Sitting of 29 April 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    HASTINGS BOROUGH COUNCIL BILL
    As amended, considered; to be read the Third time.
Oral Answers to Questions
  TRADE AND INDUSTRY

    Japan
    Mr. Cabornasked the Secretary of State for Trade and Industry what progress he has achieved in securing wider access for British exports to the Japanese market.
    Mr. Simon Hughesasked the Secretary of State for Trade and Industry what is his latest estimate of the trade deficit with Japan; and if he will make a statement.
    Mr. MacKenzieasked the Secretary of State for Trade and Industry what progress he has achieved in securing wider access for British exports to the Japanese market.
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): In the year ending February 1987 the United Kingdom visible trade deficit with Japan was £3·8 billion. Some progress has been made. I am glad to say that in 1986 United Kingdom visible exports to Japan increased by 18 per cent. to £1·26 billion.
    Mr. Caborn: Will the Secretary of State tell the House what progress has been made since he dispatched his Minister to Tokyo a few weeks ago with "a timetable in his pocket for the opening up of the Tokyo stock exchange"? First, was a timetable negotiated there, and, if so, what was it? If it was not negotiated, will the Secretary of State use the powers that he now has under the Financial Services Act?
    The right hon. Gentleman has informed the House that the trade deficit with Japan was £3·8 billion, but in 1979 it was about £882 million. The position is worsening. Will the Secretary of State tell the House what action he will take to protect British industry?
    Mr. Channon: The hon. Gentleman's question relates to two points. On the general trading front, the figures are inflated by the present strength of the yen. The House must understand that the figures are changing. As the yen appreciates, in cash terms the figures look larger at the beginning. In terms of volume, that will change as the value of the yen changes. It is mildly encouraging that British exports increased last year by more than those of any other Western European country.
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    As for my hon. and learned Friend's visit to Tokyo—and the hon. Gentleman's question relates entirely to financial services—he did indeed lay down a timetable for the opening up of the Tokyo stock exchange. There will be further financial talks at the end of the next month, and we have made it clear that we will use our reciprocity powers under the Financial Services Act if we have to. My hon. and learned Friend has already achieved a considerable moving forward of the Japanese Government's timetable for opening up the Tokyo stock exchange, and he is to be thoroughly commended for that.
    Mr. Simon Hughes: Does the Secretary of State agree that there is now a real danger of a diversion of Japanese exports to the EEC following tariffs being imposed by the United States? Can he give some indication of the Government's attitude to the proposals of Commissioner De Clercq this week on behalf of the Commission, and of what measures he thinks we can take to ensure that our financial institutions have access into Japan and to deal with the anti-dumping problem? The Government have not yet made their position clear on that.
    Mr. Channon: On the anti-dumping point, we are strongly in favour of effective action to stop so-called screwdriver operations, and we shall support effective steps to that end. On the question of the Financial Services Act, I do not think that I can add much to my reply to the hon. Member for Sheffield, Central (Mr. Caborn). The problem relates to the Tokyo stock exchange, and I have described that. As for trade diversion because of the American tariffs, there is a real risk of that. Commissioner De Clercq and the British Government have been working very closely together on the problem. We strongly support the Commission's proposals. If goods are diverted from the United States to the European Community, we shall take action, I hope within the next two or three weeks.
    Mr. MacKenzie: Will the Secretary of State accept that those of us who represent constituencies where electrical appliances are manufactured are bitterly disappointed at the lack of progress on trading with Japan? It has gone beyond being a normal diplomatic incident. May I suggest that the right hon. Gentleman asks the Foreign Secretary formally to call in the Japanese ambassador and express to him in the strongest possible terms that we have completely lost our patience?
    Secondly, is there not a great deal to be said for taking a leaf out of the book of our French partners and treating Japanese goods in precisely the same way as the French Government have been doing for some time?
    Mr. Channon: I have some sympathy with what the right hon. Gentleman said in the first part of his question. The Japanese ambassador is well aware of the Government's views, and he is also aware of the views of the House of Commons. I shall, I hope, be taking more effective steps than that. I am to see the Ministry of International Trade and Industry Minister, who is coming to London. I shall be having a meeting with him tomorrow, and on that occasion I shall convey to him what the right hon. Gentleman has said. There has been some exaggeration of the extent of what the French have done in the last few days. They have imposed duties on frozen Coquille St. Jacques and on a Japanese fish dish. Whether that will strike terror into the heart of the Japanese Government must be open to doubt.
    Sir Peter Emery: Will my right hon. Friend make it absolutely clear that we are complaining about the unfairness of trade between Japan and this country? We want there to he full and fair trade, and we want it to be expanded. Will my right hon. Friend make it clear that that is the general view of the Government, and not that there should be an overall restriction of trade?
    Mr. Channon: I agree absolutely with my hon. Friend. We want to open up the Japanese market to British goods, not to close the British market to Japanese goods. If we have to take action, either with our Community partners or, where we have to do so, on our own, that, though regrettable, may have to be done. I understand that the general aim in all parts of the House is to open up the Japanese market. I do not disguise from the House that that is extremely difficult, but some progress is being made.
    Mr. Tim Smith: Is my right hon. Friend aware that one of the few notes of caution in an otherwise very encouraging quarterly survey that was published yesterday by the CBI relates to the prospect of a world trade war? Therefore, will my right hon. Friend proceed with great caution when considering possible measures against Japan? What is proposed could be very counterproductive. What we need are specifically targeted measures.
    Mr. Channon: I agree entirely with my hon. Friend. If he is referring to financial services, we have a whole range of powers. If we took action under the reciprocity powers, we would choose specifically targeted measures that we thought were very much in British interests, in order to make sure that the action that we were taking helped Britain.
    As to the question of a world trade war, I could give many examples. We have a whole range of powers relating to financial services, of which the House is well aware, from the refusal of extra licences to the removal of institutions that are operating in this country. One could take any precise example between those two. If my hon. Friend cares to put down a question, I shall try to answer it. A world trade war would be a disaster for this country, which depends so much on exports. Incidentally, it would also be a disaster for the Japanese.
    Mr. Alan Howarth: Will my right hon. Friend take every opportunity that he can to point out to the supporters of protectionism, whether in Japan, the United States or the EEC, that protectionist measures damage consumer interests everywhere by restricting competition, by raising prices and by reducing the volume of trade? Does he agree that in an interdependent and fragile world economy we cannot afford to concede protectionist measures to producer interests and producer lobbies who are agitating in their own interest?
    Mr. Channon: In general, I agree with my hon. Friend. I emphasise what I said a few moments ago, that we want to open up the Japanese market to our goods, not to close our market to the Japanese. That is the aim that we are trying to pursue, with some success, but I do not disguise from the House that I should like it to be much more successful.
    Mr. Wrigglesworth: Is the Secretary of State aware that many of us are deeply cynical about why the Government started all this sabre rattling? We believe that it is probably
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    designed more to impress the British electorate than the Japanese Government. If the Government are genuine in their desire to stop the grossly unfair trade impediments that have been placed in Japan on products from this country, why did they not act earlier to try to help the Scotch whisky industry and many other industries that have been unable to sell their products in Japan in previous years and that have had precious little support from the Government?
    Mr. Channon: That is absolute nonsense, and I suspect that the hon. Gentleman knows it to be nonsense. No objective person would say that I have been sabre rattling this afternoon. That was a ridiculous remark. As to Scotch whisky, the hon. Gentleman knows perfectly well that the Community is taking action. The GATT panel is meeting this week, and we shall receive a report later in the summer. If there is no satisfaction from the Japanese Government, we shall retaliate.
    Mr. John Townend: When considering taking action to force open the Japanese market to British goods and services, would it not be wiser to try to hit the Japanese where it really hurts, in respect of manufactured goods, rather than take action against Japanese financial houses, which will have an adverse affect on the City? If my right hon. Friend is going to quote the GATT regulations, can he explain why it seems all right for the American Congress to take action against Japanese manufactured imports?
    Mr. Channon: I am sure my hon. Friend is aware that when I was talking about financial services I was talking about trying to obtain reciprocity for our financial services in Japan, not of trying to use financial services powers for other matters. As for general trading matters, the Community as a whole must deal with them, and I think that that is well understood in the House. A great many activities are going on in the Community at present. There is the anti-dumping matter to which I referred. There is the prospect of a trade diversion because of the American actions. That matter is being actively pursued and action on it may take place shortly. There is also the action that we are taking in the Community to try to unbind the tariffs on a certain range of products as a result of Spanish and Portuguese accession to the Community.
    Mr. Hoyle: Does the Secretary of State agree that the Japanese ambassador and the Japanese Prime Minister have been well aware of the Government's view for many years, yet the gap gets wider and wider? Will the right hon. Gentleman say something to them about the way in which Scotch whisky is taxed out of the Japanese market, and about the fact that each of the 2,000 cars that Jaguar sells to Japan is inspected individually? Is it not time to stop talking, to take action and to say to the Japanese that we will apply exactly the same measures to their goods coming here as they apply to our goods going into Japan? That will mean something, rather than having this meaningless talk that goes on time after time from the Dispatch Box.
    Mr. Channon: The hon. Gentleman has chosen one or two rather poor examples. Jaguar is doing extremely well in the Japanese market. The hon. Gentleman has raised the question of cars, so he may be interested to know that Austin Rover is now the fastest growing exporter of cars to Japan and is beginning to do much better in that market. There is a long way to go. As to the question of

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    Scotch whisky, the hon. Gentleman knows perfectly well that the Community has taken this matter to the GATT. The panel met yesterday and we will receive a report in a couple of months' time. We will either get satisfaction from the Japanese, or the Community will retaliate.
    Mr. Pollock: Apart from the GATT panel's deliberations on Scotch whisky, may I suggest to my right hon. Friend that it would also be encouraging to the Scotch whisky industry if, parallel with those deliberations, there was some direct representation by Her Majesty's Government to the Japanese Government about the need to end as quickly as possible their discriminatory tax regime against imports of that product?
    Mr. Channon: I shall be raising that matter tomorrow with the MITI Minister.
    Mr. Robin Cook: Does the Secretary of State agree that, given the remarkable success of the Japanese industry in miniaturising every electronic product, it is not credible for the Japanese Government to claim that they cannot admit any more British members to the Tokyo stock exchange because they cannot find space for them on the floor? Therefore, was the Secretary of State not surprised to read, after his colleague met the Japanese Minister for Finance, that one of the officials present told the press that he was gratified to hear that reports to withdraw the licence of Japanese banks had been exaggerated and that he assumed that such a horrible thing would not happen? When will the Government steel themselves to give the same protection to British business and British industry as the Japanese Government give to Japanese industry and Japanese business, and to act to halt the mounting deficit in our trade with Japan, which has shot up fourfold under this Government?
    Mr. Channon: I am very touched by the hon. Gentleman's deep concern for the British financial services industry and its desire to be part of the Tokyo stock exchange. I agree with him, and that is why it is so encouraging that, as a result of my hon. and learned Friend's visit, the timetable for entry into the Tokyo stock exchange has already been improved. When my hon. and learned Friend was there he set down a clear timetable and make it perfectly clear that, if it is not met, we shall retaliate. No doubt the House will keep us up to the mark.
    As to the general trading front, I have already described the action that we are taking within the Community. There is a great deal of frustration, not only in this country, but in the rest of the European Community. We shall pursue this matter. It will not go as fast as all hon. Members would like, and there is no point pretending that it will, but some progress is being made.

    Invisible Exports
    Mr. Richard Pageasked the Secretary of State for Trade and Industry if he will make a statement on the level of the United Kingdom's trade in invisible exports.
    The Minister for Trade (Mr. Alan Clark): The net earnings of the United Kingdom from all forms of invisible transactions amounted to £7·2 billion last year. It is likely that earnings continued at broadly the same rate, £600 million a month, in the first quarter of 1987, and further growth is expected during the rest of this year.
    Mr. Page: I thank my hon. Friend for that reply. Is it not true that a large proportion of that sum is due to
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    overseas investment earnings? If so, do not those huge figures give the lie to the allegation that North sea oil revenues are being squandered?
    Mr. Clark: My hon. Friend is entirely right. The balance of earnings on overseas investments rose by well over £1 billion last year. The great advantage of overseas investment income is that it allows the United Kingdom to participate in world expansion trends and offers a useful hedge against foreign currency fluctuations.
    Mr. Gregory: Will my hon. Friend continue to hold urgent discussions with my right hon. and learned Friend the Paymaster General so that any barriers to trade, particularly in the important industry of tourism, are removed? Clearly, a number of companies are holding back from investing in this country because they note that the Labour party continues to attack tourism as jobs for ice cream salesmen and Mickey Mouse jobs. Will my hon. Friend confirm that there is nothing remotely true in that, and that tourism is the fastest growth industry in Britain?
    Mr. Clark: I have constant consultations with my hon. and learned Friend the Paymaster General. Alas, my hon. Friend's point is all too true. The Labour party continually regards invisible earnings as some kind of immoral earnings, to which any kind of reference is somehow demeaning.

    Car Sales
    Mr. Gerald Howarthasked the Secretary of State for Trade and Industry what proportion of new cars sold in the United Kingdom are imported; and how this compares with 1986.
    The Minister of State, Department of Trade and Industry (Mr. Giles Shaw): Imports accounted for 49·4 per cent. of the United Kingdom car market in the first quarter of 1987, as against 56 per cent. for 1986 as a whole. This is a welcome change in trend and powerful evidence of the appeal of British products.
    Mr. Howarth: Those figures are welcome. I draw my hon. Friend's attention to the fact that Austin Rover has had its best export figures for seven years. As the buyers in Spain, Japan and the United States are demonstrating their confidence in British products, as shown by record sales to those countries, does my hon. Friend agree that the British people could ably demonstrate their concern about unemployment by ensuring that they seek wherever possible to buy British motor cars and other British products?
    Mr. Shaw: I entirely endorse my hon. Friend's remarks and his comments on the substantially improved export performance of the Rover Group. The Rover Group's share of the market in the first quarter of 1987 was 16·5 per cent. This shows welcome growth compared with the whole of 1986, when the share was substantially lower. There is plenty of room to demonstrate that, in terms of consumer choice, the Rover Group's products are beginning to meet demand.
    Mr. Terry Davis: For the purpose of the figures on imports, if a car is designed in Japan, built with Japanese components and has a Japanese badge on the front but is screwed together in this country, does the Minister regard it as a British car, or as a Japanese car?
    Mr. Shaw: As the hon. Gentleman knows very well, if the investment is made within this country and the vehicle is put together in a development or assisted area, there should be 60 per cent. of local sourcing for it to qualify as a European product.
    Mr. Roger King: Does my hon. Friend agree that one way to stem the tide of imports is to produce the sort of cars that the British public want? Is it not, therefore, good news that the Rover Group and Honda have agreed to proceed with the new R8 range of cars, using the best expertise from both countries to build a range of cars which we hope will establish a sound substantial market share within the European market within a short time? Is this not a good sign of job security at Longbridge in particular, which will have the task of building this good range of cars?
    Mr. Shaw: My hon. Friend is right and, as he knows, the developments with the Honda company continue to improve. This is the fourth occasion on which there has been a joint agreement to manufacture a motor car which has been jointly developed. From that point of view, the position of the Rover Group in relation to Honda is steadily improving, to the benefit of the workers in both companies.

    Industrial Performance
    Mr. Greg Knightasked the Secretary of State for Trade and Industry when he last met officers of the Confederation of British Industry to discuss the performance of British industry.
    Mr. Channon: I last met officers of the CBI at the meeting of the National Economic Development Council on 1 April. The performance of the economy, including industry, was among the matters discussed.
    Mr. Knight: Is my right hon. Friend aware of the results of the latest CBI survey, which were announced yesterday, which show that manufacturing output in Britain is expected to rise by well over 3 per cent. this year—an excellent figure — and that companies are now more optimistic about future orders than they have been at any time in the last 10 years? Will my right hon. Friend point out to the officers of the CBI that those results testify to the success of Government policies and are good news not only for British industry but for Britain?
    Mr. Channon: I entirely agree with my hon. Friend. I hardly need to point out to anyone—it is perfectly obvious to everyone in the country—that the success and prospects for British industry are better now than they have been for probably a generation. The survey from which my hon. Friend quoted is the most optimistic survey that the CBI has ever produced since it started to keep such records. I believe that manufacturing output will do extremely well this year, as will manufacturing exports, and the forecast for British industry is extremely good.
    Mr. Loyden: Is the Secretary of State aware that the CBI has been critical of the amount of investment that has taken place in research and development, which is one of the reasons why British industry has failed in many areas?
    Mr. Channon: The CBI, if it is critical about research and development, is certainly not critical about anything else. We see the survey as a great success, and we know how successful British industry is. As for research and
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    development, certainly no one can level that criticism at my budget, which has seen a total transformation. Most of the money that used to be spent on propping up loss-making nationalised industries is now being spent on research and development.
    Mr. Yeo: Does my right hon. Friend agree that, in an expanding economy, successful employers need to be able to attract labour from unsuccessful employers? Does he agree also that if the SDP proposals for statutory pay controls were introduced, this would stultify the economy and restrain growth?
    Mr. Channon: Yes, I am sure that that is absolutely right. It will be interesting to have the proposals explained to us in greater detail. I suspect that they will prove equally unconvincing.
    Mr. John Smith: If the Secretary of State pays attention to results rather than to projected surveys, will he confirm that since 1979 manufacturing output is down by 4 per cent., that investment in manufacturing industry is down by 17 per cent., and that British industrial capacity has been reduced by 20 per cent.? Is that an advertisement for the success of Government policies over two terms?
    Mr. Channon: Britain's manufacturing output has grown for six successive years. The volume of manufacturing output is 14 per cent. higher than it was in the depths of the recession. The growth of manufacturing output showed a sharp spurt in the second half of last year. Outside forecasters agree with the Government in predicting strong growth in manufacturing output in Britain throughout 1987. We expect it to expand 4 per cent. faster than the rest of the economy, and faster than in any year since 1973.

    Regional Strategy
    Mr. Meadowcroftasked the Secretary of State for Trade and Industry when he next intends to meet the officers of the Association of British Chambers of Commerce to discuss the impact of the Government's regional strategy.
    Mr. Giles Shaw: My right hon. Friend has no current plans for a meeting with the association specifically to discuss the impact of the Government's regional strategy.
    Mr. Meadowcroft: Surely the Minister, with his background, is aware that chambers of commerce in Yorkshire and Humberside are concerned about the wider implications of regional policy, including, for instance, assistance under the Industrial Development Act 1985. Is the Minister aware that the 1984 report showed that one quarter of all assistance went to the south-east? In the micro-electronics industry, for instance, only one project in Yorkshire and Humberside was supported, compared with 28 in the south-east. Surely the Minister has a responsibility to try to redress such an imbalance.
    Mr. Shaw: As the hon. Gentleman knows, the redrawing of the assisted area map has benefited the northern regions particularly. He will know that most assisted areas are now within that part of the country which he and I represent. He will also know that the performance of local industries and companies in Yorkshire and Humberside has shown a dramatic improvement. The regional report supplied by the Association of British Chambers of Commerce states:

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    "Yorkshire and Humberside: After a year of relatively poor results the figures for the final quarter of 1986 are comprehensively the best results seen for some time. The balance figures for domestic orders in manufacturing have more than trebled, and those for domestic deliveries are better still. Export performance too is significantly improved and employment levels and expectations are similarly encouraging."
    That is the true position of industry in the region.
    Sir Alex Fletcher: In considering the impact of regional policy, has my hon. Friend noticed that manufacturing productivity in Scotland is well above the United Kingdom average, that manufacturing exports per employee in Scotland are running at 30 per cent. above the United Kingdom level, and that the latest GDP and personal disposable income figures put Scotland in the top three of the 11 United Kingdom planning regions? Do not these excellent results shame those who constantly talk Scotland down?
    Mr. Shaw: I am delighted to hear such a robust defence from my hon. Friend of the performance of industry in Scotland. It is a powerful fact that improved competitiveness and productivity are countrywide. That is the surest way to improve sales, profits and employment.
    Mr. Pike: Are the chambers of commerce in the north-west region more concerned than the Government about the decline of manufacturing industries, which has meant a loss of 30 per cent. of the jobs in that sector in a region that is heavily dependent on manufacturing jobs? How much longer can we continue to trade with such a massive deficit budget on manufacturing industry?
    Mr. Shaw: I understand the hon. Gentleman's concern about the pattern in the north-west and I concede that regions have different patterns of performance. However, the Association of British Chambers of Commerce report for the Greater Manchester area states:
    "After a less worrying third quarter than in certain other regions the improvement in the fourth quarter is very pronounced, strongly positive for home and export orders".
    I suggest that there is now an improving trend even in the north-west.
    Mr. Hind: Is my hon. Friend aware of the quiet way in which the new post-1984 regional development grant and regional selective assistance programme is working? In the north-west and in my constituency of Lancashire, West, there have been 52 applications for such grant in the past year resulting in £3·2 million investment, which has encouraged industry to invest and has created 600 jobs in my constituency. Surely that is the way that regional development should continue, and I wish my hon. Friend every success and long may it continue.
    Mr. Shaw: I am grateful to my hon. Friend for making that point. He will be equally aware that, with the tailored system of regional support, the support is really reaching those particular areas and industries that need it.

    Manufacturing Industry
    Mr. Matthew Taylorasked the Secretary of State for Trade and Industry what is his latest estimate of the level of import penetration in the manufacturing sector.
    Mr. Alan Clark: For the year 1986, imports of manufactured products are estimated to have accounted for 34½per cent. of United Kingdom home demand.
    Mr. Taylor: Does the Secretary of State agree that an import penetration level for the manufacturing sector of nearly one third suggests that we are not as competitive as the Government claim in manufacturing, a view surely confirmed by the record deficit on manufacturing forecast in the Budget?
    Mr. Clark: In fact, the hon. Gentleman is somewhat mistaken. Over half that total is accounted for by the import of material, either semi-finished, intermediate or capital, necessary for British manufacturing industry, for jobs and production at home. With regard to the pessimistic forecast to which the hon. Gentleman drew attention, in the final quarter of last year exports were up 6·5 per cent. and imports were up only 3·5 per cent. For the period December 1986 to February 1987, exports were up 2 per cent. and imports were actually down 3 per cent.
    Mr. Fallon: Is there not rather a lot of British hypocrisy in the talk about retaliation against imports when the European industrial tariff is actually higher than the Japanese industrial tariff and when so much of the European public sector is closed to Japanese or American penetration? Is it not rather odd to be demanding access for Cable and Wireless to the Japanese market, when the Japanese are not allowed into our market?
    Mr. Clark: I do not know how appropriate it would be for me to be tempted to return to the subject of Japanese-United Kingdom trade on a question that does not actually relate to that topic. However, it has always been my view that the obstruction to our exports to Japan and the need to open up that market—to which my right hon. Friend the Secretary of State drew attention earlier—arises not so much from tariffs, but from the various obstructive devices that the Japanese interpose between our manufacturers and fair and proper access to their domestic market.
    Mr. Winnick: Do the Government recognise the tremendous continuing damage in many parts of the country, certainly in the west midlands, resulting from the high level of import penetration? Has the Minister abandoned the views that he used to advocate as a Back Bencher when he sought adequate protection for the British manufacturing industry? Has he finished with those views?
    Mr. Clark: I am quite ready to let hon. Members assess what they think my views are from what I say. The level of import penetration which the hon. Member deplores, is, as I have said frequently, not within the control of the Government; it is the consequence of a variety of individual and corporate choices that are made seeking value and quality for money.
    Mr. Richard Page: Does my hon. Friend agree that the high import figure shows that plenty of opportunities exist for British manufacturers if they care to take them? Will he support this by holding more "Better made in Britain" exhibitions?
    Mr. Clark: Yes, what my hon. Friend says is perfectly right. We support "Better made in Britain" exhibitions. We are giving a research grant to the "Think British" campaign, and public purchasing is over 95 per cent. British sourced.
    Mr. John Smith: Does the Minister understand that the full implication of one of his previous answers is that the

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    Government seem to have no responsibility for our balance of trade in manufactured goods? Is he aware that it was only under this Government that in 1983, for the first time, we had a balance of trade deficit in manufactured goods? Given that the deficit was nearly £6 billion last year and will be £8 billion this year, have the Government the remotest idea how this dreadful imbalance can be corrected?
    Mr. Clark: Considering that the right hon. and learned Gentleman had the answer less than two minutes ago, presumably he is choosing deliberately to misrepresent what I said. The Government have no responsibility for the large and widely diffused mass of individual and corporate choices which account for the present level of import penetration. I said no more than that. If the right hon. and learned Gentleman cares to tell us what the Labour party would do to direct choice, we shall be interested to hear it.

    Steel Industry
    Mr. Strangasked the Secretary of State for Trade and Industry if, when he next meets the chairman of the British Steel Corporation, he will raise the future of the five integrated plants; and if he will make a statement.
    Mr. Giles Shaw: The strategy agreed in 1985, which was based on the continued operation of all five integrated works for at least three years, remains firmly in place. Decisions on a strategy thereafter must wait until a clearer picture has emerged of market developments, particulary within the EEC.
    Mr. Strang: Will the Minister recognise that the Ravenscraig plan is fundamental to Scotland's long-term industrial future? Is he aware of the damage that recent speculation has done to confidence in the plant's long term future? Will he accept that the commitment to maintain steelmaking until August 1988 is no longer adequate? May we have a long-term commitment from the Government?
    Mr. Shaw: I understand the hon. Gentleman's concern. He will be aware that I, in company with my hon. Friend the Under-Secretary of State for Scotland, the Member for Galloway and Upper Nithsdale (Mr. Lang), who has responsibility for industry in Scotland, visited the Ravenscraig plant not long ago and had discussions with management and trade union representatives. I made it clear to them at that time that the five integrated sites policy will remain in place and cannot be altered until we have assessed the position nearer the date. The Ravenscraig plant today is working above the planned output in all areas, with some additional weekend work in the strip mill. This is a very good performance and a powerful indication that the proposals are working well at the British Steel Corporation.
    Mr. Hickmet: As my hon. Friend knows, the British Steel Corporation is on target to make a profit approaching £200 million this year. Will he confirm that the future of the five integrated plants depends upon commercial success? If jobs in the industry, and the industry itself, are to be preserved, it is essential that the corporation remains commercially successful. Does he agree that any judgment on the future of those plants—my hon. Friend will know that the plant in my
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    constituency is the most successful within the British Steel Corporation — must depend upon commercial success. profitability, viability, quality and reliability?
    Mr. Shaw: I have to endorse wholly what my hon. Friend said. The crucial factor that remains to be resolved, having agreed that the corporation is now performing with extreme success in virtually every activity, is that the market for steel products should be receptive and buoyant.
    Mr. Roy Hughes: Does the Minister appreciate the need to build long-term stability and confidence in the industry and that that can best be done with assurance from the Government about the future ownership and control? Does he further appreciate that the present policies seem to be based on the premise that if steel is produced efficiently, at some future date the industry will be flogged off to the highest bidder?
    Mr. Shaw: The hon. Gentleman may have his own views about that, but the fact undoubtedly remains that the corporation should be in the private sector. That is where, ultimately, the Government intend to place it. The reason for that is simple — it will then be able to demonstrate beyond doubt, without any taxpayers' money being put at risk, that it can survive from profits, competition and productivity.
    Mr. Dickens: Does my hon. Friend agree that when the Conservative Government returned to power in 1979 British Steel was in a very sad way? It was overmanned, uncompetitive and could not win contracts against the rest of Europe, or indeed, the world. Today it is a very different story, is it not? We are now competitive. We can compete with anybody. Had it not been for the Government's help and advice, there may not have been a British Steel Corporation today.
    Mr. Shaw: My hon. Friend is right. It was the decisive way in which the Government tackled the problems associated with the manufacturing and marketing of steel products that enabled the corporation to restructure and to survive during the biggest steel crisis in Europe, which gave rise to the original strategy decisions in 1982 and to the decision in 1985, which is still in place.
    Mr. Williams: The Minister has just confirmed his party's commitment to the privatisation of this sector of the steel industry, but will he also confirm that the previous chairman of BSC said that, regardless of productivity and profitability improvement, the privatisation of this sector could be achieved only if one of the five plants was closed?
    Mr. Shaw: The right hon. Gentleman will also know that over a considerable period there have been discussions with various BSC chairmen on the restructuring of the corporation. He will know that there were several discussions of that kind in 1982 and in 1985. The corporation is at the moment looking at plans for privatisation and the Government are taking advice from merchant banks. When all the advice is available, we shall take a view on how privatisation can best be achieved.
    Mr. Wilson: Since the top management of British Steel is notoriously anti-Ravenscraig and anti-Scottish, what guarantee will the Minister give that, in the event of privatisation, the first act of the newly privatised corporation will not be to close Ravenscraig steelworks and thus take away Scotland's indigenous steel industry?
    Mr. Shaw: The hon. Gentleman must take it from me that the five integrated site policy was agreed with the corporation in 1982 and 1985. There has been a consistent campaign by some Scottish representatives who seek to suggest that the corporation is not supportive of the five integrated site strategy. It is supportive of it, and it is that strategy that has brought the corporation to a highly enviable position within the EEC.

    Industrial Performance
    Mr. Forthasked the Secretary of State for Trade and Industry what are the latest figures for the annual turnover of British industry.
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): The output index for manufacturing industry, excluding the energy and the service sector, was 104·6 in 1986, based on 1980 equal to 100. Since the trough of the recession in 1981, manufacturing output has grown impressively and is now over 15 per cent. higher. The turnover of manufacturing industry in 1985 was £225 billion in current prices.
    Mr. Forth: Does my hon. Friend agree that those good figures, together with the CBI report that we have just received, is a tribute not only to the framework and background that the Government have provided for the industrial sector, but to management and work force within our industry, which have combined to bring Britain to the position where it can now compete right across the industrial sector with the best that the world can offer? Does that not give us enormous hope for the future in terms of the profitability of British industry and secure jobs for our work people?
    Mr. Butcher: My hon. Friend is absolutely right. I am sure that he will celebrate with me the fact Britain is now enjoying a top position in productivity and competitiveness—the best position that we have been in for two decades. As he is a west midlands Member, I am sure that he will also celebrate with me the fact that the manufacturing sector is now spearheading our industrial recovery and that the projected 4 per cent. growth in manufacturing will be the fastest rate of growth since 1973.
    Mr. Wrigglesworth: Instead of celebrating, will the Minister look at the CBI survey, in which he will find that only 15 per cent. of the companies in that survey regarded their fixed plant as adequate to the demands on them, and that 25 per cent. of companies were unable to meet demand because of a lack of fixed capacity? Is that not an inevitable consequence of the destruction that occurred in manufacturing industry during the early years of the Government's period of office, and does it not reflect on the lack of investment in fixed plant in recent years?
    Mr. Butcher: Alliance spokesmen should get involved in a different form of research. Industrialists tell me, day in and day out, that the worst possible outcome in business and industrial terms with regard to confidence, exchange rates and interest rates would be a hung Parliament. To that extent one can say that alliance spokesmen are arguing for uncertainty and the undermining of our economy.
    Mr. Latham: Following the Budget and three cuts in interest rates since early March, are not all the jigsaw
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    pieces now in place for the sustained growth of British industry? Should not any lingering political uncertainties have been satisfactorily dispelled by the middle of June?
    Mr. Butcher: If we can keep current trends going into the 1990s, talk of a British industrial renaissance would not be an exaggeration. We have a magnificent opportunity and I am sure that the electorate will not throw it away.

    Insider Dealing
    Mrs. Clwydasked the Secretary of State for Trade and Industry what action he has taken on information so far received from the inspectors he has appointed to inquire into insider dealing at the Department of Trade and Industry.
    Mr. Howard: I have received no information from the inspectors which calls for action on my part. Any question of prosecution in this case would be a matter for the Director of Public Prosecutions, who is being kept informed of the progress of the inspection.
    Mrs. Clwyd: The Government are not convincing the public that everything is now in order — quite the contrary. Surely we need the high-profile techniques of the United States regulatory authorities, which send shivers down the spines of those who are brought in for questioning, and not polite phone calls from DTI inspectors? Criminologists have shown that arrest has the greatest impact on white-collar criminals, not the softly-softly approach of the Government and the DTI.
    Mr. Howard: The powers of the Securities and Exchange Commission to investigate insider dealing are less than those that are available to our investigators, and it is noteworthy that during the passage of the Financial Services Act no Opposition Member suggested a single additional power to investigate insider dealing over and above those that are contained in the Act, which are being used.
    Mr. Nelson: Does my hon. and learned Friend agree that not only were the Government responsible for making insider deaing a criminal offence and enhancing the powers of investigation under successive legislation, but that, considering the volume of highly commercial confidential information that passes over the desks of officials in the Department of Trade and Industry, we are remarkably fortunate in this country in enjoying a high degree of integrity among officials, which has become evident over recent years?
    Mr. Howard: I very much agree with my hon. Friend's observations, which I greatly welcome.
    Mr. Robin Cook: Did the Minister note last month's statement by Tesco that it is bringing forward its hid for Hillards because insider dealing had shoved up the price of the shares of Hillards by one quarter in the preceding month? How do the Government hope to stop these scandals in the City if they cannot bring to book the insider dealers in their own Department?
    Mr. Howard: The hon. Gentleman should await the outcome of the inspection to which I earlier referred before he leaps to such unwarranted conclusions. If there is any information arising out of the other matter to which he

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    referred that warrants consideration in the Department it will receive that consideration and any appropriate actions will be taken.

    Company Takeovers (Concert Parties)
    Mr. Parkasked the Secretary of State for Trade and Industry how many prosecutions have been undertaken since 1979 under part VI of the Companies Act for the organisation of a concert party.
    Mr. Howard: None, Sir.
    Mr. Park: In view of the conclusion of the Select Committee on Trade and Industry that there was almost certainly a concert party in operation at Westland, will the Minister reconsider the decision not to hold an inquiry? Is an inquiry not made even more necessary by the strange fact that while one member of the concert party — Dreyfus of Switzerland — admits that its agents were agents for Lazards, which was the financial adviser to Westland, Lazards do not admit this commercial connection?
    Mr. Howard: My right hon. Friend the Secretary of State announced last year that he had decided not to appoint inspectors into this matter, and no new information has emerged to warrant changing that decision. The hon. Gentleman has completely misunderstood the nature of the information to which he has referred. All that that information amounts to is the fact that occasionally the Swiss bank concerned transacts business in London through Hill Samuel, the Midland bank or Lazard Brothers. This information was published in the Bankers Almanac and Year Book over a number of years, and it is of no relevance to the matters to which the hon. Gentleman has referred.
    Sir Alex Fletcher: When does my hon. and learned Friend expect to receive the report of the inspectors who are examining the Guinness affair?
    Mr. Willie W. Hamilton: After the election.
    Mr. Howard: The inspectors examining Guinness plc are carrying out their investigations with considerable expedition and are making good progress. However, I cannot give a specific date as to when their report will be available.
    Mr. Robin Cook: Did the Government know about the relationship between Lazards and Dreyfus, and if so, why did the Secretary of State or his Ministers not inform the Select Committee on any of the three occasions when they gave evidence?
    Mr. Howard: For the reason I gave a moment ago, if the hon. Gentleman had but listened, the information to which he has referred is of absolutely no relevance to this matter.

    Overdrafts (Credit Charge Advertisements)
    Mr. Jannerasked the Secretary of State for Trade and Industry whether he will consult the chairmen of the clearing banks and the Bank of England concerning the advertising of credit charges on overdrafts.
    Mr. Howard: The exemption of bank overdrafts from the full documentation requirement of the Consumer Credit Act serves the interests of both banks and their
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    customers. However, my hon. Friend the Minister for Trade told the hon. and learned Gentleman on 10 April that it might be appropriate for banks to provide more information to consumers about credit charges on overdrafts, and my officials are consulting banks and the Office of Fair Trading on this matter.
    Mr. Janner: I welcome some movement in the direction of sanity. However, do the Government not recognise that the combination of the banks' right to charge whatever interest they please on what they choose to call unauthorised overdrafts, and the banks having no duty whatever to tell people what interest will be charged on such overdrafts, is a scandalous rip-off.) It is not enough simply to say that the officials are having consultations with the banks. What steps, if any, do the Government propose to take to stop this practice?
    Mr. Howard: My hon. Friend the Minister for Trade explained in full in the debate on 10 April the reason why further action of the kind that the hon. and learned Gentleman thinks appropriate would not be in the interest of either the banks or their customers. We are seeing what can be done to make more information available.
    Mr. Peter Bruinvels: While I should not like to encourage the Government to interfere in any private arrangements over overdrafts, should not my hon. and learned Friend at least encourage all the credit card companies to publish the overdraft charges and the APR available so that at least my constituents and those of any other Member can shop around? There is no question of being ripped-off, but at least customers should be allowed to shop around.
    Mr. Howard: That information is available to consumers.
    Mr. Hardy: Will the Minister confirm that the burden of debt facing millions of households is not only up on an astonishingly high level but is increasing at an extraordinary pace? Are the Government to continue their lack of concern about this serious matter?
    Mr. Howard: I cannot see how this arises out of a question on charges on overdrafts. However, the debts to which the hon. Gentleman referred are backed by increasing assets.
    Mr. Nelson: May I put it to my hon. and learned Friend that there is a legitimate subject of concern in the questions raised today? Some of the average rates of interest charged both on overdrafts and on credit card deficit balances amount to usury, if not exploitation, given that there has been a further fall in base rate today to 9·5 per cent. and we may be looking forward to a further fall. This is not a matter for the Government to get involved in private arrangements, but I do think that they could send some signals to the private sector.
    Mr. Howard: The only real point of concern is whether information is given to consumers to enable them to make properly informed decisions. The Consumer Credit Act 1974 ensures that that information is available. Overdrafts that have not been previously agreed are a special case and, for the reasons that were explained in the Adjournment debate to which I referred earlier, I am asking the banks to consider what further information can be made available to their customers.

    Research and Development
    Mr. Allen McKayasked the Secretary of State for Trade and Industry if he will make a statement on the current extent of research and development funding by his Department.
    The Minister for Information Technology (Mr. Geoffrey Pattie): In the current financial year my Department expects to spend £412 million on support for research and development, which is a threefold increase on the expenditure level of the Labour Government.
    Mr. McKay: Irrespective of those figures, is the Minister aware that, since 1981, the number of people who work in research and development has fallen by more than 20 per cent.? Within the figure for research and development there has been an increase in military research and development and that suggests a serious decline in industrial research and development. If the Minister is aware of that, should he not take steps to obviate that balance by putting more money into industrial research and development? That would make sure that, when the oil production declines, we are in a position to become a competitive nation.
    Mr. Pattie: Yes, the hon. Gentleman is right to say that fewer people were employed in research and development in 1985 than in 1983. Between those two years it is also true to say that there was an increase in research and development in the civil sector of 16 per cent. I believe that the other part of the hon. Gentleman's question is more interesting, as it suggests that the Government, through their expenditure levels, can positively encourage industry to do the thing that only industry can decide to do—to commit the requisite levels of research and development funding to improve industry's commercial prospects.
    Mr. Forman: While congratulating the Government and my right hon. Friend's Department on tripling the research and development expenditure since the time of the Labour Government, may I ask my right hon. Friend to recognise that the important point is to get the private sector to increase its contribution to research and development on a year-on-year basis? Furthermore, is there not a role for my right hon. Friend's Department to support applications for the introduction of new technologies to existing industrial and manufacturing processes?
    Mr. Pattie: Yes, indeed, and that is why we have an extensive, advanced manufacturing technology programme and why we introduced the LINK programme in December of last year. That is a £420 million programme which, over five years, is to be targeted at precisely the area raised by my hon. Friend. The Government and industry, in partnership on a 50–50 basis, will improve what I might call the exploitation factor—taking a research and development idea and pushing it forward into a marketable product.
    Dr. Bray: Now that the Minister is the sole obstacle to agreement on the European framework programme, and in view of the projected cuts in DTI research and development expenditure over the next few years, the lack of any growth of research and development in industry since 1981, and a 10 per cent. fall in research and development in the electronics industry between 1983 and
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    1985, is the Minister aware that, under the Government's leadership, Britain has become the sluggard of Europe with regard to research and development?
    Mr. Pattie: If we are the sluggard of Europe, I do not know what Europe would have made of us in 1979, when the Labour Government went out of office. At that time there was an expenditure level precisely three times below our current expenditure level.
    If I am single-handedly holding up the European research and development, I am doing so because of my belief in the correct quality of programmes. I do not see why we should be relentlessly driven down a particular path simply to appease and accommodate the types of programmes for which we believe there is no competitive future for the rest of Europe.

    Airbus
    Mr. Sternasked the Secretary of State for Trade and Industry if he is yet able to announce his decision on the launch-aid applications by British Aerospace plc in respect of the A330 and A340 Airbuses.
    Mr. Michieasked the Secretary of State for Trade and Industry if he will make a statement on Government support for Airbus.
    Mr. Pattie: Discussions with British Aerospace about its combined application for launch aid in respect of the Airbus A330 and A340 projects are continuing. We aim to reach a decision as soon as possible and an announcement to the House will be made thereafter.
    Mr. Stern: I thank my right hon. Friend for that reply. Can he say how long he expects discussions to continue before an announcement is made? Can he also confirm the Government's support in principle for extensions to the Airbus range and assistance with funding?
    Mr. Pattie: First, I wish to recognise the considerable role that my hon. Friend has played on behalf of his constituents, who have British Aerospace and Rolls-Royce interests. The House will appreciate that the first decision that had to be taken was whether the Government believed that this project was worthy of support. That decision has been taken and we are now discussing with British Aerospace the precise level and amount of that support in a constructive and harmonious atmosphere. I am confident that we shall be able to reach agreement in the quite near future.
    Mr. Michie: I am glad that the Government have finally realised the importance of such a project. Does the Minister realise that delay means a loss of orders? The longer the delay, the more orders may be lost. Has he any idea what orders have been lost up to the present?
    Mr. Pattie: There is no question of orders being lost at present, because the aircraft concerned in the question have not yet been formally launched. That decision has not been finally taken by the Airbus consortium. What is in issue here is the level of support that will be necessary to maintain the involvement of British Aerospace in a consortium which the Government believe is very important to the health and wellbeing of the aerospace industry, not only in the United Kingdom, but in Europe.

Points of Order
3.31 pm
Mr. Max Madden: On a point of order, Mr. Speaker. I wish to raise a point of order of which I have given you notice. When matters concerning Members and business interests have been raised with you in the past, you have suggested that representations should be made to the Committee of Selection. I ask you to consider whether such advice is any longer sound as only two members of the Committee of Selection do not hold outside business interests. Indeed, the Chairman of the Committee, the hon. Member for Shipley (Sir M. Fox) holds seven directorships, five consultancies, including a consultancy with Alcrafield Ltd.—
Mr. Speaker: Order. What is the point of order for me?
Mr. Madden: —including a consultancy with Alcrafield Ltd. —[Interruption.]
Mr. Speaker: Order. All Members' interests are registered. I do not think it is necessary for the hon. Gentleman to read them out.
Mr. Madden: May I ask two specific questions? To whom can Members make representations urging that members of the Committee of Selection should be required not to hold outside business interests? Secondly, do you not agree, Mr. Speaker, that until such a requirement is introduced, suspicion that commercial interests exert influence in the House, including the selection of Members to Standing Committees, will remain? Will you also understand that concern will continue—[Interruption.]
Mr. Speaker: Order. We have a very busy day ahead of us.
Mr. Madden: I did give notice to the hon. Member for Shipley, and I am—
Mr. Speaker: Order. The point of order is to me. I want the hon. Gentleman to come to the point.
Mr. Madden: I wanted to make clear that I had given notice to the hon. Member concerned.
I have asked you two specific questions, Mr. Speaker. I wish to remind you and the House that this will remain of concern to hon. Members and to the public until we take effective action to ensure that private business interests do not exert influence in the House or on the selection of Members to Standing Committees. I ask you to reflect again—
Mr. Speaker: Order. The hon. Gentleman gave me notice of his question. I am ready with an answer straightaway. He is surely not suggesting that Mr. Speaker should be responsible for nominating Members to Select Committees. If the hon. Gentleman has any complaint to make, the Select Committee on Members' Interests exists to deal with complaints of that kind. The hon. Gentleman should direct his complaints to that Committee, not to me.
Mr. Eric Forth (Mid-Worcestershire): Further to that point of order, Mr. Speaker. If this sort of matter is worthy of further consideration, which I gather you doubt—and I share your doubt — will you assure the House that consideration will also be given, for example, to trade union sponsorship of Labour Members of Parliament and the influence that that has on their voting behaviour?
Mr. Speaker: Many hon. Members have a background of some kind or other in business or industry. Those interests are required to be registered. If hon. Members have complaints about individual Members, they should take them up with the Select Committee concerned.
Mr. Geoffrey Dickens: On a point of order, Mr. Speaker.
Mr. Speaker: I do not think it will help.
Mr. Dickens: On a different point of order, Mr. Speaker. You will recall that in recent times extradition orders have failed to be enacted because of bad drafting. I could not give you notice of my question, Mr. Speaker, but it has become common knowledge that the train robber, Ronald Biggs, who has 28 years still to serve of a sentence given in a British court—
Mr. Speaker: Order. Amongst my many responsibilities I have no responsibility for train robbers. I do not think that I can help.
Mr. Dickens: May I finish?
Mr. Speaker: I think not. I have heard the hon. Gentleman's point of order, and I cannot help him further.
Mr. Ron Lewis: On a point of order, Mr. Speaker.
Mr. Speaker: I will hear the hon. Gentleman's point of order, provided that it does not go back to what he said the other day.
Mr. Lewis: Further to the point of order—
Mr. Speaker: Order. I heard the hon. Gentleman's point of order on the same subject the other day. I have nothing further to add to what I said then or now.
Mr. Lewis rose—
Mr. Speaker: Order.
Mr. D. N. Campbell-Savours: I want to raise the question of Privy Councillor terms and how they relate to our proceedings. As I understand it, Privy Councillors are not necessarily members of Government—indeed, they include Opposition Members. Yesterday, at a press conference, Mr. Bernard Ingham was able to give a briefing to journalists in Downing street, drawing on information that was given to the Prime Minister on Privy Councillor terms when she was Leader of the Opposition. The right hon. Lady was able to acquire that information because she had been selected as a member of the Opposition, not as a member of Government, for appointment as a Privy Councillor. Would you, Mr. Speaker, deprecate a practice whereby—
Mr. Speaker: Order. I have heard enough. I do not have any responsibility for press officers in Downing street, either.
Mr. Tony Marlow: On a point of order, Mr. Speaker.

Points of Order

  STATUTORY INSTRUMENTS, &c.
  Mr. Speaker: Order. With the permission of the House I shall put together the two motions relating to the statutory instruments.
  Ordered,

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  That the draft Grants by Local Housing Authorities (Appropriate Percentage and Exchequer Contributions) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Area and Constitution) Order 1987 he referred to a Standing Committee on Statutory Instruments, &c. — [Mr. Lightbown]
  Mr. Marlow: On a point of order, Mr. Speaker.
  Mr. Speaker: I think that the hon. Gentleman has lost his chance.

Directly Elected Neighbourhood Councils
3.39 pm
Mr. David Alton: I beg to move,
That leave to given to bring in a Bill to give residents of British cities the right to establish directly elected neighbourhood councils and to make consequential provision for their constitution and resources.
The Bill will facilitate the process of parish review which was envisaged in the Local Government Act 1972. It will remove from city councils the sole responsibility of initiating the parish or neighbourhood review procedure. It will give residents the right to petition their district council to initiate the review and it will provide for a fixed timetable with which district councils must comply in initiating parish reviews under their present powers.
The legislation is designed to boost the urban parish movement. After the reorganisation of local government in 1974, urban areas in England were left without the degree of representation or participation that was adequate to secure effective and convenient local government. The Local Government Act 1972 established larger local authorities and remoter local government. Fortunately, the Act also provided the means to remedy the position—the parish review. But, sadly, the public, and even Members of Parliament, may not be familiar with this term or with the enabling part of the legislation.
The Local Government Act states that assessments of the establishment of new parishes are determined by the aptitude of such parishes to secure "effective and convenient" local government. Such assessments must be made initially by the district council, recommended by the Boundary Commission and sanctioned by the Secretary of State. However, it is clear from the legislation and Department of the Environment circulars that there is a firm intention that these reviews should be taken seriously.
The Department of the Environment circular of April 1983 reiterated to district councils that they had not been released from their obligations under the Act to conduct parish reviews. Despite all the benefits that accrue from the establishment of parish councils in urban areas, few have been established. In the north-west I can think of only two which have been established in this way—Prescot town council in the borough of Knowsley and Shaw arid Crompton town council in Oldham district council. Indeed, the Shaw town council was largely established as a result of the vigorous efforts of Saddleworth's Chris Davies who is also campaigning to establish one in Littleborough, and he should be congratulated on that. Hon. Members may know of others which have been established more recently, and some go under the name of "town council". Yet, there is disappointment and bafflement that the urban parish council movement has not developed adequately.
Unfortunately, much depends on the district council. At present there are several reasons why many district councils have failed to undertake these reviews. District councils are invariably reluctant to divest powers, and many do not agree with the view of our joint alliance commission on constitutional reform, which states:
"no decision should be taken at a higher level of government which can with equal or greater effectiveness be taken at a lower level."
Given that the legislation imposes on district councils a duty to review the position of parish councils from time

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to time, it is not surprising that those district councils which are hostile to decentralisation and devolution should have chosen to delay their reviews again and again. New legislation, such as this Bill, should lay down a specific time, and my Bill suggests every five years.
A further complication is that under present arrangements any district council recommending that a parish should be established will have to show that it, the district council, does not already provide effective and convenient local government. As Joan Perrin of the Association for Neighbourhood Councils points out, this is an "unlikely prescription for change. "The phrase, "effective and convenient" is open to some criticism as there is no uniform understanding of its meaning." Guidelines should be laid down.
The sole responsibility should also be removed from district councils. Local residents—and I suggest this in my Bill—should have the right to initiate the review by petitioning the district council. The Urban Parishes Bill 1978, a private Member's Bill introduced by the late Graham Page—and I am glad that his successor, the hon. Member for Crosby (Mr. Thornton), is one of the sponsors of my Bill today — proposed that 100 local government electors would suffice. I think that that number is about right.
These moves would give added impetus to the growth of urban parish councils. In a city like Liverpool—the Bill is specifically aimed at cities — good people have drifted away from the complex and often soul-destroying job of being a city councillor. Neighbourhood councils would be a nursery for rearing a new generation of local councillors. They would also ease the burden on city councillors. The case loads of most of our inner city councillors—I served as one for eight years—are so vast that the councillors spend most of their time solving problems and little time acting as true representatives of their community.
The neighbourhood council would not require a vast bureaucracy or infinite sums of money. As the Merseyside Association of Local Councils and groups like the Southern Neighbourhood Council in Liverpool have proved, small is not only beautiful; it is often better as well.
A century ago, Liverpool had a network of mini town halls. The old Wavertree town hall in my constituency still stands, although these days it is used as a restaurant. Without highly localised decision making, the sense of community and civic pride which once existed throughout that network of town halls has sadly become another dim and distant memory.
My right hon. and noble Friend, Lord Grimond, once said that
"if politics is about power and Liberalism is about people, then we are for power to people."
Therefore, it is not surprising that Liberals are wholeheartedly supporting the Bill, but I am glad to say that hon. Members from all other parties are backing it, too. They, like me, believe that neighbourhood councils should be able to spend the equivalent of a 2p rate, commensurate with the population of their area.
We also believe that by being able to develop the local community facilities, by ensuring proper use of existing amenities and by championing local causes which are important to people, such neighbourhood councils will help to recreate the bonding of the community and
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establish a new sense of neighbourliness. Surely the principles of the village are good for the city as well. More than anything else, it is the anonymity, the powerlessness, the lack of a clear identity and of cohesion which have threatened the vitality of city life. No one else will reverse those trends but city dwellers themselves, and they need the structure and the power to enable them to do it.
The parish is the truly local level of government in England, the only one with a statutory status. It was created by the Liberal Government in the Local Government Act 1984. As such, it is perfectly placed to be the bedrock of devolutionist plans. The recognition of the need for a national system of parish councils. neighbourhood councils, town councils, community councils — call them what one will — as the building blocks of government is our starting point for the reform of local democracy.
Mr. Speaker: Does any hon. Member seek to oppose?
3.47 pm
Mr. Terry Fields: If the problems referred to by the hon. Member for Liverpool, Mossley Hill (Mr. Alton) could be resolved by councils and committees and reports—which is the line that he takes—we would have no problems in Liverpool. The hon. Member talks about city areas. Between 1968 and 1973 Liverpool had the education priority areas study, in 1969–70 the sheltered neighbourhood action, between 1969 and 1973 the Brunswick neighbourhood scheme, between 1969 and 1975 the Vauxhall community development project, between 1972 and 1976 Her Majesty's Government carried out various studies, including the inner area study, and we had the Department of the Environment priority estates project survey in 1984. All those studies have shown what people knew already—or at least any honest person — that the fundamental problem was and is the need for an urgent injection of finance into deprived areas, not the setting up of bogus committees to deal with the problem. The Liberal party's solution is to set up councils and committees, which will be starved of finance, and by that particular device spread the responsibility away from their particular door to the deprived areas that have been mentioned already.
The Red Russian leader, Vladimir Hitch Lenin, said that an ounce of experience is worth a ton of theory. The theory expounded by the hon. Member for Mossley Hill may seem attractive. However, in my view it is blatant electioneering by the Liberal party. Set against the background of social deprivation in places such as Liverpool, it is an abrogation of the responsibility of any administration, and a failure by councillors to face up to their legislative duties as elected community representatives. That is the theory.
The experience has been referred to by the hon. Member for Mossley Hill. The Southern neighbourhood council, a typical example of what he is talking about, has been in existence for 10 years in Liverpool. But it has only glossed over the needs of the people of Liverpool at a time of deprivation.
That deprivation has been referred to in reports Europe-wide. The constituency of my hon. Friend the Member for Liverpool, Riverside (Mr. Parry) has been described as having the worst environmental and housing conditions in Western Europe, yet it is watched over by one of the neighbourhood councils that the hon. Member

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for Mossley Hill wants to implement. Blocks of flats in Caryl Gardens and King Gardens were listed on a demolition programme in 1979 in the area of the Southern neighbourhood council. In 1981–82, the Liberal administration cancelled those plans. It took a Labour administration in 1983, through the injection of finance and the urban regeneration programme, to deal with the environmental problem. Sad to relate, one of the first tasks undertaken by that council when it came to power through the decision of the Law Lords, when the 47 Liverpool councillors were removed, was to halt the project that would have dealt with the problems that the Southern neighbourhood council should have been dealing with.
The matter has been referred to in the House before. On 27 April 1983, the then Minister for Housing and Construction — the right hon. Member for Tonbridge and Mailing (Mr. Stanley), now Minister of State for the Armed Forces—said:
"I must point out to the hon. Gentleman and the Liberal Party in Liverpool that Liverpool city council has been a conspicuous underspender. The crucial need in Liverpool is for full utilisation of the resources that have been made available."
Not setting up bogus councils, as the hon. Member for Mossley Hill proposes.
"The Liverpool city council underspent in 1981–82 and it appears that it has produced an increased underspend in 1982–83. The local authority should make better use of its stock and full use of its resources."—[Official Report, 27 April 1983; Vol. 41, c. 848.]
When the hon. Member for Mossley Hill was Liverpool's housing chairman in 1978–79, the housing investment programme was underspent by £6 million. That would be a hell of a lot of money today. In 1980–81, the Liberals in Liverpool had a housing allocation of £47·2 million: they spent £40·2 million—an underspend of £7 million. In 1981–82, they had an allocation of £40·8 million and spent £35·4 million—an underspend of £5·4 million. The total resources made available in 1982–83 amounted to £106·3 million; the council spent only £74 million — and underspend of £32 million.
We talk about power to the people, but it is power to the people without the resources to deal with the problems with which the council is supposed to deal. There are 33 wards in the Liverpool area; ideally, we should like more. We in the Labour party campaign to involve people in the communities in what is going on in Liverpool. But we must understand that councillors are democratically elected to the local council. They are accountable for the allocation of finance and resources to the entire city as a community, with public watchdogs to ensure that it takes place.
The question that must be posed against the recommendation is whether the problem is organisational or structural, or whether it is exacerbated by past Liberal administrations in the city of Liverpool, financial deprivation by central Government and the underspend that has been referred to. We cannot take in isolation the pseudo-populist charade engaged in by the hon. Member for Mossley Hill.
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In a debate in the House on 18 March, it was made clear that, apart from underspending money made available for the people of Liverpool and designated for housing areas, this caretaker authority had already cut £50 million from the needs of the people of Liverpool.
In that debate the hon. Gentleman asked the Government to allow the district auditor to conduct an efficiency audit survey and to highlight areas in which savings could he made. That means cuts in services and jobs. The community councils would be unable to help to try to resolve those problems. Traditionally, the Labour party and workers have achieved everything through struggle, but all that the Liberal party wants to do is to stand aside from its responsibilities to the people of Liverpool as a whole and to the electors nationally. It pretends that problems can be solved by setting up a few bogus committees and councils. The Labour administration in Liverpool stood up to the bully boys on the Conservative Benches, and our achievements will stand for all time.
For 10 years a Liberal-Tory community council glossed over the deep-seated problems that face my city. For a period of three and a half years, by injecting cash, which is the key to all the problems in our neighbourhoods, the Labour administration in Liverpool started to put right some of the abnormalities. The Liberal resolution cancelled all that we had done. If this bogus exercise is allowed to become a reality, valuable time will be wasted. Liverpool's problems can be resolved only by the injection of some of the wealth that has been created by the people of Liverpool. Decent housing must he provided, as of right, together with services and jobs. Only in that way shall we improve the conditions that have been created by the Tory Government and their bedfellows, the Liberal party.
I shall not divide the House on this issue, Mr. Speaker. However, I am highlighting the audacity of these people and the experience of neighbourhood councils in Liverpool, just to expose them for what they are.
Mr. Speaker: The hon. Gentleman must follow his words with a shout of "No" when I put the Question.
Question put and agreed to.
Bill ordered to be brought in by Mr. Richard Wainwright, Mr. Archy Kirkwood, Mr.Malcolm Thornton, Mr. Dafydd Wigley, Mr. Terry Davis, Mr. James Wallace, Mr. John Cartwright, Mr. Cyril Smith, Mr. Michael Meadowcroft, Mr. Simon Hughes and Mr. David Alton.

Directly Elected Neighbourhood Councils
  DIRECTLY ELECTED NEIGHBOURHOOD COUNCILS
  Mr. David Alton accordingly presented a Bill to give residents of British cities the right to establish directly elected neighbourhood councils and to make consequential provision for their constitution and resources: And the same was read the First time; and ordered to be read a Second time upon Friday 3 July 1987 and to be printed. [Bill 144.]
Orders of the Day
  Finance Bill

    (Clauses Nos. 11, 18, 20 to 23, 33, 45, 147 and 160 and Schedule No. 4)
    Considered in Committee.
    [SIR PAUL DEAN in the Chair.]
    Ordered,
    That the order in which proceedings in Committee of the whole House on the Finance Bill are to be taken shall be Clause 20, Clause 23, Clause 21, Clause 22, Clause 11, Clause 147, Clause 160, Clause 18, Clause 33, Schedule 4 and Clause 45.—[Mr. Norman Lamont.]

    Clause 20

      CHARGE OF INCOME TAX FOR 1987–88
      Question proposed, That the clause stand part of the Bill.
      Mr. Bryan Gould: On a point of order, Mr. Deputy Speaker. It might be of assistance to you and to the Committee, and out of courtesy to the Chancellor of the Exchequer, if I say on behalf of my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that he has been unavoidably detained. He had intended to be present to hear the Chancellor's remarks and to make his contribution to the debate. He will join the Committee as soon as he is able to do so. In the meantime, I hope that the Committee will accept his apology.
      4 pm
      The Chancellor of the Exchequer (Mr. Nigel Lawson): I am sure that the Committee is grateful to the hon. Member for Dagenham (Mr. Gould) for that explanation.
      It is wholly appropriate that we should start the Committee stage of this year's Finance Bill with a clause that goes to the heart of the difference between the parties. I might add that before the Budget I was urged by the Opposition not to cut income tax because the polls showed that nobody wanted lower taxes, and that after the Budget they accused me of indulging in a pre-election bribe. Their concept of an unpopular bribe certainly shows the total confusion of the Labour party, which manoeuvres like squid lost in their own ink.
      If the proposal that is before the Committee today is unpopular, I can only say that the Government have consistently shown themselves prepared to take whatever measures are necessary in the interests of the British economy, however unpopular they may be at the time. If, on the other hand, it is popular, I can live with that.
      By last year we had reduced the basic rate of income tax—which is the marginal rate of tax for 94 per cent. of all personal taxpayers and 90 per cent. of unincorporated businesses and the self-employed—from the 33 per cent. we inherited from Labour to 29 per cent. The question before the Committee today is whether it should be further reduced to 27 per cent. It would then be within two points of the objective set by my predecessor in 1979 of a basic rate of no more than 25p in the pound, an objective which, given the continuation of present policies, it should not take too long to achieve—income tax down from a third to a quarter.
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      We on this side of the Committee are in no doubt: the basic rate of tax should now come down to 27 per cent. The Labour party, the Liberal party and the SDP are equally adamant that income tax should not be reduced and are committed to voting against it. The difference could not be plainer, nor is it any accident, for the Conservative party is the only party committed to reducing the burden of taxation as and when it is prudent to do so—that is precisely what we have done—while the Opposition parties are in the business of increasing the burden of taxation, as every Labour Government there has ever been have clearly demonstrated.
      It is true that when we first took office in 1979 we inherited a massive and unsustainable level of public borrowing which had to be brought under control if there was to be any prospect of bringing down inflation, to which we were committed. This initially involved, as we clearly explained at the time, an increase in the burden of taxation. But that phase was already over by the time we secured the overwhelming endorsement of the British people in the general election of 1983, and since then the path of taxation has been steadily downward.
      The basic rate of tax this year will be 6p in the pound lower than the rate that we inherited from Labour, the lowest it has been since before the war. At the same time, personal allowances are now 22 per cent. higher in real terms than in 1978–79 and the married man's allowance is at its highest level since the war. As a result, 1·4 million people have been taken out of income tax altogether, and tax thresholds in the United Kingdom are now around the international average. The overall burden of income tax is now some £12 billion lower than it would have been if we had kept Labour's tax regime and adjusted it for inflation—something which the Labour Government were not able to do in a number of years during the time they were in office.
      The benefits of these tax reductions have been felt at all levels of income. The percentage of earnings taken in income tax and national insurance contributions combined is lower at all levels than if we had kept the Labour regime and indexed it. And real take-home pay—which also, of course, takes account of the effect of changes in indirect taxation—is appreciably higher at all income levels. This is in stark contrast to Labour's record in office. Single people at all levels were worse off by 1978–79 than at the start of Labour's period in office. Under this Government their real take-home pay is up by a fifth or more.
      Take the married man on average earnings. Those without children were also worse off in 1978–79 than in 1973–74. Those with children did better, it is true. I shall quote the precise figures, because it is important that the Committee fully appreciate those cases where the Labour Government actually presided over an increase in living standards. The married man on average earnings, with two children, saw his real take-home pay go up by all of a half of 1 per cent. under Labour. That was all that the Labour Government achieved. Under this Government, it is up by more than 21 per cent.
      I should like to take just one more specific example, because it is of some topical interest and concerns a group whom the Opposition like to pretend have been victimised by this Government. After the pay award announced last week, a typical nurse will have seen her real take-home pay rise by no less than 42·4 per cent. since 1978–79. If she is

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      married to a typical teacher, their combined take-home pay will also have risen by more than 40 per cent., whereas under Labour it rose by a mere 4 per cent.
      The effect of this year's Budget alone is to increase the take-home pay of a married man on average earnings by almost £4 a week—quite apart from any further benefit that he may secure from the reduction in mortgage rates that comes into effect later this week.
      Mr. Neil Hamilton: The hon. Member for Dagenham (Mr. Gould) began with an apology for the absence from the debate of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who is still busying himself with his pudding. The hon Gentleman said nothing about the absence of any Labour Back Benchers. As this debate was trailed as their great opportunity to rant and rage against the cuts in income tax, does it not rather smack of bogus indignation that Labour cannot raise one Back-Bench Member to come to the debate?
      Mr. Lawson: My hon. Friend is absolutely right. The Committee can observe that there is not one Labour Back Bencher in his place, with the exception of one PPS. The British people know the truth of what I have been saying. They know perfectly well how much better off they are than they were under Labour. That is why they will not be taken in for one moment by the desperate black propaganda launched by the Labour party this week.
      Talking of that, I have to thank the Leader of the Opposition for the letter that he sent me, which I received today. It was addressed very properly to Mr. N. Lawson, 11 Downing street, London SW1. It began "Dear Supporter" and went on to say that Labour was hard up and to ask for money. If the Labour party wants to save money, it can cease writing letters to Downing street for a start. I hope that the hon. Member for Dagenham will pay attention, because the letter went on to say:
      "we will be fighting on our record. While others will try the usual tactic of smear and half-truth, of mud slinging and personality politics, we will go with our record and our plans."
      When the hon. Gentleman addresses the Committee, we all expect that he will obey his leader's injunction and come forward with Labour's record and Labour's plans, and will not come forward with any of the smears and half truths that we heard yesterday. We had all that business of the secret manifesto in 1983. It was codswallop then and it is codswallop now. It was totally ignored then and it will be totally ignored now. The British people know that it is the Labour party, with its massive public expenditure to finance, that will increase the burden of taxation again if it is given the chance. They know that, to pay for Labour's £34 billion public spending programme—an extra £34 billion over and above the levels in the Government's White Paper — would require either a doubling of the basic rate of income tax or a more than trebling of the standard rate of VAT.
      My right hon. Friend the Prime Minister made it clear as far back as 1984 that we have no intention of extending VAT to food. Beyond that, the incidence of taxation has to be determined in the light of the budgetary needs at the time, and no responsible Government could conceivably take any other position. What is abundantly clear is that it is the Labour party that is in the business of putting taxes up, and the Conservative party that is in business of bringing taxes down, and no amount of scaremongering can obscure that basic fact. As this year's Budget Red
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      Book clearly shows—I refer the Committee to table 2.6—the prospects on the basis of present policies are of a steady further reduction in taxation in the years ahead.
      The gulf between the parties on the issue of tax is, in part, a profound difference of political philosophy. We believe that what people earn and save belong to them, and that the state should take from them only what is necessary to discharge the functions that only the state can perform, leaving people free to make their own choices and to pursue their own destiny. The Opposition parties believe that all resources belong to the State, that all important decisions should be taken by the state, and that people should he "given"—that is the word they use—whatever pocket money is needed to keep them quiet.
      The gulf between the parties on tax is also at the heart of the difference between the two sides of the Committee over the conduct of economic policy. The Opposition start from the proposition that the cure for any economic problem lies in state intervention, which inevitably implies ever-increasing state spending and ever-increasing taxation to pay for that spending.
      The policy of the Government is clear, and distinct. As the dismal experience of the 1970s demonstrates beyond any reasonable doubt, the crucial role of fiscal and monetary policy must be to control and conquer inflation. Within that framework, improved economic performance depends on the success of individual enterprise. That requires the Government resolutely to pursue a whole range of policies designed to remove the impediments to enterprise—through deregulation, through privatisation and through reducing the burden of taxation. This prescription is now accepted throughout the world. All major countries have now embarked on policies of deregulation. Most have embarked on programmes of privatisation, openly acknowledging the lead given by the United Kingdom.
      As for the burden of taxation, all the other members of the Group of Five have either cut their income tax rates or have announced plans to do so — so has Sweden, which has traditionally been a high tax country, and so have Australia and New Zealand. It is a pity that the hon. Member for Dagenham has not kept up with his compatriots, because the Labour Government in New Zealand are following the same economic policy as the British Government and are a great deal more enlightened than he is. Among the developing countries, India is reducing taxation. The last three of those countries have Socialist Governments. On this, as on so many issues, it is the Opposition parties that are out of step and out of touch. Everyone else knows that the only route to higher living standards and more jobs is through a more dynamic economy, and that the only route to a more dynamic economy is through lower tax rates. It is no accident that the two most successful economies in the Group of Five, and the two with the lowest levels of unemployment, the United States and Japan, are the two with the lowest burden of public spending and taxation.
      Moreover, the dynamic effect of reductions in tax rates can often mean not lower but higher revenues, thus leading to the scope for still further reductions in taxation. For example, despite the reductions that we have made, inheritance tax is expected this year to yield almost 50 per cent. more in real terms than capital transfer tax did in 1978–79. The yield of capital gains tax is forecast to he 80 per cent. higher in real terms, and stamp duty is up by 140 per cent. As for income tax, the higher rates applying in

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      1987–88 are, of course, much lower than the absurd penal rates that Labour enforced, but they are expected to yield 90 per cent. more in real terms, and the top 5 per cent. of taxpayers now contribute 28 per cent. of income tax, compared to 24 per cent. in Labour's last year. The greatly increased yield of corporation tax, reflecting greatly increased company profitability, is clearly connected with the reform of corporate taxation which I introduced in 1984, which brought the rate of tax on company profits in this country to the lowest in the industrialised world.
      4.15 pm
      Mr. Gould: Is the right hon. Gentleman aware that a forthcoming article in Fiscal Studies will show that, contrary to his assertion that the 1984 changes in corporate taxation would be revenue neutral, those changes have turned out to produce £1 billion more in revenue than the previous regime would have done in these circumstances?
      Mr. Lawson: I shall, of course, look at that article and have it properly evaluated. The increase in the yield of corporation tax is a result of the enormous increase in profitability that has occurred, in part because of the dynamic effects of the change in the corporation tax regime.
      There is, as I have said, a profound difference between the two sides of the Committee over economic policy, of which tax policy is an integral part. The policies that we have been pursuing have been abundantly vindicated by the results that they have brought. It is no accident that, this year, I have been able to reduce taxes by £2½ billion and to increase public spending on priority areas by £44¾billion, while reducing public borrowing below its previously planned level by some £3 billion. For the Opposition to claim that they would have used the money differently is totally irrelevant, because with their policies it would never have been there in the first place.
      As a result of our policies, the economy today is sounder than it has been at any time since the war—a fact that is increasingly recognised throughout the world. Of course, there is always scope for further improvement—that has always been so and will always be so in every country.
      Mr. Nigel Forman: My right hon. Friend was dealing with public spending and the economy's ability after five or six years of consecutive economic growth to afford increased public spending. Does he take account of the strong case, which many of us discover in our constituencies, for allowing pensioners to share in the fruits of this economic growth?
      Mr. Lawson: I am glad to say that pensioners have fully shared in the fruits of the economic growth. Over the period in which we have been in office, pensioners' incomes have risen faster than the average for other people. My hon. Friend should look at the figures. I shall be happy to write to him about this matter.
      It is fair to say that, at the present time, the biggest problems lie in the rest of the world as the United States and Japan, in particular, struggle to adjust successfully to the massive but necessary change the has occurred over the past two years in the dollar/yen exchange rate. It is of the first importance to all of us that those two powerful
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      nations pull back from the blind alley of a trade war and instead concentrate on measures to put their own houses in order, which in turn will underpin, as is highly desirable, the present world pattern of exchange rates.
      Meanwhile, the British economy is indeed, as the headline of the leading article in today's Financial Times describes us, "an island of success". I described some of that success story in my Budget speech last month — how our growth this year will be the highest in the industrialised world, with inflation remaining low, and how by the end of this year we will have registered the longest period of steady growth, at close to 3 per cent. a year, that the British economy has known since the war. I described the massive strength of our external position, while at home unemployment is now firmly on a downward trend. All that was on the basis of deliberately cautious forecasts.
      I shall not be publishing a further forecast until the autumn, in the usual way, but all the indicators that have been published since the Budget confirm that, if anything, we are doing even better than I suggested then. The PSBR for 1986–87 has come out lower than I forecast in the Budget. Inflation, too, is slightly lower than I implied in the Budget. The current account of the balance of payments is also performing better so far than I predicted. Output appears to be rising, if anything, rather faster.
      This is fully reflected in the CBI's "Quarterly Industrial Trends Survey", published yesterday, which is of course confined to manufacturing industry, about which the Opposition always profess particular concern. All in all, that survey shows manufacturing industry's optimism to be at or near the highest level ever recorded, whether in respect of output, orders or exports. Of course, this was before the further cut in interest rates yesterday, which I am sure the whole Committee will welcome.
      Those are the fruits of the policies that we have been consistently pursuing since we first took office.
      When he rises to speak, the hon. Member for Dagenham will, I have no doubt, paint a different picture—one of doom and despair, depression and disaster. Certainly, I very much hope he does, because the more that right hon. and hon. Members opposite do so, the more nails they hammer into the coffin of Labour's credibility. All it does is to demonstrate in the clearest possible way that they are wholly out of touch with what is happening in the real world.
      For the Opposition to criticise us for having increased taxation in 1979–81, when we were clearing up the mess that they left behind, is not merely an impertinence, it is Satan denouncing sin, coming from a party which is itself implicity committed to a massive further increase in the tax burden on ordinary people. The only 27 per cent. which the Labour Government ever knew was 27 per cent. inflation—and that is what we would see again if ever they were to regain office. No wonder they have committed themselves to reversing the 2p cut in income tax in the Budget. They are pleading guilty to this lesser offence to divert attention from the fact that to finance their overall spending plans would mean doubling the basic rate of income tax.
      As for the Liberals and the SDP—it would be wrong to forget them altogether—they say that they will vote against the 2p reduction in income tax, but do not know whether, if they were ever to be in a position to influence

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      events, they would reverse it or not. Their confusion on income tax parallels their confusion on every other aspect of economic policy, not to say more widely.
      The whole world now recognises that our policies have created an economy that is stronger than at any time since the war. The policies of the Opposition would destroy that strength. An integral part of our policy has been the reduction in income tax, and clause 20 is a further step forward. So long as this Government is in office, it will not be the last. I would remind the House of the precise words used by my predecessor in 1979, which I have reaffirmed before and reaffirm today: our long-term objective is a basic rate of
      "no more than 25 per cent."—[Official Report, 12 June 1979; Vol. 968, c. 261.]
      We do not pursue policies to meet arbitrary targets, and then sit back. We pursue them because they are right, and because they work, and we shall continue to do so.
      The contrast with the Opposition could not be greater. We believe in building on success; they believe in a return to the failures of the past. We believe in a free economy and a free society; they believe in state planning and state regulation. The vote at the end of the debate will be a vote of the first importance, for it will establish beyond doubt, once and for all, which party is the party of lower taxation, and which parties are the parties of higher taxation. I commend clause 20 to the Committee.
      Mr. Gould: We oppose the clause because it is wrong. It is wrong economically and it is wrong socially. We oppose it first because, in our present economic condition, there are better things to do with £2·5 billion than to give it away in tax cuts. We oppose the clause because giving away tax cuts is likely to harm our economy. We oppose it because it forms part of an overall taxation strategy with which we profoundly disagree. We have to look at the clause against the background of the Government's tax record. The Chancellor, in his peroration, said that the debate will show which party is the party of low taxation. Therefore, we are entitled to look at the Government's claims in that respect.
      The first point that should be made is that, of course, the overall effects of all the taxation changes made by the present Government have been regressive in their consequences. At the end of the day, they have benefited only those at the top of the income scale. Only those people have had real tax cuts in absolute and proportionate terms. Let us examine that claim. Again today, the Chancellor rehearsed an argument that we heard earlier from the Financial Secretary in his winding up speech on Second Reading last week. The Conservative claim has always been that it would reduce the tax burden for the country and for ordinary families. That is a fairly clear statement, a fairly clear claim and a clear objective. No one is in any doubt about what it means and what would be required if that claim were to be made.
      We heard from the Chancellor and from the Financial Secretary a careful, complex attempt to deal with the awkward truth that, bearing in mind absolute rates of taxation and proportionate burdens of taxation, for the vast majority of people in this country—and indeed for the country as a whole—a greater proportion of income and of national wealth is now taken by taxation than was taken in 1979. Conservative Members try to deal with that awkward truth by talking about other matters, such as real
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      take-home pay and real earnings—about anything other than the precise nature of their claim to have been a tax-cutting Government.
      It is not we who wish to introduce the matter. It is not we who say that it is a matter of enormous importance. But since the Government insist that that is what their record shows, and since this is the test by which they themselves insist that that they should be judged, surely we are entitled to say that the facts simply do not bear that out. In case any hon. Members on the Government Benches are inclined to contest what I say, let me warn them, before they make such a rash claim, that they should recognise that the Financial Secretary, in addition to all the other things that he said in winding up the Second Reading debate, actually admitted:
      "of course, a person on average earnings"—
      that includes many on above-average earnings as well—
      "is paying more pounds in tax—he is even paying a higher percentage in tax".—[Official Report, 22 April, 1987; Vol.114, c. 760.]
      On my reckoning, that simple admission — that simple statement—means that no credence whatsoever can be placed on the claim that the Government have been a tax-cutting Government.
      Mr. Lawson: If the hon. Gentleman had been paying attention — he usually does, but on this occasion he clearly did not—he would have heard me deal with his point in my opening remarks. I clearly said that between 1979 and 1981, when we were clearing up the mess that we were left by the Labour Government, when we had to bring down a massive and totally unsustainable public sector borrowing requirement, we were obliged to increase the burden of taxation. Not only did I say that today, but we explained it clearly at the time, and the hon. Gentleman will find that in my Zurich speech of January 1981. That period had already come to an end by the time we went to the people in 1983 and had our mandate endorsed by the British people. Since then, the burden of taxation has gone steadily down. That demonstrates our credentials as a tax-cutting Government and a tax-cutting party. That is the direct answer to the hon. Gentleman's point.
      Mr. Gould: That statement sounded remarkably like a lengthy and unconvincing excuse coupled with a confession. It was an explanation—an unconvincing one — of why what I said was right and why the Government's claims have been wrong. It simply gave us some rationale for the confession made earlier by the Financial Secretary. Of course, the Chancellor can explain until he is blue in the face why he put up taxes between 1979 and 1981 and why, for example, his predecessor doubled VAT from 8 per cent. to 15 per cent. Of course, the point might be taken that it was not an actual doubling. In April 1979, his predecessor said:
      "We have absolutely no intention of doubling VAT."
      That is a direct quotation. The raising of VAT from 8 per cent. to 15 per cent. was just 1 per cent. short of an actual lie. If the Chancellor of the Exchequer wants to take up that point, by all means let him. However, his lengthy intervention sounded like bluster designed to get away from the simple fact on which the Government are clearly very unwilling to be hooked — the Government keep drawing attention to this, not the Opposition—that they have raised the burden of taxation absolutely and proportionately for the great majority of families.
      4.30 pm
      Mr. John Maples: How much more tax would a man on average earnings be paying if the tax rates and thresholds that we inherited from the previous Labour Government had been indexed? I believe that the answer is about £500.
      Mr. Gould: The hon. Gentleman is requiring me to have the ability of a computer to answer a totally hypothetical question, which again is no more than a ploy designed to deflect attention from this simple point.
      I am very willing to move on from this point. However, Conservative Members clearly wish me to remain with it. Therefore, I can do no more than reassert the concession made by the Financial Secretary and the point that was clearly made by the Chancellor in his intervention. In case anyone in the Committee wants to dispute the matter further, I will provide one more opportunity. The present Government, during their period in office, have raised the burden of taxation for the nation as a whole, for the average family and for most ordinary families absolutely and proportionately. That is a clear and accurate statement. It is on the record. It cannot be challenged. It rests on an assertion made by the Financial Secretary.
      Mr. Forman: Will the hon. Gentleman give way?
      Mr. Gould: No, we must really move on. I suspect that the hon. Member for Carshalton and Wallington (Mr. Forman) is likely to do even more damage to his cause than has been done so far.
      Mr. Lawson: The hon. Gentleman is not prepared to give way to Conservative Back Benchers—and I regret that—but I am grateful that he has given way to me. As the hon. Gentleman is so interested in the burden of taxation, does he believe that the burden should be reduced or increased? Will he answer that, or does he think that the burden of taxation should remain exactly as it is?
      Mr. Gould: As a preliminary remark, I notice that the Chancellor has again not taken the opportunity of disputing the simple truth that I have explained on several occasions. However, since he has asked this question, I must state that the Opposition have absolutely no responsibility for the current level of taxation. The Government's record is now under scrutiny. The Government have brought taxation to its present level. They are making false claims that I am obliged to knock down — [Interruption.] I will answer the Chancellor's question. Unlike Conservative Members, we have no inhibitions about answering questions.
      The Government have mismanaged the economy. In addition to the other damage that they have done to the economy and in addition to the desperate need for investment in the economy, they have increased the burden of taxation. It is not the Opposition's responsbility to accept that level of taxation, but we must accept it because that is what we will inherit.
      The Opposition are happy to state that if there is money available in the state of the economy that we inherit—and I have a long passage in my speech which I will come to in this respect if the Chancellor will be patient—that money should be used not to reduce income tax, but for investment. That is quite clear and we have no inhibitions about making that claim. We believe that money should be used for that purpose. The tax burden that the Government have established for the time being, which is
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      higher than they inherited, should be maintained for the moment in the interests of the economy because of the weakness of the economy that we will inherit from the present Government.
      Mr. Forman: Will the hon. Gentleman give way?
      Mr. Gould: No, I am sorry. I must press on.
      While there is clearly great interest in the question of the tax burden, I would have thought that Conservative Members would realise by now that their claim—which doubtless they will blithely continue to make in the coming months and years — that this Government are a tax-cutting Government flies in the face of the facts. All I can do is to lay the facts before the Committee and invite the British people to make their judgment. If the Committee really wants me to reiterate the truth, I will. However, I believe that I would be in danger of trying the patience of the Committee if I were to do that.
      I want to make it perfectly clear that the changes proposed in the clause do very little to remedy the picture that I have described. Even after the changes have taken place, as has been made clear in written answers provided by the Financial Secretary—and that is presumably why he had no option but to make his confession — the burden of taxation will be greater. We are not even talking about changes that will at last make good the Government's claim to be a tax-cutting Government.
      Furthermore, the Government have characteristically chosen to use the available money to reduce taxes in such a way as to produce the usual regressive effect. If the Government had been really keen to use money to reduce taxation, or even income tax, they could have done so in a way that would have benefited those at the lower end of the income scale. However, the Government chose not to do that. They again chose cynically to give the major benefits to those who are already best off in our society. If they were interested in distributing income, they could have used the money to make good the real value of child benefit. However, they chose not to. Instead. they have again given tax benefits principally to the best off. The British people will not easily forgive that. They will recognise what is happening.
      Mr. Tim Smith: The hon. Gentleman should not be allowed to get away with that assertion. If he looks at clause 20, he will learn that there has been no increase in the higher rate bands, as opposed to last year.
      Mr. Gould: However, over the total period, those at the top of the scale have obtained enormous benefits, and a flat rate cut will increase benefits for those at the top of the scale.
      The Opposition are opposed to the Government's long-term plans to shift the balance from direct to indirect taxation. I do not imagine that the Chancellor, his Minsters or any of his Back-Bench colleagues would dispute the fact that the Chancellor and his Ministers have frequently said that their long-term intention is to bring about that shift from direct to indirect taxation. In his 1984 Budget speech, the Chancellor said that an extension in VAT was the counterpart to cuts in income tax. That was the Chancellor's stated objective in 1984. A former Tory Cabinet Minister, now an EEC Commissioner in Brussels, is preparing measures which would abolish zero rating for VAT altogether. We watch with interest to see the Government's response to that proposal.

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      Yesterday there was a new development. I have on at least four occasions challenged the Chancellor and the Chief Secretary — I may even have challenged the Financial Secretary — to rise at the Dispatch Box and deny that work has been carried out in the Treasury with regard to a major extension of VAT. On each of those occasions the Chancellor and his Ministers sat tightlipped. They did not move a muscle. They did not utter a sound. It was left to their right hon. Friend the chairman of the Conservative party to lift a little corner on the truth, not in the Chamber or in Committee, but in a television studio, and under some considerable pressure. He confirmed for the first time that indeed there had been a study. Of course, he did all that he could to minimise its importance. He said that the study had been carried out by some little academic study group and it really had nothing to do with the Government. He said that academics get on with such studies all the time, although he thought that there had been some small Treasury contribution to the funds to set up that study. For the first time we have had an admission that a study has been carried out.
      Mr. Lawson rose—
      Mr. Gould: I am delighted that the Chancellor is for the first time showing signs of rising on this point, but before he intervenes could I state that we need to know the terms of reference of that study. Who carried it out? Have conclusions been reached? What action is proposed to be taken on the conclusions? What part will the conclusions play in the Government's plans if they are re-elected for a third term? If the Chancellor would care to answer all or any of those questions, the Committee would be immensely gratified.
      Mr. Lawson: The hon. Gentleman is getting desperate, because there is nothing secret or hidden about the work to which my right hon. Friend referred. The Economic and Social Research Council, the Treasury and others have been jointly funding academic research on taxation since 1983. Applications for research proposals on indirect taxes were advertised in The Guardian in 1985. When the Labour party has to scrabble around to produce examples such as those to justify its ludicrous claims about the Government's intentions it shows just how threadbare it is. No work has been commissioned or undertaken inside or outside the Treasury on any proposal by Ministers to increase VAT or extend its coverage.
      Mr. Gould: I notice how carefully the Chancellor chose his concluding remarks—that no work has been done on proposals by Ministers. I wonder whose proposals were considered in that case. He carefully avoided answering any of the questions that I posed to him. If the study was as publicly known as the Chancellor suggested, why, when the Chancellor was challenged on four embarrassing occasions to come clean, did he not utter a word? Why was it that the first time we heard of this was when a non-Treasury Minister, under considerable pressure, was forced to scrabble around for an answer?
      If the Chancellor would care to intervene to give us any of the answers to the questions I posed—what were the terms of reference of that study group; what were its conclusions; and what action is proposed to be taken in the light of those conclusions—we could test his claims that this study is of no consequence and that it implies
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      nothing for the Government's plan for a third term. I see that the Chancellor, characteristically, does not propose to answer those questions — the questions that really matter. He answered in carefully chosen words drafted for him in advance, but he cannot answer the real and crucial questions which would reveal the extent of the Government's intention to shift the burden from income tax to VAT.
      It is perfectly clear from the Chancellor's silence that we are in the familiar situation where the British people are being offered income tax cuts before the general election and an increase in VAT after the general election. That is the truth of the matter and that is what will be taken from this debate by the British people.
      Mr. David Winnick: Is it not interesting that when my right hon. Friend the Leader of the Opposition challenged the Prime Minister yesterday on whether she is actively opposed to any increase in the rate of VAT, or any extension in its scope, the Prime Minister refused to answer? If it is true that a re-elected Tory Government — it is not likely to happen, because the Tories are not likely to be re-elected — would increase VAT, as we say they would, would that not wash away the few shillings gained by people from the tax cuts, because the average family would pay far more as a result of increases in indirect taxation?
      Mr. Gould: I am grateful to my hon. Friend. It is significant that the Chancellor has had 24 hours longer in which to prepare some sort of answer to the question on which the Prime Minister dropped an obvious dead bat yesterday. If the Prime Minister had been able to deny our assertions yesterday, she would have done so. The truth is that an extension of VAT, as we believe is proposed by the Government for a third term in office, would increase the average family budget by over £10 a week. The Government have that, prospect in store for ordinary families.
      4.45 pm
      The tax cuts would impact on the economy, because the use of this money to reduce income tax by 2p in the pound is likely to damage, rather than to help, the economy. The first point is that a cut in income tax is the most inflationary way of using this money to cut taxes, because it would suck in imports, make the balance of payments decline and therefore reduce the value of the pound, pushing up inflation. It would also impact directly on the balance of trade.
      The Treasury forecasts a trade deficit in manufactured goods of £8 billion this year and an overall trade deficit of £2·5 billion. I hear a call "So what?" from the Government Back Benches. It reminds me that, when we pointed out the turnaround in our trade in manufactures of £13 billion since 1978, the Chancellor said, "That is neither here nor there". As I pointed out in that debate, the volume of production worth £13 billion is certainly not here, but it is there—it is in Frankfurt, Cologne and Tokyo. Those goods are being produced there, and the jobs needed to produce the goods are being created there. Our balance of trade deficit in manufactures is of the gravest significance for our economic future. Any measure, such as cuts in income tax, which will suck in further goods from abroad. close down British factories and throw further British workers on to the dole is likely to do grave damage to our economy.

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      Let us look at the argument about the beneficent effects of income tax cuts on incentive. We do not hear much of it today, but we used to hear a great deal of how income tax cuts would make everybody work harder and longer. It is difficult for the Chancellor or any other Minister to make that argument today, because a study commissioned by the Treasury, published recently, called "Taxation and family labour supply in Great Britain", concluded that even substantial changes would make virtually no difference whatsoever to the number of hours worked by most people. That study, commissioned by the Government, blows out of the water the reasoning which lies behind the case for improving incentives through cutting taxation.
      Mr. Michael Fallon: The Treasury study dealt with the incentives for those in work; it did not deal with incentives in the taxation system for those out of work. Can the hon. Gentleman explain how somebody who is out of work in the north-east is more likely to take work if his income tax were to be increased and his take-home pay reduced, as it would be if the Opposition's vote tonight were successful?
      Mr. Gould: The hon. Gentleman thinks he is making a separate point, but it is exactly the same point as was considered by the Brown report. It is simply a question of incentives to work additional or any hours to improve one's income above the current and presumed level. This reports bears out what common sense would have told Ministers a long time ago: if one reduces taxation, the likely effect on the ability or willingness of people to work is that they will work less and will earn the same income for less work. Many people, on purely common sense grounds, would choose to respond to that by not working as hard.
      Furthermore, the Government have to explain why tax incentives are required to get those in work who are at the top end of the income scale to work hard, whereas the disciplines required to force unemployed people to work are cuts in benefits and cuts in pay. That is the difference. That is the affront to common sense that the Government have to explain. That is the socially divisive policy to which they have attached their name and attitudes.
      Mr. Forman: The import of the point that the hon. Gentleman has just made seems to be that if the Labour party were to take office, which I doubt, it would seek to put up income tax and thereby get people to work harder. Is that the conclusion that he is drawing?
      Mr. Gould: The argument that the hon. Gentleman postulates is not one to which we have ever paid any attention. It is the Government who maintain that the incentive effect of taxes is crucial and it is the Government's own study that shows that that claim is ill-founded. Again, the Government put up a target which is all too easily knocked down. But it is not our target. It is not an argument that Labour Members would wish to make.
      The major objection to these tax cuts is that they pass up a real opportunity to use resources which have come in an uncovenanted way to the Chancellor. They have come, for example, because corporation tax, contrary to the Chancellor's assertions earlier, has proved to be a more
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      buoyant revenue raiser than was foreseen when the 1984 tax changes were made. He has used that money not for the purpose of investing in the real needs of our economy, which is desperately crying out for that investment, but for purposes that will harm that economy.
      The Government's model of the economy and the London Business School's computer model of the economy, neither of which is particularly confident or helpful to our case, show clearly that the Government's chosen course of tax cuts is four times less effective than if that money were invested in the same quantities in our economy to create employment and increase output. If we had used that £2·5 billion, the models of the economy—on which, again, we place little reliance, but which the Government have always maintained are important guides to economic policy — show a 4:1 ratio between the number of jobs created by investment in our economy and tax cuts.
      That is the chance that the Chancellor has passed up. That is the extent to which he has turned his back on the unemployed. With £2·5 billion at his disposal—he had more, but he has chosen to use £2·5 billion for tax cuts—he could have invested in our infrastructure, in our skill training and directly in our industry. He could have done all those things, but he has allowed a situation to develop in which manufacturing investment languishes at 20 per cent. below its 1979 level.
      The Chancellor asks about the CBI survey. Why does he not look at "Fabric of the Nation", the report produced by the CBI complaining that shortage of investment was ruining our industrial infrastructure? Why does he not look at the Manpower Services Commission, another Government-sponsored agency, which says that we are training eight times fewer engineers than the Japanese? Those are the things on which the money could have been spent. Those are the things on which a Labour Government would spend that money. The real charge against the Government is that, for cynical electoral reasons, they have passed up an opportunity which could have benefited the economy.
      The case against tax cuts is so substantial that it is impossible to believe that they have been proposed by the Government for any better reason than that they make the cynical judgment that the floating voter is as avaricious, selfish, short-sighted and unconcerned for the general interest as the average Tory Back Bencher.
      That judgment is as mistaken as it is cynical. It is a judgment that is not shared by the British people. Indeed, it is not even shared by the British Institute of Management, which, in February, said that managers preferred some specific increases in Government spending to a cut in taxation. Only a quarter sought tax cuts before some increase in public expenditure. The increases in public expenditure on infrastructure that were announced in the public expenditure White Paper—who was saying that they had not got it?—were not enough, according to the British Institute of Management. It said that managers strongly support direct measures to tackle persistent high unemployment.
      That is the option that was available to the Government. That is an option recognised not just by the Labour party but by many people in society, the British Institute of Management and many other institutions. All the opinion polls tell us that the British people reject the cynical bargain offered by the Government. They will reject that cynical deal. They know that tax cuts are not

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      the way to obtain decent housing, and proper pensions, schools and housing. They know that that is not the way to get what only community provision can make available to them. For that reason, they will reject the Government's offer, as we shall do tonight.
      Sir William Clark: It is always a pleasure to listen to the hon. Member for Dagenham (Mr. Gould). Most of us look upon him with generous feelings and some friendship. However, we feel some sympathy for him in advocating a policy on behalf of the Labour party with which he does not agree.
      It is obvious that with the hon. Gentleman's intellect and experience of finance there is no way in which he can talk about the Government giving away £2·5 billion. On thresholds, he will agree with me that the Government have kept well in front of inflation and that the lower paid are better off than they would have been if we had followed the principles followed by the Labour Government on the starting rate of tax. I have no doubt that he will agree that the standard of living in Britain has increased tremendously since 1975, which was not the case before the Government took office.
      The hon. Gentleman says that we have not decreased direct taxation, but he is not facing the facts. The standard rate was 33p in the pound and it is now—or will be—27p. The top rate was 98p and is now 60p. He talks about the 2p reduction being inflationary, but the logic of that is that we should go back to 33p. Apparently, if a reduction of 2p in the standard rate of taxation is inflationary, to avoid that we should go back to 33p. However, I remind him that when it was 33p we had inflation of about 27 per cent. Now we have inflation of about 4 per cent.
      The hon. Gentleman talked about the reduction in the standard rate sucking in imports, but if he looks at the Labour Government's balance of payments record, for practically every year of that Government there was a deficit in our balance of payments. That position has been completely reversed by this Government.
      I do not think that the hon. Gentleman believes all that his colleagues forecast. Just before the 1983 election the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said that inflation would be in double figures. Double figures means 10 per cent., but it has not been 10 per cent. since 1983, and it is 4 per cent. now. Another of his colleagues said that unemployment would rise to 24 per cent., but in fact it is 11 per cent. It was also said that the National Health Service would be dismantled within five years, but that has not happened. It was said that we would become a bankrupt nation and that output would go down, but since 1983 output has increased tremendously. It was said that pensioners would be much worse off after 1983 under another Conservative Government, but under this Government the pensioners have had an increase 4·5 times greater than under the previous Labour regime.
      The VAT smear with regard to food, and so on, that is now going around has been answered by my right hon. Friends the Chancellor and the Prime Minister.
      What the Labour party has not said, and what the hon. Member for Dagenham avoided, is the effect of its policies on VAT. I remind the hon. Gentleman that if the promises of his hon. Friends, and even the official policy of his party, were implemented, they would lead to a VAT rate of about 49 per cent.
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      The hon. Member for Dagenham did not deal with what the Labour party's plans for increased expenditure would mean for the standard rate of tax. It would mean a standard rate of tax of just over 50p in the pound as a starting point and VAT would be about 48 or 49 per cent. The Labour party should address itself to these points and explain to the electorate what it plans to do.
      5 pm The hon. Member for Dagenham said that the Chancellor underestimated the amount that he would receive from corporation tax. The reason for the Chancellor receiving more from corporation tax is the increased profitability of companies.
      Mr. Gould rose—
      Sir William Clark: Perhaps the hon. Gentleman will allow me to finish and get my facts right before he attempts to distort them.
      We must realise that, if the profitability of a company increases, by necessity the Chancellor's take is greater.
      Mr. Gould: I do not dispute the point that the hon. Gentleman has made, but he fails to take the one that I made. Far from being revenue neutral, the changes that were announced in 1984 — accepting the level of profitability of the corporate sector today — have produced £1 billion more in corporation tax than would have been the case without those changes. That is nothing to do with profitability.
      Sir William Clark: This worries me. The hon. Member for Dagenham is the Labour party spokesman on finance. If he believes that the neutrality of corporation tax is not dependent on the profitability of companies, he is whistling in the dark. Obviously, one can reduce taxes and receive a greater take if the income of a company increases.
      I cannot understand the Opposition's claims of gloom and doom with regard to the Budget. The CBI, which mainly represents manufacturing industry, is extremely optimistic and bullish. There is no question but that the economy is in better shape than it has been for many years.
      Let us look at the public sector borrowing requirement. I was surprised that last year's borrowing requirement was so low, and on that I congratulate my right hon. Friend the Chancellor. The Chancellor is not over-optimistic. He takes a very pragmatic approach to the outcome of the year's finances. The public sector borrowing requirement is very low at £4 billion. That achievement is not recognised by many people in this country. Output is going up.
      The Labour party gives me the impression — I am sure that it gives the rest of the country the same impression—that it is the party of higher taxation. It always has been. The history of Labour Governments since the end of the war shows that they have always increased taxes. Conservative Administrations have reduced them.
      The hon. Member for Dagenham—I welcome this—said that he was pressing my right hon. Friend the Chancellor on his plans for his third term. That is fairly defeatist talk on behalf of the Labour party. Apparently, it has realised that we shall have a third term and that, with the advent of polling day, my right hon. Friend v. ill still be Chancellor of the Exchequer.
      I welcome clause 20 because I am convinced that it is right. As a starting rate 27p is still too high, and I welcome

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      what my right hon. Friend the Chancellor said about the target being 25p. I noticed—I will not press him on this point—that he did not say what the higher rate would be. At some time I should like to tell him what I think the top rate should be.
      Anybody — including the hon. Member for Dagenham—who says that this is an election or bribery Budget and that the reduction of 2p in the standard rate of tax has been made to gain votes should think again. I wonder what the Labour party would say if it went through every Budget since 1979. Direct taxation has been reduced in each successive Budget. There was no election in 1980, 1981, 1982—in 1983 there was—1984, 1985 and 1986, but there has been a continual steady reduction in the burden of taxation. The lower we can get direct taxation, the greater the incentive for people to work, which is what we want for a prosperous society. That is what we are becoming, because we are in a much more prosperous situation today than we have been for many years.
      Mr. Ian Wrigglesworth: The hon. Member for Croydon, South (Sir W. Clark) referred to taxation and reductions in taxation, but in this clause we are only dealing with the reduction of income tax.
      The hon. Member for Dagenham (Mr. Gould) was right to point out that if one is talking about all taxes—customs duties, employees' national insurance contributions, VAT and the whole range of taxes—the Government have increased the burden of taxation.
      We are dealing with income tax, and whether it should be reduced by the 2p that the Chancellor is proposing. The Chancellor said that it was the policy of the Government, and the Conservative party's view, that income taxes should be reduced as and when prudent. I was pleased to hear him say that. However, unless we can deal with unemployment, the problems affecting the Health Service, education and training, housing and many others such as the lack of research and development in industry and the brain drain, it would not be prudent to reduce income tax. If we can start to deal with those problems in a substantial manner, we can see no reason for keeping income tax or any other taxes a penny higher than we must.
      We would have preferred to see the Chancellor in his speech today and in his Budget speech and Ministers in their speeches pay much more attention not to the inflated, exaggerated claims about the performance of the economy at the present time but to some of the problems that face the country, some of which have been exacerbated by the policies of the Government after nine years. It is to those problems that we should be addressing our minds this evening because they are the long-term problems which, if not overcome, will undermine the long-term success of the economy and industry. They are the problems to which the people of this country want to see their Government addressing their attention and resources.
      Let me deal first with what is undoubtedly, in most people's minds, the No. 1 problem facing the country—to which the Chancellor's Budget pays hardly any attention — unemployment. All the evidence we have from consistent findings in opinion polls, from our experience as Members of Parliament in our constituencies and throughout the history of the past three or four years shows that unemployment has been the anxiety about
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      which the people have felt most strongly. However, the Government have paid little attention to it in speech after speech and policy after policy. The reality is that, after all this time of Conservative rule, we still have in excess of 3 million people available for work. This figure includes those who are not on the register, because those on the register are simply those registered for benefit, and there are many more people who want to work. Those of us who represent areas of high unemployment — my county has the highest level of unemployment of any in Great Britain, except the Western Isles—believe that unemployment at over 20 per cent. is a scandal and should be a top priority for the Government.
      Before the Budget, we put forward proposals on how we believe that the Government should be using their resources to get those people back to work and make it possible for them to seek fulfilment in work, with a better income. We showed how the economy would benefit by the increased wealth that would be created if that unused capacity, that unused resource of people, was in use.
      We believe that, by embarking on a programme for expansion of some £4·9 billion, we can, over three years. get about 1 million people back to work. That will still leave an unacceptably high level of unemployed people. I wish that the House and its Committees would spend more time considering the problems that every party in the House knows will be there. We shall have at least 2 million people wanting work, no matter which party wins the general election and no matter what policies are introduced.
      That is why we believe that the second priority for the Government, rather than cutting income tax, is to deal with that problem of unemployment, which means that a substantial number of people in Britain today are facing considerable hardships. Furthermore, the benefits for pensioners and those hardest hit by unemployment and the recession should be increased.
      Thirdly, we believe that one must consider the long-term future of British industry and the British economy, and we believe that a number of measures are necessary to build for that future. Foremost among those I put education and training. When the Government came into office in 1979, they began to destroy the training system. They abolished the training boards and the apprentice opportunities that used to be available to thousands of young people when they left school.
      After a time, as unemployment went through the roof and the Government began to get very worried about the electoral consequences of the level of unemployment and realised that they must do something for the unemployed young people, they introduced the youth training scheme and spatchcocked it together. We were delighted that the Government introduced that scheme. We pressed them to extend it to two years and we were delighted when they did so. We supported the Government when they introduced the youth training scheme, but the scheme still has a great deal further to go if it is to make a contribution to the skills and future of our young people in the way that it should.
      5.15 pm
      The first and most important thing that must happen to YTS, apart from putting extra resources into it and ensuring that people get the skilled training that they need for the rest of their lives, is to give it an accredited status so that it can be used to get further qualifications. It is no good doing a two-year youth training scheme if at the end

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      of that time one has nothing of value to take either to an educational or training institution or to an employer, such as an O-level or a CSE.
      I am pleased that Ministers have responded to my pleas and those of my colleagues for a move in that direction, and that the Manpower Services Commission is working on a programme to get accreditation for the youth training scheme so that it dovetails with the rest of our education and training system and gives young people a real opportunity. Putting resources into that is a top priority if we are to succeed against competing countries such as Japan, Taiwan, South Korea, Hong Kong, America, and Germany, all of which have education and training systems that make ours look sick.
      There is a great thirst for education in places such as Hong Kong, where half the population is under 21. The small country of South Korea, with 15 million people, is producing four times as many graduates in information technology as both this country and West Germany combined. That is the challenge that faces our country, not the challenge of people in work getting a cut in income tax. We want more resources to go to education and training so that we can match the output of graduates and skilled people from our educational and training institutions with those of other countries such as Japan, America and Taiwan.
      One sees in the education institutions of the world people from China, Hong Kong, Taiwan and other countries with an enormous thirst for education. We must encourage that thirst here and provide the resources for it.
      As a priority, the Government must also pay attention to our manufacturing industries, to research and development and to ensuring that highly qualified people from educational institutions come into industry and make it a top priority. It has been palpably obvious to everybody since the Government came into office that they do not care a hoot about manufacturing industry. We have heard all this talk about the services industry and we heard it again today. The Tories say, "Don't worry about the deficit in manufactured goods. Don't worry about the billions of pounds and record level of manufactured deficit."
      Sir Raymond Gower: How does the hon. Gentleman explain the fact that action by Government is not always necessary? How does he explain the great recovery in our textile industry?
      Mr. Wrigglesworth: The textile industry is like other industries. It was hit in the face and knocked flat on its back by the Government's policies from 1979 to 1981–82. It is now getting back up on its knees again and Ministers say that that is a wonderful miracle. One industry after another has been in that position. They have been almost destroyed. Many have gone out of business, which is why we have lost 22 per cent. of our manufacturing industry.
      All that has happened because of the policies that the Chancellor has demonstrated that he wants us all to forget about. He wants to forget about what the Conservative party did to this country between 1979 and 1982. That was the black period for manufacturing industry, as one company after another went bankrupt and the level of unemployment went up through the roof. It has stayed up there ever since. That was the period that the Government want to wipe out. They are like Stalin: they want to forget parts of their history; they want to forget that that period
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      existed. Let me tell the Chancellor and his colleagues that we will not allow them to forget the 1979–82 period when they followed their monetarist policies.
      Now we are witnessing a change. It has occurred in the past few months and was contained in the Chancellor's autumn statement. Public expenditure has been anathema to the Conservatives. The right hon. Member for Leeds, North-East (Sir K. Joseph) used to talk about public expenditure as if it were a swear word. Public expenditure was not something that was embarked upon by Conservative Governments true to the faith. Goodness me, look at the Chancellor's autumn statement and consider the press releases—some extremely expensive—issued by Government Departments. The statement and those press releases boast about public expenditure. When the Government first came into office we heard a great deal about them taking their hands off industry, not intervening in industry and having nothing to do with market forces. However, the Government are intervening in market forces all over the place. One almost needs the help of a management consultant to go through all the schemes that are available from the Department of Trade and Industry.
      I welcome all those changes, but that was not what the Government had in mind in 1979. Then they said that we should abolish all such schemes. This week we had a new announcement about inner-city initiatives and partnerships with local authorities and the private sector. We have been asking for that for years, but it is only in recent times that the Government have been converted. Over the years, requests have been made for urban development corporations. How long have the Government been refusing proposals for a development agency in the north and the north-west? They have not closed down the Scottish Development Agency or the Highlands and Islands Development Board. Such intervention is line because they know that if they tried to abolish those bodies there would be an outcry and they would lose even more Scottish votes. My goodness, as ballot boxes loom large on the horizon, the Government have changed their attitude.
      Sir William Clark: Does the hon. Gentleman agree that, in 1979, British manufacturing industry was so uncompetitive and overmanned that it was inevitable that, if we were to survive, all surplus labour had to be shed? Does the hon. Gentleman not agree that, in the autumn statement of last year, the Government said—successive Conservative Governments have said the same — that when the economy was strong enough, more resources would be put into public expenditure? My right hon. Friend has been able not only to increase public expenditure on education, roads and the rest of it, but, at the same time, to reduce taxation and reduce the borrowing requirement. Surely credit should be given for that.
      Mr. Wrigglesworth: I cannot stand the Conservative party propaganda that is presently pouring out from Tory Back Benchers. To suggest that 20 per cent. of the manufacturing capacity of Britain was completely lost simply because firms were inefficient is unbelievable.
      The hon. Member for Croydon, South should look at the history and talk to some of the managers in the manufacturing industries. The Conservatives should accept that firms went bankrupt because of the exchange

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      rate and interest rates—they were crippled by them and could not remain in business. During 1979–82, the exchange rate against the dollar was $2·40. We then went almost to parity with the dollar and now the rate is $1·60. How can businesses try to organise their planning, marketing, manufacturing or investment when there are such fluctuations in the exchange rate?
      I believe that the Government should use their resources to benefit the Health Service. Recently, we have heard a number of boasts about how much the Government are spending on the Health Service. However, when the Government talk about the resources that are being spent on the Health Service, they never tell us about the demands that are placed on those resources. We believe that we must spend an extra 2 per cent. a year on the Health Service to sustain it at its present level.
      We are all aware that we have an increasingly ageing population who need more care. Modern technology in the Health Service means that it is becoming more expensive to treat people. To sustain the hip replacements and other operations that are presently carried out, we must increase expenditure by 2 per cent. a year.
      What is happening to the Health Service today? The Government are demanding productivity increases from the hospitals and are demanding that the health authorities pay for an element of the pay increases that the Government have agreed. They tell district health authorities that the Government will increase nurses' pay—they have said this for the past three years—and will increase Civil Service pay, but they will not give the money to pay for those increases.
      I concede that the Government are giving almost all the money to meet the recently announced nurses' pay increase, but an element of that increase must be found by the Health Service from other resources. That is leading to a dire financial crisis for the North Tees health authority. A deputation from that authority will shortly meet the Minister because of that crisis. It cannot sustain the present level of health care unless the Government are prepared to make extra funds available.
      The North Tees health authority has an excellent record of efficiency and productivity. There is one general hospital in Stockton — just outside my constituency —that serves the North Tees district, which covers my constituency. It has an excellent record. However, it cannot increase efficiency and productivity—that health authority has been cut to the bone. It is impossible for that authority to find the resources within its budget to meet the nurses' pay increase and the increase in civil service pay agreed by the Government. Therefore, cuts in clinical services must be made. It is a sick joke to my constituents to be told by the Chancellor that they should welcome a 2p cut in income tax. Such problems do not affect Stockton and North Tees alone; they affect district after district.
      I agree that, as the Chancellor said, "as and when it is prudent" taxation should be cut. Against the background I have described, we believe that it is not prudent, nor is this the time, to make taxation cuts. If it is possible, we shall achieve our priorities without increasing taxation.
      The Chancellor tried to goad me earlier about our position on tax cuts. We shall make our position absolutely clear before the general election, when our studies are complete. If we believe that we can achieve our
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      priorities on unemployment, on the Health Service, on education and on industry without going back to the old rates of tax, we shall certainly do so. We shall publish more detail and more information, as we have done about all our Budget proposals for the last three years, than any other Opposition party, including the Conservative party when it was in opposition. We have given more details and more costings of our proposals than any other party has given.
      Before the election, we shall publish full information for everybody, whether political parties or the public, to examine. We have published credible policies that could help get industry back on its feet, that could help to take care of those who have been hardest hit by the recession and above all that could start to get people back to work. Because the Government are not prepared to face up to those priorities, we shall vote against the clause.
      5.30 pm
      Sir Raymond Gower: While we understand much of the theme put forward by the hon. Member for Stockton, South (Mr. Wrigglesworth), I think that he tends to exaggerate what can be achieved by public spending. He seemed to imply that the more the Government spend the better it is for industry, and that any money released through tax concessions is injurious to the country. I challenge this view. I do not think that Britain achieved its pre-eminence over 100 years ago by the extent of its public expenditure. It was done by the active ingenuity of industrialists and the work force over a long period of time.
      The feeling of politicians in those days was that it was better to allow money to fructify in the hands of the people than to accumulate in the hands of the Government. All that the hon. Gentleman told us is at variance with that doctrine. The view of the Opposition parties is that only in the rarest circumstances are tax concessions of benefit. Psychologically, apart from any other reason, tax concessions have a splendid effect on the economy of any country.
      It is not just the exact impact of tax concessions that one must study. One must examine their effect on the mood of a country. In that context, we are apt to underestimate the benefit of what the Chancellor has done. Undoubtedly, when the Government came into office there was a period of great difficulty. In the first two or three years they could not do what we like doing best. We prefer to introduce tax concessions rather than tax increases. I can well recall the days of Labour Governments from 1964 to 1970 and fom 1974 to 1979. In each Budget we looked for the new imposts and the additional burdens that were being placed on industry and on individuals. How different things are today. In my right hon. Friend's Budget, and in the last two or three Budgets, we have seen what tax reductions we can identify. Surely that is much more in keeping with our record in the past and our hopes for the future.
      Clause 20 is much narrower than one might think from the speech of the hon. Member for Stockton, South. It is limited to one tax concession, namely, on income tax. I confess that I do not take the view that it is always best to make concessions in this way. Sometimes I would prefer other tax reliefs. For example, the tax thresholds might be raised, but that has been done in previous Budgets. If we

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      combine the tax concessions of recent years, we see that the benefits have been widely spread. Not least to benefit have been companies, which have had tax reductions.
      The hon. Member for Stockton, South referred to the difficulties of industry in his area. He implied that those difficulties all started with the Conservative Government of 1979. It was as though it was only then that we began to shed opportunities for people to be apprenticed in industry. The decline in apprenticeships spans a longer time. I agree with the hon. Gentleman that the training programme should be expanded and that we should consider critically the Government's contribution to training and research in industry.
      In the short term, and perhaps in the moderately long term, it is desirable to increase the return of money to producers and earners. Of course we want them to have more, but I do not think that we should set the interests of earners against those who are not working. We should try to reduce the number of unemployed. Much has been done by my noble Friend the Secretary of State for Employment. I foresee a considerable increase in training in the coming months and years. This has to be a gradual process. It cannot be achieved immediately in the context of this tax concession.
      I welcome the change in taxation. It is wrong always to describe it as a concession. It is valuable for all who are employed in industry and for industry itself. It will lead to an increase in earnings and lessen the pressure for wage and salary increases, which will he an additional benefit.
      Above all, psychologically this tax change is a stimulating, attractive feature of the Administration. Coupled with the increase in production that has occurred successively for many years, it should lead us after a long period of trial to believe that the economy is on the upturn. We should not be foolishly optimistic, but, nevertheless, we can look to the future with a soberly increased confidence. I hope the hon. Gentleman will share that view.
      Mr. Nick Raynsford: We are debating tax cuts. We have heard many strange and dubious claims advanced by Conservative Members. The most dubious and most suspect is the claim that tax cuts have helped and will help those on average and below average incomes. It is that issue that I wish to address first.
      First, that claim can be substantiated only by a highly selective presentation of statistics. We have heard such a travesty of statistics this afternoon in the claim that the Government have made tax cuts. When they are pressed, their definition changes — the ground rules change. Instead of talking about tax cuts, they say that they are talking about income tax cuts, neatly forgetting the wider tax implications of national insurance rates and VAT, which have both increased under this Government, despite the dishonest claim by the Prime Minister immediately before the 1979 general election that she would not increase VAT. As we all know, thereafter came that swingeing increase to 15 per cent.
      Secondly, in terms of overall tax, particularly for the lower paid, it is simply not true that there has been a reduction. They have borne the brunt of the much higher rates of indirect taxation, such as VAT, as well as increased national insurance contributions. In addition to the selective use of the word "tax" to limit it to income tax, there has also been selective amnesia as a convenient way of forgetting that the Government inherited a reduced
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      starting rate of taxation of 25 per cent. from the last Labour Government. Of course, that meant that the lower paid paid less income tax than now, even after eight years of Tory Government claims to be reducing the basic rate of taxation. That is a point readily forgotten by Conservative Members when they talk about the rate of income tax.
      Thirdly, Conservative Members ignore the wider implications of their policies, particularly those relating to social security benefits, which are especially relevant to the low-paid and those on below average earnings. When such people consider their disposable income, they must consider not only their income tax and national insurance. They also need to know how much income is left after their entitlement, or withdrawal of entitlement, to various means-tested benefits.
      The hon. Member for Darlington (Mr. Fallon) — I am sorry that he is not in his place—made a remark earlier in the debate that I wish to pick up. He put forward the proposition that lower income tax would be an incentive to the low-paid to work. I wish to examine the detailed implications of the Government's policies for the low-paid. Over the past eight years their position has worsened dramatically. I shall illustrate that with a typical example of a person in low-paid employment who is paying tax and national insurance and receiving housing benefit. That benefit is widely available in the form of rate rebate for home owners and, more generally, in the form of rent and rate rebate for tenants.
      In that context, there has been a serious deterioration in the position of the low-paid. A tenant receiving a rent and rate rebate, and paying lax and national insurance in 1979, would have lost 62 per cent. of any increased income. That would have been his marginal rate of taxation after losing 33 per cent. tax, 6 per cent. national insurance, and 23 per cent. through the withdrawal of his means-tested benefit. The Chief Secretary will note that I am not quoting figures for a family on the lower, 25 per cent. rate of income tax. I am quoting figures for the basic rate of 33 per cent.
      By 1987 the position has changed as follows. The income tax rate has declined from 33 to 27 per cent. National insurance has risen from 6 to 9 per cent. and the loss of means-tested housing benefit has moved from 23 to 46 per cent.—it has doubled during the period. So a family or single person in that position will lose, not 62p out of every extra pound earned, but 82p. That reveals the hypocrisy of the Government's claim to be helping the low-paid. The Government have seriously increased the loss of income to someone in low-paid work who obtains a pay rise. Such a person is now losing at the fantastic rate of 82p in the pound. What greater disincentive could there be for people to seek higher paid work? That is the legacy of the present Government, but it is not the full story.
      5.45 pm
      Worse is to come. The Government's social security proposals, to be introduced if, by mischance, they remain in office next April, will mean that the rate of withdrawal of means-tested benefits will increase more steeply. As from next April, a person receiving housing benefit and paying tax and national insurance will lose no less than 87p out of any extra money that he earns. We are talking about hundreds of thousands of people in low-paid work, to whom the Government's policies have meant, not cuts in taxation, but swingeing increases in the rate at which

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      they lose the extra pay that they earn — hardly an incentive to encourage the low-paid to work; on the contrary, a steeper withdrawal of benefit.
      What a contrast that presents to the treatment of the wealthiest 5 or 10 per cent. of the population, who have done very well indeed out of the selective tax cuts that the Government have made. For them, a rate of taxation of 87p in the £ would have been described, in the Chancellor's earlier felicitous phrase, as penal. The Government regard such taxation as wrong and as a disincentive to the richest people in the country to stay in Britain and work. Yet the Government who take that line with the richest are happy to apply that penal rate of taxation to the poorest people in employment — not the poorest in society, but the poorest in employment. That reveals the hypocrisy behind the Government's stance on tax cuts.
      The Government's policy is grossly unfair, but it is not only its unfairness that leads us to oppose the proposed cut in the standard rate of income tax that is incorporated in the Bill. We do so, as other speakers have said, because of the waste of opportunity that it represents. It is a wasted chance to use the £2·5 billion that is involved to help to revive the country's economy. The Budget has failed lamentably to tackle Britain's key problems. It has failed, as other speakers have made clear, to remedy the continuing scandal of unemployment. Greater priority should have been given to measures to reduce unemployment dramatically. It is not enough to fiddle the figures in the hope that they will fall below 3 million some time later this year. We need concrete measures that are designed to get people back to work of the kind that the Labour party is advocating in its policy to put 1 million people back in employment in the next two years.
      We have witnessed the neglect of the Health Service and the tragedy that has beset one of Britain's most important and best loved institutions in recent years as a result of Government policies. It has affected my constituency, too. The Health Service has been denuded of funds, the staff have become increasingly demoralised and hospitals have been threatened with closure. Three hospitals serve my constituency, one of which, the West London hospital, which has a fine reputation for dealing with maternity cases, has been under threat of closure for the past nine months. The threat has been postponed only by a temporary additional injection of finance to enable the decision to be postponed, because it would be electorally embarrassing to take it immediately before a general election.
      Charing Cross hospital is short of 150 nurses because they cannot afford to find accommodation and live in central London. I spoke to them about the need for additional pay. I am pleased that the Government have agreed to implement the pay review body's recommendations immediately this year—would that they had done so in previous years when there was no election on the horizon, and would that they had agreed then to implement the recommendations promptly and in full from the date on which they should have applied. At least this year they have done so, but that is not by any means sufficient.
      Last week a nurse in my constituency said to me, "I cannot afford to continue in the profession. One of my friends who also qualified recently has left the job and become a receptionist to a solicitor. Now she is paid more
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      than twice as much as I am." In areas such as Fulham, where there are acute housing problems, it is hardly surprising that the Health Service is bleeding to death, because key staff are leaving and wards are being closed. That is happening in our key public services.
      Housing, which we debated yesterday, is a further factor. Government policy makes financial nonsense. They have cut expenditure on housing and are not building the new houses that are needed. The DHSS is spending more money than would be necessary to build new houses on subsidising private landlords who are exploiting the housing shortage by offering squalid bed-and-breakfast accommodation at an extortionate cost to homeless families who should be housed. That is only one consequence of the Government's tragic failure to invest money in homes for the needy. The Government are pouring money down the drain on absurd and ineffective subsidies rather than investing it in homes that are needed. That is a further damning comment on the Government's failure.
      The Government's record on pensioners is no better. Last year pensioners were given a 40p increase in their pension, which they rightly condemned universally as an insult. This year the Government have felt more generous and have offered an 80p increase. Most of my pensioners know that that is just as insulting and demeaning as last year's increase. The Government's priorities are wrong. They can afford policies that give large sums in tax concessions to the wealthy, yet they cannot afford to give an increase of more than 80p to pensioners. Our pensioners receive the lowest level of pension of any country in western Europe, except for Greece. What a damning comment on the legacy of the Government.
      The Government's policies have failed across the board and investment is needed in many areas, but has not been forthcoming. In the Budget the Government have chosen to use their money in a way that fails to tackle our real problems and needs. For that reason, we reject the 2p cut in income tax. It is not the right decision or priority, it does not concentrate resources where they are most needed and it is not right for Britain. Therefore, we shall vote against it.
      Mr. Tim Yeo: The hon. Member for Fulham (Mr. Raynsford) began his speech by saying that this was a debate on income tax. He then diverted to housing benefit—a subject on which I know he is an authority—the Health Service and pensioners. He was reluctant to talk about income tax.
      The hon. Gentleman referred to the lower rate of income tax that existed before 1979. It was a rate of 25 per cent. which applied only to a small number of people in a fairly narrow income band. Perhaps he is reluctant to talk about income tax because, if the Committee approves this clause, as I hope it will, a rate of tax of only 27p in the pound will apply, not only to a narrow income band of people on well below average earnings, but to everyone who earns up to £17,900 a year, which is well over one and a half times national average earnings.
      If the Government are re-elected, as I am sure they will be, no one can be in any doubt that it will not be long before we have a basic rate of income tax of 25 per cent. for everyone earning up to one and a half times and perhaps even twice national average earnings, as the Labour Government had, but only for a small group of people who were earning well below national average

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      earnings. Therefore, perhaps it is not surprising that the hon. Gentleman did not wish to address income tax in great depth.
      The hon. Gentleman also referred to national insurance contributions. I appreciate that he has not been in the House for long—indeed, for an even shorter period than me — so perhaps he does not recall that in 1985 the Chancellor of the Exchequer announced substantially reduced employee and employer national insurance contributions for people on below average wages. The starting rate of employee national insurance contributions, with which we are most concerned here, has been cut to 5 per cent. by the Government.
      Mr. Raynsford: May I remind the hon. Gentleman that, when I compared the 1979 and present levels of income tax, I deliberately chose not to use as my example the 25p lower rate band? I simply made the point that that rate had applied and that Conservative Members were forgetful about it. For comparable reasons, I did not use the starting point for the lower rate of national insurance contributions because it, too, applies only at the bottom end of the income scale. For fairness, I chose the standard rate of income tax, not the lowest rate that applied in 1979 and the national insurance rate which applied to the overwhelming majority of people in paid employment—9 per cent.
      Mr. Yeo: I suspect that the electorate will also be forgetful when everyone earning up to one and a half times national average earnings is enjoying a rate of tax of 25 per cent. Not many people will recall that, under a Labour Government, a small group enjoyed that rate of income tax. People on average earnings, about whom the hon. Gentleman said he was concerned, have the prospect of paying less income tax now and in the future than they paid before 1979.
      The hon. Member for Stockton, South (Mr. Wrigglesworth) also began by saying that the debate was about income tax cuts, but he spent about 25 minutes on all the usual SDP sob stories. We had a great deal about manufacturing industry, several minutes on the National Health Service and several minutes on education and training, but without any mention of the policies of the president of the SDP. Finally, he found time to mention income tax. He could not answer my right hon. Friend's question about the SDP's position on income tax cuts, presumably because there is still confusion within the SDP about whether income tax should be higher or lower. If the hon. Gentleman were present, I would offer him a further opportunity to clarify that.
      The hon. Gentleman explained that his studies were not yet complete. No doubt he has left the Chamber to rush off and join his colleagues in their work on ascertaining whether it is prudent to be in favour of higher or lower income tax. Indeed, it is rather a touching picture. One can imagine them closeted in a room, perhaps in Cowley street, with towels around their heads, sweating it out and trying to work out their policy on this issue, possibly assisted by a few woolly-headed academic economists.
      I hope that the leader of the SDP has not been aware that that work is not complete, because only about four weeks ago he was predicting that the general election would be on 7 May. Where would we be now if, halfway through the general election campaign, the SDP were still
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      telling us that its studies were not complete and it could not tell the country whether it wanted higher or lower income tax?
      The hon. Member for Stockton, South seemed upset that, over the past four years, Government policy had not matched up to what he thought Conservative party rhetoric had been before 1983. He seemed to be trying to fight the 1983 general election all over again. If he does that, we can undoubtedly look forward to a similar result. Again, if he were present, I would ask him whether he had any criticism of Government policy since 1983, because presumably that is the period on which the electorate will shortly be asked for its verdict.
      The hon. Gentleman said that he would favour income tax cuts when they were prudent. Unemployment is falling, interest rates are falling, the PSBR is falling—
      Mr. Austin Mitchell: The Government are falling.
      Mr. Yeo: —output is rising, productivity is rising and the pound is rising. The background does not look too bad to me. I wonder what else the hon. Member for Stockton, South would like to have before he could consider that the circumstances made it prudent to permit tax cuts.
      At the start of our debate, the hon. Member for Dagenham (Mr. Gould) apologised for the absence of his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley). We have still had no explanation of where his right hon. Friend is, but perhaps that will be vouchsafed before the end of the debate. The apology raised my hopes a little, because I have listened to too many economic debates here in which the right hon. Member for Sparkbrook has opened for the Opposition; and I thought that an hon. Member as widely respected as the hon. Member for Dagenham would perhaps offer the House something a little more worthy of the occasion.
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      I was very disappointed by the hon. Member's speech, which was unworthy of so intelligent a man. The voice was certainly the voice of the hon. Member for Dagenham, but the words sounded to me rather like the words of the right hon. Member for Sparkbrook. [Interruption.] There will be plenty of time before the general election for the hon. Member for Dagenham to decide on his position and see whether he wishes to stay in the same party as the right hon. Member for Sparkbrook. No doubt the hon. Member for Fulham will have been able to think about that too, as will the hon. Member for Sedgefield (Mr. Blair). The hon. Member for Great Grimsby (Mr. Mitchell) may also wish to make his position clear after the election—if he is still a Member of the House.
      No amount of evasion or smearing will disguise from the voters the Labour commitment to higher taxation—certainly to higher levels of income tax, and probably to higher levels of other taxes as well. The Labour party cannot disguise from the voters that the higher taxes that it would have to propose would undermine incentives for workers at every level of pay.
      One point which has so far largely escaped the attention of those who have spoken is that the amount of resources used in tax cuts this year is very much less than the amount of resources used in the autumn statement to increase public spending last year. The Government's economic decisions over the past year have focused on how to spend the substantially increased resources which the success of

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      their management of the economy has generated. With the economy growing steadily for the fifth or sixth year in succession and with tax revenues rising very rapidly, partly as a result of the additional incentives offered by low tax rates, the Government have been faced with this agreeable choice of whether to increase public spending or cut taxation or do both.
      It is in very sharp contrast to the situation ten years ago, when the Labour party was in power and was being propped up by the Liberal party, and when the choice was always whether to cut spending or increase taxation or, if it could invent them, what totally new taxes to impose. We have gone to the opposite extreme: the debate today is about whether we increase spending or cut taxation, and in the past year we have managed to do both. But we have used twice as much money to increase public spending — an almost £5 billion increase in public spending last autumn—as we have used to reduce taxation; and, at the same time, there has been a reduction in the public sector borrowing requirement, a reduction of an amount which again is greater than the cost of the tax cut that we are now debating.
      So when it comes to sharing out the resources created by our success in expanding the economy, the lion's share will go to improving the quality and standard of our public services through increased public expenditure. And all that is quite apart from the excellent work done by my right hon. Friend the Chief Secretary in making sure that we get better value for money from the spending that this Government have maintained.
      All this — the combination of lower taxes, higher spending and lower borrowing requirement—is itself a very remarkable achievement, given the economic background against which it occurs. If we had listened to Opposition Members 18 months ago, in August 1985, we would have heard them say rather grudgingly that such economic success as we had achieved then was almost entirely due to the income from North sea oil. Our economy was said to be propped up by these North sea oil revenues. But what happened to those revenues after the autumn of 1985? They were reduced by about 50 per cent., with the collapse in the price of oil. One would have expected, if the Opposition assessment of our economic position at the end of 1985 had been accurate, some appalling crisis to hit our economy—a total collapse in sterling, a massive rise in interest rates, leading to huge cuts in public spending. Yet none of that has happened, and we have gone on cutting taxation and increasing spending. The pound is steady — indeed, strong. As a result of that, and of lower public sector borrowing, we are seeing substantial reductions in interest rates.
      The income tax cuts are a continuation of a policy which has been followed by this Government steadily since 1979—that of reducing the rate of income tax and also of increasing substantially in real terms the threshold at which the basic rate becomes payable. That is another important aspect of this year's Finance Bill, which rather gives the lie to the criticism of the hon. Member for Fulham, when we see that there is no increase in the thresholds at which the higher rates become payable but that the basic rate threshold has been increased in line with the retail price index.
      That comes on top of an increase in real terms, during the life of this Government, of the basic rate threshold of
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      more than 20 per cent. This whole pattern of income tax cuts has been a recognition of the vital importance of incentives — incentives which are now recognised as necessary at all levels of income. This is important at the lower end, because there is no doubt that a married man with two children who is earning perhaps two thirds of average earnings — £120 or £130 a week — is not very much better off after tax and other stoppages at the end of the week than he would be if he were living entirely on social security. The gap between his take-home pay as a full-time wage earner and what he would get if he chose to live on social security is nothing like as wide as we would like it to be.
      The way to overcome that problem is not to have a series of massively inflationary wage increases, which would feed through into prices and undermine the considerable gains that we have made in our competitive position. Nor is it to cut the level of social security benefits. The right way to widen the gap between what one earns in work and what one receives by way of social security is to reduce the burden of taxation and, in my view, also to reduce the burden of national insurance contributions which the lower-paid workers have to pay. As I said earlier, the Government two years ago made quite significant reductions in the rate of employees' national insurance contributions. I very much welcome those and hope that consideration will be given in the next Parliament to going further down that route.
      The advantage — I am sure that it is one that will impress itself particularly on my right hon. Friend the Chief Secretary — of the cuts in national insurance contributions is that they can be targeted very accurately, now that we have the categories in which people are liable to lower rates of national insurance contribution: it is an extraordinarily cost-effective form of giving tax relief.
      It is also important that we go further down the route of reducing employers' national insurance contributions as well, particularly for the people in the lower-paid categories. The accuracy with which money can be targeted in these two ways is greater than anything that can be done by way of income tax. There is no doubt that the changes made in 1985 have helped to stimulate the growth in employment since then.
      The fact that there are many jobs in both the service and the manufacturing sectors which command wages at slightly below national average levels, and the fact that it has become cheaper for employers to take on labour for those earning such wages and more worthwhile for individuals to accept such jobs, have undoubtedly contributed to the reduction in unemployment.
      I have no doubt that we shall be able to reduce the basic rate of income tax to 25 per cent. before long; indeed, many Conservative Members hope that it will become much lower than that in the lifetime of the next Parliament and the one after that, and during all the decades of happy Conservative Governments to which we look forward. If we can reduce income tax rates sufficiently, we shall completely remove any difficulty relating to thresholds. If tax rates are down to 20 per cent. no one will be too fussed about the precise level at which he starts to pay.
      Mr. Austin Mitchell: How will that affect the VAT level?
      Mr. Yeo: The reduction to 20 per cent. can be achieved as a result of the steady growth in the economy.
      Mr. Mitchell: That is what the Government said in 1979.
      Mr. Yeo: During the present Parliament, rates have come down by 3 per cent. without any increase in VAT. We can all look forward to further cuts in the basic rate and, in due course, in the higher rates.
      However, cutting the income tax rate is not the only income tax consideration; the cuts must be accompanied by tax reforms. I believe that, during the next Parliament, we should pay close attention to the ideas floated last year in the Green Paper dealing with the reform of personal taxation. Perhaps, after consultation, it will not be thought appropriate to adopt precisely the suggestions outlined in that document. Nevertheless, there is no doubt that it is very desirable for us to revise the present taxation treatment of married women.
      I know that an issue dear to the heart of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) is the merging of income tax and national insurance contributions. Indeed, I hope that he will touch on that subject if he catches your eye, Mr. Armstrong. I entirely share his interest in the matter. To the average wage earner, both contributions are simply stoppages in his pay packet. Few people who have grown up since the welfare state and such benefits as the National Health Service have become part of our culture, and a fixed element in our society, can distinguish between national insurance and income tax payments. I believe that substantial administrative savings could be derived from merging the two; it would also allow a more rational approach to policies and the setting of rates for both tax and national insurance. I hope that, when we proceed with further tax cuts in the next Parliament, we will at the same time give attention to taxation reforms.
      6.15 pm
      There is one other point that I wish to make about income tax cuts, and I am sorry to say that it is a negative point. One category of organisation in this country loses money as a result of income tax cuts. I refer to charities, which are the unique losers from a policy of switching from direct to indirect taxation. I entirely support the switch that we are making, and I applaud the substantial new tax concessions given to charities by the present Government—not least the payroll giving scheme, which came into force earlier this month. A number of organisations, including the charities VAT and tax reform group, of which I am chairman, are trying actively to promote the scheme, and we all hope that it will be a substantial success.
      I welcome the remarks made by several Treasury Ministers and the efforts that they are making to publicise the scheme, for it deserves our support. I hope that before long it will be possible for hon. Members to choose a charity to which they can make donations from their payroll, provided that the Fees Office can make the necessary arrangements.
      However, it must be said that a lower basic rate of income tax—we are talking only about the basic rate—reduces the income that charities receive from covenants. The present Government, in the Finance Act 1980, provided a substantial concession on covenants by cutting the period for which they must be taken out to qualify for tax relief from seven to four years. That helped many charities to promote the use of covenants as a form of charitable giving. Covenants have grown in importance,
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      and are now a significant element in the income of many charities. Unfortunately, however, when a cut is made in the basic rate of tax, the amount of tax that the charities recover is directly reduced. As a result of this 2p cut, there will be a reduction running into seven figures for charities — a loss of some millions of pounds from covenant income.
      I mention that point, because I hope that my right hon. Friend the Chief Secretary will keep it in mind when he considers the other requests that charities make for relief from VAT. It is not difficult to see that charities are losing income on the one side as a result of the higher rate of taxation, and on the other side are exposed to any extention of the VAT base. During the lifetime of this Parliament, one or two extensions have affected charities. I am grateful to my right hon. Friend the Chancellor for responding this year —and even more so last year—to some of the suggestions made by the charities VAT and tax reform group for VAT concessions. That has been immensely helpful, and the dialogue that the group has had with both Ministers and Customs and Excise officials about VAT problems has also been helpful.
      I urge my right hon. Friend to remember that, as he achieves these desirable reductions in the basic rate, one group—the only one in our society —loses money as result. I hope that that loss will be recognised when charities make requests in future years for sympathetic consideration of further concessions.
      Mr. Tim Smith: Surely the net effect of the various changes will be beneficial to charities. If they can get their act together on the payroll giving scheme, and can persuade employers and employees to participate, the scope for increased revenue is very substantial, and could easily outweigh the net disbenefits through reductions in the standard rate of tax.
      Mr. Yeo: My hon. Friend is right. The potential effect is there. The charities VAT and tax reform group will be monitoring through its extensive membership of charities how much income is received under the payroll scheme. It will take some time to build up, but after a couple of years we shall have some impression of whether the scheme is taking off. I hope that it will. There is a good chance, but it is not certain. What is certain is that there is an immediate loss of income from covenants. But if we monitor the position and it builds up well, the charities will join the Government in celebrating. If it does not build up as well as we hope, the charities will wish to go back the Treasury and discuss whether the scheme can be improved.
      I was glad to note that the maximum amount that individuals can give under the scheme had been increased to £120 a year from the £100 that was in last year's Finance Act. I hope that my right hon. Friend will forgive me when I say that I moved an amendment last year to increase the amount to £120. One of my hon. Friends gave us a learned and careful argument about why it was not desirable. However, I am glad that wiser counsels have subsequently prevailed.
      I strongly commend clause 20 to the House. I believe that it is the right policy for the country, and that it will be extremely popular with the voters. I am particularly grateful to Opposition Members for allowing us to have such an extended debate on what seems to me an election-winning issue.
      Mr. Matthew Taylor: Various hon. Members have said that this is a debate about taxation rather than about such issues as education and health. However, we should discuss how the £2·5 billion could best be used and what our constituents are saying that money should be used for. It should also be a debate about prudence. That money could be used for long-term investment in training and in the National Health Service, to ensure that people are properly treated, live longer and are comfortable, through changes in the benefits system. We should debate whether we can prudently spend money on tax cuts when we desperately need to invest in the future of this country.
      We should also debate whether it is prudent to make tax cuts on the basis of short-term revenues from North sea oil, the consumer boom and privatisation. None of those factors can be sustained in the longer term, and all are mortgaging our ability to invest in the real priorities.
      We could be spending that money on education. Imagine how much could be achieved in education with only a fraction of the £2·5 billion. We should be taking this opportunity to invest in adequate training for our young people.
      Despite the Government's training schemes, too many of our young people possess no qualification after they have completed their training; therefore, they cannot obtain jobs. Employers say that they can make use of people who have been trained, so money should be invested in genuine rather than mock training schemes.
      There should also be investment in basic educational needs—in providing books and the back-up that is so badly needed for the GCSE. Teachers should be provided with the support and the backing for which they ask, and the Government should ensure that, in areas such as mine, schools no longer have outside toilets that freeze up during the winter, with the result that children have to be sent home instead of being educated. Schools should not have to use Portakabins. In parts of Cornwall they have to be closed and the children sent home because they are dangerous in high winds. These are the alternative priorities that we must discuss.
      As for the infrastructure, imagine what a difference it would make if the roads were built that manufacturing industry says it needs if it is to compete effectively. And how much more of a difference it would make than an extra £1 or £2 in the pocket each week if people had a sewerage system that worked. Is it genuinely prudent not to invest in a sewerage system that is decaying and falling apart and that in many areas will soon be more expensive to replace than any Government can conceivably afford within a reasonable period?
      There are villages in my constituency that still do not have a sewerage system. In the village of Gorran Haven there is sewage in the streets, yet South West Water does not have the money urgently to rebuild the sewerage system for that village.
      The National Health Service urgently needs further investment. Everybody knows that NHS hospitals must be given the money to cope with the increasing demands on their services. My hon. Friend the Member for Stockton, South (Mr. Wrigglesworth) referred to the growing needs of the NHS. We acknowledge that the Government have increased spending on the NHS, but it has not been increased sufficiently to keep pace with the growing demand from an increasingly aging population and to allow the NHS to develop its other services.
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      We should provide proper support for the creation of jobs that would enable this country to be more competitive. If any hon. Member denies that fact, he has only to come to my constituency. Assisted area status was removed from Truro and St. Austell, and it has led to a haemorrhaging of the manufacturing base in that area. Industry is closing down or moving out. Admittedly, the grants were only marginal but they made all the difference between success and failure.
      Enterprise corporations and boards invested in manufacturing industry. The investment was marginal, but it made all the difference between success and failure.
      Many jobs were created at a very low cost. With well over 3 million people still unemployed, that is a priority that we should be considering.
      As for the taxation system, we should not consider simply cutting the taxes of those who are fortunate enough to pay them because they are in work. Instead, we should review the tax and benefits system. As a person's income increases, he can sometimes lose money. My constituency is a very low wage area. On average, wages are £36 a week lower than in the rest of the country. Families on the dole, with children, could obtain work and earn a living, thinking that they would benefit financially from doing so, whereas they could lose financially. It would be prudent for the future of this country if we invested in such priorities. It is not prudent to have a short-term spend for votes by putting a few pounds a week into people's pockets. It cannot be sustained in the long term.
      We have been asked whether the alliance is in favour of cutting or increasing taxes. Yesterday, the Prime Minister was asked in this Chamber whether or not she would increase VAT. She said that no Government could say in advance whether or not they would have to increase taxes. Is it strange therefore that we should adopt a prudent stance too, and look at the circumstances as they are?
      Of course we are not in favour of increasing taxation for taxation's sake. If it were prudent and the priorities allowed us to do so, we should cut taxation. If the Chancellor could show that the important points that I have made on education, health and benefits could be put into place without taxation having to be increased, we should welcome it and accept it. However, the Chancellor has not done that. He is cutting taxation without putting these principles into effect and without acting on these priorities. He is not investing prudently in our future. That is why we shall vote against the clause.
      The Chief Secretary to the Treasury (Mr. John MacGregor): The hon. Gentleman has referred to the Liberal party's taxation policy. Both sides of the House have asked the Liberal party about its tax policy for the coming year. We have laid out in the Finance Bill precisely what our taxation policy is. Will the hon. Gentleman say what precisely his party would do about tax this year?
      Mr. Taylor: We shall vote against the clause in the context of the Government's announced spending plans. As for our plans, we have said clearly that, if we can fund our priorities without increasing taxation, naturally we will do so. But if we cannot, we are prepared to increase taxation because we believe that that is the priority for which the people are asking, for which this nation is crying out and which this nation needs.
      6.30 pm
      Sir Brandon Rhys Williams: I spoke at some length on Second Reading, so it is not my intention to detain the Committee at great length in this important debate on the standard rate of tax. To some extent, Opposition Members have sought to make this debate a choice between raising the personal rate of tax and reducing it: there has been criticism of my right hon. Friend the Chancellor of the Exchequer for his decision to make a substantial reduction in the basic rate of tax. That is really an artificial debate in view of the buoyancy of the revenue and the ample scope which exists for tax cuts at present. Reductions in taxation are clearly indicated by the health of the British economy, but the Committee has to recognise that we are talking about just one Budget in a series. It is more than likely that my right hon. Friend will introduce another Finance Bill within a few weeks, and certainly before the end of the summer. Therefore, the Committee ought to be taking a long view.
      I want to touch on one or two subjects on which I did not go into sufficient detail on Second Reading. How much is a suitable reduction in tax? My right hon. Friend the Chancellor surprised the commentators by making a reduction of only 2p in the pound. His decision was absolutely right. because he took the view that the benefits of the buoyancy of the revenue should be offered back to the public through a reduction in the Government's programme of borrowing on capital account. The prudence of that decision was obvious.
      The decision having been made that there should also be a substantial reduction in the level of personal taxation — taxation on current account — it is right that the Committee should look at the ways in which that reduction is applied in the present Budget and should also consider the ways in which further reductions in the pressure of taxation on the public may be dealt with in the future.
      In this Budget, my right hon. Friend the Chancellor chose to make a general reduction by making a reduction in the basic rate. Before he comes to his next Budget, I should like him to consider whether there are advantages in making reductions in tax selectively. Obviously, a general reduction in the basic rate is a stimulus to the economy: it simplifies the whole proceeding in the minds of the electorate. But a reduction in the basic rate of tax goes preferentially to single people, because the system we use at present of granting handsome allowances to married couples means that single people have more pounds on which their tax is levied. Therefore, when the basic rate is reduced, single people stand to gain more than people on the same income who are married, and who enjoy the benefit of allowances which exempt a substantial part of their income from taxation.
      A reduction in the basic rate of income tax goes to all taxpayers, but it does not directly benefit those who are not in the tax net anyway because their income is below the threshold. I should therefore like my right hon. Friend the Chancellor to consider the possible advantages next time of applying reductions in taxation selectively. There are various ways in which selective reductions in personal taxation might be made.
      My hon. Friend the Member for Suffolk, South (Mr. Yeo) dealt with the desirability of tidying up the anomalies of the national insurance system. I have campaigned for a very long time for the end of the national insurance
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      system as it now exists, because it seems to be a ridiculous and unconvincing farce and a time-consuming waste of clerical effort.
      I pointed out on Second Reading that the Committee must consider that on account of their national insurance contributions, which for most people in employment are at the rate of 9 per cent., the effective rate of tax on earned income is 36 per cent., whereas on investment income it is to be reduced to 27 per cent. There is something wrong with a tax system that gives substantial advantages to investment income and leaves the rate of tax on the people who create the wealth at a substantially higher rate.
      I also draw the attention of my right hon. Friend the Chancellor to what I believe to be the compelling advantages of reducing higher rate tax and indeed of abolishing it altogether. In making reductions in taxation, we should have a very clear idea of the priorities. They must be to create or to improve the incentives to work for the mass of the population, to encourage people to save and to invest, and to relieve need, bearing in mind that workers on low wages with families may still be incurring hardship in spite of the general improvement in standards of living of the population which we can all see and which we all welcome.
      Coming back to higher rate tax, we see the way capitalism works in the far east and in other countries where there is not this oppressive and vindictive burden on the people who contribute most to the creation of wealth. It is not sufficient to talk about the reduction in higher rate tax or to congratulate ourselves, as the Government are perfectly entitled to do, on the significant reduction which has already been made in the incidence of higher rate tax. We should declare ourselves determined to abolish this vindictive and unnecessary tax altogether.
      It seems to me that, were this move to be made by a Conservative Government, everybody would gain and nobody would lose. Releasing the incentive to work and to invest of the most active elements— the people who are most able to contribute the highest degree of judgment and energy in the creation of wealth—would benefit the economy and must therefore be in the interests of the entire population. We should get rid of this inexcusable and vindictive anomaly.
      One could say many things about the redistribution of income which would not be appropriate under this clause. But one ought to consider the possibility of reductions in the impact of tax through the tax allowances. The Green Paper which was floated some months ago on the subject of the taxation of husbands and wives did not arrive at a satisfactory compromise. I do not think it was workable in administrative terms and it would probably have proved costly without achieving the result that we really want—that women should be completely independent an
      Women should be perfectly free to make their own tax declarations directly to the tax collector without having to declare what their sex or status is. If my right hon. and hon. Friends are nervous about going the whole way to that reform at once, although I think it would be an extremely popular one, why not make a beginning by allowing women to have their own completely separate investment income, unaggregated with the investment income of their husbands?
      Child benefit is the amalgamation of the old family allowance and the child tax allowances which were

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      introduced into the income tax system before the end of the 18th century by William Pitt. If we increase child benefit, we are making a reduction in the effective taxation of families, but we are also extending it to the people who are not in the tax net and therefore, by definition, are at the bottom of the income scale. It must be right to give priority to families, if only because of the assistance that we would be giving to incentives. An increase in the rate of child benefit is the cheapest way to improve the incentive to work for people at the low end of the income scale. It is a matter for regret that this aspect is increasingly neglected in the arguments about future reductions in taxation.
      For the electorate, the choice is plain. Do the people themselves have the priority? Do the Government consider that a reduction in taxation is important, or is it more important that we place bigger resources in the hands of the gentlemen in Whitehall? Do we continue with prudent expenditure policies, keeping down the necessary burdens on the public by restraining the tendency of Government expenditure; or do we let the bureaucrats start squandering our resources once again? I warmly endorse the Government's general policy. I shall support the vote to maintain the clause as it stands in the Bill, but I trust that my right hon. and hon. Friends will consider my points in framing their policies for the future.
      Mr. Austin Mitchell: This governmental obsession with tax cuts equals incentives equals the key to economic regeneration was always one of the more curious aspects of the Government's doubtful philosophy. It was interesting to note that the Chancellor did not claim that the economic revival, on which he prides himself and which he says is the product of his policies as the greatest Chancellor since the right hon. and learned Member for Surrey, East (Sir G. Howe), was due to tax cuts. He said that it was a consequence of Government policies, of which tax cuts were a part, but even in that he was wrong. The type of tax cuts of which the clause is the final triumph—or perhaps for this Parliament, the final solution—has nothing to do with the improvement in economic activity that is occurring.
      The philosophy of tax cuts equals incentives was best characterised by Galbraith, who pointed out that the philosophy really argues that the rich are not working hard enough because they do not have enough money. We all know that the poor are not working hard enough because they are overpaid and are not allowed to price themselves into jobs, so the simple solution is to transfer money from the poor to the rich and all will be well. Then incentives will flourish, the economy will blossom, and things will pick up. The solution was as daft and as simple-minded as that.
      Before the 1979 election we pointed out that the promise to cut taxation, which is the centrepiece of the Government's campaign, was a distortion and misleading because the Government could not cut taxation—they had either to shift the burden from direct to indirect taxation or to cut services and Government spending in some fashion, which they were not prepared to define. Those two points remain valid in terms of the Chief Secretary's promise to cut the tax rate to 25p in the pound. Implicit in that is a statement that the Government will either cut services and public spending in a way that will
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      be painful for the economy and the people or—I am sure that they will do this—shift the burden from direct to indirect taxation by an increase in VAT and by spreading VAT to a range of commodities that are now zero rated.
      I hope that the Chief Secretary will tell us which of those alternatives will be followed if progress is maintained towards a 25p tax rate. Inevitably, it must be one or the other. I see no way in which the dilemma that we posed in 1979 and the promised tax cuts then does not apply to the Chief Secretary's promise of further tax cuts to follow in the clause.
      Mr. MacGregor: Does the hon. Gentleman recognise that the 2p reduction in the basic rate, which we are discussing, is being achieved this year without any increase in indirect taxes?
      6.45 pm
      Mr. Mitchell: I shall come to what has provided the Chancellor with an opportunity to make that tax cut this year. Any family earning up to 1·5 times average earnings is paying more tax and a higher proportion of income tax than it was in the last year for which the Labour Government were responsible. There has been merely a shift to other forms of taxation rather than genuine tax cuts. That is happening even with this clause.
      The Government's philosophy was fallacious. If the tax burden was too high—that was never proved—because the economy was carrying the burden of the tax required by the services, for example, health and education, which the public demanded, which are essential to an advanced industrial economy, and which are better in other countries, the solution was to expand the economy and not to interfere with the economic balance by the transfer of the burden to other forms of taxation. The Government have harmed the economy. A Government who cut their spending automatically cut their revenue, which is what the Government did.
      By their policies, especially those pursued from 1979 to 1981 — the nadir of the Government's economic performance, when they inflicted incalculable harm on the economy — they effectively increased the need for taxation. Even the extra revenue from North sea oil was insufficient to prevent the burden of taxation from pressing more heavily on those on average earnings than it did in 1979. Because the Government had closed so much capacity, because they had destroyed so many jobs in manufacturing industry—1·8 million jobs, or 28 per cent. of employment in manufacturing industry—they had to pay out so much to keep those resources idle and people out of work that their economic policy was effectively self-defeating.
      Taking account of the 1979 increase in VAT to 15 per cent. the average earner is paying £6·36 more a week in taxation—a higher proportion of his income—than he was under the Labour Government. The same thing is implicit in the Chancellor's commitment. This is part of the hidden agenda, which involves the increase in VAT and the widening of its range. I take it that the pressure for this change arises, in part, from the legal action which the Commissioners initiated against us, and which will be heard in September. It arises also from Lord Cockfield's brazen schemes in the European Community to end zero rating and align the rates in the Community. Implicit in that is the increase in the burden of VAT on every family,

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      because it will mean VAT on food. Yesterday, the Prime Minister declined to say that she said that a responsible Government could not commit themselves to not increasing VAT. yet it is interesting to note that previously she had specifically committed herself to not increasing VAT.
      If the right hon. Lady could commit herself quite specifically before—she did it most notably on 12 June 1984—and say to Parliament "We shall not end zero rating on food," why can she not now commit herself in the same honest and honourable way for the Parliament that is to come? Why could she make a commitment for the 1984 Parliament, but be unable to make one in 1987 for the next Parliament? It is because there is an intention, which the Government are not prepared now to avow, to increase VAT and to shift the burden from direct taxation, which the Chief Secretary wants, to indirect taxation. That is the only way in which the Government can get their tax cuts.
      The clear reason why the Chancellor is in a position to make tax cuts this year is that he has been forced to accept — he resisted it all the way — a major proposal put forward by the Labour party in 1982 to get the pound down. Although he resisted every fall with increased interest rates, the pound has come down substantially. Since the end of 1982 it has come down by between 20 and 30 per cent. At times it has come down 10 per cent. on the exchange rate estimates in last year's Budget. This has meant an increase in exports, particularly to the American market—incidentally, such exports will be threatened by the fall in the dollar—an increase in economic activity and an increase in corporation tax, which, added to the present credit boom, allows the Chancellor to cut 2p off income tax.
      Like so much of the political situation at the moment, it is part of the window-dressing that is accumulating in the Government's window to lure voters. A prime element on display in the show window is 2p off tax and 2p more to follow if the Chief Secretary is still Chief Secretary after the next election. I hope that electors will look, not at the shop window with the somewhat shopsoiled and tarnished array of goodies, but at the creaking, collapsing, groaning building behind it — the building that is the British economy. I hope that the electors will ignore the window and the lights and look at the building. It has not had maintenance or investment. It is creaking, shabby, shoddy and disintegrating. It is a shop in which many rooms are not used because capacity has been closed. Far too many people live in far too inadequate conditions in the cellar—the three quarter society—that the Government have run. That is the reality behind the goods that the Government are shoving into the shop window.
      As the Chancellor, in his vainglorious fashion, struts outside the shop trying to tell passers by that it is one of the most successful economies in the world, voters know differently. They can see the reality of the building, the level of unemployment, the shoddy services and the cuts that have had such a serious effect on many aspects of our lives. It points to what the Chancellor should have done with the money that has been devoted in the Budget to tax cuts.
      We need to get expansion going at about double the present rate. We are running a half-cock economy. In fact, the half-cock economy is supporting a three quarter society. The fact that the economy is half cocked means that the growth rate is inadequate to bring down the level
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      of unemployment. Even in the 1930s we could manage a growth rate that was almost double the present one. That brought unemployment down in the 1930s. At this level of growth there will be no substantial and sustained fall in unemployment. It will remain to scar the country. That is what the Chancellor should have done with the money that is being devoted to tax cuts.
      The Chancellor should have used the money to stimulate investment and to use it for benign and beneficial public purposes such as housing, to expand public spending to stimulate the economy. Every computer model shows that there is a far greater return of jobs and economic stimulus from public spending and using it for investment purposes than from tax cuts.
      The Chancellor could have used the money to remedy many of the deficiencies that have been allowed to emerge in the welfare support system. He should have paid it to pensioners and to beneficiaries, particularly the long-term unemployed. That is the best and most effective means of stimulating the economy. They, with no fat to live on, spend money directly and give a more immediate and prompt economic stimulus. That is exactly what the Chancellor should have done, by expanding the housing programme, public sector spending and the benefits available to those who are deprived in the shoddy society that the Government have helped to create. It is a three quarter society, running on the basis of a half-cock economy, managed by a 40 per cent. Government It is not good enough for the country. The clause is not good enough for the Bill. We shall oppose it.
      Mr. Maples: Listening to the speeches made by the hon. Members for Great Grimsby (Mr. Mitchell) and for Dagenham (Mr. Gould), one would think that the Chancellor had devoted all the fiscal resources at his command over the past six months to tax cuts. In fact he has not. In the autumn, he announced a nearly £5 billion increase in public expenditure. In his Budget, in which he had another £5.5 billion, £3 billion came off the PSBR, which has led directly to the lower interest rates that we now enjoy. The sum of £2·5 billion went to tax cuts. So £2·5 billion out of £10·5 billion was devoted to that purpose.
      I welcome my right hon. Friend's decision to devote what he has given to income tax cuts to cutting the basic rate. The argument about the basic rate and thresholds has now been resolved quite definitely. In the incentives argument, tax on the marginal pound is important. In the context of the poverty trap, the proposed changes in social security arrangements on which payments will be based after tax income obviously make the tax rate irrelevant.
      My right hon. Friend has made the right decision to cut the basic rate of tax. Perhaps the only argument against it is that raising the threshold will benefit the lower paid more. That is undoubtedly true. The difference is fairly marginal. The best way in which to benefit and help the lower paid is to reduce the employee's national insurance contribution to a lower level. That can be done inexpensively and targeted at a particular group. I am sorry that my right hon. Friend considered that he was not able to do that. I hope that if he continues the policy of cutting the basic rate of tax he will raise the threshold on the employee's national insurance contributions to help the low paid.
      One of the canards that has to be nailed finally is that lower tax rates lead to lower tax revenue. They do not. The

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      argument about higher rates of tax and what happens to the higher paid is definitely answered by what happened to the yield from higher rate tax. Over the past eight years, it has risen by 40 per cent. in real terms. That was during a period when tax rates have been cut. That seems to bear out what we have been arguing all along: that up to a point —obviously, only up to a point — cuts in tax rates increase yield. In the case of higher rate tax, over the period when the top rate has been cut from 83 per cent. to 60 per cent., the yield rose 40 per cent. in real terms. In cash terms, it has risen from £800 million to £2·2 billion. Adjusted for inflation, that is 40 per cent. That seems to be a fairly definitive exposition of the argument that lowering rates will increase yield.
      It is interesting also to note that those who pay high rates of tax are contributing not only more in real terms but a higher percentage of income tax yield than they were eight years ago. In fact, the percentage has gone up from 4·3 per cent. to 5·7 per cent. as the yield from higher rate tax. The share of income tax paid by the top 5 and 10 per cent. of income tax payers has also risen. Cutting tax rates benefits not only the rich; it benefits everybody by generating more tax revenue.
      The other point about higher rate tax that must be noted is that not many people pay the higher rate. They do not have a great deal of income in excess of that rate. There are about 190,000 higher rate taxpayers. In answer to a parliamentary question, the Treasury said that the total income in excess of £30,000 a year for those people is £3·5 billion. In order to raise the £3·5 billion that the Opposition are talking about raising from the higher paid they will have to take every pound in excess of £30,000 a year. Opposition Members nod their heads. It is a fact. It is the answer to a parliamentary question. If they want to raise £3·5 billion, they will have to tax at 100 per cent. every pound of earnings in excess of £30,000 a year. I suggest that that is a policy of pure envy. It contains no economic sense and makes no sense in terms of tax yields.
      Mr. Raynsford: The hon. Gentleman has made the same mistake that I criticised earlier when other Conservative Members spoke. He is confusing the total yield from taxation with income tax alone. Our recovery of £3·5 billion will not come solely from income tax. Like his colleagues, the hon. Gentleman has clearly failed to grasp that point.
      7 pm
      Mr. Maples: From the speeches made by Opposition Members, I understood that they intended to recoup—as they put it—the £3·5 billion that has been given away in tax cuts to the rich. Tax cuts in favour of the rich—as opposed to cuts for everyone—can only be argued in the context of income tax. My point is that there is very little income in excess of £30,000 a year to be taxed.
      I also want to consider the argument that people are worse off and that taxation has risen. It is statistically true that tax as a percentage of GDP has risen. As my right hon. Friend the Chancellor explained in his speech, that happened mainly in the first two years, from 1979 to 1981; but it has not happened since. Most citizens are more interested to know what has happened to their real disposable income—their take-home pay. In real terms, for someone on half average earnings, tax has risen from
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      £87 to £100; for someone on three quarters of average earnings, it has risen from £115 to £134; and for someone on average earnings, it has risen from £142 to £166. Those taxes more than cover the increase in VAT. The truth is that almost everybody—whether they are earning half, three quarters, average or twice average earnings—have a greater disposable income now than eight years ago by a considerable amount, and they know it.
      Mr. Austin Mitchell: Proportionately.
      Mr. Maples: No, in real terms. In real terms, the take-home pay of people on half, three quarters or average earnings has risen substantially. The hon. Member for Great Grimsby tables hundreds of parliamentary questions. He should read the answers to one or two other questions and he might find more information.
      Mr. Mitchell: I understand the answers, which is more than the hon. Gentleman does.
      Mr. Maples: If we consider the matter in percentage terms, the real disposable income for someone on average earnings has risen by 2·2 per cent. a year over the past eight years. That is the real test of what has been happening in the economy.
      I asked the hon. Member for Dagenham what the consequences of the previous Labour Government's tax rates would be if they were indexed to the present day. He declined to answer. I was not surprised, because the answer is rather unattractive. However, as he declined to answer, I thought that I would do the arithmetic. The answer to my question is the best guide to what a Labour Government would do with income tax. The Opposition declined to answer my question.
      Mr. Gould: What about VAT?
      Mr. Maples: The hon. Member for Dagenham may not have noticed, but an election is coming. Our tax policy is perfectly clear. However, the electorate are not at all clear about Labour party tax policies.
      Mr. Raynsford: Talk about VAT.
      Mr. Maples: I am talking about income tax. A reasonably good guide to the Labour party's tax policy might be its policy in 1978–79. If we index the tax bands and the married man's threshold—or the married man's allowance, as it was in 1978–79—that allowance would now be £3,245.
      Mr. Austin Mitchell: What about oil?
      Mr. Maples: The hon. Member for Great Grimsby should listen for a minute. He does an awful lot of talking. Under the present Government the married man's threshold is £3,795—an increase of £550. If we index the rate bands, the story is the same. I have calculated the income tax payable on various incomes under the Labour Government's tax rates in 1978–79 indexed to today and compared those to the present rates. Someone earning £5,000 is now paying £325 in income tax. He would have been paying £438 — £113 more — under the Labour Government's rates. Someone earning £7,500, who is paying £1,000, would have been—
      Mr. Raynsford: Tell us about VAT.
      Mr. Maples: I am talking about income tax. I wish that the hon. Member for Fulham (Mr. Raynsford) would listen for a moment.

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      Someone earning £7,500 a year, who is paying £1,000 in income tax, would have been paying £1,250 under Labour's rates. Someone earning £10,000 — which is about average male earnings—would be paying £2,075. He is now paying £1,675. That is a difference of £400 a year, and that is close to the figure that I suggested to the hon. Member for Dagenham in my intervention earlier.
      It is perfectly clear, from any way in which we consider the matter, that under a Labour Government everyone would pay more income tax. The best guide to that claim is to he found in the rates that applied when Labour was last in office. When we index those rates, we find that everyone would pay more tax.
      I am delighted to support the clause. My right hon. Friend the Chancellor has made the right decision to cut the basic rate. When the Government are returned, I look forward to seeing the basic rate cut to 25 per cent.—and I hope in due course to see it cut even more. From the way in which Opposition Members have spoken and intend to vote, it is clear that the Labour, Liberal and Social Democrat parties are the parties of higher income tax. The Conservative party is the party of lower income tax. The interesting point is that the cut has been made at the same time as public expenditure has been increased. That may appear to be a paradox for Opposition Members, but it is the enviable consequence of a well managed economy.
      Mr. Tony Blair: This debate goes to the heart of the differences between the main parties. The Government want tax cuts, and the Opposition say that the money available should be spent on a range of targeted public expenditure measures which we claim will improve public services and reduce unemployment.
      Before dealing with that point I want to correct an assertion by the Chancellor of the Exchequer about the comments made by my hon. Friend the Member for Dagenham (Mr. Gould) about value added tax. The Chancellor claimed that the Government's position on VAT, and especially on extending VAT to food and other materials, had not changed. I want to show why that claim cannot be sustained and that the Government's position has changed.
      Three years ago, when we were approaching the Euro elections, in June 1984, the Prime Minister gave a categorical assurance in the House that there would be no VAT on food. She made that assertion in terms that admitted of absolutely no qualification. She replied to a question from one of her hon. Friends and said that the Government had no intention of extending VAT to food. That statement was made without qualification or hedging words.
      Much has happened since then. Principally, moves are afoot in the EEC for what is called the harmonisation of internal tax rates. My hon. Friend the Member for Dagenham put the case for the Government's frontdoor imposition of VAT. I want to put the case for the Government's backdoor imposition of VAT through the EEC.
      After Lord Cockfield was appointed an article appeared in the Financial Times which stated unequivocally that it was Lord Cockfield's belief that VAT rates must be harmonised within the European Community. In that article, on 25 June 1986, the Financial Times correspondent stated that the issue that was
      "probably closest to Lord Cockfield's heart"
      was
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      "The need for bringing indirect tax rates broadly into line."
      The appointment of Lord Cockfield was followed by a document issued by the European Commission. In unequivocal terms that document stated:
      "Food products, subject to zero-rate VAT in Ireland and the United Kingdom, present a particular problem which should be tackled."
      That statement appeared in the document entitled, "Towards a Europe without Frontiers: The approximation of European tax systems", which was issued in May 1986.
      That was followed by a letter from Lord Cock field to the President of the EEC in May 1986, which was published as part of a consultative document by the EEC. In that letter Lord Cockfield said that it was likely that the Council would resume the examination of proposals already before it on the harmonisation of excise duty structures. That was followed by another document from the EEC, published on 20 January 1987, which set out a rolling programme for tax harmonisation within the EEC, which included harmonisation of VAT. Studies are still continuing within the EEC on harmonisation.
      Our attention was caught by an article in the Daily Telegraph on 31 March 1987. The article did not appear in Labour Weekly, the Morning Star or the Daily Mirror. It appeared in the Daily Telegraph. The article was headlined:
      "VAT threat to child clothes food and fuel."
      In that article, the Daily Telegraph correspondent in Brussels stated:
      "Books, magazines, fuel, children's clothes and all food sold in Britain would become liable to VAT if proposals to be presented shortly by the Common Market Commission are approved by the 12 EEC governments."
      The Prime Minister followed that by a letter to Alf Lomas, a Member of the European Parliament, in which she said that the Government had not so far been convinced that the harmonisation proposal should proceed. Yesterday, when the Prime Minister was asked a question about VAT, she gave a very different answer from the one that she gave in June 1984. [Interuption.] This is relevant to the point that the Chancellor made. If the Chancellor is entitled to make points about VAT scares put about by Labour, we are entitled to answer those points.
      The Prime Minister did not say yesterday what she said in June 1984, that the Government have no intention of putting VAT on food. The right hon. Lady said:
      "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."—[Official Report, 28 April 1987; Vol. 115, c. 158.]
      That is a much more qualified statement than the statement made in June 1984. The dodging by the Prime Minister yesterday and the Chancellor today entitles us as a party to keep raising the issue of VAT until we get the firm assurance that the Government will exercise their veto on any VAT proposals that come from the EEC. Until we get that assurance, we will continue to press the Government on the VAT issue.
      The clause raises the issue of priorities. The Government have said that because of the priorities lacing the country they should, through income tax cuts, put £3 per week into the pocket of the person on average earnings. We say that that is the wrong priority. If that money is available to spend, why not spend it to provide better education, hospitals, transport and other services? The issue is not how much is being spent here and there;

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      it is how much should be spent to provide the types of services that people want. I have found, not just in my constituency, but in other constituencies, that people understand the language of priorities and that it is better for their long-term future to spend this money to build up and safeguard their long-term interests.
      We were told by the alliance Member, in an interesting series of interventions, that they could not be sure exactly what their policy on tax cuts would be. It is time that we got some straight answers to the questions that we have been putting to the alliance about its income tax policy. The Government have made their position clear and the official Opposition have made their position clear. The hon. Member for Stockton, South (Mr. Wrigglesworth) said that the alliance would make clear before the general election campaign exactly where they stand on reversing, or not reversing, tax cuts. The hon. Member for Truro (Mr. Taylor) adopted a different position and said that the alliance would look at the position when it got into power. That is the hedging and dodging that we have come to know from the alliance.
      We know that the position in the four or five weeks run up to the general election will not be materially different from what it is now, so we are entitled to have the campaign issues put fairly and squarely before the British people. We are entitled to know where the alliance stands. Until it makes it clear where it stands, it does not deserve to be treated with credibility.
      We had the usual eulogy for the economy from the Chancellor. He took a side swipe — I thought rather unfairly—at the excellent Treasury study on the effect of taxation incentives on employment.
      Mr. Lawson: Has the hon. Gentleman read it?
      Mr. Blair: I have read it. It is wrong of the right hon. Gentleman to commission a report and then dismiss it simply because he does not like the findings. Perhaps the professor who wrote the report has been consigned to the same status as the bishops in Conservative propaganda, but I should have thought that the right hon. Gentleman would treat him with a little more circumspection.
      The Chancellor, in his analysis of the economy, refused to deal with the point that he once raised in a speech about the City, that is, the short term-ism of Government economic policy. The Government's Red Book, which was published at the same time as the Budget, shows the underlying danger to the economy from the consumer boom getting out of control and causing high interest rates, which are still high even after the cuts yesterday. The Chancellor felt that he had to cut borrowing to deal with the consumer boom, because at the same time he cut taxes. The worst thing that we can do, when we have a consumer boom and high interest rates, is to cut taxes and fuel the consumer boom to a greater extent.
      7.15 pm
      The Chancellor talked about the real economy and output. I asked the House of Commons Library to give me the output figures for all EEC countries over the seven years of the Government's term of office. I assume that we are entitled to talk about the Goverment as if they were in power from 1979 to 1981. The table, which compares Britain's record with the records of other EEC countries from 1979 to 1986, shows a staggering picture of our
      364
      relative failure. All the other EEC countries, except France, which shows a 1 per cent. fall in output over the seven years, show an increase in manufacturing output. Britain is at the bottom of the table by miles, with a fall of almost 7 per cent. in that period. The countries that have overtaken us are not just Germany or Italy. The Netherlands increased its manufacturing output by 12 per cent.; Luxembourg increased its output by 22 per cent.; Portugal increased its output by almost 37 per cent.; and Ireland increased its output by almost 33 per cent. That shows how far we have been relegated down the manufacturing output table.
      The Chancellor talked about how well the Government are doing with new industries. We should look at the figures on the new technology industries, not on the traditional industries, to see how well we are doing there. Almost all those new industries are in deficit. The Government have failed, not just to save traditional industries, but to create new industries.
      The hon. Member for Vale of Glamorgan (Sir R. Gower) referred to the textile industry. The textile industry shows a deficit of almost £3 billion. That is the last available figure, so the notion that the Government are a Government of progress and innovation in the economy does not stand up to a moment's analysis.
      Government Members have several times muttered comments from a sedentary position about the CBI trend survey, published today. I have not had the opportunity of studying it in as much detail as I should want. I am sure that it has nothing to do with the impending general election, but a similar survey was published in 1983. If one looks at the detail of that CBI trend survey, some interesting things emerge in the difficulties that the country faces. It is true that the overall picture is more optimistic, but it is interesting that optimism is most prominent in the areas of the economy in which there is a degree of depression.
      The fastest-growing area of manufacturing is the chemicals and intermediate goods sector. The second is the consumer goods sector. The lowest—lowest by a long way—is the capital goods sector—electrical, mechanical, machine goods, and so on. In other words, where there is high value added to British goods, British industry is not doing as well as it should be. Where it is doing well is in the low value added sectors, which, to a large extent, is the result of the exchange rate fall last year, because it is those sectors that are most sensitive to the exchange rate.
      The CBI trend survey says about capital goods that order books are shortening, that fewer than 20 per cent. are investing to increase capacity rather than simply investing to increase efficiency, and the majority, 86 per cent., say that the major constraint on expansion is shortage of sales, orders and demand. When we are looking at the real economy, we should take some of those matters into account.
      The truth about the Government, which has been shown time and again throughout this and other debates on the economy, is that when it comes to choosing the high unemployment option, they are prepared to do so. That is the central difference between the two sides of the Committee. We live now in a kingdom divided along every conceivable type of line—between the poor and the rich, the north and the south, those with private health insurance and those with public health insurance, those who have shares and those who do not have shares. This is a Government who live and thrive on social division. It

      365
      is that social division that lies at the heart of the clause, and it is because we believe in healing the social divisions in Britain that we shall vote against it tonight.
      Mr. MacGregor: The hon. Member for Dagenham (Mr. Gould) was struggling today as much as his party is struggling in the country. I recognise that many of his energies are being directed elsewhere, but his material was remarkably thin.
      "Remarkably thin" is also an apt description of the attendance on the Opposition Benches today. There were only three on the Opposition Front Bench and one on the Back Benches until the last few minutes—indeed the last few seconds.
      Mr. Gould: The Chief Secretary must not be allowed to get away with that. There were long periods during the debate—I do not know whether he was present—when the Conservative Benches were no more heavily populated than the Opposition Benches.
      Mr. MacGregor: I have been present throughout the debate, and there were a lot more Members on the Conservative Benches.
      We are told, as the hon. Member for Sedgefield (Mr. Blair) has just said, that the clause is at the heart of the matter for the Opposition. We have made it clear throughout that clause 20 and what it does to income tax is extremely important for our economic policies, and is perhaps the most important part of the Budget. But it was the Opposition who wanted the debate today in order to highlight that the clause was, in their terms, at the heart of the matter. Therefore, it is extraordinary that, throughout, practically nobody has been here.
      Indeed, the hon. Member for Great Grimsby (Mr. Mitchell) had once again to pop from the Front Bench to the Back Benches to make his speech. I always find his speeches entertaining, and I always enjoy it when he does so. He is good at creating phrases, but the economic analyses and policies behind them are woefully thin. He has recently been popping from the Front Bench to the Back Benches in another sense—or perhaps not—in an alternative manifesto which we have recently had in the minority report of the Treasury and Civil Service Select Committee.
      The hon. Gentleman is playing a key part in the Labour party's economic policies, and he has strongly put forward his arguments today from the Back Benches, although he is now again on the Front Bench. It is interesting to look at some of the ingredients of that alternative manifesto—a return to the policies pursued by the last Labour Government between 1974 and 1976, before they had to be bailed out by the IMF; massive and inflationary expansion of the money supply; mainstream corporation tax and advance corporation tax to be raised to 52 per cent.
      Those policies are the last thing that industry and commerce in general want. They are the last thing that would keep our economy competitive and bring down unemployment. We would not have had the optimistic CBI survey this week if those policies had been followed during the past few years.
      Let me return to the thin attendance. All the Opposition Members who are now on the Back Benches will not have heard the Chancellor commenting on a letter that he recently received from the Leader of the
      366
      Opposition. Since this was supposed to be such a keynote debate, the poor attendance is an interesting reflection. The Leader of the Opposition says to the Chancellor:
      "Our campaign will be stunning."
      If it is to be as stunning as the Opposition attack today, it is no wonder that Opposition Members were not here. They were clearly so stunned that they were flat on their backs elsewhere.
      There is one other phrase that I want to pick out from the letter. Perhaps the Leader of the Opposition gave the game away rather more than he realised when, in his letter to the Chancellor, he said:
      "I need even more help from you."
      I notice how the hon. Member for Dagenham kept off Labour policies today and concentrated on whether we had or had not cut taxes enough. No wonder. The Labour party's campaign might he rather more stunning if he were prepared to accept that it is our policies that are economically successful. That may well explain why he kept right off the stunning policies that we expected to hear from the Opposition today.
      I was puzzled at the line that the hon. Gentleman pursued today. He was clutching at straws when he tried to make the main thrust of his attack our record on taxes and then spent much of his speech, which was well below his usual standard, on a tiny piece of academic research concerned with technical and forecasting matters. I came to the conclusion that the hon. Gentleman composed his speech today either because he is so sensitive to the fact that bringing taxes down receives a popular and economically positive response or because he is so keen to divert attention from the Labour party's tax policies.
      Mr. Gould: To which piece of academic research is the right hon. Gentleman referring? Is he referring to the Brown report on incentives or the mysterious study on the extension of VAT? If it was the latter, can he tell us a little more about it? Can he tell us what the Chancellor would not tell us? What were the terms of reference of that study, what conclusions did it reach, when were those conclusions produced and what action do the Government propose to take on them?
      Mr. MacGregor: The terms of reference are known. They are to examine the detailed relationships between VAT yield and consumer expenditure. The purpose is to try to improve the understanding of the relationships between expenditure and VAT and to improve forecasting. It has nothing whatever to do with the details of any policy on VAT. The results have not yet been reached and no action will follow from them.
      Mr. Gould: The Chief Secretary poses us a puzzle. If the results have not yet been reached, how can he know that no action will be taken?
      Mr. MacGregor: I have explained that this is a small piece of technical economic research, of a kind that is frequently undertaken. That the hon. Gentleman should believe that it has any significance shows how thin is the Opposition's attack. It is extraordinary. The hon. Gentleman asked me for the answers and he has got them. He now knows how little there is in the point that lie is making—nothing.
      The hon. Gentleman also gave the game away when he kept describing our fiscal policies as tax cuts. That shows that he accepts that for some years now we have been doing just that. If the best that he can do is say that we

      367
      have not done enough yet in reducing the burden of tax, I can tell him that we will, and we know that he will not. Not only will the Labour party not, but it is clear from today's debate, as from so much else that has been said, that it will put up taxes much higher than they were under the last Labour Government.
      That is why I find the hon. Gentleman's attack today so extraordinary. He has tried to demonstrate that we have not yet succeeded sufficiently in bringing taxes down. That is a recognition of the policies that we are pursuing. It seemed almost by implication to suggest that we were right to say that we know perfectly well that the policies of the Labour party would substantially raise taxes. That makes the charge of the hon. Member for Dagenham extraordinary.
      I shall deal with some of the hon. Gentleman's points on the tax record and make the record on income tax clear. Everyone will pay less income tax in this fiscal year than under the income tax regime of the Labour Government when they left office — the 1978–79 regime — if it had been indexed in the proper way. A married man on average earnings would pay £10·50 a week more in income tax under an indexed 1978–79 regime. Moreover, the proportion of income tax and national insurance contributions is lower for everyone compared with the indexed regime of 1978–79.
      Mr. Raynsford: What about VAT?
      7.30 pm
      Mr. MacGregor: It is no good the hon. Member for Fulham (Mr. Raynsford) making that ludicrous point. It is our objective to continue to get income tax down and the burden of taxes down. We know that a Labour Government would substantially raise the burden of taxation for everyone. His is a totally bogus point.
      Mr. Raynsford: Perhaps the Chief Secretary will answer the specific point that I made—that a household in low-paid employment paying tax and national insurance and receiving rent and rate rebates would have lost 62p in the pound in 1979 for every pound earned. Under this Government, even after the 27p tax rate has been put into effect, the household now loses 82p in the pound and next year will lose 87p.
      Mr. MacGregor: That is a good deal better than the 100 per cent. marginal tax rates that there previously were in many areas. That is a consequence of targeting benefits on the poorest. Reversing this income tax cut would make the situation worse.
      The more important point is to ask what the hon. Member for Dagenham would do. He would greatly increase the burden of taxation compared with what it is now, on everyone. That is what makes such a nonsense of the position that the Labour party has been taking today.
      Mr. Gould rose—
      Mr. MacGregor: I shall complete this point. Referring back to the indexed 1978–79 regime, a married man without children on half average earnings—about £113 a week — will pay 9·72 per cent. of his earnings in income tax in 1987–88, compared with 12·9 per cent. if the regime that we inherited had simply been indexed.
      My hon. Friend the Member for Lewisham, West (Mr. Maples) was right — what matters to individuals and
      368
      their families is real take-home pay. For those on average earnings, real take-home pay will be over 21 per cent. higher in real terms in 1987–88 than in 1978–79. The real take-home pay of married men without children on average earnings fell under the last Labour Government.
      The hon. Member for Fulham mentioned nurses. He heard my right hon. Friend the Chancellor say that nurses' real take-home pay had gone up 42 per cent. under the Government. Real take-home pay has been transformed compared with the performance of the Labour Government. The hon. Member for Dagenham talked about mismanagement of the economy. What better comparative example of mismanagement under the former Labour Government and successful management under this Government is there than that?
      Mr. Gould rose—
      Mr. MacGregor: I cannot give way.
      I want to respond briefly to the point on regressive taxation. It is interesting that the top 5 per cent. of taxpayers—which is what I imagine the Opposition had in mind when they made this change—now pay some 28 per cent. of the total income tax yield, compared with 24 per cent. in 1978–79. That underlines my hon. Friend's argument that reductions in tax encourage greater effort and often improve yield.
      My hon. Friend the Member for Kensington (Sir B. Rhys Williams) said that we must look at international tax rates when we are considering the rates of tax on the higher paid. He urged the Government to do more than we have, because in this Finance Bill we have consciously directed our tax proposals at those on average earnings and all those for whom the basic rate is the marginal rate. I am sure that my hon. Friend will agree that when we first took office it was right to get rid of the absurdly high levels of direct taxation that the higher paid faced under the last Government.
      It is a ludicrous charge for the Opposition to make that we have not succeeded enough in our tax objectives when we are committed to a basic rate of 25p and they are committed to further massive increases. However, those are only their intermediate proposals. As the hon. Member for Dagenham knows, I have itemised the recent spending pledges that Labour Front Bench spokesmen and their party conferences have made. There have been no denials on any of them; I have the list here and I have itemised pledges with the date and the person who made them. Those spending pledges would lead to a massive increase in taxation.
      I want to ask the hon. Member for Dagenham a question. We have been concentrating on the basic rate of income tax. As he will know, what goes with that are the reduction in the small business corporation rate of tax, which has now come down by 15p in the pound, and the reduced rates of tax on unincorporated businesses and the self-employed by another 2p. Is he saying that he would increase the rates of taxation on those businesses by another 2p if he ever had the opportunity to introduce a Finance Bill?
      Mr. Gould: We have always made it perfectly clear that the £2·5 billion which has been given away in the Budget would be recouped, not necessarily in exactly the same form, and that that money would be spent on investment rather than consumption.
      Mr. MacGregor: That clearly means that the rate of tax for the unincorporated and self-employed would increase, and I am sure that the country will be interested to know that.
      The hon. Member for Stockton, South (Mr. Wrigglesworth) said that, in a few weeks, he would tell us what the cost of the alliance programme was to be and what it would do about income tax. I do not know when the election will be, but I thought that my hon. Friend the Member for Suffolk, South (Mr. Yeo) made a very fair point when he said that the leader of the SDP had firmly predicted that the election would be on 7 May. If that were the case, presumably the hon. Member for Stockton, South has already costed his proposals and decided what he will do about the rate of income tax. If not, it is clearly a case of cobbling up a policy at the last second, which does not seem to be untypical of his party.
      I am told that, at a recent farming conference, the SDP spokesman was challenged as to what the alliance would do on the rating of agricultural land, and when it was pointed out by the chairman that the two parties in the alliance were saying different things, the spokesman said that that was the value of having two policies at one and the same time. He said, "We can choose which one we want at the time." That is typical of the hon. Member for Stockton, South and all that he has said today.
      I have been through the lengthy document, "The Time Has Conic". There is not a specific pledge in it, but there is a vague pledge of doing something nice and worthwhile for any group to which the hon. Gentleman wants to appeal. That is typical of his party and typical of what it will do in a moment. It will vote against clause 20 and at some time it will make up its mind as to what it will do. At least on this point the Labour party is much more honest and straightforward. It has said what it will do, but once again the hon. Member for Stockton, South and the alliance want to have it all ways.
      Many interesting points were made by my hon. Friends to which I will not reply because the Committee wants to come to a conclusion on clause 20.
      In his opening remarks, and again in his last intervention to me, the hon. Member for Dagenham got to the heart of the matter—to use the phrase used by the hon. Member for Sedgefield (Mr. Blair)—when he talked about my right hon. Friend the Chancellor "giving away" money in tax cuts. He used that phrase twice and in doing so gave away the Labour mentality. We believe that the tax cuts are giving back to the British people money that they have earned.
      I am grateful for the support of my hon. Friends in this debate, not only because they have so effectively exposed the smears of the Labour party about our record, but because they have underlined the benefit of, and reason for, our tax policy, so well epitomised in this clause. That is why I urge the Committee to support it.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 257, Noes 156.

      Division No. 149]

      [7.40 pm

      AYES

      Aitken, Jonathan

      Atkins, Rt Hon Sir H.

      Alexander, Richard

      Atkins, Robert (South Ribble)

      Alison, Rt Hon Michael

      Atkinson, David (B'm'th E)

      Amess, David

      Baker, Nicholas (Dorset N)

      Ancram, Michael

      Baldry, Tony

      Ashby, David

      Banks, Robert (Harrogate)

      Aspinwall, Jack

      Batiste, Spencer

      370

      Bellingham, Henry

      Griffiths, Peter (Portsm'th N)

      Bendall, Vivian

      Grist, Ian

      Bevan, David Gilroy

      Ground, Patrick

      Biggs-Davison, Sir John

      Hamilton, Hon A. (Epsom)

      Blackburn, John

      Hamilton, Neil (Tatton)

      Blaker, Rt Hon Sir Peter

      Hampson, Dr Keith

      Body, Sir Richard

      Hanley, Jeremy

      Bonsor, Sir Nicholas

      Hannam, John

      Boscawen, Hon Robert

      Harris, David

      Bottomley, Peter

      Harvey, Robert

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

      Haselhurst, Alan

      Bowden, Gerald (Dulwich)

      Hawkins, C. (High Peak)

      Boyson, Dr Rhodes

      Hawksley, Warren

      Braine, Rt Hon Sir Bernard

      Hayes, J.

      Brandon-Bravo, Martin

      Hayward, Robert

      Bright, Graham

      Heathcoat-Amory, David

      Brinton, Tim

      Heddle, John

      Brittan, Rt Hon Leon

      Henderson, Barry

      Brooke, Hon Peter

      Hickmet, Richard

      Browne, John

      Hind, Kenneth

      Bruinvels, Peter

      Hirst, Michael

      Buck, Sir Antony

      Hogg, Hon Douglas (Gr'th'm)

      Budgen, Nick

      Holland, Sir Philip (Gedling)

      Bulmer, Esmond

      Howard, Michael

      Burt, Alistair

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

      Butcher, John

      Howarth, Gerald (Cannock)

      Butler, Rt Hon Sir Adam

      Howell, Ralph (Norfolk, N)

      Butterfill, John

      Hubbard-Miles, Peter

      Carlisle, John (Luton N)

      Hunt, David (Wirral W)

      Carlisle, Kenneth (Lincoln)

      Irving, Charles

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

      Jackson, Robert

      Carttiss, Michael

      Jenkin, Rt Hon Patrick

      Cash, William

      Johnson Smith, Sir Geoffrey

      Channon, Rt Hon Paul

      Jones, Gwilym (Cardiff N)

      Chapman, Sydney

      Jones, Robert (Herts W)

      Chope, Christopher

      Jopling, Rt Hon Michael

      Churchill, W. S.

      Joseph, Rt Hon Sir Keith

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

      Kellett-Bowman, Mrs Elaine

      Clark, Dr Michael (Rochford)

      King, Roger (B'ham N'field)

      Clark, Sir W. (Croydon S)

      King, Rt Hon Tom

      Clegg, Sir Walter

      Knight, Greg (Derby N)

      Cockeram, Eric

      Knight, Dame Jill (Edgbaston)

      Coombs, Simon

      Knowles, Michael

      Cope, John

      Lamont, Rt Hon Norman

      Cormack, Patrick

      Lang, Ian

      Couchman, James

      Latham, Michael

      Critchley, Julian

      Lawler, Geoffrey

      Currie, Mrs Edwina

      Lawrence, Ivan

      Dickens, Geoffrey

      Lawson, Rt Hon Nigel

      Dicks, Terry

      Lee, John (Pendle)

      Douglas-Hamilton, Lord J.

      Leigh, Edward (Gainsbor'gh)

      Dover, Den

      Lester, Jim

      Durant, Tony

      Lewis, Sir Kenneth (Stamf'd)

      Edwards, Rt Hon N. (P'broke)

      Lightbown, David

      Evennett, David

      Lilley, Peter

      Fallon, Michael

      Lloyd, Sir Ian (Havant)

      Farr, Sir John

      Lloyd, Peter (Fareham)

      Favell, Anthony

      Lord, Michael

      Fenner, Dame Peggy

      Lyell, Nicholas

      Fletcher, Sir Alexander

      McCrindle, Robert

      Forman, Nigel

      McCurley, Mrs Anna

      Forsyth, Michael (Stirling)

      Macfarlane, Neil

      Forth, Eric

      MacGregor, Rt Hon John

      Fowler, Rt Hon Norman

      MacKay, Andrew (Berkshire)

      Franks, Cecil

      MacKay, John (Argyll & Bute)

      Fraser, Peter (Angus East)

      Maclean, David John

      Freeman, Roger

      McLoughlin, Patrick

      Fry, Peter

      McNair-Wilson, M. (N'bury)

      Gale, Roger

      Madel David

      Galley, Roy

      Major, John

      Gardner, Sir Edward (Fylde)

      Malins, Humfrey

      Garel-Jones, Tristan

      Malone, Gerald

      Glyn, Dr Alan

      Maples, John

      Goodhart, Sir Philip

      Marlow, Antony

      Gorst, John

      Marshall, Michael (Arundel)

      Gow, Ian

      Mather, Sir Carol

      Gower, Sir Raymond

      Maude, Hon Francis

      Greenway, Harry

      Maxwell-Hyslop, Robin

      Gregory, Conal

      May hew, Sir Patrick

      Griffiths, Sir Eldon

      Merchant, Piers

      371

      Mills, Sir Peter (West Devon)

      Skeet, Sir Trevor

      Mitchell, David (Hants NW)

      Smith, Tim (Beaconsfield)

      Moate, Roger

      Speller, Tony

      Monro, Sir Hector

      Spicer, Jim (Dorset W)

      Montgomery, Sir Fergus

      Squire, Robin

      Moore, Rt Hon John

      Steen, Anthony

      Morris, M. (N'hampton S)

      Stern, Michael

      Moynihan, Hon C.

      Stevens, Lewis (Nuneaton)

      Mudd, David

      Stewart, Allan (Eastwood)

      Nelson, Anthony

      Stewart, Andrew (Sherwood)

      Newton, Tony

      Stewart, Ian (Hertf'dshire N)

      Nicholls, Patrick

      Stradling Thomas, Sir John

      Norris, Steven

      Sumberg, David

      Onslow, Cranley

      Taylor, John (Solihull)

      Osborn, Sir John

      Thatcher, Rt Hon Mrs M.

      Ottaway, Richard

      Thornton, Malcolm

      Page, Sir John (Harrow W)

      Thurnham, Peter

      Page, Richard (Herts SW)

      Townsend, Cyril D. (B'heath)

      Patten, J. (Oxf W & Abgdn)

      Tracey, Richard

      Pattie, Rt Hon Geoffrey

      van Straubenzee, Sir W.

      Pawsey, James

      Vaughan, Sir Gerard

      Percival, Rt Hon Sir Ian

      Waddington, Rt Hon David

      Pollock, Alexander

      Wakeham, Rt Hon John

      Porter, Barry

      Waldegrave, Hon William

      Portillo, Michael

      Walden, George

      Powell, William (Corby)

      Walker, Rt Hon P. (W'cester)

      Powley, John

      Waller, Gary

      Price, Sir David

      Walters, Dennis

      Proctor, K. Harvey

      Wardle, C. (Bexhill)

      Raffan, Keith

      Watson, John

      Rhodes James, Robert

      Watts, John

      Rhys Williams, Sir Brandon

      Wells, Sir John (Maidstone)

      Ridley, Rt Hon Nicholas

      Wiggin, Jerry

      Rifkind, Rt Hon Malcolm

      Winterton, Mrs Ann

      Roberts, Wyn (Conwy)

      Wolfson, Mark

      Robinson, Mark (N'port W)

      Wood, Timothy

      Roe, Mrs Marion

      Yeo, Tim

      Rost, Peter

      Young, Sir George (Acton)

      Ryder, Richard

      Younger, Rt Hon George

      Sackville, Hon Thomas

      Sainsbury, Hon Timothy

      Tellers for the Ayes:

      St. John-Stevas, Rt Hon N.

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

      Shaw, Sir Michael (Scarb')

      Shepherd, Colin (Hereford)

      NOES

      Abse, Leo

      Clelland, David Gordon

      Adams, Allen (Paisley N)

      Clwyd, Mrs Ann

      Alton, David

      Cohen, Harry

      Archer, Rt Hon Peter

      Conlan, Bernard

      Ashdown, Paddy

      Cook, Frank (Stockton North)

      Ashley, Rt Hon Jack

      Corbett, Robin

      Ashton, Joe

      Corbyn, Jeremy

      Atkinson, N. (Tottenham)

      Craigen, J. M.

      Bagier, Gordon A. T.

      Cunliffe, Lawrence

      Barnes, Mrs Rosemary

      Davies, Rt Hon Denzil (L'lli)

      Barron, Kevin

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

      Beckett, Mrs Margaret

      Deakins, Eric

      Bell, Stuart

      Dewar, Donald

      Benn, Rt Hon Tony

      Dixon, Donald

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

      Dormand, Jack

      Bermingham, Gerald

      Douglas, Dick

      Bidwell, Sydney

      Dubs, Alfred

      Blair, Anthony

      Duffy, A. E. P.

      Bray, Dr Jeremy

      Dunwoody, Hon Mrs G.

      Brown, Gordon (D'f'mline E)

      Eadie, Alex

      Brown, Hugh D. (Provan)

      Eastham, Ken

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

      Faulds, Andrew

      Brown, Ron (E'burgh, Leith)

      Field, Frank (Birkenhead)

      Bruce, Malcolm

      Fields, T. (L'pool Broad Gn)

      Caborn, Richard

      Flannery, Martin

      Callaghan, Jim (Heyw'd & M)

      Foot, Rt Hon Michael

      Campbell, Ian

      Foster, Derek

      Campbell-Savours, Dale

      Foulkes, George

      Canavan, Dennis

      Fraser, J. (Norwood)

      Carlile, Alexander (Montg'y)

      Freeson, Rt Hon Reginald

      Carter-Jones, Lewis

      Garrett, W. E.

      Cartwright, John

      George, Bruce

      Clark, Dr David (S Shields)

      Gilbert, Rt Hon Dr John

      Clay, Robert

      Godman, Dr Norman

      372

      Golding, Mrs Llin

      Mitchell, Austin (G't Grimsby)

      Gould, Bryan

      Morris, Rt Hon A. (W'shawe)

      Hamilton, James (M'well N)

      Morris, Rt Hon J. (Aberavon)

      Hamilton, W. W. (Fife Central)

      Nellist, David

      Harrison, Rt Hon Walter

      Oakes, Rt Hon Gordon

      Hart, Rt Hon Dame Judith

      O'Brien, William

      Hattersley, Rt Hon Roy

      O'Neill, Martin

      Healey, Rt Hon Denis

      Park, George

      Heffer, Eric S.

      Patchett, Terry

      Hogg, N. (C'nauld & Kilsyth)

      Pendry, Tom

      Holland, Stuart (Vauxhall)

      Pike, Peter

      Home Robertson, John

      Powell, Raymond (Ogmore)

      Howell, Rt Hon D. (S'heath)

      Prescott, John

      Howells, Geraint

      Radice, Giles

      Hughes, Robert (Aberdeen N)

      Randall, Stuart

      Hughes, Roy (Newport East)

      Raynsford, Nick

      Hughes, Sean (Knowsley S)

      Rees, Rt Hon M. (Leeds S)

      Janner, Hon Greville

      Richardson, Ms Jo

      John, Brynmor

      Roberts, Allan (Bootle)

      Kaufman, Rt Hon Gerald

      Robertson, George

      Kirkwood, Archy

      Rooker, J. W.

      Lambie, David

      Ross, Ernest (Dundee W)

      Lamond, James

      Ross, Stephen (Isle of Wight)

      Leighton, Ronald

      Sedgemore, Brian

      Lewis, Ron (Carlisle)

      Sheerman, Barry

      Lewis, Terence (Worsley)

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

      Litherland, Robert

      Skinner, Dennis

      Livsey, Richard

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

      Lloyd, Tony (Stretford)

      Snape, Peter

      Lofthouse, Geoffrey

      Steel, Rt Hon David

      Loyden, Edward

      Straw, Jack

      McDonald, Dr Oonagh

      Taylor, Matthew

      McKay, Allen (Penistone)

      Thorne, Stan (Preston)

      MacKenzie, Rt Hon Gregor

      Tinn, James

      Maclennan, Robert

      Warden, Gareth (Gower)

      McTaggart, Robert

      Weetch, Ken

      Madden, Max

      Welsh, Michael

      Marshall, David (Shettleston)

      White, James

      Martin, Michael

      Williams, Rt Hon A.

      Mason, Rt Hon Roy

      Wilson, Gordon

      Maynard, Miss Joan

      Winnick, David

      Meacher, Michael

      Wrigglesworth, Ian

      Meadowcroft, Michael

      Michie, William

      Tellers for the Noes:

      Mikardo, Ian

      Mr. Frank Haynes and Mr. John McWilliam.

      Millan, Rt Hon Bruce

      Question accordingly agreed to.
      Clause 20 ordered to stand part of the Bill.

    Clause 23

      DEDUCTION RATE FOR SUB-CONTRACTORS IN CONSTRUCTION INDUSTRY
      Question proposed, That the clause stand part of the Bill.
      Mr. MacGregor: This clause deals with the deduction rate for sub-contractors, and it follows on from the debate that we have just had.
      There is no automatic connection between the deduction rate and the basic rate of tax, but the two have moved in step for the past five changes of rate and there are good reasons for that. I am sure that this change will be welcomed as it follows from clause 20 and the decision that the Committee has just taken to reduce the basic rate of tax to 27p.
      Mr. Blair: The Chief Secretary has correctly said that the proposed change in clause 23 simply follows the normal diminution in the rate of income tax. Therefore, as it follows as a matter of course, we take no stand upon it.
      Question put and agreed to.
      Clause 23 ordered to stand part of the Bill.

    Clause 21

      CHARGE OF CORPORATION TAX FOR FINANCIAL YEAR 1987
      Question proposed, That the clause stand part of the Bill.
      The Financial Secretary to the Treasury (Mr. Norman Lamont): This clause sets the rate of corporation tax at 35 per cent. for the 1987 financial year.
      Companies have told us that advance notice of the main rate of corporation tax helps with their forward planning. Hon. Members will be aware that before 1984 it was normal to set the corporation tax rate in arrears. However, the Finance Act 1984 set the corporation tax rates for the following three financial years and we intend as far as possible to maintain the practice of setting corporation tax rates in advance. Accordingly, this clause fixes the rate of corporation tax for the financial year to 31 March 1988 at the unchanged level of 35 per cent. At 35 per cent. the rate of corporation tax is, at present, the lowest of any major industrialised country, although the United States is shortly to emulate us with a rate of 34 per cent.
      The reforms introduced in 1984 are now firmly in place, and the benefits are beginning to be felt, although it will be a few more years before they fully work through. However we can already see improvements in terms of increased dynamism, profitability and the quality of business investment decisions in Britain. That is part of a continuing success story. For example, the average rate of return earned by all industrial and commercial companies has continued to grow, and in 1985, the last year for which we have figures, it was 11.9 per cent., the highest rate since 1964.
      Company profits are also up. The gross trading profits of non-North sea industrial and commercial companies have risen from £30 billion in 1984 to £45 billion in 1986. Not surprisingly, there has also been an increase in corporation tax receipts, from £10.7 billion in 1985–86 to a forecast yield of £15 billion for 1987–88. This rise in corporation tax receipts is largely the result of those higher profits. As I have said, the 1984 corporation tax reforms have stimulated business and no doubt led to higher profits. I do not pretend that paying tax helps businesses, but the corporation tax reforms show that improvements to the tax system can benefit businesses without causing a loss of revenue.
      This is not a short-term boom that will suddenly collapse. Reference has already been made to one of the most optimistic CBI surveys for many years. That survey, which covered very nearly 1,500 companies, responsible for almost half the United Kingdom's manufactured exports and more than half of manufacturing employment, reported further increases in optimism about the business situation rising to levels experienced only once before in the last decade. United Kingdom manufacturing firms are now winning orders at the fastest rate for many years, with exports at record levels and forecast to rise even further. Manufacturing output, already growing rapidly, is expected to grow faster still.
      All this underpins and emphasises that our corporation tax reforms, which were much criticised, have been compatible with healthy industrial development. Certainly the growth in corporation tax receipts reflects the strength of commerce. The clause merely repeats that the present
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      rate of corporation tax at 35 per cent. should be the same for the next financial year. I do not suppose that there will be much dispute about that tonight.
      The Temporary Chairman (Mr. Nicholas Winterton): Is it the Minister's wish that we should take clause 22 with clause 21?
      Mr. Lamont: As we have started on this debate, perhaps we could take the two clauses separately if that is convenient.
      8 pm
      Mr. Gould: We take no particular point against clause 21 and we do not propose to divide on it. As the Minister said, it gives us an opportunity to assess three years' experience of the changes which were introduced in corporation tax in 1984. If I recall correctly, the changes were designed to discourage what the Chancellor described at the time as investment which could not be justified or artificial investment produced by a system of capital allowances which the Chancellor felt was distorting the pattern of investment.
      One assumes, as a corollary of that, that the changes were also designed to encourage the use of cheap labour as a substitute for investment. I assume that that was part of the Chancellor's interest in promoting what he described in a memorable phrase as a "low-tech, no-tech" economy. Incidentally, that attitude sat uneasily with his subsequent interest in the proposition that our economic ills were the consequence of high wage rates. That also had a brief run of popularity until a reasonable amount of academic research and commentary showed that the proposition could not be sustained.
      Mr. Tim Smith: Why does the hon. Gentleman refer disparagingly to cheap labour? Surely he recalls that the 100 per cent. investment allowance was the response of the right hon. Member for Leeds, East (Mr. Healey), as Chancellor, to excessive rates of inflation. It was basically an inflationary allowance. When inflation came down, it made sense to bring the rates back to more sensible levels. When unemployment was high it did not make sense to have a system that encouraged investment in expensive labour.
      Mr. Gould: What the hon. Gentleman says is true of stock appreciation but not of capital allowances. I have used the phrase "cheap labour" because in any international assessment that is precisely what we have. Notwithstanding the Chancellor's contention that real wages were too high, he has now abandoned that, or, if he has not abandoned it, he is not saying much about it. Again, that may be one of the detectable changes in attitude and in Government policy which owe much to the apparent imminence of a general election.
      Sir Raymond Gower: Surely the chief complaint was not that wages were too high but that some wages were too high in relation to productivity. Has not that been altered by the vast improvement in productivity?
      Mr. Gould: I deliberately used the term "real wages". By definition that covers the hon. Gentleman's point. Since he mentioned productivity in his intervention, I must point out that the productivity improvements of which so much is made demonstrate no improvement in trend. The improvement over the period of this Government is no better than we achieved in the 1960s and 1970s. I shall say

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      a word in a moment about the figures that have been produced and why they are perhaps less reliable than is sometimes suggested.
      Let me return to the question of how effective the changes of 1984 have been in securing the objectives that the Chancellor enunciated. We were warned at the time by the Institute for Fiscal Studies that the effect of the changes would be to discourage investment. As I have said, at least in his own terms the Chancellor acknowledged that that was part of the intention of the changes. That objective has certainly been met. Investment in manufacturing rose briefly in the wake of the announcement of the changes, but that was a transitional response. It had a bunching effect to get investment in before capital allowances were phased out. Now that that has happened, manufacturing investment has fallen back to more than 20 per cent. below the level of 1979.
      As a consequence of that appalling investment policy for manufacturing industry, we are again as an economy disinvesting. From 1980 to 1985 there was net disinvestment of £5·52 billion compared with positive investment of about the same sum from 1975 to 1979. In other words, we are the first major country to bring in reverse development. That is the outcome of the Government's economic policies and the true measure of their much-touted economic boom.
      The Institute for Fiscal Studies also pointed out that the changes would be biased in favour of financial institutions, particularly banks, which had major investments in property and which, therefore, benefited from the cut in corporation tax but lost very little through the loss of capital allowances. The impact of the changes has been principally in respect of manufacturing industry. In that context it is also worth bearing in mind that whereas the Chancellor predicted, and indeed indicated that it was his intention, that the changes should be revenue neutral, that is not how they have turned out. I have full sympathy for the Chancellor. It must have been an extraordinarily difficult prediction to make. Nevertheless, that was his intention.
      It appears that the Chancellor missed his target. It again demonstrates how little the Chancellor knows about how the economy is performing and about how much revenue he is likely to receive from corporation tax. The reason that I make the point is that a forthcoming article in Fiscal Studies will point out that, accepting the increased profitability, the changes have produced a £1 billion increase in revenue over what would have been the revenue take if the changes had not been made, even in the same circumstances. In other words, far from being revenue neutral, the changes have produced an extra £1 billion of revenue over and above what has been produced by the buoyancy and profitability of the corporate sector. Therefore, we have yet another indication of why the Chancellor has been inundated with revenue that he had not expected even some months ago. Again, it demonstrates how little he knows about what is happening to the economy.
      The other objective of the changes, as the hon. Member for Beaconsfield (Mr. Smith) suggested in his intervention, was to boost employment. Instead of using expensive investment, the objective was to use relatively inexpensive labour. If that had been achieved, one might have said that there was a certain rationale and something to be
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      supported in the changes. But, of course, the loss in manufacturing employment has continued unabated. There has been a 28 per cent. loss in manufacturing jobs since the Government took office.
      Turning to the productivity point made by the hon. Member for Vale of Glamorgan (Sir R. Gower), it is the continuing fall in manufacturing employment outstripping the fall in manufacturing output which has produced the misleading productivity figures of which the Government have made so much. If we were to be offered a bargain of further improvements in productivity of the type that the Government have produced, but at the price of falling manufacturing employment outstripping falling manufacturing output, I do not think that many of us would say that such productivity was worth having.
      Productivity is not so favourable if one considers it in terms of output per hour rather than output per worker. Rather than sack workers, many employers have kept them on but have asked them to work longer hours. Therefore, the productivity figure is more favourable in terms of output per worker but much less favourable on the more accurate basis of output per hour.
      In addition, there is the familiar argument that much of the productivity improvement has been brought about because the weaker performers have gone to the wall and have gone out of business. For all those reasons, I think that we are entitled to look askance at the claimed productivity miracle of the Government.
      The changes introduced in 1984 have predictably discouraged investment, which is parlously low. It means that we are disinvesting rather than investing substantially in new capacity, as all our rivals are doing. The change has not been revenue neutral, as the Chancellor intended. Certainly it has not encouraged employment in manufacturing industry. Therefore, the conclusion we reach is that the changes, while in a sense understandable by the Government's rationale at the time, have not been helpful to industry and, indeed, have been deleterious to it in many respects.
      We still need some means by which investment — particularly in manufacturing industry — can be picked up off the floor. If that does not happen, we know as a matter of certainty that we cannot go on competing in international markets against countries that are investing in their own industrial bases. If we do not invest, we are trying to compete with one hand, if not two hands, tied behind our back. So it becomes of crucial importance to our economic future to find a means of promoting the investment that we need. Clearly, the Government have no answers or ideas on that subject. The changes that they introduced in 1984 have done nothing to improve the position; they have worsened it as far as one can tell.
      We need a different approach, a different macro-economic climate and specific incentives to investment. None of those appear to be in the Government's mind. The Government are guilty of the very short-termism of which the Chancellor accused the City some months ago. If we are to get the investment that we so desperately need, the economy and the country will have to wait for a Labour Government to achieve it.
      Mr. Tim Smith: I do not know how the hon. Member for Dagenham (Mr. Gould) can say that the Government are guilty of short-termism when, in 1984, they reformed corporation tax and, for the first time, told companies what the regime would be for a three-year period ahead.

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      I recall the days when Chancellors of the Exchequer stood up and announced in the course of their Budget statements the rate of corporation tax for the year that had just concluded. That did not help companies that were trying to plan ahead.
      I welcome the clause because it states the rate of corporation tax for the coming year, which helps companies. Secondly, it is a low rate of corporation tax — 35 per cent. That will also help companies. I cannot remember the exact history of all this, but I recall that, in the early and middle 1970s, as inflation rose, there was a cash flow crisis in industry. The right hon. Member for Leeds, East (Mr. Healey), then Chancellor of the Exchequer, introduced stock appreciation relief. I believe that 100 per cent. capital allowances were not only an incentive to industry to invest but were necessary so that industry had the cash to replace assets that could cost 100, 200, or 300 per cent. more than they had before because of inflation. The changes that were made in 1984 were a proper response to the fact that there was no longer rampant inflation in the economy. They were not so much designed to encourage employment in manufacturing industry as to ensure that the tax system was not so distorted that decisions about whether or not it would be commercially right to invest in new machinery or use new employees were dictated by tax considerations. So the tax regime for corporation tax and for capital allowances was basically neutral as between a decision to invest or use additional labour. At a time of low inflation and high unemployment, that was the right thing to do.
      Now, three years on from 1984, we find that the revenue from corporation tax has risen substantially. I believe that that is largely due to the increased profitability of British industry. The hon. Member for Dagenham tried to argue that the £1 billion figure that is to be published by the Institute for Fiscal Studies is due to the 1984 changes in the regime. However, that figure must he hypothetical, because people change their behaviour in response to tax changes. The figure can only be the institute's best estimate, and, even if it is correct, it shows that the hulk of the increase in revenue from corporation tax—corporation tax revenue was only £3 billion or £4 billion not long ago — has been due to the increased profitability of British industry.
      An interesting appendix to the Treasury and Civil Service Select Committee's report on the Budget shows the difficulty of forecasting the yield from corporation tax. It is particularly difficult for the Revenue to forecast the yield of that tax. Another factor is that there were huge tax loss over-hangs in many industrial companies — they were making good profits but paying no corporation tax because of losses that were carried forward. Many of those have come to an end, which is another reason for the substantial increase in yield. For all those reasons, I welcome the clause.
      8.15 pm
      I want to refer briefly to the effect of the changes on the film industry, in which I have a constituency interest. Pinewood film studios in my constituency is a subsidiary of the Rank Organisation, which has recently had to make a large number of redundancies in response to changes in the market. My right hon. Friend the Financial Secretary to the Treasury will be aware that the chief executive of the Rank Organisation wrote to him on 24 April about all this. I do not want to weary the Committee with all the figures,
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      but it is not enough to say that the business expansion scheme will be sufficient to help the film industry. The amounts of cash involved, the long lead times and the substantial amount of risk make it a special case.
      I ask my right hon. Friend to examine the letter from the Rank Organisation carefully; it sets out the arguments for some degree of special treatment for the film industry. The industry is a special case, although I know that it is not the only one. The points advanced by the chief executive, Mr. Gifford, are the substantial amount of funding required for film production and the long period between commencing production and incurring expenditure on a film and the date on which revenues start being received. There is also the fact that such revenues tend to be earned some time after initial cinema release. I hope that my right hon. Friend will give careful attention to those arguments.
      Mr. Wrigglesworth: I agree with the hon. Member for Beaconsfield (Mr. Smith) about the level of profitability, which I believe is welcome in business at the present time. I also agree with him about the certainty for rates of corporation tax. That proposal was welcome and has certainly been helpful to businesses.
      I want to say a few words about the important subject raised by the hon. Member for Dagenham (Mr. Gould) —the impact that the changes have had on investment. That is of fundamental importance to us all. There is a continuing debate about the relationship between the manufacturing and services sectors of the economy, and about whether the one can replace the other or is more important than the other. Surely the services and manufacturing sectors are interdependent. Each rests upon the efforts of the other. In a trading nation such as ours, services inevitably depend more on manufacturing than the other way round Almost 100 per cent. of manufactured goods are tradeable, whereas only 20 to 25 per cent. of services arc tradeable.
      All the historical evidence is that those countries that have succeeded in exporting a large number of their products — the most recent example in the post-war years has been Japan—have built upon the back of their enormous manufacturing trade the service industries that go with it — banking. shipping, insurance and all the other things that we provide so well in the City of London. But one needs a strong manufacturing sector to have a healthy services sector. One of the reasons why we have such a successful services sector is that, historically, we have had a substantial amount of world trade in manufactured goods ever since the industrial revolution, Victorian times and the empire. That gave us an enormous advantage.
      It is vital that we examine the impact that the changes have made on investment. I draw the Minister's attention to the latest annual report of the Equipment Leasing Association. It commissioned a report at Bath university, and has commissioned a further report on the impact of the changes on industry and investment. Many of us thought that the changes in corporation tax would lead to a considerable reduction in the leasing industry's activities, because it seemed that the leasing business was built largely on the tax structure that used to exist. However, the leasing business has continued to thrive and, indeed, is expanding. Nevertheless, the study that the Equipment Leasing Association carried out demonstrates the decline

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      in investment which has taken place recently and which is forecast to take place in future as a result of these tax changes, and I find it disturbing.
      I am fairly pessimistic, but would like to think that the Government will consider whether we can use the tax system to encourage investment in some high-tech areas of the economy in a way which commands broad consensus in the House. Generally speaking, I am sceptical about tax expenditure. One does not like to distort the tax system by introducing tax allowances any more than necessary, but against that one must admit that tax breaks are a wonderful incentive to individuals and businesses. One need only look at mortgages and the insurance and pensions industry to see the impact which tax incentives can have.
      It is absolutely vital to reverse the recent awful trend in high technology. Many countries have beaten us solidly; our balance of payments for information technology equipment has been growing increasingly wide and adverse and we must do something about it. The Government should consider introducing tax incentives to encourage more investment in these vital areas in future, not only for those sectors of industry, but for the many other sectors that depend on them.
      Information technology is an obvious case in point. In one way or another, both the service industries and manufacturing industries will depend on it. Therefore, we must be at the forefront of that technology in terms of research and development and manufacturing. We must be able to beat the competition from Japan, America and Germany, because that is the only way we can succeed.
      We may be able to encourage companies through the tax system to invest more in research and development and in capital equipment and to use and develop high technology in a way which all hon. Members want to see, and I hope that Treasury Ministers will give that some consideration.
      Sir Raymond Gower: Like the hon. Member for Stockton, South (Mr. Wrigglesworth), I agree with what has been said about the advantages of having the corporation tax rate stated firmly and clearly in this clause of the Finance Bill, and with what has been said about the benefits of this low rate, which is extremely favourable in an international context.
      The hon. Member for Dagenham (Mr. Gould) went a long way to disparage and discover the loopholes in British productivity. The fact is that our industries have been in decline for several decades and one must recognise that. Indeed, at one stage the decline seemed to be terminal. The decline of much of British industry dates back to the end of the last war and some of it dates back further, so this state has persisted for a long time. The difficulties of British industry were aggravated by the lateness of our entry into the Common Market which meant that we suffered many of the disadvantages, without gaining the advantages. Moreover, we faced enhanced competition from the new entrants into the industrial world—not merely Japan, but Korea, Taiwan, Singapore, Hong Kong and so on. All that aggravated the difficulties of British industry.
      It is only now that much of British industry has turned the corner and become more efficient than it was. The fact that our industry went through that difficult period has
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      made it more efficient, but that has brought other problems. By becoming more efficient, industry has shed some of its labour, which has exacerbated our unemployment problem.
      Mr. Gould: I am listening with great interest to the hon. Gentleman, and I would not intervene if it were not that he was making assertions which are widely made but not based in fact. He is saying that British industry has become more competitive as a consequence of changes in productivity and manning levels. I am sorry to tell him that that is not borne out by any index of competitiveness which the Government use—and they use about half a dozen. Each of those shows that competitiveness has declined since 1979, quite apart from the fact that output has fallen.
      Sir Raymond Gower: I have personal knowledge of certain companies and I have seen benefits accruing to them as they have recovered with difficulty from their position of eight or 10 years ago. It is only now that some of those companies are more efficient. One or two specialised industries, such as the textile industry, have made a great recovery, but the hon. Member for Stockton, South tended to belittle what has been a distinct recovery.
      For the reasons that have already been given from both sides of the House, we can all accept this clause, and I hope that we shall do so.
      Mr. Norman Lamont: Several speeches concentrated on the effects on investment of the changes made in 1984, but levels of investment have held up. We always accepted that reform might affect the investment profile, with some being brought forward to earlier years to qualify for the higher rate of capital allowances, but the DTI investment intentions survey suggests a rise of about 6 per cent. in industrial investment in 1987 and a similar increase in 1988.
      The hon. Member for Stockton, South (Mr. Wrigglesworth) referred to the Equipment Leasing Association. Only in March it announced that 1986 had been its second best year ever, contrary to the expectations that leasing would be hard hit by the 1984 reforms.
      Mr. Wrigglesworth: I said that the effect of the changes on leasing had not been adverse, as had been anticipated. That is different from saying that, because leasing has increased, the amount of capital investment in industry has increased. I hope that the Minister will study the report, because it points out that the level of industrial investment will decline in future and that action needs to be taken to stop that decline.
      Mr. Lamont: There are no grounds for saying that industrial investment or investment in the economy has declined. As we all know, investment in the economy is at record levels, but Opposition Members like to point out that manufacturing investment has been adversely affected.
      I mention these matters because in 1983, the year before the corportion tax reforms, manufacturing investment, including leasing, was £6·8 billion, whereas in 1986 it was £9·5 billion. Therefore, there is not much evidence that the reforms have had the dramatic adverse effects that hon. Members have described.
      That is the figure that we should look at, and that is the point that I would make in reply to the hon. Member for Dagenham (Mr. Gould) when he talked about net

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      disinvestment—a concept that is beloved of statisticians but one about which I remain extremely sceptical because of the difficulty of measuring it. What we can look at and what we do know about is gross investment, and the figures for gross investment are those that I have given the Committee. They hardly bear out the dire predictions by hon. Members of the Opposition.
      The hon. Member for Stockton, South said that he did not like tax breaks but thought that we ought perhaps to consider them in this particular instance. It is a very unfamiliar stance for him to say that, while he is against something, on the whole he might just favour it a little. It is a very attractive posture and we know why it was taken, but on this occasion the hon. Gentleman will be very pleased to know that not only have we listened to and considered what he says; we have already done what he advocates. There is already provision for short-life assets to be treated differently: expenditure on assets with a life of up to three years can be written off over the life of the asset instead of at the normal rate of 25 per cent.
      8.30 pm
      That was specifically introduced for the high technology sector, bearing in mind that in information technology and electronics some investment is written off at a truly astonishing rate these days. I merely draw the hon. Gentleman's attention to it to try to assure him that we had that particular problem somewhat in mind.
      We also heard from the hon. Member for Dagenham the view that the tax reforms had increased incentives to invest in services, particularly the financial services, although I think that it is an argument that applies to all services rather than just to financial ones. But, as my hon. Friend the Member for Beaconsfield (Mr. Smith) said, the reforms are particularly designed to bring about a situation where investment is business-driven and not tax-driven. That is the whole point of it. If this means more investment in services, so be it. I agree with the hon. Member for Stockton, South that there is not a right level of investment, either in services or in manufacturing; the important thing is that for the country as a whole the investment should be of the highest quality.
      The hon. Member for Dagenham was sceptical about the revenue neutrality of the reforms. We will read with interest what the Institute of Fiscal Studies says on this. It does not automatically follow that, because the revenue is higher than predicted, it has failed to be revenue-neutral. There will have to be rather more to the argument than that, and I know that there will be. But we are not persuaded that there is yet evidence to show that it was not revenue-neutral.
      The main factor that has increased the revenue from corporation tax has been the dramatic recovery in the profitability of British companies. I have quoted the rates of return in British non-North sea companies up to the levels of the 1960s. The hon. Member for Dagenham says that the fact that we did not predict that accurately shows how out of touch the Chancellor is. What it really shows is that the economy did even better than the Chancellor said it would, even better than he had expected.
      The hon. Member for Dagenham kept talking about short-termism, saying that the Chancellor was running the economy in a short-term way. If ever I heard short-termism expressed, it was in the hon. Gentleman leaping to say that the changes in corporation tax were all wrong
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      and that we ought to look at them again, in the first year in which they have operated in their new form. If that is not short-termism, I do not know what is.
      My hon. Friend the Member for Beaconsfield raised the subject of the film industry. I was very glad that he raised it after the hon. Member for Dagenham had spoken and not before, because the hon. Member and I used to debate legislation relating to the film industry, and the changes in corporation tax were much debated — almost out of order—when we were discussing the Films Act 1985.
      I will certainly look at the letter to which my hon. Friend referred. He will know that we have taken the view, very much on the grounds that he himself was arguing, that investment should be business-driven and not tax-driven, and that we could not make exceptions for particlar sectors. He will know—I think he said—that the film industry is not the only one to argue that it should be regarded as a special case. We do not say that the answer to the problems of the film industry is the business expansion scheme, not for one minute; but I hope that the changes that we have made in the business expansion scheme will be positively looked at by the industry, because we deliberately made some changes which we hoped would overcome some of the problems perceived by the film industry in making full use of the scheme. Nevertheless, I will look at the point that my hon. Friend made, and at the letter.
      I am grateful also to my hon. Friend for picking up the hon. Member for Dagenham when he said that one of the purposes of the corporation tax changes had been to encourage the use of cheap labour. That was never the purpose, and I would have thought that the hon. Gentleman, who likes to represent our arguments fairly, was really parodying the argument. It was always that we ought to have neutrality in the tax system as between capital and labour — it has nothing to do with cheap labour—that companies ought to be given an incentive to employ people rather than substitute machinery for labour. That is the same philosophy as informed the changes that we made in regional development grants as well; we thought it a good thing to make them more job-related. I still think that those were good changes, and I agree with what my hon. Friend said.
      My hon. Friend the Member for Vale of Glamorgan (Sir R. Gower) took up the hon. Member for Dagenham on what he had said about productivity and the fact that it was nothing remarkable. If I undestood him—he has certainly made this point on previous occasions — the hon. Member for Dagenham was arguing that there is somehow a difference between a negative increase in productivity — getting rid of people — and a positive increase, which is increasing output while keeping the same labour force. But I would put this to Opposition Members: if there is overmanning in industry, that position will be unsustainable. The level of overmanning that we inherited in 1979 in industries such as steel was untenable. It is a terrible thing that so many people should have had to be made redundant in the steel industry, but this has made the industry more competitive and it has made the jobs that remain in the industry much more secure. He says that there is no increase in competitiveness, but I think that he will find that view very much disputed by the steel industry itself.
      Mr. Gould: I am sure that the Financial Secretary understands the point. It is simply that the rates of

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      productivity are partly produced by a statistical effect, because weaker performers have dropped out of the picture. So the average of what remains appears to rise, although the actual productivity performance of each of those people need not have improved at all. That is what underlies a productivity performance which, despite the claims made for it, is no better than trend in any case.
      Mr. Lamont: Many people would dispute the hon. Member's view of that. I remember noticing in about 1980—I speak from memory—the astonishing fact, as I saw it, that the proportion of the labour force engaged in manufacturing was actually higher in this country than in Japan, even though the contribution of manufacturing to output was much higher in Japan. It just demonstrates how unsustainable was the level of manning that we inherited in 1979. However harsh the treatment has been, it is a problem that has had to be faced. By facing up to it we have made industry more competitive and much better able to face the future. We had concealed unemployment. The more we delayed facing that, the greater the ultimate increase in unemployment would have been.
      Mr. Gould: Rubbish.
      Mr. Lamont: The hon. Gentleman says, "Rubbish," but everyone here knows that it is true.
      Question put and agreed to.
      Clause 21 ordered to stand part of the Bill.

    Clause 22

      CORPORATION TAX: SMALL COMPANIES
      Question proposed, That the clause stand part of the Bill.
      Mr. Lamont: The clause reduces the rate of corporation tax for 1987 to 27 per cent. for companies whose profits do not exceed £100,000.
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      Since 1979 we have regularly declared the need to encourage activity in the small firms sector. We have not just paid lip service to this, we have progressively introduced a number of measures to help small businesses. Clause 22 is one of a number of measures in this year's Finance Bill that are aimed at small businesses. It reduces the rate of corporation tax on the profits of small companies from 29 to 27 per cent.
      This is the latest in a series of cuts. Since we have been in office, the small companies rate of corporation tax has been cut by 15 percentage points from 42 per cent. That is a drop of over one third. This is now the fifth year in succession that we have been able to keep the rate of tax for the small company in line with the basic rate of income tax, which is also the marginal tax rate for the vast majority of unincorporated businesses. That is an important reason for aligning the two.
      We believe that the reductions provide the right kind of climate for business to thrive, but that is not all that we have done for small companies. For example, we have introduced innovative schemes to help companies to raise capital for expansion — for instance, the business expansion scheme, and many of the changes that we have made on the venture capital scene.
      I hope that the change, and the clause, will be acceptable to the House.
      Sir Raymond Gower: This is a truly excellent change, and I feel that it should not pass without comment. Nothing can be more profitable than for us to assist the smaller companies. On the whole, the growth rate of such companies bears comparison with, and in many cases exceeds, that of larger companies. To that extent, we are investing in the right place.
      I welcome the clause. It is a first-class innovation.
      Question put and agreed to.
      Clause 22 ordered to stand part of the Bill.
      To report progress and ask leave to sit again.—[Mr. Neubert.]
      Committee report progress; to sit again tomorrow.

  Value Added Tax
  8.43 pm
  The Minister of State, Treasury (Mr. Peter Brooke): I beg to move,
  That the Value Added Tax (International Services) Order 1987 (S.I., 1987, No. 518), dated 25th March 1987, a copy of which was laid before this House on 25th March, be approved.
  I think that it will be for the convenience of the House if we consider also the second motion:
  That the Value Added Tax (Betting, Gaming and Lotteries) Order 1987 (S.I., 1987, No. 517), dated 25th March 1987, a copy of which was laid before this House on 25th March, be approved.
  Mr. Deputy Speaker (Sir Paul Dean): If that is the wish of the House, so be it.
  Mr. Brooke: The purpose of the first order is to amend the zero-rating provisions of group 9 of schedule 5 to the VAT Act 1983 in two respects. The first is a change in liability of services supplied at events such as exhibitions, where United Kingdom treatment has been at variance with the practice in the other member states of the European Community. The second is to correct a minor technical error which occurred during the process of consolidating VAT law and this relates to the VAT liability of financial services connected with the export of goods from the United Kingdom.
  The United Kingdom has recently accepted as correct and logical the view expressed by the European Community Commission, backed by all other member states, that exhibition services should be taxed in the country in which the event takes place. This has different consequences for United Kingdom and overseas exhibitors. I shall deal first with United Kingdom exhibitions. Hitherto, we had zero-rated supplies by United Kingdom traders to overseas firms participating at United Kingdom exhibitions, taking the line — now discredited—that such supplies were advertising services falling to be taxed in the country of the recipient. Those supplies were zero rated under item 5 or 6 of group 9 by virtue of the exception contained in note 4(b) and (c) to the group. Under that interpretation, the supplies fell to be taxed by the taxation authority in the country where the customer belonged.
  The correct interpretation is that exhibition services fall to be taxed in the country where the exhibition takes place. This order, by deleting note 4(b) and (c) from group 9, ensures that supplies of exhibition services by United Kingdom traders to overseas exhibitors at United Kingdom exhibitions are excluded from zero rating, and thus become taxable in the United Kingdom at the standard rate.
  The net revenue yield from the change will be minimal, because most of the overseas traders to whom tax will be charged will be able to apply to the Customs and Excise for refunds of the tax. At present, such refunds are limited under the eighth VAT directive to Community traders, but from 1 January next most non-Community traders will also become eligible under the recently adopted 13th VAT directive.
  I now turn to exhibitions held overseas. When exhibition services are supplied by United Kingdom traders at exhibitions outside the United Kingdom, under the EC sixth directive they fall to be taxed in the country
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  where the exhibition takes place, and should therefore be entirely relieved of United Kingdom tax by means of zero rating. The United Kingdom has always followed that line except for stands hired to United Kingdom companies. However, in the light of the new interpretation, there are doubts about the vires for this under United Kingdom law. The order is intended to place the matter beyond doubt by amending item 3 of group 9 to cover all services at exhibitions, conferences and meetings which are events similar in nature to those already catered for in that item.
  I do not think that the House will wish me at this late hour to go into the details of the order, but I shall refer to the minor technical error that I mentioned earlier which the order corrects.
  The original provisions of the Finance Act 1972, and the subsequent amendments contained in successive Finance Acts, were brought together in a consolidation exercise to form the VAT Act 1983. In the process the items of the exempt group dealing with finance were renumbered, but item 9 of group 9 of schedule 5 to the new Act, cross-referring to those items, was not amended to reflect the renumbering of the exempt group. Article 6 corrects that error.
  I commend the order to the House.
  I now turn to the second order. Certain changes in Northern Ireland social law have recently been implemented by regulations to permit the promotion of certain types of gaming, mainly bingo, which were previously illegal in the Province. The changes enable bingo to be promoted in broadly the same way as in the rest of the United Kingdom. So as to enable the VAT treatment of such gaming to be consistent throughout the United Kingdom, the minor changes to the relevant VAT law which this order proposes are necessary.
  The VAT treatment of betting and gaming is governed by group 4 of schedule 6 to the VAT Act 1983, which exempts from VAT most forms of betting and gaming. The general principle, to which there are only minor exceptions, is that activities liable to excise duty do not bear VAT, and vice versa. Most activities which are not subject to excise duty are, therefore, expressly excluded from the exemption by virtue of the legal notes to item 1 of group 4, and these excluded activities are taxable at the standard rate. One such activity, and that with which the order is principally concerned, is the granting of a right to take part in a game in respect of which a charge may be made by virtue of regulations under section 14 of the Gaming Act 1968. Broadly speaking, this concerns bingo and other gaming conducted on bingo club premises for which a charge is made for participation.
  The relevant VAT provision, note (1)(b) to item 1 of group 4, is tied to a provision of the Gaming Act 1968. However, the Gaming Act does not extend to Northern Ireland, where betting and gaming have traditionally been subject to separate social legislation. Thus, note (1)(b) to item 1 of group 4, as at present drafted, has no effect in Northern Ireland. Hitherto, this has not mattered because the types of game covered by the note were illegal in the Province and it was not thought necessary or desirable to provide for their standard rating when group 4 was originally enacted.
  As I have indicated, the position has now changed, with the promotion of bingo having been made legal in Northern Ireland with effect from 16 February 1987. Bingo is thereafter likely to become firmly established in

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  the Province, and, in order that the VAT treatment of such activities should be consistent with that in Great Britain, note (1)(b) to group 4 needs to be widened.
  The VAT revenue yield can only be speculative at the moment, since it will depend on the extent to which bingo promoters take advantage of the new social law provisions, but it is unlikely to be significant. It is not expected to exceed £1 million in a full year and will clearly fall short of this figure in the current financial year.
  The interval between the implementation date of this order and the slightly earlier implementation date of the relevant Northern Ireland social law provisions has negligible significance in VAT revenue terms since it reflects the time needed by prospective bingo promoters to obtain the necessary authority to conduct bingo operations. In practice, therefore, legal bingo operations are not expected to take place much before the operative date of this order.
  In conclusion, I should add that a parallel change has already been made in respect of bingo duty in last year's Finance Act.
  I commend the order to the House.
  Question put and agreed to.
  Resolved,
  That the Value Added Tax (International Services) Order 1987 (S.I. 1987, No. 518), dated 25th March 1987, a copy of which was laid before this House on 25th March, be approved.

  Value Added Tax

    VALUE ADDED TAX
    Resolved,
    That the Value Added Tax (Betting, Gaming and Lotteries) Order 1987 (S.I., 1987, No. 517), dated 25th March 1987, a copy of which was laid before this House on 25th March, be approved.—[Mr. Brooke.]

    NORFOLK AND SUFFOLK BROADS (re- committed) BILL
    Ordered,
    That the Order for Committee be discharged and that the Bill, as amended in the Select Committee, be re-committed to a Standing Committee.—[Mr. Neubert.]

  British-made Goods
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
  8.51 pm
  Mr. Kenneth Carlisle: I am grateful for the chance to hold this debate on a major campaign to persuade the British to buy British, and I am very glad that my hon. Friend the Minister for Trade, who has done so much for British trade, is here to reply to the debate.
  No war is a good war, and we are fortunate to be living in an age when wars are no longer seen as solutions, so it is with considerable concern that we should regard the recent rampant enthusiam for a "lovely little trade war". In the past few weeks, the ugly face of protectionism has made a dramatic come-back. Even as I speak, there is legislation in America to tax certain imports.
  Some Members of this House have repeatedly called for the protection of British industry as a means of rebuilding British manufacturing, proposing that we copy the Japanese. Let me establish at the beginning that I believe that mindless chauvinism is futile. If we as a country retreat into protectionism, we are dooming ourselves to a market of ready-made, inferior products. We cannot copy the Japanese, simply because we are not Japanese. It is for us, as a trading nation, to insist on fair trade. I believe that protectionism is a perilous form of patriotism, just because it is so disastrous as an economic strategy.
  One of the fruits of living in a free society is the freedom to choose what we buy and to buy what we choose. It also turns out to be one of the best ways of creating harmony between nations. The informal relationship of trade between nations is, though not foolproof, the best insurance policy for peace that man has yet devised. How, therefore, have we reached this pitch of trade war fever where there is more enthusiasm for trading punches than for trading nations? It is because Britain, like America. went too far.
  We moved from being the kind of country that Adam Smith described in "The Wealth of Nations"—a prudent nation that welcomes commodities from foreign countries when they are cheaper than we ourselves can produce—to a country that now imports more than one third of all manufactured goods. Britain is the fifth largest industrial economy, but our imports, as a percentage of our gross domestic product, our overall wealth, are 34 per cent., and rising, and they are higher than those of Germany, France, Italy, the USA and —surprise, surprise — Japan. I submit that 34 per cent. is a terrifying and unnecessary statistic.
  In the last seven years we in this country have witnessed a radical change of gears. Now we are seeing an exciting reverse in Britain's economic decline, a reappearance of British vitality and a rediscovery of the vigorous inventiveness that is worthy of the country that was the birthplace of the steam engine and the cradle of industry.
  The complacency that brought about our decline, and certainly installed in many of us a preference for imports that were better designed, cheaper and more reliable, has been checked. The institutional arthritis — a disease characterised by too many regulations, too many laws, too powerful unions, too high taxes and too many interests —shows every sign of remission. We, the British, have taken a very long time to learn to be competitive and we still cannot afford to make a wrong turn, but the facts and

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  figures show that we are going in the right direction. We simply cannot afford to retreat into protectionism. Instead, we must use the tried and true formula of investment in high technology to create growth and to improve our living standards.
  However, there is something that every citizen in Britain can do as well. Every man, woman and child in this country can influence the future of this country—and influence it powerfully—by what they buy. That means, first, looking for a product that is British made and, if it is good enough or, better still, if it is better, then buy British. No consumer should be deprived of choice, but if every British consumer makes just a little effort to see if a British product is available, to compare and, if it is good enough, then to buy British, the result will be greater job security and greater creation of jobs.
  I am not saying that that is easy. We are now so inundated with imports that, if we tried, we probably could not find a British typewriter, or dishwasher, or car radio. I am saying that all we have to do is to try.
  Two organisations in this country are dedicated to raising our consumer consciousness. One of these is Think British. It has published some troubling and fascinating statistics. Import penetration of all manufactured goods has risen from 25 per cent. in 1981 to 34 per cent. today. Without a campaign to think British, imports will certainly grow. The average household of a husband, wife and two children spends about £110 a week on consumer goods, services, food and drink. Of this £110, an average of £30 is spent on imported goods, and this is rising.
  Research carried out by The Economist intelligence unit shows that if consumers switched just £5 a week, which is now spent on imported products, to quality British products, within two years the result would be the creation of 580,000 jobs and a £1·5 billion improvement in the balance of payments. I am sure that is of great interest to my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) because jobs are of great importance to him. That improvement could be achieved by the modest switch of £5 a week from imports back to quality British goods and services. If more than £5 a week were switched, the results would be even better.
  These statistics are striking, but more startling is the fact that they do not seem to be taken to heart by the British public. To change this, I urge the acceptance of three duties—duties that are the opposite of trade duties—which are intended to lay to rest any attraction that those dated trade duties might have.
  The duties that I have in mind are a duty on those who manufacture and market goods in this country, a duty on the purchasers and a duty on the advertising agencies and the media. As I have emphasised from the beginning, manufacturers have to produce goods of the right quality at competitive prices and deliver quickly when they say they will. West Germans buy goods produced in Germany because they are good, not because they are cheaper or because West Germans are patriotic. That procedure is right. For that to occur here, we look to the manufacturers.
  A very promising effort in this direction has been the Better Made in Britain initiative. This group was set up to jolt manufacturers into producing what retailers really want. It holds exhibitions where retailers exhibit products that they import and where one hears the often depressing stories that led retailers to look outside Britain — predictable sagas of poor quality, unrealistic times and
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  delivery dates not kept. In those exhibitions hungry and determined British manufacturers prowl and plot how they can outmatch the competition. Manufacturers have learnt the lesson of the 1980s, that we simply have to work harder and manage smarter.
  The figures of Better Made in Britain estimate that for every £35,000 of imports, one job is lost. That is a gloomy statistic. But there is also a growing number of success stories. One example is the Stuart Mensley Knitwear company. In 1983 the company employed 120 people. Today it employs 500 people because of contracts that grew out of Better Made in Britain. There are many other examples, too.
  The second duty is on the purchaser — both the retailer and the consumer. Over Easter I was in the United States of America. Its trade deficit in 1986 towered towards $170 billion, or 4 per cent. of its gross domestic product. Such a huge deficit is too great to sustain. It poses terrible threats to the world economy, especially as it leads inexorably to protectionism. Everywhere I went in the United States of America I was struck by the abundance of foreign-made goods to the point of absurdity. I found a 100 per cent. cotton shirt in a shop in Greenwood, Mississippi — the land of cotton — that was made in China. America is in a severe crisis simply because it has abandoned the label "Made in the USA". They have dealt with that problem by going deeper and deeper into debt. That is a warning to Britain, if we need it.
  If we look in our own homes at our televisions, cookers, refrigerators, irons, washing machines, vacuum cleaners and kitchen clocks or at the clothes and shoes in our cupboards, we can see how far we have gone in the same direction as the Americans. One will not always want to buy British, even after one has thought about it, but the thing is to think British. The job saved by buying British could be one's own.
  The third duty is both a duty and a challenge and it is aimed at the members of our society who have already made spectacular profits from selling British — the advertising and media folk. I want them to invest the skills and talents so brilliantly evident in the selling of British in the buying of British. Seven different agencies worked on the publicity programmes surrounding the three major privatisations — £12 million was spent on British Telecom, £29 million on the sale of British Gas and £6·5 million on British Airways. I propose that the agencies which have been instrumental in those privatisation campaigns should each create one television advertisement which will bring home to the British consumer the vital connection between the shopping bag and the dole queue.
  We need a nationwide campaign which brings the same sense of urgency and possibility that inspired more than 3 million people to buy shares for the first time in British Telecom, British Gas, British Airways and other privatised companies. I challenge those writers, actors and actresses, designers and cameramen to invest their imaginations and skills in a campaign that will make every consumer a shareholder in Britain's future. As British advertising is art art envied and exported throughout the world, I feel that the campaign will be a celebration of that unique British product as well. At the very best, it should be "pure genius".
  I have made it clear that Britain cannot afford to retreat into protectionism, which serves only to protect poor design, inferior workmanship and irresponsible delivery. British products must be bought because they deserve to

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  be bought, because they meet the standards of quality and service. Above all, we must all be involved in this battle to regain Britain's competitive edge in the battle for jobs and for the revival of growth. We need a united front — a productive work force, the creative talents of the highly skilled persuaders and, finally, the conscious and caring consumer, the British public. If we can form a consensus, it could mean—we must bear this in mind—the creation of more than 500,000 jobs in two years. I believe that that is a goal that we all support.
  9.7 pm
  The Minister for Trade (Mr. Alan Clark): I am grateful to my hon. Friend the Member for Lincoln (Mr. Carlisle) for raising this extremely important topic and especially for the lucid and persuasive way in which he put his case, the way in which he set out his three goals and the imaginative and compelling way in which he discussed those three possible approaches. I assure him that we fully share his keenness for competitive British goods not just to capture a larger share of world markets but to recapture a larger share of our home markets. The whole House knows that we must expand our industrial base if we are to secure for the United Kingdom the extra jobs and living standards that we want.
  After six years of steady growth, exports of manufactured goods are at an all-time record; and they look set to grow even further this year. Manufacturing industry should therefore grow faster than the rest of the economy. Britain's successes in exporting are well known and, of course, they are to be encouraged and applauded. But it must be remembered that a pound earned at home is of absolutely equal value to a pound earned abroad.
  Last year, as my hon. Friend reminded us, imports again grew faster than exports, with all the signs, I am sorry to say, that they will continue to do so this year. A sustained effort will be needed if we are to ensure that the growing demand in the home market is to be met by our own industry and not someone else's. It is true—I know that my hon. Friend will admit this—that most of the free world trading nations, even West Germany, which has been acknowledged as successful, import on a substantial scale. We have to import that which we cannot make.
  One of the regrettable elements to which my hon. Friend drew attention is the fact that, with the glut of imports, we have lost the capacity to make certain things in our own country. Even were the British people to be alerted in the way he suggested to the possibility of choosing a British product and testing its qualities against a foreign import, the British product simply does not exist. We all regret that. It need not necessarily be a permanent omission. British manufacturing is recovering at a fast enough pace for it to begin to look seriously at the possibility of returning to some of the markets and some of the products that it has had to cede in more difficult times. But that is a second stage. We have to lay the goundwork along the lines that my hon. Friend suggested.
  Of course, even when we can make certain things, there can be sound economic arguments that mean that it is preferable to import and to use our own resources for something that we do better. Of course, we cannot ignore the matter — I do not think for one moment that my hon. Friend intended to—of customer choice. But—I cannot emphasise this strongly enough—I recognise the
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  concern about our level of imports and about whether employment opportunities are being put in jeopardy by the constantly rising level. Although many of my own instincts are to support a "Buy British" policy, I recognise that it will be effective only if it is equated with a customer's need to get value for money.
  Of course, protection is not necessarily the way to a better trading performance. Insulating domestic industries from the stimulus of international competition, as my hon. Friend properly reminded us, encourages inefficiency and resistance to change. But the Government have already put considerable effort into ridding British industry of such handicaps. Industrial relations are being transformed, and our reputation for quality is gradually and painstakingly being restored. Our policies derive from certainty that industry has to be competitive. We are therefore concerned to create the climate in which industry can thrive. I do not propose to drench my hon. Friend or the House with the statistics that we hear often enough about the progress that we are making, but the conditions in which British industry is now operating have improved out of all measure.
  When it comes to front-line action in making and selling goods, it is the responsibility of each supplier to make sure that he knows what the customer wants. That makes communication between buyers and sellers vitally important. In addition, the supplier must then try to match the quality, design, delivery and price expectations of the customer. Getting the communication right is not entirely a matter for suppliers. A great deal of power is wielded by purchasers, and the large ones especially have a responsibility to use that power effectively. The Government believe that it is in purchasers' own interests to use their commercial influence to help to improve the competitiveness of their suppliers. They stand to get better value for money, plus the cost and efficiency benefits of having a strong supplier base close at hand.
  That has certainly been the Government's approach to public purchasing. Our guidelines on public purchasing require public purchasers to secure best value for money. They remind public purchasers that, by deploying their massive purchasing power of £40 billion per annum on assets, goods and services to ensure the development of constructive buyer-supplier relationships, they can help to ensure that their own needs are met most cost-effectively and that the wider competitiveness of British industry is enhanced. In essence, we want public purchasers to buy products, processes and services that reflect the requirements, in terms and price, of world markets.
  We can all draw encouragement from the fact that our public purchasing is 95 per cent. British sourced. That shows that, even if the strict guidelines relating to the quality, delivery, appropriate meeting and conformity of needs are applied, and applied scrupulously, they do not necessarily exclude a 95 per cent. British purchasing content.
  The practices that public purchasers are asked to follow to achieve this include an early dialogue about their requirements with potential suppliers; encouragement of innovation; specifying requirements in performance terms rather than detailed design which may stifle innovation; framing specifications around appropriate standards to enable economies of scale and to help exports; encouraging suppliers to be assessed to British Standard 5750 — the standard for quality systems; and, where appropriate, insisting on independently certified goods to

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  reduce in-house inspection costs and costly failures; maintenance of even ordering patterns to allow efficient production planning; and debriefing of suppliers on request.
  Similar initiatives are being taken by the more forward-looking parts of British industry. "Positive purchasing" is a phrase which is increasingly cropping up in discussions with companies. It describes a practical way of stimulating greater activity in the economy. Like the public purchasing initiative, it involves organisations in carefully examining their purchasing practices. The aim is to ensure that they are getting the best possible value from their suppliers in terms of quality, design, price and delivery. It involves them in developing constructive partnerships with suppliers which will encourage the development of more competitive products. This approach, if widely adopted, should provide opportunities for the purchasers to obtain better value for money and for British manufacturers to prove their worth and expand their markets.
  The retail sector in particular, with its enormous purchasing power, is potentially very influential. My colleagues and officials in the Department of Trade and Industry have been discussing these issues with the major retail companies. More generally, because positive purchasing policies must start from a commitment at the top, my colleagues are meeting the chief executives of major companies to encourage more to follow the good example of those, such as Marks and Spencer, which have combined a thoroughly commercial approach with very high levels of United Kingdom sourcing.
  The process of communication is also greatly assisted by the enterprise of such initiatives as Better Made in Britain and I was especially glad to hear the tribute paid by my hon. Friend to that organisation. Those exhibitions make an important contribution to getting across the message that the quality of British goods and the efficiency of British companies have improved faster than consumer's attitudes towards them. That change is the key to widening the awareness that I believe will achieve the results which we all want and which have been shown can be achieved in public purchasing.
  That is achieved by bringing the requirements of industrial purchasers and retailers to the notice of large numbers of suppliers. So far, the exhibitions have covered clothing, knitwear, footwear, home furnishings, lighting, carpets, furniture, textiles, do-it-yourself kits, building products and hardware. All those have been extremely effective in heightening the awareness of purchasers to British alternatives, often in cases where purchasers did not realise such alternatives existed until they attended the exhibition and realised the full scale of what was available.
  The "Think British" campaign to which my hon. Friend referred is also relevant. The campaign specifically aims to raise consumer awareness of the quality of British goods and to encourage consumers to seek out competitive United Kingdom products. My hon. Friend suggested an advertising campaign, and I like that idea very much. I can see that his challenge to those specialists who have made very large sums of money from advertising for various privatisation campaigns should be considered very seriously by those organisations and I hope that we will hear more about that idea.
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  The Department is already supporting the "Think British" campaign to research ways of setting up a general advertising campaign. Where there is an element of direct Government support—as my hon. Friend is aware, and the House accepts with varying degrees of tolerance—that must be consistent with the treaty of Rome. It must draw consumers' attention to the quality of goods built to certain recognised quality criteria rather than relate them to any particular national origin. Industry, like the Government, is bound by its treaty of Rome obligations. We cannot discriminate, directly or indirectly, against the products of other member nations. Any advertising campaign which has Government sponsorship must have regard to those obligations.
  A great deal is being done, both by Government and by industry, to assist in the all-important process of communication between users and suppliers. I draw the House's attention also to the practical help my Department provides to companies which, in trying to match the expectations of their customers or potential customers, find that they need to improve the quality, design or marketing of their goods.
  In 1983 we launched the national quality campaign as part of our wider effort to increase the competitiveness of British industry. The aim was to produce in industry a total commitment to quality. After extensive launch promotions, the campaign concentrated on encouraging the total quality approach on a sectoral basis, and on companies interested in promoting quality with their suppliers and sub-contractors. The response from industry, particularly the willingness of management and others to work constructively together, with support from the Department of Trade and Industry, has been most encouraging.
  British industry has advanced in its recovery and the quality of its products is greatly improved, yet a certain hangover from earlier days, when people regrettably bought the foreign product because it was chic or fashionable to do so, still colours the attitude of consumers. All British manfacturers should return to their former practice of proudly and confidently marking the origin of their products. The imprint "Made in England" or "Made in Britain" has largely disappeared. One wag has said that it is more often found on goods from Taiwan than on goods made in Britain.
  An essential part of the campaign my hon. Friend suggested is for consumers to have all the help we can give them in determining whether products are made in England or Britain. The treaty of Rome does not prevent British manufacturers from marking the origin of their products. The reputation of manufacturers is such that they should consider this seriously. The House should be grateful to my hon. Friend for his service in putting the argument so succinctly. It is an important subject. I hope that he will remain in touch with me and my Department and that the original and imaginative challenge he threw down to the various advertising agencies will be considered seriously by them.
  Question put and agreed to.
  Adjourned accordingly at twenty-three minutes past Nine o'clock.

EDUCATION AND SCIENCE
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  Efficiency and Productivity
  Telecommunications Equipment
  Telecommunications Equipment
  South Korea (Scotch Whisky)
  South Korea (Scotch Whisky)
  Inward Investment
  Inward Investment
SCOTLAND
  Western Infirmary, Glasgow (Renal Unit)
  Western Infirmary, Glasgow (Renal Unit)
  Radioactivity
  Radioactivity
  Shotgun Certificates
  Shotgun Certificates
  Crime Statistics
  Crime Statistics
  Agency Nursing
  Agency Nursing
  Forestry
  Forestry
  Parole Policy
  Parole Policy
  Health Service (Contracts)
  Health Service (Contracts)
  Speed Limits
  Speed Limits
  Prisons
  Prisons
  AIDS
  AIDS
AGRICULTURE, FISHERIES AND FOOD
  Tied Cottages
  Tied Cottages
HOME DEPARTMENT
  Dialysis Treatment
  Dialysis Treatment
  Association of Chief Police Officers (Legislative Guidelines)
  Association of Chief Police Officers (Legislative Guidelines)
  Police Officers (Lost Hours)
  Police Officers (Lost Hours)
  Crime Prevention
  Crime Prevention
  Parole
  Parole
  Waltham Forest (Meeting)
  Waltham Forest (Meeting)
  Police Station, Oakham
  Police Station, Oakham
  Metropolitan Police (First Aid)
  Metropolitan Police (First Aid)
  Waltham Forest (Petrol Bomb Attack)
  Waltham Forest (Petrol Bomb Attack)
  Women's Rights
  Women's Rights
ENVIRONMENT
  Community Charge
  Community Charge
  Rate Capping (Ealing)
  Rate Capping (Ealing)
  Sewers
  Sewers
  Enterprise Zones
  Enterprise Zones
  "Paying for Local Government"
  "Paying for Local Government"
  Urban Development Corporations
  Urban Development Corporations
  Acid Rain
  Acid Rain
  Sulphur Emissions
  Sulphur Emissions
  Radioactive Waste
  Radioactive Waste
  Nuclear Waste
  Nuclear Waste
  Southern Water Authority
  Southern Water Authority
  Palace Chambers, Bridge Street
  Palace Chambers, Bridge Street
  Slum Clearance Subsidy
  Slum Clearance Subsidy
  Rate Support Grant
  Rate Support Grant
HOUSE OF COMMONS
  Members (Allowances)
  Members (Allowances)
NATIONAL FINANCE
  Liverpool Free Port
  Liverpool Free Port
  Personal Taxation
  Personal Taxation
  Personal Incomes
  Personal Incomes
  VAT
  VAT
  Unearned Income
  Unearned Income
  Government Advertising
  Government Advertising
  Data Network
  Data Network
  Personal Allowances and Expenses
  Personal Allowances and Expenses
  Isle of Man
  Isle of Man
  Land (Capital Gains Tax)
  Land (Capital Gains Tax)
  Income Tax
  Income Tax
NORTHERN IRELAND
  AIDS
  AIDS
SOCIAL SERVICES
  Hospitals (Exeter)
  Hospitals (Exeter)
  Pensioners
  Pensioners
  Single Payments
  Single Payments
  Single-parent Families
  Single-parent Families
  Benefits
  Benefits
  Board and Lodging
  Board and Lodging
  Hospital Beds
  Hospital Beds
  Private Patients
  Private Patients
  Ambulance Service
  Ambulance Service
  Drug-resistant Germs
  Drug-resistant Germs
  Hay Fever
  Hay Fever
  Nurses
  Nurses
  Chronically Sick and Disabled People
  Chronically Sick and Disabled People
  War Widows
  War Widows
  Overseas Pensions
  Overseas Pensions
  Severe Weather Payments
  Severe Weather Payments
  Waiting Lists
  Waiting Lists
  Member's Letters
  Member's Letters
TRANSPORT
  Public Transport (Country Visits)
  Public Transport (Country Visits)
  Channel Tunnel
  Channel Tunnel
  Light Dues
  Light Dues
  Rail Commuter Services
  Rail Commuter Services
  Planning Consents
  Planning Consents
  Al2
  Al2
  Road Deaths
  Road Deaths
  Bus Services
  Bus Services
  Woolwich Ferry and Tunnel
  Woolwich Ferry and Tunnel
  Road Maintenance (Shropshire)
  Road Maintenance (Shropshire)
DEFENCE
  Reserve Forces
  Reserve Forces
  Cruise Missiles (Molesworth)
  Cruise Missiles (Molesworth)
  NATO and Warsaw Pact Forces
  NATO and Warsaw Pact Forces
  Military Bases
  Military Bases
  Defence Export Services Organisation
  Defence Export Services Organisation
  Liquid Fuels
  Liquid Fuels
  Trident
  Trident
  Engineering Apprenticeships (Women)
  Engineering Apprenticeships (Women)
  War Widows
  War Widows
  Cyprus (Visit)
  Cyprus (Visit)

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Newcastle.

Lord Johnston of Rockport
Sir Charles Collier Johnston, Knight, having been created Baron Johnston of Rockport, of Caversham in the Royal County of Berkshire, for life—Was, in his robes, introduced between the Lord Ingrow and the Lord Sanderson of Bowden.

Scientific Research Spending
2.48 p.m.
Lord Kirkwood: 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, if ancillary costs over which the research councils have no control rise significantly, the science budget will be correspondingly increased to protect the level of basic and strategic research.
Baroness Hooper: My Lords, the Government review the the science budget each year in the course of the public expenditure survey and have shown themselves ready to provide extra resources when urgent needs are identified. But there can be no automatic supplementation to meet rising costs.
Lord Kirkwood: My Lords, I thank the noble Baroness for that somewhat short reply. I am sure that the whole scientific community welcomes the Government's action in providing further cash for research. But would the noble Baroness not agree that adventitious events such as the £4 million salary increase award to the scientific Civil Service and the change of exchange rate, which caused an additional burden on the science budget and a further contribution towards European research, cannot promote good management of the remaining budget for UK civil research?
Baroness Hooper: No, my Lords. In fact, the United Kingdom Government spend more on university and research council research as a proportion of gross domestic product than some of our competitors, notably Japan and the United States of America. But industry in those countries spends more on research than does industry in the United Kingdom.
Lord Mackie of Benshie: My Lords, would the noble Baroness tell us how many scientists have departed this country in the last year? Also, would she not try to agree that the reason they depart is not their personal incomes, but the fact that programmes in which they are vitally interested are being cut? Is it not the case that without an automatic rise these programmes must be cut?
Baroness Hooper: My Lords, I shall try my best to answer that question as positively as possible. In fact, academics will be getting a very substantial pay increase in terms of the 24 per cent. which is to be phased over the period from 1st December 1986 to 1st March 1988. Employers will also have discretion to pay more to the best people. So our policy of selectivity and concentration will mean better facilities for outstanding groups who are most at risk of being drawn overseas.
Lord Mackie of Benshie: My Lords, would the noble Baroness answer the question on the numbers who have left this country?
Baroness Hooper: My Lords, I regret I am not able to do that without notice, but I shall endeavour to find out and let the noble Lord know.
Lord Sherfield: My Lords, I understand that the deficit on international subscriptions in 1986 was £20 million. I understand, too, that the Government rightly insist on good and indeed better management of science. Would the Minister not agree that a deficit of this kind makes wise and good management extremely difficult, and that while the present system may make good Treasury practice it does not make very good sense?
Baroness Hooper: My Lords, we do indeed recognise the many commitments involved for people running budgets in this particular field. But I should like to emphasise that the Government are not reducing, and have not reduced, the science budget in any way. In fact, the expenditure plans announced last November allowed for a cash increase of £39 million or 6.3 per cent. between 1986–87 and 1987–88. Since then, the Government have also agreed to provide an additional £17.5 million over the next three years for AIDS research as well as the £15 million announced on 1st April this year. The science budget for 1987–88 now stands at a total of £676 million, an increase of 14 per cent. in real terms since 1979–80. We hope and expect that the institutions involved will be able to manage better as a result.
Lord McIntosh of Haringey: My Lords, the noble Baroness referred in a previous answer to the increase in academic salaries. I am sure that that is most welcome. However, does she not agree that the full amount of the increase in the science budget which was announced on 1st April of this year, with the exception of the special amount for AIDS, will be taken up by the increase in salaries, leaving no room at all for additional projects? If I am wrong about that, will the noble Baroness tell us how much money will actually be available for new research projects over and above the additional costs of salaries?
Baroness Hooper: My Lords, the £15 million which was announced on 1st April is intended to be additional money to buy more first-class science highly selectively. That is the Government's policy.
Lord Nugent of Guildford: My Lords, I recognise that the Government have made further moneys available and are producing a significant proportion of

1477
what is required, but will my noble friend consider, and ask her right honourable friend in another place to consider, whether it is possible to increase the fiscal incentives to the many firms that make no contribution whatsoever to the research side so that they may be more inclined to come up to the level of the firms in this country that are very generous on the research side?
Baroness Hooper: My Lords, I shall pass my noble friend's comments to my right honourable friend the Secretary of State. That matter and the whole subject of scientific research is kept under constant review by the department.
Lord McIntosh of Haringey: My Lords, the noble Baroness will recognise that she gave no answer to my previous question. Perhaps I may put it more precisely. What increase is expected in the proportion of research projects which are alpha-rated by the research councils as a result of increases in the science budget?
Baroness Hooper: My Lords, the Government believe that we must get the best value from the substantial funds which are available. I have already referred to the fact that the funds for 1987–88 stand at a total of £676 million. It is the hope of the Government that those funds will be concentrated on outstanding research groups and will provide more selectivity in the areas which we support. The important matters in this area are that there should be a great deal of competition for the resources available and that there should be new ideas and new initiatives. The challenge is to concentrate on getting the best possible results.
Lord Bonham-Carter: My Lords, in the light of the answer which the noble Baroness has given us and in the light of the competition for resources which she mentioned, does she recognise that the most important matters are human resources and human abilities? Those are the worrying matters. Although she cannot give the figures, it is alleged in the United States of America that the greatest haemorrhage of scientific workers of the first order leaving Europe, and particularly this country, for America since the Nazis were in power in Germany has occurred in the last few years.
Baroness Hooper: My Lords, there is always a drain; sometimes the drain goes in both directions. However, we understand that it is not significant. It is most important in areas of advanced research on any subject that there should be international liaison. That is all part of it.
Lord Bonham-Carter: My Lords, is the noble Baroness denying that there has been a haemorrhage of leading scientists from this country to the United States of America in the last two years? If she is really saying that, the Government are living in Cloud-cuckoo-land.
Baroness Hooper: My Lords, we are prepared to acknowledge, and I have already acknowledged, that
1478
some of our scientists have moved. Nevertheless, we have a number of first-rate, top-class people who still operate in this country and who are producing very sound and successful results.
Lord Mackie of Benshie: My Lords, perhaps the noble Baroness can then tell us what benefits flow back to this country from the United States from the drain of scientific workers.
Baroness Hooper: My Lords, the noble Lord, speaking from the Benches from which he speaks, will recognise the importance of international co-operation and the movement of peoples. I think that the results must be self-evident.
The Earl of Bessborough: My Lords, does my noble friend agree that there is a benefit to this country through the various grants, such as the Fulbright scheme and other grants, under which a great many Americans come to this country?
Baroness Hooper: Yes indeed, my Lords. I said previously that there is a two-way flow.
Lord Molloy: My Lords, does the noble Baroness agree that in so far as there is an appalling gap between British high technology and the technology of Japan and the United States, anything that might close that gap ought to be welcomed by Her Majesty's Government?
Baroness Hooper: My Lords, I must emphasise that the most recent study, which was based on facts and figures then available and which goes back to 1982, showed that the output and influence of British science was still ahead of that of all the other OECD countries except the United States.

Share Ownership
2.57 p.m.
Lord Brougham and Vaux: 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 new information is available on the extent of share ownership in the United Kingdom.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, a survey commissioned by Her Majesty's Treasury and the Stock Exchange shows that 8½ million people or one-fifth of the adult population now own shares. Share ownership has now trebled since 1979.
Lord Brougham and Vaux: My Lords, may I thank my noble friend for that very informative reply? Does he agree that the initiatives of the Government to encourage employee share schemes have contributed to share ownership?
Lord Young of Graffham: Yes, my Lords. The number of approved share schemes has grown from around 30 in 1979 to over 1,200 today, and 1½ million people have now benefited under those schemes.
Lord Jenkins of Putney: My Lords, what does the noble Lord have to say to those members of the public who, in endeavouring to follow the Government's advice in this matter, have lost their money as a result of investing in shares which are supported by the Government because the money has fallen into unreliable and dishonest hands? Can the Minister comment on that?
Lord Young of Graffham: My Lords, on this particular occasion the noble Lord's question passes me by. From time to time we have always warned those who buy shares that they are speculating. We believe that shares are a good investment, but anything that goes up can come down, and I am sure that those who buy shares are fully aware of that fact.
Lord Monson: My Lords, will the noble Lord agree that the very much higher minimum commission charges currently being imposed by banks and stockbrokers as an indirect consequence of the Government's Big Bang legislation will make direct investment in ordinary shares very much less attractive for the small investor than if he invests via the medium of unit trusts?
Lord Young of Graffham: My Lords, if those who are concerned with this business charge fees that are too high, they will find that they lose business, as I have no doubt others will come along and charge more competitive rates.
Lord Diamond: My Lords, it does not need saying from these Benches that we are wholly in favour of the spread of private share ownership. The Liberal part of the Alliance said so many times long before the Tories took it up. Is the noble Lord aware that 8½ million—very good figure though it may be—is somewhat less than 55 million, which is the number of shareholders in all the companies which have been privatised by the present Government? Is the Minister also aware that it is not our task to criticise the spread of share ownership, but to criticise, first, the way in which shares of privatised companies have been disposed of, and, secondly, the lack of investment of the proceeds of the sale of capital?
Lord Young of Graffham: My Lords, I should have thought that the noble Lord, Lord Diamond, would be aware of the way in which the Stock Exchange operates and would know that one of its purposes is to provide the means for both direct and indirect investment in companies. The noble Lord will also be aware that in each of the last four years records of investment in this country have been broken.
Lord Williams of Elvel: My Lords, is the noble Lord aware that settlement departments of all the major firms on the Stock Exchange have been overwhelmed by the vast number of small bargains which have resulted particularly from the TSB and British Gas issues? What steps can the Government take to ensure that small shareholders can deal properly and without excessive cost or delay?
Lord Young of Graffham: My Lords, I am well aware that as the market opens up, as the number of
1480
individual shareholders in this country increases and as we have a successful return to popular capitalism, there will be strains as demands grow in the market. As I said in reply to an earlier question, the market has a habit of taking care of that situation. If the systems are not competitive, then systems that are competitive will come through.
Lord Molloy: My Lords, will the Minister agree that a difficult social situation has been created by the fact, which can be welcomed, that shareholders have increased three-fold since 1979? Unemployment has increased even more. People who have been unemployed for the past few years simply cannot afford to buy shares. It is no joy for the unemployed whose number seems to increase to be told that many people can afford to buy shares.
Lord Young of Graffham: My Lords, it may have escaped the noble Lord's attention that in the past eight months unemployment in this country has fallen by 180,000 and is still going down. I suspect that it will continue to go down. It has also escaped the noble Lord's attention that the economy is doing well and will continue to do so. For the unemployed to return to work, the economy must grow in a strong and wealth-creating manner. In that way we can afford not only the caring society that we all want but also see people return to work. There is no other way.
Lord Molloy: My Lords, is the noble Lord aware that if there is to be social cohesion in this nation one cannot be proud of a three-fold increase in those becoming better off and a three-fold decrease in those whose standards of living are continuing to fall—namely, the families of the unemployed?
Lord Young of Graffham: My Lords, I fail to recognise the description given by the noble Lord. However, I must confess that, as good as our progress has been, I should like to see a further three-fold increase in the number of shareholders. We have to concentrate on wealth creation which is, I suspect the quickest way to deal with the problem.
Lord Mackie of Benshie: My Lords, while we welcome the news that the noble Lord has given—obviously, it is very gratifying to know that the number of shareholders is rising—can he say how we compare with our competitors and friends in the United States and West Germany in this respect?
Lord Young of Graffham: My Lords, there is no strict comparison, but the New York Stock Exchange estimates that 20 per cent. of the total United States' population own shares, including unit trusts. In this country we know that 20 per cent. of the adult population hold shares, but that excludes unit trusts. All I can say is that there was a great difference a few years ago, and that difference is narrowing very rapidly indeed.
Lord Glenamara: My Lords, further to the question of the noble Lord, Lord Diamond, will the Minister tell the House how much the British people have lost per annum by way of the payments which were previously paid to the Treasury by industries that have

1481
been privatised? For example, can he tell the House how much British Telecom paid to the Treasury annually before it was privatised?
Lord Young of Graffham: My Lords, I must tell the House that throughout the nationalised industries sector—"the commanding heights of the economy", as I believe they were once described—in 1979–80 the British taxpayer contributed substantially. As an aggregate the nationalised industries lost billions of pounds each year. All the companies that have been denationalised are making profits. The funds have gone into the Treasury and the interest on those funds contributes towards the taxpayer. If the noble Lord would like further details I am sure he will put down a Question, in which case I shall he more than delighted to give him a full and detailed reply.
Lord Nugent of Guildford: My Lords, reverting to the point made by the noble Lord, Lord Diamond—evidently on the Road to Damascus—is my noble friend aware that, in so far as the public sector borrowing requirement has diminished from some £9 billion or £10 billion in the days of the Labour Government to £2 billion or £3 billion now, this is reducing the additions to the national debt and therefore is specifically adding to the capital welfare of the country?
Lord Young of Graffham: My Lords, I am grateful to my noble friend.
Lord Glenamara: My Lords, perhaps the noble Lord will answer my question. If he does not know all the figures, I can, for example, give the figures for Cable and Wireless. I know how much that company paid to the Treasury, and it is paying nothing now. In so far as concerns the question of the noble Lord, Lord Nugent, the investment programme—
Noble Lords: Question!
Lord Glenamara: My Lords, is the noble Lord aware that we are extremely proud of the investment programme of publicly owned industries during the time of the Labour Government? We should like to see that kind of investment programme now.
Lord Young of Graffham: My Lords, the noble Lord will forgive me if my figures are slightly inaccurate but they are from memory. I am aware that when Cable and Wireless was privatised it had a market capitalisation of some £460 million. I am also aware that at the time the Government sold off the last 20 per cent. of the shareholding it was worth rather more than £460 million. I am also aware that this company's capitalisation now approaches £4 billion and I suspect that the contribution it will make in tax to the Treasury will be far greater than the dividends it has paid in any decade in the past.

EC Research and Development
3.8 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
1482
The Question was as follows:
To ask Her Majesty's Government why they do not support the EC research and development programme.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, Her Majesty's Government do in fact support the concept of a framework programme for Community research and development as they consider such a programme to be an effective means of assessing priorities for European Community research and development activity and for monitoring its implementation.
Lord Molloy: My Lords, will the Minister answer the Question? Are they supported or are they not? Is the answer simply yes or no? It seems to me that the answer is no. Can the Minister say that I am wrong? I shall give way if he wishes me to do so because the attitude of the present Government is extremely myopic and dangerous and could have a deleterious effect on industry and British research.
Noble Lords: Order! Question.
Lord Molloy: My Lords, is the noble Lord aware that it is opposed by all political parties in this country and by every one of our Euro-MPs in every party, including the six Conservative Members, who have endeavoured to get the Government to see sense? Does he not agree that one of the vital aspects of the whole idea is that European high technology could in a few years' time catch up with that of our chief opponents and competitors in high technology—the Japanese and the Americans? There should be praise of and approval for this scheme, which the Government with their myopic decision are turning down. They are missing a first-class opportunity for the British people.
Lord Lucas of Chilworth: My Lords, my original Answer was not intended to be discourteous to the noble Lord. As he put his question in a similar way and asked for specific replies, the answers are yes to the first part and that he is wrong on the second.
Lord Williams of Elvel: My Lords, is the noble Lord aware that the Government's refusal to support the European programme, together with their unenthusiastic response to the report of your Lordships' Select Committee on Science and Technology and the Answer given by the noble Baroness to a Question on a similar topic, are all rapidly giving the impression that the Government are anti-science? It is that impression above all that is causing the scientific brain-drain from this country.
Lord Lucas of Chilworth: My Lords, the noble Lord is quite wrong. There is no refusal on the part of the Government to support the European Framework Commission, as I said in my original Answer. Indeed, we have proposed increases of 47 per cent. in the ESPRIT programme, 41 per cent. in the BRITE programme and a very large new RACE programme—that is, the telecommunications programme. The Government are not anti-science in any way. Our contribution to the European

1483
framework has been concrete and determined. It has given employment to a number of companies, researchers, their scientists and technologists in this country.
Lord Ezra: My Lords, is the noble Lord saying to the House that recent press reports on the Government's refusal to support the last and most recent phase of the European research programme, when Mr. Geoffrey Pattie's name was specifically mentioned, are totally erroneous, that they are in fact supporting all these projects and that the press has it all wrong?
Lord Lucas of Chilworth: My Lords, I am saying that there is no refusal on the part of the Government to support the EC framework programme. The framework programme was introduced at £5.486 billion. Our analysis of the necessities and of the resources available in the Community determined, and we suggested, a programme that would cost £2.98 billion. Since then the Belgian Presidency has introduced another suggestion costing £3.97 billion to which we have not yet responded. In no way can that be seen to be a refusal by the Government to support the EC framework programme.
Lord Bruce of Donington: My Lords, I have a specific question arising from the noble Lord's reply. Will he confirm to the House that Her Majesty's Government will resist any endeavour to cut the Commission's proposal for funding of the JET project at Culham? Will he also confirm that that project, and the Commission's proposals for it, have Her Majesty's Government's full support during the current year and will have in the next budgetary year covering appropriations?
Lord Lucas of Chilworth: My Lords, that is a specific question which is rather wide of the original Question put down by the noble Lord, Lord Molloy. If the noble Lord tables a specific Question he knows that I shall be delighted to answer it.
Lord Molloy: My Lords, is the Minister aware that we now have a very serious situation? He has made a statement in this House which is totally contrary to what Mr. Pattie and other Ministers have said in the other place. We must ascertain who is telling the truth. My understanding from the press, as the noble Lord, Lord Ezra, said, is that Mr. Pattie is quoted as giving a very forthright reason why we will have nothing to do with the programme. Eleven countries are for it and Great Britain is the only country against it. Can the Minister tell us whether we should believe Mr. Pattie, the press or what he told the House this afternoon?
Lord Lucas of Chilworth: My Lords, it is for the noble Lord and his colleagues to believe that which they wish to believe. I am giving facts to your Lordships' House in direct response to his Question. My honourable friend said that we do not agree with the current EC proposals. We do not believe that they represent the best value for money when there are scarce resources in the Community. Our analysis suggests that the various priorities for research and development in certain areas against the resources
1484
which are available are, as we have costed, £2·98 billion. There is therefore a difference of some £2.5 billion between the Community and ourselves.
The Belgian Presidency has proposed a different programme at some £3.7 billion—a difference of £1 billion between us. We are studying those proposals to see where we can agree so that policies can be continued.
Lord Mackie of Benshie: My Lords, is the noble Lord aware that that is the answer he should have given in the first place instead of trying to pretend that the Government fully support these proposals? They have a perfect right to criticise proposals which they consider are extravagant but the Minister has no right to pretend that that is not what they are doing.
Lord Lucas of Chilworth: The noble Lord is being very mischievous, as I specifically answered the Question, which is:
"To ask Her Majesty's Government why they do not support the EC Research and Development Programme?".
I answered that we support the concept of the framework. There can be nothing more clear than an answer of that kind. Other noble Lords asked for figures and I have given those figures.

British Rail: Travel Agents' Commission
3.17 p.m.
Lord Graham of Edmonton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will consider referring to the Office of Fair Trading the action of British Rail in making cuts in the level of commission payable to travel agents on the sale of British Rail tickets, in order to ascertain whether the cuts constitute an abuse of monopoly power.
Lord Lucas of Chilworth: My Lords, I understand that officials of the Office of Fair Trading have recently considered this matter in relation to the provisions of the Competition Act 1980 and do not consider such action to be anti-competitive in effect or intent.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister for that reply. Is he aware that British Rail are imposing this cut without any meaningful negotiation or consultation with the travel agents? To describe what has happened as negotiation or consultation is a travesty of what actually took place. Is the Minister also concerned that the reduction in the commissions, which are already at a low level, will diminish the number of travel agencies that sell British Rail tickets in the high streets and that this will undoubtedly react against the best interests of the travelling public?
Finally, will the Minister accept that public services such as British Rail have responsibilities not only to the public but also to travel agents, and that besides depressing the margins of commission it may be that this action will drive the travelling public from rail to coaches? That could well be to the detriment not only of British Rail but also the taxpayer.
Lord Lucas of Chilworth: My Lords, the noble Lord asks three questions. I remind him that British Rail engaged in discussions with ABTA at the convention in November 1986. There were then discussions with the agents' representatives in January and again in February. Therefore, I suggest that there were adequate discussions. On the noble Lord's second question, British Rail are suggesting a reduction of between 8 per cent. and 11 per cent. to 7 per cent. and 9 per cent., reflecting the lower costs in ticket selling.
British Rail are in a very competitive industry because they compete with air and road transport for business. They have to respond with lower prices, which they have done, which in turn reflects in the income of some selling agents. I recognise, as do British Rail, that there is a social responsibility for providing adequate travel. As I said, taken alongside air and road travel I believe that that social responsibility is discharged.
Lord Underhill: My Lords, the Minister referred to British Rail being in competition with air and coach travel. Is it not a fact that the commission payable by airline and coach companies is now far more than British Rail will be offering? Does he agree, as my noble friend suggested, that they have a responsibility to the public; that the amount of money generated by British Rail through ABTA agencies is about £110 million; that a good proportion of first-class travel is sold and that therefore it is not just a question of helping British Rail? It is a question of helping the travelling public who by this policy may be denied some of the outlets from which they can purchase tickets.
Lord Lucas of Chilworth: My Lords, as the noble Lord, Lord Underhill, knows, commission rates, whether they are 7 per cent., 8 per cent., 9 per cent. or whatever they may be, should not be looked at in isolation; they should be looked at alongside the cost of selling, the cost of the product being sold and the volume of the product being sold. I believe that the travel agents who engage in this business have the commercial resource to determine whether they wish to continue. British Rail can assess the value or otherwise of the number of outlets the noble Lord suggests that there are.
Lord Graham of Edmonton: My Lords, will the Minister reflect carefully on the quality of the information that British Rail have given him? To say that the travel agents were consulted at the ABTA conference in Australia and subsequently is not only a travesty but, I believe, a deceit. The travel agents were told by British Rail what was going to happen. At no stage were the travel agents involved in negotiating or pleading for a change in the commission. All that happened at those meetings was that there was an attempt to delay the implementation. Will the Minister go back to his advisers and say to them that ABTA rejects completely the idea that there has been any meaningful consultation? It is a disgrace.
Lord Lucas of Chilworth: My Lords, I do not like contradicting the noble Lord, Lord Graham, because he knows a great deal about this business, but I am sorry to have to say to him that what he has said is just
1486
not true. At the ABTA convention in November 1986, British Rail gave notice of their intention to do certain things. That was discussed again in January and a formal letter was sent seeking the views of the association and its principals. They were considered, and British Rail decided the commercial line that they were going to take.

Business
3.23 p.m.
Lord Denham: My Lords, it may be for the convenience of the House to know that the noble Lord, Lord Kissin, does not propose to ask the Unstarred Question standing in his name on the Order Paper today.

Brighton Marine Palace and Pier (Finance, Etc.) Bill
Read a second time, and committed to an Unopposed Bill Committee.
Pontypridd Markets Fairs and Town Hall Bill
Read a third time, and passed, and returned to the Commons with amendments.

Trade Union Powers
3.24 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter rose to move That this House takes note of the Green Paper, Trade Unions and Their Powers (Cmnd. 95).
The noble Lord said: My Lords, the Green Paper which this Motion asks the House to take note of is of course a consultation document in respect of matters on which, as I understand it, the Government have come to no firm conclusions, and upon which they are seeking by way of consultation views from all quarters. We are still in the consultation period which, as I understand it, expires on 5th May, by which time, I notice with some amusement, comments have to be sent to the third level of my noble friend's Ministry. I do not know the significance of the third level.
We are still in the consultation period. That seems to me to be an advantage, just as it is an advantage to proceed in a matter of this kind by way of Green Paper and by way of inviting and listening to the views of all concerned before governmental decisions are taken.
The purpose of this Motion is mainly to enable your Lordships' House to take part in that consultation procedure and to offer, from varying points of view, whatever advice it thinks fit to Her Majesty's Government. I must admit that the only disadvantage in the procedure affects my noble friend the Minister, because in the nature of things, as we are still in the consultation period, he cannot reply to the debate with the precision and definiteness that we are accustomed to hearing from him on almost every other issue. I am afraid that that poses something of a problem for him. On the other hand, I hope and believe that he will welcome the opportunity to hear the views of your Lordships' House.
Your Lordships' House is especially well fitted to offer advice on these matters. Your Lordships' House contains a great many people who have vast experience, and current experience, of industry and the trade union side. It is notable that we are to have the pleasure of a maiden speech by a very distinguished trade unionist, the noble Lord, Lord Basnett, whose speech I am sure all your Lordships are looking forward to warmly. We are also looking forward to hearing speeches from two other major trade union leaders.
I could not help but reflect and consider the interesting change which has taken place in that respect over the years. When I was first involved in public life, leading figures in the trade union movement came into Parliament; but they came into another place. Great figures such as the late Mr. Bevin and Mr. J. H. Thomas served in another place, whereas today it is in your Lordships' House that the most distinguished figures in the trade union movement sit, and it is to your Lordships' House that they can contribute. That is an interesting development—I do not know whether it is a constitutional or a social change—not wholly irrelevant to the decision to hold this debate.
I was sorry to see that the TUC, as reported in The Times yesterday, had stated that the Green Paper was what it regarded, in a rather curious phrase, as "a charter of harassment". I hope that your Lordships will not take that view. I am sure that it is not so intended. I prefer on this matter the view of a former leader of the party opposite whom I am happy to be able to refer to as Sir James Callaghan. I am sure that all your Lordships were delighted to see that Her Majesty had conferred upon him, in the light of his long career of public service, the highest order of chivalry. All of us wish him many years happily to enjoy that great honour.
Sir James, as we must learn to call him, is reported as having said the other day in a Channel 4 interview that the unions were given every chance to reform themselves and failed. He said:
"To that extent they invited the legislation which was eventually visited upon them".
He went on to say:
"I had no doubt that public patience ran out in the winter of discontent of 1978–79, and a number of the legislative Acts that have been put on the statute books since then have carried a large measure of public support".
I hope that in the party opposite, as with the public generally, that more balanced view will attract more support than the rather off-the-cuff comment that the Green Paper proposals amounted to a charter of harassment.
Lord Jacques: My Lords, will the noble Lord give way? Will he further add that what Sir James said he objected to was the hostility shown to the trade union movement?
Lord Boyd-Carpenter: My Lords, he refers in a very balanced speech to that, as he does to other matters. The point on which I was inviting attention was his very specific observation to the effect that the legislative changes which had been effected had been virtually invited by the unions by reason of their
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conduct in a period of which, after all, Sir James had more direct—if you like, more painful—experience than perhaps any of your Lordships. I do not therefore think, with respect to the noble Lord, whose interventions are normally relevant, that that has anything to do with the matter.
The Green Paper follows the step-by-step procedure which the Government have followed in respect of trade union legislation. The Acts of 1982, 1984 and 1986 each took the matter further step by step. As I understand it—the Minister will no doubt confirm this when he speaks—it has been the policy to proceed in this important, sensitive and very difficult matter not by some tremendous onslaught, not by showing (as the noble Lord opposite seeks to suggest) hostility, but step by step to secure improvements, to see how they worked, and to see what basis there will be for further improvements.
As I understand it, this Green Paper follows that procedure. That procedure is working. No one with any experience of industry can dispute that the atmosphere in industry is infinitely better today than it has been for many years. The time lost in industrial disputes is enormously less. Indeed, it seems nowadays almost entirely to be confined to certain aspects of the Civil Service. However, in industry proper there has been a degree of understanding, consultation and progress without strike action that for many of us our memories would have to go a long way back to be able to equal. Therefore without claiming—as it would be foolish to do—that this is due entirely to the legislation, as if the legislation has been consistent with that steady improvement, I suggest that it has played its part. But no one with any experience of these matters believes that legislation alone can either cure the evils or create a good situation. However, it can contribute, and contribute substantially.
That is not only a view that many of us hold, but is confirmed, I suggest, by what has happened in these last seven or eight years. It is against that background that we look at this Green Paper because there is quite a long way still to go in improving our industrial relations further. We still have some way to go until we reach the situation, for example, that exists in the United States where on the whole the unions are overtly anxious to see the firm which employs them prosper in order that they may be able to get a bigger cut out of the profits, very properly, as a result. This was brought home to me vividly when I visited an American company in Pennsylvania which was a subsidiary of a company of which I happened then to be chairman. There I saw that the local union representatives had put up in the works a large sign saying, "Customers make payday possible". I think that we still have something to learn from the American industrial scene.
It may be—here I touch quickly and delicately on a sensitive matter—that this is helped by the fact that the American trade unions do not regard themselves as being tied to any political party but support such political party as at the moment seems to suit their interests at any particular election.
As your Lordships will know, the Green Paper is not concerned with the balance of power between employer and employed or between unions and government. It is almost exclusively concerned with

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the balance of power between the union officers, committees and leadership on the one hand, and the union membership on the other. In other words, it is concerned with the balance of power within the unions. The objective that seems to run through the separate possibilities which the Green Paper adumbrates is that of restoring control of the union to its members.
This leads one to refer—as I do very briefly—to one or two of the individual items which I suggest support the general proposition that I have just ventured to make. Chapter 2 of the Green Paper deals with the position of union members called upon by their union to strike. The Green Paper brings out very vividly the difficulty of a union member who is doubtful as to the wisdom of the strike yet is called upon by his union to take industrial action. After all, the union itself—provided that it carries out the ballot required under the 1986 Act—is immune from legal proceedings. The individual union member is not. He is open, if anyone so wished, to legal proceedings, and, far more important from a practical point of view, by taking part in a strike he is putting himself in the position that he can be dismissed without compensation.
Therefore some thought is demanded of the position of a union member who may find himself (as he might put it) between the devil and the deep sea: between a union calling him out on strike and threatening him with expulsion from the union, with all that that involves, if he continues to work; or, alternatively, striking and submitting himself as a result to positive legal action and to the probability of dismissal. That is not a happy position for anyone to find himself in. It is therefore proposed as one of the matters for discussion that it should become illegal for the union to expel from membership a man or a woman who refuses to take part in a strike. If a union's officer so misjudges the situation—as one or two of them have over the years—that he calls a strike which his members do not want to support then probably the answer is to get a new officer. Certainly the answer is not to cause a number of people genuinely concerned with their own future to be expelled from their union and suffer all the inconvenience, unpleasantness and loss which that could involve.
That leads to what the Green Paper calls, I think very properly, a question of principle. It says:
"More important, however, are the issues of principle. The Government believes that a decision to take industrial action should be a matter for the individual. Every union member should be free to decide for himself whether or not he wishes to break his contract of employment and run the risk of dismissal without compensation. No union member should be penalised by his trade union for exercising his right to cross a picket line and go to work".
That is obviously an issue of very great importance in principle which I am sure some noble Lords will wish to discuss.
There are other very important aspects of the Green Paper. Chapter 4 deals with the closed shop. The 1976 Act—for which the party of noble Lords opposite was responsible—had a very curious provision in respect of the closed shop. The only grounds on which a worker could be excused from joining a union in the closed shop situation was that he belonged to a religious sect which disapproved of trade unions. No doubt there are
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some sects. There are sects which believe anything. But I cannot think that they are a very significant section of our society. I doubt whether noble Lords opposite would wish to argue that either. But apart from those somewhat eccentric people, the closed shop could be imposed.
There are very strong feelings about the closed shop. It is perhaps a reflection on some of the unions concerned that they should feel that the attractiveness of their membership is insufficient to encourage voluntary membership and that it should be made a matter of compulsion that someone should join the union in order to do the particular job.
I believe that the number of closed shops is on the decline, but it is our experience that the worst industrial relations and abuses have been in closed shop industries. The classic example which all your Lordships will immediately have in mind is that of the printing trades, where enormous damage was done by the excesses of the unions there.
I had experience of that when I was Member of Parliament for Kingston. A constituent of mine who had worked for the local paper as a printer went abroad. When he came back after some years his union membership had lapsed. His old paper wanted to take him back but it had a closed shop situation and the local branch of NATSOPA, the union concerned, declined to take him into membership, which he was quite willing to accept. It said he should not be allowed to rejoin because it wished to put somebody else into that vacancy.
That seemed to be quite intolerable interference with the rights of a citizen. I am glad to say that as a Member of Parliament at the time I had certain leverage. I spoke to the regional secretary of that union, indicating to him that unless my constituent was properly elected so that he could go into the job the matter would be raised in the House of Commons. By a curious coincidence the next day he was elected and all was well.
I should like to mention the matter of the proposed new commissioner. It is no use giving legal rights to individual union members if they cannot enforce them. It has been said that the courts of law are open to all, like the Ritz Hotel. The fact is that the ordinary union member cannot possibly contemplate taking his union to the courts. With the unions' equipment of lawyers and resources it would be a hopelessly unequal conflict. So the general thinking is that if you are going to give legal rights to the individual, if necessary against his own union, you must give him some effective means of enforcing them.
Some of your Lordships may remember that when this House was discussing provisions to deal with trespassing some time ago several noble Lords with legal or professional backgrounds said that you did not need to give the police powers to remove trespassers because all the farmer or smallholder had to do was to get an injunction from a judge in chambers. Some of us pointed out that if you lived in the country and happened not to have a regular lawyer, and if this occurred at a weekend, it was not necessarily easy.
The same point arises here. As I understand it, the object inter alia of setting up the new commissioner would be that if an appropriate case arose he would be

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able to offer legal, professional and technical support to the union member if that member desired to take proceedings and if he, the commissioner, thought that they were sensible. That seems to be a necessary part of the provision, since without it this would be quite ineffective.
Perhaps I may mention postal ballots briefly. It is rightly proposed that these should be properly supervised. If they are not, there is risk of abuse. We know of recent cases where there has been abuse, and they would cease to be a safeguard if they can be abused. There is also the small but quite necessary provision to ensure that re-election of union officers by postal ballot is not frustrated after five years if they simply give up their voting rights. A device of that sort makes nonsense of what was the intention of Parliament. I think that this would put it right.
There are a number of other issues, but I know many of your Lordships are desirous of speaking and I do not wish to take up too much time. I would only add that I hope that the union movement will not regard the Green Paper as hostile. I am perfectly certain that a great many union members will not. They will realise that there are a series of proposals which would, if enacted, shift the balance of power not away from the unions but away from the union leadership towards the union membership, towards the democratic side of the unions.
Years ago that may not have mattered much, but those of your Lordships with trade union experience will know that the new generation of trade union members, the younger ones, the ones in younger industries, are taking a much more acute and intelligent interest in the way their unions are run, and would be glad, if they differ from their leadership, to have some powers to express those views and if necessary to restrain their leadership. I think that there is a considerable movement that way and that the proposals in the Green Paper would give a legal framework to it.
There is much to be considered, but all that I would venture to say, particularly in the light of what the TUC has said, is that this is not a situation in which one can stand still. Like the rest of us, the trade unions have to move and adapt to changing circumstances, changing needs and changing popular demands. Although I have often thought that the trade union movement was far more conservative than any Conservative I have ever known, it has to accept the necessity and the desirability, in its own interests as well as those of its members, of continuing change and adaptation to the differing needs of today.
I conclude with a few words which are often misquoted but which I believe to be true and relevant to this:
"The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break servitude is at once the consequence of his crime and the punishment of his guilt".
I beg to move.
Moved, That this House takes note of the Green Paper, Trade Unions and Their Powers. (Cmnd. 95)—(Lord Boyd-Carpenter.)
3.48 p.m.
Lord Young of Graf ham: My Lords, I am grateful to my noble friend Lord Boyd-Carpenter for intiating the debate this afternoon and for his thoughtful contribution. It was right that he should remind us that jobs go with customers. I was also interested in his reminder of the political affiliation, or rather the lack of political affiliation, of labour unions in the United States of America. It sometimes occurs to me to ask how well the leadership of unions in this country today reflects the real political views of the members, because I think there is a connection with the decline of membership which we have seen in recent years. However, that is not the subject for today.
I am glad to have an opportunity of returning to the Green Paper, Trade Unions and Their Members. When I made my statement on 24th February there was a clear feeling in the House that these important matters called for fuller discussion than was possible on that occasion. Several noble Lords have since been in touch with me to express interest or to seek clarification of particular points. The intervening weeks have allowed time for the paper to be studied and digested and for some of the first knee-jerk reactions of the critics to be reconsidered.
These are serious matters which deserve and require the careful scrutiny which they have been traditionally accorded in this House. A central feature of our economy and society has been a minimum of legal control of the collective bargaining by employers and trades unions of working conditions and pay in our various industries. On the basis of their negotiating position, unions have been able to play a determining role through collective bargaining in a number of areas where other countries impose more rigid institutional and legal requirements. Provided that the rules of the game are established in a way which provides a sensible balance of bargaining power, this system has an inbuilt flexibility which is highly desirable and which can assist the process of adaptation to economic change. Our system of sweeping legal immunities has in the past given great power to the unions in that bargaining process. That power imposes great responsibilities, however, upon the unions, not only in respect of the bargains struck with employers but also in their relationships with their members. To speak plainly, they must not—indeed must not be allowed to—sacrifice the individual on the altar of collective interests.
This is what lies at the heart of our Green Paper which is intended as the next step in our careful step-by-step reforms. It has little to say about the law on collective industrial action, but a great deal to say about the way in which unions treat their members. It is designed to correct undoubted abuses. Some of the cases which influenced us are displayed in the test. We took care to remind the public of some well-recorded recent cases when we drafted the document, although some noble Lords understandably could not contain their incredulity that anyone should question the evidence of abuse in respect of union discipline. I myself thought that the noble Lord, Lord McCarthy, strained logic in questioning the evidence of abuse of the statutory election requirements in the same breath as he described a proposal as "the Scargill clause".

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The protections we propose for individual union members do no more than guarantee what they are entitled to expect as members of self-proclaimed democratic, voluntary organisations in a free society such as ours. If all unions always reached the standards of democratic conduct on which our proposals are based it is difficult to see in what respect our proposals could cause any difficulty whatsoever. I shall be interested to hear whether those who oppose these measures continue to claim that they are unnecessary because there is no problem or argue that their operation will be oppressive, thereby implicitly admitting that abuses occur.
We must be prepared to tackle issues of evident and real public concern as they arise. This lies at the heart of the step-by-step concept. In 1980 we had to put right the worst features of the laws which had helped throw society into chaos during the winter of discontent. In 1982, it was clearly right to bring trade unions themselves within the scope of legal actions for injunctions and damages for organising unlawful industrial action. In 1984 we took another major step to ensure that strikes could not be called by trade unions without support from those involved in voting in a secret ballot if their immunities were to be retained. The public—and I believe the great majority of responsible trade union members themselves—have applauded these measures and they have been of obvious, practical effect. All this is part of the step-by-step process referred to by my noble friend Lord Boyd-Carpenter. Last year the number of strikes were at their lowest level for 50 years.
We have throughout worked within the framework of existing law, and common law principles in particular. We have left it to those who actually suffer (or who might suffer) the harmful consequences of unlawful acts to seek remedy and redress. The Government have provided the means for others to take action, but have not sought to impose themselves as an active party. This approach has avoided the cry of "the state against the trade unions". It has preserved the fundamental principle that at the heart of an employment relationship there lies an implicit or explicit contract between the employer and the employee.
In all that we have done we have consistently aimed to allow more scope for market forces to operate. We have dismantled legislative provisions which have interfered with the bargaining process, such as the so-called, and misnamed, "employment protection" law—Schedule 11 of the 1975 Act—which could be used to impose rates of pay which were inappropriate to particular enterprises. We have drastically reduced the powers of wages councils and done away with the unworkable and disruptive statutory recognition procedures. Alongside these actions, we have done all we can to encourage the spread of good practice and realistic bargaining through stimulating debate about matters such as profit-related pay, local bargaining and better communications between employers and employees.
The benefits of our approach are now clearly visible. It can be no coincidence that over recent years we have seen historically very low levels of days lost due to strikes. But the figures are only part of the story. Just
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as significant is the hard evidence that overseas investors are now looking with confidence at the prospect of putting their capital into our country. We hear much less about the "British disease" of strikes, stoppages and lost production. It is my fervent hope that this Government will see the establishment of a new British tradition—that of a productive, flexible workforce able and willing to respond to the demands of modern industry, services and technology. I returned only yesterday from a short visit to the United States of America. Employers and investors there are very well aware of the change of climate in the United Kingdom.
Much has been done, but much still needs to be achieved. Guided by our experience over the last few years, we put forward in the Green Paper Trade Unions and Their Members a number of proposals which are really all about the sort of trade unions and trade unionism that we will need in the economy and society of the future.
I should like briefly to remind the House of some of our key proposals and of their implications. First, we propose giving a right to trade union members to restrain their unions from calling on them to take industrial action without a proper secret ballot. This right will complement the arrangements of Part II of the Trade Union Act 1984 which give employers, their customers and suppliers the ability to take legal action against trade unions authorising or endorsing unballoted industrial action. The proposal has been designed in such a way that it should have no untoward consequences for the bargaining process. We do not propose to give individual union members the right to insist that a ballot should be held, but only to get the court to restrain the union from acting in certain ways without a ballot. I am pleased to note that there is now general acceptance of the importance of pre-strike ballots and we believe that the member's right must be properly enforceable. Looking to the future, I am encouraged by the fact that unions which have the strongest balloting tradition are among those which most rarely proceed to strike action.
I should add that in order to avoid a restraining order a union would have to hold a ballot that met all the standards laid down in Part II of the Trade Union Act 1984. In future those who actually take part in a ballot will have the right to enforce the legal requirements, covering such elementary but vital matters as secrecy and effective entitlement to vote. This should help to flush out abuses which employers may find it very difficult to detect.
We also want to give individual union members protection against being disciplined by their unions if they choose not to go on strike. I cannot believe it is right that employees should be intimidated into breaking their contracts of employment by the threat of such discipline or expulsion. We understand the arguments about collective action and strength through unity. Nothing which we propose will prevent workers from coming together in a common purpose, and we do not seek to undermine legitimate union discipline generally. We are minded, however, to restrain organisations from forcing their members into breaking their contracts of employment.
In a highly technical chapter of the Green Paper we propose a series of measures to enable members to

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exercise effective control over the financial affairs of their unions and ensure that they keep within the law. Most union leaders are no doubt acutely aware that their organisations depend upon members' contributions and exist for their benefit. It ought to be profoundly shocking that measures of the kind proposed need even to be considered. But I shall be interested to know if any noble Lord thinks that we are tilting at windmills of our own invention. I do not think any Member of this House will dissent from the standards envisaged, which should govern the behaviour of any democratic and law-abiding trade union.
We propose taking further steps to remove the basis of legal support for post-entry closed shops, and to make it easier for employers to resist trade union pressure to establish or maintain closed shop practices. This Government have always believed that individuals should be free to choose for themselves whether or not to belong to a trade union. It is objectionable in principle to allow anyone to coerce an employer into putting someone out of work (or denying employment) on the grounds that he does not belong to a union, or to a particular union. What we want is to give individuals real freedom to choose. The law already offers employees unqualified protection in case of dismissal or other discriminatory treatment on grounds of union membership. It is right that nonunion members should benefit from equivalent safeguards.
Our proposals on trade union elections represent a modest extension of the requirements of the 1984 Act. We see a need to maintain respect for the law by blocking a loophole which has provided a temptation to misplaced ingenuity. On balloting procedures we have seen some unions struggle not very successfully to put their house in order while others hardly struggled at all. More therefore needs to be done. On the other hand, the unions have now had ample time to compile the registers of members required under the 1984 Act, and it is therefore practicable, as it was not in 1984, to require them to adopt fully postal balloting. Unions will be required to have these ballots independently supervised; some already do so. And here, as in so many other respects, we are doing no more than generalising existing good practice.
Finally, I ought to say a few words about the proposal for a trade union commissioner, not least because there have been some misunderstandings about the Green Paper proposal. What we are after here is a means of helping individual trade unionists secure observance by their unions of statutory duties which they owe to their members. The commissioner's support in legal actions will not come into play unless and until there is a union member who wants to bring a legal action. He will have no roving brief to initiate investigations but will facilitate the enforcement by members of certain key rights through the existing machinery.
The commissioner will have discretion in many cases to decide whether or when to offer support. Only where a union was clearly flouting the terms of a declaration issued by the certification officer, who had found the union in breach of a statutory duty in respect of elections, would the commissioner be under a duty
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to provide support to an individual. Further, the commissioner's role, at least initially, will be confined to supporting certain defined types of complaint. I should be quite content if the commissioner's services were hardly ever sought, provided that this was because trade unions were in practice observing the relevant statutory duties and their members consequently had no cause for complaint.
In the debates and comment on the Green Paper proposals we have heard a lot of what I can only call (and here I am being kind) poor and inappropriate analogies with company law. People have claimed, for example, that we are seeking to regulate and control trade unions, while letting companies in the City go their own way. The foolishness of claiming that companies (and for that matter City institutions in particular) are free from legal constraints—and even direct interference by government departments—will, I am sure, be apparent to all in your Lorships' House who sat through the recent debates on the Banking Bill and much of the other legislation that governs the City. The Green Paper proposals are designed to be relevant to the affairs of voluntary associations which are concerned with collective bargaining and cannot be read across by analogy to companies whose purpose is the application and combination of capital in a business venture.
I commend to the House the proposals set out in Trade Unions and their Members and to which I have just briefly referred. Together they should help to ensure that trade unions in this country evolve in the direction of modern, democratic, genuinely voluntary organisations. This is a Green Paper. We have invited comments and many have been received. I shall consider them all, as I shall consider the contributions of all in your Lordships' House. In the end we look for a movement which will be strong and healthy, responsive to the wishes of working people and capable of inspiring their loyalty. It will then be truly representative and able to contribute fully to the response of our economy and society to the challenge of our times.
4.5 p.m.
Lord Murray of Epping Forest: My Lords, I welcome this debate not least because it provides the occasion on which an old friend and colleague will have the opportunity of making his maiden speech in this House. I look forward very much to hearing the way in which my noble friend Lord Basnett negotiates, as it were, a non-controversial way through a difficult and barbed subject, one which is perhaps less of a Green Paper than an instalment in the Conservative Party's election manifesto.
In introducing the debate the noble Lord, Lord Boyd-Carpenter, set out the case for the Green Paper in all its stark reality. My main complaint about this document is that the proposals are based on no serious analysis of industrial relations systems or of trade union systems, or even of serious defects in those systems. It seems to me to be based at best on misunderstandings and at worst on misrepresentations. Indeed, we are offered legislation by anecdote.
The noble Lord, Lord Boyd-Carpenter, reminded us of occasions in the past when predecessors of mine found their way on to the Benches of the House of Commons. Indeed, this was true. At that time the

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Opposition Benches were graced by people such as Churchill, R. A. Butler, Macleod and, a little earlier, Walter Monckton. I sometimes wonder what those great leaders of the Conservative Party would have made of the increasingly ideological approach of the present Administration towards industrial relations and trade unions. It seems to me—and I say it with regret—that the passage of this legislation has been marked more by considerations and interests of class than of nation. That would never have commended itself to those leaders.
We are told that the result of these proposals would he to increase the freedom of the individual. On the contrary, my view is that taken as a whole and in part—I shall come to some of the parts, although I cannot cover every detail—their result would be to reduce the opportunity of the individual employee of receiving fair treatment at work. They are based on a preconception of what happens which in my experience bears far too little relationship with reality to command the emphasis and weight which has been attached to it.
When the first Secretary of State for Employment of the 1979 Administration, the predecessor of the noble Lord, Lord Young of Graffham, first spoke to the TUC about the Government's proposals, I gave him a blank piece of paper and invited him in all seriousness to write down his complaints and criticisms of trade union activity in industrial relations. This was to give to the TUC and the CBI jointly the opportunity of starting on the basis of seeing what was wrong and what needed to be done, not ruling out legal support where that was appropriate, but starting from industrial relations as they were. I regret very much that that was rejected. I repeat the suggestion now that, instead of going through what I fear is a charade of consultation, the Government should invite the TUC, the CBI, the Institution of Personnel Management and the BIM, if they like, to sit round a table and argue it out on the basis of evidence and of needs.
The impression that has been created—the noble Lord helped to create it—is that this document is the response to some great surge of popular demands from working people. All that I have ever seen of such popular demand has been in a column penned by two of your Lordships dealing in particular with complaints made by one man, who happened to be the chairman of the national trade union committee of the Conservative Party. He had occasion to complain to the certification officer about deviations and defects in his union, NALGO. Of the 14 complaints, three were upheld, two being minor technical matters, and the third was corrected by the union itself.
I ask again, where is this great surge of demand from working people? Of course, if there are complaints they must be examined and the evidence must be put on the table. I hope that it would be rather better than the evidence for change as suggested in paragraph 2.13 of the Green Paper, which discusses the matter of unions disciplining their members. It says:
"In the summer of 1982 … the NUR disciplined about 120,000 members."
At that time, according to the TUC's record of affiliation, the NUR total membership was 150,214. I
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hope that the evidence on which other parts of the Green Paper are based is rather more substantial than a statement of that sort.
The Secretary of State reminded us that this is a consultation document. I cannot help but say that my confidence is hardly enhanced by previous experiences in this field. The TUC and the unions concerned were offered consultation on GCHQ. We know the outcome of the labours that were put into producing an agreement. So, to his cost, does the Secretary to the Cabinet, who helped produce a joint agreed statement. We know the outcome of previous consultations on reform of trade union law. Let me be fair. Some of the proposals put forward in previous Green Papers were indeed dropped—gone, but not forgotten, like ballots for trade union officers without a vote on the executive.
What we have to a considerable extent between the covers of this document is a collection of seconds, as it were, pulled from under the counter, only slightly used, put together by some Arthur Daley of the second-hand Green Paper trade with a lick of paint, and all in the name of defending the rights of workers—I am sad to say this—from a government who have repeatedly weakened and, indeed, removed the ability of workpeople who have been unfairly dismissed to get redress for it; a government who, as the Secretary of State has reminded us, although he did not use the verb, have emasculated wages councils, who have even watered down the rights of employees to be told about impending redundancies; and we are told that there are yet more on the way.
What the Government are doing in effect is offering in compensation to employees who have lost rights at work the ability to take action against their own unions, seeking to strengthen the rights of dissident members and dissident groups against their own unions. The Government in effect are offering here litigation against unions as a substitute for protection of workpeople against unfair treatment by their employers.
The rights of individuals at work were established and have been sustained by collective action by collective organisations created by those workpeople. The aim of these proposals, as with the preceding proposals, has been to weaken the organisations which workpeople themselves have established and sustained.
The Green Paper, at paragraph 2.26, talks of providing,
"assurance to trade union members that they could not be deprived of the right of reasonable access to the courts in case of breach of their common law or statutory rights".
I do not object to that at all. But where is there any evidence of a union seeking to do that or succeeding in doing it? I for one would never defend it. This document is paraded before us as if there is some practice which needs to be dealt with and extirpated at the roots, seeking to create that impression, whereas I search in vain for proposals in the Green Paper for the protection of workers who are victimised by their employers for complaining about employers' breaches of their rights or for making representations to their own unions. On that there is not a word.
In a sense these are ill-considered trifles compared with the attempts to increase the pressure on unions

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and their leaders by disaffected groups and individuals. With all respect to the noble Lord, Lord Boyd-Carpenter, I believe that the only phrase is "an invitation to harass". I would not ask for sympathy for trade union leaders—they never got much from me in my time—but they do not lie on a bed of roses. It is a rough old life. Very often—indeed, usually—they have to make decisions that upset minorities; for example, standing outside ACAS or Congress House at one o'clock in the morning after reaching agreement, telling—in the old days instructing—the members that the return to work would take place at half-past seven the next morning, with a howling mob of Trotskyites demanding the ballot before they go back to work; or on the factory floor the trade union representative having to tell a member that he has no case, no grievance, against a foreman, thus creating a dissident minority.
The Green Paper proposes to offer to dissident minorities the right to take action against the unions to undermine the collective disciplines by which unions solve industrial relations problems and to that extent put employers in their debt. It will be more difficult for unions to resolve disputes, whether collective or individual, if this is done. We have a valued tradition that minorities abide by the decision of the majority. It is a tradition of trade union democracy and I should have thought that it is a tradition of democracy generally.
Now it is proposed that where a majority ballot for industrial action, the minority can ignore the result. Paragraph 2.10 of the Green Paper states (this has been referred to already):
"The right of the individual to choose to go to work despite a call to take industrial action is an essential freedom".
There is no qualification. There is no damned nonsense about the merits of the dispute and the merits of the industrial action. There is no damned nonsense about consultation: this is an assertion. The right is an essential freedom. One might be tempted to ask about the right to go to work of 3 million people who have no jobs. Whatever happened to the right of British workmen and women not to go to work except on terms and conditions that have been agreed with their employer? It is the right which sets us apart from dictatorships, and which defends us against attempts to be taken over as agents of the state or as marionnettes who jump to some employer's whistle.
What is an essential right is the right to expect those who are opposed to a decision to abide by the results of a fair vote. We expect it in your Lordships' House, and what is good enough for us is good enough for a trade union branch leader. What is the point of holding a ballot if dissident minorities are then to be free to ignore it?
On the other hand, in relation to the closed shop, in previous legislation the Government said, "Let there be ballots", and lo, there were ballots with monotonous regularity. There were majorities exceeding 85 per cent. in favour of maintaining the principle that an individual who wanted to receive the benefits from that particular place must pay his whack of the contributions. Now we are to have second thoughts. Now we are told that no individual can fairly be dismissed if he persists in holding out his hand for
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the benefits and refuses to pay his fare or to pay his sub. But where are the individuals who have ever been dismissed for doing that? One can count them on the fingers of a hand. What about the more than 3,000 individual workers who every year prove to industrial tribunals that they have been unfairly and illegally dismissed by employers? The word "intimidation" was used. Where does intimidation lie?
Again—and this must be my last illustration—there is the proposal that all members of executives, including those without a vote, must be elected by postal ballots. I would make heavy weather of that proposal. This is known as legislation ad hominem and we all know the name of the man. I hold no brief for Mr. Scargill. The Secretary of State described this as a modest extension. Let me make a modest prophecy. If that law is placed on the statute book, the resentment created will increase the support and the votes which Mr. Scargill receives from his members.
These proposals could almost have been designed to bring the law itself into disrepute. This is where one finishes when one goes down that road, instead of starting from the industrial relations system and starting from trade unions as they really are, and when one fails to ask what are the purposes of the industrial relations system; what are the purposes of the trade unions; how can their defects be corrected? In that context, what is the role of law? The law has a place and a purpose in industrial relations and in trade union affairs. It is needed to protect the individual against abuse or exploitation. Yes, to protect him from the abuse of the power of his union and, yes, from the abuse of the power of his employers. It seems to be the concern of the writers of the Green Paper to throw out the baby of trade unionism but to keep the bathwater of exploitation by unscrupulous employers.
The second role of the law is to generalise good practices in industrial relations and trade union matters. This paper makes no contribution to that. I repeat that what is needed there is representatives of employers and workers to sit down and examine the changes that are needed. I should like to think that the TUC and the CBI might try again as they did in the late 1960s. They very nearly succeeded but for the nonsensical Green Paper or White Paper (whatever it was) In Place of Strife, and subsequently the takeover by the Industrial Relations Act 1970.
If the TUC and CBI cannot achieve that, perhaps some people should reflect upon the value of the Mond-Turner discussions of the 1930s, and upon the values that those broke down and the progress that was made through them. The point is that bad currency such as this drives out good efforts to include industrial relations. With deep respect, industrial relations are far too important to be handed over to lawyers and certainly to be handed over to journalists, who lie at the root of this matter. They are too important to be handed over to politicians who are seeking party advantage.
The danger of the Government's approach is, I believe, that it could well provoke equal and opposite reaction. It could lead to ping-pong legislation in the industrial relations and trade union field. It could lead to ever-widening swings of the political pendulum. That is no good for industrial relations, for industry or for our society.
4.29 p.m.
Lord Rochester: My Lords, I should like to thank the noble Lord, Lord Boyd-Carpenter, for having introduced this debate and thus enabling the House to take part in the consultative exercise now proceeding on the Green Paper. My noble friends and I are looking forward to the maiden speech of the noble Lord, Lord Basnett, whom I used to face across the negotiating table 25 or 30 years ago.
Hitherto we have given broad support to the Government's gradual approach to reforming the law relating to trade unions—for example, in 1982 on closed shop ballots and the limitation of union immunities and in 1984 on the extended use of secret postal ballots in electing members of union national executives. Indeed on that matter I should remind the House that we wished to go further than the Government in advocating not simply that postal ballots should be the statutory norm but that, if there had to be workplace ballots, the onus should be placed on trade unions to satisfy the Certification Officer that requirements as to secrecy, convenience of voting and freedom from interference and constraint were met rather than that responsibility for challenging dubious electoral procedures should be borne by individual trade unionists.
Lord Harmar-Nicholls: My Lords, may I ask a question? The noble Lord has said "we" on three occasions. Can he say whether he is talking both for the Liberal Benches and the SDP Benches?
Lord Rochester: My Lords, I gladly confirm that today I am speaking for the Liberal/SDP Alliance. To continue my speech, it is better late than never on the part of the Government. We continue to feel strongly, as the Government now agree, that trade unions should use fully postal voting procedures under independent supervision for elections to their principal executive committees and these should extend to the distribution, the receipt and the counting of ballot papers. The chief officers of unions, in our view, should also be required to submit themselves for reappointment at regular intervals either by the same electoral means or, at the very least, by the votes of members of principal executive committees who have themselves been properly elected.
The cost to unions of employing outside bodies to supervise ballots in this way will nevertheless be very considerable; so when the Secretary of State comes to reply I should be grateful if he would say whether, as in Section 1 of the Employment Act 1980, the Government contemplate trade unions being able to recover such costs from public funds.
I turn now to the section of the Green Paper dealing with industrial action and the rights of union members. When the 1984 Trade Union Bill was passing through this House I expressed the view that, although secret pre-strike ballots were clearly desirable in the case of major national stoppages, the effect of the measures then proposed by the Government might be to encourage even more unofficial action than there already was. In the event, I gladly acknowledge that the last three years have shown that unofficial strikes are no longer the predominant form of industrial action and the beneficial effect of the legislation in a
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number of industry-wide disputes in the public sector has been plainly demonstrated.
It is now proposed that individual union members should be enabled to take legal action to restrain their unions from authorising or endorsing industrial action which has not been validated by a ballot. We sympathise with the view that such a right should be seen as a natural development of those already accorded to employers, customers and suppliers under the 1984 Act.
However, the Government also now propose that individual union members should be protected from disciplinary action by their union if they refuse to take industrial action, even when it has been endorsed by a prior secret ballot. It is said that the individual should be afforded this legal protection since in taking industrial action and thus breaking his contract of employment he may render himself liable for dismissal.
On the other hand, it is argued by the Institute of Personnel Management, whose members have to carry the can in handling industrial relations in the front line, that the form of question now required on the strike ballot paper tends to remove the employer's existing discretion to treat strike action as a breach of contract. This, combined with the economic pressures on employment, may effectively denude the employee of the right to strike. Unless there is some counter-balancing, collective right to strike in certain circumstances, the scales appear to be very heavily weighted against trade unions.
As the noble Lord, Lord Murray of Epping Forest, has already mentioned, it said in the Green Paper that the right of the individual to choose to go to work despite a call to take industrial action is an essential freedom. But is there not also a case for limiting the extent to which employers are now able to seek ex parte injunctions, while trade unions are unable to take legal action collectively on behalf of employees, even though the employer may be threatening flagrantly to break the terms of an employment contract? What about those employers who by setting up a maze of artificial companies have been able to turn otherwise legitimate strikes into secondary action in a way which was not at all intended under recent legislation?
The CBI considers that the principal argument against this proposal of the Government is that it could undermine the balloting process itself in so far as it was seen to provide a formof statutory protection for those refusing to be bound by the results of the ballot. It concludes that the Government should not pursue the proposal, and I think they are right.
On the question of the post-entry closed shop, your Lordships may recall that when the Employment Act 1980 was being debated we opposed the immediate abolition of closed shops on the grounds that such action would simply drive them underground. Since then seven years have elapsed. In the case of many large companies closed shops which were already in existence have not been put to the test of a ballot and therefore they do not qualify for legal immunity now.
Where ballots have been held and have produced the required majority in favour few, if any, problems have arisen. Where the necessary majority has not

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been achieved, closed shops have been dismantled without adverse repercussion. In other words, for various reasons the practice is gradually withering away. Why not therefore simply let it die of inanition? If the Government are looking for a real restrictive practice to go at, what about the much more illiberal pre-entry closed shop, on which the Green Paper is strangely silent?
In the section of the Green Paper dealing with the control of trade union funds, it is proposed that members, accompanied by professional advisers, should have a right of access to their unions' detailed accounting records. Under the Trade Unions and Labour Relations Act of 1974 unions and employers' associations already have to make an annual return to the Certification Officer and keep proper accounting records which give a true and fair view of their affairs.
Rather than giving union members this new statutory right, with all the administrative burdens that could impose, why not simply require both employers and trade unions to disclose to their employees or members financial information, as was envisaged in the Industrial Relations Act 1971 in relation to employers?
There is another aspect to this matter. Companies are not legally obliged to provide the kind of detailed information which the Government apparently now have in mind for trade unions. For example, shareholders have no right to financial information on a plant-by-plant basis, nor to inspect their company's books. If I am right in my understanding, I must ask the Secretary of State or the Government to justify this proposed distinction between the members of trade unions on the one hand and the shareholders of companies on the other.
The last section of the Green Paper relates to the enforcement of statutory duties. It contains proposals designed to assist individuals who might otherwise feel deterred from pursuing their complaint because of the financial costs involved, or for some other reason. To help them it is proposed that a new commissioner for trade union affairs should be appointed. But his would surely be a highly controversial role since no limits appear to be set on the extent to which trade union members could call him in aid.
In the Green Paper the proposed commission is compared with those concerned with equal opportunities and racial equality, but those commissions can offer legal assistance only if a case raises a question of principle or is complex, and it is unreasonable to expect the applicant to deal with it unaided. Accordingly, I must ask the Secretary of State on what grounds trade union members are to be singled out from other citizens as recipients of this new kind of institutional help.
So far I have confined my remarks to the merits of the specific propsoals in the Green Paper, basing them on the Government's supposition that further trade union legislation is now called for. However, in the time that remains to me I wish to pose some fundamental questions relating to the Green Paper as a whole. First, is this really the time for the Government to be embarking on further union legislation? To judge from the response of the Institute
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of Personnel Management, the answer is, no. It believes that another round of major employment legislation at this time could be inappropriate and counter-productive. The institute considers that trade unions should be given more time in which to reform themselves. It considers that the rate of change was always bound to be slow and that more time should be allowed to make a fair assessment of the present laws before adding to them. The institute does not consider that, based on practical experience, there is justification for more legislation in the field of industrial relations. It refers to the growing number of companies where employers, unions and their members have been able to develop initiatives to improve industrial relations and hopes that these encouraging signs can be developed further within the existing framework rather than introducing new legislation which will be seen as unnecessarily controversial and adversarial.
If, in the view of those best qualified to judge this is not the time for introducing further legislation, why are the Government proposing to do it? Here one cannot help suspecting that they are less concerned with the need gradually to improve industrial relations by encouraging co-operation between management and employees than with a desire further to cripple the effectiveness of trade unions. The Government may think that this will rebound to their advantage in the forthcoming general election, but I warn them that it may do just the opposite. We on these Benches believe in trade unions as an essential means of enabling employees to join together to protect themselves from unscrupulous employers and generally to keep management up to its job.
I should next like to ask why the Government are showing themselves to be so discriminatory and lacking in even-handedness in their approach to regulatory legislation generally. Just over a month ago the noble Baroness, Lady Turner of Camden, introduced a Bill which sought to provide new rights to information and consultation for trade unions and their members involved in takeovers and mergers. In our view it would have been better if it had applied to employees generally; but never mind. On that occasion the debate centred on how in such situations the interests of employees and indeed of the general public could best be protected. I said that effective voluntary action was preferable to legislation, but that the trouble with voluntarism was that there had to be volunteers. If they were not forthcoming, legislation was all that remained.
In their response the Government referred to the review of law and policy on mergers and restrictive trade practices that is now taking place and assured us that the rights of employees in takeovers was one of the matters under consideration. However, I suggest that that slow moving, deliberative approach to further regulation of the City is in sharp contrast to the apparent imminence of further legislation on trade unions.
If there is need now for more trade union legislation, there is surely no less need for some statutory limitation to be placed on the current excess of speculative capitalism that is directed towards short-term gain rather than the long-term improvement of our industrial performance.

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My last general question is as to why we read so much in the Green Paper about the duties of trade unions and the rights of their members and nothing at all about the need for employers to do more to improve communication with their employees. It was to go just a little way towards providing some balance in these matters that five years ago my noble friends and I persuaded the House and ultimately the Government to accept what is now Section 1 of the Employment Act 1982. That is the section which requires companies employing more than 250 people to include in their annual reports a statement describing the action taken during the financial year to develop employee involvement in a number of ways.
Again, if there is thought to be this immediate need for further detailed regulation of the conduct of trade unions, why should the Government not build at the same time on what is already the practice of our most successful companies by giving employees the statutory right to be informed on matters of concern to them as employees and consulted in the making of decisions that affect their interests?
This debate is about the Government's Green Paper. The House today is not discussing the Labour Party's approach to the subject of further legislation affecting trade unions. However, having expressed our misgivings about both the timing and the unbalanced nature of the Government's proposals, I am bound to add that the Labour Opposition's intention to put the clock back by reversing so much of the legislation of the last few years would, in our view, have disastrous effects on British industry.
To mention but one example, the TUC Labour Party pamphlet People at Work: New Rights, New Responsibilities states that the new framework envisaged in it would,
"in no way give employers, or their customers or suppliers, any opportunity to seek injunctions and damages against a union".
I cannot believe that the majority of trade unionists, never mind the electorate generally, will shortly vote for a return to the chaotic conditions that such a reactionary proposal would bring in its train. Certainly the Alliance will use whatever influence it may have in the formulation of policy in this field after the election to ensure that nothing of the kind is allowed to happen.
We believe that there is now a strong case for moving towards a system of positive rights for trade unions and individual employees in place of the current system of union immunities. This might well define the conditions under which there would be rights to union recognition and for individuals to strike, but we are also sufficiently realistic to recognise that such a major upheaval in the law would have to be managed with enormous care and would require the widest possible consultation and acceptance before it could be implemented.
To sum up, we think that there should now be a breathing space in which the legislation of the last few years, much of which we have supported, can be digested and management and employees can increasingly develop the interests that they have in common. Trade unions must continue to operate within a framework of law, but when the time is ripe for a revision of that legislation, let it be fair and let it be balanced in the interests of the community as a whole.
4.50 p.m.
The Lord Bishop of Manchester: My Lords, I am very grateful, too, for the opportunity to debate the Green Paper. I believe that trade unions play a very vital role in our society these days. I am very conscious that the issues raised in the Green Paper are complex and that there are people present in your Lordships' House who have lived with them, perhaps from both sides of industry and commerce, for many years. We have already benefited from hearing some views, and I look forward in particular to hearing the maiden speech of the noble Lord, Lord Basnett. I am not quite sure how long this debate will go on. Your Lordships might say that that rests partly in my hands along with other speakers. I should like however to apologise to the noble Lord, Lord Young, if I am not in my place for the concluding stages. I hope to be here, but I shall have to see how it goes.
On study leave in India last year, I found myself in a silk factory in a major city. The factory was producing the most beautiful silks, fabrics and saris in the most terrible working conditions; and wages were clearly very low. Talking to the owner of the factory in the steaming heat, although it was supposed to be the cool season, I asked various questions about the workforce. How many? About 200. How many women employees? About 20. It was not very suitable for them. How many belong to unions? The owner put his hands together, raised his eyes piously to heaven and said, "We have no unions in this place, thank God." Market forces were truly at work.
It is important in a debate such as today's to remember something of the history of the trade unions and how they grew up in this country. I could not help being reminded, seeing conditions in India, of what conditions were like in Salford, in Manchester and in the other industrial cities of Britain back in the 19th century, and of the really vital role which trade unions then played to improve the standard of life of working people and, I believe, to help us generally forward into a better form of society.
It is very easy to build up ill will against unions in the sort of society in which we live today. The press can have a field day when something goes wrong in the conditions surrounding strikes and it is very easy to arouse a great deal of public anger. All of us have personal memories of the winter of discontent. Along, I am sure, with many of your Lordships, I was horrified by some of the things that happened, some of the incidents on picket lines. But we need to remember that trade unions arose in response to the power—the overweaning, almost unbridled, power—of employers, and to help the poor and the underpaid.
The role of the unions back in the 19th century—in the early years of their history—was necessarily defensive and protective. Their eyes were fixed on the welfare of their own members. This remains a prime consideration. But, naturally, the call today is for a wider role for unions and a greater consciousness of the kind of society in which they are operating—a call to which, I believe, they are responding.
It is necessarily part of the role of governments of every political complexion to make sure that the

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power of organisations and institutions in a country is not abused. All of us, I believe, ought to concede this. Personally, I give a welcome to some steps taken in recent years, as the noble Lord, Lord Rochester, has indicated, to achieve greater democracy in unions. It is right for governments to be concerned over abuses of power and particularly with the protection of the public. One is aware, when the public are endangered by some industrial dispute, of the awful humbug that goes on—humbug from those who are on strike and also from those opposing the wage claim, or whatever it may be, when it is argued that the intention is not to hurt the most vulnerable in our society and that the responsibility is all on the other side. That simply will not do. The innocent, the weak and the poor can get very badly hurt in such disputes. It is necessary therefore to watch for abuses of power and to encourage greater responsibility in unions along with other institutions in our society.
The trade unions are only one group of the organised institutions in society, and there are others, who exercise self-interest readily enough. My worry about the Green Paper is that there does not seem to be any awareness as to how many different groups operate in our society. It may be said that this is the responsibility of Green Papers in other fields, of discussions in other fields or of legislation brought forward, for example, to regulate the City. I do not think that that is an adequate reason for such a one-sided document now before us. Government departments can abuse their power; great multinationals, especially if they have monopoly powers, can abuse.
As regards professional associations, I should like to quote an example of what happened back in 1974—not all that long ago.
"Hospital consultants imposed sanctions to bring pressure to bear upon the Government in the case of a dispute over pay and began working to contract. In one month, a quarter of a million hospital appointments were cancelled. Support for the work-to-contract was total. Mass resignations from the National Health Service were prepared and more than half the consultants registered with private medical agencies in order to contract their skills to the National Health Service at rates fixed by themselves. The disputes rumbled on for over a year altogether before a satisfactory conclusion was reached. Where their seniors had led, junior hospital doctors and ancillary staffs followed. Grievances about pay and status were felt keenly enough for the conduct of the NHS to be in jeopardy and for considerable pain and suffering to be caused".
I make no comment on the actual causes of that dispute or to what extent people were justified. I simply show that as one example of a power group in society prepared to misuse its power. All the attention should not be concentrated on the unions. Market forces themselves can lead to very great abuse, and I was not wholly convinced by the refusal of the noble Lord, Lord Young, to consider analogies between what happens in commercial companies and what happens in the field of the unions.
A main criticism, then, of the Green Paper is that it is far too one-sided and the trade unions are, I think, entitled to react on that basis. There is no recognition of the positive value of unions and their role in society, although I was very grateful to hear the noble Lord, Lord Boyd-Carpenter, and also the noble Lord, Lord
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Young, himself, make a reference to this. It does not seem to appear in the Green Paper.
There is no recognition of the various centres of power in modern Britain. The comments of the noble Lord, Lord Rochester, on companies in relation to shareholders were a good example of how power can be abused. All the emphasis is on individual rights. Individual rights are, of course, very important. It is a vital part of the Judeo-Christian tradition to care about individuals over and against the state or other power groupings. But group rights also matter. And they can indeed protect the individual worker which is what they are often designed to do. I do not think one can accept too readily a situation where individuals simply contract out.
There could be a parallel here which your Lordships may or may not accept. I have been put under a good deal of pressure in recent years to join the peace tax campaign. The idea is that individuals who do not agree with nuclear weapons or the purchase of Trident should be entitled to withdraw their taxes and to put them aside so that they can be used for good purposes, such as world development. The idea is splendid in theory but I have always declined to join because I believe that in a democratic society where you have a democratically elected government to make decisions—even those with which you do not agree—you still have a responsibility because of your group membership, your membership of the community, to go along with them. If individual rights are to be exalted above all else, one might well ask why we have party Whips operating in this House and in another place. I do not say that, because we do not have one!
Noble Lords: Hear, hear!
The Lord Bishop of Manchester: My Lords, perhaps I may say to the noble Lord, Lord Denham, who is now present, that I was speaking of the value of party Whips—at least on one point of view!
If we look at paragraph 2.22 of the Green Paper, we see that it states:
"The Government believes that a decision to take industrial action should be a matter for the individual. Every union member should be free to decide for himself whether or not he wishes to break his contract of employment and run the risk of dismissal without compensation".
I believe that that is far too simplistic and that the balance between individual and group rights is much better argued through, as, for example, in a document which came from the Church of England Board for Social Responsibility a few years ago which dealt with understanding the closed shops. What I shall now read to your Lordships relates to closed shops and compulsory union membership. It states that a Christian:
"will feel an obligation to work for the development of laws and institutions in society which respect the conscience of the genuinely dissenting individual, without weakening them so much that those institutions cannot perform their legitimate function. The tension here between freedom and order may be particularly acute, but the Christian should be realistic about the need to live with conflicting claims … motivated by the demands of love, should feel the need to be concerned with obligations towards others and not simply with the rights of individuals on their own. He will recognise too that true freedom has more to do with responding to the obligations inherent in relationship with others than with independence and self-centredness".

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I commend those words to your Lordships' consideration because I believe that they are an attempt to wrestle with the difficult question of the balance between group rights and individual rights in modern society. I am bound to say that the unions themselves have, to my mind, sometimes given too little consideration to these difficult questions and I hope that they will consider them more in the years ahead. However, that is no excuse for the Green Paper to do the same. I am not surprised in the slightest at a TUC reaction which referred to "a charter of harassment".
I agree with the noble Lord, Lord Boyd-Carpenter, on the need for change. That applies to every human institution, including the Church of England. However, there are great dangers if change is pushed in certain directions and if it seems simply to increase divisiveness in society. We are already threatened with a society which is divided in many ways, such as in the share of our resources and in health, as we have seen recently. To legislate along those lines could be a further move down that dangerous road. Co-operation for any government of whatever political complexion with the unions in the years ahead will be essential.
Incidentally, I do not recognise the rosy picture of industrial relations which has been given to us this afternoon by the noble Lord, Lord Boyd-Carpenter. I do not think that it is sufficient simply to measure industrial relations in terms of the numbers of recorded strikes. There is a great deal of fear and many strained relationships, especially where unemployment is very high.
My last point for the consideration of your Lordships brings me back to the international scene, where I started when I mentioned visiting a silk factory in an Indian industrial city. One of the things that is happening in our increasingly concentrated world—a world which is shrinking year by year—is that the great multinationals are able to manufacture products in countries where labour is dirt cheap. There is a tremendous need there for the growth of the kind of organised union activity which we saw in Britain in the 19th century in order to give people a fair share of resources and to improve their standard of living. We in Western societies suffer very much from the fact that unions are weak in other parts of the world. Surely that is something to which any responsible government ought to give attention in the years ahead.
5.6 p.m.
Lord Basnett: My Lords, the sense of relief which I feel at now making my maiden speech is more than met by the sense of privilege and honour I feel with membership of your Lordships' House. The privilege is all mine; the honour belongs to the trade union movement and to its members, past and present, for the freedoms they have forged for the working people of this country and for the service they have done to our nation. One pleasure is perhaps unique to myself. It is the opportunity, after 40 years as an active trade unionist, to make a non-controversial speech on the subject of trade unions and the law. I can only say that I shall try.
I shall use the opportunity, not to address myself to the individual parts of the Green Paper, but to suggest
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two questions against which the proposals in the Green Paper should be judged. The first question is, "What have been the effects of the laws passed since 1979?", and the second is, "What would be the effect of the proposals within the Green Paper?". The Green Paper makes a number of claims for improvement. From its introduction I quote the two most important claims. First, it is stated that:
"there has been an avoidance of much unnecessary and damaging industrial action".
Secondly, it is stated that:
"there have been initiatives to improve industrial relations".
I am bound to recognise that there are arguments which have been advanced with great strength to support those statements. However, from my experience and involvement in the period since 1979, I cannot accept either of those statements as complete or wholly correct. While it is commonly accepted that the unions are now more cautious in their approach to industrial disputes, it is generally accepted that the major influence has been the depressing level of unemployment and, in many cases, rises above the rate of increase in the cost of living.
There have indeed been changes in industrial relations practices. I shall argue that they were occurring before 1979 and would have continued without the law. However, there is no argument about the changes in some of the unions produced by the 1984 Trade Union Act. What that Act did was not to create any major new practices but to promote the common adoption by all unions of practices which existed and which were followed by some of them. Those changes had a basis within the trade union movement. They were known; they were experienced. The Green Paper proposals, however, are not within the experience of any union within this country or indeed within any country. As my noble friend, Lord Murray, has said, they are not supported by any substantial analysis and on occasion they are supported by facts which are suspect.
In those circumstances, I am sure that your Lordships would wish to be assured that there was a general desire and a particular need, or even a general benefit, to be gained from those proposals. So the second question becomes: "Who wants them, who needs them and who would benefit from them?" No doubt at the close of the period of consultation the Government will give us their answers. In the meantime, I should like to address myself to a few points.
Neither side of industry has asked for these proposals. The CBI, while supporting some of the proposals, has totally opposed others. As has been mentioned by a number of noble Lords, the TUC describes the proposals as "unbalanced, one-sided and hostile". Within the Green Paper there is not one shred of evidence that trade unionists themselves want these changes.
Your Lordships may consider that the only wholehearted support for all these proposals comes from their authors. However, it is possible, even if there is no general desire for these changes, that there is a particular need for them. On the one hand it is possible to argue, as does the Green Paper, that the proposals provide a necessary protection for individu-

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als and for individual freedom. However, on the other hand it is possible to argue that they provide a licence for individuals to undermine the collective action and collective freedom which is so essential for the wellbeing of all trade unionists. I should like to give one example, which was also mentioned by the noble Lord, Lord Boyd-Carpenter. Having required secret ballots to establish majority decisions before strike action, they suggest a protection from disciplinary action which must encourage individuals or minorities not to abide by these decisions. Perhaps instead of the TUC's description of these proposals, and this proposal in particular, as harassment, the CBI's description that the Act would discourage democratic procedures would be more acceptable. I am certain that noble Lords would like to be sure that these proposals are even-handed. This point has been dealt with by a number of noble Lords, including the noble Lord, Lord Rochester.
Finally, who would benefit from them? Certainly not industrial relations. Our system of industrial relations remains a voluntary system which in the past has relied on the self-regulation of both parties. As my noble friend Lord Murray has said, laws have worked and produced positive changes when there has been some basis for their introduction and some acceptance of them. When they are not accepted, even if observed without enthusiasm, they have never produced constructive or new initiatives. For instance, in 1974 it was a voluntary initiative that produced orderly picketing in the miners' strike of that year. In 1984 the new laws did not ensure peaceful picketing.
However, there is a need for new initiatives. The most successful OECD economies with strong trade union movements have, almost without exception, some form of industrial democracy or co-determination. The major thrust of any law or government intervention should be to seek to assist trade unions and employers to base their workplaces on the principles of social partnership, with unions and employers working to the same ends. They should assist unions to protect workpeople in industry and should reflect the genuine needs which exists in our society for their protection.
Trade unions respond to their members' needs and react to public opinion. They reflect, as must the law, the needs of the society in which they operate. The failure of either of them to do that could bring them into disrepute. I am sure that your Lordships and the general public will agree that a law not reflecting genuine and obvious needs would suffer, and would deserve to suffer, that fate.
5.16 p.m.
Lord Thorneycroft: My Lords, it is an honour and a privilege to speak after the contribution of the noble Lord, Lord Basnett. It falls to me very genuinely to compliment him on the quality of his maiden speech. The noble Lord quite rightly said that he would make a non-controversial speech, but it was no less powerful a speech because it was non-controversial. The points the noble Lord made were made from deep knowledge and with great sincerity and I think they made a deep impression upon the whole House.
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I agree with my noble friend Lord Boyd-Carpenter, to whom we are indebted for this debate, that it is indeed an asset for this House to have noble Lords such as the noble Lords, Lord Murray, Lord Basnett and others, who are able to contribute to what is an amazingly important and complex subject. I hope that we shall hear them speak on future occasions and that the noble Lord, Lord Basnett, will often contribute to our discussions.
The debate concerns the Green Paper on trade unions and their members. It is a fairly highly technical paper. I am not a wild enthusiast for every proposal that it puts forward. It is a perfectly good debating paper, a consultation document, but I would agree with the noble Lords, Lord Murray and Lord Basnett, that we ought to listen to what they and other noble Lords have to say before we come to any final conclusion about it. In any event, it is only a continuation of a policy which exists; it adds something to it.
I should like to discuss—and I say this in reply to the noble Lord, Lord Murray—the principles that underline the paper. What are we trying to do to the trade union movement? What is the purpose of the trade union movement, and are these proposals going to help or hinder it? The purpose of the trade unions is not to help a government. It was not the purpose of the trade unions to help Mr. Heath and it is not the purpose of the trade unions—nor should it be—to help Mrs. Thatcher. It was not the purpose of the trade unions to help the noble Lord, Lord Wilson. Anyone who has read Jim Callaghan's book would know that it was not the purpose of the trade unions to help him. If I may say so, if ever there was a man who deserved the help of the trade unions it was Jim—or Sir James as I should now call him.
Lord Murray of Epping Forest: My Lords, does not the noble Lord agree that the fact that the trade union movement helped the government of the day—including Mr. Callaghan's government—to bring down inflation from 28 per cent. to 8 per cent. over three years is a service not to that government but to the nation?
Lord Thorneycroft: My Lords, that may be so. Nevertheless, I pursue my argument. If ever there was a man who deserved that assistance, even in the terms which the noble Lord, Lord Murray, has just stated, it was Jim Callaghan. He had devoted his life to preserving the immunities of the trade union movement. He had challenged his Leader, Mr. Wilson, as he then was, who, let us remember, introduced In Place of Strife with Barbara Castle.
For a moment we all thought that at last the Labour Party would do what it was peculiarly fitted to do—introduce some orderly legislation for the trade union movement. Who defeated that? It was not the Tory Party; it was not us in opposition. We all know who defeated that. It was Jim Callaghan. He absolutely wrecked it and tore it to pieces. If there was any man who deserved the help of the trade union movement in any terms that the noble Lord, Lord Murray, would like to describe such help, it was Jim Callaghan. In fact, we had the winter of discontent. The very moment when he most needed help he was abandoned.

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I am not criticising the trade unions but trying to face the facts of life. The job of trade unions is not to help politicians but to help their members, and if we are speaking about principles it is as well to get to the reality of them. If that is the attitude of trade unions what should be the attitude of all governments?
I cast my mind back rather a long way—pre-Thatcher—to when Mrs. Thatcher was in opposition in a Shadow Cabinet and the Labour Party was in power and to the situation which then confronted us. We had an income and wages policy. They were under control—more or less under control; rather a "Solomon Binding" sort of control, but control of some kind. We had bargained away the freedom of dividends, so wages were under control and dividends were under control. If you wanted to pay a man more money it was not possible to do so. In industry we were buying men from one another. If a firm was successful it could not pay higher dividends and attract more capital. It could not pay higher wages and attract more men. We were all fixed under a highly centralised system of control.
Inflation was high and inflationary expectations were higher still. I do not want to exaggerate, because the country was not run as badly as all that. Actually the IMF was brought in and was running things rather well. Denis Healey was still in post as Chancellor of the Exchequer. I do not think he was allowed to leave the country but he was still there. On balance it is right to say—because one must not exaggerate—that the position was not too bad. However, no one on this earth could have said that we were living in a free society.
It was against that background that the Conservative Party had to think out the policy that it should pursue. It wanted—and I ask the noble Lord, Lord Murray, to accept this as genuine—a free society. It wanted to get the unions back to a position where there could be free collective bargaining. Obviously we could not have free collective bargaining then; it would have been suicide. The Labour Party was not prepared to concede that; no one could with inflation going through the roof. We could not possibly have that. We wanted a high profit, high wage society. We wanted people who were successful to get more money. We wanted workers who were successful to be paid more money. That does not seem to me to be altogether unreasonable.
How did we set about that? We believed that there were two courses we had to pursue. First, we had to lower inflationary expectations. That is one of the principal actions on which we have been engaged over the past eight years. Unless you can lower inflationary expectations no form of trade union policy can succeed. If everyone with a job expects the price of everything to go up and up the next morning, no trade union leader—after all, they are human—can hold the situation. We tried our best and I am bound to say that over eight years this Administration have shown a remarkable degree of success.
That was one leg of the policy. The other leg was to reduce a little the immunities and powers of the trade union movement. I must say to the noble Lord, Lord Murray, that we did go slowly on that. Your Lordships
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can have no idea of the caution exercised. Jim Prior, who was right, pursued a policy of slowly, slowly. We were pressed all round, mainly by trade union members, to go faster, but the world of the sympathetic strike, the closed shop, the triumvirate in which transport, coal and steel were going to be able to unite together to force their views, all those things were upon us. However, gradually, very gently, we have been enacting legislation until it is now accepted.
This Green Paper is a suggested extension. To tell the truth, I have not the faintest idea whether we should go forward. I think we should be careful about that. However, on the principle I am saying that over a period we made some dramatic changes, very quietly, very carefully, and we matched them with a reduction in inflationary expectations.
What do we do now? The Conservatives will stick to this policy. They will continue to try to hold down inflation. There are many reasons for doing that, but one is that a free society is impossible unless inflation is kept down. There cannot be a sensible trade union movement with inflation going through the roof. Therefore, we shall continue to do that. We shall hold on to the legislation that we have on trade unions. I am sure that Ministers will look very carefully at and listen closely to the lucid, fair and sensible arguments that have been addressed on the suggestions for expanding it in certain fields. No doubt in some cases they will expand the legislation a little and they will reject other suggestions as unnecessary or positively harmful. However, the broad line of the legislation—and that is what matters, not the detail—will undoubtedly be held.
What will the Labour Party do? I want to put this as fairly as possible. It seems to me that it will increase the public's inflationary expectations. I do not think anyone who examines even the most modest account of what a Labour Government would do if returned to power can doubt that there would be an increase in inflationary expectations. What will they do about trade union legislation? It is felt by many that they would begin to erode it. If inflationary expectations are to go up, the immunities are to be returned and the legislation is to be abandoned, there would be a dangerous situation.
I turn to the Alliance. In some ways it seems to me that the Alliance has the most fascinating policy of all. It has set it all out. I am sure that the noble Lord, Lord Rochester, has read it in this admirable little book about the two Davids. It is great stuff. The Time has come is good reading. I recommend it.
David Owen praises General de Gaulle. I do not think he knew that the first thing General de Gaulle did was to abolish proportional representation. Nevertheless, it is frightfully good stuff. I cannot put it down. It goes on to economic policy. But the Alliance's economic policy seems to me to be deeply flawed. It too will increase inflationary expectations. The Alliance admits it frankly. I do not think it would spend as much as the Labour Party, but it will borrow a great deal more money. It asks, why not. It says that we could spend more money. The real flaw in the Alliance's policy is that it says that it could spend more because it will have an incomes policy. This is where I came in. It will have an incomes policy. It will set counter-inflationary limits.

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I hope the noble Lord, Lord Murray, is listening to what I have to say. Counter-inflationary limits are just what poor old Jim Callaghan had. That is what we had the winter of discontent about. That is what left rubbish all over the parks and the dead unburied. We do not want to have it all again. I should have thought that by this time we would have learnt one thing—that wages policies do not work.
I think that the trade union movement will agree with me about one thing. It may like or dislike trade union legislation; it may think that this Green Paper is good, bad or indifferent but it would wear almost anything rather than have its right to negotiate the wages and conditions of its workers taken away. After all, that is what trade unions are for. That is what the row in the education unions is about at present. I yield to no one in my admiration for Kenneth Baker, but I do not think that his greatest admirer would suggest that the system of wage fixing in the education world should be translated into the rest of manufacturing industry. That is exactly what the Alliance proposes to do.
I say to the noble Lord, Lord Rochester, who was talking rather lightly about crippling the role of the trade unions, that the one thing that will cripple it is not whether we do or do not have one of these proposals in the Green Paper but whether we take away its power to negotiate wages and conditions. That is what the Alliance proposes to do. It proposes to introduce the most centralised system of wage control that one could devise. At the back of it it will have an inflation tax.
Really, Roy Jenkins! Roy Jenkins was a member of the Labour Party. He was a party to all that went on. It is true that if one reads Dod's one would not think so. He admits to having some faint association with the Fabian movement, but he leaves out all the stuff about his role in the Labour Party. He was in it all. The noble Lord, Lord Diamond, was in it. He was in the Treasury. They know about these things. To suggest today that the Social Democratic Party should try to sell that to its innocent friends in the Liberal Party over there is a bit too much.
One should learn as one goes forward. One should learn from one's own experience or, perhaps better still, from other people's. We have all made a mess of this already. The Labour Party has made a mess of it. The Conservative Party has made a mess of it. I almost invented the thing. Years and years ago when I was a young and innocent President of the Board of Trade, I introduced something called "Three wise men" under Lord Cohen, who sat up all night thinking about what people should be paid. I confess this blushingly to the noble Lord, Lord Murray. That is the sort of thing I did. I was not alone. That is the type of rubbish that every party has done, and now the Alliance wants to do it all over again.
I make this appeal. The Alliance may have a role in government. Not now and with this policy, but one day it may have a role. I beg it to try to get matters somewhere on the level, to have some type of policy, or no policy at all! I think that no policy at all is good for an opposition. It should try to reach the position where it is not hooked on a policy which will play all
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over again a gramophone record which we have already heard much too often.
5.37 p.m.
Lord Houghton of Sowerby: My Lords, I wish to join in the congratulations to my noble friend Lord Basnett on a most competent and impressive maiden speech. My noble friend Lord Murray, as a former general secretary of the Trade Union Congress, addressed the House with great authority and from great experience. It is remarkable, as the noble Lord, Lord Boyd-Carpenter, said, that this afternoon, for the first time I should imagine, we have a former TUC general secretary and three former members of the TUC general council on the list to make speeches. We have a current serving member of the general council in my noble friend Lady Turner, who will be speaking later. That is a pretty good turnout from yesterday's men and today's women. It shows that trade union leaders never die. They do not even fade away; they turn up in your Lordships' House, where they should be.
I have long been in favour of adding Lords industrial to Lords Spiritual and Temporal so that the viewpoint of a responsible body should be put in your Lordships' House, and, moreover, that they should be held accountable to your Lordships' House for what they do. I see no reason why the Bishops should have 26 seats in this House and the Trade Union Congress none at all. One day the composition of this House will change. I have no doubt that it will become more representative.
The noble Lord, Lord Thorneycroft, in his usual bantering and blustering speech which we all enjoyed, said that everyone had made a mess of things. I think that that is probably true, because the history of trade union law reads like a parliamentary scrapbook that has been accumulating for the whole of my lifetime and beyond. One can lay that beside a political calendar where Conservative, Liberal and Labour governments have all come into the picture on trade union legislation. What worries me is what lies ahead in this matter of trade union law, organisation, supervision and control.
We are on the eve of a general election. How will this Green Paper fit into the programme for the future? Bear in mind also, my Lords, that we shall have three party manifestos. Each will presumably contain intentions of policies for future government regarding the trade union movement. Does it mean that we shall have a trade union Bill every Session in the foreseeable future? Shall we undo a great deal that has already been done and have an entirely new approach from a new government? Are we ever going to be free of trouble, difficulty and controversy over the law of trade unions? This is what worries me. I do not think that it will help the trade union movement if it is perpetually on the parliamentary and political slab being dissected by the various political parties in order to decide what the ultimate shape of the body politic shall be. We ought to turn our attention a little more closely than we have done to how we shall deal with these matters.
It is obvious from what my noble friend Lord Murray said that consultation between the Government and the Trades Union Congress on all these trade union Bills has virtually broken down. Today we have a Green Paper containing a

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considerable number of tricky and sensitive proposals with a date fixed for representations to be received. Then, as the noble Lord, Lord Boyd-Carpenter, said, the Government will consider what the final shape of their proposals will be.
I do not know what message the Minister will take to the Government from this debate on the Green Paper. It will be very mixed in many respects, I have no doubt. I cannot see any clear mandate emerging so far which the Government can regard as so important that they should give it priority in the next Parliament if they are still in government. I believe that if we get future Bills on trade union law we ought to insist on more adequate consultation. We ought to insist on examining these Bills in a Select Committee, or other machinery for the purpose, so that we can deal with these matters after consultation and discussion between the parties concerned.
For example, let us take ballots on the election of executive councils and officers. This House approved an amendment moved by the noble Lord, Lord Beloff, that we should have postal ballots. The Government then had to reconsider the measure because they had serious misgivings about whether obligatory postal ballots would hold. After some delay between stages of the Bill, the Government said that they had consulted with the trade unions and that postal ballots were a sheer mechanical and administrative impossibility with the existing state of the trade union records.
The unions had to know at least the private addresses of their members for postal ballots, and many unions did not have them; contact was at the workplace. We therefore reached a modified proposal that while the conventional ballot should be by postal ballot, those who could not comply with that requirement should be given a dispensation to have ballots at the workplace. I believe that that is the position today.
Some problems have already arisen in connection with these ballots. I do not deny that before very long it may be necessary to consider whether they can be made uniform. Can we have an electoral system outside the national and local government electoral systems which will be clean and efficient? We may need a separate authority to oversee ballots which are undertaken—especially those undertaken by requirement of the law—to ensure that the ballots are properly conducted and to make a report to that effect to all concerned.
There are other aspects of ballots where difficulties have already arisen. I shall give an example. There are four Civil Service organisations that have previously been involved in discussions with the Treasury on pay in the Civil Service. Since they have not reached agreement on the latest offer it was decided by the four associations concerned that they must ballot their members on industrial action. Two of them received a favourable ballot and two did not.
The result is that that consortium has had to break up. One has four unions, each tied now by the result of a ballot taken in their respective unions, rendering their executive committees absolutely helpless in an endeavour to overcome this deadlock. I do not know who is pleased about this situation, but anybody who looks at it dispassionately must be very worried that two organisations are going ahead with strike action,
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with a ballot behind them, and two are staying out because the ballot was against strike action. How does this dispute get settled? Who can conciliate? Who has the authority to do a deal with anybody on any matter in the present circumstances?
I mention this only because this is a new situation, which will have to be resolved somehow, which the observance of the pre-strike ballot has created. We have to bear in mind the strange situations that a simple proposition for ballots before strike action can create.
One proposal in the Green paper attracts me considerably: that for a commissioner. However, I wonder whether a more elaborate organisation than a commission would be suitable as an independent body to take over the responsibility for discussions with the trade union movement and others on trade union organisation, administration and finance. Some people may be horrified at this. They may think, "Oh my God, we are going to have a new bureaucracy looking after the trade union movement". But I suggest that there has to be more accountability to Parliament by pressure groups, organisations, societies, unions, and those who are exerting power and authority and political influence in the community. I believe that all power should be accountable. The greater the power, the more accountable it should be. That is the essence of democracy. It is very difficult indeed for some bodies to be directly accountable to Parliament when Parliament will probably be far too busy to attend to the matters which may arise.
I quote as my example the creation of the Building Societies Commission. I know that one cannot compare the building societies with the trade unions, but they are derived from very similar origins. However, when the building societies were seeking an expansion of their range of activities and entering into financial power and operations far beyond those envisaged by earlier building societies Acts, the Government said that they can have such powers only on condition that there is to be a supervisory body. That statutory body, representative and independent, will have the power to look at organisation, management finance, personnel, and matters of that kind, and will give directions where they feel it to be necessary. Such a body of commissioners might have similar rights to those of the Building Societies Commission to promote statutory instruments for the introduction of regulations dealing with matters which are more suitable to be dealt with by regulation than by statute law.
Do not let us rule out anything in our approach to the trade union problem. We have been at it for a long time. As the noble Lord, Lord Thorneycroft, said a few moments ago, nobody can be very proud of what has been done. I do not think the history of trade union law is any tribute to our glorious past. It is mostly the result of legal judgments, imposing on trade unions intolerable burdens of statute law from which immunities have had to be provided, or of political change. We now see yet again the see-saw of trade union legislation.
Can we go on like this? Is there no end to it? Is one political party going to undo what another has done? Is a third political party going to undo what the other

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two have done? What is the sense of going on like this? Since we are so busy organising everybody else's lives and that of bodies outside this House, why can we not give more attention to the obsolescence of many of the procedures in this House and of our way of doing business?
These matters are not suitably debated across the Floor of the House except in unreasonably long hours of Committee stages. After having had recent experience, I am convinced that a Select Committee is much the best way of going into problems in depth, sorting them out so that when they come to your Lordships' House much of the thinking has been done and all of the evidence has been taken.
There have been differences between the two sides of the House on trade union Bills in the past. Amendments have been carried which the Government have not liked and which they have wanted to change. I have already given an account of an occasion of that kind. I hope that we can consider these problems a little more closely before the time comes when we have to deal with another trade union Bill.
The trade unions are entitled to a period of relative stability. As the noble Lord, Lord Rochester, said, a lot has to be digested from the legislation which we already have. All these propositions in the Green Paper are arguable. Some of them appeal to me much more than others. I think we are right to look at questions of individual liberty in the trade union movement as well as elsewhere. We are right to look at the treatment of dissenters in the trade union movement, as we have to look at the treatment of dissenters anywhere else. I have a strong disposition towards dissenters and I am very interested in how they are treated.
I fought hard in the Parliamentary Labour Party and succeeded, as noble Lords will recall, in getting rid of the religious conscientious objection for three-line Whips there, and the trade union legislation regarding exception from closed shops. I have made a stand for people who want to dissent on grounds of deeply-held personal convictions no matter whether or not they believe in God. We must stand up for individuals everywhere unless, as the right reverend Prelate the Bishop of Manchester said in a most excellent analysis of the situation, granting tolerance to dissenters and to minorities is a substantial injury to the interests of the majority.
I think the interests of the whole must take precedence over the rights of the few, especially when in many cases the remedy of the rights of the few is for them to get out of and remain outside the body with which they would otherwise be required to conform. I hope that we are not going to be bothered with this piece of legislation for the time being, but I profoundly hope that if there is a change of government the new government will consider whether it will be in the interests of the trade unions or those of anybody else to start turning over what has already been done without giving a fair trial to the legislation on the statute book. This is a matter of political judgment. The time will come when both Houses will have to deal with the consequences.
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There is much else that can be said about trade unions, but time does not permit and some of them are not germane to the Green Paper. However, I think they will have to be debated very widely before long. I sincerely hope that we can discuss these things with reasonable calm and lack of controversy. Your Lordships' House is probably the most unbiased assembly for debating trade union matters that I know of, because everywhere else it is one-sided. One might say that almost everything is one-sided which comes forward on behalf of trade unions, from wherever it comes. It is one-sided if it comes from a Conservative Government; it is one-sided if it comes from a Labour Government; it is one-sided if it comes from the TUC.
The Labour proposals on the future of trade unions are stuffed with rights. Now and again I like to see a reference to duties and obligations when one is establishing rights. All that went by the board when we had the Bullock Committee and there was an attempt to find a basis on which a new era of co-operation could be formulated, with good will on all sides, and based on the experience of Europe. That was no more successful than the attempt of the Labour Governments' In Place of Strife in 1969. There followed the Conservative Act of 1971, and that was repealed by the Labour Government in 1974. And so we go on.
I plead for some inward looking, some self-criticism, in Parliament itself about the way in which we are handling these matters. Let us ensure that they are properly discussed elsewhere if we cannot spare enough time to do it ourselves.
6 p.m.
Lord Beloff: My Lords, it seems to have escaped the notice of your Lordships that the whole of this debate is out of order. The Order Paper refers to a Green Paper, Trade Unions and Their Powers. The title of the Green Paper which has been expounded to us by the Minister is Trade Unions and Their Members. However, I propose not to avail myself entirely of the licence which being out of order offers but only a little in order to take up some of the general points made first by the noble Lord, Lord Murray, and then by the right reverend Prelate the Bishop of Manchester.
Both of them talked about the idea of trade unionism, of the ideas that went into discussing matters affecting the trade union movement, about legislation concerning it and also about its history. I thought that they were not sufficiently radical in their appreciation of the degree of change or of the nature of the anxiety which may exist in sections of the public about the trade unions in their current position. It has been well established that the real Green Paper dealing with trade unions and their members continues a line of legislation in certain detailed respects which has been argued about. One may or may not accept that as valid, or one may accept it in part and reject it in part, as I think the noble Lord, Lord Houghton, does.
But this is to assume that the problems of trade unionism are those that were described in relation to the last century—of the development of corporate action, of collective action, to deal with exploitation by private employers in search of greater profit. The ideology of trade unionism, like other ideologies which have existed for a long time, cannot altogether escape

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its origins. Yet the trade union movement today as it affects most citizens is not the trade union movement represented in private industry or commerce. It is that very large section of the trade union movement which represents people in public employment. The problems there created do not seem to me to be addressed by the Green Paper. There is no particular reason why they should be, but they ought to be ventilated at a time when we are considering legislation that may or may not come before a future Parliament.
The most important of these changes seems to me to be that there has been some departure from the original principle of trade unionism that was referred to by the noble Lord, Lord Basnett, in his notable maiden speech and by other noble Lords—the principle that trade unions and the leaders of trade unions are primarily concerned with the physical and to some extent, if you like, moral welfare of their members. They were there to defend their members. But it is now clear that in some trade unions, or in parts of some trade unions, a rather different approach has been adopted; namely, that it is also proper for trade unions, or parts of trade unions, to use their bargaining powers to affect the policies of the bodies that employ them, irrespective of the immediate and direct effect of such policies upon their conditions of employment or their remuneration. It is obvious that this is the case in aspects of local government.
It is indeed curious—this is the only point I should like to put to the Minister—that the long and detailed report of the Widdicombe Committee on the operations of local government nowhere considers under that particular head the effect which may have come about in aspects of local government from the increasing influence of trade unions, either through elected councillors or through co-opted members of committees. Whether or not one regards that as a desirable development, it is certainly a relatively new development. It is one we shall certainly not seek to legislate about and perhaps can hardly debate unless we have an inquiry at least as detailed and thorough as that which the Widdicombe Committee made into other aspects of local government.
One is bound therefore to take anecdotal examples. One which is familiar is the position of certain members of the teaching unions in ILEA. We have been told by Mrs. Frances Morrell, who is not, I hasten to add, a natural pin-up of Conservative Central Office, that the ability of ILEA to make the best use of its undoubtedly and always necessarily limited resources has been handicapped by the unwillingness of trade unionists in the teaching profession to be redeployed from schools where the demand is falling to those where it is rising. That is to say that the ability of a local authority to carry out the policy for which presumably, as it was an elected body, it has a public mandate is frustrated by union action which is not directly concerned with the traditional motives of trade unionism.
I think I would go further than that and take up again a point made by the right reverend Prelate: that is to say, that it may be that the ideology of trade unionism—of collective action which was and remains wholly appropriate for certain occupations or certain groups of citizens—may become much more question-
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able when taken up by others. I think that for members of the medical profession to behave in the way which was described to us by the right reverend Prelate suggests a corruption of the professional conscience by motives which I think are inappropriate there, though they might well have been appropriate to other groups of employees.
I am certain that this is the case in respect of the present disputes in the teaching profession. I believe the teaching profession has suffered enormously from the imposition upon many of its members of an ideology of trade unionism which is inappropriate in a professional context and which allows its members to behave in ways which a generation ago would have been regarded as wholly inappropriate and unprofessional. For trade union leaders to pride themselves, as Mr. Fred Jarvis does, upon finding ways by which teachers can withdraw their work and disrupt the education of their pupils without suffering financially (as they would in a genuine strike) seems to me something which, if the trade union movement were to look into its heart, it might find it possible roundly to condemn.
There is all the difference in the world between men who have been employed saying to their employer, "Rather than put up with your conditions or your wages, we shall go out on strike; we shall put up with the financial consequences, with the losses that we shall suffer", and for a group of allegedly professional people to say, "We have found a way by which we can make the lives of our clients intolerable without sacrificing anything".
It is said that this kind of thing is all right because it has the backing of a conference. This is where there is some link between our consideration of secret ballots or other forms of balloting and other forms of decision-making. I am not inclined to think that the fact that a conference has decided upon a course of action of this kind exonerates the members or their leaders from responsibility. The teaching profession in the schools—I am thinking now of the secondary schools in particular—has rightly said that the new secondary school examination, the GCSE, involves considerable changes in their practices; it involves learning new syllabuses; it involves preparing lessons and methods of appraisal of a different kind. The teachers have said loudly—there is no doubt a foundation for it—that they have been very pressed for time. Professional people pressed for time in respect of their professional avocation, with a week's holiday and more in the case of teachers at Easter, would have spent that time getting up these new skills and learning these new requirements rather than trotting off to the seaside to pass resolutions.
Noble Lords: Oh!
Lord Beloff: I know that conferences have been the lifeblood of the trade union movement, but this again is an historical fact and an historical accident. It was splendid no doubt for people who had been down the mine or on the shop floor to find a reason to have a week at the seaside. It is hardly necessary for those workers in the teaching profession who enjoy the longest holidays of any employed group in the country. Their complaints about lack of time would

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ring more true if they did not apparently find their time so easy to dispose of on matters of this kind.
It is therefore an important aspect of what we are considering to wonder whether the whole notion of collective bargaining and corporate action should be looked at again in the light of a society which is totally different from the society of the first half of the 19th century, to which the right reverend Prelate referred, in which employment is in different ways, in which the pattern of society is different and in which people's lifetime experience is different. I can only echo what I think was said by another noble Lord. While at times people may have been worried by the radicalism of the trade union movement, today the major worry must be its conservatism. It is its conservatism which prevents those consultations which, like the noble Lord, Lord Houghton, I think should and always should precede changes in the law. But for consultations to proceed, they must proceed from a common grounding in the facts and a common appreciation of where we are and where we are going.
6.12 p.m.
Lord Denning: My Lords, I think that I am one of the first to speak from the Cross Benches, apart, of course, from the right reverend Prelate. The theme I desire to develop is that we have quite enough legislation on the statute book at the moment and we do not not want any more in the next Parliament, whenever that may be.
I view it—as a judge I have had to view it—historically, because trade union legislation has been the to and fro of politics for the whole of this century. It is well to know the conditions. I start with the Taff Vale case where the railway workers at Cardiff were grossly underpaid. The union agreed upon a strike in order to improve their conditions. What was the result? The Taff Vale company brought the celebrated action against the union and the House of Lords held that the union itself could be made liable for damages and that those damages could be taken out of the funds so laboriously collected to benefit the men in their ill-health, old age or unemployment.
The country would not stand for the trade unions being penalised in this way when they were only defending and hoping to preserve or improve the conditions of their members. And so, in the Trade Union Act 1906, the Liberal-Labour alliance gave complete immunity to trade unions in respect of any action for wrongdoing; not only that, but, for their leaders, immunity concerning any action which they might take—and these are the golden words:
"in contemplation of furtherance of a trade dispute".
That was the 1906 Act.
The Act did a great deal of good, if I may so. It enabled collective bargaining and collective action in support of those who were downtrodden. The trade unions did it well for a long time. That is the real role of trade unions—to look after their members, their terms and conditions of employment, and so on. That is what they did.
Unfortunately, it went too far. In the succeeding years—I jump here from 1906 to 1970—the unions increased their powers enormously by operating the closed shop not only with a single employer but
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throughout a whole industry. There was the case of a musician, Mr. Bonsor, who did not pay his union subscriptions regularly. As a result, he was expelled from the Musicians Union. As the musical sphere is a closed shop, he could not get any work and he was left removing the rust from Brighton pier. In the case of Mr. Bonsor, a trade union was taking its powers too far. It penalised, turning out of his job a little man who quite innocently had forgotten to pay his subscriptions. I forget the date of the case, but there it is. It was not the only case.
We have had cases in the courts of insistence on the rule book, expulsion of members quite unjustly, their removal from office and the like. Unions went too far in regard to their own members but also in regard to the population at large. There was action not only against employers but secondary action against other businesses and firms and picketing of their businesses. There was blacking. There was no end of abuses of trade union power. That was why, in 1970, when the Conservative Government came to power, they did their best by the Industrial Relations Act 1971 to put the matter right.
I do not want to criticise anyone. Their efforts were well intentioned but the Act did not work. I have often been accused of being against trade unions. Not a bit of it. In the Heaton case we decided, on the wording of the statute, that the trade union, its officers and people in London were not responsible for what the shop stewards did without authority on the ground floor at the port of Hull. As a result, a newspaper—I think it was The Times—came out with the statement:
"Trade union politicians on the left and the right had no doubt that the judgment of the Court of Appeal had driven a coach and horses through the Industrial Relations Act".
That was our decision; So I would hope that I am quite independent.
As the trade unions could not be sued, the Industrial Relations Court took action against the individual dockers going so far—because they stayed outside the gates of some factory or other—as to send them to prison for contempt of court. The first three dockers were let out; then another five were released. However, the unions had gone too far in putting working people into prison for asserting what were their rights. Naturally, the country did not stand for that.
A new government, elected in 1974, went too far, repealing the 1971 Act of the Conservatives and extending immunities by Acts of 1974 and 1976. They went too far in giving trade union immunities.
So to 1978. I am afraid that I got into trouble then. I said in a speech in Canada:
"The greatest threat to the rule of law is posed today by the big trade unions. One of the biggest problems is how to restrain the misuse or abuse of power".
It got back to England, and the Haldane Society said openly in the press, "Lord Denning should resign because of the extreme anti-trade union attitudes revealed by a series of recent decisions." My Lords, I did not resign.
The position—the real reason for an alteration—was that the trade unions had gone too far. They had abused and misused their power. Innocent people who took no part in any strike were damaged and inconvenienced beyond reason. Then the

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Conservative Government came into power. It was said at the time, if I may quote Shakespeare,
"Oh! it is excellent
To have a giant's strength, hut it is tyrannous
To use it like a giant."
That is what the trade unions had done.
I will not go much further because I have almost finished my story. We have had the trade union Acts of 1980, 1982 and 1984. In my judgment they have done a great deal of good, but they have not gone far enough. I need not go through them all. The analysis is well set down in the consultation paper.
Balloting before strikes is, of course, excellent. Although there are a few matters which need not be dealt with now, let me take that one. To repeat the quotation from the Green Paper to which the noble Lord, Lord Boyd-Carpenter, referred:
"More important, however, are the issues of principle. The Government believes that a decision to take industrial action should be a matter for the individual. Every union member should be free to decide for himself whether or not he wishes to break his contract of employment".
My Lords, just think! That, it seems to me, would be destructive of collective action, collective bargaining—one of the foundations of trade union authority and power. It is only because people in the old days worked together and agreed together to go on strike, or whatever, that they had the power and the influence. Collective bargaining, collective action—that is essential in modern society. It is one of the pillars of the trade union movement. I am afraid that this provision, if it were introduced would be destructive of a most important role of the trade unions: collective bargaining, trade union recognition, and so forth. I merely offer this and other matters for thought.
The closed shop has been one of the foundations of trade union power. No one could take employment unless he were a member of the union. To go contrary to that meant that he could be dismissed from his job. It has been controlled by statutory provisions. There has to be 80 or 85 per cent. agreement beforehand on the closed shop. Does that not go far enough?
It is now suggested—this is in a provision on the closed shop—that there should be immunity for any action in regard to a closed shop. The Green Paper says that,
"immunity should be removed from all industrial action designed to create or maintain a closed shop".
I do not think that that would be right. A closed shop is a feature of the trade union movement. If it has been approved by 80 to 85 per cent. of workers in the industry, why should it not remain?
I throw these matters out for consideration. I suggest that, good as the document is—and one has now had the benefit of listening to the arguments of both sides—it is better to let things settle down a little. The trade union statutes passed in 1980, 1982 and 1984, if I may say so, are first class. Let them work their way through. Is it necessary to go further? Certainly not without consultation.
There are two remaining points that I should like to make. The rule book of the trade union is not a contract, as the courts have said. The courts have held that any man who signs on in a union is bound by the rules in the rule book as if it were an agreed contract.
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Those rules give the power to expel if members do not go on strike. The rule books are really not contracts; they are a series of bye-laws laid down by the authorities of the trade unions. They ought to be revised. If there were a trade union commissioner the rule books ought to be reframed and put into good, sensible terms so that people can understand them. The power should not be used in any harsh or oppressive way. I should like to see all trade unions adopting a modern rule book.
As the noble Lord, Lord Houghton of Sowerby, suggested, a trade union commissioner could look into these matters. If wrong was done to a member, he could inquire into it. I have one thought arising from what the noble Lord, Lord Beloff, said. Ought there to be some restraint on those who seek to strike in an essential industry, whether it be water, electricity, health or education? Ought not consideration to he given to putting some limit on the right to strike in essential industries?
Those are my thoughts. To sum up, as I said earlier, perhaps the best way is not to interfere with the present legislation. Let it settle down and let us go into the next Parliament, whenever it is, without this again being made a subject for political controversy.
6.30 p.m.
Lord Irvine of Lairg: My Lords, in the forefront of the Green Paper is the proposal to give union members a statutory right, in all circumstances, not to be disciplined by their union for failing to take part in industrial action. So a union has a secret ballot; a major vote in favour of strike action; the democratic decision is for a strike. As the noble Lord, Lord Basnett, put it in what was a commanding maiden speech, the minority are to have a statutory licence not to take part. The union is to be powerless to enforce the will of the majority.
What an extraordinary vision of democracy that is! According to the Government, the correct principle is that:
"a decision to take industrial action should be a matter for the individual".
That proposal exposes hostility to effective collective action where a democratic decision has been arrived at. The essence of effective collective action is solidarity. Effective collective action cannot be mounted if a dissident minority is given a statutory licence to do as it chooses, as the noble Lord, Lord Basnett, said.
Surely a dissident minority should not be allowed to undermine the decision of the democratic minority. Surely the minority is being undemocratic in refusing to support the decision of the majority. The whole point of a ballot is to determine the majority view. That view should then prevail. There is no justification for allowing a person to remain a member of a union, not subject to any sanction, to be an active participant in its decision-making processes, to enjoy all the benefits of membership, while at the same time refusing to support the decision of the majority after a lawful and secret ballot. I was delighted to hear the noble and learned Lord, Lord Denning, bring all the authority and experience at his command to identify the dangers of the proposal, if carried into effect, and

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what injury would be caused to free collective bargaining.
At the outset of the debate I heard the noble Lord. Lord Boyd-Carpenter, assure the House that the proposals contained in the Green Paper were not concerned with the balance of power between the employer and the employed, but were concerned with ensuring a proper balance within unions. With respect, I beg to differ. A proposal which diminishes a union's capacity to call effective industrial action in which all its members will join is plainly concerned with the balance of power between employers and employed, and it reduces that balance to the disadvantage of working people.
I also heard the noble Lord and the Minister extol the virtue of the proposal in the Green Paper to have a commission to ensure that union members can enforce these new statutory rights against their unions. The Green Paper provides that the commissioner would underwrite the plaintiff's legal costs involved in the court action. It might also be possible as an alternative that the commissioner could act in his own name on the complainant's behalf or jointly with the complainant. This is in sharp contrast with the continued refusal of this Government to make legal aid available to complainants for compensation for unfair dismissal against employers who, equally in breach of statutory duty, have unfairly dismissed them. Therefore public funds are to be made available to support legal action by workers against their union, but there are no funds available for legal aid for workers claiming against their employers compensation for unfair dismissal and for reinstatement in their jobs. In these circumstances, it is perhaps not surprising that many regard the proposals in the Green Paper as one-sided.
The proposal is fundamentally unsound for the reason that the noble and learned Lord, Lord Denning, identified. In the Green Paper the Government seek to bolster a fundamentally unsound proposal by bad argument. First, it is stated that strikers are liable to their employer in damages for breach of contract. In practice that is not a very serious point; such actions are very rare. More seriously, the Green Paper provides that the employer, if he dismisses all employees for striking and does not selectively reinstate any of them, is by statute immune from unfair dismissal claimed. That is quite true. It is undoubtedly a mighty weapon in the hands of employers. It puts strikers at grave risk of permanent loss of livelihood.
The argument in the Green Paper runs in this way. An individual should be free to decide for himself whether or not to run those grave risks. To my mind, it is a form of argumentation which relies on old injustices to justify new injustices. Surely the correct principle should be that if a strike is approved by the majority in a lawful and secret ballot those who strike should be deemed not to be in breach of contract. The employer should not be able to dismiss them all with impugnity. In order that I need not be reminded, I shall acknowledge that employers have had the right to dismiss all strikers with impugnity under the legislation as it stood under previous administrations.
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However, the question today, when we are being consulted and asked for our views in principle, is: is it right or wrong in principle? We are told that this debate is part of a consultation process. I enjoy being consulted; I am accustomed to being consulted. On this point I offer the following advice to the Minister. It must surely be wrong in principle for statute to lay down, as it does, that it is automatically fair to dismiss strikers who have acted in accordance with a majority decision, arrived at by secret ballot in accordance with procedures laid down by Parliament. The industrial tribunal should be allowed to decide, in the circumstances of every case, whether it is fair or unfair to go to the extreme lengths of dismissing all the strikers. The arguments in this part of the Green Paper will persuade the enemies of any effective industrial action. They should persuade no one else.
6.38 p.m.
Baroness Faithfull: My Lords, it is with some diffidence that I intervene in this debate. I propose to take trade unions down to the local level, dealing with local trade union members. I shall deal with the position of those local level employed trade union members as touched upon by my noble friend Lord Beloff. From the outset I make clear that even now I am a trade union member and I have been president of my local trade union in Oxford. I therefore wish to speak not on high politics, not on high law, but on the ordinary person at the grass roots.
I seek to make two points. The first is the power of the minority over the majority in relation to local committee structure. Some years ago when I was working as a chief officer in local government I had a deputation from all my staff. I could see that something was very wrong and they accused me of altering their method of pay, although at that stage not the figure. I said that it had nothing to do with me. I said that I was a chief officer, a trade union member, and that their trade union had asked for it to be done.
I went on to say, "Your trade union negotiated this with the treasurer's department and therefore you are grumbling about your own mistake". They said, "Well, we are very busy. We are hard-worked, we have not got time to attend the local committee and anyway, if we do, that committee goes on for such ages and talks such rubbish that we simply have not time to stay". I said, "But that is hardly my fault, and if you will not attend your trade union meetings or find out what your local trade union has done, please don't blame me, as your employer".
I make this point, hoping that perhaps something may be done. I agree with my noble friend Lord Boyd-Carpenter that legislation does not put everything right, but a climate of opinion does put things right. I enjoin all trade union members at local level to take part in their trade union meetings. I do not think it is right that a number of people should belong to a trade union and benefit by what it brings for them without having any duties towards that union and towards doing work for that union. If the minority stays on until twelve or one in the morning, talking a lot of balderdash in order to get through the committee something which they know their colleagues would not want, I can only say that it really is the members' own fault. Therefore I enjoin trade union members to

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remember that if they belong to a trade union they should experience the responsibility of doing so and should not allow the minority to control the majority.
I have to say that in many cases where I have had to deal with strikes in my department—I am thankful to say they did not often happen but, speaking as a director of social services, it was a very serious thing when it did happen—many of the trade union members came to me privily and said, "We don't want to strike but we have to strike". I was tempted to say to them, "Well, why didn't you speak up at an earlier stage, at an earlier level in your local committee?" I quite realise that this is somewhat outside the Green Paper, but I would ask my noble friend the Minister and also my fellow trade unionists—that is to say, I belong to a trade union—whether we cannot somehow engender a good local committee structure which is democratic. That is my first point.
My second point is one which was mentioned by the noble Lord, Lord Beloff; that is, the relationship of the trade unions to professions and to professional workers. Some time ago during a debate in your Lordships' House I asked the Minister on the Front Bench whether consideration could be given to the creation of a social work council. In this country there is no council for social work that makes social workers accountable. I ask for a social work council, first, to accredit social workers; secondly, to set standards; and, thirdly, to deal with difficulties arising in the social work field.
I have made this recommendation in your Lordships' House after consultation with eight social worker professional organisations both in the statutory and in the voluntary sectors. It is with very great regret that I have to say a high official in my own union said, "We are not going to have that". I said to him, "But this is a professional matter; it is a matter for our profession; it is for us to set professional standards—and goodness knows they need to be set—and I do not think this is the role of trade union officials".
The matter has become very confused as to what the role of the trade union is. The noble Lord, Lord Chapple, is to follow me and I hope that he will tell me what the terms of reference of a trade union are. I have always understood that the trade union was there to look after the wellbeing of its members and to promote their welfare, but I have tried to look up in the Library today where it says that the trade unions shall take part in the professional decisions, professional work, professional advice and professional structuring of any work, whether it be teaching, social work, medicine or nursing. I think it is very important that this point should be clarified. At the moment there is great confusion as regards the world of the professions and for those at the grass roots. In particular there is confusion for those of us who have had to run large departments. Therefore I would say just two things. I hope that somehow and at some time we will not allow the minority to control the majority. Secondly, I hope that we will be quite clear as to what the role of trade unions is.
6.46 p.m.
Lord Chapple: My Lords, I must first apologise for having missed the first four speeches of the debate.
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Then I must go on to congratulate the noble Lord, Lord Basnett, on the sincerity and the passion of his maiden speech. However, I must say that in 50 years of trade union membership my experiences are different from those of my colleagues, although the experiences of my union replicate the experiences of all other unions. Despite the numerous mentions that my union gets in this Green Paper, I do not share the view that what we were able to do in our union is not possible in any other union because the membership of our union is more stable than the membership of all the other unions.
I cannot understand those who say that you cannot have postal ballots in trade unions because their administration is so chaotic that they simply will not work. I just do not understand how anyone can be serious in attributing, as my colleagues do and certainly I have done, great motives and great purpose to the trade union movement—in some misplaced actions trade unions have even threatened the very existence of governments—and then say that they cannot have postal ballots simply because they do not have a decent administration. That simply does not make sense or hold any water.
I hope that if the noble Lord, Lord Murray, did not explain it to the House, perhaps the noble Baroness who is to wind up the debate for the Opposition will tell us how we came to have the policy of accepting government money for education purposes and numerous other things, but saying it was wrong to take government money in order to have a decent postal balloting system. I know that policy has changed, but it would be interesting to know how we came by such a policy in the first place. Why was it so objectionable for the rank and file members of a trade union to have a ballot at their home and vote upon who should be the leader of a particular trade union?
Therefore, as I say, although my personal experiences are different from the experiences of my colleagues, my union's experiences are similar to the experiences of all other unions. We have had our share of difficulties over operating agreements both in respect of employers and of recalcitrant members. However, my own experience in respect of ballots is not the naïve one portrayed in this paper, which says that with workshop ballots one gets a greater participation. It goes on to list the instances.
The problem with the investigations that have taken place into this and into the malpractices of certain unions in recent times is that they were not deep enough or serious enough. The people who talked about workshop ballots being the way to greater participation simply had not had my experiences of being offered ballot papers of other unions to fill in when certain elections were on. Everyone knows that the shop steward whose member tells him that he does not want a ballot paper helps him out by filling it in for him or goes round collecting them out of the waste-paper baskets in the office where they have been thrown and fills them in.
It may be difficult to police that practice. Therefore the notion of postal balloting is, in my view, the only sensible one if one wishes to have reasonably fair electoral practices in trade unions. The noble Baroness, Lady Turner of Camden, who will wind up

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the debate for the Opposition may enlighten us on why it is right to live in an electoral democracy but not have the right to elect people who can seriously affect the decisions of the government of the day. I have never understood the view taken by my colleagues.
There are a great many technical matters contained in the Green Paper. I agree with a part of the comments made by my noble friend Lord Irvine of Lairg in respect of balloting before strikes. I say at this point that I have never agreed with the notion that every tiny dispute that ever occurred necessitated members being balloted before it took place. However, I have agreed that disputes which threaten major portions of industry, or perhaps the whole country, should be balloted.
However, having said that, then to say that the union, having conducted a ballot, then has no power at all over the member who wishes to go to work is carrying it too far. To say that this is a free country and that the man who does not agree with the decision of the ballot should be allowed to go to work is one thing, but then to say that the union cannot take any action against him, that it must allow that member to continue his membership of the union, even though he has gone to work after a ballot in which the majority of his fellows have decided that a dispute should take place, is an attitude that cannot be sustained.
What is more, in the long run I believe that it will prove dangerous to the development of good industrial relations and it may prove in the end to be dangerous to democracy itself. I agree with what my noble friend Lord Houghton of Sowerby had to say on this point. I worry about the amount of legislation and changes in the existing legislation that the Government seem to be proposing in this document.
Again, it is not stated in the document, but the implications are that the unions have been responsible for all our economic ills and are now in a position where the Government can give them the coup de grace. It is implied that the unions are down and out and the Government can now wipe them out. I do not believe that that is possible. The unions may decline as regards numbers of members due to changes in their industrial status and changes in industry itself. The unions themselves will have to make changes to meet those changes. However, if the majority of the population gets the impression that the Government are merely acting punitively against the trade unions to disadvantage them in their negotiations with employers, that situation will soon change.
I do not believe that there is any electoral merit in projecting such a view. If all the proposed changes in this document are carried through, with the exception of altering the issue of balloting arrangements for the leaders of the unions, there could well be not just greater industrial unrest but a threat to the democratic institutions of the country itself.
6.54 p.m.
Lord Graham of Edmonton: My Lords, I shall begin, as has every noble Lord who has spoken in the debate following the maiden speech of my noble friend Lord Basnett, by extending to him my deep thanks and appreciation for bringing not just to this debate but to I am sure all the debates in which he will participate
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during the time that he will be with us the wisdom and sagacity which was a hallmark of his active trade union life. I am certain that when this debate is read, as it will be by many people outside the House, his contribution will be seen to be one of the wisest in a debate which I believe is notable for effective contributions from all sides of the House. I am very grateful and privileged to have the opportunity of speaking in the same debate.
I also wish to begin by saying what a pleasure it was to listen to the experience and wisdom of my noble friend Lord Murray of Epping Forest who spoke from the Labour Front Bench. Without going into the detail of the many points that he made, he left the very deep impression upon the House that what counts just as much as what is said is what one knows, has experienced and has seen.
The noble Lord, Lord Boyd-Carpenter, who opened the debate, stressed that the Green Paper was a consultative document. He placed a very heavy responsibility upon the Minister to interpret fairly the word "consultation". Those who were in the House earlier today will recall that I took part in a short exchange with another Minister on what I think was a parody of consultation with British Rail in respect of fares and commissions. It all depends what one means by that. I am directing my remarks to the Minister who has been helpful to me on many occasions over the past two or three years. He has a very serious responsibility to ensure that all of the illusions, the fears and the allegations which have been made about whether the Green Paper is a charade and whether the Government are serious and have made up their mind can be put at nought. He must ensure that the consultation will be meaningful, that our words will be listened to and that the submissions from trade unions, employers and others will be given due weight by the Government. If his ministerial colleague winds-up by stressing the point that there will be genuine consultation which, to be fair, the Minister made when opening the debate, we shall have had a useful discussion.
In reading in the newspaper this morning—it is not the Guardian so the Minister can relax!—the comments of some of the Guardian writers who have moved to The Independent, I read the article by Mr. Peter Jenkins. That stated that the:
"Green Paper, on which the CBI and the TUC have now made their views known, contains only what look to be the scrapings from the bottom of the barrel served up in the hope of keeping the union question going as a vote winner".
That view is widely shared. One must question why the Government have a compulsion and an obsession regularly and periodically to review trade union legislation. I say to the Minister as a life-long paid-up trade unionist to this day of the National Association of Co-operative Officials that the trade union movement looks with real suspicion at the Green Paper. In that regard my noble friend Lord Basnett asked some very fair questions. He asked who was demanding this legislation and who it would benefit. I declare a direct interest as I have an association with the Union of Shop Distributive and Allied Workers. It may be helpful to the debate and to the Minister to relate not merely arguments but the direct impact on one trade union if many of these proposals are acted upon. The Union of Shop Distributive and Allied Workers and many others firmly believe that it is the

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intention of the Green Paper—if it ever becomes a Bill—to reject the principle and theory of collective bargaining and activity.
We have illustration after illustration of the nonsense that a trade union, whether it likes it or not—and many unions were dragged to this situation—is now in a position where it can comply with the law, where it can carry out its obligations and duties and where it has an obligation, by virtue of a mandate given to it by a compulsory ballot, but cannot operate its rules.
Let me tell the House of a number of ways in which I find this Green Paper objectionable. The Minister will have a job to reassure me, but I shall listen to him. The Green Paper gives workers a legal right to cross a picket line where the majority of members in a union have voted for strike action. I think that is wrong. The Minister can help to convince us on this. The Green Paper denies trade unionists the right to implement their disciplinary rules where individual members break union rules. A union will be denied the right to operate its own rules.
The Green Paper gives individual members the right to look at any union's financial accounts at any time. If I am misinterpreting the Green Paper, the Minister will tell me. It seeks to end the closed shop even where 85 per cent. of the employees have voted for it under the Act. It seeks to force trade unionists to vote only by postal ballot for union elections, regardless of union rules, and to elect general secretaries every five years by this method. The Green Paper gives individual members who are unwilling to accept the will of the majority the right to government financial support in bringing legal action against their union. The Minister has a very serious job in convincing me, the Union of Shop Distributive and Allied Workers and the trade union movement generally that the Green Paper is fair, just, equitable and necessary in 1987 or 1988.
Let me tell the Minister and his advisers who I know are well briefed, of the conflict which exists in the shop workers' union. On the question of members being disciplined or expelled for refusing to act on a call for industrial action from the union, there is a definite conflict with the rule book as it stands.
The rule book of the shop workers reads under Number 32:
"Disputes and victimisation:
Section 1: … the Executive Council may call upon all members of the Union directly or indirectly concerned, or any part of them, as may be deemed necessary, to withdraw their labour. Should any member refuse to obey such instructions he shall forthwith be expelled from the Union".
If the Green Paper is enacted in legislation, that rule will be in contradistinction to the law. That is a rule that has been freely negotiated, entered into and approved and no doubt over the years amended and consolidated by the majority of the union.
The Union of Shop Distributive and Allied Workers is democratic, is accountable and is responsible. I happened to be at its annual conference in Blackpool this week and the union is very concerned about the way in which the rights of members are being whittled away in a range of ways. The Minister must give us some more concrete evidence as to why a union should
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be faced with a conflict of that kind. The noble Baroness, Lady Faithfull, who is invariably in her place, asked: what is the purpose of a trade union? It was a legitimate question which we all ask, even if we feel that we know the answer. Its purpose is to protect, to strengthen, to give an effective voice and to articulate the will of the majority of its members.
No organisation or association can ever say on behalf of 10 million or 1 million members that it speaks for them all. There are divisions. But in our democracy, which I think the Minister respects, as we all do, there is a minority and a majority. What we are saying is that the effect of the Green Paper, whether by design or not—and I make no allusions—will be to destroy the basic principle of solidarity. I am not talking about secondary picketing and so on. I am talking about the solidarity of a trade union and its members who feel that they are able to act as one.
On the question of the general implications and the major legal limits, the Green Paper gives a legal right to members to continue working despite the majority having been in favour of a strike. I simply say to the Minister that that is not only unacceptable; it is un-understandable, particularly in the light of what this Government have said for seven years has been the raison d'etre of the change in the way trade unions are organised.
Let me raise again the question of the rule book and the matter of acceptance. When anyone joins a trade union—and we realise that many people join far too lightly—and the question of reading the rule book arises, he signs a form which says in effect that he has understood. In the Union of Shop Distributive and Allied Workers, as in many others, an individual declares that he will abide by the union's rules and regulations. Yet the Government's proposal denies this element of free association by making unlawful those parts of the rules and regulations made and agreed by the members which seek to impose penalties on members who flagrantly breach their conditions of membership.
May I very quickly turn to the question of union funds? I wonder whether the Minister and his advisers have taken on board the conflict for the trustees of union funds. A statutory duty will be imposed on all trade union trustees to prevent funds being spent in defiance of court orders. Yet in the rules of many trade unions, and certainly in the rules of USDAW, there are clear obligations upon the trustees to act in accordance with the advice, requests and instructions of the executive committee.
Let me quote from Number 13 of the rule book of USDAW, which states in Section 4b that trustees shall be required to,
"pay over to the Executive Council, or to such persons as they may appoint, such sums as may be required for the claims and expenses of the Union from the funds applicable thereto".
I say to the Minister that if there is to be genuine consultation there must be a period when those with responsibility in these matters have an opportunity with colleagues to argue the implications for the union, because it is not just a question of putting a piece of legislation on the statute book.
I now want to talk about inspecting the accounts. I wonder whether the Minister has taken on board the

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mischief that can be caused. In the shop workers' union there are 400,000 members, and in some unions there are 700,000 or even 1 million members. Those who wish to do so will have an opportunity to disrupt, disaffect and interfere if there is an an untrammelled right to ask at any time to inspect any aspect of a union's accounts, knowing that on many occasions the accounts may be unaudited. They may not yet be in correct order. We are not talking in terms of anything untoward. We are simply talking in terms of the state of preparation of a set of accounts. The Minister and his colleagues ought to take that point on board.
Finally, the Government may very well feel that what they have sought to do is to return a union to its members and to make them more interested in democracy. Yet all the indications I have are that in postal ballots, which have happened since the previous legislation, there are not more people taking part but fewer. I raise the question of making the mainspring of this proposal the postal ballot. I believe in postal ballots, as do most if not all of your Lordshsips. However, they should not be the sole answer in every trade union and in every circumstance. It may well be that there are other ways in which such matters should be raised.
I believe that the Government have made up their minds that there are many people outside your Lordships' House who believe that there is a missing piece in the jigsaw for reforming trade unions. I happen to share the view of many people who wonder why the Government have rushed the Green Paper out in advance of what clearly, even in February of this year, was seen to be a pre-election period. I believe that the Government genuinely felt that this issue would be a vote winner and that there are people who will wish to continue the gradual undermining of the trade union movement and trade unionism by this Government over the past seven years.
I believe that the more people look at the unfairness, inequity and injustice of many of the proposals, the more they will say to the Government, "Although we wish to support you, you should think again about this aspect of the matter". I look forward very much to hearing what the Minister or his colleague may have to say tonight or at any other time.
7.13 p.m.
Lord Elibank: My Lords, I think that there is a fair measure of consensus in this country that some of the economic decline that we have suffered over the past three or four decades has been due in part to the behaviour of the trade unions and their members. That is not the only reason. However, it is one of the main reasons and it follows from that that the present Government have embarked on the various legislative measures which they have undertaken. That is why we have in front of us today the Green Paper which seeks our views on proposals for new legislation.
On the whole, I should like to support the proposals in the Green Paper. However, I add the comment which the noble Lord, Lord Chapple, has made and which I think is a very fair and apt one: that any steps taken should be steps looking to the present and to the future and should not be seen in any sense as
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punishment for the past. I think that that would be counterproductive.
When one comes to consider bodies as powerful and influential as the trade unions, and when one contemplates legislation to regulate their procedure, it is worth spending a little time trying to look, however dimly, into the future to see what is likely to happen to those bodies in relation to changes in our economic and commercial life. Something which has happened already is the decline of the manufacturing base of this country which was traditionally the centre of power for trade unions. I should think that that is unlikely to return.
As regards organisations, we are seeing the breakdown of the large monolithic type of corporation into smaller units. Again, I think that that is a development which is likely to continue. We have seen an enormous growth in telecommunications and information technology which in turn means that large congregations of people in one place are no longer necessary and that it will be more possible, practical and pleasant to work either from the home or from the locality in which one lives.
There has been a dramatic change in work patterns with the introduction—which is fairly widespread at the moment—of flexitime, changes in working periods, job sharing and the like. Finally, young men and women now change their jobs at much more frequent intervals than they did in the past. When I embarked on an industrial career, it was normal to consider that on joining a company one would serve with it for the rest of one's working career. I should have thought that any such view now would not only be wrong but would be considered to be eccentric.
Against this background of change in our economic and industrial society, what is the future of trade unionism? It is my personal view that there will be a steady decline in influence and numbers, leading probably to the disappearance of trade unions in the early part of the next century. I see them being replaced by the sort of professional bodies we have already for engineers, doctors, lawyers and the like. On the other hand, I see a great increase in worker participation in management of what will then be much smaller firms.
Nonetheless, the Government have to deal with the situation as it is today and they must come forward with proposals which are relevant in today's climate. When we come to look at the Green Paper, the most prominent section is that relating to strikes. That is hardly surprising because strikes have been the principal point of contact of the trade unions with the public in general. Most members of the general public think of strikes instantaneously when the word "trade unionism" is mentioned.
We have heard of the provision for balloting before strikes which is a wholly admirable provision. However, at the present time a union executive is perfectly entitled to call a strike without a ballot. Of course it would run certain risks in law, and it would probably be ill-advised to do so. But it may do so if it is prepared to take the risk. As I understand it, the proposal is that a right of action should be granted to individual members of a union to insist that a ballot be taken before strike action. That seems to me to be an

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admirable proposal, not so much because strikes in themselves are bad but because the unions are in the habit in this country of calling strikes at the drop of a hat. There is no proper time for consultation and consideration of the issues in many cases, and anything which puts in an interval of time for consideration and conciliation is a progressive proposal.
The other proposal concerning strikes, upon which there has been a certain amount of debate in your Lordships' House today, relates to the right of an individual member to refuse to accept the view of the majority and to insist on working, even where a majority has passed a properly conducted ballot in favour of strike action. I must confess that I have more difficulty with that proposal. We are accustomed in this country in many ways to voting, to the majority having the power to put in laws, rules or procedures and to the minority having to accept them.
One particularly painful aspect occurs when one's political opponents are in power. They pass taxation measures with which one probably has little sympathy and they may then proceed to spend the proceeds on measures with which one has no sympathy whatsoever. Nonetheless, one is bound by the democratic process to accept that. The same is true of clubs. If one is a member of a club and the majority pass regulations, if one is in the minority which objects one must still obey the regulations and follow them or run the risk of being ejected from the club. For those reasons, I have some sympathy with the objections raised to the proposal and I should certainly like to consider it in more detail before coming to a conclusion.
There are some interesting proposals which are made about the control of trade union officials and the funds of a union. We have seen a number of prominent cases recently in which there were proceedings for damages, contempt or even the indemnisation of officials after the event. Those matters have received coverage in the press. As I understand it, the proposal is that there should be a measure of control over executive members of trade unions who risk their union funds in those ways. After all, they are the management of the union and traditionally management has a power over funds. I should need to be convinced that this was a fairly widespread abuse of trade union privileges before I felt that legislative action was necessary to control it more closely. It is something which we shall all have to watch, but at the moment I suggest that it is not a particularly widespread abuse.
On the subject of the closed shop, the most significant figures are those shown in the Green Paper. These figures show that the number of closed shops has dropped from 5.2 million in 1979 to about 3 million today—that is to say, the number has nearly halved. That being so, I can only agree with I think it was the noble Lord, Lord Rochester, that if it is an evil—and most of us feel some distaste for the concept of a closed shop, whether pre—entry or post-entry—it is declining fairly rapidly and at the present rate is virtually likely to disappear in another decade. In those circumstances, I do not see any pressing need for legislation to hasten it on its way.
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Referring to ballots, the proposal is for postal ballots for the election of officials and for the allocation of political funds, leaving workplace ballots to decide whether strike action should be taken. This seems to me to be an entirely sensible proposal, but it should be borne in mind that ballots tend to be rather expensive, depend for their efficiency on an up-to-date and accurate register of members, and also require a measure of independent supervision. Unless these are forthcoming a ballot can be a good deal less effective than some form of action in the workplace. However, on the whole one's sympathies are with the postal ballot. Although it probably produces a smaller turnout than a workplace ballot, it is considerably less liable to interference.
In general, with one or two minor qualifications which I have mentioned, the proposals contained in the Green Paper are sound and I hope that in due course the Government will see their way to bring forward the necessary legislative provisions.
7.22 p.m.
Lord Wyatt of Weeford: My Lords, I should like to add my congratulations to the noble Lord, Lord Basnett, on his splendidly delivered speech. I have met him several times in the past and I am glad to say that we have had occasional agreements. I know that he will he giving us many wise and well-informed speeches in the future and I shall look forward to them.
The Green Paper is another stage in the process of turning the TUC and old-fashioned trade union leaders into reluctant democrats. We have had some evidence of that reluctance today. We are not quite there yet, but there have been considerable advances in the powers of union members to choose the leaders they want rather than those foisted on them by defective systems of election, easily manipulated by communists and other desperadoes.
Curiously, when the transformation initiated by the Conservative Government is complete the chief beneficiaries will be the Labour Party, the TUC and the unions. Accurate reflection by union leaders of members' wishes will mean that union block votes at Labour Party conferences will gradually not be available to support dotty notions, such as more nationalisation and one-sided nuclear disarmament. That will give the Labour Party a more modern look and make more attractive the unions which have been losing members by the million because of their obsession with long dead 19th century problems and because of their refusal to deal imaginatively with the problems of the present century and the next.
I do not think that the future of the trade unions is bleak at all. It could be very much better than what it has had so far. The Labour Party and the TUC ought to erect a statue to Mrs. Thatcher in gratitude for the reform which she has introduced. I welcome the Government's proposals with reservations. For instance, like others I wonder whether it is necessary to do anything more about the closed shop. The law is that they have no legal sanction unless they have been supported in a secret ballot either by 80 per cent. of the employees affected or 85 per cent. of those voting. Obligingly, the TUC has advised union members to boycott such ballots. Consequently there are now hardly any approved closed shops and non-union members have legal protection against the unlawful

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ones. Thanks to the TUC the closed shop is on its way out.
I am worried about the suggested taking away of a unions' rights to discipline members who will not abide by majority decisions to strike when there has been a properly conducted secret ballot. The working miners went on working because the NUM had broken its own rules by not holding a strike ballot. I was assured by representatives of the working miners that they were loyal members of the National Union of Mineworkers and that if there had been a ballot decision for a strike they would have accepted it and not gone on working.
Unions are collective institutions and are effective only if they work collectively. They are entitled to require their members not to break ranks in situations where the members have been able freely to express their majority view. I am glad that the Government are at last proposing that all significant union elections should be conducted by secret home postal ballot under independent supervision. As some of us have been warning the Government since 1979, any other form of election, such as a workplace or branch ballot, can be fiddled too easily.
There have been many recent scandals. For example, there was the scandal of the election of the general secretary of the Transport and General Workers' Union in 1984. Among other peculiarities, more people voted in Ireland in 1984 than voted in 1977, though the membership there was down by a quarter. It was claimed that over 90 per cent. of members in Ireland had voted, though many complained that they had received no ballot papers. In London, one branch cast 799 votes out of 800 for the successful candidate.
Recently, in the general workers' section of the Transport and General Workers' Union 98 per cent. of the Irish electorate voted for a seat on the executive. Not even Stalin in all his glory ever claimed higher support than that! The electricians and plumbers' union has long had a secret home postal ballot sent out by, and returned to, the Electoral Reform Society. That is why it has such sensible forward-looking leadership in tune with its members' aspirations.
The engineers also have a secret home postal ballot, though it is not independently supervised. That has given them too a modern approach. Your Lordships will not be surprised that both these unions are accordingly very unpopular with the TUC.
A number of unions are not yet complying with the provisions of the 1984 Act for secret workplace ballots, preferring some form of block vote which commits members who are not even present to having their votes cast in a manner decided by the extremists who are present. The National Union of Public Employees, the National Health Service union, CoHSE, the National Association of Local Government Officers, the General and Municipal Workers' Union and the communist-dominated union, TASS, are important defaulters. The Certification Officer to whom complaints can be made is having a long and complicated struggle to get these unions over the first hurdle towards genuine democracy.
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That brings me to a serious failing in the Green Paper. A victim of the British vice of creating another commission whenever there is a tricky problem, the Government propose a new parallel authority to the Certification Officer in dealing with complaints from union members. At present, if the Certification Officer issues a declaration that a union shall comply with the law and the union takes no notice, as has been happening, the complainant has to go to court. That can not only be fantastically expensive but is alarming for unsophisticated trade union members.
Therefore the Government say that the aggrieved member can instead go to a strange new person—he might have been invented by Gilbert and Sullivan—the commissioner for trade unions. Having liaised with the Certification Officer and discovered that the complainant has good grounds, the trade union commissioner will fight his case and pay for it. That is said to be analogous to the Commission on Racial Equality or the Equal Opportunities Commission, but those more or less harmful organisations are greatly loved by the hard-Left wing. Someone who can get their support in the courts is a hero or heroine to those who make a profession of shouting at and intimidating their fellow workers. An ordinary member who took his union to court through the trade union commissioner would be instantly marked out for victimisation with the usual tyre slashing, bricks through the window, excrement through the letterbox, and the rest of it.
The motive of the Government is that they want to say to the unions, "Oh, it is not us who are enforcing the law against you; it is one of your own members". That is a cowardly game to play. Ordinary union members should not be put in the position of being law enforcement officers. I suggest something rather different. There should not be a trade union commissioner but the staff of the Certification Officer should be substantially expanded. The Certification Officer should have the power or duty, when a union refuses to remedy a complaint as set out in the declaration of the Certification Officer, to take the union to court without the original complainant having to pay anything.
Not only that, to avoid victimisation a complainant having established that he is a genuine member of the union concerned should be allowed to remain anonymous when he approaches the Certification Officer. It would then be a function of the Certification Officer to make inquiries, as would the police in a case of suspected drug pushing anonymously reported to them. The Certification Officer can then proceed accordingly if the complaint seemed well founded. The Government have created the laws about trade unions, not union members. They should not expect union members to do the high profile work of law enforcement, thus setting union members against each other.
The Certification Officer has not so far received frivolous complaints. I do not see why he should receive many, or any, if the system I suggest were adopted. A beefed-up Certification Office should also have the function of an independent supervisor of union elections. This should require unions to submit for approval their plans for complying with the electoral laws. The office should satisfy itself that those

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plans have been honoured. The Certification Office should act of its own volition to ensure that defaulters among union leaders are made to comply with the law, following up any information it receives even if it is anonymous.
One rule applying to postal ballots should be that each candidate must include an election address stating his political views and allegiance. The great majority of union members do not have the slightest idea of the background of the candidates presented to them. In my column in the News of the World I regularly print the names of those sane and sensible candidates for whom union members would be wise to vote. I receive numerous letters reminding me that I have not yet published the list for a particular election and asking whether I will please hurry up. They know nothing whatever about the candidates concerned.
I see that the Labour Party intends to remove all the new democratic rights which are already greatly valued by the ordinary union member. It has issued a programme, in conjunction with the TUC, called People at Work—New Rights, New Responsibilities. The present legislation is to be destroyed and replaced. Not only would the rights of employers to protect themselves by injunctions and court action against unlawful strikes be abolished but there would be a new law laying down general principles for union rule books. These would include secret ballots for union executives. However, there would be no way in which union members could go to the courts to enforce their democratic rights. Instead, and I quote:
"A Labour Government in consultation with the TUC would establish a new independent tribunal that would have the duty of acting on complaints by union members that the statutory principles had been breached".
The idea of a tribunal operated by or connected with the TUC being independent is highly suspect, if it is not a downright joke. I spent years, beginning in 1956, trying to get the General Council of the TUC to deal with the well-documented fraudulent vote-rigging of the communists who had seized power in the electricians' union. The TUC General Council told me that it did not want to wash its dirty linen tri public. Eventually, it was the High Court in 1961 which had to get rid of the communist gangsters because the TUC General Council was either too frightened of, or too sympathetic to, the communists. To rely on a body like that to set up an independent tribunal to deal with complaints from union members is a farce.
I congratulate the noble Lord, Lord Young, on his Green Paper. I hope he does not take it amiss that I have suggested what I think could be some improvements.
7.38 p.m.
Lord Campbell of Alloway: My Lords, at the outset I too would like to be allowed to congratulate the noble Lord, Lord Basnett, on his excellent maiden speech, which was delivered with authority and sincerity and which has greatly enhanced the order of our debate today.
I generally support the Green Paper proposals as a relevant, requisite and imaginative basis for discussion and for the way forward in a modern, free, democratic
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society. It is seldom—I think it is the first time in any debate—that I have used the word "democratic". I use it today because it is clear that it means something wholly different to me, who concentrates upon the rights of the individual, and to those trade union officials who concentrate upon the rights of the group.
This Administration, largely because of the concentration of rights upon the group, inherited a state of affairs akin to anarchy. Let us not forget that. I agree that they have already established a viable measure of industrial peace, and that is to the credit of the Administration. This Green Paper, as my noble friend Lord Thorneycroft so aptly put it, as he always does, is a continuation of government policies. It is no more than that. It is a recognition. It is a form of consolidation of the Government's achievements so far by recognising certain of the rights of trade union members.
At the outset this is a Green Paper which invites comment. Of course it goes without saying that there will be consultations before any proposals for legislation are made. As I understand the position when those consultations have taken place there will be a White Paper setting out the proposals, with all the implications to which the noble Lord, Lord Graham, referred, which can then be debated before any legislation is laid. That is as I understand the position. It is not some terrible party ploy, put forward to pre-empt what is put in a manifesto. Assuredly, that is not how I see the position at all. As I understand it, but I do not necessarily know, it is as I have stated. It is straight up.
At all events, on account of the measure of achievement towards industrial stability, there is no immediate hurry. There is time for discussion. There is time for consultation. The worst possible legislation is hurried legislation, especially in a sensitive sphere such as this. In due course legislation will be introduced.
The notable contribution in the Green Paper, which I support, raises the very question of the conflict between the rights of the individual and the interests of the group. I accept this, and I am sure that the noble Lord, Lord Murray, will accept it too, but inevitably one's reaction must depend on where one sits in the House. It is a political question. That does not mean to say that one cannot discuss the matter with total objectivity, as I propose to try to do, having declared which side I am on.
Put simply, the matter concerns the right of any man or woman, whether a member of a trade union or not, to work or to withhold labour according to an uninhibited individual will. That is a right which has not been recognised by trade unions. It has indeed been opposed by trade unions, which represent the group versus the individual. It is a right which has as yet not been recognised by the common law.
The question is whether your Lordships should endorse that as a fundamental freedom; as if, so to speak, today we were assembled at Runnymede and tomorrow there could be some new charter for a modern, free society. Or should we accept the argument of the noble Lord, Lord Murray, supported by the noble Lord, Lord Irvine of Lairg? What is the object, they say, of holding a ballot if the dissident

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minority is ignored? Is that acceptable? As the right reverend Prelate the Bishop of Manchester put it, the individual ought not to be allowed to contract out of the group. I think he should. I endorse individual freedom. The reason I do that does not spring from any particular theological concept; it comes basically from one's political stance.
I always support individual freedom in a conflict between individual freedom and the group. I always shall. It is not that I do not see the other argument; I just do not agree with it. I do not agree with it in this context because the time has come when trade unions, in their modern guise and in the discharge of their modern role, which is terribly important and which I have never denigrated in your Lordships' House but on many occasions have risen to support, must realise that they are the servants of society, in the sense that they are the servants of their members and are never again to become the masters.
Furthermore, unless we establish that fundamental freedom, I fear that the members' wishes will not be respected, but as in the past—I have to say this, I hope without causing any personal offence—they will be ignored. They will be manipulated. They will be abused by intimidation, disciplinary penalties, social pressures and other forms of oppression. That is why I support the individual fundamental freedom proposed in this paper.
The second point of conflict is the closed shop provisions. Although in a sense the closed shop is on its way out, it is taking a long time in the dying. It continues to exist. I shall be corrected by the noble Lord, Lord Murray, if I am wrong, and I invite correction, but I believe that there are millions of workers working today under closed shop agreements.
Legal immunity for industrial action to force an employer to create or maintain a closed shop will now be withdrawn, and so all that will be removed are the pressures to which exception is taken, and hence the source of much hardship for trade union members will be removed. The cause of much industrial action—the recognition, manning and demarcation disputes—will be removed. The hardship on the members, of which my noble friend Lord Boyd-Carpenter gave but one example, was recognised by Ray Gunter when he was Minister of Labour in 1965 (at Volume 706 of Hansard, col. 1019–1020).
The principle of the closed shop was called into question by Frank Cousins writing in the New Daily on 12th February 1961 when he said that he had never favoured the idea of making a man join a union. It is contrary to Article 20(2) of the 1948 United Nations Convention on Human Rights. It has given rise to problems in the European Court of Justice. The desire to maintain the closed shop is related to concentration of power. Ray Gunter said—and I respect his opinion—that the main reason for his opposition to the closed shop was,
"that throughout the whole of my trade union career … it meant too great a concentration of power".
So much for what the noble Lord, Lord Murray, stylised as legislation by anecdote. I rely on the reactions of such great leaders as Ray Gunter, Frank Cousins and so forth.
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There is no doubt, your Lordships may think, that Ray Gunter sensed that one day this great concentration of power would be abused, and so it was, first, to oust a Conservative Government, then a Labour Government and then in an attempt to topple the Thatcher Administration.
We have heard a little today in this debate about abuse of power. But never let us forget the realities of the background from which we debate the Green Paper today. It springs from a massive abuse of power to set up a form of government contrary to the constitutional traditions. The hope must be that the trade unions may soon accept that their influence and status may be enhanced only by abdication of this concept of the closed shop. It is true that it is a concept which in the distant past served a valid and justifiable purpose. However, it is no longer of relevance. Times change.
If today the trade unions are to discharge their functions in accordance with their true role—a role which affords a valuable, positive contribution to society, as expounded by the noble Lord, Lord Basnett, in that notable maiden speech—they have to recognise that they must be the servants of their members. In addition, rules which conflict with statutory requirements to be implemented by any future proposals must be made void by statute. This will afford the trade union member the right to apply to the court for a declaration.
On the suggestion of the noble and learned Lord, Lord Denning, that we ought to have model rules, 10 years ago I thought the same. Ten years ago I went to the Department of Employment. I have been there on various occasions since. That department, in good will and consultation with the trade unions, has been trying to devise a set of model rules. It is impossible to do so, not because the trade unions are obdurate or incalcitrant, but because there are so many types of trade unions that it has become a very difficult and impractical task.
One has the craft unions with a few members, the vast national unions and so on. With the best will in the world, it is very difficult to achieve model rules. If one cannot achieve this then one has to go about it another way and enact that any rules of the union which stand in contravention of the statutory requirements are void and unlawful.
I wish to say a word about the indemnification proposals. I do not think that anyone has mentioned them yet. Indemnification of officers for unlawful acts should surely not extend to such categories of conduct as violence or contempt of court in the context of industrial action.
On balloting procedures before industrial action, yes, the workplace ballot should be subject to independent supervision. As the noble Lord, Lord Houghton of Sowerby, said, perhaps a separate authority should be set up. Perhaps a panel of independent supervisors such as justices of the peace, accountants or other suitable persons should be established. Perhaps assistance to the independent supervisors could be provided by ACAS. The union could select any person from the panel as a supervisor and the whole operation could be organised and funded by the department, one of whose officials would be designated for such a

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purpose. The proposal to graft the right of enforcement by the individual member on to Sections 10 and 11 of the 1984 Act would include the right to have independent supervision of the ballot.
Finally, there should be a reconsideration of the role of the certification officer and the commissioner. I would suggest respectfully that the role of the Certification Officer should be vastly extended. He should have power to make declarations which have no legal effect. In this area the role of conciliation—which is not supposed to exist within Part I of the Act of 1984—should be expressly recognised by statute. The conciliation procedures should be extended in this way because the concept of conciliation should permeate enforcement by public authority. My suggestion is that it is only if the conciliation officer with powers extended in this way should be unable to achieve a satisfactory acceptance by the union that he should refer the matter to the commissioner.
I do not accept the criticism that has been made by the noble Lord, Lord Wyatt, about the commissioner being a Gilbert and Sullivan character. He may be, but he is a very useful one and can play a very important part. He would be of the greatest possible assistance to the trade union member. The commissioner should be the person, not the Certification Officer, who in his own name and at his own expense can initiate proceedings in court where the union is in default. Those are the only suggestions that I have.
Lord Bonham-Carter: My Lords, may I say to the noble Lord before he sits down that I have been profoundly impressed by the strong case he has made of the detriment to the public and to its members which the closed shop brings. Would he agree that the same principles which he urged on the unions might perhaps be applied for benefit to members of the English Bar?
Lord Campbell of Alloway: My Lords, time is short. I am a member of it.
8 p.m.
Baroness Turner of Camden: My Lords, first of all I too should like to congratulate my noble friend and distinguished colleague, Lord Basnett, of Leatherhead, on a very notable speech. Like the rest of the noble Lords who have spoken in the debate and who have commended Lord Basnett on his speech, I too hope that we shall hear a lot more from him. He has a great deal to offer this House, and a great deal of experience from which to offer it.
I want to express deep concern that the Government have seen fit to introduce this Green Paper. I question the necessity for it. I question the necessity, as indeed the noble and learned Lord, Lord Denning, has for another piece of so-called trade union reform. One wonders why the Government have decided to do it. Why have they thought it desirable at this time to bring forward these proposals? Do the Government really think that trade unions are so unpopular that a further attempted interference with them is a general election winner? That has been suggested by a number of noble Lords already in the debate. If they do think
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so, I sincerely hope that they will be gravely disappointed.
As your Lordships will know, I have an interest in this. As I have declared many times, I am in employment as a trade union official. I have been an official of ASTMS, the large white collar union, for over 25 years. I am also currently a member of the TUC General Council, and I have to say to the House that despite unemployment, despite unremitting hostility from almost all sections of the media, despite hostility from this Government—and government attitudes have a considerable impact on public thinking and the general climate of opinion—over 8½ million people in the United Kingdom still belong to trade unions. If you add to that number the families of those union members, it will be seen that a very large number of people in this country have an interest in what unions do, and they look to unions for their protection.
Despite the difficulties which this Government have put in the way of trade unions to try to hamper them in their task of looking after their members, still a very large part of the population voluntaril—and I stress voluntarily—puts its faith in collective organisation. Moreover, that 8½ million are in unions affiliated to the TUC. There are other collectives registered as trade unions which are outside the TUC but which nevertheless in their own way indicate the level of support that exists for collective representation. It is this idea of collectivity which is anathema to the present Government. That is at the root of their ideological approach and that, among other reasons, is why we have this Green Paper.
Yet employees need the protection of unions as never before. Mergers and takeovers threaten job security. We have discussed this before in your Lordships' House. Changes in technology threaten jobs. The great multinational companies may move their operations where they choose without being accountable to anyone. These are the forces that wield real power in our society. Nothing is done to inhibit their use of unrestricted power. It is they, the boards of directors normally completely unknown to the public and not unions, who make decisions against which unions can only react.
The idea that unions possess substantial power and that individual members have to be protected against the misuse of that power, which lies at the root of this Green Paper, is a myth, in my opinion. It has been sedulously cultivated in order that the opportunity will be there to bring in further legislation to undermine the ability of unions to protect their members.
Since 1979 Conservative Governments have set about removing from legislation all those measures which assisted unions to resolve issues in a reasonable way. No trade union official willingly enters upon a trade dispute if any other means is available to sort out that industrial problem. Long disputes in particular mean hardship for members and diminish union resources. We look for other means if we can as a way of resolving problems. Unfortunately there are fewer ways of doing this open to us now than at any time since 1945.
Since 1979 the Government have removed from legislation—the Minister made reference to

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this—Schedule 11 to the Employment Protection Act under which a union could refer to arbitration a claim that its members were being paid below the general level. Section 11 of that Act, which gave unions some method of establishing the right of recognition by employers, has also been removed. The Fair Wages Resolution, in existence since 1945, has been expunged. Wages councils have disappeared or have been emasculated. The role of the central arbitration committee has been diminished, I believe deliberately. In any event, it is fairly clear to me that this Government have little time for arbitration.
In such circumstances unions are left with only one ultimate weapon, that of industrial action, or else a tame acceptance of conditions that their members find unsatisfactory. Here the legislation we already have is intended to make this action as difficult as possible. Most unions anyway were in the habit of balloting their members in advance of strike action. We now have to insert on the ballot paper as a frightener the information that, in striking, members will be breaking their contracts of employment. Incidentally, I question why that should be so. In many countries in Europe the contract of employment is simply suspended during dispute action and not terminated. But even so, it is not enough for this Government that unions lose their immunity if they do not ballot their members in advance of strike action.
In this Green Paper, even if there is a ballot and a majority of members is clearly in favour of dispute action, individual members who are against it and who work normally are to be given protection by the Government against disciplinary action by their union. The Government are out to undermine effective and cohesive union action. Not only is there to be a secret ballot—and I have no quarrel with secret ballots—but people are to be encouraged not to abide by the outcome even when the majority favour industrial action. It is interesting to note that the CBI is not at all happy about that, and has said so. Members of the CBI to whom I have spoken say they think it demonstrates that this Government simply do not understand the facts of industrial life.
It is my experience in my own union that disciplinary rules are used very sparingly. Most union executives are well aware of the fact—mine certainly is—that they must apply their rules in accordance with the requirements of natural justice and that if they do not there can be grounds for action in the High Court. What the Government are now proposing, however, is a legal right to strike break. That is a very different matter. The TUC has pointed out that if this were applied in reverse it would justify minorities in taking strike action despite a majority vote against a strike. Clearly no sensible person would support this, just as every sensible person knows and understands the principles of majority rule in voluntary organisations. The Government are guilty here of exhibiting bias and double standards.
The Green Paper has some proposals to make about union funds. Among other things it is proposed to impose a statutory limitation on the ability of trade unions to indemnify officials against fines and damages. However, trade unions as employers are surely responsible for the actions they require their staff to take. Union officials do not in general act other
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than under instruction from elected executives. It is by no means unknown for other employers to indemnify employees acting on their behalf, sometimes by way of insurance cover. There is also a proposal that there should be a statutory right for union members to be allowed access to inspect their union's accounts with professional advice. There is already provision in many union rule books for such individual inspection, although not necessarily with professional advice.
My noble friend Lord Graham of Edmonton has dealt with that in some detail, and I agree with what he had to say. One is entitled to ask why the Government wish to impose on unions requirements that do not exist in regard to other institutions.
In the section dealing with union membership agreements and arrangements, the Green Paper proposes outlawing industrial actions to establish or maintain union membership agreements and, further, makes any dismissal for non-membership of a union unlawful. However—this has already been mentioned in debate by a number of noble Lords—there are already stringent provisions relating to union membership agreements. There is no scope at all for lawful dismissals unless the agreement has been approved in a secret ballot during the preceding five years by 80 per cent. of the employees covered by it or 85 per cent. of those voting. So why is it felt necessary to have further legislation so soon?
On the questions of ballots, we have further attempts in the Green Paper to interfere with the internal democracy of unions. I emphasise the word "democracy" because unions really are among the most democratic institutions in this country. They are governed by elected executives accountable to annual conferences or sometimes to biannual conferences, and to membership pressures of various kinds in between those conferences. The officials are responsible to elected executives, whether they are appointed under ordinary contracts of employment or, as in some instances, elected generally by the membership. The legislation now in place requires executives to be elected by individual postal ballot, or, where workplace ballots can meet the same statutory requirements as postal ballots—I emphasise the phrase "the same statutory requirements as postal ballots"—by workplace ballots. Even here there is some official discouragement given to workplace balloting. I understand that public funds cannot be claimed towards the cost of a mixed ballot; only where there is an entirely postal ballot.
In some unions there is more membership participation and a higher ballot return if there is workplace balloting. So there really is no justification for removing this option. Even in the cases to which the Green Paper refers, the Transport and General Workers in particular, there were investigations by the union when malpractices were brought to light and independent advice and assistance were sought with a view to putting the malpractice right. I repeat there is no justification for introducing legislation to do away with the workplace option.
The Green Paper also proposes that independent supervision of ballots should be required. This is already the case in many unions. My own union uses the Electoral Reform Society. However it is an expensive business. I repeat the question put by the

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noble Lord, Lord Rochester, about the costs of such a service. The evidence of malpractice in my opinion, in any event, is relatively rare and remedies already exist. Therefore, why is it necessary to make this a statutory requirement?
Then there is the proposition that all non-voting members of executives should in future be required to stand for election. I suspect that this is to "catch" as the Government see it one particular union president. However this clearly has not been properly thought through. Why should not a major institution like a union have a chief executive employed on an employment contract like the chief executive of any other large institution? The 1983 Green Paper actually acknowledged this when it said that a requirement to stand for election would be inconsistent with the nature of the job where a union had found that its needs were better served by selecting a general secretary for appointment on the basis of expertise and experience.
We do not in this country elect our civil servants. We expect them to pass examinations. Trade union administration has become a much more professional job than it used to be. The chief executive may require to have qualities and sometimes qualifications that may not be forthcoming if the post is filled by election on the basis of popular support, or as a result of political caucus activity and media intervention. As we have seen, this can very often take place. The earlier Green Paper got it right and the Government have no basis for departing from that concept.
In my view, a disagreeable aspect of the paper is the proposal to establish a new commissioner for trade union affairs to assist and fund legal action by members against their unions. My noble friend Lord Irvine has already pointed out that such assistance will not be available from the public purse for employees who wish to sue their employers in unfair dismissal and similar cases. Clearly the role envisaged for this official is that of trade union harassment officer. The Government want to destabilise union activities and to undermine union ability to act on behalf of members. They foresee involving unions in constant litigation. Indeed the Green Paper may well be the product of disappointment that previous legislation has not produced a spate of cases by members against their unions; so the Government want to encourage some more.
The Green Paper is the product of prejudice and malice. If the Government are really interested in individual employee rights, then why has their legislative approach constantly been directed to undermining those which previously existed? Why, for example, have the Government made it harder for employees successfully to pursue claims against employers for unfair dismissal? Why have they reduced the period for advance notification of redundancy from 60 to 30 days for redundancies involving 10 to 99 employees? Why have they weakened employees' protection in respect of deductions from wages, as they have with the passage of the Wages Act?
Why do the Government continue to block EC directives on matters like parental leave and leave for
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family reasons? Why will they not take steps to protect the rights of part-time employees? Why do we get improvements in sex discrimination legislation only when we are told we must do so by the European Court? Why do the Government, for example, oppose the Vredeling directive which would provide at least some rights of consultation to employees and some small measure of industrial democracy? Why do the Government oppose giving employees some rights in merger and takeover situations? Why are rights for employees constantly denied by this Government on the plea that these would represent a burden on business?
These are the real threats to individual employees. In the Green Paper the Government are seeking to make some electoral mileage out of further attacks on trade unions on the spurious argument that unions have powers that must somehow be curbed. In reality the Government are out to curb collectivity—the only response that employees have to the unrestricted power of monopolies and those with real power in our society. The Government should not proceed with these ill-judged proposals.
8.15 p.m.
Lord Young of Graffham: My Lords, I have listened with great interest to the speakers in this debate. I am grateful to all for the careful attention with which they have examined our proposals and for the courteous and measured ways in which their views and criticisms have been voiced. When we published our proposals two months ago I emphasised that they were in the form of a Green Paper on which we would welcome comment. We have received a number of comments from diverse organisations and members of the public as well as from the TUC and the CBI and we are now considering these. We will consider with special care the expert views expressed in the House today. I see this debate as a very key part of our consultation process.
If I were to attempt now to deal in detail with all the points which have been raised, it would be a wholly inadequate response. Those who have contributed to the debate are entitled to expect that we shall examine their views with the same seriousness as they formulated them. Nevertheless, there are some comments I should make. I wish to make some contribution at least as an initial reaction if not always to the particular points that were made. The noble Lord, Lord Murray of Epping Forest, to whom it is always a pleasure to listen, asked whether this was an instalment of our manifesto. At least I can assure him this is a real manifesto and not an unreal manifesto, if he follows me from the last 24 hours, that his friends, I am, alas, afraid, have been guilty of passing off in the absence of any other alternative to put before the people.
Some of the points the noble Lord and many other noble Lords have made about the right to continue to go to work when the majority of your union votes for a strike, I can accept appears at first sight to be curious. I have listened with great care to the points made by many noble Lords. All stand up save in one respect. With a pre-entry closed shop, it is difficult to say to an individual who does not believe in a strike in which the majority does believe, "If you go out on strike you run

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the risk of being dismissed but you can maintain your union card and perhaps try to get another job. However, if you go into work to protect your job then you can lose you union card and not be permitted to work anywhere else". This is a very real problem. It is a problem we shall have to look at seriously: it is one that I hope we shall all consider seriously before any action is taken. The problem of closed shops and pre-entry closed shops in particular is one which bedevils our society.
I listened with great interest to the noble Lord, Lord Rochester, who asked about the cost of refunding postal and other spending connected with a postal ballot. Our intention is that this scheme should continue to operate broadly as of now. Since our proposals would require trade unions to make more use of postal ballots, they would be in a position to claim larger refunds from public funds. That, I think, would be a sensible response to these proposals.
The noble Lord, Lord Rochester, asked why in the Green Paper there is so little about the rights and duties of employers. This Green Paper is simply about unions and their members. It is only about the relationship between unions and individual members. Nowhere was this focused on more sharply than in the speech of the right reverend Prelate the Bishop of Manchester, who apologised that he could not stay until the end of the debate. Indeed this point was taken up by a number of noble Lords opposite and gives me a cause for great personal concern.
The right reverend Prelate said quite rightly that individual rights are the foundation and the very basis of our rule of law and can be traced back to Judeo-Christian times. Of course, individual rights are the basis of the rule of law and I say with great temerity and respect to the noble and learned Lord, Lord Denning, that any society that puts group rights above individual rights ends up building a wall to keep its people in. The one essential difference between our society and others is simply that we respect individual rights and in no way will we allow group rights to overtake individual rights in the interests of justice.
Lord Murray of Epping Forest: My Lords, does the noble Lord not distinguish, on the one hand, between the use of collective action to enforce the rights of an individual, and, on the other hand, the development of some spurious sense of collectivity? What trade unions are concerned with is the development of organisations so that the individual can get his rights through the support of his mates.
Lord Young of Graffham: Yes, my Lords, but there are many countries in the world which claim that the individual's right is best supported by the collective. What the right reverend Prelate the Bishop of Manchester was advancing, as was the noble and learned Lord, Lord Denning, was that collective rights should have equal if not as great a status as individual rights. I welcome with great pleasure the noble Lord, Lord Basnett, who made his maiden speech in your Lordships' House. I have had the pleasure of sitting opposite him or diagonally opposite him on the NEDC round table for many years. I look forward to many great contributions to our debates. I have a faint suspicion that I shall not always agree with him, at
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least at the beginning, but I hope that in the fullness of time we can perhaps try to convert him a little more to our side of he House, as an eternal optimism is the one guiding principle of my life.
Lord Graham of Edmonton: He will convert you.
Lord Young of Graffham: That may well be, my Lords. I am indeed grateful to my noble friend Lord Thorneycroft who, in a very entertaining way, reached the very heart of what this debate is about. He reminded us that the purpose of trade unions is not to help government and he reminded us about so much of the recent past and the errors we have made and warned us about ever wishing to repeat them.
The noble Lord, Lord Houghton of Sowerby, also entertained your Lordships' House. Alas, I fear that we shall have to disappoint him. He asked whether we are going to have entirely new legislation from an entirely new government. The answer is no and no; and I suspect that you are going to have the same legislation subject to consultation from the same government in the fullness of time. But that is not a decision in which anyone in your Lordships' House takes a part. We shall just have to see.
The noble Lord raised an interesting point and one from which at the moment, in holding the function of my office, I am suffering. There is, alas, a strike going on within two of the Civil Service unions. It is true that of the four unions, all voted. Two voted to strike and two voted not to strike. I suspect it is an advantage that two are back working whereas in another system perhaps all four would be on strike today. At least we have the satisfaction or not of knowing that those on strike voted by a majority to strike. That is the wish of their members. Although I regret greatly the effect of the strike on perhaps the most vulnerable section of our community, I respect totally their right having decided to take that action. I shall consider seriously his suggestions about a body of commissioners in some way or other, as I shall consider seriously all the suggestions that have been made today.
My noble friend Lord Beloff drew attention to the relationship of unions and local government and in particular to the effect of trade unions on teachers. This is a difficult situation. I could not help to cool the passions by commenting on it but few of us could feel anything but concern in seeing some of the recent steps that have taken place with the teachers' unions and look upon teaching still as a real profession.
I was grateful to the noble and learned Lord, Lord Denning, for his history of trade unionism. The noble and learned Lord said that at the moment we have gone far enough and that we should stop. That is the purpose of the consultation. It is to consider the steps—admittedly small steps, although much has been made of them by noble Lords opposite. Those small steps are important in the relationship of individuals with powerful organisations in our land. I hope that the consultation will reveal that. We shall have to see after a suitable interval, and perhaps after other events, what comes forward.
The noble Lord, Lord Irvine, contrasted the commissioner for trade union affairs with the lack of legal aid for industrial tribunals. I take and understand

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that point. Industrial tribunals have always been intended to provide a quick, formal and easily accessible way of resolving disputes. Our view, which I must tell noble Lords was shared by our predecessors, is that introducing legal aid before tribunals would militate against that aim. Indeed the TUC itself made the point that the end result might be more legalism in the tribunals and that would defeat its very purpose. The cases that the commissioner is intended to support would be cases appearing in the High Court. It might be unrealistic to expect an ordinary trade union member to bring a case in the High Court without help and support. That is the proposal we have outlined and I shall read with great interest all the representations that have been made and are still being made.
My noble friend Lady Faithfull reminded us of the importance of attending trade union meetings. Nothing is more important than that, and I saw noble Lords opposite agreeing vigorously. What can he done to ensure that more people attend trade union meetings I am not too sure. In some countries of the world I suspect they are compulsory but I cannot see anything there. It is not a question of attending meetings but of playing an active part in trade unions. I suspect that in the fullness of time our postal balloting procedures will do as much to ensure that members take a real interest in the affairs of their trade union as any one single Act. Indeed the noble Lord, Lord Chapple, drew attention to both the advantages and disadvantages of voting by ballot. He knows well what an important part union meetings play in the life of a union.
I took seriously the contribution of the noble Lord, Lord Graham of Edmonton. The purpose of the Green Paper is to strengthen the rights of members of a trade union and not to whittle them away. The noble Lord drew attention to some of the financial provisions of the Green Paper. Without commenting in great detail, the trustees of any voluntary organisation must act in accordance with the order of the court and not with the rules of the union. If the two were in conflict, surely, under the rule of law, the order of the court must be complied with.
As for mischief being caused by members wanting to look at the books, when a union, for example, the National Union of Mineworkers—I know it is a name that often comes up but perhaps it is a name that will not come up so often in the future—changed its rules in 1985 to deny professional help to its members when they go to inspect the books, I think we have to look at this with some seriousness, as there may be some members of the National Union of Mineworkers who thought that those books were worth inspecting. I do not know. We should remind people that the property of the union is the property of its members as are the funds of all voluntary bodies. We are doing no more than that.
My noble friend Lord Elibank looked ahead to a time when unions would evolve into professional organisations. My noble friend is not with us now—I apologise, he is with us now. I am not sure that I am as far-seeing as he is. I suspect that we shall always have trade unions with us. I hope we will always have trade unions with us. I hope we will always have trade
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unions with us, playing a proper role in looking after the affairs of their members.
Lord Campbell of Alloway: My Lords, the noble Lord referred to the wrong person. I was not taking that point.
Lord Young of Graffham: My Lords, I thought I had said the noble Lord, Lord Elibank.
Among some of the other images that this afternoon's debate has conjured up in my mind is the thought advanced by the noble Lord, Lord Wyatt of Weeford, of the TUC joining the Labour Party in constructing and presenting a statute in gratitude to the Prime Minister for the contribution that she and the Government have made to trade union democracy. I am not sure whether that would come about—I suspect that this is not something we would in fact see.
What was interesting was the thought that the noble Lord advanced about the relationship between secret ballots and forward looking leadership of unions. I would not make any claim that the contribution made by government legislation towards secret ballots had any effect on leadership of the unions. But I do make a claim that it added a great deal to what we had to say about democracy within unions and, indeed, the record should speak for itself.
I listened with great interest to the concept advanced by the noble Lord, Lord Wyatt, of a beefed-up—I use his expression—Certification Officer. I am not sure whether that would work, but I will examine it carefully.
I am grateful to my noble friend Lord Campbell of Alloway, who displayed his enviable grasp of the legal as well as the industrial and political aspects of these matters. His points reveal not only the depth of his experience but the care with which he studied the Green Paper. I particularly appreciated his wise remarks on the subject of the closed shop and his concern about strike ballots held at the workplace. I believe that the vigilance of individual union members will provide an important safeguard of voting standards when they are given the right to enforce the balloting requirements.
As to his suggestion of a conciliation role for the Certification Officer, I should like to take time to reflect on that as, indeed, on all the comments made today on the role of the Certification Officer.
We then come to the contribution made by the noble Baroness, Lady Turner of Camden. I could not help thinking when I listened to that contribution that it was in itself justifying much of the legislation of the Government in the 1980, 1982 and the 1984 Acts. To say—I took down the words carefully—that the Government have removed all those measures that enabled unions to settle disputes in a reasonable way is to me a surprising statement. I can still remember, being of that generation, the 1970s. I know that last year we had the lowest number of strikes for 50 years, and I know that at present we have the lowest number of days lost by strikes for the last 20 years. I know that I am the first holder of my office to have spent so little time in industrial disputes possibly in this century.

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I suspect that what we are seeing is not something created by unemployment since, if unemployment was driving down the number of disputes one would expect it to have some effect on wages. Yet year after year wages have gone up by 2.5 per cent. in real terms. Last year it was 5 per cent. in real terms, and in the last five years we have seen wages go up by 17 per cent. in real terms. That does not ally with any concept of a world in which workers or working rights are pushed down by economic matters. Unions are among the most democratic institutions in the country. I welcome that. Unions have absolutely nothing to fear from the proposals in the Green Paper.
The noble Baroness asked a series of questions which I should like to answer. She asked: why are the Government not welcoming the concept of parental leave; why are the Government not welcoming the statutory rights for part-time employees; why do the Government not welcome the Vredeling directive, and why do the Government always take the view that the rights of workers end up as a burden on business? It is because of the essential difference in the way in which the two sides of your Lordships' House look at the world. The union quite properly is concerned with the affairs of its members, and concerned with all its members who are employees. My job is to help those into work. Therefore all these matters will be a clog on the growth of employment in the country.
Anything that acts as a clog on the growth of employment in the country will not help to reduce unemployment. Parental leave will do nothing for jobs in small firms, nor will statutory rights for part-time employees when we have such a growth of part-time employment in the country and such a lack of growth in those countries which have statutory rights. Vredeling has made no great contribution towards the changes which we have seen in the City. As to rights, it is my earnest task to continue only the statutory rights that I can with safety, in the interests of promoting employment and seeing unemployment go down.
I have said what I have said. None of that has any effect on the seriousness with which we shall consider all that has been said in your Lordships' House today and the many representations now amounting to 50 or 60 from many institutions and organisations and, indeed, individuals which have been made and will continue to be made.
I hope that in the fullness of time when the proposals come back to your Lordships' House, your Lordships will see that we have listened and listened carefully. I hope that then your Lordships will agee that we are acting wisely.
8.37 p.m.
Lord Boyd-Carpenter: My Lords, today's debate has brought out two matters of genuine importance with which I think most of your Lordships will agree. The first is the value of the Green Paper procedure and the opportunity that it gives to all of us to express views on difficult and complicated issues before the government of the day have committed themselves for or against them. The second is the value of your Lordships' House as a debating forum for the discussion of issues of this sort. No one who like myself has sat through the
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whole of the debate could regard your Lordships' House as being the body which takes any narrow or restricted view of these problems since almost every aspect of them has been expressed with clarity, vigour and sincerity. I am sure that this helps to build up even further the very high reputation that your Lordships' House has been establishing for itself over recent years.
I think that the only person who may be a little less pleased than I am with that is my noble friend the Secretary of State since we have undoubtedly given him a great deal of work to do and many points to consider. He and his officials, hard-worked as I know they are anyhow, will be even more hard-worked in the weeks to come.
We have had a valuable debate. If it is not an impertinence, I should like to thank all those who took the trouble to take part in it; and in particular, if I may, the noble Lord, Lord Basnett, whose notable and remarkable maiden speech was the great feature of the day. It will I think be long remembered.
I am tempted, having sat through the debate, to deal with a number of points, which I appreciate might not enhance my popularity. What Oscar Wilde said I often feel applies to me:
"I can resist anything except temptation".
However, I should like to yield to temptation on one point on a matter personally raised with me in the most pleasant way by the noble Lord, Lord Irvine of Lairg. He seemed to think that I was wrong in suggesting to your Lordships that the debate was predominantly about the relationship between union members and their leaders. He took the ingenious point that, if one protects the individual union member from victimisation when he refuses to take part in strike action, one may well be weakening the effect of that strike action or the threat to the employers by the union.
There is clearly some force in what he says, although I do not think there is very much. If the number of union members not taking part in the strike is very small, the effectiveness of the strike and the threat of it are hardly diminished. If it is very large, the idea of victimising quite a number of people because they will not take part in it seems to me, in human terms, in legal terms and in constitutional terms, infinitely so much more important than its possible effect on the unions' bargaining ability that I think the general statement which I ventured to put as to the effect of the Green Paper proposals is right. I dealt with that matter only because I respected the noble Lord's speech and I thought it fair to give him such answer to it as I could.
We have had the discussion and we have now formally to take note.
On Question, Motion agreed to.

Agricultural Training Board Bill
8.40 p.m.
Lord Stanley of Alderley: My Lords, I beg to move that this Bill be now read a second time.
This Bill was successfully piloted through another place by my honourable friend Mr. Gerrard Neale. As is so often the case with agricultural matters, particuarly in your Lordships' House, my honourable friend

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had the support of all the political parties and also the Government, so I hope that your Lordships will be able to give the Bill the same help in order to get it on to the statute book as soon as possible.
There can be no noble Lord present this evening who is unaware of the changing circumstances that face agriculture today, and because so much food is being overproduced there is a vital need for the industry to diversify. It is for that reason that this Bill has been promoted by my honourable friend with the full support of the Agricultural Training Board.
The Bill has two main objectives. First, it will enable the Agricultural Training Board to provide courses in non-agricultural skills, so helping the industry to diversify. Secondly, it will enable the Agricultural Training Board to provide courses in amenity activities to those outside the industry. These provisions will mean that the Agricultural Training Board will be able to offer courses on subjects such as food processing, bed and breakfast accommodation, leisure pursuits, small craft enterprises and ecological and conservation subjects.
Perhaps I should draw your Lordships' attention to Clause 1(2) which adds to the 1982 Act, and in particular to Section 5A(1)(b), which will allow the board to offer courses to those outside agriculture in amenity skills. I should point out that the board will not—indeed, it is not empowered so to do—instruct those outside agriculture in agricultural skills. Therefore your Lordships have no need to fear that there will be courses for those outside agriculture on, for instance, how to grow a four tonne crop of wheat and so add to our surplus. The courses and facilities will be as defined in new Section 5A(2)(a) of the Act which will be for sporting, recreational and environmental work and in paragraph (b) for courses for the rearing of animals including birds and fish. However, again I must draw your Lordships' attention to the words in brackets:
"(excluding the training of animals for any such purpose)".
That will mean that the board cannot become involved in the training of racehorses, homing pigeons, greyhounds or indeed circus animals. I am sure that that will please the noble Lord, Lord Houghton of Sowerby.
New Section 5A(3) obliges the board to consult the Minister before providing courses which will act as a reinforcement to the consultation required under 4.1(bb). That provision requires the board to have regard for any courses or facilities otherwise available. This is a commonsense provision because no one wants to see the Agricultural Training Board running identical courses to, say, CoSIRA. Subsection 5A(4) imposes a duty on the board to act commercially with the aim of meeting its costs from revenue raised and it must maintain separate accounts and records. This, in effect, means that the Bill will not increase public expenditure. Perhaps I should add that the initial funding for those new courses will be met from the board's own finances, and it is anticipated that after a suitable settling in time the new courses will show a profit. If they do not, Ministers are empowered, under existing legislation, to terminate involvement in the proposed new activities.
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Finally, I should like to pay tribute to the work of the Agricultural Training Board. I remember very well that it had a somewhat difficult start. Indeed, I have a nasty feeling that I refused to pay its levy under its initial funding methods in 1967–69. However, since then I, my farm staff, and the agricultural industry have benefited enormously from the courses which they have and which they continue to run for us. The standard of instruction is first class. I should like to put on record my thanks not just to the board but to their instructors, and for the voluntary work put in by farmer groups.
I am sure that these new provisions will enable the board to go from strength to strength and to provide a much-needed new service not just for farmers but for the rural well-being. I commend the Bill to your Lordships. I beg to move.
Moved, That the Bill be now read a second time—(Lord Stanley of Alderley)
8.47 p.m.
Lord Walston: My Lords, I should like to say at the outset that we on these Benches welcome this Bill as a valuable addition to the activities of the Agricultural Training Board. I should also like to thank the noble Lord, Lord Stanley of Alderley, not only for introducing the Bill but for the succinct and clear way in which he explained to those few of your Lordships who are still present the importance of the Bill and what it attempts to achieve.
As the noble Lord said, the Agricultural Training Board has already carried out a valuable service and has proved its worth. It came at the time when there was undoubtedly a certain amount of opposition to it. Many farmers asked: what is the need for it; we have got on very well in the past; we have a highly skilled labour force so why do we need a new board? That has been proved to be wrong.
It is perfectly true that in the old days farm workers were extremely skilled. They learnt their skills if not with their mother's milk at least from their father's feet and sometimes at their father's fist. They became a highly skilled labour force. With the advent of modern types of agriculture something more was needed and the Agricultural Training Board filled that gap in an admirable way.
As the noble Lord, Lord Stanley of Alderley, has rightly pointed out, agriculture is going through a very difficult transition. Whereas in the old days, in any village in almost any part of the country 90 per cent. of those who were gainfully employed were engaged in agriculture, today it is rare to find villages where even 10 per cent. of the people are engaged in agriculture. The number of people so engaged is diminishing slowly but steadily. If we are not to have our villages denuded, and some are already suffering from that, it is essential that agriculture should diversify. That has been accepted by all those who are concerned with this matter. If it is to diversify, clearly those who have worked in it or wish to do so—those who live in the villages and those who would like to live in them—must learn not only the old-fashioned or semi-old-fashioned arts of driving combine harvesters and using milking machines but also entirely different arts connected with rural life, of benefit to the rural

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community and of course also to the urban community who want to come and enjoy, if only temporarily, some of the more comfortable aspects of country life.
This Bill will enable that to be done. For those reasons I add my commendation to your Lordships that this Bill be accepted and implemented with the greatest speed possible.
8.50 p.m.
Lord John-Mackie: My Lords, I should like, first and foremost, to congratulate my noble friend (if I may so call him) Lord Stanley, who, as the noble Lord, Lord Walston, said, explained the position so succinctly and clearly that it could be understood by all your Lordships who have stayed to listen to the debate on the Bill. We are very grateful to him for what he said.
I should also like to confirm what the noble Lord, Lord Walston, has just said about skills in agriculture. Thinking back to my youth in the mid-twenties, there was very little training at all: simply experience and nothing else. But of course that was what was required. You could not learn to plough with a pair of horses and a high cut of plough, as we called it in Scotland, except by long experience. But today there is a great difference: there is new machinery, chemicals and everything else, so that training is absolutely essential. And of course that has to be done quickly. A boy leaving school and wanting to go into agriculture simply cannot get a job unless he has these skills and is prepared to go on courses where he can learn them. However, the courses do not provide everything and there has to be experience as well.
From all quarters—I need not go into them in great detail—we have been told to diversify to help our incomes—and, my goodness, our incomes need help. You cannot pick up an agricultural paper or go to an agricultural meeting without hearing about all these things. Listen to any speech and the matter comes up. The suggestions cover a very wide area indeed, from tea and coffee mornings, as the noble Lord mentioned, to artificial ski slopes and from bed and breakfast to clay-pigeon shooting. The variety is legion.
The noble Lord specifically mentioned the training of animals. We are asked to develop our shooting and it would be a pity if we could not get any instructions on the training of dogs in respect of that shooting. Perhaps at the Committee stage the noble Lord might manage to introduce a shooting dog in connection with the training of these animals.
On the question of amenity, it is important that the industry should be given some instruction about this. Many people need it, I would agree. I live in a very nice area just on the edge of Epping Forest, with a beautiful view over the Lea Valley—for that matter, I can see St. Paul's over the top of London. But that does not pay dividends. I think it is important to remember that on the amenity side there are no dividends. Someone might say, "You can charge people if they want to walk through the farm". Unfortunately I have four public footpaths right through the farm and people can get all they want for nothing; so I cannot do anything about the amenity side.
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When I told my wife that I should be late tonight she asked why, and I explained about this important Bill we are dealing with. She asked what it was about and, in trying to simplify my answer, I said that the Government were now prepared to send somebody out to teach the farmer's wife how to provide bed and breakfast. I think that hurt a little and she said, "I can do that without any government interfering". So, my Lords, the address is Harold's Park, Nazeing, Waltham Abbey; and the price will be unreasonable!
The whole question is very important indeed from the economic point of view. I tried yesterday morning to sell some oilseed rape forward and found that I had to take a price of exactly £40 per tonne, which is about £60 an acre less than last year. That makes a very big difference indeed and of course it applies not only to oilseed rape but to a whole lot of other products. Although the cereal market has held up well this year I do not think it will continue to do that next year; so there is the necessity for diversification.
If we do not get that diversification—and it is happening now, as the noble Lord, Lord Walston, pointed out—a number of men will be paid off because of the economic situation. We do not want that to happen. The number of people leaving agriculture and leaving the villages is too high in any case and we must hope that if farmers can get this diversification we shall be able to keep people in the countryside.
However, farmers must not rush into things rashly: we farmers are rather inclined to do that sometimes. That is why the powers now to be given to the training board will be so helpful to farmers; and they must take that help because otherwise a lot of money could be lost. I heard only this morning of money being lost by somebody who had rushed into something they knew little about, and so I welcome the suggestion as being very necessary and very helpful.
However, I think the situation, quite frankly, is becoming critical. I have had letters from the Scottish NFU and from Wales, and it seems that in some areas matters are very parlous economically. To delay this would be a pity. I have no real criticism of the Bill itself except for the point about the dogs and one other to which I shall refer later. It was given a fair ride in Committee in another place and an interesting point was raised. The noble Lord, Lord Houghton, has now left the Chamber but there was the question of hunting with dogs. I am talking about hunting deer with dogs: I think you hunt a fox with hounds and I am never quite sure about the difference between a hound and a dog, in my ignorance of these matters. One would need to be careful about this question of hunting, particularly hunting deer with dogs, because it will raise hackles in certain places.
The noble Lord mentioned the problem about the cash and that the board will have to raise the first lot of money from their present finances. I hope they have got that money, because otherwise it would cause delay. The Government want the industry to raise it themselves ultimately. That might be all right, but at the present moment I hope the board have got enough money so that there will be no delay in giving farmers help in connection with their diversification problems. I think that if the money is not available the Government should finance the schemes to begin with

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and, if necessary, get the money back later. I understand, however, that when a Private Member's Bill is concerned government money cannot be involved. I am not sure about that point and perhaps the noble Lord, Lord Hesketh, will be able to help us there.
I want to raise one point and I must declare an interest. I farm in the green belt and it is quite extraordinary how difficult it is. I have been discussing with my neighbours the difficulties that we have in getting the local council—the district council in our case—to give way on their rigid attitude to the green belt. I made an application to it. The council's objection to my application was stated on one page as being that it would create a precedent, but on the next page it stated that everything would be judged on its merits. If ever there were a contradiction of two things, that is it. Although the council denies it, it was a blanket refusal. It insisted that if I wished to take the matter further I had to appeal.
Appeals cost a lot of money and something should be done about this. When I told my district council what Mr. Baker said when he was in the Department of the Environment and what the present Minister, the Minister of State, Mr. William Waldegrave, and the Minister of Agriculture had said, I was told that those were just personal opinions and had nothing to do with the clause in question in the Bill on the green belt. I appeal to the Government to see what they can do on this matter.
I now wish to mention the case of farm workers who wish to set up a business. I have a foreman with a very good wife whose family is growing up. Would she be allowed to start a bed-and-breakfast business? My immediate neighbour, a small farmer, had to wait three years before he was allowed to do that. It is important that farm labourers, as well as farmers, should be brought into the picture in this regard. The workers' section of the TGWU is very impressed with the Bill, but it has expressed some reservations on that point.
I could add other remarks, but I shall leave it at that. We give our blessing to the Bill, but we hope that some of the points we have raised can be dealt with in Committee in due course.
9.2 p.m.
Lord Hesketh: My Lords, I am honoured to have been asked by my noble friend Lord Belstead, Minister of State, Ministry of Agriculture, Fisheries and Food, to speak on his behalf on this matter as he is engaged in other business and is unable to attend today's proceedings. I start by saying how grateful I am to my noble friend Lord Stanley of Alderley for introducing the Bill to this House and for giving such an able and eloquent presentation of the Bill's aims and merits. As my noble friend has already mentioned, this measure has attracted all-party support in another place and I very much hope that your Lordships will give it a Second Reading here tonight.
I was most interested in the comments both of the noble Lord, Lord Walston, and of the noble Lord, Lord John-Mackie, and I shall try to answer some of the points raised. I feel that the noble Lord, Lord
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Walston, particularly put his finger on the pulse of the Bill by saying that it will facilitate change. Change there must be in the countryside and the opportunity to, in the words of the noble Lord, Lord John-Mackie, "keep our men", depends on our finding new ways to provide employment not only for those who are in agriculture today but also for their children. As we are all so well aware, in the past the children of those who worked on farms used automatically to assume that there would be a job for them. We shall not be able to do that without diversifying our industry.
The noble Lord, Lord John-Mackie, asked me on two occasions about dogs and hunting and the difference between gun dogs, dogs in pursuit of deer and hounds in pursuit of foxes. The ATB will not be involved in dogs of any kind. I am sure that the noble Lord will be pleased to know that it can train the families of those who are working in agriculture. He gave the example of a foreman working for him. The ATB can help that farmer, or his wife, who wishes to find another extension of agricultural activity.
With regard to the comments of the noble Lord concerning planners, the green belt is something to which the Government are dedicated. He will have to deal with his local planners and I fear that he may have to go to the expense of an appeal. However, the Government have already, with the help of CoSIRA, tried to encourage the conversion of buildings and to assist with diversification.
The noble Lord also raised the point of funding for the ATBs. The government grant for the current financial year will amount to about £7·75 million, but, as he also rightly pointed out, there is no Money Resolution to the Bill and to press the matter could endanger what is an important, and we believe useful, piece of legislation.
The Government fully support the intentions of the Bill and believe that, if enacted, it will result in considerable benefits not only for the farming industry but also for a whole host of non-agricultural workers involved in land-related activities.
The intent of the Bill, as my noble friend has said, is two pronged. The first main provision relates to diversification training to aid the farm business. As the House will know, the Government attach great importance to the encouragement of diversification of enterprises and the role that such diversification can play in sustaining farm incomes in the difficult times which are faced by the industry.
The other main provision of the Bill is in some ways more far-reaching in that for the first time the ATB will be able to offer training beyond the farm gate. In other words, it will be able to train non-agricultural workers in rurally-related subjects. This is obviously a major departure for the board but it has been made desirable by the changing needs of society. Increased leisure time and a heightened awareness of the environment have led to greater demands on training facilities for land-related skills. Some facilities are already available but more are needed. The ATB is eminently placed to offer this training.
I am sure I need hardly remind your Lordships why the board is so well placed to offer this training. It has over 20 years' experience of training those in the agricultural industry in skills related to land-based

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activities. Over that period it has built up a system of training based around local groups of like-minded employers who organise the courses themselves. What the board does centrally is to devise the course content and to train the trainers. These training groups to which I have referred have been enormously successful and now number some 650 throughout Great Britain. This local organisation of training, together with the board's particular expertise and experience, works very well for agriculture. I am pleased that the Bill proposes that others may now also benefit.
Quite rightly there are safeguards in the Bill which are intended to help avoid unnecessary duplication with other agencies. There is the requirement before a course is considered to have regard to existing courses which are already available. There is a requirement to consult Ministers before diversification courses are offered. Finally, there is the catch-all provision in the 1982 Act that Ministers may issue a direction to the board; that provision remains.
One very important part of the Bill is that all the new training activities, whether diversification or amenity skills, must be run on a fully commercial basis. This means that all costs incurred by the board in the development and execution of a training course must be fully covered by the final price paid by the trainee. There will, therefore, be no additional cost to the public purse and those likely materially to benefit from a centrally provided service will be seen to pay for it. Finally, I should once again like to thank my noble friend Lord Stanley of Alderley for bringing this Bill forward and I commend it to this House.
Lord John-Mackie: My Lords, before the noble Lord sits down, did I hear him aright that government funding this year will be only £7·7 million, because last year it was £19·1 million? Is that just an initial sub?
Lord Hesketh: My Lords, the noble Lord was right that I said £7·75 million.
Lord Stanley of Alderley: My Lords, I should like to thank the noble Lords, Lord Walston and Lord John-Mackie, for their very warm support. Both pointed out how different agriculture is today from what it was, say, 30 years ago or indeed only 10 years ago, and the vital need for skill training as opposed to learning by following Dad. I should also like to thank my noble friend Lord Hesketh for his support and for answering some of the awkward questions about dogs and suchlike.
I do not think—and I am sure that the noble Lord, Lord John-Mackie, will agree with me—that this is the moment, and certainly I am not qualified so to do, to talk about the rights and wrongs of country sports. Suffice it to say that such activities are within the law, and certainly in my area they have brought in a lot of money and have given employment, which I certainly welcome.
The noble Lord, Lord John-Mackie, spoke about planning. He initiated a debate on planning not long ago and it seems that the same problems are going along. I do not know whether I am entitled to say so, but the Under-Secretary of State for Agriculture, Mr. Thompson, in another place, gave very sound advice
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(at col. 1164 of Hansard for 23rd January) on this Bill, which I am sure, knowing the conscientious manner of the noble Lord, he will have read. I have also had problems over planning very similar to those of the noble Lord, and all the advice I can give is for him to try and try again. I am sure that in the end he, like my friend, will succeed. Once again, it is a pleasure to see all sides of the House pulling together to help try to solve the agricultural problems that we face today.
Lord Hesketh: My Lords, before my noble friend sits down, and with the leave of the House, I should like to amend an error. The sum of £19 million is correct; the £7·75 million is the direct grant component.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

AIDS (Control) Bill
9.11 p.m.
Lord Stallard: My Lords, I beg to move that the Bill be now read a second time.
I am particularly honoured to have been asked to sponsor this Bill through your Lordships' House and I hope that I shall be able to do justice to the gravity of the cause that it espouses. I am also particularly honoured because we are to hear later a maiden speech from the noble Lord, Lord Trafford, who is a recent newcomer to your Lordships' House.
I certainly look forward to his speech. I know his background and I feel already some affinity to the noble Lord, strange as it may seem, because I know that he is the consultant physician to the Brighton Health Authority and has been since 1965. That was the year when I moved over from the smaller inner London local authority of St. Pancras to the larger authority of Camden and became chairman of the health committee there and a member of the health authority in Camden.
I remember when we were struggling with our designs to build health centres that Brighton was one of the places that we had a look at. We had discussions with the people of Brighton, because I know the record of Brighton Health Authority on the question of health centres; as indeed, when I had experience of some other facilities in Brighton in the North Chailey district, I was able to see some of the work. That must give a great deal of satisfaction to the noble Lord, Lord Trafford.
I also knew of him when he was a Member in the other place when I was there, and we saw each other from time to time in that place. So I certainly welcome him and look forward to his contribution to this debate and to the whole question of the Bill that we are discussing tonight.
AIDS, or, to give it its full title, acquired immunity deficiency syndrome, is a new disease. There were no known cases of the disease before 1981. So rapidly has the disease and our knowledge of it spread in this country and in most of the rest of the world that it now poses a health threat unparalleled in our time. I know that none of your Lordships will underestimate the seriousness of that health threat. The disease could

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have a major impact on our social, economic and political affairs, increase the cost of hospital care, result in a loss of human resources and have an effect on families and communities which would undoubtedly create many problems.
The purpose of the Bill is to provide information to help to control the spread of the disease in the United Kingdom. It is rare for a piece of legislation to relate exclusively to a specific disease and I should like to begin by saying something concerning the future and current situation in the United Kingdom and in other parts of the world, based on expert opinions and statistics.
By the end of 1986, 74 countries had diagnosed cases of AIDS. Europe had recorded 3,500 cases and the United States of America had recorded 25,000 cases. That might not seem alarming in the face of a far greater number of deaths caused by other diseases. However, the problem is not only a matter of the disease of AIDS itself. There is a bigger problem. AIDS results from a virus known as human immunodeficiency virus—HIV—which destroys the immune system of the body. That means that the body is no longer able to resist infections and diseases with which an otherwise healthy body might cope. People with AIDS die of infections rather than because of AIDS. Examples of such infections are rare forms of pneumonia and skin cancers.
It is therefore to the spread of HIV that much attention is turned, and quite rightly so. One of the key factors in combating AIDS is to establish the percentage of people with HIV who will go on to develop full-blown AIDS. The presence of HIV is detected by testing for HIV antibodies in the blood. People with HIV can remain quite ignorant of the fact that they have the virus. In fact, I understand that the virus incubates in the blood for an average of five years before developing into AIDS or such generally less serious conditions as AIDS-related complex.
During incubation, a person carrying the virus may quite unwittingly pass it on to others. In the early days of AIDS it was thought that around 10 per cent. of the people with HIV went on to develop the full-blown disease. However, as the years have passed the estimates of that vital percentage have increased. The Government now place the figure at between 25 per cent. and 30 per cent., although that seems low in respect of other world-wide estimates. The United States National Academy of Science and the Institute of Medicine believe that the current figure lies between 25 per cent. and 50 per cent. Others, notably scientists in West Germany, speak of 75 per cent.
The problem with estimating the percentage is that AIDS has been known for about four years in this country. The magazine New Scientist in its issue of 26th March 1987 reported research that had taken place over five years. That showed that 15 per cent. to 20 per cent. of people known to be infected with HIV had developed AIDS within three years and that 25 per cent. to 30 per cent. had developed the syndrome within five years. The percentage is expected to rise as time goes on and there are some scientists who believe that the figure will eventually reach 100 per cent.; in other words, all those people who have HIV will one day develop AIDS. It is a frightening prospect.
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The World Health Organisation believes that there are between 5 million and 10 million people in the world who are infected with HIV and who are known as CO positives. I expect that many noble Lords will have heard about or read reports of the World Health Organisation conference which is taking place this week. Yesterday it was reported that it had been said that 50 million to 100 million people will be infected with the AIDS virus by 1991. It was also said that the magnitude and impact of the world AIDS epidemic had been seriously underestimated and under-appreciated.
We know that America already has a massive AIDS and HIV problem. The Lancet of 6th December 1986 carried a study report by Ron Brookmeyer and Mitchell Gail showing that the United States could expect 102,000 new AIDS cases between1986 and 1991, based solely upon the number of people infected with HIV by the end of 1985. If more recent infections are included, the estimate reaches 207,000 cases in the United States by 1991. Such projections are backed up by other studies. Perhaps the most authoritative are those carried out by the Harvard School of Public Health and the American Academy of Science. They estimate a cumulative total of 179,000 deaths in the United States by 1991, with 54,000 deaths in that year alone.
In Africa there are an estimated 2 million sero-positive cases, and it is in that Continent that AIDS can wreak its worst havoc. Because of a lack of screening and an inadequate supply of syringes and medical equipment, as well as inefficient means of education and communication, the situation there will rapidly worsen. Already the risk of receiving blood contaminated with HIV through a transfusion is much higher than it is in the West.
At the moment the situation in Britain is less dramatic because the virus was introduced into these islands a few years after it appeared in America. We are fortunate to have had the benefit of their experience with the casualties. However, the potential for similar developments over here during the next few years is just as worrying and horrific. Indeed, roughly speaking, we are at the stage now that America was at four years ago. Further, the situation outside London is similar to the situation in London four years ago. We need no further warning as to why appropriate action is needed, and needed immediately.
As at the end of March in 1987 the total number of people who had developed AIDS here was 734. Of these, 405 have already died. The Secretary of State for Social Services said recently that the best available estimate shows that the number of AIDS cases here will rise to about 4,000 by the end of 1989. In a recent publication the BMA estimates that 30,000 people could have the virus and that unless people stop spreading it now there could be 10,000 cases of AIDS and 1 million people infected in this country by 1991.
It is against this background that this AIDS (Control) Bill comes before your Lordships' House this evening. It is a modest measure which will be only a part of the fight against AIDS. However, it is a vital one and needs to be in place quickly. It will fit alongside the work already being done by the Government, by the health authorities and by

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voluntary and non-statutory bodies. The advertisement campaign, the educational campaign, and educational material, the action on dirty needles and the £14 million extra resources being ploughed into research are all positive and very welcome measures already initiated by the Government.
This Bill is another urgently needed measure. Noble Lords who have followed the passage of the Bill through the other place cannot fail to have been impressed by the co-operation between the sponsor of the Bill, Mr. Gavin Strang, Member of Parliament for Edinburgh, East, and Mr. Tony Newton, the responsible Minister. Their efforts ensured that both their names appeared above the amendments at both revising stages of the Bill, and that is quite a unique experience on a Private Member's Bill. The result has been a vastly improved and practical measure.
The Bill is the result of substantial consultation with over 50 individuals and organisations involved with the disease. They include health authorities, environmental health officers, community medicine specialists, voluntary organisations and of course the DHSS AIDS units which have done sterling work both on the Bill and in other respects.
The Bill has been welcomed and supported in all quarters, notable among which are the Health Education Council, as was, and the British Medical Association, which wrote to all Members of the other place and to many Members of your Lordships' House expressing its commitment to the Bill's measures. The Bill was introduced because it became apparent last year, as a result of a number of meetings up and down the country that were reported and read about, that there was no clear picture of what was actually being done at a local level in the fight against AIDS which was available to interested parties.
Many organisations within health authorities and boards were doing and continue to do large amounts of good work on AIDS. For instance, London and Edinburgh have considerable experience in dealing with HIV and AIDS. Indeed, Edinburgh had a particular problem to deal with in Hepatitis B, which is transmitted remarkably similarly to HIV. Their experiences would be extremely valuable to areas which are just beginning to cope with the AIDS problem. Unfortunately, people working within one area often have no idea of some of the initiatives taking place in other areas. Further, within many authority areas some organisations concerned with AIDS have no idea of each other's existence, let alone what they are doing. That is particularly true of some voluntary and non-statutory bodies.
How will the Bill help that situation? The Bill is mainly an enabling clause and a schedule. That is the nub of it. It places a duty on all 191 district health authorities in England, the nine authorities in Wales and the 15 district health boards in Scotland to produce a report on AIDS and HIV in their areas at intervals at present envisaged as yearly but which as time goes on might become more frequent. The reports will be published and made available to those who want to see them. They will also be collated by the 14 regional health authorities in England and the Secretary of State for Wales to provide a further tier in the structure.
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Each authority and board will have to report on a number of areas, including the number of AIDS cases that their services have diagnosed and whether the persons are alive or dead. The original Bill included a similar breakdown for HIV figures but that had to be dropped because it has not yet proved possible to find a means of providing district-based HIV figures that is compatible with the Communicable Diseases Surveillance Centre's system of reporting. However, appropriate wording is now being sought in consultation with all interested parties in time to be added to the schedule well before the first reports are due. This is one illustration of why the Bill provides the Government with the power to amend the schedule. Clause 1(5) gives the Secretary of State the power to make these necessary amendments.
The area of AIDS is such a fast-moving one—it is extremely rapid—that the schedule to the Bill that specifies details of the report may need amendment as the situation develops. I think we all appreciate in the circumstances the need for some very early action. Clearly, with the Government publishing monthly national and regional AIDS figures, some of these statistics may be slightly inaccurate by the time the report is published. That does not affect their importance. They will serve as a record which over a number of years will indicate local trends as well as being vital in the allocation of resources in the future.
I should like to emphasise the importance of confidentiality and anonymity for people with HIV and AIDS. Any intrusion may make life even more difficult for those affected as well as deterring people from coming forward for testing and treatment. For that reason the schedule specifies that if any area has a total of between one and nine people with HIV or AIDS that is all that should be stated in the report. In that way it is less likely that a person with AIDS can be identified than if it were known there were just one or two cases in any area. The Minister in the other place gave further assurances that we may touch upon later.
HIV and AIDS statistics are but a small part of the report that will be required. They will be useful data against which the bulk of the report can be read and interpreted. The authorities and boards will have to state what services they are providing in relation to all facets of AIDS and HIV and these are spelt out in the schedule. This relates to testing, treatment, counselling and caring for people with HIV and AIDS and also to what steps they are taking to prevent the spread of the virus. In addition, the authority is expected to look beyond its own provisions and services to include those of non-statutory and voluntary bodies operating within its area. That is vital, because it is often those agencies which are bearing the brunt of the task.
The Bill also recognises the demands on the people implementing these services as well as the skills required by the services. It states that the report shall include reference to what is being done to train those people who will be working not just with members of the public with HIV or AIDS but in the community in general.
The collation of reports and the reports themselves will facilitate the recommendation of guidelines for good practice. They will highlight areas of need and those where there may be some duplication of

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resources. If enacted, the Bill will allow financial and resource targeting locally and nationally. AIDS will prove a costly burden on the National Health Service. The Office of Health Economics estimates that hospital care alone costs £6,838 for each AIDS patient. That adds up to £2.25 million for the care of AIDS patients who are known to be alive today. With the number of cases doubling roughly every 10 months at the moment, great resources will be needed in the future. It is therefore incumbent on all of us to see that the money which needs to be spent is spent where it is most effective and with as little waste as possible. The Bill will help that process.
The Bill represents the first long-term approach to AIDS and will lay down the framework that will be of use for years to come. It will help the depiction of the fight against AIDS and HIV locally, regionally and nationally. The Bill will provide an information base for people and organisations associated with AIDS. They will be able to learn from the successes and failures of others. The duty to produce a report should have a galvanising effect upon those authorities, if there are any, that believe that AIDS cannot happen in their areas as well as those striving to cope with the problem.
The report will serve as a handbook for members of the public who may be worried that they have HIV. In the report they would find organisations to which they could go for a test and advice and be assured of confidentiality.
I know that noble Lords recognise the gravity of the situation. I hope they will recognise the value of the Bill and provide it with a speedy passage through this Chamber. I commend the Bill to the House. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Stallard.)
9.32 p.m.
Lord Trafford: My Lords, I welcome this Bill. First, I must thank the noble Lord, Lord Stallard, for his kind remarks. If I had had a sense of déjà vu as he has, having met in another place, he has upstaged my memory by going back to the 1960s. I welcome the Bill for the obvious reason that it requires that reports and information are brought forward, are made public and are usable. Without information no plan of action can be formulated and no exercise of useful value can take place. Knowledge strengthens the arm of any authority or government who have the difficult task of coping with such an epidemic.
We are not unfamiliar with epidemics. There have been small and large ones in the past. We have the classic example of the great pandemic of influenza after the First World War. It is reputed, incidentally, to have killed as many people as the First World War. We had of course the Black Death, which was reputed to have killed one-third of the population of Europe in the 14th century. So great was the economic damage from that epidemic that it resulted in the introduction in this country of the first incomes policy. History relates that it was not too successful.
There is one fundamental difference with this epidemic to which we are addressing ourselves tonight.
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With all the others, the diseases struck, they killed, or did not kill, and they departed. With this one, so far no person suffering from AIDS has survived. If but one person survived the disease, the epidemic would disappear from the point of view of danger and proportion similar to the famous example of lassa fever. All we need is one person who has survived, who has the correct antibodies and who can therefore deal with this problem. This has not happened and the disease so far has resulted in 100 per cent. mortality.
It is said that somewhere between 10 per cent. and 14 per cent.—the figure given by the noble Lord is not one I would dispute—of infected persons subsequently develop the disease. But I agree that as time goes on, the very pattern of this disease—the mode of infection and the type of viral involvement—suggest strongly that this is a low estimate and that the higher estimates will turn out unfortunately to be the correct ones.
In your Lordships' House tonight we have already heard that between 50 million and 100 million people worldwide may even now be infected with this virus. These are horrendous figures. If one refers to the figure of 1 million, people can identify this figure with one city. With the figure of 100,000, people can identify this with a large town. But 100 million—the combined population of France and the United Kingdom—is an unimaginable figure. However, it gives weight to the size and seriousness of the problem.
It is estimated that in the United States 1.5 million people are infected. From the Americas as a whole, 86,000 deaths have already been reported. It is thought on very good authority that in France 150,000 people are infected. In this country estimates vary between 30,000 and 100,000.
One of the points of this Bill—the acquisition of information, which has not so far unfortunately come forward—means that we have to use such rather vague figures as between 30,000 and 100,000 simply because we do not know. But in Western Europe the rate of progress of this disease has been a little slower than in other parts of the world. We may look upon this as encouragement or—if we are somewhat pessimistic—we may say that it is only early days. However, we still have a chance to prevent a truly grim situation arising. We maximise that chance with knowledge. From the figures of those infected with AIDS and the methods by which they have been infected, there appears fortunately still to be some barrier at the heterosexual spread level. This is not true of Africa where it is well known that the spread is now largely heterosexual. In this country this has not apparently so far been the case.
I would draw to the attention of noble Lords that there is here both a message and a clue: a message from the point of view of action; and a clue from the point of view of further surveys and research. Of course we always need to know more. I do not know of any field of medicine in which we do not need or would not like to know more. If one speaks without knowledge, one ends up pontificating from prejudice rather than from a reasoned opinion. Fortunately, we are quite good in this country at collecting health statistics.
The point already raised of confidentiality is critical, particularly in relation to this disease. It is not by chance that no sexually transmitted disease in this

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country is a notifiable disease. We must not lose the co-operation, not only of the victims of AIDS, but of those who might be infected or who fear that they might be infected. Confidentiality is therefore critical. I am very pleased that by and large one can say that the manner and method of collecting health statistics have so far managed not only to preserve that confidentiality but give some confidence for future co-operation from those concerned.
May I interpolate a sad and worrying point which is relevant to the broad aims of this Bill and the debate although not directly related? It is the fear that the victims of this disease seem to create in others. One is hearing endless stories of people declining to go to the houses of those who have AIDS, who will not help them, who will not deliver to them, or who want to put on gloves, masks or special equipment before they deal with them. Worse still, one hears stories of nurses, nursing patients with AIDS, who are ostracized by other members of the general public and to a lesser extent by their own profession in this connection.
I can assure your Lordships that there is no medical or scientific justification whatever for any of this. It is a trend which must be very quickly reversed; otherwise, we shall have large groups of pariahs in the land and we shall have developed a caste of untouchables of our own. This is false, and we must take every step to stop it. At the same time, we must allay those unfounded fears which afflict people when they are faced with a rapidly spreading epidemic.
This Bill goes some way to helping ensure that information is brought forward. It helps us in resource allocation, to which the noble Lord, Lord Stallard, has already referred. It also helps us to prevent misallocation. By that I mean putting money in the wrong place when it is needed elsewhere. It also allows us to present some resistance to what I call the bandwagon syndrome. The bandwagon syndrome means that when a sum of money becomes available, too many people find that their work is in some way related to it and they put in for a slice of that money, which may not be totally justified. Many examples of that abound.
I am sure that the sponsors of this Bill would not claim that it is in any way an answer to the problem of AIDS, but it is certainly a welcome move in the right direction. Of course we need a vaccine. Of course we need an effective therapy. These matters are being actively pursued. But we also need this type of information and these sorts of reports to find out what is happening at present in the land so far as concerns dealing with patients, developing hospices and developing community care of the afflicted. The collection of information is the best chance of containing a very serious situation, and with good fortune—I emphasise with good fortune for we need it—we shall be able to avert what could easily become not just an international disaster but an international catastrophe.
9.42 p.m.
Lord Winstanley: My Lords, I am particularly privileged tonight in that it falls to me to fulfil the very pleasant and welcome task of congratulating the noble Lord, Lord Trafford, on his truly excellent maiden speech. I assure him that I take pleasure in doing this
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not merely because it is customary but because congratulations are merited and well deserved in his case. We have listened to an important, highly informed and very wise speech. We are all most grateful.
As a doctor, I am always delighted to welcome any additions to our ranks in your Lordships' House, but when the doctor is so distinguished and comes to us with such a high academic and professional record my delight is doubled. The noble Lord will soon discover that we spend a great deal of time in this House discussing medical matters, and he may come to realise that the Government are often in need of advice on these matters. I am sure that the noble Baroness, Lady Trumpington, will tell him that she gets a great deal of advice. Sometimes she heeds it, but I venture to express the hope that now that she will get advice from her own Benches, and from one who has served in another place as well, she may take even more notice of it. I am sure that we all hope to hear from the noble Lord on many occasions in the future.
I have little to say about this Bill, which I support warmly, save to ask why it should be necessary at all. It seems to me that the Secretary of State already has powers to do what is required in the Bill. Frankly, I believe that he should have been doing these things for the last three or four years. Perhaps the noble Baroness at the end of the debate will be able to tell us that the Secretary of State and Ministers have been using their powers to collect this absolutely vital information.
As the noble Lord, Lord Stallard, has rightly said, information is absolutely crucial. The BMA has pointed out that one cannot plan public information services unless we have proper information about the extent of the disease, its geographical distribution and other matters of that kind. There are, as the noble Lord said, many other things which we need to know as well. Noble Lords will remember the first time we debated this subject in the House quite a time ago. I remember saying that one of the things we needed to know as soon as possible was the incubation period. The noble Lord, Lord Rea, who is to speak tonight, said that we already knew that. I said to him, and he will recall this, that I was aware that many people thought they knew, and apparently he believed them but I did not. It is now becoming clear that we cannot yet place an upper limit on the incubation period. We do not yet know. It will be helpful when we know matters of that kind.
The part of the Bill that I particularly welcome and should like to say more about is set out in paragraph 4 of the schedule that concerns not merely the number of cases, but the number of cases that have occurred in different districts and the number of people working for health authorities and district health authorities and the people:
"known to [the authority] to have been provided in its district or area by others".
The words "by others" very often mean people from voluntary bodies.
Counselling is specifically referred to. The Bill refers to:
"facilities and services … for the treatment, counselling and care of persons with AIDS or infected with HIV".
Much of that burden falls on voluntary bodies of one

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kind or another. They are having great difficulty in fulfilling those functions. I think I am right in saying that Sir Gerard Vaughan in another place has been working actively to raise funds for counselling and has been having meetings with Ministers on this subject. We are concerned not merely with counselling in the earlier stages of the disease and assisting relatives but sometimes with terminal care. We have seen some of the voluntary bodies set up institutions for the terminal care of these tragic cases and we have seen them getting into very serious financial difficulties.
There are serious problems with regard to counselling. I have said this before and I say it again: counselling is not just a matter of being a good Samaritan. It is a highly professional job requiring professional and proper training. It is a dangerous job, not because of the possible danger of contracting the disease. I think the noble Lord, Lord Trafford, illustrated this. The disease is not as easy to catch as all that. People must realise that it is quite difficult to catch AIDS. We must not encourage any lack of thought about it, but the fact remains that some people who have been exposed to it for a very long time have not contracted it. It is unfortunate that the public should be encouraged to have this idea that once they set eyes on a person who is infected with AIDS they will automatically be infected.
The danger to the counsellor is that he is attached to a patient. He gives emotional support and develops a relationship with that patient over a continuing period until the patient dies. Then the counsellor is moved on to another patient with whom he or she develops a relationship, gives the support that is necessary to that case and to the relatives until that patient dies. Then on goes the counsellor to another patient. The possibility of very serious psychological trauma from doing that kind of work is immense. That is the reason why—as the noble Baroness, Lady Faithfull, would say if she were here—that we need professionally trained counsellors and we need to make absolutely sure that the voluntary bodies providing counselling services have the resources with which to effect the necessary training of the people concerned.
I particularly welcome that part of the Bill that will do something that has not yet been done. It will properly quantify the number of people working voluntarily in different areas, it will show where they are and give us an opportunity to see what support they need. One should also say perhaps in general—and I think the noble Lord, Lord Trafford, again hinted at this—that all the information that is available should be made properly public. I am aware of the dangers of knowledge. We often hear about this. We are told that we must not frighten people but I say from all my experience practising medicine over a long period that the dangers of knowledge are nothing compared with the perils of ignorance. We must make sure that this information is properly disclosed.
Once it is properly disclosed we may very well see that there are hopeful signs on the horizon. I understand from my medical colleagues that there are possibilities of new therapeutic substances coming along in addition to the one already pioneered by Wellcome—others for which great hopes are held. The
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noble Baroness may perhaps be in a position to tell us more about them. If there is a new therapeutic substance, first, that can treat cases, and, secondly, that can render them non-infective, we are on the way to getting something very important done. Be that as it may, it is still very important indeed that information should be collected on a regular, systematic and continuing basis and that it should he kept by the department and disclosed where necessary to the public who need it.
In that connection let me say, too, that it is necessary to be aware that we have to preserve a careful balance between frightening people unnecessarily and failing to remind them of dangers to which they might be exposed. It is a difficult path to tread, and I say straight away that I believe so far that the Government have trodden that path pretty accurately and kept roughly in the right position. But there are dangers.
I am old enough to remember—other noble Lords may remember too—the time in the early days of the war when we had certain draconian measures. We were very frightened about the escalation of venereal disease. Emergency powers were taken whereby people notified other people of the contacts from whom they could have obtained the disease, and in certain circumstances there were emergency powers whereby people could be called into hospital for compulsory treatment.
One of the effects of that campaign—and I saw it when I was practising medicine both in the civilian population and in the forces—was that we had a great deal more work and trouble from people who thought that they had venereal disease but who had not than from people who had actually had. People with guilt feelings as a result of some act they had committed harboured guilt of a profound degree. We had a great many suicides in those days by servicemen and other people who thought somehow that they had contracted syphilis and we could not assure them that they had not. I am told by consultants in this field that we are not yet seeing that phenomenon in connection with AIDS. I find that very encouraging because I feared with publicity that has been spread we might already have had a number of people suffering from the kind of neuroses which developed on that other occasion.
Finally, let me give just one other warning. A great deal is now said about the lifestyles and morality of people, the permissive society and so on. Perhaps it is right that people should be given warnings about their personal conduct. This is right. But we do not wish to return to the Victorian attitudes towards sex that we had at the beginning of this century and from which my profession suffered a great deal. An enormous amount of work arose in the psychiatric field from distorted attitudes towards sex as a result of fear being, as it were, established in the community quite wrongly.
It is a difficult path to tread. I believe that the Government have trod the right path so far, but I say this. Information should be made readily available. In particular good information should be made available. When all the facts which will be collected together as a result of this Bill and as a result of other steps being taken are examined, we may well find that the

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situation in this country at the moment is, frankly, improving in terms of the growth being delayed rather than accelerating in the way we thought. We may find that we are doing better than we feared a year or two ago. That would be helpful news. I do not think it would make people careless. I do not think it would stop people having any regard to the situation. But I think it would be useful information if that information exists.
I welcome the noble Lord's Bill and I hope that it passes speedily on to the statute book.
Lord Rea: My Lords, since the noble Lord mentioned my name at the beginning of his speech, perhaps I may hark back to a debate we had some two years ago about AIDS. If he looks at Hansard he will find that I never said what he attributed to me. He said that we knew nothing about it. I said that one thing we know about it is that it is extremely variable, and I think that that still applies.
9.55 p.m.
Baroness Masham of Ilton: My Lords, I should like to add my congratulations to the noble Lord, Lord Stallard. I hope that he will enjoy the wonderful companionship of your Lordships' House. I wish him good speed with the Bill. The noble Lord is a very caring person—the ideal person, I am sure, to take this Bill through your Lordships' House.
I should like to welcome the Bill as far as it goes. Last week I was present at a regional health authority seminar where health districts reported to the regional health authority members their plans for the future. Only two districts out of 17 mentioned that they were considering their strategy for AIDS. It is interesting how priorities differ considerably over HIV. The Bill will make the health districts and boards get themselves organised and enable health regions to collect information which can be made available to the Secretary of State. If the legislation is not implemented quickly, I think that some districts and regions will be slow to provide these important reports and will not organise their provisions speedily.
I see a serious omission in the Bill. I ask the noble Lord, Lord Stallard, and the Government this very important question. How do they intend to get the information relating to AIDS and HIV from the prisons and other penal institutions and from the armed forces? These institutions do not come under the Bill at present. Unless the number of AIDS cases and the relevant problems of the prison population, a high risk group, and the armed forces, who travel abroad and can also be at risk, are collated with the information from health regions, there will be an incomplete picture of the country at large.
If these groups are left out, should there not be added to the Bill the requirement that the Home Secretary collects AIDS and HIV information and reports to the Secretary of State at the DHSS, and that the Secretary of State for Defence does likewise?
For the past year I have been dealing with a very serious health problem on behalf of the mother of a remand prisoner. The health problems within prisons seem to need a great deal of improving if this
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complicated case is anything to go by. The prisoner concerned, when his mother last telephoned me, was on life support and in a coma, having been transferred to a National Health Service hospital from prison.
With regard to AIDS and HIV I feel that the prisons need legislation just as urgently as the health authorities. Are they going to treat dying AIDS victims in prison or send them out? If they are to be treated in prison, there should be special wards to do this with trained staff, otherwise numerous problems will result. Is not adequate health care in prisons a human right?
With the World Health Organisation's prediction which was in the papers yesterday that there may be millions more cases in the future than was previously predicted, prevention of the spread of the virus must not be neglected in any way.
The prison population and that of youth custody and detention cover thousands of males who often have their hair cut. Many of these people suffer from acne and spots. The barbers use clippers, which I am sure are not sterilised. I have spoken to the governor of the institution to which I am attached, and he thought that that was a valid point.
Are the prison population offered blood tests for AIDS? Those who are sero-positive should not be in the same cell as non-sero-positive prisoners. When prisoners are locked up in a cell for 23 hours a day, I am told that homosexual acts often take place. All efforts must be made to stop the HIV virus spreading.
Recently I have spoken with some doctors who are most concerned that some sero-positive people have such a grudge against society that they want to infect as many people as possible. This is a terrible thing and it needs careful psychology and diplomacy to change this serious conduct.
I have met some very caring and dedicated doctors and nurses who are working with the AIDS patients, which is highly commendable. All patients who need treatment and care should have it in the best way possible. I am beginning to hear from seriously disabled people statements of worry that so much effort and money is being channelled into AIDS that they are wondering whether their needs will be pushed out. The noble Baroness, Lady Trumpington, understands what serious disability can mean. Research must also continue for such diseases as multiple sclerosis, motor neuron disease and rheumatoid arthritis, to mention just a few of the many. The care of those very severely disabled people is vital.
I received a letter only last week saying that seriously disabled patients from a specially adapted ward, which I officially opened some years ago at Poole Hospital in Cleveland, were being transferred to a less suitable and inferior ward. The patients are most upset. The chairman of the district has written to tell me that this is to save money because of the nurses' pay, not under the recent award but under the previous one. The Minister will receive a letter from me, but I sincerely hope that she will give an assurance that the interests of these disabled patients will be safeguarded. As the AIDS situation develops demands on the Health Service will increase.

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One now sees advertisements in papers for private AIDS counselling and testing. Maybe many people will prefer to have themselves checked by private arrangements. Will these clinics be registered? Will they give numbers of sero positive people to the Government to count in with their figures? AIDS is teaching doctors and health care staff how to counsel. That has been a neglected subject up to now. I hope
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that it will also teach government departments to cooperate and work together over this matter in a quicker and more efficient way.
I should like to end by congratulating the Government for their efforts so far on combating these complicated viruses. It is something that the whole community should be helping with, with the greatest possible co-operation.
10.3 p.m.
Lord Colwyn: My Lords, I apologise to the noble Lord, Lord Stallard, for missing the beginning of his speech. I am grateful for the clear and concise way in which he explained the Bill. I am sure that the Minister will agree that it is very important that the information specified is made available. To that extent, I support the Bill.
I am aware that we are not here this evening to go over the many aspects of AIDS again. However, in my brief intervention I feel that it is right for me to take the opportunity to continue to try to persuade the Government to look at the problem from a far wider point of view. Perhaps this Bill could be extended in order to include the kind of information that I consider absolutely vital when assessing the scale of the problem and the best way to deal with it.
The large amounts of money available for research, confirmed by the Secretary of State for Social Services in the debate in another place on 25th February this year, are very impressive. The public information campaign is certainly having the desired effect, even if it has created an atmosphere of minor panic. We know that the AIDS virus reduces and ultimately destroys the efficiency of the immune system—thus reducing the natural defence mechanism and making the AIDS victim susceptible to all manner of infection—which invariably, we are told, results in an early death.
Where I feel the Government are wrong is in their concentration on the research for an anti-viral therapy or a vaccine rather than on research into ways of improving the efficiency of our natural defences. Conventionally we are told that we are all vulnerable to the AIDS virus, yet this is patently untrue. The virus certainly triggers off a rapid breakdown of the immune system, but very little seems to have been said on why certain people with the virus should exhibit serious symptoms while others do not.
A recent article by Carolyn Reuben, published in East West in September 1986, referred to a study of the histories of AIDS patients in the United States. There were 10 factors which seemed to show up in most cases. I shall not list those this evening but I would be happy to let any noble Lord see the article or take a copy. All these factors, ranging from a history of bottle feeding, incorrect diet, removal of tonsils and the extended use of antibiotics, had a weakening effect on the patient's immune system.
While congratulating the noble Lord, Lord Trafford, on his excellent maiden speech, I fear I must disagree with him. Telling people that AIDS is always fatal is both untrue and, I believe, misguided. This is to ignore the fact that many patients have experienced remissions and now lead normal lives. Equally important, it is an entirely negative approach. The will to live is a key element in the fight for survival. AIDS patients must be allowed to live in a wholly positive atmosphere in which their self-healing capacity is encouraged and enhanced.
In the public mind at least, complementary therapies have been largely ignored. This is rather curious, not just because orthodox medicine seems to have very little to offer to AIDS patients, but mainly because there is already a substantial and growing
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body of evidence that a number of integrated therapies are improving the quality of life for many AIDS patients, and indeed starting them on the road to recovery in several cases.
As an example, some of your Lordships may have seen an item on ITN on Tuesday, 21st April, where the International Society of Biophysical Medicine (of which I must declare my membership) was reported to have discovered a new diagnostic method for AIDS by means of electrographic imaging and a resultant treatment method for the reduction of stress, which was having very encouraging results. In my excitement at this discovery, I was guilty some days earlier of ringing the office of my noble friend the Minister, but I regret to say that the enthusiasm shown in the office did not match that of the Americans, who are now considering financing this major British development, in the diagnosis and treatment of the disease.
In conclusion, while welcoming this Bill and hoping perhaps that it might be altered in order to widen the scope of the information that is to be reported, I beg the Government to broaden their perspective and to realise that an individual self-healing capacity is the key to the problem. Government finance should be directed away from the discovery of powerful synthetic agents and focused instead on ways of enabling people to maintain their own inner strength and health.
10.9 p.m.
Lord Young of Dartington: My Lords, I should like to join in the general congratulations to the noble Lord, Lord Trafford, on a most powerful speech. I was most impressed, as I am sure we all were. I am also sure that the noble Lord would not want to be left with the impression on this occasion that we are always in agreement. That certainly would not be giving the right impression and I am not going to join in the chorus of praise for this Bill. I am afraid I am going to disagree with everyone who has spoken so far.
So lift up your hearts, there is still hope for us. I shall take as my text, at least in the first part of my brief remarks, something that Mr. Newton said in the other place when the Bill received its Second Reading. He said of the Government (in the Commons Hansard of 23rd January 1987 at col. 1191):
"We could perfectly easily have thought of endless reasons for not having the Bill and for seeking to prevent it being passed. I am bound to tell the House, if only as a matter of propriety, that, strictly speaking, we do not consider that the Bill is needed. Quite apart from the existing accounting arrangements for reporting within the Health Service, the National Health Service Act 1977 already contains provisions that enable the Secretary of State to direct local authorities to provide him with certain information".
He continued with a non sequitur which I completely failed to follow:
"Having made those points, I certainly do not intend to use them as reasons for advising the House not to proceed with the Bill".
The heart has reasons that the mind knows not of. The noble Baroness who will reply to the debate later is well known in this House and elsewhere for her heart. I hope that we shall be able to vouchsafe that what comes out of that heart will support reason and do it in a more convincing way than the Minister for Health was able to do on that occasion. I found the whole thing most mysterious.

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Perhaps the most important question is whether the Government were or were not right in the past to refrain from using the powers that they had to require district health authorities and the rest to provide all the information that the Bill will now make compulsory. I think that the Government were right then and have been wrong since in supporting this Private Member's Bill.
There has not been any complaint as far as I know. There certainly has not been any complaint voiced in this debate tonight, nor was there in the other place in any of the sessions about the way, manner and the accuracy of the figures that have already been collected about the incidence of AIDS. The figures are collected in what seems to me a properly English and very reputable way. They are collected throughout the country in a voluntary manner without using compulsion and are reported to the Communicable Diseases Surveillance Centre. That gives the country an adequate picture, broken down geographically into quite small areas, about what is happening with the incidence of this disease.
There has been no complaint about that, but now, because of this Bill, in what I think of as a fussy, Germanic way laid on top of our decent English ways, there will be compulsion requiring the district health authorities to do what within considerable limits they have done perfectly well so far in providing us all with the vital information which we need about the disease.
I fear that the danger is that the Bill will not make the statistics better but worse, because introducing compulsion into a scene that has been dominated so far by the voluntary principle could undermine the confidentiality which the noble Lord, Lord Trafford, talked of so well. This is a matter where the psychology of sufferers is vital. Some AIDS sufferers may fear that if their individual case has to be reported by law to district health authorities, it will not be treated as confidential.
This is not a realm in which reason generally prevails. It did not prevail with the Government when they decided to support the Bill and it has prevailed perhaps still less among many people who are stricken with the disease. They may withdraw their cooperation and not supply information, or not even let on about symptoms and so on, if they fear that there will be any breach of confidentiality; and I fear that this Bill will give some reason to people to think that the confidentiality principle may be broken.
The most vital part of any statistical collection is the voluntary basis of it. Unless people are prepared to provide the basic raw material, statistics as they are aggregated will be that much less good. To lay a statutory hand on statistics, whose supply is voluntary anyway at the root, could be to undermine the voluntary spirit.
There is a very grave omission from the Bill, which is that there is no guarantee of confidentiality. It would have done something to allay any fears people might have had on these grounds if a guarantee of confidentiality had been written quite specifically into the Bill. That at least would have been reassuring. I should have welcomed it if, in addition to that, provision had been made against discrimination in
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jobs and housing and on the insurance market, which is already affecting AIDS sufferers. But there is nothing of this in the Bill and I think that is one reason why, despite what the BMA may have said earlier on, when I do not think they had taken the full measure of the Bill, there is a good deal of growing disquiet among doctors concerned with AIDS.
I do not know whether other Members of this House have been written to by people at the Middlesex Hospital on behalf of Professor Adler, Dr. Ann Johnson and others there, but they are quite alarmed about this Bill, partly because they are afraid of what it might do on this issue of confidentiality. There is also some disquiet in the Faculty of Community Medicine. There obviously is not unanimity on this, and I do not think there is unanimity either way. But the fact that some eminent doctors who are in the front line of the fight against AIDS are worried about it is something which should give us pause.
Another fear is that the Government do not treat and trust voluntary bodies for the voluntary principle as they should. It is many months now since the Secretary of State was asked to help in setting up a national AIDS council for the voluntary bodies in this field, like the Terrence Higgins Trust, Gay Switchboard, Body Positive, the National Council for Voluntary Service, the College of Health, of which I have the honour to be chairman, and others. They could all do more good work with proper coordination and support. But in reply to the overtures that have been made to the department on this matter, the silence has been almost deafening. It is a serious matter which should be raised in this House and elsewhere on another occasion.
The delay is encouraging several voluntary bodies, and important ones, to think about going it alone and with a critical stance to the DHSS, which would be the greatest of pities. What we want is co-operation and not conflict and any bad feeling. We want it partly because if this Bill is to do some good, as well as any harm—which I am afraid it may do—then the cooperation of the voluntary bodies will be essential because, very strangely, the duty is laid on district health authorities in the schedule to this Bill to collect information about the work of voluntary bodies in their own area. It will not be possible to do it in any reasonable way unless much more energetic steps are taken at national and at regional and district levels to gain the fullest co-operation of the voluntary bodies, to support them and to give them sustenance over a very wide area.
So I am afraid that for those reasons I cannot possibly support this Bill. I am sorry that it has come to us and that it went through the other House. I hope that even at this late hour in the proceedings the noble Baroness will show that not only does she have a heart but she has a mind, and that mind is able to listen to good reason.
10.20 p.m.
The Lord Bishop of Newcastle: My Lords, I should like to add my congratulations to the noble Lord, Lord Trafford, on his notable maiden speech and to say what a pleasure it was to listen to a speech of so much expert content delivered with such clarity.

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At this late stage in the debate there is just one point I wish to make with regard to the Bill. It is a point close to one upon which the noble Lord himself touched. In the schedule attached to the Bill we find mentioned twice,
"treating, counselling and caring for persons with AIDS or infected with HIV".
There is general agreement that the counselling of such persons and their care in the wider sense—that is, wider than nursing or medical care—needs deft and expert handling. The noble Lord, Lord Winstanley, has already touched on that subject and it needs no underlining. Equally deft and expert handling is needed with regard to the counselling and care of the families and friends of those who are suffering from the disease and with regard to the care and counselling of those who have been bereaved as a result of it. Expert counselling is also necessary for those who have nursed persons suffering from the disease, whether they are professional nurses or not.
I gather that pressure on hospital beds may mean that the terminal stage of this illness, when the sufferer is heavily dependent on care and support, will not infrequently have to be spent at home. I am sure that families and those closely associated with persons suffering from this disease will need help of a depth and a quality beyond that required by those who watch death approach or suffer bereavement from other causes.
Understandably, family and friends in particular are likely to suffer a conflict of doubt, guilt, anxiety and anger and a veritable turmoil of thoughts and emotions, both rational and irrational, which it may be that only time can heal. Many of them will need—and will, I trust, receive—expert personal and pastoral care and support from the caring agencies and, I like to think, from the clergy. But, of course, there will be no answer to their distress, grief, rage and anxious reproaches—that is, no answer capable of crisp formulation.
There will be no answer because this disease and the problems associated with it bring us all face to face with some of life's inscrutable mysteries. Any sickness or grief, any suffering or death—in a word, any tragedy—brings us up against deep questions about the meaning of existence and about the good governance of the universe. But this disease and the problems associated with it present those questions to us in a particularly intractable and uncompromising manner.
Do we not all know that tragedy is inseparable from life? That is why we go to performances of "King Lear"' and "Hamlet". That is why we read the Greek tragedians or Racine or parts of the Bible. The tragedy is not removed by these performances or by reading. However, we come to see our tragedy as part of a much wider context of tragedy and so we are enabled to live with it and are sustained to cope with it.
Similarly, expert care and counselling, provided for those who watch those close to them suffering from this disease or who have watched them suffer and die as a result of it, will not cure their hurt. However, it may help them to live with it. I have heard of a London borough which, thanks to a charity, has been
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able to appoint an AIDS care organiser. I believe that he or she has responsibility, among other duties, to organise and provide care for families and friends, co-ordinating care from medical sources, the social services and the voluntary agencies.
In a word, we need to broaden our understanding of those who need support. Reference needs to be made to a dimension wider than that to which this Bill explicitly refers. It needs to refer to the needs of relatives, friends and nurses of AIDS sufferers and provision needs to be made for that. Why should this type of provision not be included in the schedule attached to this Bill?
10.25 p.m.
Lord Rea: My Lords, I should like briefly to say that, like all other noble Lords except the noble Lord, Lord Young of Dartington, who has made some very good points, I support this short but very useful Bill. I also confirm that it has the backing of the BMA.
By requiring the publication of the annual reports and defining their content and format the Bill will make available a great deal of information which will be extremely useful to health care planners and advisers in the National Health Service, the social services and the voluntary sector. The Bill will not greatly advance our epidemiological knowledge of the disease because we already have a pretty effective system running through the Communicable Disease Surveillance Centre which is based at Colindale. As the noble Lord, Lord Stallard, said, the information will also be very helpful to sufferers and their friends and families.
I believe that "publication" is the key word in the Bill, implying as it does that the information will be available to all—the public, in fact. Regions and districts which, as might appear from the report, apparently are not allocating resources appropriate to the size of their problem locally will immediately be called upon to justify their action or inaction. If lack of finance is blamed, then public pressure can be brought to bear to correct this through Parliament, local authorities and the media, both national and local.
I am glad that the Bill does not go into great detail in the schedule and specifically allows the changes to be made by the Government in keeping with the rapidly advancing knowledge of the nature of the problem and its complexity. I wish that I was as optimistic as the noble Lord, Lord Colwyn, about encouraging regeneration of the patient's own immune system.
There are a few problems in the Bill, to some of which the noble Lord, Lord Stallard, has referred. For instance, are districts the appropriate size of authority to be making reports, especially as they may not coincide with the size of the Communicable Disease Surveillance Centre's areas? They may contain very few cases, and some may contain even none. Another problem relates to the long incubation period. The district where the disease is diagnosed may not be the patient's district of residence where he may finally be looked after in the terminal stage of his illness. However, I am aware that there are methods of handling this problem which may be written into the Bill at a later stage.

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As the noble Lord, Lord Young of Dartington, points out, confidentiality is quite a worry. However, I think that this has been anticipated in the Bill, particularly in paragraph 3 in the schedule which provides that if the number of cases is from one to nine in any district, fewer than 10 shall be stated.
I agree with the noble Lord, Lord Trafford, who pointed out in his excellent and clear maiden speech that it is of the utmost importance to allay people's irrational fears about the disease and to combat the danger of making AIDS patients into social pariahs.
10.30 p.m.
Lord Kilmarnock: My Lords, if I were strictly to follow the Companion to Standing Orders I should not be congratulating the noble Lord, Lord Trafford, because previously that was a duty reserved only to the first speaker who followed a maiden speaker. However, in recent years in your Lordships' House all speakers have tended to join in genuine congratulations on remarkable maiden speeches, so I shall not allow myself to be left out on this occasion just because Standing Orders tell me that I cannot do so.
This Bill comes to us with a fair wind from the Commons and it seems to me from what I have heard that there is little desire to impede its passage. I was going to say there is no desire but my noble friend Lord Young has expressed some severe reservations about it. The noble Lord, Lord Stallard, referred to the collaboration between the promoter of the Bill in the House of Commons, Mr. Strang, and the Minister for Health and their joint sponsorship of some of the main amendments. That is an impressive fact which we must take into account. We have cross-party collaboration on this subject which I am keen to preserve.
The noble Lord, Lord Stallard, said this is basically a Bill about information on a single disease and he gave us a great deal of background statistics for which we are grateful to him. There is only one figure on which I take issue with him. He mentioned a figure of something in the region of £6,000 each for AIDS patients. I suggest that that is an underestimate and possibly refers only to hospital expenses. It is, I believe, an underestimate of the cost of an AIDS patient from diagnosis to death. Perhaps the Government will back me up on that because it does not accord with the figures which are at present being studied and collated in St. Stephen's and other London hospitals. All I am saying is that I think the figure given by the noble Lord is an underestimate.
My noble friend Lord Young is concerned that the Bill is unlikely to add substantial relevant information. I think he called it a fussy, Germanic Bill, if I have his words right. I am not going to agree fully with him, and that is a further illustration that this is an entirely non-party matter; and long may it stay so. We do not have to speak with identical voices from the same Bench and that is a healthy factor in our approach to this terrible disease.
My noble friend was mainly concerned in his remarks with the number of cases, whether information would be improved on that and whether confidentiality could be preserved. I am not going to follow him down the confidentiality road because I
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think that is a complicated one and perhaps needs further consideration. However, it strikes me that the Bill is an improvement so far as concerns paragraphs 4 and 5 of the schedule. My noble friend did not like them particularly but it appears to me that paragraph 4 of the schedule will help to provide a clearer picture of the AIDS-related activities within a district and by whom they are provided.
I think my noble friend will allow me to say that he saw some limited good there in that it would at least bring more to the attention of the Government the level of voluntary activities that exist and probably also accentuate rather more clearly their need for support. That would become rather more apparent in the long term. I think my noble friend saw a tiny ray of light there. However, I take the point made by my noble friend that what the voluntary bodies need is not just year-on support but a clear view over a longish planning period of where they are going and what they can hope to get.
It also seems to me that paragraph 5 of the schedule will show the actual number of people each authority is deploying to cope with the disease. It may be said that this paragraph 5 information is already available to those who seek it, and no doubt that is true; but I believe it will be of considerable value in manpower planning and will show the areas and particular hospitals in which the whole burden rests on very few shoulders indeed. There is a real danger of the burnout of small, dedicated teams. This clause may help the Government recognise that danger. One can only hope that they will act upon it.
Lord Young of Dartington: My Lords, I hate to ask of a valued colleague a question that could be thought to be in any way critical. Does my noble friend accept that that there are many people employed by authorities to provide the services mentioned in paragraph 5 who, while concerned with AIDS patients, are not wholly or mainly engaged with them? They are members of wider teams in hospitals and employed by district health authorities. One of their jobs is to deal with AIDS patients. Merely to pick out those who are wholly or mainly dealing with them could surely give a wrong impression. Does that cause him some disquiet?
Lord Kilmarnock: My Lords, I respect my noble friend's intervention. There are three or four London hospitals which are bearing the main brunt of the disease at the moment. There are wards which although not originally designed to deal with AIDS, are now doing so. They find that there is severe pressure on recruiting for that work. They cannot obtain registrars because the work does not count towards the credits that young doctors need to allow them to proceed to the next stage. If my noble friend looks into that, he will find that there are some problems, especially on those wards.
I want to probe the Government about two points. The first concerns the duty of districts to report to regions as laid down in Clause 1(1). It is important that the current system of voluntary reporting to the Communicable Disease Surveillance Centre should not lapse. Here I am in agreement with my noble friend. Currently it provides our most reliable source of information.

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It is also important to remember that reports to regions from districts will properly be concerned with manpower and resource implications. The reports will spell out the aggregate for each region and the region will pass that on to the Secretary of State. On the other hand, information fed to the CDSC is much more relevant to the research effort and to plotting the spread of the disease nationally.
I understand that at least one region, and there may be others, is looking at the possibility of adopting a dual form, giving the demographic, epidemiological and clinical data of each AIDS case. The suggestion is that one copy should go to the region and the other to the CDSC for the rather different purposes that I have indicated. The probability, the authority suggests, is that the present reporting by busy clinicians, which is often recognised to be under-reporting, would improve. I should like to ask the Government whether the idea of a dual form—one copy to the region and one to the CDSC—is one that the Government consider worth pursuing.
The next point I wish to make concerns paragraph 6 of the schedule. The Bill was substantially rewritten in Committee in another place. The equivalent paragraph, numbered 5 in the earlier version, said that the report must include:
"an estimate of the facilities or services which the authority or board will require"—
I stress the words "will require"—
"in the next twelve months for persons under treatment for AIDS as inpatients or outpatients".
The difference I want to stress is that in the present version of the Bill the phrase "will require" has been removed and the phrase "will provide" has been inserted. It is a rather crucial difference. An authority may need or require to provide all kinds of things, but actually be restrained by its likely funding level from providing anything but, let us say, a quarter of an AIDS prevention officer. That presumably will be all that it can report under the Bill as it is written.
That takes me back to the criticism I made when the Secretary of State required all authorities to state to him their plans for AIDS by the end of last year. I said at the time that these plans would depend on the level of additional funding that he would find. In other words, he had to speak first, and he did not do so. That criticism still remains. In my view there should be a strictly controlled fund to which authorities can make bids according to the development of their needs and the problem in their districts, and that does not yet exist.
As a halfway house, this Bill might have acted as a vehicle whereby authorities could state their estimated requirements. That was written into the first draft of the schedule, and I rather regret that this change has been made. It will be extremely useful if under paragraph 6 they could set out in one column what they required and in another what they could provide. Any discrepancy would then have a high claim for speedy attention.
As the noble Baroness knows, there are some very serious discrepancies. The Riverside Health Authority is to get £900,000 for AIDS this year, which is £300,000 more than last year but is only a quarter of
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what it has asked for on a rising tide of cases. It seems likely that £400,000 of that may be withheld for community nursing and housing in the community—very necessary purposes also—but they are all to come out of the same pot. As the Wellcome Foundation drug AZT comes on stream in this country it will quite properly absorb increasing sums of scarce money for which allowance will have to be made.
The noble Lord, Lord Trafford, in his remarkable speech, referred to a bandwagon syndrome. There is always a danger that if there is something to be bid for people will bid for it. But I do not see the danger as being as imminent as he does. The greater danger with health authorities is that where funding for AIDS is insufficient there will be a temptation to switch money from other purposes into the AIDS field, building up rivalries among departments and shortages of resources. I do not agree with his argument that it is an immediate danger.
I am not suggesting at this stage that there should be any amendment to the Bill. The Secretary of State has a rolling power to amend the schedule. That is set out in Clause 1(5)(b) and subsection (6). Subsection (7) specifies the negative procedure in Parliament. The Secretary of State can therefore amend the Bill in the light of experience. That seems a sensible provision. I should ideally like to see paragraph 6 of the schedule amended to read, "will require and can provide". This would give a truer picture of the situation in districts and any discrepancies between resources and needs.
The general feeling in your Lordships' House is clearly that the Bill should go through as it stands. We need to keep a careful eye on it and to bear in mind that the Secretary of State has power to amend it by the negative instrument. We are all interested in these matters. We should keep a close eye on the Bill and make suggestions on it in the future where we feel that there are inadequacies. With that proviso, I support the Bill.
10.44 p.m.
Lord Prys-Davies: My Lords, the House is grateful to my noble friend Lord Stallard for his explanation of this short but important Bill and its background. I should like to thank the noble Lord, Lord Trafford, a distinguished doctor, for and congratulate him on his illuminating speech with admixture of realism and hope. By any standard the speech of the noble Lord, Lord Trafford, was a major contribution to the debate.
The number of AIDS sufferers is relatively small in relation to the incidence of many other illnesses, but it is recognised that the illness will almost certainly be the biggest threat to public health in this country and in many other countries during the rest of this century. That is why it requires urgent attention. That is why there is very strong public interest in ensuring that we have up-to-date and reliable information about the impact of this new disease, its concentration in various areas of the country and its spread into new localities from year to year, and we hope one day about its contraction. The information will help the departments of health of the United Kingdom to prepare and assemble the facilities to fight the disease where they may be required.

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The point has been made that AIDS cases are already being reported on a national confidential basis, but that reporting does not rest on any legal requirement. The Bill provides the legal requirement. That is its primary significance. The hope is that because it rests on a legal requirement the incidence will be fully reported.
The Bill places a statutory duty on each district health authority to collect and publish the information which is specified in the schedule and which has been referred to by my noble friend Lord Stallard. The schedule may be imperfect but it has been said by my noble friend Lord Rea and the noble Lord, Lord Kilmarnock, that the Secretary of State has reserved to himself the power to amend the schedule, or indeed to amend the Bill in the light of experience.
The Bill is supported by the British Medical Association. It has been supported by the many organisations referred to by my noble friend. That is reassuring. Yet we cannot ignore the fact that the Bill has led to misgivings. That is my word for it. I would not use the word "alarm", which was used by the noble Lord, Lord Young. It has led to some misgivings among one or two of the leading medical people in the front line in the battle against AIDS. I am sure that we must take note of those misgivings, so I trust that the House will bear with me and that my noble friend Lord Stallard will forgive me if I press the noble Baroness for two assurances, of which I have given prior notice to the Minister and also to my noble friend.
My request is based on the advice which I sought and obtained from Professor Michael Adler of the Middlesex teaching hospital. Professor Adler has already been referred to by the noble Lord, Lord Young, and I am sure that the House would like to take this opportunity of paying tribute to the work of the professor and his staff on behalf of AIDS patients in London.
There is concern about confidentiality. That is an obvious problem. The noble Lord, Lord Trafford, referred to it as a critical problem, and it was also raised by the noble Lord, Lord Young. If—and I underline that—there is a weakness in my noble friend's Bill as drawn, it lies in the possible threat to confidentiality.
It is important that an AIDS sufferer or an HIV carrier whose self-esteem may be low should not be deterred in the slightest degree from seeking advice, tests or treatment at the earliest possible moment. He or she should not be deterred from taking such advice, because he fears that confidentiality and trust will be breached and that a breach of trust will lead to adverse local publicity. If a breach of confidentiality were to occur, one fears that this would lead to under-recording, not to improved recording, and that would weaken the fundamental objective of the Bill. It is to be regretted that nowhere in the Bill is there a specific injunction to the health authorities to observe individual confidentiality.
I accept that it may not be an easy task to draft the wording of such an injunction with perfection, but I think that my noble friend Lord Stallard has already indicated his belief that the right form of words may
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well find its appearance in regulations or guidance to be issued by the department. I understand that the department for its part accepts that there is a need at all times to preserve confidentiality, but it would be reassuring if the Minister, when she replies to the debate, will confirm that the Secretary of State will take steps to ensure that the need for confidentiality will be brought home to and respected by the health authorities and their staff.
As the Bill reserves power to the Secretary of State to amend these provisions—and we have already indicated that this may be beneficial—we shall press the Minister to go further and to give us an assurance that the power to amend the Bill and the schedule will not be exercised in any way that will endanger, threaten or weaken confidentiality. I hope that the Minister can give us an assurance along those lines.
I move on to the next area of concern. As I understand it, there are only two areas of real concern. According to Professor Adler, the second is that we could be lulled by the Bill into a false sense of activity simply because the reports are being written and sent to the departments or the regional boards without giving attention to the content of the reports. Professor Adler has a valid point. I think it is right, subject to the issue of confidentiality, that each area health authority should record the information correctly but that statutory requirement should not be an end unto itself.
The information, with due deference to the noble Lord, Lord Winstanley, should not merely be kept: it should not remain untouched by human thought. The health departments must constantly inquire of themselves to what extent the facilities available in their areas are appropriate or effective. This was stressed by my noble friend Lord Stallard when he said that this should lead the authorities to galvanise themselves into action.
My second question to the Minister is: will the noble Baroness assure the House that the reports will be studied by the department and that it will take the appropriate action where necessary to ensure that the facilities are in the right place at the right time? I shall listen with interest and great attention to the speech of the noble Baroness in reply to the debate.
I have just one other question for the Minister. I am interested in the position of Northern Ireland because AIDS recognises no boundaries. It does not recognise the Irish Sea either. Can the Minister tell the House how long the Province will have to wait for an Order in Council that will replicate the provisions of the Bill for Northern Ireland? It would be helpful if the Minister could tell us something about the intended timetable for legislation in Northern Ireland and the adoption of the provisions of the Bill. Is it intended that the appropriate order will be introduced before the end of this year; or, as is often the case, will the Province have to wait a couple of years for similar legislation?
Those are the few questions that I have to ask the Minister. I know that my noble friend, and it appears to me all Members of your Lordships' House apart possibly from the noble Lord, Lord Young, are anxious that this Bill should become part of the law of the land with due dispatch. It comes here with the support of the Commons and I should have thought

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that if the Minister can deliver the assurances which I have sought, that should satisfy even the noble Lord, Lord Young, also.
Lord Young of Dartington: My Lords, emboldened by what has just been so well expressed, may I add just one point, if the House will bear with me? Mr. Newton did extraordinarily well in the other place in coming together with Members there to improve the Bill. Can I ask the noble Baroness in all sincerity whether she would be prepared to consider putting some suitable guarantee of confidentiality into the Bill at later stages. It may not be possible easily to get it right. If the noble Baroness were prepared to work with sympathetic people in this House, it might be possible to produce some kind of guarantee, or at any rate statement, about confidentiality that would go a long way to allay fears and might do a great deal for the way this disease is handled in the coming years.
10.57 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, perhaps I may begin by paying tribute to the noble Lord, Lord Stallard, and to the honourable Member for Edinburgh East who introduced this Bill in another place. They have put a vast amount of hard work into getting it to this stage and I can only admire their achievement. Next, I should warmly like to add my voice to those who have congratulated my noble friend Lord Trafford. He is a most welcome addition to this side of the House and I know that his future contributions will be eagerly awaited.
We have had a very useful debate on the Bill and a number of very constructive points have been made on all sides. This, I am sure, reflects the seriousness with which we all view the threat of AIDS not only for the present population but for generations to come. First, let me say to the House that the general principles of the Bill, so ably set out by the noble Lord, Lord Stallard, have received all-party support not only in another place but also in your Lordships' House, despite the noble Lord, Lord Young of Dartington. I am so sorry that he takes the view he does, but I hope that he is a lonely little cuckoo in his nest.
Lord Young of Dartington: My Lords, I cannot really let that go—the lonely little cuckoo. I feel that on this issue of confidentiality, which baulks in many people's minds, there would be a good deal of support for an attempt to do something. I rest my case and implore the Minister to consider that, if not tonight, then at any rate on some future occasion, as a constructive way forward.
Baroness Trumpington: My Lords, if the noble Lord would give me a chance to pursue my arguments, I was sad that he said that he was totally against the Bill.
The Bill represents a very important contribution in the fight against AIDS. Although its Short Title is the AIDS (Control) Bill, it is intended to cover not only full blown clinical AIDS but also other conditions which result from infection by the human immunodeficiency virus. Your Lordships have
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listened to the impressive words of my noble friend Lord Trafford. There is no cure or vaccine for AIDS. In answer to the noble Lord, Lord Winstanley, it is true that a number of pharmaceutical companies are devoting increasing resources to develop therapeutic drugs. I am hopeful that new, helpful palliative drugs will emerge from this work. Your Lordships will appreciate that commercial confidentiality prevents companies making the details public.
The most effective weapon that we have in the fight against this terrible disease is public education. The more people know about AIDS, the better they will be able to deal with it. The detailed and accurate reports envisaged in the Bill will make an important contribution to the dissemination of information locally. This can only assist in getting over the vital facts—literally vital—and dispelling some of the myths that have unfortunately arisen.
Your Lordships may find it useful at this stage if I give the number of AIDS cases as known in this country. At the end of March, 734 cases had been reported, of whom 405 have died. The April figure will not be available until mid-May. United Kingdom cases, as Lord Stallard said, are doubling every ten months. These figures reinforce the need for the Bill.
Your Lordships will understand if I confine my remarks to matters that concern the Bill. There will, I know, be many future opportunities to debate more general matters. There are a few points on which I should like to touch to clarify the Government's position. I am grateful to the noble Lord, Lord Prys-Davies, for giving me advance notice of the questions that he intended to raise.
The noble Lord, Lord Winstanley, and the noble Lord, Lord Young of Dartington, asked about the powers to provide information. Under the existing powers, Ministers have already asked health authorities to provide details of their action plans for dealing with AIDS. These plans have come into the Department of Health, where they are being analysed. However, as the noble Lord, Lord Rea, has said, the important difference that the Bill makes is to provide for the publication—that is the important word—of comprehensive reports on what is being done in the local areas.
The Bill, said the noble Lord, Lord Young of Dartington, introduces unnecessary compulsion, and may lead to the loss of confidentiality. The Government welcome the Bill because it sets out a clear and comprehensive set of requirements for information to be provided by health authorities. If these prove to be inappropriate, Clause 1(5)(b), which gives the Secretary of State power to make amendments, can be involved.
On confidentiality, paragraph 3 in the schedule will ensure that it will not be possible to identify individuals in areas where there are few cases. Furthermore, health professions are bound by a code of professional ethics which requires them to keep medical information confidential.
The Secretary of State has announced a code of confidentiality directed at health authorities which will ensure that all health authority employees are required to keep medical information confidential. It is very important that I stress that, while the Bill

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requires this information about AIDS and HIV for authorities and boards, it also provides safeguards to maintain the confidentiality of the individual. I want to take this opportunity to underline the categorical assurance given in another place about confidentiality. None of the information which the Bill specifies should be included in the reports will threaten individual confidentiality. Nor is there any intention that the powers under the Bill to make orders and directions will be used in a way that could undermine confidentiality.
Secondly, the timing of the reports will be the same throughout the United Kingdom. We are still considering the precise timetable, but it is likely that it will be linked to the financial year to tie in readily with other information used by authorities and boards for planning purposes. The timetable for the reports is not specified in the Bill because it is sensible to retain an element of flexibility. Indeed, the provisions of the Bill generally have been drafted to avoid establishing a rigid framework which could become quickly out of date and which could be altered only by means of primary legislation.
A third point I should like to mention is that there remain a few details still to be ironed out. For example, on the content of the reports as the noble Lord, Lord Prys-Davies, mentioned. But I am confident that these will be sorted out well before the first reports from authorities and boards are due during 1988.
I wish to add that the preparation of the Northern Ireland legislation is in hand and the necessary Order in Council relating to Northern Ireland would be made as soon as possible after the Bill received Royal Assent.
The Bill's purpose is to ensure the information is provided as a basis for proper action to be taken at local level to control the spread of AIDS, together with an assessment of future requirements for planning purposes. And of course having these reports produced by authorities and boards will enable us to take action, where necessary. We must therefore make very sure that the information to be provided is needed and useful.
I should like to amend the figure given by the noble Lord, Lord Stallard, regarding government expenditure on research. The figure of £14·5 million, to which the noble Lord referred, relates to funding of the MRC for directed research. In addition, a further £3 million has been allocated elsewhere for research in 1987–88.
The noble Baroness, Lady Masham of Ilton, was worried about prisons and the armed forces. The essential purpose of the Bill is to impose a duty on health authorities to report on what is happening in their areas. Separate arrangements already exist for the reporting of cases of AIDS in prisons and the armed forces.
The right reverend Prelate the Bishop of Newcastle said that the Bill does not require health authorities to describe what help is provided for the families and friends of AIDS sufferers. I am confident that health authorities will consider the needs of families and friends as they do in relation to those who suffer from other serious diseases and who may need support and
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counselling. If any express reference is found to be needed in this respect, it would be open to my right honourable friend the Secretary of State to amend the schedule using his powers in Clause 1(5)(b).
The noble Lord, Lord Kilmarnock, spoke of the present reporting system and the CDSC. That system will certainly continue. An expert group has been set up to consider ways of improving the available information on AIDS and HIV. It will be looking at the reporting system and may consider the suggestion of dual reporting form which was raised by the noble Lord.
The noble Lord is correct in noting the change in wording. This reflects the view taken in another place that it was more important for reports to give details of what was actually going to be provided by authorities. The previous wording asked authorities to give just an open-ended statement about what they thought might be required, with no indication of how this was going to be provided in practice—or even whether it was.
There can be no doubt that the threat we face from AIDS is one that we simply must overcome. This Bill is a fairly modest measure but it is nonetheless important. The Government are fully committed to the Bill and the necessary action will be taken to ensure that the first reports go out next year. I wish the Bill of the noble Lord, Lord Stallard, a speedy passage through your Lordships' House.
11.10 p.m.
Lord Stallard: My Lords, at this stage I merely want to say that I am most grateful to all those who have participated in the debate. I should particularly like to add my thanks to the noble Lord, Lord Trafford, for his excellent maiden speech—excellent far beyond my expectations. I am very grateful indeed for what he said. I should also like to thank your Lordships for the constructive criticisms that have been made. They have supported the Bill in principle, and I know the noble Lord, Lord Young, will understand (as most of us do) the difficulties involved in getting any Private Member's legislation through Parliament.
He has mentioned some of the problems: for instance, that the Minister, Tony Newton, had said one thing on Second Reading and then had changed later. It is of course obvious that there was a Committee stage, the purpose of which was to try to persuade people to change whatever attitudes they may have held in the first place. Also, a great deal of discussion went on between the Minister and the Bill's sponsor, with the department, the BMA and other interested bodies. At that stage all this changed the Bill quite dramatically; and that accounts for the apparent change of view on the part of the Minister in the other place.
I should also like to say that this is a voluntary system. So far as I am concerned, the Bill does not in any way impinge on the voluntary system of reporting or collecting information. It simply requires the publication of the totals. It does not impinge on the voluntary aspect that now exists for the collection of these statistics. I would say, too—
Lord Young of Dartington: My Lords, may I interrupt for one moment? Will it be the case that voluntary bodies will be compelled in any way to

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provide information about the facilities they are making available for counselling, treatment, care in hospices, and the like? That will not be compulsory.
Lord Stallard: My Lords, I see no provision in the Bill for that kind of function at all. On the contrary, we would all hope that there would be complete cooperation from the voluntary organisations in the compilation of these reports and statistics. That has not been lacking so far in many of the fields in which I have been involved and I do not think it will be lacking in this field. On the contrary, I think they will be only too pleased to co-operate in the way the Bill envisages.
I am very grateful to the noble Baroness for her support and assistance and for the replies she has given—including the correction to my figure for research, which I gladly accept. She has repeated the assurance which was given in the other place on two separate occasions by the Minister on the points of confidentiality and the compilation of the statistics.
As regards confidentiality, it was made clear from the beginning in the other place that the schedule is quite deliberately worded. The Secretary of State has powers and these are not lightly given by either House, in my experience.
The Secretary of State has some extraordinary powers to amend the schedule in view of the seriousness and gravity of the matter with which we are dealing. That means of course that he has to lay a statutory instrument and any Member in either House can pray against that, and there will be a debate in the House before it is put into the schedule. Therefore, there are safeguards in that respect as well; but it means that the Secretary of State can, from time to time, vary the schedule and the requirements that are necessary according to the reports and so on and take care of the question of the confidentiality that has been raised. I understand from the discussion that I had with the CDSC and the BMA that they are well aware of Professor Adler's very valid criticisms on that point. It was their intention to contact and write to him and also to have some discussion to enlarge on and explain to him their support, the kind of reservations that they have and what they intend to do about them.
However, in no way did they think that that ought to impede the progress of the Bill on to the statute book. From there we can proceed in a normal way, and with the Secretary of State's new powers we can amend and add whatever we think may be necessary from time to time. I am exceedingly grateful for all the help and support that I have been given and for the way in which this debate has been conducted. I hope that your Lordships will give the Bill a Second Reading and that it will have a fair and speedy passage. I commend the Bill.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

University College London Bill
Reported from the Unopposed Bill Committee with amendments.
House adjourned at seventeen minutes past eleven o'clock.

  WASTE DISPOSAL: OUTSTANDING LEGISLATION
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  FOREIGN AFFAIRS COUNCIL, 26th–27th APRIL
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