Sitting of 12 January 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
DEATHS OF MEMBERS
Mr. SpeakerI regret to have to inform the House of the deaths of David Charles Penhaligon Esquire, Member for Truro, and Nicolas Guy Barnett Esquire, Member for Greenwich, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Members.
Oral Answers to Questions
  TRANSPORT

    Bus Services
    Mr. Wareingasked the Secretary of State for Transport if he will visit Merseyside to consider at first hand the results of bus deregulation in the area.
    The Minister of State, Department of Transport (Mr. David Mitchell): Neither my right hon. Friend nor I have immediate plans to do so.
    Mr. WareingMay I assure the hon. Gentleman that I should be only too ready to take him on a walk round bus stops in Liverpool and Merseyside? It would have to be a walk, because of the irregularity of the buses. It is not on for the Minister simply to say "No", when he must realise the scandal and chaos that have resulted from the
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    disastrous deregulation of the buses on Merseyside. Does he realise that a Merseyside passenger transport executive report stated last week that no fewer than 20 per cent. of passengers have turned to other forms of transport? Does he realise that the report says that what was a good and reasonable service is now completely inefficient and incompetent?
    Mr. MitchellThat is entirely a matter for those on the ground. The extent of the reliability of the operations of a local bus service is nothing to do with the Government or with legislation. It demonstrates the management efficiency of the local operators. In this case, they have not been helped by strikes.
    Mr. FryDoes my hon. Friend recall that only a few years ago between 80 and 90 per cent. of passengers on off-peak Merseyside public transport services paid no fares? That resulted in large sums of public money having to be spent to sustain Merseyside public transport, and that was one of the major reasons for the Government's reorganisation.
    Mr. MitchellTotal ratepayer subsidy on Merseyside last year amounted to nearly £50 per man, woman and child in the area.
    Mr. AltonIs the hon. Gentleman aware that before the Government's legislation the people on Merseyside were very happy with the bus services and that since the legislation bus fares have gone up, services have been slashed and there has been a strike every Saturday, which has inconvenienced the local people of Merseyside? Trench warfare has developed between the company and the users, and the initials MPTA are now thought to stand for, "Make Passenger Transport Awful".
    Mr. MitchellThose who were using the bus services at subsidised fares may have been happy, but the ratepayers who were having to foot the bill were certainly not happy.
    Mr. SackvilleWhen my hon. Friend visits Merseyside, will he also consider the position in neighbouring Greater Manchester where the passenger transport executive decided to withhold £10 million of the £l7 million available and failed to provide an adequate timetable——
    Mr. SpeakerOrder. The question is about Merseyside.
    Mr. SackvilleWill my hon. Friend the Minister draw a comparison with the situation on Merseyside?
    Mr. MitchellMy hon. Friend is right to compare the way in which Manchester has sought to implement the Act and the position elsewhere in the country. Manchester provided only a skeleton or essential network instead of providing the socially necessary services found elsewhere in Britain.
    Mr. StottIs the Minister aware that the ratepayers of Merseyside are also electors and that they voted consistently for a proper public transport system? The Minister cannot stand at the Dispatch Box and refuse to accept responsibility for what is happening on Merseyside and elsewhere. Since the Government introduced the Transport Act 1985, transport in Britain has been ruined. Responsibility lies with the Secretary of State and the Minister and not with the MPTA, which is having to put up with the results of that legislation. The Minister bears responsibility, and he was warned what would happen during the passage of the Bill two years ago.
    Mr. MitchellWhether bus services are reliable and comply with timetables is a matter for local management, not for the Government.

    London Underground
    Mr. Cartwrightasked the Secretary of State for Transport what steps beyond those announced on 28 November he is taking to respond to and implement the recommendations in the report "Crime on the London Underground".
    The Secretary of State for Transport (Mr. John Moore): Our priority is to ensure that the extra £15 million is used to greatest effect. To this end we are in close touch with London Underground and the British Transport police on monitoring the pilot schemes and ensuring that the other recommendations are followed up.
    Mr. Cartwright: Although the Secretary of State's reply is welcome, will he confirm that that £15 million is sufficient only to fund pilot schemes in a number of very important crime prevention areas? In view of the seriousness of the problem, will he give an assurance that resources will be available to make crime prevention measures more widely available if the pilot schemes turn out to be successful?
    Mr. Moore: The £15 million goes beyond the pilot schemes. The hon. Gentleman and, I believe, all hon. Members rightly support what is being done, and I think that they will first want to see the pilot schemes in operation. The £15 million is spread over three years. I shall not go into the other things on which the money will be spent, but it will be spent on more than pilot schemes. The key issue is not resources, but putting them effectively to work.
    Mr. McCrindle: Although I welcome the prospect of there being improved equipment to enable the British Transport police to carry out their task on the London Underground system, is my right hon. Friend satisfied that their establishment is adequate for that? Although
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    equipment is desirable, effectiveness may well depend, at the end of the day, on the number of men available to prevent crime on the London Underground system.
    Mr. Moore: I welcome my hon. Friend's comments. However, it is not a matter, in this case, of the number of officers involved. Indeed, the number of British Transport police has increased. We are talking about an improvement in specific facilities. That is what the report sought, and that is what the Government are committed to.
    Mr. Tony Banks: Is it not also a crime of sorts for the management of London Regional Transport and of the Underground to disregard and tear up negotiated agreements with the unions? That has led to the strike that is threatened on Wednesday. Does the right hon. Gentleman intend to do anything about the fact that in a 75 per cent. turnout, 82 per cent. voted for a strike on Wednesday——
    Mr. Speaker: Order. The question is about crime.
    Mr. Banks: Absolutely.
    Mr. Moore: The hon. Gentleman's attempt to change the question was the absolute in crime. London Regional Transport staff were asked whether they would oppose the current threat to pay, conditions and employment opportunities by taking industrial action, including strike action if necessary, and were assured by the general-secretary that that would mean that they would not be going to the barricades on 6 January. There is no dispute with London Regional Transport, and in the absence of a dispute, it would be a crime against the travelling public if there were a strike.

    London Regional Transport
    Sir John Biggs-Davisonasked the Secretary of State for Transport if, when he next meets the chairman of London Regional Transport, he will raise with him the improvement of bus and Underground services.
    Mr. David Mitchell: Yes, I would expect bus and rail service standards to be among the subjects discussed.
    Sir John Biggs-Davison: Apart from the threatened strike, which we hope will be averted, will my hon. Friend ask the chairman to take my constituents into his confidence and give them some hope that there will be an end to difficulties on the Central line arising from timetabling, the failure of equipment and work on the track?
    Mr. Mitchell: I join my hon. Friend in regretting deeply the proposed strike, which would be an especially callous act. Speed restrictions for essential maintenance have been largely responsible for the level of service on the Central line for my hon. Friend's constituents, and London Regional Transport apologises for delays. It has plans for new signalling and new rolling stock.
    Mr. Spearing: Will the Minister explain why the world-famous driving school at Chiswick has been closed? Will he comment on the allegation that it is possible for private contractors to hire men with public service vehicle licences who have not been eligible for employment on London Transport buses for health reasons?
    Mr. Mitchell: The closure of the Chiswick driving school is outside the scope of the question, but I shall certainly write to the hon. Gentleman about that.
    Mr. Chapman: Will my hon. Friend confirm that in recent months there has been an unprecedented rise in the number of passengers using the Underground service and that this is being reflected by the LRT management in the provision of additional services? Is he aware that some problems arise from the new timetables which were introduced at the beginning of November in the light of staffing problems, but will he recognise that the more people who use the Underground the more the Government should look favourably on providing increased capital expenditure for this vital part of our public transport network?
    Mr. Mitchell: I agree with my hon. Friend. Last year there were 1,900 million passenger journeys on the LRT network, including an all-time record level of Underground patronage. LRT's investment level is at an all-time record this year and is planned to be even greater next year.
    Mr. Simon Hughes: Now that the London Docklands Development Corporation has shown an interest in linking the east London line and the Bakerloo and Northern lines at the Elephant and Castle so that there is an east-west link south of the river as well as the proposed docklands light railway north of the river, will the Minister ask his Department to take a positive interest in the improvement of services south of the river, east-west, so that a natural circuit can be completed and we do not have the present difficulty of travelling in a congested part of south London which is a white hole in the underground network?
    Mr. Mitchell: I shall draw the hon. Gentleman's point to the chairman's attention.
    Mr. Sims: When my hon. Friend sees the chairman of London Transport, will he tell him that I still receive complaints about the quality of London Transport bus services, but that in recent months I have had the unusual experience of receiving compliments about contracted-out services, especially the 61 service in my constituency, which is run by Metrobus Ltd.? Is there not a moral to be drawn from this, and will he bring it to the chairman's notice?
    Mr. Mitchell: London Transport has started a programme of putting out to competitive tender a series of routes. Some of the routes have been won by London Buses Ltd. and some by outside companies. Standards appear to be satisfactory, and in a number of instances better than they were before.
    Mr. Snape: Has the Minister ever travelled on the Underground in London? If he has from time to time, can he account for the fact that throughout the system there are unmanned booking offices, ticket machines that are either out of order or switched off altogether, and unmanned stations, especially after 6 o'clock or 7 o'clock in the evening, yet London Regional Transport's management can still hand back about £20 million to the Government, presumably because it is not needed? Will he reflect on the fact that at £20 million the knighthood for the chairman of London Regional Transport must be one of the most expensive baubles known since Lloyd George was alive?
    Mr. Mitchell: First, I travel on the London Underground from time to time. Secondly, I consider that the hon. Gentleman has made a cheap and nasty jibe at a gentleman who has provided distinguished public service and who is not here to answer back.

    Motorways
    Mr. Nicholas Bakerasked the Secretary of State for Transport if he has received representations about the speed of traffic upon motorways.
    The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): The Department receives representations on a wide range of road safety issues, including speeds on motorways. Ninety eight per cent. of accidents are on other roads.
    Mr. Baker: Is my hon. Friend aware that the 70 mph speed limit on motorways is not being enforced? Will he have a word with the Home Secretary, if there are substantial safety or oil conservation grounds, and ask him to enforce the present speed limit? If, as I believe is the case, there are no such grounds, will my hon. Friend bear in mind that we have the lowest motorway speed limit of any major country in western Europe? Will he seek to raise the limit to a realistic level?
    Mr. Bottomley: My hon. Friend will be interested to know that there are over 30,000 prosecutions a year for motorway offences. I shall do as he suggests and have a word with colleagues in the Home Office. I am sure that the suggestion that the motorway speed limit should be raised will not find favour.
    Mr. Merlyn Rees: Will the Under-Secretary of State take a representation from me about the lack of regard for the 50 mph speed limit at contraflows? That is where accidents take place. It is my view that the indicators for a 50 mph speed limit are not clear enough, given the situation at contraflows, and that is dangerous.
    Mr. Bottomley: I shall review the signs. It is important that, unless advised otherwise, people stick to motorways, even where there are contraflows. Even with contraflows, with their increased dangers, motorways are still safer than other roads. It might be a seasonal time to remind everyone that the speed limit is the limit. It is not supposed to be an average. In bad weather conditions—whether fog or ice—people should reduce their speeds.
    Mr. Higgins: My hon. Friend does not intend to raise the 70 mph limit on motorways. This will encourage even more the maniacs who occupy outside lanes. Will he please erect 70 mph signs on motorways? At the moment there is no indication or reminder of what the limit is, in contrast, for example, with France, where the limit is constantly repeated.
    Mr. Bottomley: I am considering the suggestion of erecting 70 mph signs. Everyone who has passed the driving test at any stage since the war should know that the old unrestricted speed limit went a long time ago. I shall do what I can to remind people of the need to keep to the speed limit. Raising the speed limit from 70 mph would not be applauded universally. I do not propose such action.
    Mr. Haynes: When will the Minister wake up to the fact that his Government have introduced more transport

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    legislation than any other Government? The result is that the motorway system is cluttered with all sorts of vehicles, including buses. The important point is that there is far too much traffic bunching. Why does the Minister not seriously consider raising the motorway speed limit so that we avoid some of the accidents?
    Mr. Bottomley: I suggest to hon. Members that the way to deal with accidents is to slow down rather than to speed up. Bunching can take place at any speed, and the slower the speed of the bunch, the better.
    Mr. Adley: Will my hon. Friend contemplate the simple proposition that, with more than 5,000 people killed and 250,000 people maimed on the roads every year, safety standards on our motorways and other roads are virtually non-existent when compared with the stringent safety requirements laid down for British Rail? When will the Government make road transport subject to the same safety rules and requirements as are laid down for rail transport?
    Mr. Bottomley: My hon. Friend will know, or will be interested to hear if he does not know, that motorways carry 13 per cent. of national vehicle mileage but have only 2 per cent of accidents. Although motorway safety is an important subject, it is even more important in urban areas—built-up areas—where there is over 40 per cent. of the traffic and 80 per cent. of the accidents. A real reduction in the number of people who die on our roads—5,000—will be achieved by attention to built-up area traffic and other matters such as drink driving.

    Written-off Vehicles
    Mr. Robert Hughesasked the Secretary of State for Transport whether he has taken any action to end the practice whereby vehicles which have been written off are allowed to re-appear on the market.
    The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): We are reviewing the problems associated with written-off vehicles with the police, insurers and other interested bodies to see whether there are ways in which the present situation can be improved.
    Mr. Hughes: Does the Minister accept that there is an accumulating body of evidence that ripping off customers by unscrupulous car dealers is becoming far too widespread and, in some cases, dangerous to the customers? Will he therefore consider making certain that no vehicle registration document is issued from Swansea for any vehicle that has been written off, or, if he cannot go that far, will he at least make sure that it is printed on every document that the car has been written off, so that the customer might have some redress through fair trading legislation?
    Mr. Spicer: We are aware that there is considerable public concern about this matter. The working party should report within the next two or three months. It has been set up with a view to seeing whether we can get more rigid guidelines for what constitutes a write off and what can be done to make severe accident history more readily available to the public, and, as the hon. Gentleman asks, we seek to ensure that potentially hazardous vehicles are kept off the road.
    Mr. Heddle: Does my hon. Friend accept that probably the poorer members of the community are forced to buy
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    those potential death traps because they are the cheaper cars on the forecourt of the second-hand car lot? Perhaps those people would not go to the Automobile Association for an independent structural survey beforehand. At the moment, the power of monitoring is vested in the county trading officers, who can see the cars only after they have been bought. Will my hon. Friend consider giving the police power, where there is a suspicion that such death traps are on second-hand car lot forecourts, to enter those forecourts to examine the cars before they are sold?
    Mr. Spicer: The police already have powers to investigate accidents when write offs occur, so police powers already exist. The question is whether one should have more rigid guidelines on what constitutes a write off. That is the real problem.

    Docklands Light Railway
    Mr. Spearingasked the Secretary of State for Transport what consultations he has had with the London Docklands Development Corporation concerning the funding of the Beckton extension of the docklands light railway.
    Mr. David Mitchell: We expect to receive LDDC's formal proposals for financing the Beckton extension of the docklands light railway later this month. In the meantime my officials, together with those of my right hon. Friend the Secretary of State for the Environment, have been discussing with LDDC the form that those proposals might take.
    Mr. Spearing: Is the Minister aware that everybody in the area wants that railway, and wants it to be provided by public funds? There is also a desire for it to be routed via Canning Town. Does the hon. Gentleman agree that it is open to him to let the Second Reading of the Bill go forward, and if he receives the financial guarantees from the LDDC that he seeks, then and only then should he approve its construction? Is that not the best way to proceed?
    Mr. Mitchell: I am in some doubt whether everyone takes the view that the railway should be provided by public funds. The LDDC believes, and its research suggests, that large increases in land values in the docklands when the railway is built can be harnessed to pay for it. I plan to visit the area to see for myself on Wednesday this week, and I hope to see the hon. Gentleman on that occasion.
    Mr. Stanbrook: Is my hon. Friend aware that this is a very important and desirable development, which will bring great advantages to the people of that part of London? Will he give all the assistance that the Government are able to give to that project?
    Mr. Mitchell: I am well aware of my hon. Friend's interest in and connections with the area. I hope that I shall also have the opportunity to see him on my visit on Wednesday, and I shall keep in mind the point that he made.
    Mr. Tony Banks: As the railway will be funded by private developers—indeed, it is just a developers' railway—may I point out that there are other transport needs in Newham that must be met? That is why my hon. Friend the Member for Newham, South (Mr. Spearing) and myself argue that the railway should be provided out of public funds so that it can meet public need in the area.
    Mr. Mitchell: If the same objective can be achieved without use of the public purse, it seems to be wholly desirable that it should so be.

    M25 (Service Areas)
    Mr. Tim Smithasked the Secretary of State for Transport what sites are being considered for the construction of service areas on the M25.
    Mr. Peter Bottomley: A service area is already in partial operation at South Mimms, and Esso has been chosen to develop another at Thurrock. Our proposal for a site at Clacket lane near Westerham has recently been the subject of a public inquiry, together with other proposals by private developers. We are still considering proposals for Iver.
    Mr. Smith: Is my hon. Friend aware that it is proposed that the service area at Iver should be built on green belt land between two built-up areas in my constituency—Richings park and Iver village? Because that would be so close to hundreds of houses, there is considerable local opposition. Will my hon. Friend consider looking at a more suitable site?
    Mr. Bottomley: The consultants tried to identify other more suitable sites, but I am not sure whether one was found. I shall bear my hon. Friend's considerations in mind. We understand that considerable landscaping would be undertaken to shield housing from environmental intrusions.
    Mrs. Clwyd: Is there any restriction on military vehicles using service areas, especially as nuclear warheads are frequently transported on our motorways, and bearing in mind the serious accident that took place at the weekend? Is the Minister not concerned about the use of public roads for that purpose?
    Mr. Bottomley: I am not sure that military convoys often use motorway service areas.
    Sir John Biggs-Davison: Will my hon. Friend confirm that no service area is to be placed in Loughton or elsewhere in the Epping Forest constituency?
    Mr. Bottomley: I was asked where we proposed to have motorway service areas on the M25, and my hon. Friend's area of concern is not one that I mentioned.
    Mr. Madden rose——
    Mr. Speaker: The question is about the M25.
    Mr. Madden: Indeed, Mr. Speaker. What provision is being made for facilities for those driving heavy goods vehicles on the M25, and what is the general policy on the provision of such facilities on the motorway network?
    Mr. Bottomley: One of the reasons why we maintain strict control over motorway service areas is to ensure the availability of some services which may not otherwise be provided. We take the provision of rest facilities for heavy goods vehicle drivers seriously and ensure that they are provided in motorway service areas.

    Settle to Carlisle Line
    Mr. Wallerasked the Secretary of State for Transport when he expects to announce his decision concerning the application by British Rail for the closure of the Settle to Carlisle line.
    Mr. David Mitchell: I have only recently received the joint report of the transport users consultative committees for north-eastern and north-western England and British Rail's financial case. I cannot say how long it will take to consider these reports carefully, together with other relevant factors.
    Mr. Waller: I know that my hon. Friend takes a close interest in the future of this line and has visited it. As the TUCCs came out unanimously in favour of the retention of the line and thousands of people wrote in support of that approach, does my hon. Friend agree that it could be seen as perverse to take a decision which did not involve the retention of the line? At the same time, does he agree that it would be unreasonable to make such a decision without allowing for the provision of funds which are particularly necessary for repairs, and that such funds could come from the Government's tourism budget?
    Mr. Mitchell: As I have only just received the report I cannot possibly pre-empt a decision at this stage. I take note of my hon. Friend's point about the availability of funds from alternative sources, including tourism.
    Mr. Wallace: If the Minister has had a chance to read some of the report, does he accept that it shows that British Rail has not made a detailed case for closure? Apart from the hardship caused to local people by closure, there appears to be considerable potential for further marketing and promotion of this line to make it even more profitable than it has been until now. Should not the Government take that approach, rather than entertain any possibility of closure?
    Mr. Mitchell: It may be helpful to say that it is not part of the TUCCs' role to consider British Rail's case for closure. Its job is to consider what hardship would be caused if the line were closed and to report to Ministers on that. That is why British Rail's case was not deployed before them. We now have British Rail's financial case and we are considering it together with the report of the TUCCs.
    Mr. Watson: I appreciate that my hon. Friend cannot pre-empt his decision, but is he aware of strong rumours circulating locally and in British Rail that this line will be kept open? In those circumstances, will he confirm that any decision on his part to close the line would be greeted with some surprise and dismay?
    Mr. Mitchell: I can report to my hon. Friend that there are rumours in British Rail and among the public that the line is to be kept open and that there are also rumours that it is to be closed.
    Mr. Robert Hughes: Is the Minister aware that a great deal of pleasure has been expressed at the TUCCs' recommendation that the Settle-Carlisle line should remain open?
    Although one understands the pure technicalities of that decision, will the Minister take clearly into account the potential economic benefits to British Rail of keeping it open? In making his decision about finance, which I hope he will announce at the same time, will he avail himself of that escape hatch offered to him by his hon. Friend and try to raise the money from somewhere else and simply square up to the fact that the Government must provide the money for British Rail to do the essential repairs to keep the line open?
    Mr. Mitchell: Of course we will consider carefully the points which the hon. Gentleman has properly made. I accept entirely that the economic factors, and particularly the effect on Appleby as the largest town to be isolated if the railway line is closed, must be taken into account and that they are separate from the questions of hardship which the TUCCs considered.

    Road Safety
    Lord James Douglas-Hamiltonasked the Secretary of State for Transport what further action after the Christmas drink drive campaign he proposes on road safety publicity.
    Mr. John Moore: Our clear-cut "Don't Drink and Drive" campaign won strong public support. I shall follow it up in the spring and autumn. This will reinforce the message that drinking and driving is a year-round problem and must be tackled as seriously as we can.
    Lord James Douglas-Hamilton: Further to my right hon. Friend's reply, is he aware that in Scotland a campaign group is being formed of some of the relatives of bereaved families whose relatives have been killed through reckless driving? Is he further aware that a point which they make is that if the periods of disqualification for driving were much longer that would constitute an effective deterrent?
    Mr. Moore: I was not aware of the particular Scottish illustration to which my hon. Friend has drawn my attention, and I shall certainly draw it to the attention of my colleagues in the Home Office.
    The Government will do all in their power to ensure effectively that we control the appalling problem in this country of drinking and driving. I shall certainly consider the point which my hon. Friend has made.
    Mr. Boyes: Does the Minister recognise the strength of the powerful campaign that was run over Christmas time? Many hon. Members welcome the Secretary of State's undertaking to carry the campaign on throughout the year. Will the Secretary of State give three further undertakings? First, will he make the message even stronger? Secondly, will he consider stronger sentences for people convicted of drink driving offences? Thirdly, as an indication of his good will, will he reduce further the acceptable blood alcohol limit of people caught drinking and driving?
    Mr. Moore: In relation to the particular points that have been raised, I have listened very carefully to the public reaction. I was especially delighted with the media reaction to the message and I hear what the hon. Gentleman says about making it even stronger and clearer. I shall certainly consider that sympathetically. I am not sure that sentencing policy—although that is not my departmental job—is the key in this area, as opposed to trying to change attitudes, which is what we are seeking to do through our campaigns, which are supported by the private and the public sectors. I shall consider anything that will help in this area.

    M40 (Waterstock-Wendlebury)
    Mr. Baldryasked the Secretary of State for Transport when he expects the public inquiry on the
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    Waterstock to Wendlebury section of the M40 to begin; how long he expects it to last; and when he expects to be able to publish his decision.
    Mr. Peter Bottomley: Draft orders for this section of the M40 will be published shortly. A public inquiry could take place six to nine months later.
    I cannot say how long it will last or when the decision will come.
    Mr. Baldry: Will my hon. Friend simply confirm two points: first, that, irrespective of the length of the public inquiry, it is the Government's firm intention that the whole of the M40 extension from Oxford to Birmingham should be opened as one complete entity, and, secondly, that it is the Government's firm intention that the whole of the motorway extension should be opened by 1990?
    Mr. Bottomley: Subject to the outcome of statutory procedures, the aim is to start construction on the Waterstock to Wendlebury section in time to open the whole of the M40 extension from Waterstock to Warwick at about the same time, which is about the end of 1990.

    European Community (Air Transport)
    Mr. Galleyasked the Secretary of State for Transport what progress was made during the United Kingdom presidency to secure the liberalisation of air transport within the European Community.
    Mr. Michael Spicer: Solid progress has been made on the contents of a three-year first step towards full liberalisation by the agreed target date of 1992.
    There is now unanimous support for our proposals on capacity and a substantial majority in favour of our ideas on market access. Seven states support our proposals for cheaper fares.
    Mr. Galley: My hon. Friend is to be heartily congratulated on the progress made during the past few months on the liberalisation of air transport. In view, however, of the dilatory, often hostile, attitude of many of our EEC partners, what concrete steps can he take during the next few months, during the Belgian presidency and thereafter, to quicken the pace of reforms? Furthermore, is he satisfied that British airlines, especially British Airways, will be well placed to take full advantage of a more competitive regime?
    Mr. Spicer: I thank my hon. Friend for his earlier remarks. Our proposals provide for a great deal more competition between airlines in Europe and will undoubtedly reduce air fares there. As to my hon. Friend's main question, we shall fully support the Belgian presidency in it efforts to finalise the package. We also intend to enter into further bilateral discussions with certain Governments, and in particular I am arranging to have discussions with the French Minister in early February.

    Dornoch Firth
    Mr. Maclennanasked the Secretary of State for Transport if, in the light of the Mackay Consultants report "The Social and Economic Case for the Dornoch Firth Rail Bridge", he will meet a deputation of local interests further to consider the financing of a rail crossing of the Dornoch Firth.
    Mr. David Mitchell: No, Sir. British Rail has not to date submitted an investment proposal, either based on the Mackay report or not.
    Mr. Maclennan: Will the Minister clarify the position, because the Mackay report says that British Rail could put forward a proposal based only on financial considerations and that a cost-benefit analysis is needed? Will that cost-benefit analysis have to be done by British Rail, or will the Government do it themselves? Will they do it as a matter of urgency, as the cost of constructing a rail bridge in association with a road bridge is much less than if one has to be built subsequently?
    Mr. Mitchell: The Mackay Consultants' report is being considered by the Government, but nothing has yet persuaded us that we should interfere with British Rail's judgment. The expenditure for British Rail would amount to some £12·7 million and the amount of revenue that would be at risk if the Dornoch bridge were not proceeded with for rail connection would be only £120,000 per year. The hon. Gentleman will see that there is a dramatic difference between the outlay and the potential financial saving. The point made by the consultants on the cost benefit is being considered by the Government.

  ATTORNEY-GENERAL

    State Security
    Mr. Dubsasked the Attorney-General how many prosecutions under the Official Secrets Act there have been since 1979.
    Mr. Spearingasked the Attorney-General if he will make a statement concerning recent consultations he has had with the Director of Public Prosecutions concerning prosecutions under the Official Secrets Act.
    Mr. Jannerasked the Attorney-General what recent discussions he has had with the Director of Public Prosecutions concerning cases currently under consideration involving alleged offences under the Official Secrets Act.
    The Attorney-General (Sir Michael Havers): Since 1979 there have been 16 prosecutions under section 2 of the Official Secrets Act 1911, including two which were not proceeded with. During the same period there have been seven prosecutions under section 1, including one which was not proceeded with, and three under section 7 of the 1920 Act. Five cases under section 2 are presently pending before the courts.
    The consent of the Attorney-General is required before any prosecution under the Official Secrets Acts may proceed, and this may be granted either on the basis of a written request by the Director of Public Prosecutions, or after a discussion. Recently I met the Director of Public Prosecutions and we discussed the various cases which are under consideration arising out of the Wright case and its wider aspects.
    Mr. Dubs: Does it not seem that in recent years the motive in deciding whether there should be prosecutions under the Official Secrets Act was more to avoid political embarrassment than for any other reason? While I appreciate that, until the Wright case is over, the Attorney-General cannot make a full statement, would it not be
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    right, when the case is completed, for him to make a full and frank statement to the House as to the basis on which future prosecutions under the Act will be carried out?
    The Attorney-General: I refer the hon. Gentleman to a list published in answer to a question by the hon. Member for Newcastle upon Tyne, East (Mr. Brown), on 15 December last year, which discloses the type of offence. There are too many cases of people who have for money given information that is subject to the Official Secrets Act, such as police officers who have given details of previous criminal offences and things of that kind. I intend to make a full statement the moment that I am able to do so.
    Mr. Spearing: Is it not frequently the case that Governments, faced with the publication of unpalatable facts, engineer or promote the leakage of those facts from Select Committee or minority reports of Select Committees, or by other means? Bearing in mind the dual responsibilities of Law Officers of the Crown, political on the one hand and legal on the other, is it not a principle that their legal actions, particularly in matters relating to prosecutions, or lack of action relating to prosecutions, should be, and should be seen to be, wholly on the legal side of their functions?
    The Attorney-General: I entirely agree with that. I assure the House that there is no question of a political basis for any decision that I or my right hon. and learned Friend have taken in any case under the Official Secrets Act.
    Mr. Janner: Has the Attorney-General considered himself, or discussed with the Director of Public Prosecutions, the workings of this archaic and terrible old Act? For example, has he considered whether or not it would be a breach of the Act for information to be given to the public concerning the horrific dangers arising from the crashes of military convoys, such as that which occurred this weekend, about which public-spirited citizens saw fit to tell the public? Had they not done so, the public would not have known about the crash
    The Attorney-General: The basis upon which I operate was given in an oral answer to the hon. Member for Walsall, North (Mr. Winnick) as far back as 9 April 1984. The hon. and learned Gentleman knows that in appropriate circumstances Ministers themselves can authorise disclosure.
    Mr. Aitken: Does my right hon. and learned Friend agree that the Attorney-General of the day is frequently put in a virtually impossible position by the Act? On the one hand the Law Officers have a clear duty to enforce the law, while on the other, the law is so widely drafted that it is virtually unenforceable without bizarre selectivity in the exercise of the prosecutor's discretion. When my right hon. and learned Friend makes his statement, will he therefore place himself firmly on the side of the reformers of the Official Secrets Act?
    The Attorney-General: Inevitably the decisions that I, the Director of Public Prosecutions and my right hon. and learned Friend have to take are sometimes described as political decisions. However, I assure the House that we look at each case entirely wearing our quasi-judicial hats. We are not influenced in any way by the political consequences. Sometimes, as my hon. Friend the Member

    15
    for Thanet, South (Mr. Aitken) said, one is put in an impossible position. However, we use our discretion and our best judgment.
    Mr. Stanbrook: Despite the comparatively wide terms in which the Official Secrets Act is drafted, do not the figures revealed by my right hon. and learned Friend's original reply show that because the consent of the Director of Public Prosecutions is required there is a proper balance between the public interest and the enforcement of the law in every case and that, given the discretion that can be exercised by the Director of Public Prosecutions, and in the absence of any serious suggestions for reform of the Act, the present system is working much better than one might have expected?
    The Attorney-General: My hon. Friend must appreciate that it is primarily my decision, but always I am advised by the DPP, and in many cases I am also advised by counsel.
    Mr. Campbell-Savours: And by the Prime Minister.
    The Attorney-General: Certainly not. There is no question——
    Mr. Skinner: The Prime Minister's dish cloth.
    Mr. Speaker: Order.
    The Attorney-General: Now that I have a moment to reply, there is no question, ever, in any single case under the Official Secrets Act or, indeed, in any case involving a criminal prosecution, of my having been ordered or directed in any way by the Prime Minister.
    Mr. Nicholas Brown: I have no sympathy at all with those who reveal real state secrets, but the ludicrous Australian trial and the Official Secrets Act combined have not even preserved the Government's dignity in the Wright case. Will the Attorney-General confirm that if Wright were to decide to publish in Ireland, following the Miller case, the chances of successfully preventing publication would be very slight? In the light of that, is the House not entitled to a Government statement on the future of the Official Secrets Act? Once Mr. Justice Powell has announced his decision, will the Attorney-General make a full statement to the House about the Government's handling of the Wright case?
    The Attorney-General: On the Australian case, I should have thought that it would be absolutely apparent to the hon. Gentleman that it involves a very important principle, namely, that those who promise to keep quiet for the rest of their lives should keep that promise. It is very interesting that I cannot find a single hon. Member, on either side of the House, who has received a letter complaining about that.
    Mr. Alex Carlile: Can the Attorney-General tell the House if any useful purpose is served by prosecuting people who reveal matters of ancient history which can do no possible damage to the state and who, by reason of the threat of prosecution, feel driven to leave the United Kingdom?
    The Attorney-General: Let us get the procedure clear. I am surprised that the hon. and learned Gentleman does not appreciate the position. The case in Australia is not a prosecution—it is civil proceedings for an injunction. Whether the person concerned left to go to Tasmania
    16
    because of the book or for other reasons, I simply do not know. The principle remains, and it is one that we are determined to uphold.
    Mr. Greenwayasked the Attorney-General what is the cost to date to public funds of the case being brought against publication of Mr. Wright's book in Australia; and if he will make a statement.
    Mr. Teddy Taylorasked the Attorney-General what has been the cost to public funds of the action taken against Mr. Peter Wright in the Australian courts; and if he will make a statement.
    The Attorney-General: The total cost to public funds to date of the court action in Australia concerning the publication of a book by Mr. Peter Wright, including legal fees paid to date, and fares and subsistence for civil servants, is estimated to be of the order of £170,000.
    Mr. Greenway: Even if counsel's fees considerably increased that figure, is not money spent in this way on proceedings against Mr. Wright necessary in order to deter ill-motivated ex-MI5 employees from damaging the security of the nation? Does my right hon. and learned Friend agree that in future every ex-MI5 employee who breaks the Official Secrets Act should have all pension and emoluments ended forthwith?
    The Attorney-General: I agree entirely with the first part of my hon. Friend's question, but the latter part of his question is not a matter for me.
    Mr. Teddy Taylor: As there is now quite a lot of public money involved, will the Attorney-General tell us whether the action was taken because Mr. Wright broke the rules of confidentiality, or because the material in his proposed publication was considered damaging to national security?
    The Attorney-General: The principal purpose of those proceedings is to preserve the principle that those who have promised to keep the secrets do so.

  OVERSEAS DEVELOPMENT

    Aid Policy
    Mr. Chapmanasked the Secretary of State for Foreign and Commonwealth Affairs what proportion of the current overseas aid programme and budget is channelled through multilateral agencies and bilateral Government agreements, respectively.
    The Minister for Overseas Development (Mr. Chris Patten): In 1985–86, the latest year for which figures are available, Britain's contributions to multilateral aid agencies accounted for 42 per cent. of gross aid programme expenditure, and total bilateral aid for 58 per cent. Bilateral country programmes amounted to 40 per cent. of total expenditure.
    Mr. Chapman: I am grateful to my hon. Friend for that information. Can he say whether there has been any change in those proportions in recent years, and will he confirm that, generally speaking, long-term sustained aid projects can be more effectively attained through bilateral Government agreements and that a major role for multilateral agencies should be to assist in providing short-term emergency aid when necessary?
    Mr. Patten: By and large I agree with my hon. Friend. There has not been much change in the balance in the past

    17
    few years, except that our membership of the Community has had some effect because of the size of the European Community programme. Multilateral agencies have an important role to play. For example, UNICEF, which I am hoping to visit next week, has an important role. That point was put to me by the late hon. Member for Greenwich, Guy Barnett, shortly before his death. He felt strongly about these issues and the House will miss his contributions in debates about aid and development, about which he felt so passionately and about which he knew so much.
    Mr. Kirkwood: Will the Minister confirm that the relative increase in the proportion paid by way of multilateral aid has nothing to do with Government policy, but has more to do with the drop in total aid given by the Government? Does he not think that recipient countries can get far more value from multilateral aid than from bilateral aid, which has conditions attached?
    Mr. Patten: I do not accept the hon. Gentleman's second proposition. In relation to his first proposition I am pleased to say that in the last three or four years our aid programme has been increasing and, based on the public expenditure figures, over the next three years it should be secured in real terms.
    Mr. Bowen Wells: While congratulating my hon. Friend on maintaining the increase in the overseas development budget, may I ask him whether he agrees that he can accommodate the increased aid and trade provision and the increased demands of multilateral agencies only by increasing the total aid budget so that there is more in the bilateral budget, thus supporting the efforts of the Department of Trade and Industry in promoting British exports and interests overseas?
    Mr. Patten: I hope that I can satisfy my hon. Friend yet again in the next few weeks by announcing some small increases in our contributions to the multilateral agencies and increases in some of our most important bilateral programmes.

    Chile
    Dame Judith Hartasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the votes cast by the representative of Her Majesty's Government concerning recent loans to Chile by the Inter-American Development Bank.
    Mr. Chris Patten: After weighing the views of the members of his constituency and obtaining satisfactory answers to technical questions that we had raised, our executive director supported the loans for a hydro-electric project and a global neighbourhood improvement and sites-and-services programme.
    Dame Judith Hart: First, may I express my appreciation for what the Minister said about the sad death of our friend Guy Barnett, the late hon. Member for Greenwich?
    Given that Britain was the only country to vote in favour of the recent World Bank loan to Chile—even the United States abstained—and since we provide military training for Chileans and supply ships to Chile, would it not be better if the Government confessed that, apart from paying lip-service to the EEC condemnation of Pinochet in Chile, they completely support him?
    Mr. Patten: Uncharacteristically, the right hon. Lady is wrong on this issue. She is wrong to say that Britain was
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    the only country, of the larger donors, to support the World Bank loan. As she knows, although I think she disagrees with what I shall say on this, we always judge issues in the international financial institutions entirely on technical grounds, as we are bound to do by the IADB and World Bank articles of agreement.
    Mr. Stuart Holland: I am sure that hon. Members on both sides of the House agree with the remarks made by the Minister and by my right hon. Friend the Member for Clydesdale (Dame J. Hart) about the tragic death of Guy Barnett, the late hon. Member for Greenwich. His commitment to development issues, not only in the Commons but in the Commonwealth and in developing countries, will be sorely missed.
    The Minister cannot get away as easily from the matter of the IADB loan to Chile as he has tried to do.
    Mr. Forth: Why not?
    Mr. Holland: Because the reality is that the Inter-American Development Bank loan, with the World Bank and International Finance Corporation loan, and loans for projects currently under appraisal, total about £1,000 million. They have either been made or are in the pipeline. Apart from anything else, this includes $150 million support for a pulp and paper factory in a country with no press freedoms. Less than 3 per cent. of the total package will go to social development projects. The World Bank loan to Chile was passed by only 1·7 per cent. of the vote. Mr. Elliott Abrahams of the United States managed to persuade his master that the United States should abstain. What was the weakness in the Minister's case? Could he not handle his mistress and persuade her that he should have opposed this loan to what is still a dictatorship?
    Mr. Patten: May I be permitted a brief reply to that question? Article VIII, section 5(f) of the World Bank's articles prohibits the bank from being influenced in its decisions by the political character of the borrowing member concerned and requires such decisions to be based only upon economic considerations impartially weighed. We made perfectly clear before the General Assembly on 18 November, and our ambassador made clear on 20 November, what we think of the Chilean human rights record.

    EC (Aid Ministers)
    Mr. Coxasked the Secretary of State for Foreign and Commonwealth Affairs when he last met the aid Ministers of other EEC countries; and what issues were discussed.
    Mr. Chris Patten: I chaired the Council of European Community Development Ministers on 11 November. The main topics covered were food aid reform, aid for population activities and programming of the sixth European development fund.
    Mr. Cox: I note the Minister's reply and welcome the discussion on food aid, but what meaningful action will be taken in Europe to ensure that suitable food surpluses are made available to countries that face hunger and poverty? Is the Minister aware that such a policy would be received with much greater support in Britain than is the present policy, under which surplus food seems to be sold off at giveaway prices to eastern Europe and is then sold in those countries at enormous profits, which are made at the expense of British taxpayers?
    Mr. Patten: I am pleased to say that, during our presidency of the Community, we secured reform of the Community's food aid regulation. That should now mean that food goes to the developing countries to meet their needs rather than as a means of surplus disposal. Food aid will now be better integrated with general Community development programmes, and the procedures will be streamlined so that people in emergencies get food far more rapidly. I think that that reform is one of the most important things that we achieved during our presidency and that that view is widely shared in Europe.

    Administrative and Technical Services
    Mr. Nicholas Bakerasked the Secretary of State for Foreign and Commonwealth Affairs if he will expand schemes for the provision of administrative and technical services to developing countries.
    Mr. Chris Patten: In recent years we have devoted increasing resources to the provision of skilled manpower and training in technical, administrative and other areas. Our programmes of technical co-operation are designed to
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    build up the human resources of individual developing countries and are planned in close consultation with their Governments.
    Mr. Baker: Is my hon. Friend aware that such programmes are strongly welcomed on this side of the House? Will he also see whether he can achieve a substantial expansion in the Voluntary Service Overseas programme for young people from the present figure of about 1,000 a year?
    Mr. Patten: I hope that I can satisfy my hon. Friend on that. Our aid to the British volunteer programme has been increased by 113 per cent. in real terms since 1979 and it will increase by a further 11·5 per cent. next year, taking it to £8·6 million as opposed to about £2 million in 1979. That is a formidable record.
    I am sure that the House is aware of the murder of the VSO's field director, Mr. Paul Hitchman, in Uganda last week. That was a reminder of the brave and committed work of many of our young volunteers overseas, and I am sure that the House would want to offer its condolences to Mrs. Hitchman.

Earl of Stockton (Tributes)
3.31 pm
The Prime Minister (Mrs. Margaret Thatcher): Since we last met, and in addition to the other sorrows that you have reported to us today, Mr. Speaker, we heard the sad news of the death of Harold Macmillan, the Earl of Stockton. We mourn his loss and send our deepest sympathies to his family.
We pay tribute to his memory and to a life which spanned the transition from empire to Commonwealth and Community: from the Victorian to our present Elizabethan age. His part in that history began in the trenches of the western front in the first world war, where he served with distinction. He was wounded three times, most seriously during the battle of the Somme. His experiences in that war—the slaughter of the trenches and the loss of so many of his friends—imbued him with a profound horror of war which remained with him throughout his life.
In his autobiography, he said of his generation:
"We almost began to feel a sense of guilt at not having shared the fate of our friends and comrades.
We certainly felt an obligation to make some decent use of the life that had been spared to us".
The phrase "some decent use" is a characteristic understatement.
Harold Macmillan entered this House as the Member for Stockton, a seat which he held from 1924 to 1945 with a break of only two years—1929 to 1931. His subsequent choice of the title, Earl of Stockton, testifies to the affection and concern he felt for his constituency and its people. The deprivation which he saw there made its mark on him and left him determined to raise the standard of life for all the people of this country. His firm belief that economic freedom is a necessary condition for political freedom is one which he continued to stress throughout his political career.
He became a Minister during the second world war and proved outstandingly successful, first as a junior Minister to Herbert Morrison, for whom he developed a warm regard, and, secondly, as Minister Resident in Algiers, which gave him the ideal opportunity to exercise both his diplomatic and his administrative skills. He became virtually viceroy in the Mediterranean and played a major part in drafting the peace treaty with Italy and in saving Greece from Communism. The late Richard Crossman, who worked for Harold Macmillan at the time, paid him this tribute, describing him as
"a dashing man of action, self-confidently poised in his behaviour, gambling on his hunches and, when we lost, as we sometimes did, loyal to his subordinates".
Having been in office, it was a bitter blow to Harold Macmillan when the Conservative party lost the 1945 election and he lost his seat at Stockton. However, he soon returned as the Member for Bromley and set about framing a political approach which would take this country into the post-war era.
Harold Macmillan returned to office after the Conservative victory in 1951 as Minister for Housing. It was the post which made him a popular and widely acclaimed political personality. He combined a great organising ability with a zest for political communication. His success was a major contribution to the post-war improvement in living standards.
His achievements as Housing Minister were followed later by his subsequent work as Chancellor of the
22
Exchequer. He understood the aspiration of people for a better way of life. Material success was, in Harold Macmillan's view, nothing to be ashamed of. With his characteristic flair for a popular idea, he was responsible for the introduction of premium bonds, which even today, 30 years later, are a part of the lives of millions of people.
When in 1957, after Suez, Harold Macmillan became Prime Minister, his first task was to restore Britain's confidence and standing in the world. He re-established the special relationship with the United States through his close friendships with President Eisenhower and President Kennedy. He made a substantial contribution to the relaxation of tension between the Soviet Union and the West, most notably through his work to achieve the nuclear test ban treaty.
As with so much of his life, he was motivated in the search for peace by his sombre memories from the great war. But he also understood that peace was best served by a strong defence, and at Nassau he negotiated the Polaris agreement which allowed Britain to continue to enjoy the protection of an independent nuclear deterrent.
Under his leadership, withdrawal from empire continued in as orderly and peaceful a way as possible. It was in character that such a radical policy was executed with such shrewd caution. There was no more telling political phrase than "the wind of change", which he pronounced during his African tour in 1960.
Harold Macmillan will also be remembered by his work for European co-operation, and in particular for paving the way for British membership of the European Community. The second world war persuaded him that a new political order was needed in Europe to heal the divisions that had caused the conflicts of 1914 and again of 1939. He saw most clearly that the emergence of Russia and America as global powers required a more unified European voice if her counsel were not to be lost.
As Prime Minister he launched a determined bid to secure British membership of the European Community, and, although his initiative was thwarted by the opposition of President de Gaulle, he nevertheless had the satisfaction of seeing his ambitions fulfilled when my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), as Prime Minister, secured British membership of the Community in 1972.
Harold Macmillan loved this House, and I believe the House returned his affection. There are only a handful now in the House who were Members with him. I recall vividly his dominance in the early years of the 1959 Parliament before illness compelled him to relinquish office in 1963.
In his retirement Harold Macmillan occupied a unique place in the nation's affections. He continued to play his role as Chancellor of the University of Oxford, a position he held for over a quarter of a century, and which gave him immense enjoyment. He wrote an autobiography full of insight into the age in which he had lived. And when, on his 90th birthday, he became the Earl of Stockton he found another public platform from which to stimulate, inspire and not least entertain us.
For over six decades Harold Macmillan served his country, as a man of courage, determination, wit, and compassion. He lived through a period torn by great conflict, political upheaval, social change and technological advance. But always Harold Macmillan kept his eye firmly and positively on the future.

23
He showed generations to come how to grasp the opportunities of the future, while never forgetting the legacy of the past. As he said on the closing page of the sixth and last volume of his autobiography:
"Nothing in my long experience or in my observations of the youth of today makes me fear that the people of Britain, in every walk of life, will shrink from the new challenge or fail to rise to the level of events.
But to do so they must restore and strengthen the moral and spiritual, as well as the material, base on which they have rested for so many generations through so many troubles and tribulations."
His vision of the future tells us as much about the man as it does about our country.
All of us, Mr. Speaker, today feel the greatness of the example set by Harold Macmillan and the corresponding magnitude of the nation's loss.
3.41 pm
Mr. Neil Kinnock: We pay tribute today to Harold Macmillan, Earl of Stockton, but I am sure that he would have been the last to object to my taking this opportunity to voice also the deep sorrow which Members in all parts of the House feel at the sudden and tragic deaths of two other parliamentarians, Guy Barnett and David Penhaligon, which you, Mr. Speaker, reported earlier. In every case, the deaths of these men diminish us all and we mourn with their families and loved ones.
Lord Stockton is remembered in many ways—as a
soldier of great valour; as a scholar; as a business man who had the acumen to recognise a winner and sell Keynes's
"General Theory" at a mere 5s., while selling the "Treatise on Money' at 30s. His theatrical abilities are recalled by many, friend and foe alike, with admiration and affection. By a few, they are, inevitably, recalled with an unworthy carping. Assessments of Lord Stockton's political career have also, inevitably, received mixed notices.
I simply say that here in these tributes in this House we assess the whole life of a man of great distinction, and that assessment must produce the conclusion that Harold Macmillan's honourable place in history was secured by the humanity, the breadth of vision and the courage that were his persistent attributes: attributes, indeed, made all the greater because they were continuously applied throughout his lifetime, both as rebel and as ruler. They were the qualities which enabled the product of imperial privilege to become the great decoloniser; the rich man to become the caustic critic of the causes and the results of poverty; the opponent of Communism to become the communicator with the Soviet Union and an architect of the test ban treaty; the angry young man to become, on his elevation to the House of Lords, the astringent old man.
Lord Stockton's bitter experience of the first world war and the ghosts of what Siegfried Sassoon called the
"unreturning army that was youth"
haunted him throughout his life. It produced a combination of values which, to his eternal credit, made Harold Macmillan an insistent supporter of a new system of international economic and social order as the alternative to war, and at the very same time such a remorseless opponent of the appeasement of Hitler and Mussolini as to take him into the Labour party Lobby and temporarily away from the Conservative Whip in the confidence motion of June 1936.
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Harold Macmillan was obviously steadfast for causes, but for all his commitment, he was, of course, no romantic. He distrusted doctrine. Although he was a man of profound beliefs, he never let them slip into self-righteousness. Indeed, he embodied the great difference between ideals and dogma. He was, throughout his life, continual proof of the distinction that separates the real champion of conviction from the mere purveyor of prejudice.
Despite those virtues—indeed, possibly because of those virtues—Harold Macmillan was not a saintly or a sainted man. His droll dismissive humour, the way in which he turned Edwardian affectation into a wily weapon of politics, his long life in which he made enemies of friends as well as friends of enemies, and his capacity for what even one of his most admiring biographers has called hard ambition and even ruthlessness—all these human favours and frailties prevent any form of canonisation. And, as the Earl of Stockton himself might have said, just as well, too.
In that Macmillanite spirit of kindly candour, I say that death and distance cannot lend sufficient enchantment to alter the view that the period over which Harold Macmillan presided in the 1950s, while certainly and thankfully a period of rising affluence and confidence, was also a time of opportunities missed and of changes avoided. Harold Macmillan was not, of course, solely or even pre-eminently responsible for that, but we cannot but record with frustration the fact that the vigorous and perceptive attacker of the status quo in the 1930s became its emblem for a time in the 1950s, before returning to be its antagonist again in the 1980s.
However, none of that can change the history of a man who, from the furthest and most isolated Back Bench to the foremost high office, was, as the Prime Minister has said, concerned throughout his life with the condition of all of the people. Clearly, from that arose his insistence that one of the main objects of economic policy must be the pursuit of full employment. We pay tribute to him for continuing always to march under those colours. As from the 1930s to the 1960s he advocated and—in many ways, more important—administered for full employment, so in recent times in his speeches in the House of Lords he restated the case made 50 years before for positive policies and action to take proper advantage of the possibilities of the revolutions in technology.
In the words of his "The Middle Way" Harold Macmillan believed:
"The important thing is that society should be organised in such a way as to bring the economic system under conscious direction and control and that the increased production should be directed towards raising the standard of comfort and security of all of the people."
In his last speech on affairs before the Munich crisis in 1938 he drew attention to the devastating effects of social division. In probably one of the most brilliant and moving of the many contributions that he made in the House he said:
"in these home problems, it is not a question of mere geographical distance, but of the wide chasm made by the lack of imagination on the part of a portion of the people who have never been able really to have brought home to them…the problems that confront large masses of our fellow-countrymen. Those of us who attended Church last Sunday will have heard read, in the Gospel for the day, the…words of the parable of the Dives and Lazareth—terrifying words—… 'Between us and you there is a great gulf fixed.'."

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He went on to speak of what he called
"That great imaginative gulf, that incapacity to bring home to people the true realities of what is going on in this country in the 20th century."
He defined that as one of the central problems confronting the Government of the day.
The fervent enemy of appeasement concluded that speech with an assertion that showed both boldness and sagacity in that context and presented a continuing challenge to politicians of all times. He said:
"The House of Commons is pressing…the Government day by day to a solution of the problems of rearmament and the dangers that may face us from foreign invasion. I wish the House would show the same enthusiasm to solve the problems of protecting the people against the insecurities of peace."—[Official Report, 24 June 1938; Vol. 337, c. 1439–40.]
I quote from that speech, for it appears to me that it crystallises so much of what Harold Macmillan sought to stand for throughout his life: the closing of gulfs in the standards of living, and understanding between areas, classes, systems and countries. Not, for him, an invertebrate consensus, but the toughest and most central demand of democratic politics.
Throughout his life Harold Macmillan worked and spoke in the knowledge that from the village, to the nation, to the global community, the great task of us all is to ensure. in his words, that
"the machines which enable men to conquer scarcity"
never become those that
"plunge him deeper into poverty"
or indeed into conflict.
That is the man to whom we pay tribute: one who believed and sought to show by active application that the great purpose of intellect, the imagination of which he spoke, was to use intelligence and strength for the humane and productive solution of practical problems. For that service, and the effort which throughout his lifetime he put into trying to meet his duties, we honour him without restraint.
3.50 pm
Mr. David Steel: Each of our political movements has lost, during the recess, colleagues whom we will always remember with affection and whose contributions to parliamentary democracy we will sorely miss.
On behalf of the Liberal party I join the other leaders in paying tribute today to Harold Macmillan. Interestingly, in his younger years he was greatly influenced by the then Liberal leader, David Lloyd George, as could be seen from his involvement with Liberals in the organisation known as Political and Economic Planning, in the contents of "The Next Five Years" in 1935 and in "The Middle Way" in 1938.
That early experience did not, during his later period as Prime Minister and leader of the Conservative party, cause him to take a kindly view of the Liberal party. One of Harold Macmillan's characteristics was a maliciously effective sense of humour, and in 1961, in a vain attempt to stem the Orpington tide, he declared:
"As usual the Liberals offer a mixture of sound and original ideas. Unfortunately, none of the sound ideas is original and none of the original ideas is sound."
The mutual antipathy between the Liberals and Harold Macmillan's party in the 1960s in no way diminishes our respect for his very considerable achievments. His deep concern for housing and employment, stemming from his early years as the hon. Member for Stockton, his
26
restoration of Anglo-American relations after the disaster of Suez, his conduct of the transition to independence in Africa, and especially his unheeded warnings in South Africa of the wind of change, his steps towards European unity and his constructive dialogue with Moscow, which helped to secure the nuclear test ban treaty, mean that he will be remembered and appreciated beyond party boundaries.
Like most hon. Members now, I never served with Harold Macmillan in the House and my only personal recollections are of occasional meetings outside Parliament: that shuffling gait, the deliberately hesitant, pausing manner, the myopic glance at the notes, all leading to entertaining, moving and highly effective speeches. There can be few of us who can hope to make, beyond the age of 90, such major contributions to the nation's debates. His was a truly remarkable career, and we warmly salute it.
3.53 pm
Mr. Edward Heath: My right hon. Friend the Prime Minister and the Leaders of the Labour and Liberal parties have eloquently described the life and work of Harold Macmillan. It will be for history eventually to form a judgment of his policies and achievements, although already the rather superficial judgments that were made shortly after his resignation are, 20 years later, being revised.
I should like to add my tribute, both as one who served him as Chief Whip throughout his first Administration and as a colleague in his Cabinet throughout the second, and as a colleague and a friend. I think that we would want to pay tribute to Harold Macmillan from the point of view that we all have in common, which is that of a parliamentarian. It was Parliament, and especially the House of Commons, which was the main interest in his life for more than 60 years. That was so from the time shortly after the end of the first world war when he came into the House as the Member for Stockton. I do not think that anyone ever knew the House more intimately than he did. After all, he was on the Back Benches for 14 years before he received his first appointment as a Parliamentary Under-Secretary of State. That gave him every opportunity of getting to know the attitudes and changing currents with which we are familiar. For him, the Smoke Room was one of the most likeable clubs of those to which he belonged. Throughout his time, especially while Prime Minister, he never ceased to be there in the evenings at a time when the Smoke Room was used a great deal by all hon. Members and to keep in touch with them.
Harold Macmillan believed very much in working with the House in order to achieve his own purposes. As one or two here know, he did not find it easy to address the House and to try to influence it. To begin with, he found television a horrifying venture, and he was never really happy with the impersonality of radio. It was only later, on the great occasions, that he felt at home addressing conferences. It was very late in his life when he began to establish the reputation which he now has of a television performer. All these arts had to be developed, and he did so by getting to know the House better and better.
As Chief Whip, I remember reporting to Harold Macmillan as usual at 10 o'clock in the morning about events in the House the night before and the troubles over an amendment, about which discussion had still not ceased. He said, "Ask the Minister just to let this go. It will

27
not be the end of the world if we accept the amendment." I was looking rather blank, when he said, "Well, yes, tell him, you know, that often you please an awful lot of people if you give them what they want." That is not always the sort of thing that a Chief Whip likes to hear, but when it comes it is wise advice.
Harold Macmillan had an innate sense of history as well as the experience of all his years in politics. This enabled him to put every contemporary problem into a historical context. He had a creative mind which enabled him to find a solution to so many of the contemporary problems with which he had to deal. That was how he came to handle the economic problems of his time, how he foresaw the era of the great powers, how he recognised that the days of colonial powers were over and how he saw that our future lay in Europe. That was how he came to handle the innumerable problems of those years and to deal with them as a member of the Cabinet and as Prime Minister. If he had been asked, "How would you most like to be remembered?", he would have said, "As a House of Commons man."
3.58 pm
Mr. James Callaghan: It is customary on these occasions for the Father of the House to say some words supposedly on behalf of all Back Benchers, but I do not presume to do that on this occasion. I wish, however, to add a short tribute.
I first heard Harold Macmillan speak in 1936 at a conference of trade unions. I listened to him say—it was his constant theme thereafter—that we should deal with unemployment and that there was no moral case for sitting back and allowing the market to take charge of our lives. That was a theme which he pursued throughout his life. He was still saying the same thing 50 years later, and saying it with the sincerity that he had displayed in 1936.
The Prime Minister referred to the wind of change speech. I have thought more than once about why he made it, and perhaps in some ways it can be traced back to his own history and that of his firm. Macmillan, the publisher, established its firm in India more than 100 years ago.
It is not always remembered that Harold Macmillan had a special interest in and concern about India. Indeed, when there were some divisions in the Conservative party in 1947 during the Second Reading debate on the Indian Independence Bill, Harold Macmillan on behalf of the Conservative party, which was then in Opposition, expressed support for India's independence. I have sometimes thought of his close connection with India. He returned to India more than once and was delighted when he was made a patron of the Bharatiya Vidya Bhavan. That honour may have led him to think about Africa and to make his wind of change speech there some 20 years later, perhaps inspired by what he knew of and believed and cared about in India.
Others have referred to all Harold Macmillan's achievements. I do not intend to do that. I do not think that he would have wanted this to be an occasion of mourning. He had too much, as has been said, of an impish sense of humour for that. The other day, the right hon. Member for Brighton, Pavilion (Mr. Amery) reminded me of a hilarious evening when he telephoned me
28
and asked to have dinner with Harold Macmillan because he wanted somebody to gossip to him. The jokes that we heard—I dare not tell some of them!
I recall an occasion when the right hon. Member for Old Bexley and Sidcup (Mr. Heath) was present, together with Lord Wilson, Lord Home and myself. Harold Macmillan was due to address an audience. He said that he wondered what was the proper collective noun for a group of former Prime Ministers. After all, every group has its own collective noun—a flock of sheep, a herd of cows, a pride of lions. After a typical pause, he said, "Perhaps it should be a lack of principles."
The only other story that I wish to tell concerns an occasion on which he said to me, again in another enjoyable conversation, "Do you know, I think you and I ought to form the next Cabinet together." I said, "I think that that would be a good idea. I am sure that we could do better than the present lot." He said, "Yes, perhaps we could." Here I utter a word of advice to the Prime Minister. He went on to say, "But we cannot have too many young men in it. They will only try to push us out."
Harold Macmillan, with all his great talents, enjoyment and mastery of this House, would not have wanted us to be too solemn this afternoon. We celebrate his great achievements as a parliamentarian. He was a master parliamentarian in every way. He was a man of great sincerity. He had certain principles to which he stuck, whether they were popular or unpopular. As has been said, he was a man of the House of Commons. We should pay tribute to the fact that the House of Commons attracted men of his stature, and I believe that today it is continuing to attract men and women of similar stature to continue to continue in that way.
4.3 pm
Dr. David Owen: We remember a remarkable man. We have heard from people who were hon. Members with Harold Macmillan and knew him for many years. For my generation of New Statesmen readers, brought up on a weekly Vicky cartoon, he was Supermac—a lovable old rogue. I remember his characteristics in that period as Prime Minister. He was the first Prime Minister to try to make Britain a member of the European Community, and the first Prime Minister to understand that we must rid ourselves of our colonial responsibilities in Africa. Perhaps also for a generation in which Suez was a dramatic event, it is wise to remember the man who was first in and first out.
I shall add no more than the words that he himself used in another place—words which we did not hear, but words upon which we could well reflect—in his remarkable speech in January 1985. He concluded by saying:
"It is for the next generation—it will not be for me but for my successors—to make the decision. Should we just slowly and majestically sink—not perhaps drastically or tragically, but go slowly down like a great ship—or shall we make a new determined and united effort, putting, as far as we can the party aside? There must be parties, of course, but there can he co-operation and even national governments. Let us do the latter and then historians of the future will not describe the ending of this century as the beginning of the decline and fall of Britain but as the beginning of the new and glorious renaissance."—[Official Report, House of Lords, 23 January 1985; Vol. 459, c 254.]
4.5 pm
Mr. Julian Amery: The Macmillan family and its widespread connections are not as broadly represented in the House as they were when I first became an hon. Member. On behalf of the family, I hope that I may he allowed to express what I am sure is the appreciation of all of us for the generous tribute that has been paid this afternoon to the memory of Harold Macmillan. It would not be seemly for me to add to it. He was my friend before I joined his family. He taught me much of what I have learnt of the statecraft of Whitehall and Westminster. I know well that, beneath all the histrionics, he served two great goals all his life: the betterment of the condition of the people and the maintenance and possible extension of Britain's influence in the world. I am grateful to the House for letting me add my tribute to those that have already been paid.
4.6 pm
Mr. Ian Wrigglesworth: I add my tribute to the memory of the Earl of Stockton from the citizens of that town, whom I now have the honour to represent in this place. I do so as a citizen of Stockton who, for the first five years of his life, had Harold Macmillan as his Member of Parliament, although I must say that the memory is not clear. I remember also my parents speaking about Harold Macmillan and, indeed—reference must be made to this—about Lady Dorothy, who took the hearts of the people of Stockton in a way that was reflected in Harold Macmillan's later life.
It is a testament to the affection and concern that Harold Macmillan learnt and showed in Stockton that he chose the Earldom for his title when he went to the other place. I am sure that the town of Stockton will remember him in the same way. The name will permanently be remembered and will remain part of his family. I have no doubt that many people in Stockton will suffer a great loss now that he has gone and is not carrying forward the flame that he picked up in Stockton—his compassion for the unemployed, which came through so strongly in his later life.
4.8 pm
Mr. Frank Cook: I join my parliamentary colleagues, both friend and foe in political terms, in paying tribute to the life of public service dedicated by my predecessor as the hon. Member for Stockton. I did not have the privilege of meeting him personally, but I know very well many people, from all ranks and from all parties, who did. Without exception, they call him to mind with genuine warmth and with real affection. Even his most implacable political enemies from those days pay tribute to his commitment and to what the noble Lord Wilson of Rievaulx has described as his "dedicated professionalism". Lord Wilson also conferred upon him what he called "a profound sense of history." Such an observation was so aptly precise.
Although we all know how unkind a commentator history can be in looking back over the way in which we conduct our affairs, it was that very attribute—his profound sense of history—that enabled the noble Earl to pass such telling comment in recent times on measures being implemented nationally. The last year must have been bitterly ironic for the man who, 51 years before, had fought a general election on his own personal manifesto, calling for pubic control of transport and gas.
30
Indeed, some of my colleagues may be as surprised as I was to read of the Earl of Stockton's rebellious spirit and independent judgment, to learn of his single-minded approach to the choice of Division Lobby on certain issues, and to learn that it was he who, in his book "The Middle Way", written as early as 1928, described the stock exchange as "a casino"—a phrase used frequently by some of my hon. Friends even today, and almost shanghaied by the leader of a certain party over Christmas.
Harold Wilson, in his book "A Prime Minister on Prime Ministers", referred to Harold Macmillan as a Tory democrat, and asserted:
"Macmillan's Tory democracy was based on those he came to know and love in Stockton, the workers—and, in the years he represented Stockton, the unemployed."
If one compares the present with the past, little, in those specific terms, has changed, save that the lesson that I learn from those conditions of deprivation is a Socialist lesson. The common ground that remains is that of compassion and democracy.
The individual contribution of that one man to the world of politics, national and global, was quite prodigious, equalled by fewer than a handful of Britons in this century. Would that we were all able, regardless of party, to emulate his commitment, match his dedication and, above all, reflect his sensitivity and compassion.
4.11 pm
Mr. Tam Dalyell: As one of those who, as the Prime Minister put it, is a member of the small hand of those who were in the House with Harold Macmillan, I should like to refer briefly to his kindness and thoughtfulness to all young Members of Parliament of all parties, not least to opponents. On 4 July 1963 I asked him
"if he will ensure that legislation presented to this House is not drafted in obscure language."
Harold Macmillan replied:
"I have every sympathy with the hon. Member's objective. However, I am afraid that, in order to achieve precision in legislation which is complex and often technical, it is not always possible to avoid an impression of obscurity."
I then asked briefly:
"I accept the fact that the Parliamentary draftsmen must try to prevent those who would pretend to misunderstand from doing so, but is it not also important that we laity should understand legislation?"
This is a vintage and skilful Harold Macmillan reply:
"I know that this is a difficult problem. I would remind the House of the very wise words of Sir James Stephen, one of our greatest authorities, who pointed out that since legislation is often the subject of litigation it is absolutely necessary not only that it should appear to be simple to those who read it in good faith, but actually precise. That is a very difficult art. Many things are simple. Let us take the sentence: 'When John met his uncle in the street he took off his hat.' That is a clear sentence, but it is capable of at least six different meanings. The point about legislation is that the courts have to interpret it in litigation based upon it, and it is therefore essential that it should be not so much simple as precise."—[Official Report, 4 July 1963; Vol. 680, c 583–84.]
That was all, incidentally, in Prime Minister's Question Time.
The following week I heard an authoritative voice behind me in a Corridor in the House say, "Dalyell, come here." That was the Prime Minister. He said, "I was not unsympathetic towards your question, so I shall arrange for the chief parliamentary draftsman to show you exactly why I gave the answer that I did." I was a very junior Member of the House, and the following day Sir Noel Hutton appeared, on Prime Ministerial instruction. He

31
was an extremely distinguished QC, and he came armed with endless volumes. I have not been taken apart like that since I was a first-year student—s in the nicest way.
The point is that the Prime Minister should go to such trouble for a young opponent to whom he owed absolutely nothing and who had been an embarrassment to him in the West Lothian by-election before the night of the long knives, in which his party lost its deposit in our rolling countryside. It was art act of generosity that is not forgotten.
The Prime Minister referred to Dick Crossman. I was the latter's PPS. Crossman always said that when he was extremely ill Macmillan in North Africa made arrangements that saved his life. I am sure that there are many examples of the personal kindnesses of this man.

Power Plant Industry
4.15 pm
Mr. Nicholas Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the further job losses in the power plant industry."
The matter is immediate because last Friday NEI Parsons declared a further 800 workers redundant. That brings to over 1,700 the total number of jobs that have been gone at NEI in the past year. The matter is urgent because NEI is a pillar of Tyneside's industrial base. It is the largest private sector employer in the county. The matter is also urgent because those redundancies were wholly avoidable, as are other redundancies in that industrial sector—I am thinking particularly of Babcock's just before Christmas.
The fault most certainly does not lie with the company—not with the owners, the investors, the managers or the work force. The company has fought a tremendous battle for overseas work. Production utilises the very latest technology and phase II of the company's investment programme involves £30 million of further investment. Industrial relations at the plant, involving a highly skilled work force, are good.
The problem is lack of orders. No domestic orders have been placed in the industrial sector since 1978. The leader in today's edition of Newcastle's The Journal is headed "800 victims of inertia". It states:
"Whenever hundreds of jobs are lost in a community—and it is not an exceptional occurrence in the North—there is bound to be disappointment, concern, an understandable degree of bitterness…What is beyond question, however, is that bitterness will turn to justifiable anger if it is felt that action could have been taken to save and secure jobs which have instead been unnecessarily sacrificed.
And this is surely the case with the 800 redundancies announced at the end of last week at NEI Parsons, which has been waiting for years for a domestic order for a coal-tired power station.
The Government is in a position to place such an order but has refused to do so".
That leader speaks for the whole of the north-east of England.
The Central Electricity Generating Board acknowledges the requirement for coal-fired power stations, yet the Secretary of State does nothing. The hon. Member for Newcastle upon Tyne, Central (Mr. Merchant) lays the blame at the door of the Secretary of State for Energy, and he is right to do so.
The power supply industry must be maintained beyond the mid-1990s, and we should debate the Secretary of State's failure to do so.
Mr. Speaker: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the further job losses in the power plant industry."
I listened with care and sympathy to what the hon. Gentleman said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 20 and I cannot, therefore, submit his application to the House. However, I hope that he will find other ways of raising the matter.

Ministerial Statements
4.18 pm
Mr. Max MaddenOn a point of order, Mr. Speaker. If Harold Macmillan were here today, he would be surprised, as large numbers of the British public must be, that no statement is being made on what arrangements the Government are making to stop many elderly people freezing to death and, secondly, that no statement is being made on the crash of the Army convoy over the weekend. Can you say, Mr. Speaker, whether the Government, at any stage, have said that they intend to make statements on those two important matters and, if not, have you expressed any concern on behalf of the House about the absence of such statements?
Mr. David WinnickFurther to that point of order, Mr. Speaker. I sympathise with you about your voice and hope that I will not cause you any difficulties. You will understand that we do not wish to have too many applications under Standing Order No. 20, so we should discipline ourselves accordingly. I deliberately did not table a Standing Order No. 20 application because I hoped that a statement would be made about the appalling difficulties being faced by many of our elderly people during this bitter winter weather. It is disgraceful that no statement is being made about whether the trigger arrangements will be implemented so that some elderly people on supplementary benefit may receive additional heating benefits.
I am aware that there is a question tabled for tomorrow, but that is no substitute for a statement from the Secretary of State because, at most, only three or four hon. Members will be able to ask supplementary questions to question No. 7 which is tabled by my hon. Friend the Member for Bradford, West (Mr. Madden). I hope that tomorrow such a statement will be made because the difficulties being experienced by many elderly people should preoccupy the House. It is disgraceful that there has been no statement today.
Mr. ChurchillOn a point of order, Mr. Speaker.
Mr. SpeakerOrder. I shall deal with one matter at a time. Regarding the matter raised by the hon. Member for Bradford, West (Mr. Madden), as the hon. Member for Walsall, North (Mr. Winnick) said, the hon. Gentleman has question No. 7 on the Order Paper tomorrow. I am not responsible for any statements by the Government. On the question of the accident, it would be perfectly legitimate to raise this during tomorrow's debate on the Army. Again, I am not responsible for any statement.

Hon. Member for Workington (Allegations)
4.20 pm
Mr. ChurchillOn a point of order, Mr. Speaker. I rise on a point of order to seek your guidance following allegations made by the hon. Member for Workington (Mr. Campbell-Savours) in a debate on the security services on 15 December. I would have raised the matter with you sooner, but for the fact that the hon. Gentleman made his attack initially under the cloak of anonymity and it was not until immediately after the rising of the House for the Recess that my name came to be publicly linked with his accusations. Therefore, I am availing myself of the first possible opportunity to draw this matter to your attention.
During a 56-minute speech the hon. Gentleman attacked various individuals, including the head of the Civil Service and my right hon. and learned Friend the Attorney-General, impugning the honour and integrity of both. Among the targets of his attacks were two Conservative Members of Parliament whom he declined to name and who, he claimed, had engaged in a conspiracy with officers of MI5 to bring about the downfall of Her Majesty's Government by unconstitutional means during the second Administration of Lord Wilson of Rievaulx.
He said at column 783 that only one of the two hon. Members was still in the House and that he would approach that individual and ask him "to make a personal statement". Two days later I received a letter from the hon. Gentleman stating that Mr. Peter Wright had "identified" me—whatever that might mean—and calling on me to make a personal statement to the House.
The very next day a highly regarded member of the parliamentary press lobby informed me that he had been told by the hon. Gentleman himself that Sir Stephen Hastings and I had been sent letters by the hon. Gentleman, identifying us. I understand that the hon. Gentleman subsequently denied informing the press. However, by whatever process of telepathy the existence of his letters came to be communicated to the press—certainly neither Sir Stephen nor I did so—our names came by the weekend to be publicly linked with his most grave accusations.
Asserting that it was
"the biggest political scandal of this century"
and that it
"surpasses in importance the Zinoviev letter",
the hon. Gentleman accused me, and our former and distinguished colleague, Sir Stephen Hastings, of being
"beyond the law"
and
"involved in action against the Crown."
He alleged that, as part of a smear campaign designed to bring about the downfall of the Wilson Government, we acted as "conduits" for bogus information which we knew
"came illegally from within MI5."
The hon. Gentleman further declared:
"They did not stop it, nor did they report it to the Home Secretary. They just passed it on in the knowledge that it would destabilise the Labour Prime Minister and his Government."—[Official Report, 15 December 1986; Vol. 107, c. 783–4.]
The charge that the hon. Gentleman has levelled against us is, in effect, of engaging in a treasonable conspiracy to bring down Her Majesty's Government.

35
Few graver charges can be made, especially against a Member of this honourable House. Indeed, it remains a capital offence for which, uniquely, the gallows are preserved to this day.
May I say that I have never at any time worked for or with MI5. Nor have I ever knowingly even met any individual from MI5. I have certainly never engaged in any conspiracy, treasonable or otherwise, with MI5 or with any of its officers, past or present. So far as they relate to me, the hon. Gentleman's accusations are a seamless tissue of falsehoods. Furthermore, Sir Stephen Hastings, with whom I have been in touch and who, like me, has issued writs for libel against The Observer and two of its correspondents, has asked me to state on his behalf that the charges against him are also without foundation.
In the circumstances, Mr. Speaker, I must ask you whether it is in order for an hon. Gentleman to make such accusations against a fellow hon. Member without producing any evidence to substantiate the charge. If you agree that that represents a flagrant abuse of the privileges of this House, I should be grateful if you would consider referring the hon. Gentleman's conduct to the Committee of Privileges. Finally, I challenge the hon. Gentleman either to repeat his accusations outside the protection of parliamentary privilege or to withdraw them unequivocally.
Mr. SpeakerAs the House knows, the rule is that it is not in order to reflect in debate on the conduct of another hon. Member except on a substantive motion which admits of a distinct vote of the House. In the debate on 15 December, to which the hon. Gentleman has drawn attention, the hon. Member for Workington (Mr. Campbell-Savours) reflected on the conduct of two other Members. If he had identified them, the Chair would have intervened to enforce that rule. He did not do so, so there was no basis on which the Chair could take action. Nor can I take action now. However, if the hon. Gentleman alleges that this is a matter of privilege, he should write to me in the usual way and I shall consider it.
Mr. D. N. Campbell-SavoursFurther to that point of order, Mr. Speaker. I give you notice that I intend to take the opportunity of replying in full detail.

Hon. Member for Workington (Allegations)

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the Trafford Park Development Corporation (Area and Constitution) Order 1986 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Malone.]

Orders of the Day

  Local Government Finance Bill
  Order for Second Reading read.
  4.28 pm
  Dr. John CunninghamOn a point of order, Mr. Speaker. I rise in respect of certain provisions in the Bill on which it is proposed to have a Second Reading debate in the House today. Clause 1 requires all local authorities to keep a rate fund revenue account, and the Inner London education authority is a local authority for that purpose. Will you, Mr. Speaker, consider treating the Bill as a hybrid Bill? Clause 7 provides for the maximum rate precept of each designated authority to be determined in accordance with schedule 2. If any hon. Members have had the opportunity to look at schedule 2, they will recognise, not only its complexity, but the need to have a considerable understanding of algebra to make any sense of it.
  Within designated authorities, subparagraphs 2(1) and (2) of the schedule include what is called a "T" factor, calculated in accordance with paragraphs 3(6) and 4 of schedule 2 which is intended to pick up the effects of the teachers' pay settlement. The formula for designated authorities in sub-paragraphs 2(3) to 2(6) of schedule 2 exclude that T factor.
  Sub-paragraphs 2(1), 2(2) and 2(6) relate to types of local authorities which are, or may be, local education authorities. Within the category of local authorities which are designated authorities, the Inner London education authority is the only one with the functions of a local education authority which does not have the T factor applied to it. It is, therefore, arguable in terms of hybridity that among that category, the ILEA's financial interests—and therefore the financial interests of Inner London ratepayers—are treated differently from the interests of all other local authorities and their ratepayers. That could accordingly be argued to come within the definition of a hybrid Bill, as given in "Erskine May", as:
  "a public Bill which affects a particular private interest in a manner different from the private interests of other persons or bodies of the same category or class."
  In the argument on a similar point relating to what is now the Local Government (Interim Provisions) Act 1984, you held, Mr. Speaker, that there was no hybridity as the category of constituent authorities—the London boroughs—were a genuine class, and the fact that the City of London was not within that class did not alter the position. In the present case, however, the definition of ILEA as a local authority for the principal purposes of the Bill—remedying the rate support grant position—distinguishes it from the City under the 1984 Act.
  I submit, Mr. Speaker, that there is a prima facie case for saying that this is a hybrid Bill. I ask you to consider this submission most carefully in view of its complexity. To save any risk of further damaging your vocal chords, perhaps your could let the House know your decision in due course.
  Mr. Nigel SpearingFurther to that point of order, Mr. Speaker. I wish to make a point related to hybridity. I apologise for the lack of notice, but, as you will appreciate, the Bill was published only the day before

  37
  the House went into recess, and its effects have been difficult to determine, even for those expert in this complex area.
  The essence of private legislation, as I understand it, is that there is within any enactment or proposed enactment an injurious affection of a technical, private interest exercised in an arbitrary manner within a single statutory classification in that legislation. If such injurious affection can be shown to exist, such legislation may come—I emphasise "may come"—within the ambit of the Standing Orders for private business in this House, and if it is a public Bill, it is therefore declared hybrid, being subject to both sets of Standing Orders.
  As my hon. Friend the Member for Copeland (Dr. Cunningham) said, schedule 2 contains a number of complex mathematical formulae which seek to define classes of local authority. I quote the ruling of Mr. Speaker Hylton-Foster in 1963—a predecessor of yours, Mr. Speaker—from the current edition of "Erskine May", on page 896. He said:
  "I think that a hybrid bill can be defined as a public bill which affects a particular private interest in a manner different from the private interests of other persons or bodies of the same category or class."
  Unlike my hon. Friend the Member for Copeland, I am concerned that in the case of a borough the application of this formula may result in a very different injurious affection on both the borough and its inhabitants than on those to which that formula refers. You will know, Mr. Speaker, that in this respect, a borough corporate can be regarded as a private corporation just as any ratepayer in the borough can be regarded as a private individual.
  The submission I make, therefore, is that if it can be shown that within any one of these classes of formulae the effect on any such borough, any of the burgesses or ratepayers, would be injurious, as distinct from the effect of other classes, the Bill should be regarded as subject to the Standing Orders for private business and, therefore, hybrid.
  I do not necessarily expect a reply now. However, that is the position with which we are faced because of this legislation.
  Mr. SpeakerI can deal with the matter despite my vocal chords, if the House will bear with me. I am grateful to the hon. Member for Copeland (Dr. Cunningham) for having given me notice of his point of order, and also to the hon. Member for Newham, South (Mr. Spearing), because I understand that he was making inquiries about this last week. That has given me an opportunity to look very carefully into the question of hybridity. I and my predecessors have frequently ruled that a Bill that concerns a matter of public policy and deals with private or local interests as members of a class without singling out any one of a class for adverse treatment is not hybrid.
  The hon. Members for Newham, South and for Copeland both argue that because ILEA is dealt with separately from other authorities, the Bill is prima facie hybrid. I must tell them, however, that the Inner London education authority has, since its inception as the governing body for education in the inner boroughs of London, been treated as a class of its own in the metropolis. That was the case both in the London Government Act 1963 and in the Local Government Bill of 1984. I must, therefore, rule that dealing with ILEA separately does not render the Bill hybrid.
  Several Hon. Members rose——
  Mr. Speaker: Order. I shall call the hon. Member for Blaydon (Mr. McWilliam), but I have nothing to add to my statement.
  Mr. John McWilliam: On a different point of order, Mr. Speaker. I apologise for not giving you notice, but I could not do so until I discovered that a money resolution was attached to the Bill. Part II, which deals with its financial effects, states:
  "It is not envisaged that there will be any significant increase in the amount available for grants."
  I have gone through the Bill, but I cannot find any clause in italics. In other words, I cannot find any financial clause, yet a money resolution is attached to the Bill. The Bill was not properly presented to the House, as it appeared that it had no financial effects. Yet today we find that, in fact, financial effects are covered by a money resolution which we must debate later this evening.
  Given the way in which the Bill has been presented and the fact that it has financial effects—or there would not be a money resolution—I put it to you, Mr. Speaker, that the Bill has not been properly presented. The Government must consider what they are trying to do in presenting such a Bill. The House must decide how to consider the Bill, because it clearly has financial aspects.
  "Erskine May" is quite clear that if a Bill has financial aspects, the clauses which relate to the financial aspects must be printed in italics. As they have not been printed in italics in the Bill, I submit that the Bill has not been properly presented to the House.
  Mr. Speaker: On page 10, in part III, clause 16, the Bill states in italics:
  "There shall be paid out of money provided by Parliament any increase attributable to this Act in the sums payable out of money so provided under any other Act."
  A money resolution means, not that more money will be spent, but that it will be spent under a new authority. The matter is quite in order.
  Dr. Cunningham: I accept what you have said, Mr. Speaker, about ILEA being a unique authority. It is the only single-purpose authority of its kind. I also accept what you have said about the 1962 and the 1984 Acts. However, my point is different. My point is that, for the purposes of today's Bill, ILEA is taken in a class with other authorities with educational functions. They are given consideration on the basis of the T factor that I mentioned in working out the implications of the Bill for them, but ILEA is not. Therefore, within the terms of the Bill, ILEA is treated differently from the other authorities in the same class in the Bill. That is the point at issue, and it is not a question of the treatment of ILEA, as in the previous cases that I have mentioned.
  Mr. Speaker: I assure the hon. Gentleman that I have looked at this with the greatest of care, as the House would expect me to do when a question of hybridity is likely to be raised. I am satisfied that the Bill is not hybrid, for the reasons that I have stated.
  Mr. Spearing: I apologise for returning to this matter, Mr. Speaker. We are subject to time constraints, and I have already apologised to you for not having been able to raise the point by notice. My point of order was not that raised by my hon. Friend the Member for Copeland (Dr. Cunningham). It was a new and a fresh point of order, and when you replied to him with the ruling that you have just reiterated, I hope that you were not attempting to include

  39
  my point of order, which I hope can be dealt with as a separate issue, in an informal or formal manner, as you so please.
  Mr. Speaker: I take the hon. Gentleman's point. He was dealing with the formula under which local authorities are rate-capped and how it may affect this authority. In view of the difficulty that I am facing today, I shall write to the hon. Gentleman about this matter.
  Mr. McWilliam: Further to my point of order, Mr. Speaker. You drew my attention to page 10, which I had read. It says:
  "There shall be paid out of money provided by Parliament any increase attributable to this Act in the sums payable out of money so provided under any other Act".
  "Erskine May" is clear that the financial aspects of any Bill should relate to that Bill and not to any other Act. It is with that point that I find the greatest difficulty. The general financial clause seems to say that money for the Bill can come out of any other aspects of Supply to which the House has already agreed. This seems not to be in order with the general way in which we deal with financial procedures and does not, in a reasonable manner, relate to the way in which we should deal with legislation that concerns finance.
  Mr. Speaker: The hon. Gentleman raises a technical point. As far as I can see this is in order, but in view of what he has said I shall look carefully at the matter before we come to the money resolution.
  4.33 pm
  The Secretary of State for the Environment (Mr. Nicholas Ridley): I beg to move, That the Bill be now read a Second time.
  As the House knows, the purpose of the Bill is to validate the practice that my Department and the Welsh Office have both adopted since 1981–82, in line with the wishes of local government, in calculating relevant and total expenditure for block grant and rate limitation, to allow that practice to continue on a proper basis for the remaining years of the present system; and to set rate and precept limits for 1987–88. It deals also with a much lesser problem in Scotland. I explained the background in my statement on 16 December. The House may find it helpful if I expand a little on what I said then, before describing briefly the provisions of the Bill.
  I shall begin by explaining the concepts of relevant and total expenditure. "Relevant expenditure" is essentially the net expenditure of local authorities after netting off income such as fees and charges. The Secretary of State must take this into account in determining the total amount of grant which should go to local authorities each year. "Total expenditure" is a narrower concept. It is broadly relevant expenditure less specific and supplementary grants. An authority's total expenditure is the total which is eligible for block grant. Neither relevant nor total expenditure is a measure of gross spending.
  Total expenditure is taken into account in determining grant related poundages, multipliers, and, perhaps most important the individual entitlements to grants of local authorities. Total expenditure also has an important role in rate limitation. I select authorities for rate limitation if
  40
  in my view their total expenditure is excessive. The expenditure levels that I determine are levels of total expenditure, and I calculate rate limits from these.
  Before taking the House through the history of events, I should also say something about local authority funds and accounts. Every local authority is required to keep a general rate fund or its equivalent, into which receipts are paid and from which liabilities are discharged. Each will maintain, though not required to by statute, an account of its main revenue transactions, often called a rate fund revenue account. Depending on the nature of the authority, it will have a number of other named funds or accounts, some required by statute, some not—for instance, the housing revenue account, the direct labour organisation revenue account, the superannuation fund, the loans fund, special funds, including capital funds set up under the Local Government (Miscellaneous Provisions) Act 1976, and trading accounts. This Bill stems from the relationship of the general rate fund—what is usually called the rate fund revenue account—to these and other funds and accounts.
  The central issue is whether the rate fund for the purposes of calculating relevant and total expenditure should be interpreted in the wide sense of treating all other funds and accounts, such as special funds, the housing revenue account, and accounts of trading undertakings merely as sub-divisions of the rate fund, or in the narrow sense of seeing the rate fund as a separate and distinct entity from these other funds and accounts. Under the wide interpretation, expenditure falling to be defrayed from the rate fund is the entire expenditure of the authority but does not include internal contributions between funds and accounts. Under the narrow interpretation of the rate fund, its expenditure excludes expenditure charged direct to the other funds and accounts, but includes contributions to those funds and accounts. Since the beginning of the present grant system, my Department and the Welsh Office have adopted the narrow interpretation in line with the wishes of local government.
  What happened was as follows: from late 1979 the Local Government Planning and Land Act 1980, which established block grant, was passing through Parliament. The Act defines relevant and total expenditure, on which block grant is paid, essentially as expenditure falling to be defrayed from the rate fund. It was only after the Act was passed, and after the first block grant settlement had been made in December 1980, that the issue emerged clearly. This was when draft grant claim forms were sent to the local authority associations which made it clear that the Department envisaged using the wide interpretation for calculating authorities' entitlements.
  The local authority associations were very concerned about the proposal to interpret references to the rate fund in the 1980 Act in this way. They argued that the narrow view of the rate fund was an equally possible interpretation of the Act and that the wide view was not consistent with accepted and sensible accounting practices.
  Mr. Allan Roberts: The Conservative-controlled associations were particularly vociferous in making this point. It was also welcomed by Department of the Environment Ministers. They hoped to encourage housing revenue account profits which the Government had made legal by the 1980 Act.
  Mr. Ridley: I am speaking from memory, but I believe that all the local authority associations preferred the narrow rather than the wide interpretation. The only exception was the London borough of Wandsworth, which at that time was led by my hon. Friend the Member for Southampton, Itchen (Mr. Chope). He believed that it would have been better at that time, or at a later stage, to use the other definition. I cannot comment on the hon. Gentleman's second point. I was not in the Department at that time. However, I have more to tell him about what happened.
  In considering the issue, Ministers had at that time to weigh the two differing interpretations of the 1980 Act references to the rate fund and the disruption to local authorities' accounting practices which would have stemmed from a decision to proceed with a wide view of the rate fund. The Government therefore decided to accept the strongly argued and unanimous views—this is the answer to the hon. Member for Bootle (Mr. Roberts)—of the local authority associations and adopt a narrow definition for calculating grant entitlements under the 1981–82 rate support grant settlement, thus continuing what had been existing practice for many years under earlier legislation. A circular letter to this effect was sent to local authorities on 13 February 1981. No queries were raised and the approach taken was generally welcomed.
  The change in 1981–82 to the local authority approach to the rate fund was made on the basis that for 1982–83 the issue would be reconsidered with the associations.
  A paper was put to the local authority associations in April 1981. Given the unanimous acceptance of the interpretation adopted for 1981–82, this proposed that the local authority approach to total expenditure should be continued for 1982–83 and suggested a study to look at the pros and cons of changing to the wider approach in the longer term. The local authority associations continued, however, to press strongly the view that there should be no switch to the wide approach and that there was no need for any study to look at this alternative approach. The Department agreed to put the issue on one side but indicated that
  "they might come back to the group with proposals in future if they seemed necessary".
  From then on, the Government operated the block grant system on the basis of the narrow view of the rate fund. During that period there were a number of legal challenges, brought on a variety of grounds, to the Secretary of State's decisions on rate support grant and rate limitation. But in those proceedings no legal point was taken against the narrow view, nor did local government auditors question the practice.
  The issue re-emerged last year when it was discovered that a number of returns of expenditure from local authorities did not conform to normal practice on expenditure. Several authorities had decided to show contributions to special funds, even though they appeared to have a deficit on the rate fund revenue account and there was apparently no liability for which the money was being set aside. Another authority had decided that in 1984–85 transfers from a special fund should not count as income-reducing expenditure even though, in a previous year, it had counted transfers to special funds as expenditure. This was directly contrary to the approach which the Government had taken in 1981 at the request of the local authority associations.
  42
  It appeared that these devices were designed to increase block grant entitlement at the expense of other authorities. We estimate that the authorities concerned could gain a total of £38 million in grant because of them.
  Although the practices had been accepted by the auditors in a number of cases, my Department was very doubtful whether it could accept them as a basis for paying grant. One set of authorities appeared in effect to be conjuring money for special funds out of the air solely to increase their grant entitlements. The approach of the other authority ran completely counter to normal practice. If accepted, it would have meant that the Government tolerated two completely opposite practices on the question of calculating total expenditure. That, clearly, was not on. I should say here that my Department has written to the authorities concerned seeking an explanation of the figures that they have submitted.
  In September, in deciding how to respond to these cases, I looked closely at the definitions of relevant and total expenditure. I was concerned that the accepted practice did not correspond to the statute. I decided that it was essential to seek the Attorney-General's view. He supported counsel's opinion that the treatment of total expenditure which the Government had operated at the request of the local authority associations was indeed incorrect in law. Transfers between funds and accounts within the rate fund were not expenditure. Expenditure took place only when an authority had liabilities in the outside world and met these from the general rate fund. Any fund or account, whether statutory or non-statutory, which a council set up was simply a part of the rate fund earmarked for a particular purpose. I received the advice of the Attorney-General in later October and the Government decided to take urgent action.
  As I have explained, the Government had originally responded positively and constructively to the strongly held views of the local authority associations on the interpretation of expenditure, but, in view of the cases which emerged last year and of the further legal advice, the Government had no alternative but to legislate. Without such legislation, all past decisions which involved the concepts of total or relevant expenditure would have been in doubt. It would have been quite improper to take further decisions about rate support or rate limitation without securing the legal position. I came to the House in December as soon as I was able to present the Government's fully worked up proposals for handling the problem. It would have been quite irresponsible to come without such a solution and face local government with the great uncertainty that that would have caused.
  Mr. Michael Meadowcroft: The Secretary of State said that he came to the House at the earliest possible moment. On 3 December, some weeks after he knew about the problem, he made his third rate support grant statement to the House, although he knew that the basis upon which it was assessed was open to doubt under the system which he intended to tell us about on 16 December.
  Mr. Ridley: That third consultative paper was intended for discussions with the local authorities. I have not made a decision about next year's rate support grant, although I hope to make a statement very soon on that subject. No rate support grant settlement is legal until it has been approved by the House. I shall be unable to invite the

  43
  House to approve the rate support grant settlement until this Bill has become an Act. The House might like to remember that without the Bill becoming an Act, it will be impossible to pay grant for 1987–88.
  Mr. Richard Page: No Conservative Member blames my right hon. Friend for the problems with which he is faced. It was his misfortune to be sitting in the chair and holding the parcel when the music stopped. As the Bill effectively tries to maintain the status quo, will my right hon. Friend consider introducing either an amendment or a new clause to stop the present ratchet effect, which reduces the rate support grant for counties such as Hertfordshire? If it were introduced for 1988–89, it could continue until the new Conservative Government were able to produce their new rate reforms after the next general election.
  Mr. Ridley: I am grateful to my hon. Friend. I should be even more grateful if he would not seek to add to the Bill, which is already complex enough, something that is of a completely different nature, which would freeze the present pattern of grants for 1988–89 and thereafter. I agree with my hon. Friend that it will be a blessing and a godsend when the new Green Paper proposals are implemented by an Act of Parliament. In the meantime, it will become increasingly difficult to operate the present system. This is neither the time nor the place to deal with that, although the suggestion of some sort of freezing of the system is not totally unattractive.
  Dr. Cunningham: Will the Secretary of State be absolutely precise and tell the House when he was first advised of this state of affairs? We want to be told, not when the Attorney-General confirmed it, but when the Secretary of State was first advised of the illegality of the Government's position.
  Mr. Ridley: I think I told the hon. Gentleman that I first became aware of the problem in September.
  Dr. Cunningham: When?
  Mr. Ridley: Without consulting my files I cannot give the precise date in September, but let me make it clear that this was brought as a possible problem upon which it would be correct to seek legal advice. We sought legal advice from counsel and then had to seek a second opinion, and I consulted my right hon. and learned Friend the Attorney-General. It was not until we were certain about the legal position that I realised the problem would have to be dealt with.
  The main purpose of the Bill is to allow my Department and the Welsh Office to continue with the practice adopted to date, and supported by the general body of local government, for calculating relevant and total expenditure. The Bill will enable transfers to and from this account to be defined in a way which replicates current practice on expenditure; that is, that total expenditure should be the net expenditure of the rate fund revenue account.
  Clause 1 and schedule 1 require authorities to keep a rate fund revenue account and list those accounts separate from it. Clause 2 sets out the practices to be observed in compiling the account. Clause 3 defines relevant and total expenditure in relation to the rate fund revenue account. These clauses apply from the financial year 1987–88
  44
  onwards. Clause 4 validates all things done for rate support grant purposes since 1981. There are, however, further decisions on rate support grant to be taken for all years since 1981–82. Clauses 4 and 5 provide for these.
  For 1981–82 and 1982–83, only the conclusive calculation of block grant remains to close the books. The Bill provides that these calculations shall be done on the basis of the figures in the last supplementary reports made for those years. For the years 1983–84 to 1986–87, there are outstanding supplementary reports to be made. The Bill provides that these shall be made on the same basis as reports for the years 1987–88 onwards. As I have explained, authorities have in practice kept what is usually called a rate fund revenue account. Clearly, it is not possible retrospectively to require authorities to keep rate fund revenue accounts. Therefore, the calculations will be based on the notional existence of such an account.
  Mr. Charles Morrison: I think my right hon. Friend will agree that clause 5 is a little obscure and as a consequence seems to be open to a variety of interpretations, one of which is giving rise to fears that the basis of rate support grant from 1984–85 on may be changed to the disadvantage of local authorities. Those authorities will not know that until 1987, with the consequence that the whole of their calculations, not only for 1987–88, but for earlier years, might be adversely affected and ultimately ratepayers might be disadvantaged. Can my right hon. Friend confirm that it is not his intention to act retrospectively to the disadvantage of local authorities and ratepayers? If he can confirm that, and if it is possible to devise amendments for the Committee stage, will he agree to accept them?
  Mr. Ridley: I can confidently confirm that no change whatever is proposed in the way in which past years will be treated for rate grant support settlements. The only point is that they must be based on what is in the Bill about the state of the definition, because hitherto the definition on which they were based was illegal. The Bill merely confirms the definition on which previous rate support grant settlements have been struck.
  Dr. Cunningham: Will the right hon. Gentleman give way?
  Mr. Ridley: I am replying to the point raised by my hon. Friend. Let me make it clear that the only effect of the Bill is that we will not be able to present to the House those final and other statements for the years in question until the Bill becomes an Act.
  Dr. Cunningham: What the Secretary of State says cannot be true. There are retrospective provisions in the Bill. He must recognise that and must know that the Bill gives powers enabling him to invalidate decisions which may have been taken by local authorities and which may have been confirmed by the auditors. What he says about there being no retrospection is not true.
  Mr. Ridley: I do not accept that for one moment. No change whatever is proposed to the way in which total expenditure definitions are calculated. We would not have paid grant on the devices that I have explained to the House. Despite what an auditor may have said, if we understood exactly what the local authorities were doing,

  45
  we would not have paid grant on those claims. Therefore, there is no change whatever, because we will not pay grant on them under the Act.
  Mr. Terry Davis: The Secretary of State says that there will be no retrospective change. Will he confirm that he has already told Birmingham city council that it will lose £8 million because the Bill will change the basis on which the grant was calculated in previous years?
  Mr. Ridley: No, that is not right. If I understand the matter correctly—and I think I do, but I want to put in a caveat in case we do not have the whole picture—Birmingham council moved a sum of money which it did not have into a special fund, and at a later stage it moved that money back into the rate fund, thereby claiming grant. Even the hon. Gentleman will agree that that is not quite right, because it is taking money from other authorities by reducing the grant which those other authorities would have received. If that is what happened in Birmingham, clearly it would not have been acceptable to the Government and the practice would not have resulted in my Department paying grant to Birmingham. The effect of the Bill will be to leave Birmingham in exactly the same position.
  I shall now turn to rate and precept limitation. Because of the need to pass the Bill, we are unable to proceed with rate and precept limitation to the normal Rates Act timetable. The Bill therefore provides for rate and precept limits for designated authorities to be determined in accordance with a formula for each class of authority. The formulae contain broadly the same factors as are necessary to calculate rate and precept limits under normal procedures and reflect, as far as is possible, the decisions which we would have taken under those procedures.
  Dr. Cunningham: The Secretary of State is dealing with the important matters of rate limitation and expenditure limits. Expenditure limits were set in July and some councils sought redeterminations. The results would normally have been announced in December and would have been based on the merits of individual cases. Because of the fiasco that the Government have created for themselves, and presumably to avoid charges of hybridity, it now appears that the Secretary of State is proposing to treat local authority cases not on their individual merits, but by class. That is grotesquely unfair, especially to boroughs such as Newham. Will he confirm that paragraph 3(2) of schedule 2 would enable him to set new expenditure limits before the Bill is passed and thus give authorities much fairer treatment?
  Mr. Ridley: I do not have the time, in response to an intervention, to study the portion of the Bill that the hon. Gentleman has mentioned. We listened to all those authorities which applied for redetermination and took account of what they said. About half the local authorities applied and the result of those representations is accurately, although not totally accurately, reflected in the schedule showing the formula which we decided would cover the case. The alternative of allowing the Bill to become law and then go through the rest of the rate limitation procedure under the Rates Act would have taken us well past midsummer before the last rates limitation could be effected. That would have been intolerable for the authorities because they would have had no certainty at all.
  Mr. Tony Banks rose——
  Mr. Ridley: I shall give way to the hon. Gentleman, but that will be the last time that I do so, as I must allow other hon. Members to join the debate.
  Mr. Banks: The three hon. Members representing Newham constituencies went to see the Minister to support the council's case for redetermination. Is the Secretary of State saying that the Bill incorporates our individual application for redetermination? Frankly, that is not the case. Authorities are treated in terms of a class. Even boroughs which did not apply for redetermination have been given a 2 per cent. increase in their expenditure levels. Therefore, they have been treated as a class and not individually. However courteous the Minister's treatment of us, we wasted our time in seeing him.
  Mr. Ridley: If a borough or a district does not wish to increase its rates by the amount allowed for in the Bill, it does not have to do so. Some authorities which did not apply for redetermination have been given a 2 per cent. increase. They can leave their rate 2 per cent. lower than the level in the Bill.
  Newham has the highest rates of any London borough. Its 1986–87 budget was 18 per cent. over GRE and is 15 per cent. up on the 1985–86 budget. Therefore, it is the hon. Gentleman and his colleagues, not the Government, who have a case to answer.
  In setting the formulae, we took into account all the information that we had about designated authorities, including in particular that from redetermination applications and the meetings about them.
  With your permission, Mr. Speaker, I hope to make a statement tomorrow about rate support grant for 1987–88. My colleagues and I will then inform authorities of the rate and precept limits for each authority that will result from the formulae. Authorities will, therefore, be fully aware of these when they come to issue precepts and set rates—even if the Bill is not yet enacted.
  Clause 6 validates past decisions and actions on rate and precept limitation. Clauses 7 and 8 and schedule 2 set out the formulae which will produce the rate and precept limits and provide for the implementation of those limits. In particular, clause 8 provides that where an authority has fixed a rate or precept higher than its limit before the passing of the Act, it becomes invalid thereafter and it should substitute a lower one. Under the normal Rates Act procedures, rates and precepts fixed above the limits set by the Secretary of State are similarly invalid.
  This legislation is urgent to enable the House to complete the rate support grant settlement for 1987–88 and to make outstanding supplementary reports from previous years and to complete the 1987–88 round of rate limitation. It is essential that we put matters right as fast as possible to end uncertainty about grant entitlements for 1987–88 and allow authorities to plan their budgets and rates. That is why we are asking Parliament to consider this legislation on an urgent timetable.
  Supplementary provisions in clauses 10 and 11 will allow myself and the Secretary of State for Wales to announce our intentions for the 1987–88 rate support grant settlement, and certain earlier supplementary reports, which can be laid before Parliament immediately on Royal Assent. The purpose here is to give authorities the maximum certainty in setting their budgets and rates over the next two months. My right hon. Friend the Secretary

  47
  of State for Wales announced his intentions before Christmas. As I have said, I hope to announce mine tomorrow.
  My hon. Friend the Under-Secretary of State for Scotland will reply to the debate. Part II deals with a considerably more limited difficulty in Scotland. Clause 14 validates past actions of the Secretary of State for Scotland in relation to the imposition of grant penalties. It allows him to continue for the future to take into account movements between the general fund and any special fund or account, in the process of estimating a local authority's expenditure for the purpose of imposing grant penalties. Clause 15 provides that, for the future, the Secretary of State may similarly take account of movements between the general rate fund and any special fund or account, in taking decisions about selective action against any authority.
  To conclude, the principal effect of the Bill is to validate my Department's and the Welsh Office's practice in calculating relevant and total expenditure over the past six years. It confirms that practice for the future. This is a long-standing, well-established practice for which local government has consistently argued. In the light of the legal advice, the Government had no option but to legislate.
  I commend the Bill to the House.
  5.15 pm
  Dr. John Cunningham: We have heard an uncertain speech from a Secretary of State who is on uncertain ground. I advise him at the outset that if the purpose of today's debate was simply and solely to clarify a point of law, to make the de jure situation accord with the de facto practice since 1981, and for no other purpose, we could complete discussion of the Bill quickly.
  No one is opposed to placing the distribution of rate support grant on a proper legal footing. Although we do not like Government policy or the way that the grant is manipulated, we would have agreed to a Bill that intended simply to clarify the law. No such claims can be made for the complex, controversial, centralising and retrospective provisions encompassed by the 17 clauses and four schedules of the Bill.
  It is a collection of bad ideas to which we are almost wholly opposed. Even a cursory examination of it exposes the Secretary of State's misleading claims. As the debate has already shown, the legislation contains proposals for even more authoritarian, central powers for Ministers, the denial of any justice—let alone natural justice—to some local authorities. It contains proposals by the Secretary of State to try to set himself above the law, to protect himself from the normal processes of the courts and to deny the basic right of any legal challenge to his arbitrary decisions, which will also be above parliamentary scrutiny and control.
  The proposals are draconian, even for this most authoritarian of Governments. No legislature should afford such proposals to any Minister in these circumstances. The Government have brought this fiasco upon themselves and upon local government, against all the evidence and against all the advice of friends and opponents in the House and in the local authorities. The Government have made change after change in local government finance and heaped Act upon Act. Since
  48
  coming to office they have made 12 major changes in local government finance, mixing malice towards local democracy with ignorance of local government finance, and overlaying all with the stupefying legislative and political incompetence about which we have just heard. On each occasion, in every debate and during every Committee stage, a long line of Secretaries of State and Ministers of State have claimed, "This legislation will simplify the situation," and "This legislation is necessary to clarify the law." Incidentally, the system has been condemned by The Economist, the Audit Commission, the Public Accounts Committee and the Comptroller and Auditor-General.
  The right hon. Member for Henley (Mr. Heseltine) began all this at the Tory party conference as long ago as 1979. As there is some sensitivity on Tory Benches about quotations at present, I have brought the text with me in case any hon. Member wishes to challenge it. The right hon. Member for Henley said:
  "We shall, in Government department after department, reduce and eliminate many of the controls that currently link Britain's cities to Whitehall departments… We are now starting to tackle not only the capriciousness but the quite ludicrous complexity of the system."
  I wonder whether the right hon. Gentleman has a conscience or, given his experiences under the Government, whether he will vote Conservative in the next election? He organised all this nonsense, but a few months ago the Minister for Environment, Countryside and Planning told the House, as yet another reckless Bill went through:
  "This Bill is necessary to provide local authorities with certainty about their present and past grant entitlements."—[Official Report, 23 June 1986; Vol. 100, c. 82.]
  The same Minister also said:
  "We are about to pass a Bill which will clarify the law."—[Official Report, 21 July 1986; Vol. 102, c. 150–1.]
  That Bill received Royal Assent only on 21 October 1986. That gives us one of several clues as to why the Secretary of State deliberately delayed his announcement about this fiasco.
  In December, the Secretary of State told the House that he learnt of this matter in late October. Although he refused to be specific, he has now admitted that he has known about it since September last year. If he is worried about the delay in the payment of rate support grant to every local authority, why has he allowed four months to elapse before coming to the House with proposals to rectify the matter? That is reprehensible enough. He knew of the problems a long time ago, but he kept quiet because he wanted to avoid the humiliation of confessing that even more legislation was necessary, even before the previous Bill was on the statute book.
  The Secretary of State had other reasons for delaying—even more devious reasons than that. He announced his provisional proposals for next year's rate support grant in July 1986. He expressed his intention to make his final statement in November, but suddenly, and unusually, in October, when Parliament was not even sitting, he issued a second consultation document on which he said he would make final decisions within weeks. What had changed, we wondered? Within weeks, we had an unprecedented third consultation paper on local authority grant, which was greeted with incredulity inside and outside Parliament. We now know that the Secretary of

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  State was fiddling the figures to buy off his Tory Back-Bench critics from the shires and from southern England—another example of the transfer of resources from the north to the south, regardless of need.
  The Secretary of State has been forced by Tory party pressure to make a humiliating climbdown on his original grant proposals. He was forced to make those changes despite the damaging consequences of the further withdrawal of funds from many communities in the midlands and the north of England and from some inner-city areas. His grovelling surrender—that is what it is—contrasts starkly with his words on the original decision in July, about which he wrote last August to all Tory councillors. In case he is a bit sensitive about the quotation, I have his letter here. He said this about his first proposals:
  "I recognise the strong feelings over the rate support grant for 1986–87. There is no point in going back over that, and it seems more sensible now to look forward to next year. The settlement I announced last month is realistic… All of us must make sure we claim the credit for it."
  That is what he said to every Tory councillor in August, but he subsequently made two changes to his proposals. I wonder what he is claiming credit for now.
  The delay in bringing the measure before the House owes nothing to attempts to clarify the law. It owes everything to the mixture of political ineptitude, fiddling and chicanery that I have just described.
  The Secretary of State has tried to absolve himself of any responsibility for the legislative shambles that the Government have created, but he has supported every bit of it, been in the Cabinet which approved it and, in the letter that I mentioned, boasted about it. He claimed in that letter of August 1986:
  "I have been closely if not directly involved with all the issues I now deal with."
  He cannot escape his massive responsibility for the present state of affairs and the inexcusable delays of his own making.
  The Secretary of State could have told the House about this during the debate on the loyal Address. He could have been candid on 3 December in answer to a private notice question which I forced him to answer. If he had acted openly and expeditiously, a short Bill could have already gone through the House to put the matter right. When the right hon. Gentleman finally confessed to the shambles on 16 December, he probably reflected on the words of Ecclesiastes:
  "He that increaseth knowledge increaseth sorrow."
  It was indeed a sorry performance. He implied that the law was an ass, but his performance has been a mixture between Mr. Bumble and Bottom the weaver. It is not a Midsummer Night's Dream, more like a midwinter nightmare—I am tempted to say, to paraphrase "A Midsummer Night's Dream," an ass with a hole in it, as some Americans might say less politely.
  On 16 December, the Secretary of State not only told the House that he was the only person who was certain what the law is, but he ensured that his officials wrote that day to local authorities to tell them of his certainty. Unfortunately, they had to write on 18 December correcting his view yet again.
  The Labour party is opposed to many of the detailed provisions of this highly technical, legal and financially complicated Bill. We oppose the sweeping new powers proposed by the Secretary of State. We question the concept of "proper practice". We oppose the legal
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  immunity that it affords Ministers. We oppose its retrospective penalties on councils. We oppose its effects on rate limited authorities.
  Clause 2 talks of "proper practices" in connection with local government rate fund revenue account matters, but offers no definition of them. In finance law, auditors are already under a duty to ensure that councils use proper practices in their accounts. The new proposals need detailed explanation and examination of their effects on the rate support grant system. The de facto position that transfers of cash from the rate fund revenue account to other accounts or special funds were expenditure and that transfers from such special funds back to the account were income was undermined by the legal advice received by the Secretary of State. In his statement of 16 December, he made it clear that the de jure position was that transfers of cash from the account to other accounts were not expenditure and that, consequently, transfers of cash from such other accounts back to the account were not income, could not be regarded as reducing the expenditure of the council and, therefore, could not be helpful in due course in increasing the block grant which that council received. He now claims that the Bill is only an attempt to make the de jure position accord with the de facto practice since 1981. On the face of it, that appears to be helpful to local authorities. The Bill would allow them to continue accountancy practices which have been helpful to them in maximising their entitlement to block grant.
  However, that is not necessarily the case. Under clause 2(4), the Secretary of State is given sweeping powers to specify any income to the account as income that can be disregarded as revenue. Instead, such income could, if the Secretary of State deemed or specified it, be treated as a capital receipt or as having a prescribed expenditure portion. In practical terms, therefore, income from leaseback or from some other scheme, now treated as revenue income to a council and thus reducing its expenditure and potentially increasing its grant, could be deemed to be capital income or could be disregarded altogether for block grant purposes. Those are additional wide-ranging powers for the Secretary of State.
  Many points arise on this. The Bill appears to be intended to catch councils that attempt to bridge substantial budget gaps by those means. There is no parliamentary restraint on the Secretary of State's discretion to act under the clause. He need not lay an order under the positive or the negative procedures. He may act without parliamentary scrutiny and simply by letter to local authorities. Is that the sort of power that he is asking the House to give him, unscrutinised and unfettered? We respectfully decline.
  It is also not clear whether internal transfers of cash from account to account are caught by the procedures specified in clause 2(4). It is clear that transfers of cash from an external source to the account are caught in this way, if the Secretary of State says that they are. He simply has to say so. The Bill is drafted by reference to the word "expenditure" without any definition of what expenditure is. It will therefore be open to any authority to challenge the Secretary of State, regardless of the enactment of the Bill. Clause 5 applies these new rules to the financial years 1983–84, 1984–85, 1985–86 and 1986–87. For all of those years, supplementary rate support grant reports are still to be made. How can the Secretary of State claim that the Bill

  51
  will not affect decisions that have already been taken? How can he say that it will have no retrospective impact? He cannot possibly know but, in reality, it probably will.
  Clause 5 will have effect
  "as regards anything falling to be done after (but not as regards anything done before) the passing of this Act."
  That is what the Bill says. The power to specify items of expenditure for inclusion or exclusion in the expenditure definitions is applied retrospectively to the intermediate years by clause 9. Clause 10 envisages specifications being part of the rate support grant report or supplementary report for the year in question, but the Bill does not make that obligatory.
  As the rate support grant for the intermediate years is not yet closed, it is open to the Secretary of State, in future supplementary reports, to use his power of specification to exclude from the expenditure definitions items of expenditure of which he may disapprove, such as fund contributions which he believes brought certain authorities into deficit for certain years, even if the cause or link cannot be established.
  Clauses 4 and 6 have virtually identical provisions in respect of the role of the courts, as they
  "shall have effect notwithstanding any decision of the court (whether before or after the passing of this Act) purporting to have a contrary effect."
  The Secretary of State is there trying to safeguard himself from legal challenges to his arbitrary decisions by local authorities which disagree with him. He is trying to put himself above the law. He is trying to give himself special protection from action in the courts. This extraordinary provision is designed to prevent litigation by any local authority against the Secretary of State's determination of block grant levels to authorities from 1981 to 1986 inclusive. He is asking the House to give him five years of immunity.
  Mr. Tony Banks: As my hon. Friend quite clearly understands the technical effects of the Bill better than does the Secretary of State, can he tell me what would be the position under clause 6(4) of Greenwich and the judicial review of the rate support grant settlement for 1986–87?
  Dr. Cunningham: I understand that the provision would prevent Greenwich, or any other local authority, from proceeding with a challenge against the Secretary of State which is before or about to come before the courts.
  Clause 6 prevents litigation by any local authority against the Secretary of State in respect of his designation of an authority under part I of the Rates Act 1984 in the financial years 1985–87, and in respect of any determination or notification of rate limits and maximum expenditure levels to an authority for the financial year 1987–88.
  Having pursued a policy that has been found to be illegal, the Secretary of State is seeking to abolish the right of local authorities to appeal to him through the redetermination procedure, abolishing the effective right of appeal against his decisions that is possible through parliamentary debate on, and voting on, the annual rate limitation orders, and abolishing by ministerial diktat any right of access to the courts in respect of his policies on block grant and rate capping, covering a period of seven financial years. It is quite stupefying that any Minister
  52
  should try to give himself this much legal immunity. The Secretary of State is quite simply trying to set himself above the House of Commons and the courts. It is a quite new twist to the idea of Crown immunity.
  When the Rates Act 1984 was before Parliament, many promises were made by the right hon. Member for Wanstead and Woodford (Mr. Jenkin) and by the hon. Member for Bristol, West (Mr. Waldegrave) about time for consultation. Those promises were even written into the Act. The Government's intentions to abide by those promises were confirmed by the then Secretary of State in an exchange of letters with me in January and February 1985. I shall dispose of the civilities at the beginning, but this is what he wrote:
  "Since rate limits were proposed, it has been for each authority to assess its proposed limit in the light of its particular circumstances, and to put forward any proposals which it might wish to suggest by way of alternative limits. I have made clear that I am fully prepared to give details of how I arrived at my proposed limits in the context of negotiations with authorities on possible alternative limits. My clear legal advice is that this is a reasonable approach."
  In a subsequent letter, dated 22 February, the right hon. Member for Wanstead and Woodford wrote:
  "I have always made it clear that if authorities were willing to enter frankly and honestly into discussion of their rate limits—as the Act provides—I would be more than happy for there to be a full exchange of information."
  The present Secretary of State is cynically casting aside those promises to Parliament and to every local authority in the country.
  Mr. Spearing: My hon. Friend has expressed succinctly a most serious state of affairs with regard to the powers of Parliament against the prerogative of the Crown. Apart from reneging on the assurances that were given in the correspondence that my hon. Friend has just quoted, does he agree that, in the Bill, the Secretary of State is seeking powers retrospectively in respect of legislation with which otherwise the courts would have dealt concerning the past four or five financial years and that he is also blocking appeal to the courts in the future, which would otherwise have been posssible under present legislation?
  Dr. Cunningham: Yes. That is exactly my understanding of the Bill.
  Mr. Spearing: Disgraceful.
  Dr. Cunningham: The kind of problems that I have referred to——
  Mr. Ridley: The hon. Gentleman should read the Bill again.
  Dr. Cunningham: The Secretary of State says that I should read it again, but he gave all the indications that he has not read it once. In the Bill, the promises that I have mentioned and the assurances to the House and to local authorities have been cynically cast aside. This is contemptible behaviour, even by the standards that are as low as those of the Government. It demonstrates yet again how empty and valueless promises from Ministers at the Dispatch Box really are. They are worthless.
  Sir Hugh Rossi: During his telling speech, the hon. Gentleman seems to have overlooked what my right hon. Friend the Secretary of State said earlier. It was the sleight of hand, or almost three-card trick, exercised by certain local authorities which led to an examination of the practice being pursued between local and central Government which, in turn, led

  53
  to the discovery that the law needed to be put right. Those practices, which deprived other local authorities of some £38 million, are something which all hon. Members would want brought to an end, and it requires certain, precise and definite legislation and powers for the Secretary of State to ensure that such trickery cannot take place.
  Dr. Cunningham: If that were the case, I would support his view. If it were a piece of chicanery or political skullduggery, or a deception that was at point, I would agree with him. If it were a simple matter of correcting the law to prevent that kind of eventuality in the future, I would agree with that too. I have already made it clear that if that was what the Bill was about, we would allow it to go through without let or hindrance. However, that is not what the Bill is about, and that is the burden of my argument.
  Indeed, it is not established that what the Secretary of State said was correct or accurate for this reason. Birmingham's auditors—Birmingham is one of the authorities mentioned by implication by the Secretary of State—Price Waterhouse, wrote to the Department of the Environment in May 1986 relating to the account, stating:
  "We have considered this issue in some detail and have concluded that the contribution is a lawful charge."
  Price Waterhouse is a firm of auditors of high repute in the private sector. Is the hon. Gentleman saying that its reputation, work, and professional conduct is suddenly not acceptable; that it is party to some kind of sleight of hand by local authorities; that it is willing to overlook dishonest practices by local authorities? I do not believe that for one moment. Many of the other accounts at stake in this argument and debate have been verified either by independent auditors or by district auditors. That is the reality of the situation. I do not agree with the premises in the first place. If it were the case, I would agree with the hon. Gentleman, but I do not believe it to be so.
  Mr. Richard Caborn: Would it be true to say that the point that my hon. Friend is outlining is the one that has now affected Sheffield, that on 17 December Members of Parliament made representation on redetermination—I say all the Members of Parliament for Sheffield, because one is a Conservative Member, the hon. Member for Sheffield, Hallam (Sir J. Osborn). We also went with the acting treasurer for Sheffield who asked the Minister when he would announce the redetermination levels. The Minister said that it would be no later than the second week in January. Yet we come back to the House to find a Bill denying us redetermination.
  Dr. Cunningham: I differ slightly with my hon. Friend, because the Bill is not denying redetermination; it is giving it but without taking cognisance of the individual circumstances of each local authority. It is applying a general formula to authorities by class.
  Under this legislation, no debates on orders consequent upon the 1984 Act will take place. My hon. Friends will not have the opportunity to raise these matters in the debates, which were promised—indeed, written into the 1984 Act. The rights and safeguards given to rate-limited authorities by that Act are simply removed by the Bill. It is impossible for this House properly to examine the implications of schedule 2 without detailed scrutiny, but they appear to me to be essentially arbitrary decisions. Far
  54
  from ending uncertainty, this Bill will extend and prolong it because local authorities will not know their final grant entitlement for 1983–1984 until 1988–1989, five years later.
  The decision not to validate all past decisions increases uncertainty. At the very least, the retrospective provisions should be dropped and the Rates Act set aside in the coming financial year. Past decisions of councils which have been properly validated and duly certified by auditors, either district auditors or auditors from the private sector, should not be threatened retrospectively. That is a quite shameful act for any Government to embark upon. The question now arises whether councillors can take any lawful decision without the fear that the Government will retrospectively change the rules and move the goal posts. Not surprisingly, local government is rightly opposed to these proposals and contemptuous of the Ministers introducing them. This is bad legislation, guaranteed to sour further the already desperately bad relations between local and central Government. It must be opposed.
  5.43 pm
  Mr. W. Benyon: The hon. Member for Copeland (Dr. Cunningham) made great play about the delay between September and December. What he was really saying was that my right hon. Friend the Secretary of State for the Environment should have come to the House without getting legal advice. That is plainly nonsense. He had to go through not one legal process, as I understand it, but three by the time he had finished with my right hon. and learned Friend the Attorney-General.
  It is not the fault of my right hon. Friend that the Bill has to be brought to the House today, and I am glad to have that confirmed by the Association of District Councils, which says:
  "No blame should be ascribed for making what is now known to be an error in the definitions of expenditure used for rate support grant purposes… In reality, all the relevant matters were fully discussed in the appropriate fora, the Secretary of State took his decisions, and Parliament gave them due consideration."
  The reason why we are discussing this measure today is the appalling complexity of the system. When I listened to my right hon. Friend opening the debate this afternoon, and the complicated language he used, I thought how appropriate it was that some of us had been here when the tributes were paid to Lord Stockton. We heard the hon. Member for Linlithgow (Mr. Dalyell) recount a very amusing episode in his relations with the then Prime Minister about the appalling complexity of the wording of Government legislation.
  I thought that there were one or two people who understood this legislation, whether they were in the Department or local authority associations, but I now begin to wonder whether anybody fully understands the byzantine complexities into which we have got ourselves.
  Not only is the system complex, but it was not designed to be overburdened, as it is, with the level of expenditure that it has to meet. This is the point that we have got to, despite all the discussions that have taken place on this vexed subject of local government finance. Rating is a tax on property, and it is an easy and efficient tax to collect, but when the burdens placed upon it become disproportionately high, particularly in the area of education, it becomes manifestly an unfair tax.

  55
  My concern is that the Government's very laudable concern to remedy one unfair tax has pushed them down the path of the community charge, which is now being debated, for Scotland, which is another unfair tax.
  Here again, it is not the tax so much as the burden that it has to shoulder that is important. I wish that we could get some sort of consensus in the country that it is the burden, rather than the method, of raising the revenue that is the important matter.
  To me—I do not know whether it is to every hon. Member of the House—it is incontrovertible that everybody should in some measure pay towards the costs of local services, or should contribute in some measure, depending on their income.
  What is being proposed now and discussed in Committee in relation to Scotland, is not the way to do it. That tax will be seen to be as unfair as rates. Because the charge will be large due to the burden that it has to bear, it will be a heavy imposition; people will not pay it, and the difficulties of collection will be immense. I do not want to trespass into those realms, Mr. Deputy Speaker, because I know that you would call me to order.
  If there were to be a simple poll tax its collection would at least be easy, but that is not what is proposed. I beg the Government, even at this late hour, and bearing in mind all the difficulties that have been described already this afternoon, to have second thoughts on this tax, or, at least, to allow the Scottish experiment time to be proved or not, as the case may be. Nothing could be more disastrous for England than to introduce a new system which would have to be withdrawn because it proved to be unworkable. Nothing could more damage the relationship between central and local government.
  I call in aid the Layfield report, which bears rereading after all these years. It was completed after many years of calm, careful discussion——
  Mr. Robin Squire: I am sorry to interrupt my hon. Friend in the middle of a sentence, but I should like to add that a glance at our 1983 White Paper would show that we came to similar conclusions about the way in which a poll tax would be unworkable.
  Mr. Benyon: I accept what my hon. Friend says. It will be remembered that the Layfield committee's conclusion was that if it were decided that a local income tax was not a runner and that the cost would be too great, the present system would be the best. That is still my view. It is perfectly possible to make rates an acceptable, efficient and modern tax. To achieve that, certain things must be done, and the joy is that they can be done almost immediately, with one particular exception.
  First, the burden on local government, which it was not expected to bear initially, must be lessened. Therefore, certain items which are now paid for by local government must be tranferred to the Exchequer. Obviously, after the trouble that we have had over the teachers' dispute, teachers' salaries must be a top candidate for that.
  Secondly, as the Layfield report suggested, rateable values must be changed from a rentable value to a capital value. People can understand capital values. They know what their house is worth. They do not know its rentable value.
  Mr. Spearing: The amount of money that has to be paid is the same, whichever method is used. However, does the
  56
  hon. Gentleman agree that part of the trouble is that the Government, having contributed 60 per cent. of local government costs, are now contributing 50 per cent.? That is the basic problem to which the Government are not addressing themselves, but that is the problem that the hon. Gentleman is talking about.
  Mr. Benyon: I accept that one can argue about the level at which Government grant should be set. However, if one accepts my first point, Government support for local government would increase considerably.
  We want a simple system that people understand. People understand what their house is worth, not what it can be let at in the open market, which is the present definition of rateable value.
  Thirdly, it is necessary to redefine carefully—this follows the point made by the hon. Member for Copeland (Dr. Cunningham)—the powers of local government in relation to the expenditure that they can undertake. It is no good easing the burden of local government by transferring some of their expenditure to the Exchequer if that can be set at naught by raising extra rates without control.
  Fourthly, it is necessary—this is where I support what is being proposed in Scotland—to introduce a uniform business rate and a maximum poundage on other property.
  Finally, there should be a simple equalisation factor which everybody can understand and which means that the product of a 1p rate does not fall below a certain figure. Everybody can understand that. With such a system we would not have to talk in the byzantine terms that we have heard today.
  With the exception of the revaluation point—I accept all the difficulties that this implies—that system could be introduced immediately. It would be an efficient and cheap system to administer which could be augmented at will with specific grants for urban deprivation and other such matters.
  Essentially, in this matter, politics is the art of the possible. We shall not obtain a perfect system, because there is not one. Therefore, let us go for one that makes sense.
  5.54 pm
  Mr. Michael Meadowcroft: I want, first, to stress that the Government have not kept faith with the House in line with the Secretary of State's statement on 16 December. When he came to the House to admit that a grave error had been made he specifically said that the Bill that would come—which is before us today—would make no changes in policy. However, the Bill clearly dos make changes in policy. It makes changes in policy which have failed so many times in the past, increasing the powers of the centre against the legitimate and valid powers of local authorities. What is more, it rules out in the coming financial year the consultations that rate-capped authorities had previously been guaranteed under the Rates Act 1984, putting local authorities into a collective rather than an individual situation.
  If local authorities—in particular, those local authorities which the Government dislike so much, led by the likes of Councillor Derek Hatton of Liverpool—tried to do what the Government are trying to do in the Bill, the Government's outrage would have been wondrous to behold. The Government are endeavouring

  57
  to do by diktat what they cannot do by agreement. That will not work. It has not worked in the past and it will not work in the future.
  When the Secretary of State came to the House in December he had to admit in the end that he had first learnt about the legal error in September. Then, on 3 December, at the time of the private notice question of the hon. Member for Copeland (Dr. Cunningham), he made comments and statements about the rate support grant which he must have known at that time could not be substantiated in the law as he hoped it would become.
  If, as the Secretary of State said again today, local authorities wanted this and welcomed the definition that has now proved to be wrong, they can have welcomed it only in the sense that if one is being guillotined one at least welcomes the blade being sharp. There is no other sense in which local government would welcome past legislation. We have yet again an attempt to deal with local authorities in the most unfair way.
  On 16 December the Secretary of State was clearly trying to pass the buck. He tried to blame others. I always thought that, whatever else one tried to accuse Conservatives of, they could not be accused of trying to dodge the doctrine of ministerial responsibility, but that is precisely what they have done in this case. It is monstrously unfair to say that they were advised that local authorities wanted this and that therefore the Government accepted it.
  The hon. Member for Milton Keynes (Mr. Benyon) told us that the Government had to wait for proper legal advice before coming to the House in December. Why on earth did they not have proper legal advice from their officials about the proposals which were put before the House previously and which have now been found to be so grievously wrong?
  The matter goes back a long way. I wish that the Government would go back to the historic doctrine of ministerial responsibility and not try to shift the blame. The Government are responsible and the Secretary of State's predecessor, the right hon. Member for Henley (Mr. Heseltine) is particularly responsible. I wish that he would accept that publicity as well.
  The error that we face today is not, at heart, the huge sum of money involved. Of course £70 billion is a vast sum of money. but the error that matters to the House is the error of principle. At the end of the day, there is no way in which the powers and the accounting procedures of individual local authorities can be run by legislation.
  There are other constitutional objections. Like the rest of the local government legislation since 1980 which greatly increases central power, this legislation is unprecedented. The Bill attempts to give the Secretary of State power to define how local authorities should make up their accounts. He is given a blanket power to include items in or exclude them from local government's accounting system. But local authorities were legitimately seeking to ameliorate what the Government were doing and the Government did not like it.
  The Government's second unprecedented action is their attempt to gain protection from future actions in the courts. The Bill says, in effect, "If a court decision seems to be contrary to what is said here, it should be disregarded." The Bill does not seek to put the Government above the law; it seeks to put them above the courts, and that is a more insidious proposal.
  Mr. David Amess: I am becoming a little confused about what the hon. Gentleman is saying. He seems to be arguing against uniformity of accounting methods. Is he seriously suggesting that local authorities should have their own methods? That seems to be a bizarre contradiction of his opening remarks.
  Mr. Meadowcroft: The hon. Gentleman gives himself and his party away. Of course I suggest that within the provisions of the law any local authority, as an individual, corporate, elected body, should be able to present its accounts in ways that it sees fit. Surely we need greater democratic accountability, rather than central dictation.
  Conservative Members ought to know that local government has done more to put its house in order than the Government have done to put their house in order. The Chartered Institute of Public Finance and Accountancy has codes of practice on local authority accounting and the Controller of Audit at the Audit Commission, Mr. Banham, has said in many reports that local authorities have been better than the Government in their accounting principles and in accounting for finance. It is odd that the hon. Member for Basildon (Mr. Amess) should seek to defend what his Government are doing in the name of uniformity.
  The Government say that they are abolishing the rating system and moving to some kind of poll tax. However, they are doing nothing about the problem of equalisation. We were told during the Second Reading of Abolition of Domestic Rates Etc. (Scotland) Bill that central Government payments of rate support grant would be replaced in 1989–90 by revenue support grants, the amount of which would be determined by procedures that were broadly similar to those for rate support grant.
  When the Government are seeking to change the system by the method set out in the Bill, it is ridiculous for them not to do something about the equalisation system, which would benefit local authorities. The Government have instead gerrymandered the system in favour of Conservative-controlled shire counties. But the needs are not in those areas and the equalisation process should move in the opposition direction.
  Like the hon. Member for Copeland, my colleagues and I feel that if the Bill merely sought to rectify a legal error and to make the position what we thought that it was there would be a case for supporting it. However, in response to my intervention the Secretary of State said that there was the hidden threat that if the Bill were not passed in time it would not be possible to make the appropriate rate support grant settlement. It is monstrous and unjust to say to local authorities which are endeavouring to provide services that if the Bill is held up in Parliament there may be no cash for those services.
  Under the guise of correcting a legal error, the Government have attempted to slip through other proposals. That is unacceptable. We oppose the retrospective fiddling of grants to 13 councils, including two Conservative-controlled councils, Cambridgeshire, which is controlled by the alliance parties, and a number of urban authorities, including my own in Leeds.
  We also oppose the Secretary of State's powers to interfere with local authority accounting and we regret the Government's failure to make any move towards ironing out the injustices of the existing central-local government relationship.

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  Of course we oppose the attempts of some local authorities to avoid bankruptcy by using separate accounting methods. However, those are different from the accounting methods that have been used to ameliorate the effects of the Government's legislation. What is more, those differences have been spotted by district auditors, as we have seen in various cases that have trundled through the courts. There is no doubt that the professional bodies that were set up to control the accounting of local authorities have accepted the legitimacy of accounting methods that have sought to ameliorate the Government's efforts to do injustice to local authorities. It is a bit rich for the Government to criticise local authorities which acted legally to ameliorate the Government's illegal actions. That is a ludicrous and unjust criticsm.
  The order of the clauses in the Bill is not straightforward, and the way in which the measure has been presented is not helpful. Putting past practice on a legal footing is uncontroversial, but the Bill includes unacceptable proposals. It decides which items—credits and debits—should be put into local authority revenue accounts and seeks to control what is described as creative accounting. I do not believe that there is justification for the powers given to the Secretary of State in that area.
  The Bill mentions the principles which the Secretary of State may apply, but there is no definition of those principles. That is unjust. How can local councillors, who regulate huge budgets and are responsible for massive services, continue to work if they have no idea what principles the Secretary of State might apply to their accounting practices? The Minister who is to reply to the debate must give us more information.
  It is unfair that individual local authorities will not now be able to apply for redetermination for 1987–88. That makes the initial injustice of rate capping even greater. Rather than having rates set under formulae in which some categories, including previously rate-capped councils, are affected even more injuriously, we should look for a better formula to deal with the present system. The proposed formulae will affect different categories of local authorities in different ways, according to the services that they carry out. Police authorities may get extra cash.
  Mr. William O'Brien: The Secretary of State's formulae mean that there may be a serious danger to property and life in West Yorkshire, because the resources available to the fire and civil defence authority in West Yorkshire will be reduced.
  Mr. Meadowcroft: I applaud the hon. Gentleman's ingenuity in making a point to which he knows I am sympathetic. The situation that he highlights is part of the problem presented by the formulae in the Bill. The authority to which the hon. Gentleman referred is not treated as generously under the multiplier in the schedule as it ought to be if it is to cope effectively with the problems that it faces in running a service on which our security and emergency services depend.
  I do not know whether all hon. Members have been able to examine in detail the formulae in schedule 2. I hope that in his reply the Under-Secretary of State for Scotland will endeavour to explain them to those of us who have English levels of competence in these matters.
  60
  The most amazing thing that I have seen in my three and a half years in the House can be found in schedule 2. There is a large bracket, inside which there is a small bracket. It says:
  ((EL—(BG+E)) x 100\RV)+T
  One might think that that was enough, but one has to turn over the page to find out what T means. Incidentally, I am glad to see, Mr. Deputy Speaker, that you are following me closely. The definition of T is given as
  A x M/B x 12
  I hope that all that will be explained to us. It is certainly a bizarre way of determining what local government has been doing effectively for centuries. It is ridiculous that a Bill should be introduced to deal with a particular point, and that it should then go beyond that in threatening to deny local authorities the money that they need.
  Conservatives are saying that they have got us into this mess and that they can get us out of it only by creating an even greater mess and by imposing yet further restrictions on local authorities. However, the Labour party has no alternative proposals for local government finance that would give me any confidence in its doing any better.
  It is appropriate that in today's edition of The Guardian, Mr. Ian Aitken makes the very point that I should like to make, in good faith, to Labour Members. He says:
  "Mr. Kinnock and his colleagues must act decisively to curb the handful of over-zealous local authorities which are employing left-wing illiberalism to eliminate the illiberalism of the Right. There is no liberty for anyone in replacing one form of political indoctrination for another."
  The sad thing is that the actions of some local authorities have been used by the Government as a justification for this sort of measure. I hope that Labour Members will urge the local authorities over which they have some control to avoid giving the Government any further excuse for such action. We say clearly that the Tories have created a complete shambles. They must give local authorities some discretion. The Bill vividly illustrates the impossibility of controlling the vast scale and variety of local government by central Government diktat.
  Every piece of legislation on this subject that comes before the House produces a need for more legislation. That will continue, and the Bill will not work any more than the other measures have worked. We must recognise that fact. The Secretary of State may regret what his predecessor commenced in 1979, but he should be big enough to admit it and not try to compound the felony by bringing still more legislation before the House.
  Responsibility, in local government just as much as in central Government, comes by increasing democratic accountability and not by external repression. That is the alliance position, and that is why we shall oppose the Bill.
  6.13 pm
  Mr. Robin Squire: I apologise to the Chair, the House and to the two Front Bench spokesmen, as a very long-standing speaking engagement will almost certainly prevent me from being in the Chamber at the end of the debate. However, I assure my hon. Friend the Minister that I shall read his words carefully, as I hope that he will be able to answer at least one of my questions and perhaps comment on my remarks.

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  My right hon. Friend the Secretary of State must be right to introduce legislation when he discovers, as any Minister could, that the practice of the law is not as was thought when the legislation was enacted. I think that that must be common ground between us. There is obviously some urgency, as we must have some certainty in the settlements for future years, which will be delayed until this legislation has been enacted. I echo what has been said by at least one of my hon. Friends, in that my right hon. Friend the Secretary of State can scarcely be held to be primarily responsible, given the track record.
  To some extent my hon. Friend the Member for Devizes (Mr. Morrison) has already raised the query that I have in mind, but I should like to flesh it out. As drafted, clause 5 gives rise to some concern. It seems to allow the Government to amend the rules for the calculation of grant entitlement after the end of a future grant year. I hope that I am wrong, but if I am right, I must say that that is exactly the principle that we encountered in the 1982 Bill—a principle that was then given the quaint title of mid-term holdback—and several of us who served on that Committee succeeded in deleting it. We felt that it was the antithesis of good management for local authorities to be faced, after the end of the year, with something that changed the ground rules. However, I hope that I am wrong. Indeed, I had better keep quiet about those of my hon. Friends who joined me then, as at least one of them is now on the Treasury Bench, and I would not want to embarrass him——
  Mr. Tony Banks: The hon. Gentleman paid the price.
  Mr. Squire: I am still here. However, I hope that my hon. Friend the Minister will satisfy me on that point, as we have a responsibility to let local authorities plan properly.
  I have a second confession to make, in that I served on the Committee dealing with the 1980 Bill, just as only one or two other hon. Members who are now in the Chamber did, including the hon. Member for Newham, South (Mr. Spearing). I should point out that I never voted for block grant either in Committee or in the House, so my conscience is clear. All of seven years ago the drawbacks of block grant seemed fairly clear to me. In the intervening period, there has been little to remove my doubts. My main concern is that I doubt the ability of any Government adequately to be able to measure need in the detail necessary in order not merely to distribute grant but, in effect, to punish and penalise on the basis of those self same statistics. That was my main objection seven years ago, and it remains my main objection. The Bill is the third measure to seek to resolve legal matters arising out of block grant, so one or two of my fears would seem to have borne fruit.
  The recent announcement made following representations to my right hon. Friend the Secretary of State about the distribution of rate support grant serves to highlight how relatively arbitrary distribution can be if it can be amended by simply adjusting a series of multipliers, thus producing a quite different answer. I am not in a position to regret the amended statement that my right hon. Friend the Secretary of State made, but it served to emphasise the rather blunt instrument that he is dealing with. In that respect, if in no other, I am sure that my right hon. Friend the Secretary of State would agree with me.
  It must be something to do with the Christmas air that both I and the hon. Member for Copeland (Dr.
  62
  Cunningham) should find ourselves looking back at the details of the 1980 Act. I happened to find the paper that was submitted in February of that year by all the local authority associations. They pointed out the drawbacks to block grant. Hon. Members will be relieved to know that I do not intend to quote copiously from it, but it is worth summarising the four objectives that the then Secretary of State, my right hon. Friend the Member for Henley (Mr. Heseltine) sought to achieve via block grant and to assess them in the light of what has been achieved.
  The first objective was to introduce a simple, readily understood grant distribution system. The second was to place a limit on the extent to which an authority increasing its expenditure could thereby increase its entitlement to grant. The third objective was to end the system whereby the needs element was distributed solely on the basis of an analysis of past expenditure, and the fourth was to stimulate greater public interest in local government and to reinforce local accountability.
  We have taken steps with regard to the second and third objectives, but I do not think that anyone would claim that we have introduced a simple, readily understood grant distribution system after seven years, and I am very unsure about reinforcing local accountability. The local councils raised eight points against those objectives. I shall not go through them, as that would not be fair to those hon. Members who wish to speak, but their first and main objection to block grant is as true today as it was then.
  The joint paper from those local authority associations says:
  "Although every effort must be made to devise a new and better system of needs assessment, there is no way in which any"—
  that last word is stressed—
  "centrally-operated, formula-based needs assessment could ever be good enough to enable the government to use it to specify what individual authorities ought to be spending. To attempt to do this will actually reduce local accountability and increase centralist control of local affairs".
  I submit that the record of the past few years has been precisely that.
  The hon. Member for Newham, South (Mr. Spearing) made an interesting interjection when he rightly said that there has been a reduction over the years in the amount of support given to local authorities by central Government. I part company with the hon. Gentleman in only one respect but the difference between us is absolute. If local authorities had a sufficiently dynamic and sizeable enough opportunity to raise finance, it would be right and positively desirable to reduce the amount by which authorities rely on central Government. Those in the Chamber who have been councillors, let alone the chairman of a finance committee—a role in which I found myself—will know that the amount that comes from the centre, as it were, can transform any other figure in the accounts. I am speaking of the majority of authorities that still receive support.
  An authority may be a good one in that it follows all the guidelines and is efficient, or it may be the reverse, but in any event the size of the central Government figure will be the single greatest determinant. For that reason I look for something that will reduce Government support to the level at which it balances out needs requirements and resource equalisation. That would be the minimum level of central support. I would wish to see local authorities granted greater accountability for their actions by linking their expenditure much more to the moneys that they are

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  able to raise. I realise that in saying that, Mr. Deputy Speaker, I am talking about matters that are not related exactly to the Bill.
  The relationship between central Government and local government is and has been confused, and the confusion has not lessened in recent years. I recognise that a Government have an absolute right to lay down the legal framework within which the local authorities operate—we must concede that to the Government of the day—but I have always been rather more concerned about the right of government to lay down policy priorities within that relationship. There is a difficulty in the Government of the day laying down policy priorities because of the problems that attach to them being able fully to appreciate the individual priorities of about 400 authorities, and because I want there to be some sense, purpose and meaning behind the principle of individuals standing for election and being elected as members of local authorities. In that sense I wish to see the relationship between local authorities and central Government become much clearer.
  I wish also to echo a suggestion which has been made elsewhere on previous occasions. It is scarcely novel, but I wish to put it on record. In any event, it is the first time that I have raised it in the Chamber. I can see advantage in the House having a Committee that is charged with examining central Government and local government relationships in the context of any proposals that appear to effect the constitutional relationship. I should like that proposal to be considered and examined. Relationships have changed in recent years and local authorities are seen now, and far more than in 1979, as the agents of the Government of the day. That must be right in many respects because local authorities are the deliverers of so many services, and it must be right for the Government of the day to be able to require by law that a number of tasks are carried out. There are many other areas, however, that are grey and the net effect of changes over recent years seems to be that the ability of local authorities to determine has been reduced. I am not sure whether that is a good thing. I say that when a Conservative Government are in office. If in some God-forsaken century we have a non-Conservative Government I shall make the same comment, but perhaps in even stronger terms.
  Mr. Terry Davis: We shall give the hon. Gentleman a job.
  Mr. Squire: I shall still be a Conservative.
  The House should be interested in the relationships between local authorities and central Government and between Parliament and local authorities. I want to see these relationships improve, but there are few in local government who believe that in recent years we have seen an improvement. Some councils have acted stupidly and some have had their share of idiotic behaviour, and that should be recognised, but the majority of councils continue to seek in their limited way to undertake the duties and functions for which they were elected. I wish them godspeed in their task.
  6.26 pm
  Mr. Bill Michie: The Secretary of State tried to explain in his opening remarks that the Bill is a validating measure. It has already been said, however,
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  that the Bill goes much further than that. It extends the Secretary of State's powers in a sweeping fashion and undermines the position of the courts when reviewing Ministers' actions. It introduces even more controls on local authorities.
  Surely sufficient controls have been placed on local authorities over the years. Since my arrival in the House in 1983 I seem to have spent a great deal of my time listening and speaking in debates on local authorities and much less time listening to and participating in debates on what central Government should do to get out of the present economic mess and reduce unemployment. The Government have imposed restraints on the advertising activities of local authorities and the functions of local authorities and have abolished county councils.
  The Government are obsessed with the notion that this place knows better than local authorities, and having spent many years in local government I know that that is not the position. I remain convinced that the members of any party in a local authority can still provide a much better service in a democratic system than can central Government.
  The Bill makes it clear that there is no control over the Secretary of State. More control is to be placed on local government while there is to be less control on the Secretary of State. Indeed, there will be no parliamentary restraint on him. When the Bill is enacted, he will not have to lay orders within the terms of this measure and he will be able to act without parliamentary scrutiny. That means that there will be no control. It cannot be said that the Bill will produce greater democracy and accountability.
  It is made clear in the Bill that the Secretary of State is seeking to validate past acts and to protect himself. If local authorities had acted in the same illegal way, would they have enjoyed the same charity and understanding as we are expected to extend to the Secretary of State? I do not believe so. In such circumstances local authorities would be described as irresponsible and a threat to democracy and the Government might even suggest that we should abolish them. It appears, however, that the Secretary of State is able blithely to justify his own actions at the expense of local government.
  Local councillors do a tremendous job and it must be increasingly difficult for them to motivate themselves to serve local citizens and their authorities when so many constraints are placed upon them. I attended a meeting of Sheffield city council when it debated the Bill last week, and there were expressions of concern from Labour, Conservative and Liberal councillors. Attention was drawn to the damage that is likely to be done to city councils and town councils throughout the country. Sheffield recognises that enormous damage is likely to be caused. The Bill will destroy the present process of financial planning. It will withdraw the right to have the financial circumstances of a city council taken into account. It will deny the constitutional right of judicial review of decisions taken by the Secretary of State. The city council has make it clear to the Minister that it cannot provide the basic acceptable level of services, spelt out to him not only by the city council but the chamber of commerce.
  I have a copy of a letter from the Sheffield chamber of commerce to the Minister. The letter is not partisan. It makes it clear that the chamber of commerce understands that

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  "the Local Government Finance Bill, 1986—published on 18 December 1986—will set aside the previous procedures for rate re-determination laid down in the Rates Act 1984, and would thereby appear to ignore the representations made to you by the Sheffield Chamber delegation".
  That delegation was led, of course, by Mr. Stokes, the president. The letter continues:
  "If this assumption is correct"—
  this is the chamber of commerce asking the Secretary of State—
  "please let me know, because I would not like to think that our time had been wasted."
  The letter goes on to state:
  "An unfortunate by-product of the new Bill is the fact that no formal announcement about the Rate Support Grant Settlement will now be made until later in January, whereas it had previously been anticipated in November 1986. To a Council facing as many budgetary problems as Sheffield, this delay is counterproductive, as it will provide certain elements on the Council with the excuse to do nothing about tackling the deficit which the Council has to meet in 1987/8. Instead of certainty about the size of the cuts, there is now uncertainty, and this is definitely the wrong background for budgetary planning.
  As a Chamber, we will continue to press the City Council to budget in a responsible manner, but at the same time, I must register the comment that the Government's present timetable for new legislation has not helped this process at all, and indeed, has been distinctly unhelpful."
  That comment does not come from a Labour council or any other party that is opposed to the Conservatives; it comes from the Sheffield chamber of commerce.
  Those are the facts. No one could run a business in the way in which the Government expect local authorities to operate. No one can make predictions when, frankly, it is not known, according to the whim of the Secretary of State, when grants are likely to come to pass and what their level is likely to be.
  The legislation will affect places such as Sheffield, which is already suffering a tremendous level of redundancies because of the decline in engineering, steel production and matters of that nature. A 15 per cent. cut will mean another 4,200 jobs being lost within the local authority itself. Therefore, it will not help the rate of unemployment and certainly will not help the morale of the city. It will mean further cuts in the education budget in which there are bound to be problems. It is not only the chamber of commerce or the Labour party in Sheffield who are worried about this, but the Conservative opposition who, quite rightly, put up their own budget. Even they found that, despite significant savings and cuts, they could not match the Government's rates demands. The Conservative opposition could not do it, and they accepted the facts.
  Amongst our delegation to the Minister to discuss this matter was the hon. Member for Sheffield, Hallam (Sir J. Osborn). He stressed that Sheffield could not cope with the present restraints. That remark was completely ignored, as has already been said. While we debated the issue, the Bill was being printed. That is an insult not only to the delegation but to the city council and the citizens of Sheffield.
  I now refer briefly to the likely effect of the legislation on south Yorkshire services. Some of my colleagues also wish to raise issues of this nature. If the Bill as it stands is passed, the current high standards of fire cover and local transport networks in south Yorkshire will certainly be jeopardised. There was a meeting of Sheffield and south Yorkshire Members of Parliament with the officers of the south Yorkshire authorities. We discussed matters relating
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  to transport, fire and the police. One matter that arose and that we believed to be serious was whether the South Yorkshire fire and civil defence authority could have manning levels that would allow it to spend only £21·2 million, which is more than £1 million less than requested. It could mean that the fire service could not carry out its statutory duties, according to the requirements of the Home Office. I should like the Minister to bear this point in mind. If we limit an authority's finances and it cannot carry out its duties according to Home Office levels, there must be some more hard talking. It does not help when the fire service was refused a meeting with the Minister. To this day, that meeting has not taken place.
  Surely the Secretary of State must take into consideration the fact that the fire service is in serious danger of being unable to carry out its statutory duty. It also has the problem of whether it can protect the property and the life and limb of people in south Yorkshire. In my constituency, a retained fire station is likely to close because of financial restraints. Its closure will mean a considerable difference to fire services in the area. It is an area in which there is an old folks' home, a school and high-rise flats. I wish to know whether the Government, and the Secretary of State in particular, have fully considered the possible dangers to life and limb posed by these financial restraints. Has a pure accounting exercise been carried out by the Treasury that the Secretary of State must administer? Lack of cash will mean that the new multi-million pound fire station in Sheffield will not be able to open. What sort of economic sense does that make? Lack of cash will mean redundancies of 30 to 40 firemen in south Yorkshire and no new recruitment. It will also mean the mothballing of the training school and no replacement of any personnel or vehicles.
  I wish to refer briefly to the transport system of which south Yorkshire is very proud. It is no longer under the same control since the abolition of the county council. There is no doubt that there will be a further reduction in services in south Yorkshire. Concessionary fares will be threatened. Services such as Saturday shopping services, early morning services and business services will be reduced. It will mean, because Sheffield is rate-capped, that the transport system cannot be subsidised to help people to do their shopping or engage in other activities. It will mean the delay of better rail services, including more frequent local trains and improved services in the Dearne valley. In the final analysis, it will mean that the services of which the city and south Yorkshire are proud will be quite unrecognisable when the final crunch comes and the financial restraints are fully implemented.
  This is a bad and dangerous Bill. It is bad because it does not help local democracy. It is dangerous because it will affect life and limb in Sheffield and south Yorkshire. The Bill is disliked by all parties in local Government and by those in private business. The Government have made many mistakes in local government. They should now drop this Bill to avoid another.
  6.38 pm
  Mr. David Amess: Since I have been a Member of the House, I have interested myself in matters concerning local government, and local government finance in particular. As I represent the constituency of Basildon and live daily with some of the bizarre activities of the local authority, perhaps it is inevitable that I should interest myself in these matters. Several hon. Members

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  have already mentioned the amount of local government legislation that has passed through the House during the past three and a half years. They seem to resent the interference. There is no doubt that the traditional relationship between local authorities and central Government has changed in a regrettable fashion. Unfortunately, a minority of local authorities have refused to accept the result of the 1983 general election. I am sure that several Opposition Members are embarrassed by some of the actions taken by the local authorities to which I refer.
  Mr. Tony Banks: Though I do not wish to debate the point that the hon. Gentleman made, does he not agree that the change in the relationship started in 1979 with the election of the Conservative Government, and that since 1979, particularly in relation to finance, in which the hon. Gentleman is so interested, the rate support grant from central Government has fallen each year?
  Mr. Amess: The hon. Gentleman will be pleased to hear that in my brief speech, I shall take up the specific point about the rate support grant settlement. He highlighted the 1979 election, but he makes my point for me. Over the decades, local councils have accepted the result of general elections because they believe in democracy, so, if the hon. Gentleman is right, it is unfortunate that somehow they resented the result of the 1979 general election and carried that resentment through into disgraceful behaviour in several areas. However, as the hon. Gentleman rightly said, we should not digress along that road.
  I agreed with my hon. Friend the Member for Milton Keynes (Mr. Benyon) who, like myself, represents a new town, about the complexities of local government finance. He called it byzantine. However, I disagreed with my hon. Friend in his remarks about the community charge and the Bill now going through the House, which concerns the change in the rating system in Scotland. I support the Government on those two issues. I applaud and take my hat off to the Government in that at long last we have a Government who have had the guts and courage to take a firm decision on that matter. Inevitably, the system will be extremely successful throughout the country and very popular.
  Since I have been a Member of this honourable House, we have had three Secretaries of State for the Environment. When I listened to each deliver his rate support grant settlement, so complicated were they that I thought what brillant people those men must be. I wonder how many of us humble Back Benchers understand the way in which the rate support grant settlements are calculated or, more importantly, how many of our constituents understand the complexity of those settlements. I hope that the civil servants concerned with those matters understand what they are recommending to their Ministers.
  That being said, I have no doubt that the Bill will be helpful for both the Government and the local authorities, in working together on the rate support grant. The greater clarity in definitions of expenditure and income and the specific formulae now used to calculate expenditure of the councils will lead to less ambiguity and hence less conflict in the calculations of the Government and the local authorities. That will also help local authorities to project
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  with greater certainty what the size of their grant will be, so that they can more easily calculate their expenditure for the future.
  I was particularly interested in clause 1(4), which requires local authorities to itemise in detail the various things on which they are spending ratepayers' money. It is at this point that I wish to quote briefly from a letter sent just before Christmas from three Labour party supporters to the Leader of the Opposition in the House of Lords. They say:
  "We were life-long Labour voters until we were faced with the almost unbelievable fact that the Labour Party in Haringey has become a cover for the anti-democratic left, who are abusing the education of our children with the apparent aim of undermining our families and democracy. We have been told by Bernie Grant and others that Haringey is only a test case, and that other boroughs are soon to be subjected to similar treatment."
  Mr. Ron Leighton: Will the hon. Gentleman explain why he is laughing while he is saying those strange things?
  Mr. Amess: I am certainly not laughing in the sense that I regard this as being a matter for a joke, but I am simply smiling wryly. Not many hon. Members have addressed their remarks to the detail of the Bill, but they have picked up peripheral points. It will be interesting to see how many hon. Members who follow me address their remarks to subsection (4). It highlights these points, which I fully accept are rather embarrassing to Opposition Members and make them feel a little uncomfortable.
  The letter goes on:
  "We hear that Hackney, Ealing, Islington and Lambeth already have our problems."
  As my hon. Friend the Minister for Local Government has said, the local authority that serves his area in Brent should be mentioned in that vein. The letter goes on:
  "It is of course very difficult to discover precisely what is going on in nursery and primary schools"——
  Mr. Leighton: Who was the letter from?
  Mr. Amess: The letter continues:
  "but we enclose a copy of 'The Play Book for Kids about Sex'".
  The hon. Member for Newham, North-East (Mr. Leighton) groans. I understand his groaning because, as I said, such matters embarrass Opposition Members and make them feel uncomfortable. But frankly, "The Play Book for Kids about Sex" is extraordinary and any parent would be horrified to think that in 1987 any local authority of any political party was prepared to spend ratepayers' money on the disgraceful contents of that booklet.
  Another book written by Rachel Tingle, published by Pickwick Books, goes into great detail, and this shows the amount of money that is spent by certain local authorities that are fascinated by the subject of sex. It has been in existence from time immemorial. I do not know why such matters have to be written about in books for young children and why ratepayers' money has to be spent in that way when all Opposition Members plead for more resources in their local authorities. That is disgraceful and reprehensible. I know that Conservative Members will wish to pay tribute to the Government for what they have done in the Bill. Subsection (4) will require local authorities to list such expenditure in future. Therefore, it will be possible for those matters to be brought to the attention of the public.
  I am also pleased to see that there is provision to continue the rate capping of local authorities. It is

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  important to control their spending, and rate capping, as we have found in my constituency of Basildon, is an effective way of doing so until the community charge system can he implemented. I, for one, look forward to that very much, as do the majority of my constituents.
  This is the point that I mentioned to the hon. Member for Newham, North-West (Mr. Banks). We must not forget that many councils do not misuse the ratepayers' money and have kept their spending well under control. One such council is Essex county council. The hon. Member for Blackburn (Mr. Straw) will be interested in this point. Over the past five years Essex county council has spent less than what was suggested in the Government's projections. However, the rate support grant has steadily decreased, from £148 million in 1983–84 out of a county budget of £464 million, to £110 million for 1987–88 out of a budget of £574 million. Unfortunately, that represents a loss of nearly £40 million and a percentage loss of over 10 per cent. of Essex county council's budget. We in Essex cannot afford that loss. In 1983–84 the rate support grant was 31 per cent. of the budget. In 1987–88 it will not even represent 20 per cent. of that budget. That is a significant and serious loss to the ratepayers of Essex.
  Mr. Ian Wrigglesworth: I am following the hon. Gentleman's speech with great interest, but I find it difficult to square what he just said about how his county has been penalised with what he said earlier in support of the Bill about the certainty that would come about as a result of its passage through the House. Is he aware that there have been massive turn-abouts and cuts in Government support for Cleveland county which make long-term planning of budgets impossible, apart from causing deprivation?
  Mr. Amess: I thank the hon. Gentleman for making that valid point. If he allows me to continue a little longer, I shall help him to square those remarks when I reach my specific point.
  The rate support grant for Essex has fallen, although the county council has not been an overspending authority. According to the statistics compiled by the Audit Commission, Essex county council has spent 20 per cent. less per person than the average for English counties and it has spent 15 per cent. less per person than the average for similar counties. The English counties' average was £351·91 per person, the average for similar counties, called the family average, was £345·93 per person and Essex county council spent £331·46 per person.
  The council has also taken significant cost-effective measures to increase the savings to local ratepayers. Since 1979–80 Essex has consistently made savings—these remarks are addressed primarily to my Front-Bench colleagues—totalling about £75 million. Fuel bills have been cut by £33 million, we have a severe problem of falling school rolls, so the surplus school places have been taken out of use, saving £15 million, cleaning costs have been reduced by £3 million and the school meals service has been rationalised, saving £5 million. Clearly, we have striven to get better value for money.
  Mr. Jack Straw: As Essex is my native county I have listened to the hon. Gentleman's catalogue with great interest and it confirms what those of us who have lived in Essex have always known—that it is one of the meanest counties on record. Will the hon.
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  Gentleman confirm that because of that record of meanness the Conservative vote in the 1985 shire county elections sunk to a historic low?
  Mr. Amess: I am glad that the hon. Gentleman made that point, although I am beginning to regret making these remarks because I am probably helping him with his speeches in Committee. I am probably saving him having his researchers find up-to-date facts about Essex county council. I regret that the Conservative party lost control of the council and the ratepayers of Essex now regret the hung council. If ever there was proof that a hung Parliament and hung councils are disastrous, it is in Essex. I invite hon. Members to come to Essex to find out how it does not work. I thank the hon. Gentleman for helping me make that point.
  Despite the fact that the cost of many programmes that must be funded by the council is increasing faster than the rate of inflation, for example, because of the expanding need for care of the elderly and larger police forces to combat crime, the council's projected spending remains at or below the rate of inflation and well within the limits of Government expectations. If the rate support grant is reduced, it will leave a deficit of £28 million and Essex county council will have no alternative but to increase the rates by a considerable sum.
  Just as local authorities which overspend and misuse their funds should be penalised, so local authorities which stay well within the guidelines should be rewarded. I emphasise that point to my hon. Friends on the Front Bench. Essex county council is such an authority and its grant should not be reduced this year from the previous figure. I hope that my right hon. Friend the Secretary of State for the Environment will reconsider Essex county council's rate support settlement to correct that obvious injustice.
  I support the Bill in the hope that the subject will become better understood and that Essex county council's rate support grant will not only become more comprehensively understood, but, most important, be more acceptable.
  6.55 pm
  Mr. Ron Leighton: The lack of support for the Bill from Government Back Benchers is startling. I thought that we might have had support for the Bill from the hon. Member for Basildon (Mr. Amess), who is a political refugee from Newham, but after his opening sentences his speech was a long paean of complaints about how the Government are ill-treating Essex, like the rest of us, although it has made all the cuts imaginable.
  I have been invited to a meeting on 18 February where the chief speaker is to be Mr. John Banham, the new director-general of the Confederation of British Industry. The title of the address is, "Should local government survive?" which is relevant, in view of what is happening, but perhaps a more appropriate title would be, "Does local government still exist?"
  Local government has been stifled and throttled by the Government and the Bill is the last straw. The Government are reducing it to a farce and an absurdity. Under the Bill, all power is to be centralised. The Secretary of State is arrogating to himself sweeping, dicatorial powers. The Bill undermines the position of the courts in reviewing Ministers' actions. If that persists it will become increasingly difficult to get people to serve in local

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  government because they will be mere puppets or, as the hon. Member for Hornchurch (Mr. Squire) said, mere agents, cyphers who are unable to make policies.
  The Secretary of State is destroying local democracy, turning it into a sham and undermining local civil leadership. He is taking powers to dictate a council's expenditure, ignoring local authorities' assessments of local needs and plans to meet them. This meddling and intervention from afar is creating an impossible position. Local government is treated little better than a criminal if it seeks to exercise its own choices or to invoke the moral authority of its election. That devalues and poisons the democratic process. What is the point of electing local councillors if they are to be powerless and everything is to be decided by diktat and intervention based on arid, arcane formulae from Whitehall?
  Previously, we always had a balance between local and central Government, but that is being disrupted and destroyed, causing great damage to our public life. This is causing bitterness and alienation among people with a lifetime of service to local government. Nowhere is greater damage and havoc being caused than in the London borough of Newham which is being placed on the rack by this Bill.
  While the rate support grant proposals of 3 December 1986 gave more money to the wealthy Conservative boroughs, it took £6 million away from Newham. It is certainly true that
  "Unto every one that hath shall be given…but from him that hath not shall be taken away even that which he hath."
  While Newham is wrestling with the gravest problems—the downward spiral of inner-city decay—from which it is desperately trying to escape, the Government are robbing it of millions of pounds. That is their contribution to our plight.
  First, the borough is rate-capped, which is supposed to limit the rate burden. Then, the Government impose a multi-million pounds cut in rate support grant, thus putting pressure on the rates. To do both simultaneously causes a financial disaster. Is that what the Minister wants? The Government proposals are crazy and irresponsible. If the Bill goes ahead, I view the future of the borough with foreboding.
  There are conditions in Newham which look like a riot waiting to happen. Some of us have sought to ameliorate these conditions, but the Government, through this Bill, are sabotaging those efforts. They are throwing lighted matches on to the tinder. I say to them publicly today that that is highly irresponsible.
  The Bill could wipe out the £5 million now being given by the borough to voluntary organisations to alleviate the bleakness of life for many local people. Is that what the Minister wants? That is what will happen. There would also be cuts in basic services such as education, and there would be large-scale sackings. Is that what the Minister wants?
  It is frustrating for me, as a constituency Member of Parliament, making appeals in this Chamber for an Adjournment debate—in this House as I did a few weeks ago about homelessness in the borough and deputations to the Minister giving the facts—when Ministers seem blind and deaf to our needs and give no evidence or sign that they care a jot about the welfare of Newham and its people.
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  What is Newham's position? If Ministers listen to nothing else that I say, I hope that they will listen to this point. I should like to think that the Government are interested in this issue.
  Newham's original budget for 1986–87 was £167·161 million. The expenditure was rather more—about £170 million. The forecast level of expenditure for 1987–88 is £194·7 million. That figure would give a standstill budget with a continuation of present policies and commitments. The expenditure level set by the Government is based on a formula set on the original budget for 1985–86. Here is the rub, and I hope that the Minister will listen. The 1985–86 budget is an unrealistic basis for rate capping because it was distorted by special accounting measures. That was accepted by the Minister's Department, and is the reason that he allowed us to come for redetermination.
  We met the Minister to discuss redetermination and asked for a redetermined expenditure level of £175 million. The Minister was complimentary—he said that we were polite and courteous and put a reasonable case. I note that the Minister is nodding. However, before we received any reply from the Minister we were overtaken by the new Bill, with an even worse proposed expenditure level of £157·4 million. I ask the Minister to believe me when I say that that puts Newham into a desperate position. To be precise, the proposed expenditure level is £10 million less than this year's budget. It is £18 million less than the amount applied for on redetermination. It is £33 million less than the forecast expenditure level for 1987–88.
  Put another way, the new implied expenditure level is 3·6 per cent. above GREA, while the original budget for 1986–87 was 18·4 per cent. above GREA. What the Government are asking for and demanding from Newham is a 15 per cent. cut. I beg the Minister to believe that that is wholly unrealistic. Both the finance director and the chief executive of the London borough of Newham told the Under-Secretary on 19 November last year that that reduction was unachievable, even if the will were there to achieve it. Even to attempt it would mean unnecessary chaos and major diseconomies, as, for example, the cost of redundancy payments.
  The Government are imposing a standard formula on all authorities of a certain class. That overrides individual circumstances. It is grossly unfair to have a standard formula for all authorities regardless of their circumstances. Why do the Government come forward with such an idea? The only explanation I have is that the Bill would be hybrid were that not the case. The Minister is nodding. The reason for the outrageous proposal that all authorities should have a 2 per cent. uprating is so that he can remedy his legal position. That is why he must bring something forward quickly.
  The Secretary of State said that local authorities could not come to his Department, as they did previously to the Minister of State, because there would not be time. The Government have got themselves into a legal fiasco. To clear it up quickly, as this Bill seeks to do, leaves no time for us to come back to the Government and for them to look into the cases of individual authorities. Therefore, although the Bill is grotesquely unfair and inequitable for the London borough of Newham, it must be the victim and suffer for the incompetence of the Government.
  Mr. Tony Banks: I am grateful to my hon. Friend, who is making a good case. Does he not share with me the feeling that, when the three Newham Members of

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  Parliament went to see the Minister to apply for redetermination, we were wasting our time because by then, at the end of November, he must have known that the Bill would come before the House and that there would be a class increase in terms of expenditure limit and, therefore, the particular plea from Newham would be disregarded?
  Mr. Leighton: I am driven to that conclusion. I do not like to take a cynical view of our parliamentary processes. I would have liked to think that there was a serious purpose and that the Minister was serious. I do not like to think that he was just stringing us along while he knew all the time that, regardless of what we said, he would not take a blind bit of notice and that the whole thing was to be overtaken by the new Bill. Its appalling formula that he must use to prevent the Bill being hybrid crucifies Newham. That is the only conclusion that I can reach.
  One reason why the Bill is unfair is that no allowance is made for the need to restore balances. Because of the need to restore Newham's balances, our expenditure level on that account alone will be reduced by a further £2 million. In particular, as the formula is based on a distorted year, it brings about an unrealistic, absurd and grotesque result.
  Is it legitimate or prudent for the Government to place such an imposition on the people of Newham? A table that I gave civil servants to give to the Minister shows that, of the different case examples of the 20 rate-capped authorities, Basildon is 70·5 per cent. above GREA; Thamesdown 62 per cent.; Greenwich 38 per cent.; Camden 35 per cent.; and Newham is right at the very bottom at 1·6 per cent. above GREA. That is ludicrous and outrageous. It is completely crazy and monstrously inequitable.
  If the 1985–86 Budget were adjusted to take account of the special accounting in that year and the formula were then applied, Newham would be 10 per cent. above GREA. We would be roughly half-way in this table. The borough could live with that, and something of that nature has to be done. I hope that the Ministers have listened to what I have said and taken it on board. There must be a more reasonable approach and a more rational formula.
  One of the worst features of the Bill is that for the first time there is no appeal. We cannot meet Ministers, as we normally do, to ask for redertermination and to ask them to consider cases on their merits. We have heard that this is because they do not have time because of the legal fiasco. The whole thing is to be steamrollered through, regardless of the consequences, without any proper examination of the details of Newham's case. I hope that that aspect will be looked at again in Committee.
  By far the best thing, since the Secretary of State has found that he has been acting unlawfully and there is now a hiatus, would be to take the opportunity to abolish rate capping. If it is persisted with, the formula must be amended in such a way as to ensure that justice can be done to authorities such as Newham. This must be a priority in Committee, if Second Reading is given. I shall table amendments to that effect. If such adjustments are not made, I advise the Government that the consequences in Newham will be dire and catastrophic.
  7.12 pm
  Mr. John Watts: When my right hon. Friend the Secretary of State for the Environment announced his
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  intention to introduce the Bill I felt a sense of deja vu, because just under 12 months ago we had before us another Local Government Finance Bill which was designed to plug loopholes in the operation of block grant and legitimise what had gone before. It is right that we should legislate to confirm action that is past. No useful purpose would be served, and it would not serve the interests of local authorities, by overturning all settlements made under the 1980 Act. Chaos would ensue.
  Equally, it is legitimate for the Government to include in the Bill measures to prevent local authorities from cooking the books. We normally refer to this as creative accounting, but that still means cooking the books. There is nothing terribly reprehensible about that. In my days as a London borough leader a certain amount of creative accounting was undertaken. I venture to suggest that when my hon. Friend the Under-Secretary of State was leader of a London borough there might have been a little shading of the figures, even in the true blue and upright borough of Wandsworth.
  When the Government detect that the books have been cooked, either to screw more grant out of central funds or to benefit one authority at the expense of others, there is no reason for the authorities which are caught out to cry foul or for Members of Parliament who represent those constituencies to suggest that there is anything improper in the Government stopping up a loophole. I venture to suggest that Labour Members would not be protesting if my right hon. Friend the Chancellor of the Exchequer were introducing a clause into the Finance Bill to stop a tax loophole—some lacuna in tax legislation that had been exploited by those wishing to minimise their tax liabilities. Similarly, it is legitimate when the Government seek to prevent local authorities from increasing their entitlement to grant at the expense of other authorities or the taxpayers.
  Mr. Straw: From time to time Finance Ministers announce that from the day of their announcement some particular financial transaction will be unlawful, so the legislation is retrospective to the day of the announcement. However, can the hon. Gentleman think of any occasion when there has been a financial transaction that was lawful at the time, certified as lawful at the time by the accountants, but some years later Parliament has legislated to make that action unlawful?
  Mr. Watts: The hon. Gentleman will know that the opinion of the auditor on a matter of taxation carries no weight, and even if a tax assessment is accepted and it is subsequently found within six years that some error has been made, that can be overturned. The hon. Gentleman introduced the opinion of the auditor, but that has no relevance to the legitimacy or validity of the action that has been taken.
  Mr. Spearing: What the hon. Gentleman is suggesting is more serious. He is suggesting, in the equivalent to his analogy, that the Chancellor of the Exchequer could come to the House and introduce a Bill which says that he and not the courts will decide the application of the Finance Bills of the previous three years, and he and not the courts will decide the determination of the Finance Bill for that year and succeeding years. Is that not a reasonable analogy for how the Bill applies to local government?
  Mr. Watts: No, it is not. From what my right hon. Friend the Secretary of State said when he introduced the Bill, the hon. Gentleman's description does not fit what the Bill sets out to do.
  Mr. Spearing: That is what is in the Bill, not what the Secretary of State said about it.
  Mr. Watts: The hon. Gentleman will make his own speech and his own points. I should like to get on with mine.
  It is not just this year that legislation has been necessary to stop up loopholes in the block grant mechanism. The Bill is merely the latest evidence of the near total failure of the 1980 Act to provide a sensible, certain and fair basis for distributing rate support grant. In 1982 we had to have a Bill to introduce penalties because the mechanism of the block grant had failed to restrain extravagant authorities from pushing up their expenditure. It had not provided the sharp accountability between authority and ratepayer that the architects of the 1980 Act had intended. Events proved that that did not work either, and so in 1984 we had to introduce rate capping. Both penalties and rate capping have, at best, been a limited success in restraining the excesses of high-spending authorities.
  While I am perfectly content and think that it is right for us to legitimise, within the Bill, the settlements that have gone before, I am less happy that we are continuing for the next and ensuing years the continuation of this discredited system of grant distribution. To that extent, I look upon the Bill as a missed legislative opportunity, because it does not address the most serious problems of the rate support mechanism.
  My right hon. Friend the Secretary of State has promised that we shall have legislation to abolish domestic rates, to introduce a community charge and to review the grant system, at the latest in the first Session in the new Parliament. I am optimistic, and I like to place emphasis on those words "at the latest" and to harbour some hope that the legislation will come earlier. Unlike my hon. Friend the Minister for Milton Keynes (Mr. Benyon), I do not have reservations about the community charge or his optimism that the rating system could be adapted to provide us with an acceptable mechanism for raising local government taxation. The day when we carry through a major reform of local government finance cannot come too soon for me.
  The urgency about removing the uncertainty relating to previous years' settlements would not allow this Bill to be replaced by the thoroughgoing reform that was foreshadowed in the Green Paper, and it could not be enacted within it. It would be completely unrealistic of me to ask my right hon. Friend to introduce such a reform. However, I remain to be convinced that it would not be possible in the Bill to deal with reform of the grant system. For past years we should thereby legitimise what had happened, but for future years—perhaps not for the financial year 1987–88, but for the financial year 1988–89 and thereafter—there would be a different system for distributing grants.
  The block grant mechanism that was introduced by the 1980 Act is fundamentally flawed. For six years, as leader of a London borough, I grappled with the problems that the block grant system imposed and came up against some of its major difficulties. It is based upon a specious sophistication that ultimately fails to provide a sensible
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  assessment of needs or a fair basis for distributing grants. In one year, the calculation of the grant-related expenditure assessment for library services was based upon the square footage of retail floor space. There may be some relationship between shoppers and those who use libraries, but the connection is not so close or obvious as I would expect. That is what I mean by "specious sophistication".
  There is also the major flaw of poundage equalisation. If the system worked perfectly and delivered the results that its architects designed it to deliver, the result would still be unfair to ratepayers in areas with high rateable values, such as my county of Berkshire. If all authorities delivered exactly the standard of service envisaged by GREA, and if the rate was therefore levied at the same rate in the pound in every authority, some ratepayers would face bills twice as high as those faced by ratepayers in other parts of the country because of the wide disparities in rateable values, which in no way are reflected in differences in levels of income.
  Mr. Meadowcroft: Does the hon. Gentleman not accept that that has never been the way to compare like with like in different local authorities? A better measure would be the rate paid per head of population or per hereditament. The valuation differs, but a much better equalisation process is to look at what is actually paid.
  Mr. Watts: I think that the hon. Gentleman supports my point. Even if the system succeeded in equalising the rate poundage between authorities, which is what it tries to do, the rate bill faced by an individual domestic ratepayer would be twice as high in the Greater London area as in Yorkshire and Humberside. The average domestic rateable value in Yorkshire is 30 per cent. below the national average, while the average domestic rateable value in Greater London is 30 per cent. above the national average. Even if the system achieved what it set out to achieve, the result would be extremely unfair.
  The attempt to equalise rate poundage leads to the inexorable transfer of grant away from areas of high rateable value per head, such as my county of Berkshire, and, I suspect, Essex, to which my hon. Friend the Member for Basildon (Mr. Amess) referred in his speech. Because of the way in which the block grant mechanisation works, it has the effect of weakening the accountability of local authorities to their ratepayers. Changes in grant, which have a major effect on the level of any rate increase which has to be levied, may bear no relation whatsoever to the expenditure decisions of a particular authority.
  In Slough and in Berkshire we are faced with the conundrum that Berkshire county council, which has consistently spent below its GREA, has lost grant year after year. Under my right hon. Friend's latest proposals, if it spent at GREA in the coming financial year it would he £9 million worse off than if it had spent at GREA in the current financial year, while the borough of Slough has had its rate support grant increased from £1 million to £4·5 million during a period when the Labour-controlled council has trebled the borough's rates. For the minority of my constituents who are ratepayers there is some compensation from the fact that, as the county has lost grant, the borough has gained, but it is only partial compensation, because my Labour-controlled borough council uses the grant to spend more rather than to pass on the benefit to ratepayers in the form of lower rate bills.

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  There is an urgent need to scrap this completely discredited block grant machanism. It is a leaky old tub that has needed to be patched up so many times that it is now difficult to identify which are the patches and which is part of the original structure. It does not require any further patching; it requires scrapping.
  The Green Paper "Paying for Local Government" contains proposals for a new grant system that is designed to help to improve local accountability and to provide a simpler and more stable system to assist local authorities with their financial planning. As other hon. Members have said, this is a matter of considerable importance. The proposal is that there should be two elements of grant—a needs grant, to compensate authorities for the higher costs which some of them face in delivering services, and a standard grant, which would be distributed on a simple per capita basis. I hope that the weighting of the grant distribution will be mainly towards the standard grant.
  By and large, the costs of local authority services are related to population. Across a local authority area, such as a county, distribution on a population basis provides a reasonable measure of the need to spend. Whether one has a large number of elderly people, or a large number of children, there are needs to be met through expenditure, albeit by different services. A per capita system meets those needs. Similarly, in the more rural parts of a county, additional costs arise because of sparsity of population, whereas in the more built-up and densely populated urban parts of a county, such as my constituency of Slough, additional costs arise because of the concentration of population. However, if one takes the county as a whole, those factors even out. Probably, therefore, only a small needs element is required to reflect the exceptional additional costs that are borne by some authorities which diverge too far from being a microcosm of the country as a whole. To distribute as much as possible on a per capita basis would be both fairer and more readily understood by the electorate, and it would have the effect of strengthening the accountability of authorities to their electors.
  The changes in the grant distribution mechanism could be enacted separately from the legislation that would be needed to scrap domestic rates and introduce a community charge. I do not believe that the two parts of local government finance are inextricably linked. Those who have doubts about the community charge, such as my hon. Friend the Member for Milton Keynes, might agree that as a first step this is one way in which it would be possible to move to a different basis for distributing the rate support element. There is a more urgent need for reform in that area than perhaps there is in the wider aspects of local government finance reform, although I remain firmly committed to and firmly support all the Government's proposals.
  I should like to see the community charge introduced as soon as possible, because it would strengthen accountability and ensure that every adult living in the area of a local authority would have to contribute to the cost of the services that he uses. It would move us away from the system in which those who demand and use the services can be entirely free of sharing any of the burden of financing them. I shall certainly not be satisfied until my right hon. Friend comes to the House with proposals for a thoroughgoing reform of local government finance.
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  Ratepayers in Berkshire and in other areas adversely affected by the present system should not be burdened one day longer.
  Mr. Jeremy Hanley: My hon. Friend has unrivalled experience in running a difficult Greater London borough and I should like to put on record my admiration for the way in which he ran that borough for many years. For that reason, it would be interesting to me and to the House to hear his opinion of the way in which the new rating system might affect businesses.
  Mr. Watts: Perhaps that is slightly outside the scope of the Bill, but insofar as as I can I shall respond to my hon. Friend. The uniform business rate proposed in the Green Paper will generally be beneficial to business, because it will provide certainty about the level of contribution which businesses will be required to make towards the cost of local authority services. The rate at which that tax can be increased will also be limited through indexation. It will put an end to the anomaly of two identical businesses on opposite sides of the road, one luckily in Wandsworth and the other unhappily in Lambeth, one of which pays two or three times as much as its competitor.
  Generally the effect will be beneficial, but during the transition, especially in the south-east, one must expect rateable values to rise as a result of revaluation. There must be some dampening of the effects if an additional substantial burden is not to fall on businesses over a fairly short period. As a long-term reform it will be beneficial and will certainly remove from Labour authorities the opportunity to treat the business ratepayer as a milch cow.
  I eagerly look forward to the day when my right hon. Friend comes to the House with his full package of reforms. However, I suspect that that day is still some way off and I urge my hon. Friends to consider whether it would be possible to bring forward the rate support grant element of the reform so that ratepayers in Berkshire and in the areas of some other local authorities, mainly in the home counties, with high rateable values, and which are penalised year after year by this pernicious block grant system, can be relieved of that burden and no longer be subject to this discredited and unfair system.
  7.33 pm
  Mr. David Clelland: This Bill says as much about the Government's apparent conception of the functions of Parliament in passing legislation as it does about the web of complications which now form the system of local government finance. The Government appear to hold the view that legislation and the introduction of law is almost entirely about the imposition of the prejudices of Ministers on individuals and organisations, whereas the majority of our people still harbour what the Government may regard as a rather quaint and outdated view, that the law has something to do with justice.
  As clear a view as may be found that the Government are more concerned with prejudice and political dogma than with justice can be obtained by an examination of the Government's record in the area of local government in general and local government finance in particular. In the very first point of the Bill, the explanatory and financial memorandum says:
  "Relevant expenditure and total expenditure, which are essentially elements of the rate support grant and rate

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  limitation systems in England and Wales, have been calculated in a way which conflicts with the legislation concerned."
  The Government might have been a little more economical with words because all that means is that the legisation is not in accordance with the law or, to put it another way, it is illegal.
  The Government and their supporters have had a lot to say about law breaking in the area of local government finance. The surcharging and disqualification of councillors who were said to have broken the law was greeted by gloating and much amusement by Conservative Members. What crime did the councillors commit? They supported a policy that was designed to delay the setting of a rate in the full knowledge and belief at the time, and having been advised to the effect, that such a course of action was entirely legal. However, judges subsequently decided that their actions had not been entirely legal and they were surcharged and disqualified from office.
  Conservative Members added insult to injury by hurling abuse and accusations of disrespect for the law with a venom that only they are capable of harbouring and which has poisoned their minds against our local government system. But what is the attitude of the same Members, the same Government, when some of their own friends are found—not for the first time—to have broken the law? There are no cries of horror now, no pontificating about the sanctity of the law, no statements the law must be obeyed and that no one is above the law. We had no paternalistic reminders that ignorance of the law is no defence.
  When councillors were surcharged and disqualified, their defence that they thought that they had been acting legally was dismissed. Yet when a former Secretary of State for the environment, the right hon. Member for Henley (Mr. Heseltine) admits in this House:
  "I have spent £30 billion of taxpayers' money illegally."—
  he is allowed to make a joke of it.
  What is the response of this Government of law and order, the self-professed protectors of justice and fair treatment for all? The Secretary of State for the Environment said to the right hon. Member for Henley:
  "I thought for a moment that my right hon. Friend was going to offer to pay. I assure him that I would not suggest that for one moment. I do not suggest that we should apportion blame in this matter. There has been a distinction between what people thought the law was and what it is. We can easily put that right".—[Official Report, 16 December 1986; Vol. 107, c. 1055.]
  Of course this Bill is designed to do just that, to legalise what was previously illegal in order to get Tory Ministers off the hook, while for less serious and certainly far less expensive breaches Labour councillors are branded as blatant law breakers.
  Mr. Watts: Is the hon. Gentleman arguing that the law should remain as it is, which is not as it was thought to be? If he is, does he not accept that he is arguing that every settlement made under the 1980 Act should now be undone? Does he not accept that that would lead to chaos in local authorities because there would be uncertainty not just about the coming year's rate support grant, but about everything that has happened for the last five years?
  Mr. Clelland: I am pursuing an argument which outlines the Government's hypocrisy and double
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  standards. Later in my speech I shall tell the hon. Gentleman how the Bill itself will cause considerable chaos in some local authorities.
  Far from being a protector of the law, the Tory party manipulates, uses and abuses the law in order to pursue its own narrow political prejudices and as a weapon against its political opponents.
  On average, one Act of Parliament during every year of the Government's term of office has concerned the financing of local authorities and each Act has claimed to clarify, improve or otherwise enhance the system.
  Although it could be argued with some justification that measures must be taken to shield local authorities against the possible consequences of the Government's illegality during the past few years, this latest Bill only serves to emphasise the way in which local services are being made to pay for increased central Government expenditure and the increased centralisation of power. To justify their actions, the Government make spurious accusations of overspending and profligacy.
  However, to put it simply and to deal with the generality rather than with the specific point that was made by the hon. Member for Basildon (Mr. Amess), what has happened is that whereas in 1979–80, £61 of every £100 of local authorities' relevant expenditure was met by the rate support grant, today only £46·40 of every £100 is provided by the Government. Therefore, to spend the same £100, local people have to contribute £54 in comparison with the £39 that they were expected to contribute in 1979. That is an increase of 35 per cent. in the local contribution without one penny increase in expenditure.
  Add to that the effects of inflation, the continuing and increasing demands and the increased expenditure arising from Government legislation, and it is not hard to see why rates have increased while services have suffered, and why the areas with the greatest need have had to suffer the greatest increase in rates to protect services and continue with such improvements as they can. The fact that many of those councils are in the north should come as no surprise, especially given the latest reports on the north-south divide. Only two or three weeks ago, the Prime Minister denied that that divide existed. Of course, we know now that the divide exists and we also know that the Government's policies have aggravated and accentuated it.
  The divisions are also evident in local government finance. Indeed, only a few short weeks ago, the Secretary of State for the Environment announced what he called "new guidelines" based on what he said was "more up-to-date information" for the distribution of Exchequer grants to local authorities. His "more up-to-date information" was apparently gleaned following representations from Tory-controlled councils and his "new guidelines" meant losses of about £20 million to the northern regions and a gain to the likes of Surrey, Hampshire and Bedfordshire.
  Nowhere in the Bill is there any recognition of the existence of the seriousness of the north-south divide or any sign that the Government intend to do anything other than continue to undermine local government finance and accountability. They undermine local finances by the restrictions and legal entanglements contained in legislation such as is proposed, and by setting limits on expenditure which are based on complete ignorance of the real needs and priorities of an area. They undermine accountability by interfering with the priorities as they are

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  perceived by locally elected representatives, and by replacing elected bodies with appointed boards and, in too many cases, political sympathisers.
  If local government means anything, it means the right of local people to build and develop their communities in their way. The Government have eroded those rights and prevented local communities from raising their finances and deciding their priorities. In so doing, they have transferred power from local people to the Secretary of State for the Environment who now has, as the Bill confirms, dictatorial power to decide the financial fate of local councils and, in consequence, the standards and levels of essential services as well as the employment prospects of thousands of ordinary people in the public and private sectors.
  The Bill should be rejected by the House for the ill-conceived, hastily drafted and dictatorial measure that it is, as well as for the very good reason that it threatens even further cuts in jobs and services in many inner-city areas. I am concerned especially about the effect that it will have on the northern region in general, and on Newcastle and Gateshead in particular. Both authorities, despite being recognised as areas deserving special assistance through inner area partnership, are rate-capped by the Government. The expenditure levels that were proposed by the Secretary of State last year were totally inadequate to meet the existing needs and current levels of service let alone to allow any improvement.
  The new proposals in the Bill take no account of the real needs of the two councils and, indeed, clearly show that the representations made to the Secretary of State on 24 November 1986 by my hon. Friends the Members for Gateshead, East (Mr. Conlan), for Blaydon (Mr. McWilliam) and me, together with members and officers of Gateshead council, fell on deaf ears. Of course, it is now clear that even as we faced the right hon. Gentleman across the table in Marsham street, he was fully aware of the proposals to be brought forward in the Bill. Yet he allowed the Gateshead representatives to travel all the way down to his office—at a not inconsiderable cost in money and time—knowing that their journey could achieve nothing. Like the hon. Members who represent Newham constituencies, we wasted our time in seeing the Secretary of State.
  Mr. Spearing: I am grateful to my hon. Friend for what he has just said. What was the date on which he and his colleagues came down from Gateshead to visit the Secretary of State?
  Mr. Clelland: The date was 24 November 1986, two months after the Secretary of State, as he told us this afternoon, was aware of the problems in the legislation.
  My hon. Friends and I put the case clearly and forcefully, to the Minister, saying that his proposals would mean a shortfall in excess of £10 million in Gateshead's finances as a result of the special accounting arrangements of the previous year. He accepted that by agreeing to meet us in the first place. However, he has not taken on board one of those points. In the Bill he proposes a formula which will force a reduction in the council's revenue needs of more than 12 per cent. or £12·5 million in 1987–88.
  I put it to the Secretary of State—at least I should have done so had he been here to listen—and to the House that there is not an organisation in this country which, having been squeezed to the limit, could make
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  reductions of that magnitude without serious and harmful effects on those who rely on it for services or employment, or both. For those reasons and for others that have been put forward by my right hon. and hon. Friends and others, I urge the House to reject the Bill.
  7.46 pm
  Mr. Brian Sedgemore: I must confess that I gulped when I saw the Bill. On the basis of what the Secretary of State told us on 16 December last year, I expected a modest little Bill which would make lawful the illegal expenditure of £60 billion and put the law back to what we had all previously thought it had been. If that had been the case, we could have had a little bit of fun tonight scoring a few party political points, and then we could all have gone home.
  However, the Bill is not like that at all. It is one of the most extraordinary Bills that a Secretary of State has ever attempted to put on the statute book. In bringing it to the House the Secretary of State has shown the sort of regard for the laws of the country that one would expect of a member of the Italian Mafia for the laws of that country.
  The Bill is written as though the courts do not exist and as though there is no such thing as the rule of law. At a stroke the Bill wipes out administrative law over an entire area of local government finance. The Bill makes it clear that the Secretary of State sees the laws as a pestilential nuisance to be swept aside by the arrogance of the present Conservative majority. It is based on a philosophy that is deeply and profoundly offensive to the democratic process, and it enshrines in statute the proof that in the late 20th century Conservatism and authoritarianism have become synonymous in this country.
  Extraordinarily, the Bill creates a regime in which it is deemed, not only that the Minister knows best, but that he knows everything. He can do what he likes under the Bill and can even say what is, and what is not, expenditure. When the Secretary of State uses a word, he says that it means what he says it means, neither more or less. No matter how stupidly, unfairly, arbitrarily, ridiculously, perversely or viciously he acts, the courts cannot intervene and they cannot review his actions. The courts cannot consider unreasonable behaviour, maladministration, negligence and brazen political chicanery. I cannot remember a Minister coming before the House with such a Bill.
  Indeed, the Bill sets out to make a complete ass of the laws of the country. I ask the House to consider the position of the London borough of Hackney in relation to redetermination. Thanks to the Secretary of State, the entire process has been a judicial farce. The London borough of Hackney did not intend to apply for redetermination, but it was taken to the courts by a ratepayer. After a protracted, expensive action, it settled. Queen's counsel then told the council, "You must apply for redetermination because it would be wholly unreasonable for you not to do so." At precisely the moment when Queen's counsel was telling the London borough of Hackney that it should apply for redetermination, and at a time when no law had changed, the Secretary of State for the Environment stood at the Dispatch Box and said that there would be a formula. He said that there would be no such thing as redetermination because it would be unlawful.
  How, in a sensible society which believes in the rule of law, can Queen's counsel insist that it would be wholly

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  unreasonable not to ask for redetermination while the Secretary of State insists, under the same laws, that it will become unlawful to ask for redetermination? Either we have an insane Minister who should be carried away by the men in white coats, or we have the politics of "Alice in Wonderland." "Off with his head!" "But he does not have a head." "Then he will not mind it coming off, will he?" What sort of politics are we engaging in? The Secretary of State comes to the House and says—he did so today—"All that we are doing is making the law what we thought it was before." In many respects that is manifest nonsense, and it will damage boroughs such as Hackney.
  Before we started to debate the Bill, resources were calculated on the basis of expenditure levels, balances and the product of a penny rate. Now all that has been swept aside and resources will be calculated on rateable value. Everyone knows that in a borough such as Hackney rateable value will produce more resources than will the product of a penny rate. That is a major change from which Hackney will suffer.
  Clause 4(3) says that the Minister will determine rate support grant on the basis of information given before the latest supplementary report. If more accurate and up-to-date information becomes available, the Minister will ignore it. What an extraordinary state of affairs. If the Minister ignores such new information, the London borough of Hackney could lose about £2 million. In 1984–85 it entered into joint financing arrangements with the district health authority on behalf of the DHSS. Before the latest supplementary report the estimate of disregards was £10·75 million, but now there is more up-to-date information. The outturn of disregards is £12·25 million. Therefore, the poorest borough in Britain faces a potential loss of £2 million because of delays by a Government Department and because of this legislation. It is unbelievable.
  I give the analogy of two people taking an examination. The first person writes a brilliant paper in immaculate prose. He spends all his allotted time—three hours—doing that paper. The second person writes a dreadful paper in almost incomprehensible English, but he hands in his paper after three quarters of an hour. The Secretary of State for the Environment says, "I will fail the first person, who did so brilliantly and used immaculate prose, and I shall give a first-class honours degree to the second person, who produced such rubbish written in incomprehensible English, because he handed me his paper first." That is nonsense, and for the Government to allow a local authority to lose millions of pounds on that basis defies comprehension.
  On 16 December the Secretary of State made it clear that, in his view, it was unlawful to make a rate fund contribution to a special fund if that led to a deficit on the rate fund. He wrote to some authorities about that, but he did not write to the London borough of Hackney, so it is not concerned with the warnings that he mentioned today. But Hackney has a major problem, and I ask the Minister who will reply to the debate whether he can solve the conundrum created by the Bill.
  In 1982–83 the London borough of Hackney set up a special fund. In 1983–84 no contributions were made to that special fund, but a deficit was incurred in that year. If it is unlawful to make a rate fund contribution to a special fund which results in a deficit, is it unlawful to have
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  a special fund which is in credit in a year in which a deficit arises? If it is not unlawful, can the Secretary of State—from my reading of the Bill, I suspect that he can—deem it to have been unlawful? If he can perform that absurd trick, Hackney will lose a further £4 million. Therefore, under a Bill which, apparently, will make no difference to what has gone before, the poorest borough in Britain could suffer a loss of £6 million in rate support grant.
  Tomorrow we shall discover by how much the Government will expect Hackney to cut its expenditure. I shall not guess now, but it could be about £15 million. Perhaps the Minister can tell Hackney how it can fulfil the statutory obligations that it is barely fulfilling now because it cannot spend enough money on them.
  At the general election the Labour party will be targeting two key Government figures. One will be the chairman of the Conservative party, the right hon. Member for Chingford (Mr. Tebbit), especially after his statement, which apparently he denies having made, that no one with a conscience would vote Conservative. The other person will be the Secretary of State for the Environment. Together, they represent the Right-wing loony tendency of the Cabinet. The epigram with which the Secretary of State leaves the House and the country is that no one with a respect for the rule of law could ever again vote Conservative.
  7.57 pm
  Sir George Young: I listened with interest to the speech of the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore). He destroyed a potentially good case by exaggeration—a tendency to which he has resorted before. Of course there are problems in Hackney, and no one who knows the borough would deny it, but if he cares about a solution to those problems I hope that he will exhort the local council to pursue more vigorously partnership with the private sector in housing and in jobs. I hope that it will take up more enthusiastically the money that is on offer from the Manpower Services Commission, the youth opportunities programme, and the rest, and that it will examine how the town hall is run to see whether some economies can be made there.
  I support my right hon. Friend the Secretary of State. I do so with a twinge of sympathy, because whoever is to blame for the fact that we must have the legislation, it is certainly not him. Indeed, he has borne with fortitude the burden of getting the Bill through the House.
  There has been a consensus in the House that if ingenious loopholes have been disovered by a minority of local authorities, which have disadvantaged the remainder, it is perfectly legitimate for any Government to try to stop those loopholes. In response to an intervention by my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi), the hon. Member for Copeland (Dr. Cunningham) conceded that.
  There has also been consensus on the legitimacy of clarifying matters if it emerges, as it has, that what we all thought was the case turns out not to be so. I am a vice-president of the Association of Metropolitan Authorities and I have received its briefing, which says:
  "The Association is anxious that the distribution of Rate Support Grant is put on a proper legal footing."
  There is an element of consensus and I shall develop the differences in a moment.
  Mr. Tony BanksMy hon. Friend the Member for Copeland (Dr. Cunningham) made it quite clear that he did not accept that there had been abuse. The hon. Gentleman must be clear about that. My hon. Friend said that that was what was being said by Conservative Members and that local authorities might well have been able to find loopholes. That is rather different from abuse.
  Sir George Young: If the hon. Gentleman reads what I have just said, he will find that I said that there was consensus in that, if ingenious loopholes had been opened up and used by a minority, it is perfectly legitimate for the Government to put that right. I was in the Chamber when the hon. Member for Copeland disagreed with the statement that it was an abuse. I am trying to identify the consensus before demonstrating the differences.
  The differences are based on the argument that the Bill goes further than building on the consensus, removing abuses and clarifying the law. The AMA's case goes further, and I should like to consider its objections and those of Opposition Members.
  The AMA complains that the Bill is too complex and difficult to follow. I am a non-lawyer and find all legislation complex and, having dealt with some local government legislation, I have to say that it is no exception. All local government legislation on rate support grant is complex. It follows inevitably that when one tries to impose a new interpretation on existing legislation, it will be complex. Although the Bill might be complex, that is not a legitimate reason for hon. Members to vote against it, as invited to do by the AMA.
  The next complaint concerns the powers being given to the Secretary of State. The AMA complains that the Bill goes further than it need in that regard. The Bill has to address the Secretary of State's powers to replicate the existing provision. The Bill redefines the Secretary of State's powers in the light of the information to which my right hon. Friend referred. My understanding is that the definition does not tilt the overall balance away from local authorities towards the Secretary of State, which is the charge that has been made. It simply replicates what exists at the moment. I reject that argument against the Bill as well.
  The AMA complains about "proper practices" and says in its briefing:
  "It seems unsatisfactory to place so much emphasis in this Bill on 'proper practices', when those practices are not defined."
  I understand that the Bill does not define proper practices because the Government do not intend to dictate to local authorities what their accounting practices should be. As much of the criticism of the Government is that they interfere too much, it is a little inconsistent to criticise them for not defining proper practices.
  The AMA objects to the legal protection being given to the Secretary of State. The Bill affords protection, but hon. Members have gone slightly too far in their interpretation of what that protection is. The protection applies to the Secretary of State and future decisions of the courts, but only future decisions in respect of decisions by the Secretary of State that have already been taken. It does not give immunity in respect of future decisions. That is a much narrower definition of legal protection than has been given by some hon. Members.
  The AMA objects to clause 5, which concerns intermediate areas, and alleges that it could mean grant losses for several local authorities. If some local authorities
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  lose grant, I understand that that is because they have abused the existing conventions. It is only right that the majority of local authorities, which have observed those conventions, should not be penalised as a result of the activities of a minority. If they incur grant losses, I am sure that the decision can be defended.
  The AMA's final range of complaints concern rate capping—clauses 7 and 8 and schedule 2. If we are to get a rate from rate-capped authorities by 1 April, the procedures to which they would have been entitled have simply to be compressed. If they were not compressed, the authorities would not be able to fix a rate by the date laid down in law. This is a provision for just this year. In 1988 all the existing procedures will be observed. It is a temporary suspension of some procedures, and entirely necessary if local authorities are to fix a rate by the necessary date.
  I am conscious of my responsibilities as a vice-president of the AMA, but I did not find its briefing wholly persuasive and I intend to vote in favour of the Bill.
  Several hon. Members have said that if only we had a slightly better system to distribute rate support grant we would not need this rather complex amending legislation. Nobody is more in favour of a simplified rate support grant procedure than I am. I confess that, despite having spent some five years in the Department of the Environment, I never fully grasped the intricacies or RSG. Each time an official tried to explain it to me I found that such grasp as I had was beginning to weaken and I had to invite the official to stop, in case I discovered that I did not understand it at all. I understood the housing aspects of RSG, however, for which I had ministerial responsibility.
  There is a dilemma here. If we have a simple system, the chances are that it will not be very fair, and that if we have a fair system, it will be extremely complicated because it has to reflect all the differences in needs and resources of local authorities. Given a choice between simplicity and equity, I plump for equity.
  I listened with interest to speeches which commended the new system of a uniform business rate and a community charge. If we do that, we are still left with the problem of how the Government distributes their share of the grant. Community charge simply replaces the domestic rate with another system and does not finance local authorities in their entirety.
  I believe that we will be left with a fairly complex. RSG system. I voted with enthusiasm for the new system, which is to be introduced in Scotland, but I remain agnostic about its extension to England. I should like to see it up and running in Scotland before I decide whether it is the answer to all the problems associated with funding local government.
  The London borough of Ealing is one of the local authorities which is affected by the provision on intermediate years in clause 5. Ealing is not rate-capped this year and many ratepayers hope that it will be rate-capped for 1988, in view of the authority's decision to go ahead with expenditure plans which look like putting the rates up by some 60 per cent.
  There is a dilemma between giving local authorities and ratepayers more responsibility and the legitimate reaction that the Government should protect ratepayers from local authority abuses. Rate capping seems to be the right solution in the few cases when authority is abused.
  In November I wrote a letter to the leader of the Labour party, who lives in Ealing, pays rates in Ealing and voted

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  for Ealing council. I asked him fairly straightforward questions—whether he endorsed Ealing council's decision in five areas. Nearly two months later, I am still awaiting a reply. It is uncomprehensible that the leader of the Labour party, with all the resources available to him, finds it impossible to respond to a letter from another Member of Parliament on a matter as sensitive as this. Whatever influence the hon. Member for Norwood (Mr. Fraser) has, I hope that he will use it to persuade his leader to answer that letter. Having said that, I will, with enthusiasm, vote for the Second Reading of the Bill.
  8.10 pm
  Mr. Terry Davis: As my hon. Friend the Member for Newham, South (Mr. Spearing) showed in his intervention, and as I shall seek to show in a few moments, the hon. Members for Slough (Mr. Watts) and for Ealing, Acton (Sir G. Young) have completely misunderstood the true nature of the Bill.
  I do not blame the hon. Gentlemen for any misunderstanding because they have been misled and misinformed by the Secretary of State for the Environment who has misled the House in three important respects—in his statement on 16 December and in his speech today. I do not say that he has misled the House deliberately. Any such allegation would be out of order. However, as I listened to the Secretary of State for the Environment I became increasingly convinced that he does not understand the existing legislation and that he does not understand his proposed legislation. As a result of his misunderstanding, he has misled the House of Commons.
  I shall be specific. First, in his statement on 16 December, the Secretary of State for the Environment sought to persuade the House that he is proposing to make a minor change to deal with "a highly technical problem". Those were his very words. He said:
  "The Bill will simply seek to return to the legal position that everybody, including all local authorities,"—
  I emphasise the words "all local authorities"—
  "thought existed. It was the Government who spotted the error, so the credit should go to the Government for having identified a legal weakness and for having sought immediately and honourably to put it right."—[Official Report, 16 December 1986; Vol. 107, c. 1054.]
  That statement was not true. The city of Birmingham council had a totally different understanding of the law as it existed before and as it exists now, before this Bill becomes an Act of Parliament. It is now clear that the city of Birmingham council was right, and that is why we have the Bill. The city of Birmingham council understood the law as it was and is, and it was the Secretary of State for the Environment—and quite possibly some other local authorities—who misunderstood the legal position.
  The Bill is not intended to return to the legal position as it was understood to be; it is not intended to return to the legal position as it is; it is intended to return to the legal position as the Secretary of State says that it is, and there is a very big difference.
  I followed the speech of the hon. Member for Ealing, Acton, with great interest, and I agreed with many of his earlier remarks. The hon. Gentleman used the word "abuse". He used the word in two contexts and tended to confuse its meaning. In the first use of that word, he was referring to those local authorities which had engaged in what he described as abuses in their accounts. As my hon.
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  Friend the Member for Copeland (Dr. Cunningham) explained at the Dispatch Box today, the city of Birmingham council did not engage in any abuse. It made expenditure which it was entitled to make, and which was regarded as expenditure for the purposes of grants and in line with current law. That is not an abuse.
  I must tell the hon. Member for Ealing, Acton that I thought it was common ground between all parties in this House that all individuals, companies and councils are entitled to arrange their affairs according to their own judgment of what is to their advantage under the law as it is at the time of taking those decisions. It is not right to describe those decisions as abuses, and it is not right to legislate retrospectively to change the law. That is one of the points that is wrong with this Bill, and one of the points on which the Secretary of State has misled the House of Commons.
  I come to the second point of misinformation. The Secretary of State, in his speech today, said that no change was proposed for previous years, but that is not correct. The Bill will make it possible for the Secretary of State to change the definition of expenditure for previous years, and that is retrospective legislation.
  The hon. Member for Slough, who has served on several Standing Committees dealing with Finance Bills, evaded the challenge from my hon. Friend the Member for Newham, South, who asked him to say on what occasion any Chancellor of the Exchequer, in this Government or in any previous Government, had legislated retrospectively on a tax matter and changed the law as it applied to a decision taken in the past.
  As my hon. Friend the Member for Blackburn (Mr. Straw) said from the Dispatch Box, it is common practice to change the law regarding tax with effect from the time that the Chancellor of the Exchequer makes a statement, but he does not change it retrospectively. If people have succeeded—through what some hon. Members have called ingenuity, but what in truth can be described as a correct understanding of the law—in maximising their income, which every individual or council is entitled to do, then it is wrong to change the law retrospectively to reduce that income. That is what the Government are doing. They are retrospectively invalidating expenditures that were made by some councils; expenditures that were made legally by those authorities as far back as 1983–84. The decisions of those councils have, in many cases, been certified by the Audit Commission and private auditors. The city of Birmingham council had been certified by no less than Price Waterhouse, which wrote to the Department of the Environment and said:
  "We have considered this issue in some detail and have concluded that the contribution is a lawful charge."
  It cannot be stressed too much that the city of Birmingham council has not acted illegally and has not abused the law. It has acted according to the law as it was at the time of those decisions. Even worse, this Bill does not change the law in that respect; it gives the Secretary of State the right to change the law—to redefine expenditure. The Secretary of State is to be given the power to prescribe that certain items of expenditure will no longer count for grant purposes. He has written to the city of Birmingham council and given notice that he intends to change those definitions affecting the city of Birmingham as far back as 1984–85, and it has been calculated by the city treasurer that that will cost the city of Birmingham £8 million.

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  I tell my hon. Friends from the borough of Newham, who have spoken with such feeling about the effects of this Bill on their borough, that the city of Birmingham will lose more in absolute and proportionate terms than Newham from this decision. Indeed, I tell my hon. Friend the Member for Tynebridge (Mr. Clelland), who referred to changes in the proposed rate support grant settlement and to the northern region losing £20 million, that the city of Birmingham alone will lose £39 million as a result of the changes that were suggested in the third consultation document.
  The third point on which the Secretary of State has misled the House today was when he described this Bill as having the objective of "the maximum certainty" for local authorities. It will not provide certainty for local authorities. The hon. Member for Ealing, Acton said that this Bill does not change the balance between central Government and local government. He is also mistaken and is misleading the House. This Bill changes the balance because it changes the powers of the Secretary of State. It gives the Secretary of State for the Environment the right to decide what is legitimate expenditure for a council to undertake and what expenditure will be taken into account in determining the rate support grant. That means that there will be uncertainty.
  I have myself discussed this matter with the city treasurer in Birmingham, and he tells me that he is now totally uncertain about what advice to give a city council, on a non-political basis, about city finances, because he does not know what decisions the Secretary of State will take in the future to redefine what is and what is not legitimate expenditure for the city council. We will not know for five years after 1983–84 what was legitimate expenditure in 1983–84. The decision to refuse to validate all previous decisions up to the date of the Secretary of State's statement to this House on 16 December is deplorable. At the very least all retrospective proposals should be dropped from the Bill and all past decisions which have been certified as correct and legal by auditors should be accepted. How can any local councillor of any party now take a decision on the basis of knowing what the law is and what law will be applied to the decisions that he takes?
  I come now to a point that is not in the Bill but which is a direct result of the Bill. As I have already pointed out to the House, the Bill gives the Secretary of State the right to take decisions which he has already told us will cost Birmingham £8 million. That is not the first such decision that we have had from the Secretary of State. Last year, the Secretary of State pushed through the House a Bill which became an Act of Parliament in the autumn and changed the basis of the rate support grant. That decision was taken and the Bill put through the House as a result of the city of Birmingham council going to the court and obtaining a judgment in its favour. The Secretary of State changed the law retrospectively to rob the city of Birmingham council of the legitimate fruits of its success in the court.
  The Secretary of State believes that the law should be what he says it is, not what the judges say it is. As I have said before, I do not object to the Secretary of State proposing a change in the law for the future. All Governments are entitled to take that action. But I do object to any Government changing the law retrospectively and robbing a successful claimant of his award in a court of law. That cost the city of Birmingham £7 million.
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  Then there is the decision, foreshadowed by the third consultation document about the rate support grant, to reduce the rate support grant for Birmingham for the coming year by £39 million. That was the second such decision.
  Now we have the third episode in the Secretary of State's vicious vendetta against Birmingham which will cost Birmingham £8 million.
  At the very least, it is about time that the Secretary of State started to take legal advice from the solicitors who advise the city of Birmingham council. They have a better idea of the law than his advisers in the Box or in the Department of the Environment in Marsham street. If he came to Birmingham, we could tell him what the law is. But the Secretary of State will not accept what the law is. He prefers to change it retrospectively.
  This is a bad Bill and we should all vote against it.
  8.22 pm
  Mr. Peter Bruinvels: I am pleased to rise in support of the Local Government Finance Bill, particularly as I nominated Leicester city council to be rate-capped at the beginning in line with the Rates Act 1984. It was rate-capped and it was a worthy candidate for that.
  The hon. Member for Birmingham, Hodge Hill (Mr. Davis) talked about abuses. There certainly have been abuses in local government, and that is a sad fact of life. That is why we need to keep changing the rating system, the rate support grant and other matters relating to the rates. Indeed, that is why, in the long term, we must abolish the present rating system and introduce the community charge. The ratepayers have been getting a raw deal and something must be introduced as quickly as possible.
  In the meantime, I am particularly worried about the lack of any provision in the Bill for a clawback. A council like Leicester, which is rate capped one year can in the next year legitimately cause the rates to shoot to a new high level in order to claw back what it had hoped to receive in the first year but which it had been denied. That blatantly defeated the Secretary of State's will and I hope that it will be considered again.
  Local government finance is complicated. I was present when my right hon. Friend the Secretary of State made his statement to the House on 16 December, when he said that he was the only one who fully understood the matter. I can fully appreciate the problems that exist. However, it is urgent that we should have a full and proper control of rates, once collected. That is where we are going wrong now.
  The Bill will legitimise the rate-capping provision of the Rates Act 1984. Therefore, it will guarantee that Leicester was properly rate capped, signed and sealed. In the meantime, we must look at the accountability requirements before setting the rates. The Bill seems to provide no direct rules to ensure that all local authorities present to businesses in the area a proper consultation paper so that the business community can have a real say in deciding the level of rates. Like my hon. Friend the Member for Slough (Mr. Watts), I want to see one uniform business rate in the future, but in the meantime that accountability should be introduced into the Bill as soon as possible—I hope, in Committee.
  There is no provision in the Bill for value for money. All councils should be fighting for value for money,

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  whether in reducing their spendng on energy to provide more money for house repairs and some council house building. Some formula is required for that.
  It is important that all local authorities should publish details of some of their nutty schemes. The amount of money that can be spent on any loony scheme should be part of the annual financial report, whether it be the Leicester city council's go gay policy, establishing a lesbian and gay unit, additional creches, twinning with Nicaragua or renaming the Welford road recreation ground the Nelson Mandela park. It is only right that such escapades, which are deeply offensive to my constituents, should be properly priced. Therefore, I welcome the provision for that in clause 1(4). I cannot, as yet, find in the Bill any particular requirements relating to partisan and political public relations, another costing that will need to come under clause 1(4).
  It is a fact of life that in Leicester the chief executive's department is growing like Topsy. It is overmanned, overpaid and overspending. The Leicester Mercury, in an editorial a few days ago, highlighted the fact that a qualified assistant engineer would be paid about £11,200 a year, while a poverty low-pay officer would receive a minimum salary of £14,000, yet no real qualifications were specified for such a post. It is possible for a local authority to pay more for a political posting than for one which helps the entire community. An engineer would not be tempted at £11,000, while every citizen of Leicester will probably be tempted to become a poverty low-pay officer with a salary of £14,000.
  As my hon. Friend the Member for Slough said earlier, steps must be taken in relation to creative accounting and deferred payments. Leicester should have been rate-capped last year—1985–86—and it should be rate-capped this year—1986–87—but, because of deferred payments and working closely with certain banks, it has got round the law. We want to see proper payments for local government. Certain local government Acts and Bills that have previously been brought before the House should now be legitimised. It is also clear that the rate limitation system can be made to work and can make local authorities sit up and realise that they cannot spend everybody else's money with impunity. Despite the introduction of the rate support grant and the rate limitation system some Labour local authorities have been able to scoot round the provisions and make the ratepayers pay in full the next year. There has been an excessive waste of ratepayers' money.
  There is no doubt that there is no real voice for the business community. I appreciate that the Bill does not provide an opportunity for reintroducing the business vote, but that would have been the best way forward. Labour Members always argue that business men already have a vote wherever they live. However, most business men cannot afford to live in Leicester because their rates went up by 80 per cent. this year. Most have moved into the county, where the rates are considerably less. Labour Members may laugh, but those business men are the people who provide the real jobs in Leicester which are desperately required. It is depressing that they should move out into the county because they cannot afford the high rates.
  I support the Bill, but I call for guarantees that we shall have value for money in the period up to the general
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  election, for guarantees that once the Scottish dimension has been properly examined we shall get away from the current rating system and ensure that with the community charge there will be a just and equitable means for levying rates on all ratepayers.
  It seems that wherever there is a Left-wing council, few people—only about 30 per cent.—pay rates. The rest are funded by the taxpayers. There is not a truly representative voice. High rates kill jobs and deny the opportunities for expansion.
  The introduction to part II of the Bill says that it will have no effect on central Government manpower. I only wish that that were true of Leicester city council. The Labour council said that once rate limitation was introduced there would be a tremendous loss of jobs, but all that we have had is a massive increase in the number of jobs provided by the city council. The Bill might offer the council and the chief executive the opportunity to take on even more employees. That would be bad for the city's ratepayers.
  The Bill is vital and will ensure that until we do away with the rating system ratepayers will have a voice. I urge Ministers at the Department of the Environment to look again at rate capping and at the needs of Leicester, where local people desperately want to see value for money. The scope of rate limitation should be widened to cover other councils and the district auditors should have more power. Councils have used deferred payments and other methods to get round the law, and action needs to be taken urgently. If we act now, ratepayers will be justified in voting Conservative in the May elections.
  8.30 pm
  Mr. Richard Caborn: The speech of the hon. Member for Leicester, East (Mr. Bruinvels) was illiterate in terms of comprehending what local government is about and the role that it plays in local economies and in the national economy. It was the hon. Gentleman's usual cloud-seven speech, drifting away into oblivion.
  The so-called Left-wing council in Sheffield has been rate-capped under the Rates Act 1984. On 6 November a delegation from the Sheffield chamber of commerce and the hon. Member for Sheffield, Hallam (Sir J. Osborn) came to London to put to Ministers the case that Sheffield could not manage on the £259 million budget set by the Government.
  It has been useful in the past two years to have the involvement of the chamber of commerce and the business community. They have discovered the disastrous situation facing local government finance and have said that it would be impossible to run a business in the manner in which the Government are asking local government to operate. The president of the chamber of commerce told its annual meeting that nobody could run Sheffield city council on the level of expenditure determined by the Government. That view manifested itself in strong representations that there should be a redetermination of the Sheffield budget.
  A delegation from the local authority pressed its case on 25 November and on 17 November all Sheffield Members, including the hon. Member for Hallam, who is a Conservative, made representations to the Government. That was the day after the Secretary of State's statement to the House. We were told that the decision on redetermination would be known during the second week

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  in January, but when we returned after the Christmas recess we found that the redetermination process had been flattened.
  A case has been made by industry, commerce and the public representatives of all parties. Even the proposed Conservative amendments to the resolution passed by Sheffield city council called for a cut of only £15 million, compared with the £41 million cut that the Government are imposing.
  People from Sheffield have come to London and tried to put the case to the Government. They were invited by the Government to put the case for redetermination, and the community put a lot of effort into making that case. It is deplorable that the Government's only response is to introduce a Bill stopping that sort of discussion.
  The hon. Member for Leicester, East spoke about audits, and I remind him of what was said about the so-called Left-wing Sheffield city council. In February 1985 Mr. John Banham, the Controller of Audit at the Audit Commission, told the Institute of Housing conference that Sheffield was "well-managed". He said:
  "Other cities could learn from Sheffield which provides outstanding value for money."
  That authority has been vindictively attacked by the Government and is one of the most deprived areas in the United Kingdom. I represent the constituency with the highest youth unemployment in the United Kingdom. Our local authority will be denied resources for putting safety valves into the community and relieving some of the hardships. The council faces the impossible task of trying to run the city with a reduction of £41 million in its budget.
  Sheffield has a major unemployment problem, particularly among young people, but it also has one of the largest aging populations in the United Kingdom. Those are serious problems, and the community wanted to put them before the Government, but we now face a potential 15 per cent. cut in the number of council employees—about 4,200 jobs. Bearing in mind that the council has responsibilities for some compulsory expenditure on, for example, the courts, cuts in other departments could total about 20 per cent.
  The situation is desperate. I hope that the Government will accept what has been said by Labour Members. The Government have been advised to take certain legal manoeuvres to prevent consultations in the future, but I think that they should take further legal advice to find a mechanism to allow such discussions to continue. They should at least seriously consider amendments that will be proposed in Committee.
  The north-south divide has been forcibly portrayed in the media over the past two or three weeks. If the Government continue taking resources from the north of England, and particularly from the inner cities, they will wreak havoc.
  Much play has been made by Conservative Members of the legal manoeuvrings of local government. That complaint cannot be lodged against the joint boards in the areas of the disbanded metropolitan county councils. They have no reserves, because they are brand-new authorities. They could not have done any creative accountancy, because they were not there last year. There is no fat to lose, because nothing has been put into the coffers. We are talking about new authorities, yet some, like south Yorkshire, face rate capping.
  To some extent, my hon. Friend the Member for Sheffield, Heeley (Mr. Michie) has mentioned the fire
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  service. When we spoke last Friday to the chief fire officer for south Yorkshire, a black and dismal picture emerged. He is seriously concerned that he cannot meet the statutory obligations that have been laid down by the Home Office. It is all right for advisers and others not to take much notice, but they could be responsible for the deaths of people in south Yorkshire if the emergency services cannot come up to the minimum laid down by the Home Office. It is about time that there was a little more consultation between the Home Office and those who decide the expenditure levels.
  During the past 12 months, transport has seen a 225 per cent. increase in fares, with 1,300 redundancies and a 10 per cent. reduction in the number of services. The Government have totally ignored our case for redetermination, and as a result we shall have £9 million less. That will mean a considerable number of redundancies. Moreover, the position on tendering will become very difficult. Indeed, the situation in south Yorkshire is desperate. The Government are creating more poverty. All the evidence shows that the north should be given support, but the Government are operating in the opposite direction and are vindictively starving south Yorkshire and, in particular, Sheffield of resources.
  8.41 pm
  Mr. Nigel Spearing: When the Secretary of State made his statement on 16 December, I acted from memory and reminded him that with regard to London Transport, the judge had said that charging Londoners extra millions of pounds was
  "illegal, improper and administratively incompetent".—[Official Report, 16 December 1986; Vol. 107, c. 1055.]
  The Secretary of State took exception to what I said, and I now wish to make a correction. Mr. Justice McNeill said that the Secretary of State had acted
  "unlawfully, irrationally and procedurally improperly in giving a direction".—[Official Report, 19 February 1985; Vol. 73, c. 877.]
  I am sorry that the Secretary of State is not in the Chamber, as he should attend the debate more. But it is little wonder that any local authority or citizen should put the worst possible interpretation on his actions and on the power that he is grasping for himself. When the Secretary of State made that statement, I said:
  "Will he take into account the needs of inner-city areas such as Newham in his means and needs formula?"—[Official Report, 16 February 1986; Vol. 91, c. 1056.]
  Of course, the Secretary of State did not reply to that.
  Newham sent two deputations to the Secretary of State and his Ministers, and we have also heard from colleagues representing Sheffield, Birmingham and the north-east. I suggest that it was deliberately deceitful of the Government to give boroughs that sent deputations the impression that there would be a continuing redetermination at a time when the Bill was already being prepared. Indeed, as has been said, Ministers even saw a deputation the day after the statement had been made. If there had been provision in the Bill for adjusting the formulas in schedule 2, it might have been a different matter. But instead, the Secretary of State will say different things to different authorities at different times in respect of different times in respect of different times in the past and different times in the future. It is like Alice in Wonderland, only I think that she would have said, "I say what I mean and I mean what I say." No Secretary of State, supported

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  disreputably by his right hon. and hon. Friends, has ever taken such overwhelming powers in order to overrule the legitimate judgments of the court.
  I turn briefly to the determination of the grant and the capping formula in schedule 2. My hon. Friend the Member for Newham, North-East (Mr. Leighton) made it clear that Newham's standstill budget for the coming financial year would be about £190 million. The total expenditure permitted by the formula will be about £154 million. However, if the proper formula had been used to take account of the exceptional conditions prevailing, a fair figure would have been £167 million: about 10 per cent. over GREA instead of the 1·5 per cent. quoted by my hon. Friend the Member for Newham, North-East.
  I should like to ask the Secretary of State some questions, and if the Minister cannot answer them, I should like to be given a written reply. As the Minister comes from St. Andrew's house, I do not expect a reply now, although I expect him to be able to answer my sixth question. I should like the Secretary of State's signature to be on that reply. First, are the Government requiring Newham to make a 15 per cent. reduction in its expenditure? We all believe that to be the case. Secondly, if not, what is the figure? Thirdly, is there any greater reduction anywhere, and if so where, and what are the other reductions? I think that I am asking fair questions that should have been covered by the Secretary of State in his speech. Fourthly, were the figures given in the table that my hon. Friend the Member for Newham, North-East mentioned, and which is now in the possession of the Secretary of State and his advisers, broadly correct? Fifthly, if the formula was amended to discount the effects of a difference of accounting on the base expenditure, would Newham be eligible for GREA plus 10 per cent., as shown in the manuscript amendments to that table which is in his possession?
  I believe that answers to those questions should be given by the end of the week. Members of Parliament and the public in Newham require the Secretary of State to answer in his capacity as a Minister of the Crown and not as a dictator or would-be dictator.
  I shall now ask my sixth question, and I hope that the Minister will reply to it. I shall pause in order to allow him to do so, as it is a reasonable question, and he should know the answer. Will the right hon. Gentleman agree to amend the formula in Committee to give Newham at least a GREA plus 10 per cent. figure? If the Minister wishes to intervene, I shall give way. If not, that question should be answered in writing as it is capable of a reply now.
  There may be a solution to one of our major mysteries. Tonight, speeches have been made by hon. Members representing Essex and Berkshire. Each of them complained that the Government were dealing harshly and unjustly with them despite the harsh economies that they admitted that they had made. What reason can there be for a Conservative Secretary of State to take such steps? I am forced to draw an unwelcome conclusion, which is that the Secretary of State and those around him, including the Prime Minister, are bent on the destruction of local government as we know it in the United Kingdom. They are taking a leaf out of extra-parliamentary political books and are trying to push through a Bill when the House is half empty and the reporting level is not strong. That Bill will bring local government further into disrepute
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  for reasons that it cannot prevent. The usual method of discrediting something that is wholesome is to generalise from the particular to try to persuade others that it is wrong when all the time it is the discreditor who is wrong. I believe that that is what the Secretary of State and his friends are trying to do. I shall say that inside and outside the House until the allegation is denied and some evidence is produced that it is not the truth.
  The Bill is more likely to come from a political party of the extreme Right that does not believe in parliamentary democracy than from any other direction. It stems from views that we would expect from a Fascist and not from a Secretary of State who claims to favour parliamentary democracy.
  8.50 pm
  Mr. Roy Galley: The Bill is vital, because without it we shall be faced with legal and financial chaos. The exaggerated rhetoric that we have heard from Opposition Members is unjustified. We have had to listen too often to speeches about the end of civilisation being nigh. They have claimed so often that the end of local government is nigh. The crying of wolf has gone on for rather a long time and we have ceased to believe them. They have failed to produce any concrete evidence to support their claims.
  A number of justified concerns have been expressed this evening, however. Some of them are based on points of principle and some relate to the redetermination process. Surely it has emerged from the debate that there is an urgent need for a more lucid and comprehensible system of allocating resources between local authorities. The system is complex, and my right hon. Friend the Secretary of State for the Environment has accepted that. In global terms the allocations are understood only by the Almighty and two individuals. The Almighty is not communicating very directly with the Department of the Environment, and perhaps the reason for the lack of communication is the involvement of the Bishop of Durham.
  One person who I understand fully comprehends the system is my hon. Friend the Member for Edinburgh, South (Mr. Ancram), the Under-Secretary of State for Scotland. Unfortunately, my hon. Friend forgot about it the morning after the system was explained to him, and the gentleman who explained it to him and made him understand it is now a raving lunatic wandering around the bowels of Marsham street, and, if not there, in the Scottish Office, muttering that his GREAs and expenditure limits do not equate and, oh lackaday, that his block grant has declined yet again.
  It is extremely difficult to understand what is going on and extremely difficult for local authorities to plan the basis of their future expenditure, and that is borne in upon us every time that we debate local government finance. The formulae are too complicated and relate to abstract national data which sometimes can operate quixotically from one authority to another. We need to have formulae that can relate more directly to the needs of individual authorities. Having established a set of formulae, we do not want the rapid changes which have taken place over many years in the allocation of resources. No sooner does a local authority think that it understands how much money it will receive than another factor changes the allocation of resources so that its financial planning is constantly nullified. We need greater stability and the formulae must bear a relationship to the needs of

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  authorities. Surely it is not beyond the mammoth intellectual might of the Department of the Environment to set up a system that will give us a reasonably equitable base and annually make pro rata changes to that base.
  Many references have been made to the way in which the Bill aborts or circumvents the redetermination procedure. Last year, with the establishment of joint boards, there was considerable hassle about the allocation of resources to police, fire and transport authorities. It seemed in the discussions that took place last year and early this year that we were beginning to overcome some of the problems, but everything has been put back into the melting pot. The result is a stream of problems as we consider parochially the allocation of resources.
  I do not hold any brief for the West Yorkshire passenger transport authority, which has placed far too much emphasis on political point scoring rather than providing services for the general public of west Yorkshire, but it is not an inefficient wastrel, as some of the other authorities are or have been. Yet I accept that it has had difficulties. Some progress was made with the redetermination of its expenditure limit for this year but the consequence of my right hon. Friend the Secretary of State for Transport agreeing to the redetermination was a loss of block grant, which meant that no financial benefits would be passed on to the ratepayers of west Yorkshire. When we compare the finances of the authority with those of others, we find that the amount of grant as a percentage of its expenditure limit is only 14 per cent. That is the lowest percentage of any passenger transport authority. The grant-related expenditure of Tyne and Wear as a percentage of its expenditure limit is 90 per cent. and in west Yorkshire it is 70 per cent. If we compare the block grant as a percentage of expenditure limit, it is 70 per cent. for Tyne and Wear and only 14 per cent. for west Yorkshire.
  There is a series of disparities between passenger transport authorities and it seems that there is neither rhyme nor reason for this when one engages in a comparative exercise that embraces the fire, police and transport authorities in one metropolitan area with those of another. There are passenger transport authorities that have a higher proportion of expenditure covered by block grant than that of west Yorkshire and it is not possible to come to any rationale on which to base the transport services for west Yorkshire.
  West Yorkshire has had great difficulty in understanding the present system and in trying to obtain a sensible redetermination. The situation is especially difficult for the West Yorkshire fire authority. Questions have been raised about its efficiency and I have been concerned to ensure that its resources are used as appropriately as possible. Bearing in mind the performance of other authorities and Home Office guidelines, it seems to be a reasonably competent authority, yet we were faced with the possibility this year in one stage of the redetermination procedure of a shortfall of £1·7 million in maintaining services at their current level. The difficulty that arose, when one examined the comparative figures, was that, of all fire bodies, west Yorkshire had the highest rate in the pound and next to the lowest level of total grant. It seems to be nonsense that the grant-related expenditure and the expenditure limit are determined at entirely different levels.
  As the redetermination procedure progressed, we hoped that our representations to the various Departments would bear fruit and that we would be able,
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  at the very least, to maintain our services in west Yorkshire at the current level. All of a sudden, just as some sense and coherence are entering the procedure, the Bill seeks to abort the basis of that redetermination application. Therefore, on the basis of the figures in the Bill, we will receive only half of what is required to ensure that current services are maintained. It is nonsense that where a relatively efficient authority, according to Home Office guidelines and a report of the chief inspector of lire services, needs additional resources to improve fire cover throughout west Yorkshire. The redetermination process has been stopped, to the considerable disadvantage of residents of west Yorkshire.
  Would it not have been possible, instead of the algebraic formula in schedule 2 that resembles an O-level algebra paper, to enshrine in the Bill some more sensible, individual basis for redetermination? Instead of treating the authorities on a class-by-class basis, the legislation should seek to deal with some of the individual problems, such as those faced by the fire authority in west Yorkshire and the passenger transport authority.
  I make two pleas to my right hon. Friend the Secretary of State in regard to the Bill. First, I plead that he use this opportunity to inject into the Bill a comprehensive, comprehensible, coherent system for 1987–88 that, as far as possible, will relate to the needs of individual authorities. My second plea is for a determined attempt to make sure that the system is more readily understood and simplified, primarily so that ratepayers and authorities may know from year to year on what basis they are to make their calculations.
  9.1 pm
  Mr. Allen McKay: I wish to follow the remarks made by the hon. Member for Halifax (Mr. Galley) about the effects of the Bill on transport and, in particular, on the fire service in south Yorkshire. It is time for the Secretary of State to look again at the problems that will be caused by the Bill. I do not like retrospective legislation. It smacks of Victorian attitudes. I admit that if there is something wrong with the law it must be put right, but it should be put right for the future and not retrospectively just to get somebody off the hook.
  After objections were made about the cuts in the South Yorkshire fire service, the Home Office decided that an investigation should be carried out. The result was a minimum requirement for statutory cover.
  I spent 12 years in the South Yorkshire fire service as a retained fireman. At the time, one of the things of which we in South Yorkshire were proud was the efficiency of the fire service and the ability of its personnel to turn out and to be at a fire within five minutes for category A and B fires, and within 15 minutes for category C and D fires. We prided ourselves on a three-minute turnout from all retained stations and from all full-time stations. We had a service that was second to none. We also had a highly qualified service. Therefore, we had a proud record. I t was a record on which the public could depend.
  The Bill seeks to stop the Secretary of State from redetermining the expenditure that has been allocated to the fire service. For the first time, fire cover in that area will be suspect. Thirty of 40 full-time men will probably be made redundant. Some already clapped-out appliances will continue in service. The fire service has not had a new appliance for the past two years. New appliances will

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  certainly be needed in future. The old appliances that are being kept in use will need to have more and more money spent on them, to keep them in service. More than that, one has to consider the time when they will be off the road and out of the way.
  Machines that should carry six men will carry four. Machines that should should carry four will carry three. Machines that should carry two will carry one. That will happen if the Bill is not altered. Those are not the local politicians' figures: they are the Home Office's figures. They are the statutory figures. One Department is saying what the minimum fire cover should be, yet the Secretary of State is making sure that it cannot be provided. An area is at risk. Two things are essential when a fire takes place. One is the quickness of the response, and the second is the efficiency of the service that responds. The amount of fire damage depends on the response. Every 15 seconds during the three minute turnout time, the damage increases tremendously.
  It is no fault of the Government, but in south Yorkshire, ironically, since they came to power, the loss of life caused by fire has doubled. The call-out rate has increased from 10,000 to 15,000 calls per year. That is why I say to the Secretary of State, please look at the situation again, because he is putting that service into disrepute, but more than ever he is putting the people at risk.
  9.7 pm
  Mr. Tony Banks: The hon. Member for Dewsbury was absolutely correct when he drew attention to the fact that hardly anyone can honestly claim to understand how local government finance works—[HON. MEMBERS: "It is Halifax."] I beg the hon. Gentleman's pardon. His constituency is Halifax.
  Mr. Galley: I hope that the hon. Gentleman is not confusing Dewsbury with Halifax because Halifax is a much more pleasant place than Dewsbury or even Newham.
  Mr. Banks: I cannot believe that any place that the hon. Gentleman represents is more pleasant than Newham, but we shall pass quickly over that point.
  Wherever he comes from, the hon. Gentleman was right to say that few can honestly claim to understand how local government finance works. Looking at schedule 2, one realises that the Secretary of State can hardly be described as Euclid, but I should be interested to see him try to explain to the House in words that even I can understand the way in which the formula will work, because it is gobbledegook. All that we know is that the impact on the borough of Newham will be horrendous. It is no surprise that the leader of Newham borough council, Councillor Jones, wrote to the Secretary of State and said that if we have to endure the cuts that are determined for us in the Bill, there will be social disruption on the streets of Newham. I cannot believe that even this Secretary of State wants that.
  The Bill is grossly unfair. On 16 December the Secretary of State said
  "the accepted approach…did not…correspond to the statute".
  When the Secretary of State found that out, he merely brought in retrospective legislation to correct the position. Of course, this Secretary of State has been at odds with
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  statutes before, certainly in the McNeill case. Whereas Secretaries of State can come to the House and inroduce retrospective legislation, when councillors try to do their best to protect jobs and services and find that they are acting in a way that does not correspond to the statute, they find themselves surcharged and driven from office. That is what makes the Bill so grossly unfair, and that is why I am delighted that the Labour Front Bench made it clear that the incoming Labour Government will abolish personal surcharge for local councillors.
  If the Secretary of State's euphemism for law breaking was breathtaking, his claim in the same statement that he was
  "the only person who is quite certain what the law is"—[Official Report, 16 December 1986; Vol. 107c. 1051–55.]
  was downright absurd. The right hon. Gentleman is the most arrogant and indolent of all Her Majesty's Ministers. He proved that when he came to the Dispatch Box, made a great dash for the post and clearly revealed that he did not understand the legislation to which he was asking the House to agree. He has no idea of what the law was or, indeed, will be, if the Bill is passed. We have already had a list of amendments correcting the mistakes in the Bill and that is even before we have had a chance to discuss it in Committee.
  I still feel annoyed and aggrieved that at our meeting with the Minister in November where, as the Secretary of State correctly said, we were courteously received and we exchanged our views courteously, we were wasting our time. The Minister must have known that there was no chance of Newham's particular problems being considered in a particular fashion by the Government because the Bill would treat Newham within a class of local authorities. That means that the undertakings given during the Rates Act 1984 are meaningless. Redetermination was supposed to be about going to Ministers, spelling out local difficulties and Ministers making particular settlements. The Minister has still not said that I was misled in believing that our discussion with him was open, honest and genuine and that we stood a chance of reaching a better settlement for Newham than the present one.
  The Bill legalises past illegalities and seeks to protect Ministers from future illegalities. It gives those same Ministers unrestricted powers to change the financial rules whenever they want to and without reference to Parliament. This may be our last chance to influence the Government. Thus, Ministers are drawing up the rules and then acting as judge, jury and appeal court in respect of those rules. What trade union or other organisation would the Government allow to do that? They would not. There is no semblance of democracy in the Bill. It reeks of Government authoritarianism and centralisation. It all but destroys local democracy in the rate-capped local authority areas. I am gravely worried about the impact that it will have on Newham when it becomes law.
  This is an evil measure proposed by an evil and desperate Government. It will force local authorities to act illegally simply because by obeying the measure they will destroy their communities. Given such a choice, if local authorities defy the Government and refuse to do the Tories' dirty work, the responsibility will lie entirely with this most socially divisive, undemocratic and economically illiterate Government.
  9.13 pm
  Mr. Jack Straw: The debate has been characterised by excellent speeches from my hon. Friends the Members for Newham, North-East (Mr. Leighton), for Newham, South (Mr. Spearing), for Newham, North-West (Mr. Banks), for Tyne Bridge (Mr. Clelland), for Hackney. South and Shoreditch (Mr. Sedgemore), for Birmingham, Erdington (Mr. Corbett), for Sheffield, Heeley (Mr. Michie), for Sheffield, Central (Mr. Caborn) and for Barnsley, West and Penistone (Mr. McKay). We would have had a speech from my hon. Friend the Member for Peckham (Ms. Harman), had she not had a baby girl on Saturday because this Bill seriously affects Southwark.
  The Bill is about England, Wales and Scotland. Thirteen clauses apply to England and Wales and 2 two clauses, part II, to Scotland. The Under-Secretary of State for Scotland has been present during the debate, but no Scottish Member has spoken. There has not even been a representative from the Scottish Nationalist party. If there were a serious Scottish element in the Bill, an SNP Member would have been present. The only Scottish volunteer to grace our presence tonight is my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). The question arises as to why the Scottish Minister of State is to reply to this debate rather than the English Minister of State, the hon. Member for Brent, North (Dr. Boyson).
  Mr. Meadowcroft: Charisma.
  Mr. Straw: The hon. Member for Leeds, West (Mr. Meadowcroft) may say charisma, but I suspect that it is a matter of the algebra at the back of the Bill in schedule 2, and the Government's wise judgment that the Scottish Minister of State can better deal with those complicated formulae than the English Minister of State.
  On the face of it, the Bill is highly technical. It takes 17 clauses and 4 schedules simply to state what everyone had thought was already the law, or so the Secretary of State would have the House believe. We should not allow the technical nature of the language of the Bill to obscure from the House and the country the real significance of this measure. The 17 clauses and 4 schedules speak volumes for the incompetence and arrogance of the Government and for their refusal to respect the rule of law.
  This time last year the House was in the throes of the Westland crisis. The central player in that crisis from the Government's point of view was the right hon. Member for Henley (Mr. Heseltine) who was once the Secretary of State for the Environment. He started the Government down the road to local council chaos, although his successors as Secretaries of State had been all too willing to follow. When the present Secretary of State made his statement to the House about this Bill on 16 December, the right hon. Member for Henley sought to make light of his former responsibilities. He said in a question to the present Secretary of State:
  "If I understand the thrust of a complex and technical statement by my right hon. Friend, it is that I have spent £30 billion of taxpayers' money illegally. If this judgment is right, I promise him my unswerving and urgent support for the legislation."
  To which the Secretary of State replied:
  "I thought for a moment that my right hon. Friend was going to offer to pay. I assure him that I would not suggest that for one moment. I do not suggest that we should apportion blame in this matter."—[Official Report, 16 December 1986; Vol.107, c. 1055.]
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  This indeed would be a laughing matter were it not so serious. All of us understand why the Secretary of State does not wish to apportion blame, as he has been a member of the Government throughout the past seven sorry years. But it is the job of this House to determine responsibility; and the responsibility for this farce lies not with officials, legal advisers or parliamentary draftsmen but firmly with Ministers. They cannot claim that they were not warned. The basic Act from which all this trouble flows was the Local Government, Planning and Land Act 1980. That Act was conceived in chaos and it will be recalled by many of my right hon. and hon. Friends that the Bill had to be withdrawn from the other place and resubmitted to this place before it had been debated. Even when the second Bill was debated, the Government learned no lessons from their experience.
  At that time, the Financial Times made a withering comment when the Bill finally received royal assent. In 1980 the Financial Times said that in block grant
  "the Government took…principles into legislation before any work had been done to test them in detail. As Mr. King was promoting his principles in committee, horrified civil servants were discovering that the more detailed work they did, the worse the mire in which they found themselves."
  We now know, continued the Financial Times:
  "block grant will not be any simpler, will not he any more logical, and will also be full of extraordinary anomalies, and potentially unfair and discriminatory factors—all of which will need complicated, sometimes arbitrary, and often crude mathematical factors to iron them out."
  We, too, have warned the Government during the passage of the 1980 legislation and on every occasion since. We warned them that the increasing centralisation inherent in their legislation would lead to increasing levels of incompetence. We reminded them time and again, of Karl Popper's famous dictum—that while it is easy to centralise power, it is impossible to centralise the knowledge needed wisely to exercise that power.
  The defects that the Bill seeks to put right have not arisen as an accident of drafting but as a natural and inevitable consequence of Government policy. They have arisen as a result of the Government seeking to control that which they have no need to control—local authorities' current expenditure financed from their own resources. They have also resulted from the Government using, as an instrument of that control, block grant, for which purpose it was never, and could never, be designed.
  In the far-off days of the last Labour Government, such was the consensus around local government finance that in two successive years, rate support grant orders were not even debated, and this decision was made not by the Government of the day but by the Conservative Opposition. Legal challenges to the allocation of the rate support grant were virtually unknown. The simple reason for that is that, while central Government may have sought to influence the levels of local government spending, they never sought to control it. The amount of a local authority's grant was therefore finite. Authorities were not penalised if they spent above some arbitrary limit, so, at the margins, block grant decisions did not have the critical effect that they now have on local authority spending plans and on the size of their rate bills.
  All that has now changed. The Government have stumbled from one pit of their own making to another, even deeper. One control has been heaped on another. Alongside the administrative chaos that has been produced has been the Government's frenetic rhetoric

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  about local spending, rhetoric which is oddly hollow and two-faced when we see that at the same time as the Government damn local authority spending, they take credit for the spending levels of local authorities.
  Mr. Giles Radice: On education.
  Mr. Straw: As my hon. Friend the shadow Secretary of State for Education reminds us, the Government damn the spending levels of Labour local authorities while taking on themselves their education spending records.
  When the Secretary of State made his statement, he said:
  "There has been a distinction between what people thought the law was and what it is. We can easily put that right, and the House can then pass on to more important matters."
  I hardly call 17 clauses and schedules easy. He also said that the Bill was
  "designed to make no changes in policy, but as far as possible to apply existing policy within a tight timetable."—[Official Report, 16 December 1986; Vol. 107, c. 1051–55.]
  If that were the case, as my hon. Friend the Member for Copeland (Dr. Cunningham) made clear, there could be little argument about the Bill. The truth is that the Secretary of State was less than frank, and came close to misleading the House. The Bill changes policy retrospectively in two key respects. Also, and more serious, it seeks to avoid the application of the rule of law and the supervision of the courts over the Secretary of State's decision.
  Over the past four years, the House has had many opportunities to debate the occasions on which Parliament should retrospectively legislate. All are agreed that Parliament is sometimes justified in making lawful acts that were previously unlawful. No individual or institution is put at a disadvantage by such measures. We also acknowledge, although we may not agree, that sometimes it is necessary for Ministers to announce that, from a particular day, a particular transaction, usually of a financial nature, should be unlawful and that powers to provide for such unlawfulness would be sought and operate from the day of that statement, rather than the day of the Royal Assent. It was about such measures that there were many debates during the course of the abolition Act.
  The Bill breaks new ground in local authority legislation. It seeks to make unlawful acts that have already occurred and which were done in the knowledge that at the time they were lawful. My hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) has given the House full details of the way in which the Bill will affect the city of Birmingham adversely. Many of us remember that in 1984, contrary to all the complacent predictions of the Conservative party, it was trounced in the local authority elections in Birmingham and the Labour party secured a famous victory.
  The Conservative party has never forgiven the city of Birmingham for electing a Labour council. The Government pursued what can almost be described as a vendetta against that city. Last year the rate support grant Bill overturned a court case in which Birmingham had lawfully won an additional £8 million. Under the provisional rate support grant settlement, the grant gain has been taken away from Birmingham by rate capping amounting to £34·9 million. Under this Bill, Birmingham is denied another £7·5 million.
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  Trying to explain himself away, the Secretary of State said that these authorities would not have received this bit of rate support grant that is in contention in any event, but that is simply not the case. Transfers to special funds are crucial. A sum of money may be treated as expenditure in one year and income in another. Given the operation of the penalty system and the way in which the block grant has operated during the last seven years, the year in which such blocks of money are treated as expenditure and/or as income can have a significant effect upon an authority's block grant entitlement. The Department has always known that that is so. I can give evidence to the effect that sometimes the Department has advised authorities on how to maximise their block grant entitlement by shifting funds from one year to another.
  Mr. Ridley: But if there were no funds and the funds that were shifted did not exist, then I am sure that the hon. Gentleman would be the first to agree with me that that was a fiddle.
  Mr. Straw: Yes, but since we are considering Birmingham, what the Secretary of State has to explain is how it was that Price Waterhouse, the private auditors appointed by the city of Birmingham, said:
  "We have considered this issue in some detail and have concluded that the contribution is a lawful charge."
  Price Waterhouse did not say that it was a fiddle. It said that it was a lawful charge. Is the Secretary of State saying that Price Waterhouse failed in its professional duty? Has he reported Price Waterhouse to the professional bodies that are responsible for supervising accountants? Of course he has not. However, he has accused not just the city of Birmingham but Price Waterhouse of a fiddle. I give the Secretary of State an opportunity to withdraw.
  Mr. Ridley: The Government would not have paid block grant upon the information that was available to them. If Birmingham or any other authority did not like that, it could have taken us to law. What is more, it would have lost.
  Mr. Straw: The Secretary of State says that, what is more, Birmingham would have lost. I ask the Secretary of State to give Birmingham the chance to take him to court. Let us see who is right and who is wrong. Last year Birmingham took the Secretary of State to court and he lost. Therefore, the Government changed the law. If the Secretary of State is now inviting legal challenge from Birmingham, I am sure that Birmingham will be happy to accept his challenge. When the Bill is considered in detail, I hope that the Secretary of State will remove from it clause 4(6) and clause 6(4) so that Birmingham and other cities may be given precisely that opportunity. When the Secretary of State intervened he did not answer my point. He accused Birmingham and its auditors of a fiddle. On that point, he had better either put up or shut up.
  The second way in which the Bill is wholly objectionable relates to rate capping. Three years ago, almost to the day, the Rates Bill, which gave unprecedented centralised powers to the Secretary of State, was given its Second Reading. We were told in this Chamber and in Committee that local authorities had no need to worry—that if the Government decided upon provisional expenditure limits, on the basis of their own information for individual authorities, which turned out to be wrong, individual local authorities would be able to offer information about their position and submit it to the

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  Secretary of State and that not once but twice he would reconsider the matter and make a decision on the merits of the case submitted by individual authorities. For two years at least Secretaries of State have sought to judge authorities on the basis of individual merit. Not so now. The process of redetermination has been reduced to a farce by this Bill. Any consideration of the individual positions of local authorities has been abandoned. On 19 December I wrote to the Secretary of State on exactly this point.
  Mr. Meadowcroft: The letter was in joined-up writing.
  Mr. Straw: Indeed it was in joined-up writing, because it was in my own hand. I asked the Secretary of State about the effect of this Bill on his discretion separately to determine the expenditure limits on certain authorities. He replied that there were standard formulae in the Bill and his letter went on to say:
  "These formulae reflect my views and those of the appropriate Secretaries of State for the redeterminations, if any, which should be made to the expenditure levels which were determined in July 1986. Our views take account of all the information available to us…and the representations we have received since July, including representations made in support of redetermination applications."
  Frankly, that reply was disingenuous, because it is plain from the Bill and from what the Secretary of State said earlier in this debate that the decisions contained in this Bill are different from the decisions that he would have made had he been exercising his discretion on the merits of individual authorities.
  The Secretary of State said in answer to an intervention—I believe I quote him correctly—that the formulae in the Bill accurately, though not totally accurately, reflect decisions that he would have made on redetermination. Can the Secretary of State tell us the difference between accuracy and total accuracy in this matter? Will he provide the House with a schedule showing the decisions that he would have made had he made individual redeterminations in respect of each of these authorities? Is he willing to do that? I will allow him to intervene if he wishes to do so. He has admitted that there is a gap between accuracy and total accuracy. If the gap is significant, will he agree to amend the formula?
  My hon. Friend the Member for Copeland (Dr. Cunningham) asked the Secretary of State if it was correct that paragraph 3(2) of schedule 2 gave the Secretary of State the power to revise the expenditure limits for any authority up to the point at which the Bill passes into law. I understand that the Minister of State is to reply to that point. If that is the correct reading of this sub-paragraph, and it appears to be, is the Secretary of State willing to use that discretion to deal with the very real problems that have arisen in Newham and in many other boroughs?
  Mr. Spearing: Is my hon. Friend aware that the letter from which he has just quoted can hardly be correct and might even be categorised as deceitful because the table which I have supplied to the Minister and which I will supply to my hon. Friend shows that the range of GREA plus percentage to expenditure limit ranges from Basildon which is 70 per cent. above GREA to Newham which is 1·6 per cent. above GREA. How can the redetermination which the Secretary of State says he has taken into account produce such disparate percentages?
  Mr. Straw: My hon. Friend is absolutely correct. These policy decisions are now produced through algebra and buried in a schedule. The circumstances of authorities vary
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  dramatically. It is accepted that Newham is spending barely above the amount set by central Government, yet Newham's redetermination is no different from that of any other authority, regardless of the fact that circumstances are wholly different. But for this Bill, if Newham felt that it was being treated wholly unreasonably it could take the Secretary of State to court. That brings me to the most serious aspect of the Bill—its denial of the rule of law. I hope that Conservative Members who spent much time on the hustings preaching about the rule of law will look at what the Bill proposes and will agree that it is a constitutional monstrosity.
  During the proceedings on the Rates Bill, Ministers tried to reassure us that they could not act capriciously or arbitrarily in exercising the wide discretion that they had been given because the wider rule of law required them to exercise that discretion reasonably and because, in any event, the courts would prevent them from making decisions for which they had no power. The judicial supervision of Acts of Government is central to any concept of the rule of law in a democracy, but under this Bill all that is cast aside. Clauses 4(6) and 6(4) state that they
  "shall have effect notwithstanding any decision of a court (whether before or after the passing of this Act) purperting to have a contrary effect."
  One would expect such a statement only in an authoritarian, totalitarian and dictatorial regime.
  The subsections state that the Bill shall have effect notwithstanding any decision of a court purporting to have a contrary effect. But the effect of the clause is not clear. It is not clear on the face of the clause what is being denied judicial supervision. What if an authority went to court to discover the effects of the clause over which the courts have no discretion? Will the Minister confirm that, since the Bill is so obscure, local authorities at least have the right to discover from the courts that over which the courts no longer have discretion so that, by subtraction, they can discover that over which the courts continue to have discretion?
  Later tonight, there will be a motion to commit the Bill to a Committee of the whole House and to deny the House the detailed scrutiny of such a technical Bill that can take place only upstairs in Committee. That will be justified on the grounds that the matter is urgent, and I have no doubt that the subsequent threats of guillotine will be accompanied by a similar excuse. Those excuses will not wash, for the Secretary of State has admitted that he knew about this fandango and farce at least four months ago. We have had no explanation of why it took him three months to come to the House and four months to produce the Bill. Many Labour Members have every reason to believe that the Secretary of State deliberately delayed the matter for as long as possible to deny Parliament a proper scrutiny of the amending legislation.
  This is a Bill born of the incompetence and arrogance of a Government who care little for local democracy and who know even less. They refuse to listen, not just to the Opposition and to Labour local authorities, but to Conservative local authorities and to those in the House who speak for them. Contrary to the Secretary of State's undertakings, the Bill contains policy changes. It legislates retrospectively to make unlawful decisions which, when taken, were lawful, at a cost of millions of pounds to some authorities. It removes the rights of the courts of this land

  107
  to scrutinise legislation in a manner almost unprecedented in a democracy. It puts the Government above the law. It is a bad Bill, and we shall oppose it tonight.
  9.38 pm
  The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): We have had a very full debate on the Bill. From Conservative Members we have had a thorough appreciation of the logical reasons for the Bill and for their support of it. From Labour Members we have had synthetic fury laced with tortured sarcasm. We should have expected no more. It is a sign of the paucity of their arguments in the face of this legislation.
  This is a highly technical Bill, the details of which will be considered fully in Committee. However, there is a simple principle behind the Bill: to maintain the status quo in the conduct of local government finance in the run-up to the major reforms which we propose, which were welcomed by many of my hon. Friends. This means continuing with the definitions of expenditure adopted in line with the wishes of local government in England, Wales and Scotland and providing, for England and Wales, for the rate support grant settlement and the rate limitation process to be implemented with the maximum of certainty for authorities, given the need for this legislation.
  I should like to thank my hon. Friend the Member for Ealing, Acton (Sir G. Young) for his excellent speech of support and for what he said in justification of the Bill. Throughout the afternoon Opposition Members have looked for sinister motives behind every clause of the Bill. I fear that their search will go unrewarded. They would be better occupied assisting the Bill's passage so that local authorities can be sure of receiving the grant to which they are entitled from the start of the new financial year. I should tell the hon. Member for Leeds, West (Mr. Meadowcroft) that that is not a threat. It is a statement of fact and, in the light of it, I hope that he will support the Government's efforts.
  The hon. Member for Copeland (Dr. Cunningham) made much of what he called the delay occasioned by my right hon. Friend the Secretary of State. I reject that entirely. If the hon. Gentleman is sincere about his concern at the effect that delay will have on local authorities and their grant next year, we expect him to support our getting the Bill on to the statute book as soon as possible.
  Dr. Cunningham: I am grateful to the Minister for giving way. It is not a question of argument about delay—the delay is a matter of fact. The Secretary of announced today, at long last, that he knew about this four months ago. There is no argument about that—it is a fact. As for letting the Bill go through, if the Minister will remove the retrospective clauses and set in abeyance the punitive restrictions on the Rates Act 1984, we will let it go through.
  Mr. Ancram: I shall come to what the hon. Gentleman and the hon. Member for Blackburn (Mr. Straw) said in their speeches. If the hon. Gentleman is sincere about his concern at the effect on RSG, he will support the Bill.
  Some of my right hon. and hon. Friends have argued that, rather than bolster the present system, in which faults are widely acknowledged, we should have turned immediately to the Green Paper reform proposals. I have considerable sympathy for that view—it was advanced
  108
  strongly by my hon. Friend the Member for Slough (Mr. Watts)—but it is impossible to set up that new system and the necessary transitional measures in the time available. Today's debate has shown, once again, the urgent need for such reform. Reform is already being undertaken in Scotland.
  I listened to what my hon. Friend the Member for Milton Keynes (Mr. Benyon) said about reform. I agree with him about the appalling complexities of the present system, but I am sure that it will be no surprise to him to learn that I did not agree with him about our proposals for Scotland, which my right hon. Friend the Secretary of State for the Environment has made clear he will bring forward for England. I rather think that my hon. Friend and I may argue about this for some time. We might not reach an agreement immediately, but I am always hopeful that I will in the end convert him.
  Mr. Leighton: As the Minister is making the case for great haste and saying that that precludes local authorities from having time to come in for redetermination, does he agree that, in Committee, proper consideration should be given to the cases, such as the borough of Newham, which are harshly treated by the Bill?
  Mr. Ancram: My right hon. Friend the Secretary of State heard what the hon. Gentleman said. I am sure that this is a matter that will be discussed during the Bill's further proceedings.
  My hon. Friend the Member for Slough, supported by my hon. Friends the Members for Leicester, East (Mr. Bruinvels), for Halifax (Mr. Galley) and for Basildon (Mr. Amess), said that the grant proposals which are implicit in the Green Paper on rate reform would create a simpler system than that which has caused so many problems. I endorse that view. Those proposals are now part of the legislation for Scotland that we are taking through Committee. They are part of a package which depends also on creating greater accountability through the imposition of the community charge. It would not be possible to introduce that element of the package alone now.
  The hon. Member for Blackburn asked why I am responding to the debate. I suggest that, under this Government at least, we are still one United Kingdom, of which Scotland is a part. I remind him, not that it would have been evident if he had looked behind him during the debate, that one fifth of the parliamentary representation of his party comes from Scotland. It is quite right, therefore, that Scotland's view should be represented. When my right hon. Friend, the Secretary of State for the Environment, made his statement on 16 December a point of order was raised as to why there was no statement on the Scottish position. The reason was, as my right hon. Friend said today in his opening speech, that in Scotland the problem is much more limited than in England and Wales. At the same time, I believe that it would be wholly wrong if the Scottish dimension was ignored tonight.
  Mr. Donald Dewar: Will the hon. Gentleman say a word or two about the Scottish dimension? I see that the Secretary of State is taking powers to indemnify himself, and to ensure that his actions in connection with section 5 of the 1966 Act should not be called in question. It is not clear to me why he needs that indemnity. Indemnity suggests that something wrong has been done, or at least, that something is likely to be successfully challenged in the courts. Perhaps the Minister

  109
  will just say what the secret sin is, and what the effect would have been if the law had been properly carried out by the Secretary of State.
  Mr. Ancram: I congratulate the hon. Gentleman on getting Labour's Scottish voice on to the record, even this late in the debate. I shall deal with his points, because I think that the provisions regarding Scotland are important, and I want to explain them fully.
  The most important point is that the determination of rate support grant in Scotland does not depend in any way on assessments of relevant or total expenditure, but rather on what local authorities ought to need to spend as determined by a process of assessment known as the client group method, which is intended to provide objective assessments of need, taking into account the different circumstances of each authority. It quite specifically does not take account of their actual expenditure, however defined, and because the determination of the Scottish rate support grant does not depend on any assessment of actual expenditure, it follows that the Secretary of State's actions in determining it are not vulnerable on the basis that he might have misinterpreted what can or cannot legitimately be included as expenditure.
  However, on examining our Scottish practices in the light of the problems which have emerged in England and Wales, we discovered that we have counted as expenditure transfers between the general rate fund and special funds in assessing authorities' expenditure for the purpose of imposing grant penalties. According to the system we operate, we would also have been prepared to count such transfers as expenditure had they occurred in the accounts of authorities for whom we were proposing a rate reduction.
  An examination of the particular cases where rate reductions have been imposed reveals that there were no such transfers of funds at issue. Clauses 14 and 15 are designed to validate past decisions in relation to grant penalties and to allow us to continue to operate as before, both in the case of grant penalties and in the case of rate reductions.
  Mr. Dewar: I recognise that the Minister wants these Scottish points properly ventilated. I promise him that I will read with great care the important statement that he has just read.
  Will he confirm my impression that he is saying that the Government are seeking indemnity against a set of circumstances which he is satisfied never occurred? If that is so, why on earth do we need clauses 14 and 15?
  Mr. Ancram: I appreciate that the hon. Gentleman has never been a great expert on local government finance. He may therefore find my explanation difficult to understand. What I was saying, and perhaps I can put it in simpler terms for the hon. Gentleman, is that on selective action, there has been no occasion, according to our records, where any authority would have suffered because of the interpretation that has been made. However, the situation is different in relation to grant penalties.
  It is an important point that there is no Scottish authority in relation to which we have imposed a rate of reduction which has had a greater reduction imposed on it than it would have had if consideration of special funds had been excluded from our calculations. More to the point in relation to grant penalties, if consideration of special funds had been excluded from our calculations,
  110
  according to our records there are two instances from 1983–84 where authorities would have been better off; that is, their grant reduction would have been less than it actually is. In the case of one of those authorities that applies to the present financial year, so it is still possible for it to avoid paying grant penalties completely.
  Again—this is important to put the matter into context—according to our records, in 32 instances exclusion of consideration of special funds made no difference at all to the grant penalties, and in 29 cases the authorities concerned would have been worse off, in many cases substantially so. That demonstrates clearly the point that the method that we have adopted in calculating expenditure for grant penalty purposes and which we propose, as a result of the Bill, to continue, is clearly seen to be in the interests of local authorities. That is presumably why the local authority associations wish this type of interpretation and calculation to be made.
  It also underlines the completely synthetic nature of the Opposition's hostility to these measures today. In the light of the favourable impact that that has had on local authorities in Scotland, I shall be interested to see whether the hon. Member for Glasgow, Garscadden (Mr. Dewar) votes against the validation of that tonight. The hon. Members for Copeland and for Blackburn took exception to clause 5 because they argued that it would allow the Secretary of State to make retrospective adjustments to previous years' settlements. They have completely missed the point. Our clear intention is to maintain the status quo and the clause allows us to do that on a proper statutory basis where decisions are to be taken on supplementary reports for the years 1983–84 to 1986–87.
  My right hon. Friend has no intention of departing from past practice in that respect. My hon. Friends the Member for Hornchurch (Mr. Squire) and for Devizes (Mr. Morrison) were also worried about that point and I hope that they are reassured by what I have said.
  Under existing powers in the Local Government, Planning and Land Act 1980, it is open to the Secretary of State to make new directions about total expenditure before each new supplementary report is made—subject, of course, to the overriding legal requirement to act reasonably. That is the same position as that which will apply to the powers to make specifications about total expenditure when new supplementary reports are made for 1983–84 to 1986–87 after Royal Assent has been given to the Bill. Therefore, there is no type of retrospection which is new to the Bill which is not available already under existing powers. The type and concept are the same. I hope that that firmly answers the points that were made by the hon. Members for Copeland and for Blackburn.
  I do not want to repeat the detailed summary of the Bill given by my right hon. Friend at the start of the debate. However, I should underline that there is no intention here to create new structures or impose new burdens on local authorities. The Bill builds on an existing mechanism, which is usually called the rate fund revenue account, and translates into statute what is effectively current practice in defining expenditure. So far as possible, it adopts the wording of the provisions of the Local Government, Planning and Land Act 1980. Hon. Members will, of course, have the opportunity to consider the details in Committee.
  The hon. Member for Copeland mentioned the promises about the operation of what is now the Rates Act during and after its passage. He was somewhat wide of the

  111
  mark on this occasion. We accept that we are not following the Rates Act procedures. My right hon. Friend has explained why we have to adopt, for 1987–88 only, the approach to rate and precept limitation contained in the Bill. [Interruption.] If the hon. Member for Copeland will listen rather than muttering from a sedentary position, he may, yet again, hear the explanation. It would simply not have been possible to carry through the normal Rates Act procedures, given the need for legislation on the definition of expenditure.
  Labour Members have sought to argue that the method adopted and the formulae proposed in the Bill are wildly unreasonable. In reaching 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, and those decisions are now subject to the scrutiny of Parliament.
  Before leaving rate limitation, I should remind the House what it is all about. Some Opposition Members seem to have forgotten its purpose. My hon. Friend the Member for Leicester, East (Mr. Bruinvels) reminded us that the aim of the policy is to protect ratepayers by holding down rates and expenditure.
  Some authorities, despite being rate-limited in 1985–86 and 1986–87, have attempted to maintain their high levels of spending and have taken no steps to cut out waste and inefficiency or other unnecessary burdens on their ratepayers. It is right that the disciplines of rate limitation should be firmly maintained.
  Mr. Straw: Will the hon. Gentleman give way?
  Mr. Ancram: No. I have already given way on a number of occasions.
  Where authorities are newly selected for rate capping in 1987–88, my right hon. Friend has proposed some additional flexibility above the original expenditure levels set in July, but the fact remains that those authorities were selected because they were among the highest spenders, and the purpose of rate limitation is to restrain that spending and to protect ratepayers.
  The hon. Members for Copeland and for Blackburn asked whether paragraph 3(2) of schedule 2 would enable my right hon. Friend to determine revised expenditure levels for rate-capped authorities before the passing of the Bill. The answer is no. As my right hon. Friend made clear to the House in his statement on 16 December, once he had received the advice on total expenditure, he could not make any further rate support grant reports or complete the rate limitation process until matters were put right and there was new legislation. Thus, at the moment he cannot redetermine expenditure levels, and once the Bill receives Royal Assent there will be, only for 1987–88, a new method for completing the rate limitation process according to the formulae in the Bill.
  A number of Opposition Members mentioned the effect of the Bill on court decisions. The hon. Member for
  112
  Copeland made great play of clauses 4(6) and 6(4). Those provisions validate past decisions on rate support grant and rate limitation respectively. We accept that, until the Bill receives Royal Assent, the validity of past decisions is in doubt. Nothing but further uncertainty would be gained by local authorities challenging those decisions. The Bill clearly and unambiguously provides that challenges against past decisions will be of no effect.
  The Bill is not concerned, as the hon. Member for Copeland appeared to be suggesting, with validating future decisions taken in accordance with the provisions of the Bill and the related legislation. Local authorities will, of course, be free to challenge those.
  A number of hon. Members mentioned deficit financing. The Bill provides that the Secretary of State may make specifications to discount for grant purposes contributions to special funds against no known liability which create a deficit on the rate fund revenue account and the subsequent drawing down of such contributions. The Bill will put the position beyond doubt. Had the need for the Bill not arisen, the Secretary of State would have taken the action under existing powers. It has been suggested that some sort of conspiracy is involved but, again, Opposition Members are well wide of the mark.
  The Bill is not controversial, except in the conspiratorial minds of Opposition Members. It is necessary in the interests of councils which have previously endorsed the principle that it now firmly establishes. It is also in the interests of ratepayers and of good government, both local and national. I ask my right hon. and hon. Friends to support it.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 247, Noes 179.

  Division No. 49]

  [10 pm

  AYES

  Aitken, Jonathan

  Bryan, Sir Paul

  Alexander, Richard

  Buchanan-Smith, Rt Hon A.

  Alison, Rt Hon Michael

  Buck, Sir Antony

  Amess, David

  Budgen, Nick

  Ancram, Michael

  Bulmer, Esmond

  Arnold, Tom

  Butcher, John

  Ashby, David

  Butterfill, John

  Aspinwall, Jack

  Carlisle, John (Luton N)

  Atkins, Robert (South Ribble)

  Carlisle, Kenneth (Lincoln)

  Atkinson, David (B'm'th E)

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

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

  Carttiss, Michael

  Baker, Nicholas (Dorset N)

  Cash, William

  Baldry, Tony

  Chapman, Sydney

  Batiste, Spencer

  Chope, Christopher

  Bellingham, Henry

  Churchill, W. S.

  Bendall, Vivian

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

  Benyon, William

  Clark, Dr Michael (Rochford)

  Best, Keith

  Clark, Sir W. (Croydon S)

  Biffen, Rt Hon John

  Colvin, Michael

  Biggs-Davison, Sir John

  Conway, Derek

  Blackburn, John

  Coombs, Simon

  Body, Sir Richard

  Cope, John

  Bonsor, Sir Nicholas

  Cormack, Patrick

  Boscawen, Hon Robert

  Corrie, John

  Bottomley, Peter

  Couchman, James

  Bottomley, Mrs Virginia

  Cranborne, Viscount

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

  Critchley, Julian

  Bowden, Gerald (Dulwich)

  Currie, Mrs Edwina

  Boyson, Dr Rhodes

  Dickens, Geoffrey

  Braine, Rt Hon Sir Bernard

  Dorrell, Stephen

  Brandon-Bravo, Martin

  Douglas-Hamilton, Lord J.

  Bright, Graham

  Dover, Den

  Brinton, Tim

  du Cann, Rt Hon Sir Edward

  Brooke, Hon Peter

  Dunn, Robert

  Brown, M. (Brigg & Cl'thpes)

  Durant, Tony

  Bruinvels, Peter

  Dykes, Hugh

  113

  Eggar, Tim

  Lennox-Boyd, Hon Mark

  Emery, Sir Peter

  Lester, Jim

  Evennett, David

  Lewis, Sir Kenneth (Stamf'd)

  Eyre, Sir Reginald

  Lightbown, David

  Fallon, Michael

  Lilley, Peter

  Farr, Sir John

  Lloyd, Peter (Fareham)

  Finsberg, Sir Geoffrey

  Lord, Michael

  Fletcher, Sir Alexander

  Luce, Rt Hon Richard

  Fookes, Miss Janet

  Lyell, Nicholas

  Forman, Nigel

  McCrindle, Robert

  Forsyth, Michael (Stirling)

  Macfarlane, Neil

  Forth, Eric

  MacGregor, Rt Hon John

  Fowler, Rt Hon Norman

  MacKay, Andrew (Berkshire)

  Fox, Sir Marcus

  MacKay, John (Argyll & Bute)

  Franks, Cecil

  Maclean, David John

  Fraser, Peter (Angus East)

  McQuarrie, Albert

  Freeman, Roger

  Madel, David

  Fry, Peter

  Major, John

  Gale, Roger

  Malins, Humfrey

  Galley, Roy

  Maples, John

  Gardiner, George (Reigate)

  Marland, Paul

  Gardner, Sir Edward (Fylde)

  Marlow, Antony

  Garel-Jones, Tristan

  Marshall, Michael (Arundel)

  Gilmour, Rt Hon Sir Ian

  Mates, Michael

  Glyn, Dr Alan

  Mather, Sir Carol

  Goodhart, Sir Philip

  Maude, Hon Francis

  Goodlad, Alastair

  Maxwell-Hyslop, Robin

  Gorst, John

  Mayhew, Sir Patrick

  Gow, Ian

  Mellor, David

  Greenway, Harry

  Merchant, Piers

  Gregory, Conal

  Meyer, Sir Anthony

  Griffiths, Peter (Portsm'th N)

  Mills, Iain (Meriden)

  Ground, Patrick

  Mills, Sir Peter (West Devon)

  Grylls, Michael

  Miscampbell, Norman

  Gummer, Rt Hon John S

  Mitchell, David (Hants NW)

  Hamilton, Hon A. (Epsom)

  Monro, Sir Hector

  Hamilton, Neil (Tatton)

  Montgomery, Sir Fergus

  Hampson, Dr Keith

  Morrison, Hon C. (Devizes)

  Hanley, Jeremy

  Morrison, Hon P. (Chester)

  Hannam, John

  Moynihan, Hon C.

  Hargreaves, Kenneth

  Mudd, David

  Harris, David

  Murphy, Christopher

  Hawkins, C. (High Peak)

  Neale, Gerrard

  Hawkins, Sir Paul (N'folk SW)

  Needham, Richard

  Hawksley, Warren

  Nelson, Anthony

  Hayes, J.

  Newton, Tony

  Heathcoat-Amory, David

  Nicholls, Patrick

  Heddle, John

  Normanton, Tom

  Henderson, Barry

  Norris, Steven

  Heseltine, Rt Hon Michael

  Onslow, Cranley

  Hickmet, Richard

  Oppenheim, Phillip

  Higgins, Rt Hon Terence L.

  Oppenheim, Rt Hon Mrs S.

  Hind, Kenneth

  Ottaway, Richard

  Holland, Sir Philip (Gedling)

  Page, Sir John (Harrow W)

  Holt, Richard

  Page, Richard (Herts SW)

  Hordern, Sir Peter

  Patten, Christopher (Bath)

  Howard, Michael

  Patten, J. (Oxf W & Abgdn)

  Howe, Rt Hon Sir Geoffrey

  Pattie, Rt Hon Geoffrey

  Howell, Rt Hon D. (G'ldford)

  Pawsey, James

  Howell, Ralph (Norfolk, N)

  Peacock, Mrs Elizabeth

  Hubbard-Miles, Peter

  Pollock, Alexander

  Hunt, David (Wirral W)

  Portillo, Michael

  Hunt, John (Ravensbourne)

  Powell, William (Corby)

  Hunter, Andrew

  Powley, John

  Jenkin, Rt Hon Patrick

  Price, Sir David

  Jessel, Toby

  Proctor, K. Harvey

  Johnson Smith, Sir Geoffrey

  Raffan, Keith

  Jones, Gwilym (Cardiff N)

  Rathbone, Tim

  Jones, Robert (Herts W)

  Rees, Rt Hon Peter (Dover)

  Jopling, Rt Hon Michael

  Renton, Tim

  Kershaw, Sir Anthony

  Ridley, Rt Hon Nicholas

  King, Roger (B'ham N'field)

  Ridsdale, Sir Julian

  Knight, Greg (Derby N)

  Roberts, Wyn (Conwy)

  Knox, David

  Ryder, Richard

  Lamont, Rt Hon Norman

  Sainsbury, Hon Timothy

  Lang, Ian

  Shaw, Giles (Pudsey)

  Latham, Michael

  Shaw, Sir Michael (Scarb')

  Lawrence, Ivan

  Shepherd, Colin (Hereford)

  Lee, John (Pendle)

  Shersby, Michael

  Leigh, Edward (Gainsbor'gh)

  Silvester, Fred

  114

  Skeet, Sir Trevor

  Walker, Bill (T'side N)

  Stevens, Lewis (Nuneaton)

  Watson, John

  Stewart, Andrew (Sherwood)

  Watts, John

  Taylor, John (Solihull)

  Wood, Timothy

  Tebbit, Rt Hon Norman

  Young, Sir George (Acton)

  Thatcher, Rt Hon Mrs M.

  Thompson, Donald (Calder V)

  Tellers for the Ayes:

  Townsend, Cyril D. (B'heath)

  Mr. Michael Neubert and

  Wakeham, Rt Hon John

  Mr. Gerald Malone.

  Walden, George

  NOES

  Abse, Leo

  Garrett, W. E.

  Adams, Allen (Paisley N)

  George, Bruce

  Alton, David

  Gilbert, Rt Hon Dr John

  Archer, Rt Hon Peter

  Golding, Mrs Llin

  Ashton, Joe

  Gould, Bryan

  Atkinson, N. (Tottenham)

  Gourlay, Harry

  Bagier, Gordon A. T.

  Hamilton, James (M'well N)

  Banks, Tony (Newham NW)

  Hardy, Peter

  Barron, Kevin

  Harrison, Rt Hon Walter

  Beckett, Mrs Margaret

  Hart, Rt Hon Dame Judith

  Bell, Stuart

  Healey, Rt Hon Denis

  Benn, Rt Hon Tony

  Heffer, Eric S.

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

  Holland, Stuart (Vauxhall)

  Bidwell, Sydney

  Howarth, Gerald (Cannock)

  Blair, Anthony

  Hoyle, Douglas

  Boyes, Roland

  Hughes, Robert (Aberdeen N)

  Bray, Dr Jeremy

  Hughes, Roy (Newport East)

  Brown, Gordon (D'f'mline E)

  Hughes, Sean (Knowsley S)

  Brown, Hugh D. (Provan)

  Hughes, Simon (Southwark)

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

  Janner, Hon Greville

  Brown, Ron (E'burgh, Leith)

  John, Brynmor

  Buchan, Norman

  Jones, Barry (Alyn & Deeside)

  Caborn, Richard

  Kaufman, Rt Hon Gerald

  Callaghan, Rt Hon J.

  Kennedy, Charles

  Callaghan, Jim (Heyw'd & M)

  Kirkwood, Archy

  Campbell-Savours, Dale

  Lamond, James

  Carlile, Alexander (Montg'y)

  Leadbitter, Ted

  Carter-Jones, Lewis

  Leighton, Ronald

  Cartwright, John

  Lewis, Terence (Worsley)

  Clark, Dr David (S Shields)

  Litherland, Robert

  Clay, Robert

  Livsey, Richard

  Clelland, David Gordon

  Lloyd, Tony (Stretford)

  Clwyd, Mrs Ann

  Lofthouse, Geoffrey

  Cocks, Rt Hon M. (Bristol S)

  Loyden, Edward

  Cohen, Harry

  McCartney, Hugh

  Coleman, Donald

  McDonald, Dr Oonagh

  Conlan, Bernard

  McGuire, Michael

  Cook, Frank (Stockton North)

  McKay, Allen (Penistone)

  Cook, Robin F. (Livingston)

  McNamara, Kevin

  Cox, Thomas (Tooting)

  McTaggart, Robert

  Craigen, J. M.

  Madden, Max

  Crowther, Stan

  Marek, Dr John

  Cunliffe, Lawrence

  Marshall, David (Shettleston)

  Cunningham, Dr John

  Mason, Rt Hon Roy

  Dalyell, Tam

  Maxton, John

  Davies, Ronald (Caerphilly)

  Maynard, Miss Joan

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

  Meacher, Michael

  Dewar, Donald

  Meadowcroft, Michael

  Dixon, Donald

  Michie, William

  Dobson, Frank

  Miller, Dr M. S. (E Kilbride)

  Dormand, Jack

  Morris, Rt Hon A. (W'shawe)

  Dubs, Alfred

  Nellist, David

  Dunwoody, Hon Mrs G.

  Oakes, Rt Hon Gordon

  Eadie, Alex

  O'Brien, William

  Eastham, Ken

  O'Neill, Martin

  Evans, John (St. Helens N)

  Orme, Rt Hon Stanley

  Fatchett, Derek

  Park, George

  Faulds, Andrew

  Parry, Robert

  Field, Frank (Birkenhead)

  Patchett, Terry

  Fields, T. (L'pool Broad Gn)

  Pavitt, Laurie

  Fisher, Mark

  Pike, Peter

  Flannery, Martin

  Powell, Raymond (Ogmore)

  Forrester, John

  Prescott, John

  Foster, Derek

  Radice, Giles

  Foulkes, George

  Randall, Stuart

  Fraser, J. (Norwood)

  Raynsford, Nick

  Freeson, Rt Hon Reginald

  Redmond, Martin

  Freud, Clement

  Rees, Rt Hon M. (Leeds S)

  115

  Richardson, Ms Jo

  Stott, Roger

  Roberts, Allan (Bootle)

  Straw, Jack

  Roberts, Ernest (Hackney N)

  Thomas, Dafydd (Merioneth)

  Robertson, George

  Thomas, Dr R. (Carmarthen)

  Robinson, G. (Coventry NW)

  Thompson, J. (Wansbeck)

  Rogers, Allan

  Thorne, Stan (Preston)

  Rooker, J. W.

  Tinn, James

  Ross, Ernest (Dundee W)

  Torney, Tom

  Rowlands, Ted

  Wainwright, R.

  Sedgemore, Brian

  Wallace, James

  Sheerman, Barry

  Wardell, Gareth (Gower)

  Sheldon, Rt Hon R.

  Wareing, Robert

  Shields, Mrs Elizabeth

  Weetch, Ken

  Shore, Rt Hon Peter

  Welsh, Michael

  Short, Ms Clare (Ladywood)

  Wigley, Dafydd

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

  Williams, Rt Hon A.

  Silkin, Rt Hon J.

  Winnick, David

  Skinner, Dennis

  Woodall, Alec

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

  Young, David (Bolton SE)

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

  Snape, Peter

  Tellers for the Noes:

  Soley, Clive

  Mr. Frank Haynes and

  Spearing, Nigel

  Mr. John McWilliam.

  Steel, Rt Hon David

  Question accordingly agreed to.
  Motion made, and Question put, That the Bill be committed to a Committee of the whole House.—[Mr. Lighthown.]
  The House divided: Ayes 233, Noes 175.

  Division No. 50]

  [10.15 pm

  AYES

  Aitken, Jonathan

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

  Alexander, Richard

  Carttiss, Michael

  Alison, Rt Hon Michael

  Cash, William

  Amess, David

  Chapman, Sydney

  Ancram, Michael

  Chope, Christopher

  Arnold, Tom

  Churchill, W. S.

  Ashby, David

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

  Aspinwall, Jack

  Clark, Dr Michael (Rochford)

  Atkins, Robert (South Ribble)

  Clark, Sir W. (Croydon S)

  Atkinson, David (B'm'th E)

  Conway, Derek

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

  Coombs, Simon

  Baker, Nicholas (Dorset N)

  Cope, John

  Baldry, Tony

  Corrie, John

  Batiste, Spencer

  Couchman, James

  Bellingham, Henry

  Cranborne, Viscount

  Bendall, Vivian

  Currie, Mrs Edwina

  Benyon, William

  Dickens, Geoffrey

  Best, Keith

  Dorrell, Stephen

  Biffen, Rt Hon John

  Douglas-Hamilton, Lord J.

  Biggs-Davison, Sir John

  Dover, Den

  Blackburn, John

  du Cann, Rt Hon Sir Edward

  Body, Sir Richard

  Dunn, Robert

  Bonsor, Sir Nicholas

  Durant, Tony

  Boscawen, Hon Robert

  Dykes, Hugh

  Bottomley, Peter

  Eggar, Tim

  Bottomley, Mrs Virginia

  Emery, Sir Peter

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

  Evennett, David

  Bowden, Gerald (Dulwich)

  Eyre, Sir Reginald

  Boyson, Dr Rhodes

  Fallon, Michael

  Braine, Rt Hon Sir Bernard

  Farr, Sir John

  Brandon-Bravo, Martin

  Favell, Anthony

  Bright, Graham

  Finsberg, Sir Geoffrey

  Brinton, Tim

  Fletcher, Sir Alexander

  Brooke, Hon Peter

  Forman, Nigel

  Brown, M. (Brigg & Cl'thpes)

  Forsyth, Michael (Stirling)

  Bruinvels, Peter

  Forth, Eric

  Bryan, Sir Paul

  Fowler, Rt Hon Norman

  Buchanan-Smith, Rt Hon A.

  Fox, Sir Marcus

  Buck, Sir Antony

  Franks, Cecil

  Budgen, Nick

  Fraser, Peter (Angus East)

  Bulmer, Esmond

  Freeman, Roger

  Butcher, John

  Fry, Peter

  Butterfill, John

  Gale, Roger

  Carlisle, John (Luton N)

  Galley, Roy

  Carlisle, Kenneth (Lincoln)

  Gardiner, George (Reigate)

  116

  Garel-Jones, Tristan

  Mates, Michael

  Glyn, Dr Alan

  Mather, Sir Carol

  Goodlad, Alastair

  Maude, Hon Francis

  Gorst, John

  Mayhew, Sir Patrick

  Gow, Ian

  Mellor, David

  Gower, Sir Raymond

  Merchant, Piers

  Greenway, Harry

  Meyer, Sir Anthony

  Gregory, Conal

  Mills, Iain (Meriden)

  Griffiths, Peter (Portsm'th N)

  Mills, Sir Peter (West Devon)

  Ground, Patrick

  Miscampbell, Norman

  Grylls, Michael

  Mitchell, David (Hants NW)

  Gummer, Rt Hon John S

  Monro, Sir Hector

  Hamilton, Hon A. (Epsom)

  Montgomery, Sir Fergus

  Hamilton, Neil (Tatton)

  Morrison, Hon C. (Devizes)

  Hampson, Dr Keith

  Morrison, Hon P. (Chester)

  Hanley, Jeremy

  Moynihan, Hon C.

  Hannam, John

  Mudd, David

  Hargreaves, Kenneth

  Murphy, Christopher

  Harris, David

  Neale, Gerrard

  Hawkins, C. (High Peak)

  Needham, Richard

  Hawkins, Sir Paul (N'folk SW)

  Nelson, Anthony

  Hawksley, Warren

  Neubert, Michael

  Hayes, J.

  Newton, Tony

  Heathcoat-Amory, David

  Nicholls, Patrick

  Heddle, John

  Normanton, Tom

  Henderson, Barry

  Norris, Steven

  Hickmet, Richard

  Onslow, Cranley

  Higgins, Rt Hon Terence L.

  Oppenheim, Phillip

  Hind, Kenneth

  Oppenheim, Rt Hon Mrs S.

  Holland, Sir Philip (Gedling)

  Ottaway, Richard

  Holt, Richard

  Page, Sir John (Harrow W)

  Hordern, Sir Peter

  Page, Richard (Herts SW)

  Howard, Michael

  Patten, Christopher (Bath)

  Howe, Rt Hon Sir Geoffrey

  Patten, J. (Oxf W & Abgdn)

  Howell, Rt Hon D. (G'ldford)

  Pattie, Rt Hon Geoffrey

  Howell, Ralph (Norfolk, N)

  Pawsey, James

  Hunt, David (Wirral W)

  Peacock, Mrs Elizabeth

  Hunt, John (Ravensbourne)

  Pollock, Alexander

  Hunter, Andrew

  Portillo, Michael

  Jenkin, Rt Hon Patrick

  Powley, John

  Jessel, Toby

  Price, Sir David

  Johnson Smith, Sir Geoffrey

  Proctor, K. Harvey

  Jones, Robert (Herts W)

  Raffan, Keith

  Jopling, Rt Hon Michael

  Rathbone, Tim

  Kershaw, Sir Anthony

  Rees, Rt Hon Peter (Dover)

  King, Roger (B'ham N'field)

  Renton, Tim

  Knight, Greg (Derby N)

  Ridley, Rt Hon Nicholas

  Knox, David

  Ridsdale, Sir Julian

  Lamont, Rt Hon Norman

  Roberts, Wyn (Conwy)

  Lang, Ian

  Sainsbury, Hon Timothy

  Latham, Michael

  Shaw, Giles (Pudsey)

  Lawrence, Ivan

  Shaw, Sir Michael (Scarb')

  Lee, John (Pendle)

  Shepherd, Colin (Hereford)

  Leigh, Edward (Gainsbor'gh)

  Shersby, Michael

  Lennox-Boyd, Hon Mark

  Silvester, Fred

  Lester, Jim

  Skeet, Sir Trevor

  Lewis, Sir Kenneth (Stamf'd)

  Stevens, Lewis (Nuneaton)

  Lightbown, David

  Stewart, Andrew (Sherwood)

  Lilley, Peter

  Taylor, John (Solihull)

  Lloyd, Peter (Fareham)

  Tebbit, Rt Hon Norman

  Lord, Michael

  Thatcher, Rt Hon Mrs M.

  Luce, Rt Hon Richard

  Thompson, Donald (Calder V)

  Lyell, Nicholas

  Townsend, Cyril D. (B'heath)

  McCrindle, Robert

  Wakeham, Rt Hon John

  Macfarlane, Neil

  Walden, George

  MacGregor, Rt Hon John

  Watson, John

  MacKay, Andrew (Berkshire)

  Watts, John

  MacKay, John (Argyll & Bute)

  Wood, Timothy

  Maclean, David John

  Young, Sir George (Acton)

  Madel, David

  Major, John

  Tellers for the Ayes:

  Malins, Humfrey

  Mr. Gerald Malone and

  Marland, Paul

  Mr. Richard Ryder.

  Marlow, Antony

  NOES

  Abse, Leo

  Ashton, Joe

  Adams, Allen (Paisley N)

  Atkinson, N. (Tottenham)

  Alton, David

  Bagier, Gordon A. T.

  Archer, Rt Hon Peter

  Banks, Tony (Newham NW)

  117

  Barron, Kevin

  Flannery, Martin

  Beckett, Mrs Margaret

  Forrester, John

  Bell, Stuart

  Foster, Derek

  Benn, Rt Hon Tony

  Foulkes, George

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

  Fraser, J. (Norwood)

  Bidwell, Sydney

  Freeson, Rt Hon Reginald

  Blair, Anthony

  Freud, Clement

  Boyes, Roland

  Garrett, W. E.

  Bray, Dr Jeremy

  George, Bruce

  Brown, Gordon (D'f'mline E)

  Gilbert, Rt Hon Dr John

  Brown, Hugh D. (Provan)

  Golding, Mrs Llin

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

  Gould, Bryan

  Brown, Ron (E'burgh, Leith)

  Hamilton, James (M'well N)

  Buchan, Norman

  Hardy, Peter

  Caborn, Richard

  Harrison, Rt Hon Walter

  Callaghan, Rt Hon J.

  Hart, Rt Hon Dame Judith

  Callaghan, Jim (Heyw'd & M)

  Healey, Rt Hon Denis

  Campbell-Savours, Dale

  Heffer, Eric S.

  Carlile, Alexander (Montg'y)

  Holland, Stuart (Vauxhall)

  Carter-Jones, Lewis

  Howarth, George (Knowsley, N)

  Clark, Dr David (S Shields)

  Hoyle, Douglas

  Clay, Robert

  Hughes, Robert (Aberdeen N)

  Clelland, David Gordon

  Hughes, Roy (Newport East)

  Clwyd, Mrs Ann

  Hughes, Sean (Knowsley S)

  Cocks, Rt Hon M. (Bristol S)

  Janner, Hon Greville

  Cohen, Harry

  John, Brynmor

  Coleman, Donald

  Jones, Barry (Alyn & Deeside)

  Conlan, Bernard

  Kaufman, Rt Hon Gerald

  Cook, Frank (Stockton North)

  Kirkwood, Archy

  Cook, Robin F. (Livingston)

  Lamond, James

  Cox, Thomas (Tooting)

  Leadbitter, Ted

  Craigen, J. M.

  Leighton, Ronald

  Crowther, Stan

  Lewis, Terence (Worsley)

  Cunliffe, Lawrence

  Litherland, Robert

  Cunningham, Dr John

  Livsey, Richard

  Dalyell, Tam

  Lloyd, Tony (Stretford)

  Davies, Ronald (Caerphilly)

  Lofthouse, Geoffrey

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

  Loyden, Edward

  Dewar, Donald

  McCartney, Hugh

  Dixon, Donald

  McDonald, Dr Oonagh

  Dobson, Frank

  McGuire, Michael

  Dormand, Jack

  McKay, Allen (Penistone)

  Dubs, Alfred

  McNamara, Kevin

  Dunwoody, Hon Mrs G.

  McTaggart, Robert

  Eadie, Alex

  Madden, Max

  Eastham, Ken

  Marek, Dr John

  Evans, John (St. Helens N)

  Marshall, David (Shettleston)

  Fatchett, Derek

  Mason, Rt Hon Roy

  Faulds, Andrew

  Maxton, John

  Field, Frank (Birkenhead)

  Maynard, Miss Joan

  Fields, T. (L pool Broad Gn)

  Meacher, Michael

  Fisher, Mark

  Meadowcroft, Michael

  118

  Michie, William

  Short, Ms Clare (Ladywood)

  Miller, Dr M. S. (E Kilbride)

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

  Morris, Rt Hon A. (W'shawe)

  Silkin, Rt Hon J.

  Nellist, David

  Skinner, Dennis

  Oakes, Rt Hon Gordon

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

  O'Brien, William

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

  O'Neill, Martin

  Snape, Peter

  Orme, Rt Hon Stanley

  Soley, Clive

  Park, George

  Spearing, Nigel

  Parry, Robert

  Steel, Rt Hon David

  Patchett, Terry

  Stott, Roger

  Pavitt, Laurie

  Straw, Jack

  Pike, Peter

  Thomas, Dafydd (Merioneth)

  Powell, Raymond (Ogmore)

  Thomas, Dr R. (Carmarthen)

  Prescott, John

  Thompson, J. (Wansbeck)

  Radice, Giles

  Thorne, Stan (Preston)

  Randall, Stuart

  Tinn, James

  Raynsford, Nick

  Torney, Tom

  Redmond, Martin

  Wainwright, R.

  Rees, Rt Hon M. (Leeds S)

  Wallace, James

  Richardson, Ms Jo

  Wardell, Gareth (Gower)

  Roberts, Allan (Bootle)

  Wareing, Robert

  Roberts, Ernest (Hackney N)

  Weetch, Ken

  Robertson, George

  Welsh, Michael

  Robinson, G. (Coventry NW)

  Wigley, Dafydd

  Rogers, Allan

  Williams, Rt Hon A.

  Rooker, J. W.

  Winnick, David

  Ross, Ernest (Dundee W)

  Woodall, Alec

  Rowlands, Ted

  Young, David (Bolton SE)

  Sedgemore, Brian

  Sheerman, Barry

  Tellers for the Noes:

  Sheldon, Rt Hon R.

  Mr. Frank Haynes and

  Shields, Mrs Elizabeth

  Mr. John McWiliam.

  Shore, Rt Hon Peter

  Question accordingly agreed to.
  Committee tomorrow.

  LOCAL GOVERNMENT FINANCE BILL, [MONEY]
  Queen's Recommendation having been signified—Resolved.
  That, for the purpose of any Act resulting from the Local Government Finance Bill, it is expedient to authorise the payment out of money provided by Parliamemt of any increase attributable to that Act in the sums payable out of money so provided under any other Act—[Mr. Peter Lloyd.]

  Residential Care Homes
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]
  10.26 pm
  Mr. Peter Bruinvels: I am especially pleased tonight to initiate this short Adjournment debate on residential care homes for the elderly, which is a matter of great concern to hon. Members on both sides of the House and which has become a growth industry over the years.
  I first became especially worried about residential homes in December 1985. Although the new Registered Homes Act 1984 provided for every home to be inspected not less than twice in every 12-month period, it did not prescribe a minimum number of beds. Similarly, although it required the person registered to provide adequate professional, technical, ancillary and other staff and to make adequate arrangements for patients in the home to receive medical and dental services where necessary, it did not really define what was adequate or professional.
  On looking through the papers and assessing the numbers of such homes, I was horrified by the tremendous growth in residential care homes. Although I am not in any way criticising private enterprise, it seems especially easy for anyone to set up a residential care home. I welcome the presence of my hon. Friend the Parliamentary Under-Secretary of State for Health and Social Security on the Front Bench tonight, and I particularly wish to draw her attention to the private sector homes in England. I am satisfied that local authority homes appear to be properly policed, but it seems that private sector homes are not always properly assessed. In 1984 there were 4,090 such homes with 50,168 residents. In 1985 the number of homes had risen to 5,200 and the residents to 69,000. By 1986, on the provisional figures that my right hon. Friend the Minister gave me on 27 November, there were 6,303 homes and something like 80,000 residents.
  Residential care homes are a very successful industry. It is a growth industry and one in which I would expect the quality of care provided in the homes to be of the utmost in usefulness, kindness, love and great care. My hon. Friend the Minister's predecessor made it quite clear that there would be an examination of the standards being set locally by the authorities concerned and of the extent to which the legislation is being implemented, in ways that seek to develop constructive partnerships between the statutory, voluntary and private sectors of residential care.
  However, one must obviously look at the provisions of the 1984 Act and at the role placed on the local social service authorities and the district health authorities respectively. I want to see the improved arrangements for registering and inspecting all residential care homes brought forward. I know that they came into force on 1 January 1985, but I am not convinced that they are as thorough in their investigations and examinations as the Act originally intended. There is a difficulty, because we are reducing Government interference in many areas. "Building Businesses not Barriers" makes specific reference to the registration of such homes and their inspection.
  In no way do I wish any registered home to have fewer than two inspections per year. It is welcome that the
  120
  overall fees for such homes have risen—the annual fee has been increased to £15 a place, the annual registration fee to £100 and the initial registration fee to £550. Therefore, proprietors of homes should expect at least quarterly inspections by representatives of the DHSS or local authorities. I believe that local authorities should carry out the first inspection, and that thereafter the DHSS should keep a watching brief.
  I know of many instances where local authorities have telephoned homes and said, "We are coming next week, stand by for inspection." Although I do not wish the element of surprise to be Gestapo-like, the inspections should be carried out regularly and without too much advance notice. I want homes to demonstrate love and care and attention at all times. The requirements are quite clear. I want residential homes to be bright, bustling and happy. Safety should be a priority, with no loose rugs, unexpected steps to gardens or bathrooms, awkward stairs or old wiring.
  Age Concern has studied the problems in such homes. There should be a proper fee structure for residents, who can so easily be taken advantage of. Some elderly people, as their age advances, become somewhat of a burden in the family home and it becomes necessary for them to be put in residential care. I am happy to state that no residential homes in Leicester take advantage of the elderly, but dangerous precedents could be established. Homes should show kindness and provide proper professional help.
  I know of homes that maintain that full medical staff are available 24 hours a day. Certainly, registered nursing homes would be required to meet that criterion. However, the Registered Homes Act 1984 also implies that properly qualified medical staff should be in attendance at all times. It is no good just having a doctor on the board and his name appearing on the headed paper—medical staff should be available at the home. The proprietors of registered homes—who should live on the premises—should make the position quite clear. I know of cases of staff being dressed up to look like nurses, which gives a false impression to the inspectors and prospective residents alike.
  I understand that poaching has occurred—where residents are visited by nice old ladies saying, "Come on, let's go and have a nice strawberry tea". They take them to another residential care home, and the next thing is that that elderly person has been "poached" and easy money is made.
  Because there is no stipulation as to the minimum number of beds required in a residential care home, sometimes beds are moved out of rooms when the proprietors know that the inspectors are due to visit, to make what is really a double room look like a single room. That is absolute deceit and easy pickings. I know of a case in the Birmingham area where an elderly gentleman is being charged £16,000 a year by a residential care home. I find it incredible that he is kicked out of bed at 6.30 am and forced back to bed at 6 pm, does not have good food and is lucky if he meets other people during the day. Something must be done to guide prospective residential care home proprietors as to the requirement and comforts that should be available to all prospective residents.
  I asked my hon. Friend's predecessor to introduce a band of price ranges for facilities. I know that it is unusual for a Right-wing Tory Member to call for Government interference, but I believe that a minimum and maximum charge should be stipulated for providing permanent

  121
  residential accommodation. That residential charge should be in a band from £125 that the DHSS allows to perhaps £160. I ask my hon. Friend to look at this, because £240, which is a regular charge, is incredible for the services provided, some of which are questionable.
  It is clear that too many of these homes are registered too soon. On my way in the mornings, I pass two large terraced houses. Over three months, they have become a residential care home, but that is too quick. While it is worthwhile to register and establish homes, this must not be done too quickly. At the moment the number of old people is increasing rapidly. I do not want them to be taken advantage of, and I want to see such precautions as proper fire escapes. Health and safety officers have a right of entry, but perhaps do not go to such places often enough, particularly as so many are now being established. The officers should be allowed in to get on with checking.
  Many of these old people are disabled and should not be put in upstairs rooms. They can be taken up and down by lift, but they might be trapped up there. They must be treated with humanity and kindness at all times. Many residential care home proprietors show much more love, kindness and decency than some relations. That is a sad fact of life.
  On the coldest day of the year, with Big Ben stopping at four o'clock for a few minutes, we should remember that elderly people need as much warmth as possible—not just blankets but proper facilities. I look forward to inspections and investigations taking place in the winter. At the moment, many of these places seem to be inspected only in the spring. Let us ensure that conditions are examined at the worst time of the year. I am not arguing for cold payments, I reassure my hon. Friend the Minister.
  Another factor is that many people are living longer. Britain has a reputation for an increasing number of people living over the age of 65. Residential care will be a growth industry and it is important that we provide maximum as well as minimum requirements to ensure that inspections are carried out at all times, although that is already required under section 17 (ii) of the Registered Homes Act. There should be more inspections, and I urge my hon. Friend to look at this and at the charges. It would be a great service to the public if she were to introduce a system of minimum and maximum charges both for residential care homes and nursing homes.
  The type of accommodation is varied. In some of the advisory documents it has been made clear that some people would like to share, but they should not be charged £16,000 a year if they do so. Multi-occupancy and connecting rooms should be considered. There is no ratio of single to double occupancy. No two people are the same, as the local authority circular of January 1986 pointed out. We must look on our elderly people with even greater respect.
  We should consider how to strengthen the Registered Homes Act 1984 to do something about the lack of safeguards. It will mean a substantial increase in the cost of running the homes but a big increase in health and safety checks, which is important. I would like to see 24-hour medical cover, and qualified nurses, who know how to cope with emergencies, on the premises. I do not want people dressing up as auxiliaries when they are not.
  I should like a scale of maximum and minimum charges to be published. That would ensure that no elderly people or their relations are caught out by having to pay for hidden extras to get the basic service. Private enterprise
  122
  should continue to thrive, but old people's homes should be exempted so that there is the best possible control over them. I am not in favour of NUPE's idea of midnight visits, but the inspection system must be updated as a matter of urgency. It is no use telephoning a residential care home and saying, "I should like to visit you; what time can I come?" There should not be too many unannounced visits, but proper visits must be made.
  I welcome the increase in fees. Proprietors of residential care homes will realise that, once they are registered, there are effective safeguards. If registration and licensing are made a little harder, they will be worth far more.
  In the east midlands there is a very good organisation that looks after residential care homes. I congratulate it and Mrs. Heather Cowley. Nevertheless, we must ensure that all these homes are up to the same standard and that it is not made easy for buildings to be converted overnight into brand new residential care homes. This is a growth industry. We must do everything in our power to protect the elderly. They are living longer. I look forward to many other hon. Members on both sides of the House saying that they are in favour of additional help and support being provided for the elderly.
  Only 650 people have gone into residential care homes in Leicestershire. Proprietors of residential care homes have written to me. The proprietor of a home in Eastbourne says:
  "People are openly advertising and taking three elderly people with no supervision and possibly not even paying tax. This is a situation that needs to be looked into. May I add that whatever the room size, the facilities offered, it is the owners and their attitudes to the care, dignity and quality of life of those people in their area that really matters."
  Letters of support have come from the Isle of Wight community health council. It has asked for updates on the way to curb the increase in private residential care homes which has been unleashed. There is also a letter from the South Warwickshire community health council. It is extremely worried about the growth in the number of residential care homes.
  I welcome the fact that the private enterprise sector has resulted in many more new proprietors of residential care homes, but I urge my hon. Friend and her Department to look carefully at the way in which the elderly are cared for. The Department of Health and Social Security will pay most of the price, but it should not be a blank cheque. It might price itself out of the market. The elderly must be given the best possible help, love and attention, and the safeguards that I have outlined will ensure that when an elderly person enters a residential care home he is given love, care and attention by properly trained staff. There must be regular inspections and the fees charged must be such as to provide for elderly people the kind of service that will enable them to live in dignity for the rest of their lives.
  10.43 pm
  The Parliamentary Under-Secretary of State for Health and Social Security (Mrs. Edwina Currie): I congratulate my hon. Friend the Member for Leicester, East (Mr. Bruinvels) on his success in Mr. Speaker's ballot and for choosing such an important subject. He has already shown great interest in this topic. I read his November article in Social Work Today with great interest. I assure him and all concerned of the importance that the Government place on voluntary and private residential care homes and

  123
  on their having proper standards, and I am sure he agrees that they have a vital role to play in the provision of community care.
  I was a little sad that my hon. Friend used the word "horrified" when he referred to this growth. That growth and development have been meeting a considerable need and it is good to see the private sector doing it so well.
  Let me deal with a number of the points that my hon. Friend raised. He mentioned control on charges by homes. There is no control on those charges any more than there is for any other services and we would not wish to see any. The amounts paid are a matter between those running the homes and the residents or the relatives of the residents who are meeting those charges. The charges could be expected to reflect the services and the facilities available as determined by market forces, in which my hon. Friend and I have considerable faith.
  In our view, it would not be proper to introduce a system of minimum and maximum charges for the provision of services paid for privately. I know that my hon. Friend is a keen supporter of a free market and, as he is aware, many of the residents of these homes are well able to pay the prices set, especially if they have disposed of a property before entering a home. The same applies to what my hon. Friend called poaching. That is a private, commercial matter between homes and it is not for the Department of Health and Social Security to intervene.
  In one case of misrepresentation in a home for mentally handicapped people in Manchester, the registration of that home was cancelled and an appeal by the owner of the home against that cancellation was not upheld. We are aware that where there may be serious misrepresentations we have the right and the power to act. The payment of supplementary benefit is another matter and I shall now deal with that.
  My hon. Friend mentioned growth in the number of homes as a whole and growth in the number of residents. I am sure he will not mind if I refer to the number of supplementary benefit board and lodging claimants in independent homes in Great Britain, because it gives an idea of the increasing responsibility of the Department. In 1978 the number of residents claiming board and lodging allowance was 7,000. The amount being spent was £6 million and the average payment was £15·70 per resident. By 1984, the number of claimants was 42,000. Spending had risen to £200 million from £6 million, and the average payment was £91·50 per resident. These figures relate to Scotland as well as to England and Wales. We do not yet have information for 1985, although the Audit Commission recently estimated that some £500 million was now in payment. We are not in entire agreement with the Audit Commission about how it arrived at its figure, but there is no doubt that the amount has increased quite substantially.
  The growth in these numbers was not entirely unexpected and to the extent that it meets a need not previously met it is welcome, but it showed us the need for better targeting of the benefit and improved expenditure control. For that reason, a number of studies were set in hand and the amounts to be paid were set at maxima around the country. A working party is currently looking at the arrangements for financial support of residents in all types of residential care homes—local authority. voluntary, and private. That working party is chaired by
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  the Department's official, Mrs. Joan Firth. Our aim is a system of financial support which is responsive to the needs of individuals and which gives better value for public money. The working party will report to Ministers and to local authority associations around Easter this year.
  A series of pilot studies have been undertaken by Professor Bradshaw from York university and they have been conducted in four areas—Lothian, Clwyd, Devon and Sefton—to see if the local authorities could advise us on whether a system of assessment could be introduced to see if supplementary benefit claimants in residential homes are most appropriately cared for in that setting and whether the homes' charges are reasonable in the light of the services provided. We expect that report to come to us by Easter.
  As my hon. Friend knows, the limits placed on the supplementary payments to residents were reviewed last year following a study of homes' costs by the management consultants Ernst and Whinney. Their report is in the Library. As my hon. Friend may well know, as a result of that report some maxima were increased. The limits for the elderly were set at £125 per week with a London limit of £142·50 and a new category for the very dependent elderly eligible for higher rates of attendance allowance and for the blind was set at £140 with a London rate of £157·50, and a further category of younger physically disabled has been set at £197·50 for London and £180 for the rest of the country. Therefore, we have set maxima of the payments that we are prepared to meet from supplementary benefit. The Ernst and Whinney study produced a usable response from only about 23 per cent. of the homes that were contacted, but the study showed that at least some homes were using the supplementary benefit figures as maxima, whereas many others were not. However, the other studies should tell us more about that.
  I share my hon. Friend's interest in and concern about standards. I am sure that we agree that the vast majority of homes offer an excellent standard of care—often far higher than those of the local authorities which we are asking to supervise them. Since 1948, residential care homes have had to be registered with local social services authorities. That registration is not automatic. The registration authorities must be satisfied, among other things, that the person applying for registration is fit to run a particular type of home and that the facilities, staffing and care provided are up to the standard required. The authorities can insist on alterations before granting the registration, and it is the local authority's responsibility, under all the legislation going back for a long time, to ensure that reasonable standards are maintained. It is required to carry out at least one inspection a year. It need not give notice or make an appointment. It can visit at night and in the winter. Indeed, some home proprietors have been complaining about late-night visits, although I agree with my hon. Friend that they may need to be done in that way.
  The homes are also subject to environmental health officers' standards and fire service requirements, and the home proprietors have had occasion to complain about that, too. They are also subject to the Inland Revenue, like any other business, and anyone not declaring income may have a nasty surprise in store.
  My hon. Friend asked about realistic registration fees. Under the Registered Homes Act 1984, the initial fee is £550, plus £100 for a manager, where relevant, and a further charge of £15 a place annually. A typical home

  125
  with 30 or 35 places is certainly paying about £500 a year to the local authority. The penalty for offences has been increased from a maximum of £500 to £2,000. There is a national list of council registrations which is updated quarterly, and there have been 82 residential care home appeals to the Registered Homes Tribunal against local authorities' refusal to register a home or decision to cancel or amend a registration. So far, nine appeals have been upheld, 28 dismissed and 22 withdrawn.
  In addition, a non-statutory code of practice, "Home-Life", which is in the Library, has been drawn up by an independent working party and forms the basis for the recommendations that we request the registering authorities to make and to carry out in their inspections of private homes.
  My hon. Friend will be aware that some of his suggestions would require primary legislation. Since the law has been in operation for only two years—it came into force almost exactly two years ago—it would be wise to see how it has operated during those two years and how its objectives can be carried forward before we start to amend and reorganise it, especially since we are talking about so many homes and individuals.
  Some concern has been expressed about the minimum of four residents for registration. In practice, that has been the minimum for a long time. It was thought that the line had to be drawn somewhere and that it should remain there. The 1985 costing study by the social services inspectorate showed us that local authorities were hard pressed in processing new registrations and inspecting existing homes that had to be registered even before we set them further tasks. If we were to ask them to inspect the tiniest homes, they might be put under such pressure that they would miss problems in homes on which we have asked them to keep an eye.
  My hon. Friend asked about staff and standards. Unless the private residential home is dually registered as
  126
  a nursing home, in which case it must be registered with the health authority and the rules about nursing and other staff are slightly different, it is not required to have staff with medical or nursing qualifications. The care normally provided in a residential care home is broadly equivalent to what might be given by a competent and caring relative able to respond to emotional as well as physical needs. Therefore, a medical and nursing qualfication is not considered necessary. Any professional health care needed by a resident would be provided by his or her general practitioner or the community nursing service, as appropriate, and under its supervision. To ask for 24-hour medical cover for an ordinary residential care home would be going over the top, except in so far as someone who was ill did not receive such cover from his general practitioner.
  On top of all of the other studies that I have mentioned, my right hon. Friend the Secretary of State has asked Sir Roy Griffiths to do a review of community care. Between Griffiths, Firth, Bradshaw and the review of residential care currently being chaired by Lady Wagner, this sector is probably being investigated more than almost anything else.
  In the light of all of those studies, some of which are to report to us very shortly and some of which are to report to us later—such as the Wagner report which will come in 1988—I would prefer to see how the current legislation, which is relatively new, is carried out in practice and ensure that we do not change something before it has had time to settle in.
  In those ways, the sector is being studied and encouraged to expand and develop in satisfactory and suitable ways to provide a good standard of care. We will take careful note of all of the recommendations, including those of my hon. Friend, and I am most grateful to him for raising this most important issue.
  Question put and agreed to.
  Adjourned accordingly at five minutes to Eleven o'clock.

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Preamble
Reassembling after the Christmas Recess, the House met at half-past two of the clock: the LORD CHANCELLOR on the Woolsack.
Prayers—Read hr the Lord Bishop of Carlisle.
Earl Baldwin of Bewdley Earl Baldwin of Bewdley—Took the Oath.

Tributes to the late Lord Stockton
The Lord President of the Council (Viscount Whitelaw): My Lords, I am sure that the whole House will wish to join me in paying tribute to the memory of Lord Stockton, who died on 29th December. We shall recollect vividly his contribution to public life as a Member in another place, as a Minister, and finally as Prime Minister.
I do not think that on this occasion it would be appropriate for me to add in detail to the many tributes that have already been made. My noble friend Lord Home of the Hirsel, who succeeded him as Prime Minister, will have his own special memories, as will my noble and learned friend the Lord Chancellor as the only prominent Member of both this Cabinet and that of the late Lord Stockton. Others of my noble friends were close colleagues of his in government. For myself, I can speak only as a very humble member of his team.
Some of your Lordships, in particular the noble Lord, Lord Wilson of Rievaulx, will remember him rather as a formidable opponent; and the whole House will have reason to appreciate the fact that Lord Stockton, as Prime Minister, was responsible for the introduction of the Life Peerages Act, which has had an enormous influence on this House.
All of us, from our own special positions, will have felt the impact of a remarkable personality. I am sure that your Lordships will particularly cherish the memories of his contributions here after his most welcome decision to accept an Earldom. I suggest (and for once without fear of contradiction from any quarter) that his maiden speech in this House was one of the most memorable occasions of recent and perhaps not so recent history.
Noble Lords: Hear, hear!
Viscount Whitelaw: My Lords, personally I shall treasure the memory of his determination to play his part in this House, even to the extent of staying to the early hours of the morning to the end of a debate in which we had both spoken—an example perhaps to us all and an example of a great parliamentarian.
Above all, I am sure that we can all join in a tribute to the life of a most remarkable character who did so much as Prime Minister and latterly as an elder statesman to enrich the political and parliamentary life of our nation. I am sure, too, that all noble Lords would wish me to express on behalf of the whole House their sympathy to his grandson and the other members of his family.
Lord Cledwyn of Penrhos: My Lords, it is a privilege to join with the noble Viscount and others in this tribute to the late Lord Stockton, whom we shall remember as Harold Macmillan, a great peacetime Prime Minister and an outstanding parliamentarian. As the noble Viscount has just said, much has been written about him since he died and assessments have been made of his long and notable career. It is not possible, however, to make a final or a rounded judgment so soon after his death. That will be a task for historians of the future.
He was an enigmatic statesman and there were ways in which he bore a resemblance to Lloyd George, though some have recently compared him with Stanley Baldwin. That he can be compared to such diverse former Prime Ministers in itself shows him to have been an enigma. On the one hand, he was an intellectual, witty and urbane, and, as we know, unfailingly courteous. On the other, he was aware of his roots in western Scotland. He never forgot the rock from which he was hewn.
On the one hand, again, in high office of state he appeared cool and detached, and, as was said at the time, unflappable. On the other, he was, beneath it all, sensitive and even nervous before he rose to make a speech. He was a very independent Back-Bencher who believed in the middle way. Here I think the resemblance to Lloyd George and also to Winston Churchill is valid. They were all rebels who became Prime Ministers.
Harold Macmillan presided over great events with skill and discernment. At home, he revived the fortunes of his party after 1957 and his stature in international affairs was undisputed. If the last period of his premiership was less happy, his own integrity remained beyond doubt.
We must all regret that it took so long for him to enter this House, because I think his place was in Parliament. When he came here at the age of 90 he enlivened our proceedings and delighted us all. The power to cast a spell was still there when he made his maiden speech a little over two years ago. I think the House will agree that he was still walking the middle way then. The humour was there, too, when he described himself as a political Rip Van Winkle.
He was a man of great qualities and of infinite variety, and beneath it all of deep religious conviction. He will be remembered with high regard and affection.
Lord Diamond: My Lords, the death of the head of the family whenever it happens, inevitably causes great sadness to the members of that family. It is to them that we on these Benches first of all offer our deep sympathy. That sadness is shared by the many friends of the late Lord Stockton. Indeed the whole House sorrows at the passing of a great man. In the course of one memorable speech he was able to earn the admiration of us all and to regenerate to the full his reputation as a great statesman. We are glad that after some hesitation he came to the view that as an ex-Prime Minister he should accept membership of this House. We all know what a substantial contribution he was able to make in spite of severe personal difficulties.
I also remember with pleasure that he was struck by the great advance made by your Lordships' House

359
since the period of his premiership towards a better balance in our bicameral system of government. What can I choose, what can I select, to say of Harold Macmillan, the politician? He was a remarkable man by any standards. He combined an almost light-hearted manner with deep seriousness, penetrating thought and decisiveness in action. His affability, moderation and lack of dogmatism made for easy relations with the opposition of the day. An extremely skilful politician, he was the master of British understatement and his capacity to coin the right phrase gave wings to many a simple home truth.
I have seen it suggested that his affection for things Edwardian not only moulded his thought patterns but imprisoned them to the extent that he was unable fully to comprehend contemporary thought. I think the phrase used was "keeping up with the times". I regard that analysis as both superficial and wholly mistaken. He never stopped growing, and the truths on which he constructed his philosophy were not the fashion of any one period: they were timeless verities. All in all, Harold Macmillan was good for the Conservative Party and good for Britain.
2.45 p.m.
Baroness Hylton-Foster: My Lords, this is of course one of those occasions when the Cross-Bench Peers wish to be associated with the sympathy and tributes to the late Lord Stockton and to his family which have already been so eloquently expressed. Perhaps we could just add how remarkable it is that one of the giants of the 20th century in British politics was always so approachable, showing care and consideration for individuals both personally and as a Member of Parliament for his constituents, despite all the burdens that he had to carry in high office.
The Archbishop of Canterbury: My Lords, a tribute from these Benches to the late Lord Stockton is both appropriate and heartfelt. It is appropriate because he was not only a person of religious sensibilities but throughout his life a staunch churchman. It was not a part of him that he paraded. Indeed it was a part largely concealed from public gaze, perhaps by shyness, perhaps by his humorous detachment from the oddities and absurdities of ecclesiastical vitality which he combined with a reticent reverence for the sacred mysteries of the heart of divine providence and human tragedy.
On the surface he did not deny that his responsibility for nominating religious leaders had benefited from his life-long devotion to the works of Anthony Trollope. He rather enjoyed the surprising appointment of an allegedly Left-wing enfant terrible to the diocese of Southwark; but he had thought long and knew what they needed when he gave them someone of the character of Mervyn Stockwood. His final nomination to the Bench of Bishops is now the senior among us and it is fair to say that few have taken their responsibilities in this House as seriously and as constructively as the right reverend prelate the Bishop of Rochester.
There are certainly many local churches and clergy of all denominations to whom he gave generously of his time, even when he held the highest offices. This
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was far from being simply the performance of a good constituency man. A superficial opinion might think him someone with inherited faith and a private observance of it. But I firmly believe that it was never taken for granted, and it coloured his courage in combat, his compassion for the distressed and his broad and international sympathies in handling the changes coming over the world.
I said that my tribute was heartfelt. Of course my stock of anecdote is modest in such a company as this, but memorable for all that. I am unlikely to forget the two weeks I spent in his company on a Hellenic cruise. It fell to me to lecture on many sites which drew out of him the most marvellous recollections both historical and contemporary. His store of experience to mark the passing days seemed inexhaustible.
As we passed Mount Athos he told me that in 1912 he had been drawn up in a basket to the highest monastery of Simonas Petros, perched Tibetan-like on a peak. On arrival there the abbot had greeted him and presented him with a book which he still possessed, The Case Against Darwin. It was, he said, part of his experience of Byzantine culture which had helped him in his long and fraught negotiations with Archibishop Makarios. Only as we passed Gallipoli were his thoughts too deep for words.
His wit and style never seemed to me malevolent. He certainly thought that people without humour lacked judgment and it was dangerous to put them in charge of anything. He believed in religious education, but he thought that fanaticism should be taught as a disease.
We all know that the effortless style of the communicator was carefully cultivated. He was not taken in by himself on that score. However, we should remember the remarks of Arnold Bennett about style.
"It is not a trick. A clear idea is expressed clearly and a vague idea vaguely. When you cannot express yourself depend upon it you have nothing precise to express and that what incommodes you is not the vain desire to express yourself better, but the vain desire to think more clearly and to feel more deeply".
The Earl of Stockton thought clearly and felt deeply. If, in later days, changes in the life of the Church and some exponents of the Christian faith were disappointments to him, he never underestimated their difficulties or used their folly as an excuse for withdrawing his membership, challenging their sincerity or scoring cheap points at their expense.
He coped with personal sorrow with immense dignity and courteous thoughtfulness for the feelings of others. Others who are more qualified will make judgments on his political acumen and his place in history as a statesman. But any complete picture of the man must take account of the strength which he drew from his humanity, from his family and friends and above all from his Christian faith in God.
Two final illustrations distil something of the man. When the Germans sued for peace in 1945, he happened to be in Assisi. After walking in a valley in the moonlight, he wrote this:
"… Hitler has lasted 12 years with all his powers of evil, his strength, his boasting. St. Francis did not seem to have real power but here, in this lovely place, one realises the immense strength and permanence of goodness".

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I put this alongside another quotation which he enjoyed.
"Our cleverness has grown prodigiously—but not our wisdom".
Wisdom and goodness were for him an essential and pleasurable part of being alive and that should be remembered as part of the debt we owe to such a civilised and lovable character as the noble Earl, Lord Stockton.
Lord Boyd-Carpenter: My Lords, as Lord Stockton, during his membership of your Lordships' House, occupied the corner seat on this Bench, it is perhaps appropriate that a very brief tribute to him should come from this direction. The fact that he used to sit here does enable me to tell your Lordships two things which I believe throw considerable light on his character and which are perhaps of interest to your Lordships.
In the first place, he greatly enjoyed his membership of your Lordships' House. He found in it an antidote to the loneliness which survival to a great age so often involves. The other matter is that during your Lordships' debates, he would comment satirically, wittily and entertainingly on the speeches made in a voice audible only to his immediate neighbours, giving them immense pleasure as they would undoubtedly have given to your Lordships' House had they been more widely audible. That was indicative of the fact that even when sitting here in absolute quietness he followed your Lordships' debate in the utmost detail. And he always had the point at issue clearly in his mind. That is a remarkable achievement in a man not only of his age but also suffering from his physical disabilities.
Perhaps I may add one other thing as a former member of his Cabinet. One or two of your Lordships will recall the sense of style that he put into government. Government was a great enterprise to be conducted with dignity, with wit and with literary merit. I hope that I do not transgress the 30-year rule if I tell your Lordships that in that era his own Cabinet papers were often garnished with a highly apposite literary quotation. Some of us discovered that if we wished to prevail in Cabinet discussions, our chances of doing so were greatly increased should we find an appropriate quotation from Trollope to put at the beginning of a Cabinet paper.
All of us in your Lordships' House will deeply miss him; but for those of us who, in the last two years, have had the privilege of sitting close to him there will be a gap that can never be filled.
Baroness Elliot of Harwood: My Lords, one matter not mentioned in these great tributes is that it was Lord Stockton who introduced women into the House of Lords. I was one of the first four ladies to be made Peers. I should like to pay tribute to him.
I knew him well from 1924, when he came to Parliament, until the day he died. I should like to say that no one was kinder, more generous or a greater friend. By introducing women into the House of Lords, I think he has done us a great service. I am one of many women who have sat in this House and who, I hope, will continue to come to this House. I believe this to have been one of the great achievements of his career.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, perhaps I may join in the many eloquent and precipient tributes to my late noble friend. There is one point that I should like to make. I worked with him very closely indeed between the years 1957 and 1959. In the capacity which I then occupied, it was my duty to try to understand the enigmatic character to which reference has been made. I think the key was this: he was the last great British statesman there will ever be to have grown to manhood before 1914.
In his public life and particularly in his capacity as leader of my party and as Prime Minister, I am sure that the thing which was constantly in his mind was that he had survived the horrible years of torture in the trenches and on the Western Front when so many of his immediate contemporaries whom he had loved and known had died—and died without fault or blame on their part. I feel quite certain that he would have liked that fact to be recorded in the tributes that have been paid.

Recruitment to Armed Forces
2.58 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many people have applied over the last five years to join the armed forces, how many have been accepted, and how many have been rejected.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, there were nearly 800,000 applications to join the armed forces in the period from 1st April 1981 to September 1986. Over the same period, 167,000 men and women entered the armed forces.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that Answer. In simple terms, does that not mean that for every four persons who applied only one applicant was accepted for Her Majesty's forces and that three out of four applicants were refused or not required? Can the Minister explain what the Secretary of State for Defence meant when he said some weeks ago that the implementation of a non-nuclear defence policy may well involve reintroducing conscription? Was he speaking broadly or selectively?
Lord Trefgarne: My Lords, I think that it is manifestly the case that if we were to replace our existing nuclear deterrent with a comparable non-nuclear deterrent, we would need many thousands more men and women than we have today, and it is certainly our view that that would involve some form of conscription.
Lord Dean of Beswick: My Lords, is the Minister saying that the figure would be in excess of the three out of four people who have been rejected, as some who were of a quite high calibre were simply in excess of requirements? Would the noble Lord like to put a figure on what he is saying, or is he just generalising?
Lord Trefgarne: My Lords, the selection process that is presently in place is designed to ensure that those people who enter the Armed Forces are competent to carry out their duties after the appropriate training. I do not think there is any evidence to suggest that the large numbers of people who would be required to fulfil the policies of the party opposite could be found by that volunteer means.

Coastal Bathing Waters
3.1 p.m.
Baroness Lane-Fox: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they are taking to improve the quality of coastal bathing waters.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale): My Lords, we are in discussion with the water industry with a view to including more waters within the scope of Article 1(2)(a) of the bathing water directive. It is hoped to make an announcement soon.
The survey announced on 18th December 1985 by my honourable friend the Minister for the Environment, Countryside and Local Government is continuing. While full analysis of the results for 1986 is not yet complete, preliminary findings are encouraging. More than half the waters surveyed already meet the standards set by the directive. Remedial works are in hand or are planned for a number of those waters which do not at present conform. In the United Kingdom, we are at present spending some £70 million a year on schemes related to the improvement of coastal bathing waters.
Baroness Lane-Fox: My Lords, I thank my noble friend for that very useful reply. May I ask him whether, in view of the small number of bathing waters identified in this country at the moment, we can hope that the Government will consider formally identifying further ones?
Lord Skelmersdale: My Lords, in answer to my noble friend, my original Answer concealed the fact that we are currently monitoring the quality of more than 350 bathing waters according to the regime laid down by the Commission in the directive. Further-more, we are in discussion with the water industry with a view to designating further waters. It is hoped to do that shortly.
Baroness Nicol: My Lords, I missed the figures that the Minister gave for the beaches which have already been designated under the directive, but the directive is six years old and the last figure I had was 27. Can he explain why the Government are having such difficulty in designating more than that number, if that is still the number, when France has designated something like 1,000 beaches under the same directive? Is he aware that many of us, particularly on this side of the House, feel that our beaches are a
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disgrace? I mention in particular Anglesey, where I understand bathing is almost impossible. There are hundreds more beaches up and down the country of which we should be thoroughly ashamed.
Lord Skelmersdale: My Lords, the figure was and remains 27. The directive, however, does not set out guidance, and we are in discussion with the Commission as to precisely what the directive means for the selection of bathing waters. Up to now, the Government have selected them on bathing use rather than on the use of an adjacent beach, which I understand has been the practice in some other countries.
Lord Renton: My Lords, is my noble friend aware that our bathing beaches are one of the greatest assets of this island? Can he explain how it is that, whereas such good efforts have been made by local authorities inland to provide proper sewerage for the people, the prosperous seaside places seem, relatively speaking, to have failed? Has not the time come to put some moral pressure upon them, as well as bribing them and exhorting them with the aid of taxpayers' money?
Lord Skelmersdale: My Lords, the moral pressure that is required is not on local authorities but on the water authorities in whose domain these waters fall. Moral pressure is being applied. The House will know that some £280 million is being spent over the next four years by the water authorities on capital projects to improve the water quality and this will continue beyond 1991.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that I can confirm what my noble friend has just said about some of the beaches of Anglesey as I walked there during the recess? Is he further aware that a good deal of the rubbish along the coast there has been discharged from ships? To what extent is that being monitored by his department? The noble Lord is aware of the legal obligations on ships within the territorial limit, but will he and his right honourable friend look again at the damage which is being done by vessels passing our coast?
Lord Skelmersdale: My Lords, in answer to the supplementary question of the noble Lord the Leader of the Opposition, it may be that I slightly misunderstood the question from my noble friend behind me. The problem of litter on beaches is one for local authorities, whereas the quality of the water per se is a matter for the water authorities. With regard to the disposal of oil at sea, which is also involved in this matter, this is regulated by Annex 1 of the International Convention for the Prevention of Pollution from Ships. Since that annex came into effect in 1983, the number of oily beaches reported has been reduced by 20 per cent. and this improvement is continuing.
Lord Nugent of Guildford: My Lords, is my noble friend aware, that, when attributing to river authorities responsibility for the condition of coastal waters, he should take into account the fact that the river authorities inherited the condition of the coastal waters and the short outfalls from the local authorities

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only some 13 years ago? Is he further aware that the custom of all local authorities throughout the country was to take the sewage down pretty well to the tide level and discharge it there? Therefore the river authorities have had an immense undertaking to begin to install long sea outfalls, which cost many millions of pounds each, in order to clear the beaches and make them safe for bathing. On the practical side, is my noble friend aware that it would be of the greatest help to river authorities in expanding their programme of further building of long sea outfalls if he relieved the pressure on their financial objectives and did not put quite such a stringent aspect on it as he and his noble friends have been doing in recent years?
Lord Skelmersdale: My Lords, my noble friend's point on the inheritance of the water authorities from the local authorities is well made. Nobody pretends that this problem, which undoubtedly occurs in some places, will be cleared up overnight. The £280 million over the next four years, which will continue beyond 1991, is within the water authorities' investment plans approved by government, most recently in another place on 24th November.
Lord Renton: My Lords, in fairness to my noble friend Lord Skelmersdale, may I say that it was I who got my question wrong and not he who misunderstood it? The fact is, as has been mentioned, that water authorities, river authorities and to a more limited extent local district councils are all involved in this problem.
Lord Skelmersdale: My Lords, I am grateful to my noble friend for his clarification.
Baroness Stedman: My Lords, if as the Minister says some 350 beaches are being monitored by his department at the moment, and we are spending something like £70 million a year in order to try to clean up our beaches, what rate of improvement does he expect over the next decade?
Lord Skelmersdale: My Lords, from the list of monitoring which was given by my honourable friend the Member for Leeds, North-West on 18th December 1985, it appears at first glance that some 60 per cent. of the waters would meet the requirements of the directive. Over the next 10 years I would expect pretty well all the 350 waters in question to be brought to an acceptable standard.

Scottish Rating: Contractor's Principle
3.10 p.m.
Lord Taylor of Gryfe: 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 steps they will take to correct the anomalies in the Scottish rating system arising from the application of the contractor's principle in the valuation of industrial companies.
The Minister of State, Scottish Office (Lord Glenarthur): My Lords, the Government have already provided, by Section 19 of the Rating and Valuation (Amendment) (Scotland) Act 1984, the opportunity for certain Scottish ratepayers to cite English evidence in valuation appeals, an opportunity especially relevant to valuations made under the contractor's principle. Appeals are for the courts and Ministers cannot intervene.
Lord Taylor of Gryfe: My Lords, despite the fact that the opportunity is given to appeal against these valuations, is the Minister aware of the present situation in which the ethylene plant in Fife is rated at £9.8 million per annum, payable to the local authority, whereas if the same plant had been erected south of the Border the rates payable would be £1.2 million? Is not that a considerable disincentive to inward investment in Scotland?
Is the Minister also aware that a pipeline running from North to South is rated twice as high north of the Border as it is south of the Border? While there are provisions for appeal against rating, is not there a case for some uniformity of treatment in the rating of industrial undertakings?
Lord Glenarthur: Yes, my Lords. We are certainly aware that some major oil companies and petrochemical companies in Scotland, such as that to which the noble Lord referred, are dissatisfied with their rates. However, the action likely to be most productive in the short term is for the ratepayers carefully to prepare and take forward their valuation appeals.
However, having said that, I certainly agree that harmonisation is necessary, and the Government warmly welcome the technical discusions which have started between the Scottish Assessors Association and the Inland Revenue valuation office on how harmonisation between the separate valuation systems north and south of the Border can be achieved. The contractor's principle is to be given particular attention in those discussions.
Lord Taylor of Gryfe: My Lords, can the Minister expedite those discussions since there is a very large investment, in an area of high unemployment in the West of Scotland, which is in jeopardy at the moment? Incoming foreign companies cannot understand why rates should be so based that it is at least twice as expensive to invest in Scotland as it is in England.
Lord Glenarthur: My Lords, harmonisation between the independent systems in Scotland and England will take time, but certainly I note the noble Lord's remarks.

Nurses: Protection against Attacks
3.13 p.m.
Baroness Lane-Fox: My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps are being taken to protect nurses against mugging and assault on their way to and from hospital and while on ward duty.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, while realising that my noble friend's Question applies only to nurses, I wish to make clear that Her Majesty's Government take very seriously any form of violence or threat to all employees of the NHS, social security and social services.
Following a conference in December 1986, chaired by my right honourable friend the Secretary of State, a committee concerning violence to staff is being established. I am to chair it. Although its terms of reference have not yet been finalised, the committee will hope to identify and disseminate good practice and promote effective co-operation both nationally and locally.
Baroness Lane-Fox: My Lords, in thanking my noble friend the Minister for that very encouraging reply, and also in congratulating her on this new committee, perhaps I may ask what views she has on the success or otherwise of the present courses in self-protection, which surely must be important for nurses walking to and from hospitals.
Baroness Trumpington: My Lords, I believe that there are many different methods which can be applied, and of course those will depend on the particular hospital, nursing home or community which the nurses are visiting or are working in or out of. Local health authorities have taken many different measures, including the employment of safety guards, the installation of closed circuit television and panic alarms, and rearranging duties in order to reduce waiting times. However, probably the most effective measure is proper training, reinforced at regular intervals, in the management of aggression.
Baroness Cox: My Lords, is my noble friend the Minister aware that a survey is currently being undertaken on the proportion of nurses suffering physical assault? In some areas it is remarkably and alarmingly high. For example, in accident and emergency departments perhaps as high as 80 per cent. or 90 per cent. of nurses suffer physical assault. Is my noble friend aware that this is a matter of great concern to the profession?
Baroness Trumpington: My Lords, I am aware that the figures vary considerably. I also urge nurses to please come forward and report any incidents of violence, either physical or verbal, which they may have undergone, because it is very difficult for us to make a whole picture when we believe that many incidents are not reported.
Lord Avebury: My Lords, has the Minister noted over the holiday period the reports of violence and threatened violence by drunken hooligans in the
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accident and emergency departments of our hospitals? Is the Minister satisfied that adequate measures are taken to protect the staff on duty, for example, on New Year's Eve? Is she satisfied that health authorities have the money, if they choose to spend it, for extra protective services for nurses and other staff on such occasions?
Baroness Trumpington: My Lords, funding is not a problem. Health authorities introduce security measures from within their existing resources. I would add that there are very many reasons for violence.
Baroness Phillips: My Lords, does the Minister accept that one of the reasons for the violence which is increasingly perpetrated on people in their place of work is the leniency of the sentences imposed when the people responsible are caught? Does not the noble Baroness agree that her right honourable friend in the Home Office may be interested in that aspect?
Baroness Trumpington: My Lords, from my particular situation I can only take note of the remarks of the noble Baroness.
Lord Campbell of Croy: My Lords, for the benefit of those of us who have not followed this subject in detail, can my noble friend give an indication of the number of recent cases in which there has been mugging of nurses on ward duty, as mentioned in this Question? Who have committed those assaults? Is it the patients, visitors or unwelcome intruders?
Baroness Trumpington: My Lords, I do not have the exact figures because, as I said, nurses do not always report cases of assault. They sometimes feel that it is all part of their job. I hope they will cease to think that and will come forward. I cannot remember the other part of my noble friend's question.
Lord Campbell of Croy: My Lords, I had only one question asking for an indication of the number of muggings occurring against staff on ward duty, as mentioned in the Question.
Baroness Trumpington: My Lords, as I said, it is impossible to give numbers owing to the indefinite information.
Lord Auckland: My Lords, bearing in mind that many of the victims of these assaults are young female student nurses, does not my noble friend consider that the use of more male nurses, where available, particularly in casualty wards and during holiday periods such as New Year's Eve, might reduce some of the problems? Can my noble friend say when this very welcome report of the Committee to be chaired by her right honourable friend is likely to be available?
Baroness Trumpington: My Lords, it is true that young, inexperienced nurses working in accident, emergency or psychiatric units, and also ambulance personnel, are among the most vulnerable. I feel that this is a matter for future recruitment, and I take note of my noble friend's remarks.
Baroness Seear: My Lords, perhaps I may be permitted to follow the question of the noble Lord, Lord Campbell of Croy, as to who is doing the muggings. One fully understands that the noble Baroness cannot give us figures for cases which have not been reported. However, I take it that cases have been reported. Who are the people who carried out the attacks in those cases?
Baroness Trumpington: My Lords, there are so many different kinds of cases, and it should be remembered that everyone is capable of becoming aggressive. The majority of assaults on nurses take place at the hands of people under the influence of drink or are psychiatric patients.
Baroness Ewart-Biggs: My Lords, can the Minister say what kind of training in physical protection is undertaken by female members of the NHS? Do they have some training in judo, for instance?
Baroness Trumpington: My Lords, I think that again this depends on where the courses are held. There is some training given in the handling of aggression during the basic nurse training. Where local situations demand it, some health authorities are arranging further training for their staff. On a national basis, this month the NHS training authority is piloting a multidisciplinary training course on the handling of aggression.
Baroness Lane-Fox: My Lords, is my noble friend the Minister aware that in a report in The Times last week there was a suggestion that nurses were not made competent by the courses that they were receiving? This was largely the point of my Question. I wish to find out whether those courses can be checked upon and improved.
Baroness Trumpington: My Lords, I think that may be one of the questions that will be examined by the committee which I am to chair and which will have its first meeting at the end of this month. We shall certainly be looking into this aspect.

Gairloch Harbour Order Confirmation Bill
3.20 p.m.
Read a third time, and passed.

Shetland Islands Council (Ham Voe, Foula) Order Confirmation Bill
Read a third time, and passed.

Teachers' Pay and Conditions Bill
3.22 p.m.
Baroness Hooper: My Lords, I beg to move that this Bill be now read a second time.
This is the first Bill to be debated in your Lordships' House in 1987; but, that apart, it deals with what must always be a matter of considerable concern to us all.
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We all recognise that the effective running of our schools is vital for the nation as a whole. Successful education depends on well motivated teachers. Teachers have a highly responsible task, exercised not only on behalf of pupils and their parents but also on behalf of taxpayers, ratepayers and the wider community. An effective education service is crucial in the long term for all aspects of national life. We must all regret the disruption, the interrupted teaching and lost educational opportunities that have resulted from the general dissatisfaction with the way in which pay determination for schoolteachers is presently concluded. Your Lordships have a wide expertise on education and share concerns about its importance and the need to resolve the present crisis about pay determination for schoolteachers.
This Bill comes to this House with a measure of agreement. There was agreement in the other place that the Burnham committees should go, that pay and conditions of teachers should be negotiated together, that the Secretary of State should have a proper role in the pay determination of schoolteachers, and that a clear definition of schoolteachers' jobs should be adopted.
Burnham committees have existed since 1919. The present structure orginates from the Remuneration of Teachers Act 1965 under which the two present Burnham committees operate. One deals with schoolteachers' pay, the other with that of teachers in further education. Neither deals with conditions of service, which is and has been generally acknowledged to be a major defect.
As many of your Lordships will know, the present primary and secondary committee has 55 members divided into the teachers' panel and the management panel. The teachers' panel includes members from no fewer than six teacher unions. The management panel is 27 strong. It is largely composed of local authority members with just two representatives of the Secretary of State. This huge, unwieldy committee has been beset by difficulties arising from its own structure. Although the teachers' panel has traditionally spoken with one voice in Burnham, there has been a long history of differences and rivalries between the different unions. When, in November 1984, the employers presented a package linking pay and duties, the National Union of Teachers walked out of the talks in the following month. Negotiations in July last year in Coventry led to heads of agreement signed by five unions but not by the National Association of Schoolmasters/Union of Women Teachers. In November last year, after the Nottingham negotiations, a draft agreement was signed by four of the six teacher unions but within a fortnight two of the four unions had withdrawn their support. So from five, then four, there are now only two of the unions in support.
There has been one major factor which no Government have been prepared to leave out of consideration. Between 1965 and 1985 the Secretary of State's representatives had a weighted vote within the management panel and a power of veto over proposed offers on grounds of aggregate cost. This Concordat, as it was called, meant that the management panel was constrained to levels of pay increases acceptable to the Government: it reflected

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the view of the then Labour Government which introduced the 1965 Act that the Government needed to retain power over the global sum for the schoolteachers' pay bill. But the Concordat was scrapped unilaterally by the employers in 1985 and this has left the Government with a mere two votes out of 27 in the management panel: this was acknowledged by the Opposition in the other place to be much too small a role for any Secretary of State.
There have been serious attempts to reform the outdated salary structure but progress has been painfully slow. In 1981 a Burnham agreement established a joint working party to review the salary structure of the profession. This process has been going on for five years and we are still some way from a generally acceptable settlement. There have been genuine attempts by the local authority employers to make headway with the definition of teachers' duties and conditions of work. No real progress was made until last year. But a considerable gain from the ACAS-led discussions in recent months is the emerging definition of teachers' duties and working time at the direction of the head teacher.
Before turning to the clauses in the Bill I want to state briefly the Government's views on schoolteachers' pay provided pay and conditions are brought together with an appropriate pay structure. Government have said that there could be a substantial increase in public expenditure provision for schoolteachers pay provided pay and conditions are brought together with an appropriate pay structure. The Government have proposed an average increase in school teachers' pay of 16.4 per cent. to be paid in two stages as from 1st January and 1st October 1987, with an increase in the number of incentive posts to 140,000 by 1990. This is on top of increases agreed for March and April 1986, making a cumulative 25 per cent. increase over the period.
But the ACAS-led discussions between the local authority associations and the teacher unions proposed a flat and undifferentiated pay structure which provides minimal incentives and gives the biggest pay increase to the least experienced teachers. These proposals, which reduce the number of incentive posts to 80,000, do not provide for proper differentials in order to reward good classroom teaching and extra responsibility, to pay for skills in short supply and to give management adequate flexibility to attract good teachers to posts in difficult schools. It is scarcely surprising that these proposals do not commend the support of all the teacher unions. Indeed in the words of the National Association of Head Teachers, the ACAS proposals "shoot differentials to pieces".
Last Wednesday the local authority representatives and the teacher unions confirmed that they wanted to adopt the draft agreement reached last November, without amendment, but only if the Government agreed to very large expenditure increases. A sizeable proportion of the local authority representatives and four out of the six unions dissented from this conclusion.
Last Wednesday's outcome will not provide a settlement. The employers and unions have long
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known that the ACAS package does not meet the Government's condition that the unprecedented additional £608 million be matched to a substantially improved career structure with many more incentive posts. The Secretary of State has made it clear that what is now proposed in the ACAS package would compress differentials and reduce incentives for good teachers and those who take on additional responsibilities in an unacceptable way. In addition, the proposals, as they stand, involve expenditure well above the £608 million earmarked—£85 million over this year and next. Neither the local authorities nor the unions seem to have thought about the further costs involved in their proposals on conditions of service. The employers' estimate of those last November was £105 million for this coming academic year and £165 million for 1988–89.
The Secretary of State made it clear at the North of England conference last Friday that he would continue to seek a pay structure which would better meet the needs of our schools and provide fair rewards for teachers. He said:
"Last Wednesday seems not to have carried the business forward in any material way, but I remain very ready to have further discussion on possible improvements with the local authorities and the teacher unions".
For the medium term, given the turmoil there has been in pay determination for school teachers in recent years, the Government believe that an interim solution of an advisory committee would provide the best means of ensuring an efficient and realistic process of determining school teachers' pay and conditions for a temporary period until March 1990.
A committee of independent people, working within guidance given by the Secretary of State, but with a very clear requirement that it should provide the opportunity for local authority and teacher unions to submit evidence and representations, should provide a clear perspective and will help overcome the problems there have been with pay determination for school teachers over recent years.
Hence the Bill provides for interim arrangements. For the longer term there will be a variety of views about what should happen. Many of them, no doubt, will be aired today. Some will advocate a pay review body like that for doctors and dentists; others will want pay determination to be settled without the involvement of any outside body. The recent disturbed history makes it very difficult to predict how the right solution for the longer term may be found.
As to the clauses of the Bill, Clause 1 repeals the Remuneration of Teachers Act 1965 and provides for current pay provisions to remain in force until they are superseded by new arrangements; in the case of school teachers, arrangements made under this Bill, and in the case of teachers in further education where there have not been the same problems arrangements agreed between teachers and their employers.
Clause 2 provides for the setting up of the interim Advisory Committee on School Teachers' Pay and Conditions. It will report to the Secretary of State on such matters relating to pay and other conditions of employment as he may refer to them, following such directions as he may give. The clause requires the advisory committee to invite associations of local education authorities and organisations representing

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school teachers to submit evidence and make representations to them. It was made clear in the debates in the other place that all reports from the advisory committee will be published.
Clause 3 gives the Secretary of State power to put recommendations of the committee into effect after consulting the relevant local authority associations and teacher unions. If he makes no material modification to the recommendations, then the order implementing them is subject to the negative resolution procedure; if he does make a material modification, then the order requires an affirmative vote in both Houses. Local authorities will have a legal obligation to pay teachers in accordance with the scales and other provisions set out in an order or published document referred to in the order. The provisions on other conditions of employment will have effect as terms of teachers' contracts.
Clause 3 also provides that the Secretary of State will be able to make orders coming into force before 1st October 1987 without a report from the advisory committee, after consulting the relevant local authority associations and teacher unions.
Clause 4 provides for money to be made available to the Secretary of State to cover expenses attributable to provisions of the Act. The main expense would be payments to members of the advisory committee, if it is decided that they should be paid; this will be largely offset by the disbandment of the previous Burnham Committees.
Clause 5 emphasises the interim nature of the provisions in the Bill, as the Act will expire on 31st March 1990 unless renewed by order of the Secretary of State. Any renewal can only be for a period of one year at a time and will be subject to the negative resolution procedure of Parliament. Clauses 6 and 7 cover respectively definitions of terms used in the Bill and various supplemental provisions.
It has been alleged that the Bill ends negotiating rights for school teachers. The truth of the matter is that it takes necessary action. The existing bargaining arrangements have simply not worked, nor is it credible to imagine that anything like them would serve for the immediate future. The Bill sets out interim arrangements, giving time for long-term arrangements to be sorted out carefully and rationally. During this interim period there will be no shortage of consultation. The advisory committee will be required to take evidence and receive representations from the relevant associations of local education authorities and teacher unions.
The Secretary of State will be required to consult the relevant associations of local education authorities and teacher unions before making any order under the Bill about pay or conditions of employment. I can assure the House that this process of consultation will be taken very seriously indeed. Parliament will have the final say, since any order following a report from the advisory committee will be subject to either the negative or affirmative resolution procedure, as I have explained. This gives Parliament a role which it does not at present have, as orders under the Remuneration of Teachers Act are not subject to any parliamentary procedure.
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Interests representing voluntary schools have suggested to my right honourable friend that their position as employers of 20 per cent. of school teachers should be reflected on the face of the Bill. The Government accept this point of view not just because of the legal responsibilities of the governors of aided schools as employers but also because of the general responsibilities of the governors of voluntary schools for the successful running of those schools.
The Government will therefore be bringing forward amendments to Clauses 2 and 3 to provide for appropriate consultations to be made by the interim advisory committee before they formulate advice and by the Secretary of State before he proceeds to make any order under the Act. A further amendment will make it clear that an order covering conditions of employment will be able to make different provision for different cases: this would allow orders to accommodate such variations as may be needed to meet the particular position of the voluntary sector.
In conclusion, today the Government seek the agreement of your Lordships' House to a Bill aimed at ensuring that for an interim period there can be new arrangements for determining school teachers' pay and duties. The existing determination processes which should have provided resolution of regrettable and long-running difficulties in our schools have clearly failed to do so. For the sake of the effective education of the nation's children, I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Hooper.)
3.39 p.m.
Lord McIntosh of Haringey: My Lords, this Bill comes before your Lordships as a crisis measure. It is presented by the Government in a timetable and in conditions which reflect the Government's particular view of the events of the past two years in our education service. Indeed, if it were not presented as a crisis measure, it is difficult to conceive how your Lordships could ever be asked to agree to the elimination of negotiating rights on the part of the employers and the workers in 10 per cent. of the public sector in this country. That is what the Bill means, no more and no less.
I referred to the timing of the Bill. The first indication of the detailed contents of the Bill came from the Secretary of State when the Bill was introduced at the end of November 1986, not at the time of the Queen's Speech when the only reference was to the Remuneration of Teachers Act 1965. The entire process in another place took place in less than three weeks and was immediately followed by the Christmas Recess. It comes to your Lordships at a time when there has been no full opportunity for public debate or, indeed, for parliamentary consideration.
I object not so much to the procedures in another place, because it must be said that all amendments to the Bill were debated at great length and, to the great credit of my right honourable and honourable friends, without the use of the guillotine on the Floor of the House itself. I do object however to the fact that all this has taken place at a time when there has been no real opportunity for public feeling on the matter—there is

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no doubt from my postbag, which is the largest that I have ever had since I became a Member of your Lordships' House, that there is great public feeling—to have its full effect and express itself to your Lordships.
There is no doubt that there is and has been, over the years, a crisis in our schools. Every parent, every child in our schools, knows the effect of the disruption. Every teacher in the last two years, and long before that, has known the effect of restrictive policies on the remuneration of teachers and on their standards of living.
My honourable friend Mr. Giles Radice speaking on Second Reading of the Bill in another place, said that four issues had given rise to justified concern about the position in our schools. The first is that teachers' pay has dramatically fallen behind that of other professions in our society, not just in the public sector but also in the private sector. The second is that the teachers were faced with a pay structure which, because it depends on the number of pupils in the school for levels of remuneration, has had the effect that a substantial majority of teachers are now locked into the bottom two pay scales and therefore cannot earn a living that enables them to bring up their families in the comfort and conditions that they have a right to expect.
The third—this, I think, is common between all parties—is that there has been a lack of definition of teachers' duties and of conditions of service. The fourth—again, this is common between all parties—is that there has been a very severe need to overhaul inadequate negotiating procedures.
These causes have led to the most unfortunate history of the past two years, a time when the financial squeeze on local authorities has been very great and a time when the only indication of support from the previous Secretary of State came in the form of a very conditional offer of more money based on changes to conditions of service rather than a recognition of the justified demands of teachers for a living wage.
We have seen in the past 12 months the real difficulties with the Burnham procedures which have led to a reference to ACAS. We have seen within the last nine months negotiations in ACAS which have led to very substantial changes in the atmosphere in which teachers' pay has been negotiated and in the degree to which the employers and the teachers have been able to find common ground. As a result of the final ACAS-led meeting on 19th December, reference on conditions of service went back to the CLEAR school teachers' joint meeting, which agreed on conditions of service very close to those that have been demanded by the Secretary of State. It came back to the Burnham Committee last Wednesday, which agreed, subject to the impossibility of financial agreement by the Secretary of State, on virtually all the other things that the Secretary of State might have wanted.
That is the recent historical background to the Bill that we are debating today and that we shall be considering in Committee in the course of the coming weeks. It is a rather different picture from that presented by the noble Baroness, who managed to make it appear that it was the intransigence of the teachers' employers rather than the intransigence of
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the Secretary of State which was responsible for the position in which we find ourselves. I suggest to your Lordships that that is not the case.
Let us now turn to the Bill itself. The first reference that the noble Baroness made was to the Title and to Clause 1(1), the repeal of the Remuneration of Teachers Act. I think it can be said with confidence that all sides of the House will wish to agree with that part of the Bill and that most sides of the House will not wish to agree with any other part of the Bill. There is no doubt that the Burnham machinery has outlived its usefulness, not least for the reason that the noble Baroness gave. It separated perforce negotiations on pay and negotiations on conditions of service.
Then we have in the Bill this curious idea that these are interim provisions, that this is a temporary Bill. Let us look at the Bill more closely. The Bill is to continue until 1990, after which it may be renewed in successive years by the Secretary of State on resolution of both Houses of Parliament. Anyone who knows anything about local government and temporary planning permission knows that temporary planning permission is the most permanent of all kinds of planning permission. Anyone who knows about the way in which the Bill has been drafted knows that, given the powers that the Secretary of State has under the Bill—the interim powers to dictate in every respect teachers' pay and conditions of service—it is inconceivable that a Secretary of State, at least from the party now in office, would abrogate those powers and return to a more democratic procedure. This is not then, in effect, a temporary Bill; it has within it the seeds of permanence at the whim and discretion only of the Secretary of State.
Then come the provisions for an advisory committee. These are most remarkable provisions when one takes them together. The advisory committee is to be appointed entirely by the Secretary of State. There is no indication of the qualifications for membership of the advisory committee. There is no indication that there should be any form of right of membership of those involved in any way in education, whether they be the teachers, the employing organisations, parents or the churches. None of these has any right of representation on the advisory committee.
The advisory committee, as my honourable friend said, is a Secretary of State's poodle. Even so, the Government propose that the recommendations of the advisory committee can be overturned at will by the Secretary of State if the difference between his overturning the recommendations of his own advisory committee and accepting them is only a difference between negative and affirmative procedures in Parliament.
I conclude that the advisory committee, with all the fine words about consultation, is no effective alternative to the kind of negotiation that those involved in the education service—teachers and employers above all—would expect to see as the basis for the determination of their pay.
There are many other details about the Bill into which we could and will go at an appropriate stage. I want to refer to one overriding consideration which the Government have a very short time to deal with

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and which they must deal with before the Bill comes to Committee. It is the question of our obligations under the conventions of the International Labour Organisation. The Secretary of State in another place casually brushed off these obligations as if it were Convention 151 which applied to teachers. The question will answer itself, because the National Union of Teachers has appealed to the International Labour Organisation. It is quite clear, if one compares Convention 98 and Convention 151, that it is Convention 98 which applies to public servants other than those engaged in the administration of the state. The terms of Article 4 of Convention 98 are as clear as these things ever are to a non-lawyer such as myself. Measures appropriate to national conditions shall be taken where necessary to encourage and promote the full development and utilisation of machinery for voluntary negotiations between employers or employers organisations and workers organisations with a view to the regulation of terms and conditions of employment by means of collective agreements.
Consultation of the sort proposed by the Government in this Bill cannot constitute negotiations with a view to the regulation of terms and conditions of employment. Therefore, this Bill must be in conflict with Convention 98 of the International Labour Organisation to which this Government, as well as preceding governments, have subscribed. Therefore, failing the withdrawal of this Bill—of which there has been no indication in the speech of the noble Baroness—there will be a number of amendments which we shall have to put forward in due course. I can only indicate the scope of the amendments rather than the detail.
We will be seeking to ensure that schools are treated as the further education service is treated in the Bill, in a manner agreed between both parties rather than by the Secretary of State. We will seek to ensure that any advisory committee is subject to a right of reference as to the matters it considers by parties other than the Secretary of State. At the moment it is only the Secretary of State who can say what the advisory committee will consider. We will be seeking to ensure a right of evidence, of representation, and indeed of negotiation, by the teachers and the employers and by others concerned with the education service.
I was glad to read in the report of proceedings in another place that the report of the advisory committee will be published. We will wish to see that on the face of the Bill. We will wish to see that there is representative membership of the advisory committee. Again, I welcome the assurance given by the noble Baroness that the Church will be represented. I will be able to show that this is also the wish of the teachers and the employers and that it can be achieved in other ways. We will certainly wish to see that the duration of the Bill is altered and that it is not capable of indefinite renewal at the whim of government as at present. We wish to delete the references to different rates of pay in different areas, which appear to us to be potentially a return to the kind of chaos which existed before the First World War and which the original Burnham machinery was set up to get rid of. There are plenty of alterations which need to be made to the Bill if this House is to
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exercise its minimum responsibilities as a revising Chamber.
Before we reach that stage, we must consider what it is that the Government want from the teachers and from the employers in the form of a negotiated agreement and what it is that is actually being offered by teachers to decide whether any Bill at all is necessary. I take as my text the Statement by the Secretary of State at the end of October last year. He said first of all that he wanted to see adequate conditions of service. He set out 19 points for defining the duties of teachers and expressing the length of time—the number of days and the number of hours—for which teachers were to be at the disposal of the headteacher.
As I have already said, the teachers and the employers have agreed on virtually those conditions of service and they have been confirmed by the meeting of CLEAR schoolteachers. The Secretary of State wanted to see that there would be adequate opportunities for what he called management, that is, a much larger number of promoted posts than those proposed at Coventry or subsequently negotiated at Nottingham.
There are objections on the part of many teachers to such proposals, just as some of the teachers' unions feel strongly that they are desirable. At the end of the day, I am assured by teachers' unions representing the lower paid teachers that they are still open minded about the structure, as to whether or not there should be an extra tier of promoted posts. I feel convinced that if it had not been for the intervention of the Secretary of State in the middle of these negotiations we would have been able to reach an agreement, perhaps not fully expressing what the Secretary of State wanted, but certainly going some way towards his requirements.
At the moment, it is certainly the case that far too many teachers are stuck at the bottom of the scales, and at scales at the bottom of the ladder. This situation cannot be satisfactory.
The Secretary of State also feels very strongly that there should be a lower ceiling for the main professional grade, that is of non-promoted teachers, than is provided for by the ACAS agreements. I recognise that this is also a matter of dispute between different teaching unions. Teachers who stick to classroom teaching—those who wish to work in the classroom and not to take part in the management of schools—have a right to a decent standard of living. That is a point that teachers feel strongly about. And that is what the Secretary of State cannot understand. He must recognise that this situation in any solution, whether it be imposed or negotiated, would always cause conflict. It cannot be acceptable as the Secretary of State proposes that more than 50 per cent. of our teachers at the top of their scales and after years of devoted service should be earning less than £13,000 per annum.
Then there is the issue of the budget, which, in the new cant term, is called the cost envelope. It is true that the agreement negotiated last week would cost £85 million more than the Secretary of State has proposed. However, when one looks at the fact that a delay in implementation of a rise in any one year saves

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no less than £40 million, it can be seen that there is scope for manoeuvre. There is scope not only in 1986 and 1987 but also in the next year for changes in the implementation dates which would achieve the desired objectives within the budget laid down by the Secretary of State. This fact has been confirmed to me by the major teaching unions.
The Secretary of State wants stable negotiations, as do we all. But can this be the way to achieve a stable structure for determining pay and conditions of teachers? Above all, the Secretary of State wants a government role in the negotiations. The Secretary of State will have received today from the representatives of the employers' and teachers' associations a letter describing how far they are prepared to go—further perhaps than I would have been prepared to go in meeting the requirements of the Secretary of State. They recognise that the Department of Education and Science should be represented with voting rights on a national joint council. They recognise that the Church of England and the Roman Catholic Church should be offered non-voting representation on the employers side. To that exent there is no difference between the Government and ourselves except that in our case the representation for the churches would be on a real body and not simply on an advisory committee.
There is recognition that even after a decision has been reached the Secretary of State has to have some reserve powers. It is said that if the Secretary of State considered that national economic circumstances required that such an agreement or arbitration award should not be implemented, then it would be open to him within 21 days of receiving the agreement or arbitration award from the national joint council to seek affirmative resolutions from both Houses of Parliament to have it set aside. I suggest that that proposal goes a good deal further than the Secretary of State is prepared to go in defence of the rightful interests of Parliament as against the interests of the Executive.
Under the Bill as proposed, the Secretary of State sets up his own advisory committee, his own poodle, and if he likes what it says—and there is no reason why he should not like what it says in those conditions—all he has to go for are negative procedures. Under the proposals of the teachers and employers, Parliament has the right of ultimate resolution under the affirmative resolution procedure on any agreement reached by the national joint council which does not secure the approval of the Secretary of State. It is the Government and not the teachers or the employers who are frustrating the sovereignty of Parliament in this matter.
The final issue we have to consider in looking at the Bill is the likely outcome. If your Lordships think that an imposed solution, and one which puts teachers at variance with all other public servants in this country, is the way to peace, then your Lordships ought to give this Bill a Second Reading. If, on the other hand, your Lordships think, as I do, that in the circumstances, and in the light of the very substantial advances which have been made in voluntary negotiations between the teachers and the employers, the Bill is likely to be an obstacle to peace, then it should be opposed by this
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House, as a revising Chamber, with all the power at its command.
4.1 p.m.
Baroness Seear: My Lords, I must first apologise to your Lordships' House for the fact that I shall be forced to be away for a considerable time—I hope not too considerable—during this debate because I have an appointment in a government department which could not be arranged for any other time. However, I am certain that I shall be back in time to hear the reply from the Government Front Bench.
We on these Benches share the Government's concern about the disruption that has gone on in the schools for so long. We share their desire to reach a satisfactory settlement so that the schools can get back to do the job which so urgently needs to be done. We understand that the divisions in the unions which represent the teaching profession have made reaching an agreement a great deal more difficult than would have been the case had the unions been able to get their acts together more effectively than they have done.
We share, and I suspect that we exceed, the Government's recognition that great improvements are needed in the whole field of teaching. Indeed, I myself would go so far as to say that the hope for both a prosperous and a civilised life in this country in the 21st century depends on a real quantum leap in education, but quantum leaps in education cannot come on the cheap. So we share some of the Government's feelings and their approach to the problems of education and the improvements and alterations that need to be made in the education field. That refers of course to questions of pay and terms and conditions of employment for people who teach in our schools.
However, I am afraid that is as far as the agreement goes. If the Government think that this Bill is the way in which to achieve the objectives which they and we share, then I feel the Government are gravely mistaken. We oppose the proposals they are putting forward. Indeed, were it not for the constitutional agreements that we have and the very proper constitutional limitations on the powers of an unelected Chamber, we on these Benches would not be prepared to give a Second Reading to this Bill. However, we accept that we are not the elected Chamber and so we shall be reduced to seeing in what ways we can make this thoroughly bad Bill slightly less objectionable.
There are two grave defects in the Bill and I cannot believe that the Government fully understand the implications of what they are doing in producing a Bill of this kind. In fact, the Government are taking away the negotiating rights of the teaching profession. I know that the noble Baroness who introduced the Bill said that was not so, that it was only a temporary measure and that the negotiating rights would be restored in due course. But taking away negotiating rights is an exceedingly serious thing to do. How can any government who really believe in the democratic process be content to produce a solution to a dispute which undermines those rights—no, not undermines; which removes those rights indefinitely? For all that is

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said in this Bill, there is provision for year-after-year renewal. We have seen other emergency legislation (have we not?) to deal with very serious matters and which has had year-to-year renewal; and those measures are still with us. Measures of this kind have a way of lingering on, perhaps long beyond the period which was intended in the original Bill.
To undermine the rights to negotiation of hundreds of thousands of people employed by the Government is an exceedingly serious thing to do. It can only lead us to believe that the Government do not really understand that the right to free negotiation is a fundamental right in a free society. For that reason alone we would be opposed to this Bill.
As the noble Lord, Lord McIntosh, has said, it is almost certainly in breach of Convention 98 of the ILO. The Government's internationalism, as we have realised so often during their tenure of office, is at best skin deep; so perhaps they do not take very seriously the fact that it is in breach of Convention 98. We on these Benches take that breach very seriously.
The Government reveal how little they understand the importance of free negotiation by the proposal to set up in its place an advisory council, the members of which are being appointed by the Secretary of State. There is nothing on the face of the Bill to prevent him appointing all his cousins and his sisters and his aunts. We will endeavour to see that that is altered. He tells them what they can do. There is no power of initiative or suggestion allowed to the members of the council. He can remove them if he does not like what they do, and he does not have to take any notice of what they say. That is a very desirable position for the Secretary of State to be in if he wishes to get his own way as a result of this council which is being set up to take the place of the negotiating rights of these hundreds of thousands of people employed in the teaching profession.
This is not the first time it has been clear that this Government simply do not understand the difference between consultation and negotiation, which is after all the first chapter of the most elementary handbook on industrial relations. Of course they will consult everybody. They are at no risk in consulting everybody when they are perfectly free to decide that, having heard what other people say, they do not like it and therefore will not take any notice but will go their own way. This is and always has been the great weakness of consultation. I am a great advocate of consultation in its proper place; but consultation is not and never has been an alternative to negotiation. It does not limit the powers of the Secretary of State to do what he wants to do, regardless of what the members of the profession wish to have done.
True, the result will be published. It will be read perhaps by the Members of another place, but given the overwhelming majority of the Government in another place, based on a minority of votes in the country, they can override whatever the Opposition say, having read what the advisory council puts forward. This is the most phoney alternative to negotiation that could possibly be put up. If I were a member of the teaching profession, I would like the Secretary of State to come straight out and say, "I am going to oppose it, and that is that", rather than put up
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a council which has so little real validity in terms of allowing the people concerned to have a propersay in deciding the conditions under which they will work. A society which does not allow people to have an effective say in the conditions under which they will work and the right, at the end of the day, to a refusal is a society which is on the edge of slavery. That is a major reason why we utterly oppose the Bill.
The second reason is, again, one which stretches far beyond the subject of education, all-important though that is. It is that the Government, yet again, have shown their contempt for local government. I do not understand present Conservatism. A centralist Conservative Government are, in my thinking, a contradiction in terms. We on these Benches have for decades opposed the Labour Party as the party that believes the gentlemen in Whitehall know best. Apparently the Conservative Party has been converted to that age-old Labour doctrine. It seems that the gentlemen in Westminster and in Whitehall now know best.
The Conservative Party's proper place in British politics depended upon the fact that it was the party which understood the value of continuity, of preserving local roots, and of understanding the rock from which it was hewn. It had continuity. That was its place in British politics. I had an understanding of the tremendous importance of local decision-making for local affairs. That is deep in this country's history and is the basis of democracy in this country and the training ground for it. Does this Conservative Party wish to take away and to undermine local government step by step? It has been doing it throughout its years of power, and this is yet another step.
Those are the reasons why we cannot accept the Bill. We shall at least attempt to see that the period is limited. If we have to have the Bill—and I suppose we do—I cannot believe that it is necessary that it should continue until 31st March 1990. Negotiations are so near to completion that another year, at the very most, should be enough to get going a proper joint industrial council in which proper negotiations can take place and in which I accept—of course I do—that the Secretary of State should have a proper role. A great deal of money comes from the taxpayer and he should therefore be there. As it stands, the Bill will not do. I beg the Conservative Party to think again about its attitude towards local government. A Conservative Party which has lost its sense of the past has lost its raison d'être. However, such a Conservative Party, forgetful of the past, will have no future.
4.14 p.m.
The Lord Bishop of London: My Lords, some 30 years ago when I was general secretary of the National Society and of the Church of England Schools Council I was asked to lecture to Americans on the English educational system. I took proper pride in being able to begin by referring to the fact that in this country and in Wales there were no state schools. Responsibility for education had always lain with local authorities of one kind or another. I drew attention to the fact that our educational system had developed from local initiatives and depended upon a partnership between the local education authorities, the managers or

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governors of the schools and the then Ministry of Education.
I spoke also of the existence within the maintained system of county and voluntary schools and of the responsibilities of trustees of such schools, who often represented the local community and provided a statutory interest on behalf of the Church of England, some of the free churches, the Roman Catholic Church, the Jewish community and other institutions.
I spoke of the statutory responsibilities of the managers or governors of voluntary schools, who, while not concerned with negotiations over pay, were the employers of teachers with whom they entered into contracts of service. Happily, I can still say much of that today, 30 years later. Long may that situation continue. However, it must be realised that such a shared responsibility for education does not just happen; it must be kept in good repair.
At a time when we in the Churches are pressing—and we have been for some years now—for a fresh recognition of the partnership which must be the basis of our schools and for its development, we were disturbed to see that in the Bill no reference was made to one statutory party; namely, the governors of the voluntary schools, which provide a significant proportion of all schools.
The Bill assumes that local education authorities are the employers of all teachers, whereas by law of course governors of voluntary-aided schools are still the employers who enter into contracts of service with the teachers. We were surprised that this should be so at a time when the Government have been seeking to give greater responsibility and power to governors generally. When I say "we" in this context, as chairman of the Church's Joint Educational Policy Committee, I know that what I say is also the mind of Churches other than the Church of England.
We have of course made our concern known to the Secretary of State, and I was pleased and relieved to hear what the noble Baroness, Lady Hooper, said when introducing the Bill. I welcome the amendments which she says the Government will introduce when the Bill comes before us in Committee. What the noble Baroness has said relieves me of the need to press the claims of the voluntary schools, and I can turn to the Bill as a whole. Our anxiety springs not merely from our concern for church schools but from a concern lest the Bill represents an erosion of that partnership to which I have already referred.
In approaching the Bill, I am reminded of a recent situation in the General Synod of the Church of England when a report was described as "deplorable". I pointed out that it was not the report which was deplorable but the situation with which it had to deal. It was a realistic recognition of what might be done to cope with a deplorable situation, and in that sense the report could properly be welcomed. I feel much the same about the Bill. No one who cares for the children in our schools can deny that something needs to be done.
Purely negative opposition to the Bill is not enough. I would support those who maintain that the Remuneration of Teachers Act 1965 needs to be repealed. Its failure to meet the situation has been
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amply demonstrated. However, merely to repeal the Act is not enough. What is to take its place? Is this situation to drag on for month after month?
In one of the several documents which have been circulated to us it is suggested that an agreement,
"is ready and waiting to be signed. All it lacks is the Secretary of State's agreement. Four out of six teachers' unions and both local authority associations are ready to sign".
In fact, as we have heard, those numbers are already out of date and only two unions now support the agreement. However, can such an agreement be a sound basis for the future when one partner, whose responsibilities we cannot ignore or minimise, does not agree and another party is at the moment fragmented? It is quite unprofitable and unwise to attempt to apportion blame for the present situation. Responsibility must be shared among all partners in differing degrees and the teachers must not be made a scapegoat. No one has a monoploy of blame or blamelessness in this situation.
Lord McIntosh of Haringey: My Lords, will the right reverend Prelate permit me to intervene? In accordance with common trade union negotiating procedures all unions maintain their own position as negotiations proceed. But as we reach the stage, as happened last week, where a decision has to be made, those unions that did not vote for the agreement—and they include the National Association of Schoolmasters, the National Association of Head Teachers, and the Secondary Heads Association—said that they would support a decision which had been reached by a majority of teachers. Does the right reverend Prelate agree that that—which would be the result of common negotiation procedures—is likely to be achieved only when there is real negotiation rather than consultation?
The Lord Bishop of London: My Lords, I am grateful to the noble Lord for his intervention. I must be honest and say that in view of my reading of the record of these negotiations I shall believe that agreement can be reached only when it is. What matters is that any solution is based upon our tradition of partnership. In this respect I support the plea of the Association of Metropolitan Authorities that a national agreement among parents, staff, governors, local education authorities, other providers and central government would,
"be in the best interests of pupils and students".
By contrast I cannot help referring to another document which has been circulated to us. While urging the need to make the Bill,
"fit the educational partnership which was so soundly set up in the 1944 Act",
the document begins by declaring its,
"implacable opposition to the Bill".
I cannot regard that as a constructive approach to the problem.
Education is far too important to be made a political battlefield. I hope your Lordships realise that I do not say that education should not be political. There is legitimate political activity in the field of educational provision; indeed, the financial element requires it. The pattern of provision is not set for all time. Policy

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shifts, such as the creation of local education authorities in the 1902 Act, are necessary and proper, but they should be based on consensus and not made in response to sudden crises or pressures. Consensus may be difficult to achieve, not least because, whereas in 1944 there was general agreement as to the philosophy of life which underlies education, such agreement does not exist today.
However, that fact does not discharge us from attempting to achieve consensus. On the contrary, it makes the need to achieve it even more urgent. To my mind illegitimate political activity in this field springs either from party point-scoring—as, for example, between national and local administration across party boundaries—or from ideological point-scoring where what is called a principle is pressed, whatever the disruptive consequences in the schools.
Generally speaking, while I would agree with what the noble Lord, Lord Alexander of Potterhill, is reported to have said—and I hope that the report is true—about the dangers of central control in education, I cannot avoid coming to the conclusion that initiative by central government is necessary at this point if the situation is to be resolved locally. For this reason, generally speaking, I support the Bill although I have some reservations.
First, while I believe that something in the nature of an advisory committee is necessary and desirable, I am concerned about the amount of power which is placed by the Bill in the hands of the Secretary of State. I do not think I would share the view of these powers of the noble Lord, Lord McIntosh, as being draconian. I do not take quite such a low view of Parliament as to suppose that the necessity is for an affirmative procedure to deal with the matter if the Secretary of State does not accept the recommendations of the advisory committee. I am, however, worried about the effect of the Bill in the interim period until October.
As I read the Bill, whereas Clause 3(2) provides those safeguards which have been referred to and which require an affirmative vote in each House, it would seem that until 1st October the negative procedure alone would apply. I ask the Government what is the intention behind that. Is it in order that there may still be time for negotiations—in which the noble Lord, Lord McIntosh, has some hope—or is it so that the Secretary of State can act before October? In my judgment it would be much better to have an entirely independent review body whose findings would be subject to Parliament as a whole.
Secondly, I am concerned about the possible erosion of the partnership to which I have referred. The Church has always resisted moves towards greater centralisation—at least in the educational sphere if not in her own—while recognising that if the balance in the partnership is to be maintained different pressures will be needed in different directions at different times. The balance must be among the national level, the local level—that is, the local authority level—and the local level of the governors, the local community. While the kind of pressures provided by the Bill may be necessary at this stage as an interim measure, I am concerned lest future moves should tip the balance out of skew among the three levels of responsibility even further.
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Finally, I plead with the Government not to resist proper amendments to the Bill which may be moved in Committee and which, while preserving the general intention of the Bill to resolve a situation that must not be allowed to continue, will help to encourage that co-operation which is absolutely necessary if our education system is to prosper.
4.30 p.m.
Baroness Cox: My Lords, I warmly welcome the Bill as a prime example of the old adage, "Out of evil cometh good". The evil is the background to this Bill; that disastrous situation of chronic disruption which has affected so many state schools for over two years. I think it is worth reminding ourselves briefly of the effects of that disruption because they are so serious and because they are still not over. Further strike action has been threatened later this week by many teachers in London schools.
Those who suffer most from such disruption are of course the children. For far too many their education has been spoiled beyond repair by some teachers' so-called industrial action, and the opportunity to make good the damage will not recur for them. This industrial action affects not only classes in schools but also many other intangible but important aspects of education, such as sport, music, drama and parents' meetings, where the important partnership between parents and schools should be fostered.
Yet other disturbing effects are those which endanger children's basic safety and their well-being, as when schools close early or when no supervision is provided over lunch breaks. Children turned out of schools at unusual hours may not only be a danger to themselves but may also cause problems to many other people.
Many teachers too have suffered during this prolonged dispute; those conscientious teachers, and especially perhaps head teachers and their senior staff, who have tried to continue to provide as good an education as possible in trying circumstances. Parents have suffered as well, seeing their children receive an impoverished education, underachieving in exams, becoming disaffected with school and alientated from those whom they should respect.
However, I said that I see this Bill as a case of good coming from evil. The good lies in the necessary and now overdue abolition of the Burnhan machinery and its replacement by interim arrangements designed to pave the way for more satisfactory long-term solutions. I believe that the proposals put forward by my right honourable friend the Secretary of State deserve enthusiastic support, and I shall briefly highlight three aspects which seem especially significant.
First, there is the issue of conditions of service. The noble Lord, Lord Houghton of Sowerby, was in a previous incarnation chairman of the committee which produced a well received report. It recommended generous pay increases for teachers, but it was also widely understood that those increases should reflect the responsibilities associated with professionalism. In discussions of teachers' pay since then we have heard a great deal about maintaining the pay awards in real terms but little about professional responsibilities. It is

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only relatively recently that there has been any willingness to dicuss conditions of service together with salaries.
Therefore, this Bill's provision for clarification of conditions of service is important. It is important for teachers to know what is expected of them in fulfilment of their professional responsibilities; for head teachers, parents and governors to know what to expect from teachers; and for local education authorities to have a clearer basis for enforcing teachers' contracts.
The second reason why I support this Bill so strongly is that it is linked with proposals for pay awards which are not only generous but also flexible. This flexibility is important. It provides incentives for good teachers to remain in the classroom. It also provides incentives for them to take on extra responsibilities and to work in areas where there are shortages, whether those shortages are in subject or in geographical areas. Indeed the proposed pay increases are so generous that they go 10 per cent., in real terms, above the previous Houghton awards, which were themselves, as has been recognised, generous.
I was teaching at the time of those original awards, and I and my colleagues were amazed and delighted by them. But the current proposals go beyond that. The proposals for a 16.4 per cent. increase, rising to a 25 per cent. increase over two years, puts teachers in a very favourable position compared with many other professional groups. For example, with the Government's proposals new graduate entrants to teaching will earn between £7,900 and £8,500 a year, compared with £8,140 for newly-qualified doctors, despite their long training, or £6,900 for social workers, or a mere £6,475 for staff nurses, despite their tough conditions of service.
I confess that I was rather worried by the opposition spokesman for education in another place, Mr. Giles Radice, when he claimed,
"Ironically, the immediate background against which this damaging little Bill is introduced"—
Noble Lords: Order!
Baroness Cox: My Lords, I apologise to the House. He referred to the concerns behind the introduction of this Bill and to the fact that attention was being drawn to education by the teachers' dispute. It is worrying when it appears that the background to the Bill in terms of the teachers' dispute is seen perhaps by some commentators as being commendable, because the dispute seems to me to be a sorry context in which to consider favourably the provisions of this Bill, and parents' anxiety and dismay does not seem to me to be a promising background for consideration of these concerns.
But I have sadly found myself speculating on the sorry fact that teachers may be seen to be rewarded for industrial action, while a profession such as nursing, which has refused to take any actions which would hurt the vulnerable, is now lagging even further behind teachers in pay and conditions of service. I make this point to emphasise the generosity of the award which the Government are now offering to teachers both in
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terms of good basic rates and that flexible career structure and which provides incentives to enable the profession to develop in line with changing educational needs.
Finally, the third aspect of the Bill which I wish briefly to mention and to commend to your Lordships, is the principle of the independent determination of pay and conditions of service as a means of breaking out of the current deadlock of the defunct negotiating machinery. Although many leading figures in the teaching profession are now presenting a more moderate and conciliatory face, their proposals are less than convincing. For example, the proposals for a national joint council have not been acceptable. Indeed, one could say that they were nonsensical in that they excluded the Government from any official role. Although there is now talk about ways in which the Government might be involved, it is difficult to take seriously proposals which originally did not include in a formal position the Government in the pay negotiating machinery when it is the Government who are the major source of funds for that pay.
A noble Lord: Not true.
Baroness Cox: My Lords, if I may continue, I am prepared to clarify that point if it is put to me on a point of order. Much has been said in another place and elsewhere about the loss of trade union negotiating rights, but little has been said about the rights of children to a good, uninterrupted education or of the rights of parents to see their children receiving the kind of education of which they approve, an education for which those parents pay through rates and taxes and about which they care passionately.
That brings me back to where I came in. Pupils and parents have had a raw deal which has been unacceptable in degree and duration and which still cannot be assured of an ending. Those teachers who have inflicted this intolerable situation on them have been able to do so at very little direct cost to themselves. The Bill provides not only a remedy for this intolerable situation but also interim machinery which will allow carefully thought-out longer-term solutions to be developed with contributions from everybody concerned.
This Bill is necessary. It is urgent, it is fair and the settlement proposed by my right honourable friend the Secretary of State is very generous. I sincerely hope that it will receive the support that it deserves in your Lordships' House.
4.41 p.m.
Lord Stewart of Fulham: My Lords, I think it is a fortunate coincidence that on the day when we are debating the Second Reading of this Bill there should be an article in The Times referring to the progress of education over the past decade and the steadily improved performance of our children as measured in public examinations over that period. It is a well-informed article and refutes some of the reactionary attacks that have been made on our education system and on the teaching profession.
In this debate we ought to begin by realising that when we consider the teaching profession we are

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looking at a body of people who have served the nation well not only over the past decade but for a long time. I am afraid that judging from the speech we have just listened to the profession has sometimes received precious little thanks for what it has done, and that is part of the reason for the present difficulties.
The profession had a very favourable award made to it by my noble friend Lord Houghton some years ago. But the value of that award has steadily declined over the years and that has been the source of our present troubles. When it became apparent that we were running into a difficult situation the predecessor of the present Secretary of State was remarkably unhelpful. He did not, to begin with, come forward with positive proposals to improve teachers' pay. I believe that if anything like the offer that has now been made had been made then this trouble may never have arisen. But that procrastination has left us with the present situation.
Now we have a Bill which has, I am afraid, remarkably few friends. There has been comment on the disagreements among the various teachers' unions. There is a very wide measure of agreement among the teachers' unions in their disapproval of the Bill. In that they are joined by the education press and by the local education authorities. Why is that? The Bill sets up an advisory committee but, as has been pointed out, the advisory committee is only a sort of emanation from the personality of the Secretary of State. It reminds me of certain characters that appear in some of Shakespeare's historical plays. Some of the kings in those plays, such as Richard III, John and Macbeth, had people they wanted to get rid of but, because of pressure of time and circumstances, they were unable to attend to the matter themselves and so characters appear on the stage. Sometimes they are named, such as Dighton, Forrest and Tyrrel, and sometimes they are just known as "First and Second Murderer". They do the job that is required. That is really what the advisory committee is.
The advisory committee is to reflect the wishes and desires of the Secretary of State. It will then listen to the representations made to it by the teaching profession and by the local authorities. This process is to be called negotiation. I suppose that when Oliver Twist said to Mr. Bumble, "Please, sir, can I have some more?" you can, if you like, call that the beginning of a negotiating process. But that is all we have provided in the Bill. The advisory committee, having heard what the local authorities and teachers' organisations say, can just make up its own mind whether it will pay attention. It can then tell the Secretary of State what it thinks, and the Secretary of State can then decide whether he agrees with the committee. The probability is in view of the origin of the advisory committee, that he will agree with it.
Here we come up against one aspect of the Bill that even its best friends have been a little shy about defending and that is its definite shift from local government to central government or Parliament. Parliament of course is a national central institution. The fact that certain powers of the Secretary of State will require resolution in Parliament does not alter the fact that there is to be a shift of power from the local authorities to the central body. That is, I am bound to say, a tendency of this Government.
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I was a little surprised to hear the noble Baroness, Lady Seear, speak as if devotion to local government had been a sheet anchor of Conservative faith and that they were now deserting it. My impression is that the main and fundamental belief of the Conservative Party is that the Conservatives ought to govern the country and if the electoral system does not give that result it must go on being altered until it does. That in fact is what has been done over local government for some considerable time.
We used to have county boroughs. They were some of the most successful local authorities in the country, which were a centre of civic pride and achievement. They were abolished. Then we had the London County Council, an extremely good local authority whose education service was an example to the whole world, but it had a tiresome habit of having a Labour majority at almost every election and so it was abolished and the Greater London Council was put in its place. That apparently was not much more reliable than the LCC. It began at elections to produce Labour majorities, and so now we have got rid of that.
Now we have a situation in which a great many local authorities do not take the same view about how to handle teachers' pay as the Conservative Government, and so they will have the function of dealing with teachers' pay taken away from them. From what we read in certain quarters they are to have the whole process of education taken away from them as well. We ought to be on the look out for this and recognise that one of the aspects of the Bill is that it is part of the process of removing power from elected local authorities.
This is the more remarkable in view of the fact that later clauses of the Bill extend the scope of the body dealing with teachers' pay. It will deal—as has been rightly said and I do not quarrel with that—with conditions of service. But we must notice certain other points. It can make different regulations about pay and conditions in different localities. Up to a point one can understand that. What is being talked about is weighting for people working in London. But it is more than that. The body could under this Bill make different determinations of pay and conditions for every county and region in the kingdom. That certainly would cause great bitterness and disruption in feeling and disruption in the schools if it were persisted in.
Further, the advisory body and the Secretary of State together can make different provisions for pay and conditions of teachers in different cases. For heaven's sake, what does that mean? We have been able to get some idea of what it may mean from statements we have listened to from time to time indicating the Government's general approach to the teaching problem. One of the aspects in the dispute all along, as we know, has been the fact that the teaching profession in its representations, particularly through the National Union of Teachers, has been concerned that there should be a proper entering salary for people starting in the profession. If one is too anxious to have many gradations and differentials, one will not have an adequate salary to attract people into the profession at the very beginning, whereas the Government's emphasis has always been on the need for differentials.

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Presumably one of the things which is meant by "different cases" is that there will be different arrangements with regard to pay and conditions between those whom the Government describe as good teachers and those who presumably are not good teachers. The Government have not yet invented a suitable euphemism for describing those whom they do not classify as good teachers; no doubt that will come in the course of time as the debates proceed. However, it is evident from the extraordinarily wide phrase, "different provision for different cases", that the Government's approach is very much that of having as many differentials as possible.
I accept that there is a need for some differentials and some local differences. However, it must be realised that these are explosive topics which will not result in a successful outcome unless there is considerable confidence in the body which handles them. What we have done in this Bill is, first, to create a body in which nobody can have any real confidence because it is, as has been rightly said, the Secretary of State's poodle, and, secondly, to put into its hands these explosive issues of local and personal differentials. This seems to me to be a recipe for about as much damage as it is possible to do in the profession.
I therefore hope that in this House we shall do our best to make what we can of this Bill. I regret very much that we are not in a position to reject it outright; however, we know that that is so. If one were really concerned for local government, that is what one would wish to do. As it is, I hope that we may be able to get a little more precision into the phrase concerning different decisions in different cases and localities.
I hope that we may also learn a little more about how the advisory committee will be chosen and be told that some limits will be put on the power to go on prolonging the Bill by annual resolution year after year. It has been suggested that in the latest developments in the negotiations concerning proposals for a national council we have something upon which the Government can build. If they insist on having this Bill now, let them have enough faith in their capacity to devise something better in the future and abandon the power to prolong the Bill year after year. Prolonging it up to 1990 ought to be long enough for anyone if the Government are really concerned to produce a democratic structure which gives local authorities and teachers' unions their proper place and provides properly for negotiation.
4.53 p.m.
Lord Ritchie of Dundee: My Lords, other Members of your Lordships' House and especially my noble friend Lady Seear have spoken and will speak of the wider implications of the proposed Bill. As a former teacher, I should like to focus on the likely impact on teachers and their feelings on the measure. At this point, I should like to accept the words of the right reverend Prelate the Bishop of London—I am sorry that he is not in his place—when he said that throughout the whole of this unhappy dispute no party to the disagreement could be regarded as blameless.
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The strife in our schools, chiefly during 1985 and the early part of the past year, must have caused many casualties among children. We shall never know exactly how many. We shall never know how many children's chances of success were disablingly or fatally damaged by it. Many parents have suffered terrible anxiety and frustration. Many teachers have become depressed and disillusioned, to the point of being driven out of the profession assuming that they were lucky enough to find anything else to do. Head teachers and deputies have borne the brunt of the actions which have taken place in schools and have been driven to the point of desperation. It therefore became a matter of desperate urgency to find a solution to the problem.
In thinking about this matter, I have been aware of numerous ironies which I may call rich ironies. The first of them has already been referred to by the noble Lord, Lord Stewart of Fulham. Had the present offer been made two years ago, there need never have been a strike. However, all through the summer, negotiators worked under the auspices of ACAS. Four groups examined the problems of devising a new negotiating machinery, settling pay levels and a pay structure, agreeing conditions of service and working out an appraisal system. These investigations produced first the heads of agreement signed at Coventry and finally in November, under the auspices of ACAS, the agreement which stands at present. This agreement was initially signed by four of the teaching unions, although unfortunately two subsequently withdrew.
There are doubtless things which are wrong with this draft agreement to which I shall come back. However, there is a lot that is right with it. As the Secretary of State himself has acknowledged, it fully accepts the principle—impossible under the 1965 Remuneration of Teachers Act and long resisted by at least some of the profession—that pay and conditions should be considered jointly. It proposes 13 contractual duties for the classroom teacher which subsume all but two of the Government's 19 proposed functions. In my view, it also expresses them more literately and concisely, as I should indeed expect of teachers as opposed to civil servants. It lists the duties and responsibilities of head teachers and deputy heads. It accepts the principle of appraisal, endorsing the recommendations of the ACAS working party, and it proposes a new negotiating machinery to replace Burnham.
The difference between the ACAS agreement and the aims of the Secretary of State are, as we know, the matter of the pay structure and the matter of the overall cost of the proposed package. Unfortunately, there is an undiplomatic omission in that the Secretary of State's role in the proposed negotiating machinery is left completely vague. He provides something like 46 per cent. of the cost of the education service, and deserves something better than,
"The parties will seek discussions with the Secretary of State on his role in the new machinery"
which are the words of the agreement.
Since the ACAS agreement was signed on 21st November, strenuous efforts have been made by the local education authority employers and the teacher representative associations to close the gaps between them and the requirements of the Secretary of State.

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On 19th December a meeting of these bodies was held with this end in view, and the employers proposed a modification of the ACAS agreement whereby the Secretary of State was to be represented on the proposed national joint council with voting rights and with the power, in special circumstances, to set aside an agreement or an arbitration award if he obtained an affirmative resolution of both Houses of Parliament. On 5th January this proposal was discussed in more detail by employers and union secretaries, but no agreement was reached.
On 7th January there took place what may turn out to be the final meeting of the Burnham Committee. At this meeting, the big unions again turned down the proposal originally put forward on 19th December. That was not surprising since they would have had to acknowledge that in some circumstances Parliament was supreme. As the noble Lord, Lord McIntosh, has already said, the TUC has now taken up the proposal of 19th December, and as far as we know it is awaiting a reply from the Secretary of State.
Surely, in those circumstances, it is not reasonable for the Government to ignore all the blood, sweat, toil and tears which have brought a negotiated agreement so near and prepare a solution which will antagonise so may employers, unions, teachers, and, because of the teachers, parents, constitutionalists and democratically minded people. Can it really be wise? It is an example of outrageous high-handedness and thought-less impracticality. I am thinking of certain points in particular.
In Clause 2(4) this non-elected, unrepresentative body, referred to, I think I am right in saying, by the Minister as an independent committee—and that is the second irony I should like to mention—has only to refer to,
"such associations of local education authorities and such organisations representing school teachers as appear to them to be concerned and to any local education authority with whom consultation appears to them to be desirable".
Surely there should be a statutory right for all teacher associations and for representatives of the ACC and the AMA to he consulted.
In Clause 3(5)(b) it is stated that an order by the Secretary of State may, without negotiation—I stress "without negotiation", my Lords—set out provisions which,
"shall have effect as terms of the contracts of employment of teachers to whom the order applies".
How on earth can an employing authority be expected to enforce a contract with a teacher employee which has not been negotiated and which may therefore not be acceptable to either party to the contract? What about the details of the contract of employment? Is the Secretary of State really to be concerned about how many minutes teachers are to be on duty before or after school, about precisely what class size limit they are to have or what expenses they may claim for travelling, and so on?
If the Secretary of State decides not to rule on such details, that will leave the local education authorities with the responsibility; and we shall be back in the old position, which Clause 1 expressly seeks to amend, in which pay and conditions of service are separately considered. Back to square one: only worse because
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now much "aggro" will have been aroused and any shreds of good will have gone.
Finally, if this Bill is really intended to be an interim measure, as the Secretary of State constantly reiterates, why is it not to expire until 31st March 1990? Here I must agree with my noble friend Lady Seear. Why should it not expire two years earlier than this and be expressly stated to do so unless the parties concerned have failed by that time to reach an agreement? Can the Government really have considered the effect of this measure on teachers? The teachers are, after all, the key people. They are the people on whom the employers, the parents, the children and the future generations of our country shall depend. Without their co-operation—I stress the word "co-operation"—there would be no proper education for all the legislation in the world. You cannot legislate to ensure the commitment of teachers.
When will the Government understand that teaching, as it should be, is not a common occupation needing a carrot or a whip as incentive, but a high calling, and that teachers essentially work out of love, dedication and caring? How else can they cope with children, who may indeed at times have an angelic appeal but who may at other times—and perhaps more often—seem like fiends sent from hell to torment them? How else could they cope with the problems of our inner cities, the demands of the multi-cultural society, the special needs, the ubiquitous indiscipline of children today, the effect on children of parents who are unemployed, of single parent families, of broken homes, of poverty, of bad housing, of racial tension and of the resulting violence?
The term "conditions of service" has been much bandied about. Here I find another irony. The term is ambiguous. It is capable of an interpretation other than that attached to it by those in authority. What about the conditions in which teachers have recently been, and are, required to serve? Your Lordships may have read of the conditions of some of the schools in Cumbria, which in their state of dilapidation have been described as potential death traps: electrical faults, falling masonry, boiler fumes, unhygienic lavatories and laboratories, and the absence of fire escapes and alarms. And what about the shortage and dilapidation of text books? There have been many reports of children sharing, of the difficulty of setting homework, of the limitation of options in, for example, O-level English Literature, where only one complete set of books may be available.
Dedication is the indispensible qualification of a teacher. Here I find another irony. There has been much talk from the Government of motivating teachers. The impression I have had is that over the past two years everything has been done to demotivate teachers. I shall not say that this has all been deliberate but it seems to me that their dedication has been destroyed. Teacher morale has never been lower. It has reached a nadir of discouragement and disillusionment. Many are leaving the profession early—10,000 or so premature retirements in 1985–86 as opposed to 3,500 in 1979–80, and too few are joining it. The pay is not essentially what they seek. It is the honour and appreciation of society, of which a respectable salary is merely the symbol.

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This Bill, if it becomes law, will be something like the final blow to teacher morale and is almost certain to be the cause of continued strife and further disruption, starting tomorrow as I understand. There has been much disunity among the profession and its employers and representatives over the whole period of the dispute, regrettably. Now, unity has been achieved; unity in opposition to this proposed measure on the part of teachers, their representatives, their employers and parents' organisations. I would entreat the Government to look at the issues again and reconsider the possibility of a negotiated settlement. However lengthy or arduous the process, it could not be as damaging as this Bill.
5.7 p.m.
Lord Alexander of Potterhill: My Lords, let me say at once that I am very strongly opposed to this Bill. Recently I have been watching a series of programmes on television entitled "Domesday". I was fascinated by the conclusion that was reached after a study of the history of this country over the past one thousand years. It was quite simply that the great secret of the stability of this country and of its strength had been the partnership between central and local government.
In education, the partnership between central and local government has obtained from the beginning of the education service as a national system. I fear that this Bill is the first step in a deliberate process to destroy that partnership. I say "the first step" not expressing an opinion but merely quoting the Secretary of State, who in a television interview made perfectly clear that the next step would be a Bill which would give him control of the curriculum. He is evidently deeply impressed by the system in France and in Germany. The system in France was of course established by a dictator. The system in Germany enabled Adolf Hitler to make Germany a Nazi state in a very limited number of years.
I took part in the negotiations in regard to the Education Act 1944. The people concerned then were Mr. Butler and Mr. Chuter Ede. In view of the atmosphere on the subject of central control in education, if anyone had even suggested it I think they would have been shot by both Mr. Butler and Mr. Chuter Ede. They produced an agreed political measure. There were no party politics for 25 years and the 1944 Act was made a reality.
I do not dissent from the difficulties that have occurred in the past few years. Frankly, in my opinion they go back more than two years. But I am very conscious of the fact that central government have transferred £3,000 million a year from central government to local government during that period. I am very conscious of the fact that, whereas when I was in the service central government's proportion of the cost of education was 60 per cent., it is now 46 per cent.
Let us face the difficulties, which are real. As I understand them (a number of the points have already been covered) certainly the proposition of salaries and conditions of service being negotiated together—which I strongly advocated 20 years ago—has been accepted; so that is not a point of dispute. The issue of
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abolishing the Burnham Committee has been accepted. That is not in dispute. There may be differences of opinion as to whether there should be a national review body or a national council with the Secretary of State represented on it. I suppose he should have 46 votes out of 100 because the Government firmly believe in privatisation and, as I understand it, that is the basis of all companies—you vote according to the number of shares you have.
I would personally favour a national review body—an independent review body—charged with dealing with salaries and conditions of service. However, as I see the problem the real issue is salaries. The Secretary of State is anxious to provide adequate career prospects in the profession. With that I am wholly in agreement. I think it is absolutely essential that the opportunity should be available so that the top of the teaching profession is adequately rewarded and that people of the highest level and ability are attracted to it.
The Secretary of State must surely be aware that the major teachers' unions have a substantial majority of ordinary classroom teachers and therefore they are bound to be concerned that the classroom teachers are adequately rewarded. That is entirely reasonable. The Secretary of State, by setting a financial limit, is forcing a choice between one or the other: "You either have my structure which rewards the chiefs or your structure which rewards the Indians." That is what it comes to. Surely the simple answer is to ask, "Why not do both?" Why not retain the superstructure proposed by the Secretary of State but offer an adequate salary to the ordinary classroom teacher?
The Secretary of State's reply to that is that we cannot afford it. On the day he said that the Chancellor of the Exchequer stated that he hoped—in fact, he was confident—that he would be able to announce in a couple of months' time a 3p or 4p reduction in the standard rate of income tax and also a reduction in the top level of income tax. The cost of both proposals for the teachers would be an additional £200 million a year. The cost of the Chancellor's proposals would be £3 billion or £4 billion a year. Are we to accept as reasonable the statement that £200 million a year cannot be afforded by this nation in order to avoid the bitter controversy that has been going on for two years, though it would bring peace to the education service? I find that impossible to accept.
I therefore wonder why the Secretary of State is forcing this choice. Is it so that the row will continue and that he will therefore be reasonably confident that public opinion will find his first and subsequent steps to bring central control in education more acceptable; or am I being unfair? Certainly I have no doubt whatever, having heard him speak on his admiration for central control in the European countries, that he is committed to that view. Equally I have no doubt that the Prime Minister would favour that view. I had the privilege of working closely with the Prime Minister when she was Secretary of State for Education and I was conscious of her feeling of frustration that she did not have all the power she needed to do all that she wanted to do. In fact, I was one of the nuisances to her because I did not always agree with her.

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I know that it is a tradition of this House not to divide your Lordships on a Second Reading. However, in my opinion this Bill is threatening such a deep change in traditional values in this country that frankly I hope the Opposition parties will feel that they are entitled to depart from tradition and will divide the House so that those of us who want to express our view and to have it recorded may do so.
5.17 p.m.
Lord Boyd-Carpenter: My Lords, your Lordships in all parts of the House listen with the greatest respect whenever the noble Lord, Lord Alexander of Potterhill, speaks on education matters. He has been in a responsible position in our national education system for a great many years. He himself reminded your Lordships that as long ago as 1944 he took part in the Butler-Ede discussions which produced the present legislation. It would be foolish for anyone to fail to listen with the greatest care and attention to what the noble Lord says.
However, I hope he will allow me to point out that there are difficulties in the idea of continuing the system to which he has naturally, and in human terms, a feeling of devotion. He has devoted his life to working in it. The first difficulty is that the concept of a partnership between national government and local authorities has, as we have seen over the past few years, run into enormous difficulties. It is no part of my argument to attribute blame, but it is an undisputed fact that a number of local authorities in this country have behaved in an intolerable manner as regards education and in a manner which is an affront to the standards which we expect. They have inflicted considerable injury on the education system.
I do not wish to weary your Lordships with a long speech so I shall quote only one example, though I could give your Lordships a dozen. The example I shall quote is that of Brent, whose education policy was described as catastrophic, not by any Minister, nor by any Conservative, but by Mr. David Hart, the general secretary of the National Association of Head Teachers, and by Mr. Peter Snape, the general secretary of the Secondary Heads Association. Both those distinguished and experienced educationists point out that the dictatorial interference by Brent Education Committee in the working of education in that borough has resulted in the departure of a number of responsible teachers and some of the best of the head teachers.
Therefore when complaint is made, even by the noble Lord, Lord Alexander of Potterhill, about a failure of the old partnerships between central and local governments—which has perhaps a nostalgic appeal—it is fair for your Lordships to have in mind that in this country there are a number of local education authorities who are prepared to use their powers for largely political purposes and who have shown remarkably little concern for the proper handling of education in their boroughs. It seems to me that no government worthy of the name—certainly no Secretary of State for Education, with his responsibilities—could simply shrug their shoulders and let that kind of situation continue.
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I was interested to know from the noble Lord, Lord Alexander of Potterhill, that he agreed—indeed, he said it was not in dispute—that Burnham should go and that conditions of service should be settled together with pay in the teaching profession. Those are of course the two major purposes of this Bill and they certainly cannot be achieved without legislation. Among other things, they involve amendment of the 1965 Act, for which noble Lords opposite were responsible, and therefore legislation is necessary. I suggest to your Lordships, however impressed they were, as we all were, by the words of the noble Lord, Lord Alexander of Potterhill, that legislation is required along such lines—not necessarily in detail—and we are now at the stage of Second Reading. Even he accepts that.
I think that that is a very important aspect of the view that many of us will take. However, the noble Lord made a very impressive and emotional appeal against the Secretary of State setting a financial limit on the amount of money available for the substantial increases which are being made in teachers' remuneration, and it is there that I venture to join issue with him. It has been the duty of some Members of your Lordships' House from all parties when they have been in government to impose financial limits on almost every activity in the public sphere. One cannot conduct government without first trying to ascertain the most that can reasonably be provided for a particular service for its merit and then fixing a financial limit.
It is all very well for the noble Lord, Lord Alexander of Potterhill, to say, "Oh, it is only £200 million. Reductions in taxation, if they come, will cost much more than that". If one does not intend to set financial limits in the case of education, is one to continue to set them in the case of social security or in the direction of transport? Is one to undermine the whole basis on which our national financial policy is undertaken; namely, that every government from no matter which party at a certain point and at a certain stage have to come to a conclusion as to what is the maximum amount of public money that can be put into a particular activity and then draw the line?
It is only too easy—and some of us would confess that we have probably done it—to put a single plea for a single increase in a single service, and in so doing to disregard the fact that we are really trying to undermine the whole structure under which financial control is exercised in this country. However moving it was, I beg your Lordships not to be impressed by the reference to only £200 million made by the noble Lord, Lord Alexander of Potterhill.
If I may say so, in this debate the Bill has been criticised by two of the ablest debaters in this House. As he will recall, I have had the privilege of listening to the speeches made by the noble Lord, Lord Stewart of Fulham, for very nearly 60 years, so I know what I am talking about when I say that. It was interesting to hear his complete repudiation of the independence of the advisory committee which it is proposed to set up under this Bill. Even if he wanted, no Minister who is setting up an advisory committee to deal with such a subject dare set up a committee of such a composition that it could be described, as this committee has already been described today three or four times, as his

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poodle. He would be laughed out of court if he attempted to do anything of the sort.
The selection of members of these committees so as to give a fair and broad conspectus of different views, and to be composed of people of influence and independence, is an essential part of setting them up in the public interest and in the interest of the Minister concerned, because if he sets up a body which does not carry public respect and is not representative of views then he will not obtain any advantage from acting on the reports which it produces. I speak with some experience because I was Minister of Pensions and National Insurance for six and a half years and I had to deal with the National Insurance Advisory Committee, which was a very powerful, able and distinguished body. It would never have regarded itself as my poodle, though sometimes I regarded it almost as my nightmare because it was completely independent and if I made an error it was only too prompt, as indeed was its duty, to point it out. Therefore I ask your Lordships not to dismiss in advance this committee.
The noble Lord, Lord Stewart of Fulham, referred to doing away with the democratic process. What could in a way be more democratic than a decision made by a Minister who is subject to the control of Parliament and subject also in this particular case to statutory orders, whether under the affirmative or the negative procedure? As your Lordships know, there is the far greater sanction to which Ministers are subjected, which is that of having to stand at the Box here or in another place and answer questions and points raised by noble Lords and honourable Members. Surely settling a question through a Minister, whether or not one thinks it is sensible in a particular case, cannot properly be described as other than a democratic process, unless indeed one has complete contempt for the parliamentary system. I therefore suggest that this is a highly democratic procedure whatever else it may be.
Again, it is arrant nonsense to say, as was said by the noble Baroness, Lady Seear—and it is a pity that she is no longer in her place, as she warned us she would not be—that one is destroying the possibility of negotiation. There is nothing in this Bill, under the system which it proposes to set up, which can prevent the teachers' unions—and there are, I think, probably too many of them; but that is their business—and their employers, the local authorities, negotiating to their hearts' content. If they can present to the advisory committee and to my right honourable friend the Minister an agreed package, it is overwhelmingly likely that that agreed package will go through because, apart from anything else, it will save my right honourable friend an immensity of trouble and difficulty. It really is—
Lord McIntosh of Haringey: My Lords, I wonder whether the noble Lord would be kind enough to give way.
Lord Boyd-Carpenter: My Lords, when I have finished the sentence, which is a rather long one, I shall be delighted to allow the noble Lord to intervene. It is therefore quite wrong to suggest that this is the end of
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negotiating or that you are depriving anybody of negotiating rights. Now I shall happily give way.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for allowing me to intervene. He is describing the situation at the moment. Agreement has been reached on all the points to which the noble Lord referred and over which the Government are concerned, yet the Government are doing exactly what he described as being impossible—ignoring those negotiations and seeking to impose a quite different settlement.
Lord Boyd-Carpenter: My Lords, the noble Lord of course omitted in that admirable intervention the fact that this measure of agreement which has been achieved—and it is no more than a measure of agreement—has been achieved against the background of the introduction in another place of this Bill and that there is no reason to believe that if the Burnham system were to continue a sensible agreement would be reached which would carry out the objectives of the Government, which include both the conditions of service and the financial arrangements for rewarding additional responsibilities and additional qualifications. There is no reason whatever to assume that.
Therefore although I always welcome interventions from the noble Lord, because I have always had great sympathy with him over the way he was treated by the GLC, I really cannot accept that that invervention alters the case in the slightest. Neither that invervention nor the speeches to which I have referred deal with the reality of the situation as it now is. For two years and more, work in our schools has been disrupted. There is one aspect of that work which is perhaps different from the disruption which any other form of industrial action brings about. If you have a coal strike, you stop producing coal, but when it is over you can step up production and get it back. But if you interrupt a child's education, you can never redeem the time lost. If you cause a child to fail a vital examination because it has not had the training and teaching to which it is entitled, that is a permanent loss for life. Therefore there is something peculiarly vicious about industrial action in the schools.
There is also the psychological damage that it must do. What is a child going to think if suddenly the teacher whom the child has regarded as a friend, someone who is helping it to get along with its career, suddenly makes it clear that because that teacher wants more money he is going to stop helping that child and stop working in the school? Your Lordships understand the psychological damage that is being done, as well as the damage that is done, frankly, to the standing and reputation of the teaching profession.
This is not professional conduct; it is not the conduct which you would expect and are entitled to expect of an honourable profession. There is real damage being done and it is no use noble Lords saying, "Oh, well, you've had the system going for so many years; it must continue" if under that system this kind of thing can happen and can continue to happen, as is threatened in this coming term.
Therefore it really was essential that the Government should act. One of the reasons I welcome

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this Bill—and I welcome it wholeheartedly—is that it is an indication that we have a Secretary of State for Education who is prepared to act and who, in a difficult situation in which he knows he will be exposed to criticisms, nonetheless sees it as his duty to secure the proper education of our children and is prepared to take action by legislation to secure that that education continues successfully. Therefore I wish this Bill extremely well and I am enormously encouraged by the knowledge that our education system is in the hands of a Minister who can do that.
5.35 p.m.
Lord Houghton of Sowerby: My Lords, my noble friend Lord McIntosh said that this is a crisis measure. Of course it is. Were it otherwise, I think we should be opposing this Bill very strongly indeed. But look how the House of Commons was treated just before Christmas! They had the Second Reading on the Monday, all the remaining stages on the Wednesday and they were kept up all night to finish the job. That surely is an indication of the urgency with which the Government regard this Bill.
They are certainly right to consider the present deadlock in the pay dispute as of such gravity and which has gone on so long in its different phases that it is desirable to try and bring this phase of it at any rate to an end and clear the way for consideration of more permanent arrangements regarding the structure and pay, and also the method of negotiation of salaries and conditions.
I think, by the way, that it is quite significant that at long last conditions of service are in the picture. They were rigidly excluded for so long that many Secretaries of State, and indeed employers' panels, despaired of ever getting them brought into the field of harmonious discussion. But that has been achieved and it is of great importance.
However, so far as concerns the Bill itself, this resembles a kind of bloodless coup by government forces who are dissolving the authority of a subordinate community on the ground that they had made a mess of it and it is better to resort to direct rule. We know, my Lords, on how many occasions interim arrangements and temporary provisions have a tendency to be prolonged and eventually become permanent. I would remind the House that income tax was introduced as a temporary measure, and I believe it is still with us. Many times things which have been introduced provisionally have become permanent. It worries me greatly to think that it is possible, under Clause 5, for the arrangements in this Bill to be renewed after 1990 every year for ever on an order laid by the Secretary of State which is subject only to the annulment procedure, the negative procedure in both Houses of Parliament. That is quite extraordinary, and Clause 5 must undergo very serious consideration.
The only way to achieve the temporary nature of an allegedly interim measure is to limit its duration and to be very firm indeed about it. In my opinion, there should be a date in this Bill beyond which the Bill should not go. Also, the opportunities for extension should be made much more difficult. I believe that the duration of the Bill to 1st March 1990, as stated in Clause 5, should be shortened by a year for certain and
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possibly two. Only by imposing a discipline upon the whole educational setup in this regard can we be sure that the interim nature of these provisions will be in operation for a limited period.
If we are not satisfied about that, then there is a good deal wrong with the Bill. If we are satisfied about that, I think we could regard it as purely a temporary measure giving time only for the Secretary of State to sort out the tangle of pay and conditions as of now and giving all concerned the opportunity of considering what the machinery of the future should be. I do not think that either the Secretary of State to do the first job or the teaching unions and the employers, whoever they may be, to do the second job, need a lot more time because the momentum has already started on the consideration of alternatives.
Once it was agreed that the Burnham machinery should go, minds were devoted to the alternative, and a great deal of thought and work has been done on that. I say therefore that Clause 5 needs the most careful consideration. If the House is going to be fair and just on this matter, it should insist on something that is interim being interim, and force the Government and all other parties concerned to face the prospect of the lapse of the Act and other arrangements taking its place in the near future.
Clause 2, composition of the advisory committee, I think has its problems. I am sure that under Clause 2 there will be a debate on whether the advisory committee should be completely independent or shall in some sense be representative. That might be a very keen debate. There are dangers in seeking a representative role on the advisory committee because of the commitment that that may imply in the membership of those of the advisory committee with a direct interest in the outcome of its deliberations. It may be—I think probably would prove to be—better for the advisory committee to be completely independent so that none on it should be regarded as exercising any sectional interest or bias in favour of one section or party as against another.
With regard to the methods of making orders under Clause 3, the question of what the Secretary of State may do and how he may do it also raises serious problems. If one looks at Clause 3(4)(a), one sees the general terms that describe the authority of the Secretary of State to make orders relating to pay and conditions of service. I am doubtful whether, in prescribing temporary arrangements—which we must insist that these are—it is desirable to allow the Secretary of State to introduce into the public sector provincial differentiation in national rates of pay and other departures from national rates which would have a serious repercussion upon the conditions of service of other sections of the public services.
The Government have already suggested that there should be provincial differences in rates of pay. For a very long time national rates have obtained in the Civil Service, in the teaching profession and in other sections of the public services, quite part from any industries outside. Before we give the Secretary of State statutory power to vary the pay of the teaching profession on those lines, we ought to consider whether as a matter of principle it is desirable for him to be allowed for him to do that without negotiation

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when it will be a hotly disputed proposal if it is made for other sections of the public services. That too is an important matter.
I note also that the Secretary of State's authority has to be brought to Parliament for scrutiny, and that publicity has to be given in certain circumstances to any differences that he may have with the advisory committee. All these are matters that we have to consider under Clause 3.
The question then is: what is to follow? We have heard a good deal about the role of the Secretary of State. This really is the nub of the whole problem of settling the pay and conditions of the teaching profession—who is the manager, who are the employers, how can negotiations take place sensibly with one section of the employers when they can be vetoed by another section of the employers?
If we are to get coherence into the negotiating machinery of the teaching profession, there has to be one management side. That is the only way in which one can reach conclusions that will not be subject to review after they have been reached except by the overriding power of Parliament. That is the position in the Civil Service. But I know of course that the paymaster in the Civil Service is the Government, and no share of its remuneration comes from local sources. This problem of the division of responsibility for management in financial affairs has to be resolved to better satisfaction than has been obtained so far.
If the Concordat of 1965 had remained in force, we should not be in this position today. At the time of the 1965 Act, the Secretary of State desired to have a place on the Burnham Committee. The 1944 Act decided that the Secretary of State must be kept out of the Burnham Committee. However, by 1965, under a Labour Government, it was thought that the Secretary of State must have some part in the deliberations of the Burnham Committee. Two seats were allocated to the Secretary of State but, since two seats were scarcely an effective influence upon the outcome of the deliberations, two things were granted by the informal Concordat which lasted from 1965 to 1985. One, as the noble Baroness who so ably introduced the Bill pointed out, was a fixing of a global sum of aggregate cost within which the negotiations had to take place. However, the Secretary of State gave an assurance that he would not talk about the global figure before the negotiations began; it would emerge only at a later stage in the discussions. It would not be a condition of starting negotiations, but it might be a condition of concluding them. The second thing was that the Secretary of State—and the noble Baroness pointed this out—had 15 votes, a weighted vote, in the Burnham Committee on matters of allocation, distribution, scales, differentials and the rest. It was not an overriding influence, but it meant that those who were opposed to what the Secretary of State's nominees suggested had to muster quite a considerable section of support within the Burnham Committee, and it worked. I am not at all sure, incidentally, of the circumstances in which it was discontinued, but it was done unilaterally.
Had the Concordat been, in force, we should not have had the meeting last Wednesday of the Burnham
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Committee, which concluded an agreement on a scheme that it knew the Secretary of State was unable to accept on the ground, apart from other considerations, that the aggregate sum was beyond that to which the Government were prepared to go. I think that that side of the matter needs very anxious consideration.
I can understand the noble Lord, Lord Alexander of Potterhill, being worried about the trend towards a national education service. I do not shrink from the concept of a national education service. However, I do not think that we should drift into it by the prolongation of these interim provisions, nor be forced into it by the controversies among the teaching unions which may stand in the way of reaching some satisfactory arrangement. I think that that is an additional argument for limiting the duration of this Bill.
I conclude by saying that with the advance thought that has already been given to the alternative to the Burnham machinery, the best thing for all three sides, including the Secretary of State, is to speed up the momentum of the consideration of the alternative and try and get it into some agreed shape with the utmost speed because that will determine the duration of the interim arrangements. The interim arrangements are there only while some alternative is being sorted out. The quicker agreement can be reached, the less justification there will be for the prolongation of the interim arrangements. It is vital that the term of these interim arrangements be reduced. The parties concerned should maintain momentum now to get an agreement of the alternative. Let us have an end to the interim arrangements by 1988 or very soon afterwards. It is an opportunity which people should take, otherwise we shall drift into sourness or apathy and little progress may be made.
At the end of this day unions and management should make up their minds to renew pressure on their constitutent members and upon the administration to get the alternative set up and agreed. If that is done then the purpose of this Bill will have been served, otherwise it is drift, drift, drift; and in the end we shall be faced with having to clean up the whole situation because we have a virtual dictatorship in the realms of industrial relations which is quite intolerable both to your Lordships' House and to the country generally.
5.53 p.m.
Lord Rochester: My Lords, it is a privilege to follow the noble Lord, Lord Houghton of Sowerby. I always listen to what he has to say with great respect, especially on this occasion, because more than any other noble Lord his is the name most closely associated with the subject of this Bill.
My contribution will be brief. I should like to try to bring to bear on the Bill such experience in the industrial relations field as I have. It is one thing, as I see it, for the Secretary of State, faced with a negotiating procedure that has clearly broken down and the possibility of further disruption in our schools, to impose on teachers his preferred pay scales in place of those reasonably negotiated under the aegis of ACAS and ratified last week at the meeting of the Burnham Committee. It is quite another thing—and

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here I must strongly disagree with the noble Lord, Lord Boyd-Carpenter—that for the next few years and possibly for an indefinite period thereafter collective bargaining rights are to be taken away from organisations representing teachers and the authorities which employ them.
It may be said that that will not happen because under the Bill the advisory committee which is to be set up will have to give such oprganisations the opportunity to submit evidence and to make representations. I suggest that anybody with the slightest experience of managing people knows that there is all the difference in the world between being consulted before a decision is taken and sharing in the making of a decision. Therefore the question arises what there is about teachers which makes them peculiarly disqualified from engaging in collective bargaining.
To the best of my knowledge all other public servants have negotiating rights or are protected by an independent pay review body. It is only reasonable, as the right reverend Prelate the Bishop of London said, that those noble Lords who are critical of the Government and their approach to the problem on this score should be prepared to say what alternative suggestions are offered. As I see it there are three possibilities.
One is to establish an independent pay review body such as those available to doctors, nurses and others. The second possibility is to set up a joint national council composed of reasonable numbers of representatives of government, of local education authorities in England and Wales and of the six unions presently represented on the Burnham Committee, added to, no doubt, by representatives of the voluntary colleges in the way described in the letter to the Secretary of State that was quoted at an earlier stage in this debate by the noble Lord, Lord McIntosh of Haringey.
The third possibility, which is really a development of the second, would provide that the dispute should be referred to an independent body for settlement when (as in this case) negotiations have resulted in a failure to reach an agreement acceptable to all parties. There may be objection raised to this in that no government can be committed to expenditure on salaries which has been determined by parties other than themselves. But does it have to follow that teachers can accept only what the government chooses to pay them? In preference to that surely there is a strong case for asking both the Government and other parties to a dispute such as the current one to submit their case to an independent body which would have to publish its findings and state explicitly the grounds on which those findings were based. If the award of such a body were made subject to ultimate parliamentary authority, as in this Bill, what would government have to fear?
It may be very difficult to amend this Bill in ways which would accommodate fully any of those alternatives, and I realise therefore that we may have to make do, the Bill being in the form that it is, with expedients such as altering the composition and terms of reference of the advisory committee so that at least it is given much more independence than is envisaged at present. We shall have to see.
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I realise that in this House, as in another place, the Government enjoy sufficient potential support to mean that they can, if they choose, ensure the passage of this Bill in its present form. But I suggest it would be imprudent of them to force the Bill through in that way.
Like the noble Lord, Lord Alexander of Potterhill, I recall, though a little more dimly, the enormous pains to which R. A. Butler, as he then was, went in order to ensure that the 1944 Education Bill received the widest possible support before it was enacted. In my belief, a considerable responsibility rests upon this House—upon all of us—to see that the same is true of this Bill. Otherwise I fear that teachers will feel justifiable resentment, because they will feel that they are being treated unfairly in comparison with other public servants. In that situation my fear is that damage may continue to be inflicted on the children in our schools.
6.2 p.m.
Lord Beloff: My Lords, everyone has agreed that this Bill has been proposed as the result of a crisis. That means of course that it is a Bill prepared with a particular object in mind and a particular situation: so it is to end the Burnham Committee machinery so far as the schools are concerned but to leave it intact so far as further education is concerned.
I should like to suggest, as was suggested in another place (and a degree of assurance was given on behalf of the Government that it would be looked into) that there are problems with regard to the other section, notably the discrimination that has been practised on that committee against the Association of Polytechnic Teachers. I think it is very important that we should not have an education Bill too often—it keeps us here too long—and therefore it would be useful if the Government, between now and the Committee stage, could find the time perhaps to do something (though not perhaps anything very major) to remove any disquiet about the other half of the Burnham machinery.
When we come to look at the Bill itself, I find it difficult to follow a great deal of the criticism that has been propelled against it, a lot of which seems to me to be based on a series of misapprehensions. But may I perhaps clear out of the way one argument put forward, I believe, by the noble Lord, Lord McIntosh, and certainly by the noble Baroness, Lady Seear? The noble Baroness did not tell us which government department was having the honour of a conversation with her this afternoon but my sincere hope is that it is the Foreign and Commonwealth Office, because I think they would tell her that to invoke the ILO in this affair is a blind alley.
It is very doubtful whether not only many of the 150 members of the ILO but even members of its governing body (countries such as the Soviet Union, China, Hungary and Algeria) have arrangements for teachers negotiation that would satisfy the noble Lord, Lord McIntosh of Haringey, or the noble Baroness, Lady Seear. If they can come to the House at another stage and rehearse how these things are dealt with in those countries, and perhaps in other countries which are on the governing body of the ILO, and then tell us

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that in some way these proposals fall far behind them, the accusation that they are undemocratic may gain more of a hearing than is likely otherwise.
I must say there has also been so far in this debate one very curious assumption on the part of all noble Lords opposite: namely, that the next general election will be won by the Conservative Party. They have all assumed that Mr. Baker, or someone in his succession, will be there at the time when some of the important provisions of this Bill come into effect. Indeed they talk about having to limit its duration, apparently with the fear that he might still be there in 1989 or 1990. It is very curious and I must say that the shadow Secretary of State for Education, who stayed up all night in the other place fighting this Bill, must wonder whether he is ever going to reap the fruit of his endeavours, or shall we have to say "Infelice Radice"?
But leaving the politics aside, let us look at what has happened and what is proposed. First of all, what has happened? It is true there has been a very considerable advance towards agreement—agreement, for instance, that the present Burnham Committee structure, at any rate where schools are concerned, is no longer fulfilling the function that it should. I do not think there has been any disagreement in your Lordships' House about that. Secondly, I believe it is agreed to be important and to be an important advance that conditions of service and rates of pay are in future taken together. But it is not the case that, in their infinite wisdom, the two sides on the Burnham Committee have come to agree about this. Indeed, only two years ago the National Union of Teachers refused to take any part in any discussion in which the question of terms of service was raised. It is because of the pressure from Her Majesty's Government and because of the pressure from the general public, and parents in particular, who are tired of disruption in the schools, that these very considerable advances have been made.
But it is not a great deal of use, I think, coming to the House, as the noble Lord, Lord McIntosh, did, and saying that the agreement is almost here. It is not actually here. There are disagreements between the unions and there is not even unanimity between those representing the local authorities. It really could not have been expected of any government who took their duties to education seriously not to intervene to deal with the immediate situation. I think, again, all of us would agree that a better system for the future has got to be devised, though, as the noble Lord, Lord Rochester, said, there are at least three options on the table and some of us might think there are others.
Like other noble Lords, I was impressed by the speech of the noble Lord, Lord Alexander of Potterhill. I find myself in agreement with his premise. I think that the Bill, though it is an emergency Bill, marks a step towards a greater degree of centralisation of the control as well as the financing of education than has been traditional. Unlike the noble Lord, Lord Alexander of Potterhill, I cannot convince myself that that is altogether bad, not because of—although I would not dispute the reasons given by the noble Lord, Lord Boyd-Carpenter—the failure of some local authorities to live up to their obligations, but much
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more on the general point that we require a revolution in education in this country for national purposes.
Not for the first time, the noble Lord, Lord Alexander of Potterhill, said that it was the centralised education system in Germany that enabled Hitler to come into power. That is a disputable historical verdict, but I shall not take up your Lordships' time by disputing it now. But what one can say is that in the 40 years of the Federal German Republic, that system has produced—and this is generally admitted—higher levels of attainment, a greater spreading of the secondary or technical education and a greater contribution on the part of the educational system to the flourishing condition of that country's economy than we have achieved. If one is going to look at other examples, one might look also at the positive gains which may emanate from, for instance, a common core curriculum..
A good deal of play has been made—I understand that this is an issue which touches individuals and teachers closely—about the apparent latitude given to the Secretary of State, and his advisory council (his advisory committee in the first instance) to vary rates of pay in special cases or for regional reasons. Regional reasons are the ones that seem to have excited most attention so far in the debate. But I would remind your Lordships that there are other important special cases in the teaching profession. We suffer a damaging and overwhelming shortfall in the teaching of certain subjects closely connected with our industrial future.
It should not be ruled out that some different financial arrangements, maybe in partnership with private industry and with other parts of the public sector, may have to be made as against those made for the general run of classroom teachers or of teachers with special responsibilities. It seems to me therefore that the opportunity that would be given, and must now be given at least to this generation of school children, to have the dispute settled must also clearly be an opportunity which enables us to look at the future of the educational system and at the way in which we can preserve it from what has been happening in the past few years. In the light of that it would be a great pity if we were to be revealed as preoccupied with a number of what I can, with due respect to the right reverend Prelates, call political theological points: for instance, points about the difference between consultation and collective bargaining.
Collective bargaining may be, and probably usually is, the best way to determine remuneration in a competitive society. It cannot be regarded, and ought not be regarded, apart from what it produces. In some circumstances it may produce excellent results. In other circumstances, particularly in a profession such as the teaching profession which is divided by unions which do not merely represent different sections of the profession but compete with one another for membership, which is always a dangerous symptom, collective bargaining may be less valuable than consultation through a committee or possibly ultimately through representations to a review board.
If we are to discuss this Bill in detail, as no doubt we shall, those considerations of the future, as the noble Lord, Lord Houghton of Sowerby, rightly pointed out, are the things which should worry us most.
6.16 p.m.
Lord Murray of Epping Forest: My Lords, it is a mistake to think of the Bill as being a crisis measure in the sense of it being a response to a crisis. There has been a crisis in our educational system but that crisis is on the way to being resolved. As the noble Lord, Lord Beloff, pointed out, it has not yet been entirely resolved by any means, but those who look now at the situation within the negotiating machinery would not have believed 18 months ago that it could get as far as it has.
I share the view of the noble Lord, Lord Beloff, that much has been due to the pressure exerted by the Secretary of State and to the assiduous prompting administered to both sides of the negotiations. The danger is however—I believe we can see this in the Bill—that we shall go backwards from what has been achieved and lose the advances that have been made, because the Bill bears all the marks of being one conceived out of irritation.
I can understand and, up to a point, sympathise with some of the criticisms made by the noble Baroness, Lady Hooper, when she introduced the measure. I can also understand the criticism of the way in which the negotiating machinery has operated in recent years. I can understand the argument that it needs to be reshaped in line with current needs. I can understand the objections to the way in which pay and conditions were kept apart in negotiations. I can sympathise with the desire to see an end to the disturbance of education in our schools. I have considerable sympathy with the Secretary of State's assertion of his right, as a major provider of funds, to a proper role in negotiation about the quantum and structure of pay.
I do not deny that there is a degree of substance in those criticisms and arguments, but I question fundamentally whether the Bill is reasonable or is the right way to achieve the objectives, as even the Secretary of State has said, of bringing peace and order into our classrooms, of agreeing proper arrangements for deciding pay and conditions and of settling them together.
I fear that the Secretary of State has allowed his irritation to lead him to seek a short cut in the form of this measure. Legislation is needed, as has been said, to amend or repeal the Remuneration of Teachers Act 1965. But bad temper makes bad law, and I believe that bad temper underlies the Bill. The negotiating machinery has not been operating satisfactorily. It has been said that a major reason is government interference in extending their control over local authorities. I am sure that there is a measure of truth in that.
However, what has been much more important in relation to Burnham is that it suffers—as all machinery of negotiation suffers—by degenerating over a period of time. I have never known any machinery of negotiation which has not needed to be looked at, refurbished, and sometimes entirely reconstructed because of changes of circumstances and changes in attitudes that affect the machinery.
Perhaps it should have been looked at earlier. The Secretary of State helped wonderfully to concentrate the minds of the people on Burnham. We have seen changes there. We have seen the removal of the
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hegemony of the National Union of Teachers. We see a complete change agreed in the proposal for a national joint council in which the need is recognised for the Secretary of State not only to play a major role but also to be seen to play a major role.
I share the views of those who have criticised the way in which the Concordat was unilaterally torn up in 1985. However, it is no good our being told that sooner or later new machinery will be allowed to emerge. The danger is that intervention through the Bill means what that has been achieved so far in terms of agreement towards new machinery will be lost. The Bill does not put forward a proposition about machinery. It implies that the Secretary of State is dissatisfied with the proposition for an NJC. If he is not entirely dissatisfied, but thinks that there might be some mileage in it, will he not respond to the proposal—which I understand has been made to him over the weekend by the TUC—for a form of machinery in which his role will be recognised and in which he will participate? As it stands the Bill offers nothing to us except some form of consultation to which I shall come in a moment.
Secondly, there is the question of pay and conditions. I have always believed that it is a good working rule that pay and conditions ought to go on the table together with pay on the one side and the use of manpower on the other. This was the value of the product of the bargaining initiatives of the 1960s. That unfortunately was sacrificed on the altar of incomes policy and wage restraint by bogus schemes which undermined the credibility of the productivity bargaining. It was to be kept separate in education because it suited both sides to keep it separate. It was not until the teachers found themselves deprived of any other way of arguing their case in the machinery of negotiation that they began arguing about remuneration for those conditions of employment. It is not only railwaymen who work to rule or who find the benefits of working to rule—and working to rules that should be laid down by employers. I hope that the parties to negotiations and the Secretary of State will keep this danger in mind. The more precisely one defines and codifies conditions of employment the more one relies upon flexibility and goodwill to make the necessary modifications to keep those conditions in line with changing needs, changing technology and so on.
In that situation, the Bill will not provide the goodwill which is necessary if a more strict definition of conditions of work is to be made to operate in practice. Codification does not solve the problem once and for all. It is part of an ongoing activity. Conditions will need to be modified and adapted, and I do not believe that proceeding by legislation is the right way to engender the goodwill to enable this new regime to work in practice.
It has been repeated this afternoon that the purpose of the Bill is to stop disruption in the schools. The action taken by teachers in schools is not the product of some variant of original sin. It stems from a genuine feeling on the part of teachers that they were being badly treated by the rest of us. Exactly the same happened to hospital workers in the winter of 1978–79. Their pay had fallen significantly and seriously behind the pay of those whom they regarded

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as their peers in the industrial world. In each case this led to the hospital workers on the one hand and the teachers on the other acting totally out of character. The answer to that is not to seek to impose on them some package of views about what is good for them, but to remove their genuine grounds for concern.
Under the Bill the Secretary of State can direct local authorities on what is to be in contracts. It does not—and this is very wise—give him any power to enforce those views or contracts. It will be perfectly lawful for teachers to protest, and, if they have gone through the proper procedures, for them to engage in industrial action. On one matter I am certain. If this Bill becomes an Act, it will increase the size of the vote for industrial action in protest at the Secretary of State's decisions because it will add yet a further grievance to those which are held by teachers. This Bill would play into the hands of the tiny minority who want to see trouble in the schools. The Trotskyites of east London would be delighted if this Bill goes on the statute book. But it will do nothing to deal with the genuine causes of the recent discontents. It will only exacerbate the situation.
Finally, the Secretary of State argues his right to a more effective part in the settlement of pay and conditions. I readily concede that right. He is not only entitled, but, in my view, it is his obligation to be at the table when decisions are made. However, that is not what the Bill provides. It does not bring the Secretary of State to the negotiating table. The Bill takes an axe to the negotiating table. It breaks it up; it removes the negotiating table. The Bill takes away the right of employers as well as teachers through their trade unions to share in decisions. It gives the unilateral right to the Secretary of State to impose his own view. The consultative committee will be the creature of the Secretary of State. If it brings him advice on important issues which he likes the consultative committee will be redundant. If it brings him advice on important issues which he does not like, he will find it offensive and he will reject that advice.
To deprive teachers of negotiating rights is to offer them a formula for irresponsibility. The way to ensure that they act responsibly is to get them at the table with the employers and the Secretary of State. I fear that we can gauge the attitude of the Secretary of State to consultation by the fact that there has been no consultation whatever on this measure either with the employers or with the trade unions. This measure was introduced unilaterally, instead of challenging the two sides that if they were not prepared to negotiate intelligently and sensibly he would be prepared to bring forward legislation.
The basic defect of the Bill, as I see it, is that it does not start from an examination of the real situation and needs in our schools. Much has been achieved (and achieved by negotiation) largely under pressure from the Secretary of State in the form of new machinery for negotiations, a new salary structure bringing pay and conditions together, and a new system of appraisal. These may not all be to the taste of the Secretary of State, but he will not achieve what he wants in the schools by waving an Act of Parliament at teachers. As the right reverend Prelate the Bishop of London
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emphasised so rightly, he can only achieve that by building a partnership of Government, employers, teachers and parents.
I have almost taken it into my heart to congratulate the Secretary of State on what he has achieved. Certainly he is entitled to congratulate himself. The real danger now is that he will sweep away the gains that he has helped to secure. Instead he should build on what has been achieved. He should start with his role in the negotiating machinery by responding to the initiative from the TUC that we have read about. Having got that right, he can go on to talk with the unions and the employers at future meetings on the substantive issues.
Certainly, the unions have to knuckle down and be realistic and reasonable. Some acrimonious differences have too often marred relationships between the unions and they too, have to face reality. But if the Secretary of State is prepared to go down that road, then perhaps he might even consider not proceeding with this Bill and instead come back to this House and the other place with a new and agreed measure which will have some chance of the success that we all want to see.
6.32 p.m.
Baroness Phillips: My Lords, there have been so many excellent contributions from this side of the House, and indeed from my noble friend on the Cross-Benches, that perhaps it is not necessary to add to the debate. Therefore, I shall be brief. I feel that I have a vested interest. I am a teacher by profession, and proud to be so. I have many teachers in the family. Just last Sunday I sat with a group of them. They are all young: two young head teachers and four ordinary teachers. They are the recipients of this generous pay to which the noble Baroness referred. I am sorry that she has left.
Teachers are asking for more pay because their pay is low. It has nothing to do with the fact that the nurses have low pay. The noble Baroness made a peculiar kind of measurement. It does not mean that the teachers are getting too much; it simply means that too many workers are getting too little for the kind of work they do.
These were teachers from the voluntary sector; the Catholic schools. They are already demoralised. Make no mistake, when we are talking about teachers we are talking about a group in society who are totally demoralised. I have never seen anything quite so distressing, and I am in touch with a lot of teachers. They feel that there is no sympathy for them. They feel that they have been blamed for the conditions in the schools. They are expected to put right all the evils that society inflicts on the children.
Teachers are expected to act as social workers. They are expected to accept all kinds of attacks. We heard earlier of attacks on nurses and doctors. I can assure your Lordships that there are attacks on teachers. They are expected to accept all this and work in old schools, with a shortage of books and a shortage of other material. They are totally demoralised. To add to this, many unfortunate Catholic schools—and this at least is not the fault of the Bill—are facing closure. There is nothing more demoralising—and one saw this

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when the local authorities were going to disappear—than to think that the work of a lifetime is suddenly going to be set aside.
It is important that we know the kind of people we are talking about. That they are so dedicated is a great tribute to the quality of the people still working in the profession. They have had no reason to be dedicated for a long time. I have said it before and I say it again: too many governments interfere with teachers. Why do they not let the teachers get on with their job, let the doctors get on with their job, and so on? There is too much political interference, but that is rather different from the point we are discussing today. The noble Lord Lord Ritchie, described the conditions that he had seen. It is important to recognise, when we talk about pay, that these are the people being discussed in our debates on this Bill.
We have heard again that there are to be rewards, or some kind of variation, for good classroom teaching, but we have never at any stage learnt how they are to be decided. I have probably used this example before. I once taught the dull and backward, as they were called—lovely children, but they were never going to learn any more. If you managed to teach them to read or to calculate you had achieved something. But in the class next to me were the bright children of the school who got all the examination results. How do you decide which is the good class teacher? It is virtually impossible, because the results are the only things you are going to measure by and the results will be different in each set of circumstances.
It is not a question of somebody working in a car factory and the number of cars you turn out. How is the quality of the good class teacher to be decided? This has never been defined. The noble Baroness who introduced the Bill mentioned the new advisory council. We all know about advisory councils. I have had the misfortune to sit on a number, and I have heard marvellous ideas. Presumably they are listened to. One hopes so. Sometimes one even has the opportunity to take a delegation to the Secretary of State. However, their advice is acted on very rarely. Let us not be under any delusion about an advisory council.
I notice that the members of the advisory council are to be paid. Therefore, the Secretary of State is going to be able to select a few of his mates, put them on this thing and pay them well. We all know what happens if one is put on something and paid. You jolly well have to do what the person who put you there says or you will not keep the job.
This Bill places far too much power in the hands of the Secretary of State. This is obvious from the word go. As the noble Lord, Lord Alexander, said, the local authorities have wanted the repeal of the Remuneration of Teachers Act. By putting that in the Bill the Government are only agreeing to one part of this.
As for the Secretary of State talking about the money, I should have thought—and particularly with a Conservative Government—that the one who pays the largest sum of anything surely calls the tune. In this case the local authorities certainly now make the larger contribution. You can only have one employer. This matter has bedevilled the profession for a long time. As a teacher one was never clear whether you were the
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employee of the Department of Education and Science or of the local authority.
What are these contracts we hear about, these terms of employment? I recollect having all this. I knew precisely what my job was. It was clearly defined. Are we now to have everything written down—that teachers must sit in the classroom 15 minutes before the start of the class? Is that what is meant by terms of employment?
A professional person knows exactly what is expected of him long before he enters the profession. Apart from the demoralisation, what is particularly disturbing—and I put it at the door of the Government—is that this long discussion centred round what?—pay. It did not centre around anything else. It centred around an increase to people who had been denied one for a long time. We have these marvellous phrases now used by governments, "I am not putting any more money on the table". If the previous Secretary of State had put just a little more money on the table one would not have had these long and protracted negotiations. We all know that. They have all been dressed up.
It was interesting to hear the number of Peers who suggested that all this messing about, all this negotiation and all this discussion was a tidying up operation. It seemed to me to be verging on the kind of argument that a dictator would promote. Democracy is always untidy, lengthy, awkward and difficult, but it is the system under which we live, and when you look at all the others it is the best system that anybody has yet devised. I do not like the suggestion that if people do not go along immediately with what is wanted then, as has been suggested by my noble friend, you get rid of them or transfer any opportunity for negotiation away from them.
I, like many of your Lordships, have had numerous letters, and splendid letters. I have two here from parents just in case noble Lords think that it is only teachers who are worried. They say that the Bill is no answer.
"Against this background of disruption, failure and diminishing expectations, we felt hopeful that a draft agreement had been reached between the employing Authorities and a majority of the teachers' unions".
That was the case.
"To us it was the first positive achievement of the past two years … now we understand that the agreement is not satisfactory in your eyes"—
this is directed to the Secretary of State—
"and that you may impose some amended version of it".
The parents make the appeal that agreement must come and that it must not be done this way if we are to rebuild the morale of the teachers. We are not a philistine society yet, but if we continue this destruction of a great profession we shall certainly rank in history as being so.
6.42 p.m.
Lord Henderson of Brompton: My Lords, I should like to take up a phrase which the noble Baroness has just uttered. She said that there is too much political interference; I think she means in the teaching profession. I agree with her. I have different conclusions from hers, though. and I hope that this Bill

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will provide the breathing space that is necessary, the time for thinking to arrive at a new system that will so far as possible in the future be free from political interference.
I regret the necessity for this Bill, but I am satisfied that it is necessary. I find it infinitely sad that after so many years the negotiations that have taken place have not resulted in any agreement, with the result, I am afraid, that in this long period the schools and the pupils have suffered. To my mind, the Secretary of State has not merely had ample justification for introducing this Bill but he has had a duty to do so. In this connection I can quote his words in another place. He said:
"In the meantime, our children have lost out".
He is bound by the provisions of the Butler Act to promote the education of our children through a national policy under his control and direction and through the local education authorities.
That is a clear duty, quite apart from the interest of the Secretary of State in the dispute, as, in effect, the ultimate paymaster of behalf of the taxpayer. There is no doubt in my mind that the Secretary of State had the right and the duty to act as he has. Indeed, he would have been culpable if he had not done so. The Secretary of State is to my mind also abundantly justified in linking duties and conditions with the determination of teachers' pay. I was very glad to hear the noble Lord, Lord Murray, saying that he had always been in favour of such linkage.
Moreover, I cannot see any real improvement in our schools unless there is sufficient flexibility in the pay structure to reward merit in teachers and to attract men and women of special and rare talent and men and women of great talent into districts which badly need them. I also believe that it is necessary to settle the teachers' pay before the Secretary of State turns to the equally important and urgent subject of pay in higher education. I welcome the sense of urgency behind the Bill.
I have nonetheless criticism of the Bill in the light of the Secretary of State's own statement that,
"it does not seek to set a system for all time".
The Long Title says that this is an Act "to make temporary provision" and the Bill is expressed to have a statutory death on 31st March 1990, unless revived annually by order subject to annulment. My criticisms are these: first, that the words "temporary provisions" should be included in the Short Title so that no one can forget the temporary nature of this legislation. I may perhaps remind your Lordships that that amendment to the Short Title was made in the Prevention of Terrorism Act. I believe it was put in on a free vote in the House of Commons, but I am not sure about that. Certainly "temporary provisions" should be in the Short Title, and that accurately reflects the intention of the Secretary of State as stated in the House of Commons and as spelt out in the Long Title.
Secondly, I should much prefer the statutory death to be absolute in 1990 and that there should be no provision for life support after that date. Surely we have learnt the lesson from the emergency legislation
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of the last Great War that even if such legislation is expressly drafted as temporary we know from bitter experience after the war that it was capable of being prolonged well after the emergency had ended. In any case, if the revival provisions are retained in the Bill—I hope they will not be—then the annual renewal should be subject to affirmative resolution. It must be the duty of the Secretary of State to justify positively to Parliament the need for a further year's life. In other words, the presumption for a temporary provisions measure should be death at the terminal date unless the Government take positive action to prolong its life and to justify its extension to Parliament.
I have two other criticisms of this Bill of a parliamentary nature. First, can it really be satisfactory that a Clause 3 order can under subsection (3) of that clause refer to provisions contained in another document, an entirely separate document published by the Stationery Office, and direct that those provisions should have effect or be amended in accordance with the order? I should like to know what the precedents are for this unusual procedure. Should it not be a matter of principle that all the provisions made by an order may be found in one place? That place, I should have thought, was in the order itself.
I agree that the drafting in Clause 3(2) is justifiable. No criticism has been made against it, but is seems to me sensible that if one is to have a statutory committee, and if the Secretary of State substantially agrees with that committee, it is not at all necessary to have an affirmative resolution. It seems absolutely sensible that when the order is made it should only be subject to annulment. On the other hand, where the Secretary of State substantially departs from or rejects the advice of the advisory committee, then clearly he should justify that to Parliament by bringing in the order which he asks Parliament to affirm.
Having said that, I should like to say that this distinction, which I agree is rightly drawn in the first part of Clause 3, should be carried through to orders made by the Secretary of State before 1st October 1987 when he will be acting without any reference to the advisory committee. Therefore should not subsection (7) of Clause 3 be amended so that it conforms to the spirit of subsection (2) of the same clause?
I hope that those points will be seriously considered by the Government. I believe that they would make the Bill much more acceptable, and I should like to echo the plea of the right reverend Prelate the Bishop of London that the Government take seriously suggestions put forward not out of any party political motives but in order to make the Bill more acceptable generally.
I conclude by reiterating my support for the Bill, subject to detailed but important parliamentary safeguards which I believe are essential to temporary legislation of this nature.
Lord Hatch of Lusby: My Lords, before the noble Lord sits down, perhaps he can explain how he can hold that it is the duty of the Secretary of State to intervene at this point when the predecessor of the Secretary of State consistently announced that he had no part in the dispute, refused to answer questions

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about it and shed all responsibility for a dispute which he always claimed was one between teachers and their employers.
Lord Henderson of Brompton: My Lords, I cannot argue that at length. However, I believe that the Secretary of State has a residual power given to him in the Butler Act to bring proposals before Parliament when negotiating machinery has broken down.
6.53 p.m.
Lord Henley: My Lords, it is a great privilege for me to follow the noble Lord, Lord Henderson of Brompton, who is a fellow Cumbrian. This is especially so as I find myself substantially in agreement with what he says regarding the necessity for the Bill.
Like the noble Baroness, Lady Phillips, I must declare what I suppose is an interest in that I sit on the Cumbria County Council and am a member of its education committee. Having said that, I cannot honestly claim any great expertise on the subject of education. I was elected in the by-election only some six or seven months ago; I went on the education committee because my predecessor had been on it, which is the general rule in Cumbria. I cannot in any sense claim to be speaking for my county council, nor do I want anyone to think that I am. It is a council which is split more or less equally between the two major parties, with the Liberals and two independents holding the balance of power. I do not think that there would be any real consensus on the county council about this Bill. I have discussed the matter with my group spokesman on education; however, I must stress that all the views I express are very much my own.
I believe that the Secretary of State for Education is to be congratulated upon introducing this Bill. It is long overdue. I think that everyone is in agreement that the days of the Burnham Committee are over. I do not think I should repeat what others have argued both here and in another place about Burnham. It has outlived its usefulness, if it ever had any in the first place, and the fact that it has been unable to resolve this dispute satisfactorily after more than two years obviously bears this out. I think it is obvious that pay cannot be negotiated without also considering conditions. That is patently obvious and I do not think I need to deal with that matter as it has been dealt with and it seems to be a matter on which there is broad agreement.
Having said that, there is obviously the question of what will replace Burnham. As we all know, the Bill proposes an advisory committee appointed by the Secretary of State. However, during the first year the power to impose a settlement, which will need the affirmative approval of both Houses, lies with the Secretary of State. It has been argued that that is both draconian and undemocratic in that it takes power away from local education authorities, who, through the ratepayers, pay a little over half the bill. I partly accept this. However, in an emergency—and we have had disruption in our schools for over two years, which, by any standard is an emergency—desperate measures are needed. I am sure everyone will accept that the education of our children is a matter of the utmost importance and it has been disrupted for far
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too long. Over the last two years we have constantly been told that there is a solution just around the corner. We had Coventry and then Nottingham—or was it the other way around?—only to see our hopes dashed as yet another unacceptable formula was put forward. I do not think that the parents of this country's schoolchildren can tolerate this position any longer. It is not fair that we should allow it to continue and it is only right that a solution should be found.
I believe that the offer put forward by the Secretary of State is a very generous one and that it will offer a chance of peace in our schools. In subsequent years we are to see the working of the advisory committee appointed by the Secretary of State and described as his poodle by some Members on the Benches opposite. That committee will consider both the pay and conditions of teachers. It is again argued that this does not give local education authorities or, for that matter, the teachers' unions a look in on the negotiations. But then, did Burnham cater adequately for all the negotiating parties when the Government, after the breakdown, were effectively excluded? Were all local education authorities represented? I do not believe that they were and I think that only representatives from the Association of County Councils and other education authorities were included.
The creation of the advisory committee need not exclude the unions and the education authorities from negotiations. I hope that we shall have an assurance from the Government that there will be effective and very extensive consultation with all the different parties. In saying that, I should like to ask the Government, in giving that assurance, to say who such consultations will be with. In the case of local education authorities, will the consultation be with the ACC and, in the old metropolitan counties, representatives of the metropolitan districts? Will individual education authorities have a right to make their submissions? I ask this question because the ACC will at any given time be dominated by one party or another, which effectively will leave some of the others out in the cold. Similarly, will all the unions be consulted? I believe that there are six unions in all and obviously each will want to put their case separately as they represent slightly different people. I ask for such an assurance from the Government, and I am sure it will be given.
There is also the argument that this solution is undemocratic and takes power away from democratically elected representatives on county councils and other education authorities. This is slightly unfair and ignores Parliament's role in the matter, in that any order will need parliamentary approval, either by means of an affirmative resolution or a negative resolution, depending on the circumstances and whether the Secretary of State has changed the original advice given to him by the advisory committee. I feel that that process is certainly democratic; and as a county councillor I do not see it as a denial of the role of the counties as education authorities, just as long as there is the consultation to which I referred earlier. That is most important and I hope that the Government will be prepared to give an assurance to that effect.
I intended to be brief and so I should like merely to say that this saga of disruption has continued for too

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long. This Bill offers a great deal and a very generous settlement. I for one certainly welcome it. One must put the interests of parents and children above all others in this matter, and this I believe is what the Government are doing. I trust that the House will give the Bill a Second Reading.
7.1 p.m.
Lord Hatch of Lusby: My Lords, like my noble friend Lady Phillips I come from a teaching family and have myself either taught or served administratively in every part of the education system of our country. Many experts on teaching have already spoken in the debate. I do not intend to dwell on the technical side or indeed on the professional side of teaching, because I believe that in the Bill there is an even greater issue that transcends all professions and concerns every member of our society.
If we are anything in this House, we are a revising Chamber, and I believe there will be general acceptance on all sides that our main responsibility is to restrict the arbitrary use of power by the Executive, by the Government. That is especially important when in the other place either party has a huge majority. I want to concentrate all I have to say on Clauses 2 and 3 of the Bill, which deal with the establishment of the advisory committee.
It seems to me that within those two clauses there is contained, as the noble Lord, Lord Alexander of Potterhill, pointed out, the seeds of a nationalised education system which all educationists in this country, of all parties, have always resisted. The advisory committee will be arbitrary, unelected, unaccountable and unrepresentative. Yet it will be the main body, the only body, advising the Secretary of State, and the Secretary of State himself will have power to determine pay and conditions for the whole of the profession.
As I understood it, this Government were elected on the promise, among other things, to roll back the state. Is this rolling back the state? This Government have dismantled local government and local democracy and this Bill is an added weight to the consistent policy campaign of the Government in their relations with local government. It is no coincidence that the Secretary of State responsible for this Bill was the Minister of State responsible for the destruction of the metropolitan counties. But this Government have no mandate to nationalise the education service. They have no mandate for a centrally directed education service. Indeed, in the 1983 general election the Conservative Party manifesto actually referred to returning power to local authorities. How can that be consistent with this Bill
If the noble Lords would like a greater authority on the attitude of the Conservative Party to local democracy, they should remember that it was the present Prime Minister who, when speaking officially on behalf of the Conservative Party in another place on 12th February 1970, said about local and central government:
"Both are elected bodies, both finance the education system, both should have a say in the decision-making process".—[Official Report, Commons, 12/2/70; col. 1474.]
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Yet this Bill will take away that say from the whole of the local government service in this country.
A great deal has been said about the Burnham Committee. What has not been said, and what has not been said by the noble Baroness who introduced the Bill, is that it is now accepted within the profession that the Burnham Committee has failed in its most recent tasks. There has been no attempt to preserve it. But the advisory committee was described by the noble Baroness as a set of independent people. Who will appoint them? Who will pay them? How can they be independent when the Secretary of State alone will appoint them, when they will be responsible only to the Secretary of State and when the Secretary of State's department will be paying them?
It has already been accepted—and I noticed that the noble Baroness did not refer to this matter when she was talking about the Burnham Committee—that the Burnham Committee could be superseded by a national joint council. Why did she make no reference to the fact that a proposal, put forward within the past few days by the profession itself, for a national joint council to include at least discussions with the Secretary of State as to his role within such a council has been accepted by the profession as a whole?
If noble Lords should be concerned as to whether I am exaggerating the threat of the appointment of th national advisory council, perhaps I may draw their attention to the fact that all the teachers' unions have rejected it, that all the employers' associations have rejected it and that on 19th December 1986 The Times Educational Supplement, hardly a militant or radical newspaper, described it as,
"an oppressive and preposterous suggestion, one totally unjustified by past history".
In the previous week, the magazine Education described it as having,
"tyrannical powers unprecedented in peacetime".
Perhaps the most succinct, direct, encapsulated description of the whole issue on which the Bill is based was best described in the Guardian this morning by Ian Aitken, who wrote:
"If you genuinely reject conformism and seek the advance of individuality then you must at all costs resist centralised control over the educational system. Once the schools are in the hands of the gentleman in Whitehall you are on your way towards the Orwellian society".
That is the issue which seems to me to transcend all the details that we have been discussing on this Bill and no doubt will be discussing over the coming weeks. The Bill sets up a tyrannical power in the hands of an individual who happens at the moment to be the present Secretary of State. He could be any kind of Secretary of State but he will be an individual, and that is totally against not just the education tradition but the whole political tradition of this country.
At the same time, it is destroying the right of collective bargaining for a whole profession. Can the Government tell the House what other profession is going to be placed, or has been placed, in the same position as teachers will be placed—teachers and the local authorities—if this Bill becomes an Act?
I noticed that when the noble Baroness who introduced the Bill was speaking about industrial relations she showed how little she knew about the

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subject. She quoted the fact that four of the six unions had turned down the ACAS agreement. She did not say what was the number of teachers who had been balloted and what was the number of teachers who supported the agreement—not the number of unions. I noticed that the noble Baroness, or whoever wrote her speech, seemed to miss the fact that this same point was picked up in another place when the Minister of State for Education made the same error of judgment about the character of industrial relations.
If this Bill becomes an Act and if control of pay and conditions is passed over to the Secretary of State, and if all the machinery through local government and education committees is destroyed, we shall truly have direction of labour for the teaching profession in this country. That is a recipe for escalating bitterness in the classrooms which is bound to bring further tragedies for our children, for the teachers, for the parents and for the entire nation. It is a threat to the whole democratic tradition of this country.
Like the noble Baroness, Lady Seear, I recognise that this House is a non-elected assembly and therefore we have no right to oppose the Second Reading of the Bill. However, I have no doubt whatever that over the ensuing weeks we shall be spending many hours in debating radical amendments in order to take the anti-democratic content out of this Bill.
7.14 p.m.
Baroness Carnegy of Lour: My Lords, as a Scot I rise to speak in this debate because there is a strong Scottish dimension to the Bill although it applies only to England and Wales. The systems differ on each side of the Border. The way that teachers, local authorities and the Government have acted during simultaneous disputes have differed. But the most important issues to be resolved are the same, as are many more of the detailed issues.
The Government's point of view on many of the issues, as well as on the global sum and the global average of the 16½ per cent. increase for teachers which is proposed, are derived from the report of the Main Committee. The Main Committee—I point this out to the noble Lord, Lord Hatch—is an independent committee set up by the Secretary of State and paid for by the Government, having been accepted by all the teachers' unions and the local authorities as a valid independent committee.
A settlement which the Government have said will be acceptable is now out for ballot among Scottish teachers. If they agree to it, that will be the settlement. If they do not, I presume the Government will be forced to legislate in some way as it has been forced to do now in England and Wales. I think that does mean there is a Scottish dimension to the Bill.
As the noble Lord, Lord Houghton, said with his usual knowledge and wisdom of this subject, the Bill is not an end in itself but a means to an end. There is a great danger that in going through the stages of this Bill in this House, we shall do, as I believe the noble Lord, Lord Hatch, has just done and speak so much about the iniquities of what the Government are proposing in order to break the deadlock that the iniquities of the deadlock itself will be obscured. It is extremely
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important that as we go through the Bill and as we consider its various clauses we remember what has brought this deadlock about and the suffering that it has caused to children, to parents and to teachers.
It is essential that we do not forget why the Government have a responsibility here that cannot be ducked. We must remember, as we go through the Bill, the longer term objectives that must be achieved. I say again to the noble Lord, Lord Hatch, that I suspect that those objectives are not so much concerned with the centralising of education but that they have a great deal to do with rolling back the state and rolling back a lot of extremely unfortunate effects of the politicisation of schools. That will be the next step, and this is part of it. In the meantime, this Bill is a means to an end.
What are the principal issues that have to be borne in mind, the criteria against which this Bill has to be tested? It seems to me that there are three things that we must remember all the time. First, our present system can work only if local government observes the limits of its role in the system. Councillors are elected to run services. They are elected to do so within the framework set by the government of the day and by Parliament—a legal framework, an economic framework. Government, of course, have a special locus in education because nearly half of all public expenditure that goes through local government—that is, from the rates and from central government, and it is certainly over 40 per cent.—is spent on education. Half the amount spent on education goes on teachers' salaries. That means there is a special locus of government in education. Also, there is the fact that the quality of education is of national as well as local importance.
Until comparatively recently in the education system—until the last 10 or 15 years—the fact that central government set the framework was recognised and accepted by local authorities. The system worked. I was involved in the negotiations in Scotland over a long period of time. As teachers' organisations have changed from what were mainly professional bodies to what are almost entirely trades unions; as local authorities (I have to say here especially the Left-wing authorities) have allowed more and more politics to get mixed up with schools; and as Labour groups in local authorities have involved teachers' unions in their meetings when discussing educational matters; so we have come to a point where local authorities no longer behave as they are supposed to do. They have not behaved as employers working within a government framework. They have got together with the teachers' unions—not always finding it easy to get the teachers' unions to agree of course—to exclude Government and to make decisions on their own; and they expect Government to pick up what in England and Wales is 46 per cent. of the cost. That problem is at the heart of the deadlock which this Bill seeks to break. If local authorities and teachers accepted the Government's role and the fact that the Government should be setting the framework, there would be no need for this Bill. As I understand it, no alternative has so far been suggested which would resolve the issue.
It seems to me that the second criterion that we must bear in mind as we discuss the Bill is one about which

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we need not say much because others have already spoken about it; namely, that the future of this country depends on attracting high quality, enthusiastic teachers. It depends on attracting them to every part of England and Wales, including the cities and remote rural areas, and it depends on attracting them in every subject.
The noble Lord, Lord Ritchie, said that because teaching depends on dedication (and, of course, I agree with him) teachers do not mind too much about pay. I am bound to say that dedicated professionals do mind about pay. They mind about the initial pay when they come into the profession and they mind even more about prospects and opportunities for promotion. Moreover, they want opportunities which entail staying as good class teachers.
Through the years, these opportunities have been eroded for reasons which your Lordships know very well. I believe that that is one of the main reasons why, in Scotland at any rate, morale at this time is so low. The Government's proposals would reverse the decline of these opportunities. They would increase enormously the number of incentive posts. So far, the suggestions coming from local authorities and the teachers' unions would mean reducing those posts. Indeed, my right honourable friend said in another place that in a large comprehensive school of 75 or 80 teachers the proposals being put to him would mean that there would be only 15 to 20 promoted posts. I do not believe that most head teachers would feel that it was right to try to manage a large comprehensive school with that number of promoted posts.
The type of structure that the Government are proposing fits the system of appraisal which I think is now increasingly widely accepted. I believe that the public has the right to expect teachers to accept this kind of structure and local authorities to agree to it.
The third criterion that one has to bear in mind is that teachers' essential duties and conditions of service must be clarified, and not only because it is necessary for management. Until very recently the teaching profession accepted that activities such as meeting parents, marking homework, covering for absent colleagues, and running extra curricular clubs and so on, which have not been taking place during the disruption, were part of their job. It is only comparatively recently that these duties have been regarded as something voluntary and optional because they were not defined in the contract. As a result, many teachers have seen fit totally to neglect these areas. For more than two years many children have had delivered to them an arid and incomplete curriculum, but there has not been any financial sacrifice for the teachers themselves. That is far more damaging than strikes.
The other day a child of 14 said to me, "My homework is only half marked this week. The reason is that teacher is not allowed to mark the other half". That is still going on in Scotland. Fancy! What can one think about a teacher who is not allowed to mark the whole of one's homework and stops half way through? This situation must never happen again. Teachers must know what is expected of them, head teachers must know what they can call for, the public must know what it is employing teachers to do, and parents must know what they can expect.
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In addition, pay and conditions must be closely related. In Scotland a package is being balloted and the Government find the proposals acceptable. The biggest teachers' union has recommended acceptance and its general secretary has put his job on the line. The executive in some of its regions is against it. The Glasgow executive voted nine to three against. So the teachers are not fully in agreement. The SSTA, which is the secondary teachers' association, made no recommendation at all and many of its members are saying that it has had chicken for Christmas. They have problems. I do not know what the teachers will say next week but if they say no, I suggest that there will have to be legislation to sort the matter out.
In England and Wales, there has been total failure to find a package to which the Government can agree. There has been difficulty in finding one to which the unions themselves can agree. There is no sign that agreement will shortly be found. Children, parents, teachers and the country must not be asked to wait. The Government must take the matter in hand. They cannot duck this issue. The Bill is a means to that end. I am sure that we shall discuss it in enormous detail and make it as good as we can, but I hope that the Bill will be given a fair wind by this House so that the problem can be resolved as soon as possible.
7.27 p.m.
Lord Monkswell: My Lords, I hope that my contribution will not take too long; but I want to raise some issues of national defence, national economic security, democracy and human rights, and also to ponder the question of whether we have government management incompetence or government management with secret objectives. Then I shall comment on one of the specific issues that is likely to come from this Bill.
During the First World War there was a massive intake of ordinary citizens into the armed forces. One of the problems that the armed forces found was that a high proportion of the recruits were physically unfit through poverty and bad housing. This fact had a limiting effect on the war effort and partly as a result we saw the development of national welfare payments and national housing policies.
In the Second World War the same thing happened, only this time of more concern was the inadequate education of a large proportion of the ordinary citizens owing to inadequate education provision. Again, partly as a result we saw the development of a national education system particularly in the secondary school sector—the famous 1944 Rab Butler Act. If a well educated citizenry was deemed important for reasons of national defence over 40 years ago, how much more important is it now with the amazing modern developments of all kinds in defence equipment.
As time went on, it became plain that to make our way—and here I choose my words carefully—to make things is the only way forward for the economic prosperity of this country. To make our way we needed a well-educated population and not a population educated within the narrow confines of a class-based society of yesterday. To have a system that educated an elite to be managers, that educated some people to be skilled workers and left the rest with little

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or no education, to be the hewers of wood and drawers of water was simply not good enough. In practice, Rab Butler's technical schools never really flourished from the start and we had a segregated two-tier system from the point of the iniquitous 11-plus.
However, it is sometimes forgotten that some education authorities were prepared to experiment and develop new ways of organising education and we saw comprehensive education develop in some pioneering, Conservative-controlled areas. True, it was a Labour Government which made comprehensive schools national policy, but that Labour Government and subsequent Labour Governments did not ram that policy down the throats of local education authorities. They left it in the hands of the people elected locally to determine how best to reorganise their education system.
Some of us were very critical that the Labour Education Secretary in the mid-seventies did not force Tameside and Trafford local authorities to go comprehensive. But in hindsight that Labour government was right and I am glad to say that in both Tameside and Trafford the people have seen the error of their ways and they now elect councillors who are prepared to reorganise their education systems on comprehensive lines.
So a modern, we-funded comprehensive educational system is essential for national defence and economic security. But what is currently happening? We have inadequate investment in education; we need to invest in school buildings; we see a lack of resources for books and equipment in schools and our teachers are perceived to be badly paid.
What has been the Government's response? We can all remember Sir Keith Joseph saying, "It's all caused by bad teachers. How can we get rid of bad teachers?" Unfortunately, virtually all teachers were tarred with the same brush. Mass unemployment has not helped either. It must be terribly demoralising for a teacher who knows that however bright the child is, however many O levels and A levels a young person may obtain, there is still the risk that they may never get a job.
Therefore, teachers are demoralised, they feel lacking in status, and virtually everything the Government say these days contributes to that feeling. How can they improve their position? They look around and see that in our present society one is judged by how much one earns, so they say, "Right, we want status, we are due status, therefore we should be highly paid". So in some measure we have the current teacher's dispute.
To those of us outside the teaching profession, those of us with some experience of industry and industrial relations, it appears that either the situation has been handled with gross incompetence by the Government, or there has been some secret objective. We all know that this dispute could have been and in most people's eyes should have been settled some time ago. But no! there was a reason for keeping it going: the secret objective.
This Bill before us unfortunately shows what that objective was. At a stroke it does two things: it abolishes the teachers' right to union representation in
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negotiation and at the same time it takes power from locally elected authorities and passes it to central government. I think we are entitled to point out and reinforce the point which was made earlier that this did not appear in the election manifesto of the Conservative Party at the last election. We can also point out, as has been mentioned before, that this Bill will do nothing to improve education in this country.
There are two problems when it comes to denying trade unions the right to negotiate for teachers. First, it offends the British concept of human rights, and also may fall foul of our international obligations in that respect. Secondly, it is bad industrial relations practice, and if carried through will cause no end of problems.
With regard to taking power from local education authorities, again we get the impression that this Government have a very poor regard for democracy: the ability of people to determine their own destiny. I can appreciate that the current leadership of the Tory Party do not like democracy and want to stifle it whenever possible. But I am sure this is not the wish of all the Members who sit on the Government side of the House.
Finally, I should like to say something about one particular aspect of the Government's proposals on teacher's pay. That is the concept of rewarding good teachers by the payment of extra money. There are two ways that this could be done: by independent assessment which I believe would gain the support of some teachers, but which would require a massive increase in the number of the teaching inspectorate. However, this is not on offer. What is on offer is an arse-lickers' charter, a charter which will enable heads of department and headmasters to reward their blue-eyed boys and girls, but will do nothing for the status of those heads or heads of department in the eyes of their staff and will create division and dissension among teachers.
We know in industry how these arse-lickers' charters work and they may be an instrument of control; but they do nothing to encourage and assist people in doing difficult and demanding jobs. Teachers have a difficult and demanding job. They should be given every encouragement and assistance to do their job well. This Bill will do nothing to encourage or assist teachers, but will give them further problems. It has been said before and I shall say it again: it is a bad Bill and I hope that the Government will have second thoughts about pushing it through.
7.38 p.m.
Baroness Turner of Camden: My Lords, the hour is late and I do not want to take up time by repeating arguments which have already been advanced in the debate. Nevertheless, I must say at the outset how much I agree with my noble friend who has just contributed to the debate and the noble Baroness, Lady Seear, when they said that this is a thoroughly bad Bill. It is a thoroughly bad Bill. We have to deal with it as a revising Chamber, but I question very much why it has been introduced at all, because, as a number of noble Lords have said, the Bill seeks to remove from teachers the right to negotiate on their pay and conditions of service.

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As has been said on a number of occasions during the debate, there is no question but that this is the major objective of the Bill. These rights which teachers have have existed since 1919. It was in that year that the then Minister of Education, H. A. Fisher, formed a standing joint committee to secure the orderly and progressive solution of salary problems by agreement on a national basis.
Before the advent of the standing joint committee, which, of course, became the Burnham Committee, there were no fewer than 320 separate pay scales in operation. The disparity in locally negotiated salaries led to masses of pay disputes and a bitter conflict which closed 60 Herefordshire schools in 1914. That was a part of the campaign for a standing national salary scale. The standing joint committee was founded to deal with these problems and to stabilise industrial relations.
The introduction of national salary awards established by collective bargaining machinery was intended to achieve stability. Even then, there continued to be disputes in cases where nationally negotiated awards were not applied. They came to an end only when awards made through national machinery became enforceable by statute.
What the Bill attempts to do is to turn the clock right back to pre-1919 and to the situation where we had the disputes then in existence. It seeks to bring an end to the arrangements for nationally negotiated pay and condition deals. In its place, as we know, an advisory committee is proposed, with members appointed by the Secretary of State. But even so the Secretary of State will have powers to modify or ignore entirely the advisory body's recommendations and to impose his own settlements. Furthermore, as we have seen, the proposal allows for different salary awards in different areas of the country for people doing precisely the same kind of work.
As I have already indicated, history has shown that when that situation appertained there were very serious difficulties. The educational press—this has been referred to already in the debate—has already said that the Bill gives the Secretary of State unprecedented powers. This is a very dangerous step to take and will not assist in the provision of adequate education services.
The Secretary of State, I understand, claims that the Burnham Committee and the existing machinery for negotiating teachers' pay and conditions of service have become discredited. The recent dispute over teachers' pay is advanced as evidence of this. A number of noble Lords have said similar things in the debate. It must surely be clear, in view of the grave dissatisfaction that has existed for many years among rank and file teachers about pay and conditions of service, that there were bound to be difficulties. Masses of classroom teachers have felt they have not been paid enough, and the Government themselves have made major contributions to the difficulties.
Until the Government intervened, a dispute in the Burnham Committee could go to arbitration—surely a civilised way of sorting out industrial difficulties. However, intervention by the Government some time ago made access to arbitration available only at the
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request of both parties. During the 1984 negotiations I understand that the Government made it absolutely clear that they would not fund the cost, no matter what the arbitrators awarded. In effect, this wrote off arbitration as a means of settling disputes.
Nevertheless, as we have heard in the debate, there has been negotiation under the auspices of ACAS which proposes the establishment of a new joint national council to negotiate on pay and conditions of service. Indeed, as I understand it, and as we have heard, ACAS has been a party to a major overhaul in the agreements and negotiating arrangements for more than 400,000 teachers in the country. I am sure that that was a difficult and time-consuming exercise, but ACAS is a specialist industrial relations organisation respected by employers and unions alike. On what grounds are all its efforts to be set aside, efforts that we have heard tonight have resulted in considerable progress being made and in a situation in which the TUC has become involved, with a very strong prospect of a satisfactory solution being achieved?
It is claimed that the Bill is needed to end the disruption of children's education and to solve the teachers' dispute, but it does not address itself to this particular dispute. It could have done so, but it does not. It is seeking to remove altogether any future rights. If the plea is that this will stop problems in education, I believe it to be a forlorn hope. I think that the contrary is the case. All sections of the teaching profession, from the newest teachers just out of college to head teachers, and all the teaching unions are solidly against what is proposed in the Bill. How can it possibly be said that a Bill which arouses such hostility throughout the profession will improve the situation?
The public is being misled if it is being told—and I think that it is—that this high-minded intervention by the Government will encourage commitment and professionalism among teachers. I am not a teacher, as my noble friend Baroness Phillips is—she spoke, I think, very movingly from her own experience—but a number of members of my immediate family teach. I can tell your Lordships that it is no picnic being a classroom teacher nowadays, particularly in some of the inner-city areas.
Teachers often have to deal with problems in the classroom that are not of their making but are a reflection of the social conditions and social deprivation in which many of our children are being raised. Highly qualified and experienced people who shoulder responsibility for the future of our children will not become committed and professional if they think that the Government have so little regard for them that their normal negotiating rights—rights that are available elsewhere in industry and commerce and in other professions—are being removed from the organisations to which they choose to below.
Furthermore—this point has been made on several occasions already—it is my belief that we are contravening our international obligations, not, I think, for the first time under this Government. Convention 98 of the International Labour Organisation, to which the UK Government assented, provides and protects the rights to collective bargaining and direct negotiation. Convention 151, introduced later, extends those provisions to cover public employees.

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The noble Lord, Lord Beloff, in his contribution chose to pour scorn on comments about our international obligations. It is not a question of what the Soviet Government and other governments do or do not do. The fact is that British governments have ratified these conventions and, if we go back on what we have ratified, we are denying the obligations that we have willingly accepted. Moreover, we may very well be in breach not only of international labour conventions but of the European Social Charter, since I believe that Item 7 of that charter accepts in principle the right to collective bargaining.
If the Bill is passed, teachers will be left with far fewer negotiating rights than any other public servants—indeed, no negotiating rights. The Government have not made out a case for treating teachers so differently. Even the police service pay and conditions are negotiated at national level by the police negotiating board. It is quite true of course that more money was made available for those negotiations, and maybe it is for that reason that there have been problems about those negotiations. But this Bill will not solve the problems of the teachers' dispute because it does not address the problems that arose from the many years of dissatisfaction that teachers have experienced with their pay and conditions. Therefore, I think that the Bill should not be passed.
I accept, however, as other noble Lords have said, that we are a revising Chamber, and so we must utilise the opportunities that we shall have in Committee to endeavour to remove from the Bill those obnoxious provisions which prevent the teachers from having the same rights as other professions and employees.
7.48 p.m.
Lord Kilmarnock: My Lords, the Bill was rushed through the other place with such unseemly haste that we must be grateful that the Leader of the House—I am glad to see him in his place—did not move a similar business Motion here. I think that he showed his usual wisdom in not doing so, as I am sure your Lordships would have resisted it.
On Second Reading in the other place, the Alliance tabled an amendment which still sums up our position. While recognising the need to replace the Remuneration of Teachers Act 1965, it sharply criticised the Bill for making no positive contribution to settling the current dispute; for removing the basic negotiating rights of 400,000 teachers; for taking away the direct input of local authorities into negotiations and for drastically centralising power in the hands of the Secretary of State rather than allowing for direct negotiations between teachers and employers within the context of a new system of pay comparability for the public services as a whole, such as we have proposed and shall argue for at the next election.
This is an extremely reactionary step in terms of employment legislation, thrusting, as it does, a large and extremely important group of public servants into an extraordinary limbo quite at odds with the arrangements for the police, the fire brigade, the armed forces, doctors, dentists, nurses, NHS employees or almost anyone one can think of, as my noble friend Lord Rochester reminded us.
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The Nottingham package proposed a new voluntary national system, which the noble Lord, Lord McIntosh of Haringey, referred to in some detail, for negotiating teachers' pay and conditions. It is quite clear that without some such body teachers will become the only group of public servants to have no recognised form of negotiating machinery whatsoever. It is hardly to be expected that they should accept this discrimination against them other than with bitterness that bodes ill for the future harmony of our schools. Even The Times, which supports the Baker pay structure, did not think he should be allowed to get away with this. That was in the second leading article on Friday the 10th of this month.
It is not only the Alliance and the Labour Party who have criticised the Government for the drastic centralisation contained in this Bill. It was amusing and instructive to read Mr. Digby Anderson, who is not normally a fierce critic of the Government, also writing in The Times on 6th January. He said:
"Mr. Baker is a socialist. Whether or not socialists are good or bad is a matter of opinion. That he is one is a matter of fact. He is not a loony-Left socialist, but then many socialists aren't—or at least have not been. He is a socialist of the old school, favouring collectivisation and centralisation of education under the political control of the state."
The article goes on to suggest the Secretary of State's proposed apparatus would only be tolerable as a temporary expedient to be dismantled as soon as possible. It says:
"For if ever an extremist Labour Party achieves power and the nationalised framework is still in place, that advisory board will be stuffed with very different nominees."
Of course that is the fatal flaw in what the Secretary of State proposes to put on to the statute book. He will have great powers but there will be no guarantee of continuity. Educational philosophies diverge, governments change, and the education system could become the victim of rival ideologies struggling for the hearts and minds of our young people and alternating twice or even thrice in a decade. The chaos of the past could become nothing when compared to the chaos of the future if this Bill is passed unamended.
This is a short Bill but it contains rather a lot of sins. The Secretary of State seeks powers to impose a settlement of the current dispute prior to the operation of his proposed advisory committee and without further reference to Parliament. This is essentially a move designed to concentrate the minds of the local authorities and the teachers' unions and to force them to accept as a non-negotiable package the proposals of the Secretary of State on pay structure and differentials. An imposed settlement is a contradiction in terms, and the Secretary of State must know in his heart that a negotiated deal would be better far and away than an imposed deal for the good reason that it would be far more likely to stick, unless he is more concerned with machismo than with peace and progress in the classrooms.
The public will be less than impressed if an imposed settlement explodes in the face of the Secretary of State, especially in an election year. He cannot necessarily count on parental support. Here are the parents of the Fleet Primary School in London writing:

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"We have to tell you we do not believe an imposed settlement is remotely likely to deal with the shattered morale of teachers. We foresee an unbroken future of continuing chaos and increasing bitterness."
That is from the parents, and not from the teachers.
There are severe doubts about the wisdom of this approach. If the Secretary of State were determined on it, it could have been embodied in an even shorter Bill which we could have discussed on its merits, or otherwise, as a temporary measure in relation to the current dispute, which the noble Lord, Lord Houghton of Sowerby, was suggesting, while a proper national debate and consultation took place on the future structure of our education system. There is certainly room for such a debate.
At the North of England education conference at Rotherham on Friday last, Mr. Baker is reported as saying:
"In my view the country is entitled to an education system which not only works well but is also intelligible and shows clearly where responsibility and accountability lie."
No one could disagree with him thus far. The question is how this is delivered.
It will be recalled that the first national system was set up in 1870 under a government headed by Mr. Gladstone. In 1880, attendance at schools was made compulsory and the obligation to pay fees was abolished in 1891 under a government headed by the Marquess of Salisbury. All countries in the Western world and all parties in the United Kingdom believed by that time that a public system was vital to the national economy and to the development of individuals. Our system started almost naturally as a devolved system because it brought into the fold denominational schools along with the new county schools. In 1919, the devolved mechanism was reaffirmed by Fisher and again in 1944 by the Butler Act.
Other recipes are now in the air. The noble Baroness, Lady Cox, and her friends have a pet solution which they have just published which would in effect turn the schools of this country into 28,000 independent trusts, presumably all competing for public funds. It is not a solution that I would recommend. Goodness knows what would happen to the distribution of education facilities over the country. According to the noble Lord, Lord Alexander of Potterhill, the Secretary of State is reported as wanting a system along the French lines. The noble Lord, Lord Beloff, referred to an education revolution.
All these views should be and could be part of the debate. But we are not to have that debate because under cover of this Bill the Secretary of State brings in provisions which make it possible in effect to change unilaterally the whole basis upon which the public education system in this country has been founded. What we are being offered is back-door centralisation on which the Government are pre-empting any serious discussion. This is a very serious matter, and the proper course would have been for the Government to formulate their proposals and put them to the public in the next general election campaign, which cannot after all be long delayed. This is an election issue and it is quite wrong for it to be handled in this devious fashion. Many speakers have dwelt on the impropriety
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of the proposed advisory body and markers have been put down for Committee which I shall not repeat in any detail.
It is clear that many of your Lordships will want to introduce the affirmative procedure for orders made by the Secretary of State even with the agreement of his committee, because there is no guarantee that this committee will have acted independently or objectively. Its constitution as set out in Schedule 1 precludes it from so doing. It has been called a fig leaf and a poodle, and a creature by the noble Lord, Lord Murray. I shall settle for any of those metaphors, provided they are not mixed. I cannot see how the noble Baroness, Lady Cox, could refer in her speech to independent determination of pay and conditions of service in relation to this committee. That completely defeats me. Even the debating skill of the noble Lord, Lord Boyd-Carpenter, did not convince me that we have here anything that can conceivably be called independent.
We will want that committee to elect its own chairman and deputy chairman. We will want to remove the power of the Secretary of State to throw off uncongenial members. We will also want to see genuine pluralism in its composition, which should include employers', unions' and parents' representatives. The Government had much enthusiasm for parents during the passage of the last Education Bill but now they are writing them out of the script. We will want to know that a salaried and thus self-interested committee is not going to cost a lot more than Burnham itself. The financial memorandum to the Bill says that salaries will be largely offset by the disbandment of the existing committees, from which it appears the poodle will cost more than the present set-up.
In introducing the Bill the noble Baroness appeared to suggest that the members may not be paid after all. Perhaps the noble Lord, Lord Belstead, would care to clarify that when he comes to reply. I fear that if he cannot reassure us on this point we must assume yet another extension of the Government's already large and increasing network of patronage.
The advisory committee is said to be temporary but we all know that there is nothing more permanent than temporary, as the noble Lord, Lord McIntosh, said. If it is temporary why must it continue for three years and then be renewable on a yearly basis, subject only to the negative procedure? The negative procedure for renewal of a soi-disant interim measure indefinitely? I do not believe your Lordships will swallow that. Judging from the speeches this evening, I do not believe you will. I refer to the speeches of the noble Lord, Lord McIntosh of Haringey and Lord Stewart, my noble friend Lord Ritchie of Dundee, the noble Lord, Lord Houghton of Sowerby and the noble Lord, Lord Henderson of Brompton. I am sure that is something we will want to take very seriously when we come to the Committee stage.
I now come to the question: was any of this necessary? The 13-point list of teachers' views as embodied in the Nottingham agreement matches very closely the 19 points of the Government's package. As the noble Lord, Lord Ritchie of Dundee, said, it was announced on 30th October last year. There is virtual agreement in this complex area. The principle has

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been accepted, as the noble Lord, Lord Alexander of Potterhill, said. There is also agreement on appraisal and on the relatively high yearly maximum of 1,265 hours. Who would have thought when we were discussing last year's Education Bill in your Lordships' House that such progress could be made? The whole area which seemed doomed to fester in disagreement has become one of virtual consensus. Surely that is something to hold on to and not to undermine by threats such as are contained in this Bill.
It is worth noting here in passing how much more onerous these conditions are than their Continental equivalents. British overall hours—class contact and extra-curricular—are much higher than abroad. In most European countries overtime is paid for extra hours and for covering. Lunch-time supervision is not an issue in West Germany or Italy, where school finishes before lunch. In France students called surveillants are paid to do the job. British teachers have virtually agreed to assume contractually a whole area of responsibilities which either do not exist or are separately catered for among their European colleagues. This does not exactly match with the accusations of irresponsibility or lack of professionalism over here.
There are also fewer benefits such as a 13th month's pay, extra holiday allowances, sabbaticals or the right to in-service training. It is worth reflecting on what the majority of British teachers are prepared to do as compared to their Continental equivalents, where, incidentally, better teacher conditions produce better results.
As regards rewards, there has been much talk of the Houghton award, comparability and so forth; but one of the most interesting comparisons is with teachers' pay in the rest of the world. On a price-adjusted basis, a 35-year-old male teacher with about 10 years in the primary system in London comes 14th in a league table of 19 cities worldwide, with Geneva, Luxembourg and Toronto at the top of the list and Lisbon at the bottom. The London teacher makes slightly less than his Spanish counterpart in Madrid.
I make these comparisons not to condone all the actions taken by the teachers' unions but to set the whole of this long-drawn-out dispute in some kind of context. The unions, it is true, have been at sixes and sevens. This has not made negotiations any easier, as my noble friend Lady Seear said, but there are some encouraging signs. Both the Assistant Masters and Mistresses Association and the National Union of Teachers ballots have delivered a positive vote for the ACAS package, and between them they represent three-quarters of the teachers. According to the noble Lord, Lord McIntosh, the NAS, the NAHT and the secondary heads have also said they are prepared to rethink their position.
It is important that the attachment of the AMMA and the NUT to a decent main professional grade level of pay is understood as a genuine expression of concern to attract and retain dedicated classroom teachers who do not want to become managers or bureaucrats. That position was very well expressed in an article by Peter Smith, the deputy general secretary of AMMA, putting the case for fewer differentials in the Financial Times of the 17th December last.
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At the same time the Government have a point that the Nottingham package does not provide sufficient incentives for responsibilities in medium and large schools. That was a point which I think was made by the noble Baroness, Lady Carnegy of Lour, and which is the concern of the Professional Association of Teachers and the National Association of Head Teachers, who did not endorse the Nottingham agreement. Between the Secretary of State's five managerial grades and Nottingham's two, there is still clearly room for compromise and the blood, sweat, toil and tears which have brought agreement so close, in the words of my noble friend Lord Ritchie, simply must not have been shed in vain.
The larger unions must be prepared to recognise the Secretary of State's attachment to differentials. It springs from his ideology rather than theirs, but he is in the saddle. Equally, he must recognise the deep concern of the bulk of the teachers over the main professional grade. It should not be beyond the wit of man to reach a compromise if the will is there on both sides. Possible areas of compromise would be to trim back the Nottingham overshoot of £80 million or £85 million by phased dates of implementation and to allow for an additional managerial tier. This could be done within the existing money, but if the Secretary of State wants another grade or more grades he should use his muscle with the Treasury and thus secure reasonable rewards to both chiefs and indians, in the phrase of the noble Lord, Lord Alexander.
When you think that we are talking about a workforce of 400,000 people it would be absurd to allow an additional sum of, say £40 million to stand between a settlement and continuing bad blood and sporadic disruption in the classrooms. If the Secretary of State is determined that a macho image is more important than a fresh breeze of good will and high endeavour in the classrooms, and if he is determined that it must be he and not the traditional negotiators who will walk away with the credit for a settlement, he has his priorities wrong and he may discover this to his cost when the Government go to the country. The people of this country are not concerned about winners or losers in this dispute or about who walks off with the gold cup. What they want above all is peace and progress in our schools, and they are the people the Government should listen to.
These are the matters to which the Secretary of State should be applying his undoubted skills, and if he does so we wish him well. In the meantime we cannot welcome this Bill either as a weapon in current negotiations or as a long-term vehicle for the relationship between teachers and central government. It is a short cut to centralisation, without proper discussion. It sets up a body which will command little respect and it does not allow for proper parliamentary scrutiny. I am afraid that the right reverend Prelate the Bishop of London is slightly over-sanguine about parliamentary procedures in the Bill. By convention, we shall not vote against the Bill but we shall do everything we conceivably can to make it less obnoxious in Committee.
8.6 p.m.
Lord Irving of Dartford: My Lords, the Secretary of State, Mr. Kenneth Baker, has appeared on television

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so frequently lately expressing his concern about education that some of your Lordships may be tempted to forget how this present crisis arose in our schools. It was essentially caused by the failure of the Government to provide adequate resources to sustain the education service, and it brought about a position where parents and teachers joined in protesting about underpaid teachers, deteriorating school buildings and inadequate books for pupils.
The situation was exacerbated by Sir Keith Joseph, who refused to provide the money to make good a 30 per cent. deterioration over a perod of 10 years in the pay of teachers, which left them lower in the pay scales than any other comparable profession. At the same time Sir Keith Joseph was demanding a number of changes in conditions in a way that no industrialist would dream of doing in such circumstances.
All this caused a very serious fall in the morale of teachers. It was described by Dr. Harry Judge, the director of the School for Educational Studies at Oxford, as
"without precedent certainly within the working life of the older among us and arguably over the whole of the last century".
Having created a degree of militancy unprecedented in the teaching profession, Sir Keith gave way to Mr. Baker, who after 18 months to two years of upheaval quickly found £600 million. The first question that parents and others ought to be asking is why this damaging dispute was allowed to carry on for so long, whereas if the money, as the noble Lord, Lord Ritchie, indicated, had been available the dispute would probably have been settled a long time ago. Now, as the noble Lord, Lord Alexander, has indicated, the Government are moving to the total centralisation of a service, to a national education service, for which the Government have no mandate at all. The Teachers' Pay and Conditions Bill will give the Secretary of State powers over local authorities which are unprecedented and this would be the first step in the total centralisation of the service.
Through the Bill the Government intend to remove from teachers and their employers the right to negotiate on pay and conditions of service which has been enshrined in legislation since 1919 not just for this occasion but, as many of your Lordships have said, perhaps for all time. I could not help wondering when I listened to the noble Baroness, Lady Carnegy of Lour, talking about the Scottish dimension, why there should be such a difference between the Government's treatment of Scottish teachers and of English and Welsh teachers. It cannot be because there is less militancy in Scotland, and so there must be some other reason which she did not explain to the House—
Baroness Carnegy of Lour: My Lords, perhaps I could just say that the disruption has been going on longer in Scotland. The offer is exactly the same and it was on the table, I think I am right in saying, a year ago in October in Scotland.
Lord Irving of Dartford: My Lords, that seems to be an incitement to the teachers in England and Wales to go on much longer.
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The Bill is being rushed through Parliament. If passed, it will abolish the existing machinery for settling teachers' pay by repealing the Remuneration of Teachers Act 1965. It will remove the right of teachers to negotiate their pay and conditions of service. It will establish an advisory body to advise the Secretary of State on pay and conditions of service. It will give the Secretary of State powers to modify or ignore the advisory body's recommendations and impose his own settlements on pay and conditions of service. It will allow for regional, area, or school-based salary scales to be established instead of national salary scales. The mind boggles at what would happen if this were to be implemented at any time in the near future in every detail.
The Bill would give complete power to the Government, in the name of the Secretary of State, to impose any pay levels and conditions of service that they like on teachers in England and Wales and to pick the people that he wants for the advisory body. A number of noble Lords have humorously suggested who may be members of the advisory body. The point we should recognise is that nowhere in the Bill is there any indication given of what kind of people they should be or what qualifications or status they should have. The Bill tells us nothing about that.
The Secretary of State would instruct the advisory body on how much money is available for the negotiations and could overrule the advisory body's recommendations. He would make differential salary awards for different areas of the country and for teachers of different subjects. The repeal of the Act means the removal from teachers and local education authorities of the right to arbitration, leaving the Secretary of State as the only arbiter on the pay and conditions of teachers, able to modify or even ignore the advice of the advisory body that he himself had appointed.
The Bill provides no opportunities for local authority employers, teachers or even the advisory body to suggest subjects for the advisory body's consideration. The Secretary of State only would have power over that and all other matters contained in the Bill.
The Bill is arbitrary, authoritarian and antidemocratic. It shows the wilful recklessness that the Government have shown on other occasions by refusing to listen to advice. It is the same recklessness that they showed in each of the local government Bills over the past eight years which led to the calamitous situation where the Government paid out tens of millions of pounds without realising that they had no authority to do so. In our view, the Bill is contrary to the ILO conventions. The noble Lord, Lord Beloff, said that we should disregard our solemn agreements. If the noble Lord was not saying that, he was not saying anything that I understood.
Lord Beloff: My Lords, I was not suggesting that we should not observe our solemn obligations. Obviously as a nation we always should. I was suggesting that the interpretation of those conventions must be a wide one, given the countries which have subscribed to them, and therefore it is arguable that the Bill falls within those conventions.
Lord Irving of Dartford: My Lords, I do not think that the House will readily accept that explanation. It is clear that we would be in contravention of two conventions and other agreements.
Teachers contend that, as the noble Baroness, Lady Turner, said, the Bill is in breach of ILO Conventions 98 and 151, which have been ratified by the United Kingdom Government. Convention 98 came into force on 18th July 1951 and is entitled:
"Right to Organise and Collective Bargaining".
Article 4 of this convention states:
"Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiations between employers or employers' organisations and workers' organisations with a view to regulation of terms and conditions of employment by means of collective agreements."
That article is contravened because the Bill makes it impossible to secure the regulation of teachers' pay and conditions through a process of collective bargaining, imposes a government-appointed advisory committee and leaves the Secretary of State free to determine teachers' pay and conditions as he pleases, and so on.
The noble Lord said that we should interpret the conventions as suitable. The Government did not refuse to accept the conventions when they used them in defence of their action at GCHQ. They used the exemption for that class of worker. The noble Lord is being selective, as are the Government. Having signed the undertakings, either we agree that we should abide by them or we should not have signed them in the first place.
The Bill is opposed by almost every group interested or involved in education. The Associaton of County Councils has said (the noble Lord, Lord Henley, talked about his council) in a letter sent to most Peers:
"This Association is opposed to the Bill on grounds of principle and practicality."
It also said:
"The Bill proceeded through its House of Commons stages in a remarkably brief period"—
he indicated the need for consultation
"in the weeks leading up to Christmas allowing very little time for discussion."
Here there is almost another precedent:
"There has been no opportunity for the Education Committee of the Association to consider the proposals but a brief statement of our opposition was approved by the leaders of the four political groups on the ACC (Conservative, Labour, Alliance and Independent)."
All the parties, including the Conservative Party, in local government are totally opposed to what the Government are doing. The association said:
"The 1986 Bill on teachers' pay and other conditions of employment would lead to the centralisation of all the key decisions on the salaries and conditions of employment and their removal from the scope of negotiations between employers and employees. These, with Mr. Baker's intention to centralise decisions on the curriculum, show the Conservative Government's contempt for local democracy, or the traditional partnership in education, and for consensus of any sort",
without which there can be no co-operation and, in this field, no success.
There has also been criticism from parents. The vice-president of the National Federation of Parent-Teacher Associations, Mrs. Epton, writes:
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"Dictatorship was never a good answer to any problem. Yet that is precisely what Mr. Kenneth Baker intends to impose by the passing of this Bill."
She concludes:
"a solution of the teachers' dispute is something we all want, but an attempt at a settlement by imposing one from above will be no settlement at all and"—
as she says—
"merely the starting point for disruption on a scale such as we have not seen".
The Bill has no friends. As has been said by the noble Lord, Lord Hatch, The Times Educational Supplement described the Bill as an,
"oppressive, preposterous suggestion totally unjustified by past history".
Much of this affair is preposterous. We have heard the Secretary of State reflecting on standards of education and implying that somehow it is teachers who have failed. It is preposterous for a government who have underpaid and undervalued their teachers now to blame them for what the Government believe to be falling standards.
It is preposterous for a government who have failed to repair the fabric of our buildings, to the point where the HMI's report has described them as now having a deleterious effect on our children, to complain about falling standards. It is preposterous for a government who are failing to provide a book for every child, even in science subjects, to complain about falling standards in schools.
There is the paradoxical situation where publicly the Secretary of State reflects on standards but does not mention the private sector. He may say that it is not his responsibility, but if for the sake of argument we believe that certain parts of the private sector maintain high standards—like many other things the private sector is mixed, as with the curate's egg—how do they do it? It is not because of determined control by governors or by centralisation, but by paying for the best and most highly qualified teachers and by providing equipment, books and buildings which are at least adequate and in most cases more than adequate. There is a lesson in that respect that the Secretary of State should learn.
The noble Lord, Lord Hatch, indicated that the journal Education talked about "tyrannical powers unprecedented in peace time". We believe that the Bill has fundamental implications and consequences which go far beyond the teachers directly disadvantaged. This is why a number of the trade unions are becoming worried. It could apply to many other public servants.
We have made it clear throughout that the Labour Party is in favour of the reform of the Burnham machinery. We strongly oppose legislation which removes bargaining rights. We strongly oppose any attempt by the Secretary of State to impose a settlement either now or in the future. After two years of distruption in our schools, I hope that the House can agree that our objectives ought to be, first, an improved service for pupils; secondly, decent pay for teachers; and, above all, peace and stability in our schools. I therefore hope that even at this late stage the Secretary of State will draw back from this reactionary step. He must have credit for increasing quite

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dramatically the amount that was available on the table for teachers. However, he should seek either the additional money which would make it possible to bridge the gap between what the teachers are asking for and what he thinks is appropriate, or he should enter into new negotiations with the teachers to try to get some compromise settlement and also to consider joining the proposed joint national council which would give him an effective say in the negotiation of salaries.
Some papers are suggesting—I think that this is what the noble Lord, Lord Alexander, was suggesting—that the Government are setting up education for electoral purposes. I believe that that would be counter productive with the parents and the public. He will be more likely to receive the thanks of all of them if he secures a settlement which will ensure peace in our schools—a peace which we so desperately need.
8.22 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, despite the catalogue of criticism which has come from the noble Lord, Lord Irving of Dartford, I am happy that he and I can agree on one issue. I believe that both the noble Lord and I would agree that we do not and must not underestimate the important task which schoolteachers have. They have the critical responsibility for the education of future generations and, in terms of the personal fulfilment of young people and the contribution that they will make to the future of the country, that is a very great responsibility indeed.
Because the teacher individually stands at the heart of the quality of the education service, the Government are prepared to plan for an extra £608 million covering this year and next for increased teachers' pay. I was grateful to the noble Lord for what he said at the end of his speech about the effort which had been made to produce this very large sum of money, which will represent an average increase of nearly 16.5 per cent. and will mean, when added to what has already been paid this year, an average increase of 25 per cent. over a period of 18 months. This is a massive increase compared with any groups in the public sector.
However, the message which I felt came very much from the speech of my noble friend Lady Cox was that the education of the nation's children is so important a responsibility that parents will expect that this very substantial pay increase has to be conditional upon a clear definition of teachers' responsibilities and upon an effective pay structure which will attract, motivate and retain teachers of high quality. For this reason the Government's proposals will enable a good Honours graduate to start at £8,500 a year. However, if he or she becomes a head of a big school then the salary being offered now would mean that the pay would be over £30,000 a year. Of course, attracting good graduates into the profession is, as many of your Lordships will know very well, not enough. They need to be kept in teaching with good prospects. It is therefore essential to have a pay structure which
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provides differentials which recognise and reward the good classroom teacher and those taking on additional responsibilities and will also provide flexibility for filling difficult posts, including those in shortage subjects.
Despite this, the noble Lord, Lord McIntosh, in his opening speech said he felt that the Secretary of State did not want to give main grade teachers a decent standard of living. The noble Lord, Lord Alexander of Potterhill, also asked, "What about another £200 million?" The noble Lord received an answer from my noble friend Lord Boyd-Carpenter. I shall not attempt to improve upon that. I do not think that the noble Lord, Lord Alexander, with his enormous experience of education and of public expenditure needed an answer. However, I should like to give an answer to the noble Lord, Lord McIntosh. My right honourable friend's proposals would give all unpromoted teachers up to £ 12,700 a year. That is substantially more than can be earned without promotion in many other professions—for example, in the Civil Service or as a local government administrator. But, in addition, my right honourable friend wants to see an increase in incentive posts to 140,000 and these posts would be used to reward good classroom teachers so that teachers could earn another £900 or £1,800 or £2,800 without leaving the classroom. Like the noble Lord, Lord Alexander, my right honourable friend is very well seized of the importance of the highest qualities of classroom teachers.
It has been argued in recent weeks—and there were certainly echoes of that in the debate today that in making our proposals on pay structure and in bringing this Bill forward the Government are unreasonably rushing the local authorities and teachers' unions into a new situation for deciding teachers' pay and that with less haste all could be agreed. With respect, that is a proposition which does not square with the facts. Although the ACAS proposals accepted that pay and conditions should be considered together, and take an important step forward in setting out a clear definition of teachers' duties, those proposals do not provide a pay structure which would give sufficient rewards to motivate and retain well qualified staff.
Perhaps I may give one example of why I say that. Under the ACAS proposals the number of teachers benefiting from special responsibility allowances would be cut—yes, actually cut—from 105,000 to about 80,000 teachers whereas under the Government's proposals the number would increase to at least 140,000 by 1990. It is little wonder that the ACAS proposals now have the support of only two of the teachers' unions.
The right reverend Prelate the Bishop of London spoke of the need to reach a consensus if we possibly can. However, he also spoke of the great difficulties which stand in the way. My right honourable friend has made clear that he is very ready to have further discussion with the aim of agreeing a proper structure of incentives within the £608 million on offer. Regrettably, no such agreement has at the moment been reached. At the same time it is also not the case that the Burnham negotiating committees—which in the debate this afternoon we have all agreed have to go—can in some way immediately be replaced by

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permanent new machinery. I say that because the existing Burnham negotiating machinery is seen by all your Lordships to suffer from very serious unresolved problems. We have a situation where the employers two years ago presented a package linking pay and duties. What happened? The National Union of Teachers simply walked out, We have a situation where the Government's position in the negotiating process through the operation of the concordat was unilaterally scrapped by the local authorities in 1985. We now have last Wednesday's Burnham meeting which I understand wished to adopt the ACAS proposals but with four out of the six teacher unions and a sizeable proportion of the local authority members dissenting.
We have a negotiating system which, as I think the noble Lord, Lord Murray, would say, has fallen into disrepair and which, I would say, is beginning to fall into disrepute. Of course, the sufferers, as the two noble Baronesses on my side of the House Lady Cox and Lady Carnegy have pointed out, have been the children. As my noble friend Lord Boyd-Carpenter fairly said, we have a situation where something simply had to be done, and this challenge the Bill faces for the interim period by the proposal to set up an advisory committee.
For the longer term, as my noble friend Lady Hooper said in opening the debate, there are obviously various options. A range of views has been expressed about future arrangements. For instance, the noble Lord, Lord Alexander of Potterhill, and the noble Lords, Lord Houghton and Lord Rochester, spoke in their different ways about possibilities for review bodies, or indeed for forms of arbitration. Suggestions have been made for a permanent joint negotiating committee between employer and union representatives with a presence for the Secretary of State.
The noble Lords, Lord Murray and Lord Ritchie, referred to a letter sent on Friday from the Trades Union Congress to my right honourable friend, and the noble Lords, Lord McIntosh and Lord Hatch, referred to another letter sent today jointly by the employers and the teachers' associations to my right honourable friend. These letters have been received, but the House should not be under the illusion that they take significantly further forward the idea of a joint negotiating committee.
The ACAS agreement of January 1986 said that the parties would agree on new machinery. The suggestions so far do not differ much from the existing Burnham arrangements, other than bringing pay and conditions of service together. The proposals in both these letters acknowledged a role for the Secretary of State's representatives, a matter to which the noble Lord, Lord Houghton, and indeed the noble Baroness, Lady Seear, both attached considerable importance. But the letters do not define the voting position of my right honourable friend's representatives, and this lack of any precision in the proposals arises, we know, from disagreements within the employers and between the employers and the teacher unions.
Lord McIntosh of Haringey: My Lords, would the noble Lord permit me? Would he not agree that the proposal in the letter from the teachers and the
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employers that the Secretary of State should have, in effect, a veto on the grounds of urgent national importance and that the sovereignty of Parliament should be sustained in respect of any agreement reached, is far more important than the detail of the voting rights on the employers' side?
Lord Belstead: My Lords, with great respect to the noble Lord, Lord McIntosh, that does not address the position of the Secretary of State's representatives within the joint negotiating committee. It is precisely that point which has caused the trouble in the Burnham Committee. It is precisely that point which the teachers and the employers are saying they are addressing in their letter, and it is precisely that point which remains obscure at the present time, and which of course finally caused the unilateral scrapping of the Concordat in 1985 and, as the noble Lord, Lord Houghton, rightly said in his speech, the position in which we all find ourselves today.
Nor do these proposals, I have to say roundly to the House, so far address the issue of the conflicting interests of the six teacher unions. The proposals are full—I am sorry to say it—of unanswered questions. The employers appear willing to accept that Parliament should be given the power to override agreements covering pay or salaries structure. It is unclear from the letters whether the teacher unions endorse the need for such override provisions.
The noble Lord, Lord Murray of Epping Forest, asked that, whatever views one might have, my right honourable friend should respond. The noble Lord was speaking in that context of the Trades Union Congress letter. But, of course, we are talking about both letters. My right honourable friend will consider most carefully the proposals made in these two letters. However, I have to say that, on the basis of the vague proposals containing the idea of joint negotiating machinery, there is no guarantee that the pay determination process for school teachers would operate effectively without persistent disputes and disruption.
Of course, in saying that, it is the Government's hope that it is going to be possible to arrive in due course at new permanent arrangements which will be stable and effective. But, for the interim, the Bill sets out temporary arrangements designed to last until March 1990 and which can only be extended by order of the Secretary of State for one year at a time. Therefore, the Government are not asking the House to agree to a new procedure for teachers' pay for decades ahead and are certainly not riding roughshod over local authorities and teachers.
Under Clauses 2 and 3 of the Bill, there will be no shortage of consultation during the interim period. The relevant local authority associations and teacher unions will have every opportuntity to make their views known either separately or together, first, to the advisory committee, and then to my right honourable friend, for there will be a two-stage consultation process.
My noble friend in opening the debate indicated the Government's intention to amend the Bill to provide for appropriate consultation with voluntary school interests. It is not the case, with respect to the noble

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Lord, Lord McIntosh, who I think was in error on this, that the churches would appoint members of the advisory committee. We were not saying that. I think that the right reverend Prelate the Bishop of London, in welcoming what my noble friend said, was not thinking that the Government were saying that. May I just say to the right reverend Prelate that I was most grateful for the welcome he gave to what my noble friend said at the beginning of the debate.
Then, when the moment comes when an order is finally made changing teachers' pay and conditions, the order has to be laid before both Houses of Parliament, a form of parliamentary control which does not even form part of the existing arrangements under the 1965 Act.
As to the central feature of the Bill, namely the interim advisory committee, which has occupied so much of our time this afternoon, my right honourable friend will appoint independent-minded members. The noble Lord, Lord Ritchie, said that he felt that there was an irony in this, which I think was a polite way of saying that he looked at it with some suspicion. But I ask the noble Lord, who is habitually fair-minded, to consider that the Secretary of State appoints members to bodies such as the University Grants Committee which, for instance, performs a controversial task without evidence of political bias.
I think we would not achieve a truly independent committee, such as the noble Lord, Lord Houghton, wishes to see, if we were to appoint nominees or representatives of groups with a direct interest in the committee's recommendations, which was what the noble Lord, Lord McIntosh, recommended in his speech. In particular, a system of nominated members might lead to the use of mandation and recall, which would be quite contrary to the principle of an independent committee.
What the Bill does here however is to provide with critical checks and balances in the interim period the Secretary of State once again with an important role. The Secretary of State will be able to give guidance to the advisory committee. In particular the interim committee will need to pay careful attention to affordability, and it could well aid realism in its recommendations if the committee is given guidance about financial constraints. This recognises after all the important role for government which has always been held to be necessary until the concordat was scrapped in 1985.
Certainly, it is the case that under the Bill my right honourable friend will make the orders for changes in pay and conditions of teachers just like the Secretary of State for Education does at the present time. Why does he do it? It is for the reason given by the noble Lord, Lord Henderson of Brompton. It reflects the ultimate duty of my right honourable friend under the Education Act 1944 to achieve a varied and comprehensive education service. But the existence of the advisory committee, the requirements for consultation and the power of Parliament to overturn an order, will provide important constraints on the Secretary of State.
The right reverend Prelate the Bishop of London asked why it was necessary to have a power for the
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Secretary of State to impose a settlement without a report from the advisory committee up to October 1987. Teachers will not want further delay in the payment of an increase backdated to January 1987. They will want the money in their pockets and I think very reasonably.
It would inevitably take some months to set up an advisory committee and for the committee to find its feet and take evidence. We think that that would provide an unacceptable delay for teachers and so the Bill has the provision that the Secretary of State may make orders coming into force, provided it is before 1st October 1987 only, without a report of the advisory committee but after due consultation with the local authorities and the teachers' unions.
The noble Lord, Lord Stewart, queried the provisions for regional and other differences in pay. As he said, London weighting has been paid for many years. The provisions of Clause 2 (4) will allow it to continue to be paid. The noble Lord asked what other cases the Government had in mind. The principal case is teachers in special schools, who are now paid more than teachers in ordinary schools, as he very well knows. It is surely right to permit that to continue. The Government have no radical proposals for regional or other pay differentiation, though this is an issue which might in due course be considered by the advisory committee.
My noble friend Lord Beloff asked about the arrangements to ensure that the Association of Polytechnic Teachers should be included in future negotiations for further education teachers and wondered whether something along those lines could be done. The Bill provides that pay and conditions for FE teachers should be determined in future by arrangements agreed between the teachers and their employers. If they should decide to set up national arrangements which might be an extension of the existing National Joint Council for Further Education Teachers, it will be important to know that all unions representing significant numbers of FE teachers should be able to play a part. The simplest way for that to happen would be for local authorities and the teacher unions to decide accordingly. But I say to my noble friend that the Government will consider whether any steps might be taken to assist the position of the minority unions at present in membership of Burnham FE.
The noble Lord, Lord Ritchie, spoke about conditions of employment and raised various issues about what an order might cover on such conditions. The Secretary of State has expressed on a number of occasions his view that the clear definition of a teacher's job within the ACAS document constitutes useful progress. The immediate need is for a clear statement of teachers' duties and days and hours of work. My right honourable friend has said that the Government would be willing to accept the figures of 195 days and 1,265 hours per year during whch teachers would be available for work at the direction of the head.
Beyond that there are a number of issues which will have to be resolved, including some complex ones about the ways in which teachers' time should be deployed in schools. My right honourable friend has

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said he intends to consult local authorities and teachers unions about these matters, which must be accommodated within expenditure plans for education already announced. Some of these will have to be resolved between employers and unions, some on a local basis and some might be considered by the advisory' committee.
The noble Lord, Lord Henderson, put several constitutional points to which he may wish to return at Committee stage, but there is one particular one to which I should reply. It is his query about Clause 3(3) where there is a reference to an order for pay and conditions being contained in a document. This is simply taken from the Remuneration of Teachers Act 1965. The arrangements under that Act in this respect have proved convenient. The provisions relating to teachers' pay have tended to be bulky. It is convenient for local education authorities to have a standard document which can be updated from time to time through an order and when amendments have accumulated a new edition of the document can be produced. There is no innovation, if your Lordships' House agrees with it, in this procedure.
Then there is the rather more difficult point of the ILO conventions. I have to say at this stage when we are speaking generally that the Government do not accept that the Bill breaches any international conventions. The teacher unions and the local authorities will be consulted, as your Lordships know. Teachers and local authorities are free to set up joint national machinery. The new arrangements are interim. We believe that these arrangements are reasonable and do not contravene our obligations.
I was particularly pleased that my noble friend Lord Henley, in his capacity as a comparatively new county councillor, came to the House today to give support to the Bill. He asked me a particular question; that was how the consultation would work out in practice. The advisory committee and my right honourable friend will expect in the first place to consult the Association of County Councils and the Association of Metropolitan Authorities as representing the local authorities, but it would be open to any local authority to make its own representations. I am confident that the advisory committee and my right honourable friend will take full account of such representations, but if they were minded to ignore representations then they could be called to account in court under the normal principles of administrative law. On the union side those unions in membership of Burnham would certainly be consulted by the advisory committee and by my right honourable friend.
I was also particularly glad that my noble friend Lady Carnegy came to the House to make the point that the position in Scotland is relevant to our debate. This is a very fair point. The situation in Scotland now looks more promising than in the recent past. The executive of the largest Scottish teachers' union has recommended acceptance of a package on pay and conditions. It will ballot and if a satisfactory pay structure can be achieved in Scotland after the ballot that will be a major gain for children and teachers in Scotland which I hope we shall be able to follow this side of the Border.
The noble Lord, Lord Kilmarnock, questioned the propriety of the statement made by my noble friend
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Lady Hooper at the beginning of the debate that members of the advisory committee could be paid. The Bill only enables members of the advisory committee to be paid. No decisions have yet been taken about whether any remuneration will be given to the chairman or members. It is worth noting that an honorarium is paid to the chairman of Burnham but the chairman of the UGC is paid. But there is no criticism of political patronage in either of those appointments.
I was interested that the noble Lord, Lord Henderson of Brompton, said that in his view my right honourable friend has a duty to introduce this Bill before your Lordships' House. I was also interested that the right reverend Prelate the Bishop of London said that he could not avoid the conclusion that an initiative by central government is necessary. On behalf of the Government, who are faced with this very difficult situation, I must say that we have to have a resolution of the endless disruptions concerning teachers' pay. We must reach a conclusion which is fair to teachers, parents, taxpayers, ratepayers and children.
That is why the Government have put firm proposals for a pay settlement for teachers which will provide them with significantly increased salaries and more incentive posts in return for an improved education service. That is why the Government have brought forward this Bill so that pay and conditions can be settled fairly and efficiently. I believe both these actions demonstrate the crucial importance which the Government attach to the education of the nation's children and I therefore ask your Lordships to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Patents (Amendment) Bill [H.L.]
8.50 p.m.>
Lord Northfield: My Lords, I beg to move that the Bill be now read a second time.
I have repeatedly declared in this House an interest in the pharmaceutical industry as an adviser. I declared my interest in 1977 when we were discussing the Patents Bill, now the Patents Act. I declared it on the Animals (Scientific Procedures) Bill when we were discussing that. I declared it again on 22nd April when I raised the issue of licences of right and I raised it again just before Christmas when I discussed the parallel importing of medicines. My position as an adviser to this industry is well known.
The origin of this Bill is as follows. I raised the matter in April on the then Patents, Designs and Marks Bill. The noble Lord, Lord Lucas of Chilworth, speaking for the Government at col. 485 of the Official Report of 14th April, pledged to repeal the licences of right provisions. In col. 1137 of the Official Report on 22nd April he said that it should be dealt with, with,
"in the Bill that will deal with the intellectual property rights".
That was a Bill we were all expecting this Session.
When the Intellectual Property Bill did not appear in the Queen's Speech and when the industry had been

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so fervently hoping that it would be and that the matter would be dealt with, I approached the Leader of the House, the noble Viscount, Lord Whitelaw, as to what could be done to carry out the Government's pledge. The noble Viscount wrote to me on 25th November and said,
"the question of a short bill on licences of right was being considered".
He went on to say:
"The latest position is that such a Bill can indeed be detached from the Intellectual Property Bill and the Government hope very much that it could go through this session as a Private Member's Bill".
He went on to say that he hoped it might be taken up by a Commons Member in the ballot for Private Members' Bills. He then continued:
"If it is not taken up, we should be delighted if you would introduce a Bill in the Lords and would certainly be able to draft it for you".
I am therefore greatly indebted to the noble Viscount. He has been good enough to see that the Bill was drafted and we have had great help from the Department of Trade and Industry and from the Patent Office officials. I repeat that this is effectively a Government Bill which has been, as the noble Viscount has said,
"detached from the Intellectual Property Bill".
If we can get this matter right in this Chamber and send it through to another place, where there has been an Early Day Motion calling for it, there is no lack of sponsors for this Bill in another place. The industry has been slightly reluctant to take the course of a Private Member's Bill because it takes the firm view that this should have been a Government Bill. I must say that that is the case. However, when one receives advice from the number two member of the Government who is also the Leader of the House, it seems sensible to take his advice and to hope that if the Bill gets into difficulties when it gets to another place the Government will feel a moral obligation to see it through in the other place.
That is the origin of the Bill and I now come to the basic case for the Bill. The 1977 Act sought to extend patent life, as in the European Convention, from 16 to 20 years. In this Chamber I moved the deletion of compulsory licensing and that was carried and accepted in another place. A late amendment in another place, which was not actually debated here at any time, brought back compulsory licences of right for copyists to be able to produce these drugs in the last four years of patent life in the case of those patents that have more than five years to run—that is, those granted between 1967 and 1978.
The 1977 Act also removed the old provision that patentees could get unrestricted extension of patent life for up to 10 years on the grounds of inadequate remuneration. Licences of right, which had previously been voluntary, were now made compulsory by the 1977 Act, Therefore, the industry was hit in three ways: licences of right were brought in; they were made compulsory; and the possible extension for 10 years on the grounds of inadequate remuneration was removed.
The industry alerted the Government to dangers from medicinal patents. The danger arises because medicines are very easily copied once the chemical
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formula is found. That makes them unlike most other patents covered by licences of right. Also, the industry was concerned because this four-year period in which copyists could operate at the end of patent life made a further difficulty in the effective life of patents which was already very greatly eroded in the pharmaceutical industry. The problem is well known to your Lordships. It is that because of the immense time taken for testing for safety between the granting of a patent and its marketing, the effective life of a new patent today is considerably eroded. A few years ago it was calculated that effective patent life was about 12 years. It is now probably about eight years because of the immense time needed for testing. If the effective life is eight years and if four of those years are subject to compulsory licensing, one can understand the alarm of the industry at the erosion of patent life.
The noble Lord, Lord Lucas, made this erosion of patent life the basic reason for accepting the case for repeal. Thorough studies have been made to show statistically how that life has indeed been greatly reduced. I would go as far as to say that patent protection for new medicines in this country is now weaker than it was 40 years ago.
The basic need for a remedy is that this situation is an immense deterrent to research and development in this country. It is made even more glaringly obvious when one recognises that there are no licences of right provisions in our main competitor countries—that is, the United States, Germany, France and Japan. Indeed, several industrial countries are actually strengthening patent protection for medicines by such things as the five-year extension that is happening in the United States and that is now being considered by the Parliament in Japan, and by an extension of protection to cover product as well as process. Therefore, one can go so far as to say that protection in this country is now moving to a point where it is less for medicine patents than it is in most other free world countries. This is an immense and growing deterrent to research and development in this country.
The final reason for the Bill is the legal costs of resisting these licences of right. Going through the courts concerning them is necessary because there are no guidelines in the 1977 Act about how the controller is to operate the provisions. Therefore, everything must be fought out with legal costs that are now considerable. There is finally the loss of revenue from copied drugs in the final years of their patent life. I gave your Lordships' House some figures in April and I will not repeat them now.
We really must get on with this provision now. The Government announced the repeal nearly a year ago now, and we are finding a situation where uncertainty is generated and where there will be a continuous rush for licences to try to get them before the chopper falls if we do not get on with this matter. As I said in April, one copyist has already filed 30 applications in recent times.
Who could be against the Bill? The first group of people who could be against the Bill and criticise it are the copyists themselves. Some of us have had propaganda from an organisation called PLUS. I have to say, and I say this very strongly, that PLUS does not represent, though it claims to do so, the generic producers of medicines. The producers of 90 per cent.

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of generics in this country are in the Association of the British Pharmaceutical Industry and are fully behind this repeal. As I understand it, two very small companies are behind PLUS. They both have external links, to say the very least, and they have less than 10 per cent. of the generics trade. Indeed, I have to say quite bluntly that both are South African.
I have in my hand the statutory declaration made by one of them in application for a licence of right. It is a public document. It is quite clear that this company, Generics UK, is part of a very involved network of South African pharmaceutical companies. The other company also has South African links. One of them—I am not sure which—is registered in Panama. So the whole generics industry is not lined up against my Bill. Indeed, the managing director of APS, one of the most reputable generic companies in the United Kingdom, Mr. Hemmingway, made it quite clear in the Pharmaceutical Journal of 29th November 1986 that the industry is fully behind this repeal.
A good deal of the propaganda of PLUS, put forward, as I say, by the two small companies which formed this organisation of which no one had ever heard before, is both wrong and distorted. I shall not deal with it in any detail today but I can say that the organisation desperately needs some new legal advisers apart from anything else because it cannot even understand the Bill as drafted. I shall come back to that point later on. So the first people who could be against the Bill are the copyists, and I have said some words about them.
Who else could be against the Bill? The trade unions could be against the Bill. Would there be a loss of jobs? The main company involved in PLUS employs 20 people, so we are not talking about great numbers. The generic producers generally will not really be affected. They mainly produce generics from drugs where the patent has expired. Most important so far as concerns the trade unions is the simple fact that the trade unions joined with the employers in a NEDO report which studied this situation. The report was published quite recently and recommended that the Government,
"should move speedily to abolish the 'licences of right' provision in the 1977 Patents Act in order to bring the level of protection afforded in the UK up to that enjoyed in other countries".
That comes from the trade unions that are employed in this industry.
Is anybody else against the Bill? I take reputable scientists and people who are detached from the commercial and industrial world and I have found nobody who is actually against it. Indeed, I would refer noble Lords to a letter in The Times of 30th December from Professor Sir John Butterfield of the Cambridge University School of Clinical Medicine, a former chairman of the Medicines Commission, in which he hopes that somebody will pick up the gauntlet and get on with this repeal, which he believes is so obviously necessary.
Who else could be against the Bill? There are those who fasten on the problem of whether this measure will increase the costs of the National Health Service. I hope that the Minister will say a few words about that. I hope he will be able to say that the Department of Health and Social Security is fully behind the Bill
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just as much as the DTI. I hope he will be able to say, as I understand is the position, that the cost to the National Health Service is minimal. The figures given by PLUS on costs are exaggerated, wrong, and deceitful to some extent. They disguise the fact that existing licences of right will stand. They disguise the fact that these matter only for four years at a time. PLUS uses figures in its propaganda about drugs that are already out of patent and it leaves totally out of consideration the fact that the profits made by drugs companies from the National Health Service are firmly controlled by the Government under the pharmaceutical price regulation scheme. Indeed, those profits are not excessive. They are at or below the level of the profits of average manufacturing industry, as was revealed in the recent negotiations about the new PPRS.
I do not know anybody else who could be against the Bill. We have to ask: do we mean it when we say, "Let us get a true 20-year patent protection under way in this country"? If we do, we need this Bill.
I should like finally to deal with the clauses of the Bill. Clause 1(1) is drafted so that the pharmaceutical patentee has to make a declaration to the Patent Office to get exemption from the licences of right provisions. Subsection (2) defines pharmaceutical use by reference to the Medicines Act. I am quite aware that this means that veterinary products will therefore come within the repeal. This is because the industry has proved to the Department of Industry that the erosion of patent life is the same or similar in the case of veterinary products as it is for human medicines.
Subsection (3) is procedural. Subsection (4) makes it quite clear that declarations made under subsection (1) will not affect applications already made to the controller by the operative date of 17th December. There is no retrospective legislation in this Bill. I know that the noble Viscount, Lord Craigavon, may have a point about some voluntary negotiations going on prior to 17th December. I shall listen sympathetically to what he says, and perhaps we can look at that point in Committee.
Subsection (5) has clearly been misunderstood by PLUS—the two generic companies involved in this trade. It is a purely transitional provision. It gives three months for declarations to be made in respect of any applications settled after 17th December—that is, the date of the publication of the Bill. It is a perfectly simple and non-discriminatory transitional provision which harms nobody. Subsection (6) deals with remedies for the patentee who has filed a declaration. Subsection (7) deals with certain fees.
Clause 2, new paragraph (1), gives statutory force (not as PLUS says, once again, the opposite) to guidance from a legal ruling in this Chamber about making applications from the beginning of the 16th year in order to allow a year for settlement of the licences of right before the four year licence begins—that is, for the 17th, 18th, 19th and 20th years. I repeat, PLUS needs some new legal advisers because they cannot even understand that point. Finally, the new paragraph (2) makes some transitional arrangements on that point.

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I conclude by saying that this industry is hoping very much that we can now get this repeal under way before further damage is done. It is an industry with a good record. One-third of its products are exported. It has a balance of trade of £850 million per annum which helps the country's balance of payments. We are the world's third largest exporter of medicines. The industry employs 80,000 people. It invests £500 million a year in R & D. It does not make excessive profits, but in any case profits are controlled by the pharmaceutical price regulations scheme. Most importantly, our main industrial competitors in the world give better patent protection.
We hope to prove that the cost of this minor change to the National Health Service will be no more than minimal. I hope the House will go on record as supporting these companies which need encouragement rather than discouragement in their R & D investment. I hope that we shall not bow to the pressure of two South African companies who have had a rather lucrative piece of trade for a while out of the existing provision which the Government quite firmly have said is now due for repeal. It is part of the accepted case from the industry that the erosion of patent life of medicines has now gone much too far and must be stopped. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Northfield).
9.11 p.m.
Lord Lloyd of Kilgerran: My Lords, at this late hour, in the light of the full presentation made by the noble Lord, Lord Northfield, and in view of the arctic conditions promised for travellers tonight, I propose to confine my remarks to a few salient points in accordance with the well-known procedures for Second Readings in this House.
One matter is abundantly clear. The Bill applies to only a very few pharmaceutical patents; namely, those filed before the effective date of the Patents Act 1977. The effective date was in 1978, nearly 10 years ago. I was closely concerned with the many hundreds of amendments to the Patents Bill which were brought forward in 1977. The noble Lord, Lord Northfield, referred to certain relevant parts of that Act and I do not propose to repeat what he said.
I again declare my interest. In the whole of my adult life I have been concerned with intellectual property matters, and that continues—that is, patents, know-how, trademarks, copyrights and designs. I have been closely associated with such matters in connection with research and development in an international context in many fields. There is an increasing interest in these intellectual property matters related to more successful research and development in the United Kingdom. Even the Prime Minister acknowledged this in the introduction she signed to the 1983 Green Paper entitled Intellectual Property Rights and Innovation.
If I may, I should like to mention a somewhat topical matter to show that there is considerable confusion as to the scope of the Bill. I have been asked seriously what effect it would have on any new developments to cure AIDS. The answer is simply
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none whatsoever as the Bill will apply only to old inventions conceived before 1978.
The next most significant matter in relation to the Bill concerns the profound change in the effective commercial life of patents filed before 1978. As the noble Lord, Lord Northfield, indicated, prior to 1978, about eight years, or half the life of a patent, was absorbed in the necessary quality testing. Since that date, because safety in regard to the use of these drugs is paramount, the testing of pharmaceutical products has become more and more strict and now it is estimated that 12 years may be taken up in safety operations before the product is allowed to go on to the market for human use. Therefore in the past 10 years there has been an effective increase of four years in the loss of the life of a patent. These losses were not contemplated at the time that the amendments to which the noble Lord, Lord Northfield, referred were made to the Bill.
The next important factor to be considered is that the Government have introduced stricter, more comprehensive and firm controls over the profits made by pharmaceutical companies. It is in the public interest that the cost of pharmaceutical products should not be excessive. Like the noble Lord, Lord Northfield, I hope that the Minister will be able to give the House some reassurance on these matters.
A further important matter to be remembered in connection with this Bill—and again it has been mentioned by the noble Lord, Lord Northfield—is that in relation to patents for pharmaceutical products, no other country in the EC has such draconian measures as licences of right. As a result, the system of licences of right as envisaged in 1977 is 10 years later, in 1987, having a profoundly discouraging effect upon investment confidence in the United Kingdom pharmaceutical industry and upon its research. This causes serious damage to research and development and to technical progress in the United Kingdom industry and could possibly lead to serious job losses. Again I emphasise that none of these factors was envisaged 10 years ago.
I accept that in the public interest it is essential to ensure that pharmaceutical products are as safe for human use as is reasonably possible and that their cost to the nation is kept under reasonable control. As the noble Lord, Lord Northfield, so frankly admitted, there may be some unfairness to certain United Kingdom companies arising from the operation of this Bill. One such example has been mentioned to me by the noble Viscount, Lord Craigavon. I understand that he will be drawing the attention of your Lordships to this point but I hope that he will not mind if I say now what I told him on the telephone; namely, that I feel sure that the point he wishes to raise is a matter that can be dealt with at Committee stage and will not affect his general approval of this Bill. In these circumstances I give general support to the Second Reading of the Bill.
I should like to add one personal comment. In view of the travelling arrangements that I have had to make because of the severe weather I apologise now to the House for the fact that I may be unable to stay until the end of this debate. I hope that I shall be able to stay but if I cannot I shall study carefully all the speeches made.
9.18 p.m.
Viscount Craigavon: My Lords, I am grateful for the words of encouragement from the two previous speakers concerning what I have to say. I am happy to support this Bill, but I have one small concern about the effect of the cut-off date of 17th December 1986 which is mentioned in the Bill. My reason for speaking on this subject is that my concern was aroused on this point by a friend who is the managing director of one of the largest producers of generic drugs—and incidentally he fully supports the general principle of the Bill. This is not a case of special pleading but of wanting to be fair among generic companies, by which I mean companies whose main business is the production of generic drugs.
I do not want to go into too much detail at this Second Reading stage but I should like briefly to outline the problem. The effective cut-off date for changes made in this Bill is 17th December 1986, which is the day the Bill was published. I am maintaining that this could be unfair or unjust but that this injustice could be corrected without any loss to the general principle of the Bill. Generic companies are in healthy competition with each other. But by bringing down this cut-off in the Bill effectively at 17th December, some generic companies will have happened to have obtained a licence for a particular product, whereas other companies will not—for example, because they were still in the middle of negotiations at that date.
It is, in part, effective competition between all these generic companies that keeps prices down to the public and to the health service. But to be effective, that competition should be fair as between these generic companies. Now if by chance by the cut-off provision of this Bill, one or two significant products are not available under licence to some companies but are to others, then unintended and unfair anomalies will result.
I have particular knowledge of one large company, but other comparable companies will be similarly placed. This large company has been the subject of a recent management buy-out, and I am sure that the Government would approve of such considerable enterprise whereby financial projections were made last summer and significant finance raised on the basis of reasonable expectations that the existing fair competition would continue to prevail in their section of the pharmaceutical industry. Now, through no fault of theirs, the cut-off date of 17th December has been imposed by this Bill, which upsets such reasonable expectations.
If this is uncorrected, it could lead to considerable disadvantage in certain firms. What one is talking about here is a small number of significant drugs, which it was formerly reasonable to expect would be available under licence to all equally. It is accepted in this section of the industry that competing companies ought to be able to offer a similar and comprehensive range of drugs, otherwise the disadvantaged company, which is unable to offer a few key products, is like a supermarket which has some important items unavailable on its shelves: customers might reasonably prefer to shop at the firm which has the most complete
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range. So the unfair loss that I am referring to is one which arises from the chance of the state of the licensing procedure and negotiations as at the cut-off date in the Bill of 17th December.
The remedy to all this, and I shall not go into great detail at this Second Reading stage, is to amend the Bill to provide a cut-off point of a future date, such as one related to the passing of this Bill, which would have the effect of all generic companies having the same potential rights of licensing. This would only apply to products which would be endorsed as licence-of-right in the period up until that future date. Under this arrangement, there would be no scope or chance for artificially pulling a whole lot of products into licence before the door was closed. One is only talking about those products which in the effluxion of time, before the Bill passes, naturally reach their 17th year. The main principle of the Bill is thus maintained and supported, and would clearly remain intact.
So I hope that the noble Lord, Lord Northfield, and the Government would be able to support a minor amendment at the next stage to ensure fair competition in this one respect.
9.23 p.m.
Lord McFadzean of Kelvinside: My Lords, I must disclose an interest. Until my retirement in the middle of 1986 I was a non-executive director of Beecham's which has a very large pharmaceutical business. I am also still a modest shareholder in the company.
The noble Lord, Lord Northfield, lucidly stated the arguments in favour of the Bill and I do not intend to repeat them. It is, however, interesting to note that the whole topic of the nature and extent of exclusive rights to inventions has a very long history indeed, reaching back to the 15th century. It is equally interesting to note that in England it was the Statute of Monopolies of 1623 that enshrined in law exclusivity for a period of 14 years.
The time span is very interesting. Until the present century inventions and indeed most industrial processes were of a relatively simple nature and the gap between the invention and the end product appearing in the market place was usually relatively short. Moreover, investment in research, such as it was, and in plant and work in progress tended to be of a very modest nature so that the 14-year period could be regarded as being adequate, if not generous.
Today all this has changed. Lead-in times in many industries, particularly those in advanced technology, and escalation of costs have reached a scale that inventors of another era could never have envisaged. These factors have been particularly marked in the pharmaceutical industry. Research and development costs on a single drug can be measured in tens of millions of pounds, and an average of 12 years can elapse between the filing of a patent and the date the product reaches the market. This period of exclusivity is clearly of vital importance in determining the level of research investment to be undertaken. Indeed, if the original 14-year period had been maintained, little if any advanced drug research would be taking place in Britain today.

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The point at issue here and in the Bill was forcefully stated by that great philosophical radical, Jeremy Bentham, as follows:
"With respect to a great number of inventions … an exclusive privilege is absolutely necessary in order that what is sown may be reaped … He who has no hope that he shall reap will not take the trouble to sow".
An inadequate period of exclusivity results in changes of attitudes and emphasis—waiting for others to invest in research and development rather than investing oneself because of doubts about recovering the costs involved.
The 1977 Act has been dealt with at some length, and I shall not repeat the arguments, apart from saying that the licence of right in the last four years largely vitiated the four-year extension in the Act.
Last week the Select Committee on Science and Technology under the chairmanship of the noble Lord, Lord Sherfield, issued a report on research and development. Among other things, the report states that neither government nor industry is spending enough on research and development to restore Britain's industrial position in world markets. One way of redressing this is to create a climate of confidence to encourage higher expenditure. The Bill seeks to do this in respect of an industry which has made and could continue to make a substantial contribution to the country's balance of payments.
9.28 p.m.
The Earl of Halsbury: My Lords, it is quite like old times when the noble Lord, Lord Lloyd of Kilgerran, the noble Lord, Lord Northfield, and I rise to address your Lordships on patents. The last occasion was in regard to the 1977 Patents Act when I carried four forward-looking amendments against the Government, of which, needless to say, three were reversed in the other place. The same result took place in regard to the amendments of the noble Lord, Lord Northfield, on the subject of these licences of right.
I think it right to remind your Lordships of the law before the 1977 Patents Act. It was that anyone could apply to the comptroller-general of the Patent Office for a licence of right on terms to be settled by the comptroller-general such as to reward the inventor's initiative while allowing someone else to break his monopoly. In the case of pharmaceutical and medical patents, this was not left to the discretion of the comptroller-general. It was mandatory that he should grant such a licence of right. We removed that. It was a complete anomaly.
For some extraordinary reason in this country we are more subject to the burden of demonology in this field than almost anybody else. We are always trying to protect the sick against the wicked incursions of the pharmaceutical industry which makes money out of them. You might as well address your demonological criticisms to the medical profession. It does not make money out of sickness; it makes money out of restoring people to health. Surely that is a very worthwhile objective. The pharmaceutical industry is in no way different.
In order to illustrate some of the points made by the noble Lord, Lord Northfield, I should like to quote
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some statistics—and I hope I am not sinning against modesty—from my Hooper Memorial Lecture to the Institute of Inventors and Patentees of 1971, where I presented my statistical investigations into a hundred seminal inventions with respect to what the time factor was.
Every invention is based on a prior scientific discovery of some kind or other. The average time lapse between the scientific discovery and the first inventive idea based on it was 31 years. Thereafter, from the first inventive idea to the first patent application there was a time lapse on average of 11 years. From then to the first market appraisal was a further six years and another four and a half years to establish success. The total working years at this stage were 21.
If the possessor of the inventive idea had had the idea when he was 21 he would now be a man of 42, with five and a half years to go for the life of his patent. Five and a half years for 21 years' work and 42 years' life on this planet! Had the thing gone as we would have wished, he would have had the extension by another four years to nine and a half years. But by the time he had finished exploiting that he would be a man of 51, having spent 30 years of his life on one idea. Those are all average figures.
If we look at the long end of the spectrum then from the inventive idea to the first patent application could be 30 years; from thence to the first market appraisal a further 17 years; a further 12 years to establish success, and at the end of that time, aged 21 to start with, he would have put in 59 years and be aged 80. All he would have at the end of the time would be a patent which expired 13 years ago. That is a measure of the long end of the scale.
Let me just take that figure of 12 years as the long end of the scale from the first marketing operation to the establishment of success. That is equal to the 12 years that the noble Lord, Lord Northfield, quoted as being the time to get permission to launch a new pharmaceutical product onto the market. It simply is not long enough. I hope that we shall rise above our temptations to indulge in demonology of an ideological character and support the noble Lord, Lord Northfield, in the Second Reading of his Bill.
9.32 p.m.
Lord Hacking: My Lords, it is a fairly obvious statement to present to your Lordships that "we live in changing times". Nonetheless I make that statement at the beginning of my few comments in support of this Bill because the basic cause of the erosion of the patent period, or reduction of the period of patent protection, lies in the longer development period that is now needed by pharmaceutical companies between the original filing of the patent and the time that they can market their product.
Therefore, I think it is important, in considering the Bill, to identify the cause of this longer development period. Several noble Lords have extracted one or other of these causes, but it seems to me, having listened to your Lordships, that there are three identifiable causes.
First, there is the cause arising out of the more stringent tests on the efficacy, efficiency and safety of

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the drug imposed by the licensing authorities before that drug is given a licence. Secondly, there are the heavier responsibilities placed by society, through Parliament and through the courts, on the safety of drugs which in turn require the pharmaceutical company to carry out more tests.
Thirdly—to put it very simply—the bad bugs are now more difficult to attack and more resistant to the good bugs which have been used so successfully in my lifetime to exterminate diseases such as tuberculosis, polio and dyptheria and a host of diseases whose origin lies in bacterial infection.
The result of these three factors is that it takes a pharmaceutical company longer and costs the company much more money to develop new drugs. But all the factors stand to our advantage. It is to our advantage that licensing authorities require pharmaceutical companies to test their drugs more carefully so that they are safer and more efficient. It is to our advantage that society generally imposes upon pharmaceutical companies a requirement on the greater safety of their drugs. It is to our advantage that pharmaceutical companies have the resources to develop new drugs to attack a disease that affects our society and affects it in new and troubling ways.
The noble Lord, Lord Lloyd of Kilgerran, and the noble Lord, Lord Northfield, reminded us that this Bill is directed to drugs that have been patented in the period 1967 to 1978. However, I would submit to your Lordships that it affects a number of important drugs, and I will quote three of them to your Lordships. There is a drug called Feldene, which is a non-steroidal anti-inflammatory drug for the treatment of patients with arthritic diseases. It is an extremely important drug and yet its manufacturer had only four years to market the drug between the time it was able to be put on to the market for the
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benefit of the sufferers of arthritis and the time when the patent expired.
Another drug, which has only very recently been marketed, is called Diprivan. It is an anaesthetic of special value in day surgery. Incidentally, the drug offers considerable savings to the National Health Service because it enables more surgery to be done on a daytime basis rather than on a basis of having to keep the patient in hospital overnight. That drug was marketed only last year, but the patent is due to expire in 1991—a period of five years.
Another drug called Zoladex has not yet been marketed. It is to be used for the treatment of prostate cancer. Its manufacturer, a very well established British company, hopes that the drug will be marketed some time this year. Yet the patent is due to run out in 1993—a period of only six years. I cite those examples because I believe they are important, even though there may be fewer drugs generally on the market which are affected by this measure.
There is another important consideration relating to the Bill. It draws attention to the general problem that this extension in the period of development means that a patent period, whether it be 16 years, 20 years or 25 years, provides less protection for those pharmaceutical companies developing the drugs that I have argued are for our good and for our benefit.
Therefore, I hope that the Government will be able to give the strongest support to this Bill. Without Government support and without the Government making parliamentary time available, this Bill will fail. Equally, if the Government are able to give support to the Bill in your Lordships' House and in another place, it has a reasonable prospect of getting on to the statute book. If so, for the reasons advanced by other noble Lords as well as by myself, our society will be better for it.
9.39 p.m.
Lord McIntosh of Haringey: My Lords, I preface my remarks, as I must in speaking from this Dispatch Box, by saying that as this is a Private Member's Bill (although one from my noble friend) I speak in a personal capacity. I shall, of course, be referring on one or two occasions to Labour Party policy.
It was obvious to me before this debate opened that this was a matter of very great importance, where tens or hundreds of millions of pounds were at stake, in terms of the revenues of the drug manufacturers and possibly in terms of the cost to the National Health Service. Therefore I took the matter with considerable seriousness. I took steps to acquaint myself with the views of the Association of British Pharmaceutical Industry. I also received, as did my noble friend, representations from the organisation called PLUS. Those representations are in such profound conflict on matters of fact as well as matters of opinion that it is extremely difficult for a layman such as myself to sort out the virtues of one from another. What makes it worse is that the opinions are expressed in such extreme terms.
My noble friend used the word "deceitful" about the publication of the organisation called PLUS. That word has been used to me outside the privilege of this Chamber. When it was used, I demanded that the deceitfulness should be shown because that is an extremely strong word and it must be thoroughly backed up if it is to be made to stick.
Noble Lords have used the word "draconian" with regard to this measure. If someone is to use such a word I need to know exactly what is involved and what credence I can give to the opinions being expressed.
I would have said this before the debate started, but I am concerned that there must be noble Lords here who have matters of interest to declare. My noble friend and the noble Lord, Lord Lloyd, have made general declarations of interest. The noble Lord, Lord McFadzean, made a specific declaration of interest in Beechams. I understand that noble Lords who have spoken have or have had specific interests in Merck, Sharp and Dohme and in the Distillers Company.
I wish that those interests had been declared more specifically and that if any noble Lord has an interest, not as a shareholder, director or adviser, but as a legal adviser, he had made that interest clear and said what, in his understanding, is the Bill's effect on the companies or organisations with which he is associated.
The Earl of Halsbury: My Lords, the noble Lord mentioned the Distillers Company. I was a director. I joined the board in the immediate aftermath of the thalidomide tragedy, so I have no interest to declare.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Earl for that. I have not mentioned his name.
I have been trying to piece together what it is that lies behind the passions aroused by the Bill. I have been trying to understand the nature of the Patents Act, 1977 and the debate that then took place. As I understand it, and I will gladly be corrected if I am
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wrong, when introducing that Bill the Government were prepared to see it go through applicable only to future patents with the 16-year limit continuing to apply to existing patents.
It was pressure from Members of this House which secured that the Act should take effect retrospectively for patents which had been applied for before the passage of the Act. That concession, achieved by Members of this House, was then subject to a compromise in another place which said that that retrospection should apply but that there should be a mandatory licence of right.
If I understood it correctly—and I have not yet been corrected on it—I fail to understand why anyone should think that the 1977 Act was so much of an intrusion into the rights of the pharmaceutical companies. Similarly, I have been bombarded with statistics on the comparative rights available to pharmaceutical companies in different parts of the world. I discovered that many countries have patent periods of fewer than 20 years; that no country has a patent period of more than 20 years, which is our period with the exception of the licence of right; and that many countries, unlike us, have a patent which applies to process only rather than to product. I am driven to the conclusion that, with the possible exception of the licence of right, which is a dying provision half way through its active life, we have as draconian a patent protection as any other country.
I am told on the one hand that the pharmaceutical industry in this country has an outstanding record in export, research and development. I believe it. I applaud it. It is clearly valuable not only to the country but to the companies themselves and to their employees. However, if that is the case that achievement has been gained under circumstances in which the patent protection was either only 16 years before 1977 or 16 years with the licence-of-right protection which has existed since 1977. If the situation were as bad as noble Lords have suggested, why is it that the achievements of the pharmaceutical industry have been so tremendous? Yet my noble friend used words such as "an immense deterrent to research and development". The noble Lord, Lord Lloyd of Kilgerran, referred to "serious damage". I have yet to be convinced that such serious damage or such immense deterrence has occurred or has been shown by the commercial history of the pharmaceutical companies.
Finally—and this is where I come to what I believe is the concern of my party as a political issue—that is the question of the cost to the National Health Service. One side of the argument has told me that the cost to the National Health Service might be of the order of £200 million by the early 1990s. I have no way of estimating whether that is true. All I can say is that the Association of British Pharmaceutical Industry has in rebuttal simply denied those figures and has not given me any others. My noble friend Lord Northfield, for example, did not give me any indication of the difference in price to the National Health Service of generic as compared with branded drugs. Nobody has referred to the fact that this country has far stronger protections for branded drugs—I will just finish my sentence if I may before giving way—than, for

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example, the United States because there is no possibility of pharmacists substituting generic drugs for branded drugs in fulfilling a prescription.
Lord Lloyd of Kilgerran: My Lords, I am grateful to the noble Lord for giving way. I merely wanted to ask him whether he is prepared to disclose who gave him that figure of a £200 million increase in costs? There have been figures bandied about even in the papers by well-known persons which are quite wrong. I wonder whether he could disclose—I do not want to press him about this matter—who gave him the figure of £200 million?
Lord McIntosh of Haringey: My Lords, I thought that I referred to "one side of the argument". By that I clearly meant PLUS, the organisation to which my noble friend referred. The figure has also been given in a letter to The Times by the noble Lord's honourable friend, Mr Archy Kirkwood. It may well be the case that it is untrue, but I have no evidence to show that the figure is untrue. It seems to me that the onus is upon those who are proposing the Bill to show that the cost to the National Health Service will not be, as my noble friend says, significant.
Lord Lloyd of Kilgerran: My Lords, I did not realise that the noble Lord was referring to the word PLUS. However, I am grateful to him for referring to the letter which I presume is that written by my honourable friend in another place. That Member from the other place today assured me that the contents of that letter were in many respects wholly inaccurate and he apologised to me this morning for not having cleared that matter up before. I am very grateful therefore that the noble Lord has given me the opportunity of being able to explain how the Member of the other place—who belongs to the same party as myself—found himself in difficulties having introduced figures which he now confesses were not quite right.
Lord McIntosh of Haringey: My Lords, the last thing I wanted to do was to interfere in the internal communications of the Liberal Party. However, if that is the case no doubt Mr Kirkwood will make suitable corrections at an appropriate time. That is not a matter for me. I have to accept what I see in public prints.
As I said at the beginning, I am a layman in these matters. I ask questions only as a result of what appears to me to be conflicting evidence. However, the matter which I say is, apart from my own possible misconceptions, a matter of great political import is the cost to the National Health Service. Unless it can be much more clearly shown than it has been so far that there is no such significant cost to the National Health Service in the passage of this Bill, the Labour Party will oppose it.
If it is pushed through against our opposition then I must warn noble Lords who wish to push it through that the whole question, which has been raised on many occasions, of compulsory generic prescribing, or generic substitution, at the pharmacist level will be raised again and will become a matter of political
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significance. It is that above all which is the interest of my party, and it is for that reason that I am worried about the potential impact of the Bill now being put forward for Second Reading.
9.51 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, I am grateful to noble Lords for having had the opportunity to hear their views. With one exception, about which I hope I shall be able to help the noble Lord, Lord McIntosh, I see that your Lordships' House is in general agreement with the purport of the Bill introduced by the noble Lord, Lord Northfield, which we welcome. As the noble Lord said, we announced in April that the Government were proposing to introduce legislation having a similar effect.
I appreciate that it is late, but it is necessary on perhaps one or two points for me to be a little repetitive, for which I apologise in advance. We attach great importance to the maintenance of a strong research-based pharmaceutical industry in this country. The United Kingdom pharmaceutical industry has a creditable track record in the development of new medicines to combat a wide range of medical conditions.
I do not quarrel with the figures given by the noble Lord, Lord Northfield, towards the end of his speech. However, the discovery and development of new medicines is becoming increasingly complex and expensive. Gone are the days when there were numerous targets for fruitful innovation in pharmaceuticals. Illnesses, such as cardiovascular diseases, cancer, and most recently, acquired immune deficiency syndrome, for which cures are still sought, all involve complicated, time-consuming and expensive drug research.
At the time the present Patents Act was passed in 1977 the Government considered that patents which had been granted under the now superseded Patents Act 1949 should have their term extended by four years. This would bring them up to the 20 years enjoyed by patents granted under the 1977 Act.
However, these extra four years could not have been anticipated when the patents were originally applied for. It was Parliament's decision therefore that these patents should be endorsed "licences of right" during the extended period. This means, in effect, that during the extra four years anyone may have a licence to use the invention. If he and the patentee are unable to agree the terms of the licence, such as the royalties, then they are settled by the Comptroller-General of the Patent Office under powers given to him in the 1977 Act.
Parliament considered that licences of right would provide a fair balance between the needs of research-based industries and the expectations of others wanting to work inventions once they have come off patent.
Perhaps I may say to the noble Lord, Lord McIntosh of Haringey, whose contribution was made in his usual

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forthright manner (with which I am sure your Lordships do not quarrel) that his understanding of the history of the four-year term is correct. The licence of right provisions, though themselves not debated at length, were part of a compromise which was reached after discussions in the Government's Standing Advisory Committee on Patents. I believe that when that compromise was adopted by Parliament during the passage of that Bill, those concerned were in no doubt at all as to its effect. By about last spring the pharmaceutical industry satisfied us that there had been a significant erosion of the period during which pharmaceuticals could be marketed with the benefit of patent protection.
The noble Lords, Lord Lloyd of Kilgerran, Lord Northfield, and others have discussed the patent term, which noble Lords will appreciate runs from the date of application for a patent. Normally, and for security, the application is filed before the product is tested and therefore before it is allowed to be marketed. I was interested in the statistical review of the noble Earl, Lord Halsbury, which had that element of humour in it which we have come to expect from his contributions, but it was not, if I may say so, without its element of truth, as he pointed out. The time taken by testing is therefore lost from the patent term. Noble Lords who quoted these figures are right that in 1977 this time loss amounted to something like eight and a half years. It has now increased to about 11½ years. It was that which decided the Government that the situation should be redressed by exempting patents for pharmaceuticals from the licences of right.
The Bill relates only to patents granted under the previous Act. The last of these were applied for in 1978 and the provisions of the Bill will consequently be spent when these patents run out; that is, in 1998. The licence of right provisions apply to patents in all fields of invention, but it has been in the pharmaceutical sector only that convincing evidence has been furnished to show that conditions have changed significantly since 1977.
A consequence of this Bill is that patentees will have a full monopoly during the last four years of their patents. They will not be subject to competition during this time, but I should point out that all patent monopolies are subject to compulsory licences should the patentees abuse their rights; for example, by not supplying the market adequately or charging prices which are too high. The last four years of the term will not be an exception to this rule.
As a practical result of the Bill the generic sector of the pharmaceutical industry will not be able to assume that new licences of right will be available. Indeed it can be assumed that the owners of patents which are still in force after 16 years will wish to maintain their exclusivity for the full 20 years. Generic manufacturers will therefore have to wait until pharmaceuticals come off patent before they can produce their own versions of them.
I listened carefully to what the noble Viscount, Lord Craigavon, said on the subject of the cut-off date which is now in the Bill. As other noble Lords have said, this date is something which can be dealt with in
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Committee. I shall consider carefully what the noble Viscount has said about the effect of the date. It is not for me to answer for the noble Lord, Lord Northfield, but I have little doubt that he will give consideration to that. Perhaps we can engage in discussions to see that there is a complete understanding of what arrangements can properly be made.
The noble Lord, Lord McFadzean of Kelvinside, drew our attention to the recently published report of the Science and Technology Committee on the subject of research and development. While the department is studying carefully this report, I do not think it would be out of place for me tonight to thank the committee for its work, nor do I think it would be out of place to agree with the noble Lord, Lord McFadzean, in what I am sure he will admit was the narrow reference he made to that report.
The noble Lord, Lord Northfield, invited me to comment on the cost to the National Health Service, as did the noble Lord, Lord Lloyd of Kilgerran. The point has been made fairly forcibly, if I may say so, by the noble Lord, Lord McIntosh of Haringey, since he suggests that this is perhaps the only political point that seems to emerge from the Bill. Perhaps I may comment by saying that the Pharmaceutical Price Review Scheme has operated over nearly 30 years now with the agreement of both major parties when each has been in government. The scheme has sought to promote not only a manufacturing base for drugs in the United Kingdom but also to establish research centres in this country. It sets the annual profit ceilings for individual pharmaceutical companies for their total sales to the National Health Service.
The Department of Health and Social Security examined all aspects of company costs—profits, capital and so on. It is against this background that it considers that the abolition of licences of right would not have any significant overall effect on National Health Service costs.
It is seen as essentially a matter of maintaining the level of income for companies which have undertaken basic research and development, rather than requiring them to share it with companies which have not borne that cost. Perhaps when noble Lords come to read what I have said they will note carefully my opening remarks in relation to the increasing costs that are now involved in the complex matters of discovery, of invention and of innovation.
Lord McIntosh of Haringey: My Lords, before the noble Lord leaves that point, will he give way to a genuine inquiry for truth? If it is the case that there are no significant additional costs to the National Health Service, what then is the pressure for this Bill? Presumably what he is saying is that the PPRS already keeps the pharmaceutical companies' costs to the National Health Service down to reflect research and development. Presumably also therefore the PPRS reflects the additional burden on the pharmaceutical companies, which has been so eloquently expressed, from the increased development time for pharmaceutical products. Is it not the case that brand products cost more than generic products? How can somebody gain with nobody losing? I do not understand it.
Lord Lucas of Chilworth: My Lords, it is reasonably simple. While the price review system controls the profitability of that element of profit that is made out of sales to the National Health Service, it means that, should the costs rise by virtue of the increase in research and development which I have described, then that would have to be taken into account. Therefore, the rate at which the National Health Service would have to pay would have to go up. However, if the companies are able to retain more profit of their own invention by virtue of maintaining the profits from a further four years, which is now the 20-year term set by the 1977 Act, then that amount of money can be turned back of their own volition into research and development. That means that the cost to the NHS would be held or would be, as I have described it, not significantly increased. I do not believe that the noble Lord's fears, or indeed the fears of other noble Lords, with regard to the cost to the National Health Service are well founded.
I have mentioned all noble Lords who have taken part in this debate apart from the noble Lord, Lord Hacking, whose examples were extremely interesting. I was glad that at the end of his remarks he was able to give his general support to the Bill.
In conclusion, I should like to stress that the Government see the Bill as most desirable in order to help the confidence of investment in further research and development. I commend the Bill to your Lordships.
Lord Northfield: My Lords, this has been an interesting debate. As in all debates in your Lordships' House, one always learns something. I did not know the delightful quotation which the noble Lord, Lord McFadzean, had extracted from Jeremy Bentham about an adequate period of exclusivity. I shall beg leave to use it myself on future occasions. I am very grateful to the noble Lord for his support. I did not know the delightful calculations of the noble Earl, Lord Halsbury, about the number of years one has to live, hopefully, in order to profit from any invention. I shall study that with great interest.
I was not aware in detail of the kind of examples that the noble Lord, Lord Hacking, mentioned with regard to the way the erosion of patent life is now going on in those drugs with which he dealt. One learns a great deal all the time and I am grateful to noble Lords for their support. I am especially grateful to the noble Lord, Lord Lloyd, as he has been a stalwart on this matter for many years. I have asked for and received his most generous support in helping me with this Bill. I hope that that will be so when we move it in the future to the other place.
I have many thanks to express this evening. I am grateful, too, to the noble Lord, Lord Lucas, for expressing the Government's clear support for the Bill and for dealing with some of the issues that have been raised. I come to the speech of my noble friend Lord McIntosh. He has obviously fallen for a great deal of the propaganda by PLUS. He did not think that it was deceitful. Perhaps I may give him some examples. The first page of one of its documents says:
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"Many independent UK drug companies—the generic sector—are not convinced that additional protection is essential for continued development of drugs".
That is deceitful. It implies that the generic sector is being spoken for in this document and that it is against this repeal. That is deceitful. The producers of 90 per cent. of generics—the document calls it the generic sector—are in the ABPI and want the repeal of this provision. This document has no right to claim that it speaks for the generic sector.
Lord McIntosh of Haringey: My Lords, I am grateful to my noble friend for giving way. I do not doubt what he says. Indeed, I did not say that I questioned the statements on either side. My attitude was one of complete puzzlement at the conflict of evidence which was presented to me. What proportion of the remaining generic companies are subsidiaries or financial associates of the branded drug companies in the Association of the British Pharmaceutical Industry? Clearly, any association they may have will affect their attitude towards this Bill.
Lord Northfield: My Lords, I do not know the figure but I can say to the noble Lord once again that representatives of the producers of 90 per cent. of generics are in favour of this Bill. It is wrong for this organisation to say that the generic sector is not convinced about the Bill. That is what it claims to do.
I give another example. It says that the transition provisions of the Bill drive a coach and horses through the commitment given by the Government about applications made before the Bill. That is just not true. There is no retrospective legislation involved in the Bill.
My noble friend challenged me to produce examples of deceit. I give a third example. It says that in order to whip up propaganda against the Bill and make us feel embarrassed that,
"Lord Northfield in the final clause of his Bill, seeks to change the law as declared by the House of Lords in the recent Gist-Brocades case, whereby the House of Lords held unanimously that the Comptroller has jurisdiction to entertain licence of right applications before the commencement of the seventeenth year of a patent."
On the contrary, my Bill actually carries out what the legal ruling of your Lordships' House recommended. It does not change the law in the other direction.
This is a document which is full of half truths and deceit, and I shall not go on further. I am sorry that my noble friend has fallen for the propaganda of these two very small South African companies. I hope he will reconsider his position before we make further progress.
The other point that he raised concerns the cost to the National Health Service. I shall be happy to deal with that further during the Committee stage, if the noble Lord wishes me to do so. However, the position has been fairly stated that the Department of Health and Social Security has examined this problem and is fully behind the Bill, believing the cost to the National Health Service will be minimal.
I shall now deal with the point made by the noble Viscount, Lord Craigavon, and then have one final comment to make. I do not think the noble Viscount expects me to give him an answer this evening, but I

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would say that the option he put forward of altering the starting date or cut-off date, whatever one likes to call it, is not a good one. It could mean many months of delay. A better way might be found in discussions with him on the issue he raised; namely, those people who applied for licences where they had already been granted to someone else and whether we can find some way to cover that point rather than altering the date. I am sure it will be helpful to have discussions with him after Second Reading.
My final comment is this. I repeat—
Lord Lloyd of Kilgerran: My Lords, I apologise to the noble Lord for interrupting him in his peroration and at the end of his speech but there has been so much confusion about the effect of this Bill that it would be helpful to have on record that the Bill makes no amendment to Section 48 of the Patents Act, 1977, connected with compulsory licences and applications for compulsory licences that can be made to the Comptroller-General. The Minister mentioned that applications in relation to compulsory licences were in the Bill. They still remain and there is no attempt to amend that.
My final reason for intervening is that during my speech I apologised and explained that I would not be here for the end of the debate. However, I also wish to have on record that I am still here at the end of the debate.
Lord Northfield: My Lords, I will not keep the noble Lord for more than another minute or so.
Finally, may I say that this Bill comes to the heart of the matter, as I tried to say in my opening speech. Do we intend to carry out the obligation which we undertook to give an effective 20-year patent life? Either we mean it or we do not. Now that the effective patent life is not only not 20 years but is continuously reducing and is probably not even 12 years or even 8 years, is it not proper that we should face up to one mistake made in an earlier year where we have allowed a further erosion of patent life deliberately to take place? Either we mean that we want to be on the right side of this matter in giving proper protection for patent life or we do not. This Bill is part of an attempt to remedy something which is reducing the effective patent life.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at fifteen minutes past ten o'clock.

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