Sitting of 28 January 1987

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

Hon. Member for Upper Bann (Imprisonment)
Mr. Speaker: I have to inform the House that I have received a letter, dated 26 January 1987, from the Clerk of Petty Sessions, Lisburn, in the following terms:
"I have to inform you that Mr. Harold McCusker, Member of Parliament … was convicted at Lisburn Magistrates' Court on 27th November 1986".
The letter goes on to set out the offence in detail and to say that the hon. Member for Upper Bann (Mr. McCusker) was fined £50 and ordered to pay other sums, and, in default, to be imprisoned for seven days. concludes with the words:
"These amounts were not paid and a warrant to enforce the order was issued on 19th January, 1987.
I have now been informed that Mr. McCusker was arrested and lodged in prison today."
I shall cause the text of the letter to be printed in the Official Report.
Following is the letter.
Dear Sir,
I have to inform you that Mr. Harold McCusker, Member of Parliament of 33 Seagoe Road, Portadown, Craigavon, Co. Armagh was convicted at Lisburn Magistrates' Court on 27th November, 1986 of the following offence:—
He on the 10th day of April, 1986 on the public road at Ballinderry Cross Road, Ballinderry in the said district and county court division did use a mechanically propelled vehicle, Registration Mark NIJ 3803 for which a licence under the Vehicles (Excise) Act (N I.), 1972 was not in force. Contrary to Section 8(1) of the said Act. And whereas he is further liable under section 9(1) of the said Act to pay an amount equivalent to all arrears of duty owed by him and calculated as amounting to £16·66 from the first day of March, 1986 to the 30th day of April, 1986.
He was fined £50, ordered to pay £16·66 arrears of tax and £3·00 costs in 28 days and in default to be imprisoned for 7 days. These amounts were not paid and a warrant to enforce the order was issued on 19th January, 1987.
I have now been informed that Mr. McCusker was arrested and lodged in Prison to-day.

PRIVATE BUSINESS
  ASSOCIATED BRITISH PORTS BILL
  Read a Second time and committed.
  BRIGHTON MARINE PALACE AND PIER (FINANCE, &C.) BILL
  Read a Second time and referred to the Examiners of Petitions for Private Bills.

  BRITISH RAILWAYS BILL
  Order for Second Reading read.
  To be read a Second time tomorrow.

  HASTINGS BOROUGH COUNCIL BILL
  Read a Second time and committed.
  WHITCHURCH BRIDGE BILL
  Read a Second time and referred to the Examiners of Petitions for Private Bills.

  TEIGNMOUTH QUAY COMPANY BILL (By Order)
  Order for Second Reading read.
  To be read a Second time tomorrow.

  ADVOCATES' WIDOWS' AND ORPHANS' FUND ORDER CONFIRMATION BILL.
  Considered; to be read the Third time to morrow.
Oral Answers to Questions
  TRADE AND INDUSTRY

    Rover Group
    Mr. John Mark Taylorasked the Secretary of State for Trade and Industry if he will make a statement on progress toward achieving separate and distinct destinies for the various subsidaries of the Rover Group.
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): Rover Group has successfully concluded negotiations for the sale of Leyland Bus and the majority of Unipart. Negotiations are taking place for the disposal of majority interests of Jaguar-Rover-Australia and of Istel. As I told the House on 2 December 1986, commercial discussions on Leyland Trucks are being taken forward. The best way to develop the other businesses in the group will be considered in the context of the Rover Group's corporate plan, which I am studying.
    Mr. Taylor: In thanking my right hon. Friend for that helpful reply, may I remind him that Jaguar, the first company to be liberated from the group, has just announced vacancies for 700 more men, and that last time he spoke in the House about Land Rover's future he looked to the prospect of either a trade buyer or privatisation? Since no trade buyer appears to be in prospect, may we look forward to privatisation?
    Mr. Channon: I am grateful to my hon. Friend for pointing out to the House the enormous success of Jaguar, not just recently but for the past few years, as a splendid example of what can be done in the private sector. My hon. Friend is entirely right to remind me of what I said about Land Rover. The company is to be retained within the Rover Group while preparations are made for its later flotation or trade sale. I shall bear in mind my hon. Friend's preference for a flotation.
    Mr. Park: Will the Secretary of State acknowledge that as each part is sold off the remainder will find it progressively more difficult to become viable?
    Mr. Channon: No, Sir. I do not think that I could agree with that. Many of the separate bodies that have been sold off have been loss-making and therefore will not make the situation worse.
    Mr. Beaumont-Dark: Does my right hon. Friend agree that many of us accept that some of the privatisation schemes have been good for the future of the British motor industry, not least for Jaguar, and that the continuing entity of Austin Rover is of crucial importance? Does he agree that we must consider the fact that Austin Rover is building up a good export record, has a great future as long as it is given a fair wind, and is not a lame duck but an emergent swan?
    Mr. Channon: I agree with what my hon. Friend has said, as I so often do on matters relating to the motor industry. Austin Rover's export record is encouraging, as was its market share last month. I am sure that my hon. Friend is looking forward as eagerly as I am to discussing the corporate plan.
    Mr. Wigley: Is the Secretary of State satisfied that the Rover Group, even as now constituted, shows enough interest and involvement in matters of public interest as well as in its own profit, especially in the context of exports, to which he has referred, where Rover parts may be used for exporting things built up from them? If there is a change in the company's structure, can the right hon. Gentleman ensure that that aspect is properly safeguarded?
    Mr. Channon: I shall certainly consider what the hon. Gentleman has said. However, the directors of Rover Group have a fiduciary duty to the company. I shall have to examine in detail what the hon. Gentleman has said and write to him about it.
    Mr. Grylls: Is my right hon. Friend confident that the proceeds from the sale of those different businesses will be sufficient to make it unnecessary for Austin Rover to ask the taxpayer for further funds?
    Mr. Channon: I wonder whether I can persuade my hon. Friend to curb his natural impatience for news and wait until he hears the result of the Government's study of the corporate plan. I shall certainly bear in mind what my hon. Friend has said.
    Mr. Terry Davis: Why will the Secretary of State not admit that Jaguar's success has everything to do with the efforts of its management and work force and nothing to do with its ownership? Why will he not tell Mr. Graham Day to get on with the job of getting Austin Rover's share of the domestic market back to its level of 23 per cent. eight years ago instead of simply accepting the present level of 15 per cent. and declaring more redundancies among the people who work at Austin Rover and its suppliers?
    Mr. Channon: I certainly agree that Jaguar's success has been due to the efforts of its management and work force, but it is quite wrong not to take its corporate structure into account as well. The fact that Jaguar has been privatised has been a major factor in the company's success.
    As to the second part of the hon. Gentleman's question, I hope that he will join me in helping today to achieve the aim which he and other hon. Members have in mind,
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    which is to increase Austin Rover's share of the domestic market. I am very glad to say that at the moment it is running above the level that the hon. Gentleman stated.

    The North (Industrial Initiatives)
    Mr. Favellasked the Secretary of State for Trade and Industry if he will make a statement on the initiatives he has taken since 1983 to assist industry in the north.
    The Minister of State, Department of Trade and Industry (Mr. Giles Shaw): Recognising its problems, we re-designated many parts of the north of England as assisted areas following the 1984 review of regional industrial policy. In total, 30 travel-to-work areas are assisted in my Department's three regions in the north of England, thus benefiting from regional schemes of assistance. These are automatic regional development grants, selective financial assistance and the activities of the English Industrial Estates Corporation. In addition, the efforts of my Departmenet's Invest in Britain Bureau and the three regional development organisations in the north of England have helped to secure nearly 220 separate decisions by foreign companies to invest in the north in the last three years.
    Mr. Favell: The amount that has been done to help the north is impressive, as my hon. Friend has listed. As a fellow northerner, will he remind the House that Liverpool's greatness was built on the entrepeneurial spirit of Liverpudlians, Manchester on the commercial enterprise of Mancunians and Newcastle through the industrial enterprise of Novocastrians, not through Left-wing Socialists in town halls, who have done so much to destroy the reputation of the north for self-help and enterprise.
    Mr. Shaw: I fully endorse my hon. Friend's wise analysis. As a fellow northerner—one from Yorkshire— I have to comment that a Labour-controlled local authority in south Yorkshire has recently declined to assist a small business because it did not consider that it would be socially useful to do so.
    Mr. O'Brien: Will the Minister take on board the seriousness of the situation in the north, especially in the Dewsbury, Wakefield and Pontefract travel-to-work area where there is 16 per cent. unemployment? We have a 238-acre industrial site which is privately owned, but nobody will take up the offer to develop it. Will the Minister give the Wakefield area some assistance in veiw of the rising unemployment there, especially among the young?
    Mr. Shaw: The hon. Gentleman knows that I am aware of the problems in parts of west Yorkshire and I concede that there are problems associated with attracting new industries to areas that have suffered structural decline. The coal industry, for example, has suffered decline. The hon. Gentleman knows that considerable time and effort must be expended to secure an improvement, and we are doing that.
    Mr. Fallon: Will my hon. Friend confirm that, as a result of initiatives, the number of people in work in the northern region has risen by some 40,000 since 1983? Is he further aware that the only threat to industry in Darlington is the prospect of a Labour Government scrapping Trident, cancelling Sizewell and putting up inflation and the cost of of borrowing?
    Mr. Shaw: I understand my hon. Friend's comments fully and I can confirm that in my trips to Europe and elsewhere I try to stimulate inward investment. It is the continuation of the Government's policies that firms are most concerned about.
    Mr. Wainwright: Is the Minister aware that the Department's failure to restore the grants that were so greatly reduced by his predecessors has resulted in a number of non-European companies moving production from west Yorkshire to other parts of the European Community? For example, Case International is transferring a great deal of its tractor manufacturing to France. Will the Minister take some action?
    Mr. Shaw: I am aware that there have been significant changes, but the hon. Gentleman will recognise that the proportion of the working population, especially in northern parts, has been increased by the redevelopment of the map tinder RDG2. I am aware of what the hon. Gentleman said about the Case works and have written to the chairman to ask for clarification of his intention.
    Mr. McQuarrie: We hear about the north-south divide, but it appears that we now have a north-north divide. In reply to my hon. Friend the Member for Stockport (Mr. Favell) my hon. Friend the Minister did not refer to Scotland when talking about the north. Does he take account of Scotland, and is he prepared to discuss the restoration of development area status to parts of Scotland? Is he aware that there is high unemployment in my constituency?
    Mr. Shaw: I hate to take issue with my hon. Friend on a matter on which he is expert, but as far as I am aware we do not have responsibility for regional policy in Scotland. That is a matter for my right hon. and learned Friend the Secretary of State for Scotland.
    Mr. Nicholas Brown: Will the Minister confirm that no region has done more to help itself than the northern region, where co-operation between the regional Trades Union Congress, the regional Confederation of British Industry and local authorities is far advanced? What is the Department's view of he Northern Region Development Company, which has been set up by those organisations on a tripartite basis?
    Mr. Shaw: I greatly welcome the creation of the Northern Region Development Company. It is an admirable example of local authorities reaching agreement after many years of not doing so, and forming with other local bodies and industry a base for promoting the northern region. I trust that the company will continue to prosper. We wish it well.
    Mr. Phillip Oppenheim: Can my hon. Friend tell us a little about the situation in the north which the Government inherited in 1979? Is it not true that under the Labour Government 70 per cent. of manufacturing job losses were lost in the north and that the Labour Government submitted a paper to the European Community in 1978 saying that the situation in the north was disastrous because of the general state of the British economy?
    Mr. Shaw: My hon. Friend is quite correct. There has always been a view that there were significant problems which the Labour Government did not address carefully. The regional development policies pursued by the
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    Government play a significant part in improving conditions in the northern region. Some 9 per cent. more money is going into such policies this year.
    Mr. Gordon Brown: Will the Minister confirm that during the seven years of Conservative Government manufacturing employment has fallen by 34 per cent. in the north, by 35 per cent. in the north-west, by 36 per cent. in Wales and by more than 30 per cent. in Scotland? Will he confirm that the real value of manufacturing investment in the past seven years has fallen by 31 per cent. in the north-west and by more than 40 per cent. in the northern region? What practical purpose will be served by halving the value of regional development grants yet again? How can he talk of recovery when he is destroying the means of recovery?
    Mr. Shaw: There is plenty of room for arguing about the basis of the hon. Gentleman's figures and I shall not confirm any of them. I can confirm, however, that we have spent £419 million in the current year. That is a substantial increase on what was spent in 1979. I can also confirm that we are dedicated to improving conditions in the northern parts of Britain to enable the imbalance of unemployment be eliminated.

    Manufactured Goods
    Mr. Ron Daviesasked the Secretary of State for Trade and Industry when he next intends to meet the Confederation of British Industry to discuss the trade deficit in manufactured goods.
    The Minister for Trade (Mr. Alan Clark): My ministerial colleagues and I meet the CBI regularly at the National Economic Development Council and on other occasions and a variety of subjects are discussed. I have no plans for a separate meeting on this subject.
    Mr. Davies: When the Minister next meets the CBI through the forum which he has mentioned, the NEDC, will he discuss with it last month's deficit in manufacturing trade of £753 million? Will he discuss with it also the consensus that seems to exist that our trade position will worsen and that next year we shall have a deficit of about £3 billion in our overall balance of payments? Given the deterioration in Britain's manufacturing trade, what proposals does the Minister have for the time, which will shortly arrive, when North sea oil is expended?
    Mr. Clark: Stripped of their doctrinal slant, I share some of the hon. Gentleman's views. I accept that a manufactured import can mean, all too often, a job exported. That is all true, but, in a free society, consumer choice—taking consumers as both firms and individuals—is paramount. The trade gap is the aggregate of the many individual consumer choices and it points in the direction of a preference for the foreign product.
    Mr. Hickmet: Has my hon. Friend seen the CBI report published today which shows that output and export opportunities for industry are the highest for many years, and perhaps since the war, and that the prospect for British exporters, as a result of beneficial exchange rates and the economic and industrial policies pursued by the government, is the best for many years? Is not the only danger that we shall return to the bad old ways of the policies pursued by the Labour party when it was in Government, should the country be so unfortunate as to have a Labour Government after the next general election?
    Mr. Clark: My hon. Friend is right to draw attention to the opportunities and prospects. The export performance of British industry is strong. There is, however, a trade gap which is accounted for, as I said to the hon. Member for Caerphilly (Mr. Davies), by the aggregate individual preference for foreign imported goods. When British manufacturers are perceived by the domestic consumer as competitive, we shall see the gap being corrected.
    Mr. Hoyle: When the Minister meets the CBI, will he discuss with it, along with the Secretary of State, the Department's plans to try to persuade Honda to take a large share-owning in Rover, along with the scrapping of the Metro Mini? Would those plans not mean the demise of Rover as a group that can design, engineer and manufacture its own products?
    Mr. Clark: I do not know the basis on which the hon. Gentleman makes his accusations. He has heard my right hon. Friend the Secretary of State express his confidence in the increasingly creditable performance of Austin Rover and its prospects for the future, a view which has been echoed by my hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet).
    Mr. Robert Atkins: May I confirm my hon. Friend's view by drawing his attention to the report of the speech delivered to the Welsh CBI on this very issue by the Leader of the Opposition, suggesting that the next Labour Government would not, within their policies, be able to achieve any increase in manufacturing jobs? Does this not fly in the face of some of the noise, cant and humbug that we hear from the Opposition Benches?
    Mr. Clark: I did not see the announcement. Perhaps it is part of the new image of candour and open speaking cultivated by the Leader of the Opposition. How long that will last remains to be seen.
    Mr. Robin Cook: Will the Minister confirm that the sum of the Government's record in manufactured trade is that they inherited a surplus of £3 billion and have managed to convert it into a deficit of £6 billion? Is the Minister aware that this morning's figures show that the visible trade deficit last year quadrupled to £8·5 billion, yet Conservative Members can only say "So what?" Is he aware that the only other country that manages to combine an oil surplus with a deficit on visible trade is war-torn Iraq? As a well-known British patriot, what possible pride does he take in that parallel?
    Mr. Clark: The hon. Gentleman is a master craftsman in bandying statistics. I know that he has expressed reservations in a most elegant and amusing way about the City of London. He may care to ponder on the fact that the total foreign exchange earnings surplus in the City of London last year was £8·5 billion, which exactly matches the deficit on manufactured account.

    Electronic Data Systems
    Mr. Dalyellasked the Secretary of State for Trade and Industry if he will list his Department's current contracts with Electronic Data Systems.
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): My Department has no current contracts with Electronic Data Systems.
    Mr. Dalyell: With regard to EDS contracts under discussion, has any Minister had cause to refer matters in relation to Electronic Data Systems and immigration rules to the Director of Public Prosecutions? What would other companies abroad think if major domestic Government contracts, of great value, went to this particular American company and if Plessey and Racal and a number of other British companies were intimately involved in competition?
    Mr. Butcher: I am grateful to the hon. Gentleman for bringing certain matters to the attention of Ministers regarding the company's alleged view on how its employees treat our immigration controls. In the first instance, the allegations would be a matter for my right hon. Friend the Home Secretary. If they were proved, we should need to consider whether that affected any particular EDS bid.
    Mr. Eastham: Has it been drawn to the Minister's attention that some of the employees have been encouraged to falsify their work applications? If that is the case, will those forms be called in and examined by the Ministry, and will prosecutions take place?
    Mr. Butcher: The manner in which any follow-up inquiries are made will, of course, be a matter for my right hon. Friend the Home Secretary. My Department's remit is to consider its contractual arrangements with different suppliers and, of course, to offer some guidance to the Central Computer and Telecommunications Agency on the current bid for the major Government data network contract. I note what the hon. Gentleman has said and will ensure that his views find a place in the right quarter.

    British Steel
    Mr. Hickmetasked the Secretary of State for Trade and Industry if he will make a statement on the prospects for British Steel.
    Mr. Channon: The prospects for the United Kingdom steel industry, and for the British Steel Corporation in particular, are more encouraging today than at any time for at least 10 years. BSC is now operating profitably and the Government intend to return the corporation to the private sector during the course of the next Parliament.
    Mr. Hickmet: I thank my right hon. Friend for his most encouraging reply. He will be aware that the British Steel Corporation works at Scunthorpe are the jewel in the crown of the BSC. Bearing that in mind, what does my right hon. Friend think about the Labour party policy in relation to imposing a 1 per cent. levy on the total turnover of companies for training purposes? What are his views about Labour party proposals to use the nationalised industries, such as BSC, to recruit persons for social reasons?
    Bearing in mind that state aids to the steel industry in Europe were stopped in December 1985, does my right hon. Friend agree that those proposals pose a tremendous threat to the future of BSC? Surely the answer is to give the ownership of the industry to the very people who work in it so that they can have a share in its increasing prosperity and its future running.
    Mr. Channon: I agree with my hon. Friend. It is essential that this industry be returned to the private sector at the earliest possible date. My hon. Friend referred to the

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    Labour party's proposals. I am in some difficulty about the 1 per cent. training levy on turnover, because we do not hear about it. I [Interruption.] I notice that Labour Members are sensitive about it. It would cost an additional £30 million to £40 million, which would need to be taken out of the corporation's hard-earned profits. I do not know whether it will be 1, 2 or 3 per cent.
    Dr. Bray: Is the Secretary of State aware that, as this is a technologically advanced industry, it will gain. not lose, from a properly organised training scheme? Is he further aware that, under the management of this Government, the British Steel Corporation has reduced expenditure on research and development by 45 per cent. in real terms since 1979 and has failed to take advantage of funds available from the European Community? Can he give an assurance that a privatised steel industry, if the Government are in a position to secure that result, will maintain manufacture at the five integrated sites?
    Mr. Channon: I refer the hon. Gentleman to the assurances given on many occasions about the five integrated steel sites. I have to disagree with him about a training levy on turnover. It would cost an additonal £30 million to £40 million, if that is what is proposed. I wish I could get it straight from the Labour party whether it is proposing this. Some days it says yes, some days it says no, and some days it says double. I notice that no one is leaping up to tell us what the truth is. I shall look into the point that the hon. Gentleman makes about research.
    Mr. Wrigglesworth: Is not the best thing for the British Steel Corporation, rather than distracting the management with privatisation, to help it to consolidate its recent success and to open up new markets, particularly in Europe, so that it can build and grow in its present form?
    Mr. Channon: I agree with what the hon. Gentleman says about consolidation and helping the corporation in its efforts to do that. I was surprised to hear the hon. Gentleman, on behalf of the alliance, speaking against the privatisation of BSC. That is a strange posture for the hon. Gentleman to adopt, but, as he has done so, the electors will have to take note of it.
    Mr. Holt: While it would be churlish to disagree with my hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet) as to which steelworks are the best, those in my constituency are certainly another jewel in the crown of BSC. None of my constituents will allow the remarks of the hon. Member for Stockton, South (Mr. Wriggleworth) to pass unnoticed. They will realise that the alliance is against the privatisation of British Steel, which must and will come about, to the benefit of my constituents.
    Mr. Channon: I am glad to have my hon. Friend's robust support. My hon. Friends the Members for Glanford and Scunthorpe (Mr. Hickmet) and for Langbaurgh (Mr. Holt) will, I am sure, play a major part in the privatisation of British Steel.
    Mr. Crowther: When the Council of Ministers considers in a few weeks' time the further massive round of capacity cuts that are being worked out between the Commission and the steel makers through Eurofer, will the right hon. Gentleman bear in mind what the Select Committee on Trade and Industry has said many times, that the British steel industry has taken more than its fair share of cuts and should not have any more imposed on it? In view of what
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    the right hon. Gentleman said about the competitiveness of the British steel industry, is he prepared to stand up and defend it against further reductions?
    Mr. Channon: I have always taken a great deal of notice of anything that the Select Committee on Trade and Industry has said, and I shall certainly pay attention to what it says on this topic, as on others. I have made it clear that if Eurofer makes formal proposals to the Council of Ministers, the BSC contribution would have to be consistent with the strategy announced in August 1985, to retain the five integrated works for at least the following three years, and must not prejudice decisions of the strategy for the five integrated works thereafter.
    Mr. Williams: Does the Secretary of State realise that that is not enough? Is he aware that if there is the cut envisaged by Brussels of 19 million tonnes, or the smaller, 12 million tonnes cut to which he has already referred, and we took a share in that, eventually that would represent a death threat to one of our major steelworks? Will he give a clear assurance that he is telling Brussels, here, now, and unequivocally, that we will accept no further cuts in our hot rolling capacity?
    Mr. Channon: I have already told the House. Indeed, as I understand it, there are no formal proposals before the Council of Ministers and no decisions have been taken. If any proposals were to come forward they would have to be consistent with what I have just told the hon. Member for Rotherham (Mr. Crowther). I repeat the assurances that have been given on many occasions from this Dispatch Box.

    Hotels (Telephone Charges)
    Mr. McCrindleasked the Secretary of State for Trade and Industry if he has received any representations from consumer organisations concerning the level of charges imposed by hotels for the use of telephones by hotel guests.
    Mr. Butcher: No, Sir.
    Mr. McCrindle: Is it not disgraceful that some leading British hotels are applying mark-ups of anything up to 300 per cent. on direct dialled telephone calls? Does my hon. Friend agree that that must act as a deterrent to foreign visitors, not least Americans, since the practice is much less widespread in America? Will he join me in suggesting to visitors that they should ask for a list of the charges before making calls and, if the charges appear to be unreasonable, they should consider using a public telephone box?
    Mr. Butcher: Not only do I agree with my hon. Friend. but am glad to say that the British Hotels, Restaurants and Caterers Association, to which most sizeable hotels belong, recommends that where a charge is made it should be clearly stated in the hotel tariff. In order to ensure that hotel clients are better informed about the level of telephone charges, the hotel industry's voluntary code of booking practice introduced a provision in 1985 requiring hotels that make additional charges on telephone calls to state in writing on a card alongside each telephone the Fact that such charges are made. I shall draw my hon. Friend's other comments to the attention of my hon. Friend the Under-Secretary of State for Employment.
    Mr. Butterfill: Is my hon. Friend aware that similar mark-ups on telephone charges are made by private hospitals and nursing homes?
    Mr. Butcher: It is for the establishment to decide whether that is a deterrent to future customer loyalty.
    Mr. Waller: For consumer choice to operate, does my hon. Friend agree that it is vital that adequate information should be made available to consumers such as hotel guests? As mark-ups on telephone charges in British hotels seem to be so much higher than in almost every other country, would it not be right to insist, through the introduction of legislation if necessary, that hotels should publish a list of their charges and end a justifiable cause of dissatisfaction?
    Mr. Butcher: As I have said, there is a voluntary code of practice that recommends that sort of procedure. I shall draw my hon. Friend's comments to the attention of our hon. Friend the Under-Secretary of State for Employment.

    Share Dealings
    Mr. Cohenasked the Secretary of State for Trade and Industry if he will make a statement on progress in current investigations into share dealing in the City.
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): All the investigations are being pursued as rapidly as possible, but I cannot estimate how soon they will be completed. It would not be desirable to report on progress of investigations before they are completed.
    The inspectors appointed to investigate certain dealings by Mr. Geoffrey Collier have submitted their report to my right hon. Friend, and a summons has been served on Mr. Collier. As announced on 7 January, Mr. Brooke and Mr. Kennedy have been asked, in the light of that report, to investigate other possible contraventions.
    Mr. Cohen: Are all the big firms involved in the Guiness illegal dealings fully co-operating with the Department of Trade and Industry investigations? If not, why do the Government not use their muscle to compel them to co-operate? If they are co-operating, why, when the Minister says that he wants prompt action, is it going to take up to a year, perhaps more, to bring some of the culprits to justice? Is it not the case that the Government just want the scandal to die down and are lightweight in tackling big City fraud?
    Mr. Howard: I reject utterly the hon. Gentleman's last suggestion. The inspectors appointed by my right hon. Friend the Secretary of State and myself are independent of the Department of Trade and Industry. They are distinguished professional people. They are making full use of the sweeping powers available to them under the Companies Acts and they will bring the complicated investigations to a conclusion as soon as they can in a manner consistent with full, thorough and effective inquiries.
    Mr. Tim Smith: Does my hon. and learned Friend agree that if the serious frauds office proposed in the Criminal Justice Bill is to do its job effectively it must have substantial powers? Is it not extraordinary that at a time when it is protesting strongly about insider dealing and other fraud in the City, the Labour party is doing its best to undermine the serious frauds office by stripping it of its powers?
    Mr. Howard: There is a good deal in what my hon. Friend says. There is a marked contrast between the
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    attitude taken by Labour Members when it comes to asking for powers to deal with matters such as insider dealing and the attitude taken by their Front Bench spokesmen on the Criminal Justice Bill, where the Labour party seeks to whittle away the powers which the Government would like to give to the serious fraud office to investigate allegations of serious fraud.
    Mr. Campbell-Savours: Will the Minister confirm that today I have given him privately the name of a licensed security dealer in the City who is trading fraudulently; who at this very moment is trading shares in the City? Does the Minister accept that, if he fails to take action today to close down the activity of that company and people lose money by buying in, he will have acted negligently and people can fairly look to the Government for compensation?
    Mr. Howard: I can confirm that the hon. Gentleman was in touch with me earlier today, and I have made urgent inquiries as a result of that conversation. My Department is fully aware of the case to which he refers, and I can assure him that such steps as may be necessary will be taken.
    Mr. Dorrell: Does my hon. and learned Friend agree that one of the principal lessons of the events in the City during the past 12 months is that there is a need for a substantial review of the rules governing disclosure of share bargains at the moment they are completed? Without such a review, is it not the case that the takeover panel is not only toothless but is in danger of being blindfolded? Will my hon. and learned Friend take steps to initiate such a review?
    Mr. Howard: There are powers now available to deal with such matters. Of course, we shall be ready to learn the lessons, which no doubt will have to be learnt, as a result of recent events.
    Mr. Robin Cook: As the Minister resisted Labour amendments to put the takeover panel on a statutory basis, is he satisfied with its performance during the Guinness bid last spring? If so, can he explain how it was that the takeover panel found nothing suspicious about £500 million chasing about one third of the Guinness stock? After that fiasco, how can he leave the supervision of takeovers to a voluntary self-regulating body with no serious powers of investigation and no statutory powers of discipline? Why does he not now accept that the public interest must be protected by an independent public watchdog?
    Mr. Howard: The takeover panel has hitherto performed effectively. We shall seek, as I said a moment ago, to draw any lessons that are to be learnt from recent events at the appropriate time. My right hon. Friend the Secretary of State will have something to say about the takeover panel during the debate later this afternoon.

    House of Fraser
    Mr. Teddy Taylorasked the Secretary of State for Trade and Industry if he has yet completed his consideration of the new information supplied to him by Lonrho plc in December 1986 about the circumstances in which House of Fraser's purchase by the Al Fayed family was approved; and if he will make a statement.
    Mr. Channon: No. The material submitted on behalf of Lonrho plc concerning the purchase of House of Fraser by the Fayed family is voluminous and is still receiving careful consideration.
    Mr. Teddy Taylor: While I understand that it will take some time for my right hon. Friend to consider the startling new information provided by Lonrho, will he say in general whether he or the Monopolies and Mergers Commission has any power whatsoever to direct the unscrambling or the alteration of a takeover or merger if information that was provided at the time of approval proves to be inaccurate or misleading?
    Mr. Channon: If it appears to me that material facts are brought to my notice or made public that were not disclosed at the time, I have a discretion whether to make a reference to the Monopolies and Mergers Commission. If the commission makes an adverse finding, I have discretion to remedy or prevent the adverse effects identified by the commission through the normal powers available to me, including, in appropriate cases, the power of divestment. I make it clear that I make no comment about this particular case.
    Mr. Campbell-Savours: Is the Secretary of State aware that Harrods, under the former management, paid roughly £20 million per year in corporation tax to the Treasury? Is he further aware that, since the takeover by the Al Fayeds and the registration of the company in Liechtenstein, they no longer pay taxes to the British Government because they choose to offset their liability against borrowings to borrow for the purchase of Harrods? Is that not a disgrace? Did the Secretary of State not know, when the original decision was taken, that that was likely to happen, and in taking that decision did he not, in effect, write of £20 million worth of revenue to the Exchequer annually—inflation proofed?
    Mr. Channon: I think that I would be far wiser not to comment on what the hon. Gentleman says today. I am considering all the information supplied to me by Lonrho in December 1986. I shall consider carefully everything that is said in the House and that is supplied by Lonrho.
    Sir Alex Fletcher: Does my right hon. Friend agree that the Al Fayed family was greatly assisted in acquiring the House of Fraser and Harrods because Lonrho sold it a 30 per cent. stake in the House of Fraser?
    Mr. Channon: My hon. Friend makes another important point, but, again, I would prefer not to comment on the details of the case until I am in a position to consider the whole problem carefully.

    Small Businesses
    Mr. Amessasked the Secretary of State for Trade and Industry what assistance his Department gives to small businesses seeking to sell their goods abroad.
    Mr. Alan Clark: A comprehensive range of help for exporters is available through the British Overseas Trade Board. The board's objective is to stimulate more small firms to export successfully and many of its services are designed to meet the particular needs of the small business.
    Mr. Amess: Is my hon. Friend aware that many small businesses in my constituency of Basildon wish to take advantage of the strategic importance of the town in
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    selling their goods and services abroad? However, they feel that his Department mainly helps larger firms. Will he please say what he is doing to try to dispel that impression?
    Mr. Clark: My hon. Friend is right to draw attention to that. I am sorry to hear what he tells me about small firms in his constituency, because, in fact, some 70 per cent. of the clients of the British Overseas Trade Board are drawn from the category of firms with a turnover in the range of £1 million to £10 million. In fact, the BOTB established a small firms committee in 1985. The co-chairmen are both board members, and the committee commissioned a report to identify the export potential of firms in that range.
    Mr. Meadowcroft: Does the Minister accept that one of the real problems for the smallest businesses is the inability of key members of the company to spend long periods abroad? What liaison is there between his Department and the Foreign Office to enable companies to secure adequate and effective agents abroad so that they can sell their products?
    Mr. Clark: There is an arrangement whereby, for a minimal fee, small firms can have a full range of advisory and representational services arranged by post in the country where they intend to operate. We have just adjusted the scale of fees in that service to comply more realistically with the different degrees of importance and complications of the markets involved.
    Mr. Richard Page: Is my hon. Friend aware that a small and, dare I say, distinguished group of hon. Members are discussing with the BOTB methods of setting up pilot schemes to help small firms on a pro-active basis? Will he ensure that those pilot schemes receive full publicity to make sure that they are given every opportunity to help smaller businesses?
    Mr. Clark: Yes. I congratulate my hon. Friend and other of my hon. Friends in the group who are pushing that idea, to which we attach much importance. In principle, we are willing to help found, on a pilot basis, a small number of export enterprise centres away from the main regional offices of the BOTB. At present we are looking at a scheme in Chelmsford, with Essex county council, but, of course, as my hon. Friend will appreciate, that is dependent to some ex tent on getting a certain level of private participation as well.
    Mr. Madden: Is the Minister aware that in surveys conducted by the Bradford chamber of commerce business leaders have blamed the Government's interest rate and exchange rate policies as the major constraints on their businesses? Does he agree that the best thing that he could do to help businesses would be to modify those policies and introduce policies of investment-led economic expansion rather than the minimal measures that he has been discussing so far?
    Mr. Clark: The hon. Gentleman may be a little behind the times. As he knows, or as the Bradford chamber of commerce will tell him if he were to ask, the exchange rate policy—if that word applies—or at least, the results of exchange rate fluctuations, have been an effective devaluation of the pound which has been a great help to British exporters. It varies from 18 to 40 per cent. against the deutschmark, and that is the subject of particular attention in the CBI quarterly report to which reference was made earlier this afternoon.
    Mr. Peter Bruinvels: As I represent many small businesses in Leicester, I thank my hon. Friend for the help that his Department has given to those businesses. Does he agree that the major problem that has been highlighted in Bradford is high rates, which, in cities such as Leicester, kill jobs? That causes particular problems for small textile firms that are exporting. These firms would welcome putting "Made in Leicester, England" on their labels, but as a result of new regulations they may not be able to signify the country of origin. These companies are proud, as I am, to have goods made in Leicester.
    Mr. Clark: I am glad of the opportunity to dispel immediately the mistaken idea that it is no longer legal to put an origin mark on products. Although we are no longer allowed as a Government to require manufacturers to include that mark, it is highly desirable that all manufacturers should put that mark on, because that will allow the consumer to make the appropriate choice and reinforce the consumers' understandable preferences in that area.
    Mr. John Smith: As the Minister is presumably aware of the major cuts that have been made in the number of staff and the budget available to support exports, especially for small firms, and, in particular, the suspension of the market entry guarantee scheme, the reduction in the number of overseas trade fairs supported by the Government and the reduction in the number of outward missions supported, can he tell the House what possible sense it makes for a country with Britain's appalling trade deficit in manufactured goods to withdraw support for small firms seeking to exploit export markets?
    Mr. Clark: Very understandably, the right hon. and learned Gentleman did not quote the figures. He simply uttered the concepts. The budget has been increased and will be increased by £1·5 million next year. The number of firms helped in their attendance at trade fairs over the past year was 7,000. The market entry guarantee scheme is neither appropriate to, nor utilised by, small firms.

    EC-USA (Trade Dispute)
    Mr. Geraint Howellsasked the Secretary of State for Trade and Industry if he is satisfied with the progress of efforts to resolve the current trade dispute between the European Community and the United States of America; and if he will make a statement.
    Mr. Alan Clark: Further negotiations have taken place between the Community and the US Administration during the last few days. On 26 January the Council agreed, with the full support of the United Kingdom Government, that these should continue with the aim of securing early settlement of the dispute.
    Mr. Howells: Does the Minister agree that unless the grain dispute between Spain and America is settled satisfactorily in the short term it could cost European taxpayers up to £300 million in compensation, and that the Americans in turn could impose a levy of 200 per cent. on some of our exports from the EEC?
    Mr. Clark: The hon. Gentleman is quite right to remind the House that the possibilities of escalation are very serious. However, conversations continue and I under-stand that there will be further contact between Commissioner de Clercq and the United States trade
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    representative Mr. Yeutter this afternoon. I suggest to the House that it is not especially desirable to discuss the details of various negotiating ploys at this stage.
    Mr. Galley: My hon. Friend will be aware that the "Buy American" provision in some of the protectionist legislation is having a seriously adverse effect on the machine tool industry in my constituency and elsewhere. Does he appreciate that many sectors of British industry are fed up and have the impression that Britain plays fair and other countries do not? Will he express in the strongest possible terms to the United States Administration our anger at their growing unfair protectionism and to the EEC Commission the regret of British industry at the Commission's lack of action?
    Mr. Clark: My right hon. Friend the Secretary of State and I frequently express our indignation at this in our meetings with representatives of the United States Government. Although my hon. Friend's remarks are not strictly relevant to the EEC-United States dispute, and the United States is entitled under GATT to compensation for loss of trade, there is no doubt that the manner in which the negotiations were opened by the Americans illustrates their increasing propensity for taking unilateral action in trade, irrespective of their obligations under GATT. There have been several examples of this, of which the "Buy American" provision in respect of machine tools is one. The super fund, the customer user fee, tax discrimination in respect of light aircraft and the semiconductor arrangement with Japan, in their different ways illustrate the unilateral exercise of United States muscle. They are undesirable and the subject of legitimate protest.
    Mr. Carter-Jones: Is the Minister aware that he would have the support of the entire House if he did not allow the negotiations to prevent his Department from providing speedy support for the A330 and A340 Airbus? Is he aware that his Department's support of the A320 Airbus, which preserved that high technology, is likely to be repaid in the very near future?
    Mr. Clark: Yes, Sir. The two subjects are not easily taken together, but I endorse and support everything that the hon. Gentleman said. He is right to say that the A320 has been an outstandingly successful aircraft. There is no doubt that its encroachment on a market that has hitherto been dominated by the United States is giving rise to much heart-searching among Americans in an attempt to stifle it.
    Mr. Roger King: Trade wars have a habit of escalating. Can my hon. Friend confirm that with the west midlands and the midlands generally poised to start the export of the Rover Sterling and Range Rover cars in the next few weeks, the prospect of a trade war extending to cars would place the future of the British car industry in jeopardy?
    Mr. Clark: I understand why my hon. Friend makes the point, but we are still a long way from escalating the war out of agriculture. Our objectives are, naturally, to reach a compromise and to prevent another round of escalatory measures, even within the confines of agriculture.
    Mr. Stuart Holland: While allowing for the loss of United States exports to the European Community following the accession of Spain and Portugal, may I ask whether the Minister agrees that the underlying pressures for protection in the United States are aggravated by increasing imports into the United States from American

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    companies abroad? Will he urge the United States authorities to restrain the punitive protection that they are imposing on individual United Kingdom companies, such as Burroughs, and in sectors such as gin?
    Mr. Clark: The United States economy is already in such disarray that it would not he appropriate for me to urge measures or sanctions upon its representatives during our negotiations.

    Merger and Competition Policy
    Mr. Greg Knightasked the Secretary of State for Trade and Industry when he hopes to complete his review of Her Majesty's Government's merger and competition policy.
    Mr. Channon: My Department is still receiving evidence, and it will be some time before the review is completed.
    Mr. Knight: Does my right hon. Friend agree that the proper way to proceed in this matter is to take account of all the representations that are received before reaching any conclusions and not to make snap judgments merely to satisfy the bleating Opposition? However, does he accept that there is a need for clear and unequivocal guidelines so that companies know where they stand and are not subject to decisions made at random or on an unpredictable basis?
    Mr. Channon: My hon. Friend's latter point is entirely right. Recently, I met representatives of the CBI to discuss the matter and they urged on me the need for as much predictability as possible and for consistency in the application of policy. I am determined to achieve that. I also agree with the first part of my hon. Friend's question. On these very important issues, it is essential to take considered decisions and not to be rushed into action.
    Mr. Eastham: May I impress upon the Minister the great urgency for reconsideration of monopolies and mergers policy? I draw to his attention the activities of a
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    company in the north-west called Valuedale which are causing great concern to the Simon Engineering Organisation and a great deal of loss of confidence, which will affect its investment policies for the future. Is it not about time that successful companies should not have to suffer the pressures that they encounter with the parasites that have climbed on to their backs?
    Mr. Channon: I know of the hon. Gentleman's concern about this case. It is shared by my hon. Friend the Member for Stockport (Mr. Favell) and others. I hope that the hon. Gentleman will make his point of view well known in his part of the world. I am sure that those responsible for deciding—the shareholders—will take very much into account what he has said. It is for the shareholders to decide. I am sure that the hon. Gentleman will do what he can to influence them.
    Mr. Dykes: Will my right hon. Friend bear in mind that competition in retail and marketing benefits consumers by lower shop prices? Therefore, in his review, will he exercise great care when he receives complaints about dumping from manufacturers and retailers who are less efficient than most?
    Mr. Channon: I do not think that this issue has much to do with dumping, but I shall certainly examine the point that my hon. Friend has raised.
    Mr. Wrigglesworth: Is the Secretary of State aware that widespread dissatisfaction and uncertainty over the Government's monopolies and mergers policy are caused partly as a result of recent events, but also because of the general history of the monopolies and mergers policy? Therefore, will he bring forward the results of his review as quickly as possible?
    Mr. Channon: I do not accept that there is all that much uncertainty. The decisions have been consistent. In 1984 my right hon. Friend the then Secretary of State announced that references would be made primarily on the ground of competition. That has remained the policy, and it is well understood.

High Court Injunction (Mr. Speaker's Order)
Mr. Peter Shore: On a point of order, Mr. Speaker. May I exceptionally put a point of order of great importance to you and to the House of Commons, Mr. Speaker? It was my clear understanding at the end of yesterday's debate that the House of Commons, in accepting the manuscript amendment of my right hon. Friend the Member for Chesterfield (Mr. Benn), agreed that your ruling on 22 January prohibiting the showing of Mr. Duncan Campbell's film in the precincts of the House would last until the Committee of Privileges reported and the House itself debated the Committee's report. This morning, in the BBC's "Today" programme, the Leader of the House, answering questions from Mr. John Cole, said the following — "The Speaker has indicated"—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman prefaced his remarks by saying that this is an exceptional case. This is a matter of great importance to the whole House of Commons. I shall deal with it now.
Mr. Shore: The Leader of the House, in response to a question by Mr. John Cole, said:
"the Speaker has indicated that his ruling concerning the showing of the film in the Palace of Westminster will continue as long as the injunction."
That, indeed, was the central issue of yesterday's debate when the House specifically rejected the connection between your ruling of 22 January and the court's injunction, Mr. Speaker. As the Leader of the House is also Chairman of the Privileges Committee, to which the matter has now been referred, it would be extremely important if you, Mr. Speaker, were to guide the House and, in particular, were able to reaffirm the words you used in column 273 of Hansard when, in reply to the Solicitor-General last night, you said:
"my instructions of 22 January will remain in force until the House itself can make a decision following the report of the Committee of Privileges". —[Official Report, 27 January 1987; Vol. 109, c. 273.]
Dr. John Gilbert: Further to that point of order, Mr. Speaker. For the purposes of clarification, could you confirm that your instruction of 22 January in
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no way referred to the operations and work of Select Committees in connection with their power to send for persons, papers and records?
Mr. Speaker: Normally, I do not take points of order at this stage unless they arise strictly out of questions, but it seems to me that this is a matter of considerable importance which the whole House would wish to have clarified. Therefore, I exceptionally agreed to take them now.
May I reaffirm what I said yesterday at column 273 of Hansard, namely, that my instruction of 22 January will remain in force until the Committee of Privileges reports to the House and the House has made its determination thereupon, unless in the meantime that injunction has been removed.
May I say to the right hon. Member for Dudley, East (Dr. Gilbert) that I have also been asked, by him and by other hon. Members, whether my instruction of 22 January applies to Select Committees. The House will be aware that I have no authority to intervene in the operations of Select Committees, which are given their powers directly by the House. Accordingly, my instruction relates to Members acting on their own responsibility and not to Select Committees.
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Further to that point of order, Mr. Speaker. On the first point raised by the right hon. Member for Bethnal Green and Stepney (Mr. Shore), of course I fully endorse the interpretation that you gave, Mr. Speaker, and if any remarks of mine on the BBC indicated otherwise, it was wholly unintended.
As to the second point, thank you for giving us this ruling, Mr. Speaker, which we will wish to study carefully.
Mr. Tony Benn: Further to that point of order, Mr. Speaker, and given what you have said about Select Committees, I take it that the Committee of Privileges will be free to see the film, which it will have to do to discharge its task. I take it that nothing that the Lord Privy Seal said on the radio this morning would indicate that the Government wish to interpose an objection to the Committee of Privileges seeing the film when you yourself have waived any objection to it.
Mr. Speaker: That is a decision for the Committee of Privileges and not for me.

Training and Employment Measures
3.36 pm
The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): I wish to make a statement on a new package of training and employment measures. I apologise in advance to the House because the statement is on the long side, but these are important matters. This is a large package and I know that the House would wish to be fully informed sbout it.
Unemployment has fallen for five consecutive months and is now down by more than 100,000. Vacancies are standing at their highest levels this decade. Our unit wage costs are now rising more slowly than the rate of inflation and are beneath those of our principal overseas competitors. We shall shortly enter our seventh successive year of economic growth.
All this, building on the firm foundation of the million new jobs the economy has created since 1983, can only be good for employment. But with some skill shortages already emerging and unemployment at its present level there is no room for complacency. The Government have therefore reassessed the scope and direction of the employment, enterprise and training measures within existing departmental programmes. As a result my noble Friend the Secretary of State for Employment is writing to the chairman of the Manpower Services Commission to ask the commission to undertake further measures that will give priority to our task of motivating and training unemployed people, particularly the younger generation, to fill the jobs that are now becoming available.
First, restart is a success. By the end of March this year the Manpower Services Commission staff should have interviewed all the 1·25 million people who will have been out of work for over a year. This has been an enormous task. I would like to pay tribute to our staff in the MSC, not only for the forty thousand interviews a week that they have undertaken but for the enthusiastic and sensitive manner in which they are completing their task of offering advice and help to long-term unemployed people.
We can see already that this programme is bringing help and assistance to the long-term unemployed. In the latest figures, long-term unemployment fell in three months by 7,000 when in the previous year it had risen over the same period by 25,000. I am confident that this improvement will be maintained as the programme develops and as the economy continues to strengthen.
No other industrialised nation provides such a package of individual help to each and every long-term unemployed person. But even this is not enough. Last October we announced that the Manpower Services Commission would pilot, in nine areas, restart interviews being offered to those out of work for six months or more. We thought that the earlier the help was received the more effective it would be. The results of these pilots have convinced us of the need to extend the restart counselling in two ways.
First, there will be an additional earlier interview. From the end of March, everyone who becomes unemployed for more than six months will be invited to attend a restart interview. But we have decided to go further, and our second extension is to offer a restart interview at regular six-month intervals. In the future there will be regular
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contact between Manpower Services Commission staff and unemployed people, to help them, at different times and in different ways, back to work.
The counselling interview is, of course, only the first step—although a vitally necessary one—in the process of getting the unemployed back into work. That brings me to the second of the new measures I am announcing today.
Last October we also announced that the Manpower Services Commission would commence piloting an entirely novel training scheme designed specifically to meet the needs of those who have been out of work for six months or more. This scheme has three essential elements. It applies to those who have been out of work for the requisite period, it takes place on employers' premises and it must lead to recognised vocational qualifications.
The Manpower Services Commission has considered the pilots and last week the commission endorsed the report of a working party on the shape of the new scheme. We wish to accept its recommendations in full.
The commission is concerned that quality should be pre-eminent, and I agree completely. It is further concerned that quality should dictate the speed of any extension, and I again agree, as I agree that qualifications from recognised examining and validating bodies must be part of every individual programme. Indeed, these will be conditions of the job training scheme which will be available for people who come to their first six-month restart interview.
The reskilling of Britain is vital if we are to maintain our current economic progress and achieve the decline of unemployment. We have therefore decided that the new job training scheme should be expanded on a national basis to coincide with the extension of the restart programme from March this year provided that the Manpower Services Commission can maintain quality in each area. With that very important proviso we will ask the Manpower Services Commission to provide up to 110,000 places by September of this year. This will mean that in a full year nearly a quarter of a million unemployed people will be given high quality training in skills that will enable them to compete, and to compete successfully, for jobs in today's labour market. This will offer a fresh start in particular to the under-25s. They must be our priority.
I have visited too many areas with high unemployment and heard too often many employers complain that they cannot find people with the right skills. I hope that this new training measure will play a major part over the next few years to provide the skills necessary to maintan our place in the world. It will, if the Manpower Services Commission can maintain the necessary quality of provision. I have every confidence that it can achieve that.
The job training scheme is for adults. My third announcement concerns young people. We are already ahead of most other countries in the steps we have taken in the last four years to train school leavers, but there is a further step that I can announce today. The successful introduction of a two-year YTS last year enabled us to guarantee a place to every unemployed 16-year-old school leaver. Indeed, this year out of 475,000 school leavers, only 2,376 were still awaiting the offer of a place on this training programme by Christmas.
We therefore now propose to extend the guarantee of a place to every unemployed 17-year-old school leaver. This will mean that each and every unemployed young person under the age of 18 is now guaranteed high quality training leading to a recognised qualification. This

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guarantee is unequalled by any of our principal competitors. For the first time, from this Easter there will be no unemployment under 18 and anyone under that age who remains unemployed will have chosen to remain unemployed.
Finally, there will be a further increase in the enterprise allowance scheme which is our scheme for subsidising the first year of self-employment for someone previously unemployed. Over the last three and a half years more than 200,000 unemployed people have started to work for themselves under this programme. Self-employment is rapidly increasing in all parts of the country. Far from a north-south divide, I might point out that the increase in the number of self-employed since 1979 has been greater in Yorkshire and Humberside—77 per cent. —than it has been in any other region. The 43 per cent. increase in the northern region is close to the 46 per cent. increase in the south-east.
We are presently expanding the enterprise allowance scheme towards an annual target of 100,000 unemployed people setting themselves up in business. We are raising that target and next year it will be increased to 110,000—an expansion of 10 per cent.—but here again we shall be asking the Manpower Services Commission to pay attention to quality and to the amount of help the new business men and business women will have to help them succeed.
The measures we have announced today constitute a major redirection of our labour market programmes to help the unemployed back into real jobs. Unemployed people need practical help to get back into work, not empty promises to create millions of jobs on local authority payrolls. They need help and training to compete successfully for the jobs which are already becoming available. We need to have a work force with tomorrow's skills to compete in tomorrow's world. That is what these new measures will help accomplish, and I commend them to the House.
Mr. John Prescott: The House and the country will be in no doubt that a general election is near, following this further example of a Government who are obsessed with reducing unemployment figures rather than creating real jobs. Not one real job is proposed in the package announced this afternoon.
The Government's statement must be seen against today's political background and seven years of Tory policies on employment and training. Despite the many fiddles with the unemployment figures, the registered unemployed total stands at 3·25 million, with 30 people for each vacancy and with the worst trained labour force of any developed economy—[HON. MEMBERS: "Get to the point."] That is what I am doing. A major deskilling of our labour force has occurred since 1979, with this Government abolishing 16 of the 23 training boards and closing 30 of the skillcentres. That has contributed to a massive shortage of every sort of skill in this country, and has affected very many of our companies, based on the evidence that they have given.
Training is regarded by many companies as a cost rather than an investment, with the result that we now have a deplorable record of expenditure on training
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compared with our major competitors. They invest seven times—even as much as 14 times—more than Britain on the training of their labour forces.
This much-heralded job training scheme was born at the Tory party conference last October, much to the amazement of the Manpower Services Commission, and is built on a training pilot scheme that affected 10 areas in the United Kingdom and involved 1,000 people. There was little assessment in the 10 weeks that it operated before now being launched into a scheme affecting 110,000 places in six months—twice as many as the MSC thought it could handle. Is the Paymaster General convinced that those places, even on the terms that he set out, can be provided by industry under present circumstances?
I must make it clear immediately that, of course, we welcome the counselling and advice that are given to the long-term unemployed. I have suffered periods of unemployment — [HON. MEMBERS: "You soon will again."] — that have not been suffered by Tory Members. We welcome any advice that can be given—[Interruption.]
Mr. Speaker: Order. This is an important statement of great interest to the House.
Mr. Prescott: We are used to Tory yobbos in the House by now, Mr. Speaker. The debate is being broadcast on the radio and the electorate can judge who is giving serious consideration to the problems of the unemployed.
The restart programme is largely about marshalling people into dead-end schemes of limited effect. Can the Paymaster General confirm that the estimated 250,000 places in one year, which he mentioned in his statement, can be found? Can he estimate the effect that he thinks the scheme will have on the figures for the registered unemployed?
Secondly, what is the estimated cost of the schemes, and will extra resources be devoted to them? Can he assure us that they will not be at the expense of the existing alternative training schemes, as the expansion of the youth training scheme was at the expense of the adult training schemes?
What level of allowance is to be paid to people on the schemes? Are we correct in believing that it will be precisely the same as the levels of benefit? Will it include, as the MSC report requested, at the very least out-of-pocket expenses and help with extra training requirements for the individual?
Are these job training places now to be provided at half the cost of the existing community programme, thus breaking any attempt to adjust payments to proper levels of pay? [HON. MEMBERS: "Read it again."] The community programme made a clear commitment to bear some relationship to trade union rates of pay. Nothing in the scheme bears any resemblance to such pay and it is a major step to the workfare programme for which many Conservative Members have been calling.
Will the schemes be compulsory? Will there be a loss of benefit to those who are offered places on such schemes, or will they be allowed to take alternative employment schemes which pay more than these schemes without facing penalties?
Is not the limited six hours a week for job training on a six-month scheme completely inadequate to make any contribution to the high quality training, as the Paymaster General has claimed? Will more resources be made

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available for monitoring the schemes and for judging the qualifications and standards achieved by them? What are the estimated effects of—[HON. MEMBERS: "Get on with it."] The Paymaster General made a lengthy statement which raised many questions which I am entitled to ask. I hope that I will be given time to ask those legitimate questions to which not only we but the long-term unemployed want replies from the Paymaster General.
Finally, it is typical of the Government's arrogance to assume that jobs provided by local authority services, such as house building and helping the mentally handicapped and old people, as in the statement about local authority jobs, are simply a payroll contribution. They are as real as the jobs done by anyone working in industry. However, that shows the true political nature of the statement, which cruelly exploits the desire of the unemployed to have work. It does nothing to reduce the deskilling of our labour force. It is one further attempt to massage the unemployment figures downwards and it is a major step towards an industrial conscripted labour force working solely for their meagre benefits.
Mr. Clarke: At one point the hon. Member for Kingston upon Hull, East (Mr. Prescott) read a prepared part of his question explaining his concern about the level of training and skill in our economy.
Mr. Barry Sheerman: The Minister read his.
Mr. Clarke: He obviously accepts, as we do, that we need to improve our record of training, that in some parts of Britain and in some industries skill shortages are emerging and that some of the unemployed need further training to polish up existing skills or to acquire new ones to improve their chances of entering the labour market.
Therefore, I cannot for the life of me understand why he cannot bring himself to welcome the announcement of a major training scheme, aimed particularly at the under-25s, providing on-the-job and off-the-job training in specific skills for those who have been out of work for over six months.
The hon. Gentleman asked me a number of questions about the way in which the scheme will work. Perhaps I shall be able to reassure him because I think that the scheme will, on the whole, receive a widespread welcome in industry and among the general public. First, he asks whether the places can be provided. He is apparently worried about our setting a target—it is a target—of 110,000 by September. Of course, that is quite an ambitious target and we shall achieve it only if we have a good quality scheme and maintain that pace of progress. A quicker rate of progress was achieved when YTS was first introduced. In the first eight or nine months of the YTS programme, 400,000 places were provided. We are proceeding at a slower rate than that. We have a good flow of managing agents coming forward to take part, a good flow of employers who are interested in the scheme, and of bodies that are responsible for qualifications. We believe that we must go ahead and aim at that sort of figure, and I am confident that the MSC will get there.
The hon. Member asked about the cost and the extra resources. Obviously, the cost of the YTS programme depends on the extent to which we achieve the rate of progress that the Government would like to see. If we reach the sort of figure that I am talking about, the cost will be about £200 million, some of which would be
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switched from programmes elsewhere and will therefore be new money to the Manpower Services Commission. Some of that money will be found by switching funds within my Department's budget. [HON. MEMBERS: "How much?"] My Department is spending £4 billion on schemes of one kind or another, £3 billion of which is spent on schemes run through the MSC. [HON. MEMBERS: "How much new money?"] For the MSC that figure is over £100 million.
I know that Opposition Members are stronger on the amount of money that they wish to spend than they are on how they should spend it. They are committed to a £6 billion programme, but they have not explained how on earth that is meant to take 1 million off the unemployment figures. We are talking about new resources for the Manpower Services Commission and that will be achieved by switching resources within Government. That is how we shall proceed.
Mr. Frank Cook: More window dressing.
Mr. Clarke: The level of allowance received by each trainee will depend on his personal circumstances, because we shall ensure that those people who are at the moment receiving benefit will not lose money as a result of going on to the scheme. Therefore, as the level of benefit will vary, so will the average available allowance, which will be equivalent to the benefit that trainees were getting. The amount received by a young single man, will differ from that received by a married man with children who is a householder. In answer to the hon. Gentleman's query, there will be an addition for travel and out-of-pocket expenses incurred by those who take part in the scheme.
The hon. Gentleman also asked whether there would be any element of compulsion. There is no element of compulsion in any work, or training scheme in this country. We wish to encourage those who come to the restart interviews to go on to the scheme. Nobody will lose his benefit entitlement solely as a result of refusing to go on the job training scheme. As we have had to explain on previous occasions, it is true, in this as in every part of the employment world, that people who continue to receive benefit must demonstrate that they are available for work. That has always been the rule.
The hon. Gentleman was concerned about the quality of the training and the amount of knowledge that could be acquired in six months. Of course, some skills can be acquired and tested in six months, but others require longer. We are now moving over, not only in this scheme but generally, to training based on a measurement of standards, rather than time-served training. Of course some standards cannot be achieved in six months, but one can take a step towards those standards and devise skills tests suitable for the scheme, if existing skills tests cannot be accomplished within six months—but many can.
We are in contact with the agencies that determine qualifications, such as the Business and Technician Education Council, the Royal Society of Arts, and the City and Guilds of London Institute, which will welcome this announcement wholeheartedly. We shall discuss with those bodies how the training course can achieve a quality that will lead to a recognised qualification, or to a step that is definitely towards qualifications, in the period that we are discussing.
The hon. Gentleman also asked about the effects Of the scheme on the unemployment figures, which features so

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largely in the barracking from his hon. Friends. Its effect on the unemployment figures will depend on the extent to which we successfully continue to reduce unemployment. It is a sad truth, from the point of view of Opposition Members, that, as the number of unemployed people steadily reduces, the figures go down. I realise that Opposition Members are worrying as the election gets near. [HON. MEMBERS: "They are on schemes."] If Opposition Members are asserting that the growth in new jobs in the economy and the reduction in unemployment are directly related to our schemes, they are grossly exaggerating the size of the Department of Employment's schemes, and their mathematics is gravely in error. I did not give my statement a political tenor.
Mr. Sheerman: As if you would.
Mr. Clarke: It was the hon. Member for Kingston upon Hull, East who mentioned the run-up to a general election. It is quite clear to me that, in the run-up to a general election, Opposition Members are getting into a desperate panic about the obvious reduction in unemployment figures, to the extent that their only reaction to employment and training measures is to attack each and every announcement that we make, simply because they are frightened that we are demonstrating that unemployment is now going in the right direction.
Mr. Peter Thurnham: I welcome the fact that existing funds are being used more productively for these positive measures. Is my right hon. and learned Friend aware that the job training scheme in Preston, contrary to what the hon. Member for Kingston upon Hull, East (Mr. Prescott) said, has been so successful that everybody who wanted a place was able to get one, and a job afterwards?
Mr. Clarke: I quite agree with my hon. Friend. I think that the people of whom we should take notice are the unemployed who need help to get back into work, and employers who are happy to train people. We should take their opinion and experience, and not that of a panic-stricken Opposition. We have found in our pilot areas no lack of people who wish to be trainees on the course. Nor did we experience any lack of managing agents or employers who are willing to provide the training required. It is the success so far of the pilot schemes that has led us to say that we must go national as quickly as quality allows.
Mr. Malcolm Bruce: Is the Paymaster General aware that we share his anxiety at the skills shortages which are emerging in the United Kingdom? To the extent that the scheme will help solve that, we welcome it. It will also provide some outlet for the long-term unemployed.
The Minister will be aware that there is worry and scepticism about the value of such training schemes in terms of meeting skill requirements and providing long-term jobs. Can he therefore give an assurance that the MSC will not advance these schemes simply to meet Government targets if it cannot be assured that they are meeting proper skill and training requirements? Can he give an assurance that unemployed people will not be forced into schemes which they do not think are relevant to them? Can he assure us that they will not suffer any loss
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of benefit in those circumstances? Will he explain why the Government can find substantial sums of money for training schemes such as this when they are cutting aid to industry and regional development grants, which would help to create the new industrial base and jobs that would help the unemployed in the long term?
Mr. Clarke: I think that I can give the hon. Gentleman the assurance that he asks for in the first part of his question. I agree that it is important to emphasise that we are offering unemployed people training which is of genuine use to them and a potential employer. It is important to realise that the training will be geared to the individual's needs. The person concerned will be assessed—his or her needs will vary considerably according to educational attainment, the level of skills that have been achieved and the type of previous job. Each person will be offered a place for a varying length of time. It might be three months or as long as 12 months. Six months is an average that we have in mind.
Each training programme will be geared to the needs of the individual and aimed at a qualification which, I accept, may not always be achieved, but the idea is that there will be a recognisable marked step towards a qualification. It will be attainable by the individual and useful to him. We agree with the MSC that we should go ahead as quickly as achieving that level of quality requires.
I note the hon. Gentleman's comments on other Government programmes to bring new investment and industry to the regions. I agree that they are important. We have cut spending in that area because we have targeted it more sensibly. We have concentrated on jobs and chosen not to subsidise capital developments everywhere, which was always wasteful and ineffective. We are now getting near to having doubled expenditure in real terms on training and employment because we give it a very high priority.
Mr. Ralph Howell: I congratulate my right hon. and learned Friend on this most excellent statement. It will be well received by people throughout the country. I congratulate him on being able to offer a new training scheme place to everyone aged under 18. Will he explain why we are to continue to give people who turn down such a place the option of drawing benefit? I congratulate him on the success of the restart scheme. Will he consider urgently the introduction of a pilot workfare scheme?
Mr. Clarke: I agree with my hon. Friend about the public reaction to the announcement. There will continue to be incredulity outside the House at the reaction of the Official Opposition to such an announcement. Anybody aged under 18 who says that he is unemployed after this measure has been introduced has decided of his or her own volition to be unemployed and not to take a training scheme place. Certain benefit arrangements already apply to youth training scheme trainees, but I do not think that it is right to say automatically that somebody should lose benefit just because he or she declines to take part in a scheme. It is important to emphasise that anybody who continues to claim benefit has to continue to demonstrate, as Parliament has always required, that he or she is available for work and is taking active steps to find it.
As for my hon. Friend's advocacy of workfare, he knows that I am not persuaded that it would be right to start providing programmes for
unemployed people as a

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condition of receiving benefit. We are offering extremely attractive training schemes and work experience, and I cannot believe that sensible people will continue to turn them down. All the evidence suggests that, with YTS, the number of 16-year-old school leavers who choose to stay out of work now is very low. The number of unemployed school leavers by Christmas this year was far lower than in previous years.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that this is an Opposition day and that a very large number of right hon. and hon. Members want to take part. I ask for brief questions, please.
Mr. Ron Leighton: Would the Paymaster General give an account of his recent meeting with the MSC? Can he confirm that it went to see him to express its concern and reservations about the standard of training in the job training scheme and about the speed at which he wants to produce it?
Mr. Clarke: The Manpower Services Commission has written to my right hon. and noble Friend the Secretary of State setting out its views, and he has written back agreeing about progress under the JTS. The MSC endorsed the report of its sub-group, which asked for an extension of JTS, saying that it should be extended as quickly as quality allows. That is the arrangement on which we are proceeding.
We are in complete agreement with the MSC in the correspondence that we have had, subject to one or two Trades Union Congress reservations about the level of allowances. We are, however, in agreement on JTS. That includes the TUC commissioners who are Ron Todd, Roy Grantham and Ken Graham—not insignificant figures in the Labour movement. I find it difficult to engage in this exchange of correspondence with the MSC and then come here and meet a band of hooligans carrying on about everything that we propose.
Mrs. Elizabeth Peacock: May I thank my right hon. and learned Friend on behalf of people throughout the country, and especially people in my constituency, who will welcome this news? We recently had an opportunity to see more than £20 million of investment in manufacturing in my constituency—and we need the skills to go with it. Many people will welcome the opportunity to take part in a training course which will lead to a recognised and approved qualification. All will welcome the fact that £100 million will be spent on training rather than on keeping people at home.
Mr. Clarke: I am grateful to my hon. Friend. I was with her in her constituency yesterday visiting two firms that are engaging in major investment and expansion.
Mr. Prescott: It is a marginal.
Mr. Clarke: It was a marginal seat in which a great deal of investment is taking place. New jobs are being created. The choice for an unemployed person is between being paid benefit for doing nothing and being paid an allowance for good quality training. I have no doubt that most unemployed people know which is in their best interests.
Mr. Hugh Brown: Which industries in Glasgow and the west of Scotland are suffering from skills shortages?
Mr. Clarke: I agree that skill shortages are most acute in parts of the south and the midlands. The shortage tends to be limited to certain industries further north. In areas that have suffered rapid change, particular skill shortages are found. There is no general skills shortage in west central Scotland, but one can find employers in all parts of England—I have not been to that part of Scotland for about 12 months—who cannot find people with certain skills.
Employment is increasing throughout the country and unemployment is falling. The skill shortages that are obvious already in the south-east will become more apparent elsewhere. In the 1990s we shall obviously require a more skilled labour force than we had in the 1950s and 1960s. It is a positive policy to raise the level of skill of those who have been out of work for six months or more so that they are more able to take the jobs that are emerging. In doing so, we shall provide a much more skilled work force for future generations.
Mr. Michael Hirst: May I urge my right hon. and learned Friend to disregard the Opposition's pathetic reaction? They seem always to denigrate every effort that is made to improve skills and job prospects. May I welcome the further expansion of the enterprise allowance scheme? Does he agree that this will give young people especially the opportunity to acquire skills and to go into business on their own account?
Mr. Clarke: I realise that we have many schemes and that their numbers become bewildering. Through our Action for Jobs campaign we try to present the differences between them. Of all the schemes, I commend the enterprise allowance scheme most firmly to overseas visitors and to others. It is the most successful scheme and it has enabled many to set up in business on their own account. The majority of them survive and go on to provide jobs for others. For every 100 people we subsidise who go into self-employment, about two or three years later there are 190 jobs in the economy that are not being sustained by public funds. That is why we are expanding so rapidly. The scheme supports the welcome growth in self-employment in our community.
Mr. Ernie Ross: I represent a part of one of the areas that has been involved in one of the pilot projects for the scheme. Having listened to the Minister and having had experience of the pilot project in Dundee, it seems that there are two different worlds. It is clear that the Minister does not live in the world of which Dundee is a part.
Is the right hon. and learned Gentleman aware that our experience in Dundee is that the scheme was introduced far too rapidly to allow the necessary liaison that was required between trainers, the unions and the possible employers? The only real employment that we in Dundee see in the immediate future lies in the numbers of those who are looking for places whom the skillcentres will have to take on. The Minister has talked about an expansion of 110,000 places, but I suggest that when he returns to this issue in two or three months, he will confirm that only those who were looking for places were taken on. Experience in Dundee shows that he has succeeded only in dramatically reducing—from 12 to one—job choice or the menu that could be offered to unemployed 18 to 25-year-olds. He has ensured that it is no longer possible to offer the community

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programme or the restart scheme to these people. Dundee's experience is that the Minister's offer is not a very good one and is not a real improvement.
Mr. Clarke: Over 1,000 people are engaged in the pilot projects for the job training scheme and they appear happy with the training that they are receiving. About one in six drop out, some for the good reason that they have obtained a job elsewhere or have been taken on by the employer who began to give them on—the—job training. Our experience in Dundee and elsewhere does not match the hon. Gentleman's description. We shall have to ensure as we go along that we achieve quality and maintain it. I accept that some wrinkles may have to be removed.
The hon. Gentleman has said that there was not time for liaison between the unions, the trainers and the employers. The House will recall that the hon. Member for Kingston upon Hull, East contended that we were proceeding at a terrible rush. It should be understood that the unemployed are facing a serious problem and that, if someone has been out of work for six months or more, he will consider unemployment to be 100 per cent. It is obvious why the Opposition wish to delay making progress. They seem suddenly to have lost their sense of urgency in tackling the unemployment and training problems.
Mr. Geoff Lawler: Does my right hon. and learned Friend agree that all the evidence is that most young people would rather do something useful with their time than spend it idly? This means that the extension of the JTS will be welcomed. Does he agree that the description of the YTS as a dead duck by the hon. Member for Kingston upon Hull, East (Mr. Prescott) shows how out of touch he is with the views of trainees and of young people generally? There are skill shortages in Bradford, for example, where there is above average unemployment. There is a shortage of joiners, skilled sewing machinists and Asian chefs. Will my right hon. and learned Friend seek to ensure that JTS placements are sensitive to the needs of the local economy?
Mr. Clarke: I agree with the first part of my hon. Friend's question. I declined to enter to into a discussion with the hon. Member for Glasgow, Provan (Mr. Brown) about his constituency in the west of Scotland, and I am grateful to my hon. Friend for using his knowledge of Bradford to explain what the problems are there. It is an essential feature of the JTS that the employer provides on—the—job training. This helps to ensure that training is provided in areas where employers feel that there will be scope for employment. It is training that is aimed at the jobs market in the locality. I agree with my hon. Friend that that is a vital feature of the scheme.
Mr. Allen McKay: Will the Minister assure us that none of the schemes will be used as a source of cheap labour? If they were used in that way, they would be killed stone dead. I admit that some of those who are participating in the schemes are happy with what they are doing, but I am concerned about the training element. I trained for seven years, during which time I was seconded to various places. I was given day release and I participated in sandwich courses in training for a skill. For what skills will people be trained in the
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Barnsley area, when there is currently 22 per cent. unemployment and a decline in traditional industries? What has the Minister in mind for the area?
Mr. Clarke: I have already said that the allowance will be set at a level that will not cause a loss of income for any of those who take part in the scheme. It will include travelling expenses for example. The quality of training will depend on the particular skill, how long it will take to acquire it and how the training is organised. We shall begin by designing a training programme for an individual. Depending on the skill involved, some individuals will achieve proficiency in six months. Others will be taken in the direction of a good qualification in six months.
We shall be considering with the RSA, BTEC and all the other validating agencies how we can ensure that the scheme produces a level of skill or is a worthwhile step towards a qualification that can be attained with work experience afterwards. The seven years that the hon. Gentleman spent training for his trade is not the norm in obtaining trade skills. There are many skills in the economy that can be learned in the way that I have described.
Mr. Paul Marland: Does my right hon. and learned Friend agree that there are two aspects of this afternoon's proceedings that should be much more widely known outside the House? First, before his important statement, there was only the meagrest handful of Labour Members in their places. Secondly, Labour Members have shown breathtaking contempt for well tried and tested training schemes.
Mr. Clarke: I agree with my hon. Friend, but the few Labour Members present include some of the noisiest. I have no doubt that they are able to make up for the absence of their colleagues.
Mr. Martin Flannery: This a serious subject—[Interruption.]—despite the laughter that is coming from the Government Benches. I want to ask the Minister, if Conservative Members will be quiet and listen to what I consider to be a reasonable question, whether he and some of his colleagues who are making all the noise will visit the great industrial cities of the morth to see the extent of the brutalising and terrible unemployment that the Government have created, and try to understand the pervasive cynicism that dominates young persons who are out of work towards the umpteen schemes that have been introduced to take them off the unemployed list so that they can be treated as working people? Does the Minister realise that we understand that this is obviously another method of massaging the unemployment figures, no matter what he says, that everyone knows this except those who are blind and those who will not accept it, and that there is no hope of getting young people back to work by this means.
Mr. Clarke: I was in one of the great cities of the north yesterday.
Mr. Flannery: Come to Sheffield.
Mr. Clarke: After leaving Batley and Spen, I went to Leeds, not Sheffield. I announced support for a new venture capital fund for inner-city businesses, I provided money to enable some training and work experience to start, based on the Jamaica Society headquarters, and I financed a training scheme for youngsters who get into

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trouble. I realise the scale of the problems and so do my right hon. and hon. Friends, many of whom, like Labour Members, represent our great northern cities.
I agree with the hon. Member for Sheffield, Hillborough (Mr. Flannery) that one of the problems is cynicism. There is an element of opinion that takes the view:"Oh! It is all a waste of time," They say that it is all PR, all a con trick and that nothing can be done by the schemes. The Labour movement in Sheffield, and some parts of the Labour movement elsewhere is responsible for encouraging that feeling. They tell people to march behind the old banners and listen to the music of the old bands. They come here to barrack the training schemes. Unemployment is falling more quickly in the north than in the south and eventually the cynicism of the Labour movement in those great cities will be exposed.
Mrs. Virginia Bottomley: Will my right hon. and learned Friend confirm that, in recent years, a series of reports from the MSC and NEDO have consistently highlighted the need for further job training to improve our skills base? Does he agree that anyone with a serious interest in the future of our industry and a true concern for the needs of the unemployed can only regard those sniping jeers of the Labour party as showing a callous disregard for the needs of the unemployed and the needs of industry?
Mr. Clarke: I agree with my hon. Friend. In addition to our job training schemes, we must press employers and others to step up our training efforts in other ways. We must improve our record in adult training and today's announcement heralds an important new scheme that will give training to those who have been unemployed the longest and need it most.
Mr. Greville Janner: How much new money do the Government intend to pout into this scheme? Surely the answer is that they intend to spend no new money. Is it not right that this scheme, like so many other Government schemes will reduce the number of people on the register of unemployment without creating even one real job or even one real apprenticeship?
If there is no new money and if there is no reduction in true unemployment through the creation of jobs, is this not just one new string on the Government's election fiddle —to be recognised precisely for that by the electorate?
Mr. Clarke: The total level of public expenditure will not be raised by today's announcement. New money has been given to the MSC; it has been switched there from other programmes and other departments. It is quite absurd for the hon. and learned Gentleman to argue that, unless one increases public expenditure as a whole, nothing has been done.
I said earlier that the empty hole in the middle of Labour party policy is that it is extremely clear that the party will borrow £6 billion to finance its employment measures but it cannot explain what those measures will be. The only measure of which we are aware is the Southwark scheme. Perhaps the Labour party intends to build upon that scheme, which provides that three quarters of all jobs to be created in Southwark will be local council jobs provided by an already over-manned local authority.
These Government schemes do not contain a job, but they steer the unemployed towards the growth in real jobs that is taking place. There are now over 1 million more
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jobs in the economy than there were in 1983 and we are witnessing a steady and continuing increase in the number of jobs in the economy. The people we are dealing with today—those out of work for more than six months—are especially disadvantaged when it come to getting those new jobs, and that is where today's schemes fit in.
Mr. Spencer Batiste: Is my right hon. and learned Friend aware that the important announcement he has made today will be widely welcomed in the industrial cities of the north where this scheme and its predecessors have substantially contributed to the record job creation of the Government since 1983? Does he accept that the Labour party's clearly hysterical and negative opposition to his proposals is clear evidence that the only genuine commitment of the party opposite is a commitment to failure and hoplessness?
Mr. Clarke: My hon. Friend may have noticed that Opposition Members are getting quieter, no doubt as they reflect upon the import of this statement. No doubt Opposition Members will also reflect upon what measures they will put forward to deal with the problems. Unless they come up with something soon they may, eventually, be grudgingly driven to agree that they do approve of restart, YTS, JTS and the enterprise allowance scheme that we are expanding today.
Mr. Jim Craigen: The right hon. and learned Gentleman seemed surprised—his words—that skill shortages were emerging. Why, after seven years, have the Government's training policies got it wrong? How many of the unfilled vacancies will be filled as a result of the training policies he has announced today?
Mr. Clarke: I am not surprised by the emergence of skill shortages, as I am afraid that the history of the British economy is that, whenever we enter a period of expansion, that expansion is restrained by skill shortages. That is already beginning to happen again, especially in the south. That is why we have been pursuing the adult training strategy in recent years and have increased the number of people supported by adult training programmes, encouraged employers to expand their training efforts and introduced YTS for young people. YTS is the best training scheme of its kind introduced by any advanced industrial country for young people previously unemployed.
The scheme announced today is the latest addition to those programmes. I think that, with the change of climate in British industry, we now realise that to expand the economy we must provide the skills that are needed by industry. This scheme is a positive response to the needs of industry and the needs of the unemployed. How many vacancies will be filled depends on the success of the MSC in expanding the scheme as we wish and maintaining the quality required to produce people that industry need to fill the jobs that are becoming available.
Mr. Tom Sackville: Does not my right hon. and learned Friend agree that if Labour Members persist in attacking every new measure designed to make jobs through training places and to address the problems of skill shortages, they will give a clear impression to people outside that the last thing that the Labour party want is a reduction in unemployment.
Mr. Clarke: I always think they have got round to supporting YTS, which the TUC has certainly supported for a long time, until intemperate remarks are occasionally

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made by Labour Members. I thought that the hon. Member for Kingston upon Hull, East began to say that he approved of all this counselling and advice, which is rather different from the response that he gave, two months ago, to the restart programme—
Mr. Prescott: It is the motive.
Mr. Clarke: Oh, it is the motive—he fears that we are doing the right thing for the wrong reason. I think that steadily, Labour Members will come round to understanding that no responsible Opposition party can go to an election or look beyond it by solely promising to dismantle all the employment and training schemes which it has been bitterly opposing for the past three years.
Mr. Allan Roberts: Is the right hon. and learned Gentleman aware that I am inundated with the parents of young people who are on those schemes, and indeed by those young people themselves? They come to my advice bureau and write to me every week, to complain about four things — first, the inadequate supervision; secondly, the lack of any kind of real training; thirdly—this is very serious — the exploitation of many of the young people by employers who, for instance, force them to work unacceptable overtime on the threat of being sacked; fourthly — the real thing that they complain about—the fact that, at the end of the scheme, there is no lasting or permanent job in an area like Merseyside for someone who has been through this so-called training. Why do the Government borrow money to pay the equivalent of the nation's weekly food bills—unemployment and social security benefits —and not borrow to build things like council houses which would create real jobs, provide real apprenticeships and create jobs in the private as well as the public sector?
Mr. Clarke: Within YTS, which appears to be what the hon. Gentleman is describing, we have now established a system in which training is provided only by approved training organisations. The monitoring quality of the training is satisfactory and those principles will be applied to the new JTS.
I suggest to the hon. Gentleman that it is no good getting up to produce that sort of criticism of YTS—it is somewhat out of date—and apparently suggesting, as an alternative, that there should be no training provided and where it is provided people should be encouraged not to take advantage of it. I do not agree with the idea that, in Liverpool, the only prospect for employment is achieved by giving money to Liverpool city council to build more council houses rather than adding to the skill level of the unemployed. I cannot believe that people in Liverpool agree with that idea.
Mr. Roberts: I meant Sefton.
Mr. Tony Baldry: Does my right hon. and learned Friend agree that a large proportion of the unemployed are under 25, unskilled and unqualified? Any scheme that gives people the opportunity to gain skills on employers' premises and gain real vocational qualifications must be worthy and welcome to anyone who wants to see the unemployment level come down and the number of skilled people in Britain rise?
Mr. Clarke: It is also worth bearing in mind that a minority of the people under 25 do have some skill. About
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a quarter have an A-level or the equivalent, but what they need is for that skill to be topped up in a situation that will make them more attractive to employers. Those people should have a three-month training programme that would readily convert them into employable people in the local community, but, at the moment, for six months they have found themselves unemployable. That is why we have an individual training arrangement from three months to 12 months, fitted to the individual person, to try to give him or her a skill that will be useful in the labour market.
Mr. Michael Grylls: Is my right hon. and learned Friend aware that there will be a warm welcome for the expansion in the enterprise allowance scheme, which has been uniquely effective in encouraging people, often those who have lost jobs in the large-scale older industries, to set up their own businesses? The hon. Member for Kingston upon Hull, East (Mr. Prescott), in a rather snide remark, said that these are not real jobs. If he said that to those 300,000 people who have set up these new businesses, he would get a pretty dusty answer. Will my right hon. and learned Friend keep under review, under the scheme, the adequacy of the training to prepare people to set up their own firms? That, over the long term, could improve the success rate of those new businesses?
Mr. Clarke: My hon. Friend has considerable expertise in small businesses, and in particular I endorse his last point, that it is important to keep up the level of support. It is no good giving an unemployed person £40 per week and letting them run their business on their own. We have taken steps to make sure that not only the initial counselling sessions, but steady advice, are available, as that greatly improves the success rate. I agree with my hon. Friend about the reaction of Labour Members. They make wild remarks, in trying to denigrate the figures, about so-called "skivvy schemes" and the figures of those whom they say are unemployed, but ignore the 110,000 people who will run their own businesses, who, according to the Opposition, should be included among the unemployed. It rather makes clear what their intention is towards both reality and the presentation of it over the next few months.
Mr. Ivan Lawrence: Is not the miserable reaction of Labour Members to my right hon. and learned Friend's excellent statement yet more evidence that what is good news for the unemployed is thoroughly bad news for the Labour party? Will my right hon. and learned Friend take this opportunity to nail yet again the lie that is being spread by the Labour party, that the YTS and the job training scheme do not lead to permanent jobs?
Mr. Clarke: Over 60 per cent. of those who participate in YTS go on into employment. That is the average—some schemes are less successful, and some are very much more successful, and it is possible to get a good scheme with up to 100 per cent. placement from those taking part. I agree with my hon. and learned Friend that that point needs to be made, not just to win the political argument but because we do not want young people and their parents to be deterred from taking part in good schemes by political propaganda. My hon. and learned Friend will have observed that, in the political battle, we seem to have driven our opponents from the field.
Mr. Tony Marlow: Now that every 16 to 18-year-old will have the opportunity of education, training or employment, is it not mind-boggling

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to every body, except for the menagerie of ostriches on the Benches opposite, that they should still have an option of state-supported idleness? Will my right hon. and learned Friend think further that 16 to 18-year-olds who are not looking for employment do really need a kick up the backside?
Mr. Clarke: We are not proposing to change the rules of entitlement to benefit, nor that the refusal to take part in the scheme should, in itself, disqualify anyone from benefit. The fact remains that Parliament has always said that people, to get benefit, must demonstrate that they are unemployed, seeking work and taking active steps to obtain it. We must insist on that, despite the fact that yet again, we are always criticised by the Labour party when we try to make that rule more effective.
Mr. Sheerman: The Paymaster General and the House know that the Labour party supports the creation of real jobs and proper skills training. However, the background of today's statement is seven years of the collapse of proper skills training, and the fast creation of schemes that have more to do with getting people off the register than with providing proper training. The register effect has been the main thrust of the Government schemes over the past few years. We know for certain that in west Yorkshire, we call those schemes shoddy, as they do not provide jobs and training. [Interruption.] The hysterical over-reaction from the marginal seats represented on Conservative Benches persuades me that the Paymaster General should answer the following questions.
He has rather evaded the first question. Have all the guarantees for which the MSC sub-group asked been met? Everything that I have heard this afternoon shows that they have not been met. There are no genuine extra resources. There is no effective monitoring, the quality will not be assured, and people will be worse off on this scheme. In the pilot areas, one of which is in my constituency, if one goes on a job training scheme, one cannot go on a community programme and get a proper rate for the job. Is that to be the case in the expanded scheme?
Secondly, why has the scheme been piloted for only nine weeks before the decision was made? Is the right hon. and learned Genteman aware that, in every pilot area that we have contacted in the past week, the people running it have said that there is chaos? There is withdrawal of labour and a resignation of supervisors because people are so discontented with the programmes.
Thirdly, will the right hon. and learned Gentleman answer this question, because it is most important? Is it not the case that, in the pilot areas, this has led to an undermining of the youth training programme and of the community programme, and that agents are fighting for placements?
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Fourthly, is three weeks' training in six months' experience what the Government stand for? The mot to of the Government is, "Good figures, shame about the jobs, tragedy about the training."
Mr. Clarke: In that series of questions, I was searching to find whether the hon. Gentleman agrees with the MSC letter to us and with the recommendations of the subgroup, because that was not clear, Obviously, the hon. Gentleman cannot answer that question today. The implication was that he does. He said that we had not complied with them. I am not surprised if that is his position, because that group includes some powerful figures in the trade union movement, acting on behalf of the TUC. The MSC is an independent commission, better placed than I am to comment on the impact on its other programmes, such as community programmes, about which the hon. Gentleman makes the wildest allegations about the impact in the pilot areas. I remind him of the sub-group's report, which was endorsed by the MSC, which begins by saying:
"the commission should now make arrangements for measured and deliberate extension of new JTS to all MSC Areas."
The MSC does not take the hon. Gentleman's view that we should not go ahead. It recommends that we should expand now and says that measured expansion, meeting certain requirements, particularly of quality, is needed.
My noble Friend has written back to the MSC agreeing with its letter and its recommendations, and setting a target that we believe to be realistic and compatible with its wishes and ours. That is the best test of how this statement will be judged in the light of day. That is a measure of the importance that those seriously interested in the subject attach to this. We shall achieve a good quality scheme from the base on which we are insisting.
Several Hon. Members rose—
Mr. Speaker: I am sorry that I have not been able to call all hon. Members who are rising. I think that they were called during Question Time today.
Mr. John Butterfill: On a point of order, Mr. Speaker.
Mr. Speaker: The hon. Gentleman was called on Trade and Industry Questions.
Mr. Butterfill: On a point of order, Mr. Speaker. I accept what you say, but is it correct to curtail what is obviously a matter of great interest simply because the Labour Benches are so denuded and—
Mr. Speaker: Order. That is very unfair, because the hon. Gentleman will know that hon. Members on his side had greater opportunities this afternoon.

Girobank
4.38 pm
Mr. Allan Roberts (Bootle): 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 urgent matter, namely,
"Proposals of Girobank management in a secret document to build a new headquarters in the south-east of England as an alternative to the Bootle centre, causing major job losses in Bootle on Merseyside, an area with 30 per cent. unemployment."
The item is specific because the secret report exists and was prepared on the advice of the Government and the Governor of the Bank of England. It is an urgent matter because if the second headquarters for Girobank is built in the south-east of England there would be major job losses in Bootle on Merseyside, which already has massive unemployment. A total of 7,000 people are currently employed at the Girobank headquarters in my constituency and many of those jobs would disappear to the more prosperous south-east.
It is urgent because the report should be published and fully discussed, especially with the Girobank work force and unions and with the community on Merseyside and
everybody else connected with the issue. It is urgent because without a debate in the House the report could be acted upon and a site agreed in secret. That would
strengthen the major divisions that exist already between the north and the south.
It is important and urgent to have a debate so that the Government can come clean. We need to know whether it is a plan to prepare the way for the privatisation of Girobank if the impossible happens and the Tories win the next general election. The proposals are an attempt to stigmatise as militant the work force at Girobank, which has not had a major industrial dispute or strike since it was established in my constituency in the mid-1960s by my right hon. Friend the Member for Chesterfield (Mr. Benn). It is also urgent and important that it should be discussed
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because Girobank is growing. It is a huge success for the country, for Merseyside and for Merseyside's image. It is important that that is not destroyed and that there are not major job losses in this hard-hit area.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"The proposed establishment of another Girobank centre in the south-east of England, the consequence of which could lead to the loss of up to 7,000 jobs in Bootle, an areas with 30 per cent. unemployment."
I have listened with great care to what the hon. Gentleman has said but I regret that I do not consider the matter that he has raised as appropriate for discussion under Standing Order No. 20. I hope that there will be other opportunities for him. I cannot, therefore, submit his application to the House.

Girobank
  BILL PRESENTED
    PROTECTION OF SHAREHOLDERS
    Mr. William Cash, supported by Mr. Graham Bright, Mr. Colin Moynihan, Sir Alex Fletcher, Mr. Richard Ottaway, Mr. Michael Grylls and Mr. Spencer Batiste, presented a Bill to make provision for each public company to establish a shareholders' committee, for the allocation of a director in each public company to such a committee; and to prescribe the functions of the auditor, company secretary and solicitor of each such company in relation to that committee: And the same was read the First time; and ordered to be read a Second time on Friday 20 February and to be printed. [Bill 58.]

    WELSH AFFAIRS
    Ordered,
    That the matter of the Public Expenditure White Paper (Cmnd. 56-II) as it relates to Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.—[Mr. Ryder.]

Leasehold Reform
4.43 pm
Mr. Terry Lewis: I beg to move,
That leave be given to bring in a Bill to amend the Leasehold Reform Acts 1967 and 1979 to prevent the establishment of further leasehold agreements; to establish new formulae for calculating the sale value of an existing lease to an occupier of long lease residential property; to remove from leaseholders the obligation to seek permission of the ground landlord when carrying out improvements to the property; and to establish the right of long leaseholders to obtain insurance and other services from sources of their own choice.
This is the second occasion in just over a year that an amendment to the 1967 and 1979 Acts has been attempted under the Standing Order No. 19 procedure. For similar reasons to my own, my hon. Friend the Member for Gower (Mr. Wardell) made a considerable plea for reform of the Acts a little over a year ago. Like my hon. Friend, I recognise that significant improvements to an archaic law were effected in 1967 and 1979, but, as in most things, the unscrupulous and greedy always find new ways to exploit the ordinary citizen. It is that new exploitation of home owners in my constituency and in the constituencies of other hon. Members from all parts of the north-west and in Wales that moves me to try again to curb the exploiters and to return to home owners the benefits and security which they thought house purchase had given them. Equally, I want to give home owners the freedom to which they are entitled, and to protect them from exploitation which seeks to deny them that freedom.
I return to the subject of leasehold reform again today because of the activities of several estate management companies operating mainly in the north-west. I have
named two of these companies in the House recently and condemned their dubious practices in so far as they concern home owners who are leaseholders in my constituency. Since then the existence of a number of similar companies has been brought to my attention. The unacceptable practices to which I refer, therefore, are clearly taking place over a wide area.
Against that background, the starting point for any debate on this issue has to be the very existence of long leaseholds. It is ludicrous in 1987 for leaseholds originally of 999 years to he allowed to continue. It is even more ludicrous for the law to allow new ones to be created. I hope that this debate will move opinion in the House to a position where such leaseholds will no longer be seen to be acceptable.
Until that position is reached, however, many house owners are currently being subjected to varying degrees of harassment which will be deplored on both sides of the House. It is on these current matters that I wish to address the House today.
The leasehold system, as we all know, militates against the interests of the person whose equity in the land is the greatest. The ground landlord, whose financial interest is minimal, is in the strongest position in law. Unfortunately, there now appears to be a widespread growing abuse of this power. I shall explain to the House what is happening all over the north-west, affecting many thousands of home owners.
Estate management companies, many of them interrelated to each other, are buying up the leasehold interest in homes of unsuspecting owners. The first the home owner knows of that is when he or she receives a
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letter and a questionnaire concerning the property. The letter is usually threatening in tone, and I have a great deal of evidence to show that these letters have caused considerable worry to the elderly, and, in some cases, much younger owner-occupiers. There is even a covert threat in some of the letters suggesting that failure to purchase the lease could render the home owner homeless.
The answers to the questionnaire inevitably lead to estate management companies demanding that the property be insured with an insurance company of their choice. That is denial of the freedom of the individual if ever there was one, and it is clearly encouraged by the archaic clauses enshrined in most of the long leases to which I refer.
The next, and potentially the most costly, demand on home owners is that improvements to the property carried out by them should be carried out only after having obtained the permission of the estate management company—at a price, I might add.
Because many home owners have made alterations to their property, the new companies holding the leasehold are demanding exorbitant sums of money for bestowing retrospective permission. To illustrate this, I should like to refer to correspondence that I have received from a person who has been caught up in the consequence of a change of ownership of his lease.
In February 1985, the person to whom I refer received a letter from the ground landlord that ownership of the lease had been transferred, by sale, to a third party—an estate management company. In April 1986 the new company wrote to the home owner enclosing the now familiar questionnaire and asking for a payment of £400 for the sale of the leasehold, plus £185 legal costs, plus of course VAT. That was on an annual ground rent of £20. In the correspondence the new ground landlords said that they were prepared to consider retrospective consent for alterations done in the past without the permission of the previous ground landlords. They then went on to say that failure to notify any alterations could result in their refusing consent, which would, they threatened, make the property unsaleable.
On 31 May 1986 the house owner wrote to say that an extension had been built in 1984 without application to the then ground landlord. On 6 June 1986 he received a letter demanding £150 to cover the company's fees for considering the question of retrospective permission being given. I am not surprised that the company also said that it was not prepared to enter into any correspondence or discussion concerning the matter. This practice might be just inside the law as it now stands, but I contend that it is a form of highway robbery. At least Dick Turpin had the decency to wear a mask.
The home owner to whom I have referred is awaiting a reply to a letter that he wrote protesting at the amount of money being demanded. He is also being harassed into insuring his own home with a company of the new ground landlord's choice. It is estimated that this will cost him an extra 17 per cent. a year on his premium.
The matters that I have raised today clearly show that many home owners are being denied the full rights of home ownership. They are being denied the right to make improvements to their property on their own terms. They are being denied the choice of insurers and are being harassed into buying the leaseholds by threats of dire consequences. In all this they, the home owners, are not supported and sustained by existing legislation.

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I contend that it is now time to make changes. The House must legislate in favour of the home-owning individual if the property-owning democracy is to have any real meaning. My Bill will redress the balance between home owner and ground landlord. It will establish a reasonable figure for the sale of the lease and limit the costs involved. It will, where the home owner wishes to remain a leaseholder, free him or her from the need to apply for permission to alter, extend or otherwise improve the property. It will give the home owner freedom to choose the insurer of his or her choice.
My Bill will also give security to those who are currently being harassed, sometimes within the laws, which give them too little protection. Parliament should change that. My Bill will help.
Question put and agreed to.
Bill ordered to be brought in by Mr. Terry Lewis, Mr. Gareth Wardell, Mr. Ron Davies, Mr. Robert Litherland, Mr. Lewis Carter-Jones, Mr. Tony Lloyd, Mr. Ken Eastham, Mr. Peter Pike, Mrs. Ann Clwyd, Mr. David Young and Mr. Lawrence Cunliffe.

Leasehold Reform
  LEASEHOLD REFORM
  Mr. Terry Lewis accordingly presented a Bill to amend the Leasehold Reform Acts 1967 and 1979 to prevent the establishment of further leasehold agreements; to establish new formulae for calculating the sale value of an existing lease to an occupier of long lease residential property; to remove from leaseholders the obligation to seek permission of the ground landlord when carrying out improvements to the property; and to establish the right of long leaseholders to obtain insurance and other services from sources of their own choice: And the same was read the First time; and ordered to be read a Second time upon Friday 3 April and to be printed. [Bill 57.]
Opposition Day
[6th ALLOTTED DAY]
Opposition Day

  The City and Industry
  Mr. Speaker: I inform the House that I have selected the amendment in the name of the Prime Minister.
  4.52 pm
  Mr. John Smith: I beg to move,
  That this House, noting the continuing failure of the City to serve the industrial needs of the nation and concerned by the increasing evidence that the City is unable to regulate itself, urges the establishment of a statutory independent commission to supervise financial services, including Lloyd's; deplores the damage to British industry arising from the Government's complacent policy towards takeovers which, by encouraging predators, inhibits investment in capital equipment, research and development, and training; condemns the short-term perspective of the financial market which results in the denial of finance for long-term investment in British manufacturing industry; and calls upon the Government to abandon its irresponsible policies and to recognise that the provision of capital investment in manufacturing industry is essential to economic recovery.
  In this debate today we focus on three interlinked and serious matters of public concern — the failure to regulate the City, the takeover mania, which provides such fertile ground for current scandals, and, the victim of both, British industry. In a challenging editorial on 15 January the Financial Times observed:
  "The central issue raised by the Guinness affair concerns the conduct and ethics of the City of London—it already seems clear that this is the most serious challenge the present system of self-regulation on the conduct of takeover bids has had to face. With each revelation the chances of business being allowed to continue as before grow ever more slim."
  The article continues:
  "Self-regulation can only work if the people being supervised have a sense of obligation towards the system which is greater than their desire to win their own way in any particular case."
  It thus neatly demonstrated some crucial points about the present situation from a standpoint which even the present Government could not criticise as being politically biased against them.
  First, there is a very serious situation and concern should properly be expressed about it. Whatever the Governor of the Bank of England may seek to say in defensive semi-exculpation, it does concern the City of London. Secondly, it challenges the system of self-regulation which still is at the heart of Government policy. I need only quote the Prime Minister at Prime Minister's Question Time a few days ago when she said:
  "we should go further with the present system before we conclude that we should go to a statutory one."—[Official Report, 15 January 1987; Vol. 108, c. 406.]
  I have noticed how apologists of the Government's policies have laid more stress on some statutory aspects of the Government's approach and less on self-regulation as the scandals have deepened. But, as the Prime Minister reminded us, it is still essentially a self-regulatory system and in the case of the takeover code and panel it is wholly self-regulatory.
  Thirdly, the whole basis of a self-regulatory approach is that the obligation to observe and enforce the rules

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  overcomes the instinct for gain. No reasonable observer of the Guinness scandal could have confidence that such objectivity had been demonstrated.
  We therefore argue with force and conviction that the Government should move to establish an independent statutory commission without delay. From the start the Labour party has argued that the enforcement mechanisms of the Financial Services Act were inadequate and we sought in the proceedings on the Bill to give statutory force to the takeover supervision mechanism, at present left on a self-regulatory basis.
  Let us examine some of the salient issues thrown up by the Guinness affair. The most startling thought is that, but for revelations flowing from Mr. Boesky's plea bargain with the Securities and Exchange Commission in the United States, Mr. Saunders might still be riding high and one of the most audacious coups in our financial history might have been accomplished with ease and without penalty. Fortunately, as one revelation tumbled out after another, it is now clear that in the Guinness bid for Distillers a careful plot was laid and executed to gain control of Distillers by fair means or foul—clearly more emphasis on foul — and that the system existing to protect the public failed miserably.
  It all started of course with the former Distillers directors who approached Mr. Saunders as a white knight—to put it mildly, an error of judgment. Not only that, they agreed to pay him the expenses of the Guinness takeover bid. The former directors of Distillers clearly did not rise to their responsibilities. Equally, the directors of Guinness—those in place at the time at any rate—failed in their responsibilities by abdicating control of their company to the ruthless Mr. Saunders. In the bid Mr. Saunders gave undertakings about a new company to be chaired by Sir Thomas Risk and undertook to locate the headquarters in Scotland. The former undertaking was incorporated in the bid under the Stock Exchange listing regulations. I raised this matter at the time with the chairman of the Stock Exchange Council who told me that the council would be satisfied with the proposal by Mr. Saunders, and his variation from his undertakings could be sanctioned by a general meeting of the company.
  In my submission the Stock Exchange Council failed to exercise its responsibilities by permitting the departure by Mr. Saunders from his undertakings and allowing there to he a shareholders' meeting at which, because of his voting power — and when some of the 2·1 million missing shares were used — Mr. Saunders won with ease. The Stock Exchange Council was a pushover for Mr. Saunders.
  Then the takeover panel, the apogee of self-regulation, failed to act effectively when complaints were made to it by Argyll about manipulation of the Guinness share price. That was another pushover for Mr. Saunders. At this time the Department of Trade and Industry thought it sufficient for these matters to be handled by these self-regulating organisations. Because there were no real restraints on Mr. Saunders, he and his confederates—well placed in the prestigious City institutions — were able to operate freely. An interesting insight into the prevailing attitudes is given in Mr. Gerald Ronson's letter to Sir Norman Macfarlane when he returned £5,800,000 to Guinness.
  Mr. Frank Dobson: Marked "swag".
  Mr. Smith: I am grateful to my hon. Friend for his apposite intervention. I quote from the Financial Times of 12 January which gives Mr. Ronson's letter in full Mr. Ronson tells us:
  "Shortly before January 23, 1986, a representative of eminent brokers acting for Guinness called on me to seek Heron's support for the Guinness bid for Distillers. It was explained to me that the general opinion (which I must say I shared) was that it was in Distillers' as well as Guinness's best interests that the Guinness bid should succeed. I was told that the price of the Guinness shares was likely to be distorted because the rival bidders, Argyll and/or its supporters, were believed to be selling Guinness shares short and thereby depressing the market price. I understood that with the approval of the Guinness senior management (and Ernest Saunders in particular — whose skill and integrity were always regarded as of the highest) efforts were being made to support the Guinness share price by persuading Guinness's friends to buy in the market.
  In all this I naturally assumed that the Guinness senior management had had the benefit of the high quality professional advice available to it. It was, in effect, as I understood it, designed as a legitimate corrective to the tactics of the other side. I was told that in the event that Heron suffered any loss it would be covered by Guinness. This did not seem to me at the time to be in any sense unusual or sinister, particularly as it was public knowledge that Distillers itself had agreed to cover the expenses of Guinness in rescuing it from Argyll's bid. So it was agreed that Heron would give support to the extent of £10 million."
  Mr. Ronson goes on to say that that support was increased to £25 million. He continues:
  "It was by then also agreed that in the event of the Guinness bid being successful we would receive a success fee of £5 million. These arrangements were expressly confirmed to me by Mr. Saunders. In due course our invoices were rendered in the total funds mentioned above, and these were, as you will know, paid.
  I have been and wish to be completely frank. I did not focus on the legal implications of what had occurred, not did it cross my mind the City advisers and business people of such eminence would be asking us to join in doing something improper."
  We know better now. The eminent stockbroker referred to at the start of that quotation is said, in the Financial Times of today, to have been Mr. Tony Parnes who is an associate of Alexanders Laing and Cruickshank. Interestingly, the Financial Times also tells us that he was nicknamed "the animal". He also acted as personal stockbroker to various persons, including Mr. Gerald Ronson himself.
  The interesting phrase
  "I did not focus on the legal implications of what had occurred"
  will not have escaped notice. Many people are behind bars for failing to focus on the legal implications of their actions. Inventive though I thought I was as counsel at the
  bar, that never occurred to me as a useful phrase in a plea in litigation. No doubt it will pass into the lexicon of memorable phrases, together with being "economical with the truth".
  At least Mr. Ronson has confessed. But did not many others, apparently eminent or otherwise, also fail to focus on the legalities of their activities? The Guinness affair has shot like a searchlight through the present system of self-regulation and shown it to be hopelessly inadequate.
  Mr. Alan Howarth: The right hon. and learned Gentleman has spent a considerable time describing to the House circumstances of alleged malpractice in the City—[HON. MEMBERS: "Alleged?"]—and those are, indeed, very important points. By contrast, he moved hastily on in an earlier section of his speech in

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  which he called for the establishment of a statutory independent commission. Will he be good enough to tell the House, if not now, perhaps in a few minutes, exactly what the system that he envisages would be, and precisely how and why it would work more effectively to regulate the City than the system that is currently being introduced?
  Mr. Smith: If this is what the hon. Gentleman is genuinely inquiring about, he will have seen the amendments to the Financial Services Bill that were voted down by members of the Conservative party. We argued consistently throughout the lengthy proceedings on that Bill.
  Since then the Guinness affair has shown how inadequate the present arrangements are. The Government's response has been to talk tough, but they have come up with one new firm proposal. The maximum sentence for insider dealing is to be increased from two to seven years. It may be that that is wise, although I should be surprised if such a sentence were ever imposed. However, it is almost totally irrelevant to our concerns. The notion that conspirators will pause in the ante-room of crime because of the possibility that they might get five years instead of two is simply not credible. For the most part, they believe that they will be undetected. They have good cause to believe that they will be undetected. On past showing, that belief is justified. What we need is not the window dressing of irrelevant sentences but an effective system of statutory regulation and detection of abuse.
  In the past few days there has been rustling in the undergrowth about changes in the takeover panel and the code. Perhaps as one of his offerings today the Secretary of State will make tentative noises. I remind the House that the Labour party sought to give statutory force to the code in an amendment to the Financial Services Bill, which the Government voted down. In that context, may I ask the Secretary of State why, in 1984, rule 37 was dropped from the code? That rule prohibited anyone.
  "with a commercial interest in the outcome"
  from buying and selling shares during a hid unless approval was obtained from the panel. Such a rule seems highly apposite to the activities of Mr. Meshulam Riklis, the distributor of Dewar's whisky in the United States, about whose activities Argyll complained to the takeover panel. Needless to say, the complaint was rejected. Why was such a rule abandoned?
  Mr. Anthony Beaumont-Dark: I think that most of us agree with the right hon. and learned Gentleman that some of the things that have gone on in the City are not just unacceptable but disgraceful to any right-thinking person. However, the right hon. and learned Gentleman, in looking at the Securities and Exchange Commission, assumes that those things could not happen if we had one. Mr. Boesky was unmasked after four years and Mr. Levene after two years. Why would any statutory system be any different when the crooks in our City were unmasked after a very few months?
  Mr. Smith: As the hon. Gentleman knows, that was after information was received. I would not advocate something precisely the same as the SEC simply because we do not have the conflict between federal and state laws to handle which there is in the United States. Opinion has been moving strongly, especially in the more sensible parts
  364
  of the City, in the direction of an independent statutory system in the United Kingdom. I do not believe that the takeover panel and code can rest any longer on a non-statutory base. That was the point that I was addressing.
  I should like to ask the Secretary of State about the scope of the Department of Trade and Industry inquiry. Will it cover the activities of the trustees of Distillers' pension fund? It is widely said that, following Guinness establishing control, the pension fund bought Distillers shares at a high price, perhaps as a way of indemnifying those who had bolstered the price at the instigation of Guinness. They bought well above the ruling share price and, of course, since then the price has fallen steeply. The losers will be the employees who are the beneficiaries of the fund. I should like the Secretary of State to tell us whether the inquiry covers that and whether the beneficiaries' losses will be made good.
  Clearly, there was some sunny optimism on the part of the Government that their proposed new system would deal effectively with the City. That confidence has been waning. Let me remind the House of how that confidence was expressed as long ago as March 1986, some time before these events occurred. I draw attention to an interview that the Prime Minister gave, which is reported in The Listener of 20 March 1986. The right hon. Lady was interviewed about high salaries in the City, and the article states:
  "the Prime Minister herself admits: On salaries in the City, I am the first to say this does cause me great concern. I understand the resentment. And if I feel strongly about what they are taking—"
  note "taking"—
  "in the City compared to what Cabinet Ministers are taking then look at how the people who are struggling to get work feel. But I think it will change later this year when we get this terrific competition and all the fresh air in the City."
  It is at least worth asking if confidence in that "terrific competition" has been justified.
  I want to consider the position regarding mergers, monopolies and takeovers. The frenetic and highly profitable activity in the City has of course been fuelled by the Government's complacent policy on takeovers. The essence of the Government's approach, as I understand it, is that referrals should only be made on competition grounds and that the shareholders alone should decide the fate of important companies. The Opposition completely reject that approach. However, we observe that, even if the decision were properly left to shareholders alone, it would be difficult for them to reach sensible decisions if markets can be rigged as easily as the Guinness case demonstrates.
  The Government seem unwilling or unable to grasp the fact that those affected by takeovers are not simply shareholders. Long-standing and dedicated employees and communities to whose prosperity crucial industrial companies are vital are also affected. They are often affected more directly and more adversely as these companies are suddenly taken over. That is why it is important that wider considerations including the interests of employees and the effect on our industrial economy must be included in any sensible policy on monopolies and mergers, and that is what the Opposition advocate.
  The effect of unrestrained takeovers goes to the centre of some of our industrial problems. It is too easy for the acquiring company to take the takeover route as a substitute for an investment, which takes time and involves risk. By maximising short-term cash flow, funds can be found to buy up companies made vulnerable because they

  365
  have taken the long-term view. Small and medium sized companies in particular which have made long-term capital investment, put money into reasearch and development, invested properly in training, are given a low rating in the stock market. That leaves such companies wide open to the predator. Perhaps worst of all, the need to boost the share price by inflating dividend payments to keep the predator at bay deters small and medium-sized companies from taking the long-term view that the management wishes to adopt.
  When takeovers absorb important regional companies, the relentless drift to the centre in Thatcher's Britain is accentuated and business confidence in the regions is totally undermined. None of these vital issues seems to concern the Government. The Government simply leave it to the shareholders and let the devil take the hindmost. Those who gain from takeover mania are the City institutions, while those who work in British industry and the communities which depend upon it frequently suffer.
  Mr. Stephen Dorrell: The right hon. and learned Gentleman has described at some length what he believes to be the shortcomings of the takeover system as a discipline on incompetent or lazy managers.
  Mr. Smith: Not at all. The hon. Gentleman has misunderstood me.
  Mr. Dorrell: The right hon. and learned Gentleman said that he thought that takeovers would encourage short-term perspectives and weaken the possible victim companies. What alternative discipline would he propose to the threat of takeover? What discipline would he propose to encourage managments to make effective use of the assets under their control?
  Mr. Smith: I find it hard to imagine that the hon. Gentleman, whose attention to these matters I much respect, was able to misunderstand what I was saying. The whole thrust of my argument is that the threat of a takeover does not act as a discipline to make management more efficient; it acts as an incentive to make management more short-sighted because management is frightened of the predator at its elbow. Therefore, it must keep a higher share price than the company would like. It was not the threat of a takeover that made Pilkington one of the best companies in this country; it was the threat of a takeover that might have caused damage to the company. It is simply good fortune that that threat has been relieved.
  Mr. Dorrell: Will the right hon. and learned Gentleman give way?
  Mr. Smith: No, I have already given way to the hon. Gentleman and I cannot take the risk that he will misunderstand me so comprehensively again.
  Mr. Dorrell rose—
  Mr. Smith: British manufacturing industry in particular has borne the brunt of the damage caused by the Government's economic policies. Manufacturing investment, despite all the largesse of North sea oil with which this Administration have been blessed, is still 17 per cent. down on the 1979 figure. Manufacturing output, after seven years of Tory Government, is still 4 per cent. down. Our trade deficit in manufactured goods was announced today as almost £6 billion for 1986 and it is predicted to rise to £7·5 billion in 1987. I remind the House that under the previous Labour Government, in 1979 there was a
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  surplus of £2·7 billion on the balance of trade and manufactured goods. For the first time in modern economic history, we are in deficit in the balance of trade in manufactured goods. If for nothing else the Prime Minister will be remembered as the first British Prime Minister to take Britain into a deficit in the balance of trade and manufactured goods.
  Without vital capital investment in British industry, that trade deficit will never be corrected. Nor will we create the wealth that we need to create a civilised society and to pay our way in the world. This Government have abandoned responsibility for the employment of our people. They have equally abandoned the responsibility for ensuring that industry receives the capital investment that it requires.
  The figures are bad enough at present. They will get even worse as the blip caused by the ending of capital allowances works through. Those are the underlying realities behind the candy floss economy that the Government have promoted. There is a declining and debilitated manufacturing base; a deepening north-south divide which the Government do not even admit exists let alone profess to remedy; wickedly high unemployment; misery and lost opportunity for millions of our fellow citizens, including 1·25 million of our young people.
  It is clear that the Government have no policies to get Britain back to work or to rebuild our industry, let alone to bring order and decency back into our financial system. At the heart of the Government's policy is a distorted sense of values. Mr. Ivan Boesky, when he was riding high, gave a lecture to business students in the United States. He told those who might have had some conscientious reservations:
  "Greed is all right by the way. I want you to know that. You can be greedy and still feel good about yourself."
  That has, unfortunately, too obviously been taken as the motto by those favoured by the Government, those who have not only claimed but received huge salaries and also received enormous endowments from tax reductions. Their good fortune, as we have seen, has not diminished their avarice by one whit. They seek more and more, to the extent of not only bending but breaking the criminal law. It is time for others to be the beneficiaries of Government—those who work to build our industry, those who care for our people and those whose purpose it is to build a productive and decent society.
  5.18 pm
  The Secretary of State for Trade and Industry (Mr. Paul Channon): I beg to move, to leave out from "House" to the
  end of the Question and to add instead thereof:
  "deplores the irresponsible attacks on the City by Her Majesty's Opposition which ignore its massive and continuing contribution to meeting the long-term financial needs of British manufacturing industry and business and more generally throughout the country to the balance of payments, and to employment in the United Kingdom: notes that investment growth has averaged 4·5 per cent. per year during this Parliament; notes with approval the consistency of the Government's mergers policy; and applauds, in particular, its firm action in establishing a regulatory framework for the City and its determination to root out abuses."
  I begin by making it clear that we utterly reject the Opposition motion. The House is by now familiar with the Opposition's attempts to paint the blackest possible picture, to run down our industries and to leap upon and exaggerate every item of bad news that they can find. In this debate, we are discussing a sector of the economy that

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  is not just self-evidently successful but in which Britain leads the world. To most people, that should be a matter of pride. To the Opposition, it is merely something to belittle and to undermine.
  Of course I fully accept that there are serious grounds for concern, with which I shall deal later. Some of the recent revelations of what has happened in some well-publicised cases in the City are worrying and damage the City's reputation. That is agreed by hon. Members on both sides of the House. The Government are determined that each case, and others that come to our notice, will be rigorously investigated and offenders will be punished with the full weight of the law. But to portray, as some Opposition Members do, everyone who works in the City as a shark or a charlatan is offensive to hundreds of thousands of honest, hard-working people. It is grossly irresponsible and against the national interest.
  No one is keener than those who work in the City to see offenders brought to book. [HON. MEMBERS: "Come on."] The scoffing from Opposition Members helps to make my point. Those who work in the City know the disproportionate harm that a few individuals can do. Unless they are brought to book, they threaten to besmirch the reputation of the City of London on which so much of its business depends.
  The Opposition motion talks of the failure of the City to serve the nation. The financial services industry employs more than 1 million people; it accounts for between 5 per cent. and 6 per cent. of our entire national product; and in 1985 its earnings for the balance of payments were more than £7·5 billion. The Opposition try to dismiss that contribution as a failure to serve the nation.
  It is not just the size of the financial services industry that makes it such a major asset to the country. The accumulated expertise, the range of financial services available in one place and the ability to react quickly to change and to meet the requirements of a vast range of overseas customers have made the City of London the leading financial centre in Europe. As rapid advances in telecommunications lead to a 24-hour global market in financial services, London, with Tokyo and New York, will form the triangle at the heart of the financial world—[Interruption.] I am sorry that hon. Members do not like hearing good news about the City. No doubt it spoils their case.
  Mr. Kevin Barron: What are the Government doing about it?
  Mr. Channon: If the House will give me a hearing, I shall explain exactly what we are doing, what we have done and what we intend to do — [Interruption.] For some extraordinary reason, the Opposition do not seem to want to hear this. They asked for the debate, but they do not want to hear the answer.
  The City has already made the most of its strengths to develop itself as a world centre in several major sectors. It is already the largest world centre for foreign exchange dealing — £60 billion a day. It is the world centre for Eurobond trading, with £220 billion of new issues a year and five times that volume of trading. It is the largest centre of international bank lending, with more than £500 billion a year.
  Nor is the City just a direct contributor to our national wealth. It has a vital role — here I answer the point
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  made by the right hon. and learned Member for Monklands, East (Mr. Smith)—in supporting the rest of British industry — [Laughter.] The right hon. and learned Gentleman laughs; that is interesting. In 1985, £6 billion of capital was raised for industry on the stock exchange; in 1986, about £7 billion was raised. The venture capital industry, which barely existed when there was a Labour Government, raised about £300 million for British unquoted companies in 1985 alone. The business expansion scheme introduced by this Government raised nearly £150 million in 1984–85. At the latest count, more than £70 billion of loans were outstanding from the banking sector to industry and commerce in the United Kingdom.
  Mr. Allan Rogers: All to private industry.
  Mr. Channon: Opposition Members do not like hearing this. Banks are also making available finance to smaller companies in new ways that recognise their special needs. The full range of industrial and commercial risks are insured through London's insurance markets.
  No financial services industry in the world can match the scale and range of these services to the rest of industry. Many foreign firms seeking to set up manufacturing facilities abroad have been attracted to Britain because of the range of services offered by the City of London. That is the context in which the debate should be set.
  Mr. Jack Dormand: Even if we accepted those figures, how does the Secretary of State account for the fact that, after eight years of Conservative Government, manufacturing investment is still 17 per cent. lower than it was when they took office?
  Mr. Channon: I shall deal with manufacturing investment, but, as the hon. Gentleman has challenged me on it, he might be interested to know that output is 14 per cent. higher than the 1981 trough — [Interruption.] Profits and profitability are up — [Interruption.] When there is good news, the Opposition try to shout it down. They do not like to hear it. Unemployment is coming down, growth is going up, output is going up and exports are going up. But the Opposition scoff at that. They do not like good news.
  The Opposition's behaviour on this subject has been a catalogue of hypocrisy. It was a Conservative Government who first proposed to make insider dealing illegal—in
  the Companies Bill of 1973. That Bill lapsed because of the general election of 1974. There then followed five years of Labour Government — five wasted years in which they failed to tackle the problem. It required a Conservative Government to take action to make insider dealing a criminal offence in the Companies Act 1980. Having conventiently forgotten their failures, the Opposition try to make capital out of the few prosecutions that have taken place. Again, they fail to mention that this Government introduced unprecedented powers for the investigators of this crime as soon as it became apparent that convictions were difficult to obtain because of the high level of evidence and proof required. Those powers, which include the right to question witnesses on oath and compel them to answer or face punishment for contempt of court, have been described as draconian, even by the Opposition spokesman in another place.
  Mr. Anthony Nelson: My right hon. Friend is right to draw to the attention of the House the many

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  serious measures that the Government have taken to deal with insider trading, but may I mention one area where strengthening would be welcomed by hon. Members on both sides of the House? The Securities and Investments Board, which is the new watchdog body for the City, is expressly denied the power to investigate or to bring prosecutions in cases of insider dealing. It must seem incredible to the public at large that that body, which ostensibly has those powers, cannot look into such cases or instigate actions. Will my right hon. Friend reconsider the matter?
  Mr. Channon: Of course, I will consider it. I shall gladly consider anything that my hon. Friend says. He must agree that there has been no lack of effort by the Government during the past few months to bring people to book for insider dealing. Indeed, in America, our powers would be in breach of the constitution. During the passage of the Financial Services Act 1986. we heard not a word from the Labour party suggesting that they were insufficient. Moreover, we brought forward the implementation of the powers so that they took effect within one week of the Act becoming law. Royal Assent was granted on 7 November. On 14 November, I made an order which came into force on 15 November, and on the same day I appointed inspectors to investigate a case. Our powers are proving to be exceedingly effective.
  In addition, last week I announced that the Government would table an amendment to the Criminal Justice Bill to increase the penalty for insider dealing from two years to seven years' imprisonment, thus making it an arrestable offence. The maximum now is seven years. When the right hon. Member for Bethnal Green and Stepney (Mr. Shore) was Secretary of State, it was nothing. In trying to attack the Government's record on this matter, the right hon. and learned Member for Monklands, East does not have a leg to stand on.
  Mr. John Smith: Bearing in mind the fact that the Government inherited a Labour Bill to make insider dealing a criminal offence—I hope that that is accepted—may I ask the Secretary of State whether he takes satisfaction from the fact that, since 1980, there have been nine prosecutions for insider dealing and five convictions while at the same time there have been 138,000 convictions for low-level social security fraud? Does that reflect the Government's priorities?
  Mr. Channon: No, and the right hon. and learned Gentleman knows it. He tries to attack the Government on insider dealing, but he is well aware that the Conservative party brought in a Bill in 1973, which fell at the Dissolution. Five years later, the Labour party still had not enacted it. Yet only one year after the Conservative Government came to office, insider dealing became a criminal offence. That shows that we put it at the top of the list, while the Labour party put it at the bottom. That illustrates its scale of priorities. It is easy to talk loud, but Labour did not act when it had the chance.
  Our determination to stamp out malpractice and abuse has led to a concerted effort, drawing on the resources of the Treasury, the Home Office, the Law Officers, the Director of Public Prosecutions, the Bank of England, the police and the DTI. I shall not read out all the measures that we have taken in the past few years, but mention only
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  the Companies Acts 1980 and 1981, the Insolvency Act 1986, the Building Societies Act 1986 and the Banking Bill now going through the House.
  Last week, I announced the results of Sir Patrick Neill's inquiry into Lloyd's. The Government keenly await Lloyd's response to the report. By the beginning of October last year, the fraud investigation group, which was set up two years ago, had seen 121 cases through to conclusion, resulting in 100 convictions or guilty pleas. The Criminal Justice Bill implements the great majority of recommendations of Lord Roskill's committee on commercial fraud. A serious fraud office will be set up to bring together experts from all the relevant agencies and arm them with powers similar to those available to DTI investigators under the Financial Services Act—powers, incidentally, that the Opposition now seek to weaken through amendments tabled in Committee.
  Mr. Chris Smith: Clearly, the Secretary of State has not read the proceedings of the Standing Committee on the Criminal Justice Bill. The Opposition have given full support to the aims of the establishment of that office and, indeed, have secured a wide measure of agreement between the two sides represented on that Committee.
  Mr. Channon: I have a list — I hope that this is in order, Mr. Deputy Speaker—of five amendments tabled by the Opposition that would have the effect of weakening the powers of this proposal. Indeed, one amendment is designed to weaken the offence of knowingly destroying documents. It is quite extraordinary that the Opposition should speak with two voices about these matters.
  Mr. John Smith: As the Secretary of State appears to be happy with progress made with the fraud investigation group, will he tell us when Mr. Peter Cameron-Webb will be brought to justice?
  Mr. Channon: As the right hon. and learned Gentleman will know, I answered a question of his on that very point last week. I have already been in touch with my right hon. and learned Friend, but it is a matter for the DPP, as the House well knows.
  The Financial Services Act, for the first time, sets up a comprehensive and effective structure of regulation for the City. There have been widespread misunderstandings of the system of regulation that that Act creates. It has been suggested that it is a purely self-regulatory system and that the Government are proposing simply to leave it to the City to police itself. That is simply not true. The system that we are setting up is backed by a framework of laws that will ensure that the system works properly. It will be a criminal offence, punishable by up to two years in prison, to conduct investment business without authorisation. What is more, the definition of investment business has been drawn sufficiently wide to extend regulation to a number of areas not previously covered.
  Secondly, rules made under the Act will carry the force of law and will give a civil remedy to anyone who suffers loss as a result of a breach. These rules will cover such matters as conflicts of interest, the content of advertisements, the segregation of clients' money and a host of other matters. If the firm concerned has gone out of business, compensation will be payable from a fund set up under the new regulatory system. For the first time, market manipulation will be a criminal offence, punishable by up to seven years imprisonment.
  Mr. D. N. Campbell-Savours rose—
  Mr. Channon: I really must press on. I have given way about four times already. If the hon. Gentleman will let me continue, I may give way later.
  The system of control that the Act establishes does, of course, take advantage of the flexibility and proximity to the market of practitioner-based regulation, but it is reinforced by a strict statutory framework. Indeed, on Third Reading the hon. Member for Dagenham (Mr. Gould) said that he thought it was right to strike a balance between statutory regulations and a statutory framework and a substantial element of self-regulation. The Act achieves that balance.
  Of course, the Opposition have been calling for an independent statutory commission rather than the designated agency for which the Act provides. The Opposition have signally failed—with respect, the right hon. and learned Gentleman has failed today—to name a single advantage that an independent commission would have over our proposals. What matters more than any argument about the private or public sector status of the designated agency is the powers that it is given to do the job. The agency has been given those powers under the Financial Services Act— with statutory force, which means with real teeth.
  Mr. Robin Cook: As the Secretary of State stands on the powers given to the SIB, I remind him of the point that was put to him by his own Back Benchers about the powers to deal with insider dealing, which he undertook to consider. When that very amendment was tabled in Committee on the Financial Services Bill his Minister resisted that power being passed to the SIB precisely because it was not a statutory agency.
  Mr. Channon: The hon. Gentleman and the whole world knows that those powers are available elsewhere and are being effectively used at this time. Frankly, the idea that there is a lack of powers on insider dealing is preposterous; the House knows that very well.
  The right hon. and learned Gentleman asked me about the role of the takeover panel. Of course, as the House will expect, we have given further thought to the concerns expressed about the conduct of takeovers. I understand from the Governor of the Bank of England that the takeover panel will be meeting shortly to consider changes to the takeover code and other actions to strengthen its application. I welcome that. I have agreed with the Governor that all of us in Government concerned with City regulation—[Interruption.] If Opposition Members will listen to me, they will find that I have certain things to tell them. The regulatory system that we are establishing should reflect our considerations on how we can best support the panel further in its important job of regulating takeovers. To that end, the Bank of England, my Department and the Treasury, in conjunction with the takeover panel, the stock exchange and the SIB, will be looking at four main areas. First, in the light of the panel's immediate plans, they will consider whether additional action by any of us would be helpful in relation to disclosure of material interests, indemnities and nominee shareholdings.
  Company law is particularly relevant. First, we shall examine both its relationship with the code and whether it is desirable to amend the relevant provisions of the Companies Act. Secondly, we need to ensure that any
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  information suggesting that matters require investigation is passed rapidly to the body most able to take quick and effective action and to ensure that the investigative powers available under the Companies Act, the Financial Services Act and the Banking Bill are used to best effect to support the panel. We shall examine the arrangements for cooperation between the takeover panel, the stock exchange—particularly its surveillance department—the SIB, my Department and the Bank of England.
  Sir Peter Hordern: Will my right hon. Friend give way?
  Mr. Channon: If I may finish my passage on the takeover panel, I shall of course give way to my hon. Friend.
  Thirdly, we shall consider how best to reflect the provisions of the takeover code in the rules to which investment businesses will be subject under the Act. Finally, at my request the Governor, with the chairman of the panel, will review whether it has both sufficient resources and adequate representation of those with responsibility for the regulation of investment business under the Financial Services Act. The panel has much more work in hand. Our aim is together to produce a package of measures that will strengthen the existing regulation, retain the speed and flexibility of the system of regulation and enable the market to operate freely and fairly. One thing that I wish to make quite clear is that the Government are determined to enforce high standards. I underline what the Governor said on Monday — if practitioners do not respect this system, we shall replace it with one that makes greater use of statutory powers and sanctions.
  Sir Peter Hordern: Bearing in mind what my right hon. Friend said about the powers of the takeover panel and the additional assistance that the Government will give it, will he consider also disposing of the old system of nominee shareholdings? It is time that beneficial share owners are registered. Whatever may be the administrative convenience of having them in nominee shareholdings, it is greatly outweighed by the right of companies to know who their shareholders are. That would greatly ease the difficulties of my right hon. Friend's Department.
  Mr. Channon: My hon. Friend will recall that I said that I would ask the review to examine whether additional action would be useful in relation to disclosure of material interests, indemnities and nominee shareholdings. I think that, certainly in relation to takeovers, I have covered the point raised by my hon. Friend.
  Sir Peter Tapsell: When the four different areas are being examined in connection with the takeover panel, can consideration also be given to the desirability of giving statutory powers to the panel to require individuals and companies to give evidence, both orally and in writing, on oath? It is the lack of power to demand evidence on oath that has, I believe, weakened the panel. I have reason to believe that in the past its members have not always felt that they were being told the truth.
  Mr. Channon: I shall draw my hon. Friend's remarks to the attention of the review body. I do not exclude any solution to the problem, and will bear his remarks in mind.
  I want to say a word about mergers. The Opposition have become fond of talking about merger mania. I assume that that means that they are, in general, against

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  them. Indeed, the Labour finance and industry group's latest document — to which the hon. Members for Dagenham and for Livingston (Mr. Cook) contributed—calls for a merger policy that is
  "either neutral or has a built-in bias against concentration."
  Yet it was not so long ago that the Labour party believed that mergers were the solution to every economic ill. Those of us who have been in the House a long time will remember that it even set up the Industrial Reorganisation Corporation specifically to persuade, cajole and, sometimes, coerce companies into mergers. I shall not go into the details as they are unhappy memories.
  In fact, of course, mergers and takeovers are in themselves economically neutral. They are one of the main ways in which the structure of industries and the management of industrial and commercial assets adapt to changing needs. It is sometimes necessary for them to adapt. That is beyond doubt, especially at the present time of accelerating industrial and technological change.
  Of course I recognise that the interests of the parties to a merger and their shareholders can diverge from those of the economy as a whole. That is why, with the support of all parties, there exist powers to refer mergers which meet the statutory criteria to the Monopolies and Mergers Commission. It is common ground, too, that mergers that significantly restrict competition may require examination.
  We are urged to take a broader view and be more ready to refer mergers on largely unspecified grounds of public interest. I can assure the House that I have learnt one thing—nothing could be easier or more popular than for the holder of my office to refer each and every large and controversial merger to the Monopolies and Mergers Commission. I suspect, however, that the commission's findings would often come as a salutary shock to those urging referral. I well remember the criticism, in this House and outside, that the policy pursued by my predecessors—from both sides of the House—on merger references was arbitrary and unpredictable. I know that that view is strongly held in industry, as I said earlier.
  I do not rule out the very occasional case that may give real ground for public concern that is not related to competition. The Elders bid for Allied is a case in point. It was the first major example in the United Kingdom of a high-leveraged bid involving the planned break-up of a major industrial company.
  The right hon. and learned Gentleman and others underrate very seriously the value to industry of predictability in merger policy and the chaos that can result if Ministers intervene on grounds more appropriate to the shareholders.
  Mr. Tony Favell: When objecting to a merger, should we not remember that often the target company has itself previously taken over companies, and that its greatness may well have come about through merging with companies less successful than itself and through taking over companies not only in this country but abroad?
  Mr. Channon: My hon. Friend is absolutely right; that often happens.
  The BTR bid for Pilkington, which the House will remember well, raised very serious issues of corporate philosophy and style, industrial structure and research and development philosophy. I had no basis for believing that I — or, with great respect, the MMC — was better
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  qualified to decide on them than the shareholders, who had every incentive to make the right long-term judgment. What I do know is that intervention by me could have prolonged for months the uncertainty which was resolved in days by the market.
  Of course, the last word has not been spoken on merger policy. My Department's review of policy on mergers and restrictive practices policy will continue. I should have been failing in my duty had I allowed myself to be deflected and had referred to the MMC a merger that raised no issues of competition or of anything else riot perfectly appropriate for the shareholders to judge.
  Mr. John Fraser: There are two tests in the Fair Trading Act—one is competition and the other the public interest. Why does the Minister always ignore the public interest?
  Mr. Channon: Of course I must consider the public interest. I said that cases would primarily be referred on competition grounds, and that has been the practice since 1984.
  The next charge that has been levelled against the City is that of short-termism. I accept that there is a serious point here, which merits less partisan treatment than Opposition Members give it. There is a widespread feeling that the major investing institutions, whose own short-term performance is closely monitored, look too much for short-term profit and under-value expenditure on research and development, training and investment. It is said that, as a result, industrial managers, fearful of the threat of takeover, cut back on such expenditure and concentrate exclusively on the day-to-day share price.
  The evidence on that is mixed. A number of companies with high research expenditure also command high market ratings. The institutions do not always take the quick profit in a takeover; Woolworth's is a case in point. Many of the shareholdings of pension funds and insurance companies are kept for long periods. Often, it is the underperforming managers who feel under most short-term pressure, and that may be no bad thing.
  For industrialists who are confident of their future strategy for their companies, but feel that it is not understood by their investors, I suggest that they take the advice of the chief executive of the Prudential Corporation, which owns 3·5 per cent. of United Kingdom equities:
  "If boards of directors have told us what they are doing, we would normally support the incumbent management in a takeover bid."
  Very often, the remedy is better communication.
  I warmly welcome the establishment by the CBI of its City industry task force, with the object of promoting better understanding. I also warmly welcome the work currently being undertaken by the Accounting Standards Committee with a view to producing an agreed accounting standard dealing with research and development. I hope that that will be within the year. That would require the disclosure in company accounts of expenditure on research and development for the financial year reported on.
  I am less convinced by some of the more radical remedies that have been proposed for the City's alleged short-termism. Changes in the tax status of the institutions and curtailment of the rights of shareholders would have repercussions far beyond the immediate target, and the case for them has not been made.
  Mr. Tim Smith: Does my right hon. Friend agree that there are double standards in industry on this matter? The director of an industrial company will say that the market is taking a short-term view of his company, but will also wear his hat as a pension fund trustee and encourage his pension fund managers to improve their performance.
  Mr. Channon: My hon. Friend, as so often in these matters, has put his finger on a problem.
  The Opposition motion claims that the City has failed the nation. It has not. It has served, and continues to serve, the nation well as a major industry in its own right and as a provider of a unique range of services to the rest of industry. The attempts of the Opposition to blacken its name with such phrases as "a spiv's paradise"—used by the Leader of the Opposition — and "a sleazy undercurrent of corruption" — used by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—are a disgrace and damaging to the nation.
  I do not accept that either of those phrases bears the remotest resemblance to the truth. The overwhelming majority of those who work in the City are honest and hard-working. They are fully justified in finding such language deeply offensive. As in any profession or trade, there exists a minority of people who break the rules, and the Government are determined that they should be identified, rooted out and punished.
  Last week, the right hon. Member for Sparkbrook stated in the House that the Government were
  "reluctant to act against City fraud".—[Official Report, 20 January 1987; Vol. 108, c. 768.]
  We are used to the right hon. Gentleman's distortions and twistings of the truth, but with that statement he reached new depths. I challenge him or any of his colleagues to produce evidence of any case where abuse has occurred and the Government have failed to act. If they cannot do so, that statement should be withdrawn.
  The Government are doing all in their power to protect and maintain the good name of the City. I urge the House to accept the amendment.
  5.50 pm
  Mr. Ian Wrigglesworth: The House will be aware that the events of recent weeks have had considerable influence on the country's opinion of the City. It appears from the Minister's speech and from the Government's recent actions that they too have recognised this.
  Before coming here I worked in the City for National Girobank and before that for the Midland Bank, and at present I advise Barclays Bank, so I have no hesitation in saying from my experience that the City plays a very important role, not only in the way emphasised by the Minister, that is, in its contribution to overseas earnings, but in providing a service to millions of people, in insurance, banking and other spheres, that is wholly beneficial. However, it is no good the City minimising the scale of what has happened. I fear, from the remarks of the Governor of the Bank of England, reported in the press this morning, that he and some others are seeking to do that. To claim, as he did in his speech to the Institute of Bankers in Scotland, that Guinness is not a City scandal is to put his head in the sand. When I consider the number of City institutions — Morgan Grenfell, Ansbacher,
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  Alexanders, Laing and Cruickshank and others — involved in this business, I wonder how one can describe it as not being a City scandal.
  I have found, particularly among some of the older inhabitants of the City, a complacency about the current situation which is deeply worrying.
  Mr. Beaumont-Dark: The hon. Gentleman is virtually accusing the Governor of the Bank of England of being complacent. Has the hon. Gentleman not noticed a letter which has gone out today to all merchant banks in which the Governor says that unless there is tighter control and self-discipline he will seek statutory powers? How can he accuse the Governor of being complacent when he says that?
  Mr. Wrigglesworth: I regret that it has taken him so long to become aware that control in some of these apparently widely respected institutions is so lax as to allow the sort of things that have been happening in corporate finance divisions and merchant banks. As I pointed out in Question Time the other day, when the chief executive of Morgan Grenfell, who has been responsible for the supervision of that bank, is a former employee of the Bank of England and when the director of the corporate finance division of that bank is a former director-general of the takeover panel, I feel that I am not being unfair in saying that the rot has gone a very long way in terms of both supervision and the atmosphere throughout the City.
  One need only look at the sort of remark made this morning in The Times by the city editor, Mr. Kenneth Fleet, when he says:
  "There is nothing new about merchant banks and stockbrokers sailing as close as possible to the wind in takeover situations"
  to know what I mean. This is the trouble, that everyone expects these people to "sail close to the wind." It is fairly evident from what has happened in recent weeks that they have been sailing not only close to the wind but well beyond it. We want the City to thrive and make a contribution to the economic life of our country, but many of us fear that there is a lot more to come because in the City an atmosphere has developed: making a fast buck and greed are the order of the day. This attitude is most regrettable and must be rooted out.
  The whole of the recent actions of the Governor of the Bank of England raise starkly what has long been a question for me: what is the role of the Governor and of some of the other City bodies, and who is responsible for supervision? I was sorry to hear the Secretary of State say that he was drawing in the Governor in the way that he mentioned, not because of any personal antagonism on my part or anything of that sort but because I have thought for a long time — and have said so here on previous occasions — that it should not be the role of the central bank to supervise the City. We have the Banking Bill and the responsibilities clearly lie in that direction. There are others who should be responsible for the supervision of other parts of the City. It is not the responsibility of the Bank of England.
  Mr. Beaumont-Dark: Why not?
  Mr. Wrigglesworth: I am sure that hon. Members on the Government Benches will agree that there are others who are responsible. In my view, the supervision of the City is too fragmented and needs to be concentrated in a way that it is not planned to be at the moment.

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  The sort of atmosphere that has built up in the City is demonstrated by another facet of the Guinness affair. Mr. Olivier Roux, the finance director of Guinness, was paid the magnificent sum of £6,000 in director's fees for his work at Guinness.
  Mr. Beaumont-Dark: Was he not worth it?
  Mr. Wrigglesworth: I will come to his worth and his payments in a moment. It raises questions about how the gentleman was remunerated. We know that he and a substantial number of other members of staff of Guinness were employed by Bain and Co. to whom Guinness paid £8 million for their services. What a curious way for a major corporation in this country to behave. Has it anything to do with the taxation of the income of the people working in Guinness and other such companies? I wonder whether the payments were made in the Cayman Islands or in some offshore tax haven so as to avoid taxes here. That sort of practice is not unknown in the City and it is the sort of thing that breeds antagonism in ordinary people who do not have the benefit of tax lawyers and accountants, who make it possible for people earning very high salaries to avoid the taxes which they should be paying and which other members of the community are paying. It is all part of this rotten atmosphere that has built up in the City over a period of years, an atmosphere that needs to be changed.
  On the question of supervision and the role of the Government in all this, it took five years from the commissioning of the Gower report in July 1981 for the legislation envisaged in that report to be enacted, as it was last October. It took two years from November 1983 to December 1985, after the publication of the Gower report, to consult and then to publish the Financial Services Bill. That was two years during which hon. Members on both sides of the House were pressing Ministers about their delay in bringing forward proposals following the publication of the report. It took five years to get the legislation on the statute book. It is intended to give the delegated powers to the Securities and Investments Board only in July of this year, although we hear that that may be brought forward. That is dilatory progress on this important matter. One must also take into account the fact that the former Secretary of State for Trade and Industry made a statement to the House removing the stock exchange from the action that was taken against it in the restrictive trade practices court in July 1983.
  The Government bear a major responsibility for the mess that we have got. Here we are, with the big bang having taken place last October as a direct consequence of the former Secretary of State removing Stock Exchange action from the restrictive trade practices court — in order, I may say, to protect single capacity rather than to break it up, as subsequently happened—but because of the dilatoriness of the Government we have not yet got the Securities and Investments Board in action or the provisions of the Financial Services Act 1986 in force. They should have been in place before the big bang took place. It is the Government's fault that that is not the case.
  Sir Eldon Griffiths: While the hon. Gentleman is on the subject of delay, does not he recall that when the Conservative Government led by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) left office, they had introduced a measure to deal with insider trading? That fell with the election and during
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  the next five years the Government who were in power did nothing about it. At the end of that Government's period in office the Lib-Lab pact was in place and the hon. Gentleman's party claimed that it had profound influence on the Cabinet of the day. How is it that it did so little to achieve the enforcement of that much-needed legislation and how can the hon. Gentleman complain of dilatoriness now?
  Mr. Wrigglesworth: Much-needed legislation was introduced at that time. Although the history of 17 years ago may have some relevance for the hon. Gentleman, I do not think it has much relevance to the events of the last few months.
  I remind the House that not only were the Government dilatory in introducing the legislation, but when they brought it to the House the original Bill was enormous, having 166 clauses and 15 schedules. So slipshod was the preparation of the Bill that the Government had to introduce 40 to 50 new clauses, make 800 to 1,000 amendments and add four more schedules. So, after all that period of gestation, the Government almost had to rewrite the Bill.
  Mr. Tim Smith rose—
  Mr. Wrigglesworth: No, I cannot give way because many hon. Members want to take part in the debate.
  We have ended up with competition being the order of the day in the City, with the big bang having taken place and with none of the legislation properly in place to deal with it. The Government are responsible for that state of affairs and it is deplorable that they allowed it to happen without preparing properly beforehand.
  As I said earlier, one of the major problems under the present regime is that the system of supervision is too fragmented. During the passage of the legislation it was proposed that the SIB should have power to investigate and to instigate actions. In the light of recent events, I have moved considerably towards that position. As we said during the passage of the Act, the takeover panel should be brought under the auspices of the SIB and should have much greater power. It should also have greater independence. We also made it clear that it should be funded by the Government, not the City, and that it should have a much more substantial representation of lay people within it to ensure confidence outside the City in the work that it was doing.
  One problem about the Department of Trade and Industry exercising the powers that it does — I accept that they are substantial, and I welcome the changes that the Government have made to strengthen them in recent weeks—is, with great respect to the Secretary of State, that this is a Government Department supervised by politicians, with some 42 inspectors working for it. I do not believe that there can be public confidence in a Government Department, particularly the DTI with the history it has had over the years in policing companies legislation, continuing to have those powers.
  Mr. John Fraser: Is not it extraordinary that recently the takeover panel resisted being dragged kicking and screaming into the divisional court, saying that it was so exempt from supervision that not even the divisional court should look at it as a matter of judicial review? Is not it extraordinary that it should behave rather like a Borgia pope trying to control nepotism?
  Mr. Wrigglesworth: I am not sure that I take the hon. Gentleman's analogy. Before coming to the debate I was reading the report of the takeover panel on the Turner and Newall bid for AE. If the public spotlight had been put on the activities of Cazenove, Hill Samuel and others who were rebuked by the takeover panel for their activities then, and if the takeover panel had had real teeth, we would have seen more action than just a note of censure against those City institutions. That illustrates the weakness of the takeover panel's role and why it needs to be brought within the ambit of the SIB.
  I do not believe, as the Labour party believes, that Lloyds should also at this stage be brought within the ambit of the SIB. The Neill report, which has just been published, recommends that the council should have a majority of outsiders upon it. That recommendation should be implemented rapidly. I hope that there will not be delay upon that. We should see how that and the other recommendations work before making a decision to bring Lloyd's under the ambit of the SIB. Indeed, the chairman of the SIB has made it clear that he does not believe that he has the resources and the ability at this stage, with all the other responsibilities the SIB has taken on, to take that on as well. So, although I do not say that it should never come within the ambit of the SIB, at the moment it is best to proceed rapidly with the Neill recommendations, and in, say, two years, make a judgment about what should happen.
  Moving to the role of the City in relation to industry, I want to say a word about monopolies and mergers policy. As I said at Question Time this afternoon, I am disappointed that the Secretary of State is not bringing forward his review of competition policy. He seemed to be satisfied with it; if he is so satisfied, what is the point of the review? We believe that there is a need for a profound change and a streamlining of the machinery. We have said for some years that the burden of proof should be put on to the shoulders of the person making the bid. We believe that the Monopolies and Mergers Commission should be abolished, as should the restrictive practices court, that individuals and organisations should have power to take action in the courts against anti-competitive practices and that the Office of Fair Trading should have a much bigger role, removing responsibility from the Secretary of State to intervene and only allowing him to overturn recommendations of the Office of Fair Trading with the support of the House.
  Changes of that sort would ensure that mergers took place only if they were genuinely in the economic and public interest of the people working in the firms and the customers that they serve. That could also ensure that competition was safeguarded and that we had a much quicker and simpler system of dealing with mergers and takeovers than we have at present.
  Mr. Tim Smith: The hon. Gentleman has made an extraordinary assertion about his party's policy. I know that he is not a Liberal, but it is incredible to say that every case should have to be justified in the public interests and then to say that the system should be quicker and simpler.
  Mr. Wrigglesworth: I said that the burden of proof should be put upon the shoulders of the person making the bid. That would result in the public interest — the interests of the employees and the consumer — being served much better than if it was the other way round, as
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  it is at present. If the hon. Gentleman is satisfied with the present system, so be it but we are not. Britain does not have the competition that it should have and the way in which takeovers and mergers have been taking place in recent years has not served the interests of British industry or the nation.
  There is a great problem, not in the supply of money to industry, but in the terms and conditions upon which it is available to industry. Not enough medium and long-term funding is available and the levels of interest that people have to pay and the security that they have to provide make it impossible for many firms to obtain the funds that they want. We have proposed introducing an industrial credit scheme and small firm investment companies which would help to overcome that problem which undoubtedly exists and which many in the City also recognise exists.
  It is also important to see the development of regional financial services. The great contribution made by the financial services industry in Edinburgh to the Scottish economy illustrates how important it is to the regions to have a sound financial infrastructure which other parts of England, and, indeed, Wales, do not have. We should like to see the development of regional financial services, which do not exist at the moment, and which companies have to come to the City of London to obtain.
  If all those changes were made, the interests of British industry would be much better served by the financial services industry than they are at present. I hope that the Government will take into account the way in which events have changed people's attitudes in recent times and the remarkable change in the City, making it necessary for much more powerful, independent and effective supervision than we have had in the past.
  6.12 pm
  Sir Peter Hordern: I should start by declaring an interest. I have worked in the City all my working life, first as a stockbroker, then as a member of Lloyd's, and now as chairman and director of investment trust companies.
  Perhaps the part of the debate that I have enjoyed most so far was the expression on the face of the right hon. and learned Member for Monklands, East (Mr. Smith) when, in conclusion, my right hon. Friend the Secretary of State described the activities of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and what he had to say about the City. He greatly enjoyed the situation and he was well justified.
  The right hon. Member for Sparkbrook does not appear to be very comfortable either in the economics scene or in what he has to say about the City. To resort, as he did the other day, to talking about the "sleazy undercurrent" in the City does neither him nor the Opposition any good at all. The right hon. Gentleman would do much better to stick to writing articles for magazines and leave economics to his betters.
  There has been some speculation that the right hon. and learned Member for Monklands, East might take the place of the right hon. Member for Sparkbrook on the Opposition Front Bench. That might be a good move. If nothing else, the right hon. and learned Gentleman is an extremely good lawyer and quite able to make the best of a poor case, and that is really all that the Opposition have had to say about the City so far. To blame the City for the activities that have occurred recently is absurd and

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  damaging to the Opposition. Moreover, it is surprising, because if they were ever in a position to form a Government nobody would he more dependent than they would upon the City. Time and time again Labour Governments have had to be bailed out by the City. I think that they propose to borrow several billion pounds in order to renationalise. How they can do that without the City, I do not know. However, perhaps we need not exercise ourselves too much about that, because they would inevitably fall into the embrace of the International Monetary Fund, as they have done on every occasion.
  I want to say something about the place of the City and the part that it has played in our national life. The Opposition correctly talk about the loss of the share of national production and GNP in manufacturing industry. That is a phenomenon that is well known in every advanced country. Therefore, they could not be surprised at that. Indeed, any effort to retrieve that position could well be more damaging than beneficial. But what they have not done is to point to the extraordinary change which has come about in the past few years in the credit balance of our financial services.
  I have available only the figures for the first three quarters of 1986, but we ran a surplus of £6·3 billion on our financial and other services at the same time as we were running a trade balance of roughly comparable figures.
  Mr. Allan Rogers: Playing with money.
  Sir Peter Hordern: The hon. Gentleman says, "Playing with money", and I want to take that seriously. The Labour party must address itself to the fact that manufacturing industry depends upon the import of raw materials, their conversion and final sale to other customers. The hon. Gentleman and the Labour party should consider the distinction between that and a financial institution in the City discovering that a manufacturing company in Japan wishes to raise money, raising that money in the City through its own expertise and selling that service to Japan. There is an important point here. What distinguishes that is the way in which the margin of profit can be gained in financial services which now bring, and will continue to bring, considerable benefits to Britain, and which it can be argued will displace in time to come what we can now contribute from manufacturing industry.
  Mr. Rogers: The hon. Gentleman asked me to consider his thesis and I do, but at the end of the day I still do not see any increase in Britain's wealth coming from the operation that he has described. There will be no more investment in jobs or in industry. One can shuffle paper round all over the world, but that still does not create Britain's wealth.
  Sir Peter Hordern: It was a mistake to give way to the hon. Gentleman and I apologise to the House for doing so. The simple point is that it is the product of financial services which also increases the profits of industrial companies, which is the motive force for further investment and employment. It is as simple as that.
  I want to make one particular point about the change which has come about in the past three years. London is but one of three main centres in the world, of which the other two are New York and Tokyo. We are part of a global financial village, as it has been aptly described in
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  other quarters. The significance of that position may not have been generally recognised. Its significance is that we shall continue to earn a substantial financial surplus on our invisible earnings and services for years to come. It is perfectly possible now to see the position that Britain held for most of the Victorian era, when, as a result of our manufacturing capacity and our financing of world trade, we eventually had a large and continuing surplus on our invisible earnings. I see no reason at all why that position should not continue hereafter. Of course, if the Labour party were to take office it might sensibly diminish that by its proposals to bring back pension funds.
  I should also like to comment on the earnings from our portfolio investments. Last year we received dividends amounting to £6 billion, compared with only £540 million in 1979. I understand that Opposition Members plan to persuade or induce pension funds to return their investments to this country. It appears to me that Opposition Members are signally ignorant of the economic process, because if that is done, and to the extent that it succeeds, it must increase the price of sterling, relative to other currencies. It follows from that that the effect would be to reduce the competitiveness of our manufacturing industry, thus throwing more people out of work and reducing investments in manufacturing industry. Therefore, that policy is a strange one altogether.
  Mr. Gerald Howarth: Does my hon. Friend agree that the effect of that would be to put people out of work in other countries who have been financed from this country, leading to further calls from Opposition Members for increased foreign aid?
  Sir Peter Horden: I am grateful to my hon. Friend, who is quite right. I do not wish to pursue this point any longer. I regard it as important that there has been a substantial change in our economic and trading position, which is likely to continue under good guidance for many years to come. Everyone should be aware of that. If that is to be the case and we are to keep intact our place in the global village and take advantage of the situation, the law as it affects the City must be clear and the guidance must be authoritative.
  In so far as the City's activities touch upon our national life, there is a public interest 'which must be observed and protected. Although arguably we would have saved a lot of trouble if we had had an SEC, the Securities and Investments Board, with the SROs, is much more likely to uncover the sort of crooked activities that may occur than would be a full-blown SEC. However, if it is right to increase the number of nominated members on the council of Lloyd's as the new report suggested—I believe that it is right to do so—from four to eight, there is equally a case for increasing the number of lay members on ISRO from four to eight, and even, perhaps, for increasing the number of lay members on the SIB.
  I do not know whether it is necessary, because my right hon. Friend the Secretary of State for Trade and Industry would be in a better position than anybody else to know that fact. However, the number of cases that are now referred to the Department for preliminary investigation make a case for strengthening the number of people in his Department.
  My right hon. Friend announced some proposals that would affect the takeover panel. Plainly, either the panel should be brought into the ambit of the SIB or its powers

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  should be beefed up in one way or another. It cannot be allowed to continue quite as it is at the moment, without powers, nominated by practitioners themselves, in which they must have confidence, in the end. If it cannot produce any effective measures to stop the things that go wrong, some change must be made. Therefore, I welcome what my right hon. Friend said about the takeover panel.
  Sir Eldon Griffiths: Does my hon. Friend agree that the takeover panel, which has done excellent work, has nevertheless lost a great measure of confidence among people in the City, the financial press and the public? In those circumstances, without pointing the finger at individuals, does my hon. Friend agree that there should be some change in the personalities at the top of the panel?
  Sir Peter Hordern: The last thing that I wish to do is to make any remarks about personalities. However, the proposals that my right hon. Friend has made are interesting and deserve careful study. I hope that they will be carried through.
  I intervened in my right hon. Friend's speech in connection with nominated shareholders. I am surprised that the issue has not been raised before. It is an old and convenient administrative practice. When stockbrokers or banks buy shares, they put them in the names of nominees. Very often, merchant banks or stockbrokers have a substantial number of discretionary clients and it takes them some time to work out how they are to be allocated.
  Apart from that administrative convenience, I cannot now see any reason why the beneficial owners of shares should not be registered right away. That would get rid of the temptation that exists for those who want to buy shares for reasons which they do not wish to divulge from using nominee names in Swiss banks or in any other country.
  In the long run, it would do my right hon. Friend and his Department a great service if that change were brought about. There may have been very good reasons for it when those nominee shareholdings were established and the matter was originally considered because the stock exchange, as I was told when I first joined it, existed for the benefit of its members and for nobody else. The existence of nominee shareholdings cannot now be justified—
  Mr. William Cash rose—
  Sir Peter Hordern: I hope that my hon. Friend will forgive me for not giving way. I have already given way and I want to get on. Irrespective of whether the City is as closely involved in industry as it should be, it should recognise that it should be more closely involved.
  I should like to comment on merger policy and the public interest. There has been an enormous amount of merger activity. I understand that in the first nine months of last year about £11·3 billion was spent on company acquisitions, compared with £7·1 billion in the whole of 1985 and £1 billion in 1981. It would be less than realistic to suppose that all the banks that have been set up recently and the old existing merchant banks did not make a lot of money out of merger activity and that there are not a large number of people who are sedulously seeking to promote mergers and do very well out of them.
  I agree with my right hon. Friend the Secretary of State that the main test must be competition. However, one
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  must consider the reality of what it means to leave it to the market. As my right hon. Friend said, it is perfectly fair to mention the Prudential as an institution with shares in virtually every company in the country, and which on the whole decides to favour an existing business rather than the one that will take it over, but there are several other fund managements which take a short-term view, because, as my right hon. Friend mentioned, their performance is compared very carefully with other funds. In every sort of takeover one sees the same names involved. I have to say that leaving it to competition means leaving a large part of it to fund managers, who are bent on getting the best price for their shares, rather than on taking a long-term view.
  Anyone in manufacturing industry who in 1980 had to face $2·40 to the pound, $1·09 five years later, in 1985, and $1·52 now, would have to be a genius to anticipate that state of affairs and to carry out its trade perfectly, in every respect allowing for that fluctuation. It is perfectly possible that such a company would find it difficult to resist assetstrippers bidding for it at the bottom of the cycle. Therefore, there is a public interest when hundreds of people are laid off at the behest of a tiny company borrowing on the assets of a large company that it is considering taking over.
  Through the Office of Fair Trading the Government have a duty to look at aspects of takeovers apart from competition. I urge the Government to look closely at the credentials and the financial stability of those companies—often small or highly geared—which are making a bid to take over another company. The policy should not be to prevent takeovers where the business that is being acquired is likely to have more investment as a result of acquisition, rather than less, as has been suggested. The emphasis and priority should be to allow takeovers, but to be sure that the amalgamation of the two companies will not mean that more strain is placed on the two together than would have occurred before.
  It is necessary to secure an identity of interest between industry and the City if the public interest is to be served. I greatly regret the tone in which the Opposition have launched the debate. The City has served the country well for many years and will continue to do so.
  6.30 pm
  Mr. Brian Sedgemore: I shall try to be brief. One of the problems with our debates on the City is that they are getting wider and wider, so our speeches have to be ever more truncated.
  I did not think that I would, but I agreed with what I thought were three interesting aspects of the speech made by the hon. Member for Horsham (Sir P. Hordern). I believe that there is a problem with the repatriation scheme that the Labour party has proposed, the level of sterling and competitiveness. That worries me slightly. I entirely agree with what he said about nominee shareholdings, and I would not disagree with some of what he said about mergers.
  The Secretary of State was a grave disappointment to the House. He was credible for a couple of sentences and then my hon. Friend the Member for Easington (Mr. Dormand) asked him a simple question—if there are all of these investment funds, what has happened to manufacturing investment since 1979? It seemed a perfectly straightforward question. I understood it.

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  Instead of talking about investment, the Secretary of State spoke about output and compared output with what had happened in 1981, not 1979.
  The Secretary of State has had a lifetime in business. He is the top person in Government. Let us suppose that he goes to sit an O-level examination in economics and the first question is, "What has happened to manufacturing investment since 1979?" He begins his answer, "Far be it from me to be so invidious as to discuss what has happened to manufacturing investment since 1979, but as for manufacturing output since 1981…" The examiner would not mark the paper. Such behaviour is not helpful to the House when shrewd observers such as my hon. Friend the Member for Easington intervene.
  I do not think that the Secretary of State has read the figures about investment properly. If we ask who are the investors in Britain, the answer comes back that they are not rich individuals, banks, insurance companies or pension funds. The statistics of the past 20 years, as opposed to those of the past year, show that the stock exchange, which is sometimes described as the source of capital for commercial and industrial companies in Britain, has, on average, provided 5 per cent. of industrial capital annually.
  The banking sector has done rather better. It has provided between 20 and 25 per cent. of the capital that commercial and industrial companies need. The real investors are the customers. Although it is described in the City as equity capital, it is not what the individual in the street understands as equity capital and it is not what I interpret as equity capital. Year in, year out, between two thirds and three quarters of the capital used by commercial and industrial companies is provided by customers who go into shops. They are savers in a real sense. They forgo consumption, but they do not get issued with a share certificate when they go into a shop. It would be fairly complicated if they were. They do the saving, but they do not get interest on their savings or on their investment.
  What we see on the stock exchange, day in, day out, as described by John Maynard Keynes, who understood rather more about economics than some Conservative Members, is a vast amount of speculation which is based on what he described as a combination of psychology and probability theory. That process, carried out by bulls, bears, stags and whatever else, does not seem to be a productive enterprise for British industry.
  There are eight basic foreign exchanges in the world. A recent study, which was done not by me but by perfectly respectable City people, shows that $150 billion crosses those exchanges every day. I am told that that is equivalent to about 10 per cent. of the world's trade. Let us suppose that that is wrong, and that it is equivalent to 20 per cent. of the world's trade and that some of the rest is concerned with hedging. We still end up, as the report said, with about $100 billion speculated across the exchanges each day—one third of it in London. Moreover, we still end up with major financial and industrial companies using the foreign exchanges as "profit centres". Industrial companies are not producing goods and services. Rather, they are producing money through the "profit centre" of the foreign exchange market.
  That is equivalent to going into a bingo hall and playing 11-digit bingo with $100 billion as the prize every day. Conservative Members say that that is a respectable
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  activity. I do not believe that 11-digit bingo is a respectable economic activity or that any hon. Member will support such speculation.
  It is often said that the Labour party makes no proposals regarding insider dealing. The hon. Member for Horsham made a proposal which did not concern only insider dealing, but it seemed sensible and a means of dealing with insider dealing. He suggested that we should make everybody declare the beneficial ownership of shares and cut out nominee shareholdings. I advanced that idea the last time we debated these matters. It seems eminently sensible. Now that the hon. Member has advanced it, I hope that Ministers will consider it a little more seriously than when I suggested it.
  I know that some Conservative Members agree with it, but I do not believe that there should be own-account dealing in merchant banks and broking houses. Some limit themselves and do not have own-account dealing, but I believe that we should legislate to stop it. We would then cut out some of the conflicts that occur.
  If asked what I think of the performance of the takeover panel, I think that I would say that it has done a reasonably good job. It has genuinely tried to get things right. I have said that publicly before. I believe, however, that time, technology and the problems that are piling up have ceased to make it acceptable to the public that the takeover panel should be able to carry on as a purely voluntary, body, either outside the scope of the Securities and Investments Board, because it is not appropriate there, or outside some further statutory control.
  Viscount Cranborne: I am grateful to the hon. Gentleman for giving way, especially as his momentum has taken him past the point that I wanted to pull him up on. What mechanism would he propose for the conversion from one currency to another, which is essential to world trade, if we were to abolish the foreign exchange market?
  Mr. Sedgemore: I know that the hon. Gentleman is not a macroeconomic expert of the highest order, but I was not proposing to abolish the foreign exchange markets. If he wants me to go in to this macroeconomic problem, I shall devote five minutes to it at the end of my speech. It is a big problem for all nation states, whether they are governed by Conservative, Labour or Social Democratic Governments. The hon. Gentleman has put himself on a major point. I do not believe that there is a simple answer, but if he wants me to develop the argument, I shall.
  There is some agreement about takeover bids. I even heard the Chancellor of the Exchequer say that some people in the City are taking a short-term view and that they have a kind of tunnel vision. Some of the institutions, such as, I suggest, the Hanson Trust, take a short-term view of takeover bids. The public interest and the Labour party's proposal seems eminently sensible and I am glad that it has some support on the Conservative Benches.
  One of the ways in which to get around some of the problems that have arisen, including those with Guinness, is to make it illegal for people to use their own shares in takeover bids and to insist on the use of cash. That would be a simple and fundamental step. I understand that it comprises part of the legislation in some states in America.
  Our proposal that, before takeover bids of a certain size can advance, a submission must be made to the

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  Department of Trade and Industry about their likely economic, commercial and employment consequences seems perfectly reasonable.
  Conservative Members cannot disclaim responsibility and say that a group of people or companies are involved who and which are divorced entirely from the Conservative party and its ideology, some of whom have committed a few crimes. Morgan Grenfell is a merchant bank which was advising Guinness, and it gave £20,000 to the Conservative party in 1985. Let us examine the way in which one of the country's most prestigious merchant banks gives money to the Conservative party and the way in which it has handled itself over the Guinness affair. Let us ask ourselves why the Conservative party is accepting funds from such a bank.
  First, we discovered that Mr. Geoffrey Collier, the securities chief, was sacked. I shall not comment on that, because I believe that he faces criminal charges. Then we discovered that Mr. Roger Seelig, one of the corporate financiers, was in trouble. At that stage the chairman, Lord Catto, heard the alarm bells sounding. He set up an internal inquiry and we have all seen the headlines that it attracted, such as "No witch hunt, no whitewash." There was a whitewash, however, for nothing happened. Some of my hon. Friends, including my hon. Friends the Members for Cynon Valley (Mrs. Clwyd), who is in her place, and for Bolsover (Mr. Skinner), who is not, tabled a detailed motion about Morgan Grenfell. Lo and behold, it was only four days later that the Governor of the Bank of England, terrified that there was to be another Johnson Matthey bank examination, began to act in response to my hon. Friends' motion.
  It was at that stage that we discovered that Mr. Christopher Reeves, the chief executive and a former Bank of England official, had to go. There are two ways of regarding Mr. Reeves's conduct, and I do not want to judge him. Either he was incompetent or he was dishonest, or both. If a former Bank of England official is dishonest, incompetent or both, how can we be assured about the probity of self-regulation in the City? We then learned that Mr. Graham Walsh, the head of corporate finance and a former director general of the takeover panel, had to go. Either he was incompetent, dishonest, or both. How can we believe in self-regulation when a former director general of the takeover panel is dishonest, incompetent, or both? Conservative Members must address themselves to these issues in relation to Morgan Grenfell.
  Last night, I was walking across a bridge and talking to one of my—
  Mr. Bill Walker: Has the hon. Gentleman read the report of the Adjournment debate which I initiated on 25 July 1985, which dealt specifically with Guinness and Morgan Grenfell? If he has, why was he so silent at the time and thereafter?
  Mr. Sedgemore: I must apologise to the hon. Gentlemen because I did not read the report of his Adjournment debate. If it included some gem, I am sorry that I did not read it. That is negligence on my part. I must ask others whether they read the report. The hon. Gentleman wants to be like me, and learn how to use the media rather better. If he had been able effectively to use
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  the media, reports of his Adjournment debate would have been splashed over the front page of every national newspaper before I spoke.
  Mr. Robin Cook: I must correct my hon. Friend. His failure is patently clear. It is that he does not read The Scotsman, and not because he failed to read the report of the Adjournment debate which the hon. Member for Tayside, North (Mr. Walker) initiated.
  Mr. Sedgemore: That joke is too subtle for me.
  There I was on a bridge talking to a City solicitor late at night. He went south and I went north. As we parted he said to me, "Listen out for the name Hanson." We have a mutual friend called Bomber Hanson, but I do not think that he was talking about him. I think that he must have been talking about Lord Hanson. I do not know whether Lord Hanson is involved in the Guinness affair or whether his name is about to come up. Perhaps Conservative Members can enlighten us. Lord Hanson was knighted in 1983, the same year in which his company provided £82,000 for the Conservative party. Between 1979 and 1984 the Hanson Trust provided £217,000 for the Conservative party. That seems to be a great deal of money. It is something that brings a close connection between the Government, the Conservative party and the use of funds—
  Mr. Speaker: Order. The hon. Gentleman cannot criticise a Member of the other place unless by means of a motion.
  Mr. Sedgemore: I agree, Mr. Speaker. I am talking about the Hanson Trust. The trust provided the money, and not Lord Hanson, who is chairman of the company.
  We have heard about Bain and Co. this evening. It was mentioned by the Government Front Bench spokesperson, but we were not given any details. I believe that some correspondence has passed between the two Front Benches, and it seems that the Prime Minister attended a lunch that was hosted by Sir Jack Lyons at Bain and Co. a few weeks ago. What sort of company is Bain and Co.?
  Mr. Robin Cook: The Home Secretary attended the lunch too.
  Mr. Sedgemore: We know that one of the employees or associates of Bain and Co. is Mr. Olivier Roux, the disgraced director of Guinness. We know also—this is something that I discovered — that Bain and Co. is about to receive a writ from the Church Commissioners involving a large sum of money for non-payment of rent. We know even more than that, because we had some by-play from my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) in his delightful and brilliant speech about Mr. Gerald Ronson, who returned £5·8 million to Guinness. That was a fee for putting £25 million of the company's money in that firm.
  My right hon. and learned Friend did not say that Mr. Gerald Ronson was first approached by Anthony Parnes, a person who was nicknamed the "animal". Mr. Parnes is a director of J. Lyons Chamberlayne. He is a close associate of Sir Jack Lyons, who received a knighthood from the Conservative party and who more recently hosted the lunch at Bain and Co. I dare say that the "animal" was at that lunch. He is a friend of Sir Jack Lyons. We must ask ourselves why the Prime Minister went to the lunch. Who was she trying to meet? Did she want to meet Mr. Olivier Roux? Did she want to meet the

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  "animal"? Did she want to help Bain and Co. deal with its defence in the face of a writ from the Church Commissioners? Was she trying to give the firm some general solace or, as is more likely, was it a general meeting at which the Conservative party raises funds?
  One of the great problems facing the City is that which arises from the big bang, which has not been discussed in the House. I only hope that we shall have the opportunity to do so. I cannot be sure of what I shall say, but there is something disturbing in that separate control of financial institutions may well disappear. Financial institutions have operated basically under some form of separate control—the banks, merchant banks, discount houses, accepting houses and money markets have all operated under it—but they are now beginning to operate under joint control. Most of the clearing banks are in on these mergers. Every conceivable form of financial and economic activity is coming together under the same control. Some firms will not survive and they will go bust. There will be some takeovers of financial institutions as well as some mergers. There is a real fear that in 10, 15 or 20 years time we shall have large mega-merge financial institutions that will wield much greater power than any present institution of that type, and power that may be wielded globally.
  American banking law is changing. The regulations that apply to state banking are beginning to change and the New York banks are beginning to come to Britain. With Japanese and American banks coming here, mergers, amalgamation and bankruptcies could occur that will create colossal problems for a Labour Government as well as the present Government. That is something that the House should debate.
  6.49 pm
  Mr. Cecil Parkinson: I have listened with interest to the speech of the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) and his discussion on the big bang and the City revolution. Last week, we heard the speeches of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and today from the hon. Member for Stockton, South (Mr. Wrigglesworth) which seemed to imply that the whole City revolution was started by the Conservative Government as a way of creating a sort of free-and-easy in the City.
  I wish to remind the House that the rule book of the stock exchange was referred to the restrictive practices court in February 1979 by the right hon. Member for Sparkbrook. It was the Labour party that decided that the stock exchange. in its old form, was guilty of unacceptable restrictive practices and set out to make sure that the stock exchange rules were changed.
  In 1983, the Conservative Government, after four wasted years on the legal case, sought to get the equivalent of an out-of-court settlement and we obtained from the stock exchange all the concessions that were sought by the Office of Fair Trading when it started its action. Indeed, the Director General of Fair Trading, who initially resisted the actions that I took, later admitted that the reforms that had been agreed were the ones he and the Labour Government had had in mind. Therefore, the notion that the free and easy City was started by the Conservative Government and that all troubles such as Guinness flow from it does not stand up to examination. The truth of the matter is that — perhaps the right hon. Member for
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  Sparkbrook is ashamed of it and perhaps he did not realise what he was doing — that the right hon. Member for Sparkbrook set the changes in train.
  It is a mistake to think that the big bang was somehow connected with the Guinness and Distillers affair. That wrong thinking argues that, because of the big bang and the resultant changes, affairs such as that of Guinness have become possible. The Guinness affair was concluded in March but the changes to the City took place on 27 October.
  The hon. Member for Stockton, South spoke about the absence of a regulatory system after the big bang but the troubles of which he complained took place before the big bang under the old system. The other fallacy is that because of the big bang and the Guinness affair the new system of regulation has been discredited and there is convincing evidence that what we now need is a statutory system of regulations. It is argued that because of the existence of the Securities and Exchange Commission, insider trading and the Guinness affair came to light.
  Mr. Boesky's activities came to the attention of the SEC because someone wrote an anonymous letter to it about Mr. Levene and his insider trading. Mr. Levene then talked about Mr. Boesky and Mr. Boesky talked about Guinness. It was not because of the magical powers of the SEC that Mr. Boesky's activities came to light; it was because of an anonymous letter. I would have thought that the Securities and Investments Board is just as capable as the SEC of receiving an anonymous letter.
  Mr. Nelson: Although I accept that the SIB is capable of receiving such a letter, there is nothing that the SIB can do about it.
  Mr. Parkinson: I appreciate that, on the Conservative Benches, my hon. Friend is almost a lone devotee of the SEC. The Opposition have argued that there is a need for a body such as the SEC but nothing that has happened justifies that argument. The fact is that Mr. Boesky prospered for four years under the SEC. He made hundreds of millions of dollars and he was discovered only by accident. There is no argument for trying to impose on Britain the system that failed in America.
  Opposition Members make a big mistake by arguing that statutory somehow means certain. The impression is that if one has statutory regulations it is bound to work.
  Mr. Allan Rogers rose—
  Mr. Parkinson: I shall give way in a moment.
  Allow me to offer to the House the experience that I gained when I was Trade Minister. We were having trouble with the Americans who were trying to extend their market regulations into our commodity markets. I invited the chairman of the Commodity Futures Trading Commission—that is another statutory body—to come over and see how we regulated our markets. At the end of the week, he admitted that our system of self-regulation was better than theirs. Unfortunately, he had to leave early because Hunts had cornered the silver market — his statutory system had failed. Therefore, to believe that somehow statutory means certain and that, as a result a statutory system, discovering people is inevitable has no basis when one considers the experience of the American or other markets overseas.
  Mr. Rogers: If we accepted the logic of the right hon. Gentleman's argument we would not need statutory

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  regulations to catch criminals. The process that led to the apprehension of the criminals in this case is exactly the same that pertains in many instances, for example, in America, when one canary sings and the rest of the Mafia are pulled in. American crooks are just the same as British crooks.
  Mr. Parkinson: The hon. Gentleman is implying that we will have a system that is voluntary and, in some way, unenforceable. That is the big difference between the two sides of the House.
  We do not know whether the SIB will work as it is not fully in place and, therefore, to argue its failure before it is in operation is to overstate one's prejudices.
  The SIB is not a voluntary body exercising, if it wishes, powers. It is a body made up of practitioners in the market who understand how the system works but who have imposed upon them, by law, statutory duties that they must carry out. We have a system that is based on the law but run by people who understand the market.
  I believe that our system is imaginative and that it will work. It is quite wrong for Opposition Members to argue in favour of the SEC, a system that has patently failed, and to dismiss the SIB which is not yet in operation and which we have every reason to believe will be a success.
  The hon. Member for Hackney, South and Shoreditch congratulated one of his hon. Friends because he tripped up the Secretary of State by asking him why investment was not bigger than it was in 1979. Today's debate is on the City and I would argue that it was not a shortage of funds that caused a shortage of investment. That is the implication of the Opposition's motion.
  When I first went into the City as a chartered accountant more than 20 years ago there were few sources of capital. One could get short-term money from the joint stock banks, the ICFC that took minority stakes in medium-sized businesses, the merchant banks—but they wanted a substantial stake in the company if they agreed to be involved — and the stock exchange. Therefore, many companies went to the stock exchange far earlier than they should have done. That was the only way to get the necessary money.
  Now everything is different. There are venture capital organisations, the joint stock banks have their own merchant banks, business expansion schemes have been introduced and the banks are more ready to lend money. There is, in fact, a proliferation of sources of capital. There is no shortage of money for a good proposition. To criticise the City because the figures show that investment has not increased is to misunderstand the fact that the money is available, but the demand for it has not been there. That is hardly the City's fault, and the demand is growing.
  It is wrong to argue that the City has failed in its job of providing capital. There is growing demand for investment capital, and I am pleased about that. However, it is wrong to imply as the Opposition motion does, that the cause of our less than desired investment is shortage of money. It has been shortage of good propositions.
  When the Labour Government were in power we had low company profitability and high rates of yield on gilts, and the stock exchange was used by the Government as a way to fund their ever increasing debt. It is outrageous of the Labour party to criticise the stock exchange because
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  it does not provide enough capital when it was creating an economic climate in which business could not make the profits that justified further investment. We do not want any nonsense from the Labour party about the stock exchange. Nobody used the stock exchange more actively than the Labour Government, to raise money at high yields that were beyond the reach of industry, thus pricing industry out of the investment business.
  There is a notion that the British investment institutions take a short-term view. This morning, I was at a meeting of the board of a unit trust group that handles £4 billion of savers' money. We have over 400,000 investors. When Labour Members talk about City institutions and how they are investing money, they talk as if they are the private property of the people who are running the organisations. We are investing the savings of 400,000 people, and it is no part of our business to experiment with them. We have to invest them soundly so that we can give a proper return to those who save with us.
  The House partly contributes to the problem of short-term thinking in the City and investing institutions because we have such relatively short parliamentary terms. We have to face the fact that the two sides of the House offer the electorate a different economic system. One of the reasons why our investors shorten their thinking is the uncertainty that could arise if we had a change of Government. Unlike other, successful capitalist countries, we have an Opposition who basically do not believe in private enterprise, so do not support the system.
  I refer now to BTR and Pilkington. We have supported enthusiastically the privatisation of nationalised industries, because we believe that the Government are a bad commercial decision taker and should be taken out of commercial decision taking wherever possible. We have also supported the sales because we believe in wider share ownership and giving people a stake in the businesses in which they work and a say in how those businesses are run.
  It struck me as absolutely unbelievable, when my right hon. Friend the Secretary of State took the correct decision that the takeover was a matter for the shareholders of Pilkington, and that there should not be a reference, that that decision was criticised by people who have made speech after speech saying that Governments should not take commercial decisions, we should privatise and reduce the size of the public sector. It is wrong of the House to say that we want to take the Government out of commercial decision taking, we want to privatise and spread share ownership, but then to say that there are a range of decisions that are far too important to be left to people such as shareholders, and the Government should intervene and take those decisions.My right hon. Friend the Secretary of State is to be congratulated on resisting the pressure to refer the BTR bid. That pressure was not the result of a genuine desire to see the Monopolies and Mergers Commission do its job. The only reason why anybody wanted the reference was to delay the bid and to mess it about. It was not to allow the MMC the chance to decide whether the bid was in the public interest.
  I have one thing to say to my right hon. Friend the Secretary of State about the review of mergers policy. We have broad criteria which my right hon. Friend uses in arriving at his decisions about whether to accept the advice of the OFT, and the principal criterion is that of national and public interest. My right hon. Friend has been urged

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  to come forward with a series of very tightly drawn specific proposals. I hope that he will resist that advice, as he resisted the advice on Pilkington.
  As an accountant, I found that the section of the tax law that was most effective was the general anti-avoidance provision. The more specific the provisions, the easier it was to get around them. The more specific the rules about takeovers and mergers, the easier it will be for people to work their way round them, and my right hon. Friend will be legislating continuously. With the national interest criteria applied sensibly and wisely, my right hon. Friend has the basis for good decision taking. I hope that he will not allow himself to pushed or cajoled into thinking that if he comes forward with specific and clear-cut rules he will be doing something worthwhile. The present rules, with the national and public interests, as the main criteria, are just what he needs.
  I heard the right hon. and learned Member for Monklands, East (Mr. Smith) quoting the theory that one of the problems is that a company that makes investments and does research makes itself vulnerable. The idea is that one can either be profitable or invest and do research. The best companies do both, and they do them in tandem. I know that Labour Members admire the SEC greatly, so I was interested to read a speech by the acting assistant Attorney General of the anti-trust division of the American Government. He said this about the argument that one makes oneself vulnerable if one does research:
  "Finally, this argument is also contradicted by an SEC study that demonstrates firms that are subsquently takeover targets spend relatively less on research and development than firms in the same industry that are not takeover targets."
  The idea that one makes oneself vulnerable in this way is nonsense. Companies that are not doing research are shown, by the Labour party's favourite, much admired organisation, the SEC, to he the vulnerable ones.
  7.8 pm
  Mr. Doug Hoyle: I start by declaring an interest as president of the Association of Scientific, Technical and Managerial Staffss. The right hon. Member for Hertsmere (Mr. Parkinson) talked about voluntary regulation of the City, but that is different from the way in which the Government view trade unions. They insist on the compulsory regulation of trade unions. But when they are dealing with their friends in the City, regulation can be voluntary.
  We are debating a scandal without a parallel. Of what has been going on in the City, we know only the tip of the iceberg. There is much more to come out. Whether the Government or Conservative Members like it—I know that they do not, because they are dependent on what they call free enterprise—there are in the City an awful lot of fat cats who are greedy and who are not content with what they are getting with their champagne-breakfast style and with the high salaries that they receive, so move into criminal dealings. At long last the Government have woken up to them and have been forced into action because of the public outcry. It is not something that they were originally determined to do, but something that they have been pushed into doing.
  Many interesting people in the City have been dismissed or had to resign. Many of them have been referred to. Those people earn very high salaries. Geoffrey Collier of Morgan Grenfell had to resign because of insider dealing in relation to AE. He received a salary of £300,000
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  a year. Roger Seelig was very highly paid and he had to resign in connection with the Guinness bid. Ernest Saunders, the chief executive and chairman of Guinness, earned £375,000 a year. Oliver Roux, who was the finance director of Guinness, was seconded from Bain and Co. He was reported to be on a six-figure salary. Christopher Reeves is the chief executive of Morgan Grenfell and was earning £300,000. Graham Walsh was head of corporate finance at Morgan Grenfell and was earning £200,000 a year. Lord Spens was head of corporate finance at the merchant bank Henry Ansbacher and earned £100,000 a year. All those people have had to resign, yet we are told that there is nothing wrong with the City. Those people were earning salaries that are not even dreamt of in my constituency or in most others. In spite of that, they were not satisfied and had to look for ways to inflate their earnings.
  Sir Ralph Halpern is the chief executive of Burton. He has not resigned, but his lurid activities were reported in all the tabloids on Sunday. However, I am concerned, not with his sexual dealings, but with his share dealings. This should be of interest to the House.—[Interruption.] The hon. Member for Crawley (Mr. Soames) should listen. He is not renowned for listening. I am concerned about the takeover of Debenhams and the 7 per cent. that switched the balance in the takeover. Sir Ralph's company was involved in that takeover. Mr. Tony Parnes of Alexanders Laing and Cruickshank, known as "the animal", was involved in the Debenhams takeover, just as he was involved in the Guinness hid for Distillers. This gentleman arranged for Gerald Ronson to take an interest. Mr. Ronson was one of the investors involved in the block of 7 per cent. that switched the balance. That Debenhams takeover should also be the subject of an investigation by the Department of Trade and Industry. We might find out some interesting things.
  Morgan Grenfell was the banker in the takeover bid by Guinness. The position of that company is somewhat shaky and, having lost so many of its executives, it is in the process of reorganising.
  The Government have no policy in relation to merger mania. Up to the end of November, 250 offers were registered for British companies. The value of the bids is £34·4 billion. That is four times the figure of 1985, yet the Government have been complacent about that.
  Many famous names have had to fight off takeover bids and some have been successful, such as Allied Lyons, Plessey, and more recently, Pilkington. The chairmen and chief executives of those companies have better things to do than fight off predators or always to be looking over their shoulders at who is going to make a bid. They would prefer to spend all their time, as they should, creating wealth and looking to the future of the company.
  We have heard already about the earnings of the City and about how indispensable it is to the nation. We should look at the other side of that. at the capital outflow from the City. Between 1980 and 1985 there was a total outflow from Britain of £30,270 million. That money would have been better used by investing in British companies rather than in strengthening our competitors and putting British companies out of business and employees out of jobs..
  Two thirds of the takeovers have been financed by ordinary share capital. That illustrates the critical position of share prices. It also shows why there has been a big rise in the profits of many of the companies which might have been subject to takeovers, while investment in British

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  industry in general has been stagnant. If investment is stagnant or falling, we know that the net result will be fewer British companies.
  The right hon. Member for Hertsmere talked about short-termism. He said that he did not like that and that there was much finance available. Our competitors, such as Japan and Germany, have been investing in long-term ventures but we, especially the City, have been investing instead in short-term ventures because those involved are interested in short-term profits.
  The scandal of Guinness has been revealed. There has been resignation after resignation and we do not yet know whether the resignations are at an end. However, we know that about £200 million or £300 million has changed hands in share purchases. We also know that £25 million has been paid in compensation to those who have helped. I do not think that there will be any end to the saga. Every time we pick up the newspapers we see some new issue.
  Mr. John Heddle (Mid-Staffordshire): Typical Labour party pessimism.—[Interruption.]
  Mr. Hoyle: We do not control the press. It is your press that is revealing the scandals.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): The hon. Gentleman should not use the word "your". It is certainly not my press.
  Mr. Hoyle: I mean the Conservative party press. I wish that it was your press, Mr. Deputy Speaker, because if it were it might be more favourable to the country and to the press itself.
  We know that there have been offshore dealings in the Guinness affair. We are also finding out that spiv after spiv has made a quick buck over Guinness.
  Mr. Campbell-Savours: My hon. Friend makes an interesting point. There is a danger that if more and more stories come out, and if incidents surface of illegality and criminal activity in the City, the British public will simply become conditioned to accept them. If that happens, the newsworthiness of those stories will subside and the danger is that we will create a climate of acceptability for these practices in the City. That is a real danger. It will become like Northern Ireland, where, when someone dies, the media do not treat it in the same way as they did perhaps 10 years ago.
  Mr. Hoyle: My hon. Friend makes an interesting point which is worthy of consideration. All the time people come up to me and say, "Ah well, Guinness was unlucky. They were the unlucky people, but there were a lot more involved in insider dealing." That is precisely the point that my hon. Friend is making. People also say to me, "Will Argyll press ahead with the litigation, and if not why not?" Is it because, as my hon. Friend says, there is a lot more of this hidden away in the City? We know that that is so when we look at the bid for AE, in which Turner and Newall was finally successful. Hill Samuel gave an indemnity to investors who were trying to fight off the threat to the company. In this case, even the tabby cat City takeover panel voiced an opinion that that was not the right way of conducting the matter. As I mentioned earlier, one individual had to resign because of insider dealing in relation to that bid as well.
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  Then there is Hanson Trust, which is the epitome of short-termism and short-term profit. We all know that Hanson Trust and Lord Hanson are great favourites of the Government and of the Conservative party. They signify what is wrong with industry in this country. All that we have seen from Hanson Trust is a succession of takeover bids.
  Mr. Heddle: Instead of treating the House to this catalogue of episodes that anyone can read in the press from time to time, will the hon. Gentleman devote just a little of his speech to praising some of the exceedingly good things that the City does; for example, the protection that it gives to unit trust investors, as my right hon. Friend the Member for Hertsmere (Mr. Parkinson) mentioned, and the protection that the building societies give to their investors, who now receive a real rate of return at three times the rate of inflation? Will he devote just a little of his speech to an optimistic view of the City, which is the envy of the free world?
  Mr. Hoyle: I can understand why the hon. Gentleman and other Conservative Members are nervous when we talk about the City and what is happening there. I also understand why he does not defend the Hanson Trust. What have we had from Hanson Trust? We have had a succession of takeovers that reached their zenith with the Imperial Group takeover last April.
  The difficulty now is that Hanson Trust requires even larger takeovers to maintain profits and share prices. It is rumoured that City institutions backed Hanson Trust in its successful bid for the Imperial Group, not because it made industrial sense against a rival bid from United Biscuits Ltd., but because they were afraid of the consequences for Hanson share prices had it not been successful.
  Hanson Trust is a company which never hesitates to sacrifice sales, market share or employment for short-term profit. Yet that is the company which is admired by the Conservative party, which is in office at present. Recently, Hanson tried to strip £80 million from the pension funds of Courage into which it had not paid a penny. That is the sort of company with which we are dealing, and those are the asset strippers whom all of us should be condemning. The Conservative party should be interested in building up long-term investments in industry.
  The Secretary of State was praised for his conduct over Pilkington by the Prime Minister. Only last week the right hon. Lady said the right hon. Gentleman was right not to refer the matter to the Monopolies and Mergers Commission and that the market took its own decision much more quickly than if the bid had been referred. Of course, it was nothing of the sort. What really happened was that, in the wake of the Guinness affair, and following political pressure, BTR's bid was withdrawn. Pilkington is a world leader in flat glass manufacture—we do not have many world leaders — and it was spending £62 million on research and development and, £200 million on modernisation. It had invested in the regions and was one of the few multinational companies that had its headquarters in one of the regions. The company and its employees were under threat from the predator BTR, although it had made a profit.
  It was the outcry that occurred in the House and outside that caused Owen Green to back off. Certainly there was a sigh of relief from the Conservative party when

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  that happened, because had that not occurred the Conservatives would have been under a lot of pressure from many of their own party who were very concerned that a company such as Pilkington was facing that threat. I have no doubt at all that, before too long, we shall see Owen Green residing in the House of Lords for what he did in withdrawing his bid.
  I come to another matter—the destiny of Westland. Its destiny was determined by about six unusual people making bids at the same time. What happened to Westland? Several people purchased shares within the 5 per cent. limit and therefore did not have to declare their shareholding. They were very strange people. There was the Actraint No. 34, Proprietary of Australia which had just purchased 4·99 per cent. There was Lynx Marketing SA, of Panama which purchased 4·79 per cent. There was Rothschilds Bank AG, of Zurich, which purchased 4·89 per cent. There was Sterling Trust SA, of Geneva, which purchased 4·89 per cent. There was Gulf and Occidental Investment Company SA, which purchased 1·38 per cent. Sir John Cuckney said, when he was giving evidence to the Select Committee on Trade and Industry, that he thought there was one other company involved, Les Fils Dreyfus, which also purchased shares. Those purchases altogether totalled about 21 per cent. and they determined which way Westland went. All the bidders appeared late on in relation to the bids that were being made by the Americans and by the European consortium. They all purchased shares and appeared to be voting in one direction. If that was not a concert party, I do not know what was. That is the sort of thing that occurs.
  I ask Conservative Members not to be complacent about what is happening in the City or about the destiny of companies that are important to it. What are some of the factors that are encouraging the illegal activity that is occurring? One factor is the massive fluctuation in share prices, which means that enormous profits can be made when a takeover bid takes place. The Distillers shares rose from 200p to 700p in the course of the takeover. There is increasing competition to partake, especially among the merchant banks. We know about Morgan Grenfell. Morgan Grenfell has benefited considerably from the present takeover mania. There is also increased competition resulting from the big bang. If the merchant banks do not keep their present customers, the American banks that are coming in and are determined to press to the limit the regulations will get them instead.
  There are large fees and large commissions to be made from the takeover business. There is also pressure on the companies to which I have referred to neglect things that they should be doing, such as investing, so that they can keep profits high and stave off the takeover, merger and asset-stripping sharks in the market. The Guinness bid for Argyll generated £160 million in legal fees and commissions for the City. Thus, takeovers not only make for rich pickings in the City but give the speculators a field day.
  What action has been taken? Everybody regards the present takeover panel as a pretty useless body. It has failed to do what it was set up to do in the 1970s—to oversee takeover bids. Many people think that the chairman, Sir Jasper Hollom, despite the fact that he is an ex-deputy governor of the Bank of England—perhaps because he is—has not been strong enough, but the real reason for the panel's ineffectiveness is that it is a purely voluntary body run by the City for the City.
  Mr. Tim Smith: This is so sixth rate that it is unbelievable.
  Mr. Hoyle: It may be unbelievable. Nevertheless, it is true. The hon. Gentleman might not believe it. Indeed, it seems hard to believe. Nevertheless, that is what is occurring in the City. That is what is occurring all the time.
  What action has been taken by the Governor of the Bank of England? Why has he not used his powers? What about the deputy governor? What has he been doing? He has responsibility for takeovers. Why has he not initiated action?
  Then we come to the Government. They have been reluctant to take any action. There is a grave difficulty with their Front Bench. The Secretary of State cannot speak on Guinness because it is the family firm arid because the foundations are rocking. The Minister responsible for corporate and consumer affairs, the hon. and learned Member for Folkestone and Hythe (Mr. Howard), cannot speak on Lloyd's. How can people have confidence in the Government doing anything when two of the leading spokesmen cannot voice an opinion on a major crisis in relation to Guinness and Lloyd's? This is a disgusting state of affairs. The country will wonder why they are allowed to remain there when action should be taken.
  Several Hon. Members rose—
  Mr. Hoyle: I apologise to my hon. Friends. I have not finished yet.
  Mr. Deputy Speaker: Order. Perhaps I can help the House. The debate started at 4.52 pm. The hon. Member for Warrington, North (Mr. Hoyle) is the seventh speaker, and, out of those seven speeches, only two have been less than 20 minutes. Many right hon. and hon. Members are anxious to catch my eye. I appeal for brevity.
  Mr. Hoyle: I shall be as quick as I can, but I think you will agree, Mr. Deputy Speaker, that it would be wrong if we in the Opposition did not say what we want.
  I am in favour of a statutory body. I should now like to speak a little about the public interest, which the Conservatives have decried. Emphasis should be placed on the public interest. When we talk about the public interest, we should take into account the interests of the employees who created the wealth of the company and who are subjected to a takeover, as well as the interest of the shareholders. Through the trade unions, the employees should be represented on the statutory body. At least one third of the places should go to them. They should have the right to give evidence. That is important, because if the company goes and they lose their jobs, not only they but their families will suffer. They should be able to say to any company that is successful in a takeover bid that the conditions of employment and pension rights should be maintained. If an employee is dismissed as a result of a takeover, that should be deemed to be an unfair dismissal.
  It is not enough to consider just shareholders and competition. We should consider the public interest and the national interest. We should consider whether a takeover is good for the country. Equally, we should take into account the interest of the company's employees
  7.35 pm
  Mr. Michael Grylls: I shall not follow too far the line taken by the hon. Member for Warrington, North (Mr. Hoyle), much as I like him

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  personally. I believe that on almost every issue that he raised, he is entirely wrong. However, in the interests of politeness, I shall not follow him down that route. I shall be brief because I know that many colleagues want to speak.
  I shall make only a passing reference to the present problems of the City and the scandals that are coming out almost daily. Everything that my right hon. Friend the Secretary of State said today gave the answer to the criticisms put by the right hon. and learned Member for Monklands, East (Mr. Smith). He made a firm, tough and resolute speech, and everybody on the Conservative Benches was delighted to hear it. I hope that the right hon. and learned Member for Monklands, East will listen to this. It may be to his advantage. He will not damage the Conservative party by trying to smear the City or us. People are too sophisticated to do that, and my right hon. Friend the Secretary of State has given the answer.
  The right hon. and learned Gentleman may succeed —it would be a tragedy—in damaging the City itself and all the good things that it is doing for this country, such as raising money for industry and bringing benefit to the balance of payments, and all the things that have been brought out in the debate. Although we may be in an election year, I hope that the Labour party will desist because it is damaging the national interest very much.
  I should like to concentrate my few remarks on competition policy, under two heads. One is merger or takeover policy and the other is anti-competitive practices which, again, are an important part of competition policy, but sometimes are not discussed enough. I applaud my right hon. Friend the Secretary of State for the decision that he took some seven months ago in setting up the committee under Hans Liesner from the Department of Trade and Industry to look into competition policy. The House will be comforted to know that the committee is sitting at present, so in a way this debate is timely.
  I refer first to merger or takeover policy. I am sorry that my hon. Friend the Member for Horsham (Sir P. Hordern) is not here to hear what I shall say because much of what he said was near to the truth. It is a fine judgment as to whether the law is right. Of course many mergers can be constructive in an industrial sense. When a firm has floppy management, it can be rejuvenated by joining a more dynamic group. It would be idiotic to say anything else. However, we must also weigh this in the scales. For the past 30 or 40 years we have become the most concentrated economy probably in the whole of the western world. I admit that it is difficult to measure — I shall not give statistics, because there is not time — but not many people would contest the truth of that. If the private enterprise system is to work effectively and the market that we talk about and believe in is to be fair, I fear that we have to regulate, and not encourage, or encourage too much, further concentration in British industry and commerce. Many would agree with that.
  A concentrated economy also runs absolutely counter to one of the outstandingly successful policies followed by the Government, to encourage the development and growth of small and medium businesses. For 40 years before this Government took office, those businesses had been largely neglected in Britain through a lack of understanding that such businesses are the key to a successful private enterprise economy.
  Mr. Hoyle: Will the hon. Gentleman give way?
  Mr. Grylls: No, I want to finish my point.
  If that is true, if it is important to have a policy to encourage the growth of small and medium enterprises, we cannot allow the economy to become more and more concentrated. One works against the other.
  I am sure that the Government want to pursue their successful policies towards small and medium firms and they would be wise to consider some of the effects of merger policy. This concern is not simply a sudden quirk on my part or on the part of others. The provision that I have described has been written into the United States anti-trust law. There is a phrase in American statute relating to the need to protect the interests of small businesses. That is one of the criteria. For many takeovers, that would not be the most important criterion. However, with the Americans' belief in a fair market system and the diversification of economic power rather than the concentration of such power, they believe that that is a factor which must be observed when a merger is under consideration.
  With respect to some of my colleagues, it is not enough to say that we will only consider mergers if two similar firms are involved. If BTR and Pilkington had been two glass firms proposing to join together, under the present guidelines established in 1984, my right hon. Friend the Secretary of State would almost automatically have referred that proposed merger to the Monopolies and Mergers Commission for consideration. However, the bid was not referred because the firms were not both glass companies. I do not want to consider the Pilkington case here, because it is finished with and is old hat. However, other factors should be taken into consideration because other forms of concentration may be just as damaging.
  The economics editor of The Times wrote an excellent article today. He states:
  ."Of course, takeovers across industries can result in a reduction in competition if it is possible, for example, for a large company to force rivals out of the market by undercutting through cross-subsidisation from the other industries in which the firm operates."
  In a sense, that is a horizontal merger. That can result in anti-competitive practices that would be every bit as damaging to the free enterprise system as the traditional cartel. We should consider adding to our policy — I know that my right hon. Friend is considering this—the protection of smaller firms.
  I want to consider anti-competitive practices in general. It is unique to British competition law that our bureaucratic system allows a decision to be made more or less by an official. In other countries, if a firm is damaged by an anti-competitive practice—driven out of business or severely damaged—it can sue and receive damages. What happens in this country? A firm may report to the regulatory authorities the details of that anti-competitive practice and the regulatory authorities—which I admit have a good record in this respect — may decide that that is an anti-competitive practice and must be stopped. Of course, it probably is stopped, but very often it is too late. The damage has already been done.
  I believe that there should be some remedy at law for firms that are damaged by anti-competitive practices. It is interesting that in most industrial economies that principle is accepted. It is unique to this country that firms that are damaged by those forms of anti-competitive practice cannot recoup damages.

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  It would be ridiculous for me to leave the impression—I do not want do to this— that I am against large firms and mergers. In the 1960s and 1970s we believed that it was important to be big, no matter how a firm became big. The lesson that we have learnt by considering more successful overseas competitors is that they have become big because they have been successful, not successful because they have been big. There is a difference.
  We should be encouraging the internally generated growth of successful firms rather than growth by acquisition. If that view was taken in respect of merger policy, we would gradually have a less concentrated economy in which a free enterprise system could operate more fairly and successfully. That would be completely in line with the thrust of the Government's policy, which has been so right to aim for a fair enterprise economy. We will achieve that if we adjust our general competition policy in some of the ways that I have suggested tonight.
  Mr. Deputy Speaker: I am grateful for the hon. Gentleman's brevity.
  7.45 pm
  Mr. D. N. Campbell-Savours: I am glad to follow the hon. Member for Surrey, North-West (Mr. Grylls). If he studies the Committee proceedings on the Bill which became the Competition Act 1980 he will find that his proposition about anti-competitive practices was debated at some length by myself and my hon. Friends. I would like to take the opportunity to pay tribute to the hon. Gentleman for the work that he performs on some of the more innovative aspects of small business policy that have been fed from the Conservative Back Benches to the Front Bench over the past few years, some of which I have openly supported on the Floor of the Chamber when I believed that they were right and thought that they may work—especially the small business subsidy.
  Before I put the boot in, I want to pay a tribute to the right hon. Member for Hertsmere (Mr. Parkinson). In many ways he was the father of the big bang in the sense that he was responsible for negotiating a deal on commissions with the stock exchange in the early 1980s which, in effect, brought in the changes. I was sad to hear him criticise my hon. Friends for being unappreciative of that move. As those of us who sat on the Committee of the Financial Services Bill made clear, we support the changes and the greater freedom and liberation brought about in the City of London.
  We are concerned about the vast expansion in the market. We felt that some suitable regulatory system should be in place to ensure that abuses would not break out in the way that they have and will repeatedly break out in future. Without giving the case away, there is one particular reason why an SEC-type statutory operation would have been more appreciated by many hon. Members—the public would have a better perception of such a body.
  I do not believe that the British public can understand an arrangement whereby the policing of the City—apart from the statutory powers available under the Companies Acts to the Secretary of State — is carried out by a private firm of policemen in the form of the SIB. The City of London will be policed by a private company. Irrespective of the powers—and we can argue at length whether increased powers would be available to an SEC-type statutory SIB — there will always remain the
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  problem of perception. We will never convince the people that a private policing operation in the City will work. Even if it did work, people would never believe it. Wherever they saw deficiencies, they would say, even if that was not true—and I will not go into the merits of that — that they arose only because the policing operations were in the hands of a private company.
  More brutally, may I deal with the arguments during the past few months about Guinness and what it did. Despite assurances from the Dispatch Box, I believe that the Department of Trade and Industry will try to ensure that the number of people who are prosecuted is minimal. I have no doubt that some of those directly involved in the activities will be prosecuted, but the vast majority of them will not. We shall be fortunate to see two or three prosecutions from this entire affair. I believe that not just two or three people but hundreds of people are involved, and I can prove it. It was not a few people who received the £25 million, if that was the sum paid, but many people. Anyone who is willing to conspire with others to break sections 151 and 152 of the Companies Act 1985 is guilty of a criminal offence under the Criminal Law Act 1977, which sets out the offence of conspiracy. Clearly, some people conspired with those who set up the arrangements that are in default of sections 151 and 152 of the 1985 Act. They knew precisely what they were doing. They knew that they were conspiring to commit a criminal offence, and I believe that they were many.
  I warn the Secretary of State that when he comes to the House and announces the names of those who will be prosecuted, I shall be asking for prosecutions under the Criminal Law Act 1977. He knows that they have committed offences and they must not get away with it. It is as important that they are prosecuted as it is to prosecute someone who fiddles his supplementary benefit. They have all broken the law. As the Government have been willing to prosecute thousands of people who have fiddled their supplementary benefits, if it can be proved that at least hundreds, but perhaps thousands, of people are involved in this conspiracy, they should, equally, be prosecuted. I shall expect the Secretary of State to take that action.
  Earlier today—I must choose my words carefully because I gave the Secretary of State an undertaking privately — at Question Time I mentioned a licensed security dealer operating in the City and I asked the Minister to confirm that I had given him, privately, the name of that licensed security dealer, who was trading fraudulently, and that, during Question Time, that company was open for business and trading. I know that the people who bought shares today through that licensed security dealer will lose much of their money. Since I asked that question, people will have purchased shares not knowing that they will lose their money, but they will, as many before them have lost.
  I gave the Minister the name of the company and mentioned the nature of the offence that was being committed. I put it to him that, since he had the information, unless he took action to close the company immediately — his departmental officials have been considering the matter for several months and, in my view, have been hanging about and not taken the necessary action—it could be said that the Government or the officials had been negligent and that those who had lost money may have a claim against the Government.
  I give the Secretary of State notice that I intend to proceed with the case on that basis: I gave him the

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  information today. I know how much that company has been paying for shares, as today I made arrangements to ring in to discover the sale and purchase prices of their shares so that I can measure any losses in the future. If anyone who has bought shares comes to me in the future, I shall refer him to my statements in the House.
  The company, which I shall not be naming—I shall explain why in a moment — has international connections with associated companies carrying out similar activities overseas. A company associated with it in the United States of America is already the subject of an inquiry by the Securities and Exchange Commission. Information that I received from an SEC informant helped me to put together my case to the Minister at Question Time and during this debate, and I have taken that information in conjunction with further information received directly from investors. The company is already the subject of inquiries by the Department of Trade and Industry, and I am at a loss to understand why no action has been taken. There is sufficient evidence to warrant the Minister moving in to close the company before more money is lost.
  I have not revealed the name of the company for one reason. The company, which deals in the over-the-counter market, is warehousing shares. It is a market-maker in some shares and, because of its position as a market—maker, if I revealed its name, it would affect the price of shares held by ordinary people. I do not wish to be held responsible for a rapid drop in the price of those shares because many of them could be small savers.
  I have been criticised for refusing to name the company in the Chamber, and that is why I gave my reason. It is said that by refusing to name that licensed dealer, I am placing a question mark over other licensed dealers which might, as a result of my actions, lose business. I do not know. It was a hard judgment to make, and I can tell the House that I was up until 4 o'clock this morning discussing how to approach the matter. Eventually, the company will fall, and I place an obligation on the Minister to resolve the matter before the public loses more money.
  Finally, I should mention briefly the attempt by Lonrho to take over Harrods. We have all received a mountain of information from Tiny Rowland. The pile of paper that I have received during the past year is extremely thick. There must be a company somewhere doing nothing but photocopying and sending out correspondence. It is significant that much of the correspondence that he is sending out is clearly libellous. I do not know whether he is trying to provoke a legal action. He must realise that he will not get it, so now he simply says what he thinks. Some of the statements are outrageous, but they may be true. The problem is that none of us knows.
  I am informed that Tiny Rowland does not intend to give up. He will continue to ply us with information. This man may well be obsessive about this matter, but he may well be telling the truth. He is making grave allegations against Department of Trade officials, people in the Monopolies and Mergers Commission, the Prime Minister and, indeed, the Prime Minister's son, who allegedly was involved in discussions about the takeover. I do not know whether it is true or false.
  Mr. Beaumont-Dark: Why mention it?
  Mr. Campbell-Savours: That is the problem. We must discover the truth.
  Every hon. Member who, weekly or monthly, receives information from Tiny Rowland on this matter needs a full explanation. It is insufficient for Ministers to go to the Dispatch Box, as they do, and answer questions on this matter by referring to statements that were made some years ago about the Monopolies and Mergers Commission's decisions Nos. 1 and 2 on the proposed Lonrho takeover. Today, I mention the tax aspects of the matter. For those who were not present when I mentioned it at Question Time, I repeat that we have lost £20 million of revenue because of a decision taken in the early 1980s to refuse Lonrho the right to take control of Harrods. That in itself is worthy of some form of statement, if only a sentence — [Interruption.] It is not central to a statement, but may be mentioned during the course of a general statement on that takeover.
  Mr. Austin Mitchell: Does my hon. Friend agree that a statement, and indeed discussion in the House, will not clear up the matter? Grave allegations which may be accurate have been made. Certainly, in the argument put forward by Tiny Rowland in his letters to hon. Members, a strong case has been made for an inquiry, at the very least.
  Mr. Campbell-Savours: From my point of view, it does not matter what it is. All we want is an explanation.
  8.2 pm
  Mr. Kenneth Warren: The title of the debate is:
  "The City's Duty to Serve the Nation."
  As the Opposition chose this topic, I am amazed that more than 95 per cent. of Opposition Members are not present. It is their choice, their debate, and they make enough noise in the headlines—but where are they today? It was a delight to see the hon. Member for Stockton, South (Mr. Wrigglesworth) join us. Where are all his friends in the alliance? Where are the Ulster Unionists? Where are the Scottish nationalists? Where are the Welsh? It is an Opposition day, but they are not here. They serve their case very badly in seeking to criticise the City. They provide Conservative Members with an opportunity to talk in a sane and sensible fashion about the Government's relationship with the City, and to take Opposition time to do so.
  The interests of the Government and the City are mutually indivisible in exactly the same way — as we would be told by the Labour party, if its members were here—as the interests of Government and manufacturing industry are indivisible. There should be no qualification about the fact— I am sure that it will be apparent in the Lobbies—that the City does a valuable job for the nation. That job is well recognised around the world, even if it is not recognised on Opposition Benches.
  We heard the Secretary of State for Trade and Industry make a sensible statement about the value of the City. Now, in Opposition time, we could consider the way in which Her Majesty's Government should act and react to the City in a fair and reasonable fashion. Our trading position is disadvantaged because of the high cost of money in our domestic and trade economies. I hope that the Government appreciate that the regulation of interest rates should not be imposed so rigorously as to deny competitiveness. We must look sternly at the way in which

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  the present high interest rates, both in the City and in the promotion of manufacturing industry, are hurting our competitiveness.
  The issue of nationalisation compensation has been explored by Conservative Members on a number of occasions. It has been virulently pursued by my hon. Friend the Member for Surrey, North-West (Mr. Grylls), who made an interesting contribution to the debate. The Government must examine their relationship with the City — those who invest in it and those who rely on it to make progress in their businesses. That fact has not been spelt out more clearly than by the representations, for instance, by Sir William Lithgow in the Kincaid case. In letters to hon. Members, he stated that he considered that
  "The Government's attitude is quite incomprehensible to an industrial community like ours, not least because my organisation could provide so many more jobs in an area of great distress."
  He wrote that letter from Port Glasgow in Renfrewshire.
  When the Conservative party was in opposition, it was acknowledged that the Government of the day were not fair in the way in which they nationalised industries and paid compensation. I refer to the case of one company. I do not make this a cause celebre, but merely say that it is a sign of the general problem. It was stated before the European Court that Kincaid, an engineering business that had no special departmental aide, was vested in the Government on 1 July 1977. The Government acquired a business valued at £19 million, including £5 million in cash, for less than £4 million. The Government of the day acquired £5 million cash for £3·8 million and a business worth £19 million for nothing. Even at this late stage, Her Majesty's Government should examine this and other instances. The Government must be seen to be fair in their dealings with industry and the City to make sure that they protect future industry and commerce that may be threatened if the Labour party were to be in power. If Conservative Members cannot make the situation fair, the people of this country must look to Parliament and ask, "Where is our protection?"
  On 23 September last, my right hon. Friend the Prime Minister, in reply to the chairman of Scott Lithgow, wrote that she could not accept that the Government had
  produced unfair results. She went on to say:
  "Payment of additional compensation would require legislation."
  Today or tomorrow is not too late to try to achieve equity. In their relations with those who invest and deal in the City and in the community, the Government must act in a fair and reasonable fashion before we decide that we should always blame the City for any wrongs that may be done, as is so readily the accusation of the Opposition.
  What will the Government do about multiple applications in terms of the denationalisations that are most welcome and that we must pursue vigorously? At a convenient time, I shall give the Secretary of State information about the way in which multiple applications are being effected, which, judging from a reply that my right hon. Friend gave me in a written answer last week, appears not to be detected. We do not support anything that will allow multiple applications on denationalisation, but, apparently, they are taking place. I hope that my right hon. Friend the Secretary of State will pay strict attention to the need to control multiple applications without any hesitation.
  The tin crisis has almost become a traditional subject of interest to the Select Committee on Trade and Industry,
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  of which I have the honour to be Chairman. Following a personal representation — I was not acting in my capacity as Chairman—in a letter dated 22 January my right hon. Friend said:
  "I do not believe that the Government should seek a negotiated settlement of the claim against the International Tin Council and its members."
  The Government are held in high esteem throughout the world, and should take the initiative where responsibility is clearly seen to be that of the Government as a participant in an international agreement. We have only 4 per cent. of the total responsibility. I am advised that the Government's total legal liability would be not more than £20 million. However, because there has been no initiative from the Government, the creditors' hankers and brokers have been forced to take recourse in the United Kingdom courts.
  If the Government, whom I support wholeheartedly, believe in the strength and the future of capitalism but will not try to ensure that it is protected, I believe that they must examine their position and state whether they are prepared to reconsider carefully the way in which they have acted.
  Mr. Justice Millett, when considering the proposals for winding-up petitions, said:
  "The responsible course now would be for the member states by diplomatic means to negotiate suitable arrangements to meet the shortfall."
  The Government have an opportunity to take the initiative, but they are holding back. If they exercised their ability to take the lead in an international problem, it would greatly enhance their stature.
  The opportunity for debate provided by the Opposition today has, strangely enough, given Conservative Members an opportunity to tell the Government that they should act more strenuously to protect capitalism and to be seen to enhance its value
  8.11 pm
  Mr. Allan Rogers: I, too, am glad that the House is debating this issue today, although not for the same reasons as the hon. Member for Hastings and Rye (Mr. Warren). For a long time we have been concerned not about the relatively new events with mergers and insider dealing, but with the fraud in the City that has occurred over a considerable period, and that has been well known to the Minister with responsibility for consumer affairs. Indeed, our motion encapsulates the proper dissatisfaction felt not only among Opposition Members but throughout the country with what is happening in the City.
  There was a time when the City evoked some national pride; today, it stands for fraud, chicanery and fiddling — [Interruption.] It is true. If we ask anyone on the streets for his views on the City, that will be his general concept—
  Mr. Beaumont-Dark rose—
  Mr. Rogers: No, I shall not give way to the Tory Member. Most Tory Members are sponsored by and are consultants to firms and companies operating in the City. Most of them act as parliamentary consultants to large groups that have been involved in mergers and takeovers. I ask them to sit back and learn a lesson, rather than come to the House at this late stage of the debate and become very excited. They should listen—
  Mr. Beaumont-Dark rose—
  Mr. Rogers: I shall give way to my colleague and forgive him for his lateness.
  Mr. Beaumont-Dark: What lateness? I was here for the beginning and the middle of the debate. Does my honourable colleague think it logical to say that the City is noted for chicanery and fraud? Does he not know that £7·4 billion is earned by the City? Does he think that the world is as stupid as he is? Does he think that the world would deal with us if that were so? Will he not moderate his language and think of the country rather than only of the Welsh valleys, just for once?
  Mr. Rogers: I thank the hon. Gentleman for those remarks. Had I realised that he would be so personally insulting, I would not have given way.
  Mr. Beaumont-Dark: My honourable colleague was rude to us.
  Mr. Rogers: I might have been rude about Conservative Members in general, but I did not personally insult the hon. Gentleman. However, I admit that it is not difficult to be rude to him.
  The hon. Gentleman asked me to justify my opening statement; if he sits back and listens, I shall do just that. We are not dealing tonight with the new phenomena of Distillers, Argyll, Pilkingtons and BTR—we are dealing with a long history of fraud and chicanery in the City. The extent of fraud in the City's insurance sector is extraordinary in moral, legal, criminal, financial and social terms—[Interruption.] Perhaps I should say that it is anti-social. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) keeps muttering, and perhaps there are reasons why he does so at this time of night. I simply ask him to listen so that I can put my case.
  The position is extraordinary in the number of frauds that are perpetrated, in the audacity of those frauds and in their treachery. In general, those frauds are not simply a matter of one person against another—they are only the vehicles for handling the money of ordinary, decent people who, through pension funds or bank deposits, put their money into the hands of the City — and, more important to me, into the hands of the insurance sector. That aspect of the City has not previously been highlighted in this debate.
  Conservative Members are fluttering around their Benches, claiming to be concerned about standards and worried about what I may say. The Government appear to have an obsession with standards—probably because they do not have any themselves. Not long ago, the leader of the Conservative party spoke of standards in society—the need for more law and order, the need for the hanging penalty for terrorists, the birching of hunt saboteurs and the flogging of miners—[Interruption.] If Conservative Members read Hansard, they would then know that that is what was said during the miners' strike. As Max Hastings said,
  "All the other little human touches that would make British civilisation a better and a finer thing"—
  Mr. Warren: I must protest, Mr. Deputy Speaker. The hon. Gentleman has made the serious accusation that a Conservative Member has advocated the flogging of miners. Will he please name that Member?
  Mr. Rogers: Yes, I will. I shall not do so now, but will check with Hansard — [Interruption.] Because I have prepared myself for this debate—[Interruption.] I wish that the hon. Member for Edinburgh, Central (Sir A.
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  Fletcher), who is parliamentary adviser to the Argyll group, would allow me to speak. After all, I am speaking only for the Rhondda constituency—
  Mr. Warren: Name the Member.
  Mr. Rogers: I shall check with Hansard later.
  The one area in which the Government especially lack standards is in their dealings with their friends in the City.
  As the Lord Chancellor said last year:
  "The bottom seems to have dropped out of morality."
  When considering the background to the frauds, we must remember that the City has changed. The image the Conservative Members put forward in defence of their friends is one of the City still being of good men and true, working hard and honestly for God, Queen and country; of people whose word is their bond, and who meet in their clubs or at their old boy's reunions and order the world for the benefit of others.
  That is the image that Conservative Members would like us to have of the City of London but, of course, it is miles away from the present-day image of the City. It may well have been true some time ago but it bears no resemblance to the modern, high-technology money market where vast sums of money are moved and manipulated, as illustrated earlier by the hon. Member for Horsham (Sir P. Horden), and where the measure of success is not integrity but acquisition and greed.
  We know that the City is a dynamic institution and is constantly changing. As Andrew Philips said in The Observer on 15 December, 1985:
  "With all this, London has become an international crime haven, allowing financial racketers from mainland Europe and the United States to continue their commodity swindles, advance fee frauds and the like unmolested. But we also have a fraud boom all of our own. Any firm you talk to will have its own in-house tale of woe. But it will probably remain under wraps. Exposing crooked employees in court is a rarity."
  That is a City solicitor talking. He was certainly not challenged by his friends in the City.
  In the research that I have done for this debate, I have been impressed by the scale and number of frauds perpetrated. When I asked the staff in the Library if they could give me a list of all frauds that had been brought to public attention in the past couple of years, they came back to me a day or so later and said that they could do it but that there was so much I should get someone to help me carry the paper. I was not impressed, I was frightened by the volume and number of frauds perpetrated. In 1981, for example, the City of London police fraud department had 80 cases under investigation. In 1984 there were 117. New matters recorded were 536 in 1981 and 621 in 1984. In 1981 there were 35 arrests. By 1984 the figure had increased to 77.
  Before Conservative Members applaud the Government for the increase in the number of arrests, I would like them to consider the fact that there were only 18 Crown court cases in 1981 and only 18 in 1984; there has been no increase in the number of City fraudsters brought before the courts. The sums involved are huge, almost beyond what normal people can comprehend. A recent study, for example, calculated that British companies are now defrauded of £3 billion or more a year.
  Mr. Beaumont-Dark: Load of cobblers.
  Mr. Rogers: The hon. Member is using a rude word. It is probably either because he cannot understand, hear or read—
  Mr. Beaumont-Dark: You are talking nonsense.
  Mr. Rogers: —and he will drown there in his ignorance not just for the rest of the evening but probably for the rest of his life.
  An informed insider reckons that the recent reinsurance frauds netted £500 million. The City of London fraud squad has actually reported these figures.
  Mr. Beaumont-Dark: That is too much.
  Mr. Rogers: Are the City of London police figures wrong? I would prefer to accept them rather than the mutterings of the hon. Gentleman. The Government's own Inland Revenue has come up with figures as well. If there is nothing going on, as the hon. Gentleman is saying, why on earth in 1985 did Lloyd's agree to pay the Inland Revenue £42·5 million in respect of liabilities wrongfully secreted by members of Lloyd's? These were men of high probity, men in the City who settled with the Inland Revenue for forty two and a half million quid. That is the scale of the fraud that goes on in the City.
  Andrew Philips has further referred to underresourcing. Perhaps I could refer to the number of people involved in investigations in the City, the numbers that I have mentioned as compared with the numbers that my hon. Friend the Member for Workington (Mr. Campbell-Savours) mentioned, when he talked of hundreds, if not thousands. We are dealing with cases that are only in the low hundreds, because there are no people to investigate the crimes. The allegations are being made, yet there are insufficient trained police to catch up with the criminals. I quote Andrew Philips again, when he talks of
  "the bizarre under-resourcing of those responsible for policing the City and bringing its malefactors to book. The Fraud Investigation Group of the DPP, for example, has a paltry qualified staff of 21."
  Over 30 specialist claims control units investigate petty fraud in the social security system. My hon. Friend the Member for Workington said that it would be quite proper for people who were cheating on supplementary benefit to be brought before the courts. Quite right, but why do the Government have to have thousands of inspectors chasing people who may have cheated them of 5p or lop and only 21 people investigating the City of London?
  The Minister intimated last year that he was going to put more resources into this area. Perhaps he could give us some indication of this now. I am sure that he will accept my argument that more resources should be put into increasing not only the number but also the quality of the people who do this work.
  It has been argued by Government Members that other financial centres are more corrupt than the City of London, that there have always been rotten apples in the City and that we have to live with corruption and fraud. I do not think that we have to. This debate today is vital for the interests of the country. We Opposition Members are to be applauded for removing the wraps from the iniquitous goings-on in the City of London. The debate should not be in any way about self-regulation versus statutory control because to some extent it is now sterile. We cannot legislate for an institution whose moral foundations are crumbling. We can have the finest laws on earth, the finest structure and the finest institution, but if there are crooks operating inside and we do not root them out it will still be an evil, decaying institution.
  8.28 pm
  Sir Alex Fletcher: I am obviously happy to declare my interest in this matter, first as an adviser to the Argyll Group but, more important for the purposes of this debate, as the Member for Edinburgh, Central, the United Kingdom's other financial centre. I might add that also in my constituency I have what was supposed to be the headquarters of Distillers, although the actual headquarters' activities were rather difficult to find.
  I shall be very brief on matters of competition policy and in terms of City regulation, not least because my right hon. Friend the Member for Hertsmere (Mr. Parkinson) covered these points extremely well in his speech. I had the pleasure of working with him at the Department in 1983. There should not be over-reaction to the criticisms that have been made by some of my hon. Friends, but more frequently by Opposition Members, about policy on competition and mergers. I recollect that in 1973 there was over-reaction to the secondary banking crisis. As a result we had the development land tax, which stifled economic growth in the market.
  On the question of the regulation of the City, the biggest problem that we face on this side of the House, for which I must take much of the responsibility, is the continued use of the expression "self-regulation". Self-regulation was the old system of voluntary club rules in the City, but the new system which has been introduced in the Financial Services Act 1986 is by no means voluntary. If people wish to trade and do business in financial services in the United Kingdom, they are obliged to register and to submit to the rules that will be supervised by the Securities and Investments Board. These rules are no soft option. They require the consent of my right hon. Friend the Secretary of State for Trade and Industry. He in turn has the full advice of the Director General of Fair Trading. So I can only apologise for having in my time at the Department stuck with the term self-regulation. If nothing else, I can now see how badly it describes the system that is being introduced.
  In the interest of time I shall come straight to the problems that confront us in the Guinness case. This is a case of financial fraud clumsily perpetrated, one that was bound to be revealed, if not by Boesky or Ansbacher, by someone else; most likely it would have been the company auditors, Price Waterhouse. I have every reason to believe that when the DTI inspectors arrived on the scene Price Waterhouse was well on the way to investigating many of the matters that are now being aired publicly. Instead of Price Waterhouse presenting the evidence to the company's shareholders, as it would have done, it presented it conveniently to the DTI inspectors. I have no doubt that Price Waterhouse would have carried out its public duty whether or not inspectors were sent in.
  I wish that more of our companies would return to the habit of taking advice from their auditors, rather than always going to the smoothly operating merchant banks in the City. There is a good tradition in this country of people going to their accountants. This is not a commercial for my profession but it is a fact that companies do well to seek financial and business advice in general from their auditors.
  The point that I wish to make in bringing in Price Waterhouse at this stage of the debate is that investment

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  protection is not a new invention. We may be critical of aspects of it, but it is carried out day in and day out by firms such as Price Waterhouse.
  Mr. Wrigglesworth: The hon. Gentleman has raised a very important point about auditors, but is the history of auditors in not blowing the whistle on matters of this sort good enough to give him the confidence that he has about the role of Price Waterhouse in this case? Does he not feel that the powers of auditors should be strengthened?
  Sir Alex Fletcher: In my experience, yes. Having worked as a professional accountant, and having been involved in audits, I have seen many examples of fraud being exposed. It is not always exposed publicly, because it does not always have to be exposed publicly. If the auditor confronts the company chairman and says, "This is not right," nine times out of ten the company chairman will see that the matter is sorted out or that the police are called in and an investigation takes place. I am talking not about a cover-up, but about the power of an auditor to declare publicly in his audit certificate that he is unhappy with the way that the directors are treating shareholders. He has such power that the directors cannot afford to go against his advice.
  Mr. Robin Cook: The hon. Gentleman is making a serious point and I am with him in much of what he says. He will appreciate, of course, that his last observation weakens some of the force of his argument that Price Waterhouse would have been going to the chairman of Guinness, Ernest Saunders. If that method of investment protection is to work, would it not be desirable to consider having an audit committee within the board?
  Sir Alex Fletcher: I do not disagree with the last point that the hon. Gentleman has made, but it is wrong for him or the House to think that because an auditor finds a difficult chairman that is the end of his action in the event of fraud. He has other powers available to him, and he uses them. A firm of Price Waterhouses's stature need fear no one in anything that it might come across in an audit.
  On that point, I might say to the House that Price Waterhouse may also find evidence in the course of its investigation of Guinness of cash payments for which there will be no invoices, payments that were probably made in plain brown envelopes to members of the professional criminal classes. I say this because I have reason to believe that someone in Guinness may have resorted to tactics designed to intimidate those who, like myself, desired an investigation into the affairs of the company following its acquisition of Distillers. I know that such payments are difficult to detect. As I have said, I have worked as a professional accountant and I know the difficulties that Price Waterhouse faces. I am sure that if it detects such payments it will present its evidence to the new directors of Guinness, and I am sure that they in turn will wish to be as forthright about these as about the other matters that have been made public.
  Mr. Barry Porter rose—
  Sir Alex Fletcher: I am sorry, but I cannot give way. I must allow hon. Members who have been here all afternoon an opportunity to speak.
  During the Report stage of what is now the Financial Services Act I referred briefly to the takeover panel, which
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  is the last remaining vestige of the old club rule system of self-regulation. The Guinness affair has confirmed my view that the panel should become part of the new statutorily backed system, whether as part of the SIB or in some other way. It would be better if it could be contained within an existing body, rather than create another body which has to supervise the affairs of the City. This is a matter to which my hon. Friend the Minister can give further thought.
  During the Argyll bid for Distillers, Argyll complained to the takeover panel a number of times about certain dealings in Guinness shares. The panel simply accepted the assurance of Morgan Grenfell over the telephone that the takeover rules were not being broken. With the benefit of hindsight, we need much more effective supervision in the new markets. The SIB will have the resources and the authority that the panel lacks to investigate and take quick action where evidence suggests that all is not well. In any case, the SIB will be doing just that in the markets generally. I hope that in reply to the debate my hon. Friend will go a little further than my right hon. Friend in saying how he thinks the panel might be brought into the takeover sphere.
  In the wake of the Guinness revelations, the Chancellor of the Exchequer and the Governor of the Bank of England have acted quickly and effectively in the City. They were absolutely correct to ensure that the top brass cannot simply dismiss junior directors and leave it at that. The captain is responsible for the fate of his ship, whether he is on the bridge or down below in his bunk. That should apply on land just as much as it does at sea.
  Serious as these City matters are, the fundamental question in this shameful affair must be the legality of the Guinness acquisition of Distillers. I can do no better in that respect than quote briefly from the Financial Times of last Saturday 24 January:
  "It is now clear that the takeover battle for Distillers was not decided simply by free market forces. Instead the share price of Guinness was manipulated so as to give shareholders in Distillers a misleading impression of the value of its bid."
  That says it all.
  The criminal matters arising from this affair will be dealt with by the courts. Argyll and the other companies will decide what civil actions they should raise against Guinness and its advisers. But what about the Scotch whisky industry and its future? A year ago Guinness followed Argyll's lead and promised to return to Scotland the headquarters and top management of Distillers as part of the newly merged company. That commitment was broken, along with several others.
  Are the shareholders of Guinness content that the Guinness family directors and the remaining executive directors, who sat silently but profitably throughout the Saunders' stewardship, should be permitted to merge or dispose of Johnny Walker, Dewar's, Bell's or Gordon's as they think fit? I have every respect for the new non-executive directors and the new chairman, Sir Norman Macfarlane, who is a personal friend of mine, but their hands are full trying to measure the extent of the damage inflicted on the company by its directors. In any case, their presence now does not alter the thrust of my question about the future of the Scotch whisky industry.
  In recent weeks the City has revealed its deep concern for its reputation as a leading financial centre, and rightly so. I have already praised the work of my right hon. Friend the Chancellor and the Governor. But the City has another

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  equally important role in this affair as the major institutional shareholder in Guinness. The City backed Guinness twice last year, first in the bid—many people in the City took the view that because it was an agreed bid with Distillers they should back both the Distillers board and the Guinness board — and again at the extraordinary general meeting at the beginning of September when it personally backed the chairman when he went against all that the City should believe in and said that he would be chairman and chief executive. He was stubborn on that point and the City gave way, and we know why. He could not risk an independent chairman — if hon. Members will pardon the pun — of Guinness. If Sir Thomas Risk had become chairman, the company's affairs would all have tumbled out in the few weeks thereafter. However, that was not to be. On both occasions the City was seriously misled. Indeed, it was deceived.
  I respectfully suggest to the City that in the present circumstances, with Guinness confronted by enormous management and financial problems and possibly vulnerable to an overseas bidder, and with the competition policy that has been stated and restated many times—the Government cannot simply kick it into touch to the Monopolies and Mergers Commission; at least, I hope that they would, for reasons not to do with competition or the public interest — it should, as the dominant shareholder, assert its influence on the future of the Scotch whisky industry, and he seen to do so.
  The City would enhance its reputation a great deal if it showed that it could act, not just as practitioner, merchant banker, broker and dealer, but responsibly as a shareholder, rather than have this great industry floating around rudderless and, at the moment, captainless. No new captain coming on board suddenly out of the blue would easily remedy the enormous problems that that company faces. That is where I see the City's further responsibility in this affair.
  Ministers also have a responsibility here, because they have it in their power to influence swift and effective action to heal the severe wounds which the Guinness company has inflicted on the Scotch whisky industry. This is a time where the aims of the City, of the industry and of the Government should combine. They should be at one in ensuring that our financial reputation, industrial performance and good government prevail.
  8.44 pm
  Mr. Austin Mitchell: I followed the speech of the hon. Member for Edinburgh, Central (Sir A. Fletcher) with great interest. I agree with the major part of his argument. Indeed, quite by coincidence, I have just written to the Prime Minister and the Secretary of State for Trade and Industry suggesting that Guinness should be required to divest itself of the Distillers company. We cannot countenance a situation in which the criminal is allowed to keep the spoils of the crime. The hon. Gentleman mentioned the brands concerned. Will it be good for the reputation of those brands that they are now diluted with Guinness in the market? It will certainly not be good for Scotch whisky. I hope that that suggestion will be considered seriously because such a measure is well justified in this case.
  The hon. Gentleman's speech also stood out, if he does not mind me saying so, because, unlike many other speeches by Conservative Members, it was not a panegyric for the City. Clearly, Conservative Members are sensitive
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  about the City's reputation, as well they might be, but to defend it on the grounds that it earns so much money overseas for Britain, or at least for a section of Britain, is rather like the citizens of Colombia defending the drug trade for fear of endangering overseas earnings.
  What happened in the Guinness affair was surely a test of the City club and the vaunted principle of self-regulation. Most social security frauds, which the Government are so assiduous in dealing with, come to light because neighbours report on the fiddler. They complain to the Department of Health and Social Services. Yet here, in full view of the City, was a scandal of major proportions which many people knew was going on. That kind of thing cannot be kept within a close circle. The merchant banks, the institutions and the overseas connections involved must have known on a considerable scale what was going on, but nobody grassed. Nobody turned anybody in and nobody complained. They all sat there silent—the club operating.
  Then the City asks us to accept the principle of self-regulation; that the mafia can best do its own police job. We see that kind of performance in that kind of case, faced with that kind of scandal. That surely undermines the whole principle of self-regulation. The stimulus to the inquiries, the original accusations and information, came from the United States, not from the City of London where it had all been happening. That is a major indictment of the City.
  I do not want to join in this chorus of denunciation. Clearly, there are major problems. Insider trading is a major problem. If the Government want to encourage shareholder democracy, they must not allow the small shareholder whom they are encouraging to be ripped off. Yet that is what is happening with insider trading. The smaller shareholders are being ripped off by people with inside information using it for their own, now criminal, fortunately, purposes. That is what is at issue. Although few cases have been detected or prosecuted, it clearly must be occurring on a considerable scale judging by the share price movements of companies in contested takeovers. The movements always start before the bid is launched. Most of the research that I have seen shows substantial movements, which can only come from insider information and trading before the launching of the bid.
  The scandal is amplified by what went on in addition in Guinness. But I do not find that surprising. The City is, after all, about money. It is about self-interest, greed and speculation. It is about lemmingism turned into a computer programme and wearing a dark suit. The City is not the Church of England at lunch. It is not a cathedral and we should not be surprised that such things happen.
  The City is now characterised by a kind of up-market barrow boy mentality. It is rather like the Conservative party. There is no noblesse and there is no oblige. There is a kind of lowering of the accent. The elocution teacher element has gone. It is about that kind of greed and self-interest. Those who do not make it in the City, in either sense of the word, come here to the House of Commons as the pioneer corps of the City, trying as best they can to defend what is going on down the river from which they are mercifully excluded. That is not surprising because, in the ethics of the jungle, people will get away with what they can. It is no use expressing surprise that that has happened.
  We need proper, effective regulation and that is why, in Committee on the Financial Services Bill, Opposition

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  Members were adamant that the Government should place regulation on a statutory basis. We said that there should be a body with the power to prosecute and to be its own police force, rather like the Securities and Exchange Commission in the United States, and functioning in the same fashion. In the more intimate atmosphere of the City, my hon. Friends and I saw that as the most effective way of dealing with the issue of regulation.
  Indeed, we advised the Minister that a Labour Government would have to begin the work of regulation all over again if he did not accept our suggestions. We had hoped that we could come to cross-party agreement on some statutory body. The Minister unwisely rejected that advice and the Government are now desparately trying to back-pedal from their current position. They now have to strengthen what is, essentially, a limited company, financed by the City to regulate the City. That is not good enough.
  One of the next Labour Government's first jobs on taking office will be to restore the City's reputation. In that sense, we have its real interests at heart. Its trading ability and worldwide connections depend upon its reputation and it has done more harm to its reputation than have any attacks from this side of the House. By providing a statutory basis for regulation, we shall be defending the City's reputation.
  We should go further. I would like to see a requirement for the registration of the beneficial ownership of shares so that overseas nominee companies cannot go in for such raids as are involved in the process of takeover. Why should the beneficial ownership of shares not be registered? That is a legitimate requirement, and one of the problems facing us is why are the Government not proposing that.
  My hon. Friends and I should also like to see a takeover panel with statutory powers and with a duty to take the economic situation of the company and the wishes of the workforce into account to stop the highly leveraged bids that have been built on a pile of money and credit, so that we can adequately control takeovers. I would give the first response to any bid to the employees of the company so that they can take over their own company, if that could be written into the legislation. A takeover panel with statutory powers seems to be the absolute minimum requirement.
  If the Prime Minister is so keen on turning the unions over to their members, why is she not so keen on turning companies over to their shareholders? Why are the Government not bringing forward a radical programme of shareholder democracy, if they want to encourage small shareholders? Shareholders should be given more say in power and control over their companies. Why are the Government allowing small shareholders to be fleeced, exploited, rooked and duped in the way that has happened because of insider trading? Why are the Government not making the same song and dance about shareholder democracy that they made about the trade unions? Why are the Government not doing any of that?
  I should like to deal briefly wth two problems. I decline to join the chorus of praise about the achievements of the City. In the main, those achievements have benefited a fairly small and wealthy class in this country, and not the great mass of our people who depend on the real economy
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  of jobs, manufacturing and industry, not on manipulation, and certainly not on a City that is now an adjunct or an outhouse shed to international manipulation, instead of having British interests, industry and investments at the centre of its preoccupations. The interests of the people of this country are in industry and not in the speculation of the City. Therefore, I decline to join the chorus of praise.
  I note that our share of world financial services has been declining as steadily and at about the same rate as our share of world manufacturing trade. If that is achievement, the City will shortly be in the same situation as British manufacturing industry. In part, British manufacturing industry is in its current situation because of the City's approach to it.
  The Chancellor has told us that he condemns shorttermism in the City. He is the kind of man who should recognise short-termism, whenever it occurs, because his economic policies are essentially based on a short-term approach. However, in this instance, the Chancellor is right to point to the problem of short-termism in the City and to draw attention to the problems that that causes. The City's short-term attitude towards investments, shared by the banks, has fostered an attitude of shorttermism towards takeover bids, or the possibility of such bids, and is a penalty on investment. Any company that takes a long-term view makes itself unattractive to the market and immediately vulnerable. A company with an investment programme that is designed to enable it to survive as a competing, effective company in a competing world market makes its share price less attractive and, therefore, becomes vulnerable to takeover. A short-term attitude penalises innovation and one of the great problems facing this country is the lack of finance that the City has provided for innovation, new initiatives and new products.
  We do not have a similar ability to the Japanese to think long-term. The Japanese Ministry of International Trade and Industry not only has influence, but common personnel with the banks, and is able to arrange finance for a company that wants to invest in the long-term and to get a certain share of the market for its new products. That allows the company to sit through the hard years of getting a market share and building up its product and marketing force and to survive to draw the benefits. In Japan, a company can decide the market share that it wants, can get the finance to achieve that and can build on a long-term basis. That is something that we have never been able to do in this country. The City and the banks are largely responsible for the fact that we have not had such a long-term approach to investment. It is now too late for the City to pull its socks up. The City is doing a bit but it is certainly not doing enough. When it comes to investing in industry, the banks have nothing like the record, reputation or ability of the banks in West Germany. The approach of the banks has been short term. They want a quick, profitable balance sheet. A profitability time scale of three months seems to be the aim, rather than thinking of the five or 10-year expectations of the company.
  The banks in my constituency are much more keen to operate as glorified pawnbrokers and to provide money for assets rather than to invest in the future for investment, growth or business. If those banks lend money they are too keen to charge fees for arranging the loan that would be a burden on the firm. The banks snatch the loan back at the first sign of difficulty and cannot evaluate whether the

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  firm has a real possibility of success. They do not nurture business as their television commercials tell us they do, and they certainly do not nurture business as do the West German banks.
  We need an institution that looks to long-term investment. That is why the Labour party proposes a national investment bank or an industrial bank—I am not sure what the current nomenclature is—which will bring back, by stick and carrot, money that has been invested overseas and ensure that it is invested in Britain for long-term purposes.
  The weakness of the banks and the City, and their failure to nurture industry and he involved with it like the Japanese and West German banks, is one of the reasons why we have had to labour too long with an overvalued pound. The interests of finance are taken separately from those of industry. The West German and Japanese banks are keen to see that their exchange rates are as competitive as possible. They are keen to resist appreciation. They must allow their exchange rates to appreciate substantially if we are to trade fairly, win back markets and indeed survive in the face of competition from them.
  West Germany and Japan are now trading unfairly because the value of both currencies is kept lower than it should be by such devices as exporting capital, low interest rates and membership of the European monetary system. We should have gone in for that type of strategy if our banks had had similar involvement with industry and knowledge of its interests.
  We are all worried about the amount of credit. The Bank of England has called it the overhanging glacier of credit. It is one of the main engines of inflation. An example of that is the appreciation of house prices. That appreciation creates collateral. People can then borrow on an appreciating house price and, because more credit is available, the house price increases again, enabling people to borrow even more.
  One of the Labour party's aims should be to achieve effective control of credit. We should reverse the decisions that have been taken in regard to competition and credit control. They were disastrous, as they made credit an engine of asset appreciation and speculation. We must be able to direct credit so that it is used for the proper purposes of industry and the community.
  I should like the banks to be required to take Treasury bills at a low rate of interest so that they cannot fund the debt in the traditional fashion, and so that we can use Government credit and put the money out directly into public spending, benefit increases and, if necessary, tax cuts to stimulate the economy rather than pump it out through the banks. The latter course leads only to a fever of speculation on asset appreciation. It is not for the banks to fuel the fever of speculation and takeovers. One of our first jobs, as the Government, must be to ensure that credit is used for the people and not for the banks.
  9 pm
  Mr. Peter Lilley: I too must declare an interest, although I am currently on leave of absence from my old firm. Like each right hon. and hon. Member, and every constituent who has a pension plan or an insurance policy, I have a vested interest in effective and rigorous regulation and honourable and honest investment by those people who handle our funds in the City.
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  It is therefore sad that riot one Liberal Member of Parliament has turned up for such an important debate and that, although it is an Opposition day, fewer than eight Labour Members are present.
  Mr. Robin Cook: There are only nine Conservative Members.
  Mr. Lilley: I should like to deal with some of the sources of confusion which bedevil the debate in the House and in the country.
  The first is the term "self-regulation". Unfortunately, it normally conjures up the idea that it is all voluntary or, at best, imposed by the moral persuasion of professionals in the City. People therefore deduce that we need something statutory. What we have is a system of practitioner-based statutory regulation. The alternative is civil servant-based statutory regulation. Anybody who believes that it is possible for civil servants to regulate a business that is so complex and rapidly changing as effectively as those who operate a system which involves practitioners who know what is going on is talking through his hat.
  The motion talks of imposing a statutory independent commission—an SIC. The Opposition seem to believe—the right hon. and learned Member for Monklands, East (Mr. Smith) implied it—that we have not established any body to supervise the City, have no plans and are relying on the sense of obligation of those involved. All I can say is, to use the words of the advertisement, he should go and tell SIB.
  The second source of confusion is what might be called a paradox of successful detection. As long as crime and misdemeanours go unnoticed, nobody thinks that there is a problem, but as soon as we have some success at identifying crimes and those responsible for them, the public becomes aware of the problem and, as the public is wont to do, says that something must be done. It says that precisely because something has been and is being done.
  I hope that we can get over the fact that we are successfully identifying wrongdoing which was previously going unrecognised, not least because some of the things which are now crimes were riot crimes under the Labour Government.
  The third source of confusion arises from the two uses of the term "moral standards" in the phrase, "declining moral standards in the City". The first use concerns the standards which we all agree ought to be observed and which are enshrined in the rules and laws that govern the City.
  The second use is the degree to which those standards are at any time adhered to and complied with. There is no doubt in my mind that the standards that are accepted and enshrined in the rules and imposed by law have increased steadily and, over a period, dramatically from those which used to prevail. I can think of many examples, and the most obvious is insider trading, which used not to be an offence in law and was not considered to be morally wrong. Through lack of rigorous analysis, it was not known who lost as a result of it.
  My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) talked in an earlier debate about his experience in the City. He explained that at that time
  "there was no legislation on insider dealing bcause nobody imagined for a moment that there would be an orgy of insider dealing."—[Official Report, 20 January 1987; Vol. 108, c. 793.]

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  He suggested that the City did not reckon to involve itself in that sort of activity. I must tell my right hon. Friend—I endeavoured to do so at the time—that he let a lot pass him by. It was considered the norm to deal on the basis of insider information, if it was available, until about a decade ago.
  Other changes have raised the standard of morality and rule-making in the City, including the change of attitude to multiple applications for new issues. That was considered to be a bit of a lark and it is now potentially a criminal offence. It used to be considered normal for those working in banks and broking houses and acting in a corporate capacity for a company to deal in the shares of the company. That would now normally be prohibited except on the terms on which the directors of companies deal. It used to be considered normal to deal before offering advice to a client. It was commonly held to be rather a recommendation when it was said, "I have bought some myself, old boy; why don't you?" That is considered now to be wrong and improper and no one is expected to deal on that basis until after all his clients have been enabled to buy.
  There have been changes in the morality and rules that we seek to establish in the City. None of us has any firm evidence whether there has been any change in the number of bad apples in the crop and we do not know the extent to which there is compliance with the rules. My suspicion is that there has been little change over the decades and that there are as many rotten apples now as there were in the past, but probably no more.
  There is the belief that, if a company invests, its profits will be reduced and it will render itself vulnerable to a takeover. This is held to be the mechanism by which the City enforces a short-term attitude on industry, which leads to a lack of investment in research and development, for example.
  Short-termism is a weakness in industry, in the City and not least in politics. It was Lord Wilson of Rievaulx who said that a week is a long time in politics, but it is nonsense to suggest that investment is discouraged by the City and that it leads to takeovers. Investment does not reduce a company's profits. It does not enter into the profit and loss account until after the project in which it has occurred comes on stream and starts producing profits. The only areas in which there is a significant reduction in short-term profits are those where research and development is written off in the short term, and that is especially important in the pharmaceutical industry. Exploration costs are written off straight away in the oil industry, which again is an important factor.
  It so happens that the pharmaceutical and oil industries are favoured by the City and are not prone to successful takeover bids. They have not been dissuaded from investing. On the contrary, they have invested heavily, successfully and in the extremely long term. I used to be involved in the oil business and we took a 20-year view. I believe that much the same is true of the pharmaceutical industry. The City has encouraged that, not discouraged it.
  The Opposition are trying by means of the debate to arouse misunderstanding in the City on the basis of their own semantic confusions. I have mentioned the
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  pharmaceutical industry and I think that the Opposition should take the motto that was hung above a pharmacist's shop, which was, "We dispense with accuracy".
  9.9 pm
  Mr. Bill Walker: I am grateful for this opportunity to contribute to this important debate. First of all, I declare that I have no interest whatsoever other than that of a Member of Parliament in whose constituency are the firms of Distillers and Bell. On that basis, I shall concentrate my comments, in the few minutes available, on the problems in the city concerning Guinness.
  In my Adjournment debate on 25 July 1985 I spelt out the problems concerning the decision taken at that time by the takeover panel. I said that I considered that the takeover panel had made the wrong decision concerning the Bell takeover when it allowed Morgan Grenfell to continue as Guinness's merchant banker and adviser while Morgan Grenfell's corporate finance department had acted, for 10 years, as Bell's corporate finance department. Therefore, it was privy to all Bell's secrets right up to the point of the takeover. Immediately prior to the takeover, the corporate finance department was acting on behalf of both Bell and Guinness. There were no Chinese walls there.
  I criticised the takeover panel because I believed that it had let the City down and I still believe that—but, more important, the criticism that has been heaped on to the City should properly and justifiably be put on those whose job it was to look after the affairs and morals of the City. I believe that the chairman of the takeover panel should consider his position.
  At the time, I said that it was wrong of the takeover panel to allow Guinness, during the Bell takeover, to say:
  "Scotland's best performing manufacturing company has lost its way."
  That was the biggest lie that I have ever read in my life. No one could ever describe Bell as a company that had lost its way. Every year, the company had increased its profits and its sales, and the employees — who were all shareholders—enjoyed its profitability. I shall return to the matter of employee shareholders shortly as I think that it is important and crucial to any decisions that we make about the future of the City.
  I found it rather odd that General Accident, Bell's next-door neighbour, deserted Bell at the last minute of the takeover—it held 11 per cent. of Bell's shares—and if it had stayed with Bell, Bell would probably be independent today.
  The reason I speak about this is that there have been reports in the press, which I confirm are accurate, of correspondence between a director of Noble Gorssart, which was acting for Guinness, and the present chairman of Guinness, Sir Norman Macfarlane. I believe that there are questions that require an answer. I am not seeking to cast any slurs, but those questions must be answered. Why was Peter Tyrie's account of £51,000 at Quayle Munro paid for by Guinness prior to the completion of the takeover? No declaration was made.
  I congratulate my right hon. Friend and hon. Friends on the Front Bench on the speed with which they have moved. They have my full support. The criticisms that I am making are in no way a reflection on the present Front Bench. However, I must criticise my hon. Friend the Member for Edinburgh, Central (Sir A. Fletcher)—

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  unfortunately he is not in the Chamber at the moment—because he was the Minister at the time when I gave him the early evidence that I had, which stands up to close examination, that there was skulduggery going on in the City.
  My hon. Friend let the Scottish whisky industry down and it is no good for him to call foul. We would not have faced the ghastly problems of Distillers if the problems had been dealt with during the takeover of Bells. Ernest Saunders used the same tactics and the same strategy with Bells, but the funds used were smaller. I know that, because I was followed by a private investigator during the period of the Bells takeover. He must have been rather disappointed, because my life is not that exciting. Nevertheless, I know that I was followed, as were the directors of Bells.
  There is much that I wish to say about this, but I hope that the situation of the employee shareholders will be looked at. I hope that a formula to return Bells to its former directors and employee shareholders will be found and we can get rid of the greed, skulduggery and political ineptness that have brought us to this situation today.
  9.14 pm
  Mr. Robin Cook: For the first time since the hon. Member for Tayside, North (Mr. Walker) entered the House, I can say that it is a pleasure to follow him. Lest that comes as too much of a shock to my colleagues, let me explain that I represent one of the two main production centres for Bells whisky and I accompanied the hon. Gentleman when he went to see the hon. Member for Edinburgh, Central (Sir A. Fletcher). In the light of what has happened since, I rather wish that he had agreed to our representations to refer the Guinness bid for Bells to the Monopolies and Mergers Commission. Perhaps, in the light of his deep knowledge of the subsequent bid by Guinness for Distillers, he can now see the force of the arguments that we put to him.
  Sir Alex Fletcher: I am sorry that I did not hear all the speech of my hon. Friend the Member for Tayside, North (Mr. Walker) but I can guess those remarks that I did not hear. However, there was no evidence presented by anyone during my time as a Minister in the Department of Trade and Industry to show that there was any misconduct by Guinness or anyone else in the course of the takeover bid for Bells.
  Mr. Cook: That is what the takeover panel says about the Guinness-Distillers bid, a point to which I shall return.
  I shall refer to many of the speeches made today, but the House will expect me to make the core of my remarks, around which I shall weave these references, the revelations that we have had in the past month about the way in which the City operates. These have made the business pages of the newspapers much the most interesting and entertaining pages, reporting as they do flights of creative energy that we cannot discover on the arts pages.
  It is now evident that Guinness succeeded in beating off its Argyll rival for Distillers by a touch of more than pure genius. It was partly, at least, secured by the use of a war chest of £25 million, disbursed to members of the concert party. I understand that the £25 million was paid by means of petty cash invoices. Guinness is a large company, especially now that it has swallowed Bells and Distillers,
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  but even a company as large as that is not accustomed to handling £25 million through petty cash. Payments have been made to several people who have been named tonight—Gerald Ronson, Sir Jack Lyons, S. and W. Berisford. I noticed the rather plaintive observation of Jacob Rothschild's J. Rothschild Holdings the other week:
  "We appear to have been one of the few investors in Guinness which did not receive a kick-back for its help. We were a genuine part of the fan club."
  I am not sure whether the second sentence is offered in explanation of why it did not get the kick-back or a complaint about not getting the kick-back.
  An obvious series of questions flows from these revelations. The first and most clear is: is Guinness an isolated affair? Is it without parallel in the recent history of the City? Are there any comparable cases? We have the intriguing remark of Lord Hanson, who, rather unfortunately, said on 9 April 1986:
  "Guinness … are doing so many of the things we are doing in our fight for Imperial."
  I have no doubt that if he could have his time over again, he would phrase that rather more felicitously.
  The question whether there are any parallels is prompted by one or two considerations, of which the first is that Guinness is not the only company to have launched a takeover bid and discovered to its surprise its share price rising during the course of that bid. One need look no further than the case of the Burton bid for Debenhams, which was also accompanied by an interesting rise in the share price at the time of the offer for Debenhams.
  The other reason why we might speculate whether Guinness is an isolated case is the fortuitous way in which we understand that the DTI inquiry began. It began, as everybody in the world knows, because the DTI received information from the SEC which had stumbled over the link between Guinness and Boesky. The Department of Trade and Industry knew that that link was going to break on Wall street in the following week if it did not send in its people first.
  The right hon. Member for Hertsmere (Mr. Parkinson) took a dim view of the SEC in America for having taken four years to nail Boesky. It is a fact that Boesky was active not simply on Wall street, but in the City. He was involved in several of the takeover deals in the City. He formed one of his major investment trusts in the City. It is true that his enthusiasm for the City was tempered by his observation that he did not care to do business there because, as he said in his delightful phrase, he found it "too leaky". Nevertheless, Mr. Boesky was very active in the City. It ill becomes the right hon. Member for Hertsmere to complain that it took the SEC four years to uncover Mr. Boesky in Wall street when he was never uncovered in any of his operations in the City.
  It is fair to reflect on what happened during the Guinness bid for Distillers as a test of self-regulation or, as we now must learn to call it, practitioner-based regulation. At the heart of the failure of the regulatory system was the operation of the takeover panel. That panel is a prime example of practitioner-based regulation. It exchanges personnel with the rest of the City. One of the personnel it has exchanged is Graham Walsh who, five years ago, was its director general before he transferred back to Morgan Grenfell, from which he resigned earlier this month having discovered that his bank had helped to break the rules that he had helped to frame while he was at the takeover panel.

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  Where was the takeover panel when Guinness was not just breaking the takeover rules, but was comprehensively pulping them? What was it doing? Did it know? If it knew, why did it not act? If it did not know, why did it not know? It has no excuse. We know that the Argyll group made sure that it was informed about the suspicious and curious things happening to Guinness shares.
  In The Independent this morning Sir Martin Jacomb observed that the takeover panel should not be thrown to the wolves. I would not adopt that course of action. That appears to be the Lord Avebury solution. I believe that Sir Martin is missing the point. The point is not whether the takeover panel should be thrown to the wolves, but why it failed to notice such a large ravenous wolf in its own backyard.
  I listened with interest to the Secretary of State talking about setting up another review. I hope that it will report earlier than the review on competition policy which, as I understand it, will not report until the end of the year. He would have been spared the need to set up such a review if he had accepted the many offers of advice and the many amendments tabled during the passage of the Financial Services Act 1986 and taken the opportunity to put the takeover panel on a proper statutory basis.
  Another area of concern in the Guinness scandal is how it was so easy for Guinness, having embarked on its course, to find so many willing accomplices in the City. My hon. Friend the Member for Rhondda (Mr. Rogers) made a characteristically robust and fearless contribution to the House. However, I differ from him in the emphasis that he placed on crime in the City. I do not take the view that all those who operate in the City are crooks. I would go so far as to say that most of those in the City would not knowingly break the law. Over the past three months I have met many people operating in the City on many different occasions. I have not been invited to chateau Morgan Grenfell, which I understand is located in Whitehall court. However, I have met many operators in the City and it is clear that many of them —[Interruption.] My right hon. Friend the Leader of the Opposition holds out the prospect that I will be invited. I hope that this speech has drawn my absence at the chateau to the attention of those in Morgan Grenfell.
  I have met many operators in the City and there is no doubt that from most of them there emanates a sense of indignation and embarrassment at the way in which the City is being portrayed in the press, because it has been let down by what they see as a minority. I accept that as a fair point of balance. Nevertheless, the awkward fact remains that Guinness had no difficulty in finding accomplices for its manoeuvre. It found plenty who were willing to help it in merchant banks and among the stockbroker community. Since we have talked much about merchant bankers, I wish to say something about stockbrokers.
  We have as our first witness Mr. Parnes. He was described by Gerald Ronson as "an eminent broker" which immediately prompted the wonderful spectacle of top City stockbrokers hurrying to the press to say that they were not eminent brokers.
  As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) reminded us, and as my hon. Friend the Member for Hackney, South and
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  Shoreditch (Mr. Sedgemore) said in an entertaining speech, Mr. Parnes has apparently been known for a long time in the City as "the animal".
  One of the things that fascinates me about each successive Guinness revelation is that every time someone is named there are always two dozen people around to say, on an unattributable basis, that they always knew that he was a bad apple and that he was suspect. Mr. Parnes turns out to be a case in point. Nevertheless Mr. Parnes, having got Mr. Ronson's commission, successfully placed it through Alexanders, Laing and Cruickshank, which handled all Mr. Parnes' business and also, of course, took its half of the commission, worth £500,000.
  To put it mildly, the supervision at Alexanders, Laing and Cruickshank does not appear to have been of the best, which may make it regrettable that the Secretary of State has appointed the chief executive of Alexanders, Laing and Cruickshank as one of the members of the Securities and Investments Board to oversee the whole of the City.
  Mr. Parnes' tie with Alexanders, Laing and Cruickshank has now been severed. He is, interestingly, the only broker to have been thrown overboard in the past month. He is the only broker who has been involved in the share deals worth £500 million, involving perhaps one third of the entire Guinness stock, who has been caught out. I must ask the House: what about Cazenove? Cazenove was the regular broker of Guinness and handled all its share purchasing and sales. As any other stockbroker would do when acting for a client, Cazenove monitored all the purchases and sales of Guinness shares. I can reveal to the House that on 6 May, the settlement day after the closure of the bid for Distillers, Cazenove purchased 20 million shares in Guinness for Cazenove nominees. That was, of course, the same day on which Morgan Grenfell paid £7·5 million to Henry Ansbacher for Down Nominees. It is an irresistible conclusion that that payment by Cazenove on the same day was for the same purpose, to pay off some members of the concert party who had bought Guinness shares on a temporary basis during the bid for Distillers to drive up the price.
  Mr. Rogers: They are all crooks.
  Mr. Cook: A minority are. My emphasis is different from that of my hon. Friend. This again poses an interesting test of self-regulation because the body that would be responsible for scrutinising the actions of Cazenove is the stock exchange — one of the self-regulating organisations appointed under the Financial Services Act. The stock exchange has signally failed to achieve the same changes at Cazenove that the Bank has manifestly secured at Morgan Grenfell and leaves one with the doubt that it finds Cazenove too big, too prestigious or perhaps too influential within the stock exchange for it to take effective action against them.
  We now turn from the stock exchange and the City to the Conservative party. I have been greatly interested in the change in rhetoric that I have witnessed in the short time in which I have held the portfolio for the Labour party. The fact that the Government did nothing effective at the time of the bid to stop the City's excesses has not stopped them pouring forth a spate of speeches in the past month promising vengeance on it for being so troublesome to them. I notice that one Minister was quoted on an unattributable basis in the Financial Times as saying:
  "The quicker we put the handcuffs on somebody the better."

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  We now have the proposition that those caught insider dealing and sentenced will be liable to a penalty of seven year's imprisonment. I presume that that is what Conservative Members would describe as the longer-term view of financial services.
  I speak for the whole of the Opposition. We welcome the new commitment by the Conservatives to bringing City fraud to book. It sits a bit oddly with their record of the past six years—with 110 references of suspected insider dealing passed to them by the stock exchange as a result of which only nine people were prosecuted, none of whom has spent a single day in prison. It sits a bit oddly with the couple of dozen cases that they have been sitting on for a couple of years, referred to them by Lloyd's insurance as cases meriting prosecution. It sits a bit oddly with the failure for several years to attempt to extradite Peter Cameron-Webb from Florida, where he is sitting on top of the £38 million that he siphoned away. It sits oddly with the failure to bring a single prosecution arising out of the Johnson Matthey Bankers scandal, which is one of the biggest banking scandals since the war.
  My hon. Friend the Member for Workington (Mr. Campbell-Savours) made a plea to the Minister to act on a firm whose name, understandably, he was not prepared to disclose to the House. I understand that he has passed information to the Minister. I say to my hon. Friend only that I hope that the Department of Trade and Industry is swifter in acting on the case that he has passed to it than on the other licensed dealers, Ravendale, which was closed only two years after it was being regularly exposed in the Sunday papers.
  However, let us be generous. Let us not complain that the Government have tacked with the wind now that the climate has changed. However, we must say to them that they cannot reduce the lessons of Guinness to a simple matter of law and order. The issue of Guinness begs wider questions about the abuse of corporate power and about the new culture in the City, which means that in certain quarters of the City, apparently, there is a willingness to tolerate the excesses that Guinness represented; a new culture that was partly fostered by the Government, who have passed easy pickings to it in the form of the privatisation programme. They have also helped to fashion the City in the image of their own ideology. It is a completely free market, deregulated by Government, not burdened by an obtrusive Government body to supervise it, and allowed to pursue without check the dictates of market forces with the net result that it is repugnant to the public and embarrassing to the Government. Self-regulation needs self-restraint, and that is conspicuously lacking in the City today.
  The most fundamental lesson from the Guinness affair is that the City and business must shift their priorities from chasing the acquisition of each other back to investing in the future of the companies and developing real machinery, real plants and real jobs.
  Guinness was at the flood of takeover bids. It is the high-water mark. The strength of that tide was remarkable. In 1983, £2 billion was staked in takeover bids. In 1986, £16 billion was staked in takeover bids—37 per cent. of all investment capital made available in 1986. The irony is that at the very time when that takeover stampede was accelerating in pace, the Conservatives restricted the grounds on which they would make a reference of a takeover to the Monopolies and Mergers Commission panel. They bound themselves voluntarily to
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  confining references to competition and excluded the wider considerations of the public interest, which they are entitled to consider in terms of the law. They have left the public interest to be safeguarded by shareholders.
  It is no disrespect to shareholders to say that they are not there to safeguard the public interest. They are there to safeguard their shares. That, of course, is what they do. It is the Conservative Government who are charged with the important duty of safeguarding the public interest, and that is what they have now failed to do.
  Labour Members do not speak on these matters from a purely academic perspective. I want to conclude on a personal note as Conservative Members have on many occasions during this debate referred to their experiences in the City. I want to share with the House a recent experience in my constituency. At the end of last week a company operating in my constituency announced the closure of a plant within the Golden Wonder group with the loss of 350 permanent jobs and 150 seasonal jobs, which usually last for several months.
  My hon. Friend the Member for Linlithgow (Mr. Dalyell) is aware of the closure because many of those operating the plant live in his constituency. The relevance of the closure to the debate is that the company has been sold and resold over the heads of its workers. It has had three owners in two years. One of those owners was the Hanson Trust which has just broken an undertaking not to sell the company that it had acquired from the Imperial Group. The latest owners are the Dalgety food group. That company acquired the firm three months ago. Only three months later, it announced the closure, although the plant has the most modern machinery in the group, machinery which Dalgety proposed to strip and remove although it was installed only last year with the help of a development grant from the Scottish Office.
  I am sure that I speak for my hon. Friends when I say that I find it deeply offensive that a company which has owned a plant for only three months should shut it down without consultation, while refusing negotiations with the work force, many of whom have worked in the plant for 20 years. It is not just plant and machinery that change hands in a takeover. The work force which operates that machinery also changes hands. The job security of employees and the economic prosperity of communities cannot be left to be auctioned in the City.
  The truth is that the City has shown verve, enthusiasm, imagination and initiative in speculating with the ownership of British industry. However, it has shown scant interest in investing in the development of that industry. It has done itself proud, but it has failed the needs of the real economy. That is why we shall vote against the Government, who have proved the willing accomplice of the City.
  9.36 pm
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): I want to begin by welcoming the return of the hon. Member for Livingston (Mr. Cook) to these rather down-to-earth matters. He has had his mind on higher things in recent days. He made a characteristically robust contribution to the debate, and I shall have a word or two to say about his comments in due course.
  No one listening to the speeches by Opposition Members would have the faintest idea that we have been discussing one of the most successful sectors of the British

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  economy. Quite apart from its contribution to British business, London attracts huge volumes of business which has no natural reason to come here. There is no law of nature which compels Australian owners to insure the risks that they incur in the United States of America with London insurers, or which compels West German purchasers of Japanese shares to deal through London stockbrokers or Dutch borrowers to raise Swiss currency through London bankers. This business is conducted in London because the City is efficient, competitive and convenient. We should always bear that in mind when considering the criticisms that have been made about the City.
  I want to consider some of the criticisms that have been made. We have heard a good deal about short-termism. However, it is not true to suggest that the stock exchange in particular or the City in general is incapable of looking to the long term. My hon. Friend the Member for St. Albans (Mr. Lilley) quoted some specific examples. In general, companies whose shares are quoted on the stock exchange are not all rated equally. There are wide variations between the price-earnings ratios of different shares. These reflect the different long-term outlook that different companies face. Proper information must be given. If a company is spending a great deal on research and development, the financial world must be told. If that expenditure is likely to leave a temporary depression in profits, companies should be open about it. If the institutions, whose liabilities, by and large, are extremely long-term, are kept in the picture, they are perfectly capable of taking a long-term view.
  Many of those who spoke in the debate, not least the hon. Member for Livingston, commented on takeovers. In this area our policy is under review, but whatever their views on current policy, few objective observers would view with anything other than extreme alarm the proposals made yesterday by the Labour finance and industry group and commended enthusiastically outside the House by the hon. Member for Livingston, who is a member of that group, but not mentioned at all during the debate either by the right hon. and learned Member for Monklands, East (Mr. Smith) or by the hon. Member for Livingston.
  Let us spend a moment or two discussing those proposals. They would involve the vetting of almost every merger — it would involve hundreds of commercial transactions every year—by the Office of Fair Trading and, acting as an appeal body, the Monopolies and Mergers Commission. That would represent a massive increase in bureaucracy and would dramatically increase the burden on companies which are the targets of bids as well as the bidders. The criteria on which bids are to be vetted are, to say the least, confused. On page 17 of the document we read that competition may play a relatively small part in these matters, but on page 12 we are promised legislation to incorporate articles 85 and 86 of the treaty of Rome directly within our law and to apply them to purely domestic mergers. It is a pity that the person who wrote page 17 was not told about that, because those articles are based fairly and squarely on competition.
  Most disturbing of all, under Labour, the Office of Fair Trading and the Monopolies and Mergers Commission would no longer be independent bodies. They would be staffed by people with a political and ideological
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  understanding of Labour party policy. They would be selected on the ground of their political inclinations—those are the words in the report. Under a Labour Government, one would need a party card to get a job with the Office of Fair Trading or the Monopolies and Mergers Commission.
  I contrast that attitude with the attitude that this Government have taken to those bodies. I remind the House that the present Director General of Fair Trading was appointed by the Labour Government in 1976 and that the present chairman of the Monopolies and Mergers Commission was appointed by a Labour Government. Both have rendered distinguished, independent public service since then and have been reappointed to their posts by this Government. There would be no place for that approach if the Labour party was again concerned with such matters. That document says much about the reality of Labour's policies when one gets behind the rose-tinted facade.
  The hon. Member for Stockton, South (Mr. Wrigglesworth), on behalf of the Social Democratic party, suggested two possible changes to takeover policy. He suggested changing the burden of proof and giving direct access to the courts to individuals and companies affected. Those ideas will be considered during the review, but it is clear that they could not conceivably lead to the advantages which the hon. Gentleman claims for them. He said that they would streamline the system, that they would make it quicker and simpler. How reversing the burden of proof and thus involving, in common with the policy of the official Opposition, the reference of almost every merger so that that burden can be discharged could conceivably be described as making the process quicker and simpler is beyond credibility. It is hardly surprising if the hon. Gentleman's party's policies are not taken seriously, either inside or outside the House, if it continues to make such extravagant and far-fetched claims about the significance of the policies that it advocates.
  My hon. Friend the Member for Hastings and Rye (Mr. Warren) raised a series of interesting points, perhaps slightly outside the mainstream of discussion, in relation to which he has already received letters from my right hon. Friends the Prime Minister and the Secretary of State. Perhaps he will forgive me if I do not add to those letters during these observations.
  My hon. Friend the Member for Edinburgh, Central (Sir A. Fletcher) spoke about the takeover panel and made a number of points about the possibility of changing the way in which the panel operates. My right hon. Friend the Secretary of State dealt with that point in his remarks this afternoon. I have nothing to add.
  The hon. Member for Great Grimsby (Mr. Mitchell) called, perhaps a trifle surprisingly, for greater shareholder control. He said that the Government should return the control of companies to their shareholders. I was under the impression that shareholders had control of their companies and that that was why Opposition Members were unhappy with our policy on mergers. They constantly claim that we should not leave decisions of this kind to shareholders. Of course, the City's success brings obligations with it. We have legislated to ensure that those obligations are recognised and discharged. The law must be observed. The action that we have taken demonstrates our determination to ensure that it will be observed.
  Many hon. Members have expressed concern about some of the events that have been reported in the

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  newspapers in recent weeks, and I share that concern, but they are not grounds for criticism of the Government. As soon as we had good grounds for taking action, we acted. It may be recalled that when I appointed inspectors to investigate the affairs of Guinness plc many thought and wrote that I had beeen precipitate. What subsequently has come to light provides ample vindication of my decision and of my determination vigorously to enforce the law.
  Mr. Allan Rogers: The Minister said that he will be assiduous in prosecuting people who have broken the law. How is it that only 18 cases were brought in 1981 and 1984?
  Mr. Howard: I am not entirely certain to which cases the hon. Gentleman is referring. If evidence exists that justifies cases being brought before the courts, they will be brought before the courts.
  Mr. Campbell-Savours: We understand that there may well be prosecutions under the Companies Act 1985. Will the Minister not rule out prosecutions under the 1977 criminal law, which provides for prosecutions when conspiracy has taken place? There may be persons who conspired with Guinness to break the law under section 151.
  Mr. Howard: I rule out no prosecutions when evidence is available and justifies a charge being brought.
  The inquiry into Guinness plc is proceeding under the Companies Act. The inspectors, although appointed by me, are entirely independent. They have far-reaching powers. They may call for documents, examine witnesses on oath, and require witnesses to answer questions even if such answers involve self-incrimination.
  There have been calls, principally from the Opposition Front Bench, for an interim report, but the inspectors have told me that that would impede their inquiry. To compile it they would have to turn from their investigations and call a halt to their inquiry. They would have to devote their energies to the demanding procedure that must be followed before any report, full or interim, can be published if it is to contain any criticism of any individual. Of all the half-baked suggestions that have emanated from the Opposition in recent weeks, that suggestion —persisted in long after the effects were explained to them—was probably the most inept. I am not prepared to contemplate any action that would impede the independent inspectors as they set about their task. Their inquiry must be full and thorough, and I shall not take any action that would detract from that objective.
  Mr. Robin Cook: I entirely concur with the hon. and learned Gentleman's wish to put no impediment in the path of the inquiry into the Guinness affair. Does he recall his answer to a question from me last week, which showed that the average time taken by a DTI inquiry to come to final report is 36 months and two weeks? In the light of that extraordinary time scale, is he satisfied that his Department is sufficiently swift in carrying out its inquiries.
  Mr. Howard: We have taken steps to ensure that this inquiry is completed in the shortest possible time that is consistent with a full, thorough and effective report. The inspectors are devoting all their time to the inquiry, they have all the resources that they need to carry out their investigation and they are very conscious of the need for expedition.
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  As I said previously, the inspectors do not have to wait until they submit a report before they can submit to me any evidence of criminal activity that they discover. Nor is it necessary for them to complete their report before criminal charges can be laid if the evidence justifies that. The inspectors are well aware of their powers in that respect and I have encouraged them to make full use of them. If, at any time, it becomes appropriate for prosecutions to be commenced, commenced they will be.
  Mr. Allan Rogers: During my speech I asked the Minister to tell us how many additional inspectors had been engaged. In 1985, 21 inspectors were investigating billions of pounds of City fraud, compared with the thousands who were investigating social security fraud. How many additional inspectors have been engaged since 1985?
  Mr. Howard: The hon. Gentleman misunderstands the position. I explained that the Inspectors whom we appoint under the Companies Act and in connection with insider dealing—a subject to which I shall come in a moment—are independent. They are appointed for the purpose of carrying out specific inquiries. We shall continue to appoint inspectors to carry out such inquiries wherever and whenever we have the evidence to justify doing so. There is no restriction on the resources available to them for that purpose.
  As my right hon. and learned Friend said, when the Opposition were in power they never got around to making insider dealing an offence. It was this Government who took that step in 1980, and it is this Government who have taken steps to enable evidence to be obtained if the offence is to be made to stick.
  My right hon. Friend described the powers in the Financial Services Act for the purpose, but they were described as draconian by the Opposition spokesman in another place. They take away from anyone suspected of the offence the right to silence so as not to incriminate himself. They far exceed the powers available to the Securities and Exchange Commission. They are certainly not available to anyone investigating social security fraud — the Opposition's favourite comparison. Like the powers available under the Companies Act, they are available to independent inspectors appointed by the Secretary of State.
  The Opposition constantly hark back to the inadequate record on prosecutions for insider dealing before the powers were available. It is precisely because we recognised that the record was inadequate that we took increased powers. My right hon. Friend the Secretary of State has explained how speedily we have brought them into effect.
  Mr. John Butterfill: Is it not true that the Opposition in another place tried to water down the powers that we were giving to inspectors under sections 147 and 148, by moving an amendment to that effect?
  Mr. Howard: I have looked at the amendments which were put down in another place on this matter and I think that my hon. Friend is probably correct, but the discussion that took place was so inordinately complicated that, frankly, I gave up the task of trying to discover whether the effect would be to whittle down those powers.
  The motion before the House this evening calls for a statutory independent commission to supervise financial

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  services. We have heard that phrase before. We have been asking for more than a year now what it means. When the hon. Member for Dagenham (Mr. Gould), who was his party's spokesman on these matters, during the passage of the Financial Services Bill disclaimed the Securities and Exchange Commission as a model, he said that in looking for a model he would not look to that commission, and he made certain criticisms of it. The hon. Member for Livingston, by contrast, and with a touching if uncharacteristic faith in transatlantic models, seems very keen on the Securities and Exchange Commission. The right hon. and learned Member for Monklands, East, speaking earlier this afternoon, said that he was looking for something not precisely the same as the Securities and Exchange Commission.
  Not one of those hon. Members has told us what powers such a body would possess which the regulatory authorities established under the Financial Services Act will not have. Nor have they told us how, in particular, such a body could be expected to be more effective in the exercise of its power than the regulatory authorities set up under the Financial Services Act will be. If any of those Opposition Members wishes to take the opportunity now to identify a single power which the body would have, were it made statutory, and which the regulatory authorities to be established under the Financial Services Act will not have, I shall gladly give him the opportunity of making that plain to the House and to the country.
  Mr. Robin Cook: I rest with the single illustration, which will serve for the present, of the amendment, which the hon. and learned Gentleman himself resisted in Committee, to give the SIB the same powers as he is so proud of having taken in relation to insider dealing, but which he resisted in Committee precisely because the SIB was not a statutory body.
  Mr. Howard: The hon. Gentleman is wrong. It is perfectly true that we have decided not to give the SIB those particular powers, but it has nothing to do with its not being a statutory body. As I have indicated, the powers which are given to inspectors to investigate this particular offence, comparable only to the powers available to inspectors under the Companies Act, are draconian in the extreme. They are unprecedented in our legislation and are not available to the Securities and Exchange Commission. Powers of that kind should be exercised only by inspectors directly appointed by the Secretary of State because he is directly accountable to the House.
  The hon. Member for Great Grimsby seemed to be unaware, despite the fact that he served on the Financial Services Bill Committee, that the SIB would have the power to prosecute. I have beside me a list of about a dozen offences on which the SIB could prosecute when powers are transferred to it, should it be designated by the Secretary of State.
  Opposition Members have been content to mouth slogans, in the hope that no one will ask them questions or insist on answers to those questions. We do not think in slogans. We are putting into place a tough and effective system for regulating the financial services industry. We are determined to ensure that the City maintains the highest standards of conduct, and we look forward to its continuing success. I urge the House to reject the motion.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 181, Noes 283.

  Division No. 75]

  [10 pm

  AYES

  Abse, Leo

  Gilbert, Rt Hon Dr John

  Adams, Allen (Paisley N)

  Godman, Dr Norman

  Alton, David

  Golding, Mrs Llin

  Anderson, Donald

  Gould, Bryan

  Archer, Rt Hon Peter

  Gourlay, Harry

  Ashley, Rt Hon Jack

  Hamilton, James (M'well N)

  Ashton, Joe

  Hamilton, W. W. (Fife Central)

  Atkinson, N. (Tottenham)

  Hart, Rt Hon Dame Judith

  Bagier, Gordon A. T.

  Hattersley, Rt Hon Roy

  Banks, Tony (Newham NW)

  Healey, Rt Hon Denis

  Barron, Kevin

  Heffer, Eric S.

  Beckett, Mrs Margaret

  Hogg, N. (C'nauld & Kilsyth)

  Bell, Stuart

  Holland, Stuart (Vauxhall)

  Benn, Rt Hon Tony

  Home Robertson, John

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

  Howarth, George (Knowsley, N)

  Bermingham, Gerald

  Howell, Rt Hon D. (S'heath)

  Bidwell, Sydney

  Hoyle, Douglas

  Blair, Anthony

  Hughes, Robert (Aberdeen N)

  Boothroyd, Miss Betty

  Hughes, Roy (Newport East)

  Boyes, Roland

  Hughes, Sean (Knowsley S)

  Bray, Dr Jeremy

  Hughes, Simon (Southwark)

  Brown, Gordon (D'f'mline E)

  Janner, Hon Greville

  Brown, Hugh D. (Provan)

  Jenkins, Rt Hon Roy (Hillh'd)

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

  John, Brynmor

  Brown, Ron (E'burgh, Leith)

  Jones, Barry (Alyn & Deeside)

  Buchan, Norman

  Kaufman, Rt Hon Gerald

  Caborn, Richard

  Kennedy, Charles

  Callaghan, Rt Hon J.

  Kinnock, Rt Hon Neil

  Callaghan, Jim (Heyw'd & M)

  Lambie, David

  Campbell-Savours, Dale

  Lamond, James

  Canavan, Dennis

  Leadbitter, Ted

  Carter-Jones, Lewis

  Leighton, Ronald

  Clark, Dr David (S Shields)

  Lewis, Terence (Worsley)

  Clarke, Thomas

  Litherland, Robert

  Clay, Robert

  Lloyd, Tony (Stretford)

  Clelland, David Gordon

  Lofthouse, Geoffrey

  Clwyd, Mrs Ann

  Loyden, Edward

  Cocks, Rt Hon M. (Bristol S)

  McCartney, Hugh

  Cohen, Harry

  McDonald, Dr Oonagh

  Conlan, Bernard

  McKay, Allen (Penistone)

  Cook, Frank (Stockton North)

  MacKenzie, Rt Hon Gregor

  Cook, Robin F. (Livingston)

  McTaggart, Robert

  Corbett, Robin

  McWilliam, John

  Craigen, J. M.

  Madden, Max

  Crowther, Stan

  Marek, Dr John

  Cunliffe, Lawrence

  Marshall, David (Shettleston)

  Dalyell, Tam

  Martin, Michael

  Davies, Rt Hon Denzil (L'lli)

  Mason, Rt Hon Roy

  Davies, Ronald (Caerphilly)

  Maxton, John

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

  Maynard, Miss Joan

  Deakins, Eric

  Meacher, Michael

  Dewar, Donald

  Michie, William

  Dixon, Donald

  Mitchell, Austin (G't Grimsby)

  Dobson, Frank

  Morris, Rt Hon A. (W'shawe)

  Dormand, Jack

  Morris, Rt Hon J. (Aberavon)

  Douglas, Dick

  Nellist, David

  Dubs, Alfred

  Oakes, Rt Hon Gordon

  Dunwoody, Hon Mrs G.

  O'Brien, William

  Eadie, Alex

  O'Neill, Martin

  Eastham, Ken

  Park, George

  Evans, John (St. Helens N)

  Patchett, Terry

  Fatchett, Derek

  Pavitt, Laurie

  Faulds, Andrew

  Pendry, Tom

  Field, Frank (Birkenhead)

  Pike, Peter

  Fields, T. (L'pool Broad Gn)

  Powell, Raymond (Ogmore)

  Fisher, Mark

  Radice, Giles

  Flannery, Martin

  Randall, Stuart

  Foot, Rt Hon Michael

  Raynsford, Nick

  Forrester, John

  Redmond, Martin

  Foulkes, George

  Rees, Rt Hon M. (Leeds S)

  Fraser, J. (Norwood)

  Richardson, Ms Jo

  Freud, Clement

  Roberts, Ernest (Hackney N)

  George, Bruce

  Robertson, George

  433

  Rogers, Allan

  Straw, Jack

  Rooker, J. W.

  Thomas, Dafydd (Merioneth)

  Ross, Ernest (Dundee W)

  Thompson, J. (Wansbeck)

  Rowlands, Ted

  Thorne, Stan (Preston)

  Sedgemore, Brian

  Tinn, James

  Sheerman, Barry

  Torney, Tom

  Sheldon, Rt Hon R.

  Wardell, Gareth (Gower)

  Shore, Rt Hon Peter

  Wareing, Robert

  Short, Ms Clare (Ladywood)

  Weetch, Ken

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

  Welsh, Michael

  Silkin, Rt Hon J.

  White, James

  Skinner, Dennis

  Wigley, Dafydd

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

  Williams, Rt Hon A.

  Snape, Peter

  Winnick, David

  Soley, Clive

  Young, David (Bolton SE)

  Spearing, Nigel

  Steel, Rt Hon David

  Tellers for the Ayes:

  Stewart, Rt Hon D. (W Isles)

  Mr. Frank Haynes and

  Stott, Roger

  Mr. Chris Smith.

  Strang, Gavin

  NOES

  Aitken, Jonathan

  Clark, Dr Michael (Rochford)

  Alexander, Richard

  Clark, Sir W. (Croydon S)

  Alison, Rt Hon Michael

  Clarke, Rt Hon K. (Rushcliffe)

  Amess, David

  Clegg, Sir Walter

  Ancram, Michael

  Cockeram, Eric

  Arnold, Tom

  Colvin, Michael

  Ashby, David

  Conway, Derek

  Ashdown, Paddy

  Coombs, Simon

  Aspinwall, Jack

  Cope, John

  Atkins, Rt Hon Sir H.

  Cormack, Patrick

  Atkins, Robert (South Ribble)

  Cranborne, Viscount

  Atkinson, David (B'm'th E)

  Critchley, Julian

  Baker, Nicholas (Dorset N)

  Crouch, David

  Baldry, Tony

  Currie, Mrs Edwina

  Batiste, Spencer

  Dicks, Terry

  Beaumont-Dark, Anthony

  Dorrell, Stephen

  Beith, A. J.

  Douglas-Hamilton, Lord J.

  Bellingham, Henry

  Dover, Den

  Bendall, Vivian

  du Cann, Rt Hon Sir Edward

  Benyon, William

  Durant, Tony

  Bevan, David Gilroy

  Dykes, Hugh

  Biffen, Rt Hon John

  Edwards, Rt Hon N. (P'broke)

  Biggs-Davison, Sir John

  Evennett, David

  Blackburn, John

  Eyre, Sir Reginald

  Body, Sir Richard

  Fallon, Michael

  Bonsor, Sir Nicholas

  Farr, Sir John

  Boscawen, Hon Robert

  Favell, Anthony

  Bottomley, Peter

  Fenner, Dame Peggy

  Bottomley, Mrs Virginia

  Fletcher, Sir Alexander

  Bowden, Gerald (Dulwich)

  Fookes, Miss Janet

  Boyson, Dr Rhodes

  Forman, Nigel

  Braine, Rt Hon Sir Bernard

  Forsyth, Michael (Stirling)

  Brandon-Bravo, Martin

  Fowler, Rt Hon Norman

  Bright, Graham

  Franks, Cecil

  Brinton, Tim

  Fraser, Peter (Angus East)

  Brittan, Rt Hon Leon

  Freeman, Roger

  Brooke, Hon Peter

  Fry, Peter

  Brown, M. (Brigg & Cl'thpes)

  Gale, Roger

  Browne, John

  Galley, Roy

  Bruce, Malcolm

  Gardiner, George (Reigate)

  Bruinvels, Peter

  Gardner, Sir Edward (Fylde)

  Bryan, Sir Paul

  Garel-Jones, Tristan

  Buchanan-Smith, Rt Hon A.

  Gilmour, Rt Hon Sir Ian

  Buck, Sir Antony

  Glyn, Dr Alan

  Bulmer, Esmond

  Goodhart, Sir Philip

  Burt, Alistair

  Goodlad, Alastair

  Butcher, John

  Gow, Ian

  Butler, Rt Hon Sir Adam

  Gower, Sir Raymond

  Butterfill, John

  Grant, Sir Anthony

  Carlile, Alexander (Montg'y)

  Gregory, Conal

  Carlisle, John (Luton N)

  Griffiths, Sir Eldon

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

  Griffiths, Peter (Portsm'th N)

  Carttiss, Michael

  Grist, Ian

  Cash, William

  Ground, Patrick

  Channon, Rt Hon Paul

  Grylls, Michael

  Chapman, Sydney

  Gummer, Rt Hon John S

  Chope, Christopher

  Hamilton, Hon A. (Epsom)

  Churchill, W. S.

  Hamilton, Neil (Tatton)

  434

  Hampson, Dr Keith

  Marshall, Michael (Arundel)

  Hancock, Michael

  Mather, Sir Carol

  Hanley, Jeremy

  Maude, Hon Francis

  Hannam, John

  Maxwell-Hyslop, Robin

  Hargreaves, Kenneth

  Meadowcroft, Michael

  Harvey, Robert

  Merchant, Piers

  Haselhurst, Alan

  Miller, Hal (B'grove)

  Hawkins, C. (High Peak)

  Mills, Iain (Meriden)

  Hawksley, Warren

  Miscampbell, Norman

  Hayhoe, Rt Hon Sir Barney

  Mitchell, David (Hants NW)

  Hayward, Robert

  Moate, Roger

  Heathcoat-Amory, David

  Monro, Sir Hector

  Heddle, John

  Montgomery, Sir Fergus

  Henderson, Barry

  Moore, Rt Hon John

  Heseltine, Rt Hon Michael

  Morrison, Hon C. (Devizes)

  Hickmet, Richard

  Morrison, Hon P. (Chester)

  Hicks, Robert

  Moynihan, Hon C.

  Higgins, Rt Hon Terence L.

  Mudd, David

  Hind, Kenneth

  Neale, Gerrard

  Hirst, Michael

  Nelson, Anthony

  Hogg, Hon Douglas (Gr'th'm)

  Newton, Tony

  Holland, Sir Philip (Gedling)

  Nicholls, Patrick

  Holt, Richard

  Onslow, Cranley

  Hordern, Sir Peter

  Oppenheim, Phillip

  Howard, Michael

  Oppenheim, Rt Hon Mrs S.

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

  Ottaway, Richard

  Howarth, Gerald (Cannock)

  Owen, Rt Hon Dr David

  Howell, Rt Hon D. (G'ldford)

  Page, Richard (Herts SW)

  Howell, Ralph (Norfolk, N)

  Parkinson, Rt Hon Cecil

  Howells, Geraint

  Patten, Christopher (Bath)

  Hubbard-Miles, Peter

  Patten, J. (Oxf W & Abgdn)

  Hunt, David (Wirral W)

  Pattie, Rt Hon Geoffrey

  Hunt, John (Ravensbourne)

  Peacock, Mrs Elizabeth

  Hunter, Andrew

  Percival, Rt Hon Sir Ian

  Irving, Charles

  Pollock, Alexander

  Jackson, Robert

  Porter, Barry

  Jenkin, Rt Hon Patrick

  Portillo, Michael

  Jones, Gwilym (Cardiff N)

  Powley, John

  Jones, Robert (Herts W)

  Prentice, Rt Hon Reg

  Jopling, Rt Hon Michael

  Price, Sir David

  Joseph, Rt Hon Sir Keith

  Proctor, K. Harvey

  Kershaw, Sir Anthony

  Raison, Rt Hon Timothy

  Key, Robert

  Rathbone, Tim

  King, Roger (B'ham N'field)

  Rees, Rt Hon Peter (Dover)

  King, Rt Hon Tom

  Rhodes James, Robert

  Kirkwood, Archy

  Rhys Williams, Sir Brandon

  Knight, Greg (Derby N)

  Ridsdale, Sir Julian

  Knowles, Michael

  Roe, Mrs Marion

  Knox, David

  Ross, Stephen (Isle of Wight)

  Lamont, Rt Hon Norman

  Rost, Peter

  Lang, Ian

  Rowe, Andrew

  Latham, Michael

  Ryder, Richard

  Lawler, Geoffrey

  Sackville, Hon Thomas

  Lawrence, Ivan

  Sainsbury, Hon Timothy

  Lawson, Rt Hon Nigel

  St. John-Stevas, Rt Hon N.

  Lee, John (Pendle)

  Shaw, Giles (Pudsey)

  Leigh, Edward (Gainsbor'gh)

  Shelton, William (Streatham)

  Lester, Jim

  Shepherd, Colin (Hereford)

  Lewis, Sir Kenneth (Stamf'd)

  Shersby, Michael

  Lightbown, David

  Shields, Mrs Elizabeth

  Lilley, Peter

  Silvester, Fred

  Livsey, Richard

  Sims, Roger

  Lloyd, Sir Ian (Havant)

  Smith, Tim (Beaconsfield)

  Lloyd, Peter (Fareham)

  Soames, Hon Nicholas

  Lord, Michael

  Stevens, Lewis (Nuneaton)

  McCrindle, Robert

  Stewart, Allan (Eastwood)

  McCurley, Mrs Anna

  Stewart, Andrew (Sherwood)

  Macfarlane, Neil

  Stewart, Ian (Hertf'dshire N)

  MacKay, John (Argyll & Bute)

  Sumberg, David

  Maclean, David John

  Temple-Morris, Peter

  McLoughlin, Patrick

  Thompson, Patrick (N'ich N)

  McNair-Wilson, M. (N'bury)

  Thurnham, Peter

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

  Townend, John (Bridlington)

  McQuarrie, Albert

  Twinn, Dr Ian

  Madel, David

  van Straubenzee, Sir W.

  Major, John

  Waddington, Rt Hon David

  Malins, Humfrey

  Wainwright, R.

  Maples, John

  Wakeham, Rt Hon John

  Marland, Paul

  Walker, Bill (T'side N)

  Marlow, Antony

  Waller, Gary

  435

  Warren, Kenneth

  Wells, Sir John (Maidstone)

  Tellers for the Noes:

  Wolfson, Mark

  Mr.Michael Neubert and

  Wood, Timothy

  Mr. Gerald Malone.

  Wrigglesworth, Ian

  Questions accordingly negatived
  Questions, That the proposed word be there added, put forthwith pursunant to standing order No. 30(Questions on amendments):—
  The House divided:Ayes 267, Noes 192.

  Division No. 76]

  [10.15 pm

  AYES

  Aitken, Jonathan

  Cranborne, Viscount

  Alexander, Richard

  Crouch, David

  Alison, Rt Hon Michael

  Currie, Mrs Edwina

  Amess, David

  Dicks, Terry

  Ancram, Michael

  Dorrell, Stephen

  Arnold, Tom

  Douglas-Hamilton, Lord J.

  Ashby, David

  Dover, Den

  Aspinwall, Jack

  du Cann, Rt Hon Sir Edward

  Atkins, Rt Hon Sir H.

  Durant, Tony

  Atkins, Robert (South Ribble)

  Dykes, Hugh

  Atkinson, David (B'm'th E)

  Edwards, Rt Hon N. (P'broke)

  Baker, Nicholas (Dorset N)

  Evennett, David

  Baldry, Tony

  Eyre, Sir Reginald

  Batiste, Spencer

  Fairbairn, Nicholas

  Beaumont-Dark, Anthony

  Fallon, Michael

  Bellingham, Henry

  Farr, Sir John

  Bendall, Vivian

  Favell, Anthony

  Benyon, William

  Fenner, Dame Peggy

  Bevan, David Gilroy

  Fletcher, Sir Alexander

  Biffen, Rt Hon John

  Fookes, Miss Janet

  Biggs-Davison, Sir John

  Forman, Nigel

  Blackburn, John

  Forsyth, Michael (Stirling)

  Body, Sir Richard

  Fowler, Rt Hon Norman

  Bonsor, Sir Nicholas

  Franks, Cecil

  Boscawen, Hon Robert

  Fraser, Peter (Angus East)

  Bottomley, Peter

  Freeman, Roger

  Bottomley, Mrs Virginia

  Fry, Peter

  Bowden, Gerald (Dulwich)

  Gale, Roger

  Boyson, Dr Rhodes

  Galley, Roy

  Braine, Rt Hon Sir Bernard

  Gardiner, George (Reigate)

  Brandon-Bravo, Martin

  Gardner, Sir Edward (Fylde)

  Bright, Graham

  Garel-Jones, Tristan

  Brinton, Tim

  Gilmour, Rt Hon Sir Ian

  Brittan, Rt Hon Leon

  Glyn, Dr Alan

  Brooke, Hon Peter

  Goodhart, Sir Philip

  Brown, M. (Brigg & Cl'thpes)

  Goodlad, Alastair

  Browne, John

  Gow, Ian

  Bruinvels, Peter

  Gower, Sir Raymond

  Bryan, Sir Paul

  Grant, Sir Anthony

  Buchanan-Smith, Rt Hon A.

  Greenway, Harry

  Buck, Sir Antony

  Gregory, Conal

  Bulmer, Esmond

  Griffiths, Sir Eldon

  Burt, Alistair

  Griffiths, Peter (Portsm'th N)

  Butcher, John

  Grist, Ian

  Butler, Rt Hon Sir Adam

  Ground, Patrick

  Butterfill, John

  Grylls, Michael

  Carlisle, John (Luton N)

  Gummer, Rt Hon John S

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

  Hamilton, Hon A. (Epsom)

  Carttiss, Michael

  Hamilton, Neil (Tatton)

  Cash, William

  Hampson, Dr Keith

  Channon, Rt Hon Paul

  Hanley, Jeremy

  Chapman, Sydney

  Hannam, John

  Chope, Christopher

  Hargreaves, Kenneth

  Churchill, W. S.

  Harvey, Robert

  Clark, Dr Michael (Rochford)

  Haselhurst, Alan

  Clark, Sir W. (Croydon S)

  Hawkins, C. (High Peak)

  Clarke, Rt Hon K. (Rushcliffe)

  Hawksley, Warren

  Clegg, Sir Walter

  Hayes, J.

  Cockeram, Eric

  Hayhoe, Rt Hon Sir Barney

  Colvin, Michael

  Hayward, Robert

  Conway, Derek

  Heathcoat-Amory, David

  Coombs, Simon

  Heddle, John

  Cope, John

  Henderson, Barry

  Cormack, Patrick

  Heseltine, Rt Hon Michael

  436

  Hickmet, Richard

  Monro, Sir Hector

  Hicks, Robert

  Montgomery, Sir Fergus

  Higgins, Rt Hon Terence L.

  Moore, Rt Hon John

  Hind, Kenneth

  Morrison, Hon C. (Devizes)

  Hirst, Michael

  Morrison, Hon P. (Chester)

  Hogg, Hon Douglas (Gr'th'm)

  Moynihan, Hon C.

  Holland, Sir Philip (Gedling)

  Mudd, David

  Holt, Richard

  Neale, Gerrard

  Hordern, Sir Peter

  Nelson, Anthony

  Howard, Michael

  Neubert, Michael

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

  Newton, Tony

  Howarth, Gerald (Cannock)

  Nicholls, Patrick

  Howell, Rt Hon D. (G'ldford)

  Onslow, Cranley

  Howell, Ralph (Norfolk, N)

  Oppenheim, Phillip

  Hubbard-Miles, Peter

  Oppenheim, Rt Hon Mrs S.

  Hunt, David (Wirral W)

  Ottaway, Richard

  Hunt, John (Ravensbourne)

  Page, Richard (Herts SW)

  Hunter, Andrew

  Parkinson, Rt Hon Cecil

  Irving, Charles

  Patten, Christopher (Bath)

  Jackson, Robert

  Patten, J. (Oxf W & Abgdn)

  Jenkin, Rt Hon Patrick

  Pattie, Rt Hon Geoffrey

  Jones, Gwilym (Cardiff N)

  Peacock, Mrs Elizabeth

  Jones, Robert (Herts W)

  Percival, Rt Hon Sir Ian

  Jopling, Rt Hon Michael

  Pollock, Alexander

  Joseph, Rt Hon Sir Keith

  Porter, Barry

  Kershaw, Sir Anthony

  Powley, John

  Key, Robert

  Prentice, Rt Hon Reg

  King, Roger (B'ham N'field)

  Price, Sir David

  King, Rt Hon Tom

  Proctor, K. Harvey

  Knight, Greg (Derby N)

  Raison, Rt Hon Timothy

  Knowles, Michael

  Rathbone, Tim

  Knox, David

  Rees, Rt Hon Peter (Dover)

  Lamont, Rt Hon Norman

  Rhodes James, Robert

  Lang, Ian

  Rhys Williams, Sir Brandon

  Latham, Michael

  Ridsdale, Sir Julian

  Lawler, Geoffrey

  Roe, Mrs Marion

  Lawrence, Ivan

  Rost, Peter

  Lawson, Rt Hon Nigel

  Rowe, Andrew

  Lee, John (Pendle)

  Ryder, Richard

  Leigh, Edward (Gainsbor'gh)

  Sackville, Hon Thomas

  Lester, Jim

  Sainsbury, Hon Timothy

  Lewis, Sir Kenneth (Stamf'd)

  St. John-Stevas, Rt Hon N.

  Lilley, Peter

  Shaw, Giles (Pudsey)

  Lloyd, Sir Ian (Havant)

  Shelton, William (Streatham)

  Lloyd, Peter (Fareham)

  Shepherd, Colin (Hereford)

  Lord, Michael

  Shersby, Michael

  McCrindle, Robert

  Silvester, Fred

  McCurley, Mrs Anna

  Sims, Roger

  Macfarlane, Neil

  Smith, Tim (Beaconsfield)

  MacKay, John (Argyll & Bute)

  Soames, Hon Nicholas

  Maclean, David John

  Stevens, Lewis (Nuneaton)

  McLoughlin, Patrick

  Stewart, Allan (Eastwood)

  McNair-Wilson, M. (N'bury)

  Stewart, Andrew (Sherwood)

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

  Stewart, Ian (Hertf'dshire N)

  McQuarrie, Albert

  Sumberg, David

  Madel, David

  Thompson, Patrick (N'ich N)

  Major, John

  Thurnham, Peter

  Malins, Humfrey

  Townend, John (Bridlington)

  Malone, Gerald

  Twinn, Dr Ian

  Maples, John

  van Straubenzee, Sir W.

  Marland, Paul

  Waddington, Rt Hon David

  Marlow, Antony

  Wakeham, Rt Hon John

  Marshall, Michael (Arundel)

  Walker, Bill (Vside N)

  Mather, Sir Carol

  Waller, Gary

  Maude, Hon Francis

  Warren, Kenneth

  Maxwell-Hyslop, Robin

  Wolfson, Mark

  Merchant, Piers

  Wood, Timothy

  Miller, Hal (B'grove)

  Mills, Iain (Meriden)

  Tellers for the Ayes:

  Miscampbell, Norman

  Mr. Michael Portillo and

  Mitchell, David (Hants NW)

  Mr. David Lightbown.

  Moate, Roger

  NOES

  Abse, Leo

  Ashley, Rt Hon Jack

  Adams, Allen (Paisley N)

  Ashton, Joe

  Alton, David

  Atkinson, N. (Tottenham)

  Anderson, Donald

  Bagier, Gordon A. T.

  Archer, Rt Hon Peter

  Banks, Tony (Newham NW)

  Ashdown, Paddy

  Barron, Kevin

  437

  Beckett, Mrs Margaret

  Fisher, Mark

  Beith, A J

  Flannery, Martin

  Bell, Stuart

  Foot, Rt Hon Michael

  Benn, Rt Hon Tony

  Forrester, John

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

  Foulkes, George

  Bermingham, Gerald

  Fraser, J (Norwood)

  Bidwell, Sydney

  Freud, Clement

  Blair, Anthony

  George, Bruce

  Boothroyd, Miss Betty

  Gilbert, Rt Hon Dr John

  Boyes, Roland

  Godman, Dr Norman

  Bray, Dr Jeremy

  Golding, Mrs Llin

  Brown, Gordon (D'f'mline E)

  Gould, Bryan

  Brown, Hugh D (Provan)

  Gourlay, Harry

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

  Hamilton, James (M'well N)

  Brown, Ron (E'burgh, Leith)

  Hamilton, W W (Fife Central)

  Bruce, Malcolm

  Hancock, Michael

  Buchan, Norman

  Hart, Rt Hon Dame Judith

  Caborn, Richard

  Hattersley, Rt Hon Roy

  Callaghan, Rt Hon J

  Healey, Rt Hon Denis

  Callaghan, Jim (Heyw'd & M)

  Heffer, Eric S

  Campbell-Savours, Dale

  Hogg, N (C'nauld & Kilsyth)

  Canavan, Dennis

  Holland, Stuart (Vauxhall)

  Carlile, Alexander (Montg'y)

  Home Robertson, John

  Carter-Jones, Lewis

  Howarth, George (Knowsley, N)

  Clark, Dr David (S Shields)

  Howell, Rt Hon D (S'heath)

  Clarke, Thomas

  Howells, Geraint

  Clay, Robert

  Hoyle, Douglas

  Clelland, David Gordon

  Hughes, Robert (Aberdeen N)

  Clwyd, Mrs Ann

  Hughes, Roy (Newport East)

  Cocks, Rt Hon M (Bristol S)

  Hughes, Sean (Knowsley S)

  Cohen, Harry

  Hughes, Simon (Southwark)

  Conlan, Bernard

  Janner, Hon Greville

  Cook, Frank (Stockton North)

  Jenkins, Rt Hon Roy (Hillh'd)

  Cook, Robin F (Livingston)

  John, Brynmor

  Corbett, Robin

  Jones, Barry (Alyn & Deeside)

  Craigen, J M

  Kaufman, Rt Hon Gerald

  Crowther, Stan

  Kennedy, Charles

  Dalyell, Tam

  Kinnock, Rt Hon Neil

  Davies, Rt Hon Denzil (L'lli)

  Kirkwood, Archy

  Davies, Ronald (Caerphilly)

  Lambie David

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

  Lamond, James

  Deakins, Eric

  Leadbitter, Ted

  Dewar, Donald

  Leighton, Ronald

  Dixon Donald

  Lewis, Terence (Worsley)

  Dobson, Frank

  Litherland, Robert

  Dormand, Jack

  Livsey, Richard

  Douglas, Dick

  Lloyd, Tony (Stretford)

  Dubs, Alfred

  Lofthouse, Geoffrey

  Dunwoody, Hon Mrs G

  Loyden, Edward

  Eadie, Alex

  McCartney, Hugh

  Eastham, Ken

  McDonald, Dr Oonagh

  Evans, John (St Helens N)

  McKay, Allen (Penistone)

  Fatchett, Derek

  MacKenzie, Rt Hon Gregor

  Faulds, Andrew

  McTaggart, Robert

  Field Frank (Birkenhead)

  McWilliam, John

  Fields, T (L'pool Broad Gn)

  Madden, Max

  438

  Marek, Dr John

  Sheerman, Barry

  Marshall, David (Shettleston)

  Sheldon, Rt Hon R.

  Martin, Michael

  Shields, Mrs Elizabeth

  Mason, Rt Hon Roy

  Shore, Rt Hon Peter

  Maxton, John

  Short, Ms Clare (Ladywood)

  Maynard, Miss Joan

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

  Meacher, Michael

  Silkin, Rt Hon J.

  Meadowcroft, Michael

  Skinner, Dennis

  Michie, William

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

  Mitchell, Austin (G't Grimsby)

  Snape, Peter

  Morris, Rt Hon A. (W'shawe)

  Soley, Clive

  Morris, Rt Hon J. (Aberavon)

  Spearing, Nigel

  Nellist, David

  Steel, Rt Hon David

  Oakes, Rt Hon Gordon

  Stewart, Rt Hon D. (W Isles)

  O'Brien, William

  Stott, Roger

  O'Neill, Martin

  Strang, Gavin

  Park, George

  Straw, Jack

  Patchett, Terry

  Thomas, Dafydd (Merioneth)

  Pavitt, Laurie

  Thompson, J. (Wansbeck)

  Pendry, Tom

  Thorne, Stan (Preston)

  Pike, Peter

  Tinn, James

  Powell, Raymond (Ogmore)

  Torney, Tom

  Radice, Giles

  Wardell, Gareth (Gower)

  Randall, Stuart

  Wareing, Robert

  Raynsford, Nick

  Weetch, Ken

  Redmond, Martin

  Welsh, Michael

  Rees, Rt Hon M. (Leeds S)

  White, James

  Richardson, Ms Jo

  Wigley, Dafydd

  Roberts, Ernest (Hackney N)

  Williams, Rt Hon A.

  Robertson, George

  Winnick, David

  Rogers, Allan

  Wrigglesworth, Ian

  Rooker, J. W.

  Young, David (Bolton SE)

  Ross, Ernest (Dundee W)

  Ross, Stephen (Isle of Wight)

  Tellers for the Noes:

  Rowlands, Ted

  Mr. Frank Haynes and

  Sedgemore, Brian

  Mr. Chris Smith.

  Question accordingly agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House deplores the irresponsible attacks on the City by Her Majesty's Opposition which ignore its massive and continuing contribution to meeting the long-term financial needs of British manufacturing industry and business and more generally throughout the country to the balance of payments, and to employment in the United Kingdom; notes that investment growth has averaged 4·5 per cent. per year during this Parliament; notes with approval the consistency of the Government's mergers policy; and applauds, in particular, its firm action in particular, its firm action in establishing a regulatory framework for the city and City and its determination to root out abuses

London Regional Transport
10.27 pm
The Minister of State, Department of Transport (Mr. David Mitchell): I beg to move,
That the draft London Regional Transport (Levy) Order 1987, which was laid before this House on 17th December, be approved.
The House will remember that in 1984 we set London Regional Transport clear policy objectives. Since then its professional management has been allowed to get on with the task without continuous political interference. Our remit was that LRT should reduce the revenue subsidy to £95 million by 1987–88. It was requested to do so by rooting out inefficiency rather than cuts in services, fare increases or a lowering of standards.
I can report substantial progress. By last year LRT had cut its need for subsidy to £97 million. It has virtually met its target two years early.
Mr. Tony Banks: The Minister said that LRT should meet its objectives without fare increases, but can he explain why, since LRT took over responsibility from the Greater London council, short hop fares have gone up by 75 per cent. in inner London and by 50 per cent. in outer London?
Mr. Mitchell: Perhaps I should not have been so courteous as to give way to the hon. Gentleman. He would have found that I shall deal with fares, and I shall be happy to do so briefly now and at length later, if he wishes me to do so.
Our remit asked LRT to reduce revenue subsidy to £95 million by 1987–88, not through cuts in services, not by large fare increases, not by lowering standards, but by rooting out inefficiency. Substantial progress was made last year. Its annual business plan, published only last month, forecast a requirement down to £92 million this year. What is even better is that the plan shows a further fall to £58 million next year, handsomely beating our target.
We asked LRT to reduce its unit costs by at least 2·5 per cent. each year in real terms. Last year, unit costs were reduced by 4 per cent. and it expects to reduce them this year by 7 per cent. on both the buses and the underground, and to secure a further reduction of 5 per cent. next year on both.
We asked LRT to bring forward a significant investment programme design to reduce future costs, modernise the system, and make it more attractive to the paying customer. LRT will spend more than £250 million this year on investment in the system. Next year, LRT's planned investment increases to £280 million. Nobody can honestly and realistically claim that this is a system in neglect.
Costs will be reduced by a massive investment programme — £135 million on the automated underground ticketing system and £50 million to replace the underground power supply with cheaper access to the national grid. A major rolling programme of station modernisation will improve the environment of the underground. On the bus system, new buses are assisting disabled passengers and improve boarding times. Automatic fare collection is also being developed, to
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improve boarding speeds. A comprehensive computer system for the bus business is being installed to improve its operational and engineering efficiency.
Our objective is a thriving and well-used public transport system. On the buses, careful matching of supply to demand has stabilised patronage at about 2,700 million passenger miles, after many years of continuous decline. On the underground, patronage continues to exceed forecast increases, rising by 11 per cent. last year to 3,700 million passenger miles, with an all-time record of 762 million passenger journeys.
Our objective of a thriving and well-used system is being achieved. The Government are playing their part by approving expenditure of £45 million for the purchase of additional underground trains. I have just approved a £3 million scheme for the Tower Hill station to reduce congestion at this busy point.
We also made it clear that revenue subsidy target did not imply huge fare increases. Increases in fares are an annual catching-up exercise to restore their real value. The hon. Member for Newham, North-West (Mr. Banks) may laugh, but we shall come back to this point. The real value is eroded all the time as the retail price inflation continues through the year. LRT's annual business plan shows quite clearly that bus fares are now only about 90 per cent. of their January 1981 real value while underground fares are but 80 per cent. of that value. That is part of the answer to the hon. Gentleman. Another part of the answer is the huge increase in the number of people who are travelling, who must obviously find it an attractive fare level.
Mr. John Fraser rose—
Mr. Mitchell: It would be better if I finished my speech, and then allowed the hon. Gentleman to take the floor.
Particular increases in individual single fares in any one year will naturally be above, or below, the average increase for the year. That is the result of a fairly simple structure of fares, while LRT's emphasis on marketing its services will change from year to year. Notably, the cost of the one zone bus pass has been unchanged since 1983.
London Regional Transport was asked to pay particular attention to the needs of the disabled. Since the demise of the Greater London council, LRT has been responsible for funding London's dial-a-ride services, on which £5 million is being spent this year. Next year we have increased provision by 20 per cent. to £6 million, including the purchase of new vehicles and facilities to improve booking efficiency. I hope that the hon. Member for Newham, North-West will cheer at that.
Several Hon. Members rose—
Mr. Mitchell: I shall sit down shortly to give hon. Members an opportunity to participate in the debate.
Those figures compare with £4 million spent in the last year of GLC control.
LRT's services for the disabled also include the provision of wheelchair-accessible mobility buses, new design features on fleet buses and at underground stations to assist the ambulant disabled, as well as an increasing volume of information services.
Efficiency clearly brings benefits to ratepayers and taxpayers. Our first year of financial control saw a ratepayer levy of 10·8p in the pound and last year at this time I was able to bring forward proposals for a cut of 1p in the pound. The draft order before the House cuts a

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further 2p in the pound off the bill rate. That is a reduction of nearly 30 per cent. in three years. By any measure, those are astonishing achievements, at the same time as maintaining the network, increasing the services and modernising the system.I hope that the House will wish me to congratulate LRT, particularly its staff, and I accordingly commend the draft order to the House.
10.37 pm
Mr. Roger Stott: It is almost a year since we debated the London Regional Transport (Levy) Order 1986. I remember listening to the Minister saying roughly the same thing then as he has said tonight. It is rather like watching an action replay. He says that everything is doing well, services have increased, there is no problem and that LRT is discharging its responsibilities to the maximum.
During the year Ministers in the Department of Transport have been subjected to a barrage of questions from hon. Members on both sides of the House who represent London constituencies—
Sir John Biggs-Davison: And others.
Mr. Stott: The questions were about the level of services provided by LRT. The hon. Member for Epping Forest (Sir J. Biggs-Davison) continually complains. At every Transport Question Time he rebukes his hon. Friend the Minister over the level of services available to his constituents.
As this is a short debate, I shall simply make some observations on the ramifications of the order and of the business plan that has been produced by LRT. I hope that by containing my remarks hon. Members on both sides of the House who represent London constituencies will be able to make their valued contributions to the debate.
This year the Government will provide £239 million for all LRT spending, capital and revenue. Last year they provided £295 million. The Government are allowed to recover two thirds of that money from London ratepayers, yet under this order they will again recover the maximum amount, that is, £156·9 million compared with £193·6 million last year. That is a 7·7p rate, compared with the 9p-plus rate of last year. The Government may claim that the reduction in subsidy springs, as the Minister has just told us, from efficiency. It is important to note that this difference in the rate precept will be made up not just simply by efficiency, but by £27 million in fare increases and £31 million in increases in borrowing and other external sources.
If we look at the business plan prepared by LRT, which is funded by the precept which the Minister now wishes to get through the House, we see that there will be 6,650 fewer jobs this year than there were last year. This, in my estimation, will add about £37 million to Government expenditure if all those people cannot find jobs and the Government have to provide unemployment and social security benefits, and at the same time lose taxation revenue. Revenue support for LRT will go down by £13 million and by March 1988 there will be 15,000 fewer jobs in LRT than the number approved in the final plan produced by the GLC.
Mr. Jeremy Hanley: Is the hon. Gentleman aware that London has the highest ever level of jobs vacant in its history?
Mr. Stott: Inherent in the financial structure under the order is the deliberate creation of unemployment. I shall not concede to the hon. Gentleman that those people will immediately get jobs, but in the intervening period it will be a contingency on Government expenditure if those people are made unemployed. I shall leave my hon. Friends who represent London constituencies to answer the question about unemployment in London, but I know that if we made any bus conductors redundant in Wigan they would not find a job within two years of being made redundant, if ever, and that is directly due to the Government's economic policy.
Mr. Frank Dobson: Does my hon. Friend agree that, according to figures issued by the Department of Employment — Conservative Members can attach what credence they like to these figures — there are 393,000 people unemployed in Greater London and there are 36,000 notified vacancies'?
Mr. Stott: I am grateful to my hon. Friend for putting that on the record. Perhaps, if he catches your eye, Mr. Deputy Speaker, he will make that point more forcefully than I can.
I shall continue with what I have to say, which is that the total grant from the Department of Transport will be cut by £56 million, from £295 million to £239 million, which is a decrease of 19 per cent., and LRT will be forced as a consequence to borrow £45 million to make up the difference between income and expenditure. This means that services provided in 1987–88 will have to be paid for in future years.
I deal now with bus services. One-person operation, henceforth to be known as OPO, of buses will be increased from 76 per cent. under the strategic plan to 83 per cent. of services. This in itself will cause the loss of 1,100 conductors' jobs, which is 35 per cent. of the total platform staff, mainly from inner city garages.
Let us remember that in June 1984, when the Government took over London Transport, OPO buses were running on 53 per cent. of the services. The reduction in revenue support has forced London Buses, which is wholly owned by LRT, to increase OPO. However, I am advised that to do this it needs 440 new buses, but will get only 220, and will not be able to tender for the majority of the 33 routes which have been put out to tender in 1987–88. Those routes will be simply handed over to private operators. The plan states that bus staff will have to accept
"changed pay structures and working practices"
if tenders are to be won. London Buses will not even be able to tender for many of those routes, irrespective of the wage demands or wage claims that people put in. At least two, possibly five, bus garages will be closed. London's red buses will operate as much as 11 per cent. fewer services than in 1986–87, which was the lowest service since London Transport was created in 1933. Some 200 jobs — 17 per cent. of the total — will be lost in bus engineering, with 1,050 jobs going in other areas, such as catering and station cleaning All this stems from what we are debating and what is contained in LRT's business plan.
Sir John Biggs-Davison: Would the hon. Gentleman care to add to what he has been saying about one-person operation and the changes in the buses in London, and mention the dislike of many of us passengers of the inflexible, unfriendly one-person-operated bus'?
Mr. Stott: The hon. Gentleman has preceded me by five seconds. I am about to deal with that precise issue.
Returning, as the words on my script say, to OPO, I readily concede that this operation can be beneficial, and is demonstrably beneficial, in areas—
Mr. John Maples: It is cheaper.
Mr. Stott: It can be demonstrated that OPO can be beneficial to the overall transport provision in certain areas. It can be proved, I concede that, but I do not believe that OPO is suitable for the nation's capital, where millions of people are conveyed by public transport every day in difficult and heavy traffic conditions. Even with the improved design of the buses that LRT wants to use for OPO, its target is a load speed of 2·5 seconds per passenger. This is still more than twice the time to load an old-fashioned Routemaster bus. The schedules are slower too—15 per cent. extra running time has to be allowed for. Nor are the financial benefits all one way with the introduction of OPO. It will take five OPO buses to replace one of the Routemaster buses currently running on the streets of London.
It is important to look not just at the savings, which the hon. Member for Lewisham, West (Mr. Maples) mentioned, through the reduction of platform staff, but at whether those savings will translate themselves into a better transportation system for the nation's capital. I do not think that they will.
I travel on London Transport from Tuesday to Thursday when I am down here, because I live in Wigan, not London. My buses coming from Kennington have a conductor. At certain times of the morning the traffic is very heavy. Although there are bus lanes for a certain length of the run, heavy congestion can still build up. I genuinely believe that if there is a move towards one-person-operated buses this can only mean longer running times, more difficulties and more traffic congestion.
Moreover, I think that the presence of a conductor not only adds to the efficiency of the running speed of buses in the city centre, but gives an unquantifiable assurance to passengers, particularly the elderly, women with shopping and children, who need to be helped on and off buses, and the disabled. That is an unquantifiable advantage which cannot be equated with pounds and shillings. The clippy—the conductor on a bus—provides a valuable service in keeping the bus moving at speed for the convenience of the people who use public transport.
There are areas where one-person-operated buses will work satisfactorily, but there are other areas where they will not. I am pleased to have the full agreement of the hon. Member for Epping Forest on that.
Mr. Nigel Spearing: Is my hon. Friend aware that the statutory London Regional Transport passengers committee has continuously supported that contention? According to the committee, the 68 per cent. of mileage operated by OPO is the maximum acceptable to Londoners, and public opinion supports that. Is he also aware that, although the Routemaster may be of elderly design, it is preferred by Londoners? If London Transport can revamp Routemasters and try to sell them to China, should they not be kept running in the central areas of London?
Mr. Stott: I absolutely agree with my hon. Friend. There is unanimity of opinion among those hon. Members
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who have considered the matter seriously. They have arrived at this conclusion either because they use public transport, or because they are aware of the problems of people who use public transport. This is not an up-front political problem of great significance between the Labour and Conservative Benches. This is a matter of general common sense if we all want to achieve a proper transportation system in the nation's capital. However, I have finished with that point and I have the support of all my hon. Friends and of some Conservative Members.
The problems that will flow from the order that we are debating and the plan produced by LRT, relate mainly to the bus network. I challenge the Minister's definition of prosperity, because I believe that there has been a decline in services. Indeed, one symptom of that decline is predicted by a 9 per cent. fall in revenue, from £310 million to £282 million.
In addition, there is the problem of tendered services. Many of the services that used to be run by London Transport, by the red buses in London, are now, under the Government's free market philosophy, to be put out to tender. Those of us who have the honour to represent constituencies outside London know what happens to tendered routes following deregulation. I would not wish that on my hon. Friends who represent London constituencies.
I am advised that because of the tendered routes in certain geographical areas of London the Norbiton garage which was built in 1983, and the Plumstead garage, which was built in 1981, will be affected. If the Government intend to go ahead with their policy and put the routes out to tender, what will happen to the buses that are garaged at Norbiton and Plumstead? There has been massive public investment in new garages, yet the buses from these garages are to be subjected to tendered routes. As a consequence they may be put out of business. I am sure that some of my hon. Friends will refer to tendering.
I should deal briefly with the Underground. One person operation does not stop at buses. It is also being introduced on some parts of the Underground. One person operation on deep tube lines will be introduced for the first time on the Piccadilly and Jubilee lines, with no satisfactory evacuation or rescue procedure for trains that have broken down or whose drivers are taken ill in the tunnels. This will create a saving of less than 0·3 per cent. of London Regional Transport's total expenditure. Overall, 1,050 jobs will be lost on the Underground through a combination of more one person operated trains and a further reduction in station staffing.
I must tell the Minister that a further large reduction in station staffing will cause a serious security problem, especially late at night. People travelling late at night, with no one on those stations, could be the victims of muggings, violence and similar problems. It is money well invested to service those stations properly with adequate staff at all times when the trains are running.
I see that Conservative Members are becoming anxious about the time that I am taking—
Mr. Tony Banks: So are the people behind my hon. Friend.
Mr. Stott: And some of the people behind me, too. I get the message loud and clear, and I shall conclude my remarks.
This will probably be our last debate on London Transport before the election. When the Labour party

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wins that election it will, as a matter of priority, restore local democracy to London. London Transport will be run by the elected representatives of London for and on behalf of the people of London.
10.56 pm
Mr. John Maples: One hoped that since the hon. Member for Wigan (Mr. Stott) did not hold his present job when the Labour Front Bench was opposing the London Regional Transport Bill, he might have brought some fresh light to bear on his party's thinking, but he obviously shares all their old prejudices. He seems to believe that a public transport system is no good unless it is heavily overmanned, massively subsidised and incurring huge losses.
It is worth remembering the Greater London council's record on running London Transport. For the 12 years during which it was run by the council, unit costs increased by 66 per cent. on the buses and 50 per cent. on the underground, the subsidy increased from £5·5 million to £370 million, the revenue grant increased from zero in 1970 to £250 million in 1982 and fares increased by 85 per cent. in real terms, while passenger demand fell by 25 per cent.
As a result, the Government wisely proposed to reform the method by which London Transport was run. Against that, the GLC ran a disgraceful scare campaign about dial-a-ride, pensioners' bus passes, massive fare increases, the closure of 35 underground stations and route closures. It spent £1 million of ratepayers' money on the campaign, which was echoed slavishly by Labour Front-Bench Members, including the hon. Members for Kingston upon Hull, East (Mr. Prescott) and for West Bromwich, East (Mr. Snape), who danced to the tune of their county hall puppet masters and read their briefs very well.
I thought that it might be interesting to look back at our debates on the Bill. A little delving into history might provide some interesting facts. We find an extremely rich diet of words for eating. On Second Reading, the hon. Member for Kingston upon Hull, East said:
"My hon. Friends and I believe that fares will rise and that services will be cut. That belief comes not only from our judgment, but from well proven and observable principles of public transport economics … it is equally clear that the system that the Secretary of State will influence by the amount of support that he gives … will lead to service cuts and fare increases … It is clear, however that the ratepayers' contribution is likely to increase … The Bill will have the effect of increasing fares and reducing services."
In winding up that debate, the hon. Member for West Bromwich, East said:
"The Government's aims are patently contradictory. They cannot have both an improvement in services and a reduction in subsidies."—[Official Report, 13 December 1983; Vol. 50, c. 866–912.]
We then had an extended Committee session in which we thought that they might have wised up a bit, but no, they had not. On Third Reading the hon. Member for Kingston upon Hull, East said:
"The Bill is ideological and will undoubtedly produce a transport service that costs more, is inferior and does not meet the needs of London."—[Official Report, 9 April 1984; Vol. 58, c. 99.]
One may divide those criticisms into three. There will be massive fare increases, massive service cuts, and ratepayers will pay more.
Let us examine what happened. Over the four years covered by the fare increases introduced by LRT—they cover from May 1983, which is before it took over—
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fares have risen by 23 per cent. During that period, the retail price index rose by 20 per cent. and earnings rose by about 30 per cent. That is hardly a massive fare increase. According to LRT, next year fares will fall in real terms by ·05 per cent. That 3 per cent. rise in real terms compares very interestingly with the 85 per cent. real rise in the 12 years during the time that the GLC ran it. That disposes of the first criticism. [Interruption.] All I am saying is that it has now been allowed to be managed by people who know how to manage, without politicians interferring.
I now move on to the next criticism, that there will be massive—[Interruption.] If Opposition Members are not pleased to know that fares have hardly risen in real terms, I do not know what they want.
Mr. Clive Soley: I am sure that the hon. Gentleman does not wish to mislead the House.
Mr. Tony Banks: Yes, he does.
Mr. Soley: Perhaps he does, but let us give him the opportunity to prove it. If the hon. Gentleman wishes to use statistics, that is fine, but he should use a common base and not a 12-year period. He should take into account the different periods of Labour and Tory administration and the Law Lords' ruling on the price increase, and he can then make a fair comparison. Without doing that, his statistics are nonsense and misleading.
Mr. Maples: The Law Lords' ruling has nothing to do with the matter. Fares went down and went up again. I am not seeking to make a party political point about the GLC. I am seeking to say that LRT is run and allowed to be run by its management and by people who know how to run it, and it is doing a hell of a sight better job than it did when the GLC ran it. That disposes of the first criticism that there have been massive fare rises.
The second criticism was that there will be massive cuts in services. There have not been. The hon. Member for Hammersmith (Mr. Soley) should read LRT's plan In fact, there have been substantial rises in the train miles run by the tube from an index of 94 in 1983 to 104 next year. and on the buses from 93·5 in 1983 to 96·5 next year. The service level has actually risen every year except for one blip on the buses when it went down one year and up to a greater level the next. Next year, the route miles run by the bus services are planned to increase from 16·6 million to — [Interruption.] I shall make my own speech. Opposition Members will have a chance to make theirs. The bus service mileage will rise from 166 million to 169 million, and tube miles will rise from 30·6 million to 31·8 million. That does not sound to me like a massive service cut.
The hon. Member for Fulham (Mr. Raynsford) asked about passengers. The index of bus passenger miles has risen from 97·5 to 107·5 and on the tube from 105 to 147. I should have thought that that was a fairly massive demonstration Londoners' confidence in London Transport.
Mr. Nick Raynsford: In view of the hon. Gentleman's tendency to use rather peculiar bases for statistics, will he please give the House the figures of the trend in passenger usage of London Transport before the fares fair policy introduced by the GLC? Will he tell the House how that fare cut led to a dramatic reversal in a declining trend and the beginning of an upward trend in passenger usage? Will he be fair and give credit where credit is due, to the Labour GLC?
Mr. Maples: When the GLC cut fares massively, usage increased, and when it raised them again, it fell. The criticism of the Bill was that it would result in massive service cuts. Quite obviously and palpably, it has not done so. Services have increased and passenger usage has increased. Tube usage has increased by nearly 50 per cent.
Mr. Dobson: Does the hon. Gentleman travel by
Mr. Maples: I travel by tube quite a bit. I have noticed that a lot more people seem to, as well.
The third criticism was that ratepayers would end up paying massively more. That is interesting because, in fact, the rate precept was 10·8 per cent. in LRT's first year, 9·79 per cent. in the next and 7·7 per cent. in the next. I make that a fall of 28 per cent. I assure Opposition Members that ratepayers in my constituency do not regard that as a massive increase in their rates; they regard it as a substantial fall and welcome it enormously. It is a result of the revenue subsidy given to the GLC falling from more than £200 million to £58 million next year. That is a commendable performance by LRT. After all, the GLC's planned revenue support for next year was £245 million—another £200 million that would have had to be met out of public expenditure.The prediction of massive fare increases, massive cuts in services and massive increases in contributions from ratepayers has not been justified. Fares this year will fall in real terms, service levels and passenger usage are increasing and the rate precept has fallen 28 per cent. in three years.
All the Opposition's prejudice about the way transport should be run in 1983 and 1984—against anything other than a heavily subsidised, politically manipulated and municipally run service — seems to continue. It is unfortunate for the Opposition that the facts in the LRT plans, some of which I have quoted in my speech, are so confusing to those prejudices. They have to remember that the real proof of the pudding is in the eating. Opposition Members should have the grace to eat their words quietly and amend their prejudices.
11.6 pm
Mr. Simon Hughes: Although some of the points made by the hon. Member for Lewisham, West (Mr. Maples) were accurate, the selective use of statistics, and in particular the reliance on the projections rather than the actuality, undermines a substantial amount of the authenticity of what he said. He must not criticise others for selectively using statistics when he then falls into exactly that trap himself.
The last report from the consultative passengers committee—which was set up only, as I remember from Committee, with any proper accountability because of a great deal of pressure—was last March. Then follows, about 10 months behind, the time of the year when we periodically debate the order. The summary of London Regional Transport made by the Committee then holds equally good today. It summarised the performance of LRT as having poor bus reliability and an improved service on the underground. In very general terms, that has been the pattern.
I want to give what are, I hope, some authentic and certainly accurate statistics on the facts, as opposed to the forecasts or plans. On the service levels for bus use, 1985–86 — the last year for which we have complete
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figures—had the lowest million bus miles since 1982—162 million, which is 4 million lower than the preceding two years. I accept that underground miles have risen slightly.
For the passenger miles on buses, the last full year shows a reduction to the lowest figure for three years—down to 2,587. The forecast goes up again, but the reality is that it has not happened yet. Again, I concede that underground figures have been greater.
The waiting time—an important statistic for people in London — for the underground has remained consistent throughout the last five years at 3·3 minutes, but the waiting time for buses for four years from 1982 to 1984–85 was 7 minutes, and last year it rose, albeit marginally, by another 0·3 minutes. That is not substantial, but allowing for mergers it means some substantial increases in waiting times. That is not an acceptable statistic.
I have two further relevant statistics. The number of passenger journeys on buses has gone down to a figure lower than the preceding two years, and certainly the number of miles operated as a percentage of the schedule has gone down.
Of course, there have been substantial areas of improvement. For example, if we can obtain a service where the ratepayer and taxpayer pay less and the service is better, that—depending on the fare—is a good deal. The fares have gone up slightly higher than perhaps they might have done, but I accept that London Regional Transport had a particular initial capital investment job to do, and certainly the renovation of the underground stations is very welcome. That is one of the improvements that is entirely acceptable. The number of travellers on the underground again manifests the greater appeal of the underground. But there are other criteria which I would like the Minister to address, and which are equally relevant.
There is, I hope the Minister will accept, a limit to the number of people who can be crowded into the underground. One of the current problems is that at peak times, because of greater passenger use and because we do not yet have the new stock on stream, there are increasing periods of congestion on the underground as well as congestion overground, which highlights another problem. I would like to know whether we shall see a commensurate reduction in the difficulties at congested periods on the underground, which seems to be the greatest problem in passenger use terms that the underground service faces at present.
There are several problems in regard to London buses which I hope that the Minister will honestly address, because they seriously concern Londoners. The first is, of course, as statistics show, that bus services are, at best, improving only marginally so far, since LRT took over, and, at worst, are getting worse. There are substantial areas of London, as I am sure the Minister knows, where the reliability and regularity of the service are not good.
For example, there is a bus that goes almost directly from my home to here, the 53. I use it quite often. When the cab does not work I go on the bus. A couple of weeks ago, I was on the bus every day. Coming along the Old Kent road in the morning, that bus is often crowded and often late, and the timetables are often not there. Some parts of Southwark have timetables for this year already displayed; my part is not likely to get them for another four months, until May. That is not acceptable, not even

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knowing when the buses are meant to come, let alone not knowing whether they will come according to the timetable.
The second problem is that there is a tendency, which is welcome, to look at shortening the routes. The logic is that if we shorten the routes the delays should decrease. But that is just the sort of consideration that the hon. Member for Wigan (Mr. Stott) introduced, supported by the hon. Member for Epping Forest (Sir J. Biggs-Davison). Clearly, one of the factors that increases the congestion on the already congested roads of inner London is reducing the number of personnel on the bus from two to one. The obvious result is the delay when people get on; there is also not the support service for passengers—information and so on—on the buses, and that slows the whole system down.
The delays mainly arise — and I have had frequent correspondence about the lack of regularity of buses running to schedule in the Selkent district and elsewhere — because of the congestion on the roads of inner London. We must address that problem and do much more to make sure that we have a higher percentage of services operating according to schedule and on time. We are still failing badly in this, compared with many European cities.
I make the next point on every available occasion and I repeat it today for the Minister. North of the river there is to be the Docklands light railway going into the area east of the City. We do not yet have any commensurate routing south of the river, yet boroughs like mine, Southwark, and on into Lewisham and Greenwich are relatively badly served by public transport. So I ask the Minister to follow up the answer that he gave to me in the first Transport Questions of the year, on 12 January, when I asked him to look at a way of linking up the tube lines going to the Elephant with the east London line as a matter of urgency — and the London Dock lands Development Corporation has been thinking about and working on this — so that we can have much more effective east-west access south of the river to deal with many of the delays. I gather, for example, that Greenwich has just had a station opened but has still only two trains an hour in each direction. That is not satisfactory, because the potential demand is much greater. So I ask the Minister to consider the very poor bus services and the linkage between types of services south of the river, particularly in dockland.
The point that still has not been adequately addressed is how we raise to an equal standard all the public transport services in London and then run them at equal cost to the public. There is an inner London suburban railway system. I hope that the Minister has read the book, "The Clandestine Railway", that has been produced by the passengers' committee. It contains pictures of stations such as South Bermondsey in my constituency which looks as though it had not been attended to by British Rail for a generation at least. Primarily it is a potentially useful service, but first it has to be made to look as though it is there to serve the public, with proper stations and so on, and then it needs to be properly integrated into the underground and bus network.
Then the last step in the Travelcard/Capitalcard system has to happen, which is that a person would pay the same for a card no matter what public transport system was used for the journey in inner London. I hope that the Minister will encourage the House by saying that soon, no
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matter whether one goes by bus, by underground or by rail, there will be a common tariff for the Capitalcard or Travelcard with proper interchangeability.
I share the concern that we have so short a time only once a year to debate the only and very anomalous public corporation that runs transport for the capital city. Clearly it is not enough. Although there have been substantial improvements in some areas, I hope that the House will remind London Regional Transport that, particularly for the bus user in inner London, the public transport service is not as good as it could be and that passengers are still paying a relatively high price for a service that often lets them down badly.
11.16 pm
Mr. Jeremy Hanley: There is not mch left to say after the powerful speech of my hon. Friend the Member for Lewisham, West (Mr. Maples). He set out the history of the London Regional Transport Act 1984 with a clarity and honesty which we have rarely heard from the Opposition. He served with me on the Standing Committee and we both remember well the arguments from the Opposition. It is a very cynical and unpleasant politician who tries to curry favour by living on the fears of others. I well remember the leaflets being given to people on buses saying that there would be massive tube station closures as a result of the legislation.
One thing that struck me in the contribution from the hon. Member for Wigan (Mr. Stott) and the interjections of other Opposition Members was that they seemed to believe that the London transport system as a whole is meant to be a job creation and a job protection scheme. Hardly ever did any of them mention that it is a passenger scheme. It is there to provide passenger facilities at the levels that passengers require, with a price structure that ratepayers, passengers and Government can afford.
The use of the underground reached an all-time record of 762 million passenger journeys in 1985–86. Is that a 10 per cent. or a 20 per cent. increase? No, since the legislation was introduced, it is a 50 per cent. increase in journeys. And the long-term decline in bus usage has been halted. Overall last year there were 1·9 billion passenger journeys on LRT services.
It is pathetic when Opposition Members start saying, "All right, yes, we agree; the use of tube services has increased, but the bus services have gone down. That is one success and one failure." The answer is that one must give credit for the fact that the tube system is among the most attractive, efficient and well-run systems in the world. At the same time one must recognise the great difficulties that those who run London's buses have, for the simple reason that, because so many people have their own cars—a sign of affluence and of a small increase in prosperity amongst the nation as a whole—that causes difficulties above ground that cannot happen below ground. It must be desperately difficult for John Telford-Beasley to keep the buses from bunching in the traffic levels that we have. Yes, it is irresponsible of millions of people to bring their domestic cars into London. It is also unnecessary and wasteful. The bus services would improve dramatically if domestic cares and smaller lorries would keep out of inner London.
That will be achieved by making the bus services even more attractive and by imaginative schemes to make sure that parking is introduced outside London towards the M25. Individuals must be educated out of the socially

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unacceptable habit of coming alone into London in motor vehicles. Success will depend on matching the efficiency of the service, and the attractiveness of the facilities provided above ground with those below.
Mr. Raynsford: Many Labour Members accept much of what the hon. Gentleman says about the strategic importance of seeking a reduction in private vehicle usage in central London in order to facilitate bus movement. But he went on to say that one of the keys to that was making buses more attractive. Does the hon. Gentleman agree that one-person operated buses and an increase in the time taken to pick up passengers, so reducing the efficiency of buses, would have exactly the opposite effect?
Mr. Hanley: Mr. Telford-Beasley has exactly the right plans to make buses more attractive. He has already achieved that on some routes in the centre of London. He has introduced midibuses to make sure that people sit in comfort and not in long, draughty buses, often empty during the middle of the day, apart from the odd one or two passangers.
Bus mileages have reduced over the years on some routes because the level of passengers per bus has been reduced. Therefore, one must expect to reschedule the buses to make sure that they are more efficient. The midibus system and competitive tendering will bring more attractive routes that are more responsive to individual's needs.
Mr. Raynsford: I was asking about one-person operated buses.
Mr. Hanley: The hon. Gentleman seems to believe that a bus is inherently more attractive if two people are working on it rather than one. What is important is that the system is efficient, cheap and works. Merely having two people on a bus does not achieve that. I readily admit that one of London Buses biggest problems is in one-person operation. There is a resistance to that among the public. There are routes where it will be discovered that passenger resistance is such that buses will have to go back to having extra staff. I do not deny that. But the professional management of London's buses is exactly what is needed to decide on the future of the bus network. That will not be decided on the narrow political point of having as many working on the system as possible. It will be decided upon giving the best service to the passenger and that is what Mr. Telford-Beasley is capable of.
I also want to congratulate Dr. Tony Ridley. His professionalism on the underground has been superb. Let us remember that the highest level of passenger usage on the underground was last summer when the fewest holidaymakers ever came to Britain, and especially to the capital. That is indeed a tribute to Dr. Ridley and his staff. Any hon. Member who looks at London's underground system can see how attractive, informative and clean it is. Not only that but the new station designs are appropriate to the areas they serve and enhance the original architecture, as at Baker street on the old metropolitan line.
Mr. Dobson: How many of the station improvements that the hon. Gentleman is talking about were planned or commenced under the Labour-controlled GLC and how many have been carried out since LRT took over that had not been started or planned by the GLC?
Mr. Hanley: The same GLC forecast the closure of 35 stations—[HON. MEMBERS: "Answer."] It was starting to do improvements in certain stations, but it is now an attractive scheme for the whole of London which spreads out into the provinces.
Mr. Dobson rose—
Mr. Hanley: No. The hon. Gentleman can make his own speech in due course.
Ticketing has been made more attractive. It has been a hard battle to persuade LRT that passengers should be able to buy a ticket where it is most convenient for the passenger. The increase in the number of ticketing outlets is bound to increase business. It is now easier to get on an underground train, and fraud has been heavily reduced.
I should like to remind the House of the intentions behind the London Regional Transport Bill. LRT was to restore a stable framework for public transport planning. That has been achieved. It was to reduce unnecessary costs and provide better value for money for travellers, ratepayers and taxpayers. That has been achieved. It was to bring bus and underground services into the same policy framework as the BR commuter services, and to improve co-operation. Through-routing has never been easier.
Plans that London Regional Transport and BR unveiled recently are exciting and what should have been introduced years ago. They have been achieved under this structure. LRT was to redirect resources to cost-saving investment. That is exactly what has happened. The capital investment programme has increased and the need for revenue support cut while fares have been held steady. It was to ensure fully professional management. Under Sir Keith Bright, who has not been mentioned, but to whom great tribute should be paid—
Mr. Tony Banks: Who appointed him?
Mr. Hanley: —we now have a system which is improving, not declining, is popular and serving the capital rather than union and Labour pressure.
11.27 pm
Mr. Alfred Dubs: It is a matter of regret that there are so few opportunities to debate public transport in London. I get a steady stream of complaints from my constituents about the bus services in Battersea. I am surprised that the hon. Members for Lewisham, West (Mr. Maples) and for Richmond and Barnes (Mr. Hanley) seem to think that loyalty to their Minister is more important than loyalty to their constituents. The world that they describe is not that which is known in most parts of London.
During the past few years we have experienced a steady deterioration in bus services in London. This naturally attracts more cars. There is therefore more pressure for trunk roads. Therefore there will be more traffic, and therefore the environment will get worse. The evidence of the time under the Labour-controlled GLC was that public transport can win more passengers if services are reliable and fares are reasonable. That is the lesson of the past and the lesson of other cities such as Paris.
I shall concentrate on bus services in south London. Whatever are the planned services, the fact is that there are approximately 30 per cent. deficiencies on at least some of the routes in London due to staff shortages and shortages of spare parts for older buses. London Buses is some 800

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drivers short, and in the Wandle district, which covers part of my constituency, there is a shortage of 160 drivers. In south-east Kent there is a shortage of 120 drivers.
Mr. Hanley: Will the hon. Gentleman ask bus conductors to take a promotion and apply for those jobs?
Mr. Dubs: I think that that is a somewhat irrelevant point.
I receive many letters of complaint and I should like to quote briefly from one of them. The letter complains about services on the 44, 137 and 170 routes. My constituent complains that for a week recently, and not during the heavy snow, she had to wait at least half an hour every day to get a bus from Battersea to Vauxhall or Whitehall. She concluded her letter by writing:
"I wonder if there is anything further you can do to put pressure on LRT to improve the bus services in North Battersea. People are utterly fed up with excuses. We want an improvement, not excuses."
It seems that that attitude and those words typify the views of so many Londoners about bus services.
If all is as well on London buses as Conservative Members suggest, why is it that London Buses is estimating that revenue in the current year will fall by 8 per cent.? That is a sign of a service that is failing, not succeeding.
I have received bitter complaints from constituents about one-person-operated buses. The operation may be all right in far suburban areas or in the country, but in inner London it leads to congestion at every bus stop, to enormous difficulties for the disabled, who complain that if there is not a conductor on the platform they get no help to climb on the bus with the result that they cannot manage to use buses, and to similar difficulties for those with shopping or with young children.
One-person operation has been opposed by the London Regional Transport passengers' committee and criticised by the police. It is surely not the way to run an efficient and sensible bus service in inner London, yet we hear that because of less revenue support there are to be more one-person-operated buses and that London Buses will need an extra 440 new buses for this purpose. It seems that it has the money for only 65 new buses, based on £23 million of investment, and that it will have to buy 220 second-hand buses instead. Some of the 220 will be buses which it has previously owned and sold. This is ludicrous. London Transport will not have sufficient buses with which to tender for the 33 routes that will be put out to tender this year. The Minister knows that, so I am interested to know how he can say that London Buses will have to compete for routes when he is preventing it from having the resources with which to compete with private operators.
There is a list of the services that will be affected. We know that one-person operation will affect a number of routes in south London, such as the No. 1 from Marylebone to Greenwich. It will be converted to one-person operation in May. In September the 53 route from Oxford circus to Plumstead will be affected in that way. The southern section of the 88 route from Acton Green to Mitcham will also become a one-person operation. There is a long list of routes that will be affected by tendering, including many that may be lost entirely to public transport. These are services that will affect Plumstead, Norbiton, Harrow, Merton and Sutton. The tendering process may result in these areas losing public transport services. There is a list also of possible job losses.
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I agree that London Transport's primary aim is to provide a decent service, not to provide jobs, but my submission is that London Buses is failing the people of London. This is clear if we listen to the complaints of our constituents and ascertain for ourselves how long it takes for buses to appear. If services are running to schedule all may be well, but time and again schedules are not maintained because of lack of resources, inadequate buses and poor repair facilities.
We know, for example, that London Transport has had to close its driver-training school at Chiswick. We know also that many of the training resources in the districts are inadequate. It seems that the bus services will continue to offer poor and deteriorating service for the people of London. It is time to say that we do not have to run our capital's bus service in that way. It is time to say that there is another way of doing it. Provided that the resources are made available, we can have decent transport for London. Transport is the lifeblood of the capital, and given the way in which bus services are deteriorating year by year, that lifeblood will cease to flow. It is up to the Government to say that they will provide the resources in future, instead of always saying, "Never mind the bus passengers, let them wait. They do not matter."
11.35 pm
Mr. Michael Fallon: It would be quite wrong if consideration of this order was simply restricted to hon. Members with London constituencies. A large part of the estimated grant in paragraph 4 of the order must be provided, not by the ratepayers of London or by London Regional Transport's customers but by taxpayers throughout the rest of the country.
We should note—whether we represent London or elsewhere—that this year the total grant of £285 million provided to LRT exceeds the entire regional aid budget for the rest of the counry. It is only right that somebody from outside London should be asking some slightly harder questions than we have yet heard from either side of the House tonight about the performance of LRT.
Why is it that the most prosperous part of the country has the most heavily subsidised commuter network in the country? Why should taxpayers in the north fund those southern comforts?
Mr. Dobson: Will the hon. Gentleman give way?
Mr. Fallon: No. Why should taxpayers in Glasgow and Darlington subsidise the City slickers from Fulham broadway or Sloane square as they travel to work? Why does LRT make a loss? There has been a great deal of stale thinking on the issue of LRT—that has been displayed in previous debates on the Bill and during tonight's debate.
Mr. Dobson rose—
Mr. Fallon: No, I will not give way.
LRT has a virtual monopoly of the bus network and a complete monopoly of the underground network. Why does not LRT contribute — through profits — to the national wealth? Why does LRT not help to fund our schools and hospitals in the rest of the country instead of drawing resources from them?
We have an agenda for privatisation. Why is LRT not on that list?
Mr. Hanley: Is the metro in Newcastle making a profit?
Mr. Fallon: I apply the same argument to the metro, but I can assure my hon. Friend that the metro does not rely on as heavy a subsidy from public funds as LRT—that is the point. LRT is the most heavily subsidised network.
Mr. Dobson: Will the hon. Gentleman give way?
Mr. Fallon: I will give way, but I am anxious to let other hon. Members participate in the debate.
Mr. Dobson: As the hon. Gentleman is drawing attention to anomalies, does he think that it is ever so slightly anomalous that Britain's biggest education authority receives not one jot of subsidy from the taxpayer, as every penny comes from London's ratepayers unlike the hon. Gentleman's area?
Mr. Fallon: That question is entirely beyond the scope of the order.
Why is the privatisation of LRT not one of the Government's priorities? How can the Government justify taxpayers in the rest of country having to subsidise a merchant banker's journey from Fulham Broadway into the heart of the City when that same merchant banker is working on the privatisation of transit systems in the far east? It is ironic.
I have two specific questions for my hon. Friend. First, when will the estimated grant under paragraph 4(1) be zero rather than a figure reduced from £235 million in subsequent years? At what point will there be no estimated grant? At what point will taxpayers in the rest of Britain be free of the burden of subsidising southern comforts?
Secondly, when will my hon. Friend come forward not simply with guidelines that tell LRT how to manage its system better but with a positive plan of privatisation? That would free LRT of the politicking that we have seen tonight in the House. Privatisation would allow LRT to flourish as a fully commercial company and would allow those who work in it to share in the fruits of its enterprise rather than to rely on the generosity of the taxpayers in the north.
11.39 pm
Mr. Harry Cohen: The Conservative Government have reduced public transport in London to a state of crisis. They took democratic control away with the abolition of the GLC, but since then they have made ratepayers pay a higher bill for a reduced service. The Government subsidy has more than halved and, as a result, fares have shot up. Services have been cut and jobs lost. That is due to get worse, as privatisation and deregulation increasingly hit London. Private operators will squabble over the profitable routes, leaving residents everywhere else to suffer. Frequent service changes, poor information, unreliable timetabling and short cuts on safety will bring chaos and dissatisfaction. The Government are responsible for this decline, and have no remedy but to make it worse.
I wrote to Sir Keith Bright, the chairman of LRT only this week, and I shall quote part of the letter:
"Travelling regularly on the underground, including to the House of Commons from my home in Leytonstone, I am aware that there are frequently delays in service caused by signal failures, trains out of commission, staff shortages and other managerial problems, adversely affecting the service. I am also aware of the dingy state of many of the stations. I know that the GLC had plans and was undertaking a programme to invest in both rolling stock and station refurbishment, but that these plans have regrettably now mostly been delayed or abandoned."
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I call on him to be ready with a plan that will meet the joint aims of improving public transport in London and creating jobs, which will be necessary with the next Labour Government.
I am going to raise this matter when the next general election is held. Public transport will be part of my campaign in the leaflet that I shall be producing, and I shall be demanding the reversal of this decline, and calling for a Labour Government to provide much-needed investment to modernise the road, rail, tube and bus network in London; to provide adequate finance for the services that people need at fares that they can afford; to restore democratic accountability so that local communities can have a say in their public transport; to undertake action on traffic management, with schemes such as bus lanes and selective road building to reduce traffic congestion; to guarantee the free travel passes for pensioners—when the Tories look for cuts, these could still be at risk — and to improve travel facilities and access to the buses and stations for disabled people.
That programme, started by the GLC, has been cut to nothing. Staffing levels should be increased to assist and protect travellers. There must be a proper maintenance programme to improve safety and reduce the dangers of crumbling roads. That is the programe for effective public transport in London. It is a much better programme for people to get around on public transport than the market mayhem and Conservative chaos that is being inflicted on the people of London.
11.43 pm
Mr. Clive Soley: It is a bit much for the Minister to open the debate by saying that the GLC was politically motivated, with the implication that he was not. He is a politician, and the Secretary of State and the Minister are imposing political conditions on LRT. I make no complaint about that right, because they won an election just as the GLC won its election, and so had rights over London transport—until it was abolished in case the Labour party won another election, as it was bound to do.
Many Conservative Members show an appalling ignorance. All the station improvements, the fares card to cut fraud, the "Fares Fair" scheme and other improvements all came from the GLC, not the Government, and the Government are picking up some of them because it has turned out that they work. It was the GLC that appointed Dr. Bright, so the Minister's comments are even more out of tune with reality.
What the Minister said about dial-a-ride is grossly misleading. I wrote to the Minister and I have sent his reply to the dial-a-ride people. I can tell the Minister that not just my supporters but people across the political spectrum were angry with his reply, because it raised expectations. The tiny increases have allowed dial-a-ride to advertise its services more widely and provide new capital equipment in the form of buses. However, there is no provision for the increased use that will follow. All the Minister will do is upset many disabled people who will try to use dial-a-ride and find that the facilities are not available. I challenge the Minister: if he does not believe me, he should ask the dial-a-ride organisers because all of them, across the political spectrum, told me that, and I am prepared to give him further details.

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The 207 bus route starts in my constituency and thereafter passes through several constituencies held by Conservative Members such as Ealing, Acton and so on.
Mr. Tony Banks: Shame. We should re-route it.
Mr. Soley: All the Conservative Members from Acton to Uxbridge have come out in opposition and have given the Shepherds Bush and Hammersmith Gazette, the local paper that has taken up the issue, their commitment to oppose one-person operation. They have done that because they know that it is unpopular. It is unpopular because, as has already been pointed out, one-person operation, on average, increases journey time by between 15 and 20 per cent. On a route such as the 207, the journey time will be increased by much more. There have been complaints about that service for a long time.
The one area in which I was wrong in the past about one-person operation is that there is some evidence that crime and accident rates have gone down. However, it is wrong to associate that just with one-person operation. It is due to the automatic closing doors which stop people from falling off and so on. The lessening of attacks is probably due not only to the low fares in certain high-risk areas late at night, but to the shields that have been put up and radio links and so on. To say that it is because of one-person operation, as is implied in some of the recent publications, is grossly misleading and another example of the misuse of statistics of which Conservative Members have given such an appalling example this evening.
My main reason for intervening, as the Minister will know, is the development of the Hammersmith Broadway site. I realise that the Minister cannot reply at this time, because there is an appeal before the Secretary of State. However, my hon. Friend the Member for Fulham (Mr. Raynsford), the Members of the European Assembly, councillors and supporters of the Conservative party as well as myself, believe that the scheme for Hammersmith centre will be totally unacceptable in the form that has been proposed by LRT. That scheme is one of the biggest proposals of its type in the country — some say in western Europe, but I do not have all the figures. LRT has proposed that form because political pressure has been put on it by the Government to make money.
The interchange affects all hon. Members. Anybody returning from Heathrow comes through there and changes to the Piccadilly line. Many people use it to get to the Metropolitan line. It is a crucial interchange for buses, tubes and other traffic. By telling LRT that it must stay within certain cost limits and by not allowing it to fund the docks railway without finding its own revenue, the Government have put pressure on LRT to make sites such as Hammersmith pay. Therefore, there has to be a mighty office development on top. In Hammersmith centre there will be an enormous office development which will dramatically change the nature of the area. It was a major issue at the local elections and it will be a major issue again because it is ripping apart the town centre at a time when we are trying to rebuild the town centres of Britain because we know that by having them turned into derelict areas and office space areas we have created the problems of inner cities and made them worse in recent years. I ask the Minister to take away the message that if the Government allowed Dr. Bright and the LRT more flexibility on the money issue they would not have to build developments which alienate hundreds of thousands of
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people across the country. Even people who do not live in Hammersmith have been complaining about the nature and scale of that development. It is huge.
Dr. Bright has undertaken, following a meeting with some of us, to go away and look at that scheme again, but his room for manoeuvre is limited unless the Government alter their political instructions.
I understand that the Minister cannot reply to me on that tonight, but I ask him to take away the great seriousness with which people across the political spectrum view that issue. It is extremely important and will have a dramatic effect on the whole of west London. Priority must be given to passenger users and to people who live in the area, not to office development.
11.42 pm
Mr. David Mitchell: It may be convenient if I respond to a number of points that have been made. The hon. Member for Wigan (Mr. Stott) opened in his usual style. He referred to some of the unfortunate side effects of improving efficiency which often means, in any business, that one operates with less manpower than one had before. A number of hon. Members on both sides of the House referred to the fact that it is not part of the work of LRT to provide an employment agency. It is its task to provide the best possible services for the citizens of London and others who use its services. The hon. Member for Holborn and St. Pancras (Mr. Dobson) interrupted the speech of the hon. Member for Wigan by saying that there were 393,000 unemployed in London and 36,000 registered vacancies. The hon. Member for Wigan must bear in mind that the registered vacancies are a third of the total vacancies—that is 100,000 vacancies—and that must be taken into account.
The hon. Member for Battersea (Mr. Dubs) told the House that LRT had a shortage of staff. If LRT has a shortage of staff, that is self-evidently an answer to the question about what happens to some of the people who lose their jobs as a result of improved efficiency.
The hon. Member for Wigan has said before that he deplores the decrease in subsidy. He appears to regard subsidy as some sort of virility symbol. I do not do that and I do not think those who pick up the bill, the ratepayers and taxpayers, regard it in that light either. The hon. Members for Wigan and for Battersea claimed that London Buses will not have enough vehicles to run all the routes which are being put out to tender. However, we know from experience that London Buses has won 41 per cent. of the tenders for which it has entered. It would be nonsense for it to put aside the 100 per cent. of vehicles required for the tenders that are coming up and then to find that it won the same proportion, or roughly the same proportion of tenders that it won before and had a whole lot of surplus vehicles on its hands. The hon. Members who pressed that point cannot have thought clearly about the matter.
I turn to OPO services because it is an operational matter for LRT. They clearly bring major cost savings, there are fewer accidents to passengers, fewer assaults on crew and service reliability is greatly enhanced by dependence on one rather than two persons to operate the service. LRT is not committed to 100 per cent. OPO operation, although that is the norm in most major cities throughout the world. London Buses appraises each stage of OPO conversion on its merits taking account of cost

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savings, time losses to passengers, and congestion effects. It is also looking especially at ways of achieving faster boarding times and reducing delay.
The hon. Member for Wigan threatened that if the Labour party was ever to win a general election, it would re-introduce political control over LRT operations. All I can say is that I am sure that that threat will be noted in the right quarters, and plenty of people will want to see that it does not happen.
My hon. Friend the Member for Lewisham, West (Mr. Maples), in a hard-hitting speech, demolished much of the case against LRT, particularly the Labour party's prophecies that if the Greater London council ceased to run LRT, it would deteriorate. All that has been proved to be arrant nonsense.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) raised several points. He said that there was the lowest-ever figure for London Buses mileage. With great respect to the hon. Gentleman, he implied by that that fewer bus miles were being run in London. He is confusing himself with figures. While it is true that London Buses is running fewer miles, that is because the company has failed to win some of the contracts that have gone out to competitive tender. If he looks at the overall mileage in London, he will see that the deterioration that has gone on over many years has come to a stop. The crucial difference in the figures is that the 163 million miles to which he referred is the mileage by London Buses whereas the total mileage being operated in London is 169 million miles. I think that that will give the hon. Gentleman some reassurance.
The hon. Gentleman also referred to congestion on the tube. London Transport is well aware of that. We have helped by approving £45 million worth of additional rolling stock for London Transport. On top of that, as an emergency measure, some older stock is being brought into operation. The fact that there is such an increase in demand is a sign of success. It is perhaps one of the penalties of success, but the last thing that one should do is in any way to fail to recognise that it is success that has led to the problem.
My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) paid tribute to Sir Keith Bright—rightly so. I add to that a tribute to the role played by Dr. Tony Ridley and John Telford-Beasley. Those professional managers have achieved a great deal, and are responsible for the success that has done so much to improve the services in the capital.
The hon. Member for Battersea also referred to a reduction in the revenue of London Buses. That is because it failed to win the tenders. The same point was raised earlier. The hon. Gentleman is misleading himself if he thinks that there is any other reason for that.
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My hon. Friend the Member for Darlington (Mr. Fallon) asked me certain questions. He was concerned about when the subsidy to LRT would come to an end and why we had to subsidise it. That is because—
It being one and half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 (Exempted business).
Question agreed to.
Resolved,
That the draft London Regional Transport (Levy) Order 1987, which was laid before this House on 17th December, be approved.
Mr. Tony Banks: On a point of order, Mr. Deputy Speaker. May I place on record how thoroughly unsatisfactory it is to have a one-and-a-half hour debate on something as important as London Regional Transport at this time of night when many hon. Members have been unable to speak?

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

    NORTHERN IRELAND
    That the draft Local Elections (Northern Ireland) (Amendment) Order 1987, which was laid before this House on 13th January, be approved. —[Mr. Durant.]
    Question agreed to.

    WELSH GRAND COMMITTEE
    Ordered,
    That, during the proceedings on the matter of the Public Expenditure White Paper (Cm. 56–11), as it relates to Wales, the Welsh Grand Committee have leave to sit twice on the first day on which it shall meet; and that, notwithstanding the provisions of Standing Order No. 88 (Meetings of standing committees), the second such sitting shall not commence before Four o'clock nor continue after the Committee has considered the matter for two hours at the sitting.—[Mr. Durant.]

    PROCEDURE
    Ordered,
    That the Standing Order of 20th March 1984 relating to the nomination of the Select Committee on Procedure be amended, by leaving out Mr. Christopher Chope, Viscount Cranborne and Mr. Hugh McCartney and inserting Mr. D. N. Campbell-Savours, Sir Carol Mather and Mr. William Powell.—[Mr. Durant.]

  PARLIAMENTARY COMMISSIONER FOR ADMINISTRATION
  Ordered,
  That Mr. David Clelland be discharged from the Select Committee on the Parliamentary Commissioner for Administration and Mr. George Howarth be added to the Committee.—[Mr. Durant.]

Caterpillar Tractors (Closure)
Motion made, and Question proposed, That this House do now adjourn—[Mr. Durant.]
11.59 pm
Mr. Michael Hirst: Any factory closure is usually a matter of great sadness, for the management, the work force, suppliers and the local community. When news of a closure is preceded by an announcement of a substantial new investment programme, which is started and then abruptly cancelled, that must surely be a matter of more than sadness. It is a matter of outrage involving justifiable accusations of rank bad faith. That is, in essence, the experience of the Caterpillar factory at Tannochside, Uddingston. A number of my constituents and constituents of other hon. Members derive their living directly or indirectly from that factory.
Caterpillar at Uddingston is typical of many of the United States-owned factories in central Scotland which have set up during my lifetime. By and large, these United States firms have been excellent employers and responsible corporate citizens. I am pleased that the hon. Member for Motherwell, North (Mr. Hamilton) is present, because I am sure that he can testify to my points as he has for many years represented the constituency which incorporates the factory. Caterpillar has known good times as well as difficult times. Over the past 30 years it has been a profitable and worthwhile operation. The management and work force have co-operated to respond positively to the many challenges that the automotive industry has faced through competition from the Japanese, through technological advance and through world economic and market conditions.
Given the concern about the number of factory closures in west central Scotland recently, it is hardly surprising that there was universal acclaim when, just a few weeks ago, senior executives of Caterpillar announced a major investment programme at Tannochside. The factory was to be designated a PWAF, a Caterpillar acronym meaning "a plant with a future". Some £62 million was to be spent re-equipping the plant with the most sophisticated robotic machinery in order to create a factory capable of achieving the significant production cost reductions necessary to be internationally competitive. A further £8 million was to be spent redesigning the factory layout and training the employees in the new technologies.
That investment programme was supported by a promise of substantial Government assistance. All that good news was announced during a visit to the factory by my right hon. and learned Friend the Secretary of State for Scotland. Indeed, the Caterpillar press release rightly identified the need for an ultra modern factory. The plant director was able to say on the occasion of the Secretary of State's visit:
"Fortunately because of the new products that we are adding to this facility namely fabrications and transmissions, our manpower requirements in 1989 are forecasted to be approximately the same number—1,200 —of people as we presently employ. The £62 million investment can be looked upon as insurance against the loss of 1,200 jobs. There is no alternative to investment and training."
I dare say that many people on the occasion of the Secretary of State's visit would have said "Hear, hear" to that. I am glad to say further that the plant director acknowledged in pretty generous terms the support that
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the Minister's Department was giving to that investment as well as the fact that the company intended to apply for assistance under the advanced manufacturing technology scheme administered by the Department of Trade and Industry.
Caterpillar thus symbolised the new hopes for Scottish manufacturing business, where employee skills and commitment, allied to the latest technology and flexibility in work practices, could manufacture a world-heating product.
All was presumably well with this new investment programme, because in the early part of this month a very expensive robotic machine was installed and started test production exactly two weeks ago, just hours before an announcement from Caterpillar's headquarters in Peoria, Illinois that not only was the whole investment programme to be abandoned, but that the whole plant at Uddingston was to close. PWAF— a plant with a future: how sick these words must sound in the ears of the work force. Understandably, the announcement has caused dismay and outrage among the work force, the suppliers, the local community and in Government circles in Parliament.
Caterpillar has signally failed to provide a persuasive explanation for its decision, so soon after starting a major investment programme, to abandon it and close the factory. What has happened in the short time since that announcement to invalidate the corporate strategy that supported the new investment? Caterpillar's senior executives should have been aware of future market trends and production requirements when they made their announcement in September. Every hon. Member must know that investment decisions are made on a medium to long-term basis and are generally unaffected by short-term market hiccups — if that is what prompted the Caterpillar United States decision.
Why have the executives of Caterpillar in the United States been so unforthcoming about their reasons for closure? Can my hon. Friend the Minister, who met them last week, shed some light on the reasons for their abrupt decision? Caterpillar cannot slide out of its obligations as a major employer. It must explain its conduct, especially in view of the high-flown declaration of business ethics in Caterpillar's "Code of Worldwide Conduct and Operating Principles", from which I rather ruefully quote. It states:
"We intend to hold to a single high standard of integrity everywhere. We will keep our word. We won't promise more than we can reasonably expect to deliver; nor will we make commitments we don't intend to keep. The goal of corporate communication is the truth—well and persuasively told."
In the light of that and the earlier admissions by the company, I am prompted to think that, at best, the senior managers at Caterpillar have been guilty of gross incompetence in the planning of their corporate strategic objectives. At worst, their conduct borders on corporate treachery.
I accept that those are strong words of accusation, but do not the circumstances of this unique case suggest that Caterpillar has deceived a loyal and co-operative work force, that it has dealt shabbily with its suppliers and sub-contractors, many of whom have recently become recognised sub-contractors and, to do that, turned away business that might otherwise have been available to them, and that, more than anything else, it has betrayed a local community that is struggling to cope with unemployment at 20 per cent.? I do not generally support the occupation

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of a factory by its work force, but I can readily appreciate the sense of betrayal that prompted the Uddingston work force to take the dramatic action that it has.
I have some questions for my hon. Friend the Minister, and I hope that he can give me some answers. Where do matters stand with Caterpillar's senior management? When does he or my right hon. and learned Friend the Secretary of State expect a reaction from Peoria—a reaction which I understand was promised when the president of the company met him last week? Can my hon. Friend say whether the Government have made any contribution to the investment support which they promised? What contingent plans will be made to try to protect employment at Uddingston if Caterpillar pulls out? Is my hon. Friend aware of another manufacturing operation that could secure a future for the huge Tannochside factory? Will he confirm that the United Kingdom does badly out of the decision, and that Leicester will not benefit materially from the closure of Uddingston?
We all recognise that business conditions change, sometimes rapidly, and that no factory has a God-given right to remain in production for ever. Caterpillar's decision might have been easier to understand, if not to accept, had it warned in September of overproduction or market problems rather than made that bullish announcement of investment plans. The whole House will wish to join me in condemning the actions of the senior management of Caterpillar in the United States and in supporting the valiant efforts of my right hon. and learned Friend the Secretary of State and my hon. Friend the Under-Secretary of State to persuade the Caterpillar management to reconsider its decision to close the factory.
12.9 am
Mr. James Hamilton: It is most unusual for an hon. Member to have an Adjournment debate on a factory in another hon. Member's constituency, but on this occasion I welcome it because it means, in essence, that the Government very much condemn the action taken by the Caterpillar management. I have been associated with Caterpillar since 1956. As a member of a local authority, I greatly assisted it. We gave it every possible assistance. We demolished houses to give it a green field site. We built new houses for people whose houses were demolished, and we built houses for incoming workers. At the outset of our negotiations with the company, we found that, true American company that it was, we had great industrial relations trouble. However, we managed to right that problem, and since 1956 industrial relations have been of the best order and the product has been excellent. They are not my words but those of management.
My first intimation about the closure was when the shop steward, who happens to be a friend and constituent of my hon. Friend the Member for Hamilton (Mr. Robertson), phoned me at my home to tell me that, in Illinois, consideration was being given to closing two or three of the factories within the Caterpillar combine, and that our factory was one of those under consideration. To say that I was shattered is to put it mildly. I was absolutely flabbergasted; indeed, I thought that the shop steward was going stark raving bonkers.
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When the Queen made her speech opening Parliament, I met one of the top management of Caterpillar in London, at his request. He told me how fortunate I was because our factory was doing well. He mentioned the £62·5 million investment. It is not just true to say that the right hon. Gentleman the Secretary of State for Scotland visited the factory, but it was set up that he should go and assist the general plant manager to make the announcement himself. He made that announcement. Indeed, in his new year message, in glowing terms he also praised the investment that had been made by the Caterpillar tractor company.
All this was done in September last year. A few short weeks afterwards — in fact, to be precise, on 16 December—the shop steward sent for the work force, and told them that the factory was to close. This closure was to be done without any consultation with the unions, the shop stewards and, indeed, me. Bearing in mind that, before the advent of the Advisory Conciliation and Arbitration Service, I performed many miracles in the factory by acting as a mediator to keep good industrial relations, these are the thanks that we got from the company.
The Secretary of State for Scotland, it is true, met the Illinois top management. The trade unions met the Illinois management, and I met them before they boarded their plane to go back to America. We put the case to them and pointed out that it was not only a case of 1,221 men becoming unemployed, but of smaller companies that were dependent on Caterpillar also going to the wall. On that basis, many of the workers had given loyal service to the company for 25 years—some of them for nearly 30 years. They were being thrown on the scrap heap with no possible chance of getting employment anywhere because there is 22·1 per cent. unemployment in Lanarkshire.
That is the thanks that we get from an American company. To say that it is scurrilous is to put it mildly. The Minister was present at the Caterpillar negotiations—if one can call them negotiations—when we tried to get the company to keep the factory open. What is the up-to-date situation with the negotiations? What inducements were given or offered by the Government to keep Caterpillar at Tannochside? What is the situation with the Belgian factory? My information is that the work from Tannochside will go to Belgium. What is the Belgian Government giving that we cannot give? What do multinational companies have that we do not? All these questions must be answered.
I am pleased that the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) stated that he fully supports the union members' sit-in at the factory. It goes without saying that Labour Members support them 100 per cent. Indeed, some Labour Members have visited the factory on two occasions, and I intend to do so again on Friday morning. I want these men to know that we recognise that they are fighting for their very existence. If they do not fight now, and fight all the way, their jobs will be lost for ever.
I also want a catergorical assurance from the Minister and the Secretary of State—indeed, from the Cabinet as a whole—that they are prepared to support us 100 per cent. in our fight to ensure that that factory is re-opened and its workers returned to full employment.
12.15 am
Sir Hector Monro: During a week when we have had some particularly good news about new jobs, it

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is sad that we have tonight a united House condemning the disastrous decision of Caterpillar to close its works. Our sympathy — and, I hope, a great deal more—goes to those who will lose their jobs.
I want to show that the repercussions go much further a field than Lanarkshire. In my constituency of Dumfries, Penran Engineering has provided the cabs for Caterpillar —worth £1·6 million last year, which is 41 per cent. of its sales. Fifty jobs will be lost if Caterpillar does close its factory. Penran was, of course, encouraged by Caterpillar to invest £150,000 last year in robot machinery, and because of the confidence shown by Caterpillar in the very large investment that it promised to make, Penran had gone ahead with other preparations to step up production.
Hopes have been sadly dashed, and tonight I want to support my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) and the hon. Member for Motherwell, North (Mr. Hamilton) and urge my right hon. and learned Friend the Secretary of State to keep up the pressure being exerted on the directors of Caterpillar. I am sure that he is supported by my hon. Friend the Minister, who is responsible for industry. We all feel that every endeavour must be made to persuade the directors of Caterpillar to change their minds and retain what is a thoroughly efficient and effective factory that provides jobs not only in Lanarkshire but, indirectly, further a field.
12.16 am
The Parliamentary Under-Secretary of State for Scotland (Mr. Ian Lang): I welcome the opportunity given to me by my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) to explain the circumstances surrounding Caterpillar's declared intention to close its Uddingston plant. This decision has aroused feelings of shock and anger and has led to accusations of deceit, and even betrayal, from within all political parties—not only at the decision to close, but at the manner in which it was taken and announced. Many of those sentiments are widely shared by the public at large, and the Government, through the statements of my right hon. and learned Friend the Secretary of State for Scotland, have made their concern known.
I especially welcome the speech of the hon. Member for Motherwell, North (Mr. Hamilton) and the unity of purpose displayed in his remarks. I pay tribute to him for his work over the years with Caterpillar, which is in his constituency. I am sure that the House will readily understand his strong personal feelings about what has happened and his concern for his constituents in these circumstances. He and my hon. Friend asked a number of questions, and I shall try to answer as many as I can in the time available.
In December 1985, Caterpillar of the United States of America announced a five-year 600 million dollar modernisation programme to automate its manufacturing facilities worldwide. In the light of group investment intentions, Caterpillar management at Uddingston put together a five-year investment plan which my officials were advised had received group approval in principle, subject to the availability of an acceptable level of financial support through regional assistance. The intention to invest was widely publicised at that time throughout the Uddingston plant, which had been designated by the company as a PWAF — the corporate acronym for a "plant with a future".
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Caterpillar UK Ltd. is a wholly owned subsidiary of the US Caterpillar Inc. The United Kingdom company, with plants at Uddingston and Leicester, employs over 1,900 in the manufacture of tracked vehicles, lift trucks and backhoe loaders, plus spares and components for use in products assembled at other group facilities. The Uddingston factory was established some 30 years ago and now produces the D6 range of earth-moving tractors for sale in Europe, Africa and the middle east; this is regarded as the plant's prime product, although the same range is produced at Caterpillar plants in France, Japan and the United States of America.
The manufacture of replacement parts and components for other product types now accounts for a substantial part of the plant's output in which Uddingston is effectively operating as a sub-contract supplier to the group. The vast majority of its production goes to export markets, via other group plants and subsidiaries. Having at one point employed some 2,500, the 1 million sq ft plant now has a work force of less than 1,200. Until 1979, the Uddingston plant produced three models of earth-moving equipment, but is now reduced to one main product type, the D6 tractor. In 1983, application was made for regional selective assistance in order to secure continuing manufacture of the D6 range, and a substantial offer of selective grant was subsequently offered to, and accepted by, the company. This offer of assistance was in addition to the company's entitlement to regional development grant, payment of which has proceeded in the normal way.
In July 1986 the company received a further offer of substantial regional selective assistance grant towards a major capital investment programme to modernise the Uddingston facility, with the intention of improving its efficiency, driving down production costs, and broadening its product base. This offer of assistance was again in addition to the company's entitlement to regional development grant. The offer of regional selective assistance was accepted by the company in August 1986. However, I can assure the House that no payments of either regional selective assistance or regional development grant have been made to the company in respect of this major project.
My right hon. and learned Friend visited Uddingston in September 1986, and in applauding the development praised both management and work force for their efforts in attracting such an important project which would ensure the plant's future for years to come. In reply, the Caterpillar representative spoke of the need to invest and train, and said that the project could be looked upon as an insurance, as my hon. Friend said, against the loss of 1,200 jobs at Uddingston. All seemed set fair for the future.
It was on 8 January 1987 that my officials first learned of the possibility that the company might not proceed with this major investment programme, and might close the Uddingston plant. The possibility of closure was being considered in the light of a further review of the group's global capacity. On 9 January my right hon. and learned Friend contacted Caterpillar in Peoria, Illinois, urgently asking for clarification of the position and indicating that he had instructed an official from our Locate in Scotland Chicago office to call on the company to discuss the matter. An official from Chicago visited the company in Peoria on Monday 12 January. At that stage the company

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was not prepared to discuss the outcome of its review but confirmed that one option being considered involved the closure of Uddingston.
There were further contacts with the company the following day, 13 January, but on 14 January Caterpillar formally announced its intention to close the Uddingston plant. The announcement also made it clear that two plants in the United States of America were also to close — one at Davenport, Iowa, and a second at Dallas, Oregon. We understand that the company's plant at Leicester, which manufactures backhoe loaders, is secure.
My right hon. and learned Friend sought urgent talks with the company and on 20 January my right hon. and learned Friend and I met the president of Caterpillar and his senior colleagues in London. We left the company in no doubt about the strength of feeling in the United Kingdom following its decisiion—particularly following the very positive announcement in September. I am sorry to say that we received no satisfactory explanation of the company's change of mind. At the conclusion of the meeting, my right hon. and learned Friend invited Caterpillar to reconsider its decision to close Uddingston. We await the company's response.
Following the meeting with Caterpillar's senior management, my right hon. learned Friend met leaders of the Amalgamated Engineering Union and representatives of the work force.
I have felt it useful to recount this narrative to the House at some length to underline two important points. First, the Scottish Office had little forewarning that the company had changed its plans, but as soon as we became aware of the possibility, high-level contacts were immediately made with the company. Secondly, when the intention to close was announced, my right hon. and learned Friend took immediate steps to make his concern known to senior representatives of the company.
I should also emphasise that the Government's concern arises not from any wish to intervene in the affairs of private companies. The circumstances of this case are highly unusual. In September the company accepted an offer of Government financial assistance for a major new project, the specific purpose of which was to give the Uddingston plant a future. My right hon. and learned Friend, at the company's invitation, participated in the public announcement of the plans. Three to four months later, and with no warning, not only is this major new investment cancelled but it is announced that the plant itself, which has been there for 30 years and which has successful products and a good work force, is to close, with the loss of 1,200 jobs. What happened in those three to four months to cause such a dramatic change of plan has as yet not been explained other than in the most general terms.
The company made plain, both in September and subsequently, its satisfaction with the package of regional aid offered to it. The hon. Member for Motherwell, North referred to Belgium. I can reassure him that there have been no problems over regional assistance. If it were a case of trying to find more regional assistance, and if that would resolve the problem, we would be willing to consider it.
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In these circumstances, the Government's great concern should come as no surprise to anybody. My hon. Friend the Member for Dumfries (Sir H. Monro) referred to the circumstances of one of the suppliers of Caterpillar, Penran in his constituency. I fully understand the serious impact that this decision could have on that company. All I can say to my hon. Friend at this stage is that if the worst were to happen, we would be anxious to do what we could to help that company find alternative markets.
Having described the circumstances surrounding Caterpillar's declared intention to close its Uddingston plant, it may be helpful to hon. Members if I add one or two comments concerning the wider implications of these events for our policy on inward investment. I know that this has been a subject of considerable comment in recent days.
I do not for one moment underestimate the gravity of the consequences should Caterpillar untimately implement its declared intention to close the Uddingston plant. Nevertheless, we must still not get things out of perspective. Within a few days of Caterpillar's announcement, there were two other important announcements of major new inward investments. Together these will bring to the west of Scotland roughly as many jobs as there are presently at Caterpillar. I refer, as hon. Members will have guessed, to the anouncement by Compaq Computer Corporation to site its new European manufacturing plant at Erskine. I also refer to the announcement made only a few days ago by the Kymmene-Stromberg Corporation of Finland of its intention to construct a new paper mill at a site in Irvine. This will be the largest-ever single inward investment and will provide around 480 new jobs directly and 400 related jobs throughout Scotland. Together, then, these two announcements promise something over 1,200 new jobs within the next few years.
Serious and regrettable though Caterpillar's announcement may be, it is no reason for us to jump to hasty and unwarranted conclusions about the important overall role that multinational firms are playing in Scotland, and I am quite confident they will continue to play as far ahead as we can see.
Turning back to Caterpillar, I do not think it is profitable at this stage to speculate on what will happen if the company is not prepared to review its latest decision. For the moment, as I have indicated, we await the company's response in the light of its meeting with my right hon. and learned Friend and myself. Our objective remains quite clear. It is to do everything possible to try to ensure the continuation of manufacturing operations and employment at the Uddingston facility. To that end, we have indicated to the company a readiness to discuss with it what possibilities of achieving this may exist. We have made it clear that this is not a question of trying to persuade it to do something that is against its commercial interest. We believe, however, that, given the success of the plant's products and the strength of its work force, a careful review of the apparently hasty decision to close is worth undertaking. I and my colleagues stand ready to help in whatever way is possible to find a way forward.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes past Twelve o'clock.

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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR Oil the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.
Lord Parmoor—Took the Oath.

Guildford: BBC Local Radio Station
Lord Nugent of Guildford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have approved the BBC's proposal to set up a local radio station in Guildford and, if so, how they assessed the need for such a service.
The Minister of State, Home Office (The Earl of Caithness): My Lords, the BBC local radio station in Guildford was one of several proposals in a report by the Home Office Local Radio Working Party published in 1980, and approved in principle by the then Home Secretary in 1981.
Lord Nugent of Guildford: My Lords, I thank my noble friend for that Answer. However, is he aware that Guildford is exceptionally well provided with local radio and that the ILR station has coverage of 41 per cent., the highest in the South of England? Guildford is also covered by Capital Radio from London and LBC Radio from London. The surrounding stations on the north, west and south between them also cover the area. It may well be said to be saturated with local radio programmes.
Will not the BBC be wasting its money, which is much constrained, by setting up a new station, which will be to the disadvantage of all concerned?
The Earl of Caithness: My Lords, Guildford is by no means unique. There are many areas in the country—in the North as well as in the South-East—that have many different radio stations to choose from and all of them produce a slightly different programme. If the listener does not want to listen to a particular programme then all he has to do is to switch off the radio. However, I am sure that the BBC will read with interest the words of my noble friend.
Baroness Birk: My Lords, is it not the case that BBC local radio has a high speech content—about 70 per cent. speech and 30 per cent. music—compared with commercial broadcasting, which has 30 per cent. speech and 70 per cent. music? Therefore do they not appeal to a different audience? Does not BBC local radio provide invaluable sources of news and other material at regional and national level which it would be a great pity to lose? Does the Minister agree that we need this wide range of local radio stations?
The Earl of Caithness: My Lords, the noble Baroness is absolutely right in saying that we need a wide range of radio stations. That is exactly why the then Home Secretary approved the report.
Lord Mulley: My Lords, while not in any way wishing to deny the BBC's role in local radio, will not the Minister agree that at a time when we understand that the whole future of local radio, community radio and their regulation is under study, it might be sensible to defer proposals made as long as seven years ago, even if they were endorsed by a very distinguished Home Secretary six years ago.
The Earl of Caithness: My Lords, it is entirely up to the BBC as to whether or not it wishes to progress with further stations for which it has approval. However, the noble Lord is absolutely right in drawing to the attention of the House the fact that there will shortly be published a Green Paper on radio.
Lord Underhill: My Lords, is the noble Earl aware that one of the latest BBC radio stations to be opened was Radio Essex? Is he also interested to know that, in support of my noble friend's supplementary question, I was able to listen to Radio Essex quite a lot during the recent freeze and snow spell, when Essex suffered considerably. Information was given regarding travel conditions, opening and closing of schools, whether local events were on or off and there were offers of help from generous people who were prepared to help those who were stranded.
The Earl of Caithness: My Lords, it shows the benefits that local radio stations of diverse interests can give to the community.
Lord Aylestone: My Lords, when considering where BBC local radio stations should be sited, do the Government consider the effect on the BBC's finances?
The Earl of Caithness: My Lords, the approval given by the then Home Secretary covered a variety of different stations. It is then up to the BBC and the IBA to determine what to do within their expenditure.
Lord Mellish: My Lords, will not the Minister agree that, although there is a surfeit of information in Guildford, and has been for a great number of years, the people must be fairly sensible because for years they returned the noble Lord, Lord Nugent?
Lord Nugent of Guildford: My Lords, I could not agree more with the comments of the noble Lord, Lord Mellish! Is my noble friend aware that as leader of the local group asking for a local radio station, we should have welcomed a BBC local radio station seven or eight years ago? However, it was because the BBC was unable to come forward with one that we asked for a local ILR station. Is my noble friend also aware that after the local people have put up their money to finance a local station, and taken shares in it—upon which they have yet to receive a dividend—it is rather unfair that they should now have the BBC proposing to come in on top of it?
The Earl of Caithness: My Lords, I am sure that my noble friend would be the first to support the Government in giving listeners the wide range of services which a BBC local radio station can offer. Of course, it has always been known that approval was given for a BBC local radio station at Guildford and it was up to the BBC to build the station when it had sufficient finance available.

Financial Malpractice: Control Measures
2.44 p.m.
Lord Molloy: My Lords, at the request of my noble friend Lord Dean of Beswick, I beg leave to ask the Question standing in his name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what further plans they have to control financial activities in the City of London.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, provisions of the Financial Services Act 1986 relating to the conduct of investment business will be brought into operation during the next 12 months. A Bill to strengthen the system of banking supervision is before Parliament. The Criminal Justice Bill before Parliament contains a range of measures for dealing with fraud including the creation of the Serious Fraud Office.
The Secretary of State for Trade and Industry is considering the Report of the Committee of Inquiry into Regulatory Matters at Lloyd's.
Lord Molloy: My Lords, that is a somewhat encouraging reply, but is the Minister aware that there are people in trade, industry and commerce, not to mention shareholders, who believe that that part of the City is in a similar condition to the Augean stables and needs completely clearing out? During the recent scandals the Governor of the Bank of England seemed hopelessly ineffective, and the takeover panel appeared to be moribund. There should be direct ministerial intervention when required. Will the forthcoming legislation make it absolutely clear that there will be ministerial examination and action taken to prevent the terrible scandals which have taken place recently in the City of London?
Lord Lucas of Chilworth: My Lords, the recent action taken by my right honourable friend the Secretary of State for Trade and Industry in appointing inspectors illustrates the seriousness with which we consider matters of this kind. Such action also demonstrates the firmness with which the Government intend to deal with malpractice wherever it takes place.
Lord Bruce of Donington: My Lords, is the noble Lord aware that, although many noble Lords may have reservations as to the adequacy of the existing enactments and regulations, we consider it is much more important that there should be the impartial maintenance of law and order? When can the country expect that prosecutions will eventuate against some of
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those who have already committed crimes in connection with operations at Lloyd's? When are we to have action by the Attorney-General and the Director of Public Prosecutions in relation to individual allegations of people committing these offences against the Companies Act and being accessories to such offences?
Lord Lucas of Chilworth: My Lords, inquiries into a number of matters, not one of which the noble Lord mentioned specifically (he will know what I mean, as I think I know what he means), are taking place and the appropriate action will be taken when all the relevant information is gathered.
Lord Bruce of Donington: My Lords, will the noble Lord give the House an assurance that action will be taken in all appropriate instances and before the people concerned leave Her Majesty's jurisdiction?
Lord Lucas of Chilworth: My Lords, I cannot give the noble Lord an assurance in the terms he asks for because neither I nor my right honourable and honourable friends can command the free movements of individuals. I have given an assurance that the Government (as demonstrated by their actions) seek to take a firm stand wherever evidence of malpractice or misdemeanour is brought to our attention, and the rest follows from that.
Lord Paget of Northampton: My Lords, is it in order to inquire in this House about individual cases which have been referred to the Director of Public Prosecutions?
Lord Lucas of Chilworth: My Lords, my understanding is that noble Lords may inquire about anything at all. What the answer is may perhaps be a little different.
Lord Molloy: My Lords, is the Minister saying that no action is to be taken to defend shareholders or other people who may have been hurt by these scandals which have been shown on television and have been in all the newspapers and which have concerned the entire nation? Everyone knows that much of what happened was illegal and that there was some form of appalling misdemeanour and misbehaviour.
Lord President of the Council (Viscount Whitelaw): My Lords, following the remark made by the noble Lord, Lord Paget, I hope that the noble Lord, Lord Molloy, appreciates that to make firm statements about a whole lot of things which may have happened but which have not yet in any way been before a court of law or been proved is a dangerous move to make in your Lordships' House. I am sure he will be the first to understand that.
Lord Paget of Northampton: My Lords, there is such a thing as contempt of court.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that control of certain operations in the City would be welcomed? I am sure he can assure us that in future we shall be spared the absolutely nonsensical and noisy ballyhoo that took place in the

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region of the Strand and Charing Cross last night in connection with the British Airways flotation.
Lord Lucas of Chilworth: My Lords, I do not feel able to comment on that matter. It is very wide of the original Question.
Lord Diamond: My Lords, will the Minister have regard, when they are available, to all the conclusions which the Government may reach as a result of the inquiries and other activities at present taking place? Will they have regard to the overriding interest of this nation that the City should be regarded, if justified, as fully sustaining the responsibilities which it carries?
Is not the good will of so many financial centres in different parts of the world of enormous benefit to our balance of payments and to our various activities? Is it not a great pity that the one thing that we seem to be doing rather better than most other people in the world should be continually derided in this irresponsible way?
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lord for his question as it underlines the importance of the City. I can certainly tell him that the interests of the nation, to which he draws attention, are indeed the same as the interests of the Government in that connection.
Lord Broxbourne: My Lords, arising from the question of the noble Lord, Lord Paget, and the answer given thereto, is it not at all times desirable to avoid conflicts between the undoubted sovereignty of Parliament and the equally constitutionally entrenched jurisdiction of the courts?
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend for his question, and I confirm that he is quite right. Perhaps I ought to have said to the noble Lord, Lord Paget, at the time I answered him that of course questions other than those which are sub judice are normally allowable in your Lordships' House.
Lord Glenamara: My Lords, while we all appreciate and understand what the noble Viscount said, the Government must appreciate that people are beginning to believe that there is one law for the rich and powerful and another law for the rest of us. Does the noble Lord agree that if a local councillor had accepted a meal or a holiday from a building contractor, he would have been charged and given five years in gaol long ago?
Viscount Whitelaw: My Lords, I hope that I can properly, as Leader of your Lordships' House, confine myself to the point that I made and not seek to go further. It was simply that if it was a question of deciding at this stage whether someone was guilty before he had been before the courts, or indeed had had an opportunity of stating his case, that is something that I am sure your Lordships' House would not wish to do.

Robin Hood's Bay: Improvement Scheme
2.52 p.m.
Lord Hatch of Lusby: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will investigate the plans of the Countryside Commission for altering the appearance of Robin Hood's Bay in North Yorkshire against the wishes of the majority of the residents.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale): No, my Lords. Proposals for improvements to Robin Hood's Bay Bank Top are being considered by the North York Moors National Park Authority in conjuction with North Yorkshire County Council, as highway authority, and Scarborough Borough Council. The Countryside Commission is not involved. This is an initiative by the responsible local authorities and is not a matter in which the Government would wish to intervene.
Lord Hatch of Lusby: My Lords, is the noble Lord aware that this village, one of the most beautiful in the country and of great historical importance, is unique, and that there is a great feeling among the residents, as witnessed by organisations like the Residents' and Ratepayers' Association and the Fylingdales Preservation Society, that the actions of the national park are liable both to spoil the vista from the top overlooking the bay and to damage the economy, which I am glad to say is rapidly picking up as people move back to live in the village and start businesses there? Is this not a case in which a bureaucrat has been interfering with the wishes of the local residents as expressed at a public meeting last October, when, by 88 votes to 13, the plans put forward by the national park committee on 7th January were rejected?
Lord Skelmersdale: My Lords, I understand that Robin Hood's Bay is the most popular resort in the North Yorkshire Moors National Park and that the local economy depends heavily on tourism. I also understand that, subsequent to the consultation about which the noble Lord has just spoken, the revised scheme—revised to take account of comments made during the consultation—was approved by the national park, the borough council, the parish council, and the local amenities society. I think that all concerned have behaved in an exemplary fashion.
Lord Hunt: My Lords, is the noble Lord aware that I, too, am familiar with the situation at Robin Hood's Bay following a number of visits? Would he accept that in addition to the information about the procedures that he has explained, the North Yorkshire County Council has consulted far and wide? I have the plans here. There has been full consultation not only with the local amenity and voluntary bodies but also with local residents. The procedures are entirely democratic.
Would the noble Lord accept that the role of the national park committee is purely advisory in making recommendations to the county council? Would he

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accept that there is an urgent need to re-plan car parking and other facilities at Bank Top above the little town, in view of the fact that something like 500,000 visitors visit this beauty spot every year?
Lord Skelmersdale: My Lords, my answers to the noble Lord are yes, yes, and yes. I am pleased that he has backed up my last supplementary answer.
Lady Kinloss: My Lords, is the Minister aware that the scheme for improvements, as it now appears, is the result of discussions with all interested parties? Is he also aware of the need for modernisation of the toilet facilities including provision of toilets for disabled people? There is no such provision for the disabled at present, as I saw for myself when I visited Robin Hood's Bay last Sunday?
Lord Skelmersdale: Yes, my Lords, I am aware of these facts. Indeed, I can tell the House that the councillors of Fylingdales Parish Council have written to the Scarborough Borough Council expressing dismay about the way that the views of the Residents' and Ratepayers' Association objecting to the scheme have been represented in the press as the views of the whole community.
Lord Hatch of Lusby: My Lords, I am not suggesting—
Noble Lords: Question!
Lord Hatch of Lusby: I am not suggesting that what the Minister said should, in any way, reverse the decisions taken. What I am asking the noble Lord is whether he will look into this matter in view of the fact that strong opposition has been expressed by the local community, by the local residents? Unfortunately, his original Answer did not take into account the fact that a public meeting was held and that the result, as I said, was a vote of 88 to 13 against the proposal, and that far from taking that into consideration—
Noble Lords: Order!
Lord Hatch of Lusby: Is the noble Lord aware that the national park committee officer stated that it was an unrepresentative meeting and that no account need be taken of it? All I am asking—
Noble Lords: Order! Speech!
Lord Hatch of Lusby: All I am asking the noble Lord is whether he will look into this question, which appears to be a matter of a bureaucratic overriding of local opinion?
Lord Skelmersdale: My Lords, when I am asked a Question of this sort in your Lordships' House I review all the available papers on the particular case. I therefore looked at this case with great care, knowing that I would be answering a Question today from the noble Lord. As I have said, my conclusion is that the authorities in question have behaved in an exemplary fashion. They have taken account of the consultation procedure, and they have changed their plans. The
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revised plans are now well known locally, and I do not think that this is a matter on which the Government should intervene.
The Earl of Halsbury: My Lords, would the Minister agree that when it comes to tops and vistas—I choose my vocabulary from the noble Lord, Lord Hatch of Lusby—visitors are much more likely to be interested in Maid Marians than in Robin Hoods?
Lord Skelmersdale: My Lords, in this case they are also interested in cliffs.
Lord Leatherland: My Lords, may I ask the Minister whether he agrees that we should leave wild places alone? And naturally included in wild places, of course, is your Lordships' House.

Energy Supplies during Severe Weather
3.p.m.
Lord Campbell of Croy: 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 effectively the suppliers of energy in the United Kingdom have met the very high demands during the recent severe cold spell.
Viscount Davidson: My Lords, the energy supply industries did a commendable job in meeting the record levels of demand brought about by some of the coldest weather experienced in this century.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply. Did any power cuts have to be made deliberately, as distinct from the effects of the weather on overhead lines, and did gas supplies run out anywhere?
Viscount Davidson: My Lords, in spite of extreme weather conditions, electricity supplies were in general maintained and there were no major breakdowns in the gas supply system.
Lord Mellish: My Lords, may I ask the Minister how much of the electricity supply was supplied from nuclear power, both from France and this country? What percentage of it was nuclear, and have the Government yet had any protest from those who protest about nuclear power?
Viscount Davidson: My Lords, I cannot give the exact figures for the amount of electricity produced from nuclear power for the particular period, but I can say, so far as concerns imports of electricity, that I understand that the CEGB took supplies from both France and Scotland during the severe cold weather and that those were valuable in meeting the record levels of demand.
Lord Avebury: My Lords, further to the question of the noble Lord, Lord Mellish, if the noble Viscount does not know what contribution was made by nuclear power and by the AGRs in particular, will he look into

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that and give us the information? Is he aware that in paragraph 90.18 of the Sizewell Report we are told that impressive improvements in AGR construction performance became apparent during the course of the inquiry? Therefore rather than there being a one in five chance of the AGR being superior to the pressurised water reactor, what has happened in the recent cold spell may point to a much stronger argument in favour of retaining our own gas-cooled reactors.
Viscount Davidson: My Lords, I admire the way in which the noble Lord has brought Sizewell into this Question. That is another question.
Lord Campbell of Croy: My Lords, is it correct that the peak period of demand on 12th January reached a record figure in England and Wales? Does my noble friend agree that the industries concerned are to be congratulated, because if they can get through that severe period they can tackle any other?
Viscount Davidson: My Lords, I agree that this was a record demand figure and that the workers in all the energy supply industries did a magnificent job in keeping supplies going during this period of exceptionally severe weather. They deserve our heartfelt thanks and appreciation.
Lord Bruce of Donington: My Lords, is the noble Viscount aware that we wish to associate ourselves with the congratulations that have just been uttered? Will he associate with them also thanks for the personal efforts of those in the transport industry and also those on repairs and maintenance and so on who contributed to there being no significant breakdowns during this very extreme period?
Viscount Davidson: My Lords, yes; I am delighted to do so.
Lord Glenamara: My Lords, we were told last week from the Government Front Bench that it takes eight years to plan and build a power station. Ought not the noble Viscount to congratulate the Labour Governments from 1964 to 1979 on their careful planning of the power supply for the late 1980s?

Business
Lord Denham: My Lords, I should like to say a word about the arrangements for this afternoon's two short debates standing in the names of the noble Lord, Lord Allen of Abbeydale, and the noble Lord, Lord Harris of High Cross. It is customary in short debates that the mover is allowed approximately 15 minutes, and that the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate.
In the case of the short debate in the name of the noble Lord, Lord Allen of Abbeydale, it means that all other speeches should be limited to a maximum of 10 minutes. In the case of the short debate in the name of the noble Lord, Lord Harris of High Cross, the number of speakers is such that it is not necessary to propose any formal time limit, but I am confident that noble Lords will keep the length of their speeches within limits that are compatible with the spirit of these short debates.

Employment and Training Measures
3.5 p.m.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, with the leave of the House I shall now make a Statement on employment and training measures.
Unemployment has fallen for five consecutive months and is now down by more than 100,000. Vacancies are standing at their highest levels this decade. Our unit wage costs are now rising more slowly than the rate of inflation and are beneath those of our principal overseas competitors. We shall shortly be entering our seventh successive year of economic growth.
All this, building on the firm foundation of the million new jobs the economy has created since 1983, can only be good for employment. But with some skill shortages already emerging and unemployment at its present level there is no room for complacency. The Government have therefore reassessed the scope and direction of the employment, enterprise and training measures within existing departmental programmes. and as a result I am writing to the chairman of the Manpower Services Commission to ask the commission to undertake further measures that will give priority to our task to motivate and train unemployed people, particularly the younger generation, to fill the jobs that are now becoming available.
First, Restart is a success. By the end of March this year the Manpower Services Commission staff should have interviewed all the one and a quarter million people who will have been out of work for over a year. This has been an enormous task. I should like to pay tribute to our staff in the MSC. Not only for the 40,000 interviews a week that they have undertaken but for the enthusiastic and sensitive manner in which they are completing their task of offering advice and help to long-term unemployed people.
We can see already that this programme is bringing help and assistance to the long-term unemployed. In the latest figures long-term unemployment fell in three months by 7,000 when in the previous year it rose over the same period by 25,000. I am confident that this improvement will be maintained as the programme develops and as the economy continues to strengthen. No other industrialised nation provides such a package of individual help to each and every long-term unemployed person. But even this is not enough.
Last October, my noble friend the Leader of the House announced to your Lordships that the MSC would pilot, in nine areas, Restart interviews being offered to those out of work for six months or more. We thought that the earlier the help was received the more effective it would be. The results of these pilots have convinced us to extend the Restart counselling in two ways.
First, there will be an additional earlier interview. From the end of March everyone who becomes unemployed for more than six months will be invited to attend a Restart interview. But we have decided to go further and our second extension is to offer a Restart interview at regular six-monthly intervals. In the future there will be regular contact between

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Manpower Services Commission staff and unemployed people to help them, at different times and in different ways, back to work. The counselling interview is of course only the first step—though a vitally necessary one—in the process of getting the unemployed back into work. This brings me to the second of the new measures I am announcing today.
Last October my noble friend also indicated to your Lordships' House that the Manpower Services Commission would commence piloting an entirely novel training scheme designed specifically to meet the needs of those who have been out of work for six months or more. This scheme has three essential elements. It applies to those who have been out of work for the requisite period. It takes place on employers' premises and it must lead to recognised vocational qualifications.
The Manpower Services Commission has considered the pilots, and last week the commission endorsed the report of a working party on the shape of the new scheme. I wish to accept its recommendations in full. The commission is concerned that quality be pre-eminent and I agree completely. It is further concerned that quality dictates the speed of any extension and I again agree. As I agree that qualifications from recognised examining and validating bodies must be part of every individual programme. Indeed, these will be conditions of the job training scheme which will be available for people who come to their first six month Restart interview.
The reskilling of Britain is vital if we are to maintain our current economic progress and achieve the decline of unemployment. We have therefore decided that the new job training scheme should be expanded on a national basis to coincide with the extension of the Restart programme from March this year provided that the Manpower Services Commission can maintain quality in each area. With that very important proviso we will ask the Manpower Services Commission to provide up to 110,000 places by September of this year. This will mean that in a full year nearly a quarter of a million unemployed people will be given high-quality training in skills that will enable them to compete, and to compete successfully, for jobs in today's labour market. This will offer a fresh start, in particular to the under-25s. They must be our priority.
I have visited too many areas with high unemployment and heard too often many employers complain that they cannot find people with the right skills. I hope that this new training measure will play a major part over the next few years to provide the skills necessary to maintain our place in the world. It will, if the Manpower Services Commission can maintain the necessary quality of provision. I have every confidence that it can achieve that.
The job training scheme is for adults. My third announcement concerns young people. We are already ahead of most other countries in the steps we have taken in the last four years to train school-leavers, but there is a further step that I can announce today. The successful introduction of a two-year YTS last year enabled us to guarantee a place to every unemployed 18 year-old school-leaver. Indeed, out of 475,000
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school-leavers only 2,376 were still awaiting the offer of a place on this training programme by Christmas.
I propose to extend the guarantee of a place to every unemployed 17 year-old school-leaver. This will mean that each and every unemployed young person under the age of 18 is now guaranteed high-quality training leading to a recognised qualification. This guarantee is unequalled by any of our principal competitors. For the first time, from this Easter there need be no unemployment under 18 and anyone under that age who remains unemployed will have chosen to remain unemployed.
Finally, there will be a further increase in the enterprise allowance scheme. Over the last three and a half years more than 200,000 unemployed people have started to work for themselves under this programme. Self-employment is rapidly increasing in all parts of the country. Far from a North-South divide, the increase since 1979 has been greatest in Yorkshire and Humberside—77 per cent.—than it has been in any other region. The 43 per cent. increase in the northern region is close to the 46 per cent. increase in the South-East.
We are presently expanding the enterprise allowance scheme towards an annual target of 100,000 unemployed people setting themselves up in business. Next year that target will be increased to 110,000—an expansion of 10 per cent.—but here again I shall be asking the Manpower Services Commission to pay attention to quality and to the amount of help the new businessmen and women will have to help them succeed.
The measures I have announced today constitute a major redirection of our labour market programmes to help the unemployed back into real jobs. Unemployed people need practical help to get back into work and not empty promises to create millions of jobs on local authority payrolls. They need help and training to compete successfully for the jobs which are already becomng available. We need to have a workforce with tomorrow's skills to compete in tomorrow's world. That is what these new measures will help accomplish, and I commend them to your Lordships.
3.15 p.m.
Lord Dean of Beswick: My Lords, let me commence by thanking the noble Lord for the Statement he has just made. I should like to take up two or three points with him because I think he will agree that it is a rather long Statement and half an hour does not allow very much time to absorb it. Of course I welcome his statement that since 1983 there have been a million new jobs created. It would be extremely churlish of me not to do so. But is it not a fact that recent Answers in your Lordships' House have shown quite clearly that the overwhelming number of these jobs—I think the last quotation was over 600,000 but fewer than 700,000—were in the service sector and the public sector? Desirable though that is, such jobs are not as important to the economy as manufacturing jobs.
Questions are also being raised across the political spectrum, and outside it, as to whether two years' training is long enough. I should like to ask the Secretary of State whether he is aware that in the

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building industry both the public sector and the private sector are of the opinion that the two-year scheme involved there is not producing the finished article and in fact is putting people into the building trade when they are not ready to be absorbed and cannot be gainfully used by the people who wish to do
so.
It would be wrong of me not to press what I think is the weakness in the noble Lord's claim. I think it is an across-the-board criticism but I relate it mainly to his statement regarding young people. He said:
"For the first time, from this Easter there need be no unemployment under 18 and anyone under that age who remains unemployed will have chosen to remain unemployed".
Is he saying that if they do not go on a training scheme they are in fact classed as refusing a job? If that is the case, I think that quite a number of young people would think they were being subjected to some sort of libel.
The whole tenor of the reduction in unemployment contained in the Statement makes the point that people on training schemes are deemed to be in employment. There is a philosophy that divides us. From my party's point of view and from my own, we do not consider those people to be in work at all. We think it is a welcome innovation, but it is completely wrong to class this type of activity as a job. The noble Lord stands accused—this has been referred to in one of the responsible papers this morning—of massaging the figures in order to get the number of unemployed below 3 million just prior to the run-up to the next general election.
Finally, may I ask the noble Lord how the funding for this will occur? He will be aware that quite a large number of people on the present training schemes receive no additional allowance other than their social benefits. Will a special allowance be paid to the new people who are being absorbed into this scheme in order to make it more financially attractive and to give them a chance to live with a little more dignity than some of them are now able to do?
I have made this point before, as have others from these Benches. I come from industry, like some other Members of your Lordships' House. While these training schemes are extremely welcome, even at their best they are not a substitute for jobs. I do not think the noble Lord today has been able to convince this side of the House that the economy is in the healthy state, or is making the rapid upturn, that he makes out in his Statement and that Minister are continually making out in another place.
Baroness Seear: My Lords, I should also like from these Benches to thank the Secretary of State for making his Statement. I apologise for not being in my place as he began to read his Statement. When I tell him, however, that I was engaged on vetting for an approved training scheme he will perhaps forgive me.
This Statement is welcome in very many ways. I do not wish to sound churlish if I say that I greatly welcome the fact that there will be earlier and more frequent interviews of people classed as long-term unemployed. These frequent interviews, starting earlier, should have taken place a very long time ago. It was a great pity that when the opportunity arose the
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Government cut the numbers employed in the jobcentres instead of keeping the staff there and enabling them in those years to get going on these interviews. Had that happened, it is very likely that far more people would have benefited from training by this time. However, better late than never and it is a very good thing indeed that this is being undertaken.
I do not entirely agree with the noble Lord, Lord Dean of Beswick, when he criticises the YTS and the other training schemes as being training rather than employment. The fact surely is that unless we give a good deal more training than we have given in the past, there is not a hope of these people getting into jobs. The two are closely related and training has to precede any opportunity of getting into jobs. In many parts of the country there are jobs available but the training has not been done. Therefore those jobs cannot be done. We are very late. The Statement says that we are doing more than our opposite numbers in other countries. That is true, but that is because they have done so very much more in the past and we are now busily engaged on catching up. However, there is much in this Statement that one must welcome.
I should like particularly to ask one or two questions about the job training scheme which is now coming in on a much larger scale. The Secretary of State has said that this scheme is to lead to real qualifications. It was, I think, six months or a year at the outside for people who have been long-term unemployed. Very many of the long-term unemployed are people who have never done any training before; they are people who have been in the ranks of the skilled, the unskilled or, at the most, semi-skilled. What real opportunity is there, honestly, to pretend that they are going to come back at the end of six months with something which is recognisable as a proper qualification of any kind? Can the Secretary of State tell us—this must have been discussed—how it is proposed to use this period so that it really will give them something approximating to a real qualification?
I should also like to ask how this is to be organised and financed. The Secretary of State says that it depends on the Manpower Services Commission being able to provide places of quality. This means, as I understand it, that employers will have to provide, as they are providing under the YTS, the bulk of that training. Many employers are now going full stretch to give the training that is required for the YTS, and that is highly desirable.
Is the Secretary of State satisfied that employers, with the present inducements offered to them, will be able to provide high quality training? And is it not time, if the Secretary of State is to rely on employers to give all this training—and this I think is right—that the financing of employers who are capable of giving real quality training is such that there really is an inducement for them to do it? They will not be training for themselves. They will be training for other people. When the Government say that employers should invest in training, that is true if they are training for themselves. But when they are training for other people they can reasonably expect good resources from outside.
Lord Young of Graffham: My Lords, I am indeed grateful to the noble Lord, Lord Dean of Beswick, for

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many of his points, though I suspect from the points he has made today that he should have a word with the leader of his party in another place. Let me say before he does that—and I shall explain in a moment—that I should like to make one point absolutely clear. It is wrong to imply that manufacturing jobs are vital to the future of the economy of this country and service jobs are not. It is simply that all jobs that create wealth are vital to the future of this country. That is the important thing. Whether that creation of wealth is in the service sector or in manufacturing, all jobs are vital.
The noble Lord said that the building trade is a case in point and he went on to say that he does not regard training schemes as being real jobs. I must tell your Lordships that the party opposite in its claim to reduce unemployment by 1 million—even though we who have seen 1 million jobs created in the past three years have also seen unemployment go up during that time—states that it will do so by putting the half a million unemployed building workers back to work.
I must tell the noble Lord that we have been approached by employers' associations and even by the unions, who say that we must have a great big drive to train more people in the construction industries; and we are. That is what this programme will provide and there, I suspect, disappearing in a puff of smoke, go those half a million unemployed. Then if you look at the next category there are 300,000 jobs on training schemes. I suspect that the party opposite values training schemes, as we do if we are to be concerned for the future, because as a result of this measure that I have announced today, by 1991 there will be 1 million more skilled people in the British economy. That is something that we would surely all applaud.
The noble Lord also asked whether I was implying that young people under the age of 18 who did not take part in the YTS would be regarded as unemployed or were being libelled. There is no compulsion. We are saying to young people under 18–16 and 17 yearolds—"When you leave school, you have a guaranteed offer of a place on the YTS." If they choose idleness instead, I regret it. In the course of time I think they will regret it. But it is a matter for them. I suspect that none of them will. When they see and hear what is happening to their fellows, all will come in. I very much hope that that will be the case and I live in anticipation of it.
Of course unemployed people require a special allowance. They will be paid their travelling expenses. But this is, if you like, a partnership between the employers, the unemployed and government. And we are saying to the unemployed, "Come and work for the same money that you are getting at benefit levels, which varies according to your personal circumstances and travelling." Employers will contribute the accommodation and government will provide for the cost of training. As result of that, what we have seen in our pilot schemes leads me to believe that there will be no shortage of young people, or of older people, coming forward to enter the scheme.
I am grateful to the noble Baroness, Lady Seear. I accept what she said as a supreme political compliment—better late than never. I recall being
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attacked in your Lordships' House for Restart and being accused of all sorts of things. I am glad it is now so accepted and that I am being gently chastised for not having done it years ago. But at no time in the past did the employment programme introduce or contemplate anything like this.
The noble Baroness was quite right to ask what qualifications can be obtained in six months. Noble Lords may be interested to know that, in the category of those who have been out of work for more than six months and who are under 25, no fewer than 29 per cent. have A-levels or their equivalent. What we are talking about are real, valid vocational qualifications.
I am today writing to the chairman of the Business and Technician Education Council, the City and Guilds and the Royal Society of Arts, saying that this programme will be directed towards qualifications produced by them and by the other validating bodies. We are not in the business of producing new qualifications. We are in the business of helping people to take the existing vocational qualifications, all of which are now being ordered by the National Council of Vocational Qualifications, which is assessing qualification levels.
Finally, I was asked whether the employers will contribute and whether they will afford it. I believe that all in your Lordships' House will be pleased to know that this is not my scheme. It is a scheme that has been agreed by the Manpower Services Commission at its last commission meeting. It is one that has been approved by the employers—by the CBI; it is one that has been approved by the trade unions and it is one that has been approved by education and local authority interests. We have seen no shortage of employers coming forward. We have seen no shortage of young people coming forward, and in the pilots alone over 1,000 people are today on the programme. I believe that we are entering a new era, in which we will give the young and the old in this country a way back towards tomorrow's skills and, I hope, tomorrow's jobs.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, in contrast to the somewhat grudging response of the noble Lord, Lord Dean of Beswick, there are many of us who welcome enormously this carefully worked out, detailed and very important scheme which he has announced and which, despite his modest rejection of the suggestion, many of us know owes a great deal to his own personal intervention, care and experience? Is my noble friend aware—I am sure he is—that those of us who have some experience in industry know that one of the problems is the lack of availability of sufficiently trained labour to fill vacancies, and that the unemployment figures are inflated as a result of that? Is he aware that it seems clear from his Statement that that problem will be very substantially dealt with in the future?
In response to the comment of the noble Lord, Lord Dean of Beswick, that a place on a training scheme is no substitute for a job, is he aware that he is doing a much better turn, particularly to a young person, in giving that young person training which will fit him for a job for life rather than putting him into a temporary job with no economic purpose which is funded by large public expenditures?
Lord Young of Graffham: My Lords, I find it difficult to dissent from anything my noble friend has said.
Lord Dean of Beswick: My Lords, is the Minister guaranteeing everybody a job for life, on the basis of what the noble Lord has said?
3.30 p.m.
Lord Hatch of Lusby: My Lords, the noble Lord the Minister has added to his Statement a number of comments of his own. He made an electoral preface to the Statement itself in that he claimed that unemployment had fallen over the last few months. Can he tell the House what the figures would have been and whether unemployment would have fallen if the criteria for counting the unemployed had not been changed over the last five years?
At the same time, the noble Lord said that our competitors, particularly in Europe, showed a very favourable figure. I have asked before whether or not he can tell us what other industrial countries have a lower unemployment percentage than this country. His previous answer to that question was, "Spain and Portugal". Has the Minister been able to find any other countries where unemployment is not lower than it is in this country?
In the Minister's peroration he spoke about economic growth and added further comments contrasting service and manufacturing jobs. Can he tell us whether this economic growth of which he boasts includes an increase over the past year in manufacturing production and production of wealth? Does he not agree that the number of service jobs depends directly on the number of manufacturing jobs that can be created?
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Hatch of Lusby. No doubt the recent economic news is somewhat depressing to the noble Lord. However, I do not think we should enter into a general economic debate at this time. May I just say that it is true that during the last three years we have been losing manufacturing jobs at the rate of 8,000 a month. I am sure that all your Lordships will recall that for the entire decade between 1966 and 1976 we were losing manufacturing jobs at a rate of 10,000 a month. The entire industrialised world is losing manufacturing jobs, and I suspect it will continue losing manufacturing jobs because that is the way in which technology changes.
It is not true to say that service jobs depend on an increase in manufacturing jobs. It is true to say that the health of an economy depends upon sufficient wealth creation in the economy to at least match wealth consumption. Alas, for some decades after the war we were better at wealth consumption than we were at wealth creation.
The noble Lord, Lord Hatch, will be delighted to know that the OECD recently revised the unemployment statistics, so he will soon have another target to talk about. They now agree that the rate of unemployment in the United Kingdom is 11·1 per cent., which is what we say it is. One of the reasons why we have this problem of high unemployment is
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that we have had such a legacy of decades of neglect—and I mean that. When we look at the way unemployment has gone in the last five years, we are actually doing rather well.
Lord Renton: My Lords, is my noble friend aware that physically and even mentally handicapped people have a contribution to make towards the prosperity of industry within the limitations of their skills? Can he give an assurance that it will continue to be government policy to do all that can be done to help to train such people?
Lord Young of Graffham: Yes, my Lords. Certainly so far as disabled younger people are concerned we shall maintain the present position under which young people can enter YTS one day short of their 22nd birthday and under which they will have an adequate time on the scheme to make up for a more difficult learning period. I am also proud of the work which Remploy's sheltered workshops have done, and the work which has been pioneered recently by the Manpower Services Commission in providing sheltered placement to enable disabled people to work among non-disabled people, which is far better for them than working in areas where everyone is disabled. There is a great deal to be done in this area. Disabled workers are good workers. The Fit for Work Award scheme gets more popular each year. We shall certainly never nelgect our disabled workers.
Lord Cledwyn of Penrhos: My Lords, the noble Lord has made yet another Statement in a series which he has made on training since he became Secretary of State for Employment. As my noble friend has said, we warmly welcome all constructive training plans which the Government introduce, and we shall support them.
However, is the noble Lord aware that he is in grave danger of creating a mood of euphoria in this country based on the belief that by creating opportunities for training he is also creating jobs? Is he aware that he is doing no such thing? The Minister should tell the House where the jobs are; how many real jobs the Government are creating; and whether they can guarantee real jobs in manufacturing industry. Is he aware that it is absurd to suggest that jobs in service industry are of the same value as jobs in manufacturing industry? Is he aware that the root of the economic difficulties of this country is that the Government have failed to create jobs in manufacturing industry, and that we are approaching a disastrous position?
It is of course true to say that jobs in service industry are valuable. Everyone knows that. However, they are not comparable to jobs in manufacturing industry. The noble Lord should be aware of that and make it plain to the public. Furthermore, can he tell the House whether it is true that this new scheme he has announced is properly funded and that it has not been rushed through, as has been reported in the press this morning, in order to push unemployment below 3 million—for electoral purposes—by the summer? Is he aware that the future of our young people and the provision of proper jobs for them is more important than party politics?
Lord Young of Graffham: My Lords, there is no doubt that good economic news does not strike joy into everyone's heart. We can sometimes see that happening. If we have economic difficulties, it is because the party opposite fails to understand that there is absolutely no difference between the service sector and the manufacturing sector; that a hotel in any area which is earning foreign exchange by taking in overseas visitors is just as valid a method of wealth creation as any factory that exports goods; and that what we must look at time and time again is whether or not we have wealth creation within our society. Whether that wealth is created by manufacturing widgets or producing services is immaterial. So long as we do that properly and create wealth, that is where we have to be and that is where we have to go. I challenge the noble Lords opposite to find any economy in the world in which manufacturing employment is increasing. The noble Lord should have listened to the leader of the party opposite when he spoke to the Welsh TUC and said that even if they came back, they could not guarantee to provide any more manufacturing jobs.
The one canard that I tire of is being told time and time again that these measures are being introduced to bring unemployment under 3 million. I can do no more than quote the National Westminster Bank when is said yesterday that unemployment would be 2.9 million by the end of this year, 2.7 million by the end of next year and 2.4 million the year after that. It seems to me that most commentators are deciding that the economy is growing and that unemployment is coming down.
Perhaps I can reassure noble Lords opposite on how much of this is real and how much is imagined. Out of the fall in the unemployed of 107,000 in the last five months, fewer than 30,000 result from an increase in those coming under special measures. The rest is due to the growth of the economy.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that if international comparison is to form the basis for a judgment on this problem, in this country, per 1,000 of population, more people are in employment than in any other European country except Denmark? That has been the case, not three to six months before an election, but for the last three to four years.
Lord Young of Graffham: Yes, my Lords. I occasionally remind all in your Lordships' House that whereas France and Germany have 59 per cent. and 60 per cent. of those of adult age in employment, and the average for Europe is 58 per cent., we have 65 per cent. in employment. We have managed to produce more jobs for our working population than any other major country in Europe. We are very close to the figure in the United States of America.
Lord Ross of Marnock: My Lords, could the noble Lord say whether the polytechnics and colleges of further education which were set up or restructured some 20 years ago are playing a part in these retraining schemes? Is he satisfied that they are making the contribution that they were intended to make when they were set up and restructured?
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, but there is a considerable difference between a polytechnic and a college of further education. The area to which the job training scheme is primarily directed—the qualifications of B.Tech., City and Guilds, and RSA—is suited to colleges of further education. I very much hope that they will play an important role in this as they have in YTS, and they are beginning to respond much more today to the needs of industry.
Lord Ross of Marnock: My Lords, will the noble Lord at some time or other produce statistics for Scotland? Is he aware—
Noble Lords: Order!
Lord Rochester: My Lords, are the Government proposing to take any further action to ensure that those who will be responsible for giving the counselling in the additional interviews that are now to take place under the Restart scheme, and for the long-term unemployed, will themselves receive adequate training in counselling?
Lord Young of Graffham: My Lords, yes. The Manpower Services Commission will have a further 700 members of staff. Training programmes set up by the Manpower Services Commission have been in progress since the scheme first started last year, and these will continue.
Lord Ross of Marnock: My Lords, I wonder whether the Minister will produce some of these figures specifically for Scotland? Is he aware that the optimistic figures he produced in relation to the fall of unemployment in the country—
Noble Lords: Order!
Lord Ross of Marnock: My Lords, it may not suit noble Lords to hear bad news. Is the Minister aware that the figures of unemployment he produced, rather gaily I thought, in respect of improvements are not duplicated in Scotland, where unemployment is rising? Has he heard of Caterpillar? Has he heard of the Lower Clyde? Has he heard of Babcock? In the past month, one after the other they have produced figures of tremendous unemployment.
Let me welcome the fact that he has given 1¼ million interviews. Is that not great—that he has interviewed people? There was a time when this was done automatically at the old labour exchanges. It is what follows these interviews that really matters. I want the figures for Scotland. I want the figures in relation to Jobstart interviews. I want to get the training figures, and I want to get the results of the training.
At that point the Minister gave things away: after they get these qualifications they may be fitted for real jobs. How many real jobs have come so far? What is the proportion? I think the point raised by the noble Baroness, Lady Seear, is correct. Are people going to get qualifications to fit them for life after six months? That is utter nonsense; it is eyewash. I want to know if he really believes that.

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The question of colleges was raised. We are closing colleges. Have we got the colleges in Scotland? They have already spilled over into education colleges in Ayr. But the Government have been closing down education colleges, although the chance to use them for proper training is there. In that he is doing good in training, this is a reflection on our education system and shows how wrong we have been.
3.45 p.m.
Lord Young of Graffham: My Lords, I must confess that I do not appreciate the use of the term "eyewash" to describe what is a real training measure. It is true that for the past four or five months unemployment has been rising in Scotland. Scotland has suffered the brunt of the closures in the North Sea oil industry; but there was a period of many months before that when unemployment in Scotland was declining. Nobody took great pains to point out that at the time when I announced figures. Nobody in your Lordships' House came to me and said that although unemployment went up in the United Kingdom please note that it went down in Scotland.
I appreciate that there have been closures at Caterpillar, but it occurs to me—and I will write to the noble Lord with the name—that there was the announcement of the opening of a firm of 2,500 people in Scotland last week. I read that Ford are taking on a thousand more people this week. I read that Jaguar are taking on 700 more people this week. I have continually read of closures over the past five months, and yet unemployment has fallen by 100,000. I suspect that many of us in your Lordships' House would do well if we occasionally said to ourselves that perhaps—just perhaps—the economy is improving, and just perhaps there are more jobs about.
Lord Elliott of Morpeth: My Lords, is my noble friend aware that that part of his Statement which suggested the achievement in percentage terms of near balance between the employment position in Humberside and the South of the country will help further to dispel the very damaging suggestion that there are two nations within the one?
Lord Young of Graffham: My Lords, I think I should just say I am not too sure whether that will dispel the notion. My right honourable friend the Paymaster General, when he was in Yorkshire yesterday, pointed out that the increase in self-employment was 77 per cent. since 1979. "Ah, well", a Yorkshireman said, "that just shows you how many people here have been driven into working for themselves." There is no pleasing some people.
Lord Oram: My Lords, when a long-term unemployed person has been through the Restart process, then fails to get a job and returns to the register, is that person no longer regarded in the category of long-term unemployed? To what extent is that a factor in the announcement of the reduction in the long-term unemployed to which the Minister referred?
Lord Young of Graffham: My Lords, anybody going to the Restart interview or going on a short Restart
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course returns to the register but if he does not find a job or goes into a Jobclub, he returns as long-term unemployed. If someone leaves the register entirely because he goes on a six months' training programme he is no longer available for work and gets training allowance and not unemployment benefit; and if at the end of that period he is unfortunate enough not to find work he comes back on the register as an ordinary unemployed person. Since Restart has been going, there cannot be many people who have gone off on a six months' training programme and returned to the register. The vast difference in long-term unemployed is because we are helping long-term unemployed people back into work.
Lord Beswick: My Lords, is the noble Lord aware that he would create much more confidence on this side if he did not overgloss the situation? Although he says that in no other country have they got these job retraining schemes, is it not a fact that in our principal competitors countries, for example Japan, these lads would have remained at school until the age of 18? Is it not a fact that so far as concerns them they are turning out trained engineers from their colleges and universities? We have not done that, and we are reducing instead of increasing. Is not this long-term degeneration of our training system something about which we should be concerned?
Lord Young of Graffham: My Lords, I wish the noble Lord would not refer to a sober statement of fact as a gloss. When I said that our principal competitors do not run schemes as we do, I meant every word of it. I am talking about schemes such as Restart, in which we bring in the unemployed for interview and offer no less then eight different items of help to all the long-term unemployed. Nobody has yet tried to do that. We have done it, and we are improving on it.
The education system, I suspect, leaves a great deal to be desired; and far too many people leave school with little to show for 11 years of compulsory education. But schools are the responsibility of local education authorities and we should be very careful to apportion the credit, and otherwise, where they lie. There are many aspects that we have to make better but we have started the process of getting people back to work and I am sure that all in your Lordships' House will welcome that.

Private Bill Procedure: Select Committee
Viscount Whitelaw: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Noble Lords will recall that last year, on 24th June, this House concurred with the Commons' resolution of 18th June that it would be desirable to appoint a joint committee of both Houses to consider the whole question of private Bill procedure. Another place has appointed its members and it now behoves this House to do the same in the terms of the Motion set out on the Order Paper. I beg to move.
Moved, That the Commons message of 20th January be now considered and that a Select Committee of seven Lords be appointed to join with the Committee appointed by the Commons to

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examine the processes of enacting Private Legislation and to consider whether:

(a) there are any matters of a kind at present dealt with by Private Bill which could more appropriately be dealt with some other way, taking account of the interests both of Promoters and other affected parties;

(b) any changes are desirable in Private Bill procedure; and

(c) amendments are desirable to the Private Legislation Procedure (Scotland) Act 1936 and the procedure thereunder;

and to consider whether any amendments are desirable to the Statutory Orders (Special Procedure) Act 1945.
That, as proposed by the Committee of Selection, the Lords following be named of the Committee:

Atholl, D.

Bancroft, L.

Bellwin, L.

Jacques, L.

Murton of Lindisfarne, L.

Oram, L.

Wilson of Langside, L.

That the Committee have power to agree with the Commons in the appointment of a Chairman; and
That the Joint Committee do meet on Wednesday the 4th of February next at half-past four o'clock.—(Viscount Whitelaw.)
On Question, Motion agreed to; and it was ordered that a Message be sent to the Commons to acquaint them therewith.

Charity Law
3.51 p.m.
Lord Allen of Abbeydale Lord Allen of Abbeydale rose to call attention to the case for reviewing the charity law and the role of the Charity Commission; and to move for Papers.
The noble Lord said: My Lords, I at last beg to move the Motion standing in my name on the Order Paper. I begin by stating that I am a trustee of several charities, I should like to thank all those who have put down their names to speak today, with perhaps a particular word of thanks to the right reverend Prelate.
I am conscious that we debated some of these issues rather less than a year ago but I make no apology at all for returning to the subject today. It is one affecting a great many people and involving a great deal of money. I can only say that so far we have not received very much enlightenment from the Government. Things are always under consideration, but nothing very much actually happens.
The income of charities runs into billions of pounds; tax relief is substantial, to put it mildly; and the continued growth of charitable effort is indicated by the fact that getting on for 4,000 charities apply for registration each year. Since our last debate one or two things have happened. The Finance Act gave further tax concessions and, in a very important provision, authorised the Inland Revenue to tell the Charity Commission if it had suspicions about a particular charity. We have also had an Answer to a Question by the noble Lord, Lord Houghton of Sowerby, on 6th
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November 1986 at col. 1248 of the Official Report saying that the Government had no present plans for changes in charity law. I understand that it has been decided, following a Treasury staff investigation, that the Charity Commission may keep its existing number of staff but is not to have any more to cope with new work or to enable it to carry out its existing work more effectively.
Alas, there are still serious delays in registering new charities. There are still doubts and obscurities about whether particular activities will be accepted as charitable. Most charities fail to send in their accounts and not all that much is done about those accounts which do come in. The register of charities remains uncomputerised and I am sure is cluttered up with a lot of dead wood. The Charity Commission does not have the staff to carry out field visits on any scale, and overall its attitude necessarily remains one of reacting to events rather than initiating action itself.
Against this background, it seems to me that there is, to begin with, a strong case for looking again at the statutory provisions involved. I am not suggesting an attempt to define in an Act of Parliament what constitutes charity. That indeed would be to venture into a morass, and I have another approach to suggest in that context. But there are quite a few questions to be thought about as possibly improving the present state of affairs.
For instance, the commissioners, acting judicially, cannot at present refuse to register an institution which is impeccably charitable in law according to its declared objects, whatever suspicion they may have about its real intentions. There is much to be said for giving them power to register a charity on a probationary basis to see if over a period it lives up to its declared objects. Perhaps indeed all charities should be registered provisionally to begin with. Then, as the development of charity law to meet new and changing circumstances rests on judicial decisions and charities cannot afford to go to law, would it not be right to set up a suitors' fund to enable cases involving important issues to be taken to the courts at public expense, a course for which there are good statutory precedents?
Should there be some relaxation of the tight controls in the Charities Act 1960 over the disposal of property and land? Should the cy-pres provisions in that Act he looked at again? Under that Act a charity with an income of less than £15 does not have to register. Should that figure be put up to, say, £100? Should the 1985 Act—it was passed in 1985 although it seems only the other day that we were debating it—dealing with small charities be further simplified and perhaps greater powers of initiative given to the Charity Commission?
Can we not bring up to date the legislation on trustee investment? Should charities be allowed to advertise on television? Should the Official Custodian for Charities be allowed to charge fees for looking after property and investments? Should all charities, and not just those with perpetual endowments, be obliged to submit accounts? Should charities be obliged to make their accounts available for inspection by members of the public who can show good cause? Should charities with an income above a certain limit be obliged to have their accounts audited?
Should the Charity Commissioners be given greater power to remove trustees where there has been maladministration, or to wind up a charity which devotes precious little of its income to the ostensible purposes of the charity? Should there not be a serious examination of the proposals in the report of the National Council for Voluntary Organisations on malpractices in fund-raising, some of them involving legislation? That is an important report on which so far the Government have remained notably silent, as I fear appears to be there wont when faced with reports on charities from Goodman on.
There to start with are a dozen possible changes in the law to be thought about. Come to think of it, I believe it adds up to a baker's dozen, which might perhaps appeal to at any rate one member of the Cabinet. If some of these changes were made it could result in a better use of staff and at least a reduction in the possibility of some scandalous misuse of charitable funds. I have been wondering whether one possible course might be for issues of this kind to be looked at by a Select Committee of this House rather like that which led to the 1985 Act, but I am not sufficiently expert to know whether that is really a starter. Perhaps other ideas will emerge during the debate.
I now turn briefly to the role and the resources of the Charity Commissioners themselves. I sometimes wonder whether the Treasury—I try to forget that it is a department in which I once served—understands what is the role of the commission under the 1960 Act. I notice that no extra staff were provided to cope with the consequences of information handed over by the Inland Revenue under the new powers; though I understand that the small unit which has been created is finding that this involves quite a lot of work. Incidentally, I hope that there will be some ongoing publicity about the progress of this co-operative effort.
I thought I had a significant reply when, some time ago, I asked about certain provisions included in the Finance Bill as introduced last year. It suggested that those concerned had very little knowledge of how charities actually work and the provisions were withdrawn when enlightenment was forthcoming. In that reply the noble Lord, Lord Brabazon of Tara, confirmed that the commissioners had not been consulted about the proposals and he spoke in terms which implied that, if they had been, the risk of leakage would have been just as great as if any outside body had been consulted. Those exchanges are recorded in col. 6 of Hansard on 21st July 1986.
The charity world, not surprisingly, was astonished that the Government completely failed to take advice from their own professional experts within government. Indeed, this ought not to happen again. I gather that the Inland Revenue subsequently got over its fears of leakage and is currently consulting some knowledgeable people in the charity world before this year's Finance Bill is unveiled to our horrified gaze.
There is widespread appreciation of what Mr. Denis Peach, the present chairman of the Charity Commission, has done during his period in office; but Mr Peach is due to retire within 12 months. Will the Government take this opportunity not only to make a suitable appointment to the top post after open competition but also to strengthen the supporting
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posts near the top in order to equip the commissioners better both to organise their own responsibilities and to function as advisers to government, as they should?
Will the Government also think about the possibility of appointing, say, two extra non-executive commissioners from outside or perhaps giving the commissioners the backing of a pretty high-powered advisory committee—call it what you will—with whom they could discuss tricky policy issues? That could include, for example, the attitude they should take in deciding what constitutes charitable activity in such controversial areas as the relief of unemployment, the advancement of human rights and the furtherance of religion. Perhaps that is a point at which I could look rather expectantly in the direction of my noble and learned friend who is to speak later in the debate.
I know very well that there is currently an expert looking at the scope for using computers in the Charity Commission, that the Home Office is planning a six-week Rayner-type inquiry into the commission and that the National Audit Office is even now scrutinising the work of the commission—it must be the most scrutinised department of all time—but I hope that the Minister will not just rest on telling us that various inquiries are in hand and that nothing can yet be decided.
Social needs have much changed since 1960, including increased reliance on voluntary effort, but the law and the resources have not kept up. We are talking about activities involving the wellbeing of many of the less fortunate members of the community and we do not want them marred by muddle, delays, malpractices or failure to apply the large sums of money involved—much of which is provided at the cost of the taxpayer—to their proper purposes. The arguments for fresh legislative and administrative action are, to my mind, very powerful. I beg to move for Papers.
4.5 p.m.
Baroness Faithfull: My Lords, I pay tribute to the noble Lord, Lord Allen of Abbeydale, for his tenacity in again bringing up in your Lordships' House the question of charities. Much of what I have to say underlines what the noble Lord said, and I, too, should like to pay tribute to the Charity Commission, the staff, and the Charity Commissioner, Mr. Peach, who rightly was honoured last year.
The Charity Commission comes in for a great deal of opprobrium not because its staff is poor, inadequate or inefficient but because the commission does not have adequate facilities. I take up a point which the noble Lord, Lord Allen, made. Charities register at the rate of one every half hour of a working day. This betokens two points. The first is the enormous amount of work which the Charity Commissioners have to do and the second is the growing wish among the people of this country to set up charities. Six hundred letters are received each day. There is a backlog of three weeks before any matter can be dealt with. There are 60,000 to 70,000 files stored in the commission's office and to refer to one of those takes three days; and there is a considerable staff shortage.
In this country there is a great deal of complaint about the work of the Charity Commission through no

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fault of its own. It was in my mind to write to The Times and, indeed, to other newspapers, to ask those people who had been dissatisfied with the service received to write to me. However, in the first place I knew I should not be able to deal with the correspondence and in the second place it would have been unfair on the Charity Commission because it would look as if the commission itself was inefficient.
It is not known, and nor has it been quantified, what is not done. Time and again people write to say that they have written to the Charity Commission and received no reply, and I think that that will be borne out—the noble Lord, Lord Boyd-Carpenter, brought such a case to my notice only a short while ago. Therefore, I believe it should in some way be possible to find out, perhaps through community councils or local authorities, what is not being done in the country and what is not known about.
I also take up another point which the noble Lord, Lord Allen, spoke about. I refer to the very excellent report by the Natonal Council of Voluntary Organisations, the chairman of which was Mr. Harry Kidd, on malpractices in fund raising for charity. There are many recommendations for legislation in this report. The malpractices in this country are quite frightening, and they do not come to light.
My arm is in plaster. If I asked every one of your Lordships to sign the plaster, auctioned it and made a lot of money which I said I would give to charity but kept 80 per cent. of the proceeds and gave only 20 per cent. to charity, nobody would question me. One must read the report, because I suggest that that is what is going on in this country. Very many people who are contributing to charity do not realise the malpractices that go on.
It is strange to me that if there is a little trouble in the City there is a great deal of debate in your Lordships' House and in the other place; if there is a fault with local government, it is taken up; if there is a difficulty in a government department, the matter is looked into. Why is it not loked into when there is malpractice in the case of voluntary organisations, particularly when the money is given voluntarily, for specific purposes? It seems wrong that we should throw away and abuse the generosity of the many people who give so much money.
On the subject of the Charities Act 1985 to which the noble Lord, Lord Allen, referred, the Charity Commission has published and distributed 7,000 copies of a booklet. Either because there is not the staff in the Charity Commission or perhaps—I am bound to say this—because the Act was not right, although there was movement when it was first passed, this has ceased to be. Therefore, with small, parochial charities a good deal of money is being wasted and lost.
As to past history, as the noble Lord, Lord Allen, said, committees have been set up again and again to look into charities and to make recommendations—the Nathan Committee of 1952, the House of Commons Select Committee of 1975, the Goodman Committee of 1970 and a report from the Conservative Political Centre in October 1984. The noble and learned Lord, Lord Hailsham, in 1980 said:
"The legal concept of charity is not static but moving and changing".
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I suggest, as has the noble Lord, Lord Allen of Abbeydale, that the Charity Commission has no political mileage in it and, therefore, nothing gets done.
I believe that there should be a charity council. This council should be advisory and consultative. It should consist of two or three Members of the other place and two or three Members of your Lordships' House, perhaps with outside experts. Such a council would therefore be able to monitor, look at and receive requests or complaints about the administration of charity. I believe that until we get some such council to which people can refer, the noble Lord, Lord Allen of Abbeydale, will be introducing yet another debate, and that nothing will have been done.
4.13 p.m.
Lord Houghton of Sowerby: My Lords, I am sure that we are very grateful to the noble Lord, Lord Allen of Abbeydale, for once again introducing this subject for a short debate. Last time the noble Baroness, Lady Faithfull, preceded me in the debate and we were seaparated by a 50-minute interval for Statements to be made in the Chamber. This time we have been delayed by 50 minutes in starting the debate, such are the procedures of your Lordships' House.
It is difficult to avoid agreeing with everybody else in the debate. There is so much common thought and purpose about charities that what we want is for something to happen. There is no sign of serious attention being given by the Government to the numerous problems that arise in regard to charities.
The Government are in a desperate hurry to provide more tax relief to help finance charities. I was criticising last year what I thought then might be the Government's scheme for single gifts to charities to be tax deductible. The scheme that was introduced was less objectionable than that; it did not follow the American model. We all know that deductions under pay-as-you-earn are now for arrangement by employers, which makes it more modest and more widespread than otherwise it might have been.
Even so, more money is being made available to charities this year than before, imposing a fresh drain on the taxation revenue of the public, while not at the same time tackling some of the underlying problems of financial and commercial management of charitable bodies. There is so much money now going into charities and so much public interest involved in support, donations, contributions and tax relief, that it is indefensible that we should continue in this way year after year. After 14 years or so the Goodman Report—the last substantial informal inquiry into charitable law—still stands neglected, and most of it relates to the problems that we discuss from time to time.
It has been said that as a nation we cannot move faster than our institutions will allow. The Government have undoubtedly tackled some of the institutions that have been in need of attention. In general I think that the state is like Gulliver in Lilliput, tied down by unnumerable strands of rope attached to innumerable stakes, all labelled "vested interests", with the charities among them. We cannot get moving because of the antiquity of much of the charity law, the deplorable inadequacy of the resources of the Charity

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Commission and its lack of sufficient authority and power to investigate and do its job.
It is not a scrutinising body. The Charity Commissioners are like policemen on the beat. They are not plain clothes detectives; they act on information received, some of it from the Inland Revenue and a lot of it from rival charities, which will complain about the activities of their contemporaries. That is from where the Charity Commissioners receive so much of their information. Other charities watch their rivals and complain bitterly to the Charity Commission that the rules are being broken. What a way to run charities, yet so we go on.
I hope that this time we are to have from the Minister something more positive than we have had before. We do not want waffle this time. Can we be told whether the Government are to set about an inquiry into charitable law and practices so that we may have some reassurance and give our minds to the changes that are needed? For example, the accounts of all collecting societies of any size should be subject to the comprehensive audit procedure that now applies to local authorities and other public bodies. There is no audit in the charitable world of value for money, nor are all managers in the charitable world good managers. There are many dedicated people in charitable work who are not all that competent in administration and prudent management. I think that that is most important in the public interest.
I hope that the Charities Aid Foundation can develop its role of assisting charities to get higher standards of administration. I am also concerned about the integrity of appeals made by charities. There is a lot of emotional stimulus at present to arouse the public's conscience and to make people feel guilty so that they part with their money in order to assuage their consciences. We are all subject to that. We are distressed by so much on television about the handicapped, the disabled, the deprived and the poverty stricken, and about abused children, and all the social distress that viewers see day after day and night after night. It is most disturbing to those of us who feel deeply about these matters. Many of us can do little more than give our money to charity; otherwise we cannot sleep at night. The charities benefit from this state of mind. More than many people and many institutions, they have a responsibility for the emotional state of those who give their money.
I am beginning to question the role of the BBC in this connection. The BBC is now becoming a very large fund raiser. Is the BBC now a charity? Is it an arm of the charitable world? Day after day, the Children In Need programme went on until they raised a target figure of millions of pounds for distribution to children's charities. Do we know where all the money goes? Do we know the real need of many children's charities that lies behind the appeal? That kind of thing needs to be the subject of scrutiny and judgment.
My noble friend Lord Allen mentioned the possibility of television advertising for charities. Are we going to have that now? If so, is it not time that we had some advertising standards? From my own experience I know that a distressing advertisement of children in acutely deprived conditions is not a picture
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of real life but a commercial product. We must be careful about using commercial advertising agencies for charitable purposes. We must be sure that what is being presented to the public is real and not simulated.
I know the difficulty of photographing people who are in dreadful straits and who wonder whether their pictures will appear publicly so that their neighbours or friends will see their plight. I admit that difficulty, but to conjure up and concoct pictures for advertising purposes for charities is not permissible. I believe that there should be rules. Standards of advertising for charity should certainly be considered.
There are so many appeals. We must realise that the public and its money are easily parted. I need not dwell on the fact that we are a generous and responsive people. However, we must be realists and at least understand that at times charities, like other institutions, may succumb to the temptations of a materialistic society and the corruption of money. Charities must keep their hands clean; otherwise they do not deserve the support of the public.
I am not imputing any criticism to any particular charity. I say only that during the short time that I was Chancellor of the Duchy of Lancaster (it is true that this was 20 years ago) and the Minister in the Cabinet responsible for voluntary services, I did not like a great deal that I encountered in the voluntary services movement. I can only hope that a great deal of improvement has been made since then.
In the public interest, we now want the charities, together with the trades unions, the Stock Exchange, insurance services and financial services to go through the mincer and have their affairs more closely examined. I sincerely hope that the Minister will have something more concrete to say. Let us not have an annual debate on charities for no purpose whatever other than to repeat our continuing anxieties, agree with each other and obtain nothing from the Minister which gives us any comfort.
4.24 p.m.
Lord Grimond: My Lords, the House should be particularly grateful to the noble Lord, Lord Allen of Abbeydale, for raising this matter a second time having allowed what is about the right period to elapse between the two Motions. The Government have had nearly a year to consider the many questions and suggestions put to them. No doubt, as the noble Lord, Lord Houghton, hopes they will tell us that something concrete will be done.
The first reason for welcoming the debate is the set of very pertinent questions which, once again, the noble Lord, Lord Allen of Abbeydale, put before us. However, there is now an additional reason for some action; namely, the approach of the general election. A general election leads to an absolute spate of lobbying, a great deal of which comes from charities. The Home Secretary himself expressed some doubt about whether that lobbying always serves a useful purpose.
There is only one point on which I must disagree with the noble Lord, Lord Allen, and that is his suggestion of a probation period for charities. I disagree, not because I think that it would do any harm, but because I am not quite certain that it would cure the trouble. It seems to me that difficulties would

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arise at the end of the probationary period. The trouble usually is not that the charities deviate from what they say they will do but that there is justifiable doubt about whether what they do should be termed charitable.
I should like to cite the case of the Moonies which was widely canvassed. At the end of any probationary period, the difficulties about the Moonies would still exist. We can take an entirely different form of organisation. For example, I think that most people in this country wholly agree that it would he entirely beneficial to the community—which is one of the purposes of charity—if enormous sums of money were given to the Alliance. Of course there are benighted minorities in the country who would take a different view, and I am afraid that no amount of probation would reconcile the two.
I quite understand and sympathise with the way in which the noble Lord, Lord Allen, shies away from any definition of "charity" but, presumably, somebody has to decide whether or not something is a charity. Although it may not be a matter of legislation, I think we must face the difficulty about defining what is "a charity" and possibly give some guidance upon it. As the noble Lord has rightly said, charities are now very big business—is it £4 billion a year?—and are being formed at the rate of 4,000 a year. I am afraid that sooner or later we shall have to grasp the nettle.
It has often been said that when a charity is exempted from taxation it means that it receives a compulsory gift, so to speak, from other taxpayers. It may not be a very large gift but by the amount that the charity is exempted, other taxes, presumably, have to be increased. In passing, I should say that I wholly admire the voluntary organisations. But I sometimes wonder whether the word "voluntary" in the case of all of them is really justified. Many receive very large subventions from the Government. And, again, those are compulsory payments by the taxpayer.
The next point I want to make—I made it before but this will be, I hope, my only repetition—is that it is not essential to be a charity to carry out beneficial purposes. The organisation of which, for many years, I was a director—the Joseph Rowntree Social Services Trust—is not a charity. It paid its taxes but expended its money on purposes which the founder thought beneficial and social. Sometimes, it is assumed that because a particular, excellent objective is not charitable, it is difficult to support.
The crucial question that I want to put to the Government concerns Scotland. During the previous debate, it was pointed out that the Charity Commission does not operate in Scotland. As I understand it, the decision is left to the Inland Revenue. Presumably, by now, the Government have looked into whether charitable affairs are better dealt with in England or in Scotland. If, in fact, Scotland manages perfectly well without the Charity Commission, it may be that, with some additional legislation, the whole matter can be left to the Inland Revenue.
If on the other hand the Inland Revenue relies upon the Charity Commission, which I suspect is what it does—the noble Lord, Lord Allen, is nodding his head—I would strongly support (and this is my
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principal reason for speaking again) the suggestions may by the noble Lord, Lord Allen, and the noble Baroness, Lady Faithful!, in the previous debate for, as I understand it, an advisory committee to assist the commissioners. That seems to be simple and inexpensive, and, as I understand, can be done quickly. We may have to have a more general inquiry and new legislation. The proposals of the noble Baroness, Lady Faithfull, which she has outlined so cogently and which I need not repeat, would be simple and I should have thought helpful to the commissioners.
I have one piece of evidence to support that. The Joseph Rowntree Social Service Trust started paying money some years ago to the political parties to enable it to hire research assistants. This may now have gone too far. It was a departure which at the time seemed useful. We received a great deal of helpful advice from the noble Lord, Lord Glenamara, who at that time was the Labour Chief Whip. It is useful for charities, which may be operating on the verges of charitable work, to have advice from people experienced in politics and, as the noble Baroness said, from people possibly outside politics altogether. I hope that the Government have given serious consideration to the matter during the past 11 months.
The noble Baroness was not the only speaker to make useful suggestions. The noble Baroness, Lady Vickers, and the noble Lord, Lord Mancroft, also did so and received favourable notices from the Government. Has anything been done about them? That is the crux of the matter.
It seems impossible that the Charity Commission could supervise the accounts of all charities. It should possibly confine its attention to the accounts of the larger charities. When an amount of money of this size is at stake, it is highly desirable that the accounts should be available to the public if they are wanted and that if necessary those of the larger charities should be subject to periodical examination by the commissioners.
I hope that the debate does not cover the same ground as it did 11 months ago but that we shall hear from the Government what progress they have made and what concrete steps they intend to take.
4.32 p.m.
The Lord Bishop of Leicester: My Lords, the theory of charity and the action of the law of charity is of course important in my life in many ways. I should like to thank the noble Lord, Lord Allen, for providing me with this opportunity to speak on certain aspects which are particularly in the mind of a bishop. I should like also to thank the noble Lord, Lord Houghton of Sowerby, for what he said about spurious spirituality in charity.
What I wish to say first about the increase in charitable activity, which has been remarked on by several noble Lords, is that it is a matter for profound gratitude that our country is so engaged in charitable activity. But there is a spurious spirituality which is beginning to worry many of those whose spirituality can be labelled easily and clearly as religious. Those people such as the university teacher who recently said to me, "I am not religious at all but I do have a spirituality", are as concerned as we are about this spuriousness.

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I wish to draw attention to some of the doubts about charitable activities which the noble Lord, Lord Allen, mentioned and which verge on the question which he, as I, pose and which the noble and learned Lord may later investigate and refer to. My particular concern stems from my responsibilities as chairman of the Advisory Council on Relations between Bishops and Religious Communities within the Church of England. A number of our communities are contemplative and do not carry out any activity that in a purely secular sense can be seen to be charitable. They are supported, often modestly, by donors whose intention in supporting them is precisely the same as when they support the more obviously publicly well-doing charity. We find that they cannot be regarded as charities under the charity law.
To put it simply, the existing law does not recognise that prayer is charitable. On that matter, the lawyer and the theologian will find themselves unable to agree. The basis of that inability to agree may be because two different definitions of the word "charitable" are being used.
The established Church sees prayer as a charitable activity and so, I believe, do the other religions which I emphasise are of increasing importance in the spirituality of our land. With regard to contemplative communities being regarded as charities, the Charity Commissioners normally refer to a decision given by the Law Lords of this House in the case of Gilmour and Coats. It is an interesting case in which a Carmelite convent was left a sum of money on condition that the convent was engaged in charitable work. If it was found that the convent was not so engaged, the money was to go to the Roman Catholic Converts Aid Society.
The judgment finally declared that the money had to go to the society because the Carmelite sisters were not doing anything that would give public benefit as a charitable work. To put it simply, as one commentator did, the benefits to the public of intercessory prayer were not susceptible of legal proof. One is perfectly willing to agree to that. One would have to go on to say that nor are the benefits of many counselling charities and a good many other activities which now go under the name of charitable.
Curiously, the advance of the Christian religion has been allowed as grounds for charitable work. Apparently prayer is not regarded as part of the work for the advancement of the Christian religion, which to Christians is an entirely unacceptable point of view.
Beside that must be set the question of how we are to cope with non-Christian charitable organisations which are essentially contemplative and do their work through prayer. It appears that at present the law cannot cope with that problem. I suggest that it is important that it does. It is especially important for some of the great deeply spiritual religions which are now becoming so much a part of the life of our cities if not yet of the whole of our country.
I hope the question of how the charitable law refers to purely religious activities will be reconsidered. I know that that immediately opens up in the minds of many the problem of the sects. I submit that that is a
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different question. It is connected with what has already been referred to in relation to how charities are administered and the checking of what is done with the money. I ask that the spiritual basis of charity should be given due weight in further consideration of the improvements that are so necessary in every part of our law on charity.
Baroness Lane-Fox: My Lords, perhaps I may add, albeit in a rather hoarse voice, my thanks and congratulations to the noble Lord, Lord Allen of Abbeydale, on his persistence in following through most contructively a deep interest in the future of charities and the law. As one Member of your Lordships' House who served on the Select Committee on Small Charities, I retain a wish to see conditions improve both for the commission and for its clients.
The fact that the commission is expected to deal with the innermost workings of approximately 150,000 charities, growing I am told at the rate of 4,000 per annum, with a staff of 330 makes its task surely almost superhuman. It is small wonder that those of us who appeal to the commission for advice for our charity grow impatient when its answers take a long time to arrive. We all know that delay can cost money and opportunity but we should be finding a way not to impose this extra handicap on the spontaneous endeavours of voluntary groups of people.
The voluntary groups are important if only to counter the recurrent national and personal tragedies and cases of need that crop up. The wish to help is invaluable but it is a fickle spirit and if snubbed or delayed it is liable to vanish. This is a very lively time in the field of charity. However, the commission appears to be caught. At a time of striving by the charitable world to meet the requirements of today's society, the commission's establishment has virtually stood still.
What can be done to improve the scene? Obviously everything necessary should be done, including the installation of the most modern techniques. I hardly like to mention computers since I would not know how to work one. However, to do less than that is to undervalue the best of the voluntary effort that is so generously offered.
The main thrust of my remarks is to ask that the money which is subscribed by the public with such heart-warming generosity—and so evident in recent appeals—should be used to the best possible advantage. This means that advice has to be quickly obtainable from the commission together with an assurance that care is taken to prevent misuse. There are many and diverse means of raising money as was illustrated by my noble friend Lady Faithfull. The new and important provisions of the Finance Act will further complicate the work of the Charity Commissioners, although the Inland Revenue will also be closely involved. New opportunities could be of great help to worthwhile charities and should help them to achieve their objectives more quickly. That prospect cheers the hearts of those of us who are deeply involved in charities, but we want to see proper safeguards.
It is vital at this stage that the staff of the Charity Commissioners should be empowered to deal

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promptly with present-day requirements. It is for that reason that I strongly support the Motion in the name of the noble Lord, Lord Allen of Abbeydale.
4.45 p.m.
The Earl of Longford: My Lords, as always, it is a pleasure to follow the noble Baroness, Lady Lane-Fox, who embodies in the eyes of many of us the selfless longing to help one's fellow men and women, which is the essence of what we are talking about today. Before coming to my remarks, I should like to say how much I support the intentions of the right reverend Prelate. I only hope that somehow or other his purpose of putting prayer on a footing with good works will be achieved.
We are told in the Gospels—at any rate in the translation available to me—that Mary was supposed to have chosen the better part when she listened to the word of the Lord. Although nothing was said against Martha, Mary would seem to rank on at least the same footing—perhaps a higher footing—as charitable. I can see that it will be difficult, but as has been pointed out, the ordinary charities which counsel in so many forms, cannot really produce results. Therefore I do not see why a new approach should not be made to the matter.
However, it cannot be left to the Government unaided. I think that the right reverend Prelate, with all his spiritual resources—apart from his prayers—and with all his influence in the religious world should be backed up by us all. No one has asked me to speak for the Roman Catholics, but I cannot doubt that they are on his side here even if they might lose something which might otherwise go to the converts' aid.
I hesitated to take part in this debate, although I would always have a prejudice in favour of supporting a Motion put forward by the noble Lord, Lord Allen of Abbeydale. I am not one of those who are perhaps a little nervous about the sums of money going to charity. I should like to see much more go to charity. Therefore, I do not want anything to be said which would discourage charity. I yield to no one in my admiration for the noble Lord, Lord Houghton. He gave a vivid account of the way in which his conscience worked and of the sleepless nights when the programmes about helpless children were shown on television. If I may say so, with great respect, I think that that is good for him. I think that the more sleepless nights leading to a wonderful cheque in the morning, the better. I do not say that that is true of him alone. I am sure he is more generous than most of us.
I do not deplore the capacity to inspire guilt which seems to be the modern technique of the charity-mongers. Let them develop that technique and let us all feel more guilty, have more sleepless nights and give much more to charity!
Turning to the general topic, I should like to concentrate on two points. I hope that I shall have the sympathy of the noble Lord, Lord Allen, and, if I am lucky, the sympathy of the House and the Government. The first topic is the position of foreign organisations setting up charities in the United Kingdom. If time permits, I should like to say a word about the graduated registration fee on charities. First, I should like to draw the attention of the House to the
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question of foreign charities. I do not pretend to be a specialist on the matter. It has recently come to my attention through the energy and imagination of the dynamic leader of the Matthew Trust, Mr. Peter Thompson, who has raised these matters with Government and the noble Lord, Lord Allen. I believe that the noble Lord, Lord Allen, was, to say the least, sympathetic, but there was not room for this argument in his speech. He is happy, I believe, that I should raise it.
Among well-informed people there seems to be widespread concern about foreign organisations setting up charities in the United Kingdom. There is special anxiety about foreign organisations which set up charities to raise money here and then take the money out of the country. It seems impossible to trace most of that money. I do not say that there are many abuses, but there is no doubt that there are some. To cut a long story short, I think that this whole matter needs to be looked into and to be brought under control. If required, I could give the Minister after the debate various examples of alleged abuses, but he may already have them. However, in the time available I believe that it would be wrong for me to begin mentioning names of organisations which are suspect. I think that it would be unfair to them if I were to handle the matter so rapidly.
The Chancellor of the Exchequer seems to be aware of this kind of abuse. In June 1986 he brought forward various proposals which subsequently became law, including the following:
"A charity's tax relief will be subject to restriction where it makes payments to overseas bodies without taking reasonable steps to ensure that they are used for charitable purposes".
That seems to me to be a step in the right direction, but surely it does not go far enough. It may well be that the Chancellor will go further later on. I hope that there will be wide support for a recommendation of the kind that I am about to put forward, although I am not saying that the wording is perfect: namely, that trustees of charities in the United Kingdom, when charities have a foreign authority, should be comprised of a majority of British subjects to keep the control of the affairs of the charity within the United Kingdom. As I have said, no doubt the wording could be improved or supplemental and other steps taken that may be necessary.
I have given the Minister some notice of the matter, although not a great deal. However, I hope that he will at least agree that—to quote the famous words once used by the then Prince of Wales—"Something must be done".
Before concluding I should like to indicate another and in a sense more far-reaching proposal. I am sure noble Lords here do not question the ability of the Charity Commissioners. We all take their integrity for granted. As was stated by the noble Baroness, Lady Lane-Fox, and others, every time a new duty is imposed upon them it becomes more obvious that their resources are totally unequal to the task of coping with 150,000 charities.
I venture to suggest that one solution would be to impose a small annual registration fee. I would certainly exempt small charities. I admit I have a slight prejudice in favour of small charities, having started three such charities myself. I have always been very

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well treated by the Charity Commissioners. A graduated fee would enable the Charity Commissioners to acquire the kind of resources which are required if they are to continue to do the job that they are already striving so well to do.
4.51 p.m.
Lord Airedale: My Lords, I have the honour to be another member of that Select Committee on two Private Members' Bills which sat under the very able chairmanship of the noble and learned Lord, Lord Brightman. Our deliberations led to the introduction of the 1985 Bill which became the Charities Act of that year. We took evidence from the Charity Commissioners, and it is quite clear that one thing that made a deep impression upon our minds was the difficulties of the commissioners as expressed to us in evidence.
In their latest report of 1985, the Charity Commissioners have repeated for all the world to read the difficulties under which they labour. Paragraph 2 of their introduction states:
"The Commission is affected by cash limits and restraints—indeed reductions—in staff numbers, and by our inability to do as much as we should like or as speedily as we should wish. Our work increases, but staff decreases. A recent Debate in the House of Lords (5th March 1986) highlighted the concern about our resources and the undue delay in dealing with work; the incomplete and out-of-date information held in the Central Register of Charities; the lack of a computerised register; and our insufficient supervision of charities. We recognise and much regret these deficiencies. We hope that at least we may be allowed to keep the staff we have; indeed we should wish for a modest increase."
Paragraph 10 states:
"We are constrained by our limited resources from scrutinising accounts of all charities; the degree to which trustees as a whole efficiently, and effectively manage their trust property is not known to us."
This raises the question: what is the use of Parliament setting up an official body and entrusting it with tasks to undertake if the organisation is then to be denied the financial resources to enable it to undertake the tasks imposed upon it?
Our Committee were haunted from time to time by the fear that at some time some scandal would arise concerning funds of some large charity being misapplied for wrongful purposes and articles appearing in newspapers asking what the Charity Commissioners were doing about this and why they were not alert to prevent this scandal arising.
How unfair that criticism might have been. When one considers the amount of work undertaken by charities which would otherwise have to be undertaken by the taxpayer, and even allowing for the fact that some charities receive grants from public funds, one sees that the taxpayer gets an enormous benefit from this arrangement. He gets a tremendous bargain out of it. One thinks of charities such as the Salvation Army, the lifeboat service, charities providing amenities for patients in hospital.
There are 154,000 charities, as has been mentioned already. Let the Treasury go through those 154,000 cases and select those charities that are doing work which would otherwise fall upon the taxpayer to do. Let them add up the total figure and set beside it the figure that would be required to enable the Charity
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Commissioners properly to fulfil their functions with adequate financial resources. I believe that if those two figures were placed side by side we should all be ashamed at the financial stringency being imposed upon the Charity Commissioners. I very much hope that we shall not go on reading in their annual reports that the Charity Commissioners are not receiving the financial support they deserve.
4.57 p.m.
Lord Denning: My Lords, I thank my noble friend Lord Allen of Abbeydale, and let me first say that he has made a strong case for reviewing the charity law and the role of the Charity Commission. My noble friend Lord Airedale has made a strong case for saying that at the moment the Charity Commissioners cannot do their work properly, or at all, because they do not have sufficient staff or other resources to fulfil all the duties which Parliament has imposed upon them.
I propose this evening to speak about one particular group of charities. One of the main headings that charities come under is that for the advancement of religion. That has been carried so far as to enable religious cults to be set up in England, many coming from the United States. Such charities collect money which is amassed by the founders, who have great wealth. They also cause much distress to families by their doctrines.
I should like to give two illustrations. Some years ago the Daily Mail published articles exposing the activities of the Unification Church, called the Moonies. The Daily Mail put forward many young people to show the evil practices that were going on. The church sued the paper for libel. After many days a jury found the allegations were justified and added the comment that there should be an investigation into the tax-free exemption of this Unification Church.
The rest of the story is simple. The Charity Commissioners felt that according to the law the Unification Church was still an advancement of religion. Pressure was such that the Attorney-General brought an action in the courts to test the position to see whether it is a charity. The pleadings are not closed yet. There will be a long trial in the Chancery Division, then the Court of Appeal, then the House of Lords. The best estimate I can get is that it will be five years before it is decided whether or not the Moonies, the Unification Church, are a charity.
Meanwhile there has been a most important case in the High Court of Australia only two years ago about the Church of Scientology. I am afraid that in the courts judges, including me, have criticised those scientologists. But now in the High Court of Australia all five judges of the highest court in their land have held that it is a religious institution and exempt from taxes in Australia.
It was described this way by the Chief Justice:
"Scientology is said to have been discovered, developed and organised by Mr. Hubbard alone. The Library is large and the meaning of much of it is obscure".
No one has been able properly to define religion, but the Chief Justice said:
"The criteria of religion are two-fold: first, belief in a supernatural being, thing or principle, and second the acceptance of canons of conduct in order to give effect to that belief".

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These words in that test are so wide that they not only cover the scientologists but, as I read them, all the religious cults now operating in this country and in the United States.
Your Lordships should know what happens. They choose a leader. It may be Mr. Hubbard for the scientologists; the Reverend Moon for the Unification Church; it may be Mr. Armstrong for the Worldwide Church of God; or it may be Mr. Taylor for the Exclusive Brethren. They have a leader. That leader preaches its doctrine. He gets adherents to go out and collect money for his work. The money goes into his coffers and those of his trustees. There is no tax on it at all. It is not accountable at all. There are no shareholders to complain as there would be in a company. There are no named beneficiaries to complain, as there would be in a charity trust or ordinary trust. There is no one to complain. Therefore these religious cults are not accountable before the law at all.
That is how they are enabled to amass these great fortunes; and I am afraid also—and I have had masses of letters addressed to me—cause great distress in families by separating children from parents and telling children as part of the doctrine that they must have nothing more to do with their parents. I have had masses of letters about that.
I do not know what the House of Lords will say if the Moonies case ever gets here. They may feel that the arguments are so strong that they have to go by them; that these will all be charitable trusts under the head of the advancement of religion.
There needs to be at once and imperatively a committee to go into this question of religious cults; to go into their activities; to go into their moneys and how they collect them. Could not the Inland Revenue be authorised no longer to exempt them from tax under whatever cloak they are put, whether individually or not? At all events could it not make them liable to tax on what they get and also make them accountable in the same way as proper charities?
If the Charity Commission had the staff it could make inquiries. If it had the staff it could have the accounts laid before it and audited. But at the moment there is not the staff to make inquries into them and their integrity. There is not the staff to do all the accounting. That is why I suggest that the Charity Commissioners' staff should be strengthened in many ways; enough for them to do their most important duties. Such a staff would, I hope, be able to deal with all the problems of religious cults. Much is wrong at the moment, and much needs doing.
5.5 p.m.
Baroness Macleod of Borve: My Lords, as usual it is a great privilege for me to follow the noble and learned Lord, Lord Denning. I happen to know what he is talking about because I have had the privilege of sitting on a committee about the cults for some years. He has gone into this problem in great depth, and I hope your Lordships have learnt a lot about the problems of these cults from him this afternoon.
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The noble Lord, Lord Allen of Abbeydale, has brought this problem to us for the second time. It is not the second time from him, but he came to this House on 5th March 1986 when there was a similar debate which I read this morning with interest. Much of what was said then is pertinent now. So far as the figures for the Charity Commission are concerned I am afraid that they have not altered at all.
I hope that the Minister, after all that has been said by noble Lords in the Chamber this afternoon, will take note of the fact that, because of the enormous amount of work that is done through the various charities by people of good will in this country, they need adequate people on hand to help. That of course would be the Charity Commissioners.
We have heard, and it is true, that there are 330 people helping the Charity Commissioners. But under the Act five Charity Commissioners are allowed, and there are only three in post. Despite the fact that it will take more money, I hope that the numbers will be made up. From my experience it is vital that the charities should be encouraged, and by no means are they always encouraged when they are told that consideration of a new charity by the Charity Commissioners may well take up to two years.
That was a figure I heard a year ago. I was delighted to hear this morning that it is likely that a new charity will be considered well within that time now, and probably in about six weeks.
Even six weeks seems a long time to people who realise that a new charity is necessary. Six weeks is a long time also for people to go off the boil. They can get interested in starting a new charity, but they then have to go to the Charity Commissioners, and they may be told that it will take some time for their application to be put on the table of the commissioners, let alone for a decision to be made. Unfortunately sometimes those charities may not get under way. As everybody will know, it is vital for a charity to have a charity number; in my experience you cannot ask for money for a charity unless you have charitable status and therefore a number. That is why it is so important that the number of people helping us with our inquiries—perhaps to coin a phrase—should be sufficient to assist in good time.
I am privileged occasionally to lead and certainly to help several charities—the best, in my view. I know I am treading on other people's corns and I am sorry. I must tell your Lordships this because I am so proud of the way people in this country look after other people who are not so fortunate.
I shall quickly tell the House about a charity that some of your Lordships will know about, that my late husband and I started in 1967 and which, round our dining room table, we called Crisis at Christmas. We look after between 500 and 1,000 people for six days and six nights, sometimes in a disused warehouse, sometimes in an unused church. All sorts of properties are made available to us. For six days and six nights we look after people who have no roof, no food, no entertainment, no friends and nowhere to go at Christmas time.
That means, as your Lordships will all realise, three meals a day. It does not take much in the way of multiplication to realise that at least 1,800 meals are

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served, all by voluntary help, people of good will. This last Christmas we had between 500 and 700 people all day and all night on mattresses and blankets and they had adequate food.
What I am proud of most is that 2,066 people offered, indeed queued up, to give us their help to look after those people who had no shelter at Christmas time. Those 2,066 people offered to give up part of their own Christmases. I am very proud to be head of that charity. I had to tell the House about it because if people can do that for other people in distress there is not much wrong with our country at this time.
I also subscribe to the idea of my noble friend Lady Faithfull that there should be a charity council made up of people outside the Charity Commission who can perhaps oversee what is happening. Apart from reading the audited accounts from each of the charities, I suggest that there should be laid down a percentage above which no charity should be able to go for paid administration. Crisis at Christmas works with two paid staff only.
Another charity of which I was the head for 12 years, the Leagues of Hospital Friends, also has only two paid staff, but half a million people work for that charity to their own benefit because it enabled them to work. It should be laid down that only a very reasonable percentage should be allowed for paid administrators. There are many people who will help voluntarily. There are plenty of people who unfortunately are being made redundant but who want jobs to do. They will not do them unless one specifically asks them, but there is plenty of good will among people in this country.
As I understand from the Secretary of State, Department of Health and Social Security, when he was in America, very soon we shall run up against being asked to provide hospices for those who have AIDS. This again will fall on those who are of charitable mind, who are generous of spirit and who want to help those who have real problems. The Leagues of Hospital Friends, I am certain, will help, but there will be a call, I hope quite a demand, for people to come forward to help these new hospices which I understand we shall be asked to set up. We in the Leagues of Hospital Friends already help two cancer hospices. Not only money will be required but people of good will who will work. I want to emphasise that charity is not just the giving of money; it is also people willing to work, to visit and to do all sorts of things other than dipping in their pockets and saying, "Ah well, I have done my bit".
I should like to emphasise that the millions of pounds donated to charities should be, and should also be seen to be, put in the right direction for each charity. I am certain that after today's debate people will be awakened to where the money goes. I hope that as a result of this debate my noble friend the Minister will be able to tell us that more people will be drafted into the Charity Commission. They are people whom I know have a great workload on their desks, but we depend on them. I hope they know it.
5.16 p.m.
Lord Nathan: My Lords, it is a humbling experience to follow the moving speech of the noble Baroness,
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Lady Macleod. I am grateful to the noble Lord, Lord Allen, for the opportunity of participating in this debate; I did not participate in the debate in March last year. I noted that many of those who spoke today did, and I read with great interest that debate. I intend only briefly to touch on one or two of the matters mentioned then and in this debate and to concentrate on rather different fields.
Reference has been made to the Goodman Report. I was vice-chairman of that committee. I am president of INTERPHIL (the International Standing Conference on Philanthropy) which was heavily involved in the development of the convention to which I shall refer later. I should declare that I am a trustee and an officer of various charities, but I have no financial interest whatever to declare.
The crucial element for charities is the assurance that the money will be used for the purpose intended. This is vital for those who give money to charities; it is vital for the public generally because of the tax reclaims that charities enjoy; and it is vital for the general reputation of charities. Without a good reputation attaching to charities as a whole, and the good reputation of individual charities, support from the public will not be available.
In their report for 1985—this has been mentioned before—the Charity Commissioners refer to the reduction in their resources in money and manpower. They refer to the limited supervision they can exercise. If government really cannot provide the funds, I suggest that charities must do so—this suggestion has been made before by the noble Earl, Lord Longford, tonight—perhaps by some form of registration fee or annual charge. In the Goodman Report we came out against this, but something must be done to fund charity supervision adequately.
When one considers that charity administration is in the hands of just three commissioners, I for one am filled with admiration at the job they do. Nevertheless I think there is a strong case for forming a charity board or charity council, such as we recommended in our report, whose members would be drawn from a wide circle of interests and expertise to whom the Charity Commissioners could refer if desired and which could provide advice on its own initiative to the commissioners. It could also act as a standing commission on charities to advise the Secretary of State either at his request or on its own initiative.
One of the new elements which I believe should fall for consideration by the Charity Commissioners (or, as I suggest, by the charity council or board) is the impact of our closer association with Europe—the European Community, as well as the larger group constituting the Council of Europe. Charitable activity, or, if you like to be less technical, non-profit-making organisations working for the good of the community, should not be confined within this country, when practically every other activity is becoming increasingly integrated in Europe.
A first step has been the constitution of the European Foundation by agreement among the 10 members of the Community, which has been ratified by nine of them, including the United Kingdom, and there seems reason to believe that the tenth will shortly ratify. Its objects are broadly cultural within the

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context of the Community and it would qualify as a charity if it were constituted in England. It has its seat in Paris and is presided over by Ambassador Jorgensens of France, who has been devoted to that cause. I very much hope that his successor will come from this country. I believe this would be a popular move because of the high regard in which the United Kingdom tradition of voluntary giving is held. The foundation is qualified to receive private donations which may be given under convenant, and it has been agreed that where convenants are made the foundation will be able to recover tax from the United Kingdom Inland Revenue department, just as if it were an English charity.
This is a new departure and it is one which it seems to me should be monitored by a body such as a charity board. In particular, since private donations from this country may be made to that foundation, the monitoring of the process of fund raising, if that is carried out, is one of the functions I would envisage in this context.
Then there is the new convention to which I referred and which has long been under consideration on the mutual recognition of non-governmental organisations, many of which are analogous to charities in this country. It comes under the aegis of the Council of Europe and has been signed by Portugal, Switzerland, Austria, Belgium, Greece and the United Kingdom. I understand that there are good prospects of signature by France, Germany, Luxembourg and Spain. Ratification by three signatories will bring it into effect. The United Kingdom, Switzerland and Belgium are particularly important bases for non-governmental organisations, and therefore signature by these three countries is particularly significant.
The convention represents a substantial step forward in international co-operation in a field outside commerce. The promotion of a convention of this kind seems to me to be the sort of activity in which a charity council should be involved. Of course matters would be relatively simple if the law governing voluntary bodies in different countries was more or less similar, but it is not.
A more far-reaching solution to the problem to which I have referred would be to unify or harmonise the laws of different countries in this field. Such was the ambitious purpose of the initiative launched last autumn in the Committee of Legal Affairs of the European Parliament; but it did not receive sufficient support to make progress. I believe that we should progress in the international field slowly and by steps, and that these very ambitious projects do more harm than good. A lot is going on in one form or another in Europe.
The United Kingdom tradition of voluntary giving and of voluntary work for causes beneficial to the community has always been an inspiring example to other nations across the Channel and far beyond. It is important that the responsible department—the Charity Commission and, as I believe, the charity board or council to be formed—should be so organised as to play a full part in fostering the voluntary sector in England and overseas, and particularly in Europe. I very much hope that consideration of these matters
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will fall within the scope of any study made in accordance with the Motion put forward by the noble Lord, Lord Allen.
5.24 p.m.
Lord Mishcon: My Lords, in thanking, as we all have done, the noble Lord, Lord Allen of Abbeydale, for yet another charitable act, if I may say so, in raising the whole question of charities, perhaps it is pertinent in a winding-up speech from these Benches on a subject in which there is no party dispute at all just to remind ourselves what we are dealing with when we talk about charities. Our law has deep roots. None is deeper than the definitions of charity, which date back to the reign of Elizabeth I. In a very learned judgment of a very learned Law Lord, Lord Macnaghten, we have set out four heads: relief of poverty; advancement of religion; advancement of education; and matters which are for the general benefit of the community.
Our first anxiety is always in law to be as precise as possible, but there are some matters where precision is not only impossible but undesirable. We have built up by precedents in our law—and for the benefit of the Charity Commissioners who follow that law—a whole host of cases over a long period of time. Your Lordships may feel that the law stood still and did not take account when these decisions were made by our judges of changing social conditions. If I may say so as a humble lawyer who has tried to study that aspect of the law, this is not so. We have moved in various directions. Some may think that we have not moved fast enough. Others, like the noble and learned, Lord, Lord Denning, may think that in certain directions, and until the law is altered in some way, we have not moved at all: that is, in the admission of the sects to which he referred.
Therefore this is the aspect we are considerng when we look at how it is all working. Your Lordships may feel that definitions of charity beyond the heads that we have and beyond the decisions that have been made may create more difficulties than they will solve. But there are difficulties in this sphere and nobody could better the words of the noble Lord, Lord Glenarthur, who was the worthy predecessor of a very worthy Minister who will be winding up this debate. He said, in the oft-quoted debate of 5th March 1986 (at col. 220 of the Official Report):
"The charity world is an important and dynamic part of our community life and it is right that your Lordships should bring direct knowledge and considerable experience to bear on issues which affect the operation of charity law and the charity world".
He was right, and your Lordships have been right. In this debate again today a wealth of experience and wisdom has been expressed.
All is not well, as is apparent from that debate and as was apparent from the debate which was also initiated by the noble Lord, Lord Allen of Abbeydale, in March 1986. Delays have been spoken of as one of the factors which operate to the disadvantage of charities applying for registration and for guidance. I must say that when we talk about delays in registration it is not just the Charity Commissioners who take time. One must in justice tell your Lordships that on every application they refer the matter to the Inland Revenue, and it has been my experience that the Inland Revenue is as guilty of delays in this matter as

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are the Charity Commissioners. It is a fact without any doubt that delays are causing hardship.
Charities, as the noble Baroness, Lady Macleod, reminded us, cannot tell contributors that they have the benefit of contributing to a recognised charity unless the charity is registered; and of course there are then delays in getting in funds. There are hardships caused by failures to advise with promptitude, and trustees throughout the land—little people and big people who have no great experience very often of how to act as a trustee or how the law operates and who want guidance from the Charity Commissioners—very often take a long time to get advice and guidance.
One of the few occasions on which I ever had a ripple of laughter in your Lordships' House was in the early days of the service of the Minister who is to reply to this debate. A Question was put down on delays by the Charity Commissioners. He rose—I think it was almost his first day in his office—to answer the Question. I ventured in a supplementary question to say to him that I hoped that his tenure of office would be as long as it takes to get a reply from the Charity Commissioners.
It is all very well to complain about delays; and, as has been said in this debate, and said very wisely, very properly and very accurately, and as was quoted by the noble Lord from the Alliance Benches, the commissioners themselves have spoken in moderate but pitiful words about the hope that their numbers will not be further decreased and about how difficult, if not impossible, it is for them to cope with their work on their present staffing.
It is extremely easy, especially from Opposition Benches—as the noble Earl, Lord Caithness, will realise when he sits on an Opposition Bench—to say to any government "Spend more money. It is advantageous to the nation". If I may be crude, there are not many votes in increasing the staff of the Charity Commission, and political parties, whether they should or whether they should not, have the habit of acting politically.
I was so pleased when I heard not only the noble Earl, Lord Longford, but also the noble Lord, Lord Nathan, come out with a practical suggestion on which I prided myself when I was thinking about this speech, and now I have to give it not even second-hand but third-hand to your Lordships. It is the practical suggestion which I take from some figures which were given in that very debate on 5th March 1986 (at col. 220 of the Official Report) by the noble Lord, Lord Glenarthur. He was dealing with estimates of the total income of the charities sector and he said:
"A recent study of a sample of charities suggested that it might be in the range of £4.8 to £7.3 billion—perhaps 2 or 3 per cent. of gross national product".
If the Government continue to give the amount that they are giving now—and your Lordships will find that amount in the report of the Charity Commissioners for the year 1985—which is £5¼ million a year for the running of the whole of the Charity Commission, of which nearly £5 million is taken up by wages, subject only to an inflationary increase, and if there were added to that some sort of annual charge or annual licence fee only chargeable, if you like, at the rate of ½
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per cent. on the income of charities where that income exceeds £100,000, the question of delay would, in my humble judgment, go out of the window. I ask that this suggestion be very definitely considered.
Then what would the Charity Commissioners' department look like? It is all very well—and nobody listens with greater attention to the noble Baroness, Lady Faithfull, than I do—to suggest, as others have done, an outside council consisting of those who have some expertise. It is a suggestion that is worth considering and I admit that at once. But when you start setting up these bodies, which operate outside the main body that is supposed to be administering the charities, you walk into confusion and duplication. Very often the various people concerned do not know whether they are supposed to be doing something or somebody else is supposed to be doing something; possibly they are duplicating their work or possibly the decision ought to be made by the other body and not by them. Why should the Charity Commissioners themselves not be built up to do all these various things?
I now move to the next item of complaint—not enough supervision and abuses. Both those things are true. That emerged from this debate and it emerged from the last debate. Why should there not be departments in a new Charity Commission of such importance as the noble Lord, Lord Glenarthur, described on the last occasion in our national life? Why should there not be a complaints department, why should there not be an accounts department, why should there not be a registration department and why should there not be an advisory department? Why should there not be a commissioner in charge of each one of those departments, with a chief commissioner in charge of the lot? That would mean of course increasing the commissioners to five, as against three as at present, which again I think was a suggestion made by one of the noble Lords who participated in this debate. And, of course, why should there not be speedy computerisation?
I turn quickly to abuse. There is abuse. I know that the noble Lord, Lord Houghton of Sowerby, will forgive me if I say that, far from criticising the BBC, I admire the work it does in collecting moneys for very deserving charities, and I think it does it splendidly. As somebody else said, I do not think that it has to operate very much on somebody like the noble Lord, Lord Houghton of Sowerby, to make him sympathetic. It has a very much more difficult job with other people, but it manages and I am glad that it does.
But the point I make is that there are goodness knows how many charities paying out high salaries, paying out commissions and paying agencies. It is not an agreeable part of our national life that that should be so and it is not fair to the public that it should be so. They give their hard earned money in many cases—sometimes literally the widow's mite—to these causes, and it hurts your Lordships and it hurts me that a great portion very often of that widow's mite goes in so-called administration expenses.
Why should it not be law that in any appeal that is made in writing by any charity in our land—and, indeed, it may have to be any foreign charity appealing for help in our land if it wishes to do it in our land—it

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should have to state the percentage of its annual income spent last year in administration expenses? And the term "administration expenses" should be very tightly defined in any Act of Parliament or regulation made under it.
One thinks in terms not of repeating the debate that we had last March, not of coming out with truisms, arguments and statements that have been uttered in your Lordships' House on this vital national subject, where we deserve, as the noble Baroness said, a lot of praise for the way in which we react by services as well as by money in regard to charity. Practical suggestions have been made. They are thrown at the Minister. We all know that he does not have the right at this moment, short of consultation, to say "This idea is accepted. Thank you so much for giving it to me". What we do ask of the Minister is that he will, in truly sincere terms, tell us that these ideas, abuses, wrongs, delays and some of the points put forward to get over them will he duly considered, not in the customary ministerial use of that term but rather actively considered with a report back to this House at an early date.
5.40 p.m.
The Earl of Caithness: My Lords, I should like to add my gratitude to the noble Lord, Lord Allen of Abbeydale, for once again giving us an opportunity to debate charities. I know these are matters which are close to your Lordships' hearts and it is good of him to give the House the benefit of the wide experience which he brings to these matters. I am also grateful for the very wide range of experience and benefit which other Members of your Lordships' House have been able to bring to this debate this afternoon.
This debate has been interesting and wide-ranging. But behind many of the points which have been made lie two main strands: first, issues concerning charity law, and, secondly, issues concerning the Charity Commission. I should like to take these in turn.
At the risk of making a point which will be thoroughly familiar to many—though some do on occasions forget it—I should like to distinguish between charity law (properly so-called) and law which consists of fiscal provisions aimed at benefiting charities. Charity law has to do with the protection of charitable trusts and the duties of trustees to keep to their trusts' and to the donors' intentions and to ensure that money given to the charity is used for no other purposes than those intended by the donor. Tax and rating concessions—the main ways in which the Government support charities by directing money from the Exchequer into the funds of charitable organisations—are a separate instrument of social policy. It is a fact that if all tax concessions were done away with tomorrow, the work of the Charity Commission in protecting charitable trusts and the interests of donors and in ensuring the perpetuity of trusts could continue unchanged.
The 1986 Budget introduced a number of measures for the benefit of charities which were foreshadowed in last year's debate—in particular payroll giving and tougher measures to check the abuse of charitable status. Although I am conscious of some remaining issues concerning the application of value added tax, it
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is generally and widely accepted in the charity world that the tax concessions for charity introduced by this Government are the most generous ever seen and serve to create a most favourable climate for fundraising.
Every budget that we have introduced has benefited charities. If that causes the noble Lord, Lord Allen of Abbeydale, to stare with horrified gaze, I dread to think what he would do to some measures introduced by a government of a less charitable nature.
The effect of the most recent changes is that one can give money to charities tax free either through the traditional and very popular covenant or, after April 1987, by a regular deduction before tax from payroll. The Government have both shortened the minimum qualifying time for a covenant from seven years to four and increased the originally announced maximum limit for tax-free payroll deductions from £100 to £120 a year. Through these measures, as well as through the concessions we have given for one-off company donations and the like, we have endeavoured to create a steadily improving financial climate to encourage both private and corporate giving.
I should add that this is against a backcloth of steadily increasing support of the charity and voluntary sector by the Government. Through a variety of programmes and the involvement of many government departments, public sector support for charities has increased substantially over recent years—more than 75 per cent. in real terms since 1979–80—and the trend continues. Government grants to charities are now running at over £0·25 billion per annum. This increased public support is, I am glad to say, now being matched by steadily increasing private sector giving. I am sure it is the hope of all of us in this House that the new incentives for giving which we have now made available will continue to sustain this parallel growth of giving by companies and individuals.
One way in which that growth should take place is through payroll giving, which as I have said will become available with effect from April. As my right honourable friend the Chancellor of the Exchequer announced recently when the regulations were laid, employees will be able to donate up to £120 a year—£10 per month—directly to charity and before tax has been deducted. If American experience is anything to go by—and in debates like these we are frequently exhorted to take notice of American experience—payroll giving should open the way to quite considerable sums of new money and new charitable giving.
Turning now to charity law as opposed to the law relating to tax and rates, I am grateful to the noble Lord, Lord Allen, and to my noble friend Lady Faithfull for raising again the working of the 1985 Charities Act. The information we have is that use of its provisions is steady, but perhaps slower than we might have hoped. This means that it may take longer than was originally anticipated before the full effects of the Act are felt.
I was interested to hear the points raised by the noble Lord, Lord Allen, about the 1985 Act and whether its provisions could be extended. I think your Lordships will agree that the 1985 Act is sound in

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principle and may indeed pave the way for further relaxation of cy-près if that is thought desirable. But we will have to leave it a little longer before we can be certain that there are merits in trying to simplify some of the procedures.
As to any more general reform of charity law, we are of course studying the National Council for Voluntary Organisations (NCVO) report on malpractice in fundraising. This was a point raised by many of your Lordships, including the noble Lords, Lord Allen of Abbeydale and Lord Mishcon, and by my noble friend Lady Faithfull. Far from being silent on this report, we have welcomed it warmly. But the House will be aware that the majority of the recommendations are for the voluntary sector itself and do not require government assistance or changes in legislation. At this stage, we are discussing with interested parties how best to give effect to those recommendations which do need legislation. As noble Lords have recognised in this debate, charity legislation is not an easy matter and one should be careful to move, whenever possible, with a clear consensus of opinion. At the moment, this consensus has not yet emerged.
Malpractice in fundraising is only one aspect of abuse of charitable status. There are complex abuses, both connected with tax recovery and the spending of charitable funds, which also require attention. Your Lordships will be pleased to know that, following the arrangements introduced by the Budget for the exchange of information between the Inland Revenue and the Charity Commission, the commission has now established a new investigation unit, with staff with both Charity Commission and Inland Revenue experience, to tackle directly some of those abuses. I am pleased to be able to tell the House about this today and to commend it to your Lordships. I am sure that the noble Lord, Lord Allen, will particularly welcome these new arrangements.
The right reverend Prelate asked whether we might consider the possibility of some religious communities being regarded as charitable. I note the points that he made. However, I know that he will appreciate that there are considerable hazards in the definition of a religious community. Indeed, he alluded to some of those hazards himself. Those difficulties were also mentioned by the noble Lord, Lord Grimond, and the noble and learned Lord, Lord Denning. They relate to the definition of charitable status, in particular of such charities as the Unification Church and similar organisations in general.
My right honourable and learned friend the Attorney-General has challenged whether certain registered charities associated with the Unification Church are entitled to charitable status and has taken these matters to the High Court. The current position is that the Vice-Chancellor has given directions as to evidence that it should be set down for hearing immediately, but the case is not to be heard before November this year. In those circumstances I am sure your Lordships will understand why I can add nothing further to that.
I should say to the noble and learned Lord, Lord Denning, that very few cults are registered as charities in this country. The Scientologists are not a charitable organisation in this country; nor are many others. The
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charitable status of cults is scrutinised very closely and we are not convinced that it is the right time for the review of cults which the noble and learned Lord has suggested. We acknowledge the distress that can be caused by such organisations.
On the approach to charity law reform, which is a difficult subject, perhaps a more attractive course may be to concentrate on the proper regulation of fund raising and possibly on the better definition of the roles and responsibilities of charity trustees. I know that we are not alone in being conscious that we should not press too much change too quickly on to the charity world. It always takes a little time for charities to prepare properly for major change, such as the introduction of payroll giving, and there are distinct benefits in not going too fast.
The noble Lord, Lord Allen of Abbeydale, and the noble Lord, Lord Houghton of Sowerby, asked about the progress we are making in clearing the way for television advertising by charities. Reservations about what would happen to charities, in particular the smaller ones, if television advertising were allowed has been one of the reasons we have wanted in the past to proceed very cautiously. The House may know that the Independent Broadcasting Authority has been conducting a survey of the attitudes of charitable organisations to television advertising.
The question of advertising by charities on television is therefore under close and detailed discussion within the IBA and its statutory committees and among representatives of the charitable organisations. I think it will be some time before the IBA is in a position to decide whether it wishes to make an approach to my right honourable friend the Home Secretary about any relaxation of the current restrictions on charitable advertising. Until that approach is made I really cannot add anything further to what I have said.
My noble friend Lady Faithfull raised the question of the development of community trusts. I confirm that the support will continue for the designated time. As my noble friend will know, there are a number of community trusts which have established themselves without any funds from the Home Office, and it would not be right to interfere with the arrangements for the experimental schemes during this initial phase.
The noble Earl, Lord Longford, asked how we know that money which goes for charitable purposes abroad actually reaches the intended beneficiary and does not get lost on the way. I agree with the noble Earl that this can be difficult, and sometimes there is even the possibility of direct abuse. However, there is a requirement on United Kingdom charities to show that they have taken all reasonable steps to ensure that funds sent abroad are applied for charitable purposes in a way which satisfies both the Inland Revenue and the Charity Commission.
As the House may know, these requirements were strengthened in the last Finance Act. It is too early to say whether we need to do anything more, but we are aware of the problems; and to help us I should be grateful if the noble Earl and any other noble Lord would forward to us any examples of where such abuse is alleged.
The noble Lord, Lord Allen of Abbeydale, raised the suggestion of the possibility of some form of

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probationary registration of charities, and in particular the quesion of a suitors' fund. The noble Lord will appreciate that such a fund involves not only difficult matters of principle but also the provision of funds, and is not something to be embarked upon lightly without giving the matter due thought so that it does not go wrong at a later stage.
I turn now to the important issues raised by all your Lordships about the role, structure and function of the Charity Commission and the resources available to it. I know that this is a matter which is of deep concern to your Lordships' House.
The Charity Commission exists to promote the effective use of charitable resources and it is important that it should be properly resourced and staffed to carry out its statutory and other duties effectively. That is why, in the autumn of last year, when it seemed that real difficulties might arise if the Charity Commission's resources were not increased, we invited Parliament to approve a winter supplementary which raised the money available to the commission. Further increases in planned spending have been included in the Government's expenditure White Paper published earlier this month.
Since 1980 there has been an increase in the resources available to the commission to provide a computer for the official custodian. As the noble Lord, Lord Allen, has reminded the House, the Government properly take a stringent view of all proposals for public expenditure; and for that reason it is vital that the commission should continue to look for ways of improving value for money, taking account not only of the level of spending but the relative priority of the work which is being done, and whether this can be achieved more efficiently.
However, as your Lordships will be well aware, there have been a variety of issues raised about the way in which the commission operates for some time. For instance, we have debated in this House whether there is work of which the commission could be relieved. We have debated whether or not it is desirable for the commission to examine the accounts of all charities. We can hardly believe that it is, but it is a matter which has been raised.
We have debated whether the commission should be differently composed or structured—including the suggestion made again this afternoon by my noble friends Lady Faithfull and Lady Macleod of Borve about an advisory committee; and indeed we have heard the opposite point of view from the noble Lord, Lord Mishcon. We have also discussed the more complex questions of how much of the commission's work in registration should be computerised and the costs which this might involve, particularly in the early stages of conversion and programming
As I am sure your Lordships will appreciate, these are difficult and sometimes technical questions. As the noble Lord, Lord Mishcon, said, there is often an overlap, and indeed some of the suggestions which we have had put to us are contradictory. I am glad to be able to say that progress is being made with some of them. For instance, since we last discussed these matters in your Lordships' House—my noble friend Lady Lane-Fox will be pleased to hear this—computer
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consultants have been working on information technology needs of the commission and the advantages and disadvantages of computerisation.
Other matters, however—and many of these have been raised in the course of today's debate—require very careful thought and analysis. I am therefore pleased to be able to announce to the House today that, not least because of the major resource questions which such issues raise, my right honourable friend the Home Secretary has decided that it is right and timely for there to be a thorough review of the way in which charities are supervised and the roles of the Charity Commission and other bodies in this work. This review, which will take the form of an efficiency scrutiny, will begin shortly.
The noble Lord, Lord Allen of Abbeydale, gently chastised the Government about my noble friend Lord Brabazon of Tara's remark:
"The bird is apt to fly from the nest if too much discussion is taken beforehand".
That remark seems to be vindicated in that I thought I should be the first to announce to the House today such a scrutiny.
I listened with great interest to the suggestion put forward by the noble Lord for a Select Committee of this House on charity matters. That of course is a matter for your Lordships' House and I certainly agree with your Lordships that there is plenty of scope for further review. Whether there is a need for the establishment of another Select Committee will, I am sure, require very careful consideration and I do not think the House would expect me to express a firm view about this today.
I can say, however, that the scrutiny that it has been decided shall be conducted will cover a great many of the matters not only raised by your Lordships today but debated in this House from time to time. It will make recommendations about all aspects of the work of the Charity Commission in relation to the supervision of charities; the adequacy of the resources, including the staff, available to the commission and whether these could be better deployed; the scope and justification for the making of charges for services by the commission or the official custodian—a point raised particularly by the noble Earl, Lord Longford, and the noble Lords, Lord Nathan and Lord Mishcon—and any clarification which may be necessary in the respective roles of the Home Office and the Treasury with regard to the Charity Commissioners. The subject for the scrutineers is deliberately wide-ranging. In short, it will be responsible for looking at virtually anything except for the definitive definition of what is or what is not a charity.
The noble Lord, Lord Grimond, will be pleased to hear that the scrutineer will also be asked to examine and make recommendations upon the way in which charities are supervised in Scotland and Northern Ireland, bearing in mind the interests of the public as beneficiary and donor. When they are available, I will place a copy of the agreed terms of reference in the Library of the House, together with an announcement of the name of the scrutineer.
We are sure that a review of this kind will be helpful to the Charity Commission in planning for the years

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ahead. We are sure that is right, and I am sure that this is very welcome to all sides of your Lordships' House. I am pleased to be able to make this announcement today. It goes without saying that I will be delighted to hear from any noble Lord who wishes to write to me with matters to put to the scrutineer. Therefore, having said that, far from agreeing with the noble Lord, Lord Allen of Abbeydale, and my noble friend Lady Faithfull that nothing ever happens under this Government, I have to say that much has happened; much more will continue to happen, but I do not disagree that there may be more to do on top of that.
The noble Lord, Lord Nathan, broadened the scope of the debate and made some extremely interesting points. I am sure that he will be the first to realise that I am not the person to answer or debate with him some of the points. I will of course make sure that they are passed on to my right honourable friend so that they are taken into account. It may please the noble Lord, Lord Mishcon, to hear that the Inland Revenue has recently reviewed its procedures to minimise delay in considering cases referred to it. This should reduce delay significantly. I hope he will appreciate my sentiment when I say that I hope it has no effect on my term of tenure of office.
Perhaps I may deal quickly with the point raised by the noble Lord, Lord Allen of Abbeydale, about the appointment of a new chief commissioner when Mr. Denis Peach retires. I should like to join him in paying very great tribute to the work of Mr. Peach and I am sure that there will be other opportunities for the House to pay its tributes between now and the end of the year. This is perhaps not the time to talk about the precise arrangements for the new appointment, but I have no doubt that my right honourable friend the Home Secretary will wish to maintain the arrangement adopted before Mr. Peach was appointed, under which a wide field of candidates, by no means all from the Civil Service, were considered. The chief Charity Commissioner is not in any way an appointment confined to the Civil Service.
I cannot end without paying tribute to those who work so long and hard for charities and voluntary bodies. There is a danger when we discuss these matters of looking only at abuse and malpractice and forgetting about the truly magnificent work of honest and hardworking trustees and others who work for charities, so often as volunteers. There was no better speech about this point than that of my noble friend Lady Macleod of Borve.
The debate has been an excellent opportunity for me to tell your Lordships of the progress which has been made since we last debated charities, particularly but not exclusively through the Budget, and of our plans for the future including this important review of the supervision of charities. In common, I am sure, with the whole House, I have every confidence that we shall continue to maintain progress with these issues over the coming year and beyond in this way and we shall underline the Government's commitment to the vital work of sustaining and supporting charitable and voluntary work in this country.
Lord Mishcon: My Lords, before the noble Earl sits down, I wonder whether he would care to
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comment—if he does not I shall understand it—on the suggestion that on their publications and appeals charities should have to state what percentage on their last annual accounts was chargeable to administration expenses. Does he feel that this matter could be reviewed with a view to legislation?
The Earl of Caithness: My Lords, I think that is a very important matter to be looked at and I believe that it would come within the scope of the scrutineer. But if not, I am sure that my right honourable friend will take due note of what the noble Lord says.
Lord Mishcon: I am much obliged.
6.2 p.m.
Lord Allen of Abbeydale: My Lords, in rising to thank the noble Earl and all the others who have taken part in the debate, I think I can justifiably repeat what I said at the beginning. There is no need to apologise for having this debate today less than a year after the previous debate. It has been an extremely interesting and important one. I should like to read very carefully what the Minister said. I do not claim to have taken it all in and I hope that for his part he will read carefully what we and other contributors to the debate have said.
I should like to say—and perhaps I should have said it at the beginning of the debate—that we very much appreciate the tax concessions to charities which have been made in recent times. But that was not the purpose of the debate today. I should like to assure the noble Earl that the adjective I used about the forthcoming Finance Bill was directed at its drafting, not at its content.
Perhaps I may make three brief points on issues that have been raised in the debate. The noble Lord, Lord Mishcon, rightly said that we do not want a definitive definition of charity. This was the point I tried to take. It is a flexible concept which we need to adjust to changing cirumstances. He said that it rested on an Elizabethan statute which has long since been repealed and a judgment of the High Court (if it was the High Court) issued at a time when perhaps there was not the assortment of religions that we have in this country at the moment and when the education system was not quite as it is now. As he pointed out, the law has been built up by judicial decisions thereafter.
The point I was trying to make is that there are not enough of these judicial decisions and that the cost of going to the courts has meant that a number of these very important issues have not been judicially settled. When I was talking about the suitors' fund, it was to that point that I was addressing my mind, and I remind the House that there are precedents both in sex and race legislation.
Secondly, the list of possible changes in the law which I enumerated, with one of which at any rate the noble Lord, Lord Grimond, rather disagreed, was not a list of changes that I think ought to be carried out but of changes that I think ought to be looked at. One or two other suggested changes have been added to that list during the debate. Thirdly, reminding myself as I did earlier that I used to be in the Treasury, I am afraid that the suggestion that fees should be charged is not an answer of itself, because there is no guarantee that

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the Charity Commission would be around to keep the fees that it collected.
I was chairman of the Gaming Board for some years. It was supposed to be self-supporting and it charged pretty healthy fees for licences and so on that it issued. But it was subject to just the same controls over staff as any other government department. I am afraid that that solution is not quite as straightforward as it might appear at first sight, although I certainly agree that it is well worth considering.
On the whole I found the reply of the noble Earl a little disappointing—the 1985 Act operation was still being looked at; the Government were still studying the NCVO report; they were still thinking about religious cults; they were still considering advertising on television; they still saw difficulties about the suitors' fund; and all the rest of it. In regard to the forthcoming review, a great deal seems to rest on the scrutineer.
I do not know quite what to say at the end of the debate. I think it is fair to say that the attitude of the Government and what they have done so far has not received absolutely overwhelming support from those who have taken part in the debate today. It is not a very satisfactory state of affairs. I hate to think that we might have another similar debate in a year's time when we have had the same kind of putting-off replies about matters still being under consideration. I suppose I must leave it on the basis that I hope some thought will be given to the points we have raised and that if there is not much sign of progress we may be able to prod a little here and there by question and perhaps by discussion outside the House.
Although I cannot go away completely satisfied with the Government's reply, I can go away with much appreciation for the support and suggestions which have been forthcoming from all parts of the House. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Rent Control
6.8 p.m.
Lord Harris of High Lord Harris of High Cross rose to call attention to the effects of rent control on unemployment and homelessness; and to move for Papers.
The noble Lord said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. I should like to start by saying that I am grateful to my noble friends for allocating their second Cross-Bench debate to a discussion of what I regard as the evils of rent control. I must emphasise that this does not imply any concerted view on these Benches, though I shall be looking for a certain amount of support from behind me. I think it is appropriate that those of us who enjoy the comparative safety of the Cross-Benches should give a lead in raising an issue that is still unfortunately regarded as a political hot potato
On broad issues of economic analysis and development I have before ventured the view that this House is not sufficiently backward-looking. If we are concerned with conditions favourable to economic
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advance we might learn lessons from the past, when Britain was in the van of progress rather than jostling in the rear. Accordingly, for encouragement and perverse inspiration I sometimes turn to the pages of Cole and Postgate's history book entitled The Common People: 1746 to 1938. I hope that that will inspire some confidence on the Labour Benches.
The authors of course provide a strictly socialist interpretation of the transformation which we loosely call the Industrial Revolution and which shows no sign, even today, of slackening. If I were asked what was the characteristic most essential for changes that were to liberate the common people from centuries of grinding poverty, I might as a first approximation offer a single word—mobility. Certainly without occupational and geographical mobility in human resources the new mechanical contrivances could not have yielded their full fruit.
Industrially, before the transformation, Cole and Postgate say:
"England was still hollow—a circumference of activity surrounding a central area which lived largely by self-subsistent agriculture".
The density of the population was then dictated largely by the location of the woollen industry and access to seaborne trade. In 1750, outside London only Bristol and perhaps Norwich might rank in population as major towns well ahead of Manchester, Liverpool, Birmingham and the rest. Indeed, on Cole and Postgate's showing Norfolk was exceeded in population only by Middlesex, Yorkshire and Devonshire. The growth of new industry and of employment therefore depended not only on the multiplication of population but on its migration from farming to industry, from countryside to the towns, and from the South and the East to the North and the West.
My entire case in this debate is that the past transformation of wealth and standards of living would have been totally frustrated if some well-meaning 18th century crackpot had hit on the disastrous notion of controlling rents, let alone obstructing new building in deference to town and country planning regulations. Today we are faced with the urgency of a shift, not so much from agriculture to industry but from old industry to new industry and from the traditional localised manufacture of goods to the more widely dispersed provision of services—not perhaps from the South and East to the North and the West but more likely the other way.
Once again I believe mobility of labour is required to adapt to new and emerging opportunities, yet movement is severely restricted by a host of policies, including uniform national wage rates and planning restrictions. However, prominent among the obstacles to mobility is the distortion and destruction of a flexible housing market to accommodate the changing and diverse needs of our enlarged population.
There can surely be less dispute today that rent control has been the chief source of the mischief that now afflicts hundreds of thousands of homeless and others who are frozen in unemployment by the inability to move to where jobs that they could do are going begging. It was, after all, the original impact of rent control in 1915 that caused the shortage of homes

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which appeared to justify the building of millions of council houses. It was subsidised council house rents that then became a further brake on people moving home. Moreover, it was the discouragment of house building for rent, reinforced by tax incentives, that led millions more to become owner-occupiers rather than enjoying the flexibility, convenience and choice of remaining tenants at least for some part of their family and working lives.
It is true that professional economists are known to disagree on many issues of policy, although I notice a widening measure of support for market propositions even in recent Fabian tracts, in the speeches of Mr. Roy Hattersley and in the less sensational pages of recent copies of the New Statesman. But I think I can say—as I heard the noble Lord, Lord Robbins, say in this House—that there are few questions on which economists are more unanimous than the evil effects of rent control. As so often is the case, social and economic objectives are in total conflict. After all, rent control is only the application of price control to housing. All price control has what economists call an income effect and also an incentive effect. The income effect refers to the socially desirable result of raising the real income of the consumer or tenant by keeping the price or rent lower than it would otherwise be.
However, the lower price or rent simultaneously and inevitably has an incentive effect which is economically undesirable. For example, a married couple whose children have left home have less incentive to economise in accommodation by moving to a smaller house or flat so long as they have security of tenure at a controlled rent; and so we can predict that rent control will increase the demand for accommodation.
More seriously, at the same time the incentive effect on the landlord of a lower rent operates to reduce the supply of rented accommodation. This may come about by waiting for a protected tenant to die or offering him a cash inducement to quit so that the house can be taken out of renting and sold for the market price to an owner-occupier. Reduced supply has also come about by the decay of property on which the controlled rent, particularly in the days of high inflation, afforded the landlord an income wholly insufficient to cover the cost of repair and maintenance of the property. Even when the rent is closer to the market price, security of tenure imposes a cost on the landlord.
It follows that rent control, introduced for wholly benevolent and social reasons, inevitably has had malignant economic consequences. By increasing demand and reducing supply the politicians have themselves created the famous housing shortage. They have then exploited the resultant distress to indulge in such further mischief as the indiscriminate subsidy of council housing, the costly inducement of owner-occupation for people who would prefer the option of renting and the politically profitable confiscation by leasehold enfranchisement. All these expediencies would become unnecessary if party men would separate the social from the economic aspects of policy by allowing housing to reflect market prices and rents while topping up low incomes to enable the poor to pay.
It must be said from these Benches that all parties have contributed over seven decades to the unholy muddle and mischief which is dignified by the name of housing policy. It gives me no satisfaction to say that the Labour Party has come to play the most obstructive part by meeting every call for reform with the threat to restore full control if it is ever again in government. It thereby frightens off new building and renovation to rent by investors who think the political risk is a possibility, however remote. I look forward to hearing the noble Lord, Lord Winstanley, since if only the Social Democrats and even the Liberals would take courage to support this Government as a start in freeing new lettings from rent control, the Labour Party's electoral bluff would be called and its palsied veto on progress would go the way of Clause 4.
The Labour Party attempted to discredit the last effort on relaxation by a Conservative Government by blaming them for Rachmanism. I have spent a great deal of time rummaging through old newpaper clippings in order to establish an accurate view of that matter. I offer two clippings. One is from the Observer, which in July 1963, at the time of that controversy, said:
"For the Rachmans of this world, rent restrictions and controls—the solution advocated by the Labour Party—are not so much an obstacle as an opportunity.".
I then turned to my favourite journal, the Economist, and I offer your Lordships a quotation from 27th July 1963:
"Where the solution cannot lie is in Mr. Wilson's repeated promise that a Labour government would restore and re-expand rent controls".
It continues:
"the re-extension of rent control would extend the area in which Rachmanism would again thrive".
The gap between the controlled depressed rent and the market value of the premises without control provides the temptation even today for harsh or unscrupulous landlords to attempt to resort to efforts of eviction, against which, I am glad to say, the law is fairly strongly established.
I do not attach great weight to such precise statistics as 100,000 homeless, 1 million crude surplus of empty dwellings and perhaps 300,000 job vacancies in areas where housing is not available. But I have no doubt that a major reduction in homelessness and unemployment will be longer delayed unless we tackle the rigidity of rent control to encourage the provision of homes where people want to work and live.
So long as control in its present form survives, the form of rented accommodation most convenient to young people, to itinerant individual workers and to mobile families will continue its tragic decline. The Government would then be drawn still deeper into the swamp, with mounting costs in council house-building that might hardly dent the housing lists and would certainly not cater for the short-term needs of people moving in search of work.
Meanwhile, the very success of the Government's policy in selling off 1 million council houses has further reduced the total supply of rented accommodation from 44 per cent. in 1980 to 39 per cent. of the present housing stock, compared with well above 70 per cent. in 1950 and, in many European countries,

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typically 45 or 60 per cent. of all houses rented through the private sector.
I salute the courage of the present Minister, Mr. John Patten, in opening up the debate on the issue, and I look forward to hearing what measures the Government have in mind for the next session, which may turn out to be their next term of office.
6.23 p.m.
Baroness Macleod of Borve: My Lords, I am most grateful, as I am sure are other noble Lords, to have the opportunity to discuss this important subject, which is led in the usual brilliant manner of the noble Lord, Lord Hams of High Cross. I wish that I could emulate his brilliance. I shall not take very long and therefore will not bore your Lordships for too long.
I agree with the noble Lord that housing is one of the top priorities that we have to face today. It is of course part of the whole problem of homelessness and unemployment. I think that the wording of the Motion is very apposite. The Rent Act and the restriction of rent control therefore play a vital part in both these problems. For the unemployed, for instance, moving house from one area to a job in another is a great problem not only for the man and his wife but for the family. Needless to say, it is unwise to sell a home and move a family until the job is secure. Rented property for a short time is therefore essential.
I have heard that in Buckinghamshire, where a large number of jobs are going, it is difficult to find enough people to fill the jobs, and employers are going up North and bringing people down from the North to fill the vacancies. The tragedy is that there are no homes, there is no accommodation, to be rented or bought. As I have said, anyone coming to a temporary job obviously needs to rent rather than to buy as a first possibility. What they are doing now in my view is tragic. They are bussing home every Friday night and bussing back again on Sunday. What sort of family life is that? I think that something must be done.
I took part in the debate not only because I feel strongly on the subject but because I read the Written Answer that my noble friend Lord Skelmersdale gave to a question posed by my noble friend Lord Colwyn on 13th January.
At col. 542 of Hansard my noble friend Lord Colwyn asked Her Majesty's Government:
"Whether they will take any further steps to improve the prospects for the private rented sector, especially in London".
As we are talking about London, I hope that noble Lords will not mind if I read the second paragraph of the reply by the noble Lord, Lord Skelmersdale. With reference to the Rent Act order that he was then seeking to bring into force, and of which, so far as I know, very few people have taken note, he said:
"The second order amends the Housing Act 1980 so as to remove the requirement on a landlord in the Greater London area who is letting a property under shorthold to register a fair rent for the property. This requirement was abolished in 1981 for properties outside the Greater London area. It will still be open to either landlord or tenant for a property let on a shorthold in the Greater London area to apply for a fair rent to be registered. I hope this will encourage owners keeping property empty in London to now let it secure in the knowledge that they will be able to obtain vacant possession".
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There has, I think, been a great deal of confusion, which I hope the Answer I have read clears up. I believe that it will help, as I gather from the department it has done in the country. I hope also that it will make more properties available for rent in Greater London. I know that the Rent Act does not cover lodgings, but lodgings have always been part of the housing of those going from job to job.
I ask the Government to encourage people once again to have rooms in their houses to rent as lodgings to, say, people without families and young people who have just got jobs. It was easy to obtain that sort of accommodation before the war. It is not easy now because the owners of the property are worried that they cannot get rid of the tenants. However, I understand that if the owner of the property gives the tenant one good meal a day, that is sufficient for it to be called board and lodging, and he can get rid of the tenant.
I must add one warning. In society today many widows who are unfortunately left alone have one or two bedrooms, and would like extra money and some company. I must warn every widow that should she take a man into her household, for what may be the best of reasons, she will probably lose her widow's pension because it will be thought that they are cohabiting, despite the fact that she may be a widow of 75 and the man a young man of 21. Many such cases have been brought to my attention by the National Association of Widows.
However, that apart, I am very pleased that the noble Lord, Lord Harris, has initiated this debate tonight and I wish him well.
6.30 p.m.
Lord Stallard: My Lords, I too should like to begin by congratulating the noble Lord, Lord Harris, on initiating this debate and giving us his interesting and frank opening remarks. It is not the first time that he and many other Members of your Lordships' House have debated this crucial domestic question and I dare say it will not be the last.
The arguments about rent control and the reasons for and against have gone on ever since the question was first introduced in 1915. Having listened to the noble Lord's opening remarks, I think that we are probably further away from a consensus now than we were then. He will not be surprised—and it would not be fair if I did not tell him so—that I am almost totally diametrically opposed to everything that he has said on the question of rents. Nor do I agree with his interpretation of the history of Rachmanism.
It was a period through which I lived and worked as a local councillor and I saw the effects of the policy that he glossed over. I wonder what the people who suffered under that policy would say if they could hear how lightly it has been treated by the noble Lord, Lord Harris, this evening. I speak for myself only at this moment but I think that there is a gap between the noble Lord and me which is far too wide for a short debate of this nature to do anything to close.
I ought to say at the beginning that the Labour Party, which I and others on these Benches support and represent, has always supported the case for rent control in one form or another. We have pledged that

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after the next election and the return of a Labour Government in a few months' time we shall strengthen rent control and security of tenure for all tenants. We shall also lay down in the private sector minimum standards which, if they are not met, will give tenants the right to require a nominated housing association, or in some cases a local authority, to buy out the existing landlord.
We shall also give tenants the legal right to temporary accommodation when repairs or improvements are being carried out, thus preventing the practice of some unscrupulous landlords who winkle out secure tenants—and my recollection goes back to only a few weeks ago when we again experienced the effects of Rachmanism. It will be a legal right to give such tenants security and the certainty of knowing that they will be able to move back into their homes.
Those who have read the true history of Rachmanism will understand the necessity for such a legal right to protect them against harassment. Anyone who experienced Rachmanism in the 1960s and 1970s will readily appreciate the need for such a legal right, because Rachmanism is far from dead. The practice still continues. I have seen instances of it in the London boroughs and read of cases in the local press only recently. It concerns mainly elderly people who are the most vulnerable individuals to this kind of situation because many of them are long-standing rent-controlled tenants. They are very vulnerable to the kind of harassment that one became used to in the days of Rachmanism. Cases are still occurring; they are being reported and mentioned in the other place.
On the other hand, as we know, the Conservative Party—and the Government—are pledged to the total abolition of rent control. They are not saying when they intend to do it. In fact, they have said the opposite. They have said that it will not happen during the lifetime of this Parliament but during that of the next. When I recall the effects of Rachmanism and its impact on the Tory vote in the 1964 general election it is certainly not difficult to understand why they do not wish to undertake such a course before the next election, as it would certainly have the same effect.
The fact that they are toying with the idea of initiating debates in both Chambers and in other places outside the Houses of Parliament in order to push the concept of total decontrol and deregulation will still have the same effect. Indeed, at this moment the Government are preparing the ground for total deregulation probably in order to satisfy their activists and to make it easier to tackle this question after the election.
The noble Baroness who spoke before me mentioned one of the statutory instruments that have recently been announced by the Minister of State. I shall cite two statutory instruments as an example of the move toward deregulation. The first one will abolish phased introduction of higher rents awarded by the rent officer, and the second will abolish the duty to register a fair rent in advance on shorthold tenancies in Greater London.
The arguments put forward by the Minister for these two measures are these. As regards phasing, the Minister has said that because inflation has fallen to
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such a low level there is no longer any justification for delaying full payment of any increase when it is awarded. However, the facts do not bear out this argument. In recent years the retail price index has hovered around the 5 per cent. to 7 per cent. mark but housing costs have increased quite dramatically above the RPI. In the first six months of 1986 they increased by 17 per cent. and there are examples of items increased by 100 per cent. How then is it possible to say that inflation is so low that a rent increase can be afforded in one bang instead of two when there have been increases of the kind that I have just mentioned?
We also know that included among private tenants are many of the poorer sections of the community. A lot of older people are private tenants, as are many parents with young families. In London in 1984, which is the latest period for which I have been able to obtain figures, nearly 40 per cent. of privately rented households consisted of pensioners. Moreover, 90 per cent. of new lettings were to adult sharers, such as students who rely mainly on grants. Many private tenants are not eligible for housing benefit where it exists. Certainly most students are not eligible; nor are pensioners with a small occupational pension; nor low paid part-time workers, who are often single men and women. All these people are vulnerable.
The effect of the policy as it is outlined in these two statutory instruments will be that private tenants will be forced to pay the full increase from the date of registration rather than half the increase in the first year and the rest in the second year, as would happen if matters remained as they are now. In my view it will inevitably lead to more rent arrears, which in turn will lead to more evictions and homelessness. I do not need a history book to tell me that. I have lived all my life in such circumstances and I know that that is the effect of such a policy.
The proposals for shortholds in Greater London amount as of now to effective decontrol of shorthold tenancies in London. Tenants will have to pay more rent—in many cases much more than they are able to afford—which will lead to more arrears, more evictions and more homelessness. There is no argument about it, and it should be perfectly obvious to people who live in the real world that exists outside this goldfish bowl.
Support for my argument can be found in a recent comment on these two statutory instruments made by the spokesman of Shelter, who said:
"These proposals mark the beginning of a new round of Government attacks on private tenants' rights. Private tenants should be in no doubt that these changes are calculated to be the first in a series of body punches which will culminate in the complete removal of rent regulation, and for new lettings the complete removal of security of tenure".
The Organisation for Private Tenants said:
"This measure"—
that is, shortholds and the statutory instrument to which I referred—
"will simply erode the rights of private tenants, and will do nothing to reverse the contraction of the private rented sector in London. Rapidly spiralling property prices will still make sale into owner occupation considerably more lucrative than rental. Reduced tenancy rights will merely speed up the process."
Those are the facts.
The last major attempt, which the noble Lord, Lord Harris, mentioned, to end control after the Second

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World War was the Rent Act 1957. The Government argued then as they do now, and as the noble Lord did this evening, that decontrol would increase the supply of housing for rent, thus reducing homelessness. The facts do not bear out those assertions, because the Act hastened the loss of privately owned dwellings as landlords sold. I witnessed that thousands of times. They sold into owner-occupation. That was often done after receiving local authority grants to convert a property into self-contained units. That made the sale lucrative.
When I tried to introduce a Bill on improvement grants in the other place, I quoted example after example of tremendous increases in prices. Houses that had been bought for £4,500 were sold suddenly, after a tatty conversion, for £112,000 in the area I represented. It is always much more lucrative to sell to private owners than to improve dwellings or put them on the market for rent. That has not changed much. In parts of London it has become worse. We are not now talking about £120,000; we are talking about £300,000, £400,000 or £500,000 for a property. I should be happy to send the noble Lord, Lord Harris, copies of advertisements in my local newspapers from which he will see what obtains in London.
In 1956, before the Rent Act 1957 came into force, there were 6.5 million private rented dwellings. In 1961, four years after the introduction of that Act, there were 5 million. That is a reduction of 1.5 million. That was the Act which was to increase the availability of rented accommodation. It did nothing of the kind. No extra dwellings were forthcoming. On the contrary, they disappeared. The 1957 Act started and led to the biggest increase in homelessness that we have seen this century. It led to misery and unjustice for many private tenants and to Rachman, the most evil perpetrator of harassment.
Much more has been written about that period than the quotations given by the noble Lord. My God, books have been written about it. If he cannot find a book, I should be quite happy to sit down for half an hour and give him a verbatim report of what happened in those days. So great was the public concern that the Government were forced to set up the Milner Holland Committee to inquire into all aspects of housing in London. The Milner Holland report on London found:
"in areas of shortage such as London and the South East there was evidence of very high rents and evidence of abuses against tenants which could not be dismissed as isolated or insignificant."
He went on to argue for the retention of a form of rent control.
Other reports reached similar conclusions. There was widespread agreement about statistics to support the fact that decontrol and high rents had increased homelessness and dramatically reduced the availability of homes for rent. The present state where thousands of our people are living in bed and breakfast accommodation or worse is directly related to the 1957 Act and policies followed since 1979. It is not related to rent control. From the statistics, we know that in 1977 out of 550,000 empty properties in private ownership only between 8,000 and 30,000 could be said to be empty for any reason connected with the Rent Acts.
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I do not think that the noble Lord has produced evidence to back up his case on the first part of his Motion. On the second part of his Motion, relating to mobility, the noble Lord said that he thinks the ending of control would improve mobility. That is a fairy tale. It is impossible. Exactly the opposite would happen. What he suggests cannot happen. At one stage he seemed to be talking about government direction of mobility from the centre which would force people to move if they were living in one room too many. A worker must not have a spare room for friends; if he has a spare room, he should give it up because it is too much for ordinary folk to have; it is too much to have a two-bedroom flat for only a man and his wife.
For most people, mobility is a matter of choice. We want it to remain like that. It should not be at the whim of landlords or governments. Within reason, there should be choice. That principle is accepted in most other areas of housing.
It is ironical that a government who extended security of tenure to council and housing association tenants in 1980 intend to take it away from private tenants, if we go through with total deregulation. New tenants are often old ones moving into different homes, so the suggestion that the proposal will apply to new tenancies only will not make much difference. In industrial terms, insecurity of tenure amounts to unfair dismissal for a tenant. The people involved treat it just as seriously as we treat that matter.
I have heard nothing so far in this debate—I shall listen carefully to the rest of it—or in recent statements by the Minister and others that does anything but strengthen my view that the abolition of rent control, as envisaged by the noble Lord and government supporters, will be a disaster for thousands of old people. It will contribute nothing to the solution of our most serious domestic problem. It will lead to confrontation and hardship the like of which we have not seen since the 1950 rent riots.
I hope that we will debate this matter again soon, perhaps when we receive the report of the present major review into all aspects of housing. That may be a better time to discuss this matter in more detail and at greater length than we can tonight. In the meantime, I hope that we will think twice before we embark on the road outlined by the noble Lord.
6.48 p.m.
Lord Winstanley: My Lords, the noble Lord, Lord Harris of High Cross, has introduced a desperately important subject, and one of great complexity. Listening to him, I felt at times that I was listening to the Secretary of State for the Environment Mr. Nicholas Ridley, because their views seem so alike in so many ways. In fairness to Mr. Ridley, the last time I read one of his speeches on this subject it was one he made to the Institute of Housing conference on 13th June last. It seemed that Mr. Ridley covered his tracks and guarded his escape route rather better than the noble Lord, Lord Harris, has. Mr. Ridley said:
"If rents were set at market levels and there were a large number of landlords, both public and private, with a large number of properties, then a market could emerge which could clear itself at a competitive price".
There are a great many ifs and buts there. I hope that at the end of the debate we shall hear a little more

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about the ifs and the buts. If we do no more than merely remove rent controls, we are likely merely to redistribute the limited existing stock of homes for rent to those with greater market power, while other tenants will end up more poorly housed than they are today.
At least it seems that at long last the Government's sole housing policy is no longer an increase in the percentage of home owners. That is welcome. Home ownership has now reached 64 per cent., higher than in any comparable European country. I think that it is approaching saturation point. There are signs that the Government have recognised that the principal housing need today is for homes to rent. That is wise. I think that that is a view shared by noble Lords in all parts of the House. Whatever reservations they may have about the dangers of private sector rented accommodation, it is nevertheless accepted that the real need today is for more homes to rent. Where are they to come from? That is the problem. The existing provision of rented accommodation comes from many sources. It comes from local authority housing departments, housing associations, private landlords and to a limited extent from other agencies such as housing co-operatives.
It seems to me that a variety of provisions is desirable since it increases freedom of choice for the tenant. Therefore, which of the existing providers—or what new agencies—can do what is required? I think we must accept the melancholy fact that local authorities are not widely perceived as being good landlords. For one thing, they are far too large. They became much larger with local government reorganisation, and very large organisations tend to be remote and excessively bureaucratic. In addition, there are special problems in the metropolitan areas where housing has remained, as perhaps in the Greater Manchester area, the business of the city council. Indeed that particular city council has overspill housing estates many miles away from the city. Therefore, in a sense, local democracy ceases because the councillor for whom the person votes if he lives in an overspill Manchester City housing estate in Hattersley or Marple is not a councillor on the housing authority responsible for his house. I think that there are very great difficulties there.
In addition, many have found local authorities to have a tendency towards being authoritarian as landlords. I have often found experience of that. It is a melancholy fact that the person or the family most likely to get to the top of the local authority housing list is not always the person or the family in most desperate need; it is very often the person or family who makes life intolerable for the people in the housing department. The size of the organisation tends to lead to that kind of problem.
I had some experience of authoritarianism some years ago with the rent books of 17 different local authority housing departments in the North-West of England. I recall a television programme with the late Professor Harry Street, whom many noble Lords will remember as an almost perpetual Royal Commissioner and perhaps the outstanding authority on the common law in Britain. He went through the conditions in the rent books of 17 housing authority
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areas in the North-West of England. When looking through the different sections he said: "That is illegal; that is unenforceable; that is all right", and so on. As a result, the housing authorities withdrew all those rent books and each and every one of them was rewritten to remove provisions which were, frankly, ultra vires and perhaps an intolerable infringement of the ordinary rights of ordinary tenants. Therefore, I am not immensely happy about looking for a vast increase in rented accommodation from local authorities.
Where else should we look? Perhaps we should look at building societies. I mentioned in an earlier debate that now that we have removed some of the restrictions from the building societies we can perhaps hope that they will revert to what they were originally set up to do; namely to build houses. I should like to see some of the building societies building some houses to rent. I have heard rumours that theAbbey National Building Society is considering doing that. However, before building societies make progress in that direction they will need to have consultations with the Government so that the Government can in some way target a part of the subsidies which go to housing towards that source so that the societies can get on with the job.
I should like to see as much assistance as possible going to housing associations, which, because they are smaller and closer to the people who depend upon them, are in many ways more accountable. I should like to see not only more housing co-operatives, but also those housing co-operatives being given more assistance.
As regards private landlords, let us accept the fact that there are no subsidies for private landlords. If there are to be subsidies for private landlords then there must be strings attached. I am not saying here and now what kind of strings, but if we are to expect private landlords to provide more houses to rent at rents which people seeking them can possibly pay, then the Government must give a great deal of thought to the whole question of housing finance.
I should like to move on to the question of how people are to pay their rents. That is one of the problems, and the time is coming when we must get rid of the extraordinary bureaucratic muddle of our present system of housing benefits, which nobody fully understands. They result in people being subjected to an intolerable kind of catechism on all aspects of their life and financial considerations. I believe that we must have modifications there.
I recollect that the National Federation of Housing Associations, which looked at the matter very carefully, took the view that all housing subsidies, including tax relief, should be phased out. That would mean that the housing costs of council tenants and mortgagors would be higher and the householders (whatever the tenure) would be protected, if their circumstances required it, by what the inquiry called a "needs-related housing allowance"—in other words, a housing benefit of some kind.
Even then there would be problems. In 1980, before the recent steep rise in house prices, about 45 per cent. of council tenants were unable to pay their rents without the help of rent rebates or supplementary benefit. I believe that the proportion is now 70 per

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cent. If rents are to be further increased, as is inevitable if there is to be more building but no housing subsidies, even more tenants, council or private, will be unable to pay their rents without still more help. If rents, instead of merely covering costs, are to be based on the current capital value of the dwelling, they will be higher still, as will the bill for housing benefits in some form.
The question arises: can there be any logic in rent levels which few tenants, if any, will be able to pay? Unfortunately that seems to be the unavoidable result of unsubsidised rents. Subsidies for rented housing are inescapable and are certainly a lesser evil than no subsidies if that means rents which have no relationship whatever to the rent-paying capacity of those living or seeking to live in those houses.
I take the view that we should adopt a housing allowance which would not be needs-related at all but paid as of right to all householders, like child benefits or old age pensions, with the tax system amended so that the Exchequer would recover the cost where the allowance was not needed. A system of that kind has considerable merits and warrants examination. However, whatever the system of income support, no part of the cost should fall on the locality. It should be borne by the community at large, through an income support subsidy from the Exchequer.
I should like to return for a moment to the precise terms of the Motion of the noble Lord, Lord Harris, which refers to:
"the effects of rent control on unemployment and homelessness".
The link between rent controls and homelessness is of course inescapable and the problems of homelessness are immense. They have been mentioned over and over again in your Lordships' House. In answer to a Question which I tabled, the Government accepted that last year there were 110,000 families homeless in England and Wales, not counting Scotland. That figure is clearly an underestimate if we add to it the very large number of single homeless who are not included in it.
However, the link with unemployment is a little more tenuous. Noble Lords will remember that in our recent debate on the gulf between North and South it was made clear by many noble Lords that while the cost of accommodation remains so very high it has become impossible in London for health authorities to recruit nurses with the necessary qualities or for schools to recruit graduate teachers.
In general, it is a fact that those with jobs to go to seek houses to own rather than to rent. It is right as the noble Baroness, Lady Macleod of Borve, said, that there are young people who want houses to rent when seeking jobs which may be temporary. However, in general those seeking rented accommodation are the elderly with, on the whole, low incomes, and young, mobile people. I say "mobile" because they have nowhere to work, often because they have nowhere to live. We now have housing rules and board and lodging arrangements which compel them to be mobile, and rather more mobile than I think is socially desirable.
I seek some answers at the end of this debate and I am sure that we shall be given some of them by the noble Baroness. I know that she is familiar with some of the housing problems on Merseyside. We heard Mr.
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Patten saying loud and clear that we wanted "the right to rent". With the right to rent must go a right to be able to pay the rent, and I should like to hear a little more about that at the end of this debate.
Two of the main problems facing our nation today are; first, homelessness, which is a national disgrace, and, secondly, personal indebtedness. The two are very closely linked. We shall not solve one without solving the other. I hope that we solve both of those problems.
7 p.m.
Lord Seebohm: My Lords, I am delighted that the noble Lord, Lord Harris of High Cross, introduced this particular subject because I believe that bad government policy in rent restriction and in housing policy generally since the war has done as much damage to the social structure of this country as any other actions that have been taken. I do not believe that noble Lords will disagree that now there is an enormous need for rented accommodation. Anything that can be done to remedy the situation is desirable and must be looked at very carefully.
There are three categories which interest me most. The first is housing for the elderly, the second housing for the homeless and the third housing for the mobility of labour. I am not going to speak about the elderly because there are many pressure groups—Age Concern, Help the Aged and many other organisations—which are making the urgency and the need for more rented accommodation for old people so obvious that there is no great necessity for me to stress that matter tonight. Mobility has been dealt with already. Therefore, I am going to concentrate my remarks on the issue of homelessness.
There have been many debates during the last year or two on housing. We had long debates on the Scarman Report and on the Duke of Edinburgh's Report, and there have been Questions in your Lordships' House concerning this matter. I am still astonished at the lack of an adequate response from the Government to all the completely conclusive arguments concerning the state of the nation's housing.
The PSI (Policy Studies Institute), of which I had the honour to be president, has just produced a very interesting survey which I received last week called Supplementary Benefit Board and Lodging Payments. The last sentence of the report states:
"It is agreed on all sides that the real solution to these problems does not lie in supplementary benefit payments but in the availability of accommodation for single people. A sufficient supply of independent bedsitters or flatlets, supplemented by cheap private lodgings and hostels, would make the present expensive arrangements to put claimants up in bed and breakfast hotels entirely unnecessary.".
Being a money man I am going to talk about figures and the financing of houses, although I shall not bore the House with many figures. The first figure I wish to give from the latest report I have shows that in 1985 the DHSS handed out approximately £400 million for bed and breakfast and lodgings. From rough calculations I believe that for approximately half a billion pounds (£500 million) it is possible to build a mass of small flatlets and accommodation and to improve what is at present old and inadequate

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accommodation. This would solve half the problems. It is quite ridiculous to continue spending a fantastic sum every year for board and lodgings when for a little capital expenditure it is possible to put a great deal of this problem right.
I have done some more calculations which I believe to be reasonably accurate. It is not possible in the South of England to build a small house adequate for modern standards which could be let commercially at under £100 per week. This is going to put a stopper on the building of new houses. But a single person in board and lodgings is given a grant of £55 per week, and so two single people occupying a house together would save the country money.
I have some figures which illustrate the point better than that. These are figures which were produced by the DHSS in April of this year. They show that for a couple with two children board and lodgings costs £10,800 per annum. It is possible to build a house for approximately £50,000, and if one considers the modern interest rate on the amount that the local authority would have to borrow, it would cost only £6,000 per year. This illustrates a saving when building a house of £4,740 for every family that has two children. These figures have been carefully worked out. This is fantastic.
Using the same figures, one sees that the saving for a couple is approximately £1,390; for single people it is roughly all square. But many single people would not necessarily have to live in a house. If hostels and flatlets were built at least two people could share a room. At university one used to do that and I imagine that young people today can do the same. It is going to cost very much less. There is absolutely no argument whatever that capital, and not an exorbitant amount, should be spent as quickly as possible to cure homelessness. It can be done.
What I cannot understand is why the Government refuse to spend this money, a lot of which is available but is being blocked. The local authorities have the money. But if the Government can get billions of pounds from the public through the privatisation of British Oil, British Telecom and British Gas, which apparently is to be given back to them in taxation, a housing loan or something of that nature, which could be advertised with as much publicity as they gave Sid, would be willingly subscribed by everybody. It would not come out of the PSBR. It would not be produced by the banks and the Treasury. It would be just like the money that was raised for buying British Gas. At the end of the day one would end up with some genuine assets on the ground and not just added personal expenditure. I cannot see the argument against that. I hope that the noble Baroness, Lady Hooper, will tell me the answer in her reply.
One of the biggest sources we can now encourage for rented accommodation is housing associations. It is absolutely criminal that we have stopped giving adequate money to the housing associations, which can be supervised by the National Federation of Housing and subject to the Housing Corporation. Such associations can be properly supervised and managed. This is probably one of the best possible ways of getting housing.
The other point I wished to raise is this. I listened with great care to the noble Lord, Lord Stallard, and
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never once in his speech did he talk about building more houses. If you build an adequate number of houses, every argument he made falls flat on its face. I return to the same point. We could build more houses; we must build more houses. If we do not take the steps necessary to see that within reason everybody in this country has a dry and warm home, we are not a caring society.
7.8 p.m.
Lord Marsh: My Lords, I should like to add my thanks to the noble Lord, Lord Harris, for introducing the debate. It is an extremely important and very clear issue. In a short debate, we cannot conceivably discuss the complexities of the various different solutions that may be suggested. What we are faced with is a clear difference of principle. The noble Lord, Lord Stallard, stated his party's policy clearly and with total sincerity. There is no compromise with the principles behind the policy, as I think he would agree. We are actually talking of a fundamental difference of approach.
I should like to confine my remarks to the relationship, as I see it, between the effect of the Rent Acts and unemployment. I listened with surprise and amazement to some of the remarks made by the noble Lord, Lord Winstanley. To suggest that this is not a major problem in the area of unemployment, because the unemployed, when they are fortunate enough to find a job, prefer to purchase property, I find amazing. When semi-skilled or unskilled workers have been unemployed for a year or two, relatively few of them can put together the £6,000 or £7,000 in deposit and legal fees required for even a very cheap small house. The Rent Acts have an adverse impact upon the unemployed.
In my view the policies outlined so clearly by the noble Lord, Lord Stallard, would harm those he seeks to protect more than anybody else. To put it bluntly, no one in his right mind would let private property on the conditions he has outlined. That is the problem that we have faced over recent years.
Every so often, a politician, in the course of thousands of speeches, makes one comment—sometimes a good one, sometimes a bad one—which is linked for ever after to his or her name. We can go through the list: "The wind of change"; "You've never had it so good"; "Rivers of blood". Those are just a few examples, and most Members present could indentify the authors.
And so with Mr. Norman Tebbit, a man who, despite herculean efforts to demonstrate a sensitive and lovable personality (a sort of Bishop of Durham with a short back and sides) will always be remembered, whatever else he says or does, as the man who told the unemployed to get on their bikes, as his father had done, and look for a job. It was a comment seen by many people of all parties as callous in the extreme.
However, to many of us, with the same background and from the same generation, it was a perfectly understandable remark in the context in which it was made. It was out of date at the time it was made. But it was understandable because it referred to the experience of hundreds of thousands of the pre-war unemployed who did exactly that.

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My father left Swindon in the 1930s and eventually found work and re-established his family in the south east of London. How did he do it? Because, while there was poverty on a scale unknown today, there was an abundance of low-cost accommodation to rent through out the land. It is not a question of the North and the South. Men cannot look for jobs even in the next county unless there is somewhere they can take their families to live. That is the position for people of every level.
Many in this House, as children, took it as perfectly normal that we should be brought up in rented accommodation in private houses that we sometimes shared with another family—at no great hardship—and subsequently took over, later even owning our own house. Today, however, outside the public sector, there is no rented accommodation available to the ordinary working man. I repeat my disagreement with the noble Lord, Lord Winstanley. At least a contributory factor has been the spiralling price of housing accommodation which increasingly takes privately-owned houses way out of the reach of the ordinary common man.
The irony is, of course, that some will say, "We have the public sector". There, however, one encounters the paradoxical situation that before one can qualify for a council house one has to live in the area. The council will not normally produce council accommodation for somebody who does not live in the area.
We have achieved the unenviable and lunatic distinction of being one of the few countries in Europe where the unemployed cannot move to other areas where work is available and where it is known that there are vacancies, because, with the best of motives, we have legislated the only accommodation they could afford out of existence.
What is even worse, as so often happens when governments decide to solve fundamental problems, we did it by accident. It was done for the best of motives. No one from either side of the House could support the abominable behaviour of some landlords in the 1950s and 1960s. It was intolerable; it was monstrous. However, it is foolish to say that there cannot be privately-rented accommodation without accepting the excesses and the disgraceful and indefensible behaviour which Rachman signified.
The ability to move in search of a job is not a problem solely of people coming from the North to the South, though that happens. It happened in the 1930s when people came from Wales, Scotland, and the North-East. Incidentally, these are the very areas where high unemployment exists today. I wonder sometimes why, if it is so easy to solve the problem of unemployment, we have made no dent on the geographical distribution of areas of high unemployment in the last 60 years despite the efforts of every government. That is, however, a wider problem.
There are pockets with job vacancies in every region of this country—many areas of high economic activity outside London and the South-East. But lack of rented accommodation means that a worker is confined to a radius of something like 25 miles from his existing accommodation in his search for work. It is not a practicable proposition, nor can he afford, to commute much further from his home.
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It is simply not true that privately-rented accommodation is inevitably vulnerable to the behaviour of a Rachman. That is rubbish. If France, Germany, the United States, and most of the rest of the world can protect private tenants without destroying the only type of accommodation they can afford, I do not believe it is beyond the wit of a British government to be able to do likewise. If one looks at the figures—I come back to the point that there is effectively no privately-rented accommodation in this country now—in France, 33 per cent. of the population live in privately-rented accommodation.
I am the chairman of a multinational company with a large office in Paris where we regularly exchange staff. All the girls in secretarial jobs in Paris have apartments which they could not begin to afford in London. Here, they are lucky if they can find a one-roomed furnished bed-sit for £50, or £60 a week. In the United States, it is the same. Over 30 per cent. of the population live in rented accommodation. In Germany 45 per cent. of the population live in privately-rented accommodation. It is not true that half the population of West Germany lives in a state of permanent exploitation and harassment. It is simply that means have been adopted to solve the problem.
It is also said that Rent Acts are not responsible for the virtual disappearance of privately-rented property. To that, I say, "Look at London". It is probably the only area in the country where there is a great deal of rented property. A visit to any estate agent in central London will confirm that there is plenty of rented accommodation, but even if individuals are willing and able to pay £400 to £500 a week to rent that accommodation, they will not obtain it if it is unfurnished because no one will let rented accommodation which is subject to the Rent Acts. All that accommodation is available only as company lets. None of it is available to individuals, even those able to pay astronomic sums.
I come back to the point made by the noble Lord, Lord Stallard. The policies he outlines make it impossible to conceive that people are prepared, as they were in the past, when their children had left home or when they had inherited a home from a deceased relative, to keep that house for rent. It is not true to say that they would always sell it. Many working people do not think in terms of the capital value of the property. What they want is cash flow over a period of time and the ability perhaps to move relatives in at some later stage.
A radical reappraisal of the Rent Acts would not end unemployment. That would be an absurdity, but I am convinced that it would provide jobs and hope. The possibility of being able even to look for a job does not exist at the moment for an unknown number of the unemployed. I do not know how many, but I am convinced that the figure would be in the thousands. A radical reappraisal of the Rent Acts would not solve the problem of the homeless. But it would encourage more people to make more accommodation available, and in some areas it might slow down at the margin the crazy spiral of house prices. I speak as somebody who profits from the fact that my house in three and a half years has appreciated by some 250 per cent. Let us not talk about the unemployed nipping round to buy a house when they find themselves a job as a London bus driver!

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In the real world of politics it is not, and probably never will be, possible for the Labour Party to begin to take an objective look at this issue. Part of its charm and part of its problem is that it is trapped in a 1930s time warp. Many of its leaders are convinced that Love on the Dole and How Green was my Valley are contemporary accounts of conditions in Britain today. Its view is a very clear one and it is politically impossible or unrealistic to expect even those who take a different view—there are some in the Labour Party, I know—from the noble Lord, Stallard, who is totally in favour of it. It is not possible to have this discussion in the Labour Party at the present time.
The Conservative Party does not have those contraints. It does not have those excuses. It can speak clearly because it is an argument that is open to discussion within the party. I believe that if it commits itself to action designed to remove the obstacles to the provision of privately rented property, it will achieve every politician's ultimate dream. It will have combined political perspicacity with a long overdue abolition of measures which have in the event caused great hardship to the very people they were intended to help.
All I believe it requires on the part of a Conservative government is the political courage to do it.
7.24 p.m.
Lord Dean of Beswick: My Lords, I first join with previous speakers in congratulating the noble Lord, Lord Harris, on bringing this very topical subject before your Lordships to debate today and thanking him. But there, I am afraid, we part company because he opened his remarks by saying he was speaking strictly as an individual. However, the points he made stood well to the right of any pronouncements or of anything I have read or heard from Ministers in the Government today. Nobody has said anything approaching what he said.
I should like to quote from a document that is readily available in your Lordships' Library. It is a quite recently published paper by the research department of the House of Commons Library. It is not a Labour Party document. The main plank for people who think that rent control would be a panacea that would solve many of our housing problems in the housing-to-rent sector has been tried before in the not-too-distant past. The background paper refers to the effects of that. It says:
"The major attempt to end control after the Second World War was the 1957 Rent Act. This legislation was introduced by Enoch Powell, then Parliamentary Secretary in the Ministry of Housing and Local Government, who argued that there were five 'evils' which were a direct product of rent control:
Under-occupation, due to households not moving to suitable small houses when members of the household left.
The level of rents gave every incentive to landlords to sell the house when gaining possession instead of re-letting.
Control led to immobility, because suitable alternative accommodation was not available elsewhere.
Control was a major reason for low standards of repair.
The whole system was unjust because of the various systems of control in operation, so that there was no relation to the size of property and its rent…
The Government [of the day] argued that decontrol would increase the supply of housing".
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This has been said today:
"In fact it appears that this Act hastened the loss of privately rented dwellings as landlords sold out into owner occupation. Annual figures for this period are not available, but for example Stewart Lansley in Housing and Public Policy (1979) estimated that losses in the private rented sector between 1956–1960 averaged 200,000 a year, a rise from the 1951–56 figure of 180,000 a year"—
a substantial loss which in this document is attributed to the complete removal of rent controls.
"The 1957 Act decontrolled tenancies in two ways: firstly by abolishing controls on houses above a certain rateable value, and secondly by removing control from all new lettings. Rents on remaining controlled lettings would be based on gross value, provided repairs were carried out.
The classic study of the 1957 Rent Act, Joel-Barnett's The Politics of Legislation (1969) revealed that the Government's expectations of the consequences of its measures were inaccurate. The number of units decontrolled by rateable value proved to be about half the estimated number of 750,000 and these consisted mainly of purpose built blocks, and subdivided multioccupied dwellings, rather than the houses with gardens occupied by elderly couples envisaged by Ministers".
That report in part covers extensively some of the points that have been made in the debate.
I have not heard any special pleading today, though they are part of the rented sector, for the small landlords. The Small Landlords Association, according to the report:
"have argued that there have been vast changes in tenure and supply and demand for privately rented housing since rent control was introduced as a temporary war-time measure. In its report; Review of the Rent Acts (February 1985) the SLA point out that the main demand for private lets is now from short-stay tenants requiring quick access to furnished accommodation. The SLA propose market rents and the certainty of repossession".
I believe to go down that road would be a policy of unmitigated disaster for any social form.
I was pleased to hear the noble Lord, Lord Seebohm, mention that he regretted the Government's cuts in funding to housing associations. This was an area that was mushrooming to the benefit of many people and providing many homes. I fully concur in the belief that it was one of the worst acts of the Government relating to housing. We talk about the homeless; it was only yesterday that I quoted figures to show that, if the present percentage annual increase continues to take place, by the early 1990s as a nation we shall have between 200,000 and a quarter of a million homeless families.
I listened with great care to what the noble Lord, Lord Marsh, said regarding the mobility of labour and the incentive for people to move to jobs in other places based on the fact that houses were empty. But certainly people in the North of England could not go into private rented property in that area if it was free from rent control because we should be talking in terms of £50 to £60 a week rent and the average wages in the North would in no way be sufficient to meet that sort of housing charge.
If it were to happen in London, it would not be the £500 or £600 a week that the noble Lord, Lord Marsh, mentioned. I think there must be some very rich landlords in the private sector if they can refuse to let houses at £500 or £600 a week. I am not sure that security of tenure would dissuade them, as the noble Lord said. But according to the information I have, they are talking in terms of average lets of £100 to £160 a week rent in London for the private sector.

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Can you imagine a person from Manchester, Birmingham or Leeds who was unemployed bringing the family down here and paying 150 a week rent? They would probably be lucky if they had ever seen £150 a week in wages. The only way it could be done would be by means of a government subsidy of such a monstrous size that this Government would not even contemplate it because it would completely blow a hole in all their housing plans.
This is not a new subject. It has been brought before your Lordships today so that we can debate the situation, but a debate also took place in the other place last week. I am not allowed to quote from that debate on this very subject, but I am able to refer to a resolution that was moved which would have done what the people in favour of this Motion want to do: namely totally abolish rent controls. The decision was put to the vote and it went against the introduction of the Bill by 144 to 142. The significant fact was that no government Minister voted in the Division. They were totally absent from the Lobby. The payroll vote was not used.
It is all very well Mr. Patten going to a housing conference to tell everyone what he was going to do. I am not suggesting for one moment that I should have liked the other place to vote on the possibility of that Bill becoming law. Everybody knows how the other place works and very few ten-minute Bills ever reach the statute book. But the Government were absolutly gutless even in giving their intention. I suspect that there was a large element in that abortive exercise of what the noble Lord, Lord Stallard, described. The effect of lifting rent controls would have serious electoral consequences. That the Government are not prepared to face; but they will deal with the matter afterwards.
In his contribution the noble Lord, Lord Stallard, mentioned the effect of Rachmanism. In those days I was a wet-behind-the-ears young councillor in Manchester. represented an area which according to the statistics was, funnily enough, the most populated area in Europe: the ward of Beswick in Manchester. We had a mass of tenanted houses, mostly demolished now because they were rapidly becoming slums. We had a situation of Rachmanism—not islolated cases but rampant ones—and we sent public health inspectors, not environmental health officers, to deal with it. It was like a minefield trying even to find out who owned the houses.
The worst part was that large packages of houses in Manchester and in the other major towns, as well as in the City of London, had been bought by people who did not belong there. They were financiers like Rachman who came from Belgium and Holland. The only way we could deal with the situation, because the houses were in a shocking state, was to put a CPO on them and demolish them.
Who was to blame for that? In my opinion, that is a situation which could recur. I was glad to hear the noble Lord, Lord Seebohm. I recall a short while go the excellent way he introduced a debate, in a completely non-partisan spirit, as is his wont, on the report on housing of the Duke of Edinburgh's commission. That report got absolutely total support from the Government Back-Benches and from all the
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parties on this side. It was acclaimed as a first-class objective document on basic housing, and the main component was more money for new house building. It did not say council house building, it said new house building.
Had that taken place in the public sector and in connection with the housing associations, we should have had over half a million more houses today, particularly if the housing cuts imposed in the public sector and the housing associations had not been implemented by this Government. I have to say that it will be a very long time, if ever, before the 500,000 or 600,000 houses lost in the last eight years will be made up.
Next Monday evening we will be debating the Archbishop of Canterbury's report, Faith in the City. The ward from which I took my name is featured heavily in that report. The report talks about disappointments and people trapped in areas for whom there is no escape. I wonder whether that report, which I expect to be acclaimed will receive support from people like the noble Lords, Lord Harris and Lord Marsh, saying that we ought to get on with a massive housing programme irrespective of what happens about the private sector.
I do not want to go on too long. I know there is a long debate to follow and quite a number of your Lordships are interested in the subject of it. However, I should like briefly to quote from a document which comes from Cambridge University. Here again this is not a document from the Labour Party and not a politically-motivated one. It is a press release regarding a research document from the Department of Land Economy at Cambridge University. It has been quite recently released and it says:
"Relaxing controls in the private rented housing sector is unlikely to be enough to revive the sector, according to a new study by researchers, Christine Whitehead and Mark Kleinman, Rather, its main effect may well be to speed up the shift away from the provision of long-term accommodation towards shorter term 'easy access' housing. This could lead to increased hardship for households who have traditionally found their home in the rented market, especially given the current decline in the provision of social housing.
The aim of the study is to provide the sort of information about private renting which is necessary both for informed debate about its role in the housing system and for the analysis of suitable policy proposals.
The study begins by examining why the private rented sector—which now houses fewer than one in eight of all households—continues to be of interest to policy makers. This is followed by a detailed examination of the way the private rented housing market operates, including both a description of conditions currently obtaining in the sector and the role which the sector plays within the wider housing system.
Next a forecast is made of the probable size and composition of the sector over the next 15 years, and a description given of the economic and social factors which affect both the supply of and demand for private rented housing. On this basis, the authors predict that the number of households in the sector will decline from perhaps 11 per cent. of all households in 1987 to about 7 per cent. by the end of the century. Over this period, the proportions of elderly, single person and non-manual households within the sector will all increase. The authors argue that the private rented sector has a role in an ideal housing system. However, this role may be limited to providing for certain categories of households, for example students, newly-forming households and those seeking job-related accommodation.
They conclude that changes in the control system are unlikely to solve the problems of the private rented sector. In the long term what is needed is a restructuring of the system so that private renting is provided by landlords who wish to let to those who want the

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desirable attributes of private renting. This must mean that those for whom it is inherently unsuitable are readily housed elsewhere. This in turn inescapably requires the provision of additional rented accommodation by social agencies such as local authorities and housing associations, however politically unfashionable a view this may be at the present time."
I close by saying that a few weeks ago, just before the Christmas Recess, I attended a seminar based on the possibility of extending the private sector of rented housing. What came across quite clearly was that if anybody is to be invited to contribute huge sums of money, as I think was suggested by the noble Lord, Lord Winstanley, from the building societies towards this new venture, then to get even a reasonable return which one could obtain by placing one's money elsewhere, the astronomical sums of money that would be needed to subsidise the rents because of the wage packets that people earn today would once again have to be found by the Government. It is an inescapable conclusion to which anybody who has studied the subject comes.
Once again, I express my appreciation to the noble Lord, Lord Harris, for bringing this subject before us. But I have to say as I said when I commenced my speech, that I profoundly disagree with everything he said.
7.42 p.m.
Baroness Hooper: My Lords, we are indeed grateful to the noble Lord, Lord Harris of High Cross, for again concentrating our minds on this important issue, and indeed for his historical analysis and wide review of the social and economic factors involved. This debate has also provided noble Lords opposite with the occasion to state clearly their parties' policies in this area. It will be for the electorate to decide whether even more rigid controls will solve the problem caused to a large extent by existing controls.
The Government are sympathetic to many of the arguments raised during the debate today. We are in no doubt that rent controls have over time contributed to the decline of the private rented sector. I think that the noble Lord, Lord Marsh, put this very vividly by saying that no one in his right mind would put property on the rented market today. Be that as it may, there have of course been other factors. The massive slum clearance programmes, both before and after the war, tended very much to replace privately rented housing with local authority housing and social trends have contributed with an increasing preference over the years for home ownership.
But it cannot be denied that where landlords, because of controls, have been unable to get an adequate return on their capital there have been the inevitable consequences. Property was withdrawn from the rented sector. The harassment of tenants in order to obtain vacant possession became a serious problem. Much property remaining in the private rented sector has been poorly maintained, with consequent dangers of friction between landlord and tenant and to the tenants' overall disadvantage. There are those who argue that this decline is irreversible. The Government totally reject this view. We believe that the private rented sector has an important role to play in the housing market, as indeed it does in France,
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Germany and the United States, and we are committed to stimulating new investment in this area.
This debate is about the private rented sector. The noble Lord, Lord Winstanley, referred to the right to rent; that is, the freedom to choose to rent rather than to buy. He also said that there should be a right to pay. We recognise that there is a need to look at all sectors and at the ability of unsubsidised private renting to compete with other subsidised sectors. But much depends on landlords' willingness to make property available. They will not do this unless they get adequate returns, as has been said realistically by so many noble Lords this evening. So there is a good case for ending rent control on new tenancies and it is something that we are seriously looking at.
But the private rented sector is not a closed market. The housing market has to be looked at as a whole. Again, I welcome the support of the noble Lord, Lord Winstanley, for the breaking up of the monolithic local authority housing management system that has been in existence. So what is happening in the local authority sector and the owner-occupied sector has a direct effect on the economics of the private rented sector. And there are many cases where market rents alone would not bring landlords into the field, because the returns would still be inadequate. All those areas have to be looked at together and we are doing that.
However, we have made it clear that this in toto is a matter for a new Parliament. I am sure the noble Lord, Lord Harris of High Cross, will understand that I cannot give him a preview of what is intended, although I was most interested to hear from the noble Lord, Lord Stallard, that the Government are totally committed to deregulation. However, in saying that I totally refute the suggestion of the noble Lord, Lord Dean, that the Government are afraid to introduce such legislation, because they have been taking this subject very seriously and are pursuing a range of measures designed to stimulate private letting within the existing framework. I think that the noble Lord, Lord Winstanley, may be pleased to hear about some of those.
First, there is the assured tenancy scheme. Under that scheme, landlords approved by the Secretary of State can let dwellings at market rents to tenants who have a similar degree of security of tenure to that enjoyed by business tenants. Until the beginning of this year it was only possible to let newly built dwellings under that scheme, but we have now extended it to substantially renovated dwellings as well. We are confident that that will make many more projects viable for investors and that assured tenancies will now grow much more rapidly than they have so far.
The prospects for growth will be further boosted by the introduction of mixed public and private finance for housing association schemes. This also affects building societies, because it is very much aimed at such institutions and they are in fact responding with imaginative new financing proposals. The Housing Corporation has a budget for giving housing association grant at the rate of 30 per cent. for schemes attracting private finance. Perhaps this goes in some part to reply to the question raised by the noble Lord, Lord Seebohm, about the encouragement of more

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private finance. So these schemes together with market rents should enable a much wider range of projects to be attractive to investors. We expect £100 million worth of new housing investment from these mixed finance schemes this year.
Then there is the urban development grant, which is another mixed funding mechanism that has been used in some areas to enable assured tenancy schemes to go ahead. I am pleased to be able to confirm the immediate impact of these changes by announcing today that we shall shortly be laying before Parliament an order approving a further 12 bodies as landlords authorised to let on assured tenancies. Two of these are housing associations specifically responding to the introduction of the 30 per cent. housing association grant scheme. Three more are responding to the new scope for letting renovated property. And there has been a steady flow of further inquiries and applications resulting from these initiatives.
Another step that we have taken this month is to lay before Parliament two orders under the Housing Act 1980. These were welcomed by my noble friend Lady Macleod but other noble Lords have expressed reservations. As has been said—I think it worth reiterating—one of these orders will end the requirement that fair rents must be registered on shorthold lettings in London. In fact, this order will be debated in another place on 4th February and is due in your Lordships' House on 12th February. So in response to the noble Lord, Lord Stallard, there is no doubt that there will be further debates on this topic.
Shorthold is the arrangement whereby a landlord can let for between one year and five years with guaranteed possession at the end. It is particularly appropriate for the mobile. Yet while there are a considerable number of shortholds outside London, where there is no requirement to register a fair rent, there are very few in London itself. So we very much hope that this change will bring some of the 90,000 empty private sector properties in London on to the rental market. That is an objective which must be pursued vigorously.
The second order will end the requirement that increases in fair rents set by rent officers should be phased in over two years. This point was raised by the noble Lord, Lord Stallard. Because inflation has fallen to such a low level, there is no longer any justification for delaying full payment of any rent increase when awarded. This should bring some slight improvement on the return available to private landlords from fair rents. At the same time, tenants who are eligible for housing benefit will of course receive benefit at once on any higher rent.
These measures together, by helping to stem the decline of the private rented sector, make a valuable contribution to tacking the problems of homelessness and mobility, and I shall endeavour to deal briefly with each of those issues.
Turning first to homelessness, this is not a simple matter of housing shortages. Homelessness occurs for many reasons. Young people leave home earlier. Divorce rates are higher. Families are less willing to accommodate elderly relatives. These problems cannot be tackled solely with bricks and mortar.
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In Tyne and Wear, for example, last September there were 128 households in temporary accommodation, yet there were over 6,000 empty dwellings in the area. Some of these figures have already been mentioned. Nationally there are 550,000 empty privately owned dwellings, and over 100,000 empty local authority dwellings. So there is a question of making the best use of housing stock.
There can be no doubt that reducing the number of empty dwellings is something which is being tackled by this Government. The estate action initiative is a major thrust in this area. One hundred and one schemes have already been approved at a total cost of £45 million. Eight of those schemes are specifically directed at the homeless, with a further eight in the pipeline. This year we also propose to issue a general consent to authorities to dispose of dwellings in need of repair to housing associations on five-year leases. We believe that this is providing a flexible response and that these are both areas where encouragement of the private rented sector makes sense.
The noble Lord, Lord Seebohm, emphasised the importance of tackling homelessness. We are endeavouring to do this through a wide range of measures designed both to redress the symptoms and the causes. These measures cover the local authority sector, the housing association sector and the private rented sector, as well as advice and counselling services.
I am happy to agree with the noble Lord, Lord Seebohm, in his call to get away from bed and breakfast. In this context, although I have a full list if noble Lords wish to hear it, I shall only mention the specific arrangements we have introduced under which £15 million of housing association grant is being made available to stimulate £45 million of schemes to provide good quality temporary accommodation to house families who would otherwise be in bed and breakfast accommodation.
I do not think there is any argument that greater mobility is of considerable importance both to the economy as a whole and to individuals. More than one speaker has made this point, but perhaps none more forcefully than the noble Lord, Lord Marsh. The availability of housing is a key factor in promoting labour mobility. Private renting is the form of tenure most likely to meet the immediate needs of many job movers.
All the measures I have dealt with already will help to promote mobility. There are two more I should like to mention. The first is the job movers scheme, again using housing association grant, under which we hope to provide about £15 million worth of schemes of shared housing for young job-movers in London and the South. This, with our earlier changes to make it easier for resident landlords to let accommodation, will assist a group where mobility is particularly high.
Secondly and finally, I should mention the development of shared ownership. This is where a person part owns and part rents his house, buying additional shares as and when he can afford it. Up to now shared ownership has been provided only by the public sector. The Housing and Planning Act 1986 removes rent control and disapplies the Leasehold Reform Act from new shared ownership leases where

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the landlord is a housing association. Noble Lords debated this recently and will no doubt remember our discussions on that particular theme. This opens the way to share ownership schemes with index-linked private finance at rents which are lower than the normal costs of house purchase.
Perhaps I may now turn to one or two specific questions which have been raised in the debate and which I have perhaps not covered so far. The noble Lords, Lord Stallard and Lord Dean of Beswick, both referred, as did other noble Lords, to the evils of Rachmanism, as a result of the 1957 Act. We believe that the tighter the rent control the greater the pressure on landlords to harass so as to get vacant possession and sell. We believe that easy rent controls reduce the likelihood of harassment. Using the 1957 Act as an excuse for inaction is putting our heads in the sand. Circumstances have changed over 30 years and we can learn from the mistakes made then. The loss of rented accommodation occurs because landlords find it more profitable to sell or to simply not do anything at all.
My noble friend Lady Macleod raised a very specific point about lodgers. I wish to reassure her on that point. As she has said, the Department of the Environment encourages householders not to be concerned that they are creating permanent tenancies if they take in lodgers, and it sees lodging arrangements as making a potentially useful contribution to meeting housing needs in certain areas. She expressed a fear about widows having their pensions affected by taking in male lodgers. I can confirm to my noble friend that a widow's pension is not affected by any income received from offering rooms to lodgers. I can also confirm that if the relationship is a genuine one of landlady and lodger, there is no presumption of cohabitation. Only if there were significant evidence that a relationship was more than that would the social services want to investigate the matter further.
The noble Lord, Lord Stallard, and other noble Lords made the suggestion that easing rent controls hits tenants who cannot afford to pay. The question is really whether or not landlords are prepared to subsidise tenants. If they cannot get an adequate return, property simply goes off the market. Events have proved this. Rents on schemes like assured tenancies may well be higher than registered rents. However, the dwellings will be there for those who want them and can afford them. This in turn could release lower cost accommodation. In addition, the housing benefit scheme can provide help with the rent for those in need, and government grants provide help for other schemes such as the homelessness and job mover schemes which I have already mentioned.
I may not have covered all the points raised by noble Lords in the course of the debate, and if so I apologise. However, I hope that I have made it clear that our policy is to stimulate the private rented sector and to reverse its decline. We shall continue to develop measures which pursue that objective. We shall continue to aid those in need of help with housing costs. We shall continue to give tenants the fullest possible protection against harassment and the small minority of irresponsible landlords. I am sure that the private rented sector will perform its valuable social and economic role with renewed vigour as a result of our policies.
Lord Harris of High Cross: My Lords, it only remains for me to thank all the speakers who have taken part in this lively debate, and particularly the noble Baroness, Lady Macleod, as the one representative of the Tory Back Benches who always brings her human touch to our discussions.
I must say I regret that the two Labour spokesmen were caught in their time warp, (from which I am delighted to say that my noble friend Lord Marsh has so wonderfully emancipated himself in recent years) and I really believe that their simple confusion is to blame the non-existent free market in the post-war years for the acknowledged abuses of landlords, which I think stem directly from controlled rents and security of tenure.
I welcome the more balanced approach of the noble Lord, Lord Winstanley, and my noble friend Lord Seebohm, who emphasised the various contributions towards rented accommodation from housing associations and building societies as well as private landlords on market terms that work in other European countries.
In conclusion, I was mildly encouraged by the positive ministerial response of the noble Baroness, Lady Hooper. I shall read all the small print in Hansard and perhaps be ready to return to the charge later, but, as other noble Lords are assembling for a possibly yet fiercer joust, I shall ask leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Licensing (Restaurant Meals) Bill [H.L.]
8.1 p.m.
Viscount Montgomery of Alamein: My Lords, I beg to move that this Bill be now read a Third time.
In moving the Third Reading of this Bill I should like briefly to thank noble Lords in all parts of the House who have given support during the various earlier stages. I should also like to thank many other noble Lords who, outside this House and outside this Chamber, have given me an enormous amount of support and encouragement in proceeding with this Bill. I want particularly to thank my noble friend Lord Caithness, who unfortunately cannot be here this evening, for his understanding and constructive comments on the Bill both during the debate and outside the Chamber.
During the Committee stage of the Bill my noble friend Lord Caithness said that the Government looked upon this Bill in its new modified form with "benevolent neutrality". I hope that my noble friend Lord Beaverbrook, who is taking the Bill tonight, will encourage his right honourable friend, when this Bill comes to another place, to increase the benevolence without modifying the neutrality, unless of course that changes to outright support.
This Bill is about improving the quality of life for British citizens and tourists. It puts the restaurant trade on the same basis as in Continental Europe and creates jobs. It is a very short and simple measure and it deserves to succeed. I wish it godspeed, and beg to move.
Moved, That the Bill be now read a Third time.—[Viscount Montgomery of Alamein.]
Baroness Ewart-Biggs: My Lords, I think all of us who have been involved with the passage of this Bill will be very grateful to the noble Viscount for, in the first place, bringing the subject forward yet again, this time in a slightly different guise. Also, we are very grateful to him for his willingness to make some fundamental changes in his Bill at Committee stage as a result of certain suggestions coming from speakers in the debate. There is little doubt that his Bill is now a better Bill and that the proposals it contains really will give restaurant owners the benefit they want, and will also give the users of restaurants and tourists a very much more peaceful way of having their meals. So there is a great deal to be said for the noble Viscount's initiative in the first place, and also for his flexibility in making the changes that were necessary.
The noble Viscount remarked on the Government's decision to look at this Bill with benevolent neutrality. Without wishing to be a real wet blanket I should again like to remind the Government of the very widespread concern that has been expressed recently about intoxication and all the dangers of going too far in liberalising our licensing laws. I think it is the imminent passage of a Bill in another place which has brought out a great deal of concern and comment from organisations and individuals. Also, we have been reminded of some very worrying statistics about the extent in the first place of drink-related accidents on our roads; the number of beds in our hospitals which are occupied by patients suffering from drink-related diseases; and the number of offenders in our prisons who are there for having committed drink-related crimes.
So, although I join the noble Viscount in welcoming this particular change which he has brought about in this Bill, and I would like to support that initiative, I should like again to ask the Government to think seriously of looking at the whole subject, the whole area of alcohol consumption in this country together with our licensing laws, as is happening in other countries in Europe. At the same time, I wish that the Government would make more money available to services for health education and for general public information on alcohol matters.
8.6 p.m.
Lord Monson: My Lords, I rise briefly to congratulate the noble Viscount on his efforts. I warmly welcome this step towards a more civilised Britain or, to be more accurate, a more civilised England and Wales, because the Scots set us a good example on this matter some years ago.
I congratulate the noble Viscount, too, on having had the good sense to compromise. If those who supported the Shops Bill had had the wisdom to make even one tangible concession to their opponents we might not have had the misfortune of losing that Bill altogether. With that, I wish this Bill every success in another place.
Lord Beaverbrook: My Lords, it falls to me on this occasion to congratulate my noble friend Lord Montgomery upon the way in which he has steered his Bill thus far. It is not quite the Bill he introduced but, as he has readily acknowledged, it meets the concern of the restaurant trade to be able to offer drinks with
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meals throughout the day. We are grateful to him for restricting the scope of his original proposals so that instead of the prospect of licensed restaurants operating 24 hours a day without adequate safeguards against disorder, noise and nuisance, we have a modest measure but one that will nevertheless be welcome to many. If passed, the Bill will not only ease some of the restrictions on restaurants but may also enable some of us to enjoy a glass of wine with a late lunch. I shall watch its progress in another place with interest.
Viscount Montgomery of Alamein: My Lords, in conclusion perhaps I may thank my noble friend for those words of encouragement, and reassure the noble Baroness, Lady Ewart-Biggs, that I do not think that any of the preoccupations that she has expressed—and they are very genuine ones—will in any way be prejudiced by the passage of this Bill. With those few words, I commend the Bill to the House.
On Question, Bill read a third time, and passed, and sent to the Commons.

Infant Life (Preservation) Bill [H.L.]
8.9 p.m.
The Lord Bishop of Birmingham: My Lords, I beg to move that the Bill be now read a second time.
I have introduced this Bill with some reluctance and a great deal of trepidation. It is a long time since a Bishop introduced a Bill in your Lordships' House; I do so only because I have not been able to find anyone here or in another place to do it, and I have received encouragement to take an initiative.
I want to make it clear that I do not belong to any of the many pressure groups about abortion. Perhaps I should add that, when it was suggested in the General Synod by a Minister of the Crown that Bishops should knock on the door of 10 Downing Street on the subject of abortion, I did so. As a result of that I met with Ministers of State both from the Home Office and the DHSS, and I think it is fair to say that my Bill has gestated as a result of that meeting.
In fact this Bill is not about the Abortion Act at all. It is about infant life preservation and in particular about the Act of 1929 which bears that name. My Bill has one moral presupposition, and one only. It is this. It is immoral and wrong to kill a child that is capable of being born alive.
If a child can live when it breathes the air of this world, it is wrong to kill it at that stage in its development if it is in its mother's womb. The only exception to that principle would be a situation where the killing takes place in good faith, solely in order to preserve the life of the mother. I may say that the Infant Life (Preservation) Act does not talk about termination of pregnancy; it talks about child destruction.
These are not only sound moral principles but they are actually embodied in the Infant Life (Preservation) Act 1929. They are part of the laws of this land. I am sure that there are many aspects of the Abortion Act about which many of us would disagree. I make no bones about the fact that, while I am in favour of abortion in certain circumstances, I think that that Act

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is too widely drawn. I have no doubt that we would disagree about when or if an embryo or a foetus should be accorded the same human rights as a human being. We might disagree about when the soul is infused into the embryo; about whether it is at conception or at some other time or whether it is a gradual development. Indeed, we might even disagree about whether it is right to talk about a soul at all.
All such points of disagreement are irrelevant to this Bill. I mention them only because I want to make it quite clear that my Bill is not concerned with the Abortion Act. I do not propose to amend that. My Bill is concerned only with the Infant Life (Preservation) Act 1929. The only point of contact it has with the Abortion Act is in Section 5(1) of that Act, which reads:
"Nothing in this Act shall affect the provisions of the Infant Life (Preservation) Act 1929 (protecting the life of the viable foetus.)".
My Bill has one moral presupposition only. If a foetus is born alive, it is a criminal offence to kill it. It follows that if a foetus has not actually been born but is capable of being born alive, then it ought to be accorded exactly the same rights, saving only the need to protect the mother's life. I find it very hard to see how this moral position could be gainsaid.
In the 1929 Act it is stated:
"For the purposes of this Act, evidence that a woman had at any material time been pregnant for a period of twenty-eight weeks or more shall be prima facie proof that she was at that time pregnant of a child capable of being born alive".
The Act also states that, however many weeks a woman has been pregnant—say, 24 weeks—it is still a criminal offence to kill the child if it is capable of being born alive. But if you kill a child before it is born, by the nature of the case there is no evidence that that particular child could have been born alive. As a matter of fact most children of 24 weeks' gestation are capable of being born alive, but as the law stands at present there is a presumption that any child is not capable of being born alive unless the pregnancy is at least 28 weeks; and by 28 weeks I mean 196 days after the beginning of the mother's last menstrual period.
Things have moved on since 1929. Medical technology and medical care have enabled a premature baby to survive where formerly it would not have been able to be born alive. I shall not bother your Lordships with statistics, of which I have a good many. Whether one takes the figures in the Report on Fetal Viability and Clinical Practice published in 1985 or the most recent research of Yu and others in Australia published in the British Medical Journal in November last year, they show that a foetus of 24 weeks is not only capable of being born alive but has a 16 per cent. chance (in the British survey) of survival of more than a year after birth and a 33 per cent. chance of survival of more than a year after birth in the Australian survey. As the president of the Royal College of Obstetricians and Gynaecologists wrote to the DHSS in 1980:
"Twenty-four weeks does, at present and in the foreseeable future, represent the stage of pregnancy at which an expelled foetus might have a prospect of survival".
That judgment seems to me to be endorsed by most professional bodies and experts. In 1985 there was a report by a representative committee comprising the
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Royal College of Obstetricians and Gynaecologists, the British Paediatric Association, the Royal College of General Practitioners, the Royal College of Midwives, the British Medical Association and the Department of Health and Social Security—a representative committee. Its first recommendation was this:
"The gestational age after which a foetus is considered as viable should be changed from the present limit of 28 weeks (196 days) to 24 weeks (168 days) of gestation".
This change also has the approval of the report of the Committee of the Working of the Abortion Act presided over by the Honourable Mrs. Justice Lane. Its report was published way back in 1974, and it is extraordinary that it has never been discussed either in your Lordships' House or in another place. As your Lordships may remember, the committee did not recommend any change to the Abortion Act 1967, but it did recommend, 14 years ago,
"that the Abortion Act should be amended to authorise abortion up to the 24th week of pregnancy and no more".
So far I have quoted only professional bodies and the Lane Committee in my favour. I know that I must not quote remarks made in another place, but there have been, as your Lordships will know, four attempts in another place to amend the Abortion Act, and of course there was one in this House by the noble Lord, Lord Robertson of Oakridge.
Viscount Craigavon: My Lords, the right reverend Prelate mentioned that those organisations were in his favour and he read out a list of the organisations. Can he say whether all of them, and in particular the BMA, support the Bill?
The Lord Bishop of Birmingham: My Lords, I thank the noble Viscount for his intervention. I understand that not all of them have met to decide this matter. The Royal College of Midwives supports it. So far as I understand it, the British Medical Association supports it with certain exceptions, though there is a certain vacillation which we have noted before. The British Medical Association was against the Abortion Act when it was first published. It was in favour of the Act when it was implemented. It thought that the period should be 20 weeks at one stage and 24 weeks at another. Now it thinks that it should be 24 weeks, with some exceptions. That is the best answer I can give to the noble Viscount.
Viscount Craigavon: My Lords, I do not want to hold the proceedings up but I was told that the BMA had written a letter to the right reverend Prelate stating specifically that it did not support the Bill.
The Lord Bishop of Birmingham: The BMA did not support the Bill without exceptions. That is how I understood the letter. That is what I tried to convey to the noble Viscount.
When attempts were made in another place to amend the Abortion Act they failed, but this is the first attempt to amend the Infant Life (Preservation) Act. Naturally I looked carefully at what was said in another place because I wanted the Bill to pass there as well as I hope it may pass here. I notice that the mover on the previous occasion had been deflected from his intention to produce a Bill such as mine because the

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DHSS pointed out that it would cause grave legal problems as the Act does not cover Scotland and the different legal system that obtains there. However, the Solicitor-General for Scotland made it clear that that would not be the case and I hope that this particular red herring will not be raised again.
I must not quote from the other place but I believe I am allowed to say that influential people would have voted for my Bill then who could not support the amendment of the Abortion Act, including the noble Lord, Lord Ennals, who introduced an amendment to that effect and was indeed the initiator of the Abortion Act himself.
The great weight of informed opinion, as I understand it, as well as professional advice, favours the change which forms the substance of the Bill now before your Lordships' House. Moreover, we are the only country in Western Europe which permits abortion so late in a pregnancy. In Belgium it is illegal. In Switzerland it is only permitted if the mother's life is in danger or her health is permanently damaged; and the same applies in Italy after 90 days. In France abortion is allowed up to the 10th week. In Denmark, the Federal Republic of Germany, Austria and Norway it is allowed up to the 12th week. Even in Sweden, that most liberal of countries, it is allowed only up to the 24th week. I am given to understand that the same applies to the United States of America. However, in the United Kingdon abortion is allowed up to the 28th week.
Since I wish to bring forward legislation—
Baroness Robson of Kiddington: My Lords, I am sorry to interrupt the right reverend Prelate, but he referred to Sweden, which is the country I originally came from. He is right in saying that abortion is permissible up to the 24th week but will he also take into account that it is permissible on demand by the woman?
The Lord Bishop of Birmingham: My Lords, I am grateful to the noble Baroness for her intervention. But she has emphasised a point which, if I may say so, is a different one to the point I am emphasising and which is merely concerned with the period of gestation that is permissible. However, I am grateful to the noble Baroness for making that point.
I was about to say that I wish to be fair and so I want to consider seriously the possible objections to the Bill. The first group of objections might be called procedural. It is said that Mr. Kenneth Clarke, when he was Minister for Health, obtained a gentleman's agreement with private clinics that they would not allow abortions of a foetus of over 24 weeks. I do not believe that lives should hang on a so-called gentleman's agreement—which is not a phrase that I myself would wish to use in regard to those private clinics. In any case, we now have a different Minister for Health.
Secondly, it is suggested that all that the Minister for Health needs to do to stop late abortions is to send out a circular to all gynaecology departments and clinics to the effect that all abortions of, say, 22 or 24 weeks or so are in breach of the law. However, in view of what I said earlier I am not at all sure that such a circular
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would hold in law against the Infant Life (Preservation) Act as it stands. It is surely preferable to treat that Act in a proper legal way and amend it.
There is a second class of objections based upon numbers. There were 33 abortions of 24 weeks and over according to the statistics of the OPCS for 1985. Is it worth legislating, people have asked me, for only 33 abortions? I hope that that argument will not weigh in your Lordships' House. Would it be worth legislating for 33 acts of rape? Would it be worth legislating for 33 cases of murder? Of course it would. The same seems to me to hold for 33 improper abortions. I must admit that I was tempted—
Baroness Robson of Kiddington: My Lords, I am very sorry to intervene again, but may I ask the right reverend Prelate whether those 33 abortions that took place after 24 weeks were performed because the risk to the mother's life was too great?
The Lord Bishop of Birmingham: My Lords, I am grateful to the noble Baroness for her second intervention. I am glad to be able to inform your Lordships' House that I telephoned the Office of Population, Census and Surveys the day before yesterday in order to try to ascertain that fact. I was told that it did not know the answer. The office said that is might be possible to ascertain the information on a special computer programme but it simply did not know the answer. I should have liked to have the information myself, but I am afraid I cannot give the noble Baroness an answer.
As I was saying, I was tempted to reduce in my Bill the period of gestation from 28 to 23 weeks because in 1985 there were 1,185 abortions carried out between the 23rd and 24th weeks. A premature baby can easily be born alive at 23 weeks, but in fact very few of them survive; so it did not seem to me appropriate to substitute 23 weeks for 28 weeks in my Bill.
I turn to another class of objection. Some women have irregular menstrual periods and others who think they are menopausal may not believe that it is possible for them to become pregnant. It is said that such women do not realise they are pregnant until after 24 weeks. It seems to me that there is no particular reason, if they did not know at 24 weeks, why they should know at 28 weeks.
Again, there are young women who are too frightened by pregnancy to do anything about it until late in the pregnancy. I recognise that and I sympathise with their problem. It might then be too late for a legal abortion; but I do not think so. If we change the law it would soon become known that 24 weeks is the limit and even the most frightened would know that they must make up their minds before that period has expired whether to carry the child the full term.
The next is to me the most serious kind of objection: that it might not be known until too late that the foetus has some abnormality which makes it undesirable for it to be born in the view of some people and perhaps in the view of its mother. Clause 1(1)(b) of the Abortion Act states that an abortion may be legally carried out,
"if two registered medical practitioners are of the opinion, formed in good faith … that there is a substantial risk that if the child were

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born it would suffer from such physical or mental abnormalities as to be seriously handicapped".
That exemption is of course subject to the conditions of the Infant Life (Preservation) Act.
Is there not a possibility that if the gestation period were reduced to 24 weeks some would be born seriously handicapped? The answer to that question I find is reassuring. Medical technology has forged ahead since 1929. Real-time ultrasound is used to exclude multiple pregnancy, to determine gestational age and to check the foetal heart before and after diagnostic procedure. Amniocentesis is practised at a relatively late stage in gestation. However, the figures for 1982 of abortions carried out as a result of amniocentesis given in this report by a representative committee show that a mere 4·7 per cent. were carried out at 24 weeks and after. That is a very small number. In any case, a new technique has been evolved of chorion villus biopsy which is best done in the 9th or 10th week. The latest techniques involve endoscopy and ultrasound. This way is safer, earlier and generally more satisfactory. The danger of children being born severely handicapped is slight.
I quote from the Report on Fetal Viability, which I have mentioned and which is in favour of 24 weeks:
"On the one hand the great majority of foetuses capable of surviving extrauterine life would be protected, while on the other hand it would ensure that with few exceptions women with currently accepted reasons for abortion would still have time to obtain one.".
The Lane Committee, which I have mentioned, deals with the very same point. I quote:
"According to evidence received from those concerned with diagnostic amniocentesis, the diagnosis of chromosomal abnormalities, though possible by 18 or 19 weeks' gestation, may in some cases not be made until the 21st or 22nd week. Further, in the detection of biochemical abnormalities, diagnosis may not be made until 24 weeks' gestation.".
The Lane Committee continues:
"Nevertheless the Committee would not be prepared to recommend an exception to the upper limit on abortion on the sole grounds of diagnosis of fetal abnormality and we consider that such an exception would be unacceptable to the medical and nursing professions.".
Professional bodies and an expert committee do not believe that there should be any exception to 24 weeks and that is why my Bill stands before your Lordships tonight with but a single clause.
I have tried to deal with the reasons for the Bill and I have examined possible objections as fairly as I can, but in my judgment none of them holds good. However, I must add one further point which is not directly part of the Bill although very much connected with it. I have received representations to the effect that the Bill will not be fully effective unless there is a regulation which requires the gestational age of a foetus to be accurately ascertained before abortion can take place.
At the moment a doctor may rely simply on the word of the woman requesting the abortion. A woman may not remember, or may not choose to remember accurately, the date of onset of her last menstrual period. The vast majority of women are from overseas. They come here for late abortions as they are unable to get them in any other country of Western Europe. They may not even be able to understand the doctor's questions. The doctor may not choose to ascertain the weight of the foetus by ultrasound body scan.
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A report of the Royal College of Obstetricians and Gynaecologists in 1984 entitled Late Abortions in England and Wales informs us that the great majority of late abortions, over 70 per cent., are not carried out on the NHS but by private practitioners and there are 11 such—at least, there were then—who specialise in this kind of work and carry out 60 per cent. of it. They are of course being paid to produce not a live child but a dead foetus.
I asked the DHSS, which in turn asked the General Medical Council, whether there is any evidence of malpractice in the working of the Abortion Act. It replied that it knew of none. It is unlikely, I think, that it could know of any. While the NHS tends to use prostaglandins to induce labour in order to carry out late abortions, private practice is far more likely to use—according to this report, more than eight times more likely—what is euphemistically called D and E, meaning dilatation and evacuation, which is medical Newspeak for dilatation of the cervix and then dismembering a small human being limb from limb in the womb and extracting it through the cervix. How could one know in such a case that the baby was capable of being born alive? How could the emergency equipment which the DHSS rightly insists on in case a child is unexpectedly born alive possibly be needed?
The representative committee which produced the 1985 report on foetal viability, which I have mentioned several times, made two proposals: first, in accordance with the World Health Organisation recommendation, a record should be kept of all babies born alive or dead of 22 weeks' gestational age or, if born earlier, weighing 500 gms or more; secondly, confirmation of the gestational age of the foetus by all reasonable available methods, including ultrasound, in addition to a careful clinical assessment, should be carried out before a decision is taken to terminate a pregnancy thought to be of a gestational age of 20 weeks or more.
On New Year's Day I wrote to the noble Baroness, Lady Trumpington, to ask whether the DHSS would make such a regulation under Section 2(1) of the Abortion Act. Such a regulation would obviously help to ensure that the will of Parliament was being carried out. Unfortunately, I have not as yet received any reply to my letter, and it would assist us all if the DHSS would give us the answer. I realise that this is not a matter for the Home Office.
I want to return finally to the main substance of the Bill. It is a very simple Bill. It states that 24 weeks' gestational age is to be taken as prima facie evidence that a child is capable of being born alive. I believe that it is backed by most medical and professional opinion. It accords with the moral principle that, if a child of 24 weeks is capable of living outside the womb, it is immoral to kill it while it is in the womb. Indeed, such abortions are extremely distasteful to all concerned, so I hope that the Bill will receive the warm support of your Lordships' House. I beg to move.
Moved, That the Bill be now read a second time.—(The Lord Bishop of Birmingham.)
8.36 p.m.
Lord Houghton of Sowerby Lord Houghton of Sowerby rose to move as an amendment to the above Motion, That the Bill be now read a second time, to leave out ("now") and at the end insert ("this day six months").
The noble Lord said: If I may say so with respect, the right reverend Prelate has spent 23 minutes of his speech without coming to the crux of the debate. I want to suggest to your Lordships that the real issue before the House tonight is one not of doctrine or aims but of ways and means.
The right reverend Prelate read to us the recommendations of the group of professional bodies which reported to the Secretary of State in August 1985. That was the culmination of four years of investigation by different bodies at the invitation of the Government. It started in 1980, and the report was presented to the Minister in August 1985. Its first recommendation was that the gestational age after which a foetus is considered as viable should be changed from the present limit of 28 weeks—196 days—to 24 weeks—168 days—of gestation. It is from there that we start.
I want to say categorically that there is no dispute over that recommendation; there is no dispute about the aim that we wish to achieve. That report, however, made no recommendation about amendment of the Infant Life (Preservation) Act 1929. It made no proposal to deal with it by legislation at all. It left that matter to the Government. What it said was that the gestational age should be reduced from 28 weeks to 24. The report was circulated to all the nursing homes, approved under the Abortion Act within the National Health Service. All the professional bodies, everyone who might have an interest in the matter, received at public expense a copy of the report.
Its views were considered by the Secretary of State. He then summoned a conference. At the conference he came to a voluntary concordat with the proprietors of private nursing homes and all those who had special approval to provide abortion treatment after the 20th week. Everyone was consulted and brought together. It was at that meeting that the Secretary of State explained the Government's approach to the position as it then stood, which was to try by alternative non-legislative steps to achieve the aims of the report. It was that that was embarked on in the autumn of 1985.
The right reverend Prelate has suggested that this is a simple Bill because all it proposes to do is to substitute 24 weeks for 28 weeks in the 1929 Act. But what I think the Secretary of State had in mind on deciding on the policy now in full operation was that, while the period of 28 weeks should be reduced to 24, the penology of the 1929 Act should not be altered and brought down to 24 weeks for the present at any rate.
The 1929 Act in Section 1(2) states:
"For the purposes of this Act, evidence that a woman had at any material time been pregnant for a period of 28 weeks or more shall be prima facie proof that she was at that time pregnant of a child capable of being born alive."
That is a prima facie presumption which is rebuttable but which puts the onus of proving innocence on the accused. Short of that, the onus of proof lies on the prosecution.
If 24 weeks is to be the new datum line with the penology of this Act attached to it, then the prima facie presumption of pregnancy of a child capable of being born alive will be brought down to 24 weeks from 28 weeks. The question is: can one safely do that? Can one safely put the onus on the accused at 24
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weeks, as it has been in the 1929 Act at 28 weeks? If so, then the penalty under the 1929 Act applies; namely, a sentence of imprisonment for life.
Is that the proposition? I believe that that is why the Minister decided that it was far better to try, by voluntary means and the discipline of the licences granted by the Ministry to the approved nursing homes, and with the co-operation of the professions, to bring about the aim of the report of 1985 without changing the law at any rate at present. That is the issue. The Minister made that clear in a Statement to the House of Commons on 23rd July 1985. It was then that he circulated the report and convened the meeting.
Then, in a Statement in the House of Commons on 15th November 1985 the Parliamentary Secretary at the Ministry said:
"I am pleased to report that the proprietors of the eight nursing homes approved for abortions over 20 weeks' gestation have all agreed voluntarily to cease carrying our abortions at 24 weeks' gestation. This is an important step towards implementing the recommendation in the report of the working party convened by the Royal College of Obstetricians and Gynaecologists on foetal viability and clinical practice. Gynaecologists working in the National Health Service should take account of the report's recommendation in their clinical practice, as the president of the Royal College has sent copies of the report to all fellows and members in this country".—[Official Report, Commons; 15/11/86; col. 289–90.]
That was the acknowledgement that the degree of cooperation necessary to begin this operation had been obtained and that has been the policy of the Government up to the present time.
The question is whether, with that attempt at alternative means (which are believed to be more effective alternative means), this policy should continue longer before we resort to changing the law. That is the issue. I believe that the Minister is absolutely right and I sincerely hope that the noble Lord, Lord Beaverbrook, when he comes to speak, will confirm it.
I wish to point out that the lowering of the age of viability to 24 weeks has been the rule everywhere throughout the system since August 1985. Unhappily, this measure will result in more malformed and handicapped babies being born through inability to diagnose trouble earlier. For the time being at any rate that is the unfortunate consequence of reducing the age to 24 weeks.
I submit to your Lordships that this voluntary but effective clampdown on terminations after 24 weeks, which has been self-imposed and imposed on all concerned, should be allowed to run longer before we intrude upon its operation by an attempt to amend the law. The Department of Health and Social Security gave an assurance in the House of Commons as recently as 10th December 1986 that the working of this scheme was to be monitored by the examination of the reports received under the Abortion Act from all clinics and practitioners. The Minister said that in any case where it appeared that a contravention of the Infant Life (Preservation) Act has occurred, that case would be followed up.
What more can one want? If the Minister is enforcing the aims of the Bill without for the present the statutory power behind it, is it not desirable that it

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should continue without embracing the complications of embarking on further legislation?
For a minute or two I want to describe the complications of this simple Bill. I have already referred to them. I submit to the House that it would be undesirable and perhaps dangerous to try to enforce the Infant Life (Preservation) Act, which now relates to a gestation period of 28 weeks, at the new level of 24 weeks with no experience of the change, without having to resort to the law to enforce it. If the experimental period now in operation should prove unsuccessful, ways and means could be found through the law to enforce the new limit, not necessarily by the means proposed by the right reverend Prelate but probably by amending the Abortion Act.
However, let me point out to the right reverend Prelate that this Bill does not apply to Scotland any more than the Infant Life (Preservation) Act 1929 applies to Scotland. But the Abortion Act does apply to Scotland. That is one complication of using the instrument of the Infant Life (Preservation) Act. I wish to submit to the House that there could be serious difficulties in obtaining a conviction from a jury on the reduced level of 24 weeks if the court were asked to take as prima facie evidence that the woman was pregnant of a child capable of being born alive at 24 weeks when there is the certainty that one could take that charge against an accused person at 28 weeks.
One cannot play about with 24 weeks and be absolutely 100 per cent. certain. In present conditions one can be certain at 28 weeks but not at 24 weeks. It is only by clinical experience and attempts to apply the new level of gestation that we shall know for certain how reliable it will be so as to change the law.
I cannot see that what divides us justifies embarking on the controversial course of trying to change the law. If nothing were being done I should have some sympathy with that course, but when so much is being done one cannot have sympathy with it. If the right reverend Prelate thinks that this Bill is such a simple one that it will be passed without difficulty, he is gravely mistaken. We should have to fight very hard in Committee on this Bill because we should have to safeguard not only the professions but the women—the mothers who might otherwise stand in the dock charged with an offence under the Infant Life (Preservation) Act prima facie because they had a child of 24 weeks' gestation.
I submit that a firm rule can be applied far more effectively at present than the law could be enforced. The DHSS and other authorities can be in full control where the law can never be, and indeed might be an unreliable instrument in the hands of criminal justice. Considerations of criminal justice certainly would arise if it were proposed, as this Bill proposes, to transfer the penology of the 1929 Act at 28 weeks to the new level of 24 weeks, with the possibility of conviction on prime facie assumption of pregnancy, leaving the onus on the accused to prove innocence, and if on conviction there was a penalty of up to life imprisonment. That would be intolerable.
The Earl of Longford: My Lords—
Lord Houghton of Sowerby: My Lords, I shall not give way because I am about to finish. In the
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circumstances, there is every reason why we should set aside the Bill for the time being. That would allow the experiment to continue. I shall not dwell upon the new menace of AIDS, the AIDS virus and unborn babies, but a new problem is obviously looming ahead in that grave area. That again may have some influence on social policy.
In the meantime, let the concordat reached between the Minister and the professions, which is now being tested by experience, continue. Do not let us attempt to back up what by voluntary and other disciplinary means is being made effective. The number of cases of 24-week gestation will come down. We may well eradicate the problem by the system and without any legislation. Guidelines are preferable to a law that cannot be enforced. Juries may hesitate to bring convictions against women who are innocent but whom the law presumes to be guilty.
The Minister should come out boldly and clearly and tell us the Government's position. I ask the House to support the amendment. I hope that the right reverend Prelate will feel disposed at the end of the debate to withdraw the Bill and spare us all the commotion, controversy and bitterness that are almost inevitable if it is pursued towards the statute book. Let us leave the law as it is. We shall then have good will towards one another. We have one aim. Let all sides be willing to give the present policy a trial before we embark upon the contentious course of proposing legislation.
The Earl of Longford: My Lords, before the noble Lord sits down, he said that life imprisonment attached to an infringement of the 1929 Act. I take it that he means that it is the maximum penalty.
Lord Houghton of Sowerby: Yes.
The Earl of Longford: It is not mandatory, is it?
Lord Houghton of Sowerby: No, my Lords. It is not a mandatory sentence. It is the highest level of punishment. After all, the offence is murder. There are a number of other heinous crimes for which the sentence is imprisonment for life. I doubt whether juries would find it possible to convict some accused persons who have the possible danger of long imprisonment awaiting them. I beg to move.
Moved, as an amendment to the Motion, That the Bill be now read a second time, to leave out ("now") and at the end insert ("this day six months").—(Lord Houghton of Sowerby.)
8.53 p.m.
Baroness Braye: My Lords, I raise to give my wholehearted support to the Bill. I fully understand why some people regard abortion as an inappropriate subject for a maiden speech. In my experience private conversations about abortion have become so acrimonious that courtesy and good fellowship evaporate at the mention of the word.
I sincerely believe, however, that with regard to this Bill that legacy of bitter confrontation can be put aside. To me the root cause of the bitterness, put simply, is that with regard to the unborn child, where I would speak of "someone" many people with perfect

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sincerity would speak of "something". This dichotomy means that many powerful and impassioned arguments which have grown up from the basic premise on either side are meaningless to the other side. Frustration and fury result. I hope that I am right in thinking that the majority of people would refer to a child capable of being born alive, which is all that we are concerned with tonight, as "someone".
This is by any standards a rational, modest Bill. I am sure that it will elicit a rational and moderate response. According to OPCS figures, the number of abortions over 25 weeks of pregnancy seems to be declining steadily, from 102 in 1982 to 33 in 1985. We are not therefore asking for the reversal of a trend.
There is little that I can add to the right reverend Prelate's exposition of the Infant Life (Preservation) Act as it stands now and as we should like to see it in the future. The intention of the 1929 Act is beyond dispute—the protection by law of any infant capable of being born alive. Advances in obstetrics and paediatrics in the past 58 years are also beyond dispute. Babies frequently survive birth at 24 weeks or even earlier.
The problem begins, as so often, with the definition of terms. At the moment, as I understand it, the only incontestable proof that an infant of fewer than 28 weeks is capable of being born alive is that it should be born alive. Clearly that is now unsatisfactory.
We ask that 24 instead of 28 weeks' gestation should be declared to be prima facie evidence of that capability. This is not so much a change of law as a shift in the burden of proof. A new group of infants would thereby be afforded the full protection of the law. This change of wording would update a piece of legislation which has now been overtaken by events. That the law should be clear and unequivocal is essential, particularly for those whom we expect to carry it out. It would also allow some human beings to be born each year who might otherwise not be.
The issue of the potentially handicapped infant is highly controversial. I should not dream of attempting an exhaustive argument about it tonight. I do not underestimate the mental anguish of knowing that one is likely to give birth to a child who is in some way defective. For a variety of reasons, such as awaiting the results of tests, that knowledge can occasionally come distressingly late. A woman in such a position needs all the support, encouragement and practical help that she can obtain. What she does not need, I suggest, is any kind of pressure to have a late abortion.
There are positive alternatives. None of them is perfect but many of them are excellent. There are also many people ready and willing to help mothers find the best ones. We live after all in a society where more than ever before is done to improve the quality of life of the severely disabled and to proclaim their equality in dignity and status.
I see no reason not to extend that benevolence to the infants with whom we are concerned tonight. In conclusion, we are all aware of the intention of the 1929 Act. We are all aware of the progress in modern medicine. The passage of the Bill would merely mean that the one is brought into line with the other. It is a
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modest measure indeed but a worthwhile one to all of us who believe in the value of every human life.
8.59 p.m.
Lord McGregor of Durris: My Lords, it is my privilege to undertake the one agreeable part of what must be for all your Lordships a debate on an unpleasant and depressing subject. It is the happy tradition of your Lordships' House that the speaker who follows a maiden speech congratulates the Peer who delivered it. In her tightly reasoned and elegantly constructed speech, the noble Baroness has poured a stream of cooling eloquence upon what may develop into a heated debate. We welcome her presence, we thank her for her speech and we look forward to regular contributions from her.
As the noble Baroness said, abortion is one of the subjects about which opinions are sharply and often bitterly divided. Those who traditionally have been most closely involved in the debate—moralists, Christians and medical people—must be presumed in their special fields to be equally learned, equally experienced and equally devoted to the public weal. Yet, as the right reverend Prelate acknowledged, they form groupings which draw conflicting conclusions from the same information. Accordingly, the rest of us, when faced with conflict among the authoritative, must judge choices of action and legislation in accordance with our own estimates of wherein the public good lies.
In particular, we must practise the habit of toleration of other people's views, without which a democratic and pluralist society could not survive. That is very difficult because toleration does not reside in our putting up with or agreeing with views about which we do not feel strongly. The essence of this virtue is to cope with opinions which may cause one pain and anxiety and even at times disgust. I wish therefore to examine coolly the likely social consequences of the change proposed in the Bill, and in doing so I cannot avoid inflicting some statistics upon your Lordships.
If in 1985 the period of gestation had been lowered from 28 to 24 weeks, as the Bill proposes, the number of women who would have been denied abortion would have been some 471. That is rather higher than the 33 cited by the right reverend Prelate. In calculating the number I have allowed for the practice of doctors to allow for a period of two weeks as against the estimate of the period of gestation. That number, 471, is relatively small. Even so, it would have amounted to no more than one-third of 1 per cent. of all abortions in 1985, a very small number.
However, knowledge of the circumstances of the women affected, of the mothers involved, is scanty. The most recent study of late abortions carried out by the Royal College of Obstetricians and Gynaecologists and published in 1984 found that women under 20 years of age constituted more than one half of all the abortions performed after the 20th week of pregnancy. A further 19 per cent. were carried out because of foetal abnormality. Of especial concern was the finding that, while most malformations were diagnosed by the 20th week of pregnancy "a significant minority"—that is the phrase in the report—were not identified until week 25 or 26.

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In a further paper based on these data Dr. Alberman concluded:
"The next few years may see the introduction of tests for earlier detection of many defects, so that the age limit of legal viability will be less critical",
as the right reverend Prelate pointed out. It goes on to say:
"Until such tests are widely available, even with improvements in administrative and operative procedures, a lowering of the age limit of viability is bound to impose a limit on the number of legal abortions that can he done for severely handicapping conditions.".
It is to be noted, as the noble Lord, Lord Houghton of Sowerby, pointed out, that the DHSS exercises close administrative supervision over all cases of termination of pregnancy where the stage of gestation is over 20 weeks. An ultrasound scan is required to be performed as a safeguard to patients and in the interests of operating doctors and the proprietors of nursing homes. Since the summer of 1985 the Minister for Health acted to ensure that any private abortion clinic would lose its licence if abortions were performed after 24 weeks. That is hardly in the character, one would have thought, of what the right reverend Prelate described as a gentleman's agreement. Moreover, all such cases must be dealt with by the National Health Service.
Of the women who would be affected by the change proposed in the Bill, two-thirds will be carrying seriously malformed foetuses or will be below the age of 20. Therefore, it is highly desirable when discussing abortion and a change in the period of gestation to take into account the opinions of the women who suffer a procedure which gives serious upset to everyone else involved, be they doctors, nurses, supportive friends or relatives or fathers who will not be.
The Lord Bishop of Birmingham: My Lords, will the noble Lord make it clear whether he is referring to statistics from the 20th week, the 22nd week or the 24th week?
Lord McGregor of Durris: My Lords, I am assuming that the age of 24 weeks applied in 1985. I am taking the 471 women who would then have been denied an abortion under the changes proposed in the Bill and considering the constitution of that group in so far as we know anything about it. As the right reverend Prelate pointed out, OPCS has no further information to offer. All that can be extracted is from the report which I have just cited, and I am applying its proportions to the 471.
Many voices, most of which are male, have been heard overloudly on this subject. Your Lordships' debate is in one sense typical. There are 17 voices of which only three are those of women. We know almost nothing of the views and feelings of the people primarily concerned. Astonishingly enough, a recent issue of the Journal of Medical Ethics carries a report of what I belive to be a survey containing the very first information about the attitudes of mothers to caring for one category of severely handicapped children; namely, children who are mentally handicapped.
The children reported on in this survey are now between the ages of 19 and 25. But, of the 15 mothers interviewed, 10 wished with hindsight that they could have had an abortion rather than a severely
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handicapped infant. Twelve of the 15 thought that such infants should be allowed to die in peace rather than have their lives saved by medical treatment.
The numbers involved in this survey within the North-East Thames Regional Health Authority area are far too small to permit any general conclusion. But the interviews in a pilot survey suggest that many parents in this situation do not look upon a lifetime spent caring for a severely handicapped young adult as time well spent, even though they love their children, have compassion for them and want to do the best that they can for them.
Another recent study asked parents what they would do if they knew that an expected child would be severely handicapped. Seventy-eight per cent. answered that they would want the pregnancy terminated. Thus for such women carrying an abnormal foetus who are denied an abortion because of the change in the period proposed in this Bill, the lowering of the period could have shattering consequences.
When they are asked why they present themselves late to the doctors there are two main answers, as I understand, in the scanty literature. The first answer is that concerning the severely handicapped foetus there may be delays within the health service; there may be an absence of resources; or tests may take a very long time because they have to be repeated. There are a number of administrative problems which can be cured or greatly improved by looking at administrative procedures before we attempt to change the law.
The second group who are late are the ones with whose circumstances I am familiar and about whom I have to declare an interest because I am president of the National Council for One-Parent Families. These are the youngsters, the teenagers, who come late for reasons which are too obvious to mention. They are worried about telling their parents. They are young enough to conceal the fact that they are pregant for up to 24 weeks. These are the people for whom pregnancy may be a life-destroying event. Therefore, I would plead with the right reverend Prelate to consider the administrative changes which may greatly improve the situation and remove the risk to the 400-odd women who are going to suffer under his Bill.
The right reverend Prelate asked whether 33 instances are not adequate for legislation on rape? Of course they are. Are not 400-odd instances adequate to delay a piece of legislation with the likely consequences of his Bill? I hope that your Lordships may be willing to look at this proposal in the light, first of all, of the lack of any pressure for it. Doctors, so far as I am aware, are not clamouring for new legislation. In fact, my understanding is that it is the last thing in which they want to be involved at the moment. There is no clamour.
As the noble Lord, Lord Houghton of Sowerby, pointed out, the present arrangements, though they work badly for the vulnerable groups I have been talking about, are otherwise perfectly satisfactory, and so regarded, again, so far as I understand, by all those involved. I therefore plead with the right reverend Prelate that before involving ourselves, or involving everyone, in a bitter and cataclysmic debate running over months in an area that is currently operating well,

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and, moreover, moving precisely in the direction he seeks, our motto at the moment should surely be to leave well alone.
9.16 p.m.
Lord Robertson of Oakridge: My Lords, I should like first to take up one point made by the noble Lord, Lord McGregor of Durris, about the opinions of women. Before introducing my unsuccessful Bill in 1982 to tighten up the abortion law, I was written to by a number of women claiming to represent the views of other women. I have no doubt that to a certain extent they did. After the Bill's failure, when any views were obviously expressed from the heart and not inspired by pressure groups, I had 20 or 30 letters from women regretting its failure and two saying that the writers were glad that it had failed. Therefore, we cannot be all that certain how the majority of women really feel on the subject.
Like other noble Lords, I am grateful to the right reverend Prelate the Bishop of Birmingham for initiating the debate. If nothing else we have heard a first-class maiden speech by the noble Baroness, Lady Braye. How I echo her wish—it would be my endeavour to put this into practice myself—that we should discuss the matter without bitterness.
With one important caveat I support the Bill. My caveat is that I feel that it could lead to a misconception. It might be thought that support for the Bill implies not only disapproval of abortions over 24 weeks but approval of abortions under that stage. So far as I am concerned—and there are many like me—this is not the case.
The reason is that there is little difference in principle between an unborn child of, say, 26 weeks gestation who may at that time be capable of being born alive, and an unborn child of, say, 16 weeks gestation who may equally well be capable of being born alive if only left in peace in utero for a further 10 weeks. Both, I feel, are entitled to our love, care, and protection.
With this one qualification, however, I support the Bill. It makes no change of principle but it recognises the advance in medical skills and techniques since 1929 and, above all, it would save lives. Not many, but every life counts! Furthermore, it would spare some unborn children the appalling suffering caused by abortion when it takes place. It is horrifying to learn from the right reverend Prelate that an appreciable number of very late abortions are done by the dilatation and dismemberment procedure whereby the child is torn to pieces in the womb. Therefore, I hope that the Bill has a smooth and quick passage through your Lordships' House.
9.20 p.m
The Duke of Norfolk: My Lords, I should like to congratulate the right reverend Prelate on his speech, which I thought covered the whole subject admirably. He went into it in great detail and put the statistics in the right proportion to support the argument.
I found the speech of the noble Lord, Lord McGregor of Durris, quite frequently slightly
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irrelevant. Some of it was full of non sequiturs. In particular I cannot understand, for example, why he thinks women should know more about this subject than men. It seems to me to be a question of our own human life and nothing to do with whether one is male or female. I felt the same about other points he made.
I now congratulate the noble Baroness, Lady Braye. She made an excellent speech, as was shown by all of us as she made it. We thought it was wonderful. It is very unnerving and we were all kind, but we wanted to be kind. The noble Baroness made a wonderful speech and I totally support everything she said.
I want to say a very few words. It was suggested, I think by the noble Lord, Lord McGregor, that there was not a great feeling about this Bill. There is an enormously widespread criticism and clamour to have the abortion laws of this country changed. The Christian Churches and some of the other Churches too are ashamed of our abortion laws.
I know a little about this subject because my daughter had a premature baby in St. Mary's, Paddington. It was born at 28 weeks. That baby, my grandchild, is a happy, flourishing human being whom I saw only last week. When I went to the Paddington hospital to see this little baby in the life support machine I saw many other babies. One of them survived at 24 weeks. It is a live and happy baby now. I understand that there are cases where babies of 20 weeks have survived. Those are figures that I have been given.
Late abortion is normally carried out by dilatation and extraction. That means that the body of the baby is crushed and dismembered in the womb and then removed piecemeal. That is what happens. If anybody thinks that is an admirable thing for human beings to do, to advocate or to allow, I totally and utterly disagree.
Viscount Craigavon: My Lords, the noble Duke refers to that practice being used in late abortions. Can he tell us what he means by late abortions? I understand that what one might call very late abortions, after 24 weeks, are no longer done in the private sector. That practice was being carried on in the private sector, whereas according to the report, to which the right reverend Prelate referred, of the Royal College of Obstetricians and Gynaecologists in 1984 the prevalence of that in the NHS was only 4 per cent.
The Duke of Norfolk: My Lords, I thank the noble Viscount for his intervention. I am in no way a doctor. I have lived my life largely in the army over the whole world and have seen a great deal of life. I understand that if the baby has reached the size of a 24-week to 28-week gestational age it is so big in the womb that it cannot be extracted without murdering and dismembering it. May I just continue the point? The noble Viscount may interrupt me in a moment. That is a simple fact: the baby has reached such a stage of life that you cannot extract it by any other means.
Viscount Craigavon: My Lords, I am sorry to interrupt again. I know I shall have a chance to speak later on, but this is so essential. It is very colourful language, which people remember. It is my

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understanding that that practice, called D and E, which, as I say, at the time of the 1984 report was only prevalent to the extent of 4 per cent. in the National Health Service, would not now apply to abortions over 24 weeks because, as we are maintaining, abortions after 24 weeks are now done only in the NHS and so the factor which the noble Duke is raising really does not apply.
Lord Brougham and Vaux: My Lords, may I remind the noble Viscount that he will be speaking later, and he is slightly out of order?
The Duke of Norfolk: My Lords, I am just saying that I think this method of destroying a foetus in the womb at the 24 or 28 weeks' gestation period is a barbaric practice, of which I think our nation should be ashamed. It is a blot on Western civilisation.
I now turn to the fact that London is often called the late abortion capital because in most other countries abortions are not allowed after 12 weeks. I think it is really scandalous that in our country rich mothers come over here, go to private clinics and pay for these late abortions which they could not get in other countries. I do not think it is a happy situation that we in this House should be pleased to allow it to go on. One of the great points about this Bill of the right reverend Prelate is that it would stop that. I strongly support the Bill as a step in the right direction, and I thank the right reverend Prelate for introducing it.
9.28 p.m.
The Earl of Longford: My Lords, I shall speak very briefly and the brevity of my speech will not do justice to the strength of my convictions. I am sure that is true of the silence of many on both sides of the argument who are not speaking tonight. The noble Duke has expressed views which are held far and wide by Roman Catholics and by others, and I need not do much to amplify his arguments. I entirely endorse what he said and particularly join in the tribute to the noble Baroness who made such an outstanding maiden speech.
I am speaking partly and only really for a moment or two because I think it would be a very bad idea if the word got about that the Labour Party was a party that favoured abortion. It would be a pity therefore if no one spoke from the Labour Benches who is in favour of this Bill. The noble Lord, Lord Houghton, of course has been a champion, honourably and strenuously, of abortion law reform for many years. Speaking as a junior octogenarian, I salute one of my senior brethren, and I only hope that eight years from now I have a quarter of his vigour. That is without prejudice, I may say, to his views about abortion.
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I have no need to say more about my party except that, with the usual tolerance and liberality of outlook—I am informed that this is an entirely free vote—any views expressed, and no doubt expressed by some with much more personal authority than I can muster, will be entirely personal views. My views of course are entirely my own.
I was Leader of this House, sitting on the opposite side, when this abortion Bill came forward in 1967. There were a few veterans of those days, among them the noble Viscount, Lord Barrington, who played a prominent part; and there were others who are also here tonight, such as the noble Lord, Lord Molson, and the noble Earl, Lord Perth. But no one, I think, spoke in that debate except myself. I spoke, the House may be alarmed to hear, for 23 minutes. I have just looked it up. The House is not at all in that kind of peril tonight.
I shall read out just one passage. I left my seat as Leader of the House to speak against the Bill, so your Lordships will see that I felt quite strongly. I said:
"We begin with the conviction that human life is sacred; that the unborn child possesses a form of human life; that to terminate a pregnancy is to take human life and therefore is to commit homicide. There is a strong presumption that it is unjustifiable homicide."[Official Report, 19/7/67; col 311.]
I could not put it better now. At any rate, that is how I put it 20 years ago.
I made the point and I was of course thinking of someone who had then been married for many years and had children and was on her way to having plenty of grandchildren. I had in mind that there would be circumstances in which, if I was asked should the woman in question have an abortion, I would say, yes. I made it plain then and I would say it now. But I was saying there is a strong presumption that abortion is an unjustifiable homicide. I would only add that I then predicted that this would lead to abortion on demand. It was said that that was quite ridiculous, that there is no such thing and that it was a Roman Catholic fantasy. But in fact what happened has been much closer to abortion on demand than anyone predicted or allowed for officially at that time.
I naturally support the Bill. It would be humbug for me to pretend that I am able to pursue the wise and prudent tactical line oulined by the right reverend Prelate. I am sure that that is a very sensible line, but it would be humbug for me not to admit that I come here as an enemy of abortion and I shall support him in the Lobby tonight.
Viscount Barrington: My Lords, before the noble Earl sits down, as he has mentioned my name may I assure him personally that I have not changed by views in the least from the time when I opposed that Bill at the start, and I very much agreed with what the right reverend Prelate said.
9.32 p.m.
Lord Henderson of Brompton: My Lords, I should like at the outset to add my congratulations to the noble Baroness on her maiden speech which was, if I may say so entirely exemplary. I should like to quote from the preface of the report on Fetal Viability and Clinical Practice:
"I hope that the legislators will now discuss this matter in a statesmanlike manner free from emotional overtures"—
I think the chairman must have meant overtones—
"which so often seem to dominate debates in this field".
The noble Baroness could not have fulfilled that hope more successfully, and I hope that we shall hear more from her in future. I say that with great sincerity although I differ, as will become plain, from her point of view.
I follow the noble Duke, the Duke of Norfolk, but I cannot say the same of his speech. I cannot say that it was statesmanlike or free from emotional overtones. It was charged with emotion. He talked of Christian clamour. He gave us horror stories of dismemberment in the womb. It was exactly the kind of speech that the chairman of the committee in writing the preface hoped we would not have, and I very much regret its tone and its utterance.
The noble Earl, Lord Longford, said that there was to be an entirely free vote, or so he was informed—
The Earl of Longford: I am sorry, my Lords, I can only speak for the Labour Party. I cannot speak for the other lot.
Lord Henderson of Brompton: My Lords, the noble Earl said he thought there was to be a free vote, or so he was informed, and I am sure there is. But looking around the Chamber, I cannot help wondering. I recall the words of Stalin, "How many divisions has the Pope?" I shall adapt that, if I may, and ask the question, "How many Peers has the Duke of Norfolk?" I see quite a number dotted around, and I hope that they will all have a free vote. Indeed, I see seven Members of the Bishops' Bench, and I hope that the right reverend Prelates will also enjoy a free vote. I see them nodding and I am gratified that that is so.
I find myself in the position of following no less than three speakers who are strongly opposed to abortion altogether and in any circumstances. I do not think that I do them an injustice when I say that. It is, I believe, a plain matter of fact. All spoke for themselves and, I have no doubt, out of strong religious feeling which I very much respect.
In the case of Roman Catholics, they are also following the doctrine and discipline of the Church. I do not wish to misrepresent them in any way. I understand that they are totally opposed to abortion in any form whatsoever and at any stage of pregnancy. I wish to establish that point because it is in strong contrast to the opinion of the right reverend Prelate the Bishop of Birmingham. I took down his words. The right reverend Prelate said that he is not opposed to the abortion laws themselves. He said,
"I am in favour of abortion in certain circumstances".
He also went on to say,
"my Bill is not concerned with the Abortion Act".
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I ask the right reverend Prelate, whom I acquit of disingenuousness, whether it is not possible that he is the catspaw of those who wish to see the end of abortion altogether? That is their aim and the trend of their speeches. They have said that specifically.
There is a fundamental difference between the right reverend Prelate, who is in favour of abortion in certain circumstances, and other noble Lords who have spoken who are against it altogether. I think it fair to draw the distinction between the right reverend Prelate and noble Lords who have spoken in that sense.
I do not wish to press the right reverend Prelate on the moral point. I think he has had a tough enough time already at the hands of the noble and learned Lord the Lord Chancellor as regards the Family Law reform Bill. He did say, in all innocence, that this Bill is not concerned with the Abortion Act. However, it is. It is concerned with the operation of that section of the Abortion Act which refers to the Infant Life (Preservation) Act.
The moment one brick is removed from the abortion law edifice, then the rest shifts slightly. Whatever the right reverend Prelate's intentions are and whatever he may say, there is no doubt that his Bill is concerned with the Abortion Act, whether or not he thinks it is. At all events, I believe that the right reverend Prelate has made his position quite clear in this House as well as on television and in the press, and that position differs very substantially from the position of those who have supported him today. That has been plain for all of us to hear. With great respect to the right reverend Prelate, I should say that his initiative today is being exploited by those who wish to go much further than he does.
The views expressed by the Peers who spoke immediately before me are the views expressed by the Save the Unborn Child organisation. In some recently circulated briefing material, it stated the wish to substitute 20 weeks for the present 28 weeks. And, clearly, that would be only an interim measure until legal abortion was abolished altogether. That is so, because it is implicit in the following very revealing sentence:
"Not that late abortions are morally worse than early ones, of course".
That is an honest statement. It was forthrightly echoed by the noble Lord, Lord Robertson of Oakridge, and indicates clearly that the right reverend Prelate's Bill is the start of an all-out attack on the abortion laws. I hope that he is aware of that.
I should like to say two things at this stage. First, in our secular society, our plural society to which the noble Lord, Lord McGregor of Durris, referred, our morality is not dictated by the Churches. The Churches are given, scrupulously, freedom of worship and freedom of utterance in our society. I strongly support and applaud that. Due regard is paid to their views collectively and individually expressed. But since we do not live in a theocracy nowadays, the views of the Churches, which, in any case, often differ substantially on moral questions, do not necessarily prevail. Therefore, the morality of the state can and often does differ from the morality of the Churches.

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I take the existing law of the land on this subject to be morally right, kindly and humane. In my view, abortions should be allowed to be performed legally according to the carefully defined rules laid down in the Abortion Act. I cannot expect the noble Duke and the noble Earl to agree with me, but I hope that they will respect my moral sense just as I respect theirs. The noble Duke spoke as if all those who did not agree with him were moral outcasts. I hope he will take the opportunity of dispelling that impression which he certainly gave to me and I feel he probably gave to others in this House as well.
The Duke of Norfolk: My Lords, may I straightaway say that in no way did I suggest that anyone was a moral outcast? If I may say so, I think the noble Lord is saying things which really are not quite fair.
Lord Henderson of Brompton: My Lords, I should like, with the noble Lord, Lord Houghton of Sowerby, to plead very seriously with the right reverend Prelate to withdraw his Bill, not just for the reasons which I have already adduced but because it is too complex a matter to be dealt with in a Private Member's Bill. It simply seeks to amend the Infant Life (Preservation) Act 1929. But the abortion laws are highly complex and should not be disturbed without the greatest possible care and consultation.
Apart from the Act of 1929, there is the earlier Offences against the Person Act 1861, the Birth and Death Registration Act and the Abortion Act itself. The Abortion Act of 1967 was the result of many sessions of legislative labour and compromise. It is a settlement which ought not to be disturbed. It has been proved to be well founded in its 19 or 20 years of operation. If it is to be disturbed, nothing should be done without careful consideration by a committee. I am perhaps biased, but I would prefer a parliamentary committee. The overtones are so great that it is right they should be considered, along with the statistics, by those who are in Parliament.
The report of the Fetal Viability and Criminal Practice Committee is undoubtedly of importance. But the right reverend Prelate picked out only one or two of its recommendations. All the recommendations should be considered carefully by the House, preferably by a Committee of the House, before we proceed to pick away, even by one alteration, as the right reverend Prelate suggests.
The Bill ignores the progress that has been made by the DHSS in its controls in 1975, 1980 and in 1985. The last is the most important. I would say to the right reverend Prelate that it is unimaginable that any doctor, whether in the NHS or elsewhere, would conceivably perform a late abortion unless he was bound to do so morally and at the request of the patient. The doctor must be satisfied that the operation falls within the criteria of the Act. According to the morality of the doctors who have to weigh up these heavy decisions, a morality which I share, it is both morally right and humane for operations to be performed on the very small group of
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vulnerable women who for reasons beyond their control seek a termination at 22 weeks or 24 weeks.
Apart from this Bill being too simple, it would be an unacceptable narrowing of clinicians' freedom. For those two reasons only, I very much hope that the right reverend Prelate will withdraw the measure. Failing that, I think it is necessary to support the amendment of the noble Lord, Lord Houghton of Sowerby. Whether or not the Bill will get a Second Reading, I do not know. If it does, serious thought should be given to its being referred to a Select Committee for more minute consideration than it could possibly receive on the Floor of the House.
9.47 p.m.
Lord Winstanley: My Lords, like the noble Lord, Lord Henderson of Brompton, I am profoundly uneasy about the Bill. In saying that, I should make it quite clear that that is my opinion and not necessarily the opinion of my noble friends on these Benches, as indeed was made clear by the sensible intervention of my noble friend Lord Barrington. This is not a party matter but it is one on which I feel very deeply. I hope, and the hope has already been expressed by others, that those of us who disagree will accept that the opinions we all hold, though different, are held in good faith.
I was very glad that the noble Duke, the Duke of Norfolk, said what he did in response to the noble Lord, Lord Henderson. I should like to say to the noble Duke, whom I respect greatly—we have worked closely together on many matters—and who told us about his young grandchild who survived having been born prematurely, that whatever views I express about this Bill I rejoice when a healthy premature baby survives; of course I do.
I hope noble Lords will accept that my views are quite clear. I was the second sponsor of the Abortion Bill which was introduced by my right honourable friend Mr. Steel in another place; and as a doctor I was responsible for the responses on behalf of the sponsors of the Bill in the debates at the Committee and Report stages on medical matters, which particularly concerned the questions of abnormal or seriously abnormal foetuses. I was brought very much into this question at that stage.
The right reverend Prelate told us that he does not seek to amend the Abortion Act 1967. He may not seek to do so but, as the noble Lord, Lord Henderson of Brompton, said, he is in fact doing so. Section 5 of the Abortion Act 1967 states:
"Nothing in this Act shall affect the provisions of the Infant Life (Preservation) Act 1929 (protecting the life of the viable foetus)".
If one alters the provisions of the Infant Life (Preservation) Act 1929, by doing so one is necessarily altering the Abortion Act 1967. That follows. I do not think that the right reverend Prelate is being devious—not even for a bishop, if I may say so—
The Lord Bishop of Birmingham: My Lords, the noble Lord will perhaps recollect that I said the only way in which the Bill affected the Abortion Act is in so far as Section 5(1) is concerned.
Lord Winstanley: My Lords, I am grateful to the right reverend Prelate because he has now said that he does seek to alter the Abortion Act; and of course he would alter it quite significantly if his Bill goes through.
I have another worry. The right reverend Prelate said that there had been four attempts in another place to amend the Abortion Act 1967; I repeat, four attempts. In looking at the Long Title of this Bill I see that it is perfectly possible in another place for Members who seek to undermine the Abortion Act altogether to do so—and there are many who are totally opposed to it and would like in some way to put it at naught. There is no limit to the extent to which they may seek to make further amendments to this Bill and therefore further amend the Abortion Act. Therefore, I can foresee what we have had over recent years—a whole number of Private Members' Bills with publicity and argument on matters about which we all feel strongly and which are of the greatest possible importance. I do not think it is helpful to a cause of this kind to have repeated rows of that nature in another place and which perhaps in the end come to nothing.
Certainly I should like to see changes. I hope the right reverend Prelate will accept that, although I told him I was second sponsor to the Abortion Bill, that does not mean I am in favour of abortion. I was extremely angry when accused of being pro-abortion. I am not in favour of abortion. I regard abortion as a highly undesirable procedure, but I believe that there are a certain number of specified cases where it is the course of action of choice, which has to be undertaken, however undesirable. I hope that is accepted.
I also deeply believe that, if abortions have to be performed, the earlier they are performed the better. I am well aware that efforts are being made by doctors, social workers and others, to make sure that that happens wherever possible. But it does not always happen. Because of the bureaucratic inertia present within the National Health Service and because of resistance raised in certain places by certain persons—I am sure with the best of motives—there are many occasions on which the whole process of seeing a doctor, being referred to other doctors, having a second opinion and so on can be extended and lengthened to such a degree that the time comes late, perhaps far too late, and much later than it need have done.
Therefore, we have the delays that arise from the present working methods in the National Health Service, and perhaps occasionally from the lack of resources in certain areas, that in some circumstances result in a woman coming forward for an abortion at a stage much later than any of us would like to see.
The second category of cases about which I am seriously concerned are those discussed at some length and clearly and directly by my noble friend Lord McGregor of Durris when he referred to the seriously abnormal foetus. That is a matter of considerable importance. The right reverend Prelate referred to the law in certain other countries—in France, Germany, Sweden and so on. What is unusual about our law is that when it was passed it was the first time that a law had made specific provision for the termination of a pregnancy where there was reason to believe that if the
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child was born it would be seriously handicapped, mentally or physically. That had never previously been done. On the whole it had been argued on the grounds of the effect on the health of the mother.
At the time we were dealing with that in another place on the earlier Bill it was occasionally put to us that if, for example, the mother contracted rubella or German measles at the dangerous stage of the pregnancy there was the assumption that the foetus may be born seriously handicapped. I have had personal experience of a child who was born after an abortion was refused—it was long before the Act—and where the mother had suffered from German measles in about the fourth month of pregnancy. The child was born blind and deaf. The family had a desperate time. I honestly believe that the child had a desperate time as well, and the family suffered seriously.
I said at that time that one hoped that advances in medical science would make it possible to diagnose with certainty an abnormality in a foetus and to assess the degree of abnormality at a reasonable period in the pregnancy, so that, if it was decided by all the parties concerned and considered advisable, a termination could be carried out.
Progress has been made and diagnostic measures have improved. However, even with the best diagnostic measures, there are cases of very severe handicap which cannot be diagnosed with absolute certainty until quite late in a pregnancy. It is in the main those which have been responsible for the very few cases of late terminations that are now arising.
I rejoice that thay are very few, and I should like them to be very much fewer. I hope that we are moving towards that stage. Indeed, I think that we shall move towards that stage not so much by statue but by improvements in medical knowledge and services and a change in the attitude of practitioners so that this is dealt with in a different way.
As the noble Lords, Lord Henderson of Brompton and Lord Houghton of Sowerby, explained, the steps taken by the previous Minister for Health are indeed being reinforced by present Ministers in the Department of Health and Social Security in its consultations with the medical profession. I believe that steps are now being taken to do everything possible to eliminate abortions wherever possible. I believe that there will always be circumstances when it will be inevitable that late abortion should take place, particularly in a case of very serious foetal abnormality.
As to the noble Baroness, Lady Braye, whose maiden speech I greatly admired—I am very glad that she has returned because I wanted to say that—I was much moved by what she said about a human being being born who would not otherwise have been born. But as a general practitioner with experience in this field, let me refer to two cases. I referred earlier to one case where a termination was not performed and a family was well nigh destroyed by the birth of a desperately handicapped infant, this into a family where there were already three children and difficulties.
I have had experience of cases where there was termination. Where a termination was carried out because of foetal abnormality, with the desire of the

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parents, with their full consent and at their request, there was a tendency for the couple to have another child as soon as possible. My experience with a woman who has been compelled bureaucratically or legally to bear a seriously handicapped child is that there is no way in in which she will bring another child into the world. I therefore say to the noble Baroness that I know of cases of human beings being born into the world who would not have been born had those steps not been taken with an earlier pregnancy.
The right reverend Prelate made much of the report of the joint working party, comprised of many professional bodies, on the age of viability. I think that it is right to remind him that that working party was concerned in the main with the time of viability not so much from the point of view of abortion but because of important considerations regarding death certification, what was and what was not a still-birth, whether a death certificate had to be registered in certain cases and so on. The decision was taken that in view of our present knowledge the age of viability ought to be brought down a little to meet those cases.
Important matters rest upon the consideration of entitlement to certain benefits, certain legal responsibility, certification and registration of a death as against a still-birth. The fact that the British Medical Association agreed with that on the basis of the necessity to bring down the of viability because of the consideration of whether there has been a still-birth, a death, an abortion or a miscarriage does not mean that the BMA supports the Bill.
I am advised by senior spokesmen of the BMA that quite explicitly it does not support the Bill. It would like to see the age of a foetus for abortion come down and to see fewer later abortions performed. The BMA believes that fewer later abortions will be performed but not that this Bill will be helpful to the steps that doctors and other professional people are taking in this regard.
I shall say no more save that I too hope that the right reverend Prelate will think again. Perhaps if the Bill proceeds to another place it could be used as a springboard for a whole series of attempts to amend it still further by those whose desire is not to improve the present arrangements or to deal with the relatively small matter numerically about which the right reverend Prelate is talking but to sabotage altogether the whole issue of abortion. I respect their views. I know that the noble Earl, Lord Longford, and the noble Duke, the Duke of Norfolk, are opposed to abortion under all circumstances—perhaps even abortion to save the life of the mother, I do not know.
The Earl of Longford: My Lords, perhaps I may interrupt the noble Lord to say that I made it plain when I was speaking, though perhaps he was not present, that in exceptional circumstances I would agree. I emphasised that.
Lord Winstanley: My Lords, I am most grateful to the noble Earl and I am sorry that I overlooked what he said. However, I recollect that he said that on a previous occasion, and I dare say that others believe the same.
The Duke of Norfolk: My Lords, I should like to say that I spoke only to this Bill. In no way did I speak generally about abortion. I think that one of the things that your Lordships have noticed so often is the careful way in which the Bill is framed.
Lord Winstanley: My Lords, I am indeed grateful to the noble Duke for that information. I meant to say that I understand the point of view of those people who because of their sincere beliefs would like to sabotage the Abortion Act of 1967. There are people who would like to do that, and I am opposed to them. I think that possibly this Bill could give them a launching pad for further attempts of the kind that we have seen during the past few years.
I hope that the Bill will not proceed further. But I say to the right reverend Prelate that I hope that as the years go on we shall see fewer abortions altogether. Not for a moment do I regard abortion as an acceptable alternative to sensible family planning. But I hope that we shall see fewer abortions altogether and I certainly hope that we shall see earlier abortions. I should like to see no late abortions at all. Nevertheless, I believe that it is my duty to say to your Lordships' House that I am convinced that there will always be circumstances in which a late abortion is necessary and proper and that there should be no penalty attached to those who take part in it.
Baroness Robson of Kiddington: My Lords, before my noble friend sits down, I should like to thank him very much for having pointed out as a member of the medical profession that in a foetus there may be certain grave disabilities that cannot be discovered too early. Does he agree that a mother who is faced with such knowledge should never be forced to take a decision that day as to whether she will have an abortion? She should be given at least a fortnight to think about it.
Lord Winstanley: My Lords, I agree entirely with my noble friend that any question of imposing haste or pressure of any kind on mothers in those tragic circumstances is altogether regrettable. I am inclined to think that, as the age is brought down and one appears to apply limitations, perhaps one runs the risk of increasing the pressures that may be applied to certain women.
10.3 p.m.
Lord Swinfen: My Lords, when I first looked at this Bill my immediate reaction was in favour of it. I understand that in bringing down the age of viability of a foetus to 24 weeks there remains a strong chance of a healthy infant being born alive and viable. I further understand that, because of the development of the foetus, it is unlikely that the viable term for the foetus would be reduced to 20 weeks or less. It may not reach that far. To set the period at 24 weeks would allow for any mistakes that are made about the age of the foetus.
I am told that it is possible for mistakes to be made, though with ultrasound it is becoming easier to determine the exact age of a foetus. I then started to look at the question of disability and the advances that are being made in discovering when a foetus is likely to be born a disabled person. The noble Lord, Lord Houghton, said that in the majority of cases that could not be discovered before 24 weeks.

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I took the trouble to ring up one of the professors at Guy's Hospital earlier this week and I understand that amniocentesis and ultrasound tests can now be carried out in the 16th, 17th or 18th weeks with the result coming through in three weeks, which makes 21 weeks. If the tests are inconclusive, that gives time for them to be carried out again and produce a result by 24 weeks. I gather that it is not all that common for the tests to be inconclusive.
I agree with the noble Lord, Lord Winstanley, that it is highly undesirable for, I should say, not just the mother but the father as well to have to make a decision as to whether there is an abortion. I should hope that it would be a family which was involved and not a single parent. Single parents happen, but so far as I can see it is a family matter and a family decision.
At the same time, I understand that there are certain tests that are getting much earlier and that tissue sampling of the foetus—I believe it is called chorion biopsy—can be carried out between 8 and 10 weeks with the result coming at about 12 weeks. That is not for all disabilities. There are still some disabilities that it is difficult to discover up to 28 weeks or beyond, particularly where the disability is a mental one.
I worry about whether medical facilities throughout the country are up to scratch and can produce results at the time required. That started me swinging against the Bill. I am rather like a pendulum on this Bill. I have been swinging for it and against it, because it is an extremely important matter. I have been trying to give it the consideration that it deserves.
It is not often that we have a Bill from the Bishops' Bench. I have, as the House will know, railed from behind the Bishops' Bench at the Bishops' Bench for not supporting certain ethical questions in the past. This time I congratulate it.
I understand that medical services are improving, that more doctors are being trained in the services and that we should be able to discover the disabilities, where they are discoverable, within reasonable reach of where patients are. It is obvious that from time to time there will be human error. We have human error with every Bill with which we deal. It is virtually impossible to legislate against human error.
I finally come down in favour of the Bill. With regard to disabilities, I have spent most of my working day raising funds for John Groom's Association for the Disabled. I see around me people with extremely severe disabilities. I know what worthwhile people they are when given the chance and the right facilities. Not only are we improving the methods of diagnosis so that a decision on abortion can be made early enough in most cases—if it has to be made—but we are also improving the life of disabled people when they are born.
The noble Lord, Lord McGregor of Durris, produced the results of a survey. He will correct me if I am wrong, but I believe that he said the sample was 19. That is not a very large sample and I believe that most scientists would be unhappy with the results of a survey of only 19. To get the real results from a survey of that kind one needs to see the questions that have been asked, because they can well skew the results. I have come across a number of people who have had a
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great deal of joy and pleasure from their disabled offspring—both mentally and physically disabled.
This is an extremely difficult subject. It is full of emotion. I have deliberately tried to keep away from the question of abortion because in some respects that is a different subject altogether. I know that it is tied in with this matter, but we are debating the age of a foetus when it can be deemed to be viable, if born, given proper medical attention. We must legislate for proper medical attention. We must keep up to date with the advances of medical and other sciences. We change our business practices. We are gradually changing from a heavy industrial manufacturing country to a service-providing country because that is what the world economy needs. However, that is a totally different subject again. We have to bear in mind and keep up to date with this kind of legislation on medical advances.
I welcome the Bill. I think that it may have some difficulties. I have spent a long time arguing with myself about it as well as listening to your Lordships' arguments, but on the whole I come down in favour of the Bill.
Lord Taylor of Blackburn: My Lords, before the noble Lord sits down, has he done any checking or conducted any survey throughout the United Kingdom, or throughout England and Wales, of how many units or hospitals are equipped and available to do the testing?
Lord Swinfen: My Lords, I am sorry, but I did not catch what the noble Lord said.
Lord Taylor of Blackburn: My Lords, the noble Lord referred earlier to the inquiries which he had made of a friend in London as regards the testing.
Lord Swinfen: My Lords, I made inquiries from one of the professors at Guy's Hospital. I was told that there are areas of the country where it is not available. It is available, within reasonable reach, throughout the majority of the country, and the position is improving.
10.14 p.m.
The Earl of Halsbury: My Lords, before proceeding to the subject of the debate, I should like to say that when the noble Baroness, Lady Braye, spoke her opening lines, I could tell that she was going to be a natural for your Lordships' House. I shall look forward to hearing her on many occasions in the future.
I take this opportunity to thank the right reverend Prelate for taking the initiative on this matter. Let him not be discouraged by the fact that the noble Lord, Lord Houghton of Sowerby, who I am sorry to see is not in his place, drew attention to the fact that the right reverend Prelate had spoken for 23 minutes. I can assure him that I have heard the noble Lord, Lord Houghton, speak for much longer than that on many occasions. I hope that the right reverend Prelate will not withdraw the Bill and will stick to his guns.
I am sorry that the noble Lord, Lord Houghton, is not in his place. It is not his subject and so I do not suppose that he would be familiar with the words of

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the Prophet Amos, who was among the herdsmen of Tekoa and who said:
"Thus saith the Lord; For three transgressions of the children of Ammon, and for four, I will not turn away the punishment thereof; because they have ripped up the women with child".
That may be the kind of statement that my noble friend Lord Henderson calls "emotional". However, it expresses the primitive emotion of a herdsman, accustomed to caring for his sheep in the lambing season, on seeing pregnant women and their children destroyed. I do not think the noble Lord, Lord Houghton of Sowerby, is that kind of Ammonite. However, there is another kind of ammonite, an almost jumbo-sized snail which survives in fossilised form and which used to crawl about the primitive oceans of the palaeozoic era. I think the noble Lord, Lord Houghton of Sowerby's legalism is the kind of fossil we do not have to consider too seriously.
The 1985 concordat and the Infant Life (Preservation) Act have been argued as bearing on the Abortion Act. There are two Committee stage points as to which I should like to put your Lordships on notice. The first point is that in the last 12-month period three children have been born at 23 weeks' term. Quite clearly, the original 28 weeks' term is falling behind medical science and the provisions of that Act must be updated. Therefore, I should like to see the provisions of the right reverend Prelate's Bill extended from 24 to 23 weeks.
The second Committee stage point is borne on by the remarks of the noble Lord, Lord Winstanley. I think that this Bill will need consideration of a schedule of consequential amendments at Committee stage because, in so far as the Abortion Act refers to the 1929 Act, it will have henceforward to refer to the 1929 Act as amended by this Act.
I have been informed that 61 per cent. of abortions at 23 weeks and over involve foreigners in private clinics.
I do not believe that any new problem is raised by AIDS. You cannot kill people because they are handicapped or because they may die soon in any case. You cannot kill people because their parents are too young to bear them. You cannot kill people because nobody loves or wants them. The old commandment "Thou shalt not kill" survives.
I acquiesce in the Abortion Act for one reason only and that is that abortions will take place and the only issue is whether or not they take place in back streets, with all that that implies, or whether they take place under some kind of regulation. That is the condition under which I acquiesce in the abortion acts such as they are.
Where is our old sense of self-respect? Do we want Britain's doctors to be the abortionists of Europe? I find the idea totally repugnant. There again, my noble friend Lord Henderson will say that I am being emotional. I am emotional. I have seen the film called "The Silent Scream", I wonder if the noble Lord has, where by ultrasonic methods one can see the foetus being torn to pieces within the uterus. Abortionists who have seen it are so shocked by what they have done that they have decided never to do another abortion. That is public knowledge.
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There is something sick about our society. You may not take the life of a murderer, however vile, by capital punishment but you may kill as many children as you like, however innocent they may be, provided they are in utero and have not yet taken their first breath.
The noble Lord, Lord Henderson, asked that his moral outlook should be respected as other people's are. But I cannot understand that the noble Lord has a moral outlook other than his own opinions on any subject. If I am going to be guided by other people's opinions I should much sooner be guided by the Pope or the most reverend Primate in what is right or wrong, than by the private opinions of my noble friend.
We must bring old legislation up to date. It is a continuous process within this Palace. I must resist the amendment of the noble Lord, Lord Houghton of Sowerby. I am sorry that he is not here to reply to me. He and I have called one another fossils on many occasions in the past and he knows very well that though we often take sides against one another in this Chamber we are on very good terms in the Library or over a cup of coffee. We have been friends and allies on some occasions and opponents on other occasions. He will forgive me for having spoken my mind about his amendment in his absence. I support this Bill and hope that the right reverend Prelate will go ahead with it notwithstanding.
10.20 p.m.
Baroness Lockwood: My Lords, whatever might have been said from different parts of the House, the fact remains that there is a lot of common ground among your Lordships. The right reverend Prelate the Bishop of Birmingham said that the Bill was not concerned with abortion. He said that he himself was not opposed to abortion as such, and that in certain circumstances it was justifiable. I think all of us would agree with him that we want to see fewer late abortions, and that is common ground among all Members of your Lordships' House.
Some noble Lords who have spoken may take that rather further and be opposed to abortion in its entirety, but whatever position we may have within the different religious sects in the country I think that all of us are agreed on moral grounds that late abortions are to be avoided. We are concerned morally. The families involved are also concerned on psychological and emotional grounds.
The point at which we differ is the point raised by my noble friend Lord Houghton. How can we bring about a reduction in late abortions? There is the legislative route and there is the administrative route. The administrative route was chosen by the then Minister for Health in 1985 and has been supported by subsequent Ministers for Health. The right reverend Prelate is choosing the legislative route.
We have to look at the consequences of the legislative route. He referred to the small number of cases that were involved in abortions beyond 24 weeks. The noble Lord, Lord McGregor, extended that figure to something like 470, because he included the two weeks from the 22nd week to the 24 week. It is fairly widely accepted that if you put a legal limit of 24 weeks in the Bill, in practice 22 weeks is likely to become the operative date. I think it was on that basis

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that the noble Lord, Lord McGregor, brought forward his figures.
I would agree again though with the right reverend Prelate that even though it might be a small number, we must concern ourselves about it. But the issue is not quite so simple as it appears on the surface. As well as concerning ourselves with the foetus, the viability of the foetus and the subsequent life of a child, we also have to concern ourselves with the mother.
The noble Lord, Lord Henderson, said that there was no single moral view. He is right there. There is no single moral view, and it is a moral stance also to be concerned about the position of the mother and, as the noble Lord, Lord Swinfen, said about the father too, because we are thinking in the family context. We have to think of what is going to happen to the family as a consequence of reducing the possibility of abortion.
Again like the noble Lord, Lord McGregor, who I thought spoke eloquently about the women involved, we have to ask who are these women and what are the consequences for them. They are caught in four separate sets of circumstances and some of them are covered by more than one of the sets.
The right reverend Prelate tended to limit some of the circumstances too easily, I felt. The first is the inefficiency within the National Health Service which relates to late referrals. I understand that in some cases there is uncertainty and further tests have to be made, so a certain amount of delay is built into the diagnosis. Nevertheless, irrespective of what happens to the Bill we need to consider seriously the inefficiencies within the service to ensure that we do not condemn or submit more women to this dreadful decision at a late date because of the inefficient system. It is a practical problem that we must take account of anyway.
The second set of circumstances relates to foetal abnormalities. A number of your Lordships have spoken about this. The noble Lord, Lord Winstanley, indicated from his medical point of view that despite progress within the medical sciences there are still cases where diagnosis is not possible until very late in the pregnancy. We have to take account of that. Indeed, the studies to which many of your Lordships have referred, including that of the Royal College of Obstetricians and Gynaecologists, have indicated that a significant minority of cases with foetal abnormalities are not diagnosed until the 25th or the 26th week.
We have to think of the trauma that involves the family in such circumstances. They may be looking forward to a first child or a child to complete the family. Then they are faced with this information and they have to make a decision. It is a difficult decision to take: whether to go through with the pregnancy or whether to terminate it. We must have compassion for families in these circumstances.
Another problem is now emerging. It is the problem arising from the AIDS disease which has occupied the minds of your Lordships on a number of occasions in recent times. This is a new factor that enters into this whole area of abortion. AIDS is now moving into heterosexual activity and innocent victims are involved. A wife may find herself pregnant and realise that she is carrying a child which could be born with the AIDS disease through no fault of her own. It may
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be the fault of her husband, but it is not her fault. What do we do in circumstances such as those? It may be late in the pregnancy when the situation is diagnosed. We must be concerned with that.
The third area of concern mentioned by the noble Lord, Lord McGregor, is that of young teenagers. Some 50 per cent. of late abortions are to young people under 20, according to the study of the Royal College. The pregnancies of some of these girls are not necessarily due to promiscuity or curiosity. Sometimes it is a consequence of abuse or rape and that leads to difficult circumstances. This is a group that needs our understanding and sympathy.
The fourth group has not been mentioned. It might be a rather difficult group for us in your Lordships' House to understand because in a way we are a well-organised group of people. Those who can be listening to or participating in a debate at half-past ten at night have to have some order in their lives; otherwise they would not be able to be here.
I am now talking about that group of women who are socially and psychologically alienated from society. We all know of such groups: women who cannot cope with a situation, let alone cope with an abortion situation. And these are the women who so often are late in going to their own GP—if they have one. Sometimes they are not even on a GP's list. There is a great deal of sadness surrounding the lives of such families, and these are the groups who would be caught by this particular change in the law.
The right reverend Prelate referred to teenagers and said that if they knew it was going to be 24 weeks they would make up their minds and seek assistance before the 24th week. I am not sure that I quite agree with him. I am not sure whether some of these people could actually do that. Therefore I suggest that these are the people who most need our help and who suffer in a way which would not be changed if we changed the law. In other words, their circumstances would remain as they are now.
Therefore I think we have a very difficult situation. We are concerned to give life to the foetus and to protect it, but we are also concerned for the position of the mother and the family. I believe that the dividing line between our moral duty to one group and to the other is a very difficult one indeed. For my part, I would come down on the side of working with the administrative improvements that have been referred to by a number of your Lordships.
I should like to see a tightening up of the procedures and the administration within the National Health Service, facilitating medical research and advances in medical science, more easily available facilities for pregnancy testing and made more uniform throughout the country, with more information on health education and counselling, particularly for young people, and in areas where they are most likely to see that information and to be able to take up opportunities for counselling. If we could proceed along these lines in a positive way we might do more towards bringing about the objectives for which the right reverend Prelate has put forward his Bill than if we pursue the legislative way he has chosen.
10.33 p.m.
Viscount Craigavon: My Lords, I once again apologise to the noble Duke for interrupting him as I did; but I was afraid that the very graphic description he was giving of a method of abortion, unchallenged, would gain currency coming from him. In fact, as I shall explain later, the method of abortion the noble Duke was describing scarcely takes place any longer, certainly not in the private clinics, and certainly not after 24 weeks—which is the issue in the Bill we are talking about.
I should like to refer to one of the key reports in this debate, which is the Joint Report on Fetal Viability and Clinical Practice. Perhaps I may read a passage from the introduction on page 9, where there is a brief comment of the committee to the effect that it was issues of clinical, and not legal, importance which they were addressing. It says:
"There is a need to distinguish between the clinical desirability of a change from 28 weeks and the legal consequences of recommending such a change. The Committee, recognising the complexity of the present legislation relating to fetal viability, did not address themselves in detail to the legal issue, but concentrated on clinical considerations. For this reason they did not attempt to define viability in terms that would be legally aceptable but have described it as it is used by clinicians."
Given that objective, it is quite possible for an organisation which has been represented on the committee not to agree with the legislation proposed by the right reverend Prelate. I gave the example of the British Medical Association, which has specifically said that it does not support the right reverend Prelate's legislation although it was represented on this committee.
The next point that I hope to put right is the, in my opinion, misapprehension from which the right reverend Prelate was suffering about the role of the private sector in late abortions. He was trying to denigrate the present system, which I believe he was calling a gentlemen's agreement, and was hypothesising that this agreement might change because the Minister changed, which, in my opinion, is a ludicrous idea. I hope that the Minister can tell us exactly what is the present situation in the private sector and can confirm what I say. The trouble is that because of the nature of this Bill we have a Minister answering and doing his best, but speaking, as I understand, from the Home Office. A lot of the issues that we address to him relate to the DHSS and that is another difficulty about this debate.
My understanding of the role of the private sector at present is that in 1985 the Minister of Health acted to lower the time limit by administrative controls rather than by introducing legislation. In future, any private abortion clinic would lose its licence if it performed abortions after 24 weeks. That is the position and all clinics now comply with that demand. Also, another control is that the DHSS regularly visits non-NHS abortion clinics to ensure that these regulations are being put into effect. Any clinic not meeting the department's requirements risks having its licence withdrawn. That is slightly more than a gentlemen's agreement.
The reason why I am afraid that some speakers have been under a misapprehension is the briefing material which they have been given. I think it has been
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circulated by the National Council for Christian Standards in Society. It is an A4 sheet containing extracts from the report of the Royal College of Obstetricians and Gynaecologists. That is correct, but it is dated 1984 and the figures on which that report is based date from 1981 to 1982. It is from that sheet that some of the figures we have been given tonight derive.
Right at the beginning, the right reverend Prelate read out that over 70 per cent. of the total late abortions are done in the private sector. What I have just said is that the private sector is not now concerned with abortions after 24 weeks. That does not apply. Similarly, on this bit of paper there is a graphic description of dilation and extraction and it says that that method is used in 33 per cent. of abortions between 24 and 27 weeks. The noble Lord nods, but these statistics relate to the practice in 1981, the report was in 1984, the results were corrected in 1985 and we have had this voluntary agreement since that no private clinics operate in this time-scale.
The noble Duke must also have read this paper and the letter which was written with it, when he referred to this country as being the late abortion capital of the world. The figure which has been quoted of 33 late abortions for 1985 is made up of 31 abortions for residents of England and Wales and two for foreigners. So far as this Bill is concerned, when the noble Duke, the Duke of Norfolk, says that the Bill will cure the problem of this country being called the late abortion capital of the world, we are speaking of only two abortions. Therefore, I am afraid that he has been misinformed in the same way.
The Duke of Norfolk: My Lords, I am honestly unable to produce the figures or the statistics. However, I think it is relevant for me to say that in the other countries of Europe, one is not allowed to perform such procedures after 12 weeks. I wonder why that is so.
Viscount Craigavon: My Lords, that may well be a valid point, but what I am referring to and what this Bill is addressing is the problem of abortions after 24 weeks. To repeat the figures for 1985, the number of abortions affected was in fact two in this country.
I oppose the Bill for a number of reasons. I am even more convinced this evening that this very simple Bill cannot bear the weight that has been placed upon it by all the mass of detailed and complex considerations and the ramifications that have emerged tonight. The Bill is altering a general principle, but it is ignoring the detailed implications of that change. That is why I support much wider and more general discussions in this whole area before any change is made.
The noble Lord, Lord Houghton of Sowerby, has already shown how the sympathetic use of directions and guidelines by the DHSS and organisations like the BMA can provide an effective and flexible approach.
I have spoken to many people, both inside and outside this House, about this Bill. Superficially this simple Bill sounds perfectly plausible. But when one starts explaining the effect of the Bill in terms of individuals and the tragic human details, people realise that it is not the black and white gut issue that they may first have supposed.

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In my opinion, the right reverend Prelate has recently had a good run in the media by talking about killing children who are capable of being born alive. If one does not qualify that (which I know is difficult in the journalistic context), there is a general presumption that the children concerned are perfectly normal and viable foetuses which are being done away with. However, of the 1985 figure of 33 abortions after 24 weeks, in almost certainly the majority of cases there would be serious congenital abnormalities. As has been said, the sooner medical science and human shortcomings can improve the system to deal with these cases at an earlier stage the better. But provision must still be maintained to deal with the unfortunate and tragic hard cases.
Several speakers mentioned a promising system called chorion biopsy. It is justifiable to mention that system. But it is in the very early stages and its use unfortunately causes too many miscarriages at the moment. The development time to perfect the system is about two or three years. In addition, as the noble Lord, Lord Swinfen, has said, it does not cover certain abnormalities such as structural abnormalities. That is as I understand it.
Perhaps I may concentrate for a moment on congenital abnormalities. The right reverend Prelate has said that 33 lives are worth saving. However, in many of those cases I should wish to say, "What sort of life and saving for what?" A clear example concerns foetuses with anencephaly—that is, no brain at all. There is absolutely no chance of survival and the prognosis for life outside the womb is a matter of minutes. What sort of life is that child being saved for?
I have the most recently published breakdown of congenital abnormalities in legal abortions at 20 weeks or later from a paper which the noble Lord, Lord McGregor, mentioned. It was published in The Lancet of 2nd June 1984 by Professor Eva Alberman. The paper uses figures for 1982 of confirmed congenital abnormalities. Taking anencephaly, in weeks 25, 26 and 27 gestational age, there are two, one and one terminations respectively for that reason.
The summary says:
"A reduction in the legal age of fetal viability to 24 weeks, in the absence of any other change in practice, would have stopped an estimated 26 abortions for confirmed serious fetal defects other than anencephaly in 1982."
There have been beneficial changes in practice since then, and we are urging that they be continued. But there is still the question in the context of this Bill as to what should happen with foetal abnormalities which, for one reason or another, can only be dealt with after 24 weeks. It seems to me that the controlled flexibility allowed by the present system provides the best answer.
I know that I am taking the clear-cut case of anencephaly, but I am doing so because if there is no agreement on that there is not much hope of agreement on less clear-cut cases. Obviously, one is hoping to diagnose in less than 24 weeks, but I am hypothesising here the case where that has not happened. If it is finally confirmed to a woman that, at 25 weeks, her foetus is anencephalic, are we now saying that she has no choice between an abortion or a carrying to term with a prognosis for the foetus at
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birth of probably a matter of minutes? That choice would obviously be different for different women, and in that tragic circumstance a choice that in my opinion is equally dignified can occur in both cases.
I am content that some people should be guided by their own religious principles in making that decision; but I should not want the guidance of religion to be paramount in that area. This was put particularly well by the noble Lord, Lord Henderson of Brompton, and I would agree with him and with the noble Lord, Lord Houghton of Sowerby, in very much hoping that the right reverend Prelate will feel able to withdraw this Bill tonight.
10.47 p.m.
Lord Silkin of Dulwich: My Lords, my noble friend Lord Longford said in the course of his remarks, with absolute correctness, that on this side of the House—and I am sure in all quarters of the House—there is no party line or party whip, and though I speak from the Front Bench I speak in my personal capacity. However, on one matter I am quite certain that I can speak not only in that capacity but on behalf of my party; that is, in congratulating the noble Baroness, Lady Braye, on her admirable maiden speech, which was none the worse for—indeed, very much the better for—its brevity and for the sincerity with which it was spoken to the House.
It would not profit the House for me to seek to review the arguments on each side of this matter. Whatever the result may be tonight, the right reverend Prelate has done a service to the House in enabling those arguments to be placed before the House at very great length on both sides so that those who, like at least one Member—I think it is the noble Lord, Lord Swinfen—are teetering on the edge of decision may be better able to make up their minds.
What I should like to do, therefore, is rather to seek to assist the House, if I can, by saying as succinctly as possible what I think are the right approaches to the question which is before the House and what the tests are which ought to be applied. Before I do that—and I hope to do it quite shortly—it would be as well to see exactly what this Bill is seeking to do, since there has been some argument about it. It is a very short Bill and it directly seeks to do no more than amend the Infant Life (Preservation) Act 1929. Indirectly, of course, it affects the Abortion Act 1967. But the difference between the Infant Life (Preservation) Act and the Abortion Act is very significant. The Infant Life (Preservation) Act established a criminal offence punishable by a maximum sentence of life imprisonment.
In seeking to amend that Act so as to reduce from 28 weeks to 24 weeks the period after which it is to be presumed that a child who has been destroyed would have been capable of being born alive, this Bill places upon the defendant the burden in respect of that period of proving his innocence, whereas the law at the moment is in the normal form; that is to say, it is for the prosecution to prove his guilt. The House must start with that knowledge and must ask itself whether anything we have heard tonight justifies altering that burden of proof in a way which Parliament is disinclined, and rightly disinclined, to do, particularly

1443
when the offence is so serious as to be considered in some cases to justify imprisonment for life.
The issue is not, as some noble Lords have suggested, simply a question of whether it is today medically possible to ascertain after 24 weeks of pregnancy that a child will be seriously deformed or comes within the wording of the Abortion Act as enabling an abortion to take place. There can be many different views on that point. I have listened as a layman to the various views that have been expressed. It may be that medical science has advanced or is advancing to the point at which one can say 24 weeks now, 28 weeks formerly. So far as I was concerned, I certainly was not convinced that that was so. But even if I had been convinced, I should still have had to be convinced that the circumstances would be such as to place those concerned on inquiry in sufficient time for them to take the steps with the doctors in order to discover whether the deformity existed. That is crucial.
I am content to leave that issue in abeyance as not being the real issue before the House, valuable though it has been for the House to have gone around the question and found out from those who have the best evidence what the different views may be. But when we come back to the reality of what we are seeking to do, the questions which I suggest the House must ask itself, and which I have asked myself, are two fairly simple ones, bearing in mind once again that in this Bill we are altering the criminal law in regard to a very serious offence to the disadvantage of the accused person.
The first question is this. Have we heard any evidence of serious abuse which justifies a change in the law? I listened to all the speeches in the hope that one of them would contain the suggestion of abuses that are known to exist in the period between 24 weeks and 28 weeks and would justify such a dramatic change in the law. In recent times we have dealt with amendments to public order legislation and other legislation and in every case the Government or Members of the House have drawn our attention to abuses which have taken place which justified changes in the law to the disadvantage of the defendant. I have not heard a single word of evidence to suggest that abuses exist in this particular area. Therefore for my part I suggest to the House that, on that test, the case has not been made for the Bill.
The second test that I put forward is this: will legislation on these lines set at rest the controversies on abortion which existed before the 1967 Act and which have existed ever since although they have been stilled to a considerable extent over the past few years? Is the Bill likely to set at rest those controversies? I can only say that far from doing so it seems to me that the Bill will only stir them up. Both in this place and in another place the controversies which have raged over this matter will be revived, not merely over the question of this amendment to the Infant Life (Preservation) Act but on the whole question of the boundaries within which abortion should be permitted. Therefore I say that on that test too the justification for the Bill has not been shown to exist. I know of no other test which the House ought to apply.
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There has been difficulty and uncertainty as to exactly what would happen in the event of this Bill, or something like it, becoming law. One cannot of course leave out of account the indirect effect it would have on the provisions of the Abortion Act 1967. I confess that I took a substantial part in the debates in another place on various amendments to that Act which were from time to time brought forward. I always found great difficulty in understanding the provisions of Section 5 of the Abortion Act. It may be that other noble Lords were clearer in their minds about it than I was, but let me simply explain the difficulty and what I think is the solution.
Section 5 of that Act, which has been referred to more than once in the debate, has two subsections. I take the second subsection first. It provides that for the purposes of the law relating to abortion, which is the Offences Against the Person Act 1861, anything done with intent to procure the miscarriage of a woman is unlawfully done unless authorised by Section 1—the section which provides the various justifications for medical practitioners to carry out an abortion.
That is clear enough. It is saying that the Abortion Act, within those limits, overrides the provisions of the previous law relating to abortions which until then applied irrespective of the circumstances. But then Section 5 (1) states something which, on the face of it, contradicts that. It states:
"Nothing in this Act shall affect the provisions of the Infant Life (Preservation) Act 1929 (protecting the life of the viable foetus)."
As I explained earlier, the Infant Life (Preservation) Act provides that where a child which is capable of being born alive is destroyed, unless to save the life of the mother, that is an offence which is punishable by imprisonment for life. If that provision is retained, what on earth happens to the provisions that go to the previous abortion law? In other words, why can one not always, except where the mother's life is in issue, go under the Infant Life (Preservation) Act and forget about the previous abortion law altogether, even in cases where there is liable to be substantial malformity, which is expressly provided for in the Abortion Act? Obviously Parliament could not permit that.
I could not follow the apparent discrepancy until I went back to the debates in this House on the provisions of the Infant Life (Preservation) Act when it was a Bill, and then all become clear. In 1929 a learned judge expressed the view—rather a bizarre view perhaps—that where a child had been practically born but still attached to the mother, and in that condition someone, maybe the mother, maybe somebody else, destroyed the child, it could not be murder because the child was still part of the mother and it could not be abortion because there was not a miscarriage and therefore it may be that no offence at all was committed.
In the light of that, noble and learned Lords, including the noble and learned Lord on the Woolsack in those days, whose name was Lord Hailsham, brought in legislation in the form of the Infant Life (Preservation) Act 1929 to deal with the question of what happens—one may think it very unlikely but they thought it quite likely—where some ill-advised or wicked person, whatever one calls it, destroyed a child

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still attached to the mother. Tht is why that Act has been preserved in the Abortion Act 1967, although the abortion lam, has been greatly amended.
If one takes the view that that is right (I have all the debates here so that noble Lords can look at them if they have any doubts, and it is quite clear from the debates that that is what they were talking about in those days) all that this Bill would do is to affect the situation where somebody (I do not know whether it ever happens these days) destroys a child still attached to its mother between 24 weeks and 28 weeks of pregnancy. I do not believe that the right reverend Prelate thought that he was doing that, but I can assure him that that is what he would be doing.
On that basis as well I suggest that the Bill is quite misconceived, and I very much hope that the right reverend Prelate will think it right after this most valuable debate to withdraw the Bill.
11.3 p.m.
Lord Beaverbrook: My Lords, I have listened with great interest to the views expressed in your Lordships' House on this important and sensitive subject. The right reverend Prelate the Bishop of Birmingham is to be congratulated on his decision to introduce a measure which is designed to reflect the advances of medical science. I should like also to congratulate my noble friend Lady Braye on an excellent maiden speech. I am sure that your Lordships will agree with me when I say that we all look forward to hearing more from her in future.
The law in England and Wales relating to abortion is somewhat complicated and arises from an interaction among the Infant Life (Preservation) Act 1929, which this Bill seeks to amend, the Abortion Act 1967 and the Offences Against the Persons Act 1861.
It may be helpful to the House if at this stage I confirm, as the noble Lord, Lord Houghton of Sowerby, told us, that the Infant Life (Preservation) Act 1929 does not extend to Scotland. I am advised that the very different historical background to the law of Scotland in this general area would make it impracticable to extend that Act to Scotland.
Under the 1929 Act, it is a criminal offence to destroy the life of a child capable of being born alive before it has an existence independent of its mother. The Act creates a rebuttable presumption that a woman who has been pregnant for 28 weeks or more is carrying a child capable of being born alive. No offence is committed where the termination is carried out in good faith to preserve life of the mother. The Offences Against the Person Act 1861 makes it an offence to procure an abortion. However, the Abortion Act 1967 provides that a person shall not be guilty of an offence relating to abortion when a pregnancy is terminiated on the authority of two doctors for certain specified reasons and under designated conditions. The doctors must be of the opinion either that if the pregnancy continued it would involve greater risk to the life of the woman or to the physical or mental health of her or her existing children than if it were terminated; or that there is a substantial risk that if the child were born it would be seriously handicapped by physical or mental abnormalities.
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Nothing in the 1967 Act affects the provisions of the 1929 Act. The effect is that the 1967 Act cannot be used, to authorise an abortion where the pregnancy has reached such an advanced stage that a child is capable of being born alive unless the mother's life is at stake. Under the 1967 Act an abortion may only take place in a National Health Service hospital or in a hospital specially approved by my right honourable friend the Secretary of State for Social Services.
The right reverend Prelate raised the matter generally of the Abortion Act 1967. Successive governments have remained neutral on proposed amendments to the criteria under which an abortion is permitted by the Abortion Act 1967. We share that attitude. This is a matter that is best left to the individual beliefs of noble Lords. It is not a matter on which it would be appropriate for the Government to take a view.
I should emphasise that the 1929 Act protects all foetuses capable of being born alive. It does not provide a time limit above which it will always be an offence to perform an abortion or below which abortions under the 1967 Act criteria are always permissible. It is an offence under the 1929 Act to destroy the life of a foetus of less than 28 weeks which is capable of being born alive, unless it is to save the mother's life. Equally, no offence is committed if action is taken to destroy a foetus of more than 28 weeks which is not capable of being born alive.
The time limit in the 1929 Act only creates a rebuttable presumption. Thus, if the foetus was less than 28 weeks, to obtain a conviction the prosecution would have to prove beyond reasonable doubt that the foetus had been capable of being born alive when the abortion took place. Conversely, if the foetus was over 28 weeks, the accused would not be guilty of an offence under the 1929 Act if he proved on a balance of probabilities that it was not capable of being born alive.
The right reverend Prelate mentioned the accurate ascertainment of the gestational age. The Abortion Act 1967 only gives the Government power to make regulations on abortions under the Act. To answer the question that the right reverend Prelate asked me, it does not give power to require records to be kept on births in general. That would require legislation. It could not be done in this Bill and would be outside its scope. I can assure the right reverend Prelate that we shall consider further the need for these changes and, if they are desirable, how they should be achieved.
The time limit in the 1929 Act simply fixes an age at which it can reasonably be presumed that the foetus would be capable of being born alive. That time limit was fixed when the Act was passed in 1929 and clearly reflects the state of medical science at that time. The question therefore arises: does this limit reflect modern medical science or should it now be amended?
The right reverend Prelate has already explained that, in the opinion of the Royal College of Obstetricians and Gynaecologists, the answer to that question is no and the 1929 Act should be amended to take account of advances since its enactment. That is the purpose of this Bill. The report on Fetal Viability and Clinical Practice of the Royal College of Obstetricians and Gynaecologists remains the best

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advice that we have about the gestational age after which a foetus should be considered as viable. The Government could not therefore support the introduction of a limit below the 24 weeks that the report recommended.
In 1980 we invited the Royal College to consider the question of foetal viability. In 1985 we received from it a document: Fetal Viability and Clinical Practice. This presented the agreed views of the Royal College itself, the British Paediatric Association, the Royal College of General Practitioners, the Royal College of Midwives and the British Medical Association. During the right reverend Prelate's speech there was some discussion about the BMA's attitude. The BMA has not been in touch with us about the Bill, but it was represented on the committee which in 1985 recommended a reduction from 28 weeks to 24 weeks. Its representative agreed with the committee's recommendation.
The committee recommended that the presumptive age of capacity to be born alive should be reduced from 28 weeks to 24 weeks. The report acknowledged that the Infant Life (Preservation) Act 1929 is about whether or not the foetus is "capable of being born alive" rather than "viable" (that is, capable of being kept alive). However, it commented that the 1929 Act had an influence on clinical practice, clinicians tending to interpret the figure of 28 weeks as the state of pregnancy below which a baby has little chance of survival. The report concluded that this figure is no longer appropriate and quoted a survey in 1982 revealing that the chance of survival of babies of 26 and 27 weeks' gestation was greater than 50 per cent.
So far this advice from the Royal College has been implemented by administrative action. As I have explained, abortions may lawfully be carried out only in National Health Service hospitals or in hospitals approved by the Secretary of State for Social Services. In practice, clinicians now apply a 24-week limit in accordance with the Royal College's advice. In the private sector only a limited number of approved places are permitted to carry out late abortions and in this the Secretary of State has made it a condition of approval that they will not permit abortions to be carried out after 24 weeks. As the right reverend Prelate explained, his Bill carries through this change into the law by replacing the 28-week limit in the 1929 Act with a 24-week limit.
Since the 1929 Act was introduced there have clearly been technical advances. Foetuses of less than 28 weeks' gestation, which would at one time have stood little chance of surviving after birth, now have a greater chance of survival. The noble Duke, the Duke of Norfolk, gave an example of that. The Royal College's working party was clearly concerned that the 1929 Act should take account of these scientific advances and should reflect good obstetric practice.
The Government agree with the right reverend Prelate that the law should now reflect those changes and we support the Bill he has so ably introduced. If your Lordships agree with me that this Bill should indeed be read a second time some amendment may be necessary in Committee. As it stands, the Bill makes no transitional provisions. If enacted it would
1448
apply to all terminations, including those that took place before it was enacted. Thus in theory a doctor who, say, terminated a 26-week foetus five years ago could be prosecuted under the 1929 Act, as amended, and the onus would be on him to prove that the foetus was not capable of being born alive. This would hardly be just. An amendment seems necessary to ensure that the new limit applies only to terminations which take place after the Bill comes into force. If the right reverend Prelate agrees with this we would be happy to assist him in drafting the necessary amendments.
At this late hour, I commend this measure to your Lordships' House.
11.13 p.m.
The Lord Bishop of Birmingham: My Lords, some time ago I said that I introduced this Bill with trepidation and reluctance. I am sorry to have had to bring it before your Lordships' House. It is an unpleasant, emotive and sensitive matter. It is a subject on which we should all listen to one another and be tolerant of one another because we obviously disagree. It is a subject on which we have to accept one another's good faith.
I believe that it is a subject on which we must be sensitive to vulnerable groups. Your Lordships have spoken of vulnerable groups. One of the vulnerable groups that we must include is unborn children and their rights, because they cannot speak for themselves. I understood the noble Lord, Lord Winstanley, to say that there would be few whose abnormalities could not be diagnosed before 24 weeks. Of course those who are badly malformed die very soon. That does not necessarily give us the right to kill them, but it is a relief to know that they die fairly soon.
I should like to share with your Lordships' House an experience which I have had for the past nine years on the day before Christmas. I have celebrated with those in a mental hospital in which there are a large number of badly mentally handicapped people. I always find it a particularly moving occasion—one of the most moving that I attend. Although these people have a mental age of children, they call for affection and care from parents, nurses and doctors, and I really could not say that it would be better for them to be dead. I am sure that they would not think that. I feel bound to say that because they are a vulnerable group, as are other groups which have not received as much mention as they might.
Most of those who have taken part in this debate are men, but I am certain that we should listen to what women have to say. For that reason I, like many others, would like to thank the noble Baroness, Lady Braye, for what she said. I should also like to thank the noble Baroness, Lady Lockwood, for her intervention and for the way in which she held the balance in the matter.
I am more than grateful to the noble Lord, Lord Beaverbrook, for what he said and for the promise of government support, with some amendments, for the Bill. It has made me, and no doubt other noble Lords, think very deeply.
The noble and learned Lord, Lord Silkin, to whom one naturally listens with great respect and attention, asked what abuse had taken place. I wonder whether

1449
he can accept that for some of us the abuse is quite simple: that children who are capable of being born alive are killed. He may not accept that, but it seems to me to be an abuse. He also said that it would cause controversy. I wonder whether he would accept that there is controversy. There are many people who are deeply disturbed, and sometimes we have to face these unpleasant facts. He spoke about the origin of the Act, and it certainly has a very unsavoury origin. However, I wonder whether he would not accept that it is how the abortion Act is used, rather than its origins, which is of importance.
I am grateful to the noble Viscount, Lord Craigavon, for his correction, which I accept, about the changes that have taken place. I took what was in the 1984 report of the Royal College of Obstetricians and Gynaecologists to be what is happening now. I should like to apologise to your Lordships' House, and I am grateful, to the noble Viscount for pointing that out. However, I was not so grateful to him when, as I understood him, he said that of the 33 foetuses of 24 weeks or more most contained abnormalities. We do not know the reasons why those pregnancies were terminated.
I was grateful for what the noble Lord, Lord Winstanley, said. He referred to the medical services as insufficient. Others like the noble Lord, Lord Swinfen, and the noble Baroness, Lady Lockwood, also approached this subject. It is something to which great attention must be given because it is a terrible thing for a woman to be delayed administratively in this way. Surely this is a challenge to the National Health Service. If the Bill becomes an Act, the National Health Service must surely face up to the challenge rather than that we should not change the law because we think that the National Health Service is not really up to coping at the moment.
One could not hear the noble Lord, Lord Henderson, without sympathy, but I really wonder whether I am being exploited. No one has proposed the Bill to me; I have proposed it because I think that it is right. If the noble Lord thinks that it can be amended in another place in the wrong way, perhaps I may remind your Lordships' House that it can be amended in this House in another direction if your Lordships think fit. This is a matter which seems to have escaped the notice of some Members of your Lordships' House.
I should like to thank the noble Lord, Lord McGregor of Durris, especially for his plea for toleration and for his concern for single-parent families who are in very great need. I am not sure that all doctors allow a fortnight's grace. I should like to know the evidence upon which that statement is based, because I have searched and not found any such evidence. I was concerned that the noble Lord and others quoted statistics from the 20th week and after. Your Lordships will realise that this Bill is not concerned with the 20th week and after; it is concerned with nothing after the 24th week.
Finally, I must approach the words of the noble Lord, Lord Houghton of Sowerby. I listen to him always with respect. I was very grateful for his contribution on the Animals (Scientific Procedures) Bill, but I am sorry to have to disagree with him about
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this Bill. I think that moral matters are important and we ought to deal with them now. I thought I was dealing with ways and means, and I thought I gave reasons why administrative measures are not satisfactory in matters of life and death.
In matters of life and death we should have the assurance of the law. I understood that the law was there for protection of people. It seems to me that we need a change in the law, because as it stands it is not correct. It is no longer simply the case, as it was in 1929, that if a woman has been pregnant for a period of 28 weeks or more it can be proved prima facie that she is pregnant and the foetus is capable of being born alive. Rather, that is true, but we can also say now, because of the advances of medical science, that a woman who has been pregnant for 24 weeks is in that situation. The law ought to reflect the present situation. If this deterrent is so terrible at 24 weeks, it is equally terrible at 28 weeks. If it is such a terrible punishment, it exists in both cases.
I must explain why I bring forward this Bill. Perhaps I am naive, but it was for a very simple moral reason. It cannot be right to kill a child that is capable of being born alive. It ought to have its chance. I cannot believe that we and the Eastern European countries are the only countries that are in the right in this matter, because that would be the situation if we continue as we are.
I am a believer in the democratic process provided we do it tolerently. Amendments can be made to this Bill and if it seems good it will be passed; if it seems wrong it will not be passed. When I heard what the noble Lord, Lord Beaverbrook, and other noble Lords have said, I felt that I must put this matter to the suffrage of the House. I listened carefully to the pleas that I should withdraw the Bill but surely if people hold a belief in good faith the proper course is to submit the decision to the House. After great thought, that is what I think it right to do.
Lord Houghton of Sowerby: My Lords, I am so shocked at the speech that the noble Lord, Lord Beaverbrook, made that I cease to be interested in anything that the right reverend Prelate now has to say. The issue is joined fairly and squarely on the government statement.
The Government have gone yellow and deserted all those whose co-operation they sought in 1985 to carry out their existing policy of controlling late abortions by voluntary and disciplinary methods. I say this without fear of contradiction. If this Bill gets a Second Reading we shall have to fight all along the line for the removal of the clause of presumption of guilt from the 1929 Act and see that it does not appear in any amended law. I know of no law passed in recent years which contains any clause of presumptive guilt where the penalty is a maximum of imprisonment for life. That is a blemish upon our criminal law, and now it is to be retained. If the Government get their way, then I think we have to ensure that it comes out.
The right reverend Prelate may now make remarks to which we shall listen ad nauseam when he deals—if he does—with the Bill in Committee. There is a long, bitter trail ahead if this Bill gets a Second Reading. I warn the Government that they will lose the goodwill

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of many organisations and people, professional and otherwise, if they intend to take this line on the Bill.
I must press my amendment. I hope that the House will choose even at this late hour between legislation and voluntary and disciplined control. I sincerely hope that the majority of noble Lords will vote to put the Bill aside notwithstanding what the Government have said, so that we have a further opportunity of judging the experience of what the Government themselves sought to get, and obtained, from all concerned for this trial period of control other than by legislation. I sincerely hope therefore that those who are against the Bill will vote in favour of the amendment that it should be read this day six months.
11.26 p.m.
On Question, Whether the amendment to the Motion (moved by the Lord Houghton of Sowerby) shall be agreed to?
Their Lordships divided: Contents, 31; Not-Contents, 41.

DIVISION NO. 1

CONTENTS

Craigavon, V.

McIntosh of Haringey, L.

David B.

Mackie of Benshie, L.

Dean of Beswick, L.

McNair, L.

Elwyn-Jones, L.

Monson, L.

Ewart-Biggs, B.

Morton of Shuna, L.

Henderson of Brompton, L. [Teller.]

Mulley, L.

Nicol, B.

Houghton of Sowerby, L. [Teller]

Oram, L.

Ponsonby of Shulbrede, L.

Howie of Troon, L.

Robson of Kiddington, B.

Irving of Dartford, L.

Silkin of Dulwich, L.

Jeger, B.

Taylor of Blackburn, L.

Jenkins of Putney, L.

Turner of Camden, B.

Lawrence, L.

White, B.

Llewelyn-Davies of Hastoe, B.

Wilson of Langside, L.

Lockwood B.

Winstanley, L.

McGregor of Durris, L.

NOT CONTENTS

Barrington, V.

Kinloss, Ly.

Beaverbrook, L.

Lauderdale, E.

Belstead, L.

Leicester, Bp.

Birmingham, Bp. [Teller.]

Longford, E.

Braye, B.

Lothian, M.

Brougham and Vaux, L.

Lucas of Chilworth, L.

Buckmaster, V.

Murton of Lindisfarne, L.

Canterbury, Abp.

Norfolk, D.

Chitnis, L.

Parmoor, L.

Coleraine, L.

Pitt of Hampstead, L.

Cork and Orrery, E.

Rankeillour, L.

Craigmyle, L.

Robertson of Oakridge, L.

Darcy (de Knayth), B.

St. Albans, Bp.

Denham, L.

Salisbury, Bp.

Fitt, L.

Saltoun of Abernethy, Ly.

Gainsborough, E.

Shannon, E.

Halsbury, E. [Teller.]

Stallard, L.

Harvington, L.

Swinfen, L.

Hemphill, L.

Tordoff, L.

Hooper, B.

Whitelaw, V.

Ingleby, V.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at twenty-five minutes before midnight.

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