Sitting of 24 February 1987

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

  MID GLAMORGAN COUNTY COUNCIL BILL [Lords]
  Order for Third Reading read.
  Queen's consent on behalf of the Crown signified—
  Bill read the Third time, and passed.

Oral Answers to Questions
  DEFENCE

    NATO (Missile Systems)
    Mr. Tony Lloydasked the Secretary of State for Defence what has been the nature and extent of his Department's participation in the study by the North Atlantic Treaty Organisation's military committee of NATO's requirement for anti-tactical ballistic missile systems.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Archie Hamilton): The United Kingdom is playing a full part in the North Atlantic Treaty Organisation's studies of the requirement for anti-tactical ballistic missile systems.
    Mr. Lloyd: In the light of the Minister's response, and if we are playing a full part at the moment, what role will the United Kingdom have in the decision-making process about the star wars programme?
    Mr. Hamilton: This is not connected with the star wars, or SDI, programmes. It is an anti-tactical ballistic missile system and we are discussing it with our NATO allies. As ballistic missile systems are so accurate now, it is worth having tactical ones. That is a threat to which we must react.
    Mr. Wilkinson: Will my hon. Friend do everything possible to ensure that these missiles for use against ballistic missile attacks are developed as a matter of urgency, because anti-tactical ballistic missile systems, especially if applied to point defence, can greatly alleviate the threat directly posed to these shores by SS21s, SS22s and SS23s?
    Mr. Hamilton: I accept my hon. Friend's point. The United Kingdom is participating in the NATO studies of the threat posed by anti-tactical ballistic missiles and the need to defend ourselves against them.
    Mr. Cartwright: Will the Minister assure the House that the current interest in developing anti-tactical ballistic missile systems for Europe will not degenerate into some
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    sort of stalking horse for the American SDI programme by enabling the Americans to try out in Europe technologies that would be banned by the ABM treaty?
    Mr. Hamilton: We are not talking about related systems and I do not think that there is any danger of that happening.
    Mr. Dickens: Whatever he future of cruise missiles and SS20s, is it not as sure as night follows day that the anti-tactical ballistic missiles will still be required for NATO?
    Mr. Hamilton: Yes, it all depends on how we perceive the accuracy of the missile systems. They are becoming much more accurate. If that is a problem that we must face, we must produce a system to counteract that.

    Helicopters
    Mr. Ashdownasked the Secretary of State for Defence when he now expects to announce a decision on the procurement of support helicopters for Her Majesty's forces; what is his estimate of the level of funding required for the procurement of such helicopters; and if he will make a statement.
    The Secretary of State for Defence (Mr. George Younger): I hope to be able to make an announcement about our future support helicopter requirements within the next few weeks.
    Mr. Ashdown: As the Minister approaches a decision that is so vital for my community, I should like three assurances from him. First, will he fully consult the company before reaching any final decisions? Secondly, will he confirm that he realises that the phasing of orders is as important as their number, because drip feeding orders to Westland would be disastrous? Thirdly, will he bear in mind that our helicopter fleet in the central plain is so deficient—perhaps 100 aircraft light of our tactical needs—that an expert recently commented that we have only a meagre capacity to carry out a full air mobile deployment? If the Secretary of State does not recognise those facts, he is letting down the country and my community.
    Mr. Younger: I recognise the hon. Gentleman's concern for his constituents, if I can describe it in that way, and I can give him the first two assurances for which he asks. On his third point, he was trying to anticipate the outcome of the study that we have undertaken, which is wide ranging and has the object of establishing firmly what our precise military requirements will be.
    Mr. Wiggin: My right hon. Friend is aware that my contituents have a substantial interest in this matter as well. Will he lay the myth, once and for all, that there is no need for more helicopters in the British armed services and accept that there is a need for more defence equipment of all sorts and none greater than the need for helicopters?
    Mr. Younger: I appreciate my hon. Friend's great concern for his constituents, who certainly have an interest in this. I confirm that the study, which is coming towards completion, is addressing itself to precisely the question of how many helicopters we are likely to need for our military requirements in the near future. That will be the basis of the decision that we shall have to take.
    Mr. Carter-Jones: Does the Minister agree that AST 404 was the product of a study, but that it did not produce

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    helicopters? Is he aware that Back-Bench Members on both sides of the House have made representations to his Department over four years, and does he realise that without orders Westland is in grave danger of not surviving?
    Mr. Younger: The hon. Gentleman is quite right in saying that it has taken some time to resolve this matter. As he will be well aware, exercises took place two years ago in central Europe which gave us food for thought as to what the real requirements for the future would be. As a result of that, this study is trying to articulate exactly what those needs will be.
    Mr. Heathcoat-Amory: Does my right hon. Friend agree that the Army is comparatively poorly equipped with helicopters and that there is a strong case for increasing our mobility rather than, say, purchasing more tanks? Will he agree to equip a new mobile brigade of Lynx helicopters from Westland?
    Mr. Younger: Although I would not at this stage make the comparison that my hon. Friend makes with tanks, we certainly have requirements for more air mobility. The study is designed to address the way in which those requirements should be met.
    Mr. Denzil Davies: Will the Minister confirm that there really is no future for Westland as a manufacturing company making helicopters without substantial orders from the British Government and in particular from the Ministry of Defence? There is no private sector solution to Westland's problem. Secondly, will he confirm that there is no military requirement for the Black Hawk helicopter, contrary to what was said in some circles during the famous battle for Westland?
    Mr. Younger: On the latter point, we have not yet reached a conclusion on what types of helicopters might be required, so, I cannot give the right hon. Gentleman an assurance either way on that point. On the neeed for helicopters and their increasing use, that is what the study is designed to establish.
    Mr. Jim Spicer: Will my right hon. Friend confirm that the team from Westland, led by Sir John Cuckney, has made the position of that company totally clear and has not in any way indulged in what one might call the histrionics to which we have perhaps become accustomed in recent years?
    Mr. Younger: I agree with my hon. Friend exactly. I am in touch with the chairman of the company and I am being fully briefed on the needs of the company, which I shall, of course, take fully into account.

    Strategic Defence Initiative
    Mr. Beithasked the Secretary of State for Defence what assessment he has made of the implications for United Kingdom participation in the strategic defence initiative programme of any acceleration of deployment by the United States Administration.
    Mr. Younger: The United States Government have announced no decision to deploy defences against strategic ballistic missiles. The position remains, as agreed by my right hon. Friend the Prime Minister and President Reagan at their Camp David meeting in December 1984, that strategic defence initiative-related deployment would,
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    in view of treaty obligations, have to be a matter for negotiation. The United Kingdom Government continue to support the strategic defence initiative research programme and United Kingdom participation in it.
    Mr. Beith: What did the Secretary of State mean when he said that if our views were not taken into account we should have to consider what our action would be? Did he mean that if our views were not taken into account British participation in the SDI programme would be ended, and if not, why not?
    Mr. Younger: I was asked what my reaction would be if I were told that the United States had some change in policy on SDI. I replied that we should have to wait and see what the proposals were before making such a comment.
    Mr. Forth: Will my right hon. Friend confirm that any system such as SDI, developed by our friend and ally the United States, is a welcome contribution to future peace? Will he also welcome it in the context of the contribution that we in the United Kingdom are able to make and the jobs and technology that it brings to Britain?
    Mr. Younger: My hon. Friend is entirely correct. Indeed, I should add that the United States and the Western Alliance would be deficient in their responsibilities if the Soviet Union were allowed to continue active research in that area without our having some security on our side from similar research.
    Mr. Mason: Does the Minister think that research on SDI out of the laboratory will, despite the Soviet deployment of an anti-satellite system, be contrary to the ABM agreement?
    Mr. Younger: The right hon. Gentleman will appreciate that it is not for me or the British Government to interpret a treaty to which and to the negotiation of which we were not a party. It is, however, for the United Kingdom Government and for me to be concerned about the United States policy on the SDI programme and the effect that it might have on arms control negotiations. It is for that reason that I asked for and received last week in America an undertaking that if there were to be any substantial change in that policy we would be consulted before any such change were made.
    Mr. Cyril D. Townsend: Will my right hon. Friend remind the House of how much money has come into Britain as a result of taking part in the research programme? Has he any idea of how many jobs are involved, and can he confirm that this gives us a chance to have a say in whether the scheme is implemented?
    Mr. Younger: My hon. Friend makes a good point. I cannot confirm precisely how many jobs are involved, but about $34 milion worth of business has come to Britain as a result of our participation in the SDI programme. It is worth recalling that if we had not taken part in the programme very little of that would have come to Britain and our best talents would probably have gone across the Atlantic to take part in the programme there.
    Mr. Douglas: I accept that the Secretary of State acknowledges that we are not a signatory to the ABM treaty, but is it not incumbent upon the British Government to have a view as to whether that treaty

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    should be interpreted narrowly, as many of the advocates in the United States suggest, or broadly, as the Reagan Government suggest?
    Mr. Younger: We have repeatedly made it clear, as has my right hon. Friend the Prime Minister, that we are content with the United States Government's policy on the SDI programme — that is the definition that they are currently using. We have also had an assurance that, as I have said, if there were to be any change we would be consulted before it was made.
    Mr. Denzil Davies: Will the right hon. Gentleman confirm what he is reported to have said in the United States—that the British Government would be opposed to any British participation in SDI programmes where those programmes went outside what is called the narrow interpretation of the treaty? If that is the case, does the memorandum of understanding, which was signed by the Government, contain such a proviso and obstacle?
    Mr. Younger: No, it does not contain any interpretations of the treaty. We believe in the treaty and we believe that it should be adhered to. It is for the two signatories to define how they see their own treaty.
    I did not say what the hon. Gentleman has reported me as saying about our participation. I made it clear that we are content with the position as of now and that if there were to be any change in United States policy we should be concerned and would wish to be consulted before such a change was made.

    Royal Air Force
    Mr. McNamaraasked the Secretary of State for Defence if he will make a statement on morale in the Royal Air Force.
    The Parliamentary Under-Secretary of State for the Armed Forces (Mr. Roger Freeman): Morale in the Royal Air Force in this 75th anniversary year is high. This is due in large measure to the Government's major re-equipment programme and maintenance of pay comparability.
    Mr. McNamara: I wish that I could share the Government's complacency, when the recommended ratio of pilots to aircraft is 2:1 and ours is 1·7:1, among the lowest in Europe, and when the mechanistic operation of premature voluntary retirement regulations means that trained Lightning pilots at RAF Binbrook are grounded because they have asked for PVR and their substitutes will graduate just as the Lightnings are taken out of service, making the whole thing look ridiculous. If the Minister is so complacent, why was it necessary to establish the Robson inquiry? When will we have the result of that inquiry, and until then will he modify the PVR regulations so that they are used in a more delicate and sophisticated way?
    Mr. Freeman: The hon. Gentleman will be aware that premature voluntary retirement rates for officers and pilots in the Royal Air Force are down in the calendar year 1986 compared with 1985. We very much hope that that trend will continue.
    Mr. Bill Walker: Does my hon. Friend agree that when young men join the Royal Air Force to fly they are given the option of accepting a branch commission and thus spending all their time flying, or, alternatively, taking a general duties commission through a cadetship at
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    Cranwell? Does he agree that in the latter case they will also be expected to carry out man-management responsibilities and that as part of their career structure it will fall upon them to take jobs that will train them for man-management? Does he therefore agree that one of the problems that we face and the resulting publicity have arisen from the fact that one individual RAF pilot did not understand that situation?
    Mr. Freeman: I am grateful to my hon. Friend. About one third of all RAF pilots—of whom there are about 3,500—at any one time are on ground duties, and such ground duties are essential to the furtherance of their careers.
    Mr. Andrew F. Bennett: How many skill shortages are there within the RAF? How many similar examples are there to that of my constituent who had his request to buy himself out of the RAF deferred for nine months because of the skill shortages?
    Mr. Freeman: Recruitment into the RAF is good. In answer to the hon. Gentleman, it was in 1948 that the then Labour Government introduced a minimum return of service of three years upon promotion to squadron leader and higher. In 1978 the then Labour Government instituted a maximum three-year waiting period for PVR applications.
    Mr. Stern: Does my hon. Friend agree that perhaps the greatest danger to morale within the Royal Air Force will come from the threat of all the Opposition parties to cancel Trident and that the cancellation costs of that operation would strip the RAF of virtually all resources?
    Mr. Freeman: I am grateful to my hon. Friend for reminding me that in the last year of the Labour Government the PVR rates were approximately twice the present level.
    Mr. Carter-Jones: Is the Minister unable to combine a little bit of staff duties for pilots with some flying experience as well? Is that beyond the planning schemes?
    Mr. Freeman: I am grateful to the hon. Gentleman, who I know has great experience in matters connected with the Royal Air Force. As I explained earlier, it is natural in the career of all pilots in the Royal Air Force to have both flying and ground duties. Flying duties often follow ground appointments.
    Mr. Conway: Is my hon. Friend aware that RAF Shawbury in Shropshire, which is on the boundary of my constituency and that of my right hon. Friend the Leader of the House, is an excellent establishment, with high morale, providing extremely good back-up for groups such as the air training corps based in Shrewsbury? If my hon. Friend is aware that if a particular officer in the RAF wishes publicly, in the newspaper, to decry promotion, there are tactful officers at RAF Shawbury who are more than deserving of such promotion?
    Mr. Freeman: I thank my hon. Friend for that. As I said earlier, morale within the RAF is extremely high. I compliment my hon. Friend on the support that he has given to the RAF and the reserves.
    Mr. Powley: Is my hon. Friend aware that in January a number of hon. Members representing constituencies in Norfolk visited RAF Coltishall and that as a result of our discussions with officers and men we can confirm that

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    morale is high? Officers and men understand the important defensive role that they must perform in the defence of this country.
    Mr. Freeman: I thank my hon. Friend for his comments and I concur with him.

    Contracts (Cancellation Charges)
    Mr. Fatchettasked the Secretary of State for Defence which of his Department's contracts are currently subject to cancellation charges of 125 per cent.
    Mr. Archie Hamilton: There is one contract where the maximum potential liability is set at 125 per cent. of the contract price; it is for the first Trident boat, HMS Vanguard. It has been agreed, however, that once the contract for the second boat has been placed, the normal liability limit of 100 per cent. of the contract price will apply to both contracts.
    Mr. Fatchett: Does the Minister's answer not show the extent to which the Government lack confidence in their ability to sell the Trident project to the British electorate? Is not the high level of surcharge simply an illustration of the Government's attempt to try to bind a future Parliament — a Parliament in which there will be a majority of Labour Members opposed to the Trident scheme and keen to cancel it?
    Mr. Hamilton: No. Cancellation charges of 125 per cent. were offered on the first contract to take into account the massive investment that had to be made by VSEL on the first boat and the long lead times. That is the maximum amount that might be spent. The work must be done before the money can be paid out.
    Mr. Meadowcroft: What contracts will be under threat from the prospect of United States auditors being able to look at the books of United Kingdom companies? Is the Minister aware that this activity may well fall foul of the Official Secrets Act 1911 and lead to the companies involved being placed on the denials list and not being able to obtain equipment from the United States?
    Mr. Hamilton: I do not think that there is any indication of contracts being under threat in that way.

    Expenditure
    Mr. Wattsasked the Secretary of State for Defence whether he has received any representations that defence expenditure should be reduced as a percentage of gross domestic product.
    Mr. Younger: My Department has received representations on various aspects of defence expenditure.
    Mr. Watts: Can my right hon. Friend estimate the impact on the defence budget of reducing expenditure to the NATO average of GDP, which I understand is Labour party policy? Will my right hon. Friend confirm that that would involve a reduction of more than 30 per cent., which is more than the equivalent of the total procurement budget? Does that not give the lie to the Labour party's claim that its policies will involve improving our conventional forces?
    Mr. Younger: My hon. Friend is broadly right. It appears from the Labour party's national executive document that the Labour party proposes to reduce
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    defence spending as a proportion of gross domestic product to the average of the NATO allies. The average is 3·3 per cent. and our figure is about 5 per cent. A reduction of some £6 billion in the defence budget would be needed to meet the average figure. That is what the Labour party appears to be preparing to do.
    Mr. Merlyn Rees: So that I can decide whether to make representations against it, is there any truth in the story that the Navy is to be cut in the autumn?
    Mr. Younger: I have not heard such a report, but if I saw such a report I should certainly ascertain whether it had any validity.
    Mr. Couchman: Does my right hon. Friend agree that if Trident were cancelled and replaced by either the French M5 missile system or the sea-launched Tomahawk cruise missiles it would require 11 submarines rather than four and would be more than twice as expensive and, therefore, catastrophic to the defence budget?
    Mr. Younger: My hon. Friend is correct. It seems to be becoming generally accepted that any alternative to the Trident system based on cruise missiles would certainly require considerably more missiles and, therefore, considerably more boats to make it effective against likely defences at the time. It follows that it would be considerably more expensive. My hon. Friend is quite right about that.
    Mr. Campbell-Savours: If expenditure on Zircon is not part of the secret Vote, why does the Secretary of State refuse to answer my questions and tell me under what Vote and sub-head that expenditure has been incurred? If Parliament is to accept not being told the sum expended, we surely have a right to know under which Vote or Votes the money has been expended.
    Mr. Younger: That does not arise under this question. As the project that the hon. Gentleman has mentioned is secret, he will not expect me to talk about it. He should know perfectly well by now, as his right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has confirmed, that the conventions about informing the House of Commons of expenditure of this sort have been completely fulfilled by the Government.
    Mr. Leigh: Following the question asked by my hon. Friend the Member for Gillingham (Mr. Couchman), will my right hon. Friend confirm that if the defence policies of the leader of the Social Democratic party were put into effect, not only would the missiles cost twice as much if they were sea-launched, but we should incur £3 billion cancellation costs on Trident, so we should be paying twice as much for a system that was half as effective?
    Mr. Younger: My hon. Friend is correct. It would certainly be considerably more expensive. Unfortunately, it would also become progressively less effective until it was not a deterrent worth having for any money. That is its real disadvantage.
    Mr. Haynes: Is the Secretary of State aware that I am making a representation to him about defence expenditure? Is he aware, further, that the Government throw money around like confetti on defence? When will he persuade the Government to throw some money around for the people living in poverty in my constituency? How about an answer to that question to help the people in real need?
    Mr. Younger: As the Government are spending vastly more on social services than did the Government that the hon. Gentleman supported, I do not think that that comment comes very well from him. He will find that most of his supporters, even if they have voted Labour all their lives, will strongly support the Government's defence policy as against his own.

    Royal Army Veterinary Corps, Melton Mowbray and RAF North Luffenham
    Mr. Lathamasked the Secretary of State for Defence whether he will publish the reports of the working parties regarding the future of the Royal Army Veterinary Corps, Melton Mowbray and Royal Air Force North Luffenham.
    Mr. Freeman: It is not our practice to publish reports which are prepared for study within the Ministry of Defence. The future of the Royal Army Veterinary Corps at Melton Mowbray is not the subject of examination by any working party. I shall advise my hon. Friend of the outcome of the study on RAF North Luffenham as soon as possible.
    Mr. Latham: In view of the fearful mauling that his Department has had from the Public Accounts Committee over the proposed merger of the Defence music schools, and to avoid further hassles from me, will my hon. Friend throw into the wastepaper basket any half-baked proposals that he may be about to make which adversely affect the excellent units in my constituency?
    Mr. Freeman: I note what my hon. Friend said, but we have no half-baked proposals to put before the House or to my hon. Friend. When we reach a decision, we shall communicate it to the House.

    Schools of Music
    Mr. Hancockasked the Secretary of State for Defence if he will make a statement about the future of the Defence schools of music.
    Mr. Freeman: My right hon. Friend the Secretary of State for Defence expects to announce a decision soon.
    Mr. Hancock: Will the Minister explain to the people of Portsmouth what is delaying his decision? Is he aware that he has written to them on at least three occasions, the first as far back as July last year, saying that the decision is imminent? Will he make a decision also about the use of the land that the Ministry of Defence is holding at Eastney? Will he explain to the people of Deal, Portsmouth and Uxbridge what the problem is and what information is still needed for the decision to be made?
    Mr. Freeman: I am sure that the hon. Gentleman would agree that it is far better for us to reach the right decision, however long it takes. I can assure the hon. Gentleman that the amount of surplus land and married quarters is monitored closely and constantly. It is our intention to dispose of all surplus land and married quarters as promptly as possible.
    Mr. Pike: Will the Minister recognise that, as the hon. Member for Portsmouth, South (Mr. Hancock) said, major difficulties are caused in both Deal and Eastney? Would it not be better to take a speedy decision? Have the Government not had long enough to think about it? Should not early decisions be taken?
    Mr. Freeman: I am sure that the hon. Gentleman would be the first to criticise us if we reached too rapid a decision.

    Trident
    Mr. Roy Hughesasked the Secretary of State for Defence what are the future financial arrangements for the payment for work on the Trident project.
    Mr. Younger: The future financial arrangements for payment for work on the Trident programme will continue to be in accordance with normal Ministry of Defence procurement and accounting procedures.
    Mr. Hughes: Will the Minister assure the House that conventional defence support, including the frigate ordering programme, will not suffer as a result of the increased expenditure on the Trident programme?
    Mr. Younger: Yes, particularly as the Trident programme is not expected to take more than 3 per cent. of the total defence budget or, in the peak year, 6 per cent.
    Mr. Franks: Will my right hon. Friend say how imminent is the placing of the order for Trident 2?
    Mr. Younger: I cannot give a date to my hon. Friend at present, but I recognise his great concern about this matter. We hope to be able to do so before too long.
    Mr. O'Neill: Can the Secretary of State not he more specific about the future of our frigates and our surface fleet, not least because of the disclosure in the Sunday Telegraph last Sunday of the likelihood of our frigate fleet dropping to about 44 or 45 within two years? Will he confirm that that will not be the case and that the frigates will not suffer as a result of Trident?
    Mr. Younger: I can confirm to the hon. Gentleman what I and my hon. Friends have said for a long time, that we expect the frigate fleet in the Royal Navy to remain at about 50, which is what it is at present. The hon. Gentleman will also be as aware as I am that in the current financial year we have already placed orders for three type 23 frigates.
    Mr. Bill Walker: Does my right hon. Friend agree that in all defence projects and spending programmes there are always more people looking for money to be spent and that during the period of the Tornado programme, which is a much larger expenditure programme, the service has continued, despite all the dismal Jimmies who said that it would not be possible?
    Mr. Younger: My hon. Friend is perfectly correct. The Tornado programme is in fact a more expensive programme than Trident, but it is also the case that the Trident programme produces the most effective contribution to our defence and could not be replaced at the same cost in any other way.

    Armed Services (Morale)
    Mr. Allen McKayasked the Secretary of State for Defence if he will make a statement on morale in the armed services.
    Mr. Freeman: Morale in the armed services remains high.
    Mr. McKay: Will the Minister then say why it is that there are cuts in recruitment to the Royal Navy and cuts

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    in expenditure on the Royal Navy and why it is that middle officer personnel are leaving the Royal Navy? Will this not reduce the operational effectiveness of the Royal Navy?
    Mr. Freeman: As the hon. Gentleman will know, there has been a significant increase—approximately 20 per cent. in real terms — in expenditure on the armed services since the fiscal year 1978–79. That has involved a substantial amount of re-equipment, including re-equipment for the Royal Navy. As for the premature voluntary retirement figures, which are often cited as a symptom of morale, those figures in the Royal Navy have stabilised and the trend is down.
    Mr. Sackville: Does my hon. Friend agree that nothing could depress the morale either of our armed forces or anybody else in this country who is interested in defence more than the plans of the Opposition to abolish Trident, the nuclear deterrent, and to leave this country vulnerable to nuclear blackmail?
    Mr. Freeman: I agree with my hon. Friend. The figures for PVR applications, as opposed to exits, in the last year of the Labour Government were almost twice as high as the rate today.
    Mr. Duffy: Does the Minister not think that morale in the Royal Navy must suffer when, given the mining threat, they see that little more than half the minesweepers and minehunters that were ordered under the £1 billion modernisation programme are likely to come on stream by the 1995 deadline, given the curbs on defence spending?
    Mr. Freeman: This Administration has ordered many more ships in the same period of time than did the last Labour Government. As for recruitment to the Royal Navy, we continue to meet our targets.
    Mr. O'Neill: Does the Minister not agree that while the PVR rates may have stabilised, they have stabilised at the lowest figure since the mid-1970s, when unemployment was considerably lower than it is now, and that there is little incentive for those individuals who wish to remain in the Royal Navy to do so, given the unpleasantness that much of their work pattern is forcing upon them?
    Mr. Freeman: I do not agree with what the hon. Gentleman has said. Indeed, I am not sure what the direct correlation is between the rate of PVR applications and exits and the level of unemployment.

    Fighter Aircraft
    Mr. Ron Brownasked the Secretary of State for Defence what recent representations he has received from trade unions about orders for fighter aircraft; and if he will make a statement.
    Mr. Archie Hamilton: None, Sir.
    Mr. Brown: Obviously I am opposed to the arms race, but will the Minister agree to meet shop stewards and other trade union representatives from Ferranti to discuss this matter, because it is a very important issue in Leith and in many parts of Britain? Will he agree to meet the shop stewards and trade union representatives?
    Mr. Hamilton: I am always more than prepared to meet trade union representatives. I was at Ferranti in Edinburgh quite recently. I am glad that the hon. Gentleman's constituents have impressed upon him the
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    need to have an up-to-date European fighter to meet the Soviet threat, because the impression given by the hon. Gentleman is that he would welcome it.
    Mr. Gerald Howarth: Has my hon. Friend received any representations from the trade unions regarding an interim engine for the future European fighter aircraft? Can he confirm that he would regard it as intolerable that the United Kingdom, German and Italian forces should choose an aeroplane powered by an American engine when we want the RB199?
    Mr. Hamilton: I accept my hon. Friend's point. It is the Government's objective that there should be a British engine in the fighter.
    Mr. McNamara: What progress has been made with the European fighter aircraft, especially as the experimental aircraft programme has been grounded through lack of Government funding? When will development work begin? Can we be assured that there will be no further delay, especially as we know that the Germans are re-winging Phantom so that it will be operational beyond 1995? Doubts are therefore put over German co-operation in the project. If we do not get the EFA, will the RAF end up with the F18 orders?
    Mr. Hamilton: As a participating country, the United Kingdom agreed with Germany, Italy and Spain in August 1985 to proceed with the project definition phase. The industries in those nations embarked on a study in September 1985 and that was completed in September last year. The project definition reports from industry are now being evaluated and we hope to be able to make a decision before very long.

    Royal Ordnance plc
    Mr. Robert Atkinsasked the Secretary of State for Defence if he will make a statement on the current position of Royal Ordnance plc.
    Mr. Archie Hamilton: In accordance with plans announced to the House by my right hon. Friend the Secretary of State for Defence on 24 July 1986, we are negotiating with four companies to sell the Government's 100 per cent. shareholding in Royal Ordnance plc. No final selection has yet been made of the company with which a sale contract will be signed.
    Mr. Atkins: I am grateful to my hon. Friend for that reply. Does he recognise that there is considerable concern among the work force at all levels about the delays that are being caused to Royal Ordnance? Bearing in mind how successful the company has been, is, and will be, does my hon. Friend accept that there is an urgent need to resolve the matter of ownership as soon as possible?
    Mr. Hamilton: We certainly accept that point. The bids are due in the middle of next month and we hope to be able to make a decision not too long after that.
    Mr. Denzil Davies: Does the Minister not realise that there is considerable concern among the employees? One source of concern relates to conditions of service and pensions. The Minister will know that when the transfer from the Civil Service to the plc took place most of the conditions were protected under the Transfer of Undertakings (Protection of Employment) Regulations

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    1981 and other provisions. Can he give us a guarantee that those conditions will remain and will not be changed as a result of a change of share ownership?
    Mr. Hamilton: Yes, I can give that undertaking. We are talking here about a sale of shares. The conditions of the employees and the terms under which they are employed will not change.

    Helicopters
    Mr. Heathcoat-Amoryasked the Secretary of State for Defence if he has reached a decision on future helicopter needs for the Army; and if he will make a statement.
    Mr. Archie Hamilton: I refer to the answer which my right hon. Friend the Secretary of State for Defence gave earlier to the hon. Member for Yeovil (Mr. Ashdown).
    Mr. Heathcoat-Amory: Would it help this issue if a decision was reached on whether the RAF or the Army controlled battlefield helicopters in future? The present division of responsibility is causing confusion in defence policy.
    Mr. Hamilton: I know that this issue has been raised before and we have considered it. However, I do not believe that any changes are envisaged at the moment.
    Dr. Hampson: What progress is being made with the NH90? There was a great drive behind that European collaborative machine 18 months ago, but it seems, more or less, to have disappeared from sight.
    Mr. Hamilton: The NH90 is still under consideration with our European partners.
    Mr. Ashdown: In making a decision about Army helicopter procurement, will the Minister assure the House that he will afford the British services in Germany the same level of mobility as is enjoyed by other NATO forces on the Western front?
    Mr. Hamilton: The air mobility of British forces in Germany is a matter that we have to take into account when we look to our ordering requirements.
    Mr. Jim Spicer: My hon. Friend has heard the Opposition voice their dislike of the Black Hawk helicopter. Will he give an undertaking that the Ministry of Defence will do all it can to encourage overseas orders for the Black Hawk to be built at Yeovil?
    Mr. Hamilton: There are a number of export opportunities for the Black Hawk, one of which is in Sweden. We are giving all our support to that.

    "Statement on the Defence Estimates 1987"
    Mr. Wrigglesworthasked the Secretary of State for Defence when he expects to publish the "Statement on the Defence Estimates 1987."
    Mr. Younger: No decision has yet been taken. As in previous years, however, I hope that it will be possible to publish in the spring, in good time for an examination by the Select Committee on Defence and a full debate in the House before the summer recess.
    Mr. Wrigglesworth: Will the Secretary of State make it clear to the House that the expenditure on Trident will make it difficult to sustain proper expenditure on the Navy, Army or Royal Air Force conventional forces?
    Mr. Younger: The hon. Gentleman is entirely wrong on that matter. The Trident programme is good value for money. If any single programme was going to make it more difficult to buy other conventional equipment, it would probably be the Tornado programme rather than the Trident programme.

  PRIME MINISTER

    Engagements
    Mr. Donald Stewartasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others and addressed the conference of the Institute of Directors. In addition to my duties in this House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty The Queen.
    Mr. Stewart: In the light of leaks and forecasts about reduction in income tax in the forthcoming Budget, will the right hon. Lady take time to consider the evidence that the majority of people have a higher concept than the "I'm all right, Jack" philosophy and that they would prefer any excess funds to go to the deprived and less fortunate people in our society? Will she direct the Chancellor accordingly?
    The Prime Minister: I am happy, as the right hon. Gentleman knows, to report that the Government have cut income tax and have increased personal allowances considerably and we hope that we shall go on doing so. Many of us happen to think that people such as nurses on £150 a week who have to pay £41 in income tax and national insurance contributions believe that they pay too much. Clearly, the right hon. Gentleman thinks that they pay too little.
    Mr. Onslow: Will my right hon. Friend take this opportunity to congratulate the police and security authorities on their recent successes in catching suspected terrorists and in seizing illegal arms and explosives? Does she agree that the fight against terrorism might become much more effective if the official Opposition would stop opposing the renewal of the Prevention of Terrorism (Temporary Provisions) Act 1984?
    The Prime Minister: I gladly join my hon. Friend in congratulating the police and security authorities on their constant vigilance in our interest. I agree with him that it would be far better if the Opposition would support the Prevention of Terrorism Act instead of constantly opposing it.
    Mr. Winnick: As virtually everybody, including apparently the Prime Minister, believes that the appointment of the present Conservative party chairman was disastrous, will the right hon. Lady consider in future ensuring that the position is no longer be subject to appointment but is by election? Can the right hon. Lady—
    Mr. Speaker: Order. The hon. Gentleman must ask about the Prime Minister's responsibilities for the appointment and duties of the Chancellor of the Duchy of Lancaster.
    Mr. Winnick: Can the right hon. Lady explain to the House why, although she is always on about democracy and the rest of it, she is not willing to bring about any changes in her own party, and, moreover, undermines some of the rights that Conservative party members already have?
    The Prime Minister: I confirm that appointments for which I am responsible, including that of the Chancellor of the Duchy of Lancaster, will continue to be a matter for the Prime Minister.
    Mr. Lathamasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Latham: Is it not deplorable that in the week when the Russians rightly released Yosif Begun they also refused visas to three hon. Members for an entirely honourable purpose connected with a visit to Moscow for human rights? Will she please tell Mr. Gorbachev that if that is his idea of openness, it certainly is not ours?
    The Prime Minister: I agree with my hon. Friend that it was a matter of regret that visas were refused to hon. Members of the House to attend the ceremony to present awards to seven leading refuseniks. However, I am sure that my hon. Friend will be glad to know that our ambassador in Moscow has expressed regret to the Soviet authorities that the visas were not forthcoming and that he was able to present the awards on behalf of the committee and, fortunately, the recipients were allowed to enter the embassy for that purpose without hindrance.
    Dr. Owen: Will the Prime Minister confirm that if the link with pensions had not been broken in 1980 the single pension would now be £5·95 extra and the married pension would be £9·40 higher? While it is impossible to give an increased pension to every person, irrespective of their income, the Government policy ought to be—like the SDP-Liberal alliance policy—to restore the link for all those pensioners who have no other source of income.
    The Prime Minister: I see that the right hon. Gentleman has joined the great give-away — perhaps up to £28 billion, but we do not yet know. Our pledge to pensioners at the last election was that their pensions would be protected against inflation. They have been more than protected against inflation. Pensions have been paid to a million more pensioners, because there are that many more people. The right hon. Gentleman tries to give the impression that there should be higher pensions, but he never says what the greater burden of national insurance contributions would be on the working population.
    Mr. Terlezki: Does my right hon. Friend agree that while we welcome the release of 140 innocent people from slave labour camps, and while it is very important to negotiate about disarmament, it is also very important to negotiate about human rights? When she goes to Moscow, will she tell Mr. Gorbachev that we will give him a vote of confidence only when he practises what he preaches?
    The Prime Minister: I agree with my hon. Friend. The releases from prison that have been made are welcome, but there are many thousands more to go. We shall be discussing human rights with Mr. Gorbachev. We welcome what has happened, but, as my hon. Friend points out, many other improvements remain to be made.
    Mr. Tony Banksasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Tony Banks: Will the Prime Minister find time today to condemn utterly the vicious, personal and dishonest attacks being waged by certain newspapers against Deirdre Wood, Labour's candidate in the Greenwich by-election? As the Prime Minister clearly has such influence with those newspapers, will she call in the editors and see whether she can get some form of code of honest conduct to be used for by-elections?
    The Prime Minister: I am the first to condemn vicious personal attacks, from whatever quarter they may come. I am the first to say that politics everywhere should be about constructive policies and not about personalities.
    Mr. Dykesasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Dykes: Will my right hon. Friend join me today in welcoming the unanimous statement of the EEC Foreign Ministers supporting the idea of an international conference on peace in the middle east — an idea emanating from a number of sources, including the Soviet Union? Will she, on her forthcoming visit to the Soviet Union, discuss this matter with Mr. Gorbachev?
    The Prime Minister: Yes, I join my hon. Friend in welcoming that pronouncement by the EEC Foreign Ministers. The suggestion for an international conference as a background for middle east negotiations between the two parties directly concerned has been around for a long time. I think that it first came from Jordan. It must be clear that all participants in any such conference would have to accept United Nations Security Council resolutions 242 and 338 as a basis for taking part.
    Mr. Kinnock: The Prime Minister claimed earlier today that Britain's industrial base is now healthier than at any time for at least a generation. While I wish that were true, may I ask her to explain how she can make such a claim when manufacturing investment is still 20 per cent. lower than it was in 1979, when manufacturing output has yet to reach the levels that it was at in 1979, when manufactured exports have gone up by 15 per cent. under her premiership and manufactured imports have gone up by 50 per cent. under her premiership? If that is what she thinks is healthy, thank heavens she is not a doctor.
    The Prime Minister: Yes, manufacturing is much healthier now than for a generation. It is no longer overmanned. The atmosphere in industrial relations is now infinitely better than it ever was under previous Governments. Manufacturing productivity has gone up faster than in many other countries and management is now able to manage. We now have a very healthy manufacturing industry — something we never had before.
    Mr. Kinnock: When manufacturing industry is that much smaller, how it can be that much more healthy is very difficult to perceive. [HoN. MEMBERS: "Oh!"] Perhaps the Prime Minister can explain that to the 2 million people who have lost their jobs in manufacturing industry. How

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    can it be more healthy when it is 17 per cent. less competitive than it was in 1979, when engineering, construction and other industries have severe skills shortages and when even the Chancellor of the Exchequer has to admit that this year we shall have a manufactured trade deficit of over £7 billion? I ask again, where is the healthiness?
    The Prime Minister: The right hon. Gentleman says that there are 2 million fewer jobs in industry. It will not help to overman manufacturing industry to the extent of 2 million jobs, even though it is nationalised. That is the right hon. Gentleman's policy — put manufacturing industry back to overmanning and make it less competitive. That is the road to ruination. We must have competitive and sound manufacturing firms. They are. Their profitability is up, their productivity is up and their export volume is up. Manufacturing output has risen by nearly 11 per cent. since the last general election. It is in a good state. That is what the right hon. Gentleman cannot stand. The Confederation of British Industry and everyone else is saying that things are optimistic and good, but not the right hon. Gentleman.
    Mr. McCrindle: Perhaps I may revert to the question about pensions asked by the leader of the Social Democratic party. Was the right hon. Gentleman not a member of an Administration which, having introduced the very linkage to which he now refers—
    Mr. Speaker: Order. Will the hon. Gentleman please link his question to Prime Ministerial responsibility?
    Mr. McCrindle: Does my right hon. Friend recall that, when the leader of the SDP was a member of a Labour Administration, there was indeed the link to which he now refers, but does she also recall that in two years out of five that Administration failed to implement the link?
    The Prime Minister: I thank and congratulate my hon. Friend on making his point so effectively and accurately.
    Mr. Tom Clarkeasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Clarke: Does the Prime Minister accept that the present industrial dispute involving a large majority of Scottish prison officers is an indication of their frustration at overcrowding, understaffing and a lack of revenue resources for Scottish prisons? Does she further accept that the Government's neglect is particularly unacceptable in view of the increase in the Scottish crime rate of over 50 per cent. since she came to office?
    The Prime Minister: I accept that there are considerable problems with prisons in England and Wales and in Scotland. I have also told the hon. Gentleman that the Government have done more than any previous Government to build new and modern prisons.
    Mr. Richard Shepherdasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Shepherd: Will my right hon. Friend urgently consider introducing legislation to adopt the practice of India, Pakistan, Canada, the United States of America, Mexico, Brazil and Argentina, among others, and impose fines on airlines which bring in people without valid entry documents?
    The Prime Minister: It is crucial that airlines do not bring in people unless they have the proper documentation. Carriers are already required to pay the detention and other costs of people whom they bring in to the United Kingdom and who are refused entry. As my right hon. Friend the Home Secretary said last week, the Government are considering urgently whether to follow the example of certain other countries, including the Federal Republic of Germany and Canada, in taking powers to impose financial penalties on carriers who bring people to this country without the necessary passports, visas or other documents. Both the powers and the penalties may well need to be retrospective.
    Mr. Hume: Will the Prime Minister join me in calling on the leaders of all the major parties in the House to make clear, as she and the Leader of the Opposition have already done, that whatever the outcome of the election, it will make no difference to the attitudes of those parties to the Anglo-Irish Agreement, as expressed in a vote in the House, and that they will not engage in any power bargaining on that issue?
    The Prime Minister: These agreements are signed between countries and not between parties. The Anglo-Irish Agreement therefore will continue.
    Mr. Bellinghamasked the Prime Minister if she will list her official engagements for Tuesday 24 February.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Bellingham: Will my right hon. Friend find time today to consider the City? Does she agree with me that recent criminal proceedings are evidence that the Government's legislation to stamp out insider trading is working? Does she also agree with me that under the last Labour Government nothing whatsoever was done to combat fraud in the City?
    The Prime Minister: Yes, Mr. Speaker. This Government will give priority to rooting out financial misconduct and wrongdoing wherever it occurs; witness the action that we have taken to make insider trading a criminal offence. As my hon. Friend also raises the general matter of the City, may I point out that the City as a whole earns a net £7·5 billion in foreign exchange? It is of immense value to our balance of payments and to the country as a whole.

Devonport Dockyard
3.30 pm
The Secretary of State for Defence (Mr. George Younger): With permission,Mr. Speaker, I would like to make a statement about Devonport dockyard.
As the House will recall, I announced on 20 January that I was satisfied that there existed the basis for an advantageous contract to be placed for the future operation of Devonport dockyard with Devonport Management Ltd. At the same time, we provided the trade unions with further information summarising the main aspects of the draft contract arrangements negotiated with that company. In a statement made on 21 January my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement informed the House that I had invited the trade unions to a meeting on 13 February so that I might hear and consider their views before taking any final decision on the future management of Devonport dockyard.
At the time of that statement the Devonport Management Ltd. consortium comprised Brown and Root (UK) Ltd. with 30 per cent. of the shares, the Weir Group plc with 25 per cent. and Barclays de Zoete Wedd with 45 per cent. As the House knows, it has been our hope that some or all of the 45 per cent. held by Barclays might be transferred to one or more British industrial companies. I am glad to inform the House that since my hon. Friend's statement BICC, acting through its subsidiary Balfour Beatty, has now joined the consortium. BICC, Brown and Root and the Weir Group now each holds 29·9 per cent. of the shares with the 10·3 per cent. balance held by Barclays de Zoete Wedd, in trust to provide an incentive scheme for key employees.
I met general secretaries and other trade union representatives on 13 February to discuss the way ahead on Devonport. The unions made it clear to us that they remained as opposed as they have always been to the introduction of commercial management, continuing to prefer the idea of a dockyard trading fund with the work force remaining in the Civil Service. As I have already told the House, it remains our view that a dockyard trading fund, which is the option involving minimum change, is unlikely to secure the improvements in efficiency we seek or to compete as successfully as a commercial company for commercial and naval non-core work.
We have provided a great deal of information to the unions on our proposed changes to the management of the dockyards, over a very long period. I am grateful to the unions for the work they have done in recent weeks to consult the work force locally. I have considered closely the points they have put to me. These have included the request for the contract which we have already signed in respect of Rosyth dockyard, and the one we have negotiated with Devonport Management Ltd., to be made public; but I am sure that the House will understand the reasons of commercial confidentiality that prevent me from meeting this request. However, I have made every effort to provide all the relevant information that I can.
I am fully aware of my obligations to inform and consult the trade unions and I am satisfied that I have complied with such duties as the Act imposed on me at this stage. I have, therefore, authorised the signature today of a seven-year-term contract for the future operation of Devonport dockyard from 6 April 1987 with Devonport
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Management Ltd. We are also signing a service contract with the company to cover its operations in the dockyard from now until vesting day, during which time the management of the dockyard will remain the responsibility of my Department.
I have renewed my invitation to the trades unions to devote the period between now and vesting day to useful discussions on matters affecting the work force and have proposed a series of meetings to that end.
Mr. Denzil Davies: This statement again demonstrates that the Government had no intention of changing their original decision to privatise the dockyards. All the talk about consultation, frankly, was a sham. As all the independent and outside evidence has shown, there is no reason why the dockyards cannot be run commercially and efficiently by means of a trading fund, as in the case of other companies, within the public sector. We believe that these changes will lead to lower efficiency, a lower standard of service for the Royal Navy, and ultimately a higher cost to the taxpayer.
The House will remember that the Government have now destroyed four dockyards. First, there was Chatham, which has closed. The naval dockyard in Gibraltar was the second. Then Portsmouth was relegated from a dockyard to a fleet maintenance base. Now we have the destruction of Devonport and Rosyth. That does not augur very well for the future of the Royal Navy and the services provided for it.
Could the right hon. Gentleman confirm that the lead company in all this will be Brown and Root, a foreign-owned subsidiary, and could he tell the House what expertise and experience Brown and Root has in operating dockyards of this kind? Could he also confirm that, as is widely believed, the change will lead to a lowering of engineering standards and also to at least 5,000 redundancies at Devonport?
Who are the key employees who are apparently to be provided with an incentive scheme? Why not such an incentive scheme for all the employees at Devonport?
Mr. Younger: The right hon. Gentleman really must appreciate that the objective of all the consultations that I have been having over recent weeks with such great care and consideration has been to find out whether there were any good reasons to assume that one of the alternatives to what I have announced today would be better for the future of the dockyard. The only criterion in my mind in assessing these has been that which would give the dockyards, in this case Devonport dockyard, the best opportunity to operate successfully and to get more business for those who are working in the yards. With great respect to the right hon. Gentleman, I really think that those who will work in this yard for many years in the future will be somewhat depressed to hear him today talking about the destruction of the yards, which is so remote from the truth that it makes what he says quite absurd.
I thought that the right hon. Gentleman would know that Brown and Root has very wide experience of engineering work both in the United States and in this country. There is certainly no reason whatever to think that its standards will be lowered.
With regard to employment, I have expressed the opinion that in the worst case, if the dockyards remained under the present management, there might be 5,000

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redundancies over the next 10 years. I understand that the new managers who are being appointed today expect about 2,300 redundancies over the next four years, which is at least a rather better outcome than we had feared. I certainly think that this company has the capacity to run the dockyard extremely successfully and to get new business into it, and that is the greatest security that those who work there could possibly have.
Miss Janet Fookes: I wish first to dissociate myself from the very gloomy interpretation of events described by the official spokesman for the Opposition. Secondly, I express my pleasure that a place has been found in the new arrangements for the present managing director, Mr. David Johnston, and at the same time inquire whether places will be found for the other senior managers who form the non-winning consortium.
Thirdly, will my right hon. Friend explain in more detail what the precise arrangements are for the service contract between now and vesting day, and what that will involve?
Mr. Younger: I am grateful to my hon. Friend. I entirely agree that it is most unhelpful to talk inaccurately about the destruction of the dockyard when this is the best opportunity that we can give to those who work there for a better and secure future.
My hon. Friend asked about the people who have been working as managers in the dockyards and, in particular, about Mr. Johnston. I understand that most of those who were in the consortium with Mr. Johnson are likely to continue in employment with the new company, although probably not all. I expect the new management to attain high standards. The understanding that we shall work with it during the interim period will enable it progressively to move in to take over management, but until vesting day responsibility will rest with my Department.
Dr. David Owen: How does the Secretary of State justify restricting shares in the new commercial enterprise to key employees only? In view of the fact that the commercial management has been criticised not only by the unions but by distinguished industrialists, managers throughout the country, two all-party Select Committees, all three Opposition parties and the local and district councils, will he not at least take into account the fact that this decision will be reversed and that a unified, integrated commercial enterprise will be established in Devonport dockyard with share ownership open to all employees?
Mr. Younger: I note what the right hon. Gentleman says and know from his close contacts locally that he will be anxious to know what the future arrangements can be. At this stage the shareholding system that has been set up offers the best opportunity for good, sound management of the company. However, I note what the right hon. Gentleman says, and no doubt it can be considered.
Mr. Robert Hicks: In view of the consequences for employment opportunities in the area arising in part from the decision to alter the system of management, can my right hon. Friend say what tangible assistance his Department will make available, in addition to that provided by the Department of Employment and the Department of Trade and Industry, to alleviate those adverse affects and to promote the introduction of new suitable industry into the area, thus diversifying the local economy?
Mr. Younger: I am grateful to my hon. Friend. The decision that I have announced today does not in any way obviate or remove the obligations that my Department and I have to do all we can to help all aspects of the changeover, including giving any help that can be given from parts of the old dock yard which may no longer be required in the new set-up. I do not regard our responsibilities for that as ending with the new regime. I hope that my hon. Friend and those who are employed in the dockyard will recognise that, while the new system of management will come in on vesting day, 6 April, that does not end my Department's interest in the dockyard, nor our responsibility to supervise what goes on there.
Mr. Dick Douglas: Will the Secretary of State reflect on what he has been saying about commercial confidence in relation to the contracts? While it may be acceptable to acknowledge that certain aspects of confidentiality must be adhered to prior to signing the contract, there is no overwhelming reason to keep these contracts strictly secret now that they have been signed. Why cannot the trade unions see the terms and conditions that the Secretary of State has accepted with these companies? Who will be the boss at Devonport? If the existing personnel and expertise are retained, who will administer the yard? Who signed the contract with the Ministry of Defence and—
Mr. Speaker: Briefly.
Mr. Douglas: Yes, Mr. Speaker. What was the nationality of the individual who signed the contract with the Ministry of Defence? May we have a complete assurance that at Rosyth the apprentice numbers that we have been led to expect in the past year will be maintained and not diminished, as we heard in previous answers?
Mr. Younger: I understand the hon. Gentleman's desire for more information. However, if he reflects about the contracts and thinks a little further about them. he will appreciate that when two separate contracts with different companies in different dockyards are negotiated simultaneously it would not be fair to either of the parties if the precise terms, conditions and details of one became common knowledge to the other.
If the hon. Gentleman thinks further ahead, after the seven-year period there may be a renegotiation of the contract or even a new contract with a new consortium and it would not be right for the precise details of the previous contract to have been known publicly.
The trade unions have had a huge amount of information passed to them for more than two years, and a great deal of which, I fear, has not been adequately digested. They have plenty to go on with all of that.
The boss will be the managing director of the new company that is to run the consortium that will take over.
Apprentices at Rosyth have been the subject of a statement by the new company. If more information is required, the unions would be well advised to break what they previously regarded as their blockage on discussions with the new company because, with great respect to the unions, that would be valuable to them and their members.
Mr. Robin Maxwell-Hyslop: Has my right hon. Friend noticed the absence of all the Liberal Members from the House? Does he agree that that suggests that they are entirely satisfied with the decision

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that he has reached? Does he further agree that, as there is only one SDP Member present, presumably the other SDP Members are also satisfied with the decision?
As the volume of naval orders does not depend on the decision announced today, will not employment in the dockyard depend wholly on the ability of the winners of the competition to attract overseas repair orders? Does my right hon. Friend agree that world-wide experience is the best warranty that there could ever be for future employment in Devonport dockyard?
Mr. Younger: I thoroughly agree with my hon. Friend's last point. There is no doubt that the level of work in the dockyard, under any form of management, including under the present management, depends on the yard becoming more competitive and able to acquire business other than normal naval dockyard work. I am absolutely clear that the new arrangement with the commercial consortium is much the best way of giving the yard the best chance to obtain new work. However, I do not wholly agree with my hon. Friend's theory that, because Liberal Members are not in the Chamber, they agree with everything that has been done. If that were so, they would be the happiest Members of the House by a long way.
Mr. Michael Foot: If this wretched plan goes through, despite opposition from all the independent bodies that have considered it, will the Secretary of State confirm that the assurance on control of future employment in the yard will be taken from the Government and transferred to the company—and that the guarantees that the Government have given about employment in the yards are of no use or worth?
Mr. Younger: That is a fair point. When the new employers take over the management of the yard, the employees will be responsible to their new bosses for doing their jobs properly and for negotiating any changes that they may wish in their conditions of service. However, on vesting day, their present rights and conditions will be carried through. That is fair treatment for those transferring to a new employer. The Minister of Defence will retain an interest as being responsible overall for the dockyard, subject to the contractors.
Mr. Jonathan Sayeed: Does my right hon. Friend know that the one interested party that Opposition Members have neglected to mention is the Royal Navy? Will he confirm that the Royal Navy greatly favours his plans for Devonport?
Mr. Younger: My hon. Friend is correct. I understand that the trade unions had a meeting with the Navy Board, asked that question, and were told that the board was absolutely clear that this was the right policy.
Mr. Willie W. Hamilton: In the light of the information supplied, does the Secretary of State accept that Brown and Root is a company of complete honesty and integrity? As the right hon. Gentleman has estimated that thousands of jobs will be lost, does that not add to the importance of accepting my Bill for the establishment of a development agency for the south-west of England?
Mr. Younger: The hon. Gentleman would not expect me to comment on a south-west England development agency. That is not a matter for me to decide. However,
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I can confirm that I have no reason to think that Brown and Root is not an entirely honest firm with integrity. It has operated, as he should know, for a long time in Scotland and has provided a great many jobs there.
Mr. Gordon Brown: Will the Secretary of State now admit that he cannot conduct and complete the remaining consultations on conditions of service, pensions and the social and economic consequences of what he is doing and still meet his proposed deadline for transfer, which is only five weeks and a few days from now? Will he take note of the advice from my hon. Friend the Member for Dunfermline, West ( Mr. Douglas) and publish all those details of what I understand are 1,000-page contracts involving jobs, apprenticeships, work load and reserve powers available to the Ministry of Defence so that we can see for ourselves the surrender of British interests and the unpatriotic betrayal of the work forces involved in this pernicious statement?
Mr. Younger: The hon. Gentleman is wrong about the amount still to be discussed. I remain ready to discuss solidly with all concerned between now and vesting day, and indeed beyond if necessary, any points that they wish to discuss. The conditions of service for the employees will be carried through to the new employment, and it is thereafter for them to negotiate any changes that they wish with their new employer. That is a perfectly fair treatment.
Some amendments will have to be made to conditions to recognise the changeover. Those can easily be discussed, and I remain ready to discuss them at any time. The position is, I am sorry to say, that repeated suggestions of dates for meetings to discuss those matters further have been turned down by the unions. I hope that they will now appreciate, in the interests of their members, that they should discuss much more fully all the details with me and my representatives and with the potential contractors at both dockyards. They have plenty of information upon which to work.
Mr. Dennis Skinner: Did the Secretary of State hear my right hon. Friend the Member for Llanelli (Mr. Davies) ask who were the key personnel? Is it not important that we know who those people are and what influence they will have? Is it not somewhat ironic that the flag-waving Tory party, represented by the Secretary of State today, is prepared to allow international money, say, from Libya or Argentina to be invested in this defence area while, at the same time, many British workers who are not key personnel will not be allowed to play a part in it? I think that the Secretary of State must answer that question.
Mr. Younger: On the matter of hearing what was said, my only problem in hearing is usually the hon. Gentleman's sedentary speech which goes on throughout the proceedings. It is for the new management to discuss key personnel with the unions, no doubt, and with representatives of the work force if they wish, on how that scheme can best be put forward. That is much the most sensible way to proceed.
Mr. Sydney Bidwell: How can the Secretary of State be sure that there will be no greater security risk as a result of this widespread involvement in the docklands area? In view of the growing sophistication of armoury of the Navy and other forces, how can he be sure that there is not a grave security risk?
Mr. Younger: There are two points worth making in connection with that question, which is a perfectly fair one. First, all the security conditions and security arrangements that apply at the present will apply in the future. All that will have changed is the precise form of the management. I remind the hon. Gentleman and the other Labour Members who have expressed doubts of the structure of the management company that I have announced today. Certainly 29·9 per cent. of the shareholding is held by Brown and Root, whose parent company is an American company, but BICC has 29·9 per cent. and the Weir Group has 29·9 per cent. Barclays de Zoete Wedd has just over 10 per cent. That is a clear security for anyone who feels that there is foreign ownership of the dockyard. There is clearly a large majority shareholding of non-foreign ownership, for what that is worth. I expect all of those companies to be dedicated to the success of the dockyard under its new management.
Mr. Martin J. O'Neill: Will the Secretary of State please be more specific about what he thinks the outcome will be in relation to key employees? Will those be people who are at present in the employ of the Ministry of Defence or are they likely to be Brown and Root placemen in the new organisation? Would it not be more sensible to make the terms of the contract clear and explicit so that employees could decide whether they wished to participate in the incentive scheme and so that people are not asked to take a pig in a poke, as the British Navy is having to do in this wretched business?
Mr. Younger: No, the British Navy is not taking any pig in a poke; it is taking an alternative form of management which should have a better chance of making a success of the dockyard. Of course, the key personnel could come from those presently employed in the dockyard and they could also come from outside. It should be an advantage for the future management of the dockyard to obtain the best talents from either of those two sections. The details of the scheme should be negotiated between the unions and representatives of the work force and the new management.

Trade Unions
3.55 pm
The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): With permission, Mr. Speaker, I wish to make a statement on trade unions and their members.
Since 1979 we have proceeded step by step to introduce a succession of measures which, together, have helped achieve the least number of working days lost to industrial action for a generation. We have sought to restore a proper balance of bargaining power between trade unions and employers. We have also sought to establish democraticrights for individual members within their unions. Above all, we have sought to promote an environment in which both sides of industry can work together to generate the wealth the country needs.
We have observed closely the impact of our legislation. In general, progress has been marked and encouraging. However, some unions have declined the opportunity to put their house in order, and union members have not always felt able to take a stand and ensure that abuses are corrected. It is therefore clear that we need now to take another step both to strengthen the rights of individuals within a union and to reinforce their ability to exercise those rights. That is why we are today publishing a Green Paper "Trade Unions and their Members" which sets out a number of possible changes, on which comments are invited, as a basis for further legislation.
The Government have always believed that individuals should be able to choose for themselves whether to belong to a trade union. We also object strongly to attempts to coerce an employer into putting someone out of work on the ground that the person does not belong to any union or to a particular union. Our earlier measures have certainly reduced the scope for the worst excesses of the closed shop. However, I am afraid that in some industries the power of the closed shop still remains. We therefore propose measures which will end the legal protection of a post entry closed shop in any circumstances.
The present law allows a closed shop to be enforced if a weighted majority of employees votes for it in a ballot. Few major employers have yet been affected by this provision, but in the cases where ballots have produced a lawful closed shop the rights of many individuals to choose whether to join a union or not have been extinguished. Experience has shown that unions' legitimate interests are not seriously weakened where the closed shop is not protected by law. The repeal of balloting provisions for t he closed shop would give any individual dismissed for not belonging to a union the right to compensation for unfair dismissal. We also propose to end all legal immunity for industrial action designed to force an employer to create or maintain any closed shop In short, we are proposing to end completely the use of the law in any circumstances to sustain the closed shop.
The most important feature of democracy within a trade union must be the right of the members to a secret vote in the direct election and re-election of their union leaders. The Trade Union Act 1984 established such a right for the election of the voting members of union executives and created a presumption that postal ballots would be used. However, a large number of trade unions have retained workplace ballots, and the conduct of such ballots continues to give rise to controversy. Now is the

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time to act against these abuses. When we legislated in 1984, many trade unions did not have lists of membership of sufficient quality to serve as electoral rolls. Since 1984 they have been required to have such lists and they have now had the time and opportunity to draw them up. There is, therefore, no longer any reason why we should not move to the most secure method of balloting available—the secret postal vote under independent supervision.
The process of election is intended to ensure that the leadership of a union is, and remains, responsible to its members. In practice, not all trade union leaders have been required to be elected. We now propose to make presidents, general secretaries and any others with seats on the executive subject to direct democratic election.
The right to choose to go to work during industrial action is an essential freedom. We believe that union members are entitled to a vote on whether their union should call them out on strike in the first place. We also believe that they are entitled to continue to go to work and honour their contract of employment if they disagree with their union's call. At the moment, legislation does not give union members any right to take action to restrain their unions from calling a strike without a ballot. Nor do they have any statutory protection against disciplinary action by their union if they cross a picket line or carry on working during a dispute. We proprose to give them both.
Recent events have thrown light on the unusual ways in which some unions run their financial affairs. Union members ought to be seriously concerned about some of the manoeuvres that have been used to evade or circumvent the jurisdiction of the courts when unions find themselves in conflict with the law. The Green Paper considers possible safeguards that might be enacted in legislation, of which the most fundamental is a right of access for every member, accompanied by a professional adviser, to current union accounting records.
It is not enough to provide rights and protection for individual citizens if, in practice, they find it too daunting to claim them. As things stand, trade union members need to be exceptionally determined and courageous if they are to embark on the process of enforcing the full rights that the law now gives them. Parliament has provided agencies to help employees to complain against employers about discrimination on grounds of race or sex. It is clear that there is now a need for a new commissioner for trade union affairs to advise and support union members who need to make a formal complaint and perhaps take legal action against unions and their officials who appear to be failing to comply with statutory duties. The new commissioner would help to make sure that trade unionists can defend both their existing rights and the new rights we propose giving them in this Green Paper.
The next steps that I am announcing today are wholly consistent with our approach to trade union reform through the period of office of this Government. We believe that trade unions behave more responsibly when they are in close touch with the views of their members and take steps to ensure that their actions command members' support. We have watched closely developments since 1984 and the Green Paper is based on our experience of events since the last legislation. Its proposals frame sensible solutions to specific problems that can be expected to work in practice. Consultation has, of course, always
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been an important part of our process of law reform in this area and the Government will welcome informed comment on these latest proposals.
Mr. John Evans: May I first draw attention to the usual iniquitous practice of Government Ministers issuing statements to the press, as witnessed in the headline in the new London Daily News"Tory assault on unions", before the statement was issued to the House.
Today's announcement is a further petty, vindictive and miserable attack upon the rights of millions of working trade unionists. It is an extension of the blacklegs' charter that has been introduced by successive Secretaries of State over the past eight awful years of this Government. It is savagely ironic that this statement has been introduced by a Secretary of State who sits in the other place and has not been elected to anything by anybody. However, he is discussing the democratic rights of trade unionists and that is hypocrisy of the highest order.
Once again we have heard the usual weasel words from the Department of Employment. When that Department is not fiddling the unemployment statistics it turns away for a moment to attack, once again, the trade unions. The Minister's statement informs us that fewer working days are now lost than for a generation. The fact is that, per thousand workers employed, there is more time lost now than there ever was under a Labour Government. I certainly suggest that the statement in the Green Paper—if I cannot use the word lie—was a perversion of the truth.
The statement informs us that the Government intend to extend the rights of trade union members. That is from a Government who have, over the past eight years, successively and repeatedly destroyed the employment rights of millions of workers. That is from a Government who even vetoed the modest Vredling proposals to give rights to part-time workers. That is from a Government who are currently abolishing the rights of teachers to have any sort of trade union rights, free collective bargaining or the right to discuss their prospects with their employers.
The Minister's statement informs us that he proposes to insist upon postal ballots. Can the Minister inform the House why there is nothing in the Green Paper that forces employers to provide workplace facilities for employees to carry out their trade union activities? If workers could participate in their trade union activities at their workplace it would represent the greatest single extension of trade union democracy. Perhaps the Minister can inform the House why it is that every study suggests that there are far more people participating in workplace ballots than there are participating in postal ballots. My union, the Amalgamated Engineering Union, can confirm that.
Why have the Government not said something about the Murdochs of this world? They have used the Government's legislation in the worst possible fashion to create companies, which have denied workers their basic human rights in relation to their contracts of employment.
Why have the Government said nothing about the miners who lost their jobs, who have been declared innocent by industrial tribunals, but who are still denied the right of employment by British Coal? Why is there nothing about those rights in the Green Paper?
The Minister's statement informs us that we shall have an Eastern European style commissar for trade union affairs. Why are we to have a commissar for trade union affairs, yet there is to be self-regulation for the City of

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London, where some of the biggest crooks in the world are currently operating? It is the height of hypocrisy for the Government, who talk about self-regulation for business, to seek to shackle the trade union movement.
What is the period of consultation? The Minister has not informed us. My hon. Friends and I suspect that the statement is part of the election manifesto of the Tory party. We welcome that. Millions of trade unionists will see through this miserable exercise and will rally to the support of the Labour party at the next election.
Mr. Clarke: On the question of present industrial harmony we lost 1·9 million working days through industrial action in 1986. That is the lowest yearly total for 20 years. I believe that the process of reform that we have introduced in the trade union movement will help to improve the harmony in industry that we require for economic recovery.
I have listened to his diatribe and I am astonished that the hon. Member for St. Helens, North (Mr. Evans) has produced this explosion of rage and a confusion of slogans, such as the "blacklegs' charter" as a description for proposals that confer on individual members of trade unions the rights to a secret, well-organised ballot for the leadership of the union and to insist that their union calls a ballot before they go on strike, and provides that the unions should allow their members to know how they spend members' funds. I believe that the hon. Member will have difficulty in sustaining his attack in the face of such propositions.
On the question of postal ballots and workplace ballots, and the suggestion that there may be a higher turnout at workplace ballots, I accept that turnout is a relevant consideration. However, the main thing that people want when they take part in an election is some guarantee about the integrity of the election and the efficiency with which it is organised. Workplace ballots may produce a higher turnout because more ballot papers are generally available for various people to cast. An independently supervised postal ballot is better. [Interruption]The reason we did not do it under the Trade Union Act 1984 was that unions did not have up-to-date lists of members. Therefore, they did not have an electoral register and that was one of the objections put forward by the unions. They have had two years in which to produce those lists of members and we propose to make this change.
The hon. Member for St. Helens, North asked about the position of Mr. Rupert Murdoch, the recent strike, and the impact of the Green Paper. The main two changes that the proposals in the Green Paper would have had, if they had been in force at time of the News International dispute, would have been, first, that any individual SOGAT wholesale worker could have obtained an order restraining his union from calling a strike without balloting the wholesale workers. As the law stands it was left to News International to seek compensation and seek sequestration of the union's assets. As a result of the proposals in the Green Paper any union member may have stopped his union from committing suicide and pulled it back from the sequestration by insisting there was no call for industrial action until a ballot was held.
The other change would have been that no disciplinary action could have been so lightly entertained by the National Union of Journalists against its journalists, and by the Transport and General Workers Union against its
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lorry drivers for taking action during that dispute. On both scores, the proposals in the Green paper are adequately supported by the experience of News International.
The idea of describing the commissioner for trade union affairs as a kind of eastern European commissar, when his duty is to assist the individual to protect the rights which Parliament gives him in existing or future legislation, is absurd. The commissioner is modelled closely on the Race Relations Commission and the Equal Opportunities Commission. I very much doubt whether the hon. Gentleman would denounce those commissions as having eastern European-type commissars. I suspect that he heavily supports them.
We have named a date, early in May, and there will be two months' consultation. We are, of course, looking forward to comments on, and constructive criticism of, these proposals to ensure that we consider how best to put them into practical effect.
Mr. Ian Gow: Is my right hon. and learned Friend aware that many Conservative Members believe that the right to work ought to depend not on whether a man is or is not a member of a trade union but only on a person's suitability and willingness to work? Will my right hon. and learned Friend confirm that, in response to his proposals in the Green Paper, he will be prepared to consider making it unlawful for there to be a closed shop arrangement in the United Kingdom?
Mr. Clarke: In effect, any post entry closed shop will be devoid of legal protection under our proposals. Anybody who is dismissed for not belonging to the "right" trade union—in the opinion of his employer or of trade union officials who pressurise the employer — will be entitled to compensation at a punitive level to compensate him for what I agree is a serious infringement of individual liberty and personal choice in the workplace.
Mr. Malcolm Bruce: Is the Minister aware that I find myself in the rather surprising position of welcoming the Government's conversion to substantial tracts of alliance policy?
On the issue of postal ballots and the selection of office bearers in trade unions, why did the Government resist amendments to legislation to this effect when they were moved by David Penhaligon two years ago? Of course, I welcome the fact that the Minister is now saying to the House that what he told us then was not Government policy and was impossible is now to be introduced in the form of a pre-election proposal for reforming the trade unions. To that extent, I obviously welcome the statement. Will the right hon. and learned Gentleman acknowledge that it would be better if he proceeded with industrial reform in the context of extending industrial democracy in general? That would be a fair-minded and even-handed approach.
Mr. Clarke: If we are indeed moving closer together, of course, I welcome that. The more support for these measures, the better. I recollect that the voting pattern of the alliance parties on the three previous stages of industrial relations reform was singularly confused. On the second of the Bills, they voted on both sides in differing numbers at different stages of the debate. It is clear that the process of reform would never have got under way if alliance Members had been in any position to block it. As I understand it, the latest alliance proposals suggest that

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we should make it easier to establish a closed shop by reducing the weight of the majorities required by the present legislation. I fear that we are going in diametrically opposite directions on that proposition.
As for independently supervised postal ballots, we are now in agreement with the alliance. The difference between us is that, two years ago, it would have been impractical to propose such a thing to unions that did not have lists of members and could not produce an electoral register. Now that we have given them two years during which they have been required to produce an electoral register, it is practical to take that step. The only difference between the alliance and the Government on that proposition, I am glad to say, is that the alliance proposed it when it was unrealistic and we took steps to ensure that it would be realistic before we put it forward.
Mr. Andrew Rowe: Does my right hon. and learned Friend agree that one of the most discouraging and cynical operations at the moment is the battle that goes on between trade unions for membership in which the rights and aspirations of their members are very much ignored? Will my right hon. and learned Friend reassure us that these proposals will go some way towards ensuring that, in competition between unions for membership, the quality of service and not the political aspirations of general secretaries will make the difference?
Mr. Clarke: I agree with my hon. Friend that the further we go down that road, the better. I believe, as, I feel sure, does my hon. Friend, that it is entirely a matter of individual choice whether a person joins a particular union or decides to change his union. No person should be at the risk of losing his job because he falls out with his union. Unions should be voluntary associations of people who are brought together in a properly run democratic institution.
Mr. Ron Leighton: Does this mean that the Government are revising their attitude towards ballots? Under previous Conservative legislation introduced by the chairman of the Conservative party, there could be closed shops, provided that the workers voted for them, as they did with unprecedentedly high majorities. Now that the workers have voted in favour of those closed shops, the Minister proposes to abolish the ballots. Are we to understand that he is in favour of ballots only when they go his way but, when the ballots go the other way, he wants to abolish them? Is that what the right hon. and learned Gentleman is saying? Does this mean that the police will no longer have to join the Police Federation, whether they like it or not? Since the right hon. and learned Gentleman has this tender concern for private organisations and is intervening so that they can put their own house in order, does this mean that there will be a ballot for the chairmanship of the Conservative party? Does it mean that individuals can inspect the Conservative party's accounts?
Mr. Clarke: With the experience of recent years, we have seen that, in those industries where the closed shop has come to an end, this has not fatally wounded the trade union movement, as people said it would. We have also found that, where the closed shop has been retained and lawfully protected, the individual's right to choose, which
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my hon. Friend the Member for Mid-Kent (Mr. Rowe) defended, was extinguished. There have been cases—notably that of the tugboat men at Bristol — where people have lost their jobs during the past two or three years because they were not in the correct union. We believe that that is wrong. The post entry closed shop will be effectively finished because it will not be legally protected in any particular employment.
The position of the chairman of the Conservative party is not remotely analogous with the organisations about which we are talking. The leadership of a trade union should be answerable to its membership. It takes decisions which can affect the livelihood of its members. Whatever power my right hon. Friend the chairman of the Conservative party has, he cannot put remotely at risk — certainly not directly — the livelihood of my hon. Friends and those who follow our policies.
Mr. Conal Gregory: I welcome the Green Paper introduced by my right hon. and learned Friend. I am sure that it will bring a further note of democracy into the trade union movement as has happened with the right to buy under housing legislation introduced by my right hon. and learned Friend's colleagues. I ask him to extend an invitation to the nationalised industries since, with hindsight, they are forced into a closed shop. A great number of my constituents in York and elsewhere have said that, by sheer coercion, they are forced to join a trade union which is totally unrepresentative of them. They will certainly welcome the opportunity of commenting on the Green Paper.
Mr. Clarke: I am grateful to my hon. Friend. I trust that the changes which we are making will have their effect on the nationalised industries, as elsewhere. It is significant that we shall effectively give a remedy to those railwaymen who have been disciplined for refusing to take part in industrial action. I think that in 1982 both railway unions went in for disciplinary action against spectacular numbers of their members simply because their members chose to continue working and providing a service to the public.
Mr. Kevin Barron: Since the Minister talks about the rights of individuals not to belong to a trade union, will he reflect on what has happened under trade union legislation over the past six years? Trade union members in the midlands coalfield have been sacked for being active members of the National Union of Mineworkers. While the right hon. and learned Gentleman reflects on that, will he reflect on the workplace ballots which have been held for many years under the guidance of the NUM, which have been a classic example of how to run private ballots, whereby individuals can take decisions without ballot papers going to the homes of people who have left trade unions? I experienced that when I changed homes many years ago.
Mr. Clarke: If anybody is dismissed because of his union membership, that is unfair dismissal. It that is the sole cause of dismissal, he is entitled to compensation. Our proposals are to make that equal in both directions. The idea that the hon. Gentleman should cite the midlands coalfields as an example of good practice is a little inappropriate. It is not so long ago that the coalfields had a call to strike in which no ballot took place before the strike was called. It succeeded in severing the union. That

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preceded my right hon. Friend's legislation. Since that time, all that we have done has been to make sure that the law guarantees the right to a ballot, which the NUM's rule was supposed to do until it was flouted by the present leadership a few years ago.
Sir Kenneth Lewis: Does my right hon. and learned Friend agree that most people accept that trade unions must belong to their members, and, therefore, that the extension of voting must be acceptable in terms of industrial democracy? Does he have any knowledge of whether the TUC and individual unions are prepared to consult on this matter? [Interruption.]They might get an invitation to Downing street for beer and sandwiches. Will the matter require one Bill or two Bills? When is the first Bill expected?
Mr. Clarke: I have sent invitations to the TUC inviting it to give its comments and to meet me if it wishes. I am sure that the TUC, together with many individual trade unions, will take up that matter. It will be interesting to see whether, in fact, the reactions of Opposition Members have run ahead of the trade unions.
My right hon. Friend said that unions should belong to their members. I wait to hear whether the various general secretaries — for example, Clive Jenkins, Rodney Bickerstaffe and Arthur Scargill — will argue that it is wrong to make them stand for re-election at the hands of their own members. I am not sure how they will argue that point in public. I have no doubt that it will come out in the course of consultation.
The next step is to consult and reflect on what we get in response. On past form, of course, having consulted, we shall move to a White Paper and eventually to a Bill, but all kinds of events may supervene before we get to the legislative chain.
Mr. Michael Welsh: If the Minister's opinion is that there should be a ballot for strikes to take place, and if those who have no desire to strike are in the minority, so they can still work, how will one know who voted against a strike?
Mr. Clarke: The right is not confined. On each day, an individual should be free to decide whether he or she wishes to continue to go to work or to cross a picket line. That is the kind of choice that we have, particularly in situations in which the individual faces two conflicting calls -one from the trade union calling for industrial action, and the other from the employer insisting that the individual carry out the contract of employment and show some loyalty to the firm. In the end, it is an individual choice. It is wrong that people should be disciplined if they take a view that is not shared by the leadership or even the majority of their trade union.
The role of the ballot is still important. As long as the union ballots and gets a majority of its members, it has total immunity as a union against actions that could otherwise be brought by the employer in tort, contract and so on. The ballot has legitimacy, but it does not mean that individuals who want to work should be coerced by the rest of those involved into not crossing picket lines.
Several Hon. Members rose—
Mr. Speaker: Order. I ask for brief questions, please.
Mr. Andy Stewart: I welcome my right hon. and learned Friend's statement, and so will my constituents who were subjected to 12 months of tyranny
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by people who had never heard of the word "democracy". For their own protection, they had to set up their own Union of Democratic Mineworkers. The Government's proposals will give the remaining members of the NUM the opportunity to remove the man who brought their own great union into disrepute.
Mr. Clarke: My hon. Friend's constituents and my constituents in the Union of Democratic Mineworkers have every reason to remember how deep the commitment to democracy was or was not in the case of the trade unions, the Labour movement and the National Union of Mineworkers. Our experience in Nottinghamshire certainly reinforces the need for continuing law reform of the kind we described today.
Mr. Eric S. Heffer: Is the right hon. and learned Gentleman aware that the seven major changes already outlined in the Green Paper, if they are followed up by the Government's proposals, will add up to one thing only, and that is industrial slavery for the mass of ordinary workers? The Government have gone out of their way to undermine and destroy the rights of the trade union movement in the interests of capital and employers. I give notice to the right hon. and learned Gentleman that, sooner or later — certainly under a Labour Government — the measures will be destroyed because the workers will not stand for them for ever. Ultimately, they will get rid of the anti-trade union legislation brought in by the Government in the interests of employers.
Mr. Clarke: The general public would not agree with the hon. Gentleman's description of a modern, democratically based union as tantamount to introducing industrial slavery. A union that is led by people who command the genuine support of its members and take care to consult and to take them with them if they contemplate action tend to be more powerful as well as more responsible than those led by narrowly elected little caucuses that seek to lead their members on political grounds and use the discipline of the closed shop, and so on, to get support for such actions.
The hon. Gentleman is totally out of touch with the times, let alone with the current political mood and the current economic climate. We are seeing the emergence of the kind of trade unionism that is much more useful to its members but, of course, quite redundant to the political aims of the hon. Gentleman.
Mr. Peter Thurnham: I welcome the Green Paper, particularly the provisions for postal balloting for the election of union officers. As one who rebelled on that issue, I ask my right hon. and learned Friend to think carefully before the Government should ever be tempted to vote in the same Lobby as Opposition Members on such an issue.
Mr. Clarke: I am delighted to hear that my hon. Friend has not changed his mind and that we are in total agreement on supervised postal balloting. I congratulate him on his prescience.
Mr. Nigel Spearing: The Minister has made it clear that the Green Paper is ostensibly concerned with individual rights and democracy. How does he reconcile those sentiments with the fact that the Government are denying the whole teaching profession the right to joint collective bargaining with employers on

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a national basis? Does it not show that there is great inconsistency between the Green Paper and the statutes? Does it not suggest also that the Government are concerned with forcing down rates of pay for ordinary people?
Mr. Clarke: The issue to which the hon. Gentleman has referred had its background in a totally collapsed bargaining process between rival and warring trade unions on the one side and politically divided employers on the other. It has failed, unfortunately, to come to a negotiated conclusion for over two years. Obviously, questions about the way in which we have decided to resolve the problem should be addressed to my right hon. Friend. He advocates a temporary arrangement which will enable us to consult the parties, reach a settlement and then work towards reestablishing some workable procedure and machinery for this vital national service.
Mr. Charles Wardle: Does my right hon. and learned Friend agree that rank and file trade unionists and the general public will recognise the justice in measures that enable individuals to continue to work with impunity, even though the majority of their union colleagues decide to go on strike, and in measures that enable them to examine precisely what has happened to the proceeds of their union subscriptions?
Mr. Clarke: I agree with my hon. Friend about the judgment that the public will make about the reaction of Opposition Members to that measure as a blacklegs' charter, with the occasional call of "scab" from the Opposition, as my hon. Friend defends the undoubted right of someone to decide whether he or she wants to go to work. I agree also with my hon. Friend that most trade union members will not see why on earth there is opposition to the suggestion that they should have access to the current accounts of their trade unions. In fact, they had such rights for 100 years until the last Labour Government repealed them.
Mr. Max Madden: Does the Paymaster General not understand that a great many trade unionists resent being lectured about democracy by Ministers representing the Conservative party? Does he also not understand that, rather than embarking upon another round of trade union bashing, the vast majority of the public want him to create genuine, well-paid jobs for people who are desperately seeking work? Finally, if the Paymaster General cares about industrial democracy, will he have a word with the Secretary of State for Defence, who told the House earlier this afternoon that those whose jobs are being sold are not even to have the right to look at the contract for selling their jobs and livelihoods?
Mr. Clarke: I agree with one small phrase that the hon. Gentleman used. I think that there are some trade union leaders who resent being talked to about democracy, but they would resent that from whatever quarter it came. Fortunately, there is emerging a number of trade union leaders who are democratic, who know how to live with democracy and who are also very powerful figures, as they command support in their unions and take care to consult their members before they take action. The difference between those trade union members and the kind whom the hon. Gentleman defends is that the more modern trade
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unionists are more responsible vis-à-vis their industries and the companies in which their members work. They may be powerful figures, but they use their power in a way that pays regard to the long-term interests of their members.
Mr. Spencer Batiste: Is my right hon. and learned Friend aware that the proposals he has announced this afternoon will be widely welcomed among rank and file trade unionists across the country, none more so than by those in the NUM, a union that has been brought to the verge of bankruptcy and that has denied access to financial information and whose president is able to use loopholes in the law to avoid re-election? Will he ensure that these important provisions are brought into law to protect rank and file trade unionists at the earliest possible opportunity?
Mr. Clarke: The NUM is indeed a shining example of the worst of problems, with its rules having been changed to make sure that its president does not have to stand for re-election by its members, with attempts having been made to change the rule book to exclude members from the right of access to the law courts and with attempts having been made to provide wide immunity for officials who have acted in breach of the law. Most members of the NUM—let alone ex-members of the NUM, who now, in despair, have gone to the Union of Democratic Mineworkers—will welcome any attempt to bring back democracy and proper accountability to that trade union.
Mr. Tony Lloyd: If the Paymaster General is really sincere in saying that this proposal is about the extension of democracy and the rights of the majority and that it is not about the rights of capital, will he tell the House how these measures would have helped the National Graphical Association and the Society of Graphical and Allied Trades members at Wapping to get rid of Rupert Murdoch?
Mr. Clarke: It would not have helped them to get rid of Rupert Murdoch, but it would have helped them to have a proper say in the activities of their own trade unions. [Interruption.] I shall try to avoid a lengthy repetition of what I said earlier. The funds of SOGAT were sequestered because it did not carry out a ballot of its wholesale members. It called out on strike its wholesale members but it did not ballot those members. The result was that SOGAT lost its immunity. Rupert Murdoch's News International took action against it and was awarded compensation, and eventually had the union's funds sequestered. If these proposals had been in force, it would have been open to an individual member of SOGAT being called out on strike to seek an order restraining his union from commencing strike action until a ballot had been held. That would have enabled the members of the union to save the union from itself and to pull back from the unlawful action that brought it near to ruin.
Mr. Tony Marlow: My right hon. and learned Friend is seeking to introduce welcome rights and safeguards for ordinary, individual trade union members. Will my right hon. and learned Friend write to the hon. Member for St. Helens, North (Mr. Evans) in the absence of his more moderate hon. Friend, the hon. Member for Kingston upon Hull, East (Mr. Prescott), and ask him urgently to tell us which of those rights he intends

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to oppose, because there are millions of trade union members who would like to know the answer to that question fairly quickly?
Mr. Clarke: That is a worthwhile suggestion that I shall certainly act on. Three years ago the Labour party fought tooth and nail against the introduction of pre-strike ballots and the direct election of executives. Since then, it has committed itself to the total repeal of what we have achieved so far, so I am afraid that I regard its reaction to our present Green Paper as wholly predictable and consistent with its opposition to genuine democracy inside the trade union movement for the last 10 years or more.
Mr. Peter Pike: Does the Paymaster General not recognise that most trade union members will regard this as a blatant attack on the trade union movement and as an attempt to shackle the trade union movement and weaken its ability to negotiate fair pay and working conditions? Is it not a fact that trade union members already within the democracy of the trade union movement have the right to change the rules if they wish? Does he not recognise that many trade unionists will regard it as complete hypocrisy if the law outlined in this Green Paper has to be approved by a House that is not democratically elected and by the other place that is unrepresentative?
Mr. Clarke: First, I do not accept that unions such as the Electrical, Electronic, Telecommunications and Plumbing Union, or the AUEW, which will have no difficulty complying with this as the last step, are in any way shackled or inhibited from looking after the interests of their members. In fact, they are far more powerful unions to face across the negotiating table than many of the old dinosaur unions with unrepresentative leadership and shaky command over their own followers. Also I do not accept that we can just leave it to the members to exercise their rights by getting the rule books changed. Simply to rely on the rule books involves going through a process of branch meetings, rules conferences, and so on, and that is not a secure, democratic route for the ordinary trade union member to follow. Therefore, I do not think that this proposal will be opposed by most trade unionists, as the hon. Gentleman declares. Most trade unionists will see this as an attempt to give them individually a greater say in whatever action their unions want to take.
Mr. Roy Galley: My right hon. and learned Friend's Green Paper will be both apt and timely and he is heartily to be congratulated on bringing forward proposals that will have the rare distinction of being both popular and just. Will he also consider that it may now be timely to take the first steps towards restricting the right to strike for those who carry out essential services and who, by their strikes, disadvantage most those who are in greatest need? Should we not consider tempering the right to strike of workers in vital public services with a sense of responsibility to the wider community?
Mr. Clarke: I am grateful to my hon. Friend for his remarks. I agree with him in disapproving most strongly of people taking strike action that adversely affects patients and pupils in hospitals and schools. I do not think that any of us support strike action in essential services, taken against members of the public who are not parties to the dispute. On the other hand, we have no present intention of legislating on the matter because in practice
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it is extremely difficult to formulate proposals that would be effective and enforceable. However, we shall continue to keep the matter under review. At the moment, thanks to all the other legislative changes that we have made, 1 am glad to say that industrial peace is more or less restored in most of the essential services. The problem will arise again only if there is a fresh outburst of industrial action in the essential services.
Mr. Richard Caborn: It was interesting to hear the Paymaster General speak on behalf of the AUEW. As a member of the AUEW, I think that these proposals are extremely undemocratic and that, if anything, this proposed legislation will tilt matters clearly in favour of employers. That is not democracy; it is turning democracy on its head. There can be a ballot on the shop floor, but those who participate in it and vote against the majority decision can continue to work. It is ironic that this Government should be putting this type of legislation on the statute book. They have broken more international conventions than any other previous Government. This Government prevented the Vredeling proposals and the fifth directive from reaching the statute book.
I noted the Paymaster General's attitude towards the teachers. I presume that his own profession — the barristers — will not be affected by the legislation. On the one hand, we take rights off workers; on the other, we allow absolute immunity to the legal and other professions because of the closed shop.
Mr. Clarke: The effect of the strike ballot is to give a trade union total immunity against action that might otherwise be taken against it by employers or by the employer's customers or suppliers. The effect of a strike ballot should not be that individual members who still want to go to work should be coerced, intimidated or subjected to disciplinary action, or that they should not be allowed to cross picket lines. Democracy does not entail the right to intimidate or coerce individuals or to take unfair action against them. They are perfectly entitled to exercise their right to go to work.
As for the Bar, this legislation will apply to the Bar Council as much as to any other trade union. In the days when I practised at the Bar, we did not have a closed shop and, as far as I am aware, there is no closed shop at the moment. I should certainly vote against the establishment of a closed shop.
Mr. Peter Bruinvels: I welcome my right hon. and learned Friend's statement, especially as it concerns free, secret and democratic postal ballots. Is he aware that this will be of particular importance to those members of the Civil and Public Services Association who, before the elections for the general secretary, faced massive intimidation and, I believe, election-rigging, which explains why John Macreadie won the election rather than John Ellis? Is he further aware that, after the teachers' surveys and elections for future industrial unrest, ballot papers were hanging around classrooms? My right hon. and learned Friend's announcement today will ensure that we have true, free and proper elections. That is good for the interests of all union members throughout the country.
Mr. Clarke: My hon. Friend is right to recall the shambles that surrounded the CPSA elections. A re-run also had to be ordered in the Transport and General

159
Workers Union and apparently there is some controversy in the National Union of Seamen. That may explain the absence of one of the more prominent members of that union from the Chamber this afternoon.
Given that we want to see the executive elected properly and directly, it is essential that we ensure that elections are organised fairly, supervised properly and conducted with great secrecy.
Mr. Dennis Skinner: If this Green Paper is so good, and if those institutions which have not already adopted such systems are to be regarded as dinosaurs, why did not the Prime Minister tell the Institute of Directors that it, too, should come under the aegis of the Green Paper? Why should not the Green Paper apply also to the CBI? Why should it not apply to the medical profession, and the legal profession to which the right hon. and learned Gentleman has referred? Why in all this talk about self-regulation for the City could not the Paymaster General take another step-by-step approach and tell his friends in the Cabinet that they ought to apply the provisions to the stock exchange and other areas of the City of London where swindlers proliferate and support the Tory party? Is not the truth of the matter that, just prior to the next general election, the Government are taking another step-by-step approach with a view, eventually, if they are successful in the election, to abolishing the right to strike?
Mr. Clarke: First, the new proposals will apply to absolutely any organisation that is a trade union and, so far as I am aware, that includes, and always has included, the British Medical Association and similar bodies.
With regard to the City, we have just introduced regulatory arrangements and they are subject to legal restrictions. The self-regulatory mechanism is backed up by legal penalties for those who depart from it. It is pointless to make broad-brush comparisons with other parts of our way of life in order to try to evade the crucial point which faces the hon. Member for Bolsover (Mr. Skinner) and his colleagues. The Opposition must determine why they are so opposed to simple concepts such as the direct election of the executive by the members and of giving the members the right to decide whether they will be called out on strike.
Mr. Eric Forth: Is my right hon. and learned Friend aware that his statement will be greatly welcomed by some of my constituents who are, regrettably, still having problems in terms of ballots, closed shops and many related matters? Will he look especially at the role of the certification officer and the ease of access that ordinary union members have to that officer in his capacity to supervise the regularity and correctness of ballots? Will he, in particular, consider the holding of hearings by the certification officer and the payment of expenses for ordinary union members to allow them easy and effective access to the certification officer?
Mr. Clarke: I am grateful to my hon. Friend. The certification officer tries to provide a reasonably informal route for complaint. However, there is no doubt that he can take up to six months to hear complaints. That can involve a member facing the certification officer with the union and its lawyers ranged against him and there may
160
be a great deal of procedural argument. Nevertheless, the certification officer has made a number of orders, but unfortunately he lacks the powers to enforce them. At least one union, the Technical, Administrative and Supervisory Section, appears to have implied recently that it will not comply with the declaration of the certification officer who claimed that the election rules should be brought in line with present legislation. For that reason, we believe that a commissioner is required to give support to individual complainants in proper cases and to ensure that someone is not overawed or intimidated and that the law is not just ignored.
Mr. Tony Banks: Why do the Government spend so much time extolling free trade unionism in countries such as Poland and so much time trying to destroy free trade unionism in this country? How can the Minister refer, as he does in paragraph 2.10 of the Green Paper, to the right to work despite a strike, yet not extend the right to work to the 4 million unemployed people in this country? As he said earlier that the unions should belong to their members, what would be the Government's attitude to these proposals if the unions, through balloting and consultation of the members, told the Government to stick the Green Paper?
Mr. Clarke: My idea of a free trade union is one that elects its own leadership and consults its membership about the way in which it behaves. The hon. Gentleman's idea of a free trade union may be one in which the leadership emerges from some small political caucus, where some leaders are appointed for life and where members are not entitled to be consulted before a strike is held. I believe that the Government's reaction to the activities and events in Poland is wholly consistent with our attempt to have free and democratic unions in this country.
Mr. David Winnick: Is the Minister aware that I am the vice-president of a trade union which, since 1890, has always belonged to its members and has never needed any lectures in democracy from a political party which did not get around to electing its leader until 1965 and which even now, as I told the Prime Minister, does not subject the party chairman to any form of election? Is it not a form of political corruption for a party which receives fairly substantial sums of money from big business to use its political power to undermine the rights of working people at their places of employment?
Mr. Clarke: I am delighted to learn that the hon. Gentleman's trade union has always complied with the type of measures that we are now suggesting should be prescribed by law. Undoubtedly it will have ease in complying with our provisions. He should welcome our attempt to spread good practice to the likes of the National Union of Mineworkers, the Confederation of Health Service Employees, the National and Local Government Officers Association, TASS and other trade unions which would not have got anywhere near internal democracy unless the law had intervened to look after the members' interests.
Mr. John Evans: I want to take this opportunity to inform the Paymaster General and his right hon. and hon. Friends that the Labour movement welcomes the opportunity to take on the Tory party and the alliance at the next election on the basis of free trade unionism and the right to strike.

161
Will the Paymaster General now answer the question that he has been evading all afternoon? Why is it that one side of industry — the workers — must be regulated by Government diktat while the other side of industry—big business and the City — is allowed to practise self-regulation?
Mr. Clarke: I look forward to the challenge that we should argue these points before the electorate, given the nature of the Labour party's commitment to repeal everything that we have done and to return to a position in which indirectly elected leaders of trade unions will tell their members to rely on the rule book as a remedy.
On the imbalance to which the hon. Gentleman referred, there are strict constraints on the behaviour of companies and employers, and there always have been. There are strong protections for workers who have been unfairly dismissed, including people unfairly dismissed for exercising their right to belong to a trade union. It is simply absurd to suggest that there is any reason why trade unions should be outside a basic regulatory system which will not weaken the unions in any way, but will ensure that their membership and workers at the workplace will be the real holders of power in the trade union rather than the unelected, irresponsible minorities.

Parliamentary Conduct
4.48 pm
Mr. Andrew Faulds: I am grateful to you, Mr. Speaker. I rise to apologise to you, Sir, and to the House, for my discourtesy and disregard for parliamentary conduct yesterday. Having looked at column 24 of yesterday's Hansard, I realise that my words could have been interpreted as a personal accusation against a right hon. Member of this House, and I withdraw unreservedly the phrase in question. May I also express my regret that I did not on two occasions at once resume my seat when you rose, Sir.

Points of Order
Mr. Jeremy Corbyn: On a point of order, Mr. Speaker. You will recall that last week there was a statement by the Minister of State, Home Office concerning the removal of Tamil asylum-seekers from this country and the following day you granted a private notice question to my hon. Friend the Member for Coventry, South-East (Mr. Nellist). News has just come through that the right of the Tamils to seek a judicial review against the Home Office decision has been granted and that, therefore, they cannot be removed from this country until that review has been heard.
My question for you, Mr. Speaker, is this. Can you advise the House so that we can ensure that the decision of the House last year, which granted hon. Members the right to place a stop on that removal, can now be implemented by the Home Office and the Minister concerned brought to the House to explain his disgraceful conduct in trying to remove asylum-seekers from this country against the spirit of the terms of the Geneva convention?
Mr. Max Madden: Further to that point of order Mr. Speaker.
Mr. Speaker: It is not a point of order for me. Order does not arise. I can advise both hon. Members, because I suspect that they are making the same point, that the proper course of action is to seek to obtain a statement on this at an appropriate time. It is not a matter of order today.
Mr. Madden rose—
Mr. Speaker: Order. It cannot be a point of order for me.
Mr. Madden: I am not asking you, Mr. Speaker, to take a decision now on this, but to reflect on—
Mr. Speaker: I spend my life reflecting. I do not need to reflect on a matter which is clearly a question for the House, and not a matter of order.
Mr. Madden rose—
Mr. Speaker: I am reflecting on my feet. The hon. Gentleman should have a go at this tomorrow.
Mr. Rob Hayward: On a point of order, Mr. Speaker. In column 24 of Hansard yesterday you gave guidance in relation to comments that have been made about people who are not Members. Has any guidance been given to the Table Office in relation to that in the light of the fact that I have traced 7ft of criticisms of the Prime Minister's son and husband during this Parliament? Will your ruling avoid that sort of condemnation?
Mr. Speaker: Order. I repeat what I said yesterday. If the early-day motions on the Order Paper do not meet the criteria, they are brought to me for my attention. I cannot recollect that any of those particular early-day motions, which are probably from two years ago, were ever brought to me for my attention.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. I know that you have carefully scrutinised the Select Committees and other Committees of the House. I wonder whether during the course of the day you would take the appropriate steps, where possible, to find out whether there has been any statement by any Government spokesman on the question of setting up a lifeboat for Morgan Grenfell, one of the firms involved in the Guinness—
Mr. Speaker: Order. I am not responsible for Morgan Grenfell.
Mr. Skinner rose—
Mr. Speaker: Order. I cannot help the hon. Gentleman. I am sorry.
Mr. Tony Banks: On a point of order, Mr. Speaker. Can you advise me how I can raise today on the Floor of the House last night's news that Fulham and Queen's Park Rangers are to be merged? If it was the Royal Opera House that was about to be sold off and turned into luxury flats, hon. Members would be in uproar, yet we cannot get a discussion on this important issue.
Mr. Speaker: Order. I do not quite know where Government responsibility would lie on a matter such as that. The hon. Gentleman might have an opportunity when the Minister responsible for sport is due to answer questions.

Points of Order
  BILLS PRESENTED
    GANGMASTER
    Sir Richard Body, supported by Sir Kenneth Lewis, Mr. Clement Freud and Miss Joan Maynard, presented a Bill to require gangmasters to be licensed by justices: And the same was read the First time; and ordered to be read a Second time upon Friday 6 March and to be printed. [Bill 87.]
    DEER
    Mr. David Knox, supported by Sir Peter Mills, Mr. Robert Hicks, Mr. Ivan Lawrence, Mr. Tom Torney, Mr. Eric Deakins and Mr. Geraint Howells, presented a Bill to make it lawful for deer kept on deer farms in England and Wales to be killed during a close season: And the same was read the First time; and ordered to be read a Second time upon Friday 27 February and to be printed. [Bill 84.]

Public Opinion Polls (Prohibition at Election Times)
4.54 pm
Mr. Ray Powell: I beg to move,
That leave be given to bring in a Bill to prohibit the holding of, and publication of the results of, opinion polls about voting intentions at times prior to general elections and by-elections to the House of Commons.
The first parliamentary consideration of the problem took place under the auspices of the Speakers Conference on Electoral Law which reported in 1968. That conference recommended that there should be no broadcast or publication in a newspaper or other periodical of a result of a public opinion poll or of betting odds on the likely result of a parliamentary election for a period of 72 hours before the close of the poll. Regrettably, however, that recommendation was not implemented.
To avoid taking too much time, I shall not deal in too much detail with the wide discrepancies of the opinion polls that have been published in recent times, save to mention the recent bizarre one for "Newsnight" on the Greenwich by-election, presented by Vincent Hanna who, I am given to understand, is developing the concept that by-elections are created entirely for his personal amusement. That poll result alone should be sufficient to persuade the House of the necessity of a free passage for my Bill.
Numerous attempts have been made by hon. Members to persuade the House to agree to measures for some control, and on 22 October 1985 I presented a somewhat similar Bill which was defeated by four votes. This time I feel confident that the results of recently published polls will persuade hon. Members on both sides that it is becoming even more essential to acquire some sort of control. If the rumours that I have heard today are correct, there might be opposition to my Bill. If that is so, I sincerely hope that this time, unlike the previous occasion, the argument will be soundly based and the occasion not used to expound and develop differences which might have occurred in the Greenwich by-election.
In recent weeks we have been subjected to all sorts of political fortune-telling which is about as accurate as the palmist on the pier. Is it too much to ask that for just three or four weeks we should be spared the peddling of those pointless predictions? Opposition to the Bill and the protestations that I have received have come mainly from interested parties, press barons and pollsters who obtain rich pickings from attempting to predict the results. It is all too easy to manipulate random sampling to ensure that the result is one that will boost circulation or stimulate further interest and assignments for the pollster. Nevertheless, we all appreciate that on many occasions it is the press which deliberately distorts some of the fair and reasonably conducted polls.
No fewer than 50 opinion polls were carried out during the four and a half week campaign of the 1983 general election. When we include the private and unpublished polls undertaken on behalf of political parties and interest groups, that represents a formidable amount of polling activity. Nevertheless, the reliability and validity of the opinion polls and perhaps more significantly the influence of the polls on the election itself is a cause for grave concern.

165
Students of electoral behaviour have known for some time that opinion polls have low reliability. Differences in question wording, methods of filling sample quotas and interviewer effect, together with the inherent randomness of response from individuals with a low level of knowledge and interest in politics, produce those results. Furthermore, average sample sizes, which between 1970 and 1983 were 1,900 respondents per survey, have fallen to 1,100. Field workers tend to be mostly middle-class, middle-aged women who are disproportionately of one political persuasion, making unconscious bias and interviewer effect an acute problem, particularly at a time of intense partisan activity. Other sources of error result from the changing nature of British politics, with wide regional variations emerging in voting behaviour.
The problems of reliability and validity of polls would not have any wider political significance if there were not compelling evidence to suggest that polls directly influenced the election results in 1983. The system of tactical voting needs special consideration. It is highly likely that opinion poll results could persuade voters not to cast a vote for the favourite party but to use it to produce the most desired or least objectionable outcome. If we are to preserve the true democratic process of electing a Government by the majority accepting the presentation of political parties' policies, we must ensure that pollsters are not the deciding factor and that they are not allowed to sway electors to vote for a party, the policies of which are not liked, just to keep out another party that is liked even less. Tactical voting is encouraged by the present applied system. Until the electorate votes according to conscience, principle and the policies presented, uninfluenced by bizarre pollster predictions, we are allowing the franchise won for us after a considerable struggle by former generations to be lost to the fancies and favourites of the few large influential pollster organisations.
Aneurin Bevan once accused the polls of taking the poetry from politics, and he was right. I want to put the poetry hack into politics by banning these polls during the period prior to an election because they are increasingly not just predicting the result but determining it. If market researchers expect to achieve respect for their poll predictions, I suggest that they make further attempts through their advisory group to ensure that their code of practice is immediately and fully implemented. Until this is achieved, my Bill is the only way to protect the electors from voting on the predictions of the polls rather than on the policies of the politicians.
5.2 pm
Mr. Colin Moynihan rose—
Mr. Speaker: Does the hon. Gentleman wish to oppose the Bill?
Mr. Moynihan: Yes, Sir.
First, I thank the hon. Member for Ogmore (Mr. Powell) for providing the House with this opportunity to debate the merits or otherwise of prohibiting the holding of and publication of the results of opinion polls at election times.
Opinion polls are of justifiable concern to many people both inside and outside the House. Arriving from three weeks on the election trail in Greenwich and hardly the beneficiary of gargantuan swings to the Tories in by-election polls there, I wish nevertheless to record my strong
166
support for the continued holding of opinion polls and to make some suggestions to improve their contribution to elections.
The most recent and authoritative report on this subject was produced by my hon. Friend the Member for Harrow, West (Sir J. Page) for the Council of Europe in 1985 after two years taking expert evidence. The Council of Europe Assembly unanimously accepted the conclusion of the report that no controls of polls at election times were desirable, appropriate or workable, that polling organisations in Europe should comply with their own industry's code of practice, and that no one knew the effects that polls might or might not have on bandwagons, backlashes or the momentum of an election. Polls are not intrinsically harmful to the democratic process although, if abused, they can be. Our concern, and that of the pollsters' professional body, the Market Research Society, should be to deny opportunities for abuse. That requires better scrutiny, further policing and regulation of polls, with the publication of results in full. The Market Research Society and ESOMR — the European Society of Opinion and Market Research — seek to ensure good technical standards, which need to be improved.
Let us consider the implications of a ban. Private polls would proliferate and be leaked. The media would commission polls and use the results by innuendo. Greater weight would be given to the canvass returns. Overseas newspapers would commission polls and give results. Would the hon. Member recommend that overseas newspapers or the international media such as the BBC World Service should be censored? I assume that he would not. For example, The Times published a poll when, for a short period of time, opinion polls were forbidden in Germany. The banning of polls would be deeply detrimental to the freedom of the press and especially the international press. Moreover, such a ban would treat the electorate like sheep. Ultimately, it must be for the electorate to decide how to use the information available to them. To ban opinion polls during elections would be a fundamental move away from freedom of information in our society.
I conclude with some reflections on Greenwich and how polls can provide a valuable information service. Is the hon. Member for Ogmore suggesting that, when an alliance campaigner brands Deidre Wood a liar at a public meeting, public opinion should not be tested and the results published to show the disdain felt by the Greenwich electorate for the sickening personality attack made on Mrs. Wood? Is it not justified that pollsters should be able to concentrate on asking and publishing the answers to questions on grossly misleading alliance election photographic material and campaign tactics? In a free society, it is right that opinion polls on all aspects of elections should be permitted, but the need to provide a reinforced code of conduct and further information and judgment on their use in the media should focus the attention of the House. We should concentrate on that and reject this undemocratic and unworkable motion.
Question put, pursuant to Standing Order No. 19 ( Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 116, Noes 103.

Division No. 99]

[5.07 pm

AYES

Adams, Allen (Paisley N)

Anderson, Donald

Adley, Robert

Ashton, Joe

167

Atkinson, N. (Tottenham)

Leadbitter, Ted

Bagier, Gordon A. T.

Lewis, Terence (Worsley)

Banks, Tony (Newham NW)

Lloyd, Tony (Stretford)

Barron, Kevin

Lofthouse, Geoffrey

Bell, Stuart

McCartney, Hugh

Bidwell, Sydney

McKay, Allen (Penistone)

Boothroyd, Miss Betty

McQuarrie, Albert

Caborn, Richard

McWilliam, John

Callaghan, Jim (Heyw'd & M)

Marshall, David (Shettleston)

Carter-Jones, Lewis

Mason, Rt Hon Roy

Carttiss, Michael

Maxton, John

Clarke, Thomas

Maynard, Miss Joan

Clay, Robert

Michie, William

Clelland, David Gordon

Mikardo, Ian

Cohen, Harry

Moate, Roger

Coleman, Donald

Morris, Rt Hon A. (W'shawe)

Conway, Derek

O'Brien, William

Cook, Frank (Stockton North)

Park, George

Corbyn, Jeremy

Patchett, Terry

Craigen, J. M.

Pavitt, Laurie

Cunliffe, Lawrence

Peacock, Mrs Elizabeth

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

Pendry, Tom

Duffy, A. E. P.

Pike, Peter

Dunwoody, Hon Mrs G.

Powell, Raymond (Ogmore)

Eadie, Alex

Radice, Giles

Eastham, Ken

Rattan, Keith

Faulds, Andrew

Randall, Stuart

Fenner, Dame Peggy

Redmond, Martin

Fields, T. (L'pool Broad Gn)

Richardson, Ms Jo

Finsberg, Sir Geoffrey

Roberts, Ernest (Hackney N)

Fisher, Mark

Ross, Ernest (Dundee W)

Flannery, Martin

Rossi, Sir Hugh

Fookes, Miss Janet

Sheerman, Barry

Foulkes, George

Sheldon, Rt Hon R.

Garrett, W. E.

Skeet, Sir Trevor

Glyn, Dr Alan

Skinner, Dennis

Godman, Dr Norman

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

Gower, Sir Raymond

Thompson, J. (Wansbeck)

Griffiths, Peter (Portsm'th N)

Thome, Stan (Preston)

Hamilton, James (M'well N)

Thornton, Malcolm

Hamilton, W. W. (Fife Central)

Tinn, James

Hardy, Peter

Torney, Tom

Harrison, Rt Hon Walter

Townend, John (Bridlington)

Hawkins, Sir Paul (N'folk SW)

Vaughan, Sir Gerard

Home Robertson, John

Walker, Bill (T'side N)

Howells, Geraint

Wardell, Gareth (Gower)

Hoyle, Douglas

Weetch, Ken

Hughes, Roy (Newport East)

Welsh, Michael

Hume, John

Wilson, Gordon

Hunter, Andrew

Winnick, David

Jessel, Toby

Winterton, Nicholas

John, Brynmor

Woodall, Alec

Jones, Barry (Alan & Deeside)

Young, David (Bolton SE)

Kaufman, Rt Hon Gerald

Key, Robert

Tellers for the Ayes:

Lambie, David

Mr. Frank Haynes and

Lamond, James

M. Don Dixon.

Lawrence, Ivan

NOES

Alexander, Richard

Beith, A. J.

Arnold, Tom

Benn, Rt Hon Tony

Ashby, David

Best, Keith

Atkins, Robert (South Ribble)

Bevan, David Gilroy

Atkinson, David (B'm'th E)

Biggs-Davison, Sir John

Baker, Nicholas (Dorset N)

Blackburn, John

Banks, Robert (Harrogate)

Body, Sir Richard

Batiste, Spencer

Bright, Graham

Beaumont-Dark, Anthony

Brown, M. (Brigg & Cl'thpes)

168

Buck, Sir Antony

Livsey, Richard

Budgen, Nick

Lloyd, Sir Ian (Havant)

Burt, Alistair

McCrindle, Robert

Butterfill, John

Maclennan, Robert

Campbell-Savours, Dale

McLoughlin, Patrick

Carlile, Alexander (Montg'y)

Maples, John

Cartwright, John

Meadowcroft, Michael

Cash, William

Moynihan, Hon C.

Chapman, Sydney

Mudd, David

Clark, Sir W. (Croydon S)

Neale, Gerrard

Coombs, Simon

Pawsey, James

Cranborne, Viscount

Proctor, K. Harvey

Crouch, David

Raison, Rt Hon Timothy

Dickens, Geoffrey

Rhys Williams, Sir Brandon

Dicks, Terry

Roe, Mrs Marion

Dorrell, Stephen

Ross, Stephen (Isle of Wight)

Douglas-Hamilton, Lord J.

Rost, Peter

Dover, Den

Sackville, Hon Thomas

Dykes, Hugh

Sayeed, Jonathan

Fletcher, Sir Alexander

Sedgemore, Brian

Forth, Eric

Shaw, Sir Michael (Scarb')

Freud, Clement

Shields, Mrs Elizabeth

Gale, Roger

Sims, Roger

Gardiner, George (Reigate)

Smith, Cyril (Rochdale)

George, Bruce

Speed, Keith

Gilmour, Rt Hon Sir Ian

Spencer, Derek

Goodhart, Sir Philip

Squire, Robin

Gow, Ian

Stanbrook, Ivor

Greenway, Harry

Steel, Rt Hon David

Griffiths, Sir Eldon

Stern, Michael

Hargreaves, Kenneth

Stewart, Allan (Eastwood)

Haselhurst, Alan

Stradling Thomas, Sir John

Hayward, Robert

Terlezki, Stefan

Heddle, John

Thomas, Rt Hon Peter

Hind, Kenneth

Thorne, Neil (Ilford AS)

Holland, Sir Philip (Gedling)

Thurnham, Peter

Hubbard-Miles, Peter

Wall, Sir Patrick

Hughes, Simon (Southwark)

Wallace, James

Jones, Gwilym (Cardiff N)

Whitfield, John

Jones, Robert (Herts W)

Wood, Timothy

Kennedy, Charles

Kirkwood, Archy

Tellers for the Noes:

Knight, Greg (Derby N)

Mr. John Page and

Knox, David

Mr. Conal Gregory.

Leigh, Edward (Gainsbor'gh)

Question accordingly agreed to.
Bill ordered to be brought in by Mr. Ray Powell, Mr. Don Dixon, Mr. Frank Haynes, Mr. Gareth Wardell, Mr. Tony Banks, Mr. Roy Hughes, Mr. Doug Hoyle, Mr. Lawrence Cunliffe, Dr. Roger Thomas, Mr. James Hamilton, Mr. Jim Callaghan and Mr. Martin Redmond.

Public Opinion Polls (Prohibition at Election Times)
  PUBLIC OPINION POLLS
    (PROHIBITION AT ELECTION TIMES)
    Mr. Ray Powell accordingly presented a Bill to prohibit the holding of, and publication of the results of, opinion polls about voting intentions at times prior to general elections and by-elections to the House of Commons: And the same was read the First time; and ordered to be read a Second time upon Friday 24 April and to be printed. [Bill 88.]
Orders of the Day

  Ministry of Defence Police Bill [Lords]
  As amended in the Standing Committee, considered.
  5.18 pm
  The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Archie Hamilton): I beg to move, That the Bill be now read the Third time.
  The House will now know that the aim of the Bill is to tidy up the statutory basis of the operations of the Ministry of Defence police. However, it should not be assumed that, because the Government are introducing legislation, they must wish to confer new powers on the MDP.
  By introducing this Bill, the Government are responding to the recommendations of the Select Committee on Defence made in 1984 and of the Broadbent report published in July 1986. The hon. Member for Walsall, South (Mr. George) commented in Committee on the speed with which the Government were moved to bring in legislation. He described it as
  "what appears, in the history of bureaucratic reform, to be indecent haste."—[Official Report, Standing Committee B, 10 February 1987; c. 18.]
  In the circumstances, I take that as a compliment.
  May I take this opportunity to clarify again the powers of the Ministry of Defence police? There is a distinction between the position when MDP are within the establishments which they may be called upon to protect and the position when they are outside those places. Inside the establishments, which, broadly speaking, are those in the possession or under the control of the Ministry of Defence, visiting forces, ordnance factories or dockyards, the powers of MDP will not change. When in those establishments they have the full powers of a constable covering all types of crime in the same manner as for a Home Department police constable.
  When outside those establishments MDP powers are more restricted. Under existing statutes they have constabulary powers in Great Britain in relation to Crown property and service personnel, including the property and personnel of visiting forces and international military headquarters, and the property of ordnance factories and dockyards. Such powers may be exercised only up to 15 miles from any of the establishments. Under this Bill the I 5-mile limit will no longer apply; instead the MDP will have constabulary powers throughout the United Kingdom but they will be able to exercise them only in relation to Crown property and the property of those I have mentioned, the personnel of MOD and visiting forces and matters connected with defence contracts. The Bill also contains some minor provisions which enable the MDP to assist their Home Department police colleagues in the vicinity of a defence establishment and to exercise constabulary powers in United Kingdom territorial waters and and in certain places, such as the Royal Mint, which will be published in gazettes.
  The main effect of the Bill on MDP's jurisdiction will be to remove the uncertainties caused by the 15-mile limit when MDP are outside defence establishments. It will not affect their present responsibilities or the way in which these are discharged. The very few other changes to MDP's jurisdiction concern the extension of their powers,
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  when outside establishments, to MOD civilians and defence contracts, and the power to assist Home Department forces in the vicinity of defence establishments
  In Committee we explored in detail the relationship between the MDP and the Home Department police forces. Nothing in the Bill changes the primacy which the Home Department chief constables have throughout the United Kingdom, including "within the wire" at defence establishments. As for the working relationships between the forces, I agree entirely with the point made repeatedly by hon. Members in Committee that the effective operation of both MDP and Home Department forces requires, in the words of the hon. Member for Woolwich (Mr. Cartwright),
  "sensible co-operation with local police forces."—[Official Report, Standing Committee B, 12 February 1987; c. 58.]
  Officials are making progress in discussions with the Associations of Chief Police Officers for England and Wales and for Scotland and interested Departments about the arrangements to be followed in certain situations where the Home Department forces and the MDP have concurrent jurisdiction. I expect the discussions to lead to guidelines covering such subjects as the policing of married quarters estates, public order policy, major crime and terrorism and control of traffic.
  Sir Eldon Griffiths: What will he the status of the guidelines? Are they to be laid before the House as a statutory instrument? Will they be advisory? How will they be enforced on the respective police services?
  Mr. Hamilton: They will be advisory.
  I have already acknowledged the prime responsibility which the chief constables of Home Department forces have for all crime and I propose to leave the arrangements concerning the interface between the MDP and Home Department police forces to these discussions on the broad principles and also to more specialised local arrangements in particular areas. But there will be advisory guidelines put out because, as we know, the status of chief constables is such that they take advice from the Home Department.
  Sir Eldon Griffiths: That would mean that if, for example, the chief constable of the MOD police chose not to follow those guidelines he would not be required to do so.
  Mr. Hamilton: As I understand it, such is the primacy of the chief constable that he can only be advised and in practice he cannot be instructed on what he is supposed to do.
  The Government do not believe it is proper to embody such administrative matters in legislation, but in Committee I accepted that the guidelines should be public. I intend, therefore, to have them placed in the Library of the House when they have been agreed and issued.
  In Committee, a number of hon. Members raised questions about the Police Committee and its procedures. Its terms of reference are:
  "To determine policy for the operation, management and the administration of the Ministry of Defence police, including the identification of the overall money, manpower and equipment resources necessary to achieve that policy."
  The chief constable and deputy chief constable of the Ministry of Defence Police will normally attend meetings.

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  When necessary, the police staff associations will have access to the meetings of the committee, and they will also be able to make written representations.
  We expect the committee to meet four times a year. Some hon. Members in Committee queried the terms of clause 1(5) of the Bill because they interpreted it to mean that the Ministry of Defence Police Committee would be inhibited in carrying out its terms of reference. I repeat my assurance that this clause does not restrict in any way the freedom of the Ministry of Defence Police Committee to advise my right hon. Friend the Secretary of State on its own initiative.
  Viscount Cranborne: My hon. Friend will remember that in Committee I asked particularly whether he would reconsider the membership of the Police Committee and whether he would be prepared to broaden that membership to reflect something less than the rather cosy arrangement for membership indicated by my hon. and noble Friend in another place. Has my hon. Friend had time to reconsider that point?
  Mr. Hamilton: We have thought about the membership of the committee. Of course, it includes an ex-chief constable from an English constabulary and also one from Scotland, so we feel that the interests of police constables have been reflected in the composition of the committee. I do not think there is anything inflexible about the composition: it could be changed.
  There are two areas of management in which other bodies complement the Police Committee. The first is industrial relations. The existence of the Defence Police Federation is established in the Bill, just as the Police Act 1964 established the police federations.
  The chairman, vice chairman and other Police Committee members will meet the Defence Police Federation and the senior officers twice a year in meetings of the joint consultative committee, which is the forum for dealing with MDP industrial relations problems.
  The second is complaints against the MDP. The force is subject to the Police Complaints Authority, just as the Home Department's police forces are. It is not the MOD Police Committee which is responsible for investigating complaints.
  Thus the public have an entirely satisfactory means of protection against any misuse of the MDP's power. More widely, my right hon. Friend the Secretary of State is answerable to the House.
  5.28 pm
  Mr. Martin J. O'Neill: When the Bill was published, I gave it a cautious welcome on behalf of Opposition Members. We had anxieties on Second Reading and in Committee over questions of primacy, jurisdiction, the complaints procedure and relationships with the Home Department police forces. We also expressed anxiety about the Police Federation's concern about rights to finance for legal representation, if necessary, for its members on disciplinary matters. We ventilated most of the areas of concern in Committee.
  On primacy, we welcome the Minister's clarification of the position. Certainly it is reassuring to know that the Home Department police forces will still be in the lead in any matters outwith the Ministry of Defence and other related establishments. In regard to jurisdiction, we all
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  recognise that the 15-mile rule was somewhat old-fashioned and outdated. It related more to the distance that any thieves of cannonballs could be expected to carry their loot than to anything else. We have now probably got a more sensible arrangement and the concerns of Members on all sides of the Committee about the relationship between the home police forces and the MOD police force have been to some extent reduced.
  I think it is fair to say that some of us would probably have preferred some form of statutory instrument to consolidate the relationship between the two bodies. However, the Department's lack of enthusiasm for such a proposal is understandable, even though it is not acceptable. The compromise put forward by the Minister was offered in a spirit of good intent and the publication of the guidelines should be an opportunity for all who are concerned to see whether they are working properly. If they are not, I would imagine that the kind of pressure that was building up on all sides of the Committee will be brought to bear. The biggest source of concern was the uncertainty of those Members with constituencies near which there are major defence establishments. They and their chief constables required some reassurance.
  My hon. Friend the Member for Walsall, South (Mr. George) referred to the spectacular haste—I would not think that he would want to use the word "indecent"—of the MOD in bringing forward this legislation. Perhaps it would have been better if it had been delayed a little longer until we had reached the end of the negotiations between the Home Department police forces, the MOD and the respective Ministries. But the Minister has given us assurances and I do not believe that it would be tolerated either by the House or by those who take an interest in matters relating to law and order and civil liberties if a set of guidelines were established which did not afford the kind of provisions and facilities available to the home police forces at the moment. We shall obviously have to wait and see what happens. We are not in a position to change the guidelines but the fact that they will be open for public scrutiny is in itself an advance and should be of assistance to those hon. Members who might want to make representations at some future stage.
  I am not completely satisfied with what the Minister has said with regard to the complaints procedure, but I think that any change would probably require legislation to take care of the home police forces as well, because many people on the Opposition side are not at all satisfied with the nature of the complaints procedure. There is always the lingering doubt that it is merely the police force looking after its own and that, even if justice is done, it is not seen to be done. However, that is a problem beyond the terms and objectives of this legislation and if we were to seek to make the complaints procedure more open it would require legislation of a good deal more controversial nature than the kind that we have before us this evening.
  With regard to industrial relations aspects, the Minister, as I recall, has met the observations of the MOD Police Federation as distinct from the Home Department Police Federation. There are two organisations, one of which the hon. Member for Bury St. Edmunds (Sir E. Griffiths) represents in the House, and another which many of us, having been exposed to its activities, view with some affection. If the MOD Police Federation is to be put on an equal footing with the Home Department Police Federation one hopes that the facilities which the Home

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  Office makes available to its Police Federation will be made available on the same generous lines to the MOD Police Federation, because the membership base of the organisation is somewhat restricted and the need for some degree of support from the Ministry of Defence has already been recognised. I think it is fair to say that the membership of the MODPF would be grateful for more resources being made available and I know that the Minister did not rule this out. He is too old a hand to be forthcoming in making promises about increased assistance for pretty well anybody — apart, perhaps, from Vickers Shipbuilders, but that is another story.
  This Bill has certain problem areas, but we do not think that they are major ones. We would have liked to have the opportunity of debating this later rather than earlier. Having said that, however, this is a Bill which is long overdue. The Select Committee on Defence made recommendations which have been acted upon. They are not to any great extent contentious. We would like to think that recent incidents involving convoys and the like would be taken care of in the guidelines and that the anxieties that have been expressed by local Members of Parliament concerning the activities in sensitive areas of all the security services would be ironed out. If they are not, I am sure that we shall be coming back to the subject. I very much doubt that it will be in the form of amendments, but there will certainly be close scrutiny of the guidelines. In fact, the scrutiny may be so close that the Minister will come to regret that he ever conceded the point in the first place. I will he generous, because this is not a partisan issue, and we are satisfied that this Bill should be given a Third Reading. I know that some of my hon. Friends have observations to make, but I do not think that any of them are of a kind likely to obstruct the progress of this modest, but at the same time important, piece of legislation.
  5.38 pm
  Mr. Robert Key: This is a very unusual and in some ways a very difficult Bill. It is unusual in that there has been scarcely any party political disagreement about the need for the Bill and it is probable that it will pass through all its stages in this and the other place without Divisions. But it has at least been debated; it is the first time since 1860 that the question of Ministry of Defence police has been debated.
  I inadvertently did an injustice to my noble Friend Lord Trefgarne at column 289 of the Second Reading debate when I said that my hon. Friend was the first Minister of the Crown to introduce a debate in either Chamber on the subject. Of course, I was wrong, but I was seeking to compliment my hon. Friend.
  The Bill is also unusual because the official Opposition have raised many quite fundamental objections to aspects of it, only to have been almost instantly reassured by my hon. Friend the Minister. This is a great compliment to his powers of persuasion. It is also a very genuine compliment when I say how patient he has been with his hon. Friends, including me, who have felt it important to make a number of probing comments on his thinking. We have no wish to look in later years at events which may take place and say "We told you so."
  Perhaps what is most unusual in this Bill is the degree to which we have been legislating in the dark, and this worries me. On point after point we have been told that
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  consultations will take place, agreements will be reached, guidelines will be established, and we have taken it all on trust.
  I said that in some ways this was a difficult Bill. It has been particularly difficult to probe the Government's intentions without giving the totally misleading and unworthy impression that some of us are in some way opposed to the MOD police. I certainly am not. The present position is as unsatisfactory for the MODPF as it is for the Home Department police force.
  I have been anxious to ensure that the new arrangements will be better. Perhaps I have been particularly sensitive, because in the county of Wiltshire and in my constituency of Salisbury the county constabulary and the MODPF have worked side by side for many years and because the Wiltshire county constabulary was the first in the country, which is why its motto is "Primus et optimus".
  We must not be in any doubt that with this Bill we have for the first time created a national police force, which, against all the traditions, is accountable only indirectly through the Secretary of State to Parliament. It is not true that the Docks police, the Transport police or the Atomic Energy Authority police are in the same category. Their jurisdiction is severely and precisely limited geographically and functionally. Nor is it true that the Metropolitan police are in the same category because they are answerable to the Home Secretary. It is true that the Home Secretary is the police authority for the Metropolitan police, but his jurisdiction is geographically limited and is not national. Like the chairman of every other police authority, he often is heard to protest that operational matters are not for him, but for the chief officer of police.
  Yet, today, we shall create a police force with a national jurisdiction under the direct operational control of a Minister of the Crown. Throughout our nation's history we have resisted this sort of arrangement and I am astonished that Parliament has allowed it to happen so easily. I know that I am just one Back Bencher and that not even the Opposition Whips are worried about this, so I recognise reality when it stares me in the face. However, I am certain that we have not heard the last of the Bill.
  Clause 1 sets up the machinery for MOD special constables. We were told in Committee that the need for the scheme is being reviewed and that consideration will be given to whether MOD police specials should be paid or unpaid. The Minister could not say how long the inquiry would take or when its findings would be available. Yet, if he decides to adopt such a scheme, clause 1(1) provides for it without the need for further amendment or discussion. Yet to pay MOD police specials would seriously upset the traditional position in the Home Department forces and create anomalies which I would not welcome.
  Many of the points of disagreement that were discussed in Committee are capable of resolution only under the guidelines which are to be agreed in future between the Ministry of Defence and chief constables of Home Department police forces. The guidelines are to be established by ministerial direction and my hon. Friend the Minister has told us that he is nowhere near formulating them.
  It is in the national interest that those guidelines should have the unqualified support of Home Department police forces and I urge my hon. Friend the Minister to ensure that that is the case. It is also in the national interest that

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  the guidelines should be in the public domain. They should not be secret and I welcome my hon. Friend's assurances on that.
  In Committee the hon. Member for Walsall, South (Mr. George) said that any decisions reached on the guidelines should be brought to the House in one form or another and added:
  "Very often, decisions are made almost regardless of the operation of a Standing Committee or of the House itself." —[Official Report, Standing Committee B, 10 February 1987; c. 30.]
  That is a problem which I echo. My hon. Friend the Minister said that he genuinely did not know what form the guidelines would take and that it was difficult to know what classification to put on them. I am delighted that that has now been resolved. We look forward to reading the guidelines as soon as possible and practicable.
  I hope that in considering firearms in the guidelines my hon. Friend the Minister will exercise the closest possible co-operation with Home Department chief constables. When firearms are taken outside military establishments, for example, accompanying a convoy or policing a base, it is not enough for the local chief constable to be told that that is happening. Home Department forces should be consulted in advance because sensitive community policing is involved. Moreover, since we have established by probing in Committee that Home Department police forces have primacy both inside and outside the wire, it is logical that the chief constables should know what they are to be responsible for. A situation, however remote, could arise when firearms are drawn. Parliament must legislate to cover the worst scenario. If something goes wrong and shots are fired by the Ministry of Defence police, the county chief constable will have primacy and must restore law and order. Therefore, it is a principle of good policing that he should be aware of the possibilities, however remote, before they arise.
  I lament the fact that the legislation is necessary, but I do not dwell on the past. I look to the future and to the fundamental importance of maximum consultation in establishing those crucial guidelines. That must be in the best interests of both the Ministry of Defence police and Home Department forces. It is also in the best interests of communities, such as mine in south Wiltshire, and, indeed, of policing the nation.
  5.45 pm
  Mr. John Cartwright: I welcome the Bill perhaps because of the long association of the Ministry of Defence with the Woolwich arsenal, but also because it provides much needed clarification of the powers and duties of the MDP and much needed recognition of the important work that the MDP does on all our behalfs in the difficult jobs which it undertakes.
  Three areas worry me, all of which we explored in depth in Committee. First, the powers of the MDP committee seemed to make it a somewhat toothless tiger. I have explored that in depth with the Minister and I accept his assurances that, although we may argue about the membership of the committee, it will have rather greater powers and be more effective than it appears to be on the face of the Bill. I am happy to accept that assurance.
  The second area of concern was reflected in all parts of the House and is the question of relationships with civilian
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  police forces. We all understand the need to achieve what I called "sensible co-operation" between the MDP and the Home Department police forces. In Committee the Minister went a long way to reassure us on that matter. As other hon. Members said, we shall examine the guidelines in depth when they are published. Nevertheless, this is an important step in the right direction. The commitment to consult on and publish the guidelines and to be as open as possible about those relationships is welcome and removes some of our anxiety about the original implications of the Bill.
  The third area of concern relates to the complaints machinery. There is no doubt that the MDP will be subject to the same complaints procedures as the civilian police forces. I wish that that general procedure were a little stronger, but the Bill is not the vehicle to deal with that matter. It is absolutely right that the MDP should be subject to the same arrangements as the civilian police and I welcome that.
  I do not intend to delay the House. I compliment the Minister on his careful handling of the Bill through all its stages. Its passage has been a model of good-tempered parliamentary scrutiny, and I am happy to support its Third Reading.
  5.48 pm
  Viscount Cranborne: Like hon. Members on both sides who have spoken, I welcome the principle of the Bill and, like my hon. Friend the Member for Salisbury (Mr. Key), I draw the attention of the House to the fact that we are creating a national police force for the first time. It is as well that hon. Members should consider what the implications are.
  That national police force may be hedged around in clause 2(2)(d) by the restriction that the M DP can operate only on land
  "in the vicinity of land mentioned in any of"
  the other paragraphs of that clause. As we found out in Committee, only one part of the United Kingdom is excluded from that definition and it happens to be the constituency of the hon. Member for Walsall, South (Mr. George), who distinguished our debates in Committee.
  The hon. Member for Walsall, South, perhaps with more ribaldry than is his wont, tried to dismiss my pointing out to him that the area also includes land in the vicinity of the United Kingdom. That was not an entirely frivolous remark because, of course, the existing Ministry of Defence establishments, together with the definition of the vicinity, means that we are giving jurisdiction to the Ministry of Defence police that covers virtually the whole of this country, especially when one considers how indented is our coast line.
  Therefore, it behoves us to consider what we are creating in the way of jurisdiction. That is something that we would do well to take more than merely on trust, however much we are wont to trust everything that my hon. Friend says. Therefore, I hope that he will not only publish the deliberations of the committee, which we understand is considering the issue of jurisdiction, but will find a way of embodying its conclusions—so long as we agree with them — in the proceedings of the House. Perhaps some form of order would be an appropriate way of dealing with it, as the hon. Member for Clackmannan (Mr. O'Neill) suggested.
  My remarks in Committee about the composition of the Ministry of Defence Police Committee were not wholly

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  frivolous. On 10 February, at column 24, my hon. Friend suggested that the membership of the committee which came from the Home Office represented an outside element. I know that my hon. Friend is not so parochial as to expect us to believe that Home Office membership of such a committee would effectively represent the concerns of the general public over and above the concerns of the Home Office, as against those of the Ministry of Defence.
  In view of the strong constitutional implications of the Bill, I urge my hon. Friend to consider that there would be a great deal of merit, if only to appease the worries of my hon. Friend the Member for Salisbury and myself, in the suggestion that some member of the great and good on that list, who is also a member of the public and not a civil servant, might be included as a member of that committee. 1 understand that there are still one or two people on the list who are not civil servants.
  Like other hon. Members, I congratulate my hon. Friend the Minister on the extraordinary persuasiveness that he has displayed. He certainly persuaded us not to seek to press these matters to a Division. I hope that during our debates in the coming months he will reassure us on the worries that we have expressed.
  5.52 pm
  Mr. Bruce George: I have suffered several grievous blows in these proceedings by being quoted approvingly by three Conservative Members. It would be most helpful if the Minister would denounce me, lest I return to my party in even greater difficulties.
  The proceedings in Committee were unique. I did not think that it was possible to find an area of defence where there would be no divisions, and the Minister must be complimented on finding at least a tiny area of consensus about defence security policy and for building upon it as fast and as far as possible. The proceedings in Committee were notable partly for their brevity—there were only two sittings—partly for establishing a sort of consensus, and partly because several myths were discussed and eliminated.
  We heard earlier that the Government were legislating in the dark, and that is partly true. However, we must distinguish between the darkness for which the Ministry of Defence is responsible, having turned off the lights, and the darkness which is our responsibility. If information is not there and if we do not seek to find it, that is our responsibility and we cannot completely blame the Ministry of Defence for that. However, the criticism that things have been unfolding in and since the Committee stage is absolutely valid.
  The Committee was notable for enlightening us all on defence matters and for taking us along the highways and byways of Salisbury on a veritable "Down Your Way" with Franklin Engelmann. I must say to the hon. Gentleman, who managed — I do not say this too harshly — to create almost a "Guinness Book of Records" in terms of mistakes per paragraph in Hansard, that most of the alleys turned out to be blind.
  A couple of new areas have been introduced that I did not catch in Committee, and one is the establishment of a national police force. The hon. Member for Salisbury (Mr. Key) talked about his unhappiness — I am not quite sure whether that is the correct word— that the Bill had to be introduced. I do not feel that, somehow, we are creating a gendamerie, a KGB, a unit of black or
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  brown shirts, or a national police force that would somehow be unleashed on an unsuspecting public. We have managed to avoid that during more than a century of policing in this country. For a start, there are only just under 5,000 Ministry of Defence police officers. If a national police force were created, it could hardly be of a magnitude such as to threaten civil liberties. It is far more important and inevitable that a police force that would be attached to the Ministry of Defence should be a part of national operations, because crime does not confine itself to neat geographical or policing boundaries. Despite the constraints upon the Ministry of Defence police, that force clearly must operate not only within the national framework but, in some cases, within an international framework. It is not right at this late stage to introduce a new concept and suggest that we are opening a Pandora's box and establishing a national police force. Some of the myths have been eliminated, but some have been recreated.
  In Committee we were informed about the "rubber-stamp" police committee. I understand that, since then, the composition of that committee has been announced. However, I am not entirely placated by the Minister telling us that two ex-chief constables have been added to it. I mean no disrespect to the Minister in saying that hon. Members of all parties said that it might be better to appoint from those outside the normal policing framework. I am disappointed that my volunteering to serve on such a committee was so swiftly dismissed. However, there must be a broader basis of experience on that committee. I hope that when the Minister provides us with the necessary information, we shall be reassured that the committee will not simply do the Minister's bidding, but will have a wider basis of representation.
  The Minister was silent about the suggestion of publishing an annual report to Parliament on the activities of the Ministry of Defence police. Until this Bill, its activities went largely unnoticed by this place, but it has now emerged as an interesting issue. Although we are obsessed by the Home Office police forces, we should also not be indifferent to the Ministry of Defence police. Therefore, the publication of an annual report to this House would give us the opportunity to scrutinise the activities of that important force, and a report by the chief constable to the Secretary of State would not be an adequate substitute.
  My hon. Friend the Member for Clackmannan (Mr. O'Neill) reiterated an issue that was raised in Committee about the Defence Police Federation. Unlike the Police Federation, that federation is very small, with a membership of less than 5,000. That gives it an inadequate financial base upon which to mount its activities. The Defence Police Federation is inadequately funded because of its lack of membership and it is unable to mount the range of activities that it should mount. Therefore, I hope it will be possible to establish a degree of parity with the Police Federation. I understand that there is some financial contribution to the Police Federation from the Home Office — or the provision of certain facilities. I would like to see that replicated within the Ministry of Defence relationship with the Defence Police Federation. I hope that something will emerge from our deliberations.
  An issue that was not raised in Committee, which is of critical importance, is the use of firearms. Clearly, the attractiveness of the Ministry of Defence police over contract security is the access that they have to firearms.

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  They do not carry firearms, but they have access to them. Surely that is a deterrent to any potential terrorist if he or she is considering raiding the royal ordnance factory at Enfield or anywhere where there are arms or small arms that could be used for illegal and terrorist activities.
  Hon. Members on both sides of the House are concerned that the police, the Ministry of Defence police and anyone else who has access to firearms are properly trained. I am not in any way criticising the Ministry of Defence police, its method of training or the amount of time spent in training, but I ask the Minister in all seriousness—he is being as helpful as possible—whether he will review the training given to the Ministry of Defence police. I should like to see the system of training sufficiently refined so as to give people with an interest in policing the proper reassurance that the degree of training given is adequate to meet the tasks. I hope that it is not just a question of examining that aspect. I understand that a working party involving the Home Office police forces has been examining that aspect. I would at some stage like to have reassurances that the Ministry of Defence police weapons training is adequate to meet the growing threat that it faces.
  I understand that something that I brought up on Second Reading is proceeding, I might add detrimentally. I now believe that the central London detachment of the Ministry of Defence police is to be moved from guarding the headquarters of MI5. I should have thought that this was not the right time to do that. The argument that £250,000 might be saved by moving the Ministry of Defence police and inserting a civilian grade, the Property Services Agency security guard, is questionable. I hope that the Minister will be prepared to give the House, or the Defence Select Committee representing the House, adequate opportunity to examine that decision because, obviously, everyone here is interested in national security. While efficiency and cost saving is to be elevated to the highest order, national security is much more important than the saving of £250,000. I hope that the Minister is prepared to argue his case in the House, or before a Select Committee, to justify the decision that his Department has taken.
  What the Select Committee on Defence, the Standing Committee and the House have done is to debate an important police force that we tend to forget about, and an important police force that, as a result of this legislation, has justification for saying that it is not a second-class police force. It is not some ramshackle security outfit that happens to be given the privilege of guarding sensitive property, but is a force whose history goes back many years. It has a history of 300 years of policing military establishments. The legislation gives that police force the statutory recognition that it deserves. I hope that the people who read and listen to these proceedings will recognise that here is a police force of competence, one that needs to be taken seriously and not just dealt with on sporadic occasions by the House.
  It is important that the activities of this police force are constantly brought to our attention. I do not mean that they should always be brought to our attention in a critical way. I hope that the Minister will give serious thought to presenting an annual report to Parliament. Even though these proceedings have been dealt with rather swiftly and there has been little fundamental disagreement—despite
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  what the hon. Member for Salisbury said—this modest Bill is one that needs to be passed. I am pleased to participate, in my own way, in the passage through the House of an important though small piece of legislation.
  6.4 pm
  Sir Eldon Griffiths: Some Standing Committees tend to polarise the divisions of the House while others create an atmosphere of brotherly love. I did not have the pleasure of serving on the Standing Committee, but it is clear that the charm and blandishments of my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement have brought about a quite unaccustomed unity of view on both sides of the House, and I congratulate him on that. In those circumstances, it may be indelicate on my part to intrude a few questions about the wisdom of what we are about to do.
  By instinct, I favour defence and I support the police, so I have no choice but to support the Bill. I also read with great interest the report of Sir Ewen Broadbent and I congratulate him and his committee on the thoroughness of their work. I also congratulate the Select Committee on its thoroughness. With that sort of authority, how dare one raise one's voice about some aspects of the Bill? As I am also in favour of my hon. Friend the Minister, it is with the greatest reluctance that I must point to certain defects in the Bill.
  It is common ground that the Ministry of Defence police need a statutory framework, and we are all for that. I think that we all agreed, too, that at a time of increasing attacks on British and American defence installations in this country and of increasing demonstrations and thefts of MOD property, there should be a stronger and clearer arrangement to provide the necessary support and protection for those agencies. However, having examined the Bill in detail with representatives of the Association of Chief Police Officers and with the Police Federation, I must say that I am unhappy about it, and so are they.
  My hon. Friend the Minister has succeeded in convincing the Committee that the powers that the Ministry of Defence police will exercise will not be increased, but I am advised that the Bill changes their powers substantially. Broadly speaking, their jurisdiction is extended in area in the sense that, henceforth, they will have responsibility and powers across the entire country. Their powers are also extended by function in that, for the first time, the MOD police may exercise the powers of a constable on any matter that has been the subject of a contract between the Secretary of State for Defence and any other person. A contract can mean virtually anything from the procurement of food for the American forces, right the way through to the complexities of modern weapons procurement. It is therefore a broad extension of powers by function.
  The status of the Ministry of Defence police is materially altered and strengthened. Henceforth, instead of being special constables its members will be full constables. I have no objection to that, but it is important that the House should recognise that nearly all legislation touching upon the criminal law starts out with the words "that constable may". The term "constable" has a special status in this country. Now that we are conferring that status on Ministry of Defence police it is incumbent on the House to ensure that the powers of the constable are balanced in every way by the same accountabilities that the

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  Home Department's police constables are required to observe. At present, the Bill confers the powers of the constable on the Ministry of Defence police, but it does not require the same degree of accountability as for the civilian police. I will try to illustrate that.
  Mr. George: If the powers to confer accountability on Ministry of Defence police already exist in other legislation, it would be superfluous to introduce them into this legislation.
  Sir Eldon Griffiths: This legislation clearly goes further because legislation to date gives the Ministry of Defence police only the powers of special constables, which are very different from those of the constable under the criminal law.
  One of the central differences that will continue to exist between the two types of constable is illustrated by clause 1 of the Bill, which states that the MOD police shall consist
  "of persons nominated by the Secretary of State".
  Moreover,
  "The Secretary of State shall appoint a chief constable" and
  "shall have power—

  (a) to suspend a member of the Ministry of Defence Police from duty; and

  (b) to terminate a person's membership."

  In other words, the Secretary of State hires and fires every member of the MOD police. That is entirely different from the Home Department police. No Minister of the Crown has ever sought to arrogate to himself the power to hire and fire police officers, and it is central to the separation of the powers of the police from the political management of our country that the Home Secretary, who is the only Minister who has anything directly to do with the police, does not have that power. The House should therefore recognise that the Bill will create not only a national police force but a one-man political police force under the control of the Secretary of State for Defence. That has never happened before. The House should be clear about what it is doing.
  My next point concerns jurisdiction. The MOD police will henceforth have power to go into virtually any area of Britain provided that they are carrying out the functions laid down in the Bill. I am advised that unless clear and mandatory guidelines are laid down — I emphasise the word "mandatory" — there could be unnecessary collisions between two groups of officers who in general work well together. I give just three examples. I hope that I can attract my hon. Friend the Minister's attention in offering them to him as they arise not from my imagination but from the advice of those who have perhaps rather more experience than he or I in practical policing.
  My first example concerns a surveillance operation conducted by the Metropolitan police, or indeed by any other police force, through the CID or the special branch in respect of the Prevention of Terrorism (Temporary Provisions) Act 1984. When such a surveillance is being conducted, the police must be sensitive to the situation in the local community. They may have to operate, as from time to time they do, under cover without there being much knowledge of their presence. That is implicit in the nature of counter-terrorist activity. In those circumstances, what will happen if members of the new MOD police move in—in pursuance of one of their operations in plain clothes, and armed because they are conducting the CID or detective side of their work — without
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  advance notice being given to the police conducting the counter-terrorist operation? Without elaborating too much, the possibilities of collision or worse are grave.
  I hope that we shall overcome that problem by establishing beyond peradventure, wherever the MOD police are to operate outside their installations and within the area of another police force, not merely that it ought to be their duty but that it shall be their obligation to inform the chief officer of police of the county force in question of what they are doing and why. If they fail to do that, they may run the risk of arrest and of a collision between the two forces.
  Mr. Key: Does that not also reinforce my earlier point that in those circumstances, having established that the Home Department force has primacy, the chief constable of the county constabulary would be responsible for clearing up the ensuing mess although he did not know that it was likely to happen?
  Sir Eldon Griffiths: He would indeed. That is another example of the Bill's asymmetry.
  Secondly, the House and the country now expect the police to deal with the problem of drugs. It is the common experience of police officers in big city areas that if they seek to enforce the criminal law in respect of drug trafficking by stopping, searching and even arresting two or three young people, perhaps in an ethnic minority area, before they know it, they are confronted with a threat to the Queen's peace — in other words, a race riot. The delicate area between the enforcement of the criminal law and the maintenance of the Queen's peace requires the greatest sensitivity, which, I concede, the police do not always achieve with the greatest efficiency. But if, in that situation, without the knowledge of the officer in charge of, say, the Metropolitan police operation, members of the MOD police then come lumbering in — [Interruption.] Tiptoeing in, shall we say — I do not need to use pejorative language. If the MOD police insert themselves into the area, pursuing their obligations to look into some contract with a defence producer or in respect of some particular member of the Armed Forces whom they are seeking—an extremely sensitive situation—and if they do so without giving advance notice of what they are doing, who is doing it, and why, the situation will be replete with difficulties.
  My third example has been mentioned on several occasions and relates to convoys. Of course, I am in favour of ensuring that convoys of sensitive materials through Britain are properly protected. I want to see the MOD police active in that difficult duty. But it must be completely understood that where a convoy goes into a civil police area there must be proper advance warning of what it is doing and where it is going. It was put to me by a senior member of the Association of Chief Police Officers only this morning that if the police have determined that a demonstration is likely to take place, for example, near a defence establishment in my own or any other constituency and they decide for a variety of reasons that it is important to route traffic away from a particular area, it is critical that the MOD police should advise the chief police officer and, through him, his traffic department of what they are about to do.
  In mentioning those possible difficulties to the House, I understand full well that my hon. Friend the Minister will! say that the primacy of the civil police is not in doubt and

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  that it is certainly the intention that the chief constable of the MOD police should do his duty and inform the local chief constable in advance. I am sure that in most circumstances that would happen as between practical men, but nothing in the Bill requires it. There is only, with respect, my hon. Friend's assurance and the circular that he has yet to produce. That circular should be mandatory in respect of the chief constable of the MOD police. I appreciate that it can only be advisory in respect of the other chief constables, but in respect of a man who is hired by and can be fired by the Secretary of State, that instruction should be mandatory and binding upon him.
  Mr. O'Neill: As the hon. Gentleman has just been in consultation with the Association of Chief Police Officers, can he enlighten us as to what progress has been made in the establishment of the guidelines and whether the association is satisfied with the present position, given the length of the discussions?
  Sir Eldon Griffiths: It is much more for my hon. Friend the Minister to satisfy the House on that than me. The ACPO committee put forward its views on the initial draft offered by MOD and there was a wide divergence of views. As I am advised, MOD has returned with a further draft and ACPO is not satisfied with it. It may be that in the course of the consultations, and I have been involved in this kind of thing over many years, a sensible conclusion will be reached. I certainly hope so. But the important point remains. The ordinary chief officer of police is, in a sense, his own man under the law. His police authority can give him general instructions, but he is his own man with regard to operations. The chief constable of the Ministry of Defence is a different creature. He is a servant, an employee, a man to whom the Secretary of State can say, "Do this or be sacked". The circular should be advisory in relation to the chief police officers who do not come under the jurisdiction of the Secretary of State, but in relation to the Secretary of State's own man the circular should instruct that chief constable to inform the chief officers of police into whose jurisdiction his force may go. There can be no compromise — no question of asking the MOD police politely to advise the police force into whose jurisdiction they may go. They must advise the chief police officers, and it is for the Secretary of State to ensure that they do so.
  Mr. Geoffrey Dickens: I am grateful to my hon. Friend for giving way. He may recall that a few months ago I spoke about some misdemeanours occurring on a London housing estate. The charges were denied by the local police, but months later when people were sent down at the Old Bailey it was discovered that the estate and certain people living on it had been under surveillance by Scotland Yard. That illustrates a lack of information as it is clear that the local police did not know about the Scotland Yard operations. How does my hon. Friend expect cross-communication between the military and the police to work if it does not always work within the police force?
  Sir Eldon Griffiths: My hon. Friend is correct. From time to time there is a lack of co-ordination between individual forces or branches of the same force. I am not proud of that. I deplore it. But the House should not
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  institutionalise the likelihood of its happening. I therefore make a plea to the Minister, who has still to determine the guidance to be given, to ensure that it is binding upon the MOD police, before going into a chief constable's area, to tell that chief constable what they are about, what they are seeking to do, and why.
  I should like to examine further the difference in status between the two types of constable. The constables that for some 17 years I have had the privilege to represent are unique citizens under the law. A police constable is given, through legislation, certain powers that are not available to other citizens. In return, special duties and accountability procedures are laid upon him. The constable is accountable, first, under his oath of office; secondly, to his discipline code; thirdly, to the law of the land; fourthly, in general terms, to his chief officer and the police authority; and, finally, to the independent Police Complaints Authority.
  The Minister should make it clear that every constable in the MOD police is as accountable in those specific ways as any other constable in the country. That accountability is not clear in the Bill. Nor is it clear from the various byelaws that the Bill pulls together. I hope that my right hon. Friend the Minister can find a way of attaching some code or schedule to the Bill to make that accountability clear beyond peradventure.
  My final point is a political one. Throughout my life in the House, in my connection with the police services and on behalf of my party, I have always held one thing dear — that we must at all costs separate the police from politics. No Minister controls a civil police force in Britain, as my right hon. Friend the Home Secretary would be the first to agree. The police authority in Manchester, Merseyside or the west midlands is not the operational controller of the police in that area. Similarly, the Home Secretary is not the controller of the Metropolitan police, nor should he be. But with this Bill we are creating for the first time, by statute, a police force which is the creature of the Secretary of State for Defence. He gives the orders. He can hire or fire members of that force. It is he who defines where that force will go. Ultimately, the Secretary of State is responsible to the House. That is the only safeguard on Ministry of Defence police actions. But what has happened to the separation between the police and the politician? The Bill destroys it. That question should have been examined by the Opposition in Committee. It is the job of the loyal Opposition to try such issues before a Committee of Parliament.
  I wish to end my speech with a quote from the chairman of the legislation sub-committee of the Police Federation. Inspector Mannion and his experienced colleagues have examined every major piece of legislation that has come through the House in the past 10 years. They have examined every clause and every amendment to test legislation against the background of practical experience. Inspector Mannion writes of this Bill:
  "Amongst a host of sloppily drafted, abstract, inconsistent and vague legislation this Bill ranks supreme. It says very little. It leaves much up in the air and if I were a member of the Defence Police Federation I would regard it with the utmost dismay."
  That is the considered judgment of the chairman of the legislation sub-committee of the statutory Police Federation of England and Wales. My hon. Friend should take that judgment seriously. I have sent my hon. Friend a copy of the letter from the Police Federation, which has

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  objected to a number of points in the Bill. I hope that there is still time for some discussion before the circular is agreed and sent out to police forces.
  I hope that this Bill is passed. Overall it is a sensible Bill, as it is high time that the Ministry of Defence police were placed under proper statutory jurisdiction and that they performed their job of protecting our defence establishments more effectively. But while I respect my hon. Friend the Minister's intentions, the Bill is defective. It has moved in other directions than the House has previously recognised. The circular, when it emanates, must tidy up those problems. Otherwise, there will be nothing but trouble ahead.
  6.27 pm
  Mr. O'Neill: I did not intend to intervene at this stage, but I must tell the hon. Member for Bury St. Edmunds (Sir E. Griffiths) that a number of the points that he raised were ventilated in Committee.
  The hon. Gentleman takes his money from the Police Federation and he is entitled to do so. However, he did not participate in the Committee proceedings, nor did he seek to participate. He made one or two superficial interventions on Second Reading—
  Sir Eldon Griffiths rose—
  Mr. O'Neill: As far as the Labour party is concerned — other parties can speak for themselves — any representations that were made either from the Association of Chief Police Officers or, for that matter, the Ministry of Defence police force were subjected to discussion. The fact that we did not put such matters to the vote is, frankly, of no consequence because—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. I was misled by the hon. Gentleman. I believed that he wished to make an intervention. However, if he wishes to make another speech he must have the leave of the House. Does the hon. Gentleman have the leave of the House to speak again?
  Hon. Members: Yes.
  Mr. O'Neill: I am sorry, Mr. Deputy Speaker. It had not originally been my intention to speak again. However, I waited until the hon. Member for Bury St. Edmunds had finished his speech.
  It is only fair to reply to the hon. Gentleman's speech because his remarks were tantamount to a slight on all hon. Members and the manner in which we discussed the Bill in Committee. It was open to the hon. Gentleman to put any complaints or grievances to the Committee about how it had dealt with the Bill. The hon. Gentleman could have approached the Committee when it sat for two days. Indeed, there were certain critics on the Conservative side of the Committee who attracted media attention and who were capable of putting forward the amendments that the hon. Gentleman sought to discuss. Frankly, I believe that it is a disgrace for an experienced Member to make on Third Reading, a Second Reading speech—I imagine to save face with his paymasters. That is unacceptable.
  Important points were made constructively in Committee by a number of Conservative Members. We should have taken on board some of the points which the hon. Gentleman made had they been brought to our attention by him or by the individuals and organisations with which he associates. We are not prepared to take that kind of criticism because it is totally unfounded. We raised
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  points on many matters and the fact that we did not detain the Committee unnecessarily with Divisions which would not achieve anything reflects hon. Members' good sense and is to their credit. Too often we are accused, correctly, of using adversarial tactics in Committee. We had no intention of doing so on that occasion.
  6.30 pm
  Mr. Archie Hamilton: I seek the leave of the House to speak again.
  Mr. Deputy Speaker: Order. In the particular circumstances the hon. Member does not need the leave of the House.
  Mr. Hamilton: That is reassuring, Mr. Deputy Speaker.
  This has been a constructive debate with good contributions by hon. Members on both sides of the House. It has been a good, non-partisan Bill.
  The hon. Member for Clackmannan (Mr. O'Neill) was not happy with the complaints procedure, but I think that he recognised that the complaints procedure provided for in the Bill follows that of the Home Department police forces. If we wanted to change this complaints procedure, it would be sensible to change the Home Department's complaints procedure. I should be surprised if, in practice, Ministry of Defence police did not follow suit in any changes made in the Home Department police forces.
  My hon. Friend the Member for Salisbury (Mr. Key) said that the Ministry of Defence police were a national force under the operational control of a Minister of the Crown. The Secretary of State is directly accountable to Parliament for the actions of the Ministry of Defence police who, in common with other police, are accountable to the courts and to the independent Police Complaints Authority. Direction and control of the force are exercised by the chief constable, who is under oath to administer the law in the same way as other members of police or any other police force. That is an important point. There has been much talk about us having a political police force. That is not true.
  Sir Eldon Griffiths: I am sorry to interrupt my hon. Friend, but I must point out that no other Minister can sack a chief constable in the fashion that the Secretary of State for Defence can in this case. The chief constable of the Ministry of Defence police is the creature of the Secretary of State for Defence, and no other chief constable is put in that position.
  Mr. Hamilton: I take my hon. Friend's point about hiring and firing, but I should like to come to that problem when I deal with his speech.
  The hon. Member for Woolwich (Mr. Cartwright) raised three points which I think were covered reasonably well in Committee. I thank him for his general welcome for the Bill.
  My hon. Friend the Member for Dorset, South (Viscount Cranborne) mentioned, once again, his concern that the definition of "Crown property" covers the foreshore. I am sorry that he thought that I was deriding him in Committee. I am afaid that I still cannot conceive of a large number of circumstances in which the Ministry of Defence police will want to operate on the foreshore, even though they may be free to do so. I think that my hon. Friend was slightly misled.
  The hon. Member for Walsall, South (Mr. George) does not mislead us often, but he gave the slight impression

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  that his was the only area that was not covered under the 15-mile limit. I have a map with some black areas on it which I should be happy to show to the House. It shows that extensive areas of, for instance, Scotland are not covered under the 15-mile limit. [Interruption.] I shall certainly ensure that a copy is placed in the Library. I might even send one to my hon. Friend so that he can see that there are incomplete areas which are not covered under the 15-mile limit. This causes embarrassment if there are convoys going to nuclear areas in Scotland. That is one of our difficulties.
  The hon. Member for Walsall, South made a strong point about the national police force. At the end of the day, we are talking about crime, which happens all over the country and knows no boundaries. It is important that the police should have the capacity to deal with crime wherever it happens on Ministry of Defence property.
  The hon. Gentleman was concerned about publication of reports. There is, of course, the chief constable's report. I have a copy of the report for the year ending 30 September 1985 which, as the hon. Gentleman can see, is restricted. It is quite a document. We have agreed that future reports may be placed in the Library. Last year's report ran to 19 pages and eight additional annexes. It is not altogether fair to dismiss that as inadequate. My right hon. Friend the Secretary of State would have to draw extensively on the report if he was to write another report for the House. We might agree therefore that, if the report is placed in the Library, we can discuss whether we should go further and whether the Police Committee should produce its own report.
  The hon. Member for Walsall, South raised the problem of firearms and training and expressed concern about whether people were being properly trained. I repeat what I have said because it is extremely important. The use of firearms is always a serious matter because of the possibility of injury or even death arising from their use. That, of course, includes innocent people not in any way involved in the offence to which the firearms are related. Firearms are therefore issued only to Ministry of Defence police officers who are fully qualified to use the types of weapon to be carried and only when the order for their issue has been given by the chief constable after the authorisation by the Secretary of State.
  Training in the use of firearms is undertaken regularly and the senior police officer at each establishment is responsible for ensuring that all ranks are fully conversant with the MDP's safety precautions and general instructions on the use and carrying of firearms. I shall consider this training aspect because the hon. Member for Walsall, South is clearly concerned about it. We should not dismiss it lightly because it is sensitive. We must have total confidence in police training. I shall write to the hon. Gentleman to tell him of my findings.
  My hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) is worried about the role of the Secretary of State towards the Ministry of Defence police and the degree to which he is able to hire and fire. My right hon. Friend the Secretary of State is responsible for hiring and firing a large number of people. I suppose that he is responsible for most of the civilian work force in the Ministry of Defence which, according to the last figures I
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  saw, numbered 160,000 people. I do not envisage my right hon. Friend spending a lot of time worrying himself too much about who is hired and who is not.
  I agree that there is concern about the firing of people within the Ministry of Defence police, but I do not think that my right hon. Friend has quite the freedom of action suggested by my hon. Friend in terms of firing a member of the Ministry of Defence police with whom he does not agree. There would be a fantastic furore if my right hon. Friend were to take what could be seen as very arbitrary action in firing a member of the Ministry of Defence police. I should have thought that, in those circumstances, there would be a serious row if it were not seen to be a reasonable action of getting rid of someone who was not doing his job properly.
  My hon. Friend the Member for Bury St. Edmunds raised a number of questions and gave a number of hypothetical examples of what might go wrong in terms of the inter-relationship between Home Department police forces and the Ministry of Defence police. He mentioned surveillance operations under the Prevention of Terrorism (Temporary Provisions) Act 1984 with Home Department police forces acting under cover. He saw armed plain clothes Ministry of Defence key people moving in without giving any notice and without saying that they were there. That conflicts with practice in almost every way. In practice, when it comes to armed people moving about, the MDP makes certain that the local Home Department police forces are informed about what is happening. The CID of the Ministry of Defence police spends most of its time investigating fraud. To deal with fraud that body wants the greatest freedom of action. It always communicates with the local police forces to say what it is doing and what lines of inquiry are being pursued.
  It is in those respects that the police are likely to range widest across the country when tracking down contracts which have gone wrong and cases in which people have cheated the Ministry of Defence. That is not a likely hypothesis, nor indeed is the hypothesis on the drugs investigation and the sensitive policing that is going on. I cannot imagine the Ministry of Defence police going into an area such as that. As I have said, most of the matters in which they are involved concern fraud. They would be unlikely to end up in some difficult part of Brixton, for example.
  Sir Eldon Griffiths: I am quite sure that the Minister means what he says, but how does he know? How can he say that he does not think that it is likely that the Ministry of Defence police would go into a particular area? He is not prepared to give them an instruction that they should not go into such an area without telling the civilian police beforehand. That is the issue.
  Mr. Hamilton: It is better, rather than to deal with hypotheses, to see what has happened under the existing practice. Under the existing practice there is close cooperation between the Home Department police forces and the Ministry of Defence police. Indeed, at a low level, they work extremely well together. On the whole, when crimes are investigated, the Home Department police forces are likely to contact the Ministry of Defence police and say, "Will you deal with this one for us?"
  The practice now is for Ministry of Defence police always to notify the Home Department police forces and tell them where their convoys will go and the routes that

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  they will follow. They will not find themselves going into a demonstration or anything of that sort, because the local Home Department police forces will already have been informed of the route that they intended to take. Obviously, if there were demonstrations and such matters going on, and the chief constable were concerned that they might get mixed up in them, he would come back to them on that matter.
  I apologise to the hon. Member for Walsall, South. I have been trying to dream up some basis on which I could denounce him. I have his political interests at heart. He has made my job extremely difficult. I echo his words to the House. The Ministry of Defence police are not a second-class police force. They are doing a useful and valuable job in protecting Ministry of Defence property. They are available also to back up the Home Department police forces, and regularly do so, when their resources run low. They are playing a magnificent role in maintaining law and order.
  Question put and agreed to.
  Bill read the Third time, and passed, with amendments.

  Food Aid
  6.42 pm
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer): I beg to move,
  That this House takes note of the un-numbered explanatory memorandum dated 21st January 1987, submitted by the Ministry of Agriculture, Fisheries and Food, describing draft Regulations: amending Regulation 1785/81 on the common organisation of the market in sugar; relating to a decision on placing sugar held by the Italian intervention agency at the disposal of charitable organisations for consumption within the Community; on the free transfer to charitable organisations of products processed from cereals held in intervention; and amending Regulation 804/68 on the common organisation of the market in milk and in milk products and Regulation 1842/83 establishing general rules for the granting of milk and certain milk products to students in educational establishments; and endorses the Government's decision to work speedily through charitable organisations to achieve free distribution of beef, milk and certain milk products to the most needy in the United Kingdom.
  Mr. Deputy Speaker (Mr. Harold Walker): Mr. Speaker has selected the amendment in the name of the Leader of the Opposition and others.
  Mr. Gummer: These arrangements arose from the decision of the Council of Ministers in the European Community to react to the extremely hard weather earlier in the year by ensuring that; the supplies of food that we had in surplus were available to those in the Community who were most needy and had therefore been affected more than others by the weather. The decision was taken after a quick discussion over a couple of days so that the distribution of food might be started before the weather warmed up. I put it as simply as that because, with some of the suggestions that I have heard about what we might have done and how we might have arranged it, it would have been flaming June before anybody got any butter or beef. Therefore, it seemed to me that it was important for us to act as rapidly as possible.
  I make no apology for the timetable that was forced upon us by the nature of what we sought to do. Nor do I apologise for the fact that, from the beginning, the United Kingdom was concerned lest the speed with which we acted and the haste with which the Commission presented its proposals meant that the scheme was unworkable. We pressed a number of changes upon the Commission, all of which were accepted, and have ensured that we at least had a scheme that could properly be implemented. For that reason, on the very day on which the decision was made, we sought a meeting with charities in this country to get the scheme under way.
  The idea that the scheme would make a major contribution or, indeed, even a partial contribution to getting rid of the surpluses in the CAP was not entertained by the United Kingdom Government. After all, butter stocks amount to one and a half times the annual world trade. They are equivalent to 10 months' supply for every man, woman and child in the Community. Unless one envisages the delivery of a quantity of butter on every family doorstep so enormous as to reach well into flaming June, it would be unlikely to make any real impact on our stores. We were concerned to use the opportunity that was afforded to us in a sensible and realistic way. We were much happier to do so, given that the proposals that came after the decisions in the December Council which, as we

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  know from yesterday's decisions, are soon to be implemented, enabled us to see that there was a change of heart in the CAP, and the tap was turned off. In other words, we shall not produce the kind of stocks that we had in the past. The 9·5 per cent, cut in milk quotas and the further cut in the year after the coming marketing year mean that we have a realistic approach and that our present stocks, once they are removed from cold store, will not be replaced.
  In that context, it seemed sensible that even the small contribution that could be made by providing butter and beef and the other surplus products for the most needy was worthwhile, particularly as we were looking for additionality. The idea was that we would seek so to distribute it that it would provide extra food for those who had been most affected by the weather. To do that, we used charitable organisations. That was part of the Commission's intention. It was not a choice by us, although I shall not disguise from the House that it is a system through which I am pleased to have worked. There was no flexibility on this point. There was no way in which we could directly use local authorities, for example, because the legislation was directly applicable in the United Kingdom.
  Mr. George Foulkes: Will the Minister give way?
  Mr. Gummer: When I finish dealing with this passage of my speech, I shall be happy to give way.
  The point that I wish to make clear is that what we sought—and we achieved this—was to ensure that we should decide which charities we should invite to help us. Originally, the plan was to have only two charities throughout the European Community, the Red Cross and Caritas. Admirable though both organisations are, they are obviously not the two organisations which, alone, would be satisfactory in this country, and, in the event, we have seen that this is so.
  Mr. Foulkes: The Minister seems to imply that these rules, to which we must adhere, are laid down by some external body. Will he confirm that that is not the position? The Commission puts up a proposal to the Council of Ministers, of which he is a member, and he and his colleagues in the Council of Ministers are responsible for the ultimate decisions. Therefore, he, together with his colleagues on the Council of Ministers, must take the responsibility for whatever scheme was agreed. They— not the Commission—are the ultimate authority in the Community.
  Mr. Gummer: I am happy to accept what the hon. Gentleman said. All that I said was that the decision was not for the British Government alone. That seems to be a perfectly unexceptionable comment. The truth is that, on the recommendation of the Commission, the Council of Ministers agreed that the scheme would be operated through the charities. I said that I agreed willingly. I am not opposed to it—in fact, I am pleased about it. But once we agreed, there was no question of our being able unilaterally to make a different decision. I merely made that point in case people considered that we could have chosen to do both. We felt that it was not necessary to do both, because most of our charities work extremely well
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  with most of the local authorities and they have been able to work side by side with them. However, the charities have been the engine of the operation. That is valuable. The voluntary movement in this country is particularly good at this kind of operation, and it has shown itself to be good in this case.
  Hon. Members are familiar with the list of charitable organisations concerned. I do not wish to be invidious by choosing one, or another, or a number, for special mention as having been particularly helpful. Nevertheless, I stress how very generous they have been in terms of the time and effort that have been put into this operation and how enthusiastically the voluntary movement has sought to carry out difficult operations. The charities had to move very quickly. The decision was made at 2 am, our time, in Brussels. I arrived back at 3 am. By 5 pm the charities were sitting round the table in the Ministry discussing how best to carry out the operation. At no time since then have any of the charities, save perhaps one, suggested that they could not cope with this operation.
  Mr. Robert Atkins: I apologise to my right hon. Friend for not being here at the beginning of his speech, but may I endorse what he has said about the British Red Cross, for example. I went to see the ladies who were doling out the butter on Saturday morning in my constituency. They were doing a remarkable job. Many of the people there were delighted to take advantage of the butter that was being provided for them. All that upset them was the thoughtless and rather silly attack of local Labour party members who suggested that old people were being demeaned by being provided with this butter. The British Red Cross are doing a remarkable job and will receive the grateful thanks of the local community.
  Mr. Gummer: I am grateful to my hon. Friend for what he has said. That is certainly my experience, too. In Wolverhampton, for example, I found that the Women's Royal Voluntary Service was doing a remarkable job in distributing these products through the meals on wheels service. I have also seen the Salvation Army operation. In parenthesis, may I say that those who have not seen the Salvation Army operation at full stretch have missed a remarkable sight.
  I accept that because this came very quickly upon them it caused difficulties for some of the voluntary organisations. Some of them said, "We shall make our arrangements tonight and start tomorrow." Others said, "We are not directional organisations; we do not run from the centre outwards, as the Salvation Army does. We consist of federations; therefore, it will take us a little longer to get off the ground." We accept that. Some voluntary organisations found it easier to deal with some products rather than others. Again we accepted that. We sought to have, not a formal system, but one that they could work out together. We hoped that the smaller organisations — the territorially more limited organisations—would be able to work through the main group.
  To the main group we added a number of others. It was felt that the original selection did not wholly cover all the needy. Therefore we sought the advice of the Scottish Office and the Northern Ireland Office to make sure that they, as well as the Welsh Office, were covered and that every part of the United Kingdom had the best mix that we could possibly put forward. Again I thank all those groups, both the ones that we have dealt with directly and the rest, for the work that they have done.
  Mr. Tom Cox: I accept what the Minister has said about the role of the voluntary organisations, but is he aware that in the London area there appears, sadly, to be a lot of confusion in the minds of elderly people as to where to go to collect the surplus butter? Could he tell the House what kind of publicity has been made available because, frankly, many people have not benefited at all? If this is the start of other surpluses being made available, although the charitable organisations may continue to distribute them, it would be a good idea if the Minister could consider an advertising campaign so that people would know where to go to collect the surpluses.
  Mr. Gummer: When I describe to him what has generally happened I think that the hon. Gentleman will discover that in fact we have reached a very high proportion of those who come into the general categories that we have sought to reach. The hon. Gentleman is quite right; there are difficulties. We could have had a bureaucratic scheme whereby we defined precisely who might have the surplus products. It would have taken us some time, of course. However, we could have given them a voucher and made sure that people knew exactly where to go for the products. But that was not our intention. We decided to use the voluntary system to reach as many needy people as quickly as possible. In general, that objective has been achieved. I agree with the hon. Gentleman that there will be some who have not been reached, but if I describe to him how we have done it I think that he will find that he is happier than he was to begin with.
  I ought to explain some of the logistical details. Butter is stored in intervention in bulk, and it takes three or four days for the butter to warm up sufficiently to be able to chop it up into suitable packs. That is paid for by the Commission at a flat rate per tonne for repackaging and transport. Beef is made available in boxes of 25 kg. It consists of cuts of boneless beef. Therefore, although butchering is necessary, it is not of a very sophisticated type. We sought to ensure that we got out as much as we could as quickly as we could.
  We started with butter, because that was the easiest product for most of the charities to deal with. Then we took the beef and sought first to get the large orders out — in other words, in I tonne pallets — to those organisations that could deal with them. Having got that beef under way, we were able to provide charities with beef in 25 kg boxes so that a much wider range of people was able to receive it. Normally about 10 boxes were taken rather than 40, which is the size of a pallet.
  Some organisations and charities found that they did not have the resources to do the butchering. I pay tribute to the initiative of the meat trade. It has provided its expertise free, or at nominal cost, to the charities. As for transport, the Commission is making a flat rate payment for transport to distribution points.
  We have discussed eligibility with the charities and have sought to lay down guidelines as to those who might be categorised as particularly needy and particularly affected by the cold weather, but we wanted the charities to feel that they could make sensible judgments about the people with whom they were in general contact. The advantage is that these people are dealing from day to day with the needy. That is why we chose the charities.
  We laid down guidelines to the effect that those normally in receipt of supplementary benefit or family
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  income supplement, the homeless, those living in hostel accommodation, or attending feeding centres, or receiving meals on wheels, or those who are disadvantaged in other ways, should receive these products, but we wanted the charities to use their common sense. For example, if the majority of people who use a luncheon club come from needy backgrounds, it would obviously be invidious to provide butter for some but to say, for example, to Mrs. Jones, "No, you can't have it, because you are not on supplementary benefit." I did not want this scheme to be based on people producing their supplementary benefit books or their family income supplement entitlement. It seemed to me to be better to leave it to those who know the circumstances and who can act sensibly within the guidelines.
  We have not broadened the scheme to cover all pensioners. That was not the arrangement under the agreement. The arrangement was that these products should go to the needy. Although some pensioners are needy, others are not. Therefore, it seemed to be more sensible to do it that way. We have also sought to ensure that the product received is additional rather than a substitute. It would be very expensive to give butter to those who normally buy it. They would then put it into their own freezers and would not buy other butter, which would mean that we ended up with as much butter in store as we started with, and also with the great cost of distribution. That would not have been sensible. It would have repeated the failures of past arrangements, of which hon. Members on both sides; of the House have been very critical.
  Having set up the arrangements for beef and butter, we turned our attention to milk, cheese and certain other milk products. Having talked to the charitable organisations, we decided that milk and cheese were the two that we particularly wanted to distribute. They felt—and we felt, too—that yoghurt was probably not one of the products that we wanted to use in this way. On 6 February that part of the scheme began to operate.
  The Community legislation that is in front of us today is different in this case, because instead of the products coming out of intervention store — because we do not intervene in the case of these products—they are bought on the market and the charities are reimbursed. The charities are able to purchase whole and semi-skimmed milk, buttermilk, cheese and concentrated butter and these products are distributed in many parts of the country.
  Mr. Tony Banks: I apologise for missing the start of the Minister of State's speech. However, what about the booze? What about the wine lake? Will pensioners get to grips with that?
  Mr. Gummer: I am not sure that the House would have been very enthusiastic if I had proposed that we should spend a large sum of money importing wine to distribute free to pensioners. Many hon. Members, including my hon. Friend the Member for Southend, East (Mr. Taylor), would have had some comments to make about the distribution of free alcohol. I have noticed that the two categories in the population who have remarked about this distribution of alcohol are Members of Parliament and journalists, both of whom fell, that we should do it. I have decided not to accept the blandishments of those who wished us to distribute free olive oil or free wine. Neither of those products came into the categories that we wanted to distribute.

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  I have also decided, in concert with the charities, that both flour and sugar, for different reasons, should not be distributed.
  Mr. Foulkes: Why not?
  Mr. Gummer: I was about to explain why and the hon. Gentleman does not need to intervene from a sedentary position.
  We have no milling flour in this country in intervention. We would have had to bring it in, although at least it would have been paid for by the Commission. It would have come from Germany, been milled and made into loaves. It would not be easy to provide what I call additionality in the business of bread. That is not a sensible way to use money to which, in the end, we contribute.
  Similarly bringing in and distributing quantities of sugar from Italy at great expense would not have been a sensible way of implementing the proposals.
  Mr. Foulkes: I would have thought that the Minister could have made do with a couple of loaves and a few fishes.
  Mr. Gummer: The hon. Gentleman may make jokes about this, but I believe that we are distributing in a sensible way.
  To date, the figures for authorised releases from intervention stores of butter are 22·6 million packs and for beef 4·16 million meals.
  Mr. Brynmor John: I want to make an important point because there are different base lines for the calculations. Did the Minister say authorised for release, but not released?
  Mr. Gummer: No, I used the expression "authorised releases" because I did not want to mislead the House. I am absolutely sure how much has been authorised for release. That means that which has already gone out or is going out in some form. In other words, it may have just left the intervention store or it may already have been consumed. Any other figure is arbitrary. For example, on Wednesday five tonnes of butter will arrive in Tunbridge Wells and I know that because an hon. Member asked me about it. There should not be a moving base line, so I have always used the same base line and the House can see how it builds up. I believe that that is the best base line and I will continue to use it.
  A very large number of the most needy in the United Kingdom have already received a substantial addition to their weekly diet and others will receive that addition before the scheme ends. A comparison between our efforts and that of our neighbours will show that we have been very much more successful on the whole. I say "on the whole" because, for example, the French have operated a system for many years which might inevitably be called "beef kitchens". The French provide, as a matter of course, all over the country, the equivalent of soup kitchens, into which they put cheap beef. The French have used that system for distributing free beef. However, the French have been much less successful in the distribution of butter. The Germans appear to have distributed much the same amount of butter as we have, although it is difficult to know the exact up-to-date figures. However, they have distributed a good deal less beef. I must stress
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  that that is the latest position, but we do not have up-to-date figures such as I have been able to give about our distribution.
  However, in the rest of the European Community, no other country appears to be distributing in the same way as we have distributed. There has been no report of implementation in Greece. The latest figures from the Netherlands show a very much more limited distribution. The Irish, the Luxembourgers and the Spanish all have a much more limited distribution. The Italians are not reported to have made any distributions. There have been no distributions in Portugal. There has been a certain amount of distribution in Belgium and Denmark. However, none of those countries has operated in the same way as we have.
  It was the Council's decision that the distribution should be made. We all had reservations about the method and the sense of making the distributions. However, having decided to distribute, it seemed to be correct that the United Kingdom should take action and do what we could as well as we could. Our action has meant that throughout the country there has been an addition to the diet of those most in need and that has been distributed by those most able to distribute it. The voluntary societies for which Britain has an international reputation and of which we are proud are distributing those goods.
  It was therefore, with some amazement that I read today's Order Paper. I discovered that the Labour party, concerned as it always is for the most needy, does not in its amendment mention any congratulations. There is not a word of thanks for the 22·5 million packs of butter for the most needy. There is not a scintilla of thanks for the Red Cross or the Salvation Army. The Opposition have not thanked Help the Aged or Age Concern. They do not mention the Church of Scotland or the Church Army, nor do they reach out to the Society of St. Vincent de Paul or to Bryson House. The Opposition have not mentioned any of those organisations. Indeed, I doubt whether they have heard of them. All that the Opposition wanted to do was to make a cheap party political point.
  Mr. Foulkes: I have two points to make about the Minister's impudent diatribe. First, will he confirm that the Church of Scotland was not included in the original list until some of us raised that matter? Secondly, does he not remember that I used to work at Age Concern and I know a little more about it than he?
  Mr. Gummer: The fact that the hon. Gentleman used to work for Age Concern does not change the fact that he did not mention in the amendment the good work carried out by Age Concern. He appears to have forgotten more about Age Concern than he should have. The hon. Gentleman is not correct about the Church of Scotland.
  Mr. Foulkes: Yes, I am.
  Mr. Gummer: The hon. Gentleman must really wait for my answer. I shall tell him exactly what happened about the Church of Scotland. We had the meeting at 5 o'clock in the afternoon and the arrangement was made through the Church Army at the behest of the British Council of Churches, as I understand it, which covers the Church of Scotland, that initially the Church Army would make arrangements with the Church of Scotland and tell the Church of Scotland that it could choose how it wished to be associated with the scheme, either directly or indirectly,

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  through the Church Army. The Church of Scotland chose to be associated directly. We made the arrangements as it wanted. It had nothing whatsoever to do with the impudent comment made by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) who did not contribute to the matter. The hon. Gentleman's only contribution is his whingeing and miserable attitude.
  Mr. Robert Maclennan: I know about the Minister's connections with the Church of England. Does he not recognise that the Church of Scotland is the established church of Scotland and a direct approach to it would have been appropriate?
  Mr. Gummer: The hon. Gentleman must accept that in the United Kingdom we have a very close working relationship between all the major denominations, both established and non-established. I do not think that the establishment has anything to do with the matter. What we sought to do was deal through all the organisations that were most appropriate and that could be gathered together between 3 o'clock in the morning and 5 o'clock in the afternoon. It may have escaped the hon. Gentleman's knowledge that the Church of Scotland operates mainly in Scotland and, therefore, it was easier, in order to have that meeting, to arrange for someone to stand in for it at that time. I make no apology for that.
  Mr. Foulkes: That is not true.
  Mr. Gummer: The hon. Gentleman must not say that. What he is saying from a sendentary position is utterly untrue. I was present at the meeting and I heard the statement made on that occasion. It was my statement which said that we should ensure that the Church of Scotland was represented in whatever way it wished to be represented. I do not see how one could be fairer than that. My relationship with the Church of Scotland has always been extremely cordial and I would not wish to remove it or exclude it. I think that what the hon. Gentleman has to say is in a spirit that is far from Christian charity.
  Mr. Foulkes: I am in regular touch with different people in the Church of Scotland and their account of the set-up which took place in relation to its involvement is totally different from the Minister's. Having in my constituency, in Crichton West church in Cumnock, a lady minister, someone ordained in the Church of Scotland, I can recommend that for any church. Women can play a far greater part in the Church than the Minister.
  Mr. Gummer: I suspect, Mr. Deputy Speaker, that you would say I was out of order if I tried to explain to the hon. Gentleman what a difference there is between those of us who hold the historic ministry that comes from the universal church and those who seek to break that historic ministry. It has nothing to do with sexism but a great deal to do with the catholic doctrine. I shall now move on to discuss the motion before us and in that I know that I am supported by the hon. Member for East Lothian (Mr. Home Robertson) who understands catholic doctrine in these matters.
  Mr. Max Madden: Before the Minister moves on — I am not in any way seeking to detain him on matters we have been debating in the past few moments—can he confirm some of the amounts of money involved in surpluses? Can he confirm that British taxpayers are now paying well over £1,000 million a year to subsidise the mountains of butter and beef? Can he also
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  confirm that British taxpayers, in the latest sale of butter to the Russians, are having to foot the bill, which comes to £650 million? Are those not astronomic amounts of money coming from British taxpayers and is not the scheme we are debating just a tiny bit coming back to this country?
  Mr. Gummer: Obviously the hon. Gentleman was not here to listen to the first part of my speech when I made my point clear. I do not think that anybody who was here missed the point. I said right at the beginning that (his was only a small contribution to the reduction of surpluses but that it seemed, nonetheless, a worthwhile one. In that catalogue of woe that the hon. Gentleman put before us, he might have mentioned that in December, because of the action of the British Government in the British presidency, we have now changed the arrangements of the common agricultural policy so that surpluses in beef and dairy products will no longer be built up. I am sorry that the hon. Gentleman was not in his place when I announced that from the Dispatch Box so that he could congratulate the British Government, which sentiment I know would have been in his heart at the time.
  Mr. Ian Gow: In the presence of my hon. Friend the Member for Beverley (Sir P. Wall) and my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin), could my right hon. Friend find it within himself to pay a tribute to the faithful Church of Rome?
  Mr. Gummer: I feel that I am going to be led down a whole series of unsuitable courses. However, I have to say that the Roman Catholic organisations have been particularly good in the distribution of this food. Indeed, I believe that the Roman Catholic cathedral in Middlesbrough has been used as a storage point from which the butter has been distributed over the diocese of Middlesbrough. I should like to thank the Roman Catholic organisations for that and to say how much we appreciate it.
  Mr. Cyril Smith: I should like to ask the Minister to take up the point made by an Opposition Member about publicity. I have listened with great interest to 98 per cent, of his speech — I missed the first three lines or so—but I must tell him that my experience in the north-west is totally different from everything I am listening to in the House. I am fed up with people in the north—I even had it in the train travelling down today — telling me that they have never seen the butter and asking where it is and who has got it and so on. I accept everything that the Minister said. I do not doubt the points that he has made for one second. However, I wonder whether some sort of publicity about the limitations and who are the correct recipients of the butter might be in the Government's best interests. A lot of people who think they should have got it should not have got it within the scheme. Some publicity about that might be in the Government's interest and certainly in the interests of some hon. Members in the north.
  Mr. Gummer: I understand the hon. Gentleman's point. However, I have heard others in the north congratulating us on the extent by which we have been able to get to those in most need. It is in my experience, sadly, that any hope of anybody getting something for nothing tends to bring people out, whether one has advertised to them that they come within the category or not. I have appeared —

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  some Opposition Members would say too often—on the television and radio and on every occasion I have tried to make the point clear. I took every opportunity because I wanted to help the voluntary organisations, which themselves explained the restrictions. I agree that it has not always been understood, but I do not think that further advertising would have been satisfactory.
  Mr. Patrick McLoughlin: Will my right hon. Friend accept that his Department has informed Members of Parliament of the scheme and that it is up to hon. Members, not only his Department, to provide press releases and advertisements on the scheme to inform our constituents about it and not to rely on national advertising all the time?
  Mr. Gummer: I agree with my hon. Friend. I made sure that there was a full and detailed statement available to all hon. Members through the usual channels in quantities large enough for every hon. Member to take action on it. That was not only through the usual channels on the Conservative side of the House, but through the usual channels of the various Opposition parties. I did that personally because I thought that it was necessary for every hon. Member to act upon it. I hope that that was successful.
  It does not help the House or the reputation of the Opposition if they are not willing to accept even the part of our motion in which we express some thanks and congratulations for the activities that have gone on. It leads me to think that the Opposition amendment is tabled in the vain hope of getting a bit of party political propaganda. I am terribly sad because I would have expected more of one or two of the signatories. I would not have expected much better of one or two others, and with one or two I am surprised that it is as moderate as it is. Their amendment states:
  "Regrets … the lack of proper consultation with, and information to, charitable organisations".
  They say "proper consultation" but there was a meeting at 5 o'clock on the day on which we decided on the scheme. Not a single one of the charities has complained about consultation. Where is that from? It goes on to say that the charities were "prevented … from making preparations". They were told that the scheme was under way in the morning, they met to discuss the scheme and the scheme is phrased in the way that they wanted. How could we have done it better than that? The motion then goes on to say:
  "as a result of which large numbers of the most needy are likely to be excluded from this aid."
  That cannot be so because we have already distributed 22·5 million packs of butter—[Interruption.] I was quite clear in saying that it is either distributed or on its way. The hon. Member for Pontypridd (Mr. John) knows perfectly well how this figure has gone up day by day and week by week and will continue to do so. The Opposition would stand better in the eyes of the country if they had the grace and courtesy on occasion to say that the Government have done as well as they could in the circumstances and thanked the charities and the Ministry officials for having made this possible.
  7.20 pm
  Mr. Brynmor John: I beg to move, to leave out from "establishments" to the end of the Question and to add instead thereof:
  'but regrets that the lack of proper consultation with, and information to, charitable organisations in the United Kingdom prevented them from making preparations for a speedy and efficient distribution, as a result of which large numbers of the most needy are likely to be excluded from this aid.'.
  When the Minister was about half an hour into his speech—and had said very little—I began for the first time to feel sorry for the Archbishop of Canterbury. His combination of querulous behaviour and heckling tone sits ill on a Minister discussing an item of this nature. The motion—in a wadge of dough with very little currants in the form of facts—contains no word of congratulation to the charities, but merely asks this House to endorse the Government's action.
  The Minister has the effrontery to talk about somebody seeking to extract political capital out of this issue. Scarcely a day goes by without this Minister being photographed in front of some open door or another, in some silly hat or another, yet he talks about political capital. I genuinely seek to have a good and fair distribution of what is available to everyone, but we are not helped by his attempt — thinly disguised by facts, because the Minister can handle them least well of all— to be a national figure.
  The Minister and the Council of Ministers have decided to distribute the £36 million worth of food to the most needy. Whatever our views of the idea — and the Minister made clear his dislike and distrust of this scheme —we must now make the best scheme possible for the United Kingdom. But it must be put on record—and I think that my hon. Friend the Member for Bradford, West (Mr. Madden) has already referred to it — that it is a sweetener to smooth the disposition of 400,000 tonnes of butter to the Russians with a forced loan of about £400 million by the United Kingdom on uneconomic terms to the EEC, and for a further 400,000 tonnes to be disposed to animal feed.
  How should we assess the success or otherwise of the scheme? The duty on any Government in this country is to give as wide and prompt a distribution of the aid available as possible. The question we must answer tonight is how many of the most needy have received the aid and how quickly, and how many of the available commodities have been distributed? As the Minister made a partisan point, I want to make it clear that nothing in our amendment or anything that I say tonight is in any way critical of the charities that have been involved in this scheme. Many people have worked very hard and with great dedication—
  Mr. David Ashby: Oh.
  Mr. John: I do not know what the hon. Member for Leicestershire, North-West (Mr. Ashby) is saying, but I think he probably finds difficulty in following the complexity of this debate.
  Mr. Ashby: No; I can understand it.
  Mr. John: The hon. Member says that he understands it. A less vacuous appearance on his face might benefit the House.

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  Many people are working very hard and with great dedication to distribute this food. They deserve our thanks. The hon. Member is now seeking to sing a duet, and since his voice is unmusical the effect is unpleasant.
  We must ask ourselves whether the charities were given a fair chance of meeting the criterion of wide and prompt distribution, given the way that they were handed the problem by the Government. Prior to the EEC announcement, as has been confirmed this afternoon by the Minister, there was no warning and no consultation on the likelihood of any scheme being set up. Therefore, I think that the Minister will accept that some of the charities involved are not distributing charities. There was no organisation in place, nor was there any system for this operation. The factors that the charities had to face lead us to suppose that a better system of consultation and more prompt information could have improved the scheme.
  Mr. Keith Best: Will the hon. Gentleman give way?
  Mr. John: The hon. Gentleman has been in the House for none of the speeches. He needs to wait a little while before he can intervene. I will give way to him once he is accustomed to the House.
  The first factor that the charities had to overcome was in the form of food. The Minister of State said that both the butter and beef are in 25 kilo blocks — immense quantities. Some of the charities did not have refrigeration facilities, so that once the food was defrosted it was unuseable if the charities did not pick it up. Last Monday the Salvation Army was appealing on HTV in Bristol because 140 lb of beef was on their hands and defrosting. The charities concerned did not pick it up and the Salvation Army was asking any luncheon club to take it. That sort of problem is caused by these large quantities of food.
  This morning it was reported in The Scotsman that a Fife butcher has constructed a scheme whereby the beef in question can be reduced to be used in hamburgers. The report said that the butcher had to find some use for it because otherwise the charitable bodies with which he was speaking were suggesting that the best thing to do was to dig a hole and bury the beef in it. That is a real problem facing charities. The form in which the food was released was so large and difficult to handle that the charities had to have help.
  Secondly, another difficulty is the number of people involved. The Minister of State said that he did not want to tie that down to any particular figure and that supplementary beneficiaries were a major but not the sole category. Charities such as the Salvation Army and the Womens Royal Voluntary Service can identify the people within this definition with whom they deal, but they have no comprehensive knowledge of who is within this category, even by pooling their ideas. I put it to the Minister that it is unlikely that the pooled ideas of all the charities involved are likely to reveal all those who are eligible. Some may supplement that by phoning in to state their own claim but the DHSS could not possibly release their confidential lists of people who are eligible and in receipt of supplementary benefit. The number is more than 5 million people in this country.
  I regret, since the Minister played a part in the decision by the Council of Ministers, that local government
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  authorities were not involved — not for any doctrinaire reason but because they could have helped to identify people within their areas who were in the subject categories. A few became involved in this operation, but had it not been for the exclusive nature of the resolution and the form of legislation which the Commission and the Council of Ministers adopted, many more would have become involved and the charities would have had much better knowledge of those who were eligible for aid. Distribution of food to people eligible to receive it is likely to be more comprehensive and speedier. Earlier and better consultation in that area could have improved the scheme.
  Thirdly, there was the question of speed of distribution. Not only was there the need to set up the organisation, but a great deal of hard-pressed charity cash, which could have been used for other cases, was absorbed on postage and telephones. That is not only my view; it was expressed by the European Conservative group when it commented on the measure.
  Despite the very careful words which the Minister of State used at Question Time last Thursday—many of us were listening to him carefully—it is quite clear that the cost of distributing food will be borne by charities unless the EEC rules are changed, I do not believe that any charity is in such luxurious financial circumstances as to be able to bear that expense. Moreover, such expense will reduce charities' ability to help those whom they normally help.
  The Minister will probably want to convey to the EEC our call for administration and distribution costs to be lifted from the shoulders of charities so that they can do their work safe in the knowledge that their future work will not be hampered as a result.
  We have not taken up all the items of aid for which we are eligible. The Minister implied that the charities could not handle the extra burden, but why have we not taken advantage of sugar from Italy? Ireland is just one of the countries which has taken advantage of it. We also have surplus cereals. We have 2·36 million tonnes of bread wheat in store in the EEC. Why have we not used it?
  It is not suitable to distribute wheat in the form of bread because it is so perishable, but why are we not distributing cereals as flour which the needy can use for cake or bread? The Government said initially that there was no demand for it. When there proved to be a demand, the Government said that the surplus could not be distributed except at disproportionate cost. The sad thing is that we are the only country in the EEC which is not taking advantage of those surpluses.
  I intervened in the Minister's speech to ask about the quantities of food that have been received. He recognised my serious point. There is the world of difference between authorising release from storage when charities ask for it: and distribution. At column 1049 of Hansard on Thursday, the Minister appeared to give different statistical bases. He talked about packs of butter and portions of beef. The Minister has said what is in store and can be released if asked for, but he has not said what has been released.
  Mr. Gummer: It is a matter not of whether charities ask for it but of what they have asked for and what we have released. We will release anything that they ask for. We are talking of butter or beef which has been distributed, is on its way and which charities have ordered. There is nothing potential about it.
  Mr. John: With respect, I think that it is a little different. The figures reveal a wide disparity between the Minister's formula and what has been distributed.
  I want to challenge what the Minister said last Thursday. I remind him that he said:
  "Britain got off the ground first."
  It was the United Kingdom, but never mind.
  "We have distributed more than any other country in Europe and have done it more efficiently." — [Official Report, 19 February 1987; Vol. 110, c. 1049.]
  I would welcome confirmation of the suggestion that he was referring to the figures given to the European Commission as of noon on 16 February. There were no more contemporary figures at that stage. If that is so, his statement was seriously misleading because earlier he told my hon. Friend the Member for Jarrow (Mr. Dixon) that 15 million packs of butter and 3·15 million portions of beef had been released.
  We have already considered authorisation, and I have demonstrated that it does not mean that the commodities have been released. If the Minister's words were taken literally, each of the 5 million supplementary benefit recipients in Britain would already have had three packs of butter. Nobody believes that that has happened. Indeed, none of us has met anybody who has received three packs of butter. As at 16 February, 639 tonnes of butter had been released. By 20 February, 2,358 tonnes of butter had been released. Will the Minister confirm those figures because the number of packs that they imply is markedly lower than the figure he gave on Thursday?
  The same is true of beef. We were told about the size of the 3·15 million portions of beef but, at 16 February, only 58 tonnes had been distributed from cold stores in the United Kingdom. The Ministry told me this afternoon that, by 23 February, 191 tonnes of beef had been delivered. The Intervention Board gives a somewhat larger figure. All the figures, however, show a much less sanguine position than that given by the Minister last week. If 3·15 million portions have been issued, on the basis of the volume of beef that is known to have been distributed, each portion would have been less than one ounce — hardly a significant addition to people's diet.
  There are even disparities in authorisation as between regions. I understand from the Intervention Board that 174·5 tonnes of beef have been authorised for England and Wales, that the figure for Scotland is 71 tonnes and that that for Northern Ireland is 221 tonnes. Therefore, more beef has been authorised for release in Northern Ireland than in England and Wales. Certainly Wales comes out badly because the figure authorised for release there is nil. Northern Ireland seems to have got more than its fair share. Why? Why, for example, has none of the 150 tonnes of beef in store in Truro been authorised for release?
  On the figures, can the right hon. Gentleman be forgiven for saying that he was correct in his assertion that we have distributed more than any other country as opposed to saying that we have authorised it for distribution? I looked quizzically at the right hon. Gentleman when he gave the figures because on 16 February we were third in the EEC for the amount of butter distributed. Germany had distributed far more than we had, as had France. We were also third in the distribution of beef. France and Ireland had distributed far more. Ireland, which was second, had distributed four times as much beef as we had. If the right hon. Gentleman reads Agra Europe, he will see the source of the figures. I
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  have checked with the European Commission. I think that the Minister is getting agitated because he is using a different statistical base. I am talking about food actually distributed, food that has got to the needy. We are lower in the pecking order than he suggests.
  Mr. Gummer: To take the Irish position, on 18 February — this is information that we have gathered directly—small, unspecified amounts had been moved. The Irish intend to move considerable amounts, but on 18 February the figures for Ireland for butter, cheese, milk, beef, flour and sugar were small, unspecified amounts. I am happy to mix figures with the hon. Gentleman. I have been trying to give as accurate figures as I can. I have been careful to try to find out the realities. The evidence is as I have given it. If I discover that I have been wrong, I shall be happy to apologise, but that is the evidence we have.
  Mr. John: I will release the figures to the Minister, but a perusal of Agra Europe would have given them to him. It gives the figures that were released by the European Commission. I have checked directly with the European Commission that at 16 February the Irish had released 245 tonnes of beef. That is the reason for my assertion. Whereas we are third in the two major categories, all the other countries are also distributing commodities which we have deliberately by our own choice refused to distribute. We have said that we cannot handle them.
  We will never know how many of the people who are eligible for this food aid will get it. Some will get more than their share, but many will get little or nothing. That is why I am concerned, and that is why we tabled the amendment. The Minister has given charities the political equivalent of a hospital pass. Let me tell him what that is. It can be seen sometimes on the rugby field, most commonly when England plays international rugby. It is a pass where the ball and the opponent arrive simultaneously at the same spot. In this case the ball is the responsibility for carrying out the scheme and the opponent is the demand which has been stoked up by news of the scheme.
  There have been disappointments. We have all had letters from people complaining about their disappointment at not benefiting under the scheme. Paradoxically the disappointments are blamed on the charities and not on the Government. The Government have claimed responsibility for beneficence, with many photographs of beaming smiles. The beneficence of the Government is seen by everyone, but the responsibility for disappointing ordinary men and women who have applied for food aid and who have overwhelmed the system has fallen on individual charities.
  Lest the tabling of the amendment is misunderstood by some of the slower learners on the Government Benches, let me once more pay tribute to the work of charities. They deserve better of us than to be landed with the responsibility for disappointing many people. Their organisation has been stretched beyond reasonable limits. If we as a House do not endorse the Government's action, that is in no way critical of the charities or unwelcoming of their actions. It means that if there is any follow-up proposed by the Government it will be much better than this scheme has proved.
  7.46 pm
  Sir Philip Goodhart: The hon. Member for Pontypridd (Mr. John) is a notable member of that

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  small minority of sensible Members within the parliamentary Labour party. I am not surprised that he seemed to distance himself from the amendment which was so effectively demolished by my right hon. Friend the Minister in his opening speech.
  Mr. John: In that case, it must be the only example of an author distancing himself from his book.
  Sir Philip Goodhart: There are many cases in which an author has had second thoughts on reading what he has written and has done his best to strike it out. I think that is what happened today.
  I note that the emergency scheme that we are discussing is only part of the subsidy system for distributing cheaper food. In 1986, the Intervention Board spent some £5 million on subsidising the purchase of 4,000 tonnes of butter which went to 3,869 non-profit-making organisations. One recipient of the subsidised British butter is St. Christopher's hospice in my constituency. The authorities there tell me that the subsidy is worth about £56 a month to them. That works out at about £1 per bed per month, or nearly £700 in a full year. For an organisation with an annual budget of £2·5 million, a subsidy of £700 a year is very welcome. The Intervention Board scheme is hedged around with rules of Byzantine complexity, which cannot be altered dramatically without the approval of the Community. When the emergency scheme has run its course, I should like to see the Intervention Board subsidy scheme simplified and expanded.
  I note in passing that if the scheme were to be expanded in the right way it could be of considerable help to the London borough of Bromley and to the Bromley health authority. Last year, Bromley council provided 200,000 meals on wheels. There were also 100,000 meals served in the day centres for the elderly. The council provided 2·5 million school meals. The local authority also provides meals every day of the year for 600 elderly people in residential homes. In other words, Bromley council provides, directly or indirectly, more than 3 million meals a year, while the Bromley health authority provides more than 1 million meals for the occupants of the 2,000 hospital beds which it maintains in acute, geriatric and mental health wards. A subsidy for the butter, cheese, meat and sugar components of those millions of meals would surely lead to increased consumption of these products and bring considerable benefit to the consumer. In my constituency, some of the day centres for the elderly have been serving meat which has been made available under the present winter emergency scheme, the pensioners have paid 40p rather than the 80p normally charged for their meal, and they have had more meat to eat than they would normally have had.
  At Christmas, and perhaps at Easter, there may well be a case on a regular basis for distributing individual packs of butter and cheese, and indeed bags of sugar, to individual pensioners. After the present scheme has run its course it would be sensible to look at the desirability of increasing the scale and the scope of the Intervention Board's butter subsidy scheme to cover other dairy products and meat and sugar as well. This could substantially increase the amount of food used by the caring charities and by local authorities. There would thus be minimum dislocation in the market place and one would be using a method of support which has been well tested over the years. It would also be comparatively easy
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  to monitor the scheme to see whether there had been any real increase in consumption rather than a displacement of normal purchases.
  The sale of large quantities of butter to the Soviet Union—some 222,000 tonnes in 1985, at a cost as low as 15p per pound—has provoked widespread protest. If the taxpayer is to go on paying substantial sums in subsidy, we want to make sure that our own pensioners get some of the benefit on a lasting basis.
  7.54 pm
  Mr. Robert Maclennan: It is not entirely clear what the Minister thought was being achieved by the debate tonight. This question of intervention food to meet needy cases has been drawn to the attention of the House as suitable for further debate by the seventh report of the Select Committee on European Legislation. This was done on two grounds, to neither of which the Minister referred.
  First, the Committee asked whether, bearing in mind the objectives of the common agricultural policy set out in article 39, the present proposals could be appropriately based on article 43, on which the regulations were issued in late January. The Minister had nothing whatever to say about this. The alliance view is that the objectives of the common agricultural policy are certainly not being met at this time by the administration of the CAP. They do not give a fair standard of living to the farmers, they do not stabilise markets wholly and they do not take into account a number of other factors which are of considerable importance, including the provision of food at reasonable prices to our consumers. We would wish to see the objectives of the common agricultural policy widened considerably. I need not linger on the legal point, because I do not think that it gives rise to a great deal of anxiety in the House.
  On the second point to which the Select Committee drew attention — what it called the wider context in which these proposals were made and their political importance — it was presumably referring to the extensiveness of the scheme and the amount of money involved: the 50,000 million ecu or £36 million in total throughout the 12 member countries of the European Community. Again, the Minister did not refer to that, and I think it odd that he did not choose to do so.
  One must therefore ask oneself why the right hon. Gentleman initiated the debate in the way that he did. It seems that his sole objective was to give himself a substantial pat on the back. So far, he has not given us any reason to believe that that is deserved. He has drawn attention to the language of the motion standing in the name of the Government, which endorses what he now calls the Government's decision. I thought that the opening part of his speech was designed to demonstrate that it was not the Government's decision but the decision of the European Community, ratified by the member countries of the Council. He went on to say that not only was it not the Government's decision but it had been laid down by the Council and he had simply to follow the lead of the Council. I understood him to be saying that that was the case and that, although it was the case, he thought that they had taken the right decision.
  I say that the Minister has not deserved the pat on the back he wanted, very largely for the reasons that were given in an intervention earlier in the debate by my hon. Friend the Member for Rochdale (Mr. Smith), who

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  pointed out the sense throughout the country that, if there is a scheme in operation, no one quite knows how it is going, whether they are eligible and, if they are eligible, whom they should approach.
  There is no doubt that any scheme being operated by the charities under considerable pressure of time is bound to some extent to be hit or miss. I would certainly wish to begin my remarks by paying a considerable tribute to the charities for the work that has been done. I will single out two in particular, although they are by no means the only bodies that have played a notable part in this: the Salvation Army and the Women's Royal Voluntary Service, which have, through their national administration, greatly facilitated the distribution of food not only by their own hands but by other charities as well.
  However, they are not without their criticisms of the scheme, or of the Government for the lack of consultation. I have spoken today to several of the charities involved. Among those that voiced considerable anxiety was, of course, Age Concern, which specifically criticised the lack of consultation and said that it had had to spend too much time answering inquiries from the public during the initial stages and was unable to concentrate on setting up a system of distribution.
  The Red Cross said that it believed that the system would have worked better if there had been more consultation with charities, as the success of the scheme depended on all charities coming together at local level. There have been several other individual comments. To some extent, those difficulties were inevitable because the Government were under some pressure of time. The scheme is due to end at the end of March. When the Minister replies, it would be interesting to hear whether the Government believe it has been sufficiently successful to be extended beyond that date.
  A ministerial answer last week to the hon. Member for Romsey and Waterside (Mr. Colvin) partially gave the game away about the Government's approach and revealed how they could have done better. The hon. Gentleman pointed out that there had been a lack of liaison between the Department of Health and Social Security and the Ministry of Agriculture, Fisheries and Food. The Minister replied, oddly:
  "I must warn my hon. Friend about … the DHSS."— [Official Report, 19 February 1987; Vol. 110, c. 1050.]
  The implication of that warning was that it was inappropriate for the DHSS to be in any way involved. The hon. Gentleman was not saying that the DHSS should be responsible for administering the scheme—that was never in his mind and certainly is not in mine—but if anyone knows who the needy are and who falls into the categories which the Council of Ministers intended to help, it is certainly the DHSS. It is certainly in a position to advise the recipients of the assistance that it dispenses of the availability of this help and how it can be obtained locally. By setting his face against the DHSS, the Minister has not helped to extend the take-up of the scheme.
  Similar dogmatism on the part of the Minister has informed his attitude to local government. Social work departments are also well placed to assist in the distribution of food to the needy. Although several have undoubtedly been involved through the work of charities, no systematic attempt has been made to use the services of local government to extend the operation of the scheme.
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  The scheme is somewhat limited. Not only does it not reach all those who need it: it cannot operate extensively without creating some difficulties in the market place. The disposal of stocks from intervention on a large scale would almost certainly eventually, and probably not far down the track, simply result in stocks being consumed by those who would buy them in any event.
  What has been done is a welcome response to exceptional weather. I expected the Minister to give some indication of how much money had been spent or of the value of the stocks released to date. We are now five weeks from the end of the scheme and it would have been informative to know. In judging the value of the scheme, it would have been interesting to know the costs and value of what has been done, together with the costs of storage.
  The Government set out in last month's White Paper on public expenditure the figures for intervention stocks held in this country. It shows a steady rise in intervention stocks of beef. In 1981–82, 11,000 tonnes of beef were held in store; the forecast for this year is 60,000 tonnes. In 1981–82, 1,000 tonnes of butter on average were held in intervention; this year the forecast is for 250,000 tonnes. The cost of that to the Exchequer is enormous. It should be stressed that the money does not go to line the pockets of farmers when goods are held in storage. The storage and related costs have risen from £15·5 million in 1981–82 to an estimated £134·2 million in 1986–87 for this country alone. That is some yardstick with which to judge the impact of what has been taken out of intervention for distribution. It is a tiny proportion of what is being held, both in quantum and in value.
  The decision that the administration of the scheme should be handled by the Intervention Board for Agricultural Produce was inevitable. It has not been made clear how much will be made available under this scheme and how much is being made available at present. In answer to a parliamentary question, the Secretary of State for Scotland said:
  "The amounts of food to be distributed will depend on the needs established by the charitable organisations."—[Official Report, 30 January 1987; Vol. 109, c. 427.]
  I hope that that remains the position. I have been informed that there is some anxiety that the amount that is available may not be limited by that consideration and that charities are having some difficulty distributing the amounts that they can identify as needed. The Salvation Army told me today that it may be reaching saturation point on inquiries and making supplies available and that it is trying to spread the burden to other charities. I hope that the Minister is in sufficiently constant touch with the charities to help to relieve those that are operating under pressure.
  The second question on administration relates to how the needy are to be identified. I have already pointed out that the Minister denied charities the assistance from which they might have benefited, if the DHSS were used to inform those in need of the availability of the scheme and local points of collection.
  Furthermore, have charities given priority to the distribution of food to those in institutions ? In some areas, fear has been strongly expressed that understandably charities have focused on institutions with which they are most closely connected and have not, also understandably, known how best to distribute the food quickly to those living at home. That has resulted in some food going to

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  those less in need than those living alone at home. That was bound to be a problem with reliance almost wholly on charitable distribution.
  However, these problems should now be taken on board by the Minister in case there is any question of ever utilising such a scheme in the future. There are lessons to be learnt from this, but the Minister does not appear to realise that. Indeed, his cockiness in introducing the debate was quite striking. As a reader of the King James version of the Bible and the Sermon on the Mount, I was reminded of the passage that reads:
  "charity vaunteth not itself, is not puffed up."
  The Minister would do well to take those words to heart.
  The alliance parties welcome the scheme, so far as it goes. It is a modest scheme with, as the Minister has reasonably admitted, a modest impact on the problem of surplus disposal. Indeed, he even suggested that it had nothing to do with surplus disposal, although I suspect that if other suitable occasions arose for the distribution of food in emergencies, the Minister would not recoil from the thought that it would be appropriate to use such a scheme for the distribution of surpluses.
  We recognise that the Minister of Agriculture, Fisheries and Food has recently devoted more attention to his activities in the Soviet Union—no doubt butter was on the agenda — than to helping needy people at home—[Interruption.] I do not know whether the Minister's ejaculations reflect his disagreement with the facts or with my interpretation of them. I am bound to say that it seems perfectly self-evident that butter has been on the agenda. We look forward to hearing the results of those discussions about butter because they have certainly been controversial in the past.
  Mr. Patrick Thompson: Come off it.
  Mr. Maclennan: About 5 million people are living on or below the poverty line in this country. All of them could have benefited by being included in the scheme. I do not think that the Minister can tell us how many have benefited from the scheme. However, if he is to operate such schemes in the future, it would be considerably to our advantage to know that and for the Minister to conduct a proper follow-up survey of what happened.
  I hope that the Minister will treat this debate not so much as a pat on the back, but as a kick in the pants, and get on with a better analysis of what has been done ex post facto so that when we next have food to spare for those most in need, we do so with greater efficiency than proved possible on this occasion.
  8.13 pm
  Mr. Michael Colvin: I had intended to compliment the hon. Member for Caithness and Sutherland (Mr. Maclennan) on his speech, but he spoiled it in the last few minutes. If ever there was a case of a speech that needed a little oiling, his was it — whether with olive oil or wine from the wine lake.
  Although the hon. Gentleman associated himself too closely with the Opposition amendment, he drew attention to my earlier parliamentary question, and I shall pat him on the back for that. He understood what I was asking and I hope that the Minister will give us the answer for which we both hope.
  I want to comment on the Opposition Front Bench speech of the hon. Member for Pontypridd (Mr. John) because we have seen action and not words in this scheme.
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  Quite frankly, if we were to consult all the institutions that the hon. Gentleman would have wished, we would still be talking, the food would still be in the cold stores, and no one would have it. The whole point of the scheme was that it had to be put into operation during the cold weather, although we might like it to continue for a little longer than 31 March. Speed was essential and it is fully to the Government's credit that they showed that they could act.
  I want to make three brief points. First, I applaud the splendid work that has been undertaken by the voluntary organisations in my part of Hampshire. Secondly, I want to identify one or two ways in which the scheme might be improved; and thirdly, I want to take up the point made by my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin) and speak about the scheme to publicise it. I trust that hon. Members from both sides of the House will issue to the press the speeches that they now wish they had made to give the scheme wider publicity.
  In my part of the country, the voluntary organisations are already doing a magnificent job in distributing the free food. The WRVS, for instance, has extended its initial order of 10 tonnes of butter for Hampshire to a total of 15 tonnes. A tonne of butter and a tonne of cheese are on their way to my constituency right now.
  Age Concern should also be praised. In the Southampton area, where it looks after meals on wheels, nearly 4 tonnes of butter a week passed to pensioners, direct to their door with the daily milk delivery by milkmen from the Unigate and Vines companies. That is a good example of co-operation between a voluntary organisation and businesses that are prepared to pick up a challenge and help.
  The scheme is being run by hard-working volunteers. They have had to set up their own distribution systems virtually from scratch. The voluntary bodies and their workers are usually unpaid and some of them are elderly; they deserve our warmest congratulations for having clone so well in so short a time.
  My right hon. Friend the Minister has been asked by many people to publicise the scheme a little more and I ask him again to do that. Some of my constituents are still unclear about who qualifies for free food, what foods are available and where they can obtain them locally. Cannot my right hon. Friend take further steps to advertise the names and telephone numbers of participating charities on a regional basis, using the regional press, television or radio stations? My local media have shown tremendous readiness to participate. I know, for instance, that the Salvation Army is making good use of the media to spread the word. Can my right hon. Friend say whether the charities that are obliged to buy advertising space can be recompensed by the Government and repaid those costs?
  My second point relates to eligibility. My right hon. Friend has told me that the assessment of eligibility for the scheme lies with the charitable organisations. It does not seem to be widely known that there is some room for discretion in the assessment of beneficiaries. Some organisations are including borderline cases in their distribution, for example, an elderly person who has not applied for supplementary benefit but who, in the opinion of the charity worker, would qualify if he or she were to apply. Perhaps my right hon. Friend could take steps to give wider publicity to the fact that some discretion can be exercised by the charities involved.
  I should next like to touch on the question of abuse. I am confident that the charities in my area are scrupulous

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  in administering the scheme according to the rules. However, I am afraid that there is potentially some scope for abusing the system as there is no way of checking that an applicant for free food has not toured around the other outlets to obtain supplies of free food from other charitable organisations. I should add that there has not been any evidence that that has happened in my area, but the potential for abuse exists. I suggest that some system of marking pension or other benefit books to denote that the holder has received free food could prevent abuse.
  While the charities have been able to organise the distribution of butter and cheese, and I welcome my right hon. Friend's decision to extend the scheme to cover milk, cheese, semi-skimmed milk, buttermilk and concentrated butter, the drawback has been distribution of beef. The drawback so far has been the distribution of beef stocks. I welcome the Minister's decision to reduce the amount of beef that can be drawn from store at one time from one tonne to only a quarter of a tonne. That has certainly been extremely helpful, but the charities working in my constituency tell me that they have not opted to take any beef as much as they would like it.
  I am pleased to learn that the European Commission has made payments available to charities at a flat rate per tonne for repacking large quantities of food into smaller amounts, but that still does not solve the problem of meat because it must be cooked and distributed as part of a meal. That, incidentally, is probably the reason why the two organisations most concerned in my constituency, the WRVS and Age Concern, are the two that are already involved with meals on wheels. No one else is yet involved in the business of distribution. I hope that my right hon. Friend can be persuaded by us in this debate to return to Europe and argue for the distribution of beef without the stipulation that it is cooked. That would give many more needy people the chance to enjoy food from the intervention stocks.
  Finally, I shall say something about the extension of the scheme. This free food for the needy scheme is due to end on 31 March. There are no immediate plans to extend its operation, but surely there is a permanent place for that type of organisation in our welfare state. Far-reaching changes to the common agricultural policy have recently been announced and those will affect future food production. Yet, I see in Lord Bethell's recent publication entitled "Why do we sell butter to Russia?" the following figures for over-production in the Common Market:
  "24 per cent, more butter and cheese than we consumed, 27 per cent, more cereals, 12 per cent, more beef and veal, 32 per cent, more sugar."
  Those intervention stocks still exist, despite last December's agreement. The same publication goes on to tell us of the Russians:
  "the butter they buy is 18 months old or more and much of it is used industrially, for lubricating machinery"
  Which is better, to grease the wheels of Soviet industry or to spread a little bit more happiness among the needy of this country? I hope that my right hon. Friend the Minister will be able to persuade his colleagues in Europe to extend the distribution period beyond 31 March. This scheme is not pie in the sky. It is a sensible way of giving help to needy people which I hope will become a permanent feature of our welfare state.
  8.22 pm
  Mr. George Foulkes: I congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on one thing anyway, and that is for livening up a debate which was beginning to die on its feet. The hon. Members for Beckenham (Sir P. Goodhart) and for Caithness and Sutherland (Mr. Maclennan) were both pretty quickly becoming eligible for handouts. I shall return to the speech of the Minister of State, Ministry of Agriculture, Fisheries and Food. A more unctuous and self-congratulatory speech I have never heard in this House.
  Mr. Tony Banks: Not since his last one.
  Mr. Foulkes: As my hon. Friend says, not since the previous speech by the right hon. Gentleman.
  One of my colleagues commented, after the Minister had been going on for about 30 minutes, that he was making a meal of it, but I thought that my hon. Friend the Member for Newham, North-West (Mr. Banks) was more on the ball when he said that it was more of a Lord Avebury — I think that he meant a dog's breakfast. 1 believe that it was my hon. Friend the Member for Newham, North-West who said it.
  Mr. Banks: I do not think it was, but it will do.
  Mr. Foulkes: I am grateful to my hon. Friend. It was certainly an attempt to take the credit for this exercise. As we have seen with the photographs and with the publicity that the Minister has eked out of this whole exercise, it was yet another attempt to gain publicity and congratulation for himself.
  Mr. Banks: I am grateful to my hon. Friend for giving way. I shall not intervene in his speech again. However, I should like to set the record straight because it is rather important. I said that it was typical of the Liberals that it would be their thinnest member, Lord Avebury, whom they offered to the Battersea dogs' home rather than the hon. Member for Rochdale (Mr. Smith).
  Mr. Foulkes: I am most grateful to my hon. Friend, except that he has lost me half of my audience, with the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food leaving. However, I wish to make a few serious points.
  As joint chairman of the all-party pensioners group in the House, and, as I said earlier, a former director of Age Concern Scotland, I have been in touch with my successor at Age Concern Scotland about the operation of this scheme and I have spoken about it with a number of the other people involved. However, I also know that the Opposition spokesmen who deal with EEC affairs, as well as my colleagues on the Front Bench today dealing with agriculture, have pressed the Government for some time to use their influence within the European Community to deal with the enormous surpluses of butter, beef and grain and, as my hon. Friend the Member for Newham, North-West keeps reminding us, of wine.
  We have pointed out the huge cost to the European Community budget of the common agricultural policy, which is 70 per cent, of the EEC budget. A large percentage of that which supposedly goes to farmers goes to entrepreneurs and speculators who set up more and more cold stores and grain stores and other stores in the

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  Community to store the huge surpluses and less and less of it goes to the farmers, and certainly less goes to the consumer.
  What we have been arguing for and what we should have had in this case is a carefully planned, comprehensive and, above all, fair distribution of the surpluses, if we are to have them, to help the people in need. Some of my hon. Friends may argue that that is too much to expect from the European Community, and especially too much to expect from this Government. Instead we have had chaos, shambles, a large number of anomalies, delay and abuses. I agree with the hon. Member for Romsey and Waterside that these abuses have not taken place because of the charities or, I would argue, because of the individual people at whom he was pointing the finger. However, I shall mention in a few minutes one or two of the abuses.
  Mr. Colvin: I did not point the ringer at anyone. I merely said that the potential for abuse existed and that there should be some way of preventing it.
  Mr. Foulkes: I am glad that the hon. Gentleman has pointed that out, because certainly I thought that there was some innuendo in what he said. I am glad that there was not.
  The principal reason for chaos is the political dogma of the Government, as represented especially by the Minister of State, Ministry of Agriculture, Fisheries and Food. It was clear to anyone that if we were to have this sort of scheme—we may all have some reservations about it; I certainly have—the most obvious bodies to distribute it effectively, those who have lists of old people and other people in need, those who have the transport ready and available to provide it, and those who have the logistic support were the local authorities. However, it was far too much to expect the Government to do anything that might give any credit to any local authority. The vast majority of local authorities — the number is increasing — are Labour controlled. Conservative Members are always attacking local authorities, undermining them and threatening them, and anything that might give them any credit whatsoever would certainly be ruled out. The social work and social services departments in England, but with the support and the assistance of the voluntary bodies, were the obvious means of distribution.
  Mr. Colvin: In the city of Southampton, the local authority, Southampton city council, is responsible for meals on wheels. What does it do? It gives the job to Age Concern.
  Mr. Foulkes: I know that that is the case in some places. Where that system is operating, Age Concern can carry on the distribution, but that is not the case everywhere. In many parts of the country the distribution of meals on wheels and the lunch clubs are organised directly by the local authority. The Minister looks astonished, but I can assure him that that is the case.
  The social work and social services departments distribute the food with the support and assistance of the voluntary bodies, and that support and assistance, as the hon. Member for Romsey and Waterside pointed out, vary from one part of the country to another, according to how much they are involved. But the Government did not want the local authorities to be involved in any way. Therefore, the entire burden has fallen on the voluntary organisations. I know that through my previous connection, which
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  I have already mentioned, and because my mother, who is involved in one of the organisations making the distribution, has told me about the chaos. In some cases, as was said earlier, distributions have been made by the Church of Scotland.
  Mr. John Home Robertson: Is my hon. Friend aware that in my home parish of Hutton food is being distributed to the needy people by the local parish minister of the Church of Scotland, the Rev. Mrs. Geraldine Hope, which might cause some alarm in the breast of the Minister of State but is welcome by people of all denominations in my parish?
  Mr. Foulkes: I am grateful to my hon. Friend It is a pity that the Minister of State—not the Parliamentary Secretary, who I am sure is sensible on this issue-is not present to benefit from my hon. Friend's intervention.
  The placing of that extra burden on the voluntary organisations has led to some unfortunate results. The energies of the voluntary organisations have been diverted from activities that they should and want to undertake and that they desperately need to undertake. Some of the services that such organisations should be providing to the old and needy have not been provided because they have been diverted from that task. It would have been much better in my local area for Strathclyde region to have organised the distribution with the assistance of the local authorities.
  To compound the difficulties of the local and voluntary organisations, there have been confused messages from the Government. The Minister talked earlier about his meeting at 5 o'clock. He told us three times how quickly he had arranged that meeting, but he did not say that the voluntary organisations were receiving confused messages about the rules and regulations relating to the distribution of the food—that it should be distributed directly to the old person, and, as was later mentioned in relation to beef, that it could be distributed only at cooking centres. It is worrying that we should be going back to the concept which the Minister described as the meat kitchen, which we know better as the soup kitchen, to which old people have to go and, effectively, beg for the distribution of food from the EC.
  Mr. Gummer: The hon. Gentleman must not quote me incorrectly. I said that France had meat kitchens and used that method. I stressed that Britain has been using its own methods. The hon. Gentleman really must not say that I stressed that we have meat kitchens.
  Mr. Foulkes: The Minister will agree that only butter is being given directly to the old people in their homes or at distribution centres. I visited the Dalmellington street wardens who were distributing only butter on Friday morning. Yet originally we were led to believe that food packages would include meat and other foods. That is not the case. My understanding is that meat is available only at cooking centres or at places where cooking takes place for the distribution of meals.
  The regulations have been changing throughout the operation of the scheme and have caused much difficulty. That has resulted in a patchwork distribution of butter. Some areas are getting it, but in some areas there has been no distribution. Such anomalies have occurred.
  Let me deal with the abuses about which the hon. Member for Romsey and Waterside talked. There have

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  been abuses. People not unconnected with the Conservative party have distributed butter and talked of it being a present from the Government. I suspect that such abuses follow on from the Minister's highly publicised efforts to be seen as the centre of the distribution and taking political credit from it.
  I hope that the Minister will specifically deal with abuses in Northern Ireland that have been drawn to his attention.
  Mr. Gummer: The hon. Gentleman has made an allegation. I hope that he has helped with the distribution in his constituency. Indeed he has mentioned that he was out earlier. Can he give me a single case in which anybody has done other than that? I should like to know and would be happy to look into it.
  Mr. Foulkes: I made it clear that I went to see the distribution taking place by the Dalmellington street wardens, not to hand out food myself. However, Conservative Members and people concerned with the Conservative party have been handing out butter and saying, "This is your free butter from the Government." I may be naive in believing that that was not part of the purpose of the exercise in the Minister's mind right from the start.
  I know that specific matters in relation to Northern Ireland have been drawn, if not to the Minister's attention, to that of his Department. The right hon. Member for Strangford (Mr. Taylor), who is also a Member of the European Parliament, alleged at a meeting in Brussels last week, attended by Mr. Tom Megahy, a vice president of the European Parliament, that paramilitaries were distributing butter in Northern Ireland. The hon. Gentleman said that he had 4 tonnes in his office which he was distributing. If that is the case, what action has been taken to stop it? If none has been taken, what action is proposed?
  Let me deal with the future. I, and I think all Labour Members, wish that it was unnecessary to make such distributions to anyone. We would prefer not to have pensioners who depend on handouts. They should have an adequate pension, as the Labour party has promised. Conservative Members have not and are not providing an adequate pension. The Labour party will give an immediate increase and restore the link with earnings so that the ratchet effect increases real pensions. We also want to see a drop in the price of butter within the EEC. Then, if the pensioners have the buying power and if the butter is cheap enough, the pensioners can buy it for themselves.
  Meanwhile, I hope that the Minister will tell us about the future when he replies. The hon. Member for Romsey and Waterside asked several questions. What is to be the policy? Will there be future distributions of the surpluses? I should like to see the surpluses reduced in this way. Will they include grain, as they should, because that would be helpful? Will they include uncooked beef delivered to the homes of the old people or available to them in packages? Will they include milk powder and other goods in surplus at the moment? I hope that that will be the case if the scheme is to continue.
  I look forward to the day when our old people have adequate pensions and when we do not have a large number of needy people who the Government have
  216
  recognised exist in Britain by the need for this distribution. The only way in which we shall achieve that is by the return of the Labour party.
  8.38 pm
  Mr. Andrew F. Bennett: I want to place on record the strong feelings of my constituents about the shambles that the scheme has turned out to be. Over the past three to four weeks, I have had many queries from my constituents about how the scheme was operating in my constituency. I found it extremely difficult to piece together what was happening and to know how best to give my constituents good advice on how they could benefit from the scheme if they qualify for it. I was so concerned last week that I put down a question to the Minister. I hoped that the Minister would give a clear picture of what was happening within the Stockport and Tameside parts of my constituency. In the reply that I received yesterday, the Minister was really saying that he did not have a clue what was going on. He only told me what was happening at a national level.
  My constituents are resentful because they believe that the Government have designed the most incompetent rather than the most competent scheme to deal with the distribution. They resent the fact that we have a dear food policy in this country. They recall the period from the 1940s to the 1970s when a cheap food policy operated, ensuring that the consumer paid the lowest possible price, but at the same time the fanner was guaranteed a decent income. They persistently ask why we cannot go back to the type of system that was better for the consumer and benefited the farmer by giving him a guaranteed income. I believe that it is tragic that, because we are tied to the Common Market, we cannot return to a cheap food policy.
  My constituents wish to know why the Government did not involve the retail and wholesale trade in the distribution of the surpluses. The benefit books could have been used like ration books. My constituents believe that that would have been the logical approach rather than to leave it to the charities, which already have far too much work to do, to carry out the scheme.
  I have no great brief to speak for the supermarkets, but I would certainly speak on behalf of many of the small shops in my constituency. They are especially resentful of the fact that the Government and other Governments within the Community insisted that they could not be involved in the distribution of the food. Corner shops provide a social service for many pensioners and to those on low incomes in my constituency. On many occasions such shops offer credit to people on extremely low incomes and offer a welfare service to pensioners. It is of great resentment to those shopkeepers when pensioners come in to ask them to explain the chaos of the Government scheme and the shopkeeper must point out that he is not involved and has been unable to get accurate information from the charities within the area mainly because those charities' phone numbers are engaged because of the number of people who want to know what is going on.
  My constituents resent the fact that the Government have not used the existing distribution system within the country, but have asked the charities to distribute the food. In my constituency, the charities already have more than enough to do because of the social deprivation that the Government have created. The Salvation Army does an extremely good job within the Greater Manchester

  217
  area, but it does not have the surplus resources that it can suddenly switch to this type of distribution. Nevertheless, it has done an extremely good job in difficult circumstances.
  Age Concern in Stockport and Tameside provides excellent services but it does not just have people waiting to undertake the Government scheme. The resources of that charity have been stretched and it has now discovered that it is being blamed by local people because the scheme has failed and because it has not had adequate resources to cope with the scheme. The charity feels extremely aggrieved that the Government have taken advantage of it rather than using reasonable means to distribute the food within the area.
  Is there any evidence to suggest that the Government are getting rid of the existing surpluses rather than creating other surpluses? Certainly, those pensioners I have met are pleased when they have managed to get hold of their butter allocation. However, they point out that they will spend less money on margarine for that week and that, in fact, one is moving from one surplus to another. The best solution would have been to reduce the prices of all food and return the country to a cheap food policy.
  I stress to the House the bitter resentment of my constituents who believe that the Government have made a shambles of the whole scheme. In future I hope that the Government will fight extremely hard for a cheap food policy in Europe. If any more surpluses are to be distributed, I hope that the Government will use the existing trade system to carry out that distribution rather than impose a burden on charities which many of them are unable to carry.
  8.45 pm
  Mr. Tony Banks: I will not delay the House long, but I have a constituency interest that I wish to represent. In Stratford, in the London borough of Newham, there are intervention stores of beef and butter. In the past, certainly before this scheme was introduced, I have often argued in the House that the Government should distribute the beef and the butter to the people of Newham because, according to Department of Environment statistics, it is the second most deprived local authority area in the country. Therefore, we have many worthy cases who should receive such food and could make good use of the obscene mountains of food held not only in Stratford but in the rest of the country.
  My hon. Friend the Member for Denton and Reddish (Mr. Bennett) put his finger on the mark when he said that we are not knocking the scheme as such, but what we should be debating is how on earth those huge food mountains developed in the first place. The House is aware that they came about because of the absurdity of the common agricultural policy. I support my hon. Friend in arguing for a return to a system whereby farmers were guaranteed a certain income and the market decided the price of food. When farmers, as a result of their efficiency, produced much more, it meant that consumer prices went down. That is a sensible food policy and the Government should consider returning to that policy.
  There have been reforms, but when the Minister replies —[Interruption.] I hope that I can attract the Minister's attention. The Minister made great play of the changes that have taken place under the British presidency and the fact that we have a common policy as regards the food mountains. Therefore, I hope that we will not see a
  218
  continuation of such mountains. I would like a timetable from the Minister that shows when we can expect an end to those huge international stores. Will they be like the poor under Conservative Governments-always with us? When will the obscenity end of these vast quantities of food that people cannot afford?
  I am sorry that the Minister found my suggestion that Ministers might like to get to grips with some of the wine rather diverting. My grandmother always liked a little drop of Guinness or gin. I am not aware of the presence of any great gin lakes, but if there are any, I am sure that hon. Members are more than capable of draining them. I feel that we should consider the other food stores that are available in Europe. It may be argued that we are not doing pensioners any favours by lining their arteries with cholesterol-heavy food such as butter and beef. Perhaps we should think about distributing the cereals, because they would be far better for the health of pensioners. However, if the butter and beef is available in Stratford, we will take it.
  I am not knocking the distribution of the food, because I have been pushing for that distribution for some time, but I would like to raise some of the points that have been made to me by the charities in the London borough of Newham about the way the system has operated. I am merely acting as a conduit in putting these points forward.
  The national organisations are organised locally and there is no co-ordination between them in boroughs such as Newham. No money was provided for distribution. That is important, because I have been told that a number of housebound, disabled pensioners, those on supplementary benefit, missed out on the distribution of food because the food was not taken to them. They had to go to a particular place to collect it. Age Concern in Newham said it would have been far better if the whole thing had been done through local authorities. The local authorities have a great knowledge of the needs of the elderly within the area and through the meals on wheels service they could have made sure that the housebound and disabled got their fair share of the butter and beef.
  The Government said that only pensioners on supplementary benefit should receive butter, but a number of organisations, certainly Age Concern in Newham, gave it away to all pensioners who asked for it. It appeared discriminatory between different groups of pensioners to control such distribution and it did cause a great deal of aggravation in the area. Therefore, it was decided to give the butter to any pensioners who came to ask for it.
  A number of hon. Members said that it would have been better if the meat had gone out uncooked. 1 hope that the Minister will discuss that when he replies. One organisation in my area gave the meat out uncooked rather than cooked.
  I should like to echo the comments of my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on the publicity stunt element. A number of charitable organisations in the borough of Newham felt that it was more of a publicity stunt than anything else. They said that because Newham is a newly rate-capped borough. It is an amazing irony that the Government are saying, "You can have a pound of butter and a little bit of beef," but are cutting the amount of money given by central Government to local authorities. This means that boroughs such as Newham have to look to meals on wheels, one o'clock clubs and home helps as possibilities for cuts imposed by central Government. As my hon.

  219
  Friend the Member for Carrick, Cumnock and Doon Valley said, instead of the 1 lb of butter and the bit of beef, it would have been far better if the House had realised that there was no substitute for a decent pension which enabled pensioners to choose what they wanted to eat and drink. Perhaps they would choose more healthy foods than the cholesterol-loaded beef and butter. I am afraid that we shall have to wait until there is a Labour Government to give pensioners proper pensions so that they can make a proper choice.
  8.50 pm
  Mr. Gummer: With permission, Mr. Deputy Speaker, may I say to the hon. Member for Pontypridd (Mr. John) that we expect that, by the end of this period, Britain will have spent £30 million of the available £36 million on distribution of food. There is clearly a major programme. I have already spoken to the hon. Gentleman about the problem with the figures. We have carefully considered the ones which he presented, but they do not tally with our direct information on the countries concerned. I assure the hon. Gentleman that I am only going by the best figures that I have. If I turn out to be wrong, I shall be happy to apologise to him.
  We tried to give out the food as rapidly as possible, so we started with the larger packages. Butter has always been available in small packs. The hon. Member for Pontypridd is probably overdoing it by suggesting that, if we only had another form of packaging, distribution would have been much better. I do not agree. Distribution has been more difficult than it might have been because butter is stored in a particular way. We have done everything possible to make the butter available in forms that would enable the local charities to distribute it.
  Despite everything that the hon. Member for Pontypridd and his hon. Friends said, they did not mention that the charities almost without exception believe that we have done as well as could be done in the time available. The Commission produced its first proposals of any kind on Thursday 15 January. We agreed them at 2 o'clock in the morning of the following Tuesday. We did not even have the regulations at that stage, because these matters are within Commission competence, for the most part. Therefore, all our discussions with the charities were carried out as rapidly as possible. We have tried in every way to keep the charities informed of our information. I did as much directly as I could and I do not believe that we could have done it more rapidly or more effectively, given the circumstances. Of course I agree that, after the scheme has finished, we shall have to ascertain whether there are lessons to be learned. I am sure that there are. It is always true that the next time one does something, one hopes that it will be done better. We shall certainly do that.
  My hon. Friend the Member for Beckenham (Sir P. Goodhart) referred to the scheme. The present scheme is all that we have in front of us at the moment. No doubt we shall learn from it. We may decide that it is a sensible approach. It has to be an additional scheme. The trouble with many of the schemes to which my hon. Friend referred is that they were substitution schemes. It is easy for them to be substitution schemes, but I think that my hon. Friend will agree that, even though they do not want to make a huge contribution to reducing surpluses, we
  220
  want schemes that reduce the food in store rather than merely substitute for foods which would otherwise have been bought.
  The hon. Member for Caithness and Sutherland (Mr. Maclennan) was less than generous. I say that not because I wanted a pat on the back but because I should have thought that the hon. Gentleman, with his charity, would understand that, if one tries to run a scheme that no one has ever run before and one does so as rapidly as possible, one has to do what one can with the regulations and arrangements to hand. It cannot be gainsaid that more than 20 million packs of butter are either out or on their way to the people who need them. We have what amounts to more than 4 million meals — taking account of the quarter of a pound of beef allocated for each meal—on the way to those who need them. At least one should say that that is good rather than bad.
  I felt that there was a good deal of whingeing from the hon. Member for Caithness and Sutherland. He spoke in a rather miserable way. He may not like the style in which I have introduced the matter, and I agree that one is sometimes led astray by the far-fetched comments of the hon. Member for Carrick, Cumnock and Doon Valley. The hon. Gentleman has an effect on me, just as he has on most spokesmen. He tends to raise the temperature of the debate without perhaps throwing light on it.
  On the other hand, I think that it would be reasonable for the hon. Member for Caithness and Sutherland to get off his high horse, especially in view of his curious comment that he would give us, yet again, the alliance view of the common agricultural policy. I thought that the alliance was not referring to the CAP any more, ever since it was rumbled on this matter. We all now know about the CAP. We know what would happen if the alliance ever formed a Government — it would introduce a policy which would be beneficial to almost every country in the Common Market except Britain. The president of the National Farmers Union knows that. Only the hon. Gentleman appears not to know it.
  Mr. Maclennan: I am grateful to the Minister for giving way. It is such a rare experience that it seems unusual. I refer him to the article in today's Financial Times by Mr. John Cherrington, a notable commentator, who speaks very highly of the alliance's policy for the future of the common agricultural policy. He has recommended that those proposals should be given wider study. I hope that, when the right hon. Gentleman has given them wider study, he will realise that there is a great deal in what we are saying.
  Mr. Gummer: Whatever Mr. Cherrington may have said, the president of the National Farmers Union said to the right hon. Member for Plymouth, Devonport (Dr. Owen) that he knew nothing about agriculture and that his proposals in the Bledisloe lecture, to which Mr. Simon Gourlay was listening, would be disastrous to agriculture. I know of no one who has ever said that Mr. Simon Gourlay was unassociated with the sort of ideas put forward by the right hon. Gentleman, but he blasted them to kingdom come. He listened to the lecture and worked out the figures, which show that the alliance would help 80 per cent, of corn growers in the rest of Europe but only 30 per cent, of British growers. What is more, the right hon. Gentleman told the National Farmers Union what can only be described as a "terminological inexactitude"

  221
  because he said that the figure of 140 tonnes had never been used. Those were the exact words in the speech of the right hon. Member for Devonport. The hon. Gentleman, when challenged in this House, remained unmoved. I challenge him again. Did he or did he not say that? If so, why did he?
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. We are discussing a humanitarian programme — the distribution of food. We really must stick to the subject.
  Mr. Maclennan: I am grateful to the Minister for giving me the opportunity of countering the accusation that I told an untruth. The reality, as the Minister well knows, is that the figure of 140 tonnes was prefaced by the word "say", and that, furthermore, it was not put forward as a normative proposal. It was produced as an illustrative proposal to show the amount that would be required to remove the entire surplus from the Community. It was rather like saying, "If one reduces institutional prices by 25 per cent., one will dispose of the surplus." Now that we have set the record straight, perhaps—
  Mr. Deputy Speaker: Order. I allowed the hon. Gentleman to reply, but he made a 20-minute speech. We should now get on with the matters before the House.
  Mr. Gummer: Perhaps it will be more humanitarian if I do not subject the hon. Gentleman to that point any further, although the temptation is enormous.
  My hon. Friend the Member for Romsey and Waterside (Mr. Colvin) made many helpful points which I shall examine and see whether I can help. Publicity is a difficult matter because many of the charities considered that one needs to have an ongoing programme and not to overload them at any time. Certainly, I shall see whether we need anything further of that sort.
  The hon. Member for Carrick, Cumnock and Doon Valley raised many points. It is peculiar to make allegations that do not appear to have any foundation in the mainland part of the United Kingdom. I repeat that I look forward to receiving a letter from him with details of what hon. Members, in what circumstances and at what times he considers were politically motivated. The food has been distributed in Northern Ireland through Age Concern, the Society of St. Vincent de Paul, Bryson House, the Salvation Army and one other of the six charitable organisations. Any voluntary or welfare group that wishes to distribute food does so, according to the rules, through that group. I can asssure the hon. Gentleman that, as far as I know, there has been no breaking of the rules, but I shall look into the allegations made by Mrs. Janey Buchan on that matter.
  The speech by the hon. Member for Denton and Reddish (Mr. Bennett) was so absolutely without foundation that it is not worth referring to.
  In the plethora of comments made by the hon. Member for Newham, North-West (Mr. Banks), the only point that he had to make was that his local branch of Age Concern is not as happy as it might be. I do not agree that we should distribute wine. I do not think that the country would want to do that. What we have done is right.
  I thank the Ministry officials who have done so much to make this scheme work and, above all, I thank the charities for making it a success.
  Question put, That the amendment be made:—
  The House divided: Ayes 114, Noes 160.

  Division No. 100]

  [9.1 pm

  AYES

  Adams, Allen (Paisley N)

  Heffer, Eric S.

  Anderson, Donald

  Hogg, N. (C'nauld & Kilsyth)

  Archer, Rt Hon Peter

  Holland, Stuart (Vauxhall)

  Ashton, Joe

  Home Robertson, John

  Atkinson, N. (Tottenham)

  Howarth, George (Knowsley, N)

  Banks, Tony (Newham NW)

  Howells, Geraint

  Barron, Kevin

  John, Brynmor

  Beckett, Mrs Margaret

  Kaufman, Rt Hon Gerald

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

  Kennedy, Charles

  Bermingham, Gerald

  Kirkwood, Archy

  Bidwell, Sydney

  Lamond, James

  Boyes, Roland

  Leadbitter, Ted

  Bray, Dr Jeremy

  Leighton, Ronald

  Brown, Gordon (D'f'mline E)

  Lewis, Terence (Worsley)

  Brown, Hugh D. (Provan)

  McDonald, Dr Oonagh

  Buchan, Norman

  McKay, Allen (Penistone)

  Caborn, Richard

  MacKenzie, Rt Hon Gregor

  Callaghan, Jim (Heyw'd & M)

  Maclennan, Robert

  Campbell-Savours, Dale

  Madden, Max

  Clark, Dr David (S Shields)

  Martin, Michael

  Clarke, Thomas

  Mason, Rt Hon Roy

  Clay, Robert

  Maxton, John

  Clelland, David Gordon

  Maynard, Miss Joan

  Clwyd, Mrs Ann

  Michie, William

  Cocks, Rt Hon M. (Bristol S)

  Millan, Rt Hon Bruce

  Cook, Frank (Stockton North)

  Nellist, David

  Cook, Robin F. (Livingston)

  O'Brien, William

  Corbett, Robin

  O'Neill, Martin

  Corbyn, Jeremy

  Park, George

  Cox, Thomas (Tooting)

  Parry, Robert

  Craigen, J. M.

  Patchett, Terry

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

  Pavitt, Laurie

  Deakins, Eric

  Pike, Peter

  Dewar, Donald

  Prescott, John

  Dixon, Donald

  Randall, Stuart

  Dormand, Jack

  Redmond, Martin

  Douglas, Dick

  Robertson, George

  Dubs, Alfred

  Ross, Ernest (Dundee W)

  Duffy, A. E. P.

  Sheerman, Barry

  Dunwoody, Hon Mrs G.

  Short, Ms Clare (Ladywood)

  Eadie, Alex

  Skinner, Dennis

  Eastham, Ken

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

  Evans, John (St. Helens N)

  Smith, Cyril (Rochdale)

  Fields, T. (L'pool Broad Gn)

  Soley, Clive

  Fisher, Mark

  Spearing, Nigel

  Flannery, Martin

  Thompson, J. (Wansbeck)

  Forrester, John

  Thorne, Stan (Preston)

  Foster, Derek

  Wainwright, R.

  Foulkes, George

  Wallace, James

  Garrett, W. E.

  Wardell, Gareth (Gower)

  George, Bruce

  Welsh, Michael

  Godman, Dr Norman

  White, James

  Golding, Mrs Llin

  Wilson, Gordon

  Gourlay, Harry

  Winnick, David

  Hamilton, James (M'well N)

  Young, David (Bolton SE)

  Hamilton, W. W. (Fife Central)

  Hardy, Peter

  Tellers for the Ayes:

  Harrison, Rt Hon Walter

  Mr. John McWilliam and

  Haynes, Frank

  Mr. Lawrence Cunliffe.

  NOES

  Adley, Robert

  Boscawen, Hon Robert

  Alexander, Richard

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

  Amess, David

  Bowden, Gerald (Dulwich)

  Ancram, Michael

  Brandon-Bravo, Martin

  Ashby, David

  Bright, Graham

  Atkins, Robert (South Ribble)

  Brinton, Tim

  Atkinson, David (B'm'th E)

  Brown, M. (Brigg & Cl'thpes)

  Baker, Nicholas (Dorset N)

  Browne, John

  Batiste, Spencer

  Buchanan-Smith, Rt Hon A.

  Beaumont-Dark, Anthony

  Budgen, Nick

  Bellingham, Henry

  Butcher, John

  Bendall, Vivian

  Butterfill, John

  Best, Keith

  Carlisle, John (Luton N)

  Bevan, David Gilroy

  Carlisle, Kenneth (Lincoln)

  Biggs-Davison, Sir John

  Carttiss, Michael

  Blackburn, John

  Cash, William

  223

  Chope, Christopher

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

  Colvin, Michael

  Howell, Ralph (Norfolk, N)

  Conway, Derek

  Hubbard-Miles, Peter

  Cope, John

  Hunt, David (Wirral W)

  Corrie, John

  Hunt, John (Ravensbourne)

  Couchman, James

  Hunter, Andrew

  Cranborne, Viscount

  Jessel, Toby

  Currie, Mrs Edwina

  Jones, Gwilym (Cardiff N)

  Dorrell, Stephen

  Jones, Robert (Herts W)

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  Dover, Den

  King, Roger (B'ham N'field)

  Dunn, Robert

  Knight, Greg (Derby N)

  Durant, Tony

  Lennox-Boyd, Hon Mark

  Eggar, Tim

  Lightbown, David

  Evennett, David

  Lloyd, Sir Ian (Havant)

  Fallon, Michael

  Maclean, David John

  Favell, Anthony

  McLoughlin, Patrick

  Fenner, Dame Peggy

  McQuarrie, Albert

  Finsberg, Sir Geoffrey

  Major, John

  Fletcher, Sir Alexander

  Malone, Gerald

  Fookes, Miss Janet

  Marland, Paul

  Forsyth, Michael (Stirling)

  Maude, Hon Francis

  Galley, Roy

  Meyer, Sir Anthony

  Gardner, Sir Edward (Fylde)

  Neale, Gerrard

  Garel-Jones, Tristan

  Pattie, Rt Hon Geoffrey

  Goodhart, Sir Philip

  Peacock, Mrs Elizabeth

  Goodlad, Alastair

  Percival, Rt Hon Sir Ian

  Gow, Ian

  Pollock, Alexander

  Greenway, Harry

  Rhodes James, Robert

  Gregory, Conal

  Rhys Williams, Sir Brandon

  Griffiths, Sir Eldon

  Ridley, Rt Hon Nicholas

  Griffiths, Peter (Portsm'th N)

  Ridsdale, Sir Julian

  Gummer, Rt Hon John S

  Rifkind, Rt Hon Malcolm

  Hamilton, Hon A. (Epsom)

  Roberts, Wyn (Conwy)

  Hampson, Dr Keith

  Robinson, Mark (N'port W)

  Hanley, Jeremy

  Rossi, Sir Hugh

  Hargreaves, Kenneth

  Rowe, Andrew

  Hawkins, C. (High Peak)

  Sackville, Hon Thomas

  Hawkins, Sir Paul (N'folk SW)

  Sainsbury, Hon Timothy

  Hawksley, Warren

  Sayeed, Jonathan

  Hayward, Robert

  Shaw, Giles (Pudsey)

  Hicks, Robert

  Shaw, Sir Michael (Scarb')

  Hind, Kenneth

  Shepherd, Colin (Hereford)

  Holland, Sir Philip (Gedling)

  Sims, Roger

  Holt, Richard

  Skeet, Sir Trevor

  224

  Soames, Hon Nicholas

  van Straubenzee, Sir W.

  Speller, Tony

  Viggers, Peter

  Spencer, Derek

  Waddington, Rt Hon David

  Spicer, Jim (Dorset W)

  Wakeham, Rt Hon John

  Spicer, Michael (S Worcs)

  Walden, George

  Squire, Robin

  Wall, Sir Patrick

  Stanbrook, Ivor

  Waller, Gary

  Steen, Anthony

  Ward, John

  Stern, Michael

  Wardle, C. (Bexhill)

  Stevens, Lewis (Nuneaton)

  Warren, Kenneth

  Stewart, Allan (Eastwood)

  Watts, John

  Stewart, Andrew (Sherwood)

  Wheeler, John

  Stradling Thomas, Sir John

  Winterton, Mrs Ann

  Taylor, John (Solihull)

  Winterton, Nicholas

  Temple-Morris, Peter

  Wolfson, Mark

  Terlezki, Stefan

  Wood, Timothy

  Thomas, Rt Hon Peter

  Woodcock, Michael

  Thompson, Donald (Calder V)

  Thompson, Patrick (N'ich N)

  Tellers for the Noes:

  Thornton, Malcolm

  Mr. Richard Ryder and

  Twinn, Dr Ian

  Mr. Michael Portillo.

  Question accordingly negatived.
  Main Question put and agreed to.
  Resolved,
  That this House takes note of the un-numbered explanatory memorandum dated 21st January 1987, submitted by the Ministry of Agriculture, Fisheries and Food, describing draft Regulations: amending Regulation 1785/81 on the common organisation of the market in sugar; relating to a decision on placing sugar held by the Italian intervention agency at the disposal of charitable organisations for consumption within the Community; on the free transfer to charitable organisations of products processed from cereals held in intervention; and amending Regulation 804/68 on the common organisation of the market in milk and in milk products and Regulation 1842/83 establishing general rules for the granting of milk and certain milk products to students in educational establishments; and endorses the Government's decision to work speedily through charitable organisations to achieve free distribution of beef, milk and certain milk products to the most needy in the United Kingdom.

  Appropriation (Northern Ireland)
  9.13 pm
  The Minister of State, Northern Ireland Office (Mr. Nicholas Scott): I beg to move,
  That the draft Appropriation (Northern Ireland) Order 1987, which was laid before this House on 11th February, be approved.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): It might be helpful if I made it clear that the debate on the Northern Ireland order may cover all matters for which Northern Ireland Departments, as distinct from the Northern Ireland Office, are responsible. Police and the security are the principal excluded subjects.
  Mr. Scott: The order is being made under paragraph 1, schedule 1, of the Northern Ireland Act 1974. The draft order has two purposes. The first is to authorise the additional expenditure covered by the 1986–87 spring Supplementary Estimates. That is dealt with in part 1 of the schedule which sets out the details for a further £99 million required from the Consolidated Fund of Northern Ireland. That is in addition to some £3,256 million which has already been approved by the House for the 1986–87 financial year and thus brings the total Estimates provision for that year to £3,355 million.
  Part II of the schedule gives details of the Vote on account of some £1,483 million for 1987–88. That is a normal provision and it is necessary to enable services to continue until the 1987–88 Main Estimates are debated later in the year. Full details of all the provisions sought in the draft order can be found in the spring Supplementary Estimates volume and the "Statements of Sums Required on Account" leaflet. Copies of those two documents have been placed in the Vote Office.
  In considering the Supplementary Estimates, particularly those related to industrial development, employment and unemployment, the House will wish to bear in mind the latest economic information about the Province. That represents a somewhat mixed picture. On the positive side, the United Kingdom as a whole is now into its sixth successive year of continuous economic growth. Output in the Province has responded to those developments at national level with total output of the production industries now within almost 8 per cent. of its 1980 level. Also, manufacturing output has almost recovered to its 1980 level. The prospects there are not unencouraging. As my right hon. Friend the Chancellor of the Exchequer recently outlined in his autumn statement, growth this year is anticipated to be higher than in 1986.
  However, there is a negative side too. Increased output has yet to have an appreciable effect on unemployment in Northern Ireland. Nevertheless, seasonally adjusted unemployment has fallen by an average of 700 per month over the past three months. However, unemployment in Northern Ireland remains at what I think the House will agree is an unacceptably high level. In January 1987 the rate of unemployment in Northern Ireland was 19·3 per cent. compared to 11·8 per cent. in Great Britain and 16·9 per cent. in the north of England. I would like to emphasise that the Government remain determined to tackle that problem and substantial resources have been made available to finance the job creation efforts of the Industrial Development Board, Local Enterprise Development Unit and the various training and retraining schemes.
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  In class I of the Estimates, which covers expenditure on agriculture, fisheries, and forestry, an additional £600,000 is required for Vote 1; £400,000 of that is for agricultural science services and £120,000 is to cover the capital cost of providing accommodation for a computerised system of animal health records. The purpose of that system is to provide a more efficient information base giving the ability to respond faster to any outbreak of animal disease, thus reducing the risk of spread.
  There are Supplementary Estimates for three Votes in class II. Vote 1 relates to the activities of the Industrial Development Board. A total of £750,000 is required there. Of that, some £680,000 is directly related to increased administrative costs. In particular I mention the restructuring of the business development division. The strengthening of that division by the addition of 12 staff reflects a change in emphasis by the IDB already outlined in its own strategy document. In future it will take a closer and much more active role in its ongoing relations with Northern Ireland industry in order to encourage the expansion of existing businesses within the Province. That also enables the IDB to develop its sectoral campaigns and, therefore, to concentrate resources on specific areas of industry which show the most potential for development.
  For Vote 5, "Functioning of the Labour Market", the additional provision sought is £3·78 million. That is made up of additional expenditure of £6·37 million less savings of £2·59 million. Of the additional expenditure, some £3·43 million is for the action for community employment scheme—ACE. As right hon. and hon. Members will no doubt already be aware, ACE provides temporary jobs for the long-term unemployed. In line with the Government's continuing efforts to respond positively to the special problems of the long-term unemployed it has been possible to increase, during this financial year, the number of jobs provided through this programme. The original target was 5,400. We have increased this by 750 places to 6,150. Increased provision of £1·24 million is also required for expenditure on Government training centres mainly For additional running expenses attached to the setting up of the restart programme for the long-term unemployed, and to carry out necessary maintenance to training centre buildings.
  Under the new arrangements for the training on employers' premises scheme, a grant of £65 per week will be paid in respect of each additional eligible employee who is under 25 years of age, or who was unemployed, or unavailable for work, during the previous 12 months. A grant of £52 per week will continue to be paid to all other categories of additional employees eligible under the scheme. This revision to the scheme will cost an extra £200,000 this year and provide assistance at the higher rate to companies during the costly initial training period for new employees. I hope that it will encourage employers to recruit more young people and the longer-term unemployed into new jobs. Also in subhead B4, the new pilot manpower training scheme, which became operative in June 1986, requires £400,000 for this year. This scheme is aimed at developing a cohesive package of training assistance geared to the specific needs of individual Northern Ireland companies operating in the international market place. The early indications are that the scheme will make a positive contribution to the local economy.
  A further £678,000 is required for management training. This is a crucial area which is fundamental to the

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  economic well-being of the Province. The aim is to improve both the quantity and quality of resource management. The provision now sought will enable Government to maintain and indeed increase activity in this area. Hon. and right hon. Members might wish to note that the Estimates also provide for the introduction of four new employment measures requiring a total provision of £420,000 at subheads C7 to C10 respectively. Of particular interest is the restart programme. Good progress has been made in this programme since its introduction on 1 July 1986. In the first six months some 31,000 people had received a counselling interview and we are on schedule to achieve our target of 60,000 for the year.
  Moving on to Vote 6, which covers the administration and miscellaneous services of the Department of Economic Development, a net increase of some £2 million is sought. During the course of the year, my noble Friend, the Secretary of State for Employment announced a number of initiatives aimed at assisting the long-term unemployed such as the provision of in-depth counselling interviews. These initiatives were applied in Northern Ireland at the same time as the rest of the United Kingdom and additional resources were therefore provided to DED to ensure that the long-term unemployed in Northern Ireland benefited to the full extent.
  Before moving away from class II, Vote 5, may I draw the attention of the House to one unfortunate typographical error in the provision for subhead A1 in the Estimates volume? The figure of £10,330,000 in respect of YTP trainee allowances should in fact read £10,200,000. I should make it clear that this does not affect the draft order.
  Turning to class IV, Vote 1, which covers the Northern Ireland roads service, a net additional provision of £6·9 million is required of which some £1·9 million has been earmarked for capital works and nearly £4 million for essential road maintenance. The sum of £1·5 million relates to the construction package announced by the Secretary of State last October, and the remainder will further assist the construction industry in the Province. The emphasis within the roads programme continues to be placed on the management and maintenance of the road system. This is right and proper, bearing in mind the importance of a well-maintained road network to the economic and social fabric of the Province. In Vote 3, ports, the further provision of £700,000 is required to fund the upgrading and modernisation of port facilities throughout Northern Ireland under the port modernisation schemes.
  Moving on to class V, Vote 1—housing services—a token provision of £1,000 is sought to bring hon. Members' attention to additional expenditure of some £5·5 million to finance increased activity on the general housing association programme and to meet the demand for renovation grants. However, this additional expenditure has been more than offset by a combination of additional housing association receipts from equity sales, surplus rental income and by savings on the revenue grant for the Northern Ireland Housing Executive. These savings arise mainly from a reduced requirement for maintenance and from closer control of the level of vacant dwellings.
  In class VI, Vote 1—water and sewerage services—the net additional provision is £2·5 million. This includes
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  £1·9 million for capital works. In Vote 2—improvement of the environment — additional expenditure of some £5·6 million relates, in the main, to an extra £3 million for the urban development scheme, £800,000 for grants to the National Trust and £600,000 for the repair and maintenance of historic buildings. However, this additional expenditure has been offset by savings within the Vote and by receipts from the sale of land, leaving a net requirement of £600,000.
  For Vote 4 — rating, records registrations, surveys and administration — the net increase of some £1·1 million is attributable largely to additional expenditure on computer systems and running costs, which have been partly offset by savings on the purchase of survey equipment and increased receipts.
  Class VII has only one Vote, protective sevices, which covers expenditure on the fire service. An additional £500,000 is sought to cover the cost of an increased allowance to operational staff of the Fire Authority for Northern Ireland.
  I come now to education, class VIII, where Supplementary Estimates are being sought in Votes 1, 2, 3 and 4. In Vote 1, a net additional £4·2 million is sought, and £4·6 million is required to meet the increased cost of school teachers' salaries arising from the April 1986 salary award and from the balance of the 1985 award. Hon. Members will be aware that it is established practice for Northern Ireland teachers to maintain parity in respect of salaries and conditions of service with their counterparts in England and Wales.
  A further £300,000 is required by voluntary grammar schools for books and practice materials for the new general certificate of secondary education examination. There is a saving of £700,000 on capital grants to voluntary schools where progress has been slower than expected on a number of major schemes and on gas conversion work.
  In Vote 2, a token estimate of £1,000 is sought to bring hon. Members' attention to increases which relate in the main to capital expenditure. Increases totalling £1·2 million are required to cover equipment and capital grants to the two Northern Ireland universities. Similarly, capital expenditure at the two teacher training colleges, including investment in new information technology equipment, will require an additional £200,000. These additional requirements are offset by savings of about £1·4 million in the recurrent grants to the universities partly as a result of lower than anticipated rates payments by Queens university, and partly following a revision of block grants on the recommendations of the University Grants Committee. The committee advises the Department of Education in Northern Ireland on the level of funding for the Province's universities based on the principle of parity of provision with elsewhere in the United Kingdom.
  Under Vote 3 — miscellaneous services and administration—an additional £2·4 million is sought. The additions required cover a wide range of services. In the main they reflect allocations as part of the Belfast urban programme, which were made after the 1986–87 Main Estimates were finalised, and the further measures taken by the Secretary of State in October last to aid the local construction industry.
  The final education item is Vote 4, which covers grants to education and library boards. Of the total of £14·9 million sought, £11·5 million is required to cover the cost of a backdated revaluation of the rates on school property.

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  This follows a recent decision by the Lands Tribunal about the method of assessing schools' rateable value in circumstances where the premises are not fully utilised because of falling enrolments.
  Responsibility for the education of mentally handicapped children transfers to the education service on 1 April 1987, and £2 million is required in advance of the transfer to enable boards to carry out essential preparatory work such as the provision of accommodation and the purchase of buses. Increased capital resources of just over £3 million are required for minor works including projects related to the Belfast urban programme, gas conversion and the youth training programme.
  Under class IX—health and personal social services—an increase of some £10·6 million is sought in Vote 1. About £6 million of this is for capital expenditure. This substantial increase will enable work to begin on a number of major capital projects, including additional and improved facilities for geriatric patients in Armagh and additional day care provision for mentally handicapped persons in Londonderry and Banbridge. Again, this capital expenditure will have the added benefit of boosting employment in the construction industry. An additional £4·1 million is sought of which £2·3 million is to supplement the provision already made for the pay awards recommended by review bodies for doctors and dentists, nurses and paramedical staff. The balance is to fund service developments at the Belfast City hospital and at Altnagelvin hospital in Londonderry as well as grants to voluntary organisations, and expenditure arising from a major campaign aimed at reducing the incidence of coronary heart disease in Northern Ireland. In Vote 2—family practitioner and other services—a further £3·8 million is sought, mainly to meet the additional cost of dental and pharmaceutical services, where increases in demand as well as in fees and costs have exceeded earlier expectations.
  In the social security programme, additional provision of £33·5 million is required in class X, Vote 2, to meet increased expenditure on invalid care allowance, supplementary benefits and housing benefits. The increases are offset by a reduction of £1·7 million in the requirement for severe disablement allowance. I assure the House that I am coming to the end of the extensive list.
  In class X, Vote 4—administration and miscellaneous services—an additional £4·7 million is required mainly for salaries and wages and social security adjudication costs. A further £1·7 million is required to accommodate a shortfall in the amounts to be appropriated in aid in respect of administrative costs of the national insurance fund. These increases are offset by a reduction of £768,000 in earlier estimates of requirements, mainly of the amount of the grant to the Northern Ireland Housing Executive for its costs of administering the housing benefits scheme.
  And finally, moving on to class XII, Vote 1ߞoffice and general accommodation services—provision is being sought for an additional £2 million to cover the purchase of office accommodation in central Belfast.
  In these opening remarks I have tried to cover the main features of the draft order and to draw the attention of the House to a number of new items of expenditure. I know that as usual on these occasions right hon. and hon. Members will wish to express their views on both these and other matters. I shall listen with great interest to the points raised and my hon. Friend the Under-Secretary will reply in due course.
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  I commend the draft order to the House.
  9.33 pm
  Mr. Peter Archer: We are grateful to the Minister for that exposition of the Government's requirement. I am not sure that I totally endorse the picture which he seemed to be painting at one time, but it deserved to be addressed to a wider audience of both sides of the House.
  I have not attempted to count the number of times I have taken part in debates on appropriation orders and supplementary appropriation orders. It is so many that one merges into another in my mind. I no longer embark on these debates with the same sense of adventure with which I once did. Each time, hon. Members refer to the proposals in class II of the schedule and draw attention to the same unhappy stories, the same depressing statistics, the same human problems. Each time, the Minister responds to such of the points raised as time permits, and each time nothing else changes, except that the stories become more tragic, the statistics more depressing and the human problems greater.
  Throughout the United Kingdom, those long-term unemployed to whom the hon. Gentleman referred find that the period since they worked becomes longer, the clothing which they cannot afford to replace becomes more threadbare. But it is true that the actual number unemployed as measured by the Government's 18th method of calculating the figures has not increased in the last 12 months. I hope that the Minister will concede that a 12-month period can be less misleading than a three-month period. Many, admittedly, are participating in schemes designed to keep them off the register, but the number has not increased, except in one region—Northern Ireland, where the number unemployed, on the Government's own method of calculation, has risen in the last year from 17·9 per cent. of the population to 19·3 per cent., and it is not confined to any one kind of work.
  Each year the Financial Times publishes a league table of universities according to the success of their graduates from the previous year in finding employment. The last annual survey shows that Queen's university, which for many years was well into the top half of the table, is now 40th out of 44 universities. Of its 1985 graduates, 16·4 per cent. had failed to find work in the year following their graduation, against the United Kingdom average of 11·7 per cent.
  Those are the figures. They represent a lengthening list of companies where it used to be thought that if one had a job there one was safe for life. Now their names are associated with lay-offs. In the last seven years, 64,000 jobs have gone. Since August of last year, Gallaher records '700 job losses, Hughes Tool 40 job losses, Blue Circle 150 job losses, Harland and Wolff 800 job losses. Metal Box up to 174 job losses, Van Heusen and National Supply Company an unspecified number of job losses. Now, we have reached the point where there are more people officially recorded as unemployed than there are people working—a distinction unique in the whole European Community.
  When we speak of the annual subvention to Northern Ireland, it is only fair to point out that the people of Northern Ireland are not allowed to earn the income which would enable them to meet the expenditure of the Province. In 1985, in consequence of the north-south divide in Great Britain, the gross domestic product per

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  head in the south was 109·6 per cent. of the United Kingdom average, as against 93·9 per cent. in the north of England. In the other north, the north of Ireland, it was 74·6 per cent. of the United Kingdom average. And there is little comfort for those in work. The earnings of male workers in Northern Ireland were only 89·7 per cent. of the United Kingdom average.
  The Minister very fairly referred to the problem of unemployment but, if I may say so without disrespect, he referred to it as one might refer to some natural, unavoidable calamity such as the eruption of a volcano. It might have been thought that, since those 64,000 jobs have been lost in the last seven years, this had something to do with the policies of a Government who were elected eight years ago. But we are always assured in these debates that none of this is the Government's business. Even in the debate on the supplementary appropriation order last year, the hon. Gentleman — I am sure that he will be informed of what I have said, because at the moment his attention is distracted—had this to say:
  "The right hon. and learned Member for Warley, West and other hon. Members alluded to the level of unemployment that we must endure in Northern Ireland. We cannot counter unemployment by Government action alone. We need efficient, competitive and innovative employers in Northern Ireland if we are to tackle the problem. I do not see the outlook for employment in Northern Ireland as being particularly encouraging at present. There are still industries under threat and they may have to endure further redundancies."—[Official Report, 4 December 1986; Vol. 106, c. 1125.]
  It did sound a little as though the hon. Gentleman was saying that, if companies cannot sell their goods, that has nothing to do with the economy; it is the fault of employers. May I try once more to explain to him that, if United Kingdom shipowners have no British goods to carry in their ships, they are not likely to order further ships from Harland and Wolff. If farmers cannot afford to buy so many tractors from Hyster, it will not require castings from James Mackie. If people cannot afford to buy the products of Gallaher, it will not order machinery from Molins. Obviously, no industry should be content to rely wholly on the home market, but it is hard for any industry to survive completely without a home market.
  A frequent pattern is for a company to cost its products, taking account of development costs and overheads, so as to make a small profit on the anticipated home demand. The substantial profit, which it is hoped will support futher investment and guarantee the company's future, comes from overseas sales. Unless demand can be generated at home, that process is not possible. Either the company must cost its product at an uncompetitive level or, at best, the price of the exports will simply be swallowed up in the break-even process.
  I turn to class V of the schedule. Last year the 15th annual report of the Housing Executive revealed a new and disturbing pattern. A decade ago, it was possible to point to the large number of dwellings which lacked some essential amenity—about a quarter of the total dwellings in Northern Ireland. Now an additional problem is developing. Dwellings which do not lack amenities are nevertheless deteriorating for lack of repair. That is particularly true of houses in owner-occupation. People are finding it increasingly difficut on reduced incomes to provide for the necessary repairs to their houses.
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  The report indicated that 15·5 per cent. of the housing stock required at least £2,500 to be spent on repairs. If those sums are not spent, the stock of modern, properly equipped houses will be at risk. That expenditure on repairs can be achieved only if the Government are prepared to make money available to owners through repair grants and to the Housing Executive through budgetary provision. The estimated sum is £50 million, but far from increasing the money available by that amount, that was the very sum by which the Government cut the budget of the Housing Executive for 1985–86.
  In addition, there is still a great need for public sector building. The Housing Executive has nearly 25,000 families on its waiting list. Assuming there are no additions to the list, at the present rate of building some of them can expect to wait until the year 2000 before they are given accommodation.
  This year is designated by the United Nations as International Year of Shelter for the Homeless. The Simon Community estimates that there are 7,500 homeless individuals and families in Northern Ireland. They are not people with defective homes, not people facing the problem of housing repairs and not people who are finding it hard to pay their rent, but people who have no home. There are young couples and families, but in terms of numbers the problem seems to be worst among young single people.
  In Northern Ireland there is no legislation which recognises their right to a home and no equivalent of the Housing (Homeless Persons) Act 1977 of Great Britain. I hope that the Minister can tell us when he replies that it is proposed to remedy that.
  The burden of what I am saying is that one does not provide homes for the homeless simply by writing down some words and calling the paper on which they are written a statute. One can provide homes only by building them. There are construction workers eating their hearts out for funding to bring the two parts of the equation together.
  I realise that in Northern Ireland the construction industry has different problems. We know that there are paramilitary organisations which, even if they cannot agree on anything else, agree on how to divide building contracts — either by territorial demarcation or by allocating the bricklaying to one, joinery to another and electrical installations to a third. We have heard that a contractor with his labour force ready to undertake the work is told, "You won't employ those men. We will provide you with a labour force." Unless he is able to resist the pressure, good workers waiting to do a job are laid off so that their work can be done by the protéges of a paramilitary organisation who will hand over a proportion of their earnings to their protectors. We heard recently of ways in which those groups provide themselves with a bonus by organising frauds with tax exemption certificates, the proceeds of which no doubt also find their way into the coffers of those organisations.
  The tragedy is that money is desperately needed to build homes for the homeless, to repair houses that are falling into disrepair and to povide amenities for houses that are unfit. I make no comment as to whether those practices should have been addressed earlier. It cannot be easy for officials who are at risk: gathering evidence is never easy, and police manpower is not always available. However, the Opposition support whatever steps are necessary to ensure that the money goes where it is needed.
  Mr. Scott: I hope that the right hon. and learned Gentleman will recognise not only the additional measure to help the construction industry that was announced by my right hon. Friend towards the end of last year, but the fact that, in much of what I announced today in terms of additional provision, there is a substantial construction element that will help to reduce unemployment in the construction industry.
  I am grateful to the right hon. and learned Gentleman for his support on the issue of paramilitary activity. I am under no illusion that it will be possible instantly to choke the paramilitary exploitation of rackets on building sites or elsewhere. However, I can give him an absolute undertaking that the Government are determined to do their best, recognising that, as we choke one channel, the paramilitaries will seek other sources of finance. However, I am grateful for his expression of support for our efforts to prevent them from using existing rackets for their own purposes.
  Mr. Archer: I, in turn, am grateful to the Minister for his comments. I recognise that some of the funds that we are discussing tonight will assist the construction industry. We must be grateful, I suppose, for a crust, even if we cannot have half a loaf. I hope that he will forgive me if I say that there is still a great deal to be done on both sides of that equation.
  One effect of the housing problems that arise from underfunding is that more people need advice about housing problems. Giving people rights is futile unless we also give them the help that they need to understand their rights and make them effective. Last year Shelter (Northern Ireland) asked for help to fund a housing aid service. It applied to the Under-Secretary, the hon. Member for Wiltshire, North (Mr. Needham), who replied that it was not necessary because the Housing Executive already operated a mobile housing advice unit for its tenants. That strikes me as a rather naive answer. First, it is not only the tenants of the Housing Executive who need advice-more to the point, advice sought by the tenants of the Housing Executive is about their rights relating to the Housing Executive.
  It implies no criticism of the Housing Executive to say that public confidence in any advisory service is not enhanced when it is perceived to be operated by the very authority whose obligations may be in question. In fact, part of the problem of what is sometimes called alienation is the feeling that one cannot get past "them". Even if one asks for advice as to how one can, one finds "them" there, because only "they" can advise one. Perhaps the Under-Secretary will think again about his response.
  Still in the context of employment I invite the Minister to pay attention to class IV(2). Does it include any provision for any phase of the York road-Central station link that would make an important difference to the comfort and convenience of travellers and to the efficiency of industry and commerce? It would also offer employment to a substantial number of people who are now unemployed.
  On class VIII, there is no time this evening to embark on a debate on whether the Government are providing more or fewer resources for education, given the additional expenditure arising from salary settlements. I simply invite the Minister to turn to the evidence which is there for all to see. No figures and statistics are persuasive to school crossing patrol personnel, school cleaners and
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  meals helpers when they are told that they will lose their jobs. Teachers also have been threatened with job losses. Across the public and voluntary sectors, the figure of 300 teaching posts has been canvassed—187 in the control sector. That will not contribute to high morale among the teaching force. There is no greater sense of optimism among university teachers or among university technicians and library staff and those who offer similar services.
  I understand that it sometimes makes sense to take a synoptic view of the services provided to the students and to research in a particular geographical area by the universities as a whole. The Chilver report did not meet with a great deal of opposition when it suggested that there should be a body with the knowledge and resources to coordinate and help to plan higher education in Northern Ireland.
  There can be no complaint that the Butler working party was given the limit that it was. It is fair to say., too, that the universities were represented on the working party. There is a feeling among teaching staff generally, and among those doing other work in the two universities concerned, that representation by distinguished academics does not necessarily constitute representation of all the interests involved. If animals are represented by the cat, the mice may feel that their view could possibly have been overlooked. It is hardly surprising that such a working group should tend to reflect the establishment. I make no complaint about that. I understand that the working group received written evidence from the trade unions involved, and that there is a feeling that there was no discussion with those interest groups and no meeting of minds before the interim report was published.
  I hope that there will be Fuller consultation at the next stage. However, even that will not allay all the fears, if the recommendations in the interim report are intended to close a range of options, and if they themselves are now regarded as beyond further discussion.
  Finally, I turn to another service which raises, yet again, the question of employment which I understand is included in the provision for the Department of Economic Development, class II. Item 5 of class 11 makes provision for schemes that are centred on and directly benefit and are part of local communities. At the same time it provides employment for those with something to offer the community who would otherwise be denied the chance to offer it.
  On 12 February 1987, during Northern Ireland questions, my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) asked about the funding for Action for Community Employment schemes and the Under-Secretary of State for Northern Ireland, the hon. Member for Gosport (Mr. Viggers), seized the opportunity to say how popular ACE schemes had been. He was quite right to say that. He was then asked by my hon. Friend the Member for Ladywood and by the hon. Member for Foyle (Mr. Hume) and myself about six ACE workers at St. Matthew's community centre in Short Strand whose funding had been withdrawn. The only reason given by the Government was that it was not in the public interest.
  The Under-Secretary of State reminded us of the statement of the then Secretary of State for Northern Ireland on 27 June. I hope that he will forgive me. He said 25 June, but he meant 27 June 1985. That statement referred to groups having
  "sufficiently close links with paramilitary organisations to give rise to a grave risk that to give support to those groups

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  would have the effect of improving the standing and furthering the aims of a paramilitary organisation". —[Official Report, 27 June 1985; Vol. 81, c. 449.]
  I doubt whether that will ever be awarded a Nobel prize for literature, but it is clear that that form of words was obviously very carefully formulated. Clearly, no one wishes to see public funds used to benefit paramilitary organisations, except possibly the paramilitary organisations themselves.
  The problem is that a reference to that formula gives no indication to those who manage the groups or the scheme what is alleged against them. They cannot defend themselves or explain anything which may admit of explanation or correct any mistakes because they do not know what the Government have against them.
  On the face of things, it is startling that an Irish language nursery school should be regarded as a back-up for paramilitaries. It seems that a scheme can simultaneously benefit from the Belfast area needs programme and be refused funds by the Department of Economic Development.
  The nursery school in question is housed in premises provided by the Belfast area needs programme. That is not all. It has been told by the Government that its funding will be terminated unless it moves from that accommodation and transfers to other accommodation. The Government funding is dependent on the nursery school leaving the premises provided by Government funding. There are no other premises in that locality, even if it were somehow possible to raise additional funding to rent them.
  But even that is not all. The very vagueness of the Government's reasons leads to further problems. When it becomes known that Government funding has been withdrawn under that formula, others may believe that there is no smoke without fire. Other sources of funding will dry up and teachers will find it impossible to obtain other employment.
  I understand that the Government cannot always give details of sources of information in these matters, but does it have to be left that the Government's reasons are completely beyond challenge for those at the receiving end and completely beyond scrutiny by anyone? Will a Minister at least visit the area and meet some of the people concerned, or is this another instance of people being left to feel that there is no redress or even a listening ear within the constitutional process?
  Mr. Scott: In the Committee discussing the Northern Ireland (Emergency Provisions) Bill we have been debating paramilitary finances and the introduction of a scheme of certification to prevent money from flowing to paramilitary organisations through bogus security firms. I think that in our discussions there the right hon. and learned Gentleman accepted that there could be no appeal and that that had to be an act of the Executive. That was what the then Secretary of State was setting out in his statement in another context. I hope that the right hon. and learned Gentleman will take it from me that, as the Minister who was responsible for bringing the Bunscoile Gailge in Belfast into the state system, I can say that there is no hostility to the concept of people being taught through the medium of Irish at any level in Northern Ireland. I can also say that, if the representatives of the
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  nursery schools are prepared to have informal conversations with officials within the Northern Ireland Office, they will get the best advice that is available to them as to the way in which they can rectify their position.
  Mr. Archer: I am grateful for that intervention. I do not suggest that the Government have some political prejudice against the Irish language school. I am not sure that I accepted in Committee—I am still reflecting on it—that it is not possible to build in some way of taking further a refusal by the Executive. But that is not quite what I was suggesting at this stage in this place. I was hoping that someone would listen. I should be grateful if officials would listen. I am not for one moment saying anything against the dedication and open-mindedness of officials, but it would appear to those concerned to be better if a Minister would listen and perhaps even visit the premises and show them what is going on, which is something that I hope to do myself in the fairly near future. I only invite the Minister to reflect on that and I shall not seek to take it further this evening.
  I suspect that when the Minister replies he will accuse me of moaning. The purpose of appropriation debates is for hon. Members to have a moan. They are based on the principle of redress of grievances before supply and this is an opportunity to express the grievances of those who have approached us. I draw these matters to the attention of the House because in a parliamentary democracy that is the proper forum to discuss the redress of grievances. If discussion in the House does not lead to their redress, there will be those quick enough to argue that there is no future within constitutional politics and to suggest to the susceptible that other methods may be better. That is why I beg the Government to listen to the debate with an open mind and to demonstrate that it really can lead to change.
  9.59 pm
  Sir John Biggs-Davison: The House will be relieved to know that I do not propose to follow the right hon. and learned Member for Warley, West (Mr. Archer) in his wide-ranging and agreeable speech, but I shall respond to his invitation to have a moan. It is a moan that I have indulged in before now. I do that in relation to class VIII, paragraph 3 — expenditure by the Department of Education on various services including sports and allied services. The sum involved is £2,387,000. I am not sure what is meant by "allied services", but perhaps my hon. Friend the Minister will enlighten me when he replies.
  I presume that that sum includes grants paid by the Northern Ireland Sports Council through district councils to the Gaelic Athletic Association in Northern Ireland. I have periodically queried that expenditure but not out of any prejudice against its sports. The Government and the House are right to encourage the Irish language, and the House will have noted what the right hon. and learned Gentleman had to say about that and the Minister's response in his intervention. It is right to encourage the Irish language, the Gaelic culture and Gaelic sport in Northern Ireland.
  Unionists as well as nationalists used to play a part in the old Gaelic league until it became biased towards one political opinion. I tabled an early-day motion applauding the opening of the BBC's Irish programmes. I join the Opposition in congratulating the Gaelic Athletic Association on its centenary. More recently, at the

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  instance of Sir Oliver Flanagan. T. D., with whom I had the pleasure of being associated briefly in the Council of Europe, I raised the vexed matter of the Gaelic Athletic Association's field at Crossmaglen with my right hon. Friend the Member for Henley (Mr. Heseltine), who was then Secretary of State for Defence.
  In 1981, I first raised the offensive rule 15 under which the Gaelic Athletic Association bans from membership those who serve or have served in the British Army, Navy or police. The rule is too antique to have taken any account of the Royal Air Force. When I attempted to correspond with the hierarchy of the Gaelic Athletic Association in Dublin. I received no reply. I am not the only person to complain of its attitude. There are those in the Republic who have questioned the bigoted behaviour of people at the top of the Gaelic Athletic Association. Attempts have been made to change the rules, but in vain. It has made no difference that Mr. Peter Barry has appealed to Northern Ireland Catholics to join the Royal Ulster Constabulary and that members of the SDLP have praised that gallant force. In The Irish Times of 16 January an article by Mr. Michael Finlan entitled, "Has the GAA got a persecution complex?" described the Gaelic Athletic Association as "prickly".
  As my hon. Friend the Minister knows, I referred this abuse to the Northern Ireland standing advisory commission on human rights. The commission has not yet reported on this and the other instances of discrimination which are before it. I understand that the grants made in Northern Ireland are on a reduced scale precisely because of that discrimination. I ask whether the grants should be continued at all, unless the Gaelic Athletic Association can give an assurance that steps will be taken to lift this unjust and bigoted ban in respect of Northern Ireland.
  10.3 pm
  Mr. Michael Fallon: It is a shame that there are not more hon. Members present to scrutinise these formidable powers which have been delegated for some years by the House in the matter of expenditure to the Northern Ireland departments. There is the formidable spending power in total under the territorial block formula and a quite formidable administrative power within that total to switch resources between departments.
  I want to raise three points. If my hon. Friend the Minister does not wish to reply, I should be happy for him to comment later. First, what is the overall expenditure policy of the Northern Ireland departments? My hon. Friend the Minister of State confirmed the other day that public expenditure in Northern Ireland is well over 70 per cent. of the Province's gross domestic product —probably nearly twice the Great Britain figure.
  Secondly, in terms of public spending per head, according to the latest territorial analysis, spending in Northern Ireland is now 52 per cent. higher than it is in England. The higher figure of 52 per cent. suggests that, within that total, there are huge differences.
  I am aware that spending on industrial support, energy trade and employment is now 340 per cent. higher per head in Northern Ireland than it is in England. Spending on housing is 362 per cent. higher in Northern Ireland than in England. For that reason I was rather puzzled by the remark of the right hon. and learned Member for Warley, West (Mr. Archer) that Northern Ireland had to be
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  grateful for the crusts that it received. If those figures represent crusts, I believe that there are those in England who would be grateful for a few crumbs.
  The figure of expenditure of 300 per cent. has increased in the past five years—in 1982 the figure was only 200 per cent. How does the territorial block formula work for Northern Ireland? Are such huge differences accounted for simply by the automatic operation of the formula or are they bargained for, quite correctly and fairly, by Northern Ireland Ministers on the basis of genuine need?
  Thirdly, in relation to part II of the order, what compensatory arrangements will he made in the allocation of expenditure between Departments for the financial years in which the international fund for Ireland begins to operate? I understand that at least two of the three purposes of the fund may be classified as purposes of public expenditure. Therefore, I wonder whether we will see from the Northern Ireland departments compensatory reductions in the appropriations that are prescribed under the departmental headings in those two categories.
  10.6 pm
  The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Peter Viggers): The nature of an appropriation debate tends to be wide-ranging; and tonight's debate has been no exception. Whilst its purpose is to approve the Supplementary Estimate of £99 million for this financial year and a further £1,483 million on account for the next financial year, it affords the opportunity for the House to discuss a wide range of subjects related to Government expenditure.
  Public expenditure in Northern Ireland is, of course, high in comparison with the rest of the United Kingdom. That has been noted by my hon. Friend the Member for Darlington (Mr. Fallon). That expenditure reflects the special needs of the Province and must also be recognised as a tangible sign of the Government's commitment to Northern Ireland.
  My hon. Friend the Minister of State, in opening the debate, spoke briefly about the state of the economy, productivity and employment. As the Minister responsible for industry and in the light of the speech made by the right hon. and learned Member for Warley, West (Mr. Archer), may I add some comments on our strategy in approaching the economic challenge. We are, of course, seeking to reduce unemployment, but that is only one aspect of our work and by itself it is a negative concept.
  If we were to restrict ourselves to that mode of thinking we would be condemning Northern Ireland to continued economic vulnerability, in danger from fluctuation in world trade and in need of continued dependence, on a long-term basis, upon the crutch of Government support.
  We shall, of course, continue to alleviate unemployment, and greater resources have been made available to expand the restart and the ACE schemes. However, in a fast changing world, the reduction of unemployment cannot be an end in itself, nor does it constitute a complete and sufficient policy. To be successful in the long term we need a much bolder and more determined approach.
  Our industrial policies in Northern Ireland are much more ambitious and much more positive. Our policy is to go for further growth in areas of expansion and to do that by the pursuit of excellence in products and services. That requires a comprehensive approach with many components. I will give only some examples.

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  We must look for engines of growth through new technology and growth multipliers through better marketing. We need to promote stronger links between education and industry to encourage the entrepreneurial spirit and harness scientific skills to industry. It is fundamental to competitiveness that products should be well designed for economic manufacture and to international standards. There must be a firm insistence on quality and total consistency. We must get out and pursue world markets and make sure that our products are market-orientated.
  Increasingly, our policies and schemes are shaped to achieve these aims. We have put greater emphasis on training and re-training to keep the Province's work force tuned to the requirements of local and incoming industry. Government want to help industry to help itself, not simply through financial support but by working with industry and the financial and educational institutions to identify key factors for success and to help strengthen the Province's performance in such areas.
  I give some examples of the practical application of these general policy objectives. The Industrial Development Board has launched its quality initiative which has been well received by industry. Similarly, we recently announced a design competition in schools, because design and high quality are essential if Northern Ireland goods are to penetrate export markets. To encourage the development of marketing, the IDB has the 40/30 marketing plan which, in the past 15 months, proved so successful that 65 per cent. of its client companies have taken it up. Innovation in industry is being promoted by IDB's research and development scheme and by the establishment of the Northern Ireland Technology Board. Bright young graduates are being encouraged to go into industry and to start up their own businesses through the graduate attachment scheme and the graduate enterprise scheme. In a similar vein, IDB has established a master in business administration course in industrial development—a unique course—to encourage graduates to address their skills towards the opportunities for economic regeneration. Through the efforts of the Local Enterprise Development Unit and the opportunities afforded by the enterprise allowance scheme, the economy is being renewed by the constant growth of new small companies, many of which will not only survive but grow. The local enterprise programme povides a vehicle for small community-based groups to offer premises and advice for small businesses. LEDU's enterprise grant scheme produced 441 business start-ups in the last financial year.
  In parallel with all these Government initiatives I am able to report some significant successes for Northern Ireland through industrial investment. Recently, Lucas Stability in Antrim set up Northern Ireland's first silicon chip factory, providing 200 extra jobs. BIS/Beecom has set up a hi-tech operation in the new science park at Antrim. The Province now has two Japanese manufacturing companies, which will employ almost 300 people at Balleymoney and Mallusk. RFD, a manufacturer of marine rescue equipment, has moved its headquarters to Northern Ireland. Shorts has won major contracts for its aeroplanes and for its high technology Javelin and Star Streak missiles. Temtech, in Bangor, in conjunction with
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  Medphone of the United States, has recently successfully carried out the world's first heart defibrillation by telephone.
  They are just some examples, but important ones, and there are many more to show that Northern Ireland's economy should not be viewed in negative terms. I accept the points made by the right hon. and learned Gentleman that unemployment is a serious problem in Northern Ireland—of course it is—andthat this matter should be grasped, but I should like him to balance that judgment with the points that I have made.
  The economy of Northern Ireland has endured a great deal over the past years, but there are grounds for optimism that the future could be much brighter.
  A number of points were mentioned during the debate, and I shall try to deal with all the specific points that were raised. The right hon. and learned Member for Warley, West commented on housing expenditure in Northern Ireland and the unfitness of housing. I shall give some examples, in addition to those that have already been given by my hon. Friend in opening the debate, and some facts to put with those that the right hon. and learned Gentleman put before the House.
  It is a fact that unfitness levels have continued to fall and now stand at a little over 10 per cent. compared with over 14 per cent. five years ago. The proportion of dwellings that lack basic amenities was halved in the same period and the urgent waiting list for housing was reduced by over one third since 1981.
  Private housebuilding as soared to about 2·5 times its 1981 level, reaching record levels in 1983 and 1984 and maintaining its buoyancy in 1985 and 1986. Spending on the improvement of the public housing stock has increased three times since 1981, while grant aid for the improvement and repair of private dwellings in 1986–87 is twice the 1980–81 level. Similarly, expenditure by housing associations in 1986–87 is three times the 1980–81 level. These changes have been made possible by levels of funding for the housing programme that have enabled gross expenditure to rise to a level that is 60 per cent. over the 1981 level. I ask the right hon. and learned Gentleman to put these facts with those that he put before the House.
  The right hon. and learned Gentleman also asked about improvement and repair grants. Meeting the demand for 6,000 improvement grants and 6,000 repair grants on the worst of the private stock, which is either unfit or otherwise likely to deteriorate, was part of the 1986 strategy review for housing, and that has been fulfilled.
  The right hon. and learned Gentleman asked specifically about the Housing (Homeless Persons) Act 1977. I can give him some assurance about that. Following a review of the situation in the Province by the Northern Ireland Assembly, the Government accepted its recommendation that Northern Ireland should have legislation that will place a statutory duty on the Housing Executive to secure accommodation for certain categories of genuinely homeless people. It is intended to publish a proposal for a draft housing order about mid-1987. It will contain homelessness legislation that will be broadly similar to that for Great Britain, and it will include a number of miscellaneous provisions derived from the Housing Act 1985 and the Housing and Planning Act 1986. It is the Government's intention to bring the legislation into operation early in 1988. I hope that the right hon. and learned Gentleman will accept that assurance.

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  The right hon. and learned Gentleman pressed again his point about the funding of the Irish language nursery school that is run by the St. Matthew's tenants association. It is extremely difficult for Ministers to comment on specific cases, but I understand why he commented on the very straight bat that I played to questions at Question Time the other day. My hon. Friend the Minister of State intervened and made some points about consultation. There has been consultation. There is an open door, in terms of discussing the difficulties.
  However, the decision that has been taken about the St. Matthew's tenants association has nothing to do with the teaching of the Irish language. At present the Government provide support through the action for community employment programme for eight Irish language nursery schools, located in different parts of the Province, including West Belfast, Omagh and Londonderry. I cannot say more on that subject at the moment.
  The right hon. and learned Gentleman asked about the advice given to tenants and owner-occupiers and specifically about the Housing Executive and the Belfast Housing Aid Society. It provides a service to people with a wide range of housing problems. It is particularly effective in the private rented sector by representing the tenants at rent assessment panel hearings. The Department annually contributes 90 per cent. of the approved running costs of the society, and in the current year has also given a capital grant towards the cost of the society's move to new premises. Similarly, the tenants' participation advisory service that was set up in December 1984 provides an information and advisory service to landlords and tenants in the public and private housing sectors and encourages and develops tenant participation in housing management. The Department has agreed to grant aid 100 per cent. of the cost of the service for a three-year trial period.
  Nevertheless, despite these facts, which I hope will be found to be reassuring, the point made by the right hon. and learned Gentleman about the lack of opportunity for Shelter to provide advice was new to me. As he has raised that point in the debate, I think that it would be right for me to draw that part of the debate to the attention of the Under Secretary, my hon. Friend the Member for Wiltshire, North (Mr. Needham) who has responsibility for housing matters. I am sure that he will do his best to take account of the representations made by the right hon. and learned Gentleman.
  The right hon. and learned Member for Warley, West asked about job losses in the education sector. My hon. Friend the Minister of State, who opened the debate, referred to job losses in education and the general level of available resources. There can be no question about the Government's commitment to the education service in Northern Ireland, which is receiving its highest level of funding at more than £670 million this year. The effective deployment of those resources may sometimes lead to the need for rationalisation in certain activities. That is a matter for the providing bodies, especially the education and library boards.
  The reductions in the number of teachers have been considerably less than those that would have been created by the rate of decline in school enrolments. As a result, pupil-teacher ratios have improved significantly from 19:1 in 1979–80 to 18·5:1 now. Examination results also bear
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  testimony to the quality of education in Northern Ireland, something about which we can be very proud. A higher proportion of pupils gain A-level passes than in England.
  My hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison) raised an important issue.
  Mr. Archer: At the risk of being tiresome, is the Under-Secretary of State able to respond to my point about the York road—Central station rail link? If he is not able to do so, can he write to me later.
  Mr. Viggers: I will do that immediately. I am advised that consultants are undertaking a review of the present transportation strategy for Belfast as an integral part of the preparation of the Belfast urban area plan. The review, among other things, is re-appraising the position on the York road—Central station rail link.
  My hon. Friend the Member for Epping Forest raised the issue of grants to the Gaelic Athletic Association. The Government have frequently voiced their abhorrence in this House of the Gaelic Athletic Association's rule 15, which inhibits the admission of certain individuals, chiefly members of Her Majesty's security services. Let me once again stress that the Government take account of that in assessing the level of grants and the Gaelic Athletic Association receives a significantly lower level of grant on that account. We continue to hope that wiser and more moderate counsels will soon prevail within the association and it is fair to say that there are already signs of that within the association.
  My hon. Friend the Member for Darlington raised a number of very wide points about the funding of the Northern Ireland exchequer. He was kind enough to say that it would be agreeable to him if I wrote to him on those subjects. As the points that my hon. Friend raised were so completely fundamental to the issue of Government funding for Northern Ireland, that would be a sensible idea and perhaps we can have discussions outside the Chamber. However, I can tell my hon. Friend that the funding of the Northern Ireland exchequer is a matter for discussion between Ministers at the Treasury and the Northern Ireland Office. Matters are not decided on a formula basis and are always under review.
  Within my limitations, I have tried to answer the points that have been raised during the debate. In commending the order to the House, may I thank the House for its patience in allowing me to make this, my maiden speech, from the Dispatch Box.
  Question put and agreed to.
  Resolved,
  That the draft Appropriation (Northern Ireland) Order 1987, which was laid before this House on 11th February, be approved.

  Appropriation (Northern Ireland)
    STATUTORY INSTRUMENTS, &c.
    Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments &c.)
    STATUTORY INSTRUMENTS, &c.

      CONSUMER PROTECTION
      That the draft Nightwear (Safety) (Amendment) Regulations 1987, which were laid before this House on 30th January, be approved.—[Mr. Portillo.]
      Question agreed to.

    REVERTER OF SITES BILL [LORDS]
    Order for Second Reading read.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 90(6) (Second Reading Committees), That the Bill be now read a Second time.
    Question agreed to.
    Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).

  Prefabricated Concrete Houses (Thurrock)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Portillo.]
  10.23 pm
  Dr. Oonagh McDonald: Thurrock has about 500 of the 1·5 million prefabricated concrete houses and flats which were built during the 1940s, 1950s and 1960s. More than 200 of them have been sold to tenants and about 300 are still owned by Thurrock borough council. The types of concrete house involved include Airey, Cornish unit, Lecaplan, Stent, Unity, Wates and others.
  The problem with concrete houses, as the Minister well knows, is that the concrete gradually crumbles away, steel reinforcement erodes and cracks appear. The pre-1960 houses are, of course, deteriorating rapidly. The Housing Defects Act 1984, now part of the Housing Act 1985, was supposed to deal with those problems, but from the start the Labour party asked for extra money to be given to councils to enable them to assist owner-occupiers and council tenants, for whom the Government did not allow in the legislation.
  Councils such as Thurrock are struggling to meet their obligations to owner-occupiers under the legislation. First, to give some indication of the problems, I want to refer to a letter sent by the council's consultants, M. Dysons Associates, to the council's housing committee on 20 January this year. Tenders had been requested for the repair and reinstatement of Wates houses at South Ockendon. There are approximately 40 houses and the cost of repairs varies from just over £800,000 to just under £1 million depending upon the tender. In fact, the highest tender, curiously enough, came from Wates Ltd. for the structural reinstatement for Wates houses and comes to just under £1 million.
  The grant applications based on one of the tenders, the cheapest in fact, mean that the council anticipates grant applications of the order of £23,000 per basic house. That is above the nominal £20,000 expenditure limit and the reinstatement costs of some houses would cause a further increase. There are two reasons for that. First, the houses are in Essex where the highest prices in the country are being obtained as a result of the volume of work available to contractors in the area. Secondly, the party wall construction of this variant of the Wates houses is the most expensive to deal with. Comparisons are made with similar Wates houses in the north midlands area and the cost there comes to just over £20,000 for repairs.
  According to M. Dysons Associates, a 15 per cent. loading for work in Essex seems in proportion. The facts on the tenders received by M. Dysons Associates on behalf of the council for 15 contracts for Wates house repairs throughout the country have been reported to the Department of the Environment. Therefore, hopefully the Minister will have information available about the fact that the cost of reinstatement, even at the expenditure limit of £20,000 per house, is sufficient to cause the borough council considerable struggle. However, the costs in terms of the tenders submitted in the Essex area are above the expenditure limit, and that merely makes the problems even worse.
  Some notion of the extent of the problems is given again in the state of applications given by the borough council

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  as of January this year. A total of 42 Cornish unit style concrete houses are the first to be reinstated. The value of the potential grants is estimated by the council to be £522,000. The Minister may well say that the cost of reinstatement was taken into account in the housing investment programme allocation last year, which was £606,000 above the previous year.
  When one looks at the costs of reinstating 42 of the houses. The addition made last year was insufficient to meet Thurrock's problems. The council made clear that the total costs of all potential grants to the owners of concrete houses in Thurrock is over £4 million. The inclusive amount of the council's HIP allocation for 1987–88 is £2 million, which takes account of the 20 per cent. cut on last year's allocation which the Government have just announced. The chief executive of the council said in a letter to the regional controller of the Department of the Environment:
  "My council faces a substantial problem in complying with the legislation to PRC dwellings. There are 240 such dwellings in the borough eligible for reinstatement grants"
  and these will lead to potential grants to the owners in excess of £4 million. Obviously, with the kind of HIP allocation of Thurrock borough council and the costs of reinstating these dwellings, it will be a long time before people have their houses repaired and are able to sell them again.
  I am well aware that the Government have requested bids for a share of the extra £14 million from local authorities set aside for the repair of concrete houses and that these bids should come in by the end of this month. Thurrock will put in its hid. I have already indicated the scale of the problem that Thurrock faces, as do many other district housing authorities. The sum of £14 million will not go far in dealing with essential repairs. If Thurrock council would like £4 million, that would leave only £10 million for other authorities which have similar and even more extensive problems in some cases.
  The first Government statement about the state of these houses was made in November 1983. Many eligible owner-occupiers have been waiting for more than three years for their properties to be repaired, placing many of them in an extremely difficult position. They need to sell those houses and they cannot expect to sell them because would-be buyers would not ba able to get mortgages on them.
  I refer to a different problem concerning Lecaplan and other large panel concrete houses which are not covered by the Housing Defects Act. A letter I have received from the Building Research Establishment says that
  "there is no presumption that these large panel systems are faulty but rather that any remedial needs should be assessed on the basis of a proper understanding of the issues and the best available information."
  Lecaplan houses are not necessarily faulty.
  The problem is that we are still waiting for the BRE report. As long ago as 1985 I received a letter from the Building Societies Association saying that it would be extremely helpful if that report was published as soon as possible. The report is to be published, I understand, in early summer. Therefore, the delays go on and we are still waiting for this extremely important report which will make it easier for us to press building societies to lend on these properties.
  My constituents tell me that a number of major building societies will not lend on these properties. Constituents have had difficulties locally in selling these houses because would-be buyers have been unable to
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  obtain mortgages from the Abbey National, the Leeds, Nationwide, Woolwich, Town and Country and the Halifax building societies. Leading building societies will not lend on such properties. My constituents who live in them and other similar properties, however, are waiting for repairs and suffering greatly. The Government are supposed to favour owner-occupiers, but these owner-occupiers are in a miserable and desperate situation.
  Many of my constituents have invested their life savings in houses which they are unable to sell. Repairs cannot be carried out because the Government will not make money available or allow councils to spend their capital receipts, despite requests from Thurrock to do so. They have also received requests for more flexibility in parliamentary questions that I have tabled.
  This matter has been raised with the Minister in debates before, but he has failed to give a satisfactory answer. All that the Government have done so far is to pass a law and fail to provide the money necessary to meet the responsibilities which it implied local authorities should take on. They desperately need additional funding for such responsibilities.
  It is plainly impossible for Thurrock council to assist my constituents out of its funds for housing. It needs more money. My constituents need to be able to sell their homes and move, either to get a job or for personal reasons. Their inability to do that puts a great strain on them — so much so that some couples tell me that their marriages are under stress as a result. That is intolerable.
  I want to hear three things from the Minister. First, I want to know whether the Building Research Establishment report on large panel houses will be brought forward quickly. Secondly, will the Minister ensure, as far as it is possible for him to do so, that building societies understand that these types of house are not necessarily faulty and that they should be willing to lend on them? Thirdly, will the Minister say what money will be made available so that Wates houses and other concrete houses in my constituency can be repaired as soon as possible?
  10.37 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Richard Tracey): I commend the hon. Member for Thurrock (Dr. McDonald) on giving the House the opportunity to discuss these important topics. I would like tonight to cover three aspects which I know are of particular concern to her — first, the Housing Defects Act 1984 and how it is working in Thurrock; secondly, the position of owners living in properties not designated under that Act but who are concerned about saleability and mortgageability; and, thirdly, repair work for properties remaining in Thurrock's rented stock, and the overall resources available.
  I should like to repeat two basic but very important points about the Housing Defects Act which, as the House will know, is now consolidated into part XVI of the Housing Act 1985. First, the Act attracted all-party support when we took it through Parliament in 1984. We must not lose sight of that fact when we discuss any problems that may have arisen since. It was always accepted that we would need a reasonable period to carry out the assistance programme. That is why the designations allow 10 years for owners to obtain assistance. I must remind the House that well over seven years still remain, so no one need feel that they are running out of time.

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  Thurrock district council, along with certain other authorities, has quite a variety of different designated prefabricated reinforced concrete types—Airey, Cornish Unit, Stent, Unity and Wates. The good news is that there are now National House Building Council approved repair methods for all those types—and others, too. In fact, PRC Homes Ltd.—the NHBC's subsidiary, set up to approve repair methods and provide a warranty—has now approved 28 repair methods for eight different PRC types; and these cover over 60 per cent. of all designated properties. More proposed repair methods are in the pipeline. So, once again, we are making progress.
  The hon. Lady has described some of the difficulties in her constituency. I do not think that it would be appropriate tonight to get into the details of particular cases, though I will of course respond in writing to the points which the hon. Lady made and to any other points she wishes to put. What I would like to stress is that the Act allows the local authority, the owners and the repairers a reasonable degree of flexibility, for example, on the procedures for getting repairs done. My Department has issued guidance on this, first in 1984, when the Act first came into force, and then again last summer, when we put out a circular explaining how local authorities and owners might tackle reinstatement and how this meshed in with the NHBC approval and warranty procedure. But I must stress that final decisions on how to implement the legislation—and therefore on the handling of particular cases—must rest with the local authority concerned.
  I am aware of problems concerning the repair of Wates houses in Thurrock and, in particular, that there are differing views on an appropriate repair method. Under the Act the council has to specify the works to be done and the amount eligible for grant. We look to authorities and owners to reach sensible understandings on actual repair methods to be used: if the council has in mind any particular repair methods—especially one not approved by PRC Homes Ltd—it will need to be satisfied that it meets the requirement of subsequent mortgageability. I understand that in the cases she mentioned of the Wates homes we may be approaching agreement.
  We look to authorities to operate the Act in a reasonable way; and we look to owners to be patient. One approach worth serious consideration, particularly where resources are tight—as I acknowledge they may be—is for the council, owners, and indeed repairers, to achieve an understanding on a likely timetable for assistance, spread over a reasonable period. This allows everyone to plan sensibly and to know where they stand. Obviously, any hardship cases can be dealt with quickly, through repurchase as necessary, as provided in the Act itself. Beyond that, where owners would like repair — and I know many do—a sensible understanding on how it is to be spread over time can be a great help to everyone.
  I should like to turn now to the position of those owners whose properties are not designated under the housing defects legislation. I know that the hon. Lady is concerned on behalf of the owners of the Lecaplan large panel houses. As the hon. Lady knows, properties can be designated under the housing defects legislation only if they are inherently defective by design or construction and if there has been a substantial fall in value by virtue of that fact becoming generally known. Designation is therefore a major step and not one to embark upon lightly. Indeed,
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  many owners do not look forward to the notion of their house being declared as defective, even if there is a scheme of assistance to follow. So far as Lecaplan is concerned, I can reassure the House that we have no current plans to designate.
  What we have done—as the hon. Lady knows and has mentioned—is to commission our Building Research Establishment to carry put a thorough study of large panel buildings generally. Lecaplan is of this large panel type. This research is going well and a major report, which includes structural appraisal, should be complete by early this summer. The hon. Lady has said that originally we had a somewhat earlier date in mind, but it has, quite understandably, taken BRE a bit longer to assemble all the important material it needs. I am sure that the House would agree that we want a thorough and helpful report and that it is sensible to take the time needed to achieve that.
  That report should be valuable to all large panel owners, both local authorities and, of course, their tenants, and owner-occupiers. Also—and this is very important — it will be useful for building societies and other lending institutions when they are deciding whether to offer a mortgage advance. One of the problems we have seen following the PRC issue is very regrettable widespead blight on non-traditional properites in general, even of types that bear little or no relation to those designated under the housing defects legislation. We are concerned in the Department to see this blight removed wherever possible. Good research and the resulting increased understanding all round certainly helps, but we are also talking directly to the Building Societies Association on this matter: and I understand that it expects to issue further guidance to its members in the near future. I hope that that will reassure the hon. Lady to some extent, as that was one of the points she mentioned.
  Again, I have to stress that individual societies or other lending institutions must decide on and take responsibility for their own lending policies. That cannot be a matter for the Government. But I would certainly encourage owners who are having difficulties with the mortgageability of their properties to shop around. Not all societies, or indeed banks or other lending institutions, take the same view.
  If there are technical problems or uncertainties, the local authorities may be able to help with information. They usually commissioned the properties and have maintained the rented ones ever since, so they will have a great deal of local knowledge, which may be very valuable both to owners and to local building societies.
  I hope that what I have said is helpful to the hon. Lady and, of course, to her constituents in Thurrock. My hon. Friend the Minister for Housing and I would be extremely grateful if she could keep us informed of any developments on Lecaplan in her constituency, because we realise that the owners have genuine concerns.
  I turn now to another area of great interest to the hon. Lady and that is the question of Thurrock's rented stock and HIP resources. The Government are concerned about the condition of local authority rented housing. That is why we commissioned the 1985 stock condition inquiry. Indeed, we were the first Government to conduct such a systematic survey, which helped to give individual authorities a better picture of their property. That is why we initiated Estate Action, previously called the Urban Housing Renewal Unit, to work up specific projects for some of our worst affected urban estates. As the House

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  will know, we have made available £75 million for such projects in 1987–88, which is a 50 per cent. increase on 1986–87.
  Indeed, local authorities generally are spending an increasing proportion of their resources on renovation. National expenditure is now running at some £2½ billion a year, which is split broadly 50: 50 between capital and revenue. These are large sums in anyone's language. and we must not forget the role of the private sector. Authorities need to be willing to tap private sector expertise and resources.
  For 1987–88 we have increased the gross housing expenditure provision by £390 million and we expect to see even greater spending on renovation. Obviously, we have to operate within the constraints of the existing capital control system. For example, we must acknowledge the large spending power that has accumulated nationally through capital receipts. Our decision on the overall resources available for HIP distribution had to recognise that fact. Nevertheless, we were able to honour the
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  assurance given by my right hon. Friend the Secretary of State and his predecessors that allocations for 1987–88 would not be less than 80 per cent. of those for 1985–86. I am sure that the hon. Lady will agree that we were absolutely right to do that. Moreover, we have retained, in addition to the £75 million for Estate Action, a national reserve of £14 million for authorities facing particular difficulties with housing defects obligations. We have asked for bids by the end of this month and hope to make the additional allocations by the end of April.
  I hope that I have answered some of the hon. Lady's points. This is only a short debate and we do not have time for much detail. I should like to close on the thought that, whether it be the Housing Defects Act 1984, non-traditional dwellings or local authority rented stock, we are making progress. With patience and good will, that will certainly continue.
  Question put and agreed to.
  Adjourned accordingly at seven minutes to Eleven o'clock.

DUCHY OF LANCASTER
  Magistrates (Lancashire)
  Magistrates (Lancashire)
EDUCATION AND SCIENCE
  Scottish Universities
  Scottish Universities
  Students (Parental Assistance)
  Students (Parental Assistance)
  Queen's Croft Special School, Lichfield
  Queen's Croft Special School, Lichfield
  Swann Report
  Swann Report
  Research Projects
  Research Projects
  Literacy
  Literacy
  University Grants Committee
  University Grants Committee
  Genetic Handicap (Research)
  Genetic Handicap (Research)
PRIME MINISTER
  A330/A340 Airbus
  A330/A340 Airbus
  Satellites (Orbital Slots)
  Satellites (Orbital Slots)
  Engagements
  Engagements
  School Meals
  School Meals
HOME DEPARTMENT
  Greenwich Mean Time and British Summer Time
  Greenwich Mean Time and British Summer Time
  Merseyside Police Committee
  Merseyside Police Committee
  Prison Officers' Hostel (Culcheth)
  Prison Officers' Hostel (Culcheth)
  Immigration Policy
  Immigration Policy
  Concessionary Television Licences
  Concessionary Television Licences
  Birmingham Pub Bombings
  Birmingham Pub Bombings
ENERGY
  Severn Barrage
  Severn Barrage
  Power Stations
  Power Stations
FOREIGN AND COMMONWEALTH AFFAIRS
  Arms Sales
  Arms Sales
  WEU (Assembly)
  WEU (Assembly)
  Diplomats (Offences)
  Diplomats (Offences)
NORTHERN IRELAND
  Plastic Bullets
  Plastic Bullets
SCOTLAND
  Sizewell B Power Station
  Sizewell B Power Station
  Chiropodists (Tayside)
  Chiropodists (Tayside)
  Blood Donors (Tayside)
  Blood Donors (Tayside)
  Life Expectancy
  Life Expectancy
  Cervical Cytology (Tayside)
  Cervical Cytology (Tayside)
  Infant and Perinatal Mortality
  Infant and Perinatal Mortality
  Prescriptions (Tayside)
  Prescriptions (Tayside)
  Chiropody Treatment (Tayside)
  Chiropody Treatment (Tayside)
  Labour Statistics (Tayside)
  Labour Statistics (Tayside)
  Nursing and Midwifery Staff
  Nursing and Midwifery Staff
  District Wards (Dundee)
  District Wards (Dundee)
  Nurses (Resignations)
  Nurses (Resignations)
  Hospital Beds (Tayside)
  Hospital Beds (Tayside)
  Earnings
  Earnings
  Housing Starts
  Housing Starts
  Homeless Persons
  Homeless Persons
  Homeless Persons
  Homeless Persons
  House Possessions
  House Possessions
  Housing Revenue Account (Expenditure)
  Housing Revenue Account (Expenditure)
  Household Income
  Household Income
  House Sales
  House Sales
  Owner-Occupation
  Owner-Occupation
  Mobile Homes
  Mobile Homes
  Health Centres (Argyll and Clyde)
  Health Centres (Argyll and Clyde)
  Manpower Services Commission
  Manpower Services Commission
TRANSPORT
  Lorry Sizes
  Lorry Sizes
  Air Traffic Controllers
  Air Traffic Controllers
  Trunk Roads and Motorways (Expenditure)
  Trunk Roads and Motorways (Expenditure)
  Driver-only Trains (Safety)
  Driver-only Trains (Safety)
  Vehicle Excise Duty
  Vehicle Excise Duty
  Drunk Driving
  Drunk Driving
EMPLOYMENT
  YTS
  YTS
  "Services—the Second Industrial Revolution"
  "Services—the Second Industrial Revolution"
  Labour Statistics
  Labour Statistics
  Community Programme
  Community Programme
  Hotel Classification
  Hotel Classification
  Literacy
  Literacy
ENVIRONMENT
  Rate Support Grant
  Rate Support Grant
  Man-made Mineral Fibres
  Man-made Mineral Fibres
  Community Change
  Community Change
  Housing Investment Programme
  Housing Investment Programme
  Urban Development Programme
  Urban Development Programme
  Heritage Conservation
  Heritage Conservation
  Spectrum Arena
  Spectrum Arena
  Angling
  Angling
  Housing Defects Act
  Housing Defects Act
  Nitrates
  Nitrates
  The Rural Economy
  The Rural Economy
  Water Services (Share Sales)
  Water Services (Share Sales)
  Anti-Fouling Paint
  Anti-Fouling Paint
  London Docklands
  London Docklands
TRADE AND INDUSTRY
  Manufacturing Investment
  Manufacturing Investment
  Rates
  Rates
  Machinery (Investment)
  Machinery (Investment)
  Regional Development Grant
  Regional Development Grant
  Insurance and Pension Fund Investment
  Insurance and Pension Fund Investment
  Employment (Assistance)
  Employment (Assistance)
  Credit
  Credit
  Rolls-Royce
  Rolls-Royce
  Correspondence (Delays)
  Correspondence (Delays)
  United States (Export Controls)
  United States (Export Controls)
  Fireworks
  Fireworks
THE ARTS
  Marketing and Management
  Marketing and Management
NATIONAL FINANCE
  Finance Ministers (Paris Meeting)
  Finance Ministers (Paris Meeting)
  Free Ports
  Free Ports
  Civil Service Pension Schemes
  Civil Service Pension Schemes
  Value Added Tax
  Value Added Tax
  Excise Duties
  Excise Duties
  Tax Revenue
  Tax Revenue
DEFENCE
  RAF Range, Tain
  RAF Range, Tain
  Maritime Strategy
  Maritime Strategy
  HMS Hermes (Replacement)
  HMS Hermes (Replacement)
  Dangerous Military Cargoes
  Dangerous Military Cargoes
  Surveillance Satellites
  Surveillance Satellites
  Trident
  Trident
  Army Resources (Equestrian Duty Time)
  Army Resources (Equestrian Duty Time)
  Contracts (Cancellation Charges)
  Contracts (Cancellation Charges)
  ABM Treaty
  ABM Treaty
  Strategic Defence Initiative
  Strategic Defence Initiative
  Frigate Orders
  Frigate Orders
  Western European Union
  Western European Union
  Tornado Programme
  Tornado Programme
  Nuclear Missiles
  Nuclear Missiles
  Soviet Union Defence Minister
  Soviet Union Defence Minister
  Helicopters
  Helicopters
  Anti-Submarine Warfare Capability
  Anti-Submarine Warfare Capability
  Royal Dockyards
  Royal Dockyards
  Nuclear Capability
  Nuclear Capability
  Nimrod
  Nimrod
  Departmental Land and Property
  Departmental Land and Property
  Air Defences
  Air Defences
  Defence Equipment (Orders)
  Defence Equipment (Orders)
  United States Secretary of Defence
  United States Secretary of Defence
  Cruise Missiles
  Cruise Missiles
  Exports
  Exports
  Bramley Camp, Basingstoke
  Bramley Camp, Basingstoke
  Polaris
  Polaris
  YTS
  YTS
  French Defence Minister
  French Defence Minister
  Pegasus 11–61
  Pegasus 11–61
  Committee of Public Accounts (Projects)
  Committee of Public Accounts (Projects)
  Royal Ordnance Factories
  Royal Ordnance Factories
  AWACS (Contracts)
  AWACS (Contracts)
  NATO (Missile Systems)
  NATO (Missile Systems)
  European Fighter Aircraft
  European Fighter Aircraft
  Force Level, Europe
  Force Level, Europe
  Porton Down (AIDS)
  Porton Down (AIDS)
  Modular Stand-Off Weapon
  Modular Stand-Off Weapon
  Royal Military School of Music, Kneller Hall
  Royal Military School of Music, Kneller Hall
  Defence Procurement (Co-operation)
  Defence Procurement (Co-operation)
  Defence Capability (Costs)
  Defence Capability (Costs)
  Research Expenditure
  Research Expenditure
  Fishing Vessel (Submarine Incident)
  Fishing Vessel (Submarine Incident)
  Pilots
  Pilots
  Nuclear Weapon Programmes (Jobs)
  Nuclear Weapon Programmes (Jobs)
  US Bases
  US Bases
SOCIAL SERVICES
  Cervical Screening
  Cervical Screening
  Health Authorities (Chairmen)
  Health Authorities (Chairmen)
  Medical Practitioners (Fees)
  Medical Practitioners (Fees)
  Departmental Staff
  Departmental Staff
  Benefits
  Benefits
  Rent Arrears
  Rent Arrears
  Occupational Pensions Board
  Occupational Pensions Board
  Maternity Payments
  Maternity Payments
  Family Income Supplement
  Family Income Supplement
  Family Credit
  Family Credit
  Single Payments (Appeals)
  Single Payments (Appeals)
  Hospital Beds
  Hospital Beds
  Births (Sheffield)
  Births (Sheffield)
  McColl Report
  McColl Report
  Social Security Act 1986
  Social Security Act 1986
  Severe Weather Payments
  Severe Weather Payments
  Nurses
  Nurses
  Medical Equipment
  Medical Equipment
  Psychiatric and Mental Handicap Hospitals, Epsom
  Psychiatric and Mental Handicap Hospitals, Epsom
  Expenditure
  Expenditure
AGRICULTURE, FISHERIES AND FOOD
  Beef and Veal Stocks
  Beef and Veal Stocks
  EC Food Aid
  EC Food Aid
  Radiation Contamination
  Radiation Contamination
  Fish Stocks (Seals)
  Fish Stocks (Seals)
  Agriculture Council
  Agriculture Council

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 Carlisle.
Lord Manners—Sat first in Parliament after the death of his father.
Lord Borthwick—Sat first in Parliament.

Eldon Hill Quarry
Baroness David: 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 when the result of the inquiry into the Eldon Hill quarry on the Peak National Park will be announced.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale): My Lords, my right honourable friend the Secretary of State for the Environment has today written to the parties in the case announcing his decision to dismiss the appeal.
Baroness David: My Lords, I warmly thank the Minister for that reply, which is very good news. It is odd how answers to letters seem to go out on the day that Questions are put down. Why are there usually such long delays in issuing the results of public inquiries, particularly about limestone quarries, where a great deal of damage can be done while the results are being awaited? It is a year since the inquiry on this quarry was finished.
Lord Skelmersdale: My Lords, in answer to the noble Baroness, the reason the announcement of this decision was deferred—it could have been made last week—was in deference to her and her putting down the Question on the Order Paper.
Noble Lords: Oh!
Lord Skelmersdale: My Lords, there is general laughter, but that statement happens to be true. In answer to the supplementary question asked by the noble Baroness, this was a complex case in which the inquiry ran on and off for four months. The inspector then put a great deal of effort into assessing much complex evidence and presenting it objectively.
Lord Hunt: My Lords, is the noble Lord aware that I too am absolutely delighted that his right honourable friend has reached this conclusion? Is he aware that Eldon Hill Quarry is arguably the most blatant contradiction in all our national parks of the purposes for which the national parks were established and that any extension of that quarry could only have made the problem of restoring it eventually that much more difficult?
Lord Skelmersdale: Yes, my Lords. I am grateful to the noble Lord, Lord Hunt. The position is exactly as he has stated. However, I would point out that the planning permission for the original quarry does not expire until September 1997, and so we shall not see overnight the environmental improvements that he wants.
Lord Molson: My Lords, in view of this very welcome decision by the Government may we take it that the present Government stand by the criteria laid down by the late Lord Silkin—Mr. Silkin as he then was—in 1949 that permission for the exploitation of minerals in national parks will not be given unless it is absolutely necessary in the public interest and there is no possible alternative source of supply?
Lord Skelmersdale: My Lords, I can tell my noble friend that there has been no deviation from that policy.
Baroness Nicol: My Lords, can the Minister say whether any effort is being made to persuade contractors not to use high-grade limestone as roadstone?
Lord Skelmersdale: My Lords, the Government have made quite clear that they see roadstone being quarried in those places outside the national parks where such a thing is possible.
Baroness Nicol: My Lords, that was not quite the question. The question is whether contractors should be dissuaded from using high-grade limestone as roadstone, because that would have beneficial effects on those quarries which produce high-grade limestone.
Lord Skelmersdale: My Lords, the technical specifications of what is used as roadstone, and indeed ballast on railway tracks, is beyond me. If I may, I shall write to the noble Baroness on that point.
Lord Molson: My Lords, this arises out of my noble friend's earlier reply. To use high-quality limestone for roadstone would not satisfy the criterion that no possible alternative source of supply is available.
Lord Skelmersdale: My Lords, high-quality limestone can on occasions be found outside the national parks and so the situation is rather different.

Road Repairs and Improvements
2.47 p.m.
Baroness Lane-Fox: 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 measures they have taken to improve efficiency in road construction and repair.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, we have taken a wide range of measures to

89
provide better roads at lower costs including increased competition, improved designs and lane rental contracts.
Baroness Lane-Fox: My Lords, I thank my noble friend the Minister for that reply. Is he aware that since putting down this Question I have been helped by very impressive reconstruction of the road outside my home? Having studied that, I am prompted now to ask my noble friend what good achievements there have been as a result of lane rentals?
Lord Brabazon of Tara: My Lords, I am delighted that my noble friend has had a satisfactory repair done to the road outside her home. Lane rental has proved very successful, with contracts being completed on average 38 per cent. more quickly than normally expected. As a result, 500 days of delay were avoided in 1985–86, worth over £8 million to the nation.
Lord Underhill: My Lords, is the Minister aware that in contrast to his noble friend Lady Lane-Fox I travel each day through a rate-capped borough where the roads have very bad potholes and shocking surfaces due to the recent cold spell? Has he any indication that local authorities with these problems have the necessary finance to cope with them? Simply filling in a pothole is not good enough; the pothole will reappear within a few days.
Does the noble Lord recall that in July a Question was put down on the Horne Report on roads and utilities? The Government did not accept one of the recommendations. Has the advisory committee, which has no teeth, been set up, and, if so, what results have occurred?
Lord Brabazon of Tara: My Lords, we have increased the public expenditure provision for local road maintenance by 13 per cent. for 1987–88, continuing a run of increases well above the rate of inflation. Decisions on spending priorities are of course a matter for local authorities. But we hope very much that they will respond by increasing the money devoted to road maintenance. As regards the Horne Report, I am afraid that I do not have the information with me and I shall have to write to the noble Lord.
Lord Tordoff: My Lords, one of the best ways of achieving the improved efficiency to which the Question refers is to support the Transport and Road Research Laboratory. Without wishing to anticipate the report which is due from your Lordships' Select Committee tomorrow, have the Government any plans in the near future to restore the cuts that were made in the funding of the laboratory?
Lord Brabazon of Tara: My Lords, that question is a little outside the one on the Order Paper. Also, as the noble Lord says, your Lordships' committee will be reporting shortly. I shall reserve my judgment until I see the report.
Baroness Lane-Fox: My Lords, is my noble friend the Minister able to say whether improved, modern techniques and efficiency have gone some way towards
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ruling out the damage that was done by the 35 per cent. cuts made on major roadworks during the time of the last Labour Government?
Lord Brabazon of Tara: My Lords, certainly since 1980 we have doubled the provision for repair—on motorways particularly—from 40 miles per year in 1979 to 80 miles per year now. So our record is, I think, pretty good.

Estate Action
2.46 p.m.
Lord Sandys: 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 progress has been made by the Department of the Environment's Urban Housing Renewal Unit, now known as Estate Action, in tackling the problems of run-down council estates.
Lord Skelmersdale: My Lords, since the unit was set up in June 1985, 124 schemes in 63 local authorities have been approved, involving additional targeted resources of £50 million in 1986–87. Under Estate Action's homelessness initiative some £4 million within this total has been approved specifically to enable local authorities to bring nearly 1,000 empty council properties back into use to benefit the homeless. In the next financial year Estate Action will have resources of £75 million to support considerably more new and continuing schemes.
Lord Sandys: My Lords, I thank my noble friend for that very encouraging reply. Can he tell the House whether housing action areas, with which your Lordships will be familiar, will be the same sort of areas as those involved in the present new scheme of Estate Action?
Lord Skelmersdale: Not exactly, my Lords. Estate Action is concerned with finding solutions to problems on difficult-to-manage council housing estates, whereas in housing action areas the prime concern is with modernising run-down private sector housing, typically the pre-1919 stock.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for the list he read out and for his indication of the growth in this programme. But are the criteria wide enough to encompass council estates built in the last 25 years by industrial systems which are in need of urgent repair and which are deteriorating quickly? They represent one of our worst housing problems, and so far little or no additional funding has been received by local authorities to deal with the problem. If they are not being considered by Estate Action, will the Minister take back to the Secretary of State a request that they should be as a matter of urgency?
Lord Skelmersdale: My Lords, the objective of the scheme is to improve the quality of life on council estates. As I said, Estate Action is supporting a wide

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range of initiatives by making the estates pleasanter, safer and more attractive places in which to live. Thus a substantial proportion of its resources have been used in support of, for example, measures to combat crime and vandalism; to improve security; to create defensible space; for heating and insulation packages to produce housing which tenants can afford to keep warm; for environmental improvements; and for the remodelling of unattractive open-plan estate lay-outs, sometimes through community refurbishment schemes carried out by local unemployed people funded by the Manpower Services Commission's Community Programme and the Department of the Environment's Urban Programme.
Lord Sandys: My Lords, can my noble friend tell the House whether Estate Action applies to England and Wales only or to all parts of the United Kingdom?
Lord Skelmersdale: England and Wales only, my Lords.
Baroness Fisher of Rednal: My Lords, can the noble Lord give the House details of any extra finance that has been given to local authorities which have properties in Estate Action areas? Is it over and above what would be given by rate support grant? In other words, is this a special grant that is given to a local authority?
Lord Skelmersdale: It is extra money, my Lords.

Deaths: Winter Increase
2.50 p.m.
Lord Ezra: 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, in view of the reported increase in the number of deaths by 2,000 in the week following the recent exceptional cold spell, they have in mind long-term measures to deal with possible recurrences in future years.
Lord Hesketh: My Lords, the underlying causes of the annual winter increase in the number of deaths are very complex. The underlying trend in excess winter mortality has been downward over the last 35 years, but it remains a matter of great concern. We need to gain more knowledge of the factors involved. My right honourable friend the Secretary of State for Social Services is considering how that can be best achieved. Meanwhile, the Government are spending some £400 million per year in supplementary benefit heating additions to help supplementary pensioners and others on low incomes to meet their fuel bills.
Lord Ezra: My Lords, I thank the noble Lord for that reply. But may I ask him whether he agrees that long-term measures are preferable to short-term palliatives and that organisations such as Neighbourhood Energy Action which draughtproof and insulate the homes of elderly people on low incomes are much to be encouraged? In that connection, will he indicate what replacement is
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envisaged by the Government towards the single payment hitherto made by the DHSS for draughtproofing which is due to come to an end in April next year? If that is not soon decided, is he aware that the work of the NEA could very quickly grind to a halt?
Lord Hesketh: My Lords, the Government recognise the valuable co-ordinating role performed by Neighbourhood Energy Action, of which the noble Lord is chairman. We also fully recognise the value of draughtproofing measures and of the important work undertaken by local insulation projects. Future arrangements to help with the cost of draughtproofing materials are being considered by the government departments concerned in the context of the Government's help to people on low incomes with energy conservation measures as a whole. I appreciate the concern that has been expressed about the need for an early announcement, but it is still too early to say what the outcome of this consideration will be.
Baroness Jeger: My Lords, can the noble Lord say whether the Government agree with the figure of 2,000 as the increase in the number of deaths from hypothermia and whether it includes hypothermia-related illnesses as the cause of death? Can he also tell the House whether the Government are satisfied with the arrangements for a £5 a week severe weather payment, how many applications were received, how many were granted and whether any payments have yet been made?
Lord Hesketh: My Lords, that is a rather confusing number of questions. As regards the 2,000 deaths, they were certainly not all related to hypothermia. Cold weather has of course always caused a rise in the death rate and the problem of the additional number of deaths from all causes—which is what the figure of 2,000 refers to—particularly heart disease, strokes and chest infections, that occur in winter compared with the summer. However, excess winter mortality has declined significantly from in excess of 68 per cent. from 1951 to 1955 to 29 per cent. from 1981 to 1985.
Baroness Jeger: My Lords, what about the £5 grant? There is no answer.
Lord Paget of Northampton: My Lords, does the noble Lord agree with the general scientific view that the fundamental cause of the problems of our species is a tendency to live far too long? Is he satisfied that the Government's efforts here are in the right direction?
Lord Hesketh: My Lords, the Government make a special provision of an extra £200 per annum to all those who achieve the age of 85 and above.
The Earl of Halsbury: My Lords, can the noble Lord urge his department to come into the computer age and realise that the giant computers of the Meteorological Office could within minutes evaluate a points scheme for every postal district in the country which combined temperature, wind velocity and elevation above sea level, transmit it to every post office where pensions and supplementary allowances are payable again within a matter of an hour or so, and allow these things to accumulate once a week?
Lord Hesketh: My Lords, with regard to the gathering of information from the weather stations, it was generally agreed last year that there had been a vast improvement on previous years and I am sure that that will continue.
Lord Harmar-Nicholls: My Lords, in addition to the direct help that a government can and should give in circumstances such as those set out in the Question, will the Government consider giving guidance to families to make an effort themselves to look after their elderly people and not leave it entirely to organised bureaucracy? We know that winter will come. Perhaps the family contribution has a bigger part to play than in many instances it is playing today.
Lord Hesketh: My Lords, I am sure that many Members of the House would agree with that view. In the direct matter of advising the elderly on protection and on keeping warm in the winter, the Health Education Council has issued two training packs, one of which is entitled Your Right to be Warm and the other Warmth in Winter.
Lord Kinnaird: My Lords, is my noble friend aware that if it gets cold enough I would rather be dead anyway?
Lord Hesketh: My Lords, I am grateful for my noble friend's observation.
Baroness Ewart-Biggs: My Lords, to return once more to the replacement of single payments for draughtproofing, is the noble Lord aware that on several occasions his right honourable friend in another place also accepted the principle that it should be replaced and said that an answer would come in due course or shortly? Will the Minister say, first, when this equivocal period of time will finally come to an end; and, secondly, whether the obstacle to coming to a decision is perhaps that the departments involved cannot agree who will bear the cost of replacement of the single payment?
Lord Hesketh: My Lords, I feel that I have already answered this question of the noble Baroness, who I know is the vice-chairman of Neighbourhood Energy Action, when I answered the questions of the noble Lord, Lord Ezra.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord say whether the Government have machinery to study the overall effects of the exceptional spells of cold weather which happen every three years or so and which at times appear to leave us at a standstill without any idea what to do? Can he say whether the Government are studying the point on this occasion so that they will have a policy to deal with the range of problems which arises? Also, will he reply to the question about the £5 allowance put by my noble friend?
Lord Hesketh: My Lords, I think it is generally considered that with each passing year the data that are collected and their quality are improving. We hope this will assist the Government in providing answers to the problem.
Lord Glenamara: My Lords, has the noble Lord seen the recent reports on the carcinogenic substance in the material with which most houses in this country are insulated? Have the Government formed any view on this?
Lord Hesketh: My Lords, I understand that my right honourable friend the Secretary of State for the Environment is expected to make an announcement shortly. There is no reason for householders to remove man-made mineral fibres from their lofts, but they should take simple precautions such as wearing masks, gloves etc. when working in lofts where the insulation is exposed.
Baroness Jeger: My Lords, is the noble Lord unable to answer my simple question on what happened about the £5 weekly allocation?
Lord Hesketh: My Lords, if the noble Baroness could remind me of the point about the £5, I should be most happy to answer.
Baroness Jeger: My Lords, I asked how many applications had been received, how many had been approved and whether anybody yet had any money.
Lord Hesketh: My Lords, the latest figures we have are for last year, when there were 500,000 applications, compared with 170,000 in 1982.
Baroness Jeger: My Lords, I am talking about this year.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that should the Committee stage of the Local Government Finance Bill not have been completed by then it will be adjourned at approximately 7.30 p.m. for approximately one hour, and that during this adjournment the Committee stage of the Coal Industry Bill will be taken.

Trade Unions: Members' Rights
2.58 p.m.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, with the leave of the House, I shall now make a Statement on the rights of trade union members.
Since 1979, we have proceeded step by step to introduce a succession of measures which together have helped achieve the least number of working days lost to industrial action for a generation. We have sought to restore a proper balance of bargaining power between trade unions and employers. We have sought to establish democratic rights for individual members within their unions. Above all, we have sought to promote an environment in which both sides of industry can work together to generate the wealth the country needs.
We have observed closely the impact of our legislation. In general, progress has been marked and encouraging. However, some unions have declined the

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opportunity to put their house in order, and union members have not always felt able to take a stand and ensure that abuses are corrected. It is therefore clear that we need now to take another step both to strengthen the rights of individuals within a union and to reinforce their ability to exercise those rights. That is why we are today publishing a Green Paper, Trade Unions and Their Members, which sets out a number of possible changes, on which comments are invited, as a basis for further legislation.
The Government have always believed that individuals should be able to choose for themselves whether or not to belong to a trade union. We also object strongly to attempts to coerce an employer into putting someone out of work on the ground that the person does not belong to any union or to a particular union. Our earlier measures have certainly reduced the scope for the worst excesses of the closed shop. However, I am afraid that in some industries the power of the closed shop still remains.
We therefore propose measures which will end the legal protection of a post-entry closed shop in any circumstances. The present law allows a closed shop to be enforced if a weighted majority of employees vote for it in a ballot. Few major employers have yet been affected by this provision. But, in the cases where ballots have produced a lawful closed shop, the rights of many individuals to choose whether to join a union or not have been extinguished.
Experience has shown that unions' legitimate interests are not seriously weakened where the closed shop is not protected by law. The repeal of balloting provisions for the closed shop would give any individual dismissed for not belonging to a union the right to compensation for unfair dismissal. We also propose to end all legal immunity for industrial action designed to force an employer to create or maintain any closed shop. In short, we are proposing to end completely the use of the law in any circumstances to sustain the closed shop.
The most important feature of democracy within a trade union must be the right of the members to a secret vote in the direct election and re-election of their union leaders. The 1984 Act established such a right for the election of the voting members of union executives and created a presumption that postal ballots would be used. A large number of trade unions have retained workplace ballots and the conduct of such ballots continues to give rise to controversy. Now is the time to act against these abuses. When we legislated in 1984, many trade unions did not have lists of membership of sufficient quality to serve as electoral rolls. Since 1984 they have been required to have such lists, and they have now had the time and opportunity to draw them up. There is, therefore, no longer any reason why we should not move to the most secure method of balloting available—the secret postal vote under independent supervision.
The process of election is intended to ensure that the leadership of a union is, and remains, responsible to its members. In practice not all trade union leaders have been required to be elected. We now propose to make presidents, general secretaries and any others with seats on the executive subject to direct democratic election.
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The right to choose to go to work during industrial action is an essential freedom. We believe that union members are entitled to a vote on whether their union should call them out on strike. We also believe that they are entitled to continue to go to work and honour their contract of employment if they disagree with their union's call. At the moment, legislation does not give union members any right to take action to restrain their unions from calling a strike without a ballot. Nor do they have any statutory protection against disciplinary action by their union if they cross a picket line or carry on working during a dispute. We propose to give them both.
Recent events have thrown light on the unusual ways in which some unions run their financial affairs. Union members ought to be seriously concerned about some of the manoeuvres which have been used to evade or circumvent the jurisdiction of the courts when unions find themselves in conflict with the law. The Green Paper considers possible safeguards which might be enacted in legislation, of which the most fundamental is a right of access for every member, accompanied by a professional adviser, to current union accounting records.
It is not enough to provide rights and protections for individual citizens if they in practice find it too daunting to claim them. As things stand, trade union members need to be exceptionally determined and courageous if they are to embark on the process of enforcing the full rights which the law now gives them. Parliament has provided agencies to help employees to complain against employers about discrimination on grounds of race or sex. It is clear that there is now a need for a new commissioner for trade union affairs to advise and support union members who need to make a formal complaint and perhaps take legal action against unions and their officials who appear to be failing to comply with statutory duties. The new commissioner would help to make sure that trade unionists can defend both their existing rights and the new rights we propose giving them in this Green Paper.
These next steps which I am announcing today, and which my right honurable and learned friend the Paymaster General will shortly be announcing in another place, are wholly consistent with our whole approach to trade union reform through the period of office of this Government. We believe that trade unions behave more responsibly when they are in close touch with the views of their members and take steps to ensure that their actions command members' support. We have watched closely developments since 1984 and the Green Paper is based on our experience of events since the last legislation. Its proposals frame sensible solutions to specific problems which can be expected to work in practice. Consultation has of course always been an important part of our process of law reform in this area and the Government will welcome informed comment on these latest proposals
That concludes the Statement.
Lord McCarthy: My Lords, I must begin by thanking the Secretary of State for the explanation which he has given of the forthcoming Green Paper. It is difficult for us to react to this very substantial set of proposals having had very short notice of them. I

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suppose therefore that I must thank not only the Secretary of State but also the Guardian. I know that the Secretary of State does not like reading the Guardian and does not believe what it says. However, over the last two weeks, the Guardian has given us a good idea of what would be said this afternoon, and got it right this time.
We need time to consider these proposals. However, the noble Lord will not be surprised when I say that we do not like them. We regard them as "Operation Scapegoat". We think that the lady wants to say with Lady Macbeth, that she has not killed the snake but only scotched it.
I want to go very quickly through the provisions which the noble Lord has advanced. I believe there are five, possibly six. The first matter is the total illegality of the closed shop. Once again, as we said when the previous legislation on closed shop cases came to the House, no evidence has been given of abuse. Very few cases as regards the closed shop have been taken under unreasonable exclusion provisions since the 1980 legislation, and in half of them the trade unions sustained their case.
We have heard nothing about proposed analogues in the professional associations. I ask the Secretary of State if that is why he wants to abolish the post-entry closed shop and not the pre-entry closed shop, since that is what professional associations use. What is the evidence he can put before us, and may we have that evidence in detail, when he says that most unions can sustain their positions without the closed shop? That is not the evidence I have; and it is not what the unions say. I hope that the noble Lord will be giving us more evidence when we come to debate the Green Paper.
The second proposal concerns the rights of members to a ballot before a strike. We are not against that. We are not against membership rights to a ballot before a strike, especially if they are in accordance with the rule books. However, will the Secretary of State tell the House whether, if he is going to take that sort of step for members, it is fair to retain what the Government provided in the 1984 legislation—the right of employers to take action in parallel to force ballots and deny unions protection and immunities unless those ballots take place? If one gives such rights to members, why should one give them to employers as well?
. The third proposal concerns no right of discipline on crossing a picket line. Once again, what is the evidence of abuse?
Noble Lords: Oh!
Lord McCarthy: I hope that the people who are carrying on in this way will get up later and give their evidence to the House. There is plenty of evidence of violence on picket lines; there is also plenty of evidence that we have laws to deal with that violence. But there is no evidence that we have the kind of abuses with which this type of legislation will deal. If there is, I hope that noble Lords opposite will get up and give me chapter and verse.
Then we come to the non-voting member of the executive; to what might be called the Scargill clause. What is the evidence of systematic abuse of members of executives who do not have votes inducing other
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people to vote? What is the precedent? Do we have this legislation in companies, in professional associations, in political parties, in any other country in the civilised world? I believe that the answer is no. What is the evidence of the degree of abuse that justifies introducing yet another regulation of trade unions in this way?
Finally, we come to the question of the independent commissioner. What will be the functions of this independent commissioner? Who will be the independent commissioner? How will he be chosen? Will he be in any sense acceptable to trade unions or will he be by definition unacceptable to trade unions? Is he to be an enemy, or a friend or an independent observer?
In making these points were are not opposing the principle of the regulation of trade unions. We are not saying that trade unions are perfect democracies; merely that they are more democratic than companies, universities or most political parties. We are not seeking to justify their breaking their own rules. We are not seeking to justify their being intolerant or illegal. We say that there is no evidence—and the Secretary of State has put none before us today—for the kind of proposals that he justifies and advances; and we shall oppose them.
3.15 p.m.
Lord Rochester: My Lords, from these Benches I should like to join in thanking the Secretary of State for making this Statement. It is long, detailed and in some respects potentially controversial. We therefore wish to give it the closest examination before arriving at a considered conclusion.
I am glad that a Green Paper is to be published today. That leads me to ask the Secretary of State whether he will agree, or at any rate suggest to his noble friend the Chief Whip, that there should not only be wide consultation with bodies such as the CBI, the TUC and other interested parties before legislation is introduced, but also an opportunity for debate on the whole subject in both Houses of Parliament.
Perhaps I may make a preliminary response on the specific measures referred to in the Statement. Your Lordships will remember that at the time the Employment Act 1980 was being considered we on these Benches opposed the immediate ending of the closed shop on the grounds that such action might drive the closed shop underground. Since then, seven years have elapsed. For my part, I agree that the case now for ending post-entry closed shops and the legal immunity for industrial action designed to force employers to maintain them deserves re-examination and that we shall certainly give it.
As regards postal ballots, perhaps I may remind the Secretary of State that in discussions on the Trade Union Act 1984 we on these Benches were prepared to go further than the Government were at that time. I shall not elaborate on that point now but it enables me to say that we are therefore favourably disposed towards moving further in this direction, as proposed in the Statement. At first sight there seems a strong case also for obliging chief officers of unions to subject themselves to election and re-election at periodic intervals rather than that they should be exempted from that process simply because they may not

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exercise a vote at union meetings. The proposal about strike ballots is perhaps more controversial and wide-ranging but here too we shall examine the Government's new proposal realistically in the light of experience over the past few years.
There are still more proposals in the Statement, such as giving union members access to union accounts and the appointment of a new commissioner for trade union affairs. At this stage we do not necessarily oppose those steps. Perhaps I may express a certain general concern lest legislation concerning trade unions should go too far. I say this in all humility as one who has had some experience of conducting industrial relations on the ground. With that in mind, perhaps I may ask the Secretary of State whether he agrees that in the last resort good industrial relations depend on co-operation between management and employees and that there is therefore a limit on the extent to which legislation in this field is desirable and can be effective.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord McCarthy. At the outset I wish to assure the noble Lord that I would not deny anything I have said in the past. I should like to confirm that I read the Guardian every day; it is just that I do not always accept everything I read in the Guardian every day, particularly when it comes to its opinions.
In turning to the basis of the argument, I notice that the noble Lord asks why we do not do anything about the pre-entry closed shop. The answer is that there is no legal support for the pre-entry closed shop. What we are saying is that we want to take away legal support for the post-entry closed shop. I was glad to hear from the noble Lord, Lord McCarthy, that those on the Benches opposite are not against balloting before strikes. My Lords, you could have fooled me. I read very closely the policy of the Labour Party. It is for balloting, not before strikes but at some distant time when the strikes have had some effect. It seems to me that what we are about and what this Green Paper is about is restoring and reinforcing democracy within trade unions.
The noble Lord said that there is no evidence of abuse. I seemed to detect a certain element of disbelief within your Lordships' House, and we shall have time to look at that. I certainly fail to see what is so difficult about the concept that we have elections for all on executives of unions whether or not they have votes. Let me assure all noble Lords that whether or not the independent commissioner would be acceptable to trade unions, he would be acceptable to trade unionists because it is for the support of trade unionists that we are looking.
I am also grateful to the noble Lord, Lord Rochester, for his desire to give close examination to our proposals. I have no doubt that through the usual channels arrangements can be made to debate this matter in your Lordships' House. I am aware that there are those on the noble Lord's Benches who wished us to go further at some time. We have adopted a step-by-step approach and I believe that when we look at the Green Paper proposals we shall find that there may indeed be a desire to go further on the postal ballot.
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The noble Lord, Lord Rochester, referred to our desire to look into the financial affairs of unions. Of course we cannot legislate for good behaviour. That is probably the great divide between us and those on the Benches opposite. There are probably few in your Lordships' House who did not have the impression that during some notable industrial disputes in the past few years there were what appeared to be financial irregularities. It may be that some of those irregularities could bear further examination.
I hope that we can look closely at this Green Paper. I hope that it will lead towards a world in which we no longer speak about two sides of industry but about the one side of industry with the other side being the customer.
Lord McCarthy: My Lords, before the noble Lord sits down may I ask him to make one point clear? He said that he wants the new commissioner to be acceptable to trade unionists. Is he going to ballot the trade unionists on that?
Lord Young of Graffham: No, my Lords, but I hope that should we have such a person—after all, this is but a Green Paper and a proposal—we would have someone who is approachable and supportive of individual trade union members in this country and not necessarily the power brokers in trade unions.
Lord Boyd-Carpenter: My Lords, may I ask my noble friend to clear up one point in the Statement in connection with postal ballots? Do the proposals contain any provision to prevent the postal ballot papers, when returned to the union office, being either lost, fiddled with or dealt with improperly? My noble friend will know that there have been cases where that is alleged to have happened. May I also ask my noble friend whether I understood him correctly when he confirmed to the noble Lord, Lord Rochester, that your Lordships' House would shortly be debating this Green Paper?
Lord Young of Graffham: My Lords, I am grateful to my noble friend. The date of the debate or the possibility of a debate must be arranged through the usual channels. The suggestion concerns independent postal balloting, which means that presumably the postal ballot papers would be returned to a third party.
Lord Mellish: My Lords, can it be emphasised at this stage to the Secretary of State and, via him, to the Leader of the House that many of us have very strong views on these matters—and this is a fundamental Statement—and feel that the Green Paper should and must be debated in some detail so that we all know what we are talking about?
Lord Young of Graffham: My Lords, I have no doubt that those concerned will pay full attention to what is being said this afternoon.
Lord Dean of Beswick: My Lords, is the Minister aware that as a life-long trade unionist I have had the right to ballot since pre-war and have always exercised it, albeit at a much lower level than is envisaged in this Green Paper? Will the Secretary of State kindly tell the House, bearing in mind that the Government will now

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fund imposed trade union ballots—and they are to be imposed on trade unions—whether any quantification has taken place on the cost of this exercise if it comes to pass? May I also say this to the Minister? From past experience it is clear that you may pass all the legislation you want about closed shops but the question of who people work with on the shop floor depends on the people who actually work on the shop floor. The noble Lord may find himself embarking on a long and tortuous exercise on legislation which when it reaches the shop floor will be absolutely useless.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord. I am well aware that many of the laws which we pass in practice turn out to be rather different. I hope that we will have an opportunity to discuss this paper at length. With the permission of the noble Lord, at that time I hope to bring to the House details of what the cost may be. I think it will be more suitable to do so on that occasion.
Lord Harmar-Nicholls: My Lords, does my noble friend anticipate that when this investigation gets to the point of legislation it will deal with the appointment of officers for life instead of for a fixed term? Is that likely to come within the ambit of legislation?
Lord Young of Graffham: My Lords, this is another matter which I hope any debate in your Lordships' House will cover and which we can then take into account. The Green Paper is just that—it is Green. These are by no means fixed proposals but are matters on which we want to consult as widely as possible.
Lord Harris of Greenwich: My Lords, is the Minister aware that we welcome the conversion of the Government to the cause of secret postal ballots with the ballot papers being sent to the homes of union members? Is he further aware that these Benches twice divided the Chamber on precisely that question during the Committee and Report stages of the 1984 Bill? Is he also aware that we are not at all surprised that many unions have. as he said, retained very unsatisfactory workplace ballots? Does not the noble Lord agree that it might have been slightly better if the Government had accepted those amendments and thereby prevented the abuses which have taken place since then at many workplaces?
Lord Young of Graffham: Alas, my Lords, I was not a Member of your Lordships' House when that legislation was debated. All I can say is that I am grateful for the support given today to our measures. I heard clearly what the noble Lord said.
Lord Wedderburn of Charlton: My Lords, before your Lordships debate the matter further—which will be very welcome—will the Minister place somewhere on the record or in his publications a precise indication of the few employers he mentioned who today suffer from closed shop problems? Will he give the particular trade unions and occasions in relation to the abuses which he stated have occurred and the particular experience of the legislation in detail to which he referred? The noble Lord has come up to the gate in naming names. It is very easy to laugh and say that of course it exists, but unless he gives names he
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will not substantiate the allegations made in today's Statement. Will he undertake to do so before we debate the matter?
Lord Young of Graffham: No, my Lords. I cannot hope to give such an undertaking for the simple reason that if I were to make any disclosure it would not be full and complete because much of this discrimination remains unrecorded and comes within the general tenor of working practices. Your Lordships will have, I hope, an opportunity to debate this matter in full and that is the time when we can ventilate all these issues.

Local Government Finance Bill
3.26 p.m.
Lord Skelmersdale: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Skelmersdale).
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 7 [Restrictions on rating and precepting]:
Baroness David Baroness David moved Amendment No.23:
Page 6, line 29, leave out from ("with") to end of line 30 and insert ("the following provisions of this section")
The noble Baroness said: In speaking to Amendment No.23 I speak also to Amendments Nos. 24, 25, 26, 27, 28, 29 and 39. The purpose of this key group of amendments is to allow flexibility in the final setting of the rate and precept limits and to introduce on a very tight time-scale an element of discretion for the Secretary of State before the rate-cap formulae in Schedule 2 are finally fixed. This will enable account to be taken of changes in the local authorities' financing position since December 1986, when the Bill was published. It will also allow the House to be assured that, in the absence of the normal order-making process for rate limitation, the position of local authorities is being fully taken into account.
As regards the Rates Act procedure, there are serious objections to the lack of discretion for the Secretary of State. These arise from considerations of, first, practicality and, secondly, natural justice. Under Clause 7 as it stands the precept and rate limits for authorities will be fixed by the formulae contained in Schedule 2. The schedule applies common formulae to groups of authorities with the inevitable result that the effect varies among these authorities. A number face serious disadvantage as a consequence of the standard formulae.
The setting of limits by a formula is quite at variance with the usual procedure under the Rates Act. Under that process the setting of expenditure limits in the summer is followed in autumn/winter by a process of redetermination. Authorities make representations as to the level of rate or precept limit proposed. After the completion of that process interim maximum limits are announced. There is a final stage of discussions in mid to late February as to the levels of final maximum limits. That is intended to deal with changes to

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authorities' financing positions which only take place towards the end of the financial year.
The best example of this is the level of an authority's reserves, which can vary substantially towards the end of the year in relation to any over- or under-spending against its budget. The anticipated level of reserves is taken into account at the earlier stages in arriving at the interim limit, and the final total of reserves would clearly be significant in relation to the actual impact of that limit in the following year. This last stage of discussion, referred to in a court case in 1985 as "statutory negotiations", is intended to iron out difficulties of that kind.
In debates on what became the Rates Act 1984, government spokesmen made it clear that the extensive process of discussion was intended as a safeguard against arbitrary decision-making. The introduction of the present Bill on 18th December effectively halted the process half way through redetermination. Eighteen of the 40 authorities affected by Schedule 2 had applied for redetermination and the Secretary of State's response was awaited at the time of the Bill's introduction. The Secretary of State must have been aware at the time the representations were being made that he would be bringing in this Bill, but there was no mention of it then to the local authorities. No response has been given to these representations.
The Government state that representations have been taken into account in the formulae. Quite apart from the fact that the limits are still inadequate for many authorities, it is difficult to see how a series of formulae can constitute a response to individual applications. The whole purpose of the Rates Act process from redetermination onwards is to take account in the individual limits of the precise circumstances of each authority.
A number of authorities which did not seek redetermination were intentionally awaiting the further stage of discussions before making representations. Since the Bill has stopped the whole process, it is clear that the representations of the majority of authorities will not be given serious consideration. In addition to that, I mentioned last night a letter dated 20th March 1986 to Margaret Hodge from the Secretary of State in which he gave an assurance that in later years, that is, from 1987–88 onwards, he would consider the implications of changes in grant entitlement resulting from the removal of the temporary safety net when calculating rate limits for those years. It is worth noting that in this Bill the Secretary of State has prevented himself honouring that assurance by the terms of Clauses 6 and 7 which mean that the position of individual authorities cannot be considered prior to settling a rate limit.
The practical implications of the Bill for authorities will be serious. The formulae in the Bill were fixed at the date of publication, which was 18th December, and no opportunity exists to vary them after Royal Assent. Therefore, no account will be taken of changes in budgetary position, including the level of reserves. In the same way, there will be no opportunity for the Secretary of State to remedy any error of calculation or adjust to any new developments without further primary legislation.
In their representations, local authorities have drawn attention to the serious implications for services in many areas as a result of the limits proposed. The amendment suggests that the Secretary of State should have a proper opportunity to assess those representations at the time of the year when he would normally make his final decisions and when the financial proposition of authorities arising from the current year is becoming clear.
As regards its operation, the amendment recognises the extremely tight timescale that now faces both Ministers and local government. Upper tier local authorities are obliged to set their precepts by 10th March and lower tier authorities by 31st March. Royal Assent to the Bill is likely to fall at some time before 31st March although if this amendment were accepted there would be little objection from authorities to proceeding to Royal Assent at the earliest possible date. It is already clear that upper tier authorities will have to fix their precepts before Royal Assent and it is possible that lower tier authorities will face the same problem.
The difficulty is not confined to rate-capped authorities but affects all authorities which are in receipt of block grant, since the 1987–88 RSG settlement cannot proceed until after Royal Assent. I should like to ask the Minister when he replies to give us an assurance that the 1987–88 settlement will proceed in good time for authorities to know its contents before they make their rates by 31st March. The difficulties caused to local authorities by this Bill on the eve of rate-making are enormous. In these circumstances the amendment seeks to put forward a practical timetable that recognises the time constraint but also avoids the dangers to both government and local authorities when legislating in haste for fixed formulae without a proper opportunity for review as to their practical effect.
The procedure in the amendment would be as follows. Immediately after Royal Assent and the laying of the RSG report, the Secretary of State would serve a statement on each authority covered in Schedule 2. The statement would set out their preliminary limit and invite representations within a timescale specified by himself. This timescale could quite reasonably be a matter of only a few days, given that most authorities either have already made representations or are on the point of doing so. After the period for representations, the Secretary of State would take them into account and set out maximum limits for each authority, which would not be less than the interim limit, in an order. He is thus enabled to take account of the individual circumstances of authorities. Authorities would be notified of the limits. As with the present rate-capping orders, the order would require approval of the House of Commons.
Clause 8 of the Bill already makes provision for substituted rates or precepts. In circumstances where a rate or precept has already been made and the Secretary of State then proposes a different limit after hearing representations, the amendment cross-refers to that clause and makes provision for the issuing of substitutes. In the event of any decision of the Secretary of State as to a final limit being challenged successfully in the courts, the amendment makes similar provision for substituted precepts or rates.
It will he seen that the whole process could take a matter of only two to three weeks and that both the timescale and the contents of the order remain at the discretion of the Secretary of State. The amendment preserves certainty around the rate-making process. It also causes no noticeable inconvenience to ratepayers whose bills for 1987–88 will not fall due until after those processes are completed.
The amendment is a practical compromise between the lateness of the timescale and the need to allow some discretion to the Secretary of State in order to avoid the worst effects of arbitrary decision by formulae. In explaining this series of amendments I have kept to the general principle and purposely not entered into details of how the formulae will affect different authorities. That can be discussed in reference to later amendments. We ask that the promises that were made when the Rates Act 1984 was passing through Parliament should be kept and that natural justice should be seen to be done. Services of many varying kinds to thousands of men, women and children will be affected by the decision on this series of amendments. I hope that the Minister will be sympathetic to them. I beg to move.
Lord Kilmarnock: The main objection to the formula funding, triggered off by this clause and described in more detail in Schedule 2, is that it over-rides the redetermination procedure in the Rates Act 1984, so that all flexibility to take into account special circumstances in different areas and different types of authority is removed. Pledges given under the 1984 Act are, frankly, being torn up, and under the Bill as drafted, authorities will not be able to enter into discussions on a proposed maximum rate. For previously rate-capped authorities, expenditure levels are frozen: for newly capped authorities it means a 2 per cent. increase; and there is a flat 4 per cent. increase for all police authorities regardless of their particular needs. Therefore, we argue that these formulae are excessively rigid. The Bill as drafted means that it will be impossible for the Secretary of State or the authorities to make adjustments once the Bill has been passed without new primary legislation being introduced. That seems unsatisfactory for the Secretary of State, for the authorities and, if I may say so, for Parliament itself.
The principal amendment in this group, as the noble Baroness, Lady David, has so lucidly explained, seeks to reintroduce some element of flexibility by proposing a preliminary limit and inviting representations within a time limit over which the Secretary of State retains control. It could be very tight but at least it gives some opportunity for authorities to make representations over a change in their circumstances, or in consideration of extra or special expenditure which has occurred or is likely to occur. All that could be done within a matter of two or three weeks.
One of the worst features of the clause is that the redetermination procedure has been overridden. The noble Baroness mentioned that, had authorities known in advance that a legislative formula to determine expenditure levels was being contemplated and that there would be no challenge available to them, many more would have submitted information earlier. There is some evidence to show that those that
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applied for redetermination of expenditure levels have had their representations largely ignored.
I have already referred to the discrimination under these formulae among different types of authority. There appears to be some discrimination against ILEA, to which I shall come in the next batch of amendments. It is the only rate-capped education authority not to be given an additional factor to deal with the financial consequences of the final teachers' pay settlement.
This all takes us back to the fact that the Secretary of State had no need to introduce a Bill of this type. It is another instance of a nightmarish morass of complications brought about by excessive central government control of local authority spending. The Secretary of State could easily have introduced a very simple Bill in November or December to rectify the illegality on the block grant, a measure that I think all parties in the Committee would have supported. He has chosen instead to get himself and us into this morass which we are trying to do something to rectify. On those grounds, we support the amendment.
Lord Underhill: I support my noble friend in her group of amendments. In her concluding remarks she said that the amendments propose a practical compromise. It may be recalled that on Second Reading I drew attention in particular to the effect that the procedure in the Bill would have on the new joint passenger transport authorities. I agree with the noble Lord, Lord Kilmarnock, that we shall go in detail into the various formulae on the next batch of amendments.
I want to deal with the criticism levelled at the Government for abolishing the redetermination process, in many cases after authorities had gone to considerable effort to submit their cases for redetermination. In response to that criticism the Government have argued that the cases submitted in support of redetermination applications were considered in detail in setting the percentage increase for each type of authority. That was a very important statement.
The Association of Metropolitan Authorities has challenged this claim generally but, in particular, because of the shortfall of some £26 million that has been clearly identified in relation to the six passenger transport authorities. There is now specific evidence clearly demonstrating that the redetermination applications have not been taken into account in setting the 12 per cent. all round increase in the expenditure for the PTAs. This relates—I have to refer to the body—to the South Yorkshire Passenger Transport Authority. It will have to bear £5·5 million in 1987–88 as a result of the transfer scheme that set up the authority' s public transport company under the Transport Act 1985, of which all Members of the Committee will be aware.
The Department of Transport knows fully the elements making up these costs. About half the £5·5 million is attributable to changes made in the transfer scheme imposed by the department. In common with other PTAs, South Yorkshire's expenditure level has been increased under the Bill by 2 per cent., yet the costs associated with the transfer scheme made for it by the department amount to 12 per cent. of the

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original expenditure level. The extent of these costs was not known at the time that the original expenditure level was set, yet the standard formula ignores that fact.
Perhaps I may give the Committee the timetable. On 19th June 1986, South Yorkshire was given a provisional expenditure level for 1987–88 of £45·2 million. On 22nd July the PTA was informed that its expenditure level was £45·7 million. On 31st July, nine days afterwards, the PTA was told by the department of the modification that it intended to make to its company transfer scheme. The department assured the PTA that the effects of the transfer scheme and the department's modifications would be taken into account by the Secretary of State when he set the expenditure level and precept limits for 1987–88. Then 16th October was the deadline for submission of determination.
South Yorkshire PTA applied for redetermination of £55 million. The key component in its case was the transfer scheme costs imposed by the modifications made by the department. So far so good. On 13th January this year the PTA was informed that the Bill would give a revised expenditure level of £46·6 million, a 2 per cent. increase, but a shortfall of £8·4 million.
I am using this case to prove beyond question that the Government have not reflected the redetermined applications in setting the 2 per cent. increase to PTAs' expenditure levels, and the same can be said of all the other formulae in Schedule 2.
The Minister must explain to the Committee in the light of this evidence—similar evidence can be provided for the other passenger transport authorities—the claim that all applications for redetermination by PTAs were taken into account in the decision to increase their expenditure levels by the standard 2 per cent. This would justify the compromise scheme proposed in my noble friend's amendments.
3.45 p.m.
Lord Skelmersdale: I noted with interest that the noble Baroness introduced the block of amendments without condemning rate-capping. I understand that it is her party's policy to abolish rate-capping, should it get into power. I can only hope that her measured tones in introducing the amendments indicate a change of heart for her party in this respect.
I thought that we agreed in Committee yesterday that the one objective that we all have in the Bill is to secure certainty in local authorities and that the Bill had been drafted with this objective in mind. I regret, therefore, to have to tell the Committee again that the effect of the proposal in the amendments is to create delay and continuing uncertainty about what rate and precept limits in the areas of designated authorities will be.
We shall no doubt be considering the substance of rate and precept limits on the debate on the next set of amendments. That is one point on which I can agree with the noble Baroness, Lady David. I suggest that the points that the noble Lord, Lord Underhill, has raised would be more pertinent in that debate than in this
108
one, if he agrees. I will concentrate, therefore, on the procedures that we have adopted for 1987–88 alone.
As my noble friend Lady Hooper explained on Second Reading, it would simply not have been possible to carry through the normal rates legislation procedures, given the need for the Bill. Our aim throughout has been to give authorities the maximum of certainty in fixing their rates and precepts, given the need for the Bill. We have therefore provided that authorities will be notified as soon as is reasonably practical, after the rate support grant report for 1987–88 is laid before another place of the rate and precept limits that will apply to them.
I assure the noble Lord, Lord Kilmarnock, that my right honourable friend the Secretary of State for Education and Science took full account of the costs of the teachers' pay settlement in deciding the formula for ILEA in the Bill. It was unnecessary to include a separate "T" factor for ILEA because it is in a class of its own and so clearly has it own formula.
If I may stay with the noble Lord, Lord Kilmarnock, because of the total expenditure problem, we have had to roll up the normal rate limitation procedures and adopt the formula approach. We shall be discussing that in detail with the next block of amendments.
In deciding on the formula, we have taken account of the representations made, including those on redetermination applications. What we are doing is for one year only. It is not ideal, but the Government believe that it is the least undesirable course open to us. The Secretaries of State concerned with precept limitation have already written to those authorities explaining to them the effect of the formulae. If those authorities have to set their rates or precepts before the Bill is enacted and the report laid, they will know clearly what will be expected of them under the formulae and can act accordingly.
As the noble Baroness well knows, we announced our firm intentions for the 1987–88 settlement on 13th January. We intend to make the 1987–88 rate support grant report immediately upon Royal Assent to the Bill. We hope to make the report before 1st April 1987.
No sensible authority would, with all that knowledge at its command, issue a rate or precept at a level which would require a substitute one to be issued following Royal Assent. The Bill therefore gives absolute certainty to local authorities and their ratepayers. Under the Local Government Act 1986, local authorities have by law to make a rate by 1st April, as the noble Baroness said. As she also said, the last date for precepting authorities is 10th March under the general rate legislation.
As I have said, nothing but gross uncertainty would come from this set of amendments. Authorities would not know until possibly long after the Bill is enacted what their rate or precept limit was to be. There would also be uncertainty for ratepayers, who would not know how large their bills were to be. I do not accept that continuing uncertainty is necessary or a desirable price to pay for the flexibility in the rate limits which noble Lords opposite seek through this amendment. Accordingly, I can do no other than recommend the Committee to reject the amendments on the grounds

109
that they will produce chaos and confusion where certainty is the objective agreed on on all sides of the Committee.
Baroness David: I am disappointed that the Minister has not seen the point of these amendments. He upbraided me for not having mentioned rate-capping. I was saving the Committee's time by sticking to the matter in hand.
Lord Skelmersdale: I sought to say that I was delighted that the noble Baroness did not raise the matter of rate-capping.
Baroness David: The Minister said that the amendments will make everything happen very much later. I gave a practical timetable which would not take long. It could all be done in a matter of two or three weeks. Authorities would much rather have uncertainty for that length of time if they knew that at the end they would receive fairer treatment. Do I understand that the rate supplementary report may not be in time for local authorities to study it before they have to make their rate on 31st March?
Lord Skelmersdale: It depends entirely on the speed of progress of this Bill through Parliament.
Baroness David: We know the timetable fairly well. My noble friend Lord Underhill gave an example of the unfairness that would be caused to local authorities by the timetable to which they will have to work, and the lack of notice about the representations that they made. In some cases, as the noble Lord, Lord Kilmarnock, said, they made no representations because they hoped to have the opportunity later. It is unfair to a large number of authorities and to the people for whom they provide services.
I seem to have made no impression on the Minister about the seriousness of the objections. This is a matter of principle. What was promised in the Rates Act 1984 has not been kept to; it may only be for one year, but one year is a long time to have grant reduced and not to have the chance to make clear the position about reserves and so on. I believe that I have no alternative but to press the amendment.
3.55 p.m.
On Question, Whether the said amendment (No.23) shall be agreed to?
Their Lordships divided: Contents, 100; Not-Contents, 141.

DIVISION NO.1

CONTENTS

Airedale L.

Bottomley, L.

Alport, L.

Briginshaw, L.

Amherst, E.

Brockway, L.

Annan, L.

Campbell of Eskan, L.

Ardwick, L.

Chitnis, L.

Banks, L.

Cledwyn of Penrhos, L

Beswick, L.

Collison, L.

Birk, B.

David, B.

Blyton, L.

Dean of Beswick, L.

Bonham-Carter, L.

Dennington, B.

Boston of Faversham, L.

Diamond, L.

110

Donaldson of Kingsbridge, L.

Lloyd of Kilgerran, L.

Dowding, L.

Lockwood, B.

Elwyn-Jones, L.

McCarthy, L.

Ennals, L.

McNair, L.

Ewart-Biggs, B.

Milford, L.

Ezra, L.

Morton of Shuna, L.

Falkender, B.

Mulley, L.

Falkland, V.

Murray of Epping Forest,

Fisher of Rednal, B.

Nicol, B.

Fletcher, L.

Northfield, L.

Foot, L.

Ogmore, L.

Gallacher, L.

Oram, L.

Galpern, L.

Phillips, B.

Gladwyn, L.

Pitt of Hampstead, L.

Graham of Edmonton, L.

Ponsonby of Shulbrede, L. [Teller.]

Grey, E.

Hampton, L.

Prys-Davies, L.

Hanworth, V.

Raglan, L.

Harris of Greenwich, L.

Rathcreedan, L.

Hayter, L.

Ritchie of Dundee, L.

Henniker, L.

Robson of Kiddington, B.

Heycock, L.

Rochester, L.

Hirshfield, L.

Ross of Marnock, L.

Hooson, L.

Serota, B.

Hunt, L.

Shepherd, L.

Hunter of Newington, L.

Silkin of Dulwich, L.

Ilchester, E.

Stedman, B.

Irving of Dartford, L.

Stewart of Fulham, L.

Jacques, L.

Strabolgi, L.

Jeger, B.

Taylor of Gryfe, L.

Jenkins of Putney, L.

Taylor of Mansfield, L.

Kagan, L.

Tordoff, L. [Teller.]

Kennet, L.

Underhill, L.

Kilbracken, L.

Wedderburn of Charlton, L

Kilmarnock, L.

Wells-Pestell, L.

Kirkhill, L.

Wigoder, L.

Kissin, L.

Williams of Elvel, L.

Lawrence, L.

Winstanley, L.

Leatherland, L.

Winterbottom, L.

Llewelyn-Davies of Hastoe, B.

NOT CONTENTS

Aldenham, L.

Denham, L. [Teller.]

Allerton, L.

Denning, L.

Ampthill, L.

Derwent, L.

Auckland, L.

Drumalbyn, L.

Bauer, L.

Dundee, E.

Beaverbrook, L.

Eccles, V.

Belhaven and Stenton, L.

Eden of Winton, L.

Beloff, L.

Effingham, E.

Belstead, L.

Ellenborough, L.

Biddulph, L.

Elliot of Harwood, B.

Borthwick, L.

Elliott of Morpeth, L.

Boyd-Carpenter, L.

Enniskillen, E.

Brabazon of Tara, L.

Faithfull, B.

Brightman, L.

Fanshawe of Richmond, L

Broadbridge, L.

Ferrers, E.

Brougham and Vaux, L.

Ferrier, L.

Broxbourne, L.

Fortescue, E.

Bruce-Gardyne, L.

Fraser of Kilmorack, L.

Butterworth, L.

Gainford, L.

Byron, L.

Gardner of Parkes, B.

Caccia, L.

Granville of Eye, L.

Caithness, E.

Gray of Contin, L.

Cameron of Lochbroom, L.

Greenway, L.

Campbell of Alloway, L.

Gridley, L.

Campbell of Croy, L.

Halsbury, E.

Carnegy of Lour, B.

Harmar-Nicholls, L.

Carnock, L.

Hesketh, L.

Cathcart, E.

Hives, L.

Chelwood, L.

Holderness, L.

Cornwallis, L.

Home of the Hirsel, L.

Cottesloe, L.

Hood, V.

Cowley, E.

Hooper, B.

Cox, B.

Hylton-Foster, B.

Craigavon, V.

Kaberry of Adel, L.

Craigton, L.

Killearn, L.

Cromartie. E.

Kimball, L.

Cullen of Ashbourne, L.

Kimberley, E.

Dacre of Glanton, L.

Kinnaird, L.

Davidson, V. [Teller.]

Knollys, V.

De La Warr, E.

Lane-Fox, B.

111

Lauderdale, E.

Portland, D.

Layton. L.

Rankeillour, L.

Lloyd of Hampstead, L.

Renwick, L.

Long, V.

Rodney, L.

Lothian, M.

Romney, E.

Lucas of Chilworth, L.

St. Davids, V.

Lurgan, L.

Saint Oswald, L.

McFadzean, L.

Sandford, L.

Margadale, L.

Sandys, L.

Marley, L.

Sempill. Ly.

Marshall of Leeds, L.

Shannon, E.

Maude of Stratford-upon-Avon, L.

Sharpies, B.

Shaughnessy, L.

Merrivale, L.

Skelmersdale, L.

Mersey, V.

Strange, B.

Milverton, L.

Sudeley, L.

Molson, L.

Swinton, E.

Monk Bretton, L.

Teviot, L.

Morris, L.

Thorneycroft, L.

Mottistone, L.

Torrington, V.

Mzunster, E.

Tranmire, L.

Murton of Lindisfarne, L.

Trumpington, B.

Norrie, L.

Vickers, B.

Nugent of Guildford, L.

Vivian, L.

O'Brien of Lothbury, L.

Westbury, L.

Onslow, E.

Whitelaw, V.

Orkney, E.

Wise, L.

Orr-Ewing, L.

Wolfson, L.

Pender, L.

Wynford, L.

Peyton of Yeovil, L.

Young, B.

Porritt. L.

Young of Graflham, L

Resolved in the negative,and amendment disagreed to accordingly.
4 p.m.
[Amendments Nos. 24 to 28 not moved.]
Clause 7 agreed to.
Schedule 2 [Rates: maximum limit]:
[Amendment No.29 not moved.]
Lord Underhill Lord Underhill moved Amendment No.30:
Page 10, line 39, leave out ("(EL T—(BG + E))") and insert ("(EL x 1.348)-(BG + E)").
The noble Lord said: It will be useful if under Schedule 2 I deal with Amendments Nos. 30 to 35, which concern the formulae.
I am sorry that the Minister did not deal with the points I raised on the example of South Yorkshire PTA, because I was not dealing with the PTA as such but with the whole question of the lack of consideration of redetermination and the fact that that PTA had not had the opportunity to have its points considered. I am surprised that the Minister did not deal with this matter in reply to the amendments from my noble friend, because it vitally affects the position of those amendments and the Government's intention. On my noble friend's amendment, the Minister also said that we must remove any uncertainty; or if he did not say "remove any uncertainty" he said that there must be certainty.
Before going into the details of Amendments Nos. 30 to 35 I must refer to a letter which was sent out only yesterday—the first day of the Committee stage—to a large number of authorities by the Department of the Environment, that is, to almost all those affected by Schedule 2. Some authorities received it only today. Others, including the AMA, have not yet received it, or at least they had not received it by the time I was given this note.
Two further errors are now admitted by the Department of the Environment in connection with this matter. I do not think the Committee would wish me to read the whole of the letter, but that letter to all those authorities, dated 23rd February, says:
"For 1987/88 there was an error in the calculation of the grant-related expenditure assessment for the rate fund revenue account contribution to the housing revenue account for certain authorities. This has consequential effects on some other GRE assessments, the grant related poundage at GRE and on multipliers".
They say that they enclose the corrected versions of the tables. In paragraph 3 the letter reads:
"The departmental paper on the 1985/86 Report also contained an incorrect expenditure figure for one authority which affects grant related poundage for spending at GRE".
Those are two very serious matters. It means that at the very time we are considering the formulae, at the very time we are considering these amendments, we find that the DoE has to send out another communication with two very serious corrections. I hope the Committee will forgive me if I am a little hesitant, but I have had to work on notes which have been hastily drawn up as a result of this letter, which has not yet been received by my association but which was received by some authorities and conveyed to the association. These notes were given to me just shortly before we went into the last Division.
The effect of the two errors relates directly to Schedule 2 of the Bill with which we are now dealing with my six amendments. They change the figures for block grant specified in the Bill as BG and thus the figures for maximum rates and precepts. So at this very late stage the Committee is being told that the Government are changing the purport of the determination in Schedule 2. How can the Committee agree to that when the Government are changing their mind even at this very late stage of the second day of the Committee?
Secondly, it appears that Tyne and Wear Fire and Civil Defence Authority only yesterday set its precept at the maximum produced by the formulae in the Bill, which is covered by the amendments, but using the 13th January figure for BG and not that of the 23rd February correction. Can the Minister say what he now expects Tyne and Wear Fire and Civil Defence Authority to do? Presumably they would be expected to remake their precept. At what cost?
Thirdly, the Government could not have been aware of the full implications for authorities of their determination in Schedule 2 when they changed the figures at this late stage of the proceedings. This admirably illustrates the folly of the Government trying to set rate limits for authorities in this Bill rather than relying on Rates Act procedure, which would enable late information such as this, or that coming from the authorities such as balances, rateable values and so on, to be properly taken into account when setting local authority maximum rates. If ever there were justification for not turning down the amendment which my noble friend moved, surely that is it.
Now we are in the position of having to look at the formulae laid down in Schedule 2. We find that the previous rate-capped authorities have no uplift at all. That is in paragraph 2(1) of Schedule 2. The newly-designated rate-capped authorities have an all-round

113
uplift of 2 per cent; the metropolitan police authorities an all-round uplift of 4 per cent; metropolitan and London fire and civil defences authorities an all-round uplift of 2.5 per cent; and the metropolitan PTAs, to which I have already referred, an all-round uplift of 2 per cent. ILEA is the only one where the affairs of the authority could have been taken into consideration because there is only one ILEA. However, there the uplift is only 0.06 per cent. My noble friend Lady Ewart-Biggs will be dealing specifically with the position of ILEA.
Instead of setting a maximum rate or precept for the individual authorities we are now presented with these flat-rate formulae for each category of authority. The amendment seeks to increase the respective formula for each group by an amount equal to the highest bid made by an authority, on individual redetermination, which is now taken away by the Bill. The common expenditure uplift currently in the formulae as set out in the schedule takes no account whatever of the representations made by individual authorities to Ministers for increases in their expenditure levels to take account of their local circumstances. By substituting the highest percentage increase sought by different types of authority these amendments ensure that no authority loses out by the common percentage uplift approach.
Ministers will say that they have taken account of the representations that have been made to them and that the uplift factors reflect this. I have given evidence on the previous amendment that that could not possibly be so. We now have the latest situation with the two corrections which the department sent out only yesterday. There are substantial differences in the expenditure level offered to rate-capped authorities, and in their bids for increases. There is no consideration given for any local needs or circumstances, such as the effects on some of the joint fire and civil defence authorities which have all been given an all-round 2·5 per cent. increase.
Spending at that level is very serious. Time does not permit full details to be given but all these fire authorities will have shortfalls. For example, the shortfall for Merseyside will be £1·4 million, for South Yorkshire £1·5 million, and for West Yorkshire £2·9 million. We are talking about shortfalls for joint fire and civil defence authorities—very important bodies. These shortfalls involve a large number of cutbacks. They include such factors as not filling staff vacancies to the levels recommended by the Home Office and possibly no replacement of essential operational appliances and equipment.
South Yorkshire has prepared a very detailed document, which no doubt the Minister has seen, arguing the whole of its case and what this block formula process means to it. The problem of manning appliances, the lack of equipment and the lack of trained men could be extremely serious. I say that not only because of the evidence we have before us, but as one who has served for a number of years in the National Fire Service. What will be the attitude of Her Majesty's Chief Inspector of Fire Services on these cutbacks if some of these essential matters cannot be put forward by the civil defence authorities?
On 26th January the Secretary of State stated that the Minister of State at the Home Office was to meet
114
the South Yorkshire authority to discuss matters of concern. I have not heard from South Yorkshire whether that meeting has taken place. But what does it mean? Does it mean that the EL set out in Schedule 2 can be varied by the Minister after meeting the authority? If so, how can it be done? It could have been done if the Government had agreed to my noble friend's amendment, which unfortunately noble Lords have rejected. We then find under the common formula for the joint police authorities that they have all been uplifted by an all-round 4 per cent. We have the position of West Midlands Police Authority with a shortfall of no less than £3·7 million. Service developments cannot be accommodated. It seems inevitable that the increase in police officer establish-ment of 88 posts, which has been supported by the Home Office, must be delayed.
I have mentioned the general position of the PTAs with an all-round increase of 2 per cent. At Second Reading I referred to the concern of two other PTAs in addition to South Yorkshire. I remind noble Lords that Greater Manchester, under the block formula scheme which we are seeking to amend, will receive £11·4 million less than it needs to spend during 1987–88. This size of shortfall can be met only by reductions in spending on subsidised bus networks and/or concessionary fare schemes. The Minister of State for Transport has agreed that improvements are vitally necessary in the introduction of additional tendered bus services in Greater Manchester. He agrees that the PTA is faced with a shortfall. However, the department is reluctant to ensure that the authority has the resources it needs to do that.
Tyne and Wear bitterly complains that the standard formula means that little or no consideration has been given to its individual needs. There is a general complaint about the adoption in the formulae of the use of rateable values instead of the penny rate product, but we shall be dealing with that in later amendments.
The Committee has rejected the revised procedure for the current year. Based on the criticisms here—on the lack of consideration of individual needs, and the two corrections that the department had to make only yesterday—I would suggest that even at this late stage there is time for the Government to realise that something urgent has to be done. If they do not like Amendments Nos. 30 to 35, and the figures that I put forward, they can put their own amendments and figures at Report stage.
4.15 p.m.
Lord Kilmarnock: While agreeing with a great deal that the noble Lord, Lord Underhill, said, I want to talk mainly about Amendment No.35, which deals with ILEA. I understand that the noble Baroness, Lady Ewart-Biggs, will also give her party's position on that.
I want to make it clear from these Benches we believe that ILEA has brought some—I repeat, some—of its woes upon itself by creative accounting and by putting off the evil day when it would have to face up to the redeployment and retraining of teachers above authorised numbers. Instead it has kept some of

115
them idle while there have been shortages in other schools. It is partly because ILEA has been dilatory in putting its house in order that it is now faced with a very severe financial shortfall indeed. I say that so that the Committee can be clear that I am not speaking from an ILEA brief and that I have some criticisms of ILEA.
However, punishing ILEA as drastically as the Government plan to do has the drawback that it also punishes the children of London. At least some of the treatment being meted out to ILEA is unfair and causes great concern. The noble Baroness, Lady Ewart-Biggs, in her Second Reading speech gave some very good instances of how certain schools would be specifically affected. The position therefore of ILEA—however it is brought about—gives ground for considerable concern, and in our view the Government's approach to that authority is far too draconian.
There are two main points about which I wish to ask the noble Lord, Lord Skelmersdale. The first point is on the question of the teachers' pay settlement. In our earlier debate the noble Lord said that that matter had been taken care of in the ILEA formula, and I shall come to that in a moment. However, the fact is that those costs are being made available to otha authorities through the RSG block grant. That distribution mechanism ensures that ILEA, which faces the largest share of those costs, would receive no financial benefit at all. I understand that the Secretary of State has not responded to the authority's request for specific funding of any agreed settlement.
I also understand that since that meeting a paper has been tabled by the grants working group under which the ILEA share of the grant for teachers would be distributed elsewhere and ILEA would receive none of the grant. That situation would result in non-inner London authorities receiving an additional block grant while inner London ratepayers would be expected to pay the full cost of settlement. That surely cannot be right.
In relation to other education authorities, there is the T formula which is intended to take into account the effect of the teachers' pay award on rates and which is based on proposals by the Secretary of State. As regards rate-capped local education authorities the T factor is worth between £1.1 millon and £4.9 million in rate income. However, as I have already said, the Inner London Education Authority does not receive a T factor because DES officials say that the cost to the ratepayer of the teachers' pay award is allowed for in the precise multiplier of 1.006 in the formula in Schedule 2.
Turning to Schedule 2, one sees that the factor of 1.006 is the lowest for any type of authority listed in that schedule. There is listed 1.02 for metropolitan passenger transport authorities; 1.025 for civil defence authorities and 1.04 for police authorities. Therefore the authority faced with the biggest cost for pay rises will be credited with the smallest factor under the schedule. That surely must be wrong. Will the noble Lord, Lord Skelmersdale, say how he imagines that ILEA will be able to meet the pay settlement other than through increasing its precepts on the ratepayers?
116
I shall be very interested to hear the noble Lord's answer to that question.
The second factor relating to ILEA which obviously causes concern is County Hall. My understanding is that the authority has received notice to quit County Hall by 31st March 1988 and that the London Residuary Body is currently offering the buildings for sale. Apparently there is at present no agreement for the authority to share in any receipts from such sales and there is no additional prescribed spending allocation for the purchase of future accommodation. Will the noble Lord, Lord Skelmersdale, explain how it is conceivable that ILEA can live within that formula when it will be faced with the costs of relocation—presumably somewhere in central London—and when apparently it will not share at all in the proceeds of the sale of County Hall, if and when that takes place? I must say that that matter baffles me, and I believe that it baffles many other people.
That situation seems to be inherently unfair when one considers that the inner London ratepayers funded the initial costs of County Hall prior to 1965 and that they continued to pay their full share of capital maintenance costs to date. It is possible that the Government intend to accommodate ILEA elsewhere without additional cost to the authority. Perhaps the Government will make available a special fund so that inner London ratepayers will not be required to meet a new burden in respect of accommodation, which has until now been provided. I should very much like some enlightenment from the noble Lord, Lord Skelmersdale, concerning that point. As regards those two points in particular, it seems to me that there is no way that the Inner London Education Authority, which I have criticised for a certain dilatoriness, will be able to live within the formula set out for it in the Bill. I very much hope that we shall have some answers in respect of that matter.
I repeat that even if the authority has dragged its feet to some extent in doing certain things which it ought to have done—and that is my belief—I am convinced that the authority must not be crippled to the extent of penalising the education of children in London to an even greater degree than exists already. There must be a compromise on the matter: ILEA must move towards the Government and the Government must move towards ILEA. There will otherwise be a further decline in standards in London schools which we on these Benches cannot contemplate with any equanimity. I should be most grateful if the noble Lord would comment on those points.
Baroness Ewart-Biggs: I should like to add a few words to what has already been said by the noble Lord, Lord Kilmarnock, and I should like to speak specifically to Amendment No.35. I shall speak from my base as a governor of ILEA and I shall deal with one or two matters which the noble Lord has not mentioned.
I should like to reiterate that the purpose of the amendment is to amend the precept formula to produce a precept income of £1,068 million as opposed to £942 million at present. That figure falls within the range of the authority's redetermination for 1987 and 1988. The proposed limit would leave a budget gap of £125 million, which is 12 per cent. As

117
the noble Lord, Lord Kilmarnock, has said, that is a very large sum of money which must be cut. The gap will require service cuts of approximately £71 million.
The gap has been caused in two ways. First, the DES underestimated for a number of areas of unavoidable costs such as provision for inflation, pay increases, reserves and so on. Secondly, the spending costs of at least £71 million will be necessary in ILEA's direct spending on education. The authority has costed what budget cuts of £50 million would bring about and the following would result. First, two staff vacancies out of every three would be frozen, including teachers; secondly, there would be a reduction of 6 per cent. across all budget heads, other than those fixed in the short term; thirdly, for students charges would increase by at least 10 per cent.
During the Second Reading debate I gave an example of how the cuts would affect particularly a primary school, where there would be the loss of at least one teaching post by the end of the year. In larger schools with above 300 pupils two teaching posts would be lost. As the noble Lord, Lord Kilmarnock, has said, that would have a very great effect on the services provided by those schools for the children. From the point of view of maintenance one must remember that a great number of schools in the inner London area are quite old and therefore maintenance is very important. The moment that a school building starts to crumble the situation will be very serious. With budget cuts of only £50 million maintenance in all schools would be cut by as much as 60 per cent. The effect would therefore be disastrous.
During the Second Reading debate the Minister unfortunately talked constantly of ILEA being a very high-spending authority. The noble Lord did not mention that what comes out of that high spending is very much to the benefit of students and children attending those schools. I should like to remind the Minister of one or two records of achievement which have been generally accepted as coming from ILEA schools. For example there is very close co-operation with business. There is a greater degree of teaching involving computers and there are extensive language courses. There is also a strong parent-teacher involvement which has been used as an example in other education authorities. There has been great access to further education with 260,000 adults attending courses.
As the noble Lord, Lord Kilmarnock, said, these achievements should not be endangered by an arbitrary spending limit which is the objective of the Bill. I hope the Minister recognises that although the authority has spent a large amount of money, it has had some very remarkable results. I hope that he will listen to the arguments put forward in Committee.
4.30 p.m.
Lord Silkin of Dulwich: I should like to point out a printing error in Amendment No.30. No doubt the Minister has already had his attention drawn to it. The formula set out in Amendment No.30 is not in line with the formula as set out in the relevant part of the schedule. There is a "T" which ought not to be there. Does the Minister wish to tell me that he has already observed that error?
Lord Skelmersdale: I am very grateful to the noble and learned Lord. The error has been pointed out to me. However, while he is speaking about the primary formula, as we might call it, in this block of amendments, will the noble and learned Lord say whether or not the amendments intend line 40 to remain as printed in the Bill; namely, divided by rateable value?
Lord Silkin of Dulwich: I certainly cannot answer at the moment, but I am sure that my noble friends will be looking at that point in order to give an answer. As regards Amendment No.30, the Minister is aware of the error and I assume that nobody has been put in any difficulty as a result. Perhaps the amendment can be read as not having a "T". Without weakening the force of the speeches of my noble friends and the noble Lord, Lord Kilmarnock, which all go very much to the merits of these amendments, I should like to talk about the extraordinary circumstance resulting from the two letters of 23rd February sent by the department to the chief executives, to which my noble friend Lord Underhill has already referred.
In the debate on the last series of amendments my noble friends urged that there should be some further opportunity for the local authorities to make representations however short the time available. As I understood it, the Minister's reply was, "No, because there is a need for certainty". The certainty that apparently exists is one which has the result that between 13th January—the date a letter was sent from the department to the chief executives, the letter which is referred to in this latest correspondence, enclosing the paper setting out details of the Secretary of State's intentions for the 1987–88 rate support grant settlement—and yesterday, errors have been discovered which alter the picture.
As the Committee has heard, the Tyne and Wear authority has already acted upon the original letter. It is a pity that when the Minister replied to my noble friend's introduction of those amendments and relied upon certainty, he did not mention the letters which were sent yesterday and which disclosed the degree of uncertainty that apparently existed. For all we know, there may be a great deal more uncertainty in the future. If two errors are discovered within a matter of a month or so while the Bill is actually proceeding through Parliament, who knows what other errors there may be?
This is a matter of very great importance to which the Minister must immediately give his attention. The whole future of discussions on the Bill will be tied up to some extent with the question of how certain we are to assume the contents of the Bill to be. Are they to be changed? Are the two errors, specifically referred to in the letter, validated, or will they be validated by the provisions of Clauses 4 and 6? Alternatively, will they escape from the validation which we debated at such length yesterday?
Much of the argument put forward by the Government rested upon the basis that there must be certainty—what certainty when we are faced with amendment of the Bill on the hoof, as it were, as it goes through Parliament? Even the figures which have been given to the chief executives by the department on the authority of the Secretary of State are changed as we

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proceed. What we had regarded, subject to the amendments that we have moved, as being certainty, at least as regards the figures in the Bill, we now find cannot be trusted.
I hope that before the Minister even gives his attention to the specific contents of this amendment, he will, as a matter of principle, tell the Committee what the Government propose to do about the serious errors which destroy the whole fabric of the legislation which we are discussing.
Baroness Gardner of Parkes: I am sorry that I was called from the Chamber and that I was not here when the amendment was introduced. I have, however, heard a great deal of discussion including a rather emotional speech concerning ILEA and what might be the effect of rate-capping on ILEA. I believe that ILEA has to be continually rate-capped if inner London is to survive at all in terms of its resident population, certainly until such time as the rating system may be changed.
The population in inner London consists largely of elderly people. Although a great many of these elderly people are on rate rebates and therefore not directly affected, a great many do not receive a rate rebate. They are people who have scrimped and saved, who have been careful over the years and who find sudden and violent increases in rates a terribly heavy burden for them. They are the people who suffered so badly before the Rates Act 1984. I believe that it was because of the tremendous jump in the rate year after year in respect of the Inner London Education Authority, even more so than the Greater London Council, that the Rates Act was introduced.
As the Committee is aware, I was a member of the Greater London Council. In its final year a budget was passed after greatly prolonged argument. It was a budget which the Conservative members of the Greater London Council had insisted upon. That budget was well below the rate-capped level. Yet, within that final year we were unable to spend even the amount that was passed, much less the extra 2p in the pound that would have been allowed by rate-capping. It was more generous than the budget we actually passed, yet we ended the year with a great surplus. Because of rate-capping, a great deal of thought had to be given to good housekeeping principles.
In all my time at County Hall I represented an outer London borough. Each outer London borough runs its own education authority. I believe the education provided in the outer London boroughs was very adequate indeed. ILEA has a good reputation, particularly for handicapped children and special cases, but it does not have a good reputation for ordinary education. Sadly one of my children suffered under the ILEA system because I thought it was wrong not to use the state education system. Instead I found that, although money was being splashed around, care and thought were not.
Having listened to the points made—which I think were valid and sincere points from the noble Baroness, Lady Ewart-Biggs—I believe that there is a strong case for rate-capping for ILEA to continue to enable inner London to remain viable and to allow boroughs such as Westminster, which are considered to be rich and
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wealthy yet have control over only a very small proportion of their rate every year as local expenditure is so restricted and limited, to keep the rate within people's means. I believe it was 14p from £1·35 in the past. It has perhaps changed a little now with the abolition of the Greater London Council. But the ILEA rate directly affects everyone living in the inner city because the amount is so great.
I think that rate-capping each time will be carefully considered. It will not be a purely arbitrary decision. It will mean that the authority concerned, in this case ILEA, has to look carefully at its expenditure and plan good housekeeping. That will be to the benefit of all those paying rates and receiving the services.
Lord Kilmarnock: I always listen to the noble Baroness with care because she usually talks a great deal of sense. But I should like to ask her on this occasion whether she agrees that, if the Government do not make special allowances to ILEA to cover the Secretary of State's new round of teachers' pay awards—which is the situation we were debating while she was out of the Chamber—precisely the problem she fears will come about. The precept added to the rate, which is paid by the elderly people she is so concerned about, will rise. Therefore this is an argument in favour of at least helping ILEA to cope with the Secretary of State's new pay awards.
Baroness Gardner of Parkes: When I was in the Chamber earlier this afternoon I thought I heard the Minister say that it was not correct that there would be no help for ILEA to meet the teachers' pay awards. Perhaps we could ask him to repeat that. I was here and I thought he made the statement that ILEA would not go unaided.
Lord Kilmarnock: I should of course not speak for the Minister, but what I thought he said was that that is already covered in the formula to be applied to ILEA in Schedule 2. In my speech, and I think also in the speech of the noble Baroness, Lady Ewart-Biggs, we cast doubt on that proposition. Indeed we are eager to hear from the noble Lord, Lord Skelmersdale, on that.
Lord Graham of Edmonton: The noble Baroness, Lady Gardner of Parkes, has far more experience both of ILEA and the GLC than myself, but in commenting upon the ability of ILEA to control its affairs, she should look carefully at the recent report by the Audit Commission. It criticised expenditure by local authorities, but it said nothing about ILEA. My noble friend Lady David took the opportunity in a recent debate not to laud ILEA because we know there are problems. But we should be careful. Those who have studied the matter in detail recently with a critical eye have not been able to criticise ILEA about the management of its money.
Baroness Gardner of Parkes: I find the point made by the noble Lord interesting. I think he is referring to the recent audit report which we debated. I agree with what he said about that, but we had another report some months earlier which stated that ILEA was the most expensive and least effective education authority in the country: in other words, the worst value for money.
Lord Graham of Edmonton: It has the worst problems too.
4.45 p.m.
Lord Barnett: I hope the Committee will not mind ill make a brief intervention. I did not intend to do so. I listened with great interest to the noble Baroness and, like her, I do not wish to get involved in the emotive nature of the debate. But I should like to say a word about the practical problems involved in this part of the Bill as it now applies.
I had a little experience in another life, as it were, in squeezing local authority expenditure. In no way do I wish to apologise for that because I thought that what I was doing at the time was right and necessary. I entirely take the point that the noble Baroness was making, but I am concerned that, even assuming that the Government are right to rate-cap the local authorities that are affected in the way described, can it be practical to do so at such short notice? I hope that at the time when I was cash limiting local authorities and others of my friends I took account of the practical nature of being able to do the job. Here, as I understand it, if the level of rate-capping set out in the Bill applies. we are now very near to the start of the year 1987–88 and, for example, one way or another, ILEA will have to find in the region of £125 million. That is something like 12 per cent. of its total budget.
Even assuming that the noble Baroness and the Government are right and the levels of expenditure of ILEA both for 1986–87 and in the past were far too high—for reasons which she has argued in the past and argued again today and which I do not necessarily accept or ask anyone else to accept—it is asking a lot to expect a local authority now, for a period a few weeks ahead, to make plans for cutting 12 per cent. off its budget. Inevitably, even if it tries to do it, the net result will be either chaos or expenditure at the beginning of the year (which inevitably it will not be able to cut because it could not do it in the time), and therefore the cuts coming later in the year would have to be so excessive as to make nonsense of what the Government are hoping to achieve even if they want to achieve it later. All I ask the Committee to understand is the practical nature of imposing cash limits, which is what this is in effect, in so short a space of time.
When I had—I nearly said the good fortune—the misfortune to be Chief Secretary to the Treasury and I sought to impose cuts on my colleagues, at no time did I seek to do so a few weeks from now. I sought to do so usually at least a year later so that one could plan for it. It seems to me that what the Bill is trying to impose—I am not getting into the emotive nature of the argument—is totally impractical. I ask the Minister to reply to the practical point, as well as all the emotive and other questions that have rightly and properly been put to him by my noble friends. I hope he will deal constructively with the practical problems that will face ILEA and other local authorities in the next few weeks to bring their budgets within the levels that have been spoken of.
Lord Boyd-Carpenter: The noble Lord, Lord Barnett, was a very distinguished Chief Secretary to the Treasury and many of us admired the work he did
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there—perhaps more of us on this side of the House than on the other. I speak with some experience of the matter.
Lord Graham of Edmonton: That is true.
Lord Boyd-Carpenter: I am infinitely obliged to the noble Lord, Lord Graham. I am glad I carry him with me for once: that is most reassuring to me.
I think the noble Lord, Lord Barnett, slightly overstated his case. It is not fair to suggest that the figures to be provided for the local authorities concerned are suddenly now bursting upon their astonished gaze only a few weeks—the noble Lord used the phrase "a few weeks"—before the beginning of the financial year. This Bill has been through another place. This Bill was in another place a considerable time ago. The figures have been available for some time. The noble Lord is on a bad point when he suggests that figures which were known towards the end of last year are inapplicable to the coming financial year.
He must remember from his days at the Treasury that most of the figures for the estimates were discussed, debated and settled in the months of November/December for the forthcoming financial year in April. I do not have with me the exact dates when this Bill was in another place but it was some weeks ago, and not wholly out of line with that. Therefore for once in his distinguished career I think the noble Lord is overstating a case. I believe that the time the local authorities have had, dating back from the time when these figures were first known, is not unreasonable.
Lord Barnett: With great respect to the noble Lord, who is an equally distinguished predecessor, if I may put it like that, of both my position as Chief Secretary and my position as chairman of the Public Accounts Committee, I am surprised. What he is saying is that those involved in local authorities should have taken account of a piece of legislation not yet on the statute book. What I was saying is not what the 1986–87 Budget should have been, in accordance with what the Government would have liked, but what it actually is. Taking that as the starting point—as it is—then there has to be a massive cut starting from 1st April. That is the main point, and indeed the only point, that I was seeking to make—the practical nature of the problem.
Lord Boyd-Carpenter: I was also dealing with the practical nature of the problem. But surely the noble Lord is being impractical when he says that local authorities should not pay attention to a public Bill, published and introduced by a government with a substantial majority, all the facts and details of which have been known for some considerable time. Is he suggesting that they should simply hide their eyes from it and say that they will pay no attention to the Royal Assent? You cannot carry on government that way, and it is utterly unrealistic and irresponsible to try to.
Baroness David: I wonder whether I may remind the noble Lord of when this Bill was introduced.
Lord Boyd-Carpenter: Please.
Baroness David: It was published on 18th December, which was the day when both Houses, I think, were going into recess. There was then the Christmas holiday, and the Second Reading of the Bill was not until 12th January. It was rushed through another place; there was no Report stage and it was guillotined at the Committee stage. It has not been published for all that long.
Lord Boyd-Carpenter: I am much obliged to the noble Baroness for giving me the exact date. I knew it was before Christmas some time. However, the figures she has given completely destroy the statement of the noble Lord, Lord Barnett, that it was a matter of only a few weeks. It is a ridiculous exaggeration to describe the period from 18th December to 1st April as only a few weeks. It is a substantial period. What is more important, as I was trying to say, is that it is a period very much in line with the period in which most spending departments learn from the Treasury of the likely provision to be made for them for the forthcoming financial year. It is not at all out of line with that; nor, I repeat, is it properly described as a few weeks.
Lord Bellwin: If anyone can join in just on this one narrow topic, let me say that I very much agree with what my noble friend Lord Boyd-Carpenter has just said. The Committee may say, "Well, he would, wouldn't he!". I almost invariably have that great pleasure, and it gives me no trouble at all. But I think that he has a valid point. If we are talking about the amount of time that authorities have by way of advance notice, I have to say, as I have said before in your Lordships' Chamber on more than one occasion, that I think back over the years to the amount of notice we used to be given by way of information when I was in local government. Believe me, the time that is given now is far, far longer than we used to receive.
I thought that my noble firend's point was a valid one when he talked about the Bill coming before Christmas. In practical terms the authorities know more or less whereabouts these numbers are going to be. It is only because of the need to regularise what has been going on that there has been a delay. However, it is not a delay in their having the information but a delay in validating what they have to do.
Lord Graham of Edmonton: I very much hope the Minister will appreciate that this amendment is an opportunity to accept a compromise and still leave the opportunity for the Secretary of State to determine that which I fear he is determined to determine. We are talking about determination. It is all very well to say that the time from 18th December until now—just over two months—is adequate: from December to January to February. If you take out the Christmas break—the Minister should contain himself because we shall give him an opportunity to speak—you have a situation in which on 18th December, under the guise of correcting errors, a completely new concept is introduced. It was not a question of dealing with money but of changing the whole basis of the system—that is, the right to apply for redetermination.
A great many authorities were in the process of considering their reactions They were chopped off
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without the opportunity. What the Minister has with this series of amendments in a very short time-scale—a matter of two or three weeks—is a method by which he could ameliorate what we suspect on this side to be very, very sharp practice.
The noble Lord, Lord Boyd-Carpenter, hits the nail on the head, as he always does. A government with a substantial majority, when they issue an edict or a diktat are entitled to be taken seriously. And of course on 18th December the Government said what they were going to do, not that they were going to invite those affected to consider what was proposed. They said, "This is what we are going to do". What we are trying to do, as the noble Lord, Lord Barnett, properly said, is to point out the grave consequences for some authorities caught in a tight time-scale.
The series of amendments we are debating will, in my view, provide the Minister with the opportunity still to take the action he intends to take—which we still think is wrong—and will alleviate the feeling in many authorities that they have not been treated fairly. I hope the Minister will be sensible in responding and will not merely say, as others have said, "They knew what they were doing: they knew the consequences". This is basic democracy and we believe that the Government have been basically undemocratic.
Lord Kilmarnock: Before the noble Lord winds up, with respect to the noble Lords, Lord Boyd-Carpenter and Lord Bellwin, it is not only a question of time but also a question of money. If you have a matter of weeks to decide how you are going to implement a change or a cut of 2 or 3 per cent. maybe you can do it; but if you are required to implement a whopping 12 per cent. cut, it will certainly take you two or three months to work out how you are going to do it and even then you may not be able to do so. I think the time and money factors must be taken together.
5 p.m.
Lord Skelmersdale: After that vigorous debate I can hardly believe that now I can actually speak for myself rather than having Members of the Committee putting words into my mouth. I was particularly interested in the speech of the noble Lord, Lord Graham, who suddenly reminded us after this long and, as I say, vigorous debate that we were talking about a series of amendments. What we are discussing of course are alternative formulae to what is proposed in the Bill. My noble friend and I on numerous occasions now have explained why we had to use formulae. We have admitted that it is not the most perfect position, in the Voltaire sense, but nonetheless we have now agreed in Committee on a Division that formulae are required.
Let us look at the individual formulae. The first point that was mentioned was the letter which issued yesterday from the Department of the Environment about two errors in rate support grant for 1987–88 and 1985–86. I acknowledge that the department yesterday wrote to all local authorities about two small errors in the calculation of grant announced by my right honourable friend the Secretary of State on 13th January this year. But at this point I ought to break off to comment on the vigorous exchange between my noble friend Lord Boyd-Carpenter and the noble Lord,

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Lord Barnett, which resulted in what I can only describe as a bit of a mix-up.
The noble Lord, Lord Barnett, suggested that rate-capping was done at short notice. Nothing, but nothing, could be further from the truth. All authorities were told not in January, not in December, not in October but in July last year that they were going to be rate-capped. That is hardly a short period. My noble friend Lord Boyd-Carpenter made this point very strongly indeed and I am extremely grateful to him for so doing.
So far as the fire and civil defence authorities are concerned, the expenditure limit for 1978–79 was considered. The figures were announced in July—again in July—by the Government. The matter was then discussed with each authority to take into account the previous year's experience. The decision is usually at the end of the year and that is exactly what happened this year. There was no time wasted by anybody. I shall return to that in a minute.
But for 1987–88 there was an error in the calculation of grant related expenditure assessment for the rate fund revenue account contribution to the housing revenue account for certain authorities. The Opposition majored on what I think was described as the Department of the Environment's error. I suggest that it comes rather oddly from noble Lords opposite to talk about uncertainty when they propose a whole series of amendments which would throw local government and ratepayers into what I can only describe as a ferment of uncertainty. As I said, the department very much regrets the errors and has acted swiftly to draw the consequences of these to authorities' attention so that they can take them into account.
But how does that affect the Bill? That is the crucial question. The answer is, not at all. The change simply affects the amount of block grant to be used in each authority in its formula and hence the amount that it has to raise from the rates to finance its spending. The individual formulae are not affected. They stand and they will remain.
As to the amount of the errors, I do not know whether the Committee is interested, but they affect eight of the 20 rate limited authorities and nine of the 20 precept limited authorities. In the case of the precept limited authorities, the amounts are 0.01 or 0.02 of a penny in the pound. For the rate limited authorities, the maximum change is less than one penny in the pound. The point is that the errors require no amendment whatsoever to the Bill—not even a tiny one. They relate to decisions which the Secretary of State has not yet taken and therefore, to use the jargon, are not judge-proof by any part of this Bill.
Looking at the amendments one sees immediately that they are very inflationary indeed—a 34.8 per cent. uplift in Amendment No.30, a 34.8 per cent. uplift in Amendment No.31 and an 11.05 per cent. uplift in Amendment No.33. Now I know that the Opposition really are the party of spend, spend, spend. Not content with the £3 billion extra which the Government have made available to local authorities next year, these amendments propose vast inflationary
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increases on the rate and precept limits of all designated authorities. I must tell the Committee straight away that there is absolutely no way at all that the Government can accept them.
My noble friend Lady Hooper and I explained at Second Reading why we have to adopt for 1987–88 only the approach to rate and precept limitation contained in the Bill. It simply would not have been possible to carry through the normal Rates Act procedures, given the need for legislation on the definition of total expenditure. The Government had to get cracking and have got cracking, and the method chosen was by the formulae as printed in the Bill.
In reaching their decisions on the formulae, the Secretaries of State took account, as in any normal year, of all the information available to them about the designated authorities. They took particular note of applications for the redetermination of expenditure levels. The representations made at meetings about those applications were carefully considered. Of course, given the need for the formula approach, limits cannot be precisely tailored to individual circumstances as in a normal year. But so far as is possible they reflect decisions that would have been taken under Rates Act procedures.
The Government are in no doubt that they must protect ratepayers by holding down rates and expenditure. Some noble Lords may have seen last Friday's Evening Standard, now called the Standard. The headline read, "Rates frightening, admits Labour". This was not opposition party policy, I hasten to say, because the following article started,
"Ealing Council's Labour leader admitted today that the possibility of an 80 per cent. rate rise this year was frightening".
Ealing is not even rate-capped.
We must retain rate limitation to encourage authorities to cut out waste and inefficiency or other unnecessary burdens on their ratepayers. Many of the authorities which have been selected for rate limitation in 1987–88 have been selected for a second or third year and have shown little inclination to respond to the pressures of this necessary discipline, for that is what it is. We must therefore maintain those pressures. Authorities which are newly selected are high-spenders rightly subjected to restraint.
I have already explained to the Committee that the selection was done in July last year for the newly rate-capped authorities. But I ask the Committee to look at Brent. It was first rate-capped in 1985–86, as was a whole range of other authorities. I do not see that the local authorities in question have had the slightest bit of delay in knowing, either those which had previously been rate-capped or those which were being rate-capped for the first time. Precept limitation for three years of the new authorities set up by the Local Government Act 1985—that is to say, the passenger transport authorities, fire and civil defence authorities, the police authorities and ILEA, about which we have heard so much this afternoon—was designed to constrain spending and prevent the burgeoning of new bureaucracies.
I must tell the noble Lord, Lord Underhill, that I am advised that the Tyne and Wear authority has not yet issued its precept, which is rather contrary to the information he gave to the Committee. Quite

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honestly, I do not know what the answer is. If we had as a Member of this House someone who was on that authority, we could get a definitive answer. But the noble Lord's advice is quite clearly contrary to mine—
Lord Underhill: I am certain I said that yesterday it decided on its precept. I ask the Minister what he suggests Tyne and Wear should now do, because it may have acted quickly. I do not know whether it sent out the figure last night, but it does not matter whether it did. It met yesterday and decided on its precept based on the previous information supplied by the Government.
Lord Skelmersdale: As the Committee well knows, I am not expert on local authority procedure, but I understand that such a thing can be corrected by a subsequent meeting. If I am wrong, I shall tell the Committee as soon as practicable.
Lord Underhill: Again I am sorry to interrupt the Minister. Of course that can be done, but in the meantime somebody has to work on new figures based on the corrections that have been sent out. There is a cost involved for the Tyne and Wear authority and its representatives in so doing.
Lord Skelmersdale: So there would be if we changed the formula. I shall return to that matter in a moment. For the South Yorkshire Passenger Transport Authority, the fixed costs were, I am advised, fully taken into account in the decision on a 2 per cent. uplift which is given in the formula under the Bill. Again so far as South Yorkshire is concerned, the Government believe that if concessionary fares do not change and if rail fares rise nearer to the level of bus fares, the uplifted expenditure limit—that is, the expenditure limit plus 2 per cent.—will require only small reductions in subsidised bus services. If the will is there, the means are there.
I believe that I heard the noble Lord, Lord Kilmarnock, correctly when he said that some of the treatment meted out to ILEA is unfair. I agree with my noble friend Lady Gardner and I say in addition that some of the treatment meted out by ILEA is quite unfair. I thought that the noble Baroness, Lady Ewart-Biggs, put a very rosy view of ILEA in using the particular to describe the general, which was a point taken up by my noble friend Lady Gardner.
Lord Kilmarnock: I did not in fact put a rosy view of ILEA's performance.
Lord Skelmersdale: I am sorry. Was I gabbling again? I always like to be told when I am gabbling! I intended to say that the noble Lord, Lord Kilmarnock, referred intitially to ILEA but that it was the noble Baroness, Lady-Ewart-Biggs, who in my opinion was generalising from a particular case. I have no doubt that the case which she quoted is absolutely correct.
I think I am right in saying that both the noble Lord and the noble Baroness referred to County Hall. The ILEA precept formula took account of the rent which the London Residuary Body has said it will charge ILEA next year. The formula is based on an overall
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judgment of what it is reasonable for the authority to achieve, having regard to its high levels of spending.
So far as concerns ILEA and teachers' pay the Government have proposed that the extra grant for teachers' pay should be paid as block grant, as that is the normal means of channelling government support to local authorities. My right honourable friend the Secretary of State for Education and Science assumed when deciding the formula in the Bill that ILEA would have to cover the whole of the cost of the teachers' pay settlement from the precept. However, he also took account of the buoyancy in the penny rate product for the inner London area.
I say again that ILEA's formula takes account of the teachers' pay settlement. The formula allows ILEA to raise a total of £942 million against an expenditure level set in July of £915 million. The formula was set in the light of all the financial circumstances of the authority.
I therefore must say that the amendments before us would drive a coach and horses through any notion of spending constraint. The Government are clear that they cannot accept the increases in spending levels implied by them. As they stand. they would mean an increase in the expenditure of the 20 authorities selected for rate limitation in 1987–88 of £762 million and increases of those precepting bodies designated by law of police authorities, £18 million; transport authorities, £45 million; fire and civil defence authorities, £29 million; and ILEA, a whopping £122 million. That is quite unacceptable both to the Government and, more importantly, to ratepayers.
I thought on the last amendment, and indeed in some speeches on the present amendment. that no notice was going to be taken of what I can only describe as the poor ratepayers. We see here a total of £976 million or nearly billion to come from the pockets of ratepayers in only a small area of the country. Many of the authorities are in London and we debated their waste and inefficiency the other day. I cannot and will not advise your Lordships to accept amendments which pour money into wasteful and inefficient authorities at the expense of their local ratepayers.
The noble Lord. Lord Underhill, expressed concern about fire and civil defence authorities. But I assure the Committee that my right honourable friend the Home Secretary is satisfied on the information available to him that the precept limits for those authorities derived from the formulae in the Bill should be sufficient to enable them to maintain adequate minimum standards of fire cover.
So far as the West Yorkshire Fire and Civil Defence Authority is concerned, I think that it is germane to point out that on the basis of the latest report from Her Majesty's Fire Inspectorate, my right honourable friend the Home Secretary is satisfied that the authority will be able to maintain an adequate level of fire cover. The Government remain committed to the minimum standards of fire cover. The problem in West Yorkshire has not come about as a result of local government reorganisation.
The formulae in the Bill are correctly and properly arrived at and there is no reason for any authority, whether designated by law or by straightforward

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means, to be frightened of them. They are doing exactly what was intended in putting pressure on those authorities to be as efficient as they possibly can be. If it is necessary, as it has been with some authorities, to rate-cap them for three years—for example, Greenwich, Hackney, Haringey, Lambeth, Islington, Lewisham, Southwark and Thamesdown, to say nothing of Basildon—then the ball must surely be in the court of those local authorities.
I cannot suggest that the Committee accedes to these amendments.
5.15 p.m.
Lord Underhill: I should first like to thank the Minister for giving a far better reply than that given in the other place. I turned up there before the debate started on similar criticisms of the formulae, and frankly the reply was disgraceful in that it hardly referred to any of the points raised. There had been a wide debate dealing with particular authorities and also with joint authorities.
Having thanked the Minister for dealing with some of the points, I saw no sign of any apology to the Committee or to the local authorities for errors which were communicated yesterday. Also, when we were at Committee stage yesterday, could a statement not have been made that the errors were there so that we would know where we are today instead of having to hastily cobble speeches together? Even my own association had not received the letter this morning. It would seem to be treating this House with scant courtesy or no courtesy at all in that no such statement was made during Committee stage yesterday.
I am informed that the errors made change the figures for block grants. Block grant is featured as BG in every one of the formulae. Therefore, there must be some effect and authorities will now have to look carefully at what they will do.
The noble Lord referred to South Yorkshire. However, he has not replied to the criticism I made on the previous amendment concerning the fact that certain information on expenses of transfer to the private transport company, with modifications laid down by the department, could not have been known when the formula was fixed. If I have his words down correctly, the noble Lord said, "We took into account all the redeterminations and meetings". It is therefore strange that authority after authority is complaining either that it has not had the opportunity of redetermination or that little account has been taken of its particular needs. That is what we attempted to do in the previous amendments and the Government were given that opportunity with those amendments of a compromise which would enable them to satisfy the local authorities for this year.
The Minister again repeated the word "certainty". By heavens, we have got this Bill as a result of lack of certainty. We need not have had all this complication; we could have had a simple Bill and everyone in the Committee would have voted for a Bill to put the law back as it is. Instead, we have all this complication.
Frankly, in the light of these errors about which authorities had to be circulated yesterday, and in the light of comments that have been made, I should have
130
liked the Minister to say that he would take another look at the formulae to see whether some changes could be made. I gave him that chance in my first speech, but he rejected it.
Therefore, in protest at the way this matter has been treated and at the way local government has been treated, I believe that we should ask the Committee to divide on the issue. I am only sorry that many noble Lords have not been in the Chamber to hear the debate and to appreciate that this is one more shambles created by an error on the part of the Government.
5.20 p.m.
On Question, Whether the said amendment (No.30) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 144.

DIVISION No.2

CONTENTS

Alport, L.

Llewelyn-Davies of Hastoe, B

Ardwick, L.

Lockwood, B.

Barnett, L.

Longford, E.

Blyton, L.

Lovell-Davis, L.

Boston of Faversham, L.

McCarthy, L.

Bottomley, L.

Mclntosh of Haringey, L.

Briginshaw, L.

Mishcon, L.

Brockway, L.

Molloy, L.

Bruce of Donington, L.

Morton of Shuna, L.

Campbell of Eskan, L.

Mulley, L.

Carmichael of Kelvingrove, L.

Murray of Epping Forest, L.

Cledwyn of Penrhos, L.

Nicol, B.

David, B.

Northfield, L.

Dean of Beswick, L. [Teller.]

Phillips, B.

Dowding, L.

Pitt of Hampstead, L.

Elwyn-Jones, L.

Ponsonby of Shulbrede, L.

Ennals, L.

Prys-Davies, L.

Ewart-Biggs, B.

Rea, L.

Falkender, B.

Rhodes, L.

Fisher of Rednal, B.

Ross of Marnock, L.

Gallacher, L.

Sefton of Garston, L.

Galpern, L.

Serota, B.

Gifford, L.

Shepherd, L.

Graham of Edmonton, L.[Teller.]

Silkin of Dulwich, L.

Stewart of Fulham, L.

Gregson, L.

Stoddart of Swindon, L.

Hayter, L.

Taylor of Blackburn, L.

Heycock, L.

Taylor of Gryfe, L.

Howie of Troon, L.

Taylor of Mansfield, L.

Jacques, L.

Underhill, L.

Jeger, B.

Wedderburn of Charlton, L.

Jenkins of Putney, L.

Wells-Pestell, L.

Kagan, L.

Williams of Elvel, L.

Kilbracken, L.

Wilson of Rievaulx, L.

Kirkhill, L.

Winterbottom, L.

Lawrence, L.

Ypres, E.

NOT CONTENTS

Ailesbury, M.

Brougham and Vaux, L

Aldenham, L.

Broxbourne, L.

Aldington, L.

Bruce-Gardyne, L.

Alexander of Tunis, E.

Butterworth, L.

Allerton, L.

Caccia, L.

Auckland, L.

Caithness, E.

Bauer, L.

Cameron of Lochbroom, L.

Beaverbrook, L.

Camoys, L.

Bellwin, L.

Campbell of Alloway, L.

Beloff, L.

Campbell of Croy, L.

Belstead, L.

Carnegy of Lour, B.

Biddulph, L.

Carnock, L.

Borthwick, L.

Cathcart, E.

Boyd-Carpenter, L.

Chelwood, L.

Brabazon of Tara, L.

Cork and Orrery, E.

131

Cottesloe, L.

Lucas of Chilworth, L.

Cowley, E.

McFadzean, L.

Craigavon, V.

Margadale, L.

Cranbrook, E.

Marley, L.

Cromartie, E.

Marshall of Leeds, L.

Cullen of Ashbourne, L.

Maude of Stratford-upon-Avon, L.

Dacre of Glanton, L.

Davidson, V. [Teller.]

Merrivale, L.

De La Warr, E.

Mersey, V.

Denham, L. [Teller.]

Milverton, L.

Derwent, L.

Molson, L.

Dilhorne, V.

Monk Bretton, L.

Drumalbyn, L.

Morris, L.

Dundee, E.

Mottistone, L.

Eccles, V.

Mountgarret, V.

Effingham, E.

Munster, E.

Ellenborough, L.

Murton of Lindisfarne, L.

Elliot of Harwood, B.

Newall, L.

Elliott of Morpeth, L.

Nugent of Guildford, L.

Elton, L.

Onslow, E.

Enniskillen, E.

Orkney, E.

Erne, E.

Orr-Ewing, L.

Erroll of Hale, L.

Pender, L.

Faithfull, B.

Peyton of Yeovil, L.

Fanshawe of Richmond, L.

Porritt, L.

Ferrers, E.

Portland, D.

Ferrier, L.

Rankeillour, L.

Fortescue, E.

Redesdale, L.

Fraser of Kilmorack, L.

Renton, L.

Gainford, L.

Renwick, L.

Gardner of Parkes, B.

Rodney, L.

Glenarthur, L.

Romney, E.

Gormanston, V.

St. Aldwyn, E.

Gray of Contin, L.

St. Davids, V.

Greenway, L.

Saltoun of Abernethy, Ly.

Gridley, L.

Sandford, L.

Haig, E.

Sempill, Ly.

Halsbury, E.

Shannon, E.

Hanson, L.

Sharples, B.

Harmar-Nicholls, L.

Skelmersdale, L.

Harvington, L.

Stodart of Leaston, L.

Hesketh, L.

Strange, B.

Hives, L.

Sudeley, L.

Holderness, L.

Swansea, L.

Home of the Hirsel, L.

Swinton, E.

Hood, V.

Thomas of Swynnerton, L.

Hooper, B.

Thorneycroft, L.

Hunter of Newington, L.

Tranmire, L.

Hylton-Foster, B.

Trumpington, B.

Kaberry of Adel, L.

Vickers, B.

Kimball, L.

Vivian, L.

Kinnaird, L.

Whitelaw, V.

Kinnoull, E.

Windlesham, L.

Lane-Fox, B.

Wise, L.

Lauderdale, E.

Wolfson, L.

Layton, L.

Wynford, L.

Lindsey and Abingdon, E.

Young, B.

Long, V.

Resolved in the negative and amendment disagreed to accordingly.
[Amendments Nos. 31 to 35 not moved.]
5.29 p.m.
Lord Elwyn-Jones Lord Elwyn-Jones moved Amendment No.36:
Page 11, line 19, leave out sub-paragraph (2) and insert—
("(2) EL is—

(a) in the case of an authority whose maximum limit is determined by reference to paragraph 2(2) above, the higher of—

(i) the level for the authority's total expenditure in the relevant year which before the passing of this Act was determined and notified to the Authority under section 3(1) and (3) of the 1984 Act,

or

(ii) its GRE for the financial year 1987/88 plus 7.5% where GRE is the amount shown as the grant related expenditure in relation to the authority in the Rate Support Grant Report for England for the financial year beginning in 1987; and

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(b) in the case of all other designated authorities the level for the authority's total expenditure in the relevant financial year which before the passing of this Act was determined and notified to the authority under section 3(1) and (3) of the 1984 Act.")

The noble and learned Lord said: I rise to move Amendment No.36 and I shall be concentrating very considerably on the constituency of Newham, which I had the honour to represent for 29 years. I should add that if the amendment is agreed, as I have every confidence it will be, there will need to be an appropriate consequential amendment to the block grant in the formula so that it relates to the new expenditure levels arising from the amendment.
The amendment is designed to give all newly selected rate-capped authorities an expenditure level within the formula in Schedule 2 to the Bill, which is the higher of presently determined levels or the Government's grant-related expenditure assessment for the local authority, plus 7.5 per cent.
I raise the matter in particular in the interests of Newham but it also will have an effect on Brighton, where, by happy coincidence, I reside and accordingly should declare an interest as a ratepayer. It would also be of benefit to Gateshead. It is a curious trinity and very worthy folk live in all three places; but particularly worthy are the folk I had the honour to represent.
The amendment is of major importance to Newham because it is faced with an almost unique injustice arising from the provisions of the Bill. The council is required by the Bill to cut its expenditure to a level closer to the Government's grant-related expenditure assessment for the authority than any of the 20 rate-capped local authorities, despite this being the first year of rate-capping. The council is required to reduce its rates by 26 per cent. That is twice the reduction required of all but one of the other rate-capped councils and over three times the reduction required of 15 of the rate-capped councils.
While 16 of the rate-capped councils are allowed by the Government's formula to spend over 10 per cent. above the Government's GREs for their areas, and seven of these can spend over 20 per cent. more, Newham is required to reduce its expenditure to only 3.7 per cent. above its GRE. I submit that that is a gross unfairness that results from the application of a standard formula to local government expenditure—something which we have complained about more than once during the course of the debate on the Bill. The outcome would face the Newham council with a desperate situation and only an amendment to the Bill on the lines proposed will ensure that the borough is at least treated on the same basis as the other rate-capped authorities.
The London Borough of Newham, comprising the former county boroughs of West Ham and East Ham, covers about half the East End of London, including the Royal Docks. The council is the education, housing and social services authority for one of the most deprived parts of this country. According to the Department of the Environment's own analysis of the 1981 census, Newham has the second highest intensity of urban deprivation of all the 365 local authority districts in England. It faces in the matter of housing what can only be described as a housing crisis. Over 45,000 of its dwellings are unfit, or lack basic amenities, or are in need of substantial repair.
The council is experiencing the fastest increase in homelessness in London. The number of household nights, as it has been described—a curious term of art—in bed and breakfast accommodation has risen from 588 in 1981 to 25,000 in 1985; and to over 100,000 households in 1986. That is the reality. Of course the drain on the council's revenue resources arising from that is substantial. The level of human misery that it causes is incalculable.
Newham is almost unique, in that it ranks higher than most of the inner-London boroughs on indicators of inner-city urban deprivation, but it is an outer London borough with the additional expenditure problems and responsibilities of being an education authority. Simple comparisons of expenditure with other local authorities, particularly in London, are therefore not realistic. Newham has tried to spend wisely in order to meet the problems of the borough and to defend its services. It has paid a high price for that because block grant has been reduced substantially.
In order to maintain services in this deprived area rates have had to be considerably increased. The average domestic rate bill is the seventh highest in London and because of the low rateable values in the area the actual rate in the pound is now the highest in London. It is an unavoidable necessity and not something that the council desires. It is a consequence of the very high level of need which I have endeavoured to describe—without, I hope, too much emotion, although I feel it—and the reduction of government support.
The Government may say that their support to Newham through block grant will increase if the council spends less, but that is not an answer to the borough's expenditure needs. I doubt whether it will be said by anyone in the Committee that Newham is a profligate spender or a so-called extreme council. I do not suppose that that will be said about Newham and its problems, but, if it is, it will be a piece of defamation.
The proposals in the Bill exacerbate all the problems that I have mentioned by putting Newham in a Catch-22 situation which, I submit, only the amendment can resolve. The Government proposals make an additional cut of nearly £9 million to this deprived borough. That is £9 million which is desperately needed for local services that need not be cut if Newham is treated on the same basis as the other rate-capped authorities. I submit that the technical case for the amendment is fair and I will endeavour to explain it, although algebra has never been among my highest intellectual attainments.
Newham council is being rate-capped in 1987-88 because its expenditure in 1986-87 was more than 12.5 per cent. above the Government's GRE figure—it was 18.4 per cent. above—and because expenditure between 1985-86 and 1986-87 had increased by more than 4 per cent. However, the Government figures—I hope the Minister will agree with this—significantly under-estimate the council's true expenditure in 1985–86 because they are not adjusted for the council's legitimate use that year of special accounting measures. When adjustment is properly made on that account it shows that the increase in expenditure
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between 1985–86 and 1986–87 was 4 per cent. and not the 15 per cent. that is shown in government figures.
The amendment that I am moving will accommodate the justifiable readjustment of Newham's anomalous position without Newham gaining relatively or absolutely at the expense of the other authorities. The amendment will be without cost to the Government and will still involve a reduction in council expenditure and a 6.2 per cent. reduction in rates for Newham ratepayers for the year 1987–88. I must stress that there is no special advantage for Newham over and above the other authorities by reason of this amendment because the authority will still be required to cut its expenditure more closely to GRE and reduce its rates by a greater amount than 18 other rate-capped authorities will be obliged to do. However, this reduction will be to a more realistic and fairer level for the authority itself.
I submit that it is unjust that Newham should have to suffer disproportionately by reason of what is supposed to be a piece of tidying up legislation. That is how it was so innocently described, and what a tidying up it is! The social effects of cutting so deeply into local services in Newham, as the provisions of the Bill will do, will be extremely serious and must be treated as something that is far more important than a mere local problem. I make no apology for raising this matter as a Newham problem. It is clear that East London, or almost half of it, is one of the most deprived areas in the country, with consequent effects doing more serious damage to public order and the public wellbeing than occurs in many other inner city areas; and heaven knows there have been adequate warnings about that situation.
I urge the noble Lord, Lord Skelmersdale, to look at this matter not only sympathetically but fairly, because what is proposed in the Bill not only is contrary to natural justice but offers grave damage to a long-suffering part of our population. I beg to move.
5.45 p.m.
Lord Renton: I wonder whether the noble and learned Lord will be so good as to help us even more. I tried to follow his explanation, which was given in such a pleasing and lucid manner, and it is no doubt owing to my ignorance that I have not entirely succeeded in taking it all in. However, as I understand it, the change that he intends to make to the Bill is not to be found in the first four lines of the amendment at the top of page 3 of the Marshalled List but in the lines which follow:
"or
(ii) its GRE for the financial year 1987/88 plus 7·5%".
That is the essential point. Then the following three lines seem to make a difference, which from his point of view is an improvement, to what is proposed already in the Bill. Am I right in thinking that that constitutes the essence of his amendment and is where the real change is to be found?
Lord Elwyn-Jones: I think that is so, with the effect of an additional burden on the local authority that I mentioned in the course of my speech.
Lord Skelmersdale: As I understand it, Amendment No.36, which the noble and learned Lord, Lord Elwyn-Jones, has just moved, takes a rather different track from the amendments that we discussed in the last block. I think that the noble and learned Lord has made clear that this amendment is primarily designed to assist the London borough of Newham, though of course it also assists a few—a very few—other local authorities, as the noble and learned Lord said.
Lord Elwyn-Jones: More than a few local authorities.
Lord Skelmersdale: I was about to question the noble and learned Lord on that very point because in his very interesting introduction to this amendment, to which I listened with great care, I understood that so far as he could work it out himself—and after all it is the noble and learned Lord who is moving the amendment—this applied to all authorities that were rate-capped for the first time in 1987 and 1988. Have I understood the noble and learned Lord correctly?
Lord Elwyn-Jones: But the particular impact is upon those three authorities.
Lord Skelmersdale: So it affects some authorities more than others but it affects all those authorities first designated in 1987–88.
Lord Elwyn-Jones: That is so.
Lord Skelmersdale: In which case of course to that extent it would cover Hounslow and Tower Hamlets as well. I do not think that it will benefit the Committee if I again explain the process through which the formulae were derived. However, I must stress that representations made by honourable Members in another place and by local representatives when they met my honourable friend the Minister for Local Government were certainly not ignored; nor indeed do the Government intend to ignore the very interesting speech that the noble and learned Lord has just made, which will require careful study later. He pointed out quite correctly that Newham spent 18.4 per cent. over the grant-related expenditure assessment in 1985–86, which is one of the reasons Newham was rate-capped in the first place.
Although no one has suggested that Newham is a super-inefficient local authority—a point that was made by the noble and learned Lord—I think that we ought to ask ourselves a few questions about the precise position of the London borough of Newham. The noble and learned Lord said, "Ah, well, it is an education authority". He is absolutely right. That is why the Bill makes special arrangements for local education authorities, and I refer him to paragraph 3(6) of Schedule 2, which states:
"T is the amount (if any) determined by applying the formula—
AB × M × 12"
That is all explained elsewhere in the Bill. The T factor applies to Newham as to other selected authorities. It makes an allowance for the additional cost estimated as falling on Newham as a result of the prospective pay settlement for teachers. That is a point
136
about which the noble Lord, Lord Kilmarnock, was asking in reference to ILEA during our earlier discussion. For the purposes of the T factor the costs have been estimated on the basis of the announcement by my right honourable friend the Secretary of State for Education and Science on 30th October.
So of course I accept that it is an education authority, but the noble and learned Lord suggested that with a rate limit at the level in the formula the borough would face real financial problems. I am afraid I must say that he has not convinced me that that is in fact so. The Government recognise that Newham is an area of high need and our grant-related expenditure assessment for that borough is the highest for any of the outer London boroughs.
Against that background I wonder why Newham has not contracted out any services; why it is sitting on nearly 70 acres of unused land; why it reduced rents between 1983 and 1986; why in April 1986 it had 2,420 empty dwellings, and why in 1984–85 rent arrears in Newham were 11.73 per cent. of rates collectable against a class average of 4.2 per cent. On behalf of the Government, I accept that we should take every opportunity to find out the true position. My honourable friend the Minister of State for Local Government is going down to Newham to do just that on Friday. Until then, I am not persuaded on behalf of the Government that this is an amendment that we should accept.
Lord Pitt of Hampstead: Will the Minister not recognise that the real trouble is the formula for grant-related expenditure assessment? If the formula produces a large number of boroughs that are heavily deprived, the formula must be wrong, but we—certainly I—cannot get the Government to look again at that formula.
The formula is obviously wrong. It produces a situation in which the most deprived boroughs in the country are always regarded as those boroughs that spend more than they should. If one considers the boroughs that are very deprived, they are all in that list, so it must be because the GRE is wrong. Why can the Government not look again at the GRE formula?
Lord Graham of Edmonton: I do not know what my noble and learned friend Lord Elwyn-Jones will say in response to the final few words of the Minister. I certainly see some hope. I detect that the Government, instead of just looking at figures and assessments and producing blanket solutions, are prepared to reconsider the application of the formula, in certain instances. I am only surprised that there is not a system in the ministry whereby the consequences on each of the affected authorities can be seen—the horrendous consequences that my noble and learned friend has drawn to the attention of the Committee.
Neither I nor the Minister would claim anything like the detailed knowledge of conditions in a place such as Newham that my noble and learned friend has. I doubt whether in a visit of one day, even with all the good intentions of the Minister of State, that can be put right. One has only to look at the nature of deprivation, particularly in inner London areas, to understand. I have a table here. By all the indices and yardsticks that measure deprivation, the London

137
borough of Newham, to its enormous cost in social unrest and misery, is the second most deprived. The position of Hackney is of course acknowledged. If one takes the basic index, housing index, social index and economic index, the London borough of Newham is near the bottom of the list.
The great puzzle to me is that there is no compassion in the heart of the Minister and his advisers for the local councillors and local officials in their efforts to combat these dreadful problems. The Minister-1 do not know whether fairly or unfairly, but I give him the benefit of the doubt—drew to our attention some of the matters that he believes militate against the London borough of Newham being considered with compassion: land that had not been sold, services that had not been privatised—all the measuring rods of a good and efficient council.
In Newham, people are facing enormous problems. Many would run away and say that the problems are too large, but the councillors, the officials and the civic leaders are having to get on with it. My noble and learned friend pointed out that, horrendously, a reduction of 26 per cent. is called for—a penalty of £9 million, almost £10 million. Someone in the ministry, seeing that that is the consequence, ought surely to have done more than wait until now to send a person with the political clout of the Minister there to look at things.
The reality is that Newham has the lowest domestic rateable value in London. The Minister may say that all this is taken into account with GREA, but as my noble friend Lord Pitt points out if this is taken into account in GREA and still produces this kind of result, then GREA itself must be reconsidered.
Although it is late in the day we are making a special pleading. I am not proud or arrogant. If Newham comes to me, as it has to many others, and asks whether I will plead its case and support my noble and learned friend, I will, because we know what this means on the ground in housing, jobs and social services, and we accept that it is a good case. It has been pointed out that Newham is not a profligate spender. It never figures in the umbrella criticism of wildly extravagant councils doing all sorts of things with their money that are regarded as intolerable by some others. It is a good council, a sincere and a long-established council that knows the needs of its people. It wants a little more help. I hope that the Minister will see that it gets it.
Lord Renton: Having listened to my noble friend and the noble and learned Lord, Lord Elwyn-Jones, I find myself a little surprised at the amount of controversy that has arisen. The noble and learned Lord seems to accept the GRE formula as laid down by Parliament at the Government's request, and as applied. He also accepts—this comes out in the seventh, eighth and ninth lines of the amendment—the system whereby the rate support grant for England is applied to these circumstances. He does not challenge the principles of the report.
However, what he is saying in relation to his former constituency—for which he was I remember a distinguished and zealous Member for many years—is that the formula does not do it justice. To overcome
138
what seems to be his problem—which he is regarding as exceptional, though I must say that I think one could find some other cases where an argument might be made out for saying that the GRE formula does not do the trick—to overcome the defect in the formula as he sees it, he is simply asking for the GRE to be increased by 7·5 per cent. I do now know how that 7·5 per cent. is arrived at. I do not think that the noble and learned Lord has specifically told us. It seems that, in trying to do justice, he thought of a number and included it in the amendment in the hope that it might appeal to the Government and to the Committee. If the Government are to be persuaded, I think that they are entitled to know a little more about how that 7·5 per cent. is worked out, and why.
The only other point I would add is that granted in Newham and various other places the local authorities have problems relating to and resulting from deprivation, surely those problems should and can, so far as possible, be taken care of by the GRE formula, which the noble and learned Lord accepts, because, one of the main factors of the formula is the number of people for whom a service is provided; for example, the number of primary school children. I should have thought that the number of people for whom welfare services have to be provided might be another factor. Bearing in mind the fact that the number of premises from which refuse must be collected is a factor, I should have expected that the formula would cover (we shall be told if it does not) the number of houses which cannot be made the subject of demolition orders and which must continue to be inhabited but which nevertheless are a burden upon local authorities which must continue, even temporarily, their habitable existence.
Bearing in mind that the formula is intended to cover the services and the problem to which the services give rise, to ask the Committee to accept that a mere 7·5 per cent. extra would make up for the deficiencies of the formula may be capable of explanation, but it something which I do not so far understand.
6 p.m.
Lord Elwyn-Jones: First, I wish to deal with the concluding words of the noble Lord, Lord Skelmersdale. I detected sympathy in what he said and a willingness on his part and, therefore, on the part of the Government, to look at this matter again. I am not blackmailing the noble Lord on this matter, but if he is prepared to say that he and his colleagues will now have serious discussions with Newham with a view to reviewing and, if necessary, altering the position which has affected the Newham council so grievously, I am prepared, rather than to go into a prolonged algebraical and political speech on these matters, to sit down. If the Minister will be good enough to give me an answer to that point at this stage, it will be most helpful to our proceedings.
Lord Skelmersdale: I was at pains to point out, albeit comparatively briefly for me, that my honourable friend will be going to Newham on Friday to investigate matters. I am afraid that I can give no commitment as to the result. If the noble and learned Lord would like to take the words that I have uttered in the spirit in which I have uttered them, he will know what to do with his amendment.
Lord Elwyn-Jones: I do not think that at this stage I can ask more of the Minister than that. I await with hope, and a reasonable measure of confidence, the outcome of the visit of his honourable, or is it right honourable friend?
Lord Skelmersdale: My honourable friend.
Lord Elwyn-Jones: If there is a successful outcome to the visit to Newham, he will be right honourable at any time of the day. In the light of that, I shall deny my noble friend opposite the pleasure of an algebraical exposition (if I may say so, to my relief) although there are clear points to be made. In the circumstances and in the light of the Minister's statement, I ask leave to withdraw the amendment.
Baroness David: May I ask the Minister a question? As we have the Report stage of this Bill coming next week rather quickly after its Committee stage, will he be good enough to let my noble and learned friend and me know as soon as possible the outcome of the Minister's visit to Newham on Friday? That will be helpful to us when we consider what amendments to put down on Report.
Lord Harmar-Nicholls: When we reach the Report stage we sometimes read what has been said in Committee, and as there has been general criticism of the formula, it should be on the record that the formula, as it now stands, is 1.5 per cent. above the rate of inflation from the period when it was entered into.
Amendment, by leave, withdrawn.
Lord Underhill Lord Underhill moved Amendment No.37:
Page 11, line 32, after ("is") insert ("the lesser or).
The noble Lord said: I shall speak also to Amendments Nos. 38 and 40. When I was dealing with the amendments relating to the formulae contained in the schedule, the Minister asked whether Amendment No.40 was still standing. I hope that he was giving me some encouragement that he may be prepared to accept the amendment.
Lord Skelmersdale: May I interrupt the noble Lord? I was trying to prove that I read the Marshalled List.
Lord Underhill: I thought that my hopes might be a bit too high, but I still hope that at the end of the debate the Minister will see the common sense of the amendments. They are designed to provide designated authorities with an alternative factor (RV—rateable value) in each formula in Schedule 2.
The majority of designated authorities have made the point that the expenditure limit under the Rate Acts is translated into a rate limit by the use of an estimated penny-rate product for the area of a rating authority. Precepting authorities also use that estimate in making and issuing precepts. Rateable value calculated by reference to the penny-rate product is in most cases a smaller sum than the rateable value figure derived from the rate support grant report. That is because the former allows for the costs of collection and write-offs and reflects a truer position of an authority's rateable resources.
140
The Secretary of State should allow authorities to use the normal method if it produces a higher rate limit. That will be made possible by the amendments. In practical terms, the use in the formulae of rateable value rather than the penny-rate products, will mean that some authorities will be unable to finance a level of expenditure assumed in the formulae—that is, originally determined expenditure level (EL x a percentage uplift)—with the maximum rate limits that have been set by the Secretary of State.
The formulae assume that the maximum rate based on RV will bring a higher rate income than that based on a penny-rate product. That is not so. In the case of Sheffield, the shortfall will be no less than £5.27 million. Far from allowing a level of expenditure assumed in the formula (EL x 2 per cent.), Sheffield will be forced to spend at a level even lower than its originally determined EL. In the case of Newcastle, the rate income shortfall will be £4.7 million.
In previous years, maximum rates have been determined by reference to penny-rate products—either the authorities' estimates or those of the Secretary of State. DoE officials say that rateable value has been used because they have incomplete information on penny-rate products. I hope that the Committee will agree with me that that excuse is completely unacceptable and that the Minister will see the fairness, the commonsense and the continuity of practice proposed in the amendments and will therefore be prepared to accept them.
Lord Skelmersdale: This is a remarkably technical amendment, although presented so clearly and fairly by the noble Lord, Lord Underhill. Amendments Nos. 37, 38 and 40 provide that in setting up the formulae we should use in effect whichever is the more favourable to an authority of the penny rate product or the rateable value figure presently included.
I accept that the penny rate products are the amounts normally used by authorities when calculating their rates. Those amounts take account of the likely yield from the rates and hence allow for losses, which are not taken into account if a figure of rateable value is used. But penny rate products for the coming year, by their very nature, involve estimation. If a designated authority did not return its estimate of its penny rate product to the department, we should have to make our own estimate if the formulae contained a term for penny rate products.
I suggest that that would be unsatisfactory to local authorities' own interests because it would introduce uncertainty. Hence we have chosen to use rateable value instead of the penny rate product in the formulae. The rateable value figure is known with certainty as it is used for the purposes of rate support grant reports. That gives a slightly different result from that obtained if we had used penny rate products, but we took that difference into account when considering the appropriateness of the formulae. We chose the rateable value option because that was a figure used for the purposes of rate support grant reports and more importantly in the context of the 1987-88 rate support grant report. It requires no estimation on the part of the Secretary of State, and its derivation is quite clear.
In deciding to do that we were obviously aware that use of rateable value would produce a different result

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in terms of the spending power which the formula produced from using the penny rate product. We took that into account. I am advised that the shortfall in Sheffield and the other shortfalls which the noble Lord, Lord Underhill, mentioned were taken into account in deciding on the formula. In those circumstances, I suggest to the Committee that the amendments add an unnecessary complication as well as uncertainty to the formula. I recommend that the Committee reject them.
Lord Underhill: It is rather strange that we hear this word "uncertainty" again because, as I said in my opening remarks, in previous years maximum rates have been determined with reference to a penny rate, either the authorities' own estimates or those of the Secretary of State. Yet the Minister has declined to accept this amendment because it would require an estimate. I am informed that it is the estimate either of the Secretary of State or of the authority which has been used before in fixing maximum rates.
We want to give the designated authorities the alternative either to have the penny rate product or to have the rateable value. Many of them have complained about that lack of opportunity. I am somewhat surprised to learn that the Secretary of State has taken into account the position in Sheffield and that he is quite prepared for them to have a shortfall of £5.27 million. It is amazing to hear that he has taken that into account and regards it as quite satisfactory for an authority of Sheffield's standing.
This is not an issue on which I am prepared to divide the Committee now. I should like to read carefully what the Minister has said. I hope he will accept that authorities which are designated are complaining that they are being compelled to take the rateable value formula whereas they would prefer to have the choice either of the rateable value formula or the penny rate product. However, based on what the Minister has said at this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 38, 39 and 40 not moved.]
On Question, Whether Schedule 2 shall be agreed to?
6.15 p.m.
Baroness David: I said nothing when we came to the end of Clause 7 and the Question whether Clause 7 stand part because I thought that was so closely linked with Schedule 2 that it was better to make my comments now. I am very dissatisfied with what we have heard, both on Clause 7 and on Schedule 2. Possibly because the Minister has never been a local councillor, his understanding and response to some of today's amendments and to the discussion has not been satisfactory; he has not been as understanding as he normally is.
Schedule 2 is linked to Clause 7 and dependent upon it. The Government's argument has been that the exposure of the illegal calculation of total and relevant expenditure, relating to an amount of £68 billion in block grant between 1981-82 and 1986–87, has made it impossible for the normal Rates Act procedures to apply this year. The Secretary of State
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argues that because of the exposed illegality the normal processes have had to be suspended in respect of 1987–88.
I have spoken previously about what the normal processes are. They involve various stages which have been passed by. In 1987–88 the formal order to be laid before the House of Commons specifying the designated authorities, their expenditure levels and final rate precept level will now not be laid because the process is being conducted by primary legislation; that is, the powers granted to the Secretary of State in Clause 7 and the mathematical formulae for the calculation of expenditure limits set out in Schedule 2. Therefore in the absence of any formal order-making process after the Bill is enacted there is no parliamentary procedure through which the Secretary of State's final decisions on rate precept limits can be challenged.
Our objections to the Bill's proposals are clear. On the grounds of natural justice and financial probity it is unwise for Ministers to destroy all procedures which allow for final and late revision of rate precept levels. The formulae set out in Schedule 2 are calculated on a grossly unfair basis. First, no specific account has been taken of the individual circumstances of particular authorities. Secondly, the applications for redetermination of expenditure levels submitted by a number of authorities have been ignored. Thirdly, authorities were not told to submit information to Ministers on their expenditure level-rate precept position in advance of the Bill being published.
Since the Bill was published on 18th December, Ministers have been arguing that the formulae are immutable. That is what we have heard frequently today. Had authorities known in advance that a legislative form of determining expenditure levels was being contemplated and that there would be no challenge available to interim rate precept levels, many more authorities would have submitted information early. Such authorities have therefore been seriously disadvantaged.
Fourthly, discrimination has occurred within classes of authorities and between classes of authorities. We heard about that just now in relation to Newham. Thus newly rate-capped authorities as a complete group are given a higher expenditure level than existing rate-capped authorities. There has never been any explanation for that. Also, there is discrimination between some of the statutorily rate-capped joint authorities. Police authorities get a higher expenditure level than fire and civil defence authorities, which in turn get a higher expenditure level than transport authorities, which in turn get a higher expenditure level than ILEA.
This clearly reflects the Government's estimation of political priorities rather than any estimate of the true financial position of individual authorities. There is also discrimination against ILEA, which is the only rate-capped education authority not to be given the additional T factor to deal with the financial consequences of any final teachers' pay assessment. I know that the Minister has tried to explain that.
There are no grounds for saying that the Minister needs the mathematical formulae, crudely applied in primary legislation, for the reason that there is no time to go through the normal Rates Act procedures. Mr.

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Ridley could have introduced a very simple Bill in November or December merely to rectify the revealed illegality on block grant which would have received the support of the Opposition, as I said at Second Reading and again today. Mr. Ridley could therefore have had his Bill. He could have kept the Rates Act procedures on redetermination in place. Indeed, he could have even pleased himself by allowing the parliamentary draftsmen to work on the privatisation Bill which he has now been forced to abandon. I should have thought that for him this was a serious political mistake. But, of course, we do not mind the last one. We therefore feel that Schedule 2 should not stand part of the Bill.
Lord Renton: I hope that the noble Baroness will forgive me if I do not follow her arguments or try to reply to them in substance. I want to make a brief comment about the drafting. It must have saved pages of verbiage to have used the formulae that appear in the schedule. I sometimes wish that we could use the formulae more often. In certain circumstances, they are a very valuable and helpful way of legislating. I therefore welcome the use of the formulae.
I must point out however that we have here an example of the passion of the parliamentary draftsman for putting the cart before the horse. I can perhaps put it this way. It is not until one reaches paragraph 3 of the schedule that one has a clue as to what paragraph 2 might mean. It is a most lamentable habit of the parliamentary draftsman to defer the definitions. These should always come where they facilitate understanding. If the definition is vital to the understanding of a piece of legislation, the definition should come first. This is a prize example.
I hope very much that when we come to Report stage we shall find government amendments which transpose paragraphs 2 and 3 and that all users of the statute will be much happier.
Lord Kilmarnock: We should also like to restate our dissatisfaction with the schedule. It is obviously right to speak on the schedule, rather than on the motion that Clause 7 stand part of the Bill. In combination with Clause 7, the schedule leaves absolutely no machinery for taking account of special or changed circumstances. It must be a disadvantage for the Secretary of State to have to come back to Parliament for any change that he wants to make, or is forced to make, during the coming financial year. There is no presumption on past performance that the Government are right and that they may not have to come back to Parliament yet again. On those grounds, therefore, Clause 7 and the schedule seem to be unsatisfactory.
I should like to return to the ILEA point. In the debate on the block of amendments which covered ILEA, I assured the noble Lord that I was not painting a rosy picture of ILEA. ILEA has definitely been dilatory and there are ways it could have saved money which it has not used. But that does not detract from the point I made to the Minister. I do not see how ILEA will meet the teachers' pay settlement this year on the basis of the formula in this schedule. I am bound to say that the noble Lord has not satisfied me
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on that point. Nor has he satisfied me as to how ILEA will meet the cost of moving from County Hall.
Those seem to me to be two special, one-off factors which cannot possibly be catered for by the formula in the schedule. I remain deeply unconvinced and dissatisfied with what the noble Lord has said.
On these Benches, we feel that this is precisely the kind of Bill which is bound to come from excessive central government intervention in local affairs. It is extremely complicated and very rigid and unsatisfactory. We do not like it. In a happier world, Bills of this kind would not exist. We very much hope that that happier world will come about quite shortly.
Baroness David: Perhaps I may say one word in response to the noble Lord, Lord Renton. It is not so much the formulae to which we object. In fact our amendments kept the formulae. It is the fact that there was no consultation with the local authorities before they were presented, and there has been no opportunity to discuss them since.
On the other point about EL and so on not being explained until paragraph 3, I am entirely in agreement. I read it through and could not think what it was all about. I hope that the Minister will pay attention to what his noble friend says.
Lord Skelmersdale: That was rather a barbed comment. I have learned from bitter experience over the last six years that when my noble friend Lord Renton speaks about drafting, any sane, sensible Minister ducks—and ducks very rapidly indeed. Yes, of course I shall take up his point. However, he did not develop it.
On looking at the schedule, there are even worse crimes, in my noble friend's book, perpetrated by the draftsman. Paragraph 3(6) explains how the amount of T in paragraph 2(1) is to be calculated. Therefore, I have indeed understood the point of my noble friend. I shall look into the matter and tell my noble friend whether I shall be able to take action.
I cannot but admire the confidence of noble Lords opposite. It is absolutely astounding how they announce over and over again that it would be possible to draft a simple Bill on this issue. If it were a simple Bill, they say, there would be no problems. It would sail through both Houses of Parliament overnight, and all the rest of it. I take that with a pinch of salt. Our debates have surely made clear that this is far from a simple matter. As I have explained on several occasions, it simply was not possible to carry through normal procedures for rate limits and, albeit on a decision of the House which was voted upon, that is why we had to set formulae.
After the expenditure limits were determined in July, as I said earlier, we proceeded to operate the normal timetable for redetermination applications, those applications being returned by the early autumn. Authorities had no reason to believe that redetermination could be submitted in December. The Bill has not cut across the normal process of submitting applications for redeterminations. What it has done is to roll up the subsequent procedures.
In passing, I ought to say something about Sheffield where the expenditure implied by the rate limit is

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£261·3 million but the expenditure level is—guess what?—£258·9 million excluding teachers' pay. I therefore do not think that the dire effects mentioned by noble Lords opposite will happen in this very special year. 1987–88, for rate-capped authorities. That is why I suggest to the Committee that Schedule 2 should remain part of the Bill.
Schedule 2 agreed to.
Clause 8 [Sanctions]:
On Question, Whether Clause 8 shall stand part of the Bill?
Baroness David: I should like to make a few comments. My purpose is not to challenge the need for some provision for supplementary precepts but to draw attention, first, to the potential penalty on local authorities implicit in the clause, and, secondly, to the difficulties caused to local authorities by the lateness of the Government's timetable which has occasioned the need for the clause.
The clause makes provision for supplementary rates and precepts to be issued by authorities which have already made an initial rate or precept before the passing of the Act. These supplementary issues must be made within four weeks in the case of precepts and within six weeks in the case of rates from the date of a notice served after Royal Assent by the Secretary of State. The clause makes no provision for the cost of the supplementary issues to be met from the Exchequer; they will therefore fall on to the local authorities concerned. We spoke yesterday about the extra costs in which local authorities may be involved.
The Government will no doubt argue that the original purpose of the clause was to penalise any rate-capped authorities which took advantage of an opportunity to make their rates or precepts before the passage of the Act when affairs were, as it were, in limbo. This is no longer relevant because the Bill has proved to be so complex that its progress through Parliament has necessarily taken a little time. All authorities are now potentially placed in difficulty.
The practical position is that all authorities—and in particular precepting authorities—are facing a difficult situation which has been caused by the Government. Precepts must be made by 10th March and rates by 31st March. The 1987–88 block grant settlement and the 1986–87 supplementary report cannot proceed until the Bill is enacted. It is even possible that the supplementary report may be further delayed if judgment is made for Greenwich in its case on Thursday, adding to the uncertainty facing authorities as to their true financial position. I believe that the Minister agrees with that position.
The Bill will not receive Royal Assent until after 10th March, thereby forcing precepting authorities to set precepts without final certainty as to the contraints upon them. Rate-making authorities will have little time before the end of the month to confirm their position and all authorities in receipt of block grant would wish to know that the settlement will proceed before setting rates. This will not be possible for the precepting authorities.
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The only way for authorities to avoid this situation is for them to observe rate-cap limits which will not have been approved by the statutory deadline or else bear the penalty of the cost of a supplementary precept. This is a questionable use of the legislative process, amounting as it does both to pressuring authorities and to presuming on the remainder of the parliamentary process. The Government's whole approach since the legal misunderstanding was discovered has been to assume that Parliament would agree the legislation without amendment and to that extent to take Parliament for granted. As we have said previously a simple Bill, designed only to cope with the legal problem, could have been on the statute book by Christmas after an unopposed passage and all this uncertainty avoided.
6.30 p.m.
Lord Skelmersdale: I do not believe that it helps the Committee at all if I continue to repeat myself. However, we are now in what I can only describe as peculiar and particular circumstances.
I re-emphasise that what we have here are provisions which apply only to the next financial year; namely, 1987–88. I declared some time ago—I do not remember whether it was yesterday or on Second Reading—a non-interest in that I have never been a member of a local authority. I do not see that that makes me any better or any worse an individual. However, I am at least able to declare an interest as a ratepayer. The speeches throughout this afternoon by the noble Baroness and her noble friends in connection with this Bill seem to have ignored that aspect totally. We are talking as much about ratepayers as about local authorities and the difficulties of local authorities, which I accept are very real indeed, in some cases.
Baroness David: We are concerned about the people for whom local authorities are providing services.
Lord Skelmersdale: That brings me to the whole subject of changing the local government finance structure, which I long to do and which the noble Baroness has said is desirable. Indeed, the Government intend to do that as soon as they properly can on the basis of the Green Paper Paying for Local Government. However, I do not think that I should go down that track at this time of night.
Authorities will need to make the substituted rates and precepts referred to by the noble Baroness only if they chose to ignore the limits which will fall to be determined under the formulae and about which we have told the authorities. We do not expect authorities to be in that position. We believe that they will chose to act sensibly—which is a point that I made some time ago—but we must make provision in Clause 8 in case they do not act in such a responsible way.
The only other point made by the noble Baroness in what I suppose was a forerunner of a Third Reading or Bill do now pass speech was the lateness of the timetable. The cost of supplementary rates should fall on the authorities concerned if, knowing what their proposed rate limits are—which they do—they nevertheless fix a rate above their limit. The same point applies to precepting authorities. Therefore

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everything contained in Clause 8 of the Bill is a necessary part of the Bill and I hope that the Committee will agree to it remaining part of the Bill.
Clause 8 agreed to.
Clause 9 [Poiver of specifying: general]:
Baroness David Baroness David moved Amendment No.41:
Page 7, line 45, leave out ("1(6)").
The noble Baroness said: The purpose of the amendment is to remove the power to make specifications from the provisions of Clause 9: the powers in Clause 9(3). Clause 1(6) empowers the Secretary of State to add to the list of accounts in Schedule 1 which are to be treated separately from the rate fund revenue account. Under Clause 9(3) the Secretary of State is empowered to revoke or amend any specifications covered by the clause. Given that specification of an amount is likely to be helpful to the authority, it seems invidious that such a specification can then be amended or revoked. The result would be disruptive to that authority's accounting practices and without any guarantee, even with consultation with the authority, under Clause 9(4).
More generally, since Clause 1(6) is excluded from the need to observe common principles in making specifications wider Clause 9(6), presumably on the basis that it is designed to deal with particular local matters, it would seem better to exempt it from the provisions of the whole clause. I beg to move.
Lord Skelmersdale: I find it refreshing when the noble Baroness asks a straight question which I can understand. We spoke about Clause 9 in discussions on an earlier amendment yesterday (I believe that it was on Amendment No.9, although I should not like to swear to that). Therefore I can say that the consultation power referred to by the noble Baroness relates to specifications in all reports and supplementary reports, except those three to be made immediately on Royal Assent to this Bill. The specifications may be made outside reports, and consultation applies. However, the Secretary of State will consider representations made on reports and supplementary reports to be made immediately after Royal Assent. The purpose of the amendment, as I understand it, is to revoke or amend. It is the usual power relating to specifications and it is to cover mistakes which happen, and have happened, under all governments from time to time. The power must be exercised reasonably, but I do not wish to enter into the discussion of what is reasonable which the noble and learned Lord, Lord Silkin, had with my noble friend Baroness Hooper. Nonetheless, that, as I understand it, is the position and I hope that it answers the question of the noble Baroness.
Baroness David: I shall read what the Minister has said and consider whether I shall take up the matter again. At the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Underhill Lord Underhill moved Amendment No.42:
Page 8, leave out line 7, and insert ("the local authority associations, any local authority directly concerned").
The noble Lord said: I declare my interest as president of one of the associations. The amendment follows on from the previous amendment dealing with the powers of the Secretary of State to make the specifications or to revoke or amend them. It may be helpful to the Committee if I read Clause 9(4), which states:
"Before exercising the power the Secretary of State shall consult such associations of local authorities as appear to him to be concerned and any local authority with whom consultation appears to him to be desirable".
The amendment would read:
"Before exercising the power the Secretary of State shall consult the local authority associations, any local authority directly concerned and any local authority with whom consultation appears to him to be desirable".
Therefore the important changes are that all the local authority associations should be consulted. That seems to be elementary because they will all be affected by any specification that the Secretary of State makes. Surely it is elementary justice, natural justice, that it should be written into the Bill that the local authority directly concerned with a particular specification shall be consulted. There remains in the Bill the provision that:
"any other local authority with whom consultation appears to him to be desirable".
Therefore we are asking that the Secretary of State shall consult all the local authority associations and the local authority directly concerned. This seems to be such elementary natural justice that I am certain it is one issue which the Minister will be prepared to accept. I beg to move.
Lord Renton: I wonder whether my noble friend can explain the meaning of line 7 as drafted? As I understand it, it is the local authorities that will be concerned, rather than associations. If we refer to,
"such associations of local authorities as appear to him to be concerned",
would it be possible, for example, for the local authorities in a particular part of the country to form an association because they felt that they were particularly concerned? From the wording of the Bill as it stands that is a possible interpretation. The Government no doubt have clearly in mind what they intend, but it would be nice to have an explanation.
Lord Skelmersdale: My noble friend Lord Renton gives me a magnificent cue to what I was about to say to the Committee. The amendment seeks to alter a traditional form of wording on consultation. The drafting to be found in Clause 9(4) has been used in legislation for many years. Indeed, it was the party opposite which passed the Local Government Act 1974. Section 1(3) of that Act states:
"the Secretary of State shall consult with such associations of local authorities as appear to him to be concerned and with any local authority with whom consultation appears to him to be desirable".
This Government used the same formulation in Part VI of the 1980 Act. Sections 60(5) and 59(11A) both say that before doing certain things the Secretary of State,
"shall consult such associations of local authorities as appear to [him] to be concerned and any local authority with whom consultation appears to [him] to be desirable.".

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Both those Acts remain on the statute book. Now suddenly in 1987 we have, if this amendment were agreed to, an Act which says:
"the Secretary of State shall consult the local authority associations, any local authority directly concerned and any local authority with whom consultation appears to him to be desirable".
Before I say how and why I am amazed at this formulation, perhaps I may turn back to my noble friend Lord Renton and answer his question. Clause 9(4) states:
"Before exercising the power"
that is the power to make a specification—
"the Secretary of State shall consult such associations of local authorities as appear to him to be concerned".
That means any associations representing any body of local authorities. It goes on to say that the Secretary of State can also consult individual local authorities which it appear to him it is desirable to consult. I suggest that the point is covered in any kind of formulation.
I am quite amazed at the implication behind the amendment, especially as it was moved by the noble Lord, Lord Underhill. The Bill already contains Clause 9(4), which covers consultation with individual authorities with whom consultation appears desirable. The amendment is a tacit admission that the local authority associations do not or cannot represent their members. I should like to ask in what position that puts the noble Lord, Lord Underhill, who has told us from time to time that he has the honour to be president of the Association of Metropolitan Authorities. Moving closer to home, where does the noble Baroness, Lady David, stand on this particular matter, briefed as she is on local government matters by the local authority associations? I am sorry but I just cannot see the relevance of this amendment and why it should be incorporated into the Bill when the history is very much on the draftsman's side.
6.45 p.m.
Lord Underhill: We have heard some amazing answers from Government Ministers, but to me this is the most incredible. I have in front of me the Hansard of another place for 21st January. Thank God I found it among my documents; I thought I did not have it. At col. 974 Dr. Boyson, the Government Minister dealing with a point raised by the honourable Member for Norwood, said:
"I give the commitment that the local associations will be seen".
That concerns another matter, but he says that they will be seen. I want them to be more than seen.
At col. 976 a Member of Parliament refers to the fact that a Minister gave an assurance that there would be general consultation with authorities. Later the Minister, Dr. Boyson, said:
"As I said to the honourable gentleman earlier, the Secretary of State will consult local associations and the specification is answerable to the courts.".
Therefore on certain matters the Government are prepared to consult the associations. I want to write into the Bill that, whether it be the Association of County Councils, the AMA, or the Association of District Councils, they should all be consulted on the specifications because they are very important issues
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affecting all local government. I cannot understand why the Minister should resent that any local authority directly concerned should be included.
If there is one authority directly concerned, surely natural justice says that at least that authority should be heard and consulted. Why should it be left to the Secretary of State to decide. Subsection (4) says:
"any local authority with whom consultation appears to him to be desirable".
Whatever may have happened in years gone by, we are now dealing in 1987 with a new pattern of local government finance which has never existed before. However, I shall read very carefully what the Minister has said. We may come back at the next stage after consultation with the bodies concerned. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 agreed to.
Clause 10 agreed to.
Schedule 3 [Rate support grant: special provisions]:
Lord Skelmersdale Lord Skelmersdale moved Amendment No.43:
Page 12, line 31, at end insert ("; and the requirement in section 54(4) of that Act to consult may be satisfied (as regards a determination to be specified in such a Report) by consultation before the passing of this Act.").
The noble Lord said: In moving this amendment I trust that it will be convenient to the Committee if I speak also to Amendments Nos. 44 to 55 inclusive.
All these amendments relate to Schedule 3 of the Bill which is designed to enable my right honourable friends to make the 1987–88 rate support grant reports and certain supplementary reports immediately after the passing of the Bill in line with their announced intentions for these reports.
The amendments are necessary if the schedule is to enable us to make the reports in the way we intend. The amendments will make clear that the extensive consultation we have already carried out for these. reports satisfies the statutory requirements even though it was carried out before the passing of the Bill and will also enable us to use for certain of those reports, and certain estimates of grant entitlements made thereafter, the information about authorities' total expenditure and rateable values which we intend to use and which authorities expect us to use. I commend the amendments to the Committee.
Baroness David: I think I said yesterday that I was grateful to the Minister for writing about the amendments which the Government were about to put down. Again I cannot help commenting that there are a great many of them. It is not really very competent legislation to have to produce such a vast number of lengthy amendments at this stage when the Bill is going through the Upper House. It has already had time in the other House.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Nugent of Guildford): Unless any noble Lord objects, I propose that Amendments Nos. 44 to 55 inclusive should be put to the Committee en bloc.
Lord Skelmersdale Lord Skelmersdale moved Amendments Nos. 44 to 55:
Page 12, line 46. at end insert ("; and the requirement in section 54(4) of that Act to consult may be satisfied (as regards a fresh determination to be specified in such a report) by consultation before the passing of this Act.")
Page 13, leave out line 17.
Page 13, line 44, at end insert—
("Total expenditure 1985–86"
2A.—(1)In doing any of the acts mentioned in sub-paragraph (2) below the Secretary of State shall treat the relevant amount as the amount of an English local authority's total expenditure in relation to the relevant year.
(2) The acts are —

(a) making any determination or doing any other thing after the passing of this Act for the purposes of any relevant report, and

(b) making under section 66(1) of the 1980 Act the first estimate and notification to be made after the passing of this Act as regards the authority concerned for the relevant year.

(3) Where an amount estimated as an authority's total expenditure in relation to the relevant year was submitted to the Secretary of State by the authority—

(a) before llth December 1986, and

(b) in response to a requirement made under section 65 of the 1980 Act in April 1986.

for the purposes of this paragraph the relevant amount is (as regards the authority) the amount submitted.
(4) Where in the case of an authority no amount was submitted as mentioned in sub-paragraph (3) above but an amount estimated as the authority's total expenditure in relation to the relevant year was submitted to the Secretary of State by the authority—

(a) before llth December 1986, and

(b) in response to a requirement made under section 65 of the 1980 Act in February 1985.

for the purposes of this paragraph the relevant amount is (as regards the authority) the amount mentioned in sub-paragraph (5) or (6) below (as the case may be).
(5) Where sub-paragraph (4) above applies in the case of an authority which is not a local education authority, the amount is the amount submitted.
(6) Where sub-paragraph (4) above applies in the case of an authority which is a local education authority, the amount is the amount submitted as adjusted by a method determined by the Secretary of State: and the method shall be determined in accordance with principles to be applied to all authorities affected by the adjustment.
(7) Where in the case of an authority more than one amount was submitted as mentioned in sub-paragraph (3) above, for the purposes of that sub-paragraph the amount submitted shall be taken to be the latest to be so submitted.
(8) In this paragraph "the relevant year" means the year beginning in 1985.
(9) For the purposes of this paragraph relevant reports are—

(a)the report mentioned in paragraph 1(4)(a) above, and

(b)any report proposed to be made in substitution (directly or indirectly)) for the report mentioned in paragraph 1(8)(a) above.

(10) In its application in relation to the Greater London Council, the Inner London Education Authority or a metropolitan county council, this paragraph shall have effect as if the second reference to the authority in sub-paragraph (3) included a reference to the London Residuary Body or (as the case may be) the body established for the metropolitan county by section 57(1)(b) of the Local Government Act 1985.")
Page 13, line 48, leave out ("any") and insert ("the"). Page 14, line 3, after ("the") insert ("relevant")
Page 14, line 9, leave out ("year for which the amount was submitted") and insert ("relevant year")
Page 14, leave out line 11
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Page 14, leave out lines 19 to 30 and insert—
("(6) In this paragraph "the relevant year" means the year beginning in 1986.
(7) For the purposes of this paragraph relevant reports are—

(a)the report mentioned in paragraph 1(4)(b) above and that mentioned in paragraph 1(4)(c) above, and

(b)any report proposed to be made in substitution (directly or indirectly) for the report mentioned in paragraph 1(8)(b) above or that mentioned in paragraph 1(8)(c) above.

(8) In this paragraph "the relevant date" means 20th December 1986 in the case of an English authority, or 4th December 1986 in the case of a Welsh authority.
Total expenditure 1986-87 (further provisions)
3A.—(1) Sub-paragraph (2) below applies where before the relevant date a local authority submitted to the Secretary of State an amount which it estimates as its total expenditure in relation to the year beginning in 1986.
(2) Where, in making any determination or doing any other thing after the passing of this Act for the purposes of any Report as regards which paragraph 1(2) and (3) above apply the Secretary of State wishes to take into account the authority's total expenditure in relation to the year beginning in 1986, he shall treat the amount submitted as the amount of its total expenditure in relation to that year.
(3) For the purposes of sub-paragraph (2) above—

(a) if the authority and the Secretary of State agreed before the relevant date an amount to replace any amount submitted, the amount submitted shall be taken to be the amount agreed, and

(b) subject to paragraph (a) above, if more than one amount was submitted before the relevant date, the amount submitted shall be taken to be the latest to be so submitted.

(4) In this paragraph "the relevant date" means 20th December 1986 in the case of an English authority, or 4th December 1986 in the case of a Welsh authority.").
Page 14, line 39, leave out ("on 19th") and insert ("in")
Page 15, line 8, leave out ("on 19th") and insert ("in")
Page 15, leave out lines 9 and 10
Page 15, line 17, at end insert—
("Rateable values
5.—(1) In doing any of the acts mentioned in sub-paragraph (2) below the Secretary of State shall—

(a) take into account information relating to hereditaments in the area of an English local authority and their rateable values if the information falls within sub-paragraph (4) below, and

(b) leave out of account information relating to such hereditaments and their rateable values if the information does not fall within sub-paragraph (4) below.

(2) The acts are—

(a) making any determination or doing any other thing after the passing of this Act for the purposes of any relevant report, and

(b) making under section 66(1) of the 1980 Act the first estimate and notification to be made after the passing of this Act as regards the authority concerned for the year beginning in 1985 or that beginning in 1986.

(3) For the purposes of this paragraph relevant reports are—

(a) the report mentioned in paragraph 1(4)(a) above and that mentioned in pragraph 1(4)(b) above, and

(b) any report proposed to be made in substitution (directly or indirectly) for the report mentioned in paragraph 1(8)(a) above or that mentioned in paragraph I (8)(b) above.

(4) The information referred to in sub-paragraph (1) above is that which was taken into account in making the Rate Support Grant Report for England for the year for which the relevant report is made or the estimate and notification are made (as the case may be).
General
6. References in this Schedule to making determinations or doing other things for the purposes of a report include references to making or doing them with a view to the inclusion of anything in a report whether or not the inclusion is required by any enactment.
7.—( ) Paragraph 4 above shall have effect subject to paragraphs 3 and 3A above.

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(2) Part VI of the 1980 Act shall have effect subject to paragraphs 2 to 5 above.")
On Question, amendments agreed to.
Schedule 3, as amended, agreed to.
Clause 11 agreed to.
Schedule 4 [Amendments]:
Lord Skelmersdale Lord Skelmersdale moved Amendment No.56:
Page 15, line 41, leave out ("In section 56(6) and (7) of the 1980 Act") and insert—
("(1)Section 56 of the 1980 Act shall be amended as mentioned in sub-paragraphs (2) and (3) below.
(2) In subsections (6) and (7)").
The noble Lord said: With the leave of the Committee I shall speak also to Amendments Nos. 57,58 and 59.
All these amendments amend Schedule 4 to the Bill so that, where in the other statutory provisions covering rate support grant it is intended to refer to "total expenditure", the provisions do so. In some cases the provisions refer to "expenditure" in cases where the practice has been to construe those references as "total expenditure". Total expenditure is now by statute an artificial accounting concept and is likely to be different from what is expenditure in the true sense. These amendments will mean that Schedule 4 will carry through the necessary amendments to other statutes consequent upon the provisions of the Bill. I commend the amendments to the Committee.
On Question, amendment agreed to.
The Deputy Chairman of Committees: With the leave of the Committee Amendments Nos. 57, 58 and 59 will be moved en bloc:
Lord Skelmersdale Lord Skelmersdale moved Amendments Nos. 57 to 59:
Page 15, line 43, at end insert—
("(3) In subsection (8), in the definition of grant-related expenditure, after "notional" there shall be inserted "total".")
Page 15, line 43, at end insert—
("2A. In section 58(5) of the 1980 Act after "in their" there shall be inserted "total".")
Page 17, line 5, at end insert—
("5A. In section 8 of the Local Government Finance Act 1982 (adjustments of distribution of block grant) the following shall be inserted after subsection (4)—
"(4A) If guidance issued for the purposes of section 59(6)(cc) of the said Act of 1980 is guidance by reference to total expenditure, and if representations in the following behalf are made to the Secretary of State by any association of local authorities or by any local authority, he may—

(a) in the Rate Support Grant Report made for any year under section 60 of that Act, or

(b) in a supplementary report made for any year under section 61 of that Act,

provide that items of any description or amount shall be disregarded in calculating total expenditure for the purposes of the said section 59(6)(cc) and of determining under subsection (3)(c) above whether or the extent to which local authorities have or have not complied (or have or have not taken steps to comply) with the guidance.".").
On Question, amendments agreed to.
Schedule 4, as amended, agreed to.
Schedule 5 agreed to.
Clause 12 [Interpretation]:
Lord Skelmersdale Lord Skelmersdale moved Amendment No.60:
Page 8, line 29, leave out subsection (3) and insert—
("(3) For the purposes of this Part of this Act as it applies in relation to an intermediate year beginning in 1983, 1984 or 1985—

(a) "local authority" also includes the Greater London Council and the Inner London Education Authority within the meaning of section 30 of the London Government Act 1963,

(b) references to the Inner London Education Authority in section 1(1)(c) above, paragraph (c)below and paragraph 2A(10) of Schedule 3 to this Act shall be construed as references to the Inner London Education Authority within the meaning of section 30 of that Act,

(c) the Greater London Council and the Inner London Education Authority shall be taken to be separate local authorities, and

(d) "local authority" does not include a joint authority or the Inner London Education Authority established by section 18 of the Local Government Act 1985.").

The noble Lord said: This is a technical amendment. What it does is to make it clear that the references to ILEA in relation to the years beginning in 1983, 1984 or 1985 are to the special committee of the Greater London Council, rather than to the new corporate body established by the Local Government Act 1985. It also ensures that although the old ILEA and the GLC were the same legal entity, they are treated separately for the purposes of Part VI of the 1980 Act, as they always have been in the past.
As this is the last occasion that I shall speak in Committee on this Bill perhaps I may thank noble Lords in all parts of the Committee for their cooperation in reaching this point in the Bill in such an exemplary fashion and for the good temper exhibited by all who have spoken. I include in that particularly my noble friend Lady Hooper who has been scurrying hither and thither at my request for what seems a very long time. I beg to move.
Baroness David: If I may, I shall respond to what the Minister has so kindly said about the good humour with which this Committee stage has been conducted and the speed with which we have got through it, which is rather greater than I expected. Our thanks from this side to the Minister and to the noble Baroness and I hope we shall have a satisfactory Report stage.
On Question, amendment agreed to.
Clause 12, as amended, agreed to,
Remaining clauses agreed to.
House resumed: Bill reported with amendments.

Coal Industry Bill
6.58 p.m.
Viscount Davidson: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Viscount Davidson.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD NUGENT OF GUILDFORD in the Chair.]
Clauses 1 to 4 agreed to.
Lord McCarthy Lord McCarthy moved the amendment:
Before Clause 5, insert the following new clause:
("Collective bargaining conciliation machinery.
.—(1) It shall be the duty of the Board to enter consultation with the workers' organisations concerned in order to establish and maintain joint machinery appropriate to national conditions, and utilisation of the collective bargaining machinery for voluntary negotiations, with a view to the regulation of terms and conditions of employment by means of collective agreements, with provision for reference to arbitration in default of such settlement in such cases as may be determined by or under the agreements.
(2) The conciliation machinery so established shall ensure respect for the right of workers to organise and will not cause the dismissal of or otherwise prejudice a worker by reasons of union membership or because of participation in union activities outside working hours or, with the consent of the employer, within working hours.
(3) The workers' organisations shall participate in such conciliation machinery at all levels of administration with the British coalfield.").
The noble Lord said: This new clause derives from a debate at Committee stage of the Bill in another place when the Member for Salford, East, moved an identical new clause except for the fact that in the second line of the clause he said the word "organisation" and we say "organisations". Thus we are adding a single "s" to that word in our new clause. Otherwise the clause is the same as that moved in another place.
The reason we are adding that "s", so far as we understand it, is because that was the single point of substance which was made by the Government against the clause. They suggested that if we included the word "organisation" rather than "organisations" we might be doing some undercover activity for the National Union of Mineworkers and, to make it quite clear, we put in the plural.
The argument that was advanced by the honourable Member for Salford, East, in another place is essentially the argument which I wish to advance tonight. It is that Clauses 5 to 8 of the present Bill, as I said at Second Reading, represent the consequences of recognising the Union of Democratic Miners. As was said in another place and in this place on Second Reading, we are not contesting that. What we are saying is that certain consequences follow from the recognition of the Union of Democratic Miners at national level and at area level. At both levels the National Coal Board, or British Coal as it now is to be called, has decided to recognise the UDM. Consequently there are consequences for the recognition of the UDM in the ancillary bodies of the conciliation machinery; and that is what Clauses 5 to 8 are intended to cover.
We have no desire to divide the Committee or to quarrel with those consequences. However—and this is the second point which was made in another place—we would argue that the NCB, or BC, is not carrying through the consequences, because what in essence it is doing is ending what might be termed the exclusive bargaining rights of the National Union of Mineworkers for the grades it represents. Under the terms of Section 46(1) of the 1946 nationalisation Act, the National Coal Board was informed by statute that it had to provide negotiating machinery with those unions that represented substantial proportions of the workers that it employed. Until the recognition of the
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UDM that meant in effect the recognition of the NUM, which was the only union representing substantial proportions of the grades it sought to organise.
As a result of recent events the UDM arose and developed to a position where it has something like 28,000 or 30,000 members, and British Coal decided that it had to recognise the UDM. Therefore there are consequences, and we do not think that those consequences have been followed through. The consequences are the ending of the exclusive bargaining rights in the coal industry of the National Union of Mineworkers. Therefore at national level and at area level a system of what one might call parallel unionism has been established—a system where two unions have their own individual and independent rights for negotiation and where they exist, so far as I can see, from the point of view of the NCB in positions of equal authority so far as national negotiations are concerned and in the case of area negotiations so far as the Nottingham area is concerned.
The problem is that British Coal has not carried through these consequences to the level of the individual unit. What it is trying to do at that level—and this was the argument advanced in another place—is to operate a kind of two-class system, a preferential system, in which there is a majority union and a minority union, and in which, in particular in those areas where the Union of Democratic Miners is the majority union (for example, in Nottingham), the NUM has very restricted bargaining rights. That is the essential problem with which this new clause seeks to deal.
We are saying that on the evidence we have—and I do not think this was denied by the noble Lord when we discussed this on Second Reading—at the level of the individual unit British Coal is operating a two-class system in which there is a majority union, the UDM, which still in effect is the sole bargaining agent at that level, and certain peripheral facilities are offered to the minority union—in that case, the National Union of Mineworkers. It is allowed to represent individuals as the friend of individuals; it is allowed representation on certain local issues. It is not allowed collective bargaining rights—for example, in respect of bonus schemes and so on—and it is not given what would normally be regarded as equality of representation with the majority union.
What was argued by the spokesman for the Opposition in another place, the honourable Member for Salford, East, and what I referred to very quickly at Second Reading is the fact that this anomalous position inevitably leads to charges of victimisation. As the members of the National Union of Mineworkers in Nottingham and Derbyshire seek to exercise what they regard as their normal representative functions, they move beyond the limited functions granted to them by British Coal; and so we have had allegations of victimisation. I am not suggesting to your Lordships that they are proven. In any case some of the allegations are subject to industrial tribunals and therefore may be said to be sub judice. But the allegations have been made, for example, that Mr. Whetton of Bevercotes Colliery was dismissed for putting up a National Union of Mineworkers poster. As I say, I am not suggesting that British Coal would

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accept that that is what happened. There was an allegation that Mr. McGinty of the 0llerton Colliery was also dismissed for union activity. Similar charges in other pits have been made and some of them are before industrial tribunals.
It is inevitable that such charges should be made and that such disputes should arise if members of the National Union of Mineworkers and representatives and secretaries of local branches seek to act normally and to exercise the normal representative functions of collective bargaining at unit level which they have enjoyed since 1946 and even before that, before nationalisation. Therefore we propose in our new clause a way of solving this problem. What we are saying essentially is that British Coal has decided to operate a system of parallel unionism of equal rights at the level of the areas and in the national negotiating machinery. Therefore it must carry this through at the level of the unit. There must be parallel unionism with equal bargaining rights for the minority where there is a significant membership for both unions.
It was said, and most unjustly said I suggest, in another place in Committee that this was in some way an undercover attempt on the part of the Labour Party to produce benefits for the NUM rather than for the UDM. We do not deny this. There will be benefits in the sense of a return to the established position for the National Union of Mineworkers in Nottingham and also in Derby, where it is clearly a minority union. But the UDM still has only something like one-third or less of the overall membership of the National Union of Mineworkers, and there are many other areas, and units within those areas, where the UDM is in the minority and the NUM is in the majority.
Therefore we would argue very strongly that this is a fair and equitable distribution of advantage and disadvantage. We want to see this because we wish to encourage either of two things. We want especially, directly and exclusively to benefit the National Union of Mineworkers, and we want to do two rather different things. I mentioned them very briefly on Second Reading and I have to say a bit more about them now.
First of all, in terms of good industrial relations principles this is the logical consequence of the breakup of an exclusive bargaining agency. The minority union should be accepted in a position of parity at national level and at area level, but in those areas where the minority union is in the majority, the union which is in the majority overall should be accepted there to be in a position of parity. That is the logical, common sense consequence of breaking up an exclusive jurisdiction arrangement, and it exists wherever there is multi-unionism. So that is the externally determined logical argument in what we are suggesting, but we do not suggest that this is entirely done for logical analysis of collective bargaining principles.
As I sought to suggest at Second Reading, we believe that it is an unmitigated tragedy that there has been the division in representation and trade unionism in the coal industry. Nevertheless, it is a fact and one has to come to terms with that fact. There are a number of ways in which that event can develop, and it is because we believe that parity, rather than an attempt to give advantages to one union or another when it is in a
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majority position at unit level, is the best way to deal with this unfortunate division between unions that we argue for this clause tonight.
We believe that there are a number of ways in which such a division can go. It can go in the end to a perpetual argument and row between unions or, hopefully, it can go to reconciliation between two different unions. If it is to go towards some kind of accommodation—perhaps some sort of medium, middle-road position—then there must be equality there must be parity and there must not be the feeling that the employer is favouring one union rather than another. In order to facilitate that kind of approach we are moving the clause.
I want to turn very briefly to the three subsections within the clause, in order to argue how it works and how it facilitates and carries forward the objectives that we want to achieve, because one or another of these phrases in the clause has been the subject of certain objections in another place. Subsection (1) of the new clause merely restates in an attenuated and abbreviated form the substance of Section 46(1) of the 1946 nationalisation Act. We want it there to build on. We want it there as a way of emphasising the further consequential effects that we wish to achieve in subsections (2) and (3).
One has to say, however, that it does not do what some of the opponents of the clause in another place suggested that it did. It does not impose a rigid bargaining pattern on the industry. For example, it does not involve automatic arbitration. It merely reiterates and states in a summary form the essential provisions of Section 46(1) of the 1946 nationalisation Act, which, in effect, put a legal authority and responsibility upon the Coal Board to negotiate with unions representing workers in its employ.
Subsection (2) is based upon the provisions of Article 6 of ILO Convention 98, which emphasises the right to organise and bargain. What it does in the context of the new clause is to bring the question of the right to organise without discrimination, and the right not to suffer dismissal or other prejudice, within the negotiating machinery. What we are saying in the first sentence of subsection (2) is:
"The conciliation machinery so established shall ensure respect for the right of workers to organise and will not cause the dismissal of or otherwise prejudice a worker by reasons of union membership".
In other words, this shall be done and ensured by the conciliation machinery.
If one understands this, I think it answers some of the objections which were raised in another place on the basis of arguing that we do not need subsection (2) because, under the terms of the Employment Protection Act, we already have provision for unfair dismissal. But the provision for unfair dismissal is external. You go to the Industrial Tribunal and the remedy which you obtain there is compensation. You do not effectively obtain a remedy of reinstatement. Moreover, there are the Government's restrictions on access to the tribunal. Anybody with under two years' service has no right of unfair dismissal.
So what we are proposing here is not something which merely reiterates what is existing in statute. It is something which is going back to the situation as it

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existed before the Coal Board terminated the conciliation machinery; a situation which has existed since the beginning of that machinery; a situation in which questions of unfair dismissal were dealt with within the conciliation machinery with the acceptance on both sides that the proper remedy in cases where dismissal was found to be unfair was reinstatement or re-engagement. We are saying that that should be the case in circumstances in which dismissal is based on discrimination on grounds of union membership. So subsection (2) is not an unnecessary aberration. It takes us back to the situation as it existed before the board revoked the conciliation machinery.
But we agree that it is subsection (3) which is the central part of our amendment. It is subsection (3) which makes it clear that all recognised unions, including the minority union at unit level, should be allowed to participate in such conciliation machinery not on some kind of second- class basis but from a position of parity. The Government have said in another place, and to some extent when we discussed this at Second Reading, that there are various things wrong with the different subsections. Our position is that we are perfectly willing—indeed, we are eager—to accept any changes which the Government may want to make in terms of the drafting of this amendment.
If the Government say that the terms of subsection (1) are there in any case in the nationalisation Act and that they therefore do not see the need for any addition to Section 46(1) of the 1946 Act but accept the principle behind subsection (2) and, above all, subsection (3), then we shall not ask the Committee at this stage to divide, or argue that the provisions of subsection (1) are crucial.
The central point that we are trying to make is that the Coal Board, for reasons of its own which we do not wish to debate or divide upon tonight, has decided to move away from a position of exclusive jurisdiction. It has done it at area level and at national level, but it has not carried it through to unit level. It is critical for the future of the industry that it should be made quite clear that this in no way means any discrimination against one union or another, and in that spirit—if the Government accept-that principle—they should be prepared to accept our new clause. I beg to move.
7.15 p.m.
Viscount Davidson: When this Bill was debated at its Second Reading, the noble Lord, Lord McCarthy, gave notice that he would be tabling an amendment of this kind. I gave reasons on that occasion why I believed that the introduction of such a clause was unnecessary and undesirable. The noble Lord has said nothing this evening to make me change my mind. The clauses in this Bill which give certain rights to unions other than the NUM—that is, Clauses 5, 6 and 7—were necessary to secure for thousands of men basic rights in the management of affairs outside the scope of their normal terms and conditions of employment. However, the proposed new clause deals with matters which do relate directly to the contractual relationship between employer and employee and which govern precisely those normal terms and conditions. Legislation exists which places certain very clear duties on British Coal in that regard. The detail
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of agreements entered into must be a matter for the parties to the agreements and not for politicians, whether in this House or in another place.
Legislation can lay down basic rights for employees. This has been done, particularly in the Employment Protection (Consolidation) Act of 1978. Some of the provisions in that Act are similar to subsection (2) of the new clause. We see no reason to go further in saying what should or should not be in one particular industry's conciliation machinery. I understand that British Coal, in line with its duty under the Coal Industry Nationalisation Act 1946, has entered into discussions with both the NUM and the UDM on proposals for new conciliation machinery. The task is made more difficult because of the failure of the NUM to come to terms with the existence of the new union. The extent of its recognition is a refusal to sit with the UDM. Joint negotiations on any matter are therefore out of the question.
This is why British Coal is in the process of discussing two separate conciliation agreements. Each of those agreements is designed to reflect the 50 per cent. plus one principle for negotiating purposes, whereby it is the majority union in each place of work with which British Coal will negotiate on matters relating to the terms and conditions of employment. That approach seems to me to be entirely sound from a management viewpoint and fully in line with employment legislation. Any other basis for collective bargaining could have a serious destabilising effect on industrial legislation in the coalfields.
I should also emphasise that the proposals give conciliation rights to minority unions, wherever they are. British Coal proposes that, where a union has a majority among mineworkers at a particular colliery, disputes should be resolved by negotiations between British Coal and that union. But where a dispute relates specifically to a minority union, its members would be entitled to discussions with management and to assist any individual member of their union in dispute with colliery management.
To require British Coal to recognise minority unions for all purposes would go far beyond the 1946 Act and it would also be contrary to the position in other industries. There is no general legal requirement of this kind. In the coal industry it would lead to all sorts of difficulties, in particular when men working at the same face might receive quite different rates of pay. Would any union, no matter how small, qualify for recognition? That is what could be implied by the proposed new clause.
Of course there are industries in which more than one union is recognised in a single negotiating unit. But that is something for decision by the employer and not for imposition by statute. There is nothing in either this Bill or the 1946 Act which prevents British Coal from recognising minority unions for any purpose when it thinks that that would make good industrial relations sense.
When an identical amendment was introduced in another place, my right honourable friend the Under-Secretary of State said that he was puzzled by the new clause. The noble Lord, Lord McCarthy, has attempted to explain why he considers a new clause necessary. But I have to confess that I am equally

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puzzled. It has been said that by using a phrase such as, "appropriate national conditions", the clause could be used to deny rights to the UDM because, while the union is in a majority in some areas, it is in a minority nationally. I prefer not to ascribe such ulterior motives but rather to view the proposed new clause as misguided and unnecessary, albeit perhaps well meant. I hope that I am right.
Whatever the reasons for the amendment, I am sure that if the Government had included such a clause in the Bill as a means of ensuring representation for the UDM the history of the passage of the Bill would have been very different. We would have been accused of driving wedges into the union movement and of unwarranted interference in the affairs of the industry. However, the Government did not introduce such a clause; they saw no need to do so and they still see no need.
I repeat that legislation already puts a duty on British Coal to enter into consultations on conciliation machinery. Individual rights of employees are protected by a body of employment legislation, and it is not appropriate to legislate on the terms of conciliation agreements, which are matters for negotiation between British Coal and its employees. In view of what I have said, I hope that the noble Lord feels able to withdraw the amendment.
Lord Wedderburn of Charlton: I rise briefly to support my noble friend in the amendment which he has moved. The noble Viscount referred to the important clauses of the Bill which he spoke of as, "intended to give basic rights to workers on matters that were not within the normal scope of their terms and conditions of employment". I hope that I have quoted him correctly. He is therefore concerned with Clauses 5, 6 and 7. Accepting that, one might think that it was equally if not more important to ensure that similar rights are accorded to workers on matters within the normal scope of their terms and conditions of employment.
When the noble Viscount says that negotiations in this country are traditionally not a matter for legislation, he is right. However, there is perhaps a footnote exception; namely, that all the nationalised industries, and especially the National Coal Board in 1946, had placed upon them a statutory duty to negotiate with unions which represented and which still represent a substantial proportion of workers in the industry. The Government do not change that obligation.
Indeed, I expected the noble Viscount to say that the problem with subsection (1) was not so much that it introduced a new facet into industrial relations in the coal industry but rather that it repeated Section 46 of the Coal Industry Nationalisation Act 1946. To some extent, that is true. As my noble friend has said, subsection (1) is the basis for the other two clauses, to which I largely wish to address myself this evening.
In subsection (3) what is at stake is the participation of the trade union chosen by groups of workers at all levels of the industry in what is called in this particular industry the conciliation machinery or, more generally, the negotiation machinery which sets up various types of procedures, including disputes procedures. I fail to see on the argument of the noble
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Viscount what is wrong with that. There is a problem in the industry. There has been the break-up of a single bargaining agency. There are questions raised, both by the Union of Democratic Mineworkers and the National Union of Mineworkers, as to whether they are being allowed properly to represent their members.
On the day upon which a new Green Paper thrusts before us new proposals based on the notion of democracy in trade unions, it is quite startling to find that the Government are not prepared to advance arguments better than those advanced in another place and in this House in the face of a proposal that in an industry where negotiation has a legal framework and has had such a framework since 1946, a union should be ensured in its ability to represent its members at all levels of the industry's machinery. Contrary to what was said in another place on behalf of the Government, that certainly is not already enshrined in existing legislation.
Subsection (3) appears, in my submission, to advance a case helpful to the industry in clearing up the question of whether each union, in the new situation which is always plagued by the echoes of the strike, can represent its members at various levels, which is not covered in existing legislation.
Subsection (2), it is said by the Government (and I understood the noble Viscount to be repeating the claim tonight), tries to deal with the very important human right of being a member of a trade union and engaging in the activities of an independent trade union without dismissal or penalty by employers. The basic rights of the International Labour Organisation have not been renounced by this Government. It is said that those rights are covered by existing legislation. With great respect, I do not think that is the case. There are two reasons why that is not so.
First, as a matter of law, what the new clause tries to do is to maintain the practice in the industry of ensuring that dismissal or penalty on the ground of trade union membership of whichever union, or on the ground of trade union activity, does not in any way give rise to a threat to the job. The 1978 Act, upon which the noble Viscount relies, in Sections 23 and 58 provides some protection. However, the protection is by way of compensation, and for a person whose livelihood depends upon his employment, that is a distinction of a very material character, whether or not he obtains a special award as compensation in the industrial tribunal. Indeed there is an industrial relations reason under the same heading. These matters are better dealt with in the conciliation machinery and should be dealt with there. It is a great regret, whatever the truth of the matter, that members of the National Union of Mineworkers have been forced into the procedures of the industrial tribunals with, it appears, very arguable cases of discrimination.
Secondly, and perhaps more importantly, it is now manifest on the records of the judgments of the courts that the National Coal Board has until very recently engaged in policies which were discriminatory against members of the National Union of Mineworkers. In Ridgeway v.National Coal Board, decided by the Court of Appeal on 29th December last year, one met the case of the National Coal Board refusing to pay the same rates of pay to workers who were members of the

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National Union of Mineworkers that it had agreed to pay to workers alongside them who were members of the Union of Democratic Mineworkers, the very case instanced by the noble Viscount to support his argument that we did not need this clause.
That case did two things. First, it showed the uncertainty of the present law. It was one of those delightful cases for the lawyers where the industrial tribunal found for the two members of the National Union of Mineworkers and where the Employment Appeal Tribunal reversed that decision. It therefore required further fees for an appeal to the Court of Appeal, which reversed the Employment Appeal Tribunal decision but only by two Lords Justices to one. It came from the Court of Appeal by two to one that the National Coal Board had acted illegally.
This was the policy of the National Coal Board, however, and it might be thought that other lawyers, perhaps members of your Lordships' Judicial Committee, could possibly have taken the view of the Employment Appeal Tribunal. In other words, there is doubt. There is doubt that if the Court of Appeal judgment stands, the National Coal Board was acting illegally in this highly discriminatory policy. Do not the Government want to clear away such uncertainties? Do not the Government want to make sure of the very case that the noble Viscount put to us this evening; that members of different unions will not be paid different rates when working side-by-side underground in the pits? An amendment along the lines of the proposed subsection (2) would do that. It may be that, having received further advice, the noble Viscount will tell us that it is inadequately drafted. If so, one hopes that the Government will take it away, clear up the problem and say quite clearly that, in an industry which has suffered such agonies and which, for the past 40 years, has been based on some kind of statutory structure, there shall not be discrimination against members of one union or indeed of the other at all levels.
7.30 p.m.
Lord Rochester: From these Benches, I feel it incumbent on me to make a few comments on the amendment. I have listened carefully to what the noble Lords, Lord McCarthy and Lord Wedderburn, have said, and also to the Minister's initial response. With all respect, I do not think that an adequate case has been made out for the inclusion of the new clause in the Bill.
The legislation is not concerned with negotiating rights or with conciliation machinery. Therefore, it does not seem to me to be an appropriate vehicle for what the noble Lord, Lord McCarthy, has in mind. Even if it were, I can see no adequate reason for this amendment to be made. As I understand it, the effect of the judgment in the High Court last June was to make it clear that the conciliation machinery which has operated in the past in the coal industry should be altered to accord recognition to the Union of Democratic Mineworkers. I regret the necessity for that change but feel that in the circumstances it was unavoidable.
My information, like that of the noble Viscount, is that British Coal is now discussing proposals for new
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conciliation machinery with the relevant trade unions as required by the Coal Industry Nationalisation Act 1946. There does not therefore appear to be any need to provide for such machinery to be set up under this Bill.
For that reason, I do not find it possible to support the amendment. In the light of the words used by the noble Lord, Lord McCarthy, when he first moved the amendment, and with that factor among others in mind, I hope that he will not press it any further tonight.
Viscount Davidson: I apologise to the Committee if I jumped up to speak rather too quickly. I thought that I had paused for rather a long time. I think it would have been better if perhaps the two noble Lords who have spoken had done so before I replied, Nevertheless, I shall try in a very short time to reply to some of the points they have made.
I do not propose to go into the details of the proposed new clause. As I said earlier, the main point of the Bill is to enable British Coal to establish parity between the two unions which now exist. What is proposed by British Coal is an agreement which offers the same rights to the unions depending on whether they are majority or minority. I am most grateful to the noble Lord, Lord Rochester, for his support.
So far as concerns industrial tribunals, this is now the general law and there is no good reason why the coal industry should perpetuate separate and more stringent regimes for its own employees. There was no general law when in 1948 the National Coal Board and the NUM agreed the previous arrangements for wrongful dismissal and it is difficult to accept that British Coal should now perpetuate arrangements which would oblige it to go further for its employees than other employers have to do.
I should like to repeat that I have been advised by British Coal that proposals for new conciliation machinery are being discussed with the unions. That point was made by the noble Lord, Lord Rochester. It is not therefore necessary to take powers in relation to conciliation in the Bill. I would again ask the noble Lord, Lord McCarthy, not to press his amendment.
Lord McCarthy: We are naturally disappointed by the replies of the noble Viscount. I accept that he has done his best to answer many of the points that have been raised, though I am sorry that he did not refer particularly to the points made by my noble friend Lord Wedderburn in respect of the Ridgeway case, the discrimination against the National Union of Mineworkers and the opportunity that the Government might have had at this stage to clear up the issue.
However, as I understand the noble Viscount, three arguments have been advanced and it does not seem to me that they hold up. First, he seemed to be saying in much of his original contribution and in his subsequent contribution that we cannot do what we want to do because it would represent an interference in the contractual autonomy of the parties to the collective bargaining process in the coal industry.
As my noble friend Lord Wedderburn has said, the nationalised industries have had from their inception a statutory structure which has regulated and affected

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their system of collective bargaining. In so far as we wish to regulate, change or support that structure, we essentially want to go back to the principles of Section 46(1) of the Coal Industry Nationalisation Act 1946. Therefore the argument that we should not interfere with the contractual relationships of the bargaining parties in the coal industry does not stand up. That comes extremely ill from a Government who have not only regulated collective bargaining in all kinds of ways—in the legislation of 1980, 1982 and 1984—but on this very day have proposed a whole series of new ways in which the internal affairs of trade unions shall be regulated. Therefore I do not believe that "hands off" is a consistent and comprehensive policy which this Government can advance against our clause at this time of night.
The second set of arguments which the Minister advanced seemed to be that the problem we are trying to deal with—and I give him credit for saying that we are trying to do this in the right spirit, misguided though we may be—is in a sense the fault of the National Union of Mineworkers. I do not want to misrepresent the Minister but he seemed to say that the problem is that the National Union of Mineworkers will not come to terms with the existence of the Union of Democratic Mineworkers.
I accept that there are problems in coming to terms with a breakaway union such as the UDM, but there is also a responsibility on the part of governments, if they take a serious interest in industrial relations, to assist such a coming to terms. What we have been arguing throughout this debate is that the proposals we suggest are one of the ways in which the Government might help the two unions to come to terms with each other and to do so because that is the logical and equitable consequence of the recognition of the UDM at area and national level.
Until and unless that is done, and unless some indication is given by the Government to the National Coal Board that it ought to be done, it is legitimate for the NUM to say that it is being discriminated against at unit level and that the alternative system of parity operates at national level and area level where it benefits the UDM; but if it does not benefit the UDM and if it discriminates against the NUM, then some quite different system is to be introduced at unit level. Therefore if the noble Lord says that he wants to help the unions and the industry to come to terms with each other, I suggest that he should support our amendment.
Finally, and I suppose this is in a way the one new fact which we have elicited from the Government this evening, the noble Lord has actually brought out into the open and defended at unit level the principle of 50 plus one. I say with sincerity and with whatever authority I can muster that I know not this principle of 50 plus one. It is a strange, bizarre and unusual principle to me. I do not know where the National Coal Board got it from. I do not know how it reconciles and justifies what it has done at area and national level where they do not operate 50 plus one; they operate parity.
If it were a legitimate principle, then surely it should operate at all levels. If it operated at all levels the UDM would not be recognised at national or area level. Therefore this strange and bizarre principle of 50 plus
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one which we know not, which we have never seen before and which I hope we shall never see again, is introduced at unit level. The inevitable consequence one must draw—and I draw it with regret and reluctance—is that it is introduced by the management of the National Coal Board because it benefits one union. That seems to me to be the last thing to do if you want to reconcile unions and get them to come to terms with each other.
Those are the arguments put before us by the noble Lord. We said on Second Reading that we regarded the division of the mining unions in this industry as a tragedy. We said we accepted that, given recognition, Clauses 5 to 8 were inevitable. We said that what was not inevitable was an endless and continuous battle between the two unions in which it could be said that both the employer and the Government take one side against the other. That is the inevitable consequence of what we have heard tonight. We shall not divide the Committee. On the other hand, we do not intend to withdraw our proposed new clause.
The Deputy Chairman of Committees (Lord Hayter): Is it your Lordships' pleasure that this amendment be withdrawn? The amendment is, by leave, withdrawn.
Remaining clauses agreed to.
Schedules agreed to.
House resumed: Bill reported without amendment: Report received.

SIB Polarisation Rules
7.46 p.m.
Viscount Colville of Culross Viscount Colville of Culross rose to ask Her Majesty's Government whether the likely effect of the proposed rules of the Securities and Investments Board Limited with regard to polarisation will be to restrict, distort or prevent competition and whether they will provide the consumer with adequate choice.
The noble Viscount said: My Lords, I beg leave to ask the Question standing in my name. As I understand that there is some controversy about the last part of the Question, I want to make it abundantly clear to my noble friend, Lord Lucas. When I ask in the Question,
"whether they will provide the consumer with adequate choice",
I mean whether Her Majesty's Government will provide the consumer with adequate choice. I am going to ask my noble friend how that can be done under the legislation which we passed in the last Session.
I have no interest to declare in this, save that when it comes to asking about changes in the rules of the Securities and Investments Board—I shall refer to it as SIB from now on—I must declare that I am a member of one of the embyronic new self-regulatory organisations which are trying to set up rules in order to become recognised under the Act.
The subject is polarisation, which is a jargon word. I shall attempt briefly to explain what it is in a moment. I want to draw attention to the particular rules that were published by SIB in their final form about 10 days ago. I want to ask my noble friend about the Government's ability to secure changes in the SIB

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rules in general, not only on this point but also in other respects, because I believe it is important to find out whether the Government can do so.
The subject of polarisation was referred to on 20th October last in a short amendment at Report stage of what was then the Bill, and I took up a point then which I propose to pursue again today. The SIB rules in respect of polarisation concern life assurance and unit trusts. SIB thinks that these are inseparable. I do not know whether other noble Lords will agree, but a powerful document arguing that they are has been produced by SIB.
In order to try to describe briefly what polarisation means, I should explain that the rules require that anyone advising a member of the public on, or selling to a member of the public, life assurance or unit trusts must be either a company representative working for one company or group and selling the group's products or an independent intermediary; that is, an agent for the customer acting only for him and surveying the whole market to find the product which best suits that customer's needs.
The restriction will apply to many financial organisations, groups and companies. It will apply to insurance companies, to banks, to which I have certainly talked about this matter and which are not exclusively involved at all, to estate agents who advise those who are taking out mortgages to cover their mortgage by an insurance policy, to solicitors, to accountants and, I suspect, to others. It will apply to all those people if they have any tie with a life assurance or unit trust firm whose products they are proposing to sell to the customer.
The Securities and Investments Board is anxious about small investors. I am bound to say that that is entirely in the spirit of the legislation and I am sure that it is right to be anxious in that way. The board is particularly concerned for customers and members of the public who do not know about any special commission that will be received from the people in charge of the insurance company or unit trust scheme by the agent who is trying to sell such customers an insurance policy or is suggesting that they should buy into a unit trust scheme. It is concerned too that customers may not know whether the insurance policy or unit trust scheme is in-house for the person who is purveying it to them.
I shall summarise the arrangement that is suggested in order to look after the small investor, and other noble Lords may wish to flesh out my remarks. In the branch of the insurance company, bank, or whatever, the manager can advise the customer on the firm's own schemes but on no other, or he can refrain from giving any advice at all. However, it is possible for a large financial group to set up a separate independent subsidiary which can advise on the full range of financial services, including life insurance and unit trusts. Such a subsidiary can cover the entire range of services and give the customer the benefit of impartial advice. There is one snag about that, and I shall come back to it in a moment. It happens that I had prepared this speech in sufficient time to enable me to watch television for a short while last night and during that period, in prime time, one insurance company and one bank were featured, both advertising that sort of comprehensive service.
The difficulty about an independent intermediary, which is the subsidiary, is that if it is part of a group which itself has in-house products, whether it be life assurance or unit trusts, in theory it is perfectly entitled to advise on those products as well as on all others that are available. However, there is a rule—Rule No.5.03(2)(a)—which will make that impossible. It is too complicated to read out in full but I shall try to summarise it. The rule forbids an independent agency of that sort which has a connection with a group that is offering insurance or unit trusts to advise the customer to take out one of those policies or to embark upon one of those unit trust schemes unless, after making reasonable inquiries, that firm neither is nor ought to be aware of any other life office or unit trust scheme which is not part of the group that would be willing to enter into a transaction with the customer that is likely to secure his investment objectives as advantageously as the in-house scheme. It is the words "as advantageously" that are the catch.
I ask your Lordships to contemplate the situation for one moment. It is very clear that life assurance and unit trust schemes are matters which have to be judged over the long term, and crystal balls are of no use when the customer enters into the agreement. It will be actionable as a breach of statutory duty, sounding in damages, if that agency advises the customer to take out an in-house policy or to go into an in-house unit trust scheme which turns out to be not as advantageous. In those circumstances what agency in its senses will ever advise on the in-house group?
So there are two places to which the customer can go: the branch, where only the in-house group can be presented to him, and the independent agency, where only the in-house group schemes cannot be presented to him. Nowhere will he be able to obtain a full range of what is available.
I wonder how it will work? I note that two years ago Sir Mark Weinberg who is now the deputy chairman of SIB, though he did not hold that office at the time, said:
"Most people do not enjoy shopping around for financial services. I believe that if an organisation they trust, acting through an individual with whom they have established a personal relationship, offers them a wide range of services and saves them from having to shop around, they will be extremely relieved".
I agree with him. Except in major cities I do not believe that people will get the spread of advice which I am sure that everybody intends them to have. At the present moment the ordinary people who are at all interested in financial services go to the building societies, the banks and the insurance companies in their town or the district where they live. Those are the financial institutions and the people with whom they are familiar and whom they trust. Those are precisely the people who, if they have any in-house schemes at all to offer, will be able to offer nothing else. I can only think that in those places there will be a little office and the manager will say, "You can go in there. We have a tied VDU on which you can tap up our independent agency and you will be able to read on the display unit all the other services that are available. Mind you, don't come back to me afterwards and ask me whether they are better than mine because I can't tell you!".
I do not think that there is any other way in which a person who lives in the kind of ordinary little place in which most of us live—not in the City of London and possibly not in one of the other major financial

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centres—will be able to obtain a full range of services. The employee in the branch office will not be able to help him to work the computer or do anything at all.
It is no use being wholly negative about this situation. I have looked very carefully at a powerful document that was produced by the SIB very recently (I think specifically for the debate on this Question), in which it is strongly argued that for this reason it has rejected the principle of disclosure which applies all the way through the rest of the regulatory system in the Financial Services Act. I hope that this rejection will be looked at again very carefully.
I appreciate that my noble friend Lord Lucas will tell me tonight that he can say absolutely nothing and will not say anything because this matter has been referred to the Director General of Fair Trading, who in due course will report to him. I have asked this Question tonight for exactly the same reason that my noble friend will give for not answering it tonight. If he could answer it tonight then the matter would probably have gone beyond repair. However, if the matter is still in front of the Director General of Fair Trading and no decision has yet been made, it may be that your Lordships can still bring some influence to hear on the decisions that will ultimately be reached by my noble friend in his department. If, as is the case under the Act, the Secretary of State can refuse a delegation order, which puts him into business, and there is a recommendation from the Director General of the Office of Fair Trading that the rules produced are anti-competitive, then he must be able—although the Act does not say so—to suggest to the SIB that there should be changes in the rules before he is prepared to recognise them. I wish that it had said so in the Act. It does not.
It seems to me to be an inevitable consequence of the legislation that if there is a major role, as is the case, for the Office of Fair Trading to play, it must be possible for its advice to be implemented somehow. I hope that my noble friend will be able at least to touch on this as I gave him notice of the point.
I come on to the slightly wider matter as to whether any of the rules can be changed. In general, before the Secretary of State can make a delegation order handing over a multitude of functions under the Act to the SIB, he has to be satisfied with the rules that the SIB has produced—Section 114(9). I think that the rules will not themselves be part of the delegation order and therefore there is some room for flexibility thereafter. Certainly my right honourable friend can reclaim the SIB's powers if, after it has taken over, he ceases to be satisfied with its rules—Section 115(5).
What we need to know, I suggest to your Lordships, is whether opportunities will exist before the delegation order is laid when I believe my right honourable friend will have opportunities to suggest to the SIB that there are still alterations that should be undertaken. Can we know that this is indeed the situation? I say this because some of the SIB's latest rules, which as I say were published about 10 days ago, contain material that is not in any earlier versions. Some of the embryonic self-regulatory organisations are looking hard to see whether they can apply them, as they will have to, if they are to be recognised in their turn. I therefore hope that there will be an opportunity to make further comments and suggestions that will be
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put into effect before the order is made. I hope that others will fill this out. I believe that it is timely to discuss this matter this evening.
8.3 p.m.
Lord Graham of Edmonton: My Lords, I think we could all agree with the last few words of the noble Viscount that it is a timely opportunity to express a point of view and perhaps bring some influence to bear on the final outcome.
Interests have been declared. I am a vice-president of the Building Societies Association. I have received its brief, though I shall not be following it in what I have to say. I also have strong connections, as the House knows, with the co-operative movement. There must be some aspects of the matter that touch upon the co-operative insurance society interests or the co-operative bank in one way or another. I have received no brief from them in this matter, but I declare that simply to be open and honest with the House. I am willing to listen to what the Minister has to tell us about what he can do at the end of the debate, apart from having listened to it.
The noble Viscount, Lord Colville of Culross, did not exactly give the game away but pointed out the dilemma. Let us go back to the debate that we had on 20th October last year, and what the noble Viscount asked for when the matter was introduced by the noble Lord, Lord Ezra, as a legitimate ploy—the same as tonight—to try to get some better understanding in the House of what was likely to go on outside the House when these matters were discussed. The noble Viscount, Lord Colville, said at col. 101 of Hansard:
"The only other chance that will occur for this House to express itself upon them is when the rules as a whole come forward as a statutory instrument for approval as they stand or not at all".
He had been asked whether that was the position.
He continued:
"They will not be able to be amended and therefore what we need is some kind of flexibility between this evening and the time when the rules are finalised so that a good deal of further thought may go into this".
I am certain that not only the noble Viscount but his friends and other interests outside the House have given a great deal of further thought to it. He said at col. 102:
"What we really want now is reopening of negotiations between the various people concerned and the SIB—the latter presumably being very interested in the protection of the investor".
I cannot believe that his aspiration on those last few words has not been carried out; that is, a continuation of negotiations between powerful and legitimate national interests and the bodies that the House has seen fit to authorise setting up. Before I express a view, I wish to plead in aid the words of the noble and learned Lord, Lord Cameron of Lochbroom, the Minister then dealing with the matter. He referred to the discussion document and said at col. 103:
"The Bill provides that the Director General of Fair Trading should keep under review the rules, regulations and so on of SROs and a designated agency and that he must report to the Secretary of State if he thinks they are anti-competitive".
The noble Viscount, Lord Colville, seeks to make the case that in essence that which is likely to flow from the existing 9th February paper is anti-competitive in the sense that it is unfair and unjurious to some

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parties. The noble and learned Lord, Lord Cameron, continued:
"The amendment prejudges the issue in one area and makes the director general's role nugatory as a result. The Bill provides that the Secretary of State shall not recognise the SRO or designate an agency unless he is satisfied that the anti-competitive effect is not greater than is necessary for the protection of investors".
We need to have confidence that all the advice—this is what we seek tonight—is taken on board by the Minister and given proper weight along with the advice he receives from other sources. One of those sources is undoubtedly the SIB. Another source that helps the SIB to make up its mind is the SROs. I have received a brief from the Association of British Insurers. It is one of the large financial interests besides the banks and building societies which are crucially affected—perhaps underground—by the manner in which the matter will proceed.
The ABI says:
"we feel that now that polarisation has been SIB's declared policy for the best part of a year, and was accepted by the life offices last March, it would be impossible to make exceptions to the general rule at this stage without undermining the entire concept".
Some noble Lord who follows me may tell me that the association does not know what it is talking about, and that it would not do what the association says it would—undermine the entire concept—if one made exceptions. But that is what the association tells me.
The association also tells me this:
"The concept of polarisation was accepted by ABI last March, having considered the views expressed in the House of Commons Standing Committee's debates. Since that date, life companies have been making the necessary, and in many cases extensive, adjustments to their marketing arrangements in order to comply with the polarisation requirements".
The Minister and others may tell me that life officers can do things under the polarisation rules that other agencies such as banks and building societies cannot do. I shall be interested to hear whether that is the case. The ABI's final point is:
"To make an exception for banks and building societies would effectively undermine the whole concept of polarisation, given the large volume of life assurance business which these institutions transact through their branches, through their insurance broking subsidiaries, and in some cases through their direct sales forces on behalf of their life companies".
No one will deny that the ABI speaks for the large insurance companies.
There are undoubtedly those who are advantaged and those who are disadvantaged, but not to a large extent, by the way that this provision operates. I had not given it a great deal of thought, but I like the idea of polarisation. There are many in this House, and I respect their experience, who know their way around the investment world and who do not need to take advice as earnestly as others. Those who need advice are often less able to take it, value it and understand it when it is given to them. Those who are deeply, professionally involved in the investment world know the value of advice. They know where to get it; they respect it and they act upon it. Sometimes they are right and sometimes they are wrong.
I am much taken by the sense of the Bill. It seeks to protect the investor. A great deal was said during our debates about it protecting the new breed of investor—the people who may not have been involved before in making simple decisions about what they
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want to do with small sums of money. The last thing I shall say is that there are hoards of people in banks, insurance companies or financial conglomerates who are there to mislead or give wrongful advice. I can see, however, that interests can often be better served by dealing with a matter one way rather than another.
The Consumers' Association is in no doubt that the polarisation route is the one which provides the best opportunity to satisfy one of the Bill's basic tenets. It tells me:
"At present, without polarisation, a potential investor may, justifiably, be unclear (or worse, misled) as to the status of the advice he is getting. For example, when a cold-call salesman comes to the `prospect's' home and offers the product of perhaps two or three companies, the would-be investor may well assume he is getting independent advice. Equally, when he goes to his bank and the bank's independent broking service recommends him to buy the in-group products, he would surely expect that they had been selected because of their superior qualities. This may not be so. For an individual to check himself whether the advice offered is indeed independent, or whether the products recommended are, indeed, superior is well-nigh impossible—particularly given the long-term nature of the investments under consideration. Polarisation would put an end to this potential source of confusion and misplaced trust in the quality and independence of the advice being given.".
I understand that there may be anti-competitive aspects of polarisation. I should think that they would be taken care of by the Director General of Fair Trading. I accept that polarisation will restrict the way in which conglomerates, particularly banks and building societies, offer some services. Surely they have a choice. They may not like to make the choice, but they have it. The noble Viscount was clear and scrupulously fair when he said that the SIB said that the organisation had to be one thing or another. The choice is there.
A bank or financial service agency faced with having to act under the present rules (they are not the final version) must make the choice. It must either act in-house and declare it or work through an independent intermediary and keep its nose clean. There may well be some tie up and so forth.
The advice which is categorised as better than best advice is what I want to see provided. I am prepared to hear the Minister tell the House, not that these are early days but that this is not the end of the road. The SROs have been busy. They are earnestly anxious to serve the public and obtain Parliament's good will. They do not want to be seen to be in the pocket of or working at the behest of anyone. I hope that they will be seen to be powerful organisations.
In insurance, they accept and work under the rules. Banks and building societies may take a different view. With respect to building societies, however, only last year an enormous door was opened to enable them to expand. There must be a great deal of honest endeavour, and practical work must be done, by building societies before they start shouting about being hit by a provision which is basically designed to protect the investor.
8.17 p.m.
Lord Banks: My Lords, I am grateful to the noble Viscount, Lord Colville of Culross, for asking this Question tonight, even though I cannot agree with all that he said. I must begin by declaring an interest in that I am a registered insurance broker specialising in life assurance and pensions. I should like to make it clear that I speak only for myself. I do not seek to commit my noble friends in any way.

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I support the regulation and registration of all intermediaries in this field which follows the passing of the Financial Services Act 1986. As we know, the SIB has been established. Its rules will be applied by the SROs within its jurisdiction. Underlying those rules, as has been clearly explained by the noble Viscount, is the principle of polarisation.
By the end of this year, every intermediary will have to be fully independent, offering the best advice across the board or he will have to be a company representative—the representative of one life office. Thus, those intermediaries with at present two or three agencies only will have to move one way or the other. All intermediaries must consider their position. The principle is that the client must know whether he is receiving impartial advice across the board or whether he is dealing with someone tied to a particular office.
I support that principle, but I am concerned about the effect of its application on small intermediaries. There is a danger of putting such a burden of expense and administration upon them that they will be forced out of business. General concern is felt about that at the moment. We have only to read the pages of Money Marketing week by week to see that that is so.
Chris Leach, who is president of the Life Assurance Association, is quoted as saying in that journal on 30th January that many intermediaries find FIMBRA—FIMBRA being the self-regulatory organisation which is expected to be the one for insurance intermediaries—too bureaucratic and do not understand the rules. An editorial in the same issue said:
"Practically every document that emanates from SIB these days brings some new horror for the independent intermediary … SIB's changing structure is unreasonably weighted against the intermediary sector. SIB appears to assume that intermediaries can easily afford to pay a substantial increase in their overheads; either that or SIB is deliberately aiming to drive some of the smaller firms Out of business".
I understand that FIMBRA has to pay £1.25 million to SIB this year. There have been complaints about the cost of both SIB and FIMBRA.
A report in Money Marketing on 13th February said that FIMBRA is considering doubling or trebling its annual company membership charge. It is not surprising, therefore, that Derek Thomas, writing on 9th January, said small independent life and pension brokers could be an endangered species by the end of this year. Significantly, Teresa Hunt said on 6th February:
"As many as 20,000 jobs will be created in large firms of financial intermediaries by 1990 as an increasing number of small advisers are forced out of business".
It may be inevitable that some of those advisers should go out of business or join larger organisations, but there is cause for concern. I wonder whether the Government are fully aware of the situation and whether they agree that it cannot be good for competition.
In those circumstances it is not surprising that small intermediaries view with a jaundiced eye the efforts of the large banking conglomerates and the building societies to escape the full effects of polarisation. It looks to them as though banks and building societies want to have their cake and eat it. If the concern of a bank is that its branches should give best advice across the board, it can opt for them to do so. It seemed to me
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that the noble Viscount did not make that point as clear as he might have done in his otherwise very fair picture of what polarisation meant. The bank manager could then offer the widest possible advice to customers backed by his group's independent intermediary. If the bank decided to restrict his role to that of representative of its own group life office, that would be its doing.
Even in those circumstances, as has been explained, the bank manager may still refer the customer to the group independent intermediary or to another independent intermediary. He can be the channel of communication too for passing the independent intermediary's recommendation to the customer. Once he has done that he must not offer further advice as to the placing of the policy, but he can discuss with the customer the impact on his general financial position of the recommendation. It is also important to remember that the need for a policy will have been discovered and discussed between the client and the bank manager before reference takes place.
I believe that conglomerates should be subject to the same rules as everybody else and that at all times the status of the intermediary should be clear. As the noble Lord, Lord Graham of Edmonton, pointed out, that is certainly the view of the British Insurance Brokers' Association, the Corporation of Insurance and Financial Advisers and the Consumers' Association. The latter feels that any marginal restriction of competition which is brought about by these rules is more than compensated for by the clarity of status which they would ensure.
In conclusion, I return to my first point and ask the noble Lord who is to reply who is going to control the controllers, and how effectively.
8.22 p.m.
Lord Tryon: My Lords, I think I shall be briefer than most of the previous speakers, and I do not wish to steal any thunder from the very senior bankers and others who will speak after me tonight, but I took some interest in this topic when we last discussed it on 20th October.
At that stage I described our discussion as being rather like Hamlet without the prince, because we were all waiting for the SIB rules. We now have the SIB rules, but they have gone almost nowhere towards dealing with the reservations which were expressed in particular by the banking community. It is becoming a little clearer, especially from what the noble Lord, Lord Banks, has just said, that we are in a battle here between the insurance industry and the banking industry. Let that debate continue. I have no interest to declare. As far as most of the Bill was concerned, I had endless interest to declare, but I have no very obvious interests in this respect. I am not a director of an insurance company or a bank, or not a UK bank.
However, it seems to me that there is a powerful argument for reconsidering the position of the high street bank manager. In the rules as they have been set out we appear to be moving into almost an Alice-inWonderland situation. That was vividly illustrated by a very good article in The Times on 20th January by Edward Adeane, which concerned an imaginary conversation between a bank manager and one of his clients. I commend it to the noble Lord, Lord Lucas, if he has not yet read it.

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Despite what has been said on behalf of the insurance industry, bank managers are those to whom people around the country, particularly outside the big cities, turn for financial advice. Bank managers' hands seem likely to be tied by these rules. I am sure we shall hear more of that from the noble Lord, Lord Boardman, and others shortly.
The SIB rules are voluminous in size. Some of us have had a few days in which to look at them, and as a general comment I would say that they are very legalistic. Some of us had hoped that they would be confined more to simple principles, coupled with a lot of heavy surveillance.
I shall not produce many examples tonight as I appreciate that the rules are in draft form, and that there is a lot still to be done, but parts of them are extremely hard to follow. I would mention to the Minister page 224, section 5, categories of firm. I have tried that section on a number of highly intelligent people and they are completely unable to understand it. I do not expect an answer on that point tonight.
The more important point is the one which the noble Viscount, Lord Colville, raised in his remarks at the end of his full and eloquent opening to the Question. I should like to ask the Minister to what extent the SIB rules form part of the delegation order. When the delegation order is put before us the rules will be in their final form. That I appreciate. Shall we at that point have any opportunity to alter any part of the rules? Shall we have any opportunity to do so before that happens, or shall we have to take them in full or reject them in full?
This debate has given a good opportunity to ask those questions because there are a number of people who are still worried about this whole process.
8.30 p.m.
Lord Bruce-Gardyne: My Lords, I should also like to join in the thanks to my noble friend Lord Colville for raising this matter tonight. It is extremely pertinent, as various noble Lords have said. I should also like to thank the noble Viscount for the great clarity with which he spoke.
Before I proceed to the argument, I should once again repeat my own interest as a director of the TSB, which is certainly as concerned about this matter as any other banking group—and arguably more concerned. I have listened carefully to the arguments we have heard tonight. Like the noble Lord, Lord Tryon, I looked up the debate we had on 20th October. I notice that my noble and learned friend Lord Cameron of Lochbroom then said that there was far to go in the way of discussions between interested parties and the SIB—as indeed there was. However, I must say that the attitude of the SIB reminds one somewhat of the stance of an American ambassador who arrived in London many years ago and who was said to have taken up office at Winthrop House, or whatever it is called, with a policy of an open door and a closed mind.
The SIB has shown a willingness certainly to listen but very little flexibility in the interpretation that it has chosen to put on the rules. I find its explanations somewhat peculiar. Like other noble Lords, I have received a copy of the latest document from the SIB
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setting out its position. It refers to the fact that banks, and for that matter building societies with branch networks, feel that their local branch managers,
"can be relied upon not to succumb to the conflict of interest inherent in having both an agency and a company representative role in the field of life assurance and unit trusts".
Its response to that is simply: be that as it may. It does not dispute that that tradition of trust and confidence exists. It simply says, "Be that as it may. We cannot see in effect any way of introducing a measure of flexibility in our rules on the subject of polarisation without unpinning our arrangements reached with the life assurance companies". Yet the fact is that the bulk of this document that we have received from the SIB is expressing caveats—not about the hazards with which customers may be confronted by uncertainties about the nature of the advice they may receive from bank managers or building society managers but about the hazard with which they could be confronted in dealing with life assurance salesmen.
The document says:
"Life assurance is an area in which the investor is particularly in need of protection … The costs are often concealed from the customer".
What has the SIB done about this? What the SIB has done is to say that there is no obligation at all on the independent salesman of life assurance to declare the scale of the commission which he will receive from one product vis-ù-vis another. Yet surely that is a matter of crucial interest and concern to the customer and might legitimately be expected to influence the advice which the customer was given by such an intermediary.
The noble Lord, Lord Banks, said that the banks and building societies seem to want to have their cake and eat it. I suggest that it is more a question of the banks and building societies wanting the customers to have their cake and eat it, if that is possible. I am not at all clear from listening to the noble Lord, Lord Graham of Edmonton, for instance, whether even at this late stage there is really an awareness of precisely what the SIB is proposing. It is saying that there must be a clear obligation on the purveyor of unit trusts and life assurance policies to satisfy himself that what he is offering to the customer is the best for that individual customer's circumstances. I am sure that we would all say "Amen" to that. We would all agree with that; it must be right.
The SIB then goes on to say that under its rules, in the case of the building society branch manager or the bank manager who takes the option—as in practice he is bound to do—to sell in-house products, he is debarred from doing precisely that. If he were to come to the conclusion that an out-house product were better than any of the in-house products he could not sell it. He would be debarred from selling what in his judgment was the best. This seems to me to be an extraordinary way of going about it.
The noble Lord, Lord Graham, referred to the advice we have had from the Consumers' Association. The Consumers' Association makes it quite clear that what it objects to most are cold calls—the so-called foot-in-the-door salesmen. Again, many noble Lords may have sympathy with this view. But the SIB has sanctioned and agreed that the so-called foot-in-the-door salesmen shall continue to operate. For reasons which frankly I do not begin to understand, the Consumers' Association concludes that that is all right

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so long as the position of the bank manager or the building society manager is effectively polarised.
The conclusion seems to be—and frankly I find this bizarre—that you may not make a choice to go to see your local bank manager or local building society manager and have presented to you all the options with the best judgment that he can offer you of what is the most suitable product for your individual circumstances on an occasion of your own choosing. However, you may be interrupted in your admiration of "Coronation Street", or whatever it may be, by a cold-call salesman as an independent intermediary who can offer you any of a complete range of products; and if you were to ask him what were the relative commissions that he receives from those different products, under the rules he is entitled to tell you that that is none of your business. I find this the most extraordinary way to achieve satisfaction of the consumer's interests. That is surely what we are concerned with.
There is much in these documents that we have been given about the problems of definition and the need to avoid confusion in the eyes of the consumer. However, I beg my noble friend to take this point on hoard, as I am sure he has done. It seems to me to be crucially important for us to understand that there are literally millions of people—the kind of people to whom the noble Lord, Lord Graham, was referring—who do not have the necessary sophistication or access to sophisticated financial advice and who are accustomed to looking to their bank manager or their building society branch manager for that type of advice.
Lord Graham of Edmonton: My Lords, I am most grateful to the noble Lord for allowing me to intervene. The noble Lord certainly made the strong point that the Consumers' Association is vehemently opposed to the whole nexus of cold calling. There is no dispute about that. I rise now because on a previous occasion when I spoke in a debate I was less than fulsome in acknowledging that that was the standpoint of the Consumers' Association. Nevertheless, the noble Lord went on to relate its attitude to polarisation as somehow being contradictory to its attitude to cold calling. I shall need to read what the noble Lord has said.
I am asking the noble Lord whether the words which he has put into the mouth of the Consumers' Association—that is, ipso facto from what I have said on its behalf and what he has read in its brief—mean what he has told the House. I have a strong suspicion that he will tell us that that is not necessarily so.
Lord Bruce-Gardyne: My Lords, I shall read that intervention with a little care tomorrow morning, if the noble Lord will forgive me. I find the advice given by the Consumers' Association profoundly contradictory. That is the point that I am making. I do not understand how it can conceivably be construed as being a good defence of the basic interests of the consumer.
In conclusion I simply appeal to my noble friend to bear in mind the fact that there are millions of consumers who rely on the advice of their bank and building society managers concerning the comprehensive range of choices in this field. They will be hopelessly confused if they are told that their bank
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manager cannot advise them and they are sent off to intermediaries.
The noble Lord, Lord Tryon, referred to the fact that we shall eventually have the SIB rulebook before us. Yes, we shall, but it will be a take-it or leave-it job. My noble friend shakes his head, but when the order comes in we cannot amend it; we can accept it or reject it. Therefore in practice time is running short. It is crucial and I beg my noble friend to consider that an element of common sense should be brought into the argument even at this late stage.
8.42 p.m.
Lord Boardman: My Lords, I too declare an interest in this matter as the chairman of a clearing bank upon which these rules will have an impact. Like my noble friend Lord Bruce-Gardyne my interest is not just for the fortunes of the banks or building societies but it is essentially for the fortunes of the consumer who, I believe, will suffer severe penalties through the lack of competition and the like that will result from the rules as at present drafted. Many of the points were raised in the debate on 20th October. It is something of a disappointment that they did not provoke a response from the SIB until yesterday.
The noble Lord, Lord Graham of Edmonton, said that the point raised on 20th October opened up the field for further debate. I am sure that it is as disappointing for him as it is for me that we did not receive a response from the SIB until yesterday, and then only a disappointing one. My noble friend Lord Colville has done much by sparing the SIB the need to put its views on paper. However, the responses we have received do not give a real answer to the charge which has been made against the rules. They make no attempt to say why the present rules and the provisions of the Financial Services Act do not give the protection which I believe is essential, which is granted by the provisions and which would make polarisation unnecessary.
The requirements of the Financial Services Act and of the various rules are, first, that persons selling or introducing life assurance or unit trusts must give the best advice; secondly, that they must secure the best execution; thirdly, that they must disclose any interest that they have in the transaction; and, fourthly, that they must subordinate their interests to those of their customers. I suggest that that is a pretty effective control against the abuse which it has been suggested might otherwise arise. Perhaps I may add that in the case of banks—and I believe that it will shortly be the case in respect of building societies, if it is not so already—there is an ombudsman to whom they can appeal if it is thought that they have acted unfairly or improperly in any matter.
I contrast that position with that of the life insurance company representatives. My noble friend Lord Bruce-Gardyne pointed out that they are permitted to cold call; they are permitted to put their foot in the door. They do not have to disclose a commission that they are earning but can merely say that it is on some approved scale. As I see it, there is no obligation on them to give the best advice, to secure the best execution, to disclose the extent of their interests or to subordinate their own interests. If that is the yardstick which should be used—and I do not suggest that it is—I believe that it is quite wrong that one should then

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subject managers of banks, building societies and the like to a severe regime which inhibits them and makes it impossible for them to give proper wide financial advice to their customers.
Part of the problem is that the SIB inherited a whole set of proposals that came forward from MIBOC. I cannot now recall what MIBOC means but there is a translation which it would be inappropriate to use in your Lordships' House. An argument was put forward which your Lordships accepted, that cold calling could continue for those people. I find that somewhat remarkable in the light of the debate which we had and to which my noble friend Lord Lucas responded on the Financial Services Bill. However, that is the position.
I distinguish the position of a customer of a bank and his bank manager. It is not a one-off transaction. There is no related commission arising from that transaction which goes to the manager. There is a continuing long-term advisory relationship between the customer and the manager. It is the duty of the manager to establish a long-term, satisfactory link with the customer.
In my capacity outside the House complainants and dissatisfied customers tend to write to me, but I am not aware of complaints made against branch managers or bank managers for abusing their position between those products which they are selling as principal and those for which they are acting as agent. I have heard no such complaints. I believe that the position is very much different from that of door-to-door salesmen, against whom many complaints are made. I am sure that the noble Lord, Lord Graham of Edmonton, was referring to those people in the comments that he made. However, they are permitted to continue. As my noble friend Lord Bruce-Gardyne said, that is quite illogical.
My noble friend Lord Colville referred to the geographical aspect and the fact that in the City of London and in any large metropolis there are areas where, if one's bank manager cannot advise because he is forbidden to do so, one can go next door and get advice from an independent intermediary. However, there are vast tracts of the country where that choice is not available. There are areas where there is only one branch of a bank or building society and where the locals look to the manager of that establishment to give them wise and wide financial advice. Are those people to be told that they cannot be given advice and that they must take a plane or train to Edinburgh, or somewhere like that, where they may be given advice. The matter has not been thought through.
Perhaps I may turn to the link between life assurance and unit trusts. There is no direct link; they are different animals and different products, and they are usually used for different purposes. Life assurance is very often taken out in connection with support for a mortgage or for some other borrowing of that kind. Unit trusts are associated with investment. They are different products. Unit trusts are more akin to stocks and shares. In that connection your Lordships will recall that there is no division in dealing in those between a principal—a market maker—and a broker. They are required and were required by this Government to bring those two capacities into one. However, the distinction is being made here between
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unit trusts and life assurance but not with stocks and shares or PEPs. They will have many features similar to unit trusts.
I do not believe that this matter has been clearly thought through. Even if today my noble friend cannot go very far—I understand the limitations—I hope that he will at least say that he will consider very carefully the possibility of dual polarisation. By that I mean that unit trusts are in one pocket and life assurance in the other. Someone can be an independent intermediary for one and a company representative for the other. I do not believe that that goes nearly far enough, but I should have thought that it was certainly an elementary first stage in accepting what is wrong in the present system. It would represent some understanding of the practical work of these matters.
The noble Lord, Lord Tryon, drew attention to an article in The Times by Mr. Adeane which I hope my noble friend has read and will re-read. I also suggest that he reads the article by Christopher Fildes in the Daily Telegraph and the article in the Spectator. Those articles show what an absolute nonsense this is. I believe that when he has done that and when he has listened to the powerful arguments put forward by my noble friends, he will believe that it is essential to review the whole issue and the rules before they are cast in whatever stone they are to be cast in if the SIB is adopted as—the correct term escapes me.
Viscount Colville of Culross: The designated agency.
Lord Boardman: Yes, the designated agency. I ask my friend to take careful note of these points and indeed of what has been said both in this House and outside.
Lord Winstanley: My Lords, before the noble Lord sits down, I wonder if he will answer one question from his great experience in these matters. The noble Lord has referred to the wise advice of the bank manager to his client, and I accept that I rely on that wise advice very often. Many bank managers sell life insurance. My experience of those cases in which a bank manager has sold the wrong policy—I have come across many examples—is that he has done so not because of any advantageous question of commission rates, but merely because he does not know anything about life insurance. I wonder whether the noble Lord can tell me from his experience to what extent High Street bank managers are properly trained in the very complicated professional business of life insurance?
Lord Boardman: My Lords, obviously they cannot be masters of every part of the whole wide range of financial services. All bank managers have access to the best advice. If they are unfamiliar with a particular opportunity they should make sure that they have the best advice in order that they can give to their customer the quality of advice that he has come to expect.
8.53 p.m.
Lord O'Brien of Lothbury: My Lords, I, too, am grateful to the noble Viscount, Lord Colville, for raising the Question today, partly because I was not able to attend the debate on 20th October and therefore have so far made no observations on this subject at all. Like other noble Lords, I must declare my interest. Sunday next will be the 60th anniversary

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of the first day I spent in a bank in the City of London. I have been employed by that industry continuously to this day. Whether I shall be so employed tomorrow or the day after, in view of what I have to say tonight, remains to be seen.
For the greater part of the time I was a central banker. Therefore, some people would say that I was not a true banker but simply a supervisor and attempted controller of the real bankers. For the last 14 years, I have been trying to be a commercial banker. During the first half of that time, I was president of the British Bankers Association and therefore represented them all as best I could. Some may feel that that disqualifies me from talking on this subject. However, I propose to do so.
Over that long period, I have come to have a very high regard for the British banking system. It is a regard which I hope I have expressed and attempted to improve, believing that the banking system is best when it is providing the best possible service to its customers. Frankly, I was horrified, no less so than the noble Lords, Lord Bruce-Gardyne and Lord Boardman, by the polarisation proposals emanating from the SIB. This seems to be a case of a very energetic bureaucracy deciding that bureaucratic tidiness and logic arc the all-important matters and that there is no need to make bureaucratic rules tie in with the real facts of life.
All too often bureaucrats are unafraid of complication and complexity, which is a very serious sin in a bureaucrat. All the time he should be on the look-out for things he is trying to do which are far too complicated for the general public to absorb. This is one such case. The matter is wide and covers insurance companies and building societies as well as the banks. However, I should like to talk particularly about banks.
As we all know, in the years since the war, wealth has become much more widely distributed. Interest rates have increased a great deal and the need to manage financial assets has become more urgent for everyone. More people have opened bank accounts, particularly in the last 20 years. Where does the man who is unable to afford highly expensive financial advice go for advice? Many people have bank accounts, but they do not have solicitors, accountants or stockbrokers. Who advises them? The village parson? Certainly not. The bank manager advises them. Fortunately, bank managers are to be found throughout the country in the thousands of branches of our banks. They are banks of high repute.
As has been said, not all bank managers are equally good at giving this kind of advice. Indeed, that applies everywhere. One can go to the most expensive financial advisers in the City of London, but they do not always get it right. It is very difficult to give accurate and valid financial advice, day in, day out, over the years. However, the bank manager is the man available. He is the man who already has a relationship with his customer—very frequently a friendly relationship. I do not see why his ability to advise that customer should be cut down by these proposals which I find highly repugnant. I believe that sufficient could be done to protect the customer by instituting rules whereby the bank manager had to declare his interest in whatever products he was
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pressing on his customer. It would be a very sad day if the present proposals were to go through.
8.58 p.m.
Earl Ferrers: My Lords, it is always a privilege to hear the noble Lord, Lord O'Brien. Unlike the noble Lord, I have not had the privilege of being employed by the banking system for 60 years. I am quite certain, in view of what he has said this evening, that he need have no worries as to the future. I should declare an interest in that I am a director of an insurance company. However, it is not in relation to insurance companies that I wish to address my remarks this evening.
Judged by the list of speakers, my noble friend Lord Colville has clearly touched upon a raw nerve, and the House is indebted to him for having introduced the subject. He explained it with the clarity and, if I may say so, the simpleness which we are accustomed to hear from him.
Everyone can understand and applaud the Government's desire to increase the regulations in respect of financial affairs, especially when the pace of financial life has hotted-up so much in this computer age. The size, method and speed of transactions have been altered out of all proportion. Quite clearly, probity and the public must be protected. However, like many of your Lordships, I question whether the rules of the SIB have not gone over the top. They may be intended to ensure clarity in competition. In my view they will cause an unnecessary and monumental upheaval in the banks and building societies. which will be against the public interest. Far from protecting the public, the rules as they are at present will, in my view, totally confuse it.
I give an example that is on everyone's mind, that of a person who has, say, £5,000 and goes to his local hank manager to seek advice on how to invest it. The lucky owner of this sum of money knows his bank manager as a figure in the locality: he may know him socially and he trusts him. At present the bank manager may say, "You can put it in a unit trust. Our bank has its own. You can put it into life assurance. We have an insurance company". Or he can say, "But I am bound to tell you that there is an even better life assurance offered by another company and I would suggest that you put your money in that. I will arrange it". The bank manager gives his client the best possible advice, but under the new rules the bank manager is bound to declare the bank's interest. He will say, "We have a unit trust and a life assurance company and I would suggest that you go to those offices or I will ask a representative to see you. He will be working on behalf of our bank as a company representative". Or the manager can say, "I advise you to go to our broking company. Our man will show you what the market has to offer, but he is not a company representative. He is an authorised independent intermediary".
By this time the client is totally confused. He then goes to these different companies, all of which are at present owned by the bank, and is inundated and bamboozled by the technicalities of what they have to offer in a financial sphere with which he is not familiar. If he goes into the next room, as my noble friend Lord Colville suggested, and looks at a VDU, he will come out even more completely confused.

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So what does this poor client do? He goes back to his bank manager and says, "I have been to these various companies of which you have told me. I do not know which is best. Give me your advice". Then the bank manager says "I can't. I'm not allowed to. The Government have prevented me from doing so. I used to be able to do so. Indeed I know how I would advise you, but if I do I shall be breaking the law". If the manager advises his customer to get a life assurance from a company which is not an in-house company he will be breaking the law as he is not an authorised independent intermediary. If he advises his customer to choose his bank's own product when he knows it to be inferior, he is breaking the law because he is not giving the best possible advice. As a result the bank manager gets it in the neck either way and so does the client.
I hope that the Government will seek to amend what is an absurdity. I hope that my noble friend Lord Lucas, will, if he cannot amend it this evening (of course he cannot) at least say what he can do, because he must do something.
The Financial Services Act is so complicated that, frankly, one has to be a financial whizz-kid to understand it. I listened with wonder and incredulity to the intricacies of the Bill as it went through your Lordships' House. I am bound to say that most of it went over the top of my head like the crack of rifle fire. Most of it was unintelligible to the average person, but this particular part is totally intelligible to even the simplest of people; including myself. I suggest that it is quite clear that these provisions are wrong, that they will work against the customer's interest, that they will work against the financial institutions' interests and that the best possible advice will not in the end be given.
I agreed with my noble friend Lord Bruce-Gardyne when he said that millions of people rely upon the advice of their bank managers. It is all very well to tell people to shop around. That is all right if one is buying soap powder. Financial guidance and investment require trust and confidence. These millions of people to whom my noble friend Lord Bruce-Gardyne referred do not want that trust and confidence dislodged.
9.5 p.m.
Lord Campbell of Croy: My Lords, I should like to congratulate my noble friend Lord Colville upon raising this subject this evening. He has described clearly the dilemma facing the Government because they are due shortly to take decisions. That is why this debate is so well timed.
The Securities and Investments Board, the SIB, has made recommendations in the interests of protecting investors and putting into effect the Financial Services Act. Those in the business of financial services, authorised persons under the Act, must be in one of two separate categories for life assurance and unit trusts. They must be either independent intermediaries or sellers of their own products. If they are offering their own schemes they will be debarred from discussing the purchase of the products of others who might be regarded as rivals. This raises difficulties and anomalies for financial conglomerates and
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especially for the high street banks and building societies. Again I declare an interest as a director of one of the largest building socieites.
Bank managers have for many of our citizens been a source of general financial advice, besides being in a position to offer the bank's own schemes in insurance and unit trusts. The noble Lord, Lord O'Brien, a few minutes ago outlined lucidly what banks had been able to do. Now that the Building Societies Act enables building societies to offer a range of financial services too, they will shortly find themselves in a similar position. If the present proposals are not changed they will have to set up separate bodies—one category to deal in their own products only and the other to give general advice on the products of others. This I suggest will cause harm to the interests of investors and customers which will greatly outweigh any benefit of supposed protection. No longer will the customer be able to receive general advice about his affairs from one manager over the whole field of opportunities—that manager of course being able to call on expert advice as required—always bearing in mind the manager's interest in the in-house products and recognising that of course the customer should be properly informed where the bank or building society has an interest of any kind in a scheme or product.
I shall not illustrate examples of the anomalous situations which could occur because they have already been graphically described in the article in The Times of 20th January by Mr. Edward Adeane which has been referred to by the noble Lord, Lord Tryon. There was an imaginary interview between a customer and a bank manager whose general advice he had been used to seeking for 20 years. The effect of polarisation would be to restrict the advice which could be given and in certain circumstances to prevent the best advice on what would be the most suitable for the customer from all the schemes and products available.
Where building societies are concerned, polarisation would run counter to one of the principles underlying the recently passed Building Societies Act to assist the public. The principle is that members of societies when visiting their branches can, at the counter or in the office, have the facility and convenience of financial services not previously available.
Where house buying is concerned, this is known as the one-stop objective. The customer no longer needs to be dealing separately with two, three or even four different offices. Polarisation would be a reversal of that principle.
Where life assurance is concerned, polarisation would mean either that building societies would have to become independent intermediaries or that they would have to be tied to one company only. For many societies this would mean that they would become tied agents of one company and the consumer would be offered less choice rather than more.
Another bizarre effect of the SIB's recommendations on building societies relates to the new power under the recent Act to offer personal pensions. If societies arrange insurance policies, which is part of their normal business, they would be prohibited from selling their own pension products through their branches. What can be the objection to a building society acting as an intermediary in life assurance while selling its own products in other areas?

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When the noble Lord, Lord Ezra, raised this subject at the Report stage of the Financial Services Bill on 20th October, my noble and learned friend Lord Cameron of Lochbroom gave a reply which to me still left open the matter so far as the Government are concerned. He said the Government's view was that there should be safeguards so that the investor can be sure of getting genuinely independent advice. I am sure we all agree on that, but the proposals now put forward to achieve that end seem divorced from reality.
Cold calling is, I understand, what the Consumers' Association was particularly against. My noble friend Lord Bruce-Gardyne has already spoken on this. It is to continue under the proposed arrangements, but if it is to continue, it seems that the safeguard proposed in its place is polarisation. Polarisation has been put forward instead of a ban on cold calling.
What are the difficulties about rules for full disclosure? Would not this be a better alternative to polarisation? A bank, building society or other financial organisation should be required to tell the customer about any connection or association of its organisation with a product or scheme. That interest must be fully declared. The customer then has the widest possible choice, knowing in which products his adviser has an interest, near or distant. I hope the Government will consider that very carefully as the best of the possible choices.
9.13 p.m.
Lord Mottistone: My Lords, I too have to declare an interest but it is not quite such a detailed interest as those of several other speakers who are deeply involved in the businesses they were seeking to defend. I have a son who is an insurance broker but I hasten to tell your Lordships that I have never done business with him because I have been brought up never to do business with members of one's family. I think that is probably wise.
I have great admiration for the bank managers with whom I have dealt, who have all been of the outfit in which my noble friend Lord Boardman is such an important figure. I have always found that they have been jolly good at their job, as I understand their job, and certainly I have never sought to consult them on life assurance, or any other insurance for that matter, because I have never seen a bank manager as that sort of person.
There has been a great deal said for the banks and one wonders whether they are protesting a little hard. My noble friend Lord Ferrers told us a most moving story about what might happen to an unfortunate member of the public who went to his bank manager and was not able to get the results that he wanted. I did not quite recognise that as something that I saw happening every day.
When I was thinking what I might say to your Lordships, I thought I might see whether I could answer the questions that my noble friend Lord Colville had put to the Government. I confess that I interpreted his wording to be whether the rules gave the consumer adequate choice, but I do not think the answer, which in the main is that supplied by the SIB, makes much difference.
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What it has suggested is that, on the one hand, polarisation does not reduce consumers' choice. The SIB estimates that there are well in excess of 5,000 independent intermediary firms, employing upwards of 50,000 people, that will be required to offer the best advice across the whole market without any restrictions or qualifications. I question what my noble friend Lord Colville said about vast tracts of the country without advice available. I do not believe that is so. Certainly wherever I have lived, worked or been, I have found that there have been insurance brokers to whom one could refer and there has been no difficulty in obtaining such advice. One has not had to go to one's friendly bank manager. In any case, my friendly bank manager has always been in London and I have communicated with him as necessary by letter. That is the choice part of it.
As to whether polarisation restricts, distorts or prevents competition, I am sure your Lordships have all been informed by the SIB, as I was, of its explanations. But I think it is worth putting them down on the record as a balance to the debate. In that connection it says that all rules and requirements are restrictive, and one would accept that. They are, and that is one of the problems. But it also says that without them markets could not operate and nor could investors be protected. Life assurance and unit trusts are an area where improved protection for the small investor is of paramount necessity and unbiased advice from an agent working entirely for the client is an important option. That surely is the burden of the proposed system that we are debating.
Lord Bruce-Gardyne: My Lords. I apologise for interrupting my noble friend. Would he say that advice would be likely, certainly or assuredly to be entirely unbiased when an independent agent received a commission of X in the case of one product and a commission of three-X in the case of another?
Lord Mottistone: Yes, my Lords, it would in this sense. I checked up on this point. As I understand it, there will be a normal commission rate, which admittedly will not be a public figure but will be agreed by the parent body which is to be allocated the duty of looking after this aspect. It will be known within the industry and known to my noble friend the Minister. But it will not necessarily have to be declared as in the normal case. But if there is a commission which is two or three times as much as the normal, a declaration will have to be made of exactly what it is. That part of the rules will have to be accepted. In that respect it will be made clear to the customer that there is a special bias. Polarisation is the only policeable way of removing bias.
There is an anti-competitive aspect in this. There must be, because any regulation of whatever sort has an anti-competitive element within it. But the anticompetitive cost in terms of constraint on the way intermediaries operate is small compared with the advantage to the consumer of the greater likelihood of a product best suited to his needs. That is the nub of the argument.
I do not wish to absorb any more time. However, my noble friend Lord Campbell of Croy, in his concluding remarks, asked, "Why not disclosure

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rather than polarisation". The argument is that where disclosure is allowed in the securities and money markets, a dual capacity operation is permitted because the announcement of dual capacity gives the client knowledge that it is there. However, in addition, and more importantly, it is easy to check on whether the best advice is given because all securities of a given type are identical—one ICI share at a given time is identical to another—and this can be readily checked. In life assurance, on the other hand, no two contracts are the same and the choice for the customer depends on long-term performance. Thus, it is extremely difficult to check whether the agent has done his best for his client unless one has polarisation.
Without wishing to burden your Lordships further, and because most of what needs to be said has been said, perhaps I may just summarise, in addition to what I have said about commission arrangements, on what I understand is likely to be the case for controlling the independent adviser. He would have to say that he was such on his writing paper and in dicussions with his customer. He would have to say that he was a member of an appropriate governing body—the body which must agree the normal commission rate. He would have to give evidence, or have evidence, of the steps he had taken to give the best advice if anyone challenged him as to whether or not it was the best advice.
It seems to me that the arrangements for controlling the independent adviser are going to be pretty stiff. If I take the remarks of the noble Lord, Lord Banks, aright, it will be unfair competition if the advisers have to compete against the bank manager, with his supporting expertise, on absolutely level terms. I suspect that this is the area where the noble Lord, Lord Banks, thought that many people might go out of business. One must be fair not only to the customer but also to the people supplying the information and the best advice which the customer really needs. I hope that the Government will not obstruct the introduction of polarisation.
9.23 p.m.
Lord Shaughnessy: My Lords, I did not have my name down to speak, but I ask the indulgence of your Lordships in hearing me for a moment. I am impressed with the concept of confusion involved in this discussion in the application of the Securities and Investments Board under polarisation. The brief states that,
"The investor will be confused as to the nature of the service available to him and as to the position of the person advising him and accordingly liable to make decisions based on erroneous assumptions".
The prescription of the rules as they appear in the basic document is certainly one of confusion and whatever the potential veniality of an honest bank manager in advising his clients, I suggest that he is performing a better function than these rules would seem to imply.
9.24 p.m.
Lord Williams of Elvel: My Lords, we must be grateful to the noble Viscount for raising this Question. With great respect. I take issue with him on
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the question of timing. I am not sure that it is the right time for a debate when the Financial Services Act passed by Parliament is in the process of being implemented. The SIB draft rules are in front of the Office of Fair Trading, and it is at the point at which the Office of Fair Trading makes up its mind what is its view of these rules that I suspect the noble Viscount's Question might be more appropriate.
Under Section 122 of the Financial Services Act the Director General may publish his report. A Question of this nature coming at that time would certainly bring pressure to bear on the Director General to publish a report that otherwise he might not consider it appropriate to publish. Nevertheless, I have to apologise to the noble Viscount for pressing him before the debate on exactly what was the meaning of the second "they" in his Question. He was kind enough to explain that, having thought about it a little, "they" must mean the Government, since the Government were the only people who could do anything about it and that "they", as the noble Lord, Lord Mottistone, felt, could not mean the rules. I apologise if I threw some of your Lordships into confusion by my pre-debate intervention.
Had the noble Viscount not given me that interpretation of the second "they" in his Question, I should have had a great deal of sympathy for the Minister as the Government at this point have no case to answer. There is nothing that the Government either can or indeed should do about this. Parliament has passed an Act. The Act is in force, and that has to be the Government's position. As the noble Viscount pointed out, he did not expect to get a detailed answer from the Minister this evening and I am sure that the noble Lord will oblige the noble Viscount by not giving a very detailed answer.
As a number of noble Lords have said, this whole debate took place when the Financial Services Bill was before your Lordships' House. An amendment was introduced by the noble Lord. Lord Ezra. A number of noble Lords who have intervened this evening took part in that debate. The basic problem is whether bank managers. building society branch managers and certain others—I shall come to certain others in a moment—should have a treatment in the sale of life insurance and unit trusts different from the treatment of life insurance salesmen who may belong to other institutions.
When this question first came up in the Financial Services Bill I had a certain amount of sympathy for the case, and particularly for the TSB case which was explained very well to us at that time, that perhaps banks (and in particular clearing banks) and building societies were in a special position. If at the time the noble Lord. Lord Ezra, had been able to devise an amendment to the Bill which focused narrowly on banks and building societies and their branches it might have attracted a certain amount of support from this side.
On the other hand, when we looked at the possibility of drafting such an amendment, we found it impossible. In my view—and this is my first point—polarisation is indivisible. You either have polarisation across the range in the same product—life assurance or unit trusts—or you do not have it at all.

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I do not see how you can invent rules and regulations that are applied to one group of people selling product A that do not apply to a different group of people selling the same product. I find that a difficult concept and I do not see how it could be written into law. I would regard the thought that banks and building societies might be special cases in respect of polarisation as being something of a non-starter if polarisation is to apply at all.
Many noble Lords have commented on the virtues of high street bank managers. I have nothing against high street bank managers or indeed, if I may address myself to the noble Lord, Lord Campbell of Croy, against building society branch managers. They are all extremely worthy men. However, I am reminded of what the noble and learned Lord, Lord Templeman, said during the course of the Financial Services Bill. He made a very moving speech about the role of the family solicitor and how the family solicitor was the parent, guide and friend in all matters. I had a lecture earlier this afternoon from my noble friend Lord Morton of Shuna, who told me that the Scottish solicitor is much more of a friend and counsellor than the English solicitor and that the Scottish solicitor—I am sure that the noble and learned Lord the Lord Advocate will support my noble friend—is the person to whom everyone turns for proper financial advice, advice on marital affairs, and so on.
Lord O'Brien of Lothbury: My Lords, does not the noble Lord agree that only a minority of people employ a solicitor on a regular basis, whereas nearly everyone uses a bank manager?
Lord Williams of Elvel: My Lords, I have to disagree with the noble Lord, Lord O'Brien. A majority of people in this country do not have bank accounts. Indeed, although I do not have any figures in mind I suspect that at some time in their lives more people use a solicitor than use a bank. At the last count, some 40 per cent. of the population did not have a bank account. The building society movement is of course different because more people have a building society account, or share account, than have a bank account. Therefore I am not sure that the noble Lord's point is entirely correct.
We are dealing with a conflict of interests and I believe that every noble Lord who has spoken recognises that. There are two ways of dealing with conflicts of interest. The noble Lord, Lord Campbell of Croy, carefully set out that you either have some sort of rule or you have total disclosure. The noble Lord, Lord Campbell, and indeed other noble Lords said the answer in this case is total disclosure.
I am bound to say again that I share the doubts of the noble Lord, Lord Mottistone, about whether total disclosure is, first, possible, and, secondly, enforceable; and if disclosure is not possible and enforceable we must look again at rules. Nevertheless, there is something of a muddle. Noble Lords on all sides have expressed the opinion that through the publication of the SIB rules we have got ourselves into something of a jam. I should like to follow the noble Viscount, Lord Colville, the noble Lord, Lord Tryon, and the noble Earl, Lord Ferrers, along the path of what actually happens now to get ourselves out of this jam.
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What happens if the Director General of Fair Trading, who is required to report on the SIB rules, advises the Secretary of State that polarisation rules are unnecessarily restrictive of competition? That is what the Director General is required to advise the Secretary of State on.
There are two possibilities. The Secretary of State may overrule the Director General. He may decide that although the Director General makes his point nevertheless it is important for the protection of investors that the particular rules in the SIB rule book should remain as they are and remove the words "unnecessarily restrictive". In other words, he can overrule the Director General and say that he will issue the delegation order with the rules as they are in the present rule book. In those circumstances and under the Act the delegation order would be to the SIB. The Act does not give the Secretary of State the choice of another designated agency provided the SIB satisfies the qualifications under Chapter XIV of the Act and under one of the sections of the designated agency provision.
Alternatively, the Secretary of State may decide that the Director General is right and that the polarisation rules are, for example, unnecessarily restrictive of competition. What can he do then? Clearly he cannot at that point issue a delegation order because he is prohibited from doing so by the Act. He cannot make an order changing the SIB rule book. He can only make an order changing the SIB rule book after he has made a delegation order making the SIB the designated agency. However, between the point at which he receives the Director General's report and makes a delegation order he has no power at all to change the SIB rule book.
Of course he has influence. The Secretary of State can say to the SIB, "Now, my friends, you are applying to be a designated agency and you want a delegation order from me. I have to tell you that I am not prepared to give you a delegation order and make you the designated agency unless you change your rules". As we know, the SIB is a private company, with directors like those of any other private company who meet and take decisions in the interests of their shareholders, as all companies do. At this point the directors say, "Well, we have considered this but we are not prepared to change our rules. We think our rules are perfectly satisfactory".
What does the Secretary of State do then? Either he climbs down and says, "Well, after all, I have thought again and I am prepared to overrule the director general", or he does not climb down and then he has to look for another designated agency; or if he cannot find another designated agency to designate, he has to do the whole job himself, which is where we were when we started to debate this Bill.
In my view all this could easily have been avoided by the simple procedure of the Government adopting what the Opposition wanted, which was statutory regulation and the SIB as a statutory body. Now, having come full circle, I ask the noble Lord whether my analysis of the Act is right. I believe it is and, like the noble Viscount, I have looked at the Act very carefully. If I am right, are the Government on the

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hook and would they not have done better to accept our view in the first place?
9.36 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, I knew that we should have an extremely well informed and expert debate this evening. I must confess that a couple of hours or so ago I was not so sure that it would be as amiable and good natured as it has turned out to be. Let me just dispose of the question that the noble Lord, Lord Williams of Elvel, posed in a fascinating speech in which he drew a hypothetical scenario. No, we are not on a hook.
Let me turn to the Question that is before us tonight. With regret I have to say to my noble friend Lord Colville of Culross that I am not in a position to give him a definitive answer and I think I should explain why. The House will recall that before the Securities and Investments Board can assume its regulatory functions under the Act is has to be designated and have functions transferred to it by order of the Secretary of State. Before that order can take effect, it has to be approved by both Houses of Parliament. Whatever else may be said, certainly your Lordships and Members of another place will have a further opportunity to debate this and any other matters relating to the designation of the SIB.
During the passage of the Bill Parliament also provided for a vetting process before the order can be drafted. Under the Act any rules, regulations and other guidance that the SIB proposes to make—and one might as well accept that it is the SIB which is the designated agency, or it certainly has applied to be so—have to be scrutinised by the Director General of Fair Trading. who will consider.
"whether … the rules, regulations, guidance … have, or are intended or likely to have, to any significant extent the effect of restricting, distorting, or preventing competition".
I quote from the Act there. The director general will report to my right honourable friend the Secretary of State. The Secretary of State then has to consider the report and if he considers that the anti-competitive effects identified by the director general are significant, then the Act does not allow him to designate the SIB unless he is satisfied that this anti-competitive effect is—and again I quote from the Act—
"not greater than is necessary for investor protection".
I have spelt out this process in some detail because it is central to the Question that my noble friend has asked. This process is under way. My right honourable friend the Secretary of State has received a request from the SIB for the transfer of powers under the Act and copies of the proposed rules, 'regulations and guidance. These were published on 12th December. If I may say something to the noble Lord, Lord Tryon, here, it is from that date until the end of this month—I may be wrong by a day or two—that the SIB asked for comment on the booklet. Voluminous it may well be, but there is adequate opportunity for comment to be made.
Viscount Colville of Culross: My Lords, this touches on the question that I asked my noble friend. The whole point is that the time is not adequate. It is far too
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short for the extreme complexity of some of these things to be followed through by embryonic SROs which are trying to set up their own regulatory systems. I know that a number have given notice to the SIB that they cannot do it in time. That is why I wish to know the machinery for doing it later.
Lord Lucas of Chilworth: My Lords, if my noble friend will perhaps allow me to continue a little further, I think that he will find his question answered.
The Director General of Fair Trading is considering the very question that is on the Order Paper tonight. I therefore hope that my noble friend will understand that, before the Director General has reported and before my right honourable friend has had the opportunity to consider the report, it would be wrong of me to answer it.
The noble Lord says that the period is too short. We have been considering this business now for nearly two years. With regard to the final rules, which are not very different from the draft rules that have been available to interested parties, I do not think that the period is too short. Representation can be made to my right honourable friend the Secretary of State up to and including the date at which an order is laid before Parliament. My noble friend and others have the opportunity to put their points of view when the order comes before Parliament, so there is plenty of time.
My noble friend Lord Colville raised two specific queries on which I ought to comment. I am not sure whether it was he or Lord Tryon who expressed concern about how polarisation might affect the less sophisticated, but both they and my noble friend Lord Bruce-Gardyne certainly spoke about the less sophisticated people who rely upon the local bank manager for advice. I will pass on the noble Lords' concern about rural areas.
I ought here to say something about the effect of polarisation. If a local bank branch—perhaps I may address this also to my noble friend Lord Boardman—acts as a company representative selling only the bank's products, the customer has two options if he wishes to obtain independent advice. He can contact an independent intermediary in the nearest town, or the local bank branch may refer him to the bank's separate, independent intermediary subsidiary, provided that it has one. As an illustration of the distance that a person may have to travel for independent advice, from Beccles to Edinburgh is something of an exaggeration.
With modern technology, that advice is available almost at the pressing of a switch. If the local bank branch is as isolated as noble Lords have suggested, it probably opens only three mornings a week, so the consumer cannot talk to his local, friendly bank manager as effectively as some people have suggested. I do not see great difficulty there. The consumer can do the two things I have suggested.
SIB's draft proposed rules will allow the local bank branch to act as a channel of communicatio between the customer and the bank intermediary, again provided that the local branch does not advise on the merit of the intermediary's recommendations. There is no restriction on the form of the channel of

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communication. It may be by computer, by the pressing of a button, by telephone or by letter.
My noble friend and others asked me about the scope for changing SIB's proposed rules, which are before the Director General of Fair Trading. Before my right honourable friend the Secretary of Stage can make an order transferring to SIB the functions made under the Act, he must be satisfied, as we know, on two counts in respect of the rules it proposes to make. First, he must be satisfied that the rules offer investors adequate protection and comply with the principles set out in Schedule 8 to the Act, which noble Lords will recall. Secondly, if after considering the report from the director general the Secretary of State considers that SIB's rules are likely to have significant anti-competitive effects, then, as I have explained, he must be satisfied that such effects are no greater than required for investor protection.
That brings me to the point on amending the rules about which my noble friend Lord Colville and the noble Lord, Lord Tryon, asked. The Act which Parliament has passed does not provide for SIB rules to be approved. That would be inconsistent with the concept of a practitioner-based framework. Rather. Parliament will be asked whether on the basis of the proposals put forward by SIB it wishes SIB to exercise the function of a designated agency, including the ability to make rules. As I explained, there are checks and balances before that stage is reached.
That consideration is under way. I cannot prejudge my honourable friend's decision. If he is not satisfied with SIB's rules on either of the two counts— the point about which my noble friend Lord Ferrers asked—I have no doubt that he will tell SIB so. It will then be up to SIB to produce proposals for rules which will meet the Act's requirements. Of course SIB, if that is what it is to be, must satisfy Parliament that it can exercise the relevant functions. At the end of the day, and this goes back to the point made by the noble Lord, Lord Williams, the Secretary of State can hold the authority unto himself. That is the ultimate sanction.
The noble Lord, Lord Banks. asked me about the costs of the regime. He and others will appreciate that it is unrealistic that the improvements in investor protection for which we are looking, and for which everybody is looking, can take place without some increase in costs. That is to be appreciated. I merely say to the noble Lord. Lord Banks, that we are aware of the concerns of the smaller intermediaries about costs and we shall certainly have to take them into account.
My noble friend Lord Bruce-Gardyne asked me about disclosures of commission and the ending of cold-calling. The noble Lord, Lord Graham of Edmonton, made a similar point. SIB's rules will be scrutinised by the Director General of Fair Trading and by my right honourable friend. In those circumstances it is difficult for me to comment on specific rules. We expect the rules to contain provisions for the disclosure of commissions by independent intermediaries. SIB also envisages a
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commissions agreement to reduce the conflict of interest for such intermediaries. There are rules to regulate cold-calling by salesmen. Let me add that the proposals are similar to those that the Government suggested in the White Paper of January 1985 which most of us have had the opportunity of discussing.
The noble Lord, Lord O'Brien, and my noble friend Lord Campbell of Croy, raised the point quite shortly but nevertheless succinctly that polarisation would upset the special relationship between a bank manager and his customer. I think I have partly answered that point in my earlier remarks. But perhaps we could all agree that, for many people, bank managers do hold a special position of trust.
It has been argued by some that because of that presumption of trust, there is a greater need for investor protection. In this respect, a balance has to be struck between the need to protect the consumer from biased advice on the one hand and the need to avoid over-regulation on the other. That is the balance currently being considered. I assure your Lordships that everything which has been said this evening will be taken into account and considered when the Director General of Fair Trading's report is to hand and my right honourable friend comes to consider all of these matters.
Finally, let me say that I have carefully noted what has been said. I appreciate that the new regulatory system will have far-reaching implications. We accept that our desire to improve the standards of investor protection is an aim which your Lordships and which Parliament has endorsed. There is no doubt that that will involve changes and some difficult decisions. Of course we want to take into account the views of all those who are affected by the changes. many of which have been put before us this evening.
Before reaching his decision on whether to make an order designating SIB, my right honourable friend will take into account not only the report from the DGFT to which I have referred but also the views which are currently being expressed outside your Lordships' House, and certainly those which have been so well expressed this evening. All the representations which we receive on this or any other aspect of SIB's proposals will be taken into account.
I have tried in somewhat difficult circumstances to explain to your Lordships how we see this process. I have said why I am not able precisely to answer the Question. My noble friend understands that. With that, I hope that those noble Lords who still have some problems uppermost in their minds will convey them to us so that we can give them the proper consideration that they deserve.

Mid Glamorgan County Council Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments considered and agreed to.
House adjourned at four minutes before ten o'clock.

  ARMED FORCES: ACCOMPANIED FOREIGN POSTINGS
  ARMED FORCES: ACCOMPANIED FOREIGN POSTINGS
  NGOs' CONFERENCES ON CLASSIFIED SUBJECTS
  NGOs' CONFERENCES ON CLASSIFIED SUBJECTS
  CHEMICAL EMERGENCIES PROPOSAL
  CHEMICAL EMERGENCIES PROPOSAL
  PEERAGES: CRITERIA FOR RECOMMENDATIONS
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