Sitting of 18 November 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    GREATER MANCHESTER (LIGHT RAPID TRANSIT SYSTEM) BILL [Lords]

      GREATER MANCHESTER (LIGHT RAPID TRANSIT SYSTEM) (No. 2) BILL [Lords]
      Orders for consideration, as amended, read.
      To be considered Tomorrow.

Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Human Rights
    Mr. Roger King: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on Soviet violations of human rights.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): There have been some developments in Soviet human rights performance recently, in particular the release of a number of prisoners of conscience and a modest increase in Jewish and other emigration. But there is a long way to go. Individual gestures are no substitute for the abolition of repressive legislation and an end to the use of state power to crush individual rights. We continue to press the Soviet authorities on these matters, both in bilateral contacts and at the Conference on Security and Co-operation in Europe meeting in Vienna.
    Mr. King: I thank my right hon. and learned Friend for that reply. Is he aware that in my constituency Dr. Dick Rogers is one of the leading campaigners for the freedom of Anna Chertkova, a Soviet dissident who has been imprisoned in a psychiatric hospital for her religious beliefs since 1973? Will he impress on the Russian people, and especially on the Russian Government, that if they want rapprochement with the West and with this country such behaviour towards people who are imprisoned for their religious beliefs must stop?
    Sir Geoffrey Howe: I agree entirely with my hon. Friend that it is unacceptable to persecute those who seek no more than the freedom to profess their religious faith. The case of Anna Chertkova has, as he will know, been the understandable subject of an extensive campaign throughout the country in which his constituent has taken
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    part. The case has been raised in the House on several occasions and was debated here as recently as 6 November. I hope that that serves to underline the importance attached to that case by all hon. Members.
    Mr. Mullin: Does the Foreign Secretary agree that we would be in a better position to lecture the Soviet Union on human rights if our own gaols did not contain so many innocent prisoners? I refer especially to the 11 innocent people who were convicted in connection with the Guildford and Woolwich pub bombings and the six innocent people convicted—
    Mr. Speaker: Order. That case is sub judice.
    Dr. Blackburn: Does my right hon. and learned Friend accept from me, as the vice-chairman of the all-party committee for Soviet Jewry, that there is widespread support from hon. Members of all parties for the cause of Soviet Jewry? Will he continue his efforts with the full support of the House and rejoice with me that the Kholmiansky family, who are mentioned in question No. 92, have been released during the past 24 hours?
    Sir Geoffrey Howe: I join my hon. Friend in welcoming that good news on one individual case. As he will know, we continue to stress consistently and tenaciously the importance that we attach to a substantial improvement in the freedom of emigration, not just of Jewish citizens, but of others from the Soviet Union. It is true that there has been an improvement in the total number of Jewish people who have left the Soviet Union this year. That number is between 6,000 and 7,000, but it still compares unfavourably with the peak total of 51,000 who left in 1979.

    United States of America (Meeting)
    Mr. Canavan: To ask the Secretary of State for Foreign and Commonwealth Affairs what subjects were discussed at his last meeting with representatives of the Government of the United States of America.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): My right hon. and learned Friend held extensive discussions with Mr. Shultz on 20 October in London, and they also met in Brussels on 24 October. A wide range of bilateral and international topics were discussed. We value this regular frank and constructive dialogue.
    Mr. Canavan: How does the Minister explain Britain's humiliating defeat yesterday at the United Nations, when the United States and other allies, with more than 100 other countries, supported the rejection of Britain's intransigent stance on the Falklands? As Britain can now muster the support of less than a handful of other countries, is it not time to enter into negotiations with Argentina on the future of the Falklands and to follow America's advice, at least on this issue?
    Mr. Eggar: We regret the fact that some countries failed to agree with us on this important issue, but I thought that the hon. Gentleman would be the first to agree that the fact that the United States takes a different view from us does not mean that we are wrong.
    Mr. Wilkinson: Will my hon. Friend reassure the House that the British Government will press the United States Administration to ensure, in the negotiations with the

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    Soviets, that Soviet officials will limit their verification of nuclear bases in the United Kingdom, as part of an INF deal, to RAF Molesworth and RAF Greenham Common, and that they will not tour the country and visit naval institutions and other Royal Air Force bases?
    Mr. Eggar: As my hon. Friend will be aware, details of verification are still being discussed. We are in close consultation with the United States.
    Mr. Ron Brown: Did the Minister discuss with his American counterparts compensation for the Libyan people, remembering that not so long ago that country was bombed thanks to support from the British Government? Is that not an important issue of human rights and basic justice? Did the Secretary of State mention that matter in America?
    Mr. Eggar: If the hon. Gentleman chooses to refer to Libya, he should also refer to its appalling conduct in supplying arms to the IRA.
    Mr. Foulkes: The Minister must accept that if the Americans are free to criticise us about the Falklands, we should be free to criticise them—if we believe that they are wrong—about Central America. Will he give an assurance that the next time Ministers meet the American Administration they will mention the report of the Congress investigation committee into the Iran-Contra affair, which is said to criticise the President for "subverting law" and undermining the constitution of the United States? Will the Government at last use what is called our special relationship with the United States to get the President to stop funding terrorists and to use the money instead for humanitarian and economic aid to Costa Rica and the peoples of the other countries of Central America?
    Mr. Eggar: The hon. Gentleman knows that our position on Central America is clear. We advocate a peaceful negotiated solution, not a military solution, to the problems of the region.

    Jordan
    Mr. Arbuthnot: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his recent visit to Jordan.
    Sir Geoffrey Howe: During my visit to Jordan from 1 to 3 November I held friendly and detailed discussions on international and bilateral issues with King Hussein and his Ministers. Relations with Jordan are excellent.
    Mr. Arbuthnot: Is my right hon. and learned Friend aware that that is welcome news? Does he agree that King Hussein's work for a peaceful solution in the middle east has been extremely valuable and an example to other Arab leaders?
    Sir Geoffrey Howe: I endorse my hon. Friend's tribute to His Majesty King Hussein. His courage and tenacity have been an example, not just in that region, but much more widely. The House will wish to acknowledge his most recent considerable achievement in securing full representation from the Arab states at the recent Arab League summit. The final communique from that summit offered several important contributions to the two key regional issues: the Iran-Iraq war and the Arab-Israel dispute.
    Mr. Faulds: Does the right hon. and learned Gentleman agree that, in view of the great success of a move to moderation among the Arab states, it would be a wise time to use what little influence we have on the declining years of the Reagan presidency to get the American Government — the only one in the world who could do it — to pressure Israel into adopting a more realistic attitude towards a settlement of the Palestinian problem?
    Mr. Winnick: For once I agree.
    Mr. Faulds: Then I must be wrong.
    Sir Geoffrey Howe: I shall leave the hon. Member for Warley, East (Mr. Faulds) to resolve his dispute with his hon. Friend the Member for Walsall, North (Mr. Winnick) privately. I, at least, am prepared to accept the central thrust of the points that he has made. The United Kingdom, and, indeed, all 12 Community members, have come out firmly in favour of an international conference — one of the initiatives being supported by King Hussein. The United States has not done that. We shall certainly continue our efforts to convince the Americans and the Israelis that an international conference is an opportunity, not a trap or a threat. It is clear that the status quo serves no one's interests. There is no viable alternative to the international conference as a way forward.
    Mr. Soames: Will my right hon. and learned Friend tell the House what steps Western leaders are taking to support King Hussein's heroic efforts?
    Sir Geoffrey Howe: I think that the visit that I undertook, and the extent to which we have been in close and continual consultation with King Hussein, are intended to underline the support that we give to his efforts.
    Of course, we also give support to Jordan itself. During my time there, a couple of weeks ago, I announced a 50 per cent. increase in our capital loan as a contribution to the five-year development plan. That, however, is only one outward manifestation of the support that we consistently give to the courageous and far-sighted efforts of King Hussein.
    Mr. Kaufman: In view of the success of the Amman summit and the opportunity that it opened up for possible new initiatives for a settlement of the conflict between Israel and her neighbours, will the right hon. and learned Gentleman use all his influence to persuade the United States to put pressure on the Israeli Prime Minister to accept the view of his Foreign Minister that an international conference opens the first possible opportun-ity, under the auspices of the five permanent members of the United Nations, for a long-delayed and wholly desirable settlement to provide security for Israel and self-determination for the Palestinians?
    Sir Geoffrey Howe: The right hon. Gentleman's question precisely underlines the point made by his hon. Friend the Member for Warley, East (Mr. Faulds). I make no complaint about that. This is a matter on which there is a widespread community of views on both sides of the House. We shall continue tenaciously to press the case for an international conference on the basis of the principles that the right hon. Gentleman has identified, because that is the right way forward.

    European-American Relations
    Mr. Baldry: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet the United States Secretary of State to discuss European-American relations.
    Sir Geoffrey Howe: I expect to see Mr. Shultz at the North Atlantic Council meeting planned for 11 and 12 December.
    Mr. Baldry: My right hon. and learned Friend will doubtless continue to indicate our support for the INF agreement. However, does he agree that the issues that might divide us are as important as those on which we are agreed? To that end, will he take every opportunity to signal to the Americans our determination to campaign vigorously against any proposed protectionist legislation that would damage the interests of Europe and, indeed, the United States and the whole free world?
    Sir Geoffrey Howe: There will no doubt be some discussions about both those points. I hope that, by that time, there will have been further — if not final— progress towards the signing of the INF agreement. I shall emphasise the extent to which that has the support of all 16 members of the North Atlantic Alliance and, therefore, deserves the wholehearted support of the United States Congress as well.
    On the question of trade and protectionism, I entirely agree with my hon. Friend that the one thing that we must continue striving to avoid is any increase in protectionism across the Atlantic in either direction. The United States Administration are well aware of the strength of our feelings about that, and it is a topic that I regularly discuss with the Secretary of' State, George Shultz.
    It is important that the political dimension of that question should be fully appreciated. It would be politically damaging to the unity of the West, and to the prospect of free trade throughout the world, if we allowed ourselves to lapse into a trade war either way across the Atlantic.
    Mr. James Lamond: Is there any chance of the Foreign Secretary asking the Americans to help us with our special responsibility towards Cyprus by exerting their undoubted pressure on another member of NATO—Turkey—to withdraw its troops, which have been invading the southern territory of a fellow signatory of the Helsinki Final Act?
    Sir Geoffrey Howe: As the hon. Gentleman says, that is a topic on which Britain has a special position as one of the guarantor powers. It is a topic that we discuss with other friendly nations, including the United States. We seek to impress on all parties to that dispute the need for the withdrawal of foreign troops, including Turkish troops, from the island as part of the settlement that we all want.
    Sir Peter Blaker: Is my right hon. and learned Friend aware that he deserves the congratulations of the House on the robust support that he has given consistently to NATO's twin-track policy on intermediate-range nuclear forces, which has led directly to the present prospect of an agreement by both sides to abolish those forces?
    Is my right hon. and learned Friend aware also that, subject to the resolution of one or two difficult outstanding problems, such as verification, the words that he used in answer to my hon. Friend the Member for
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    Banbury (Mr. Baldry) reaffirming our wholehearted support for the proposed treaty will be extremely welcome?
    Sir Geoffrey Howe: I am grateful to my right hon. Friend for that support. We welcome the prospect of signing an INF agreement at the forthcoming summit between the United States and the Soviet Union. We hope that by that time the issues still outstanding, including the crucial one of verification, will have been resolved. My right hon. Friend is right to say that achieving such an agreement will be a success for multilateral, not unilateral, disarmament, which contrasts vividly with the Opposition's policy, which has been described by the right hon. Member for Bethnal Green and Stepney (Mr. Shore) as morally flawed and riddled with inconsistencies.

    Vietnamese Refugees
    Mr. Alexander: To ask the Secretary of State for Foreign and Commonwealth Affairs if he has any further plans to relieve Hong Kong of the burden of Vietnamese refugees.
    Mr. Eggar: We are pursuing our diplomatic campaign to urge other resettlement countries to do more to help Hong Kong. We are also discussing with the United Nations High Commissioner for Refugees and the main resettlement countries durable solutions to the Indo-Chinese refugee problem.
    Mr. Alexander: I thank my hon. Friend for that reply. Are there not about 9,000 refugees in the Hong Kong camps, of whom about 2,000 only are likely to be settled this year? Bearing in mind that those who have been settled here have been no trouble and that this must be one of the most appalling tragedies of our time, would it be possible to relax the family relations criteria for settlers here and allow those without families here to come to settle?
    Mr. Eggar: The world is suffering from the problem of refugees fleeing from Communist regimes. About 5 million refugees have had to leave, or felt forced to leave, Communist countries. With the specific problem of Hong Kong, the United Kingdom has a good record. We have accepted nearly 20,000 Indo-Chinese refugees since 1975, including about 13,000 Vietnamese refugees from Hong Kong. That is the third highest number of refugees accepted from Hong Kong. My hon. Friend knows that we announced in May that we would be prepared to take 468 further refugees from Hong Kong. I do not think that we can announce any further moves at present.
    Sir Russell Johnston: Will the Minister accept that, with a resettlement rate of about 2,400 per annum and an inflow to August this year at a higher figure than that, we shall never get anywhere near a solution to the problem if we continue to approach it in the way in which it has been approached so far? Does the hon. Gentleman appreciate that about 1,200 children in Hong Kong have never seen anything but the inside of a camp? Is this not a major disgrace, which the British Government, because of their responsibility for Hong Kong, have a special duty to act upon?
    Mr. Eggar: I recognise the problem to which the hon. Gentleman refers. That is exactly why we are taking an initiative with other countries and urging them to follow our example and be prepared to accept more refugees for resettlement.
    Mr. Churchill: Having recently returned from a visit to the Chi Mah Wan camp for refugees in Hong Kong, may I inform my hon. Friend that the authorities charged with looking after the interests of the Vietnamese refugees should be congratulated on the humanity with which they discharge their tasks? It is time that Her Majesty's Government redoubled their efforts to secure the placement of these refugees. Of the 9,000 refugees referred to by my hon. Friend the Member for Newark (Mr. Alexander), some 3,000 are in closed camps behind barbed wire, and many of them have been there for five years, with no prospect of being resettled. It is frightful to think that those people are refugees from totalitarian oppression.
    Mr. Eggar: I welcome my hon. Friend's comments about the way that closed camps are operated and I understand his concern for the refugees. I have already said that we are doing everything that we can to urge other countries to increase the number of refugees whom they are prepared to accept.
    Mr. Tony Lloyd: Does the Minister accept that there is concern among all hon. Members about the inhumane conditions that people in the camps in Hong Kong are suffering? As we have a special responsibility for Hong Kong and those refugees, we believe that we should be doing more. I agree with the Minister and understand that we need to persuade other countries to do more, but Britain must take a bigger step than it has in the past.
    Mr. Eggar: As well as asking other countries to increase the number of refugees whom they are prepared to take, we recognise that resettlement alone is not the answer to the problem. Therefore, we are considering longer-term solutions. In particular, we support the orderly departure programme from Vietnam as a mechanism to reduce pressure for illegal departures. We are doing all that we can to urge Vietnam to accept back people who are prepared to return. Thus far, that idea has not been well received in Vietnam.

    Yugoslavia
    Mr. Janner: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the present state of relations between the United Kingdom and Yugoslavia.
    The Minister of State, Foreign and Commonwealth Office (Mr. David Mellor): Relations with Yugoslavia reflect close ties over the years, and there remain many shared interests. A regrettable problem is the failure of the Yugoslav authorities to settle British claims arising out of the Zagreb air disaster in 1976.
    Mr. Janner: Have the Government had conversations with the Yugoslav Government regarding documents that the British Government have in their possession and are refusing to reveal about the activities of the German Group E— which is alleged to have been involved not only in the mass killings of Yugoslav civilians but in complicity in the deaths of British prisoners of war— particularly regarding the charge laid by the Yugoslavs to the United Nations, which placed in category A of wanted war criminals for murder and putting hostages to death the man who was then Lieutenant Kurt Waldheim?
    Mr. Mellor: The hon. and learned Gentleman has pursued this matter with customary perseverence and
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    courtesy. He knows that we are always ready to engage with him on the detail of this matter, which evokes widespread concern and interest among hon. Members. We regard the complaints laid by the Yugoslav authorities in 1947, which were not followed up by them, as a matter for the Yugoslav Government and not for us. A matter that would concern us is any mistreatment of British service men. As a result of the allegations that were made, the Ministry of Defence made a thorough search of the files, and the hon. and learned Gentleman received a detailed letter from my right hon. and learned Friend on that matter. I am ready to reply to any further inquiries, but I know of no document relevant to that matter that has not been properly considered during the investigations about which I have told the House.
    Mr. Allason: Will my hon. and learned Friend give consideration to the release of the retained file on Klaus Barbie? The file has been retained by the Foreign Office.
    Mr. Speaker: Order. Does the hon. Gentleman's question have anything to do with Yugoslavia?
    Mr. Skinner: The hon. Gentleman is a double agent; let him carry on.
    Mr. Allason: With regard to the many files relating to Yugoslavia and war criminals, particularly Klaus Barbie, will my hon. and learned Friend consider releasing them as soon as possible, because some of those individuals have been convicted?
    Mr. Mellor: I was getting the wrong impression from the trainer's hints that I was receiving.
    The rules about the disclosure of documents have been clearly put forward in the House. I have nothing to add. The files that my hon. Friend mentioned will not be released.

    Namibia
    Miss Lestor: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current situation regarding the future of Namibia.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): We remain committed to the independence of Namibia on the basis of United Nations Security Council resolution 435, and without precon-ditions. The United Nations Secretary General and the United States Administration are engaged in continuing efforts to secure its implementation. We support their efforts.
    Miss Lestor: Is the right hon. Lady aware that we are being seen, as others are, to be dragging our feet over Namibia? With no foreign journalists allowed into that country, we had to go to the children's conference in Harare and Zimbabwe to learn of the torture, detention and murder of the children who are caught up in the conflict. When her right hon. and learned Friend the Foreign Secretary meets Archbishop Huddleston shortly to discuss the matter, will he bear in mind that the world should be alerted to what is happening in Namibia, with a view to some concerted action being taken at the summit in Copenhagen?
    Mrs. Chalker: I understand the hon. Lady's anxiety. It is simply not true that nothing has been done. We have

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    made sure that representations about Namibia have been made here and in Pretoria to the South African Government. We continue to he well aware of, and condemn, all abuses of human rights, wherever they may occur and whoever may perpetrate them. Indeed, we shall continue to urge South Africa to withdraw from Namibia. We voted in support of resolution 601, and we shall help the implementation of it wherever we can. As I said earlier, we remain fully in support of the withdrawal of troops, but that is not a precondition for a Namibian settlement, which should be an internationally accepted settlement.
    Mr. Atkinson: Will my right hon. Friend consider visiting Namibia? She will see for herself the considerable progress that has been made by the transitional Government towards eliminating apartheid and racial discrimination. She will also have the opportunity of meeting the committee of parents whose sons and daughters have been abducted to SWAPO camps, where they have been held against their will, in Zambia and Angola.
    Mrs. Chalker: I have no plans to visit Namibia at present. We do not and shall not recognise the TGNU or any settlement that is inconsistent with the United Nations plan. We shall not meet members of the TGNU in their official capacity. We shall continue to promote dialogue across the political spectrum with all parties in the Namibian dispute. That is why we have made several representations to South African authorities on behalf of detainees, and we shall continue to do that.
    Mr. Wilson: Will the Minister elaborate on what the Government are doing to encourage the implementation of resolution 601? Does she agree that the British Government's treatment of the Namibian delegation to Vancouver was contemptible? Does she agree also that the Prime Minister's craven attitude towards Pretoria at the Commonwealth conference — whatever the Minister's personal good will might be — makes one wonder whether the British Government will do anything to impose a settlement on Namibia that might inconvenience the Prime Minister's friends in Pretoria.
    Mrs. Chalker: I have already answered the point on resolution 601. We shall help its implementation wherever we can. We wish to see a ceasefire between the South African Government and SWAPO, which will lead to SCR 435. In regard to the hon. Gentleman's other comments, we did not enter into any discussions with Namibia—it was not part of the Commonwealth conference at Vancouver—and there is no reason why we should have done so.
    Mr. Colvin: Does my right hon. Friend agree that a most significant further step towards the democracy that we all wish to see established in Namibia would be taken if the South African Government would agree to the repeal of the Administrator General 8, which presently enshrines ethnic divisions in that country?
    Mrs. Chalker: Sadly, I see no sign of the withdrawal of AG 8. But my hon. Friend is right; it might help the overall position, which, as I made clear, we wish to assist.

    South Africa
    Mrs. Mahon: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will give details
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    of representations received about South Africans under sentence of death in South Africa; and what response he is making.
    Mrs. Chalker: We have received various representa-tions about South Africans under sentence of death. We are ready to consider making appeals for clemency in cases where the crime is clearly political and there are extenuating circumstances, or where there are strong humanitarian grounds for doing so.
    Mrs. Mahon: As this House rejects capital punishment, will the Minister make the strongest representations, because there are still approximately 150 people on Death Row? Will she give an undertaking that, when the United Nations Security Council intervenes, Britain will not vote alone, as it did before, to veto that intervention. leaving us isolated yet again?
    Mrs. Chalker: We make inquiries into every case that comes up. The case to which the hon. Lady refers is that of Mr. Mulungisi Luphondo. His offence was clearly a criminal act. He and two others were on the run from the police. Their car ran out of petrol and they waved down another car. An argument ensued and the three drew guns. Luphondo shot dead a black female passenger and an accomplice shot dead the black driver of the car. That is in no way a political act; it is clearly a criminal act. Frankly, if we expend credit in making appeals to the South African Government about cases that are clearly criminal cases, we shall devalue our representations and risk the consequences that the South African Government will take less notice of the appeals for clemency that we always make in cases of a political character, such as that of the Sharpeville six.
    Mr. John Carlisle: Is my right hon. Friend aware that the crimes committed by the so-called Sharpeville six were horrendous? Those under sentence of death dragged the deputy mayor of Sharpeville out of his house, having stoned and petrol bombed it. They put him in his car, turned it over, poured petrol on him and set light to him, causing his death. Does my right hon. Friend accept that in this case the British Government are in no position to make any comment at all on the just sentence passed upon these evil men?
    Mrs. Chalker: I understand what my hon. Friend says. In the case of the Sharpeville six, the matter went to appeal. The case was heard on 2 and 3 November, but the court reserved judgment. It would not be appropriate or right for us to make representations until judgment is given. I shall comment no further.
    Mr. Anderson: Has the Prime Minister personally ever criticised sentences in cases that are clearly political cases? Has the Prime Minister personally ever criticised the torture of children in South Africa?
    Mrs. Chalker: My right hon. Friend the Prime Minister has repeatedly criticised the torture of persons in South Africa, particularly young people. I am not aware of the answer to the hon. Gentleman's other question, but I shall look into the matter.
    Mr. Forth: Does my right hon. Friend agree that were we to make representations to another country, such as South Africa, about its domestic judicial arrangements, it would be entitled to react in exactly the same way as we would if South Africa made representations to us about our domestic judicial arrangements?
    Mrs. Chalker: I understand entirely what my hon. Friend says. However, he must realise that there is a difference between cases that are brought to court and the general appalling state of apartheid in South Africa. We believe firmly that we do, indeed, have a right to express our views on apartheid.

    Arms Control
    Mr. Tony Lloyd: To ask the Secretary of State for Foreign and Commonwealth Affairs in what recent discussions he has been engaged with Governments of the United States of America and the Union of Soviet Socialist Republics concerning verification procedure relating to arms control.
    Mr. Mellor: Verification procedures relating to all aspects of arms control are frequently discussed as part of the continuous dialogue between the United States and British Governments about arms control matters. Verification procedures relating to a chemical weapons ban and nuclear testing are also discussed at the conference on disarmament in Geneva.
    Mr. Lloyd: As the Government are not directly involved in negotiations with the Soviet Union but are merely in the process of consultation with the United States, will the Minister tell us — in response to an earlier question — what the British Government's minimal line is? For example, will they say that inspection can take place only at Greenham Common and Molesworth, or will they unquestioningly accept what the United States negotiates on our behalf?
    Mr. Mellor: The hon. Gentleman is fully entitled to pursue that point. He may be interested to know that I gave as full an explanation as I could in Committee on the Arms Control and Disarmament (Privileges and Immunities) Bill. The discussions on the treaty have not been concluded. The way in which the arrangements work means that the United States would not put forward any negotiating gambit with the Soviets that had not previously been cleared with us. At the moment negotiations are concerned with disclosed sites, which in this country involve only Greenham Common and Molesworth.
    Mr. Bellingham: Does my hon. and learned Friend agree that we must not forget that the historic breakthrough in INF arms reduction is the result of multilateral disarmament and this Government's policy of negotiating from a position of strength? Does he also agree that if the Labour party had had its way there would be no chance of ridding Europe of SS20s or cruise missiles?
    Mr. Mellor: My hon. Friend is entirely right. It was only the decision of the Alliance to deploy a new generation of cruise missiles and Pershing IIs in Europe that compelled the Soviet Union to abandon its stance of boycotting the disarmament talks while it thought that unilateralist Governments would be elected in Europe, to come back to the negotiating table and to negotiate seriously. That could not have been achieved if the Labour party had been in power.
    Mr. Robertson: Will the Minister tell his hon. Friends that if he wants to talk across the Dispatch Box he cannot do so from the Strangers' Gallery? The Government are in the Strangers' Gallery at the negotiations and are not
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    part of them. Last weekend the Defence Secretary was telling the media that the Government had serious reservations about the concessions being made by the Americans on an INF treaty. At the same time the Minister was telling the world that the Government were in favour of the INF deal but were enthusiastically in favour of a strategic arms limitation deal as well. Since there is clearly an argument within the Government on the issue, can he tell us who is winning, or has the Prime Minister not yet made up Ministers' minds for them?
    Mr. Mellor: The hon. Gentleman is wrong on both points. First, while of course the talks are bilateral, because the weapons systems concerned are wholly American, the agreement upon which the talks are predicated was reached by the NATO Alliance. All members of the NATO Alliance subscribe fully to the American negotiating position and any matters relevant to Alliance-basing countries are cleared by the United States with those countries before negotiations proceed.
    On the second point, the hon. Gentleman knows full well that when the Prime Minister went to see President Reagan at the end of 1986 the communiqué stated clearly that it was the priority of those two leaders that there should be an INF deal, followed by a START deal, followed by talks to try to bring about conventional stability. Subsequently, that became the position of the whole NATO Alliance. It is the sheerest mischief-making for the Opposition to try to suggest that the INF deal does not have the support of all members of the Government. Their only aim is to give aid and comfort to those in the United States who are trying to prevent Senate ratification in due course by saying that the Europeans do not want it.

    Council of Ministers (Foreign Policy)
    Mr. Ian Taylor: To ask the Secretary of State for Foreign and Commonwealth Affairs whether there have been any recent foreign policy initiatives by the Council of Ministers of the European Community.
    Sir Geoffrey Howe: The 12 have called on Iran and Iraq to implement Security Council resolution 598 forthwith, and have expressed their firm support for the fundamental principle of freedom of navigation. They have also welcomed the recent Central American peace agreement. They are working closely together at the Vienna CSCE follow-up meeting. The 12 have worked hard for the successful outcome of last week's record United Nation's vote on Afghanistan. They continue to intervene together on human rights questions.
    Mr. Taylor: I welcome the news that the Council of Ministers meeting on political co-operation was more united on foreign policy. Will my right hon. and learned Friend continue to press his colleagues to go further on Afghanistan, and in particular to take further the overwhelming vote on 10 November, to which he referred, urging the removal of foreign troops? Will he stress that the whole European Community is dismayed at the continuing atrocities against people in Afghanistan carried out by the Soviet Union?
    Sir Geoffrey Howe: I am grateful to my hon. Friend and I can assure him that the 12 will continue to make plain their view exactly along the lines that he has described. For the eighth successive year, ahead of this year's United Nations debate, we have called for the immediate

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    withdrawal of Soviet troops and for genuine self-determination for the Afghan people. We have made it clear that that is the thing for which the whole world is looking. The Afghan people deserve peace and they must be allowed to decide their own future on that basis.
    Mr. John D. Taylor: Does the Council of Ministers intend to follow the example of the Political Affairs Committee of the European Parliament, which, at its last meeting, decided to become involved in the internal political and constitutional affairs of Gibraltar?
    Sir Geoffrey Howe: No, the Council of Ministers does not intend to do any such thing. It respects the constitutional proprieties of each member state.
    Mr. John M. Taylor: Will my right hon. and learned Friend suggest to the Council that one of the main causes of transatlantic trade stress is the huge farm subsidies which the Americans feel obliged to match to protect their own agriculture, thus deepening their deficit, to the disadvantage of us all?
    Sir Geoffrey Howe: I shall certainly make sure that the European Community joins the United States in making plain the need for the removal of extravagant and grotesque food subsidies throughout the world. As my right hon. Friend the Prime Minister said in her speech to the Guildhall on Monday, there are massive food subsidies in the United States, probably about twice as much as in the European Community. if one measures them in terms of dollars per cow per annum. In Japan, the prices being paid to the farming community are in some cases eight times the world price, so it is necessary for all countries to engage in the "disarmament" of agricultural subsidies as quickly as possible.
    Mr. Tom Clarke: Has the Council of Ministers addressed itself urgently to the problem of famine, particularly in Ethiopia, or are we to have a repeat of the events of 1984–85 in spite of all the recent warnings by the BBC? Is the Council of Ministers prepared to try to prevent a crisis, instead of merely responding to it?
    Sir Geoffrey Howe: The hon. Gentleman can be completely assured that this is a matter which my hon. Friend the Minister for Overseas Development keeps well to the forefront of the agenda of Community Council meetings. Yesterday he announced a further extension of Britain's aid to Ethiopia because of the famine there, and he will be certain that this matter remains at the top of the Community's agenda.
    Mr. Jack: In the light of reforms in the United Nations, will my right hon. and learned Friend suggest to his colleagues in Europe, that they take a joint initiative to try to persuade the United States fully to pay its dues this year so that the world body can continue the very valuable work referred to in my right hon. and learned Friend's responses to earlier questions?
    Sir Geoffrey Howe: My hon. Friend is right to draw attention to that important matter. I have discussed the topic with Secretary of State Shultz on more than one occasion. It is a topic on which the United States Administration are striving to make headway, but on which they have not yet been able to persuade Congress.
    Mr. Kaufman: Given that five of the seven naval contingents in the Gulf have been sent by Community members, and bearing in mind the recent Iranian attacks
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    upon innocent shipping, and other recent acts of war by Iraq, does the right hon. and learned Gentleman agree that, four months after the passage of resolution 598, it is unacceptable that no action has been taken to implement that resolution and that killings and warfare in the Gulf continue? Will he therefore take an initiative, in collaboration with the members of the 12, plus the United States, the Soviet Union and the People's Republic of China, to sponsor a resolution in the United Nations that will contain a package of an immediate arms embargo, coupled with a United Nations command for the naval contingents in the Gulf? I know from my own discussions that that would be acceptable to both Kuwait and Oman.
    Sir Geoffrey Howe: The right hon. Gentleman is supporting almost all the right propositions in his somewhat lengthy interrogation. It is certainly the case that all 12 European Community members and, more specifically, the seven members of the Western European Union, are actively engaged in maintaining freedom of navigation in the Gulf. Also, we are all equally committed to the implementation of resolution 598. That resolution carries with it two commitments:first, to sustain the work of the Secretary General ; and, secondly, to proceed to measures for its enforcement. The pressure that I, together with all the partners of the European Community, have deployed is to get effective commitment now from the Soviet Union to move on to the enforcement measure that is clearly necessary as part of that process. I believe— this is the one point where I part company from the right hon. Gentleman — that the proposal for a United Nations naval force is not one that we regard as a sensible way forward. The Soviet espousal of that idea has all the hallmarks of a propaganda exercise. The Soviets have not put forward details of the proposal that they support. The Soviet Union should now let its actions live up to the commitment made by Mr. Shevardnadze at the meeting in New York on 25 September.

    New Zealand
    Mr. Wigley: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next expects to pay an official visit to New Zealand.
    Mr. Eggar: My right hon. and learned Friend has no plans at present to visit New Zealand.
    Mr. Wigley: Can the Minister tell the House what representations the Government have had from New Zealand concerning the access of New Zealand butter to the United Kingdom, particularly after 1988 when the present agreement runs out and in view of the importance of this matter not only to New Zealand. but, from a different view, to the dairy producers in Britain? In particular, can he tell the House the Government's standpoint on the possibility of making the quota of New Zealand butter that currently comes to the United Kingdom available to the EEC?
    Mr. Eggar: The questions that the hon. Gentleman has raised are, of course, a matter for the Community as a whole to answer, but, for our part, we shall continue to support the New Zealand case for access for its butter.
    Mrs. Kellett-Bowman: Will my hon. Friend remind his right hon. and learned Friend that he called the New

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    Zealand Government's attention to this country's extreme irritation at their attitude to defence and linked that, at that time, to the import of New Zealand butter?
    Mr. Eggar: We were not very happy with the New Zealand anti-nuclear legislation that was enacted last June. There is no way in which Her Majesty's Government can change that legislation ; nor, because of that legislation, is there any way in which we can contemplate sending Royal Navy ships to New Zealand ports, unless New Zealand amends or repeals that Act.
    Mr. Corbett: I thank the Minister for the support that he expressed a few moments ago for the continued access of New Zealand butter to the United Kingdom market. Will he confirm that, even if the Community were to change its view on access, that would not make any significant contribution to avoiding the problem of expensive over-production of dairy products within the Community?
    Mr. Eggar: As regards over-production, the important thing is the steps that have already been taken within the Community to reduce Community production, but we must take account of New Zealand's ability to undercut production prices within the Community. That is an inevitable factor that will be considered.

    French Foreign Minister
    Mr. David Shaw: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the French Foreign Minister; and what subjects were discussed.
    Mrs. Chalker: My right hon. and learned Friend last met the French Foreign Minister at the Western European Union ministerial meeting on 26–27 October in The Hague. Their most recent bilateral talks were on 9 September in London, when they discussed the Gulf, East-West and Community matters.
    Mr. Shaw: Will the Minister convey to the French Minister the support and congratulation of this House on the recent way in which the French customs services and secret services managed to impound a ship carrying IRA weapons? Will my hon. Friend confirm that there are people on this side of the English Channel who will continue to co-operate with the French to ensure that terrorists are stopped? Will she also confirm to the French Minister that there are no Conservative Members who, in any way, shape or form, support the murderous IRA terrorists?
    Mrs. Chalker: I am glad to join my hon. Friend in congratulating the French authorities on their successful seizure of a large shipment of arms from the Eksund. They have undoubtedly saved lives in Northern Ireland and elsewhere by seizing those arms. I assure my hon. Friend that the British and French Governments are united, in co-operation with their partners, against terrorism, and we will co-operate with them in all ways necessary to combat terrorism.
    Mr. Cryer: Will the Minister confirm that neither her Department nor any other is discussing Anglo-French arrangements on nuclear weapons and that if, following the agreement between the Soviet Union and America in the INF talks, Britain were left isolated as a nuclear power, it would not reach out and come to any agreement with France on an Anglo-French nuclear bomb?
    Mrs. Chalker: The United Kingdom and France have had contact on a variety of defence subjects, including nuclear issues, for a long time, and we shall continue to do so. It is natural for two neighbouring European nuclear powers, who are partners and work closely together in all areas to do so on the subjects mentioned by the hon. Gentleman.

    Argentina
    Mr. Gerald Howarth: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on United Kingdom relations with Argentina.
    Mr. Eggar: We continue to seek more normal relations with Argentina, while honouring our commitment to the Falkland Islanders. We look to the Argentine Government to respond positively to our efforts.
    Mr. Howarth: Is my hon. Friend aware that Great Britain's rejection of the United Nation's resolution last night is far from humiliating and will be widely welcomed at home and in the Falkland Islands? Will he confirm that the question of sovereignty of the Falkland Islands is non-negotiable? Does he agree that what is humiliating is the enthusiasm shown by the Opposition to treat with those who invaded the Falkland Islands and cost the lives of British soldiers?
    Mr. Eggar: I very much agree with my hon. Friend. Last night's debate avoided the central issue. The resolution before the United Nations sought to fudge the differences between the British and Argentine Governments. That is not possible when the differences are so fundamental. The difference is that we do not regard the sovereignty of the Falkland Islands as a matter for negotiation.
    Mr. Pike: Does the Minister accept that many people will view that statement as a tragedy because, ultimately, Britain must negotiate a settlement with Argentina on the Falkland Islands? The money that was wasted and the lives that were lost by both sides were a tragedy. Will the Minister think again and assure the House that at some stage negotiations will be held?
    Mr. Eggar: The whole country and the House will reject that simplistic and naive assessment. Self-determination is an inalienable right. It is a basic principle within the United Nations charter.
    Mr. Jacques Arnold: Will my hon. Friend comment on the current situation of the fisheries between the Falkland Islands and the mainland of South America?
    Mr. Eggar: I am delighted to tell the House that the last fishing season went extremely well. The revenue raised by the Falkland Islands Government tripled as a result of the fishing conservation zone. Applications have now been received for the 1988 fishing season and the companies involved have recently been informed of new licences that have been awarded.

    Suva
    Mr. Eastham: To ask the Secretary of State for Foreign and Commonwealth Affairs what is the current establishment of the British mission in Suva.
    Mr. Eggar: The current United Kingdom based establishment of the British high Commission in Suva is eight.
    Mr. Eastham: Is the Minister aware that there is justifiable concern among Indian citizens about the situation in Fiji? Has the high Commissioner received any representations on behalf of the Indian citizens, who are the majority there? Will he also tell us what representations are being made by those Indian citizens?
    Mr. Eggar: Of course, our high Commissioner keeps in close touch with members of the Indian community, as he does with the Fijian community. He reports regularly to us on developments in that country.

    Iran/Iraq War
    Mr. Robertson: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next intends to meet the Secretary-General of the United Nations to discuss the Gulf war.
    Sir Geoffrey Howe: I value greatly my periodic meetings with the UN Secretary-General. My most recent meeting with him was in New York on 25 September, when we discussed the Gulf conflict. There are no plans for a further meeting in the immediate future, but we remain in close touch through the United Kingdom permanent representative in New York.
    Mr. Robertson: When the right hon. and learned Gentleman meets the Secretary-General, will he explain at some length why we are so implacably opposed to a United
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    Nations flag flying over our naval presence in the Gulf, and why Britain seems to be oblivious to the dangers to which our naval ships are put while they sail under one of the eight different flags of the eight different navies that are sailing around in the Gulf? Surely it would be in the interests of the safety of shipping in the Gulf, as well as the safety of our mariners in that area, if we bit the bullet and got down to having a United Nations flag over the naval presence.
    Sir Geoffrey Howe: The hon. Gentleman presses with astonishing enthusiasm a proposition that does not commend itself anywhere else. There are formidable practical difficulties about that proposal in present circumstances; for example, in obtaining agreement in the Security Council itself, when it is hard enough to get agreement on the support for the arms embargo, agreeing operational instructions and rules of engagement, and seeking agreement on cost burden-sharing. The truth is that there has never been a United Nations naval peace-keeping task force. It would represent a problem of a new order of magnitude. It is the view of those who have naval vessels in the Gulf that in the current situation it is much better for individual national forces to look after their own shipping and to co-ordinate their activities locally. The Opposition would be far better engaged in pressing the Soviet Union to take the simple step of delivering its support for an arms embargo, as Mr. Shevardnadze said he would on 25 September.

Mr. Frank Larsen
3.31 pm
Mr. David Winnick(by private notice) asked the Secretary of State for the Home Department if he will make a statement on the decision to deport Mr. Larsen from the United Kingdom.
The Minister of State, Home Office (Mr. Tim Renton): Mr. Larsen is in fact Mr. Viggo Oerbak, a Norwegian national and convicted criminal there. My Department has produced fingerprint evidence from the Norwegian police to the court, which was satisfied as to Mr. Oerbak's identity. Mr. Oerback's application for leave to move for judicial review against the decision that he is an illegal entrant was dismissed yesterday in the divisional court by Mr. Justice Macpherson.
Mr. Oerbak originally arrived in the United Kingdom in 1982 with a false Norwegian identity. He subsequently claimed yet a further false identity in the name of John William Pearson Lewes Parker, a British national. Both identities have been disproved and in particular Mr. Oerbak's claim to a British nationality in the name of Parker has been found to be false and I understand was also dismissed by the judge yesterday as "scandalously inappropriate and wrong". In view of his unlawful entry to the United Kingdom and the fact that he has no claim to remain, Mr Oerbak is being removed to Oslo today. His removal has already been deferred to enable him to pursue his application to move for judicial review of the decision to treat him as an illegal entrant. In view of the fact that that application has been unhesitatingly—the judge's words — dismissed, the way is now clear for Mr. Oerbak's removal to proceed. We see no reason for it to be further delayed.
Mr. Winnick: As this person was undoubtedly involved with the South African security service in trying to kidnap members of the African National Congress in London, and in other illegal actions, why are these matters not being proceeded with in the courts? Is it not a fact that he has become such an embarrassment to the Government that he is being sent off quickly? Would an agent who had acted for the Soviet security service have been allowed to get out of the country without any court action if he had no diplomatic status?
In view of the concern about the close co-operation between the British and South African security services, is the Minister aware that my hon. Friends and I remain most dissatisfied with the way in which the case has been handled?
Mr. Renton: I find it wholly incomprehensible that, in view of the answer that I have given, the hon. Gentleman should remain completely unsatisfied.
We have not been informed that there was any evidence of any involvement of South African Government agencies. As regards the hon. Gentleman's point that the court should be involved—it has been involved. As I have described, it has dismissed the man's application for leave to be given for judicial review. It is a clear-cut case of an illegal entrant and it is right that he should be treated as such.
Mr. Ian Gow: Would it not have been better if the hon. Member for Walsall, North (Mr. Winnick) had done his homework before he asked his question?
Mr. Renton: Yes, Sir. The hon. Gentleman is engaged in a wild goose chase that does him no credit.
Mr. Gerald Bermingham: We have already had the explanation for why the conspiracy charge was dropped. However, does the Minister agree that, during the police investigation into the African National Congress case, the man was found to be in possession of a number of classified documents — including those relating to Operation Layout—or in receipt, control or possession of various forged documents? Does the Minister agree that if a person is in possession of documents that are classified or forged, he should be charged with those offences and dealt with by the courts?
Mr. Renton: The points that the hon. Gentleman has raised were dealt with fully by my right hon. and learned Friend the Attorney-General on 23 October. He said:
"The Security Service advised that the documents purporting to be governmental documents were not genuine." —[Official Report, 23 October 1987; Vol. 120, c. 1101.]
Mr. Kenneth Hind: I congratulate my hon. Friend. Will he be reassured that my hon. Friends and I take the view that anyone acting against the interests of the British people should be got rid of—so we are grateful to him?
Mr. Renton: I thank my hon. Friend for his support. I stress to him that as far as my Department is concerned, this is merely a question of treating this man as an illegal entrant, which is what he has been shown to be, and therefore of removing him from this country at the earliest opportunity.
Mr. Simon Hughes: Will the Minister answer clearly the question that his right hon. and learned Friend the Attorney-General did not answer? Is there no evidence that now, or at any time, Larsen— or Oerbak—has been engaged by British, South African or other security forces?
Mr. Renton: I refer again specifically to the point made by my right hon. and learned Friend the Attorney-General, on 23 October. He said:
"I am advised that none of the defendants in this case has at any time been employed in any capacity by any of the security or intelligence services." — [Official Report, 23 October 1987; Vol. 120, c. 1096.]
I have already dealt with the point about South African involvement.
Mr. John Carlisle: Does my hon. Friend accept that the smokescreen put out by the Opposition about this man's involvement in South African and British security forces is designed merely to cover their own embarrassment? The man is obviously a deceiver and liar, and my hon. Friend was right to remove him as quickly and efficiently as he did.
Mr. Renton: I agree with my hon. Friend. The affair shows the willingness of the Opposition to run with any fantastic story or allegation that could lead to the disadvantage of our security services.
Mr. Peter Archer: Does the hon. Gentleman understand that when questions are asked about the security services it is too easy to refuse to answer them by pleading security considerations that cannot be disclosed? A possible alternative explanation is that someone has something discreditable to conceal. Given that our security services have been under question in the

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past two years in a way that they have not been under question since the Napoleonic wars, will the hon. Gentleman consider with his right hon. Friend the Prime Minister the establishment of some body or group that enjoys general confidence and which can consider the merits of these matters?
Mr. Renton: I have to say to the right hon. and learned Gentleman, who is very expert in these matters, that my right hon. and learned Friend the Attorney-General made a very full statement to the House on these subjects on 23 October. In the light of what he said there is absolutely no need for an inquiry—if that is what the right hon. and learned Gentleman's question was leading to. I am answering now on the question of this man's position as an illegal entrant, and I must make it plain to the House that the judge found very clearly in favour of the evidence lodged by the Home Office that this man was an illegal entrant and was not a British citizen.
Mr. John Watts: Is my hon. Friend aware that he is to be congratulated on his speedy action in deporting this undesirable? Will he take steps to ensure that this man does not have the opportunity to strip off on the tarmac to delay his departure? Can he understand the willingness of the Labour party to rush to the defence of any illegal immigrant?
Mr. Renton: I sympathise with my hon. Friend's second point. It is a great pity that when we follow immigration procedures the Opposition should immediately seek to load them with political allegations. We seek to enforce immigration procedures as quickly as possible—as the Opposition often urge us to do—and that is what we are doing in this case.
Mr. Richard Caborn: I have listened very carefully to the Minister's explanation to the House. Can he answer two questions? First, why is there urgency to deport this gentleman, especially when there are further actions in the court, particularly by Mr. Solly Smith, the chief representative of the African National Congress, about compensation for the conspiracy to kidnap? Secondly, the Minister said in his statement that all the evidence was forged. Can he tell the House whether that evidence will be available to the African National Congress so that it can scrutinise it carefully and decide whether it has been wronged?
Mr. Renton: On the first point, I stress to the hon. Gentleman that—to use his word—there is no urgency whatever to deport. The man is not being deported; he is being removed as an illegal entrant. The procedures to
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remove him were held in suspense when the judicial application was lodged. Now that the judicial application has been dismissed, it is perfectly right and proper for us to proceed under the procedures that we were planning to use two or three weeks ago. The hon. Gentleman spoke about the ANC prosecution. I understand from the press that the ANC may be contemplating a civil action against those who attempted to kidnap its members. However, as that would be a civil action, it cannot be allowed to influence the removal of Mr. Oerbak in connection with the offence of unlawfully entering the United Kingdom.
Mr. Michael Fallon: Is it not hypocritical of the Opposition to object to the deportation of a convicted criminal to Norway, the country of his citizenship? If any further questions are to be asked about this entire affair, should they not be asked in the Norwegian Parliament rather than in this one?
Mr. Renton: There is a lot of sense in that. Mr. Oerbak is a Norwegian citizen and it is absolutely right that he should be returned to Norway as soon as possible.
Mr. Roy Hattersley: Is the Minister of State aware that I have absolutely no objection to the removal, but merely ask questions about the details? First, on 23 October the Attorney-General announced that this man was guilty of masquerading as a police officer. Why was he not charged with that offence in open court? Secondly, this man claims that he had impounded papers that implicate the security services in his activities and also implicate Members of the House. Are those papers to be returned to him or to his legal representatives? Thirdly, in replying to his hon. Friend the Member for Luton, North (Mr. Carlisle), the Minister of State accused the Opposition of following any course that would lead to the disadvantage of the security services. What did he mean by that? How could pursuing this case lead to the disadvantage of the security services?
Mr. Renton: The right hon. Gentleman misquotes me on the last point. I said that this exposes the willingness of the Opposition to run with any fantastic story that could lead to the disadvantage of the security service. That is precisely what this afternoon's performance shows.
On the first point, those matters are clearly for the police. Whether they decide to pursue other charges is a matter for them, as my right hon. and learned Friend the Attorney-General made plain in the House on 23 October. On the second point, there is nothing to stop Mr. Oerbak's legal representative from going today—or having gone any day in the past—to collect any documents that Mr. Oerbak wishes to be collected.

Unemployed People (Training)
3.45 pm
The Secretary of State for Employment (Mr. Norman Fowler): With permission, Mr. Speaker, I would like to make a statement on a new training programme for unemployed people. Unemployment has now fallen for 16 months in succession by a total of nearly 500,000. Over the last 12 months, long-term unemployment has shown a record fall and the latest figures for unemployed young people also show that we are well on the way to eliminating the problem of school leaver unemployment. This September there were fewer unemployed school leavers than for 13 years.
I believe that this is the right time to review the Government's programmes for unemployed people. We need to be sure that we have the right programmes to meet the demands of an improving labour market. We need to be sure that we are giving unemployed people the help that they need to take advantage of the increasing number of jobs now becoming available, and we need to be sure that the programmes we operate are helping to provide the skills that we require to compete in world markets.
I am clear that the priority now must be to provide training for the long-term unemployed. The emphasis should be switched away from providing temporary jobs as an alternative to unemployment and towards providing training to help unemployed people to get back into permanent jobs. But more than that, we must ensure that the training we provide is geared both to the needs of the individual and to those of the economy.
We already have a unified programme for young people —the youth training scheme. I have now decided to bring together all the existing programmes for unem-ployed people over 18 into a single new programme. It will involve the substantial reform of the community programme, including a major enhancement of its training content. The new programme will offer up to 12 months training for anyone who has been out of work for more than six months. Entry to the programme will be through the restart interviews and jobcentres. Training agents will then assess the needs of each person and training providers will arrange a suitable programme. There will be special arrangements for disabled people and others with special needs.
This new programme will involve employers and a range of other organisations like chambers of commerce and voluntary and training bodies. I hope that managing agents now in the community programme and the job training scheme will play a full part. The programme will provide training and practical experience with employers and on projects. The emphasis will be on practical learning to help people get back into employment. Accordingly, the training will range from basic working skills, including numeracy and literacy, to training at craft and technician level. The aim is that the new programme should improve significantly on the number of people who obtain jobs when they leave.
For all its merits, the community programme in its present form does not attract unemployed people with dependants and with higher benefit entitlement. It has become increasingly a programme for single people rather than the family man with children. It has also become overwhelmingly a part-time programme, with little opportunity for training. We need to tackle those
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problems at the root. It is essential that unemployed people who join the new programme know that they will be better off than they were on benefit. I therefore intend that all trainees in the new programme should be paid a training allowance that will give them a lead over their previous benefit entitlement.
The budget for the new programme will be just under £1·5 billion a year, so maintaining the provision for the schemes it will replace. When the new programme is fully operational, it will be possible to provide training for some 600,000 people a year. It will therefore make a major contribution to fulfilling the Government's commitments to the long-term unemployed. It will also help to ensure that we train the work force with the skills that we shall need in the 1990s and into the next century.
I am asking the Manpower Services Commission for its comments on the new programme and to let me have proposals for introducing it from September next year. I propose to publish a White Paper early next year setting out the detail of the new programme and putting it in the context of the Government's overall strategy for employment and training.
At a time of rapid growth and change in employment opportunities, training through life is of key importance. That means training for the young and for adults, for the unemployed and for the employed. The programme I am announcing today focuses on the long-term unemployed and complements the youth training scheme for young people and our efforts, through employers, to improve and increase training for employed people. No other country has a programme on this scale. It will provide new opportunities for long-term unemployed people to obtain the skills and qualifications employers need. This programme will benefit unemployed people, employers and the economy as a whole and I hope that it will command the support of the whole House.
Mr. Michael Meacher: Is the Secretary of State aware that, while the Opposition have consistently called for improved training for the unemployed, we strongly reject the Government's strategy of providing mass programmes of low-level work experience dressed up as training such as the Secretary of State has described today? Is he aware that his much-vaunted guarantee of a job or a place on a scheme in reality means compelling people by threat of withdrawal of benefit on to low-paid placements without choice and with minimal training? The Government talk about freedom of choice for everyone else. Why then do they not have the confidence, if those schemes are so worthwhile, to allow the unemployed to make a free choice?
Does not the statement mean that the community programme will be dragged down to the level of the JTS, which has been a monumental flop in which the Government have only managed to fill a quarter of the places that they intended? Is the Secretary of State aware that even near his constituency some two months ago only 3 per cent. of people on JTS found jobs after completing the course?
Is the Secretary of State also aware that the community programme managers running the schemes are deeply opposed to his plans and expect there to be poor take-up, resentful participation and a loss of momentum on those schemes as a result of a switch from the rate for the job to merely benefit-plus? Is the Secretary of State further aware that the Government have already cut the rate for

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the job from £89 a week under the community enterprise programme to an average of £67 a week under the present community programme? With a further near 50 per cent. cut to about £35 a week proposed for a single person, is it not clear that today's announcement is much more about cutting low pay than about improving training?
Why has the Secretary of State not told us exactly what the so-called training programme entails? In reality, it is benefit-plus. That was the major omission from his statement. It is widely rumoured that it will be only £4 or £5 a week above social security levels. Will the Secretary of State confirm that figure?
As the training allowance will almost certainly be less in many cases than necessary work expenses for travel and clothing, and since the link with benefit means that in future the employer top-up will no longer be available, is it not clear that the Government are now officially sanctioning poverty wages on those schemes? Is the Secretary of State also aware that his claim that he is increasing training is scarcely credible from a Government who have abolished 16 of the 23 industrial training boards, closed 29 skillcentres and cut apprenticeships to half their pre-1979 level? Is he aware that his claim of enhanced training today is totally incredible when he is offering no additional funds whatsoever?
The Secretary of State's statement perpetuates his myth that people can get training on the cheap. Is he aware that his proposals today will actually worsen the situation for many people on the community programme? Is he not writing off persons over the age of 50? Is he not penalising those who need part-time work, such as single parents and disabled people? As the people on the schemes will be reduced to the status of benefit claimants rather than employees, will they not lose entitlement to sickness or industrial injury benefit and the protection of health and safety legislation?
The statement is not about training. It is about compulsion and working for benefits. By contrast, the unemployed want to volunteer, not to be forced. They want to have the chance to train for real skills and recognised qualifications, and when they work they want to be paid the rate for the job and not to provide cut-price labour at benefit rates.
Mr. Fowler: The response of the hon. Member for Oldham, West (Mr. Meacher) is even more nonsensical than usual. The hon. Gentleman has once again gone raving over the top in his typical way and has avoided all the points that have been announced. Let me try to tell the hon. Gentleman about—[Interruption.]
Mr. Speaker: Order.
Mr. Fowler: Let me tell the hon. Gentleman about the scheme and respond to his questions. The programme will cost £1·5 billion and will provide training for 600,000 unemployed people a year. That is an improvement on the 400,000 people who receive training at the moment. I should have thought that the hon. Gentleman would welcome that.
The fact is that the hon. Gentleman and his colleagues made exactly the same mistake with YTS. They condemned it at the time and have been shown to be totally wrong in their judgment. [Interruption.] The hon. Member for Oldham, West and his hon Friend—if that is what he is — the Member for Huddersfield (Mr.
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Sheerman) give the impression of being terrified that the unemployment position in this country is improving, which it is.
On training, I should like to respond to what the hon. Member for Oldham, West said about the job training scheme. The cause for concern about the job training scheme is that at the moment 50 per cent. of those who agree at a restart interview to go on to the job training scheme do not turn up even for the start of the scheme. They do not even look at what is on offer. I should not have thought that the hon. Gentleman would justify that.
I can certainly give the hon. Gentleman the assurance that we are retaining the good features of the community programme. We want the continuing involvement of the voluntary organisations which do useful work. However, I must advise the hon. Gentleman and his hon. Friends on the Opposition Front Bench that at the moment training does not take place on the community programme. It is part-time—[Interruption.]
Mr. Speaker: Order. May I ask the House not to ask questions while the Secretary of State is giving answers, since otherwise there is little point in asking them afterwards.
Mr. Fowler: The community programme is part-time work, not full-time.
As far as the benefit-plus premium is concerned., the comments of the hon. Member for Oldham, West are simply not the case. I have asked the Commission to advise on all aspects of the scheme, including the level of the training allowance. I am obviously required to do that. We aim for a lead over benefit not only on the community programme but on other programmes, such as the job training scheme. In other words, that will apply not only to the community programme but to every scheme in the programme.
Mr. Meacher: Why?
Mr. Fowler: I have just told the hon. Gentleman that I have asked the Commission to advise on all aspects of the scheme, including that. I can certainly give the lion. Gentleman an assurance that the amount will be more than the £4 or £5 that he alleged a moment ago.
I remind the hon. Gentleman that the present structure of benefit-plus means that predominantly single people will benefit from the community programme. The new structure would treat everyone according to his individual circumstances. A training allowance would mean that, for the first time, married men with children could benefit from the community programme.
This is a good and serious attempt to provide better adult training for the unemployed, and I deplore the hon. Gentleman's response to it.
Mr. Jim Lester: My right hon. Friend's statement is welcome and timely, because there is a real need to reach out to the long-term unemployed with families. The Opposition's frenetic shrieking about the transferability of benefit is completely misplaced. because we cannot help the wide variety of long-term unemployed unless we accept the principle of the transferability of benefit, plus a suitable premium which allows for the training that a person desires. I commend my right hon. Friend's decision to proceed by way of a White Paper, in which many of the niggles that we hear shrieked by the Opposition can be properly discussed with the Manpower

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Services Commission. I hope that all those who are really worried about the long-term unemployed and those who want proper training leading to qualifications which will get them jobs will participate in that discussion, and that there will be no repetition of the niggardly way in which the Opposition have greeted this statement.
Mr. Fowler: I am grateful to my hon. Friend. Many people inside and outside the House recognise the need for a unified scheme such as the youth training scheme for young people. The present schemes and the community programme provide too little training. We need a full-time scheme, not a part-time scheme, and we need training that will meet the needs of the individual. The programme is intended to achieve that, and I am sure that it will.
Mr. Malcolm Bruce: Does the Secretary of State accept that his announcement will be greeted with much scepticism by many of those who are involved in training the unemployed, especially in view of the Government's declared intention of compelling people to join schemes in exchange for taking them off benefit? Does he accept that the premium that will be paid on a training allowance will be a crucial factor in whether people regard the scheme as cheap labour or as real training? Does he further accept that many of those who run training schemes do not want unwilling people forced on to them to lower the morale of those who want to be trained?
Does the Secretary of State accept that the demise of the community programme, which many of us believe is wrapped up in this statement, will be resented? The community programme has demonstrated that there is a great need for such community work. But the Government should fund it so that people can gain training and then go on to full-time jobs in the community. At present, the Government are not providing such funds.
What special schemes does the Minister have in mind for the disabled? Will he provide interpreters so that the deaf may benefit from training which many of them are now denied?
Mr. Fowler: The disabled will be an exception to the rule that people should be unemployed for six months. We shall make any other reasonable exceptions that we can to meet the problems of the disabled and other groups.
My announcement does not remotely mean the demise of the community programme. We shall try to retain the good features of the community programme. I agree with the hon. Gentleman that much good project work is done by many organisations, including voluntary organisations. But I hope he will agree that it is better to have full-time training than the part-time work that we have now. Above all, there should be training inside any such programme.
I heard what the hon. Gentleman said about the benefit-plus concept, and we shall take it into account. But the £67 average that is paid on the community programme does not meet the needs of many married people with children—irrespective of what the plus will be—whose benefit is already more than that. Those on the job training scheme are paid benefit with no premium at all. We are trying to rationalise and improve the system.
Mr. David Madel: My right hon. Friend has put a welcome emphasis on skills being provided that will lead to jobs for people, and on the skills
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that employers want. Does the statement mean that he is thinking of expanding the technical and vocational education initiative courses in schools in which his Department is involved? May we have an assurance that, as they build their expertise, the Government will make full use of city technology colleges, which are very much involved with chambers of commerce and employers?
Mr. Fowler: I can give my hon. Friend an assurance on both points, especially the second one. We want the TVEI to be built up, and the most encouraging trend is that now all local education authorities are taking part in the TVEI. A few days ago, I saw an example of that near my hon. Friend's constituency.
Mr. Ron Leighton: Is this not a curious statement, in that it does not tell us much? It hides more than it tells us, and it gives us no figures. It does not tell us what the wage—if I may call it that—will be. It gives a figure of £1·5 billion, which is meaningless because it represents the gross cost, not the net cost. The community programme costs £1 billion in gross terms, but the real cost is one third of that.
The trade unions okay each scheme on the present community programme. Will they be involved in the new scheme, or will they be shut out of the Training Commission? Another six employers' representatives will be added to it, but will the trade unions be involved, as they were with the community programme?
As my hon. Friend the Member for Oldham, West (Mr. Meacher) said, the JTS has been a monumental flop. If we turned the community programme into something like the JTS, it would degrade and even ruin it in the eyes of many people like me. If there is to be financial compulsion, most of us fear the worst. Does the Secretary of State agree that there should be full consultation and proper discussion in the House and with the trade unions?
Mr. Fowler: Yes, I do, and that is precisely why I made this statement. The hon. Gentleman asked about its purpose; it is to tell the House that we are consulting the MSC on our proposals and that early in the new year the Government will introduce a White Paper setting out the full details of the scheme. I have set out the outline of the scheme, which I believe will meet some of the fundamental criticisms made about adult training by committees such as the Select Committee on Employment, which the hon. Gentleman chaired. It will provide better training while retaining the best features of the existing provision.
Mr. Robin Maxwell-Hyslop: My right hon. Friend has outlined the scheme, and I am most grateful for his assurance that people taking part in it will be better off than those living on unemployment benefit. In the past, so many of these schemes have been designed by townees ignorant of everybody except those who live in towns. As unemployed people in rural areas can have to spend up to £3 a day merely to get to training schemes, I am happy with my right hon. Friend's implied assurance, but I would ask him to spell out that their transport costs to and from the schemes will be covered; otherwise, they will be worse off than if they did not participate in the scheme.
Mr. Fowler: With the benefit-plus premium, we will ensure that the training allowance which is paid gives a lead over the benefit that the individual would otherwise have received. I am grateful to my hon. Friend for

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mentioning travel costs. I shall ask the MSC to consider especially the exceptional travel costs which trainees must meet, because I see the force of my hon. Friend's point.
Mr. Dafydd Wigley: Does the Secretary of State accept that, even if there was a lead of £15, one person on the scheme might be receiving £40 a week while the person sitting next to him received £120? Is not that bound to lead to tension and rankling feelings between such people, and towards difficulties in the scheme?
Can the Secretary of State comment on the position of a married couple, both of whom are unemployed? How will the lead figure be worked out in those circumstances?
Mr. Fowler: We are trying to provide a rate for the individual, rather than for the job. We are talking about a training allowance, which means that married men with children will, for the first time, have an incentive to go on to the training programme. That is the whole purpose of benefit-plus.
Mr. Tom Sackville: Will my right hon. Friend join me in deploring the total absence of any welcome from the Opposition Benches for the rapid and continuing reduction in unemployment to which he has referred? In complete contrast, will he confirm that the Government's principal aim in bringing in these changes is to ensure that those entering training schemes will leave them better equipped to find permanent, full-time work?
Mr. Fowler: I entirely agree with both those points. I believe that the public generally will want to make their views known about the reaction that we have had from the Opposition. As for the point about skill training, there is no doubt that, if people are increasingly to go into jobs — that is what is happening— they will need to be trained for the skills that those jobs require. Moreover, if the country is to remain competitive, we shall need skill training. Both those points are behind what we are doing. The Opposition do not begin to understand the concept.
Mr. Jack Thompson: Will the Secretary of State recognise in his proposals for training—the current position on training is disastrous — that some skills cannot be taught in 12 months? Some take far longer than that. Is the right hon. Gentleman prepared to make some adjustment, so that skills that require two or three years' teaching. or even longer, can be taken into account?
Mr. Fowler: Obviously, I have some sympathy with the hon. Gentleman's point. The training that the individual receives, leading to a qualification or a credit towards a qualification, will be of help to him by providing him with skills that he needs. However, if anything further can be done, I shall do it. I welcome the hon. Gentleman's rather more constructive approach.
Mr. Tony Baldry: Is it not clear that the jobs of tomorrow will require higher skill levels and qualifications? Over half of today's unemployed have no qualifications whatever. Unless we take action to ensure that more people have skills, there will be persistent skill shortages, combined with persistent unemployment.
Today's statement is concerned with ensuring that the unemployed have the necessary skills to tackle the jobs of tomorrow. Conservative Members are engaged in a skills crusade. The Opposition must decide whether they wish to join us—and, I hope, every employer in the country—in being part of that crusade. Or do they prefer to sulk in their tents?
Mr. Fowler: I entirely agree. What we require in this country is training through life: that applies to the unemployed and the employed alike. However, unless the lesson is taken on board, we shall not be able to compete with our major international rivals. My hon. Friend is absolutely right about that, and the Opposition are entirely wrong.
Mr. Norman Buchan: Is there riot a great mystery at the centre of the statement, and also a great nonsense? The Secretary of State tells us that the scheme will cost £1·5 billion, which works out at about £48 a head. How much of that will be allocated to the people taking part, how much to the cost of training and how much to the Commissioners?
Is the right hon. Gentleman really announcing a scheme Costing £1·5 billion without knowing how much will be paid to the 600,000 people participating in it? Is not the real conclusion to be drawn that, once again, a number —in this instance, 600,000 — will be taken off the unemployment figures? Is this the 23rd or the 24th time that the right hon. Gentleman has changed the figures, and has not every such change reduced them?
Mr. Fowler: The hon. Gentleman is not right about that. I am asking the Manpower Services Commission to examine the details of the proposals. Clearly, the Commission will want to look at the balance between the provision and the allowances and other matters connected with it. But it will work within the budget, the limits of which I have made clear. I have also made it clear that we shall be introducing a benefit-plus arrangement.
Mr. Tony Marlow: In view of the excellence of the programme that my right hon. Friend is putting forward today, does he not agree that it would be heartless to continue to pay benefit to those who do not take advantage of the wonderful opportunities that are being provided? As, in some areas of the country where job availability is at its most abundant—in London, for example—male unemployment is also at its highest, does my right hon. Friend not agree with me that the greatest training aid that some people need is a well-placed boot up the backside?
Mr. Fowler: The scheme seeks to provide better training for the benefit of the country, and of the long-term unemployed in particular. Certainly, the normal arrange-ments for checking availability for work will continue.
Mrs. Margaret Ewing rose—
Hon. Members: Tell him to withdraw.
Mr. Speaker: Order. The phrase used by the hon. Member for Northampton, North (Mr. Marlow) was inelegant.
Mr. Bob Cryer: I agree with you, Mr. Speaker. It was inelegant.
Mr. Dave Nellist: Ask him to withdraw it, Mr. Speaker. You would if one of us had used it.
Mr. Speaker: Order. The phrase was not unparliamen-tary. I said that it was inelegant.
Mrs. Margaret Ewing: When the Secretary of State says that no other country has a programme of this size, does he not mean that no other country has a programme of this nature? Most of our European counterparts have real

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training schemes and real apprenticeship schemes, offering the real prospect of real jobs at the end of them. Does he not understand why many of us are cynical about today's statement? There seems little likelihood for many people here of a job at the end of their training.
During the consultation period, will the right hon. Gentleman please ensure that education authorities are involved? Many of our further education colleges that are involved in training schemes are already bursting at the seams, and are desperate for resources.
Mr. Fowler: The education colleges will certainly be involved in the programme. That has always been our intention.
The hon. Lady will recognise that, during recent months, the unemployment rate has been falling faster in this country than in many of the countries to which she referred. I am not remotely complacent about interna-tional comparisons, but I think that the training scheme for the long-term unemployed, with which the statement is basically concerned, will be one of the major schemes in Western Europe.
Mr. Julian Brazier: While welcoming the statement, may I put it to my right hon. Friend that there is a case for concentrating particularly heavily on institutions — for example, our technical college in Canterbury — that make a considerable effort to ensure that their schemes are oriented towards the needs of the local market place?
Mr. Fowler: Obviously, my hon. Friend is right. Training generally must be orientated towards the demands and needs of employers, because that is where the jobs will come from.
Mr. Dennis Skinner: Is the Secretary of State aware that it comes ill from some of his friends to attack the unemployed? One example is this one here — the hon. Member for Northampton, North (Mr. Marlow)— who is a member of the goose-stepping tendency. Does the right hon. Gentleman understand that we can do without lectures from moonlighting Tory Members, some of whom have three or four jobs and are picking up more than £50,000 a year? If he wants a tip on how much should be paid, why does he not copy the training system in another place, where £55 is paid each day tax-free with all the extras? There is no need for consultation. Get on with that.
Mr. Fowler: It seems that the hon. Gentleman, who comes from the hectoring tendency, has not quite focused on what the Government are proposing for the long-term unemployed. I am sure that, when he has, he will welcome it with his customary fairness.
Mr. Jonathan Aitken: Perhaps we can get back from the hectoring and the goose-stepping to the unemployed. Will my right hon. Friend bear in mind that those who have been on the community programme, or who are on it, have often expressed the wish that it should contain some element of training? As the Government's most welcome statement suggests that the long-term unemployed will be given precisely that for which many of them have been asking, is my right hon. Friend surprised by the extraordinary hostility of Opposition Members?
Mr. Fowler: The extraordinary hostility of those on the Opposition Benches is surprising. It comes partly from
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their terror that the unemployment position is improving and partly from their recognition that this training proposal will improve the position of many who are currently unemployed. What my hon. Friend says about the community programme is right. Many have argued for a long time that the programme should include a much greater element of training and should be full-time, not part-time. That is precisely what we are proposing.
Miss Marjorie Mowlam: The Secretary of State and some of his colleagues seem to question the attitude of Opposition Members and imply that there is some cynicism. That is understandable, because the right hon. Gentleman has not given us the facts. He keeps saying —[Interruption.] I shall get to my question in about 30 seconds. I hope that I shall be allowed to preface it as others have prefaced theirs. The right hon. Gentleman has said that he will communicate with the MSC and enter into discussions with it, but he has not given us any background details. I have a short and straightforward question for the right hon. Gentleman and I shall appreciate a short and straightforward reply. How much new money is there?
Mr. Fowler: The £1·5 billion that is being made available is the budget that is being provided for the existing schemes. It is now being put to the new programme.
Hon. Members: No new money.
Mr. James Cran: Conservative Members might be entitled to say that the comments that we have heard from Opposition Members will merely undermine the confidence of many of those who are on the schemes of which we are talking. I think that I am entitled to say that that is disgraceful.
My right hon. Friend has said that he expected a rather larger contribution from the private sector. As corporate profits are now at a high level—I think a 20-year high— we must not have the private sector pleading poverty when it comes to it making a contribution to make the new scheme a success.
Mr. Fowler: I hope that we shall see an increasing contribution from the private sector. I pay tribute to the training providers who are working within the JTS and other areas, but we would look for an even greater contribution.
Mr. Seamus Mallon: Will the Secretary of State accept that there is a part of the United Kingdom where unemployment has increased, not fallen? This is an area in which employment in manufacturing industry has decreased to the extent that there are more unemployed who used to work within it than there are currently employed. In the light of this experience in the north of Ireland, will the right hon. Gentleman accept that, unless skills are translated into jobs, we shall have nothing more than another large piece of blotting-paper to soak up the unemployment figures?
Mr. Fowler: I recognise the position of Northern Ireland, but that does not apply throughout the United Kingdom. The unemployment rate has been falling in the rest of the United Kingdom. In all regions of it there are jobs available, certainly in Northern Ireland. The figures that we announced last week were the best for Northern Ireland for more than 10 years. Increasing numbers of jobs

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are becoming available throughout the country and it is crucial that individuals should have the skills to enable them to take up these jobs.
Mr. Tony Favell: Is my right hon. Friend aware that the great involvement of the private sector in the community programme will be most welcome? Will he accept that one of the problems so far has been that the public sector has been unable in many instances to offer the unemployed long-term prospects?
Mr. Fowler: Yes. One of the problems of the community programme is that the long-term unemployed have not been able to find jobs after leaving the programme. The design of the scheme has made it ring-fenced and has kept it away from the normal employment programme. I hope that the flexibility within the new programme will enable jobs to come through from project training and from training with employers.
Mr. Frank Cook: In the light of the statement, will the Secretary of State consider the letter that I forwarded to him on Monday of this week? This is a letter that I received from David Ward of 25 Palmerston street, Stockton-on-Tees, in which he gave an account of his first visit to the restart programme a week last Monday. He asserts that he was encouraged to complete his form falsely. He develops that to an accusation that the set-up is no more than a semi-disguised confidence trick that is designed to persuade people to complete forms to the effect that they are asserting that they will accept employment at a much reduced rate of pay so that employers can come along and pick them up for the labour market under the threat of them losing their DHSS benefit. Will the Secretary of State have the courage to answer that letter? Will he deny that the programme that he proposes is nothing more than a fulfilment of Mr. Ward's fears?
Mr. Fowler: It is not remotely a fulfilment of what the hon. Gentleman suggests. I am prepared to give the guarantee that I shall consider the individual case that he has sent to me. His description of the restart interview process is not remotely general and is not remotely a fair description of it.
Mr. James Paice: Does my right hon. Friend agree that there is a major distinction to be made between a training programme and work? The constant sniping about the plus part of benefit and the training allowance demonstrates clearly that there is a serious lack of recognition that training is in itself a major benefit and will provide opportunities for earning greater sums in future. Does my right hon. Friend accept that there will be a great welcome for the proposals that he has outlined in many parts of the country, including my constituency, where at any one time there are over 1,000 vacancies that connot be filled because of a lack of necessary skills?
Will my right hon. Friend agree with me, finally—
Mr. Speaker: Order. The hon. Gentleman must be brief.
Mr. Paice: —that there is a welcome on this side of the House for the aspect that he mentioned about basic literacy and numeracy? We have just heard that £1·5 billion equates to £48 per head for the people that have been mentioned. Does my right hon. Friend accept—
Mr. Speaker: Order. In fairness, I think that that is enough.
Mr. Fowler: I agree very much with what my hon. Friend says. The importance of training cannot be over-stated. There are many who will recognise its importance, and what my hon. Friend has said in underlining that is right.
Mr. Speaker: Order. I shall endeavour to call those hon. Members who have been standing. However, there are likely to be further opportunities to question the Secretary of State.
Mr. John Cartwright: While we all want improvement in the quality of the training available to unemployed people, will the Secretary of State accept that there is often a sharp contrast between the aspirations of Ministers and what happens on the ground? Is he aware that, despite the shortage of skilled building craftsmen in Greater London, skillcentres have reduced the number of training places for bricklayers and carpenters? As a result, my unemployed constituents must wait two years for a training place, while building firms cannot employ skilled labour. Is there anything in what the right hon. Gentleman has announced today that will deal with that short-sighted nonsense?
Mr. Fowler: The purpose of this new programme is to seek to match the needs and demands of the economy. I entirely share the hon. Gentleman's aspirations in that regard.
Mr. Michael Fallon: Is my right hon. Friend aware that, more than any other region, the northeast will welcome his announcement of better value training that is better tailored to each individual according to his needs and ability? Will he confirm that one of the targets of his new programme will be to increase the striking rate—the rate at which those who enter the programme go on into real work at the end of it?
Mr. Fowler: Yes, sir, I can confirm that that is our aim. We want training that will meet the needs of the individual, with individual assessment. This is the first time that that has been done in Britain.
Ms. Hilary Armstrong: Is the Minister aware that the voluntary organisations, which act as managing agents, will view his statement with great concern and distress? They have made representations to the Minister about rumours that they heard, and today he has confirmed them. Will he confirm that he is spending the same amount of money on 200,000 more people? Inevitably, that means that the quality of training for the individuals who take part in the scheme will be diminished because quality training needs quality resources.
Mr. Fowler: The budget for this programme —£1·5 billion—is what we are providing for existing schemes; I said that in my statement, so there is no surprise about it.
I am not sure that I regard the hon. Lady as a spokesman for voluntary organisation up and down the country. We have spoken to a number of them, and I believe that a number of them will welcome these changes. I should like to see voluntary organisations fully involved in the new programme.
Mr. Nicholas Bennett: Will my right hon. Friend accept that in Wales his statement will be especially welcome? Long-term unemployment in Wales has fallen

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faster than in any other part of the country. Does he accept that one of our largest problems is that 25 per cent. of those who go on restart interviews are shown to be functionally illiterate and innumerate? Therefore, before they receive training they must have had a basic education. Will this new programme take account of that?
Mr. Fowler: One of the issues with which we must deal — I hope that there will be no disagreement on this point — is that of literacy and numeracy. The restart interviews demonstrate the need in that regard. I hope that we shall use not only the colleges of further education but open learning techniques and the open college to solve the problem.
Mr. Max Madden: As there is no new money available, is it not a dishonest charade to ask the Manpower Services Commission to make recommendations to the Secretary of State when he must know to the nearest pound what the basic training allowance will be? Will there be an official or unofficial upper age limit for entry into the scheme? Will any previous training scheme debar a long-term unemployed person from joining the scheme? Will the right hon. Gentleman confirm that if a person refuses a place on the scheme he will be suspended from benefit?
Mr. Fowler: The normal rules will apply ; there is no change in that regard. The scheme will be open to people of any age, but clearly the top priority is people between the age of 18 and 50. They must have been unemployed for six months—with the exceptions that I have given, such as the disabled—but there will be room for people above that age group. I hope that we shall be able to provide a training programme that will offer training to people of all ages.
Mr. Irvine Patnick: Will my right hon. Friend ensure that the MSC gives training in the skills that are needed to fill vacancies in Sheffield — [Interruption.] I do not interrupt Labour Members, so I hope that they will not interrupt me. In Sheffield there is a mismatch between vacancies and jobs.
Mr. Martin Flannery: The hon. Gentleman is unaware of the realities of the matter.
Mr. Patnick: Will my right hon. Friend ensure that training is made available to people who require jobs? I have listened to Labour Members, and they seem to enjoy the fact that people such as my daughter have been unemployed and unable to obtain retraining in skills for jobs with vacancies.
Mr. Fowler: I agree with my hon. Friend. What we are trying to do, and what my hon. Friend is rightly urging, is to ensure that training matches the vacancies in the job market. That must be the sensible thing to do, and that is what this training programme is about.
Mr. Bob Cryer: Will the Secretary of State accept that Labour Members' complaints are compounded by the fact that he failed to repudiate the vicious attack on the unemployed by the hon. Member for Northampton, North (Mr. Marlow)? It was a disgraceful example of an unscrupulous attack on people who are not here to defend themselves. Will the right hon Gentleman accept that his speech will have no credibility unless he
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gives the amount of the training addition? Will he further accept that many people outside the House will consider this measure to be a cynical manipulation of the unemployed, creating a conscript army forced into low-paid jobs as a smokescreen for the coming slump that will inevitably hit the Government and this country?
Mr. Fowler: I am not sure that I take the economic forecasts of the hon. Gentleman too seriously, and I doubt that the Labour Front Bench does either. We are demonstrating our concern about unemployment and the unemployed by reducing, by a record amount, the numbers of unemployed, by providing and producing a new scheme that is geared and aimed entirely at bringing the long-term unemployed back into work.
Mr. Michael Jack: Does my right hon. Friend agree that one of the more interesting elements of his statement — the concept of the needs assessment — has been ignored by Labour Members? Does he consider that that development would be of particular benefit to older people who have been unemployed for a long period, to help them return to work and reintroduce their skills to the labour market? Will he give consideration to producing a document, perhaps entitled "Training for Jobs", to communicate the benefits of his programme? That document could be along similar lines to the successful "Action for Jobs" leaflet.
Mr. Fowler: I shall consider that proposal. As to my hon. Friend's first point, we want to provide training for older unemployed people and bring them back into employment. I shall consider his proposal regarding a document on action for training, which was a useful suggestion.
Mr. Dave Nellist: It ill becomes the Minister, who earns almost £1,000 per week, together with the Alan B'Stards with whom he surrounds himself on the Government Benches, to lecture the unemployed on the need for another cheap labour scheme. Why does he not consider Coventry, where, according to his fiddled figures, 22,000 people are out of work? Less than 500 vacancies exist, and even if everybody was equally better trained, there would still be 43 unemployed people for every vacancy that was filled. This has nowt to do with unemployment, but everything to do with reducing the unemployment figures.
Mr. Fowler: As the hon. Gentleman should know, in the west midlands generally, including Coventry, the rate of unemployment has declined faster than in any other region of the country. The hon. Gentleman knows, or should know, of the tremendous achievement of many companies in Coventry, such as Jaguar, which are providing new jobs and better products than ever before.
Mr. Graham Riddick: Will my right hon. Friend reassure me that he will not fall into the trap of believing that the best and most effective training is carried out in a training school or behind a desk? What sort of measures does he intend to introduce under the new scheme to improve the quality and level of on-the-job and field-based training?
Mr. Fowler: We want to do both. I entirely agree with my hon. Friend. We want on-the-job training in the conventional form. We also want training in the open

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learning sense, through the open college. We want all the new techniques, and they will be available under the programme.
Mr. Bruce Grocott: Does the Minister understand the real anger that is felt when Ministers who could no doubt quote BP share prices to several decimal points, are unable to answer the simplest of questions to which any person considering a job would need to know the answer ; that is, how much in pounds will the individual receive each week for going on one of the schemes? Will he say — he should be able to do so, as he represents a west midlands seat —that the simple answer to training is restoration after the collapse in engineering appren-ticeships that has occurred in the past eight years? Why on earth should an employer establish a proper engineering apprenticeship scheme when he knows that he can get labour schemes on the cheap?
Mr. Fowler: The hon. Gentleman refers to the wrong age group, apart from anything else. The apprenticeship schemes, which were good, were for a minority. Schemes such as the YTS and the programme that I announced today provide much more general training for the population at large. I have answered the hon. Gentleman's first point before. We are asking the MSC to examine the details of the proposal. I make it absolutely clear that the payment will he above the level of benefit of any individual training.
Mr. Henry McLeish: Opposition Members are interested in real and effective training. That is why we have no enthusiasm for the Minister's cheap, complacent statement. Will the right hon. Gentleman reflect on his statement about eligibility criteria? It seems that 18 to 25-year-olds will be excluded from his new programme because it is targeted at people aged 25 and over. Will the Minister tell the House that that is a fact? If this is about conscription, if people do not accept a place on the Minister's new programme, will they remain on the register, with benefit being paid to them? The MSC is talking about using the restart programme, the merger of benefits and the employment office further to harass the unemployed and exclude them from the register. Will he comment on the Treasury suggestion that £6 will be the training premium? That would be a disgrace to the people who enter the programme.
Mr. Fowler: There is no change in regard to benefit and the withdrawal of benefit. As I have said, I have not made any proposals on that matter. The hon. Gentleman has misunderstood the proposal regarding age groups. The fact of the matter is—
Mr. Skinner: The fact of the matter.
Mr. Fowler: The position is that our aim will be to provide training for people in the 18 to 25 age group and also the 25-to-50 age group. One of the priorities will be the 18-to-25 age group.
Mr. Brian Wilson: I congratulate the Minister on his effrontery. Not once did he acknowledge the fact that his own Government removed the training element from the community programme. It is rather like Santa Claus turning up with presents that he stole from children several years ago. We cannot have bold new initiative without bold new money. Will the Minister confirm the impression that he gave my hon. Friend the Member for Redcar (Miss Mowlam), that there will be no new money? If that is the case, is it not a three card trick rather than a brave new hope on the Minister's part?
Will the Minister acknowledge also that the measure is based on a cruel and crucial deception — a gulf of understanding between Conservative Members and the poor souls who work in many of the schemes — that there is quality training available for them'? Does he accept that that is a fraudulent conception? Will he agree further that to conscript people into schemes on the basis of that fraudulent proposition is indeed criminal and immoral?
Mr. Fowler: The hon. Gentleman was wrong in virtually everything that he said. The gulf of understand-ing to which he referred is the gulf of his understanding. He does not appear to understand the value of training and the need for training not only unemployed but employed people. Nothing is more important.
It is recognised that we need to reform the community programme to make it full-time and not part-time and also to ensure that people are better off on the programme than they are on benefit. That is what we propose. The result will be a training programme that will be a great improvement on what has gone before.
Mr. Alun Michael: Will the Minister accept that, far from being good news, as suggested in the grovelling question by the hon. Member for Pembroke (Mr. Bennett), the statement is bad news for Wales and other areas with high unemployment? It merely means shuffling money with no new resources. It depends on voluntary organisations and companies putting in more resources if there is to be quality of training. Therefore, in areas with high unemployment, voluntary organisations and firms will be under pressure and will not be able to contribute. Areas of high unemployment such as south Wales will once more be disadvantaged as a result of the three card trick that the Minister has tried to play on us today.
Mr. Fowler: That is totally untrue. It means using the £1·5 million more effectively than it has been used up to now. By any standards, that is a vast budget for training in this country.

Points of Order
4.39 pm
Mr. Harry Ewing: On a point of order, Mr. Speaker. I refer to the circumstances that prevailed after last Wednesday's business was lost. As you know, the Order Paper was published. Indeed, I have a copy of it in my hand. Sixty questions for oral answer were put down a fortnight in advance, 206 questions were put down four or five days in advance for priority written answers, and some were put down a longer period in advance for normal written answers. It now becomes clear that, on either the advice or the instruction of the Table Office, none of the questions has been answered. Surely, with the questions and the Order Paper having been printed, and, without a shadow of doubt, all the answers being printed and in envelopes ready to go on to the letter board for hon. Members who have put questions down, it would have made good economic sense for the answers to be issued.
Because we played stupid games in the House, last Wednesday's business was lost. It would have been sensible automatically to transfer all the questions to the following day and still have them answered. If any hon. Members — [Laughter.] It is not funny, even for Conservative Members. They were also involved. They have put down questions. If they want answers to their questions, they will have to table them again, with all the printing costs that that will involve. Surely that is absolutely outrageous and we should do something about it.
Mr. Dave Nellist rose—
Mr. Speaker: Order. Let me deal with one question at a time.
I thank the hon. Member for Falkirk, East (Mr. Ewing) for giving me notice of this matter, but he must know that, like everyone else in the House, the Table Office is bound by Standing Orders. Let me explain the position to him. Paragraph 9 of Standing Order 17 lays down that, on a day on which the House does not sit because the previous day's sitting has not ended in time, questions down for written answer are deemed to be questions for answer on the next sitting day. By virtue of an express decision of the House on 27 February 1986. that does not apply to questions put down for oral answer, which are accordingly lost.
I do not think that I can do more than to state the terms of the Standing Order to the hon. Gentleman. I have sympathy with what he has said and I suggest that he puts the matter to the Select Committee on Procedure so that, if this happens again, a change can be made.
Mr. Ewing: Further to the point of order, Mr. Speaker. I am interested in your kind explanation regarding written questions because this morning I obtained copies of Hansard for last Thursday and last Friday and there is no evidence that questions down for written answer — I accept the distinction between written and oral questions —have been answered.
Mr. Speaker: I understand that all the questions were answered. There may have been some delay in printing them in Hansard, but they were all answered in the normal way. As I said, I sympathise with the hon. Gentleman's position. I hope that we shall not lose the day's sitting again—[HON. MEMBERS: "Oh"] Order. If that happens it would be sensible to look at the matter again.
Mr. Nellist: On a point of order, Mr. Speaker. Given your role as protector of the rights of Back Benchers against the Government in this Parliament, how can you argue, even before the evidence is presented in the allowed time limit of 180 seconds, that today's business on the European Community should occupy a higher priority in this House than the fate of an 11-week-old baby refused a heart operation? It takes only three minutes to make an application since we changed the rules. How can you argue that this baby and its family and the constituents of the hon. Member for Coventry, South-West (Mr. Butcher), who is sitting on the Treasury Bench and whose constituents are waiting for operations in Birmingham, should not have their case put before the House? I can say honestly that I play more or less by the rules in this place —sometimes less reluctantly than other hon. Members. For those who do not understand the rules of this House, the clear implication of a decision that prevents a debate is that someone is protecting the Government's reputation on the Health Service. You, Sir, would not like that allegation to be made about you and the best way to solve the problem would be to make sure that the debate can take place.
Several Hon. Members rose—
Mr. Speaker: Order. I am reluctant to state in the House the details of what was a matter of private conversation between the hon. Gentleman and myself. However, as he has raised the matter, I must tell him that the reason why I turned down his application under Standing Order No. 20 was that it referred to a hospital that was mentioned on Monday. I explained to the hon. Gentleman that, deep though my concern was for his constituency case, there were other ways of raising the matter. The whole House would accept that if we received Standing Order No. 20 applications every time an operation had to be delayed, we should not get much business done.
Mr. Nellist: Further to the point of order, Mr. Speaker.
Mr. Speaker: No.
Mr. Nellist: Further to the point of order, Mr. Speaker.
Mr. Speaker: Order. I have explained the matter, and I do not intend to take further points of order on it.
Mr. Nellist: Further to the point of order, Mr. Speaker.
Mr. Speaker: I have explained to the hon. Gentleman that there are other ways of raising this matter. I hope that he will take advantage of ensuring that the matter is raised in that way.
Mr. Nellist: Further to that point of order, Mr. Speaker.
Mr. Bob Cryer: Mr. Speaker—
Mr. Speaker: Mr. Cryer.
Mr. Cryer: On a point of order, Mr. Speaker. You will recall that, during questions on the statement of the Secretary of State for Employment, the hon. Member for Northampton, North (Mr. Marlow) said that the unemployed needed kicking up the backside. You made the comment during the interjection—
Mr. Nellist: Further to the point of order, Mr. Speaker.
Mr. Speaker: Will the hon. Member for Coventry, South-East (Mr. Nellist) kindly sit down?
Mr. Nellist: Further to the point of order, Mr. Speaker.
Mr. Speaker: Order.
Mr. Nellist: I was about to thank you, Mr. Speaker, for the statement that you made.
Mr. Speaker: Will the hon. Gentleman kindly sit down? If he wishes to thank me, I shall with gratitude accept his thanks when I have heard the second point of order.
Mr. Cryer: You will recall, Mr. Speaker, that you said that the remarks of the hon. Member for Northampton, North (Mr. Marlow) were not unparliamentary because they did not attack a particular hon. Member, although many of us would find that distinction extremely offensive because it represents the protection of a tiny elite. You will have heard the hon. Member for Sheffield, Hallam (Mr. Patnick) say that, in spite of the booming economy of the Government, his daughter is unemployed.
Mr. Irvine Patnick: No, with respect.
Mr. Cryer: Therefore, the remarks of the hon. Member for Northampton, North reflect on—
Mr. Speaker: Order. The hon. Gentleman has returned to us after some time away from the House, and we welcome him back. However, he must remember that we cannot continue questions on a statement on which every hon. Member who wished to he called was heard. There is no point of order in the hon. Gentleman's remarks. We cannot have a continuation of that.
Mr. Cryer: I am just trying to stop hon. Members such as the hon. Member for Northampton, North making imputations affecting other hon. Members such as the hon. Member for Hallam. The hon. Member for Hallam made it clear that his daughter was in a difficult position because she was unemployed. She should be protected from—
Mr. Speaker: Order. I cannot hear this. It has nothing to do with the matter. Now, Mr. Nellist. May I express my appreciation to the hon. Gentleman if he is going to thank me?
Mr. Nellist: While thanking you, Mr. Speaker, for your statement, could I ask you to reflect later on the fact that the Birmingham children's hospital serves a wide area and that twice in the past seven days Conservative Members in my area have had to save the operations of individual children?
Ms. Hilary Armstrong: Sit down.
Mr. Nellist: What has it got to do with you?
Mr. Speaker: Order. It is unfair of the hon. Gentleman to seek to raise this constituency case on a point of order. As I have told him, there are plenty of other opportunities and I will ensure that he has a chance to put these matters to the House. I cannot take them on a point of order.
Mr. Nellist rose—
Mr. Speaker: Order. I genuinely understand the hon. Gentleman's concern for his constituent, but I cannot take the matter on a point of order. I thank the hon. Gentleman for what he has said. If he will kindly come to see me privately. I will tell him of the other opportunities that he may have.
Mr. Tony Marlow: Further to the point of order, Mr. Speaker. While the hon. Member for Coventry, South-East (Mr. Nellist) was on his feet causing trouble, the hon. Member for Durham, North-West (Ms. Armstrong), the daughter of one of your assistants in the last Parliament, shook her fist at the hon. Gentleman. Is it in order—
Mr. Speaker: Order. I really do not think that the pursuit of such matters helps our reputation. Mr. Skinner, on a completely different point of order.
Mr. Nellist: There is a completely different one here and all.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. I have been listening to exchanges beween yourself and my hon. Friend the Member for Coventry, South-East (Mr. Nellist). The case that my hon. Friend wished to raise was different from the one that arose last week. I would like to know whether you would rule out applications under Standing Order 20 on different cases at the same hospital. Many instances might arise in which it was necessary to try to differentiate between two incidents. To wrap it all up — especially as you are to have a discussion with my hon. Friend — could we not have some recognition of the fact that when there are two different cases it may be absolutely necessary for different hon. Members to make different representations?
Mr. Nellist rose—
Mr. Speaker: No.
That was a most helpful suggestion. I shall certainly reflect upon it.
Mr. Nellist: I have a helpful suggestion.
Mr. Speaker: One helpful suggestion, then — in one phrase.
Mr. Nellist: On a point of order, Mr. Speaker. When you consider the matter, would you bear it in mind that if an hon. Member had complained about a series of cases at one hospital in a constituency, I could fully have understood your point? However, you surely cannot mean that the 57 Members of Parliament in the west midlands who have constituents affected by events in Birmingham will never have the opportunity to raise the matter again. I ask you to reflect on the matter, because a number of hon. Members are involved.
Mr. Speaker: Just to clear the matter for those who may not understand our procedures, I am not stopping the hon. Gentleman raising the matter. I am saying that I cannot allow him to raise it today since it was raised only on Monday in an application for an emergency debate, which unfortunately did not meet the criteria of Standing Order No. 20.

BALLOT FOR NOTICES OF MOTIONS

  FOR FRIDAY 4 DECEMBER
  Members successful in the ballot were:

  Mr. William Shelton

  Mr. Tony Lloyd

  Mr. James Lamond

  Coal Mining Subsidence (Damage and Arbitration)
  5 pm
  Mr. Alan Meale: I beg to move,
  That leave be given to bring in a Bill to establish the rights of owners of houses, land, buildings and other constructions which have suffered damage due to subsidence resulting from the working and getting of coal or of coal and other minerals worked therewith, to full repair or equitable compensation of their properties ; and further to establish an independent arbitration procedure to resolve any disputes that may arise out of such damage or any matters relating thereto.
  With only 10 minutes to put my case, I must first emphasise that it is not just my constituents who are suffering the problems of subsidence damage to their homes and property caused by the mining activities of British Coal but also the constituents of many right hon. and hon. Members on both sides of the House. Since highlighting the problem I have been contacted by a number of hon. Members with constituencies geographic-ally as far apart as Lancashire, Derbyshire, Yorkshire, north-east England, south Wales and Scotland. In many instances, coal mining in the vicinity is taking place or has taken place in recent years. Sadly, that is not always the case.
  Problems also arise from old mine workings which collapsed many years after operations ceased. In part, the need for the Bill arises because current legislation applies a six-year time limit, laid down by the general law of limitation, following cessation of coal mining beneath the property. The law is archaic and unjust. It reiterates unfairness by requiring that claimants should submit claims within two months of damage becoming apparent. That is not only wrong but borders on the ludicrous. It implies that owners, many of them elderly, should be eternally vigilant and that they should be expert in recognising damage. In the same way as with people who live close to railway lines—sadly a diminishing number these days—main roads or airports, it is more often the visitor or relative who notices the damage.
  The problem of mining subsidence damage is severe. This is evident because, since the 1960s, hundreds of thousands of claims have been made to the industry's management bodies. In the east midlands coalfield area I am informed that in the period from 1967 to 1980 a study of the records shows that some 62,000 damage claims were made. In my constituency, as in the constituencies of my hon. Friends the Members for Bolsover (Mr. Skinner), for Ashfield (Mr. Haynes) and for Bassetlaw (Mr. Ashton), serious problems arise because of subsidence damage to homes and communities. In the Mansfield area alone, schools and hospitals have had to be closed because of the danger to children, patients and staff from damaged properties. Further, some farmland, buildings and business premises have been rendered unusable. Hundreds of homes, private and public, have been and remain damaged. The owners are rapidly losing patience about repairs or compensation for their loss.
  It is generally thought by all who are affected that British Coal is avoiding its responsibilities rather than attempting to find a speedy solution to the problem. Hon. Members whose constituencies are affected are inundated every week with cases arising within and outside the set time limit. Local authorities are continually harassed by tenants seeking repairs to their subsidence damaged
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  homes. I understand that they have already spent substantial amounts of money for which they await reimbursement. Individual owners who have invested in their homes for their own future and that of their dependants are continually denied their right to repairs or compensation, delay or denial being the order of the day.
  I wish to refute the suggestion made by some that for British Coal to find a solution to the problem will mean that it will have to close pits. That is like saying to someone who has been mugged, "Do not prosecute or they will not mug anybody else." The reality is different. I have here a recent official press release issued by British Coal headquarters which proudly boasts a half-yearly operating profit this year of £104 million. Why cannot some of that money be spent on British Coal's responsibility in this matter?
  It is a fundamental plank of my Bill that no time limit should apply to damage claims. Such a get-out clause would not and should not be offered to a second-hand car salesman, let alone a public industry. After all, who in the Chamber would feel safe in arguing that mining subsidence will occur only within six years of mining?
  Another part of the Bill embodies the right of every ratepayer, where possible, to have access to mining records, past and present, in the vicinity of his property, with an obligation being placed upon the management of any company or public body to inform residents or owners in advance of mining activities under their properties.
  Perhaps the most fundamental part of the Bill covers the need for the establishment of a system of independent arbitration to resolve disputes between owners of damaged properties and British Coal, together with a back-up system which would provide an independent surveying and damage assessment service for owners of damaged properties.
  I am aware of the recent publication of the Waddilove report which carried out a review of subsidence damage and compensation. I welcome wholeheartedly the publication of that document. However, it has gaps, which my Bill will fill.
  As hon. Members will know, I had to queue for 24 hours to be given the right to present the Bill. That, in comparison, is little when one sees the heartbreak, worry and despair of tenants who find themselves isolated from any satisfactory help. The primary purpose of my Bill is therefore to achieve justice for those in this plight. I commend the Bill to the House for its approval.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Alan Meale, Mr. Frank Haynes, Mr. Dennis Skinner, Mr. Joseph Ashton, Mr. Harry Barnes, Mr. Don Dixon, Mr. Harry Cohen, Mr. Eric Illsley, Mr. Martin Redmond, Mr. John Prescott, Mr. Alexander Eadie and Mr. George J. Buckley.

  COAL MINING SUBSIDENCE (DAMAGE AND ARBITRATION)
  Mr. Alan Meale accordingly presented a Bill to establish the rights of owners of houses, land, buildings and other constructions which have suffered damage due to subsidence resulting from the working and getting of coal or of coal and other minerals worked therewith, to full repair or equitable compensation of their properties ; and further to establish an independent arbitration procedure to resolve any disputes that may arise out of such damage

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  or any matters relating thereto: And the same was read the First time ; and ordered to be read a Second time upon Friday, 12 February and to be printed. [Bill 56.]

  European Community
  Relevant documents: European Community document No. 6476/87, second report from the Commission to the Council and the European Parliament on the implementa-tion of the Commission's White Paper on the completion of the internal market.
  Madam Deputy Speaker (Miss Betty Boothroyd): I announce that Mr. Speaker has selected the amendment standing in the name of the right hon. Gentleman the Leader of the Opposition.
  5.10 pm
  The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): I beg to move,
  That this House takes note of the White Papers on developments in the European Community July to December 1986 (Cm. 122) and January to June 1987 (Cm. 205), and European Community Documents COM(87)100 on making a success of the Single European Act, COM(87)101 on the future financing of Community Budget, and Nos. 8248/87 on Budgetary Discipline, 8249/87 on Own Resources, 8251/87 on Structural Funds, and 8087/87 and 8940/87 on amendments to the Financial Regulations, all relating to the future financing negotiations ; and endorses the Government's objective of securing effective and binding control of Community expenditure.
  The occasion for the debate are the two White Papers on developments in the Community. The Government would have wished to adhere to their normal practice of holding one debate per White Paper, but pressure of other business in the House and the dissolution of Parliament in May followed by the long summer recess intervened to prevent that.
  Although it is customary for such debates to take note of the White Papers, I accept and expect that hon. Members will want to focus more on current issues rather than on events six to 12 months ago. In the period since those covered by the White Papers, events of major and lasting importance have been taking place in the Community. These mainly concern the future financing of the Community. I am sure that, just two weeks before the Copenhagen summit, hon. Members will wish to hear about the current negotiations. I shall turn to them in a moment.
  I want first, however, to set in its proper perspective Britain's drive to put Community finances on a firm basis with effective control of spending. We regard proper financial control as a necessary condition for the Community's healthy development, but not a sufficient condition. We have also been working to introduce across Europe new attitudes and practical reforms that will benefit the real economy and the lives of ordinary citizens in the United Kingdom.
  The Europe of the future will also be an increasingly efficient Europe. Our companies will supply a domestic market of 321 million consumers. With the strength of that home market behind them, British companies will be better equipped to export successfully to the wider world. It will be a truly competitive Europe. Services as well as goods will be provided freely across frontiers and that will be an enterprise Europe. It will also mean better prospects for British companies, more jobs for the people of this country and it will be an opportunity Europe. The opportunities will not just be for a few companies or in a few sectors.
  During the British presidency in the second half of last year — the period covered by the first of the White

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  Papers — a record number of practical measures to benefit business and the citizen were agreed or adopted. To anyone who doubts that, I commend the paragraphs on the internal market on pages 16–21 in the White Paper covering our presidency. The subjects of the agreements reached range from telecommunication terminal equip-ment to tractor controls. That may not sound much in itself, but the Community telecommunications market is worth hundreds of millions of pounds. The tractor market is worth over £100 million pounds a year to British exporters alone so it is very important.
  The changes being made to open up the internal market may seem small and unglamorous taken one by one, but they represent important advances for the businesses and individuals to whom they apply. For example, liberalisa-tion of financial services will open up a vast range of export opportunities, and ensure a better service to the consumer. Measures such as the recommendation agreed during our presidency on hotel fire safety and the directive that we are shortly to adopt on toy safety will benefit every citizen of this country.
  Although all may not yet be soundly effected, our voice is always heard and respected in the many debates to dismantle barriers to trade, for others have watched the growing success of deregulation here at home in Britain.
  What we now need to do is to make sure that all concerned at home are aware of the opportunities of the single market and are gearing themselves up to take advantage of them for the benefit of British jobs and business.
  Mr. Bob Cryer rose—
  Mrs. Chalker: I shall not give way to the hon. Gentleman now.
  Regrettably, too few British companies are yet aware of the obligation, now written into the treaty of Rome by the Single European Act, to complete the single market by 31 December 1992.
  British companies will have new opportunities, but they will also face very keen competition. All over Europe business men are talking about 1992 and completion of the single market. Their strategists are planning now for the opportunities and challenges which a genuinely free market in goods and services will provide. We must do the same. We need to study the competition, study the markets elsewhere in Europe, and learn how the coming changes will alter the environment in which we work.
  We already sell more than half our exports to the Community. The value of those exports has grown faster than our exports to other parts of the world, but we need to do more, much more. That is why my right hon. Friend the Secretary of State for Trade and Industry has announced that we will launch a major awareness campaign in the new year. We shall support him in every way.
  We are creating the framework for a modern Community where, within a framework of common law, individual enterprise will flourish. But we cannot build a sound Community on unsound financial foundations. That is why the negotiations on future financing matter so much and why we attach so much importance to using them to secure improved spending control.
  Mr. Cryer: The Minister has been elaborating on the commercial opportunities that she claims the development
  1092
  of the internal market will produce, but I know that she would not want to omit the dangers that exist. When the Minister notifies the commercial community of the removal of barriers she will also be notifying the arms smugglers, the drugs dealers, people who want to bring animals into the country in breach of our rabies law and people who want to export live animals without proper scrutiny. Will she spend a little time discussing the safeguards that will exist in the internal market to stop such abuse?
  Mrs. Chalker: As I have said to the House on previous occasions, it is in the fight against terrorism, against drug smuggling, arms smuggling and, indeed, the fight against rabies and other diseases, that we have always had unity among members of the 12. The frontier controls that are necessary for such matters will be considered by this Government, and by this Government alone, because we reserve the right to protect our citizens in such situations. I am not talking about such frontier controls now. I am talking about the petty controls that represent an additional cost of billions of pounds to industry and prevent us from having easy and open access to other markets in Europe. Such petty controls prevent our business men and those seeking to be entrepreneurs from realising their full potential.
  Mr. Eric Forth (Mid-Worcestershire): Before leaving the question of the internal market, will my right hon. Friend give her assessment of the varying degrees of enthusiasm that there might be among our colleagues in the Community for the full development of the internal market? Is my right hon. Friend concerned that, in the bargaining that will inevitably take place to achieve the internal market as quickly as possible, we may have to give up things in other areas that are dear to us?
  Mrs. Chalker: I do not perceive that as a problem. There are many areas where we co-operate and collaborate for the benefit of British industry. We shall continue to do so, because that is top of our priority list.
  I come to the nub of the debate. I wish to concentrate on future financing, which is the issue in the mind of everyone in the House. I remind hon. Members that the present negotiations are taking place in the face of proposals from the Commission for an increase in the Community's own resources of 45 per cent. That is simply not on. There are other elements in those proposals that we cannot accept. We cannot accept the proposed change in the abatement mechanism or the proposed doubling of the resources devoted to the structural funds.
  But there are other elements in the Commission's proposals on which we can and are building, especially those for the control of agricultural expenditure. The Commission's proposals embody the important principles of stricter budgetary discipline, stricter budgetary management and mechanisms to achieve that. The negotiation is about those principles and their implementation is not a new task.
  Mr. Win Griffiths rose—
  Mrs. Chalker: It is a task which we started in the early part of the decade. I acknowledge that it has been a frustratingly slow process. No one knows that better than the Ministers involved. There have been two principal elements in our quest to achieve stricter budgetary

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  discipline and management. The first was to ensure that Britain's own contribution to the budget was fair. That goal was achieved at Fontainebleau in 1984.
  Mr. Teddy Taylor: Oh!
  Mrs. Chalker: The Fontainebleau abatement mechan-ism has worked well. By the end of this year we shall have benefited from abatements worth £2,800 million, reducing substantially our net contribution to the Community budget. If anyone, and I mean anyone — the Commission or any other partner — wants to change that mechanism it can be done only by unanimous agreement.
  Mr. Teddy Taylor: Will the Minister give way?
  Mrs. Chalker: I shall finish this point and then give way to my hon. Friend who has been muttering all this time.
  Any change in the mechanism must be designed to make the system less, and not more, onerous from the United Kingdom's point of view. The Commission's latest proposals, which are the same ones that it put forward nine months ago, do not meet that criterion ; far from it. On the Commission's own calculations its proposals could leave the United Kingdom about £700 million worse off over the five years up to 1992. On more realistic assumptions, they would leave the United Kingdom approaching £700 million worse off in 1992 alone. That is simply not on. The Commission has described its proposals as being "grossly equivalent" to the present Fontainebleau system. Gross they may be, but equivalent they certainly are not.
  The Government's position is quite straightforward. The Fontainebleau abatement mechanism was the result of years of difficult negotiation. It has proved itself. Any change would need to make the United Kingdom's budget burden less, not more, onerous.
  Mr. Taylor: In common with the Minister I was greatly heartened after Fontainebleau when we were told that the new mechanism would greatly reduce our contributions. At that time, our average national contribution was £621 million. Can the Minister tell us—to encourage us all in further efforts — what is her latest estimate for the net contribution for this financial year? How much down is it on £621 million?
  Mrs. Chalker: My hon. Friend will know, if he has read the Autumn Statement, that it has gone up considerably.
  Mr. Taylor: What is the figure?
  Mrs. Chalker: My hon. Friend knows, and I am not telling him what he already knows. He is well aware of what appears in the Autumn Statement.
  Mr. Taylor: What is the figure?
  Mrs. Chalker: I am also aware—
  Sir Anthony Meyer: On a point of order, Madam Deputy Speaker. Some of us on the Conservative Benches are having some difficulty hearing my right hon. Friend because of the consistent yelling of the yobbo tendency.
  Mrs. Chalker: I am grateful to my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) for his gallant intervention.
  We are all well aware that the estimates made early in the year have not turned out to be correct, and it is for that
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  very reason that the mechanisms that we have been suggesting for budget discipline and budget management are vital. I do not disagree with my hon. Friend the Member for Southend, East (Mr. Taylor) that the figures are far too high.
  Mr. Teddy Taylor: What is the figure?
  Mrs. Chalker: The figure in the Autumn Statement— I have not looked it up immediately — was £1,400 million. My hon. Friend knows that figure because he has already written it down.
  Mr. Nicholas Budgen: Will my right hon. Friend give way?
  Mrs. Chalker: No. I have already given way a number of times.
  My hon. Friend the Member for Southend, East should have listened hard to what I said a few moments ago before he intervened. I repeat that the changes that could be contemplated by the United Kingdom would have to make the budget burden less and not more onerous. They would have to be unanimously decided upon and there is no other way of changing the position.
  Of greater interest in the Commission's proposals are the ideas for making Community revenue and the way in which it is raised relate more closely to the real prosperity of the contributors. As hon. Members know, the Community raises its revenue in three ways — through levies on agricultural imports into the Community, through duties on other imported goods, and through VAT. Levies and duties are a declining source of revenue as intra-community trade increases and as other tariffs are reduced. That is exactly what has exacerbated the Community's financial problems.
  The Commission's proposals would make two changes in the present system. The ceiling would be expressed in terms of GNP and part of the revenue that is now raised solely on the basis of each member state's VAT share of the budget would, instead, reflect the difference between the VAT base and member states' GNP. The effect of the proposal would be that the United Kingdom would contribute to part of the budget, not at our current VAT share of 18 per cent., but at a lower rate reflecting our GNP share, which is 15 per cent.
  The House of Lords Select Committee on the European Communities recently concluded that these proposals would relate revenue more closely to each member state's ability to pay. They would benefit the United Kingdom, and we are seriously considering them. The Committee also supported the Government's view that agreement could not be reached on these matters until enforceable mechanisms of financial control were in place. With strong financial control in place as a prerequisite of the overall package, it could be possible to consider a GNP-based system, but it would be impossible without that control.
  Our central goal is the achievement of binding controls over spending. Runaway agricultural spending has squeezed all other expenditure. It is now accepted by our partners that the operation of the CAP has been of declining benefit to the very farmers it was meant to help. With the competitive subsidies deployed by other major producers, it is having an adverse impact on international trade relations and on markets in developing countries.

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  In 1983, the Community agreed on the need for reform. Terms such as quotas, guarantee thresholds, co-responsibility levies and guidelines entered the vocabulary. Turning words into reality has been a slow process, as it is bound to be in a democratic Community, but substantial progress has now been made, and those words are now actions.
  The fundamental reforms to the beef and milk regimes agreed in December last year were milestones. In the milk sector we now have quotas to limit production. We have a cut-off point for expenditure, so that once production reaches a pre-set level no further money is spent on buying into intervention. That cut-off was triggered for milk earlier this year.
  The results are already visible. Butter production was down by more than 13 per cent. in the first half of this year. Skimmed milk powder production was down 17 per cent. We expect Community intervention stocks of butter to fall this year, for the first time since 1981. Milk deliveries are down 4 per cent. The penalties for overproduction are bringing production much closer into line with demand. That is exactly what we have been aiming for. As an article in The Independent put it last week:
  "The significant point is that the butter mountain is an old mountain and gradually being eroded … For the first time in a decade it is no longer being replenished with fresh butter."
  That is an achievement on which we intend to build.
  Sir Russell Johnston: When the Minister describes positive advances, she should not give the impression that they were solely and entirely due to the United Kingdom, and that no other country had any part in them.
  Mrs. Chalker: The hon. Gentleman does the House a disservice. I did not imply that it was solely due to the United Kingdom. None of these aims could have been successful unless other member states had been persuaded to accept them. That is why the democratic process takes so long to achieve. One has to work by persuasion. It is interesting that, by our example, we are persuading many of our partners to follow what has proved a profitable path for us, and we shall continue to do that. The hon. Gentleman said that I should not claim it for Britain. I do not claim it all for Britain.
  The regimes agreed last year introduce order and financial discipline into two important areas of production where overspending was recognised as the major problem. They are landmarks because they provide us with models for the reforms that are needed in all commodity regimes, particularly that for cereals, where Community spending has risen from £1 billion in 1984 to more than £3·4 billion this year. That has to stop and we are all determined to stop it.
  We have argued, and the Commission now agrees, that we need stabilisers for each agricultural regime. That means that each commodity must have its own control mechanism built in, so that the costs for which the Community budgets are the costs for which it pays; no more, no less. Those control mechanisms will take different forms in each commodity, but they must be agreed in detail as well as in principle, and once agreed they must be capable of automatic implementation. That is why they have to be agreed by Heads of Government, on a lasting and binding basis.
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  The Commission's proposals that will come before the Heads of Government meeting in Copenhagen embody that concept in a detail and with a rigour which—I say frankly and gladly—is new to Community negotiations and which we warmly welcome. They are being discussed in the Agriculture Council this week. The outcome of that marathon will determine the prospects for success at Copenhagen.
  I should like to make a couple of points about other expenditure.
  Mr. Nigel Spearing: It might be useful to clarify this point before the main debate. The right hon. Lady mentioned the discussions in the Agriculture Council. Is it not a fact that, whatever conclusion it may reach, it will have to pass the rigorous eyes of Foreign Affairs or Treasury Ministers to ensure that those disciplinary measures stand up to what the right hon. Lady wants? Will the tests of the more rigorous legislation be available to the House, and will they be placed before the House so that hon. Members can comment before the Prime Minister goes to Copenhagen?
  Mrs. Chalker: I am glad to tell the hon. Gentleman that I am sure that the Scrutiny Committee's recommendation in that respect will be complied with by the House. I hope that there will be a debate before long on the details mentioned by the hon. Gentleman, but it is not for me to say when it will be. I am sure that my right hon. Friend the Leader of the House will be glad to correspond with the hon. Gentleman as soon as the decision is taken through the usual channels.
  We all know that obligatory expenditure forms the bulk of the Community budget. Spending on agriculture accounts for most of that obligatory expenditure. So agriculture is the most important thing that we have to get right. But we cannot and should not let other expenditure grow out of control. That has been the problem in the past.
  The Commission's approach is very simple. It suggests that the structural funds, which include the regional development fund and the social fund, should be doubled. Of course, I understand the wish to see support for less-developed and industrially disadvantaged regions, but, at a time when each national Government in the Community is struggling to control its own national expenditure, as we in Britain have controlled ours, and when the Community is in the throes of trying to put its own finances on a sensible footing, arbitrary and free-standing decisions on individual future financing issues are not feasible. We have to take all the issues together.
  Mr. Win Griffiths: Will the right hon. Lady give way?
  Mrs. Chalker: I shall give way. I apologise for not doing so earlier.
  Mr. Griffiths: On the point about doubling the size of the structural funds, does the Minister agree that, with regard to the social fund and the regional development fund, the Commission is asking not for a theoretical amount, but for the money that it needs to satisfy the applications that are already coming in? As regards the completion of the internal market — although I do not think that that will be done by 1992— it is bound to disadvantage the peripheral regions and countries such as the United Kingdom, so it is extremely important that if that is to happen, the regional and social funds should be doubled in size, if not more, to compensate and create new development in regions such as south Wales.
  Mrs. Chalker: I fear that, understandably, the hon. Gentleman is putting the cart before the horse. I understand and am sympathetic to the wish to continue to help the less-developed and industrially disadvantaged regions, but first we have to get expenditure under control. Then we can, and we shall, discuss further plans for structural fund spending. In discussing that issue only yesterday with Members of the European Parliament in Strasbourg, I made it clear that it must be discussed in the light of overall measures of control and that full account must be taken of the industrially disadvantaged and less-developed regions. We shall do that.
  Mr. William Cash: One of the documents that we are debating, entitled "Making a Success of the Single Act", and dated 15 February 1987, states that the Commission is looking forward to assuming fully its initiative-making role and involving the Council and Parliament as equal partners at every stage of the budget procedure. Does my right hon. Friend think that "equal" is the right word, having regard to the fact that if one is talking only of the Council, Commission and Parliament, that excludes by implication any serious investigation by the House into the budget procedure? That must be implicit in those words.
  Mrs. Chalker: I do not agree with the Commission's use of the word "equal". it will always be the prerogative of national Governments to take decisions as they affect their own membership of the Community. As my hon. Friend knows, financial decisions are taken by unanimity.
  We are seeking, whether on the issue of structural funds or anything else, to make sure that the Community is not just about budgeting — any more than good budget control is the sole goal of national policy. Sound finance is the basis of prosperity, and that prosperity is fundamental to the cohesion of a democratic society. I know that my hon. Friend understands that well. When we say that there can be no agreement to increase the Community's own resources without effective and binding control of Community expenditure, we are not delivering an ultimatum. We are facing up to reality. We are asking the Community to face up to the hard choices that Britain has already faced here at home. In Britain we are now able to hold our head up high because we have restored our economic strength and our national pride. We want to see the rest of the Community doing the same.
  The Community is embarking on major trade negotiations in the new GATT round. Its success will be vital to our objective of strengthening the world open trading system, on which our prosperity and employment depend. Not only do we want to see further liberalisation of trade in goods, but we want to extend multilateral rules to such areas as services and intellectual property. In particular, we have a unique opportunity to wind down the competitive support for agriculture, which has distorted world markets and damaged the social fabric of developing countries.
  There are, therefore, twin imperatives that require us to tackle the common agricultural policy: first, the inescapable internal logic of reform, driven by growing cost and diminishing returns, and, secondly, the external logic of taking a lead in securing a far-reaching improvement in world trading relations. It is a change which would be as significant for the poorer countries as any debt write-off, and it would be much longer-lasting, which is all-important.
  1098
  The logic of the external arguments on the GATT and the internal EC arguments on control and reform, which we are deploying, is now accepted. That is a great and important change from the past. The political will to put logic into practice must be made to follow.
  I have tried to give the House and, through the House, the public a fair appraisal of the task that we face We face a difficult negotiation in Copenhagen ; it will be difficult but crucial.
  The essence of the Community is that it is a democratic organisation. That is its strength. The ideals of Western European democracy are embodied in the Community. That is why I remind hon. Members of the importance of that in the events leading up to the entry of Spain and Portugal.
  Hon. Members are perhaps better placed than anybody to appreciate that, because the Community is not a democratic organisation—[Interruption.]—because it is a democratic organisation; sorry, not a good slip at all. I shall repeat the sentence so that it is absolutely clear. As hon. Members are perhaps better placed than anybody else to appreciate, because the Community is a democratic organisation, progress is not always as quick as e should like. Nobody in the Community can simply take a decision and push it through. That comes back to the point that I made about persuasion. The Commission cannot push through—
  Mr. Budgen rose—
  Mrs. Chalker: I shall not give way for a moment, although I know that that will only encourage my hon. Friend to intervene again.
  As I have said, other countries have to be won over. That will be done only by persuading them to come over to the clear line that I have outlined to the House.
  Mr. Budgen: Can my right hon. Friend explain why all this rhetoric about democracy is important? Is she saying that these decisions are taken by the assembly, which is the only quasi-democratic part of the EEC?
  Mrs. Chalker: Certainly, the European Parliament has a role to play in giving its opinion, but my hon. Friend knows only too well that decisions are taken by the Council of Ministers, which is representative of the Governments of the 12.
  Mr. Budgen: It is not a democratic structure.
  Mrs. Chalker: My hon. Friend and I will never agree on that point, but anyone who is democratically elected forms part of a democratic structure, which is what the European Parliament has been since direct elections began in 1979.
  I have had a careful look at all the amendments and in particular at that tabled by the Opposition. It is the type of amendment which brings the House into public contempt. It contains the sort of politics which have been decisively rejected in the past three general elections. I know that I should take comfort from the fact that the Opposition rarely learn from their mistakes— but I do not. The public are concerned about these matters. They expect us to deal with them seriously, constructively and accurately. That is why I must tell Opposition Members that the figure of 17 million in the amendment is incorrect; it should be 15·9 million. I give that information for nothing.

  1099
  The Opposition's amendment, with its unique combination of invective and inaccuracy, will not commend itself to the public or the House. It is not enough to say that the Community's policies are not working as well as they should. We must come up with detailed, persuasive and workable answers, and that is what we are doing.
  I hope that what Opposition Members say in the debate, which will be read in other Community capitals, will help in persuading our partners of the benefits of the reforms that we are seeking for the Community. The reforms are intended to secure binding budgetary discipline and clear budget management, on top of the stabilisers to cut back the excesses of the common agricultural policy. All those are essential if there is to be a major advance in the creation of a single European market, which would greatly benefit this country. We are no less committed to that task than we are to the control of expenditure and the stopping of wasteful subsidy. I hope that we shall have support from all sides of the House for that difficult but possible achievement.
  5.43 pm
  Mr. George Robertson: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  'believes that the response of Her Majesty's Government to the crisis in international financial markets has been wholly inadequate, given the danger of increasing the already unacceptable jobless total in the Community of seventeen million; considers that the proposals to deal with the Community's budget shambles would mean the loss of the British rebate in return for no real financial discipline; further believes that Her Majesty's Government's intransigence and obstruction has sabotaged Britain's place in future space and research programmes ; and calls upon Her Majesty's Government to take a lead at the Copenhagen summit for joint action by the Community to promote mutual growth, trade and jobs, to agree urgent measures to cut food surpluses and to promote industrial joint ventures including aerospace in order to strengthen industrial competitiveness in the European economies.'.
  Notwithstanding the rosy, sunny-side-up picture painted by the right hon. Member for Wallasey (Mrs. Chalker), this is, by any test, a gloomy time for the European Community. I say that with no sense of pleasure or satisfaction, because I, too, am a citizen of Europe, and, like all hon. Members, I represent citizens of Europe. In my constituency one in four are out of work, and we all deserve better from the organisation at this point in the 20th century. [Interruption.] Conservative Members should kindly take their frustrations out on the Minister and leave me alone — I agree with most of what they say.
  Mrs. Chalker: I doubt it.
  Mr. Robertson: The right hon. Lady is wrong. They will agree more with me than with anything that she said about the facts that are on display this evening.
  We have just experienced a dramatic, traumatic collapse in the financial markets of the world and the European states could only gaze on, transfixed and paralysed as that collapse did its enormous damage to the fragile conditions of most economies. Even before that financial Chernobyl the realists were talking about growth in Europe being wholly insufficient to get to grips with
  1100
  Communitywide unemployment of at least 17 million people. The right hon. Lady was disingenuous to give us a statistic of 15·9 million. We know that the Government fiddle the unemployment statistics in this country. What do they do across the European Community? Many authoritative commentators, such as Mr. John Palmer in The Guardian the other day, have said that 17 million is only a modest figure for real unemployment in the Community. Now even the optimists realise that the going will get worse before it gets much worse.
  The shock waves are still hitting the shores of the 12-nation-strong European Community. It is small wonder that the word "economic" has not been dropped from the European Economic Community. Yet again it is strapped to its usual budget straitjacket, like mental patients in hospitals locking themselves into their wards. The cash is running out, the dollar is falling, agricultural spending is rising out of control, and serious research and technology programmes are being sacrificed on the altar of producing nothing more than an agricultural Tower of Babel.
  While all this goes on, the entire attention of the 12 Heads of Government will be riveted on cobbling together yet another temporary, bandaged, inadequate package of half-measures and fudges that will fool no one—least of all Opposition Members. It will not even fool Conservative Members.
  Mr. Michael Fallon: Will the hon. Gentleman comment on the fact that the amendment clearly calls for further Community expenditure, and criticises the Government's attempts to impose financial discipline? Do we take it from that that the hon. Gentleman does not support the principle of my right hon. Friend's approach to the budget — that finance should determine expenditure, rather than expenditure finance?
  Mr. Robertson: Speaking as one who was at St. Andrew's university long before the hon. Gentleman brought it into disrepute, I suggest that he tries reading the amendment, in which there is no call for additional expenditure. The Opposition believe that if the savings that we have been calling for for some time had been made —the Government have only now woken up to them— there would have been more than adequate finance to deal with the social programmes that we are discussing. The amendment calls for co-ordinated Government strategies across the board to deal with the problem of recession. The hon. Gentleman has completely misunderstood its thrust, but I am not surprised at that.
  There is no will to grasp the opportunities and challenges that are urgently before us — in space, research, information technology, energy programmes and transport. In the driving seat of reaction — at the heart of the Luddite forces — is the Prime Minister herself, who goes around abusing her fellow Prime Ministers and Presidents as if they were mere Conservative Cabinet Ministers. She sends the right hon. Member for Wallasey waltzing around European capitals like a demented tourist, only to set the stage for the pantomime dame who will perform her histrionics, deliver her blusters and torpedo the Copenhagen summit, just as she did the Brussels one before it. Then she will fix the front pages, just as she did after Brussels, with her technicolour tantrums, but all the time we know that, as at Brussels, she is ready to sell out again when the crunch comes, just as she did at Fontainebleau three expensive years ago.

  1101
  I shall now turn to the budget, because that is close to the heart of hon. Members in all parts of the House. It is an endless show that makes "The Mousetrap" look like a first night. In this field, above all others, we shall judge the resolve and intent of the Government, who indulge in fine and noisy rhetoric about reform and financial discipline. We await with above-average expectation the reply to the debate by the Paymaster General, who will be making his first speech since being plucked from the obscurity of these esoteric debates and propelled into the chairmanship of the Conservative party no less. As the right hon. Member for Chingford, (Mr. Tebbit), the Boris Yeltsin of the Tory party. departs to the well-padded Back Benches, we await the new entrant, whose exile to Siberia will not be long delayed if he deals with the Conservative party's finances in the way that he deals with the European Community's budget.
  Mr. Forth: Will the hon. Gentleman take effective action to solve the problem of his metaphor mountain and his excessive verbosity, and get on with the debate in hand? We are most anxious to hear some substance in his speech.
  Mr. Robertson: It is nice to hear from an hon. Member who is always so sartorially well turned out that he shows up his colleagues, but that is about the only contribution that he usually makes to debates.
  There is, of course, no budget for 1988 and it is now long after the point where one should have been put before the European Parliament. Instead, the Community is inexorably sliding towards bankruptcy, and a whole series of black holes loom before it.
  The response by the Community is a series of proposals by the European Commission to revamp the whole sinking ship in the hope of avoiding a few more rocks. These proposals will simply mean that British taxpayers will have to shell out a lot more cash in return for nothing at all, and they get nowhere near the heart of the problem. I know that the hon. Member for Mid-Worcestershire (Mr. Forth) entirely appreciates those sentiments. In addition, the proposals are bound to kill the United Kingdom rebate, about which the Minister, continuing a long tradition, makes so much so often. If the Prime Minister comes back from her Danish blustering, having done a deal on this new GNP-linked scheme, and at the same time having sold the pass on the rebate, that will be nothing less than surrender. I am sure that I carry the whole House with me on that.
  Mr. Elliot Morley: My hon. Friend has talked about rhetoric and bluster. Does he share my concern, as a Member representing a steel constituency, about the current EC proposals for yet more quota cuts in the United Kingdom steel industry? Does he share my worry that, while we hear rhetoric from Ministers about the industry, if there is a chance of a deal that may make a nice cosy arrangement between Britain and the EC about steel production, it might be made at the expense of one of our steel plants, or certainly at the expense of our capacity? Such a deal would undoubtedly undermine the fragile recovery that is taking place in the United Kingdom steel industry.
  Mr. Robertson: I represent a steel constituency, and its largest employer is the Ravenscraig steelworks. Therefore, I fully appreciate the point made by my hon. Friend. It is astounding that the Minister talked for 35 minutes in a debate that covers two six-monthly reports and did not say
  1102
  a word about the steel industry, the shipbuilding industry or the other industrial interests that are being prejudiced by the Government's stance in Europe. I certainly underline my hon. Friend's apprehensions. We shall strongly press the Government on these matters.
  I was talking about the budget. Our rebate, the great abatement, will next year be worth £1·75 billion if the present system continues. According to the Treasury figures, which we heard again in the debate, the British bill to the Community if these proposals go through will rise by about £800 million to £900 million a year. The Minister invented a new figure when she said £700 million, but her hon. Friend the Member for Westminster, North (Mr. Wheeler) told the House of Lords Select Committee that the figure was in the range of an additional £800 million to £900 million net per year. The Paymaster General went further. He said that the Commission's idea was ' wholly unrealistic". We all agree with that, and that is what the Minister seemed to be saying.
  The question that is then begged is what is a realistic figure. We are not being told, not that the figure is unacceptable, but that it is unrealistic. Is the realistic increase 10 or 20 per cent.? How far is it short of the 45 per cent. by which we are told the new system will inflate the budget by 1992? Perhaps at the end of the debate the Paymaster General will give us the answer to that question.
  Mr. Cash rose—
  Mr. Robertson: I should prefer to continue with my speech, because other hon. Members would like to take part.
  The United Kingdom rebate is just as unpopular with the other European countries as is the Prime Minister, arid is inextricably tied to the Fontainebleau agreement, which will be thrown out if the idea of the fourth own resource is eventually adopted. On 9 November Lord Brabazon of Tara replied to the House of Lords debate on the financing of the budget. Speaking about the United Kingdom rebate, he said:
  "any changes to the Fontainebleau abatement system (which has served us well) must improve our overall position." — [Official Report, House of Lords, 9 November 1987; Vol. 489, c. 1243.]
  That is slightly different from the Minister's formula, which is that the budget burden must be less, not more, onerous. However, that is the formula that the Government are taking. What precisely does it mean? Does it mean that under the new system we shall get a more generous rebate, or does it mean that we shall pay less than we are paying at the moment? What precisely does it mean when it is said that we must improve our overall position? We have a right to know so that we can measure the Prime Minister's success in Copenhagen or, in six months' time, at Hanover, against the criterion that is being laid down.
  We shall watch closely, microscopically, the outcome of Copenhagen to spot any new deal with which the Prime Minister emerges. She will be judged according to the colour of the money that she brings home, and not on the colour of the language fed to the press by Mr. Bernard Ingham. We support the Prime Minister in her crusade against the lunacies of the common agricultural policy. We welcome her belated arrival at the door to challenge the basic conditions that have led to this crazy, illogical and wasteful position that once again freezes the institutions of the European Community.

  1103
  As the Minister said, control of the CAP lies at the heart of controlling the budget, and real control is no more likely to come out of Copenhagen than it was to come out of Brussels. Any policy that accounts for nearly 70 per cent. of total Community expenditure will be crucial to solvency, but a policy that takes half the available cash in order to store and destroy food that nobody wants and that nobody can use is plainly berserk. That is all the more so when any small drop in the value of the dollar can automatically drag millions of pounds straight out of European taxpayers' pockets. The Government's crusade for agricultural reform is right and justified, and we fully support it, even though the Government have had eight long, expensive years to do something and only wake up when the real and total disaster looms in on them.
  Even as we speak, the farm Ministers are locked in negotiations in Brussels. We wish them fruitful conclusions, but it will not be easy to get agreement. The odds-on certainty is that in Copenhagen the Heads of Government will be asked to bite the bullet and make the decisions—if they are capable of making them. I shall make clear again that what happened at Brussels last time when the Prime Minister torpedoed the 1988 budget, while the night before she sold out on a lucrative deal for farmers, will not fool the people this time.
  With 1·5 million tonnes of surplus butter in store, with a million tonnes of dried milk in store, with 16 million tonnes of surplus grain in store — yet on the open market we have to buy from Saudi Arabia to get the right quality of grain—when Mr. Peter Dooley, the Briton who is Deputy Director General of Agriculture in the European Commission says,
  "The problem is now absolutely terrifying, not least because we are now actually holding 80 per cent. of the entire world's stock of butter"
  and when small farmers do not even benefit from the great largesse concerned and are leaving in droves to join the dole queues while those who remain are up to their eyes in debt, the time has come to call an end to the madness. We will be watching to see whether the Prime Minister's rhetoric is matched this time by some results.
  When one strips away the froth of synthetic outrage at the ongoing craziness of the CAP and all the fancy ideas of holding out for a new rebate deal and genuine budget discipline, one sees that the Government do not have the tiniest clue about how the European Community could help Britain. There is no better illustration of that than in space and research policy. Last Thursday the Chancellor of the Duchy of Lancaster reported to the House the Government's cop-out of the European space project. As my hon. Friend the Member for Dagenham (Mr. Gould) said, it was a "confession of failure". It was a dismal day for Britain.
  In a couple of months' time the Institute of National Affairs will publish a special paper on European future in space. This follows a study by five institutes of international relations in Europe. The report concludes:
  "The extent to which nations or groups of nations are able to explore and exploit space will increasingly determine their standing and influence in the world of tomorrow."
  It goes on:
  "A quantitative and qualitative jump is necessary towards a truly collective space policy, if Western Europe is to have anything more than a walk-on part in the world."
  It then makes the practical point:
  1104
  "Space technologies foster the flexibility and innovation required to create new jobs and promote economic modernisation."
  Contrast those sentiments with the sad, bleak words of the Minister last week. No wonder that The Independent, which the Minister had the audacity to quote in her speech, concluded in its editorial that the Minister had
  "added rudeness to our reputation for meanness and myopia".
  What a knock that decision was for the 300 British companies that are involved in space technology, what a disaster for the remarkable British-invented Hotol project, and what a dismal approach to the challenge of the big thinking that is necessary for the future of our nation.
  Sir David Nickson, the president of the CBI, said at the CBI's conference in Glasgow:
  "Sometimes the sheer scale of the investment or the long pay back time means, as the City Industry task force pointed out, a major degree of enterprise not only from us—
  that is, industrialists—
  but from Government."
  The Government must have a role in major projects such as the Airbus, the Channel tunnel and the mega-ventures where no company, not even the largest in Europe, can go it alone. The CBI knows the facts, unlike the Government, and it and future generations have been let down by the foolish Luddites who inhabit the Cabinet.
  That penny-pinching short-sightedness is also charac-terised in the Government's attitude to the European framework research programme. The previous Minister for Information Technology has been loud in his denunciation of the Government's decision to pull out of the space programme, but earlier this year he was the mouthpiece of the Prime Minister when the Government set out to sabotage the European research programme. At the start of the year he derided that programme as being "too extravagant", which is one of the mildest criticisms that he levelled at it. The obstruction and intransigence that he displayed during the months has led to the disbanding of scientific teams, to the abandoning of projects and to a unique chance for the Japanese and the Americans to catch up in an area in which they were behind.
  On 23 July, after the Prime Minister sacked the Minister, with shades of Boris Yeltsin once again, she capitulated, as she always does, and agreed to a programme with only a 6 per cent. reduction in the total amount. No wonder that Mr. Amédée Turner, the Conservative leader in the European Parliament—
  Mr. Forth: He is not.
  Mr. Robertson: He is nearly that. Mr. Amédée Turner, a Conservative Member of the European Parliament and the leading spokesman on research, said that it was
  "equivalent to taking a mouse hostage."
  However, the damage was done and a legacy of bitterness has been left behind. Important British interests have once again been subordinated to short-sighted tantrums. We will be watching very carefully what goes on in Copenhagen. We will be watching more than just the budget gyrations, because a lot more than that is at stake, although one may find that difficult to believe after hearing the Minister's speech this evening.
  We want to know what will happen about the harmonisation of VAT. The Prime Minister made a number of pledges during the general election campaign about using the veto. She said that the veto would be used

  1105
  to prevent VAT on fuel, food and children's clothing. Apparently that is now a decision that ties even the Chancellor of the Exchequer in his new popular role. What about new building and construction? Will the Government use their veto in the Council of Ministers against any increase in VAT on the important commodities of books and periodicals? What will be done about the harmonisation of excise duty? Will the Government veto any reductions in duties on alcoholic beverages which such harmonisation would mean? So often in the past the tub-thumping has simply been the prelude to a sell out. Will it be any different this time?
  As my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) asked, what about the steel and shipbuilding industries? Will the Government put their veto on the line in the Council of Ministers to ensure that, as we have carried a far heavier burden than the vast majority of our Community colleagues, those crucial strategic and employment important industries will be safeguarded from any discussions that take place?
  By their very nature, these debates cover a wide and diverse range of subjects, but it all comes back to cash. It is estimated that £2 billion will be squandered by the European Community simply to destroy the surplus food that nobody needs. What about the billions of pounds that we now understand goes missing in the European Community through fraud? If that money were liberated —I do not suggest that the Minister is opposed to this —it would be available for other projects. We want the United Kingdom rebate protected, and we want the taxpayers' contribution to the European black hole limited.
  The Prime Minister's task in Copenhagen is to do a lot better than she has done before at summits: to sort out the lunacies of the common agricultural policy, to contribute to programmes that build Britain's future and not unwanted mountains of inedible food and to stand up for Britain's interests without caving in as so often before on essentials, while broadcasting her belligerent impotence. If the right hon. Lady can deliver we will congratulate her, but if she fails the condemnation will not just be from the Opposition. It will be universal, and it will be richly deserved.
  6.8 pm
  Sir Anthony Meyer: I agree with what the hon. Member for Hamilton (Mr. Robertson) said about the Government's withdrawal from much of the European scientific research programme, but I agreed with very little else that he said. It was sad to listen to a man of such honesty and integrity delivering a speech of such manifest intellectual dishonesty. I want to commend my right hon. Friend the Minister of State, Foreign and Commonwealth Office, who spoke from the Government Front Bench against a steady background of mumbling from behind her, for the job that she has done. I urge her and other Foreign Office Ministers to adopt the bold and radical approach to the European Community and its problems which they would like to adopt if they were free to do so and which they know to be necessary if Britain is to derive full benefit from its membership of the Community.
  The target of a single European market in 1992 is not the kind of vague aspiration towards European union that flourished briefly and died in the 1970s. It is a specific target, with specific stages. The situation today is very different from that in the 1970s. Europe today has a
  1106
  manifest need to defend its own interests, a need that is underlined daily by economic developments, the threat of a world recession after the stock market crash—which Europe could, if it had tried, not merely cushioned itself against, but have helped to avert—and by the course of United States-Soviet discussions on nuclear disarmament, as Europe must be able to defend its own interests and influence the course of East-West relations.
  The need for closer European Community co-operation is manifest, as is the possibility of achieving it. The Single European Act, which the Government treated initially with such scepticism, has turned out to be an indispensable tool for the achievement of agreement on pretty well anything in a 12-member Community. Even the Government now accept that—at least I hope they do.
  Mr. Tony Marlow: Will my hon. Friend give way?
  Sir Anthony Meyer: No. My hon. Friend is the parliamentary equivalent of an automatic bird scarer. He goes off with a loud report every five minutes. He will not scare this particular bird.
  In 1985, the Government appointed Lord Cocktield as a Commissioner and told him to get on with the job of removing barriers to trade. He is getting on with the job. However, who is raising hands in horror over that? Her Majesty's Government are doing that. Shame on them. Ministers used to be fond of the proverb about not making an omelette without breaking eggs, and heaven knows they use it often enough in other spheres, notably in local government finance and education. However, when it is a matter of altering our excise taxes, the coverage or rates of VAT, or frontier controls — all of which are eventually indispensable changes if we are to achieve a single market by 1992—Ministers scuttle like frightened rabbits to the shelter of their election pledges.
  Mr. Marlow: Will my hon. Friend give way?
  Sir Anthony Meyer: Do the Government want a single market? If every member state is going to cling to its own method of VAT — Britain and Ireland are the two odd men out here — to its own system of holding up travellers and goods at the frontier and in totality to its own health, hygiene and safety regulations, that may preserve the status quo, but we will never achieve a single market in 1992.
  Of course the Government are right in their insistence that the Community must deal with its budget problem and do so properly, not by short-term fudging. Our record on that is outstandingly good. We have managed to keep that problem at the forefront of everyone's attention. However, it is a pity that we have weakened our ability to achieve that vital long-term objective of a just and sensible method of financing the agricultural policy and the Community as a whole by an over-shrill insistence on our budgetary refund and the desire to get our money back. That makes splendid headlines in The Sun or the Daily Express, but it does nothing to advance our long-term aims. On the contrary, it diminishes our chances of achieving them. That only plays into the hands of opponents of the European Community like some of my hon. Friends who have been so vocal during this debate and it enables hon. Members like the hon. Member for Hamilton to exploit the subject quite cynically.
  Mr. Marlow: My hon. Friend is suggesting quite plainly to the House that he would rather that our net

  1107
  contribution was much greater than it is at the moment. How much greater would he like it to be, and what benefits would we get additionally from the Community by having a greater contribution?
  Sir Anthony Meyer: My hon. Friend has entirely misunderstood me. I have suggested that if we can achieve a sensible long-term solution to the problem of financing the Community, the likelihood is that that will result in a smaller annual British contribution, because the system will be fairer. However, if each year we triumphantly battle for a maximum refund, we damage our chances of getting a sensible long-term solution.
  I am glad that the Government are taking measures to make British industry and British public opinion more aware of the opportunities and the challenge of 1992. However, they are too late, and too little. French industry, once renowned for its sluggishness and its yearnings for protection, is moving rapidly to take advantage of the possibilities opened up by the single market. French public opinion has developed a new enthusiasm for the idea of a united Europe and what that can do to bring more jobs, to protect its citizens against world recession, to influence Soviet and United States policy and, in short, to bring about a renaissance of European influence in the world. The only people who are standing out, the only equivalents to the doubters on the Conservative Benches and to the cynics on the Opposition Benches, are the Communists and the followers of Monsieur Jean Marie Le Pen.
  The Government now need to wake up the House and the country. Let them admit that under electoral pressure they made some pretty unwise pledges and let them begin to educate people to the changes that are going to have to come and to come well this side of the next general election if we are to meet the 1992 target. Make no mistake about it, the single market is a vital British objective although it is only one step towards a real European Community which remains, as it has been for 16 years, the principal basis of our foreign, economic, commercial and military policy.
  The place to begin that process is in the corridors of government. The Government should consider what happened in the 1970s, when Britain first joined the European Community. Each Government Department was required to set up a unit to assess the implications for that Department of European Community membership. Exactly the same should be happening now. Every Department in Whitehall should have a small but high-powered unit with direct access to the Secretary of State, with the specific task of studying what changes are necessary in the policies and practices of that Department to prepare for the advent of the single market in 1992.
  There is no time to lose, and no room for half-measures. There will have to be big and deep changes. The Government have not shrunk from such changes in other areas. Let them show themselves equally bold in matters of even greater consequence.
  6.18 pm
  Mr. Bruce Milian: I intend to make only a very brief intervention in what is obviously a wide-ranging debate covering many important matters. I want to confine my remarks to the shipbuilding industry, which is mentioned in one of the documents under consideration this evening.
  1108
  Debates of this kind on the European Community are inevitably dominated by discussions of the budget and the completely disproportionate amount of Community expenditure devoted to the common agricultural policy. I do not want to comment on that, except to say that, when I listened to the Minister this afternoon, as I have listened to successive Ministers expressing the Government's firm determination to solve the budget problem once and for all, I listened with the most profound scepticism. I do not believe that that will happen this time, any more than it has happened in the past.
  I should like to make one or two points about shipbuilding. First, page 22 of the report in the Blue Book covering the period from July 1986 to December 1986 mentions the agreement on the sixth directive on shipbuilding which was signed at the end of December 1986. That agreement lasts for four years. Incidentally, it does not come into the budget because it relates to aids for shipbuilding which are financed by national Governments. My hon. Friends and I, who take a constituency interest in shipbuilding, were extremely disappointed that the maximum limit for aid to shipbuilding agreed in the directive was 28 per cent. Anyone who knows about merchant shipbuilding in this country and the worldwide problems that it faces at the moment will know that that limit will not allow our industry to get the orders that are required, or keep it at its present demoralisingly low level, because most of our capacity has been lost during the past few years. Therefore, we argued that the percentage maximum limit should be considerably more than 28 per cent.
  I do not want to go back over that argument, as I understand it, but that agreement was reached only a year ago. Although the directive applies for four years, it does not necessarily apply at the maximum percentage limit for the whole of those four years. As I understand it — I hope that we shall get an answer on this point—the limit is subject to review during the period of the directive. Are discussions taking place at the moment about the limits on aid that are to be allowed under the Community directive? If so, what are the Government doing to increase the limit of 28 per cent? Can we have at least the basic assurance that there is absolutely no question of the limit being reduced, because that would be disastrous? I hope that there is no possibility of that. However, we require some assurances on the level of aid. I should like an assurance from the Government that they are arguing for a higher level than was set in the agreement that was reached in December 1986, because the 28 per cent. limit is obviously inadequate to deal with the crisis facing merchant shipbuilding in this country.
  Secondly, we were told that one of the virtues of the sixth directive was that the various aids would be transparent and that there would be no possibility for members of the Community to cheat on the arrangements. However, just a few months ago an incident occurred that affected Govan Shipbuilders in my constituency. Govan Shipbuilders had pretty well signed, sealed and delivered a contract for ferries for Brittany Ferries, but before the contract was finally settled the French Government intervened and the contract went to a French yard. The Irish Commissioner responsible for such matters, Mr. Sutherland, took the view that the French Government had breached the terms of the directive.
  I raised this matter during the Third Reading debate on the British Shipbuilders (Borrowing Powers) Bill on 16

  1109
  July. The Minister kindly wrote to me afterwards. In a letter dated 5 August, the Under-Secretary of State for Trade and Industry wrote that the British Government were rigorously pursuing the matter and that he would keep the House informed. So far as I am aware, the House has not been kept informed — at least I have no information on it —of what has happened. Whether we like it or not — I dislike it intensely — that order is proceeding in the French yard. We must have an answer to what happened to the objections that were lodged and to the Commissioner's investigations. The House is entitled to know what happened.
  My third point is not unrelated to the budget and to what the Minister has said this afternoon about the Government resisting—that was the sense of what the hon. Lady said—any increase in the regional and social funds, not for reasons of merit but simply because the budget is so disproportionately taken up with expenditure on the common agricultural policy at the moment. As I understood it, a few months ago there was, if not a definite Commission proposal, at least some talk — perhaps it had gone beyond that into something more definite— about a package of aid for areas that were suffering from shipyard closures. In July, the Commission mentioned the figure of about £350 million. So far as I am aware, absolutely nothing has come of that. Again, I should like some information from the Minister.
  If we are to spend large sums of money in the European Community, I should like it spent on the regional and social funds. I should like money spent on supporting our industry and spent in the regions that are suffering serious unemployment. Unfortunately, that includes my own constituency.
  Another example of the way in which the European Community is being completely distorted and its priorities made inappropriate for the real problems that are facing Europe is that we have such an over-emphasis on the CAP, and a disproportionate amount of the budget is spent on it. We should like to see that matter remedied. If it were, money could be spent much more sensibly on the regional and social funds. There is a strong argument for some of that money being directed to areas in Britain and elsewhere that have been decimated by shipbuilding closures during the past few years. I should like the Minister to comment on that also.
  6.26 pm
  Mr. David Curry: It is fortunate when inclination and obligation go hand in hand. In the convention in this House that a maiden speaker devotes the first part of his remarks to the record of his predecessor, that coincidence comes happily together.
  I have great pleasure in recalling the work in this House and in the constituency of Mr. John Watson, my predecessor in Skipton and Ripon. He was unremitting in his energy, unfailing in his courtesy, and unhesitating in his commitment to the interests of his constituents. He was the spokesman, advocate, sponsor and defender of the constituents of Skipton and Ripon. With those people, who tend to judge a person first by what he is and secondly by what he represents, he had a special empathy. I know now how I will be judged on my time in this House. My constituents will say, "How did he rate against John Watson?" I know that that will be an immensely difficult comparison.
  1110
  John Watson represented, and I now have the honour of representing, a continent of a constituency. In the east, there is the vale of Mowbray and the rich farmlands of the vale of York, along which so much of British history has marched. In the foothills of the dales there is the great squat bulk of Ripon cathedral and close by is Fountains abbey, which is surely one of the loveliest abbey ruins in Europe, and where there is a special quality of peace and reflection. Going into the centre of the constituency is the great River Wharfe, with its sculpted escarpments and its contours ribbed in stone. The grey of the wind against a tumbled sky shows up with violence against the crystal colours of summer and the gentleness of the changing landscape.
  Then the market town of Skipton —confident, self-assured, used to being battered by the ages—giving way to the great spine of the Pennines and the Yorkshire Dales national park. Everywhere one goes, there are the villages: built of stone; built as though they grew out of the landscape; huddled against the elements, but sheltering that especially warm welcome which is so much the hallmark of my part of the world. The Yorkshire constituents, with the reticence and modesty which is their characteristic, believe that they live in one of the most beautiful parts of the country, and I think that they are right.
  My constituency is a paradise, but a paradise with problems, including housing. In the dales, it is rare to find a village where more than half the houses are permanently inhabited, with the rest being given over to summer lets or holiday homes. There are problems of planning, because the more farmers are given injunctions to diversify their activities, the more they run headlong into planning restrictions which prevent them from observing those injunctions. Agriculture is especially important in my constituency. There are short growing seasons, long winters and a great deal of bought-in feed. Livestock production is especially difficult. The sheep is the great mainstay of the economy, as it has been from the middle ages. If the sheep disappeared from those hills, the land would become depopulated.
  I have chosen a European debate to make my maiden speech not because of any demonstration of Euro-fanaticism, which I understand is frowned upon in the Chamber, but simply because my constituents are vitally affected by the decisions that are taken in Europe.
  It is important to review the United Kingdom's three strategic interests in the European Community. The first is the need to develop the political unity which will enable us to stand on our own feet in defence—not because we are preparing against the day when the Americans leave, but because only if we show that we can stand on our own feet will the Americans not leave. Nothing could give a better pretext to those in the United States who wish to take the troops home than the demonstration that Europe is unwilling to assume its share of the burdens. Security and defence are inextricably linked with political unity, which is part and parcel of the European Community.
  Britain's second interest is in the creation of the internal market ; but I urge the Government to be cautious. It is all very well to have the great internal market. If we do not have a competitive exchange rate to go with it, and if our industry cannot compete in terms of its labour costs, productivity and control of inflation, we will become the

  1111
  victim, not the beneficiary, of the internal market. We must maintain our economy so that the internal market will work.
  The debate on full membership of the European monetary system must be seen in that context. One could argue — it is a plausible thesis — that the United Kingdom economy is so vulnerable to structural inflation that we must always have available the possibility of engineering a creeping depreciation of the currency so that we can compete. If we believe in that thesis, it would be wrong to lock ourselves into a mechanism. But one could equally argue that, if the thesis was correct, we need a counter-inflationary strategy. A formal attachment to an exchange rate discipline might perform that function, but those who argue that must demonstrate the link between membership of the exchange rate mechanism and its effective operation on the disciplines being observed in the negotiating forum of the corporate sector.
  Once that is established, the way to membership becomes more plausible. The case for our membership has not yet been made out, although during the past few months the relationship between the deutschmark and the pound has been as close as—on occasions closer than— it would have been had we observed the formal mechanisms of the exchange rate discipline. Our hope now is that the Louvre accord will work to help the world out of its financial crisis, although we should not place too many hopes on that new instrument. In the context of a sustained recovery in world financial markets, an agreement on future financing — which would make a contribution to that recovery — the creation of a free capital movement in the Community and signalling the continued priority of our counter-inflation strategy, our full membership must be kept under urgent review.
  Another aspect of the internal market is what has become known as the north-south divide in the European Community. We must be realistic enough to recognise that we will not achieve the internal market unless the new members of the EC—those which have fewer riches and which are peripheral to the Community — can see benefits for themselves. The budget is an instrument for a managed resource transfer, which is politically at the heart of the equation of the enlarged Community. But that should not be a pretext for not exercising rigour in supervising the budget. In 1987, 1 billion ecu of expenditure in the non-agricultural sector cannot be spent because the programmes — mainly social — have collapsed. Rigorous supervision is necessary across the spectrum of the European budget.
  The third important strategic requirement for the Community is that the internal market should be created in the context of an open world trading economy, not a closed trading economy.
  What is the substance of the Copenhagen discussion on future financing, remembering that the Community budget is roughly the size of the amount of money by which President Reagan is reluctant to reduce American public expenditure in the first year? The case for an increase in own resources is inescapable. The fourth resource is satisfactory for the United Kingdom in so far as it relates payments to wealth, which is something for which we have consistently asked in the Community. Even more importantly, if that resource was linked to gross national product, there would be no further cause to
  1112
  increase the Community's resources, short of a major transfer of new competence from national Governments to the Community. I do not envisage such a major transfer —at least not in the forseeable future.
  We have set the budget on a stable path, but there are conditions. The first is that we should fix intermediate ceilings of expenditure. If we do not do that, we shall not sustain the pressure for reform. The evidence is that only by applying budgetary pressure will we obtain those reforms, and we should be fools to sacrifice that weapon. We also need a phased clean-out of expenditure commitments in the budget, of which the write-down of agricultural stocks is the most important. We need advanced planning of expenditure to achieve that.
  The second condition is that there should be no special reserves. I can think of nothing more dangerous than to inscribe budgetary discipline simultaneously with the bolthole which enables us to evade it. We have seen in the past how dangerous that can be.
  The third condition is satisfaction on the United Kingdom abatement, or rebate. The proposed 50 per cent. rebate on agriculture is not a satisfactory solution. The ideal solution would be the GNP formula, plus the Fontainebleau agreement, and I hope that our representatives will aim for that. But we must be realistic enough to realise that the problem with the rebate mechanism is the way in which it is accounted for in the budget. The 2·5 billion ecu rebate in 1988, which is what the Chancellor of the Exchequer's Autumn Statement predicts, is obtained at a charge to the budget, in accountancy terms, of 3·6 billion ecu. The expenditure equivalent formula means that there is 1 billion ecu of dead money in the budget, because of the mechanism of the rebate, not because of the United Kingdom's entitlement to it. The answer is to move towards a uniform and average means of defining VAT, given that that element is likely to remain in the final equation. The second major item at Copenhagen will be Copenhagen. The reforms have been significant already. I invite those right hon. and hon. Members who do not believe that to my constituency, where I will show them the human face of the reforms that have taken place.
  There is remorseless pressure for the reform of agriculture. The dollar is one of the major external determinants, and 5 per cent. devaluation of the dollar against the ecu adds 400 million ecu in a full year to the European budget. To a large extent, however, that is not under our control. The world markets are less than buoyant; they are shrinking, and the only world market that appears consistently open is the Soviet Union. That is due to Soviet incompetence in agriculture.
  We have an enormous vested interest in continuing Soviet inefficiency. The day that the Soviets get their act right in agriculture — a low level of technology is needed ; it is a question of storing and moving their products—there will be a problem for all the world's agricultural producers.
  Then there are the GATT talks. Agriculture is now inescapably locked into those talks. The United States may not have very much faith in them, but they are at least useful for the negotiators in fighting off protectionist measures in Congress.
  Those elements mean that there is no point in asking whether agriculture will be reformed. It will be reformed by the Community, or by others on behalf of the Community. But, if the status quo cannot continue, external circumstances now determine our fate to far too

  1113
  large an extent. We cannot guarantee both farm incomes and farm employment. We may not be able to guarantee either, in the present circumstances.
  What we need in the reforms now being discussed are the automatic mechanisms that arrest budgetary overruns. The House must face facts. If we demand discipline in agricultural spending, and that that discipline should be applied immediately, we must give the Commission the competence to apply it. We cannot claim that there is a problem of law and order, and then refuse to supply the gendarmes to enforce that law and order. It is essential that we recognise that, because it touches upon the competence of national and Community authorities.
  There will be some who urge my right hon. Friend the Prime Minister to stand firm, because they will rejoice at the disarray that they hope to see as a consequence. But there will he others who have a true belief in the rightness of British membership of the Community, and who will urge her to stand firm for precisely the opposite reason. We believe that those reforms are essential if we are to see a Community under firm control and firm management, which takes political options and supplies the resources to match those options—in other words, a Community in which vision is allied to realism, and imagination is inspired arid nourished above all by common sense.
  6.42 pm
  Sir Russell Johnston: It is a great pleasure to congratulate the hon. Member for Skipton and Ripon (Mr. Curry) on his maiden speech. The hon. Gentleman described his constituency as a continent. He must come to my constituency some time. I do not claim that it is a continent, but it is certainly larger than Cyprus.
  The hon. Gentleman gave us a lyrical, indeed poetic, description of his constituency, which we all appreciated. I know his work and his contribution in the European Parliament. I cannot say that I always agree with him, but he has always fought his corner with intellectual rigour and force, and I am sure that that is exactly what he will do here. Indeed, we have already heard him do so.
  The Minister produced some rather pallid excuses for the fact that there has been only one debate on progress within the European Community, rather than two, as there should have been. She said that there had been problems—for example, the election, and the pressure of business in the House. I must say that the idea of "pressure of business in the House", an excuse that the Minister proffered in a voice totally drained of conviction, was the least persuasive argument. After all, the business of the House, as we saw from the lengthy debate on the Felixstowe Dock and Railway Bill, is a reflection of the Government's priorities. They determine such matters. In that respect at any rate, I found the Minister's excuses like flat Perrier.
  Likewise, not for the first time where Ministers are concerned, I found the right hon. Lady's approach both uninspired and insular. I wish that I could say otherwise, because I think that within the bonds of the brief in which she is bound is a fairly decent person struggling to get out. The Minister has now left the Chamber, so that is the end of that. However, it would be a change if, for once, a Treasury Minister introduced such a debate with a forward looking, constructive speech — not dodging problems, certainly, but at least setting the ideas within positive, co-operative objectives.
  1114
  The Minister bridled when I suggested that she was implying that any progress that the Community was making was exclusively due to the charm, persuasiveness and foresight of the Conservative Government and their representatives. However, that has repeatedly been the word that we have heard from the Prime Minister, and the Minister has given us an echo of it this afternoon. The lack of emphasis on Community co-operation, the particular stress on rights of individual state action and the Victorian and very shallow references to a recovery of national pride were all part of the pattern of a short, self-righteous speech. We are rather bad at being self-righteous.
  If I may say so in the presence of a new Member such as the hon. Member for Skipton and Ripon, the Minister's reference to the democratic nature of the elections to the European Parliament made me spit. I am glad that the hon. Member for Bradford, South (Mr. Cryer), who is seated in front of me, at least makes his demonstration silently.
  Mr. Cryer: I can provide an oral demonstration, if the hon. Gentleman wishes.
  Sir Russell Johnston: I assure the hon. Gentleman that I do not.
  The Minister knows that the non-proportional system maintained uniquely among European Community countries by the British Government gives Conservatives a wholly false, cheating advantage in the European Parliament, and treats non-Conservative voters unjustly and nastily.
  Let me return to the basic issue, on which so far everyone has naturally and rightly agreed: the single market and the budget. It is the Government's contention that, until a system of budgetary discipline is in place, no Community resources can be increased. I do not accept that that is a sensible position. I think that the two questions of discipline and resource must be considered together. Budgetary discipline must be imposed and, of course, improved. However, to suggest that in trying to perform that difficult exercise we should ignore the problems referred to by the hon. Member for Glanford and Scunthorpe (Mr. Morley), and all the other problems included in the work of the regional and social fund, is silly.
  In June, all member states apart from the United Kingdom — as often happens — agreed a statement in Brussels, which said:
  "It is essential that a lasting response be sought to the question of the Community's financial equilibrium, on the one hand, by providing it with appropriate resources, and on the other by subjecting the use of these resources to effective and binding budgetary discipline."
  That, I think, is the essence of the matter. I have repeatedly said as much in this Chamber, wher1e we have again and again had to listen to resounding denunciations of the common agricultural policy which suggested, without any accompanying detail, that somehow or other the whole problem of surpluses in store can be swished away almost overnight. That is simply not possible.
  It is true also that we are making progress. Paragraph 3.1 of Cm. 205 states:
  "The package is estimated to constitute a reduction in CAP prices (expressed in real terms) of about 2·5 per cent. across the Community taking into account both changes in institutional prices and other adjustments in support arrangements."
  The support price of cereals has fallen by 10 per cent. in real terms and the butter mountain—the hon. Member

  1115
  for Hamilton (Mr. Robertson) said that it is the largest such store in the world—is being reduced at long last. It is not realistic, however, to believe that everything can be done overnight.
  The British Government are not always in the best position to be hypercritical. They pressed strongly for and obtained a devaluation of the green pound of up to 7 per cent. for some products, and I do not deny that there was an argument for doing so. However, support prices in the United Kingdom have increased by between 5 and 6 per cent., with consequent increases in Community agriculture expenditure. The real argument, which we do not always address, is between the Chancellor of the Exchequer and the Minister of Agriculture, Fisheries and Food, not between the United Kingdom Government and sup-posedly spendthrift Europeans.
  The Minister referred in passing to The Independent, and I was fascinated to read on 14 November a small article which I am sure depressed some of those who like to rush across the Channel. The article stated:
  "Cross-Channel shoppers' food allowances will be drastically curtailed from tomorrow. The restrictions are being introduced in the guise of a simplification of existing personal import concessions. In effect, today is our last chance to bring back up to 1 kilo of delicious hams, saucissions secs, salamis, and charcuterie, or even up to 1 kilo of fresh beef, lamb, poultry".
  What is the reason for this? The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food explained that meat or meat products can be introduced to this country only if they are cooked or are in cans or other hermetically sealed containers.
  As we are unlikely to be enlightened about the European monetary system, perhaps the Minister will enlighten us about matters that are not so immediately pressing but interesting for those who cross the Channel from time to time. Why are we suddenly concerned about a health hazard? If the danger is so grave, why are citizens of France, Germany and Italy not dying in the streets? If distance is a problem, let it be understood that the distance from Watford to Dundee is greater than that from Watford to Calais. Is it being suggested that there are grave health hazards in sending English hams to Scotland? Or is it that bureaucracy is having its effect? I suspect that my final rhetorical question provides the answer.
  I have found the Government's approach to the Community to be depressing and offensive over a long period. They seem to see the Community as a free trade area rather than a community of peoples working together towards a supranational cohesion. It has been the Liberal vision for a long time that the Community is about bringing the people of Europe closer together, enabling Europe to keep up with the other major economic power blocs and protecting the European environment in a way that no national Government would find possible. I do not think that the British Government contribute enough to the furtherance of these objectives.
  I shall give some examples. The framework programme is an eminently sensible and cost-effective way of assisting scientific research. That is the way in which I would describe it. It establishes information links between European establishments that are engaged in similar areas of research. However, Britain refused at first to agree to the establishment of the project, thus delaying for a number of weeks the start of a programme that included
  1116
  work on epidemiology, including AIDS, despite it being the Government's policy to ensure that all research on AIDS is adequately funded. The Government's initial refusal had an effect also on work on advanced communications technology.
  Another example is radioactive contamination. Again I find the Government's attitude difficult to understand. At the time of the Chernobyl disaster, the European Community was in almost disarray. Perhaps it can be excused in that the Chernobyl disaster was so sudden, apocalyptic and unexpected, but a system of agreeing common standards of permissible radiation levels is needed. The temporary post-Chernobyl agreement expired in October. That agreement has been extended for a short time, but the British Government are pushing for permitted radiation levels that are over eight times higher —that is, more radioactive—than those that led to the existing restrictions on lamb sales in north Wales and Scotland. I do not understand why the Government are taking this position, and I should like an explanation this evening.
  The hon. Member for Hamilton referred generally to unemployment, which is referred to in the official Opposition's amendment. The contribution that the Community makes to tackling youth unemployment especially is not insubstantial. For example, the Manpower Services Commission's schemes receive considerable European Community support, although the Government keep very quiet about that. Unfortunately, the Council has failed yet again to agree a proposed action programme for vocational training to combat youth unemployment when it discussed the issue earlier this year. What are the Government doing to press the furtherance of such agreements?
  Political co-operation was mentioned during Question Time this afternoon. The Foreign Secretary is rather good at giving the impression that everything in the garden is lovely and that he is sitting in a deckchair admiring it. It was stated clearly this afternoon that we are in favour of co-ordinating co-operation on foreign policy within the European Community. That being so, why do we walk out of UNESCO when no other member of the Community chooses to do so? What are we doing about walking back in again now that Mr. M'Bow has departed?
  There is non-participation in space research. I am sure that the Minister has observed the motion that stands in my name and those of others of my colleagues, which states that we
  "regret the refusal of Her Majesty's Government to support any of the three new projects of the European Space Agency, the Ariane 5 Rocket, the Hermes shuttle or the Columbus Space Station, noting that the United Kingdom is the only European Space Agency member country to be playing no part in any of these; and explicitly reject the Government view that Britain should remain a passenger as America and Japan forge ahead in space technology."
  When the hon. Member for Hamilton quoted an as yet unpublished report, I noted what I considered to be a most appropriate phrase. I, like the hon. Gentleman, do not want the United Kingdom to have a "walk-on part" in the world. The hon. Gentleman is sitting on the Opposition Front Bench and looking unaccustomedly demure. He is becoming better and better at being rumbustious. His delivery of his alliterative rhetoric — "technicolour tantrums" was quite good—enlivens these debates, and sometimes they certainly need it. The hon. Member for Hamilton did not inspire me, but he certainly did not bore

  1117
  me, which is something. His speech, however, seemed to have only a loose relationship with the amendment that he was supposed to be moving, but that is not so surprising.
  Mr. Robertson: Hold on.
  Sir Russell Johnston: Hold on to what?
  Mr. Robertson: Hold on until the wind-up.
  Sir Russell Johnston: More is yet to come.
  I must tell the hon. Member for Hamilton that I shall be inviting my hon. Friends to support his amendment. However, that is not because I regard it with much warmth, although I applaud the references to the sabotage of the space and research programmes, the need to promote mutual growth, trade and jobs, the urgent need for measures to cut food surpluses, the need to promote industrial joint ventures including aerospace, and so on. Those are all good points with which I agree.
  I do not think that using wild language—I am sad to say that the hon. Member for Hamilton is rather given to wild language these days — such as "shambles" is helpful.
  It is peculiar that mention is made of international financial markets, yet there is no reference to the EMS or to the establishment of some financial stability in the European Community. The difficulties of the budget are real and hard to solve.
  Mr. Teddy Taylor: How would the hon. Member solve them?
  Sir Russell Johnston: The hon. Gentleman asks impossible questions. I have often tried to answer his questions, but have now given up. [Interruption.] I have tried to answer the hon. Gentleman several times; perhaps I should write to him.
  The speech of the hon. Member for Hamilton, who would like to describe himself as a member of the progressive Left, ignored the problems of rural communities and the particular problems with which they are faced with the shrinkage in CAP expenditure. It was strange that nothing was said about the need to help poorer countries such as Portugal, at the same time as securing proper treatment for our under-privileged areas in the north of England, Wales and the highlands of Scotland from the regional and social funds.
  But I must find a way in which to express my deep dissatisfaction with the style, form and approach of the Government.
  I began my speech by complaining that we have had one debate too few. Perhaps that remark was wrong, because we tend to have the same kind of debate. However, I should like to put it firmly on the record that Liberals remain completely committed to the European Community and are convinced that only through that Community shall we secure an expanding economic future for our country and an opportunity to express our opinion on world events. With such a Government as we have, that will be slow in coming, but we shall try to make our contribution towards that end.
  7.3 pm
  Mr. Ian Taylor: For many years prior to becoming a Member of Parliament I debated with enthusiasm the European cause all around this country and on the Continent. On occasions that has been with representatives of the Opposition parties and sometimes with friends from the Conservative party.
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  I have long respected the desire of the House to retain control over events in the European Parliament. Having listened to the debate, I have some qualms about whether the House is fulfilling that role with the commitment that it should. I hope that, over the years that I intend to remain in the House, the standard of debate — as evidenced by the speech of the hon. Member for Hamilton (Mr. Robertson), which would have defied all translation into whichever language of the Community if it had been made in the European Parliament—will improve as will the attendance. The debate is about what I regard as an essential part of the future policy and status of the United Kingdom.
  Prior to becoming a Member of Parliament one aspect that I commended was the alacrity with which the House accepted the passing of the Single European Act. I did not manage to read all of the speeches made at the time, but I am sure that most of them favoured development of the Community, to transform it so that we could look forward to more efficient institutions. That is what is so important about the Community, and it was referred to by my hon. Friend the Member for Skipton and Ripon (Mr. Curry) in his excellent maiden speech. It may be patronising for me as a new Member who entered Parliament at the same time as my hon. Friend, but I should like to congratulate him on his speech. He brings to the House a great knowledge of the way that the budget is negotiated in Europe, having been responsible for the Budget Committee and the Agricultural Committee in the European Parliament. One or two Members of the European Parliament have not contributed to the strength and sense of the budget or agriculture debates, but that finger cannot be pointed at Conservative Members of the European Parliament.
  A point that I should like to underline from my hon. Friend's speech is the importance of the increased strength of these institutions for increased budgetary control. In a sense, there lies the nub of the question. In the past we have not willed the means to the Community to control budgets, despite wishing that that control was applied. In many cases, we have undermined the institutions that tried to control them.
  With regard to the budget, on many occasions the House has discussed whether it should increase own resources, after the Community has already made commitments to increase them. The problem is that to appear within the legal budgetary limits the European Community has often had to do things that I, as a corporate adviser, have advised my clients on innumerable occasions not to do, which is to fudge and fiddle the books.
  On many occasions the budget has reclassified items that it should not have reclassified and changed the timing of payments and taken the credit for them, which it should not have done. It has budgetised agricultural stocks, which has given a misleading impression. One can justifiably criticise the European Community for those measures, and I do, but one can also justifiably criticise the Council of Ministers for never anticipating the problems, yet always trying to pretend to their domestic Parliaments — this Parliament is no different in that context — that there is no problem. If we look in Hansard at some of the debates of recent years, we see that Ministers have said that budgetary control is within our grasp and that I per cent. or 1·4 per cent. of VAT will be sufficient. Most people knew at that time that that would never be the case.
  Mr. Teddy Taylor: They will do it again.
  Mr. Ian Taylor: If my hon. Friend will allow me I shall demonstrate how it can be avoided.
  It is important to point out that the European budget for all 12 member countries, with 321 million people, is about £26 billion. That represents just over half of what our Secretary of State for Social Services administers in any one year. To put it another way, it is 15 per cent. of our national budget. Yet it covers 321 million people throughout the Community. With all the fuss that is made about an attempt to increase own resources, one would have thought that it was dramatic — that it was hundreds of times the size of the British budget or any departmental budget. We have got the matter out of proportion. We have become nit-picking in a way that has stopped us from having a vision of the future. [Interruption.] Interventions from a sedentary position are never clear for the record. There was a murmur of dissent from what I said.
  I was clearly pointing out that if we persist in nit-picking and trying to demonstrate an attempt to be completely profligate with resources, which, in relative terms, are small, we shall lose the vision of why many of us have spent many years fighting for increased strength of the European Community. We believe that the vision of the future, which the internal market and the prospects for 1992 could bring us if we stick to the Cockfield timetable, is more than well worth fighting for. In many cases, it justifies an increased contribution from members of the Community.
  Mr. Cryer: Would the hon. Gentleman take the same attitude to local authorities, for example, if, in the past three years, we had spent £4·3 billion more on local authorities than we had received back in services provided? Would he say that we should wave that amount to one side and examine the vision of the future? Does he agree that the Government look rather more scrupulously at local authorities than at the Common Market?
  Mr. Taylor: The hon. Gentleman chose a bad example. The profligacy of Labour councils makes the organisation of European Community budgets look efficient and parsimonious. [AN HON. MEMBER: "They hit their targets every time."] They have hit their overspending targets, without any question.
  Many hon. Members have said that agriculture has been the main problem. Over the years, there has been no doubt that agriculture has been out of control. It is beneficial for the European Community that agricultural production is in surplus. Back in the 1950s, when one started to take an interest in the matter, many hon. Members were worried about the opposite effect ; that is, of famine and shortage. We must now tackle the problem of how to deal with surpluses. The Government have taken a proper lead in that respect.
  However, there is absolutely no doubt that the only way in which to deal with the problem is to give increasing powers to the Commission and the European Parliament to trigger automatic stabilisers and reinforce a reduction in quota impositions on cereals, which are still at high levels. I refer to what has happened to milk powder and butter. Last week, The Independent stated that, on a year-on-year basis, the flow into surplus stores has been reduced to a trickle. The Milk Marketing Board is one of the largest employers in my constituency. In many cases, the problems that it thought it would face in regard to
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  quotas are no longer quite as apparent as it first feared. The systems have at least brought that section of the agricultural surpluses within some control and have at least given us the prospect of trying to marry supply and demand. Those measures must not —
  Mr. Win Griffiths rose—
  Mr. Taylor: I have given way once. I shall carry on and make my point.
  If we can apply the same sort of discipline to other products — I know that there will be shouts from the agricultural community—we may bring back supply and demand to other products and at last give European Community institutions a chance to apply the automatic stabilisers that will relieve the future problem.
  Mr. Teddy Taylor: Will my hon. Friend explain how stabilisers will solve the financial problem if we retain export rebates for items that are not taken into intervention? We must bear in mind that the EEC currently spends £185 millon a week on export rebates, but only £17 million a week on storage. How will it solve the financial problem if we retain export rebates?
  Mr. Ian Taylor: The financial problem will be dealt with if the system of rebates gets more attention in the negotiations in Copenhagen. I hope that the Minister of Agriculture, Fisheries and Food is dealing with that aspect. My hon. Friend must realise that unless we bring in automatic stabilisers and attack the problem in terms of various commodities and examine how they can be cut off when they run into surplus, we will never get the agricultural budget under control. It is essential to bring it under control. Therefore, I strongly support the Government's line in the current talks and those which will inevitably take place in Copenhagen.
  Mr. Cash: Will my hon. Friend give way on that point?
  Mr. Taylor: No, I shall not give way. I have just given way. I should like to continue my remarks.
  If we can bring in budgetary control, the future of the Community will require us to examine a wider horizon. We must accept that more resources are required. As I said, the proportion of member countries' budgets that is devoted to the Community through own resources is extremely low. Incidentally, far from being expanded at a massive rate, taken in terms of total GNP, the European Community's budget has been relatively static. If we can develop more resources, we can start to tackle problems other than agriculture, as many people would like us to do, such as the social, employment and regional policies. Therefore, we shall be able to fulfil the requirements of the Single European Act and also those of 1992 targets.
  The matter is important. It is not inherently wasteful for resources to be subscribed to and then distributed by the European Community. In assessing which resources should be submitted, there will inevitably and desirably be some transfer of wealth within the European Community. That will strengthen the Community. That is a political objective. The 321 million people within the Community will be better served if the whole Community is strengthened and regional disparities are gradually reduced.
  In an age when the super powers are taking decisions over our heads and when we have to sit and wait for President Reagan eventually to make up his mind about what attack he will make upon the United States deficit,

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  it is important that Europe puts its own house in order, and is seen to do so, and makes a strong European Community contribution to world political and economic debates.
  I have mentioned the need to control the past, but if we are to look with some vision to the future we must consider the basis on which such extra resources should be raised once control of the existing budget system is introduced. The Delors proposal shows one of the best moves forward that the Community can consider. There may be discussion about whether it moves too quickly, and there may be consideration about whether the total estimate of 1·4 per cent. of GNP is too ambitious a target, but for the first time it relates to greater fairness by not retaining some variety and pot-pourri of structures related to notional VAT rates. I commend the fairness of the proposals to the House. When the Prime Minister goes to Copenhagen, if she can achieve—
  Mr. Win Griffiths: Does the hon. Gentleman agree that we should perhaps extend the principle of the community charge to the Community to produce the money to fund the European Community?
  Mr. Taylor: Will the hon. Gentleman repeat his point?
  Mr. Griffiths: I was wondering whether the wonderful British poll tax device to help finance local government might not be taken by the hon. Gentleman as a means of financing the Community.
  Mr. Taylor: I could not believe my ears. I am glad that the hon. Gentleman has a sense of humour, but I am not sure how relevant it is in this context.
  Mr. Curry: It would not come through in translation.
  Mr. Taylor: No, my hon. Friend is right.
  If we note the package contained in the Delors proposals, the Government should press to find out how the proposals can be introduced in stages. The Delors package relates to an advance budget, three years ahead. That is exactly the point that I raised earlier. In the past, we have reacted to something that has already happened. I believe — and I make this point seriously—that we should have more resources and therefore that we should anticipate what the resources are likely to be in the future. We should take a three-year view. We should look forward, as opposed to being reactive. We are already under great pressure. We have to contend with what is called the cost of the past which might also be described as a historic budget deficit. Let us see how we can plan for the future and what is likely to occur. The 1984 settlement has been undermined to an extent by the fact that it did not allow for currency movements such as have affected the ecu-dollar rate in recent years, thus causing considerable problems.
  My hon. Friend the Member for Skipton and Ripon referred to the European monetary system. In attempting to get budgetary discipline imposed on our colleagues in the Community—some of whom have already accepted the argument and some of whom have not—we should show our own European credentials openly and strongly rather than talking about it in guarded terms. We are not full members of the exchange rate mechanism of the European monetary system. In recent years we have made slightly more positive noises about it, but said that we would wait until the time was ripe. When the time appeared to be ripe, the ground rules were changed for
  1122
  some reason. If we are to go to the Copenhagen summit hoping to make a major impact and take a major step forward, we should show our true European credentials. In my previous profession, I talked to many business men and I believe that the strength and discipline that full membership of the European monetary system would give would be more than welcome in Britain.
  One can always ask about the sterling-deutschmark rate, but recently we have been behaving as though we were EMS members, Our monetary policy is increasingly tied to circumstances in Germany. Other members of the Community are increasingly making concessions that we have demanded on freeing capital movements and yet we ourselves have yet to make the final commitment. I know that there will be arguments against it, but there are overwhelming political reasons and good sound reasons of economic discipline why we should declare our membership. We need an objective peg by which to maintain our anti-inflationary policies and to provide a greater sense of exchange rate stability. If the Government made that gesture and committed themselves, they would be much more likely to achieve the essential controls of the existing budget system and to provide a strong platform for solid growth of the European Community, for which I very much hope.
  7.22 pm
  Mr. Nigel Spearing: I agree with a good deal of what the hon. Member for Esher (Mr. Taylor) said at the beginning of his remarks and congratulate him on his approach. However, I could not agree with the rest of his speech and when I come to my remarks about the Cockfield package I hope to show why.
  First, let me comment on the hon. Gentleman's dismissal of just £26 billion — not £26 million, but £26,000 million. That sum may be equivalent to our own social security budget. It may be just 12 to 13 per cent. of our VAT take, although that is quite a lot for a Chancellor to deal with. Our current contribution to the EEC, including customs duties of more than £1,000 million, now amounts to £4,000 million. Statistically the hon. Gentleman may be right, but the matter looks rather different when one considers it in terms of what this country would do with that money were this House in control of it.
  This afternoon we are exercising the power of scrutiny, but I am not sure that we are doing very much more than that. The power of scrutiny can be defined as the power to be aware both of the factors and of their context, and as having the power to influence through that knowledge. If one has real power, one has the power to change arid, in this context, the power to approve or disapprove. I am afraid that the House no longer has that power. I do not know how long ago the Government last disapproved a Commission document or when the Opposition last succeeded in doing so. It would be instructive for hon. Members to look in the history books to find out when it was. Only this week I received a letter from a prominent Member of the European Parliament referring to the activities of this House in relation to EEC matters as but a "rubber stamp". Whether we are more than that depends a great deal on the activities and integrity of Conservative Members.
  On 21 October I asked the Minister of State, Foreign and Commonwealth Office, who is not here now, about the Copenhagen summit and the powers of the Council of

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  Ministers, or the European Council as we now have to call it. I asked whether the decisions would commit this country even if further regulations were promulgated. The right hon. Lady said:
  "The Copenhagen meeting of leaders of European Community countries will be no different from any other European Council meeting. We shall proceed exactly as we have previously, under the Single European Act, which now binds us all together."—[Official Report, 21 October 1987; Vol. 120, c. 708.]
  I do not know whether the right hon. Lady was speaking Eurospeak, or newspeak, or some other kind of speak, but the remarks seem inaccurate. The Single European Act came into operation only on 1 July. The Copenhagen meeting will be the first meeting of Heads of Government under that Act.
  I agree with the hon. Member for Esher that the fact that we are operating under that Act makes this debate, the process of decision-making, the nature of the package and its linkage with the European institutions to which the hon. Gentleman referred a very different matter. That is why I am surprised that the Single European Act and its significance are not dealt with in the two White Papers that we are considering. Only eight lines of these important White Papers refer to the Single European Act, and most of those eight relate to dates. In that respect the Government are off beam in their report about developments in the Community.
  In our commitment to the Single European Act there is a commitment to European union. There is the wish for a single European market by 1992, which is frequently referred to by Conservative Members. There is the system of majority voting in the Council for a wide range of harmonisation. There is the power of the European Parliament, now officially named that, to amend legislation. Indeed, with the approval of the Commission, it is almost certain that the European Parliament will amend legislation in a way that we in this House cannot. There is the prospect of increased expenditure—up to 45 per cent. more in real terms — by 1992. There is a commitment to the doubling of the structural funds, much of which must go to the southern members of the EEC, and there is now the attempt at budgetary discipline. I was grateful to the Minister when she said that we would have another debate on the outcome of the Agriculture Ministers' meeting and possibly of the Finance Ministers' and Foreign Ministers' meetings before the meeting in Copenhagen.
  One issue that I did not list under the effects of the Single European Act and building towards its success, as outlined in Cm. 101, is the possible United Kingdom rebate. I say "possible" because, under the terms of the proposal from the Commission, we will get it in 1988. In answer to a question, the right hon. Lady said that we would get something because there is a unanimous requirement that it goes on after Fontainebleau. The Treasury Minister may be in a better position to answer.
  From what basis does that so-called unanimity spring? I had understood that after Fontainebleau the rebate mechanism would disappear after the end of the 1·4 per cent. ceiling. If there is agreement in Copenhagen, that ceiling will end. I can only conclude that the unanimity to which the Minister of State, Foreign and Commonwealth Office referred was our power of requiring unanimity over an increase in the budget as such, and that it is the linkage
  1124
  of that that provides us with the power to try to renegotiate a United Kingdom rebate. It is to the nature of that rebate that I wish to address my remarks.
  In the 17th report of the Scrutiny Committee, Session 1986–87, referring to new own resources, we say:
  "These resources would be subject to a ceiling set at 1·4 per cent. of the Community's GNP until at least 1992. The Commission also proposes replacement of the existing Fontainebleau abatement system by a 50 per cent. refund of the burden to the United Kingdom arising from the CAP."
  That is the mechanism on the table. The reference to 50 per cent. of the burden is taken from the Commission's proposals. I interpret that as a refund of half the difference between our CAP share and our CAP income.
  That may look all right in figures, but there is a quotation in another report which shows that the situation is not as rosy as Conservative Members may think. When the Minister quoted figures, I believe that she was quoting the calculation on the GNP formula, but in relation to our own rebate the position is different. In its 19th report in the 1986–87 Session the Scrutiny Committee said:
  "The EM"—
  that is the explanatory memorandum—
  "also notes a Commission estimate that under the proposed new corrective system the United Kingdom would have received a compensatory payment in respect of 1987 of 1,016 million ecu (£701 million). This compares to a forecast in the Treasury's Public Expenditure White Paper of an abatement of £1,623 million in respect of 1987 over the existing Fontainebleau abatement system. The abatement would therefore have been £922 million less if the new mechanism had been in operation."
  This is the abatement. We are not talking about the GNP own resources formula. The abatement plays a large part in our net payments. In 1986, out of a payment of £4,493 million, we received only £2,219 million, with a net payment of £2,274 million. That was reduced by a rebate of £1,701 million, giving a final figure for the net contribution of £573 million. Therefore, the gearing of that final figure to the United Kingdom rebate was 3:1. The nature of our rebate mechanism and the likelihood of us getting a large sum are crucial.
  I remind Conservative Members that if the agricultural problem is dealt with effectively, the disequilibrium between our contribution to the CAP and our receipts will get smaller. So far as I can see, and the Treasury Minister will agree or disagree when he replies, the rebate that we receive will also get smaller. Considered in that light, the prospects of the rebate system as proposed by the Commission are not at all bright.
  I look upon that as an objective calculation that might have been made by the Select Committee on the Treasury and Civil Service if it had had an opportunity to have a go at it. I am glad to see here the Chairman of that Committee in the last Parliament — the right hon. Member for Worthing (Mr. Higgins). I think that before the election the Select Committee did some quick work on it.
  What about the increase in contributions? We will have that only if the Prime Minister and the Chancellor of the Exchequer get their discipline. They may or may not get it, but let us assume that they do. The Minister of State told us this afternoon that if they get the discipline we will not agree to 1·4 per cent. GNP related and that we will not go up to a 44 per cent. increase. Perhaps they will reduce that figure to 1·2 or 1 per cent. and we will hear from the media that the Prime Minister has had a great victory because she has reduced the proposed increase. But out of

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  that increase there is to be a doubling of the structural fund. Again the Minister has said that we do not want a doubling of the structural fund and that that is too much. The Government will have to give something. Even if discipline is achieved there will have to be some increase, if only to pay the deficit in the 1987 budget.
  Mr. Terence L. Higgins: The hon. Gentleman is knowledgeable on these matters. Can he tell me why the figure of 1·4 per cent. of GNP has been selected, since that seems relevant to the argument that he is making?
  Mr. Spearing: I am grateful to the right hon. Gentleman for asking that question. It must be addressed to the Minister, or perhaps to the Commission. The figure of 1·4 per cent. rings various bells. At the moment it is 1·4 per cent. of the harmonised VAT. Someone may have thought, "Let us put up the same figure because it will sound the same even if the income is half as much again." It is a possibility— I put it no higher than that—as a statistical sleight of hand so that someone reading the Financial Times will see 1·4 per cent. and will not realise that it is related to GNP rather than to VAT. I hesitate to make an accusation against the gentlemen of the Commission, but it might have been better had they chosen another figure. If they wanted a bigger sum, 1·5 per cent. might have given them the ceiling that they wanted. I am grateful to the right hon. Gentleman for pointing out the similarity.
  I turn to the Cockfield package and the single European market. Although it is not part of the Copenhagen package, that is the context in which the single European market is placed. Here I take up with alacrity the view and vision of the hon. Member for Esher. What he and other Conservative Members, particularly the hon. Member for Clwyd, North-West (Sir A. Meyer) and indeed the Minister, seemed to be saying, was, "Let us get this great market by 1992 and not only will there be a cornucopia of prosperity throughout Europe, but somehow international brotherly love and all that goes with the positive parts of the EEC will automatically flow with it". They may not have put it in exactly those words, but that at least is the implication.
  Mr. Ian Taylor: I certainly did not put it in those words. I am not as poetic or as inaccurate as the hon. Gentleman. Does he agree that it is estimated that about 8 per cent. of the cost of all goods traded within the Community is represented currently by internal customs barriers?
  Mr. Spearing: That may well be, but I shall tell the hon. Gentleman why I think he is being obsessively optimistic about the result of the single European market. Perhaps he will consult some of his business friends, because, although customs are a nuisance and sometimes difficult, there are many other factors in selling abroad that are important to them.
  The hon. Gentleman mentioned the social benefit that would flow from the great single market. On the Order Paper there is a little paragraph which says:
  "European Community Document No. 6476/87, Second Report from the Commission to the Council and the European Parliament on the implementation of the Commission's White Paper on the completion of the Internal Market is relevant,"
  to our debate, and I have it here. It is a report on the Cockfield package, the harmonising directives, that will
  1126
  come up shortly. If the hon. Gentleman refers to annex 3, which is about documents yet to be presented, he will see the delights of VAT on passenger transport. Both newspaper articles and hon. Members have drawn attention to the prospects of VAT on articles of clothing, food and newspapers. Those may be delights for Conservative Members, but they are not delights for us. We know that such impositions are socially regressive and cannot be a tool of social policy, as even progressive Tory Members have understood in the past 50 years.
  Mr. Ian Taylor: The hon. Gentleman should not put words into my mouth. I did not refer specifically to tax approximation, but I am sure that ingenuity will enable us to retain the Prime Minister's pledges and still get close to the Cockfield measures. That ingenuity will be apparent in a few weeks' time.
  Mr. Spearing: I recommend that the hon. Gentleman consults Hansard, as I would take the matter further. The measures in the Cockfield package are socially regressive and the House, if left to itself, would never have conceived them.
  Mr. Teddy Taylor: Does the hon. Gentleman agree that if we are to achieve this great internal market and get rid of internal customs it is vital to harmonise VAT in Europe? If we do not do that, customs duties will continue to upset the business men of whom my hon. Friend the Member for Esher (Mr. Taylor) spoke.
  Mr. Spearing: I fear that the hon. Gentleman is right. This brings me to the Prime Minister's policy during the election campaign. She was put in a corner on the question of VAT by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and she got out of it very neatly. She said, "Oh, I cannot imagine the House of Commons ever passing legislation to put VAT on children's shoes." The right hon. Lady is right, but I have news for her and for the House. The Barber Budget of 1971 did that very thing. Opposition Members tabled an amendment to exempt that item, but the Prime Minister voted it down. The matter might come before the European Court. Perhaps the House would not vote for such a proposal, but the European Court may impose it on us.
  We are awaiting, on 2 December, a preliminary view of the European Court's decision on whether we have to put VAT on new buildings, water and industrial fuels. To judge from Lord Cockfield's package, domestic fuels will not be far behind.
  I shall end my speech as I started, by emphasising the importance of scrutiny and power. Following the debate and scrutiny of the documents, we may be a little more aware of what is happening but I doubt whether we have much influence. I do not think that the House can change the document. We are unable to disapprove it because power has flowed away. I hope that no more power will flow from this House.
  7.44 pm
  Mr. Teddy Taylor: These debates tend to be rather depressing, not just because the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) insists on speaking, but for other reasons as well. However, one thing has made this debate different and that has been the delightful maiden speech of my hon. Friend the Member for Skipton and Ripon (Mr. Curry).

  1127
  I am glad to reveal that he is my representative at the European assembly, as he represents Southend. Today he spoke with great determination and honesty and those are qualities he has shown in his activities as a representative at the European assembly. I am sure that we all look forward to hearing his future contributions, especially bearing in mind his long experience of European matters. That speech cheered us up. However, the debate has been depressing because, sadly, the official speech from the Government showed that, once again, we are approaching the issue of Europe in terms of slogans and daydreams.
  We heard from my right hon. Friend the Minister of State about the great opportunities that Europe provides for jobs. Why on earth do the Government not consider what is really happening? It is a sad fact that the Common Market is awash with unemployment. I challenge the Minister who is to reply to name any part of the world that has a higher rate of unemployment than the Common Market, with the exception of Tibet and Ethiopia where special circumstances exist. The Common Market's growth rate is low, the unemployment is appalling and the situation is extremely serious.
  We have heard about the wonderful opportunities for trade and how Britain will benefit immensely. Again, I appeal to the Minister to consider what is happening. Before we joined the Common Market we always had a surplus in our manufacturing trade with that market, but since then we have had a growing deficit and it is now more than £10,000 million. It is not a small problem and indeed, in the long term, it could wreck Britain's recovery once our oil exports go down and our invisible exports no longer grow.
  We have heard again about the wonderful oppor-tunities of the internal market as though, somehow, there are now in existence massive tariff trade barriers that will be swept away if that internal market is achieved. The Minister must be aware that, in 1973, we were given free trade. The fact that free trade has not developed has been partly because of illegal, non-tariff barriers—a problem which, unfortunately, the Common Market has been unable to resolve—and partly because we have retained certain national characteristics.
  My hon. Friend the Member for Esher (Mr. Taylor) is concerned about business men who find that their costs are increased because they must stop at frontiers where their goods are examined in various ways. The only way in which it is possible to achieve the internal market which Lord Cockfield has discussed and which would enable goods to move more freely between Britain and Germany in the same way as they move between London and Glasgow would be to have complete uniformity of VAT, complete uniformity of excise duties and no statistics taken on trade between countries.
  Mr. Ian Taylor: It is now established that we will probably move towards tax approximation as opposed to harmonisation and exactitude. That gives room for the freedom to make certain national movements within the barriers.
  Mr. Teddy Taylor: I hope that my hon. Friend does not believe that he is the only one who has read the proposals. We know exactly what is meant by approximation. It means two rates of VAT. Does it not mean the taxation
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  of food? Does it not mean the taxation of children's clothes? It is abundantly clear that all the member states, with the exception of two, operate in such a way.
  Mr. Ian Taylor: My hon. Friend must not try to twist what I have said or what the Commission has said. They are matters for debate and—
  Mr. Ron Leighton: On a point of order, Mr. Deputy Speaker. Is it right that an hon. Member who has already spoken at considerable length should repeatedly interrupt everybody else's speech and possibly keep out other speakers?
  Mr. Deputy Speaker (Sir Paul Dean): It is a matter for whoever has the Floor to decide whether he will allow interventions. However, this gives me the opportunity to remind the House that there are quite a number of hon. Members still wishing to speak from both sides of the House.
  Mr. Teddy Taylor: I am sure that the Government will accept that it is simply not possible to have the kind of free movement of goods between one country and another that has been suggested unless there is harmonisation of taxation and excise duties, and unless trade statistics between countries are not taken. The Cockfield package is not about moving great trade barriers because that was already guaranteed in the treaty of Rome. The Cockfield package is simply concerned with harmonisation and the introduction of measures such as the mutual recognition of firearms certificates that we discussed in the House recently. I suggest that to remove all the restrictions on firearms would be unrealistic on security grounds.
  We have been told that the contribution position has improved because of Fontainebleau. In the Autumn Statement the Government's figures show that this year there will be a net contribution of £1,400 million. That is the highest figure I can remember and it is only part of the story. On top of that sum, many payments have been switched, some legally, some illegally, from the EEC to member states.
  I wish that we would stop kidding ourselves and face reality. We should start putting forward positive suggestions instead of slogans such as reforming the CAP. The fact is that, once again, the Common Market is bankrupt, as it was in 1984. It is bankrupt because it has wildly overspent its legal budget. That is not a new situation. In 1984 when the Government said that they wanted binding controls on spending they were promised such controls and they were part of the agreement. We were told that the controls and restrictions were binding on the Council. When several of my hon. Friends suggested that such controls would not be binding, Ministers repeated the assurance that they were indeed binding.
  My hon. Friend the Member for Esher has a great interest in these matters and I believe that he described the Delors package as a sensible proposal. I suggest to him that the problem with the last binding proposal was that there was a clause that said that, while there would be restraint, if at any time Ministers, by a majority, took the view that there were exceptional circumstances they could increase spending by any amount they liked. I draw my hon. Friend's attention specifically to what is contained in the Delors proposals. It is there in black and white. In COM (87) 430 of the Delors package, it says:

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  "The budgetary effects of exceptional circumstances shall be cancelled out within a three year period. If any overruns have not been offset by the end of this period the Commission and the Council shall assess the situation and decide how to deal with such overruns."
  If the Government and my hon. Friend the Member for Esher believe that the Delors package has given us spending controls, are they willing, in any circumstances, to agree to an exceptional circumstances clause? If they are, we can forget all about budgetary control and budgetary restraints; they simply will not happen.
  I do not question the strength of Government statements on overspending. I do not question the strength of what they have said about the scandals of agricultural spending. However, I hope that they appreciate that there are some outside this House who are beginning to wonder whether strong words are enough. Indeed, in 1984, we heard terribly strong language—the most frightful things were said about the CAP and terrible things were said about overspending. We had wonderful speeches from virtually every Minister saying how the scandals of agricultural waste had to stop. However, when the crunch came, we handed over a 40 per cent. increase in the VAT payment in exchange for a control package that proved to be utterly worthless.
  If the Government are truly concerned about overspending, why on earth have they sat round in the Council while commitments have been made that will inevitably lead to overspending? I hope that when the Minister replies he will tell me why the Government have accepted the introduction of this wonderful new Common Market principle that will get round legal limits called the "metric year." Many things have gone metric since we joined the EEC. Now, the financial year in the Common Market has gone metric. The Common Market has achieved that by asking for money one month in advance and paying out one month late. Where were the protests when that device was introduced — a device that was devised simply to get round legal spending limits that we were told were sacrosanct?
  We know that the only body that really watches Common Market spending is the Court of Auditors which constantly sends out reports — which no one bothers about—saying that money is being wasted. The Minister is aware of a recent occasion when it said that the device to curb spending by switching the responsibility for butter dumping on member states was, in its words, unlawful and against the treaty of Rome. It sent a report to the Council, saying that it was unlawful. What happened at that time? Where was the voice of Britain that is concerned about overspending? The Minister is aware that the Council unanimously agreed to set the report aside and not discuss it.
  Mr. Marlow: I am sorry to interrupt my hon. Friend. He is talking about some of the devices—legal and illegal — that have been used by the Community to extend its expenditure and sources of finance. I know that my hon. Friend is aware of most things, but is he aware that if there are differing levels of VAT between Community countries, as we develop along the lines that he described, that difference in VAT will be held as a Community resource? We are faced with a 1·4 per cent. GNP assessment, and our existing taxes to the Community, so it has up its sleeve another source of revenue which will be used to develop those policies.
  Mr. Taylor: My hon. Friend is right, as usual. Again we will be told that if we adopt the new plan, our gross contribution will not be as great as before, and the rebates will be cleared. Again there will be an Autumn Statement saying the Government are terribly sorry but they got their sums wrong. It is not a matter of pennies. The latest estimate in January, which was itself an increase, said that this year's figure was £900 million. The revised Autumn Statement gave us £1,400 million. I suggest that an increase of that size goes far beyond a miscalculation by the splendid Treasury officials who usually take their responsibilities very seriously.
  We shall probably hear slogans to justify a further movement. Last time it was quotas. Because we have quotas, we are told, agricultural spending is under control. What has happened since quotas? Production remains at 20 per cent. above the demand within the Community. Farmers have been paid substantial sums of money to go out of milk production. What has happened to the land? It has been switched from milk to other areas of production where there are chronic surpluses. That is why the so-called reduction in the butter mountain has been accompanied, as the Minister knows, by an increase in the beef mountain and the need to export beef at rock-bottom prices. The latest example is that we have sold massive amounts of beef to Brazil at 11p per lb which comes back to us as corned beef.
  We were told that quotas would reduce spending. Why then, this year, despite the achievements of December 1984, are we spending £185 million per week on dumping? We are asked "What do millions matter?" Hon. Members may remember Bob Geldof who worked his guts out holding concerts all over the world to raise £100 million for the world's poor. That was a wonderful effort, and I applaud it. How would Bob Geldof feel, having raised £100 million, to know that that amount is spent by the Community every four days on dumping cheap food to destroy the world markets?
  That policy is crazy. It is also an evil policy, as by dumping cheap food on the world market we destroy the prosperity of the Third world. Because food is dumped at low prices those countries do not get a decent price for their food, and the world price of food has never been so low. In addition, we spend £17 million a week on storage. Is there not some way in which we in the House of Commons can commemorate the fact that last year, for the first time in history, the Common Market managed to employ men and machines to destroy 1 million tonnes of food and fruit? That is quite an achievement, and I hope that Europeans are as ashamed of that as they should be.
  Where has the progress been? Milk quotas are selling at a high price. People have now moved out of milk production and are producing other things, so that the quotas, which were a salvation last time round, have proved to be a fraud.
  The new slogan is not quotas but stabilisers. Somehow, if we have stabilisers, our problems will disappear. After we take a certain amount of food into intervention, we shall not take any more. I know that the Minister is speaking on behalf of the Government and that she is an honest person. Surely she must know that the major expenditure in the Common Market is not on storage but on dumping. It is on providing massive amounts of money to export food cheaply on to the world market. If we have stabilisers, and food is not taken into intervention, will we stop export rebates for that food going abroad? The

  1131
  answer is no. The massive expenditure will continue. The only way in which we can solve that problem is by reducing production. That is the only thing on which we have no proposals.
  We should like to know the view of the Government about other things that are happening. I am glad to say that I got a good result in the general election, as most Conservative Members did. The one point on which we were challenged constantly by the Labour party was the question, "Will you put VAT on various items?" We said, "No, don't worry. If any such proposals come before the Council of Ministers, we shall use our veto."
  That was, as Sir Robert Armstrong, our splendid Secretary to the Cabinet would say, being economical with the facts. The real danger to VAT comes not from the Council of Ministers, but from the Commission going to the European Court. Will the Minister tell us, the country and our party what the blazes will happen if, in January, we lose the current case of levying VAT on house building, construction, electricity and gas for industry, water and sewerage for industry, protective clothing and footwear and news services? Will we use the veto? But we have no right to use the veto — it cannot be used against the European Court. I hope that hon. Members who are interested in these matters will look at the real danger of the Commission exploiting that fact, having found that way of forcing us to charge VAT if it wins its case, despite the views of the House of Commons or anyone else.
  In the Single European Act a commitment was made by the Government to harmonise VAT and excise duties in so far as it was necessary to complete the internal market. The Government said, "Don't worry about this. We have unanimity." I should like to ask the Minister, with his legal knowledge and that of his Department, to suppose that in 1992 the Commission takes the view that we have not submitted proposals for uniformity that conform to the commitment in that clause. Is it not possible that, not under the sixth directive, but under the Single European Act, the Commission could just as readily go to the court and say that we have not carried out our obligations? I fear that we are well on the way to having our taxes determined not by the House of Commons but by the European Court.
  Mr. Marlow: Is it not true that, whatever the European Court decides, the House of Commons will vote it down and it will not apply?
  Mr. Taylor: I know that my hon. Friend is an intelligent person. He may have been asking that question rather simplistically to draw attention to a point. He will be aware from his long experience that it has been proved time and again that European decisions, laws and rules take precedence over the decisions of the House of Commons and, indeed, of the Government.
  I have asked two specific questions of the Minister. One was about exceptional circumstances, which was important, and I hope that I shall get an answer. The second was about VAT. I hope that the Minister will also answer my final question. Does he agree that it is rubbish for us to say continually, "No more cash"—bearing in mind that the Community is bankrupt — unless we put forward a specific proposal that would reduce its spending? Unless we are prepared to put forward proposals that would lead to the reduction of spending, it is almost wrong — I
  1132
  could go further than that — for us to say to the Common Market that it is wildly overspending, wasting money and throwing it away, and that it must stop.
  I appreciate that we cannot force the Common Market to do anything. We can only make proposals, but if in December at Copenhagen we say, "No more cash," and leave it at that, we know that six months later, as happened in December 1984, eventually we shall go along with it because the money has been spent and the commitments have been made. The only way in which we can say justifiably, "No more money," is if, at the same time, we present a proposal and say how it should be done.
  There is no way in which the reform of the CAP will be agreed by all member states. There is no proposal that will not hit one country harder than another. We know the strength of agriculture lobbies. We could contain the spending by proposing repatriation of agriculture policies to member states, which would take away the burden of agriculture from the EEC. We could let each member state try to resolve its agriculture problems within its own national frontiers. Some people will say that if one takes away the only common policy that the Common Market has, one is giving a vote of no confidence to the Common Market. Therefore, could we not simply say that our proposal is that every year the Council of Ministers should declare a percentage reduction in agriculture production for every commodity to bring our demand and supply into stability? For example, we might say that wheat production should go down by 20 per cent. and sugar production should go down by 15 per cent. Every member state would have to implement that proposal nationally.
  The difficult decisions that have to be made could be made far more easily by member states. We must get rid of surplus production. No present proposal achieves that. If we do not tell the Community how we think its spending should be cut, some member states might wonder whether we mean business when we say, "No more spending."
  8.7 pm
  Mr. John D. Taylor: For the past two years, it has been unusual for right hon. and hon. Members on the Unionist Bench to pay tribute to the Conservative party. I find myself in the rare position of having to applaud it in two respects. First, I pay tribute to the maiden speech by the hon. Member for Skipton and Ripon (Mr. Curry). I have known him for some nine years as a colleague in Strasbourg. He spoke with great expertise today. I did not agree with much of what he said, but he spoke with a background of great knowledge and understanding of the workings of the Community and his presence here will be a great addition to European debates in the House. The hon. Gentleman is a distinguished former chairman of the Agriculture Committee of the European Parliament, and was also rapporteur of the EC budget in the European Parliament. He has a great store of knowledge.
  I should also like to pay tribute to the Government themselves because in the debate we are, after all, referring to the past year, during which period Her Majesty's Government were president of the European Community. They served the nation well in those six months, in their regular appearances at the three institutions — the Commission, the Council and the European Parliament. They were regularly at all the committee meetings of the European Parliament. I should especially like to pay tribute to the Minister of State, who was there almost

  1133
  every week batting for the United Kingdom and showing the rest of Europe that the United Kingdom was keen in its interest in developing Europe.
  However, debates on the European Community often seem to be about discipline. The word "discipline" seems to be repeated in every other sentence. I thought that, in the debate following the Fontainebleau agreement, we were assured that the matters of the United Kingdom rebate and the own resources for the European Community were settled and there would not be many problems for the United Kingdom or the European budget in the foreseeable future. Tonight, within three years of that event, we are recognising what some of us said was inevitable—that the European budget would be out of control, and that the United Kingdom's contribution to the European budget would have to be increased.
  Why has the European budget gone out of control? One of the reasons is not under our control or that of the European Community—the factor of the declining value of the American dollar. So long as the United States dollar declines, the finances of the European Community will be adversely affected. The second major factor is the continuing expenditure on agriculture. The Community has made some efforts on beef and milk, but we urge the Government to bring as much pressure as possible to bear on the Council of Ministers urgently to make a decision to curtail grain production in the Community.
  Will the Paymaster General let us know whether the Government have had any change of position on the proposal for an oils and fats tax? If not, we need to know what the Government's alternative proposals are to curtail the production of oil. Olive oil is looming as the next major threat to the European budget and to agriculture expenditure in the Community. Especially in Spain, the production of olive oil is increasing daily, and we need proposals to bring it under control.
  Of course, the Community is now changing its system of own resources. As hon. Members have already said, there will now be a fourth basis to finance the budget: the introduction of a system based on the gross national product of each member nation. It is not possible at this stage for the Government to say whether that will mean an increase in the United Kingdom's net contribution to the European budget. We do not yet know the final details, but I suspect—I want to hear the Minister's opinion on this — that the reason why we are leaving the system under which the 1·4 per cent. VAT was the main own resources contributor and introducing a new factor is that that will bring about an increase in the percentage contribution that the United Kingdom makes to the Community's total budget. It is not the total amount that counts, but the percentage that each nation contributes to the Community's budget. That is why the Community is changing the system now. Once again, we shall find ourselves caught in the trap, contributing an increasing share of the European budget.
  I was surprised that the right hon Member for Wallasey (Mrs. Chalker) never mentioned the European monetary system. I notice that, in the first six-monthly report, that subject is dismissed in two lines, and in the second report it is dismissed in five. On neither occasion is any reference made to the United Kingdom's membership of the exchange rate mechanism. Not every hon. Member agrees that the United Kingdom should join the European monetary system ; not everyone agrees that that is good for the United Kingdom.
  1134
  It is all very well for Conservative Members to believe confidently that, as there is a Conservative Government now, exchange rates will be reasonably static. However, we shall not always have a Conservative Government who will keep exchange rates static. There might be a period when there was massive public expenditure and a run on the pound. If that happened, and the United Kingdom was a member of the European monetary system and had to hold the value of the pound sterling, there would be only one way of achieving that—by increasing interest rates.
  Mr. Teddy Taylor: You can change the value.
  Mr. Taylor: Yes, but not every week — only in periods.
  So the objective must be to retain the value of the pound sterling. The only way to do that is by increasing interest rates. I understand that people who are involved in industry and the export business want a static value for the pound sterling ; but many others who are in employment, business, and commerce, who are not exporting but are employing people, and who have overdrafts at the bank, might be caught if interest rates went up because of our membership of the EMS. That would be bad news for many people in the United Kingdom.
  Apart from economic matters, I want to deal briefly with some of the political issues that are not mentioned in the reports. During their presidency of the European community, the Government initiated the normalisation of relations between the Community and Turkey. There has certainly been an improvement in Turkish human rights and democracy. It is hard to imagine a Europe without Turkey, which has been part of European history —although, at times, not with us. Luckily for England, Turkey is even in the European football competition.
  Mr. Teddy Taylor: And Miss World.
  Mr. Taylor: Indeed. More recently, Turkey has been president of the assembly of the Council of Europe. It has played a major role in NATO for many years, and I welcome the fact that the United Kingdom's presidency initiated the normalisation of relations with Turkey. I hope that they continue to improve and that Turkey will join the rest of Europe in the Community in the foreseeable future.
  This is not to say that we should avoid other countries. There has been too much silence on the issue of Norway. Europe would benefit by having Norway in the Community.
  We have had an association agreement with Cyprus. Clause 5 of that agreement specifically states that both communities in Cyprus must benefit from their relations with the EEC. The agreement was initiated before the coup in Cyprus, the subsequent arrival of Turkish troops and the consequent division of that island — a tragedy that has existed since 1974. Therefore, much of the terminology of the agreement is no longer relevant to the island.
  Only this year, the Government agreed with the rest of the Community to have a customs union between the European Community and Cyprus. Can the Paymaster General explain how the Community can have a customs union with Cyprus when there is not even a customs union in the island? There is no trade between the south and the north—there is a total barrier. So how can the Turkish Cypriots and the Greek Cypriots benefit in the way in

  1135
  which the original association agreement said that they must? One group should not benefit at the expense of the other.
  A subject that has been on the horizon — rather dangerously — for the past six months is Gibraltar. Only last week, about 80 per cent. of the population took part in a major demonstration against an offical from Her Majesty's Government who was visiting Gibraltar. The issue has been raised in the present proposals for airline flights in Europe. Spain has lodged an objection because the Gibraltar airfield is involved. It seems to me that the Government let down the United Kingdom at the time when Spain was negotiating membership of the European Community. The Foreign Office did not have the foresight to see that Gibraltar would be a sensitive problem and did not ensure that Spain's terms of membership would not allow it to raise the constitutional problem of Gibraltar in the EEC.
  Let us remember that Gibraltar has been a member of the Community since 1973—long before Spain, which was then a dictatorship, joined. At the first opportunity, Spain objected to Gibraltar being included in the new proposals for flights in Europe. One proposal that the Government are apparently making to resolve this EC dispute is that the airfields should be used jointly by Spain and the United Kingdom, although not controlled by both countries. There are parallels for that. At the Basle-Mulhouse airport passengers can go from the arrival lounge into France through the door at one end, and by the door at the other end they can go into Switzerland. The system there works happily because the two countries recognise each other and there is no constitutional problem.
  Gibraltar is different, because one country is claiming jurisdiction over it against the wishes of the people there. Therefore, it would be wrong to enter into an arrangement similar to the one that operates on the French-Swiss border while there is this constitutional difficulty. Certainly it would be bad for the people of Gibraltar, who would misunderstand such an arrangement and would suspect that it was the first sign of the United Kingdom yielding on the question of their constitutional position. Of course it is not unknown for the Government to change their position on the constitution of other territories friendly to Her Majesty's Government.
  I should like briefly to refer to one or two matters about my own Province of Northern Ireland. I underline as strongly as I can the thrust of the speech about shipbuilding by the right hon. Member for Glasgow, Govan (Mr. Millan). The shipbuilding industry in the United Kingdom, and, indeed, in Europe, is under great threat. It has declined greatly and there is much unemployment in the shipbuilding regions of Britain. We are worried about the fact that the European Community reduced the allowable grant to 28 per cent. We in the shipbuilding areas feel that European shipbuilding is facing unfair competition from the far east — from Korea, Taiwan and Japan.
  While investigations are being carried out into the hidden support that is given to far eastern shipyards, it is unfair to cripple European shipyards. We ask the Government to ensure that there is no further reduction in the foreseeable future, until a full inquiry is carried out into the hidden subsidies given to far eastern shipyards.
  1136
  Our Merchant Navy has already been reduced too much and it is important that we maintain our shipbuilding industry so that, when fair play exists, our yards can compete on equal terms.
  On the matter of agricultural prices, I ask the Government to look carefully at the problems on the Irish border between the United Kingdom and the Republic of Ireland. Too often, when agricultural prices—
  Mr. Stuart Holland: On a point of order. Mr. Deputy Speaker. You have been quite tolerant about a range of issues from Turkey joining the Common Market to customs facilities at Gibraltar. Do we have to get the Northern Ireland border question into this debate, which is supposed to be about the EEC budget?
  Mr. Deputy Speaker: A wide range of topics is in order on the series of papers that we are discussing, and I am sure that the right hon. Member for Strangford (Mr. Taylor) will resist the temptation to go more than incidentally down the road that he is now on.
  Mr. Taylor: I am afraid that the hon. Member for Vauxhall (Mr. Holland) does not understand what I am speaking about. Monetary compensatory amounts are a vital issue in the European Community and on the Irish border they operate very badly for the United Kingdom. I am not talking about terrorism or anything like that— far from it. I am talking about unfair competition, in that the MCAs are operated in such a way that cattle and other animals move from plants in Northern Ireland into the Republic of Ireland. As a result, workers in Belfast lose their jobs because of a European Community system. I shall not go into the matter in detail, but I must tell the Government that too often when MCAs are being renegotiated each year they forget about this problem on the Irish border, and overnight many thousands of people are thrown out of jobs. I ask the Government not to ignore this matter, because there is a feeling in Dublin that the Irish Goverment get away with murder every year when this matter is discussed.
  During the last six months, the Dublin Government took a decision to restrict the movement of shoppers from the Republic of Ireland to the United Kingdom. That was done without notifying the EC, and in this debate the Minister did not mention it. In their April Budget, the Irish Government ruled that such shoppers had to spend 48 hours in the United Kingdom. The EC Commission has advised the Irish Government that this is contrary to European Community law and that if the Irish Government proceed further they could be brought to the European Court in Luxembourg. However, that would take several years, and in the meantime shops and communities along the border are being severely hit by this budgetary decision.
  It is not only hitting shops and business men but is unfair, because the balance of trade in the island of Ireland is in favour of the Republic. Therefore, there was no necessity for this decision and I ask the Government to do all they can to bring pressure to bear on the Irish Government to reverse their decision and not to let it drag on for another two years until it reaches the court in Luxembourg.
  Hon. Members have spoken about VAT on things such as food and children's clothes. Given that the internal market will come about in 1992, it is a logical conclusion that at some stage there will be standardisation of VAT

  1137
  rates throughout the Community. While the Government may now say that they will not allow VAT on food and on children's clothes, in the long term they will have no choice in the matter. That is because, as soon as we get uniform rates, they will have to be applied. There is a decision pending on new building, and the Government will eventually have to give in if the court rules against them. The same thing will happen about VAT on food. Even if the Government and this Parliament vote against it, the European Court can overrule us and impose it. That is the reality of what the Common Market is all about. We have to abide by the rules.
  The Ulster Unionists believe in co-operation within Europe and believe that it is important to have a market of 320 million people. However, we do not think that, in order to have that market, it is necessary for the House and Parliament to surrender powers drip by drip, day by day, to another institution. That is what is happening and the more powers we give to the European Parliament and the Community the fewer powers we will have in this Parliament, and at the end of the day we will have to abide by the decisions of the European Court. For that reason, I and my hon. Friends will vote against the Government.
  8.27 pm
  Mr. Terence L. Higgins: I begin by expressing my appreciation to the members of the Select Committee on European Legislation chaired by the hon. Member for Newham, South (Mr. Spearing). Undoubtedly, the vast mass of papers that we are debating was carefully analysed by the Committee in some of its reports. That is a great advantage to the House. The hon. Member was kind enough to speak about the Select Committee on the Treasury that operated in the previous Parliament. It is a matter of great regret that that Committee has not yet been established in this Parliament. The evidence taken by that Committee in the last Parliament was illuminating, particularly at the time of the Fontainebleau agreement. and the evidence that it took about value added tax was important.
  I am sure that my right hon. Friend the Paymaster General, who I am glad to see on the Front Bench, will agree that many of the matters before us cannot be clarified in a debate such as this. That requires prolonged examination of Ministers, because it enables a Committee to get to the bottom of the matter. It can then provide the House with the information that it needs if it is to do its job properly. Therefore, in this debate we are under something of a handicap.
  The right hon. Member for Strangford (Mr. Taylor) and a number of other hon. Members talked about value added tax. The Treasury Select Committee in the previous Parliament took the view that harmonisation of value added tax was not necessary to secure an effective unified market. That is something of an over-simplification, but in broad terms that is the conclusion that we reached. If we are to go down the route of harmonisation—I think that there is a distinction, which the right hon. Member for Strangford blurred, between those items that may be covered by the court case and the broader issue that is not covered by the present case, where we shall still have a veto —we ought to harmonise on the British basis.
  I am not totally unprejudiced in saying that, because I had the somewhat thankless task of steering the original VAT legislation through the House. It was made somewhat easier by the fact that we abolished selective
  1138
  employment tax and purchase tax at the same time. None the less, what we devised was a system with a single positive rate and with a zero rating for the most sensitive items. That is a sensible way of proceeding.
  I feel bound to add that, throughout that period, I was advised that that was a sensible way of proceeding by Mr. Cockfield, as he then was, because he was then my senior outside adviser in the Treasury. What a falling off it is ; the arguments that he put forward then were, and remain, convincing. Why he is now going back to double rates and all that sort of rubbish, I cannot imagine. It has been a basic principle of Conservative tax philosophy that one should tax people on their income as appropriate. but then allow them to spend it as they see fit without gross distortions by multiple tax rates and all the sorts of things we got rid of when we abolished purchase tax.
  I hope that the members of the Commission, on reflection, will come to the conclusion that, if it is necessary to harmonise—I do not accept that it is—we should harmonise on a sensible basis, with a zero rating for those items that are most sensitive. The calculation of the VAT contribution is not relevant—it never was—because that has always been on a notional basis that made allowance for the fact that rates and zero ratings were in existence.
  Other hon. Members have spoken about own resources. I do not doubt for one moment the good intentions of the Prime Minister, the Minister of State, Foreign and Commonwealth Office or my hon. Friend the Paymaster General who is to close the debate this evening. I am sure that we all understand the need for effective budgetary discipline, but we also need to recall that, when the House agreed to increase the limit from 1 per cent. of VAT to 1·4 per cent. of VAT, it clearly did so on the understanding that it would be in exchange for effective budgetary discipline. It would be quite absurd if we now agreed to a further increase in own resources to get effective budgetary discipline. We have already paid that price.
  I am sad that my right hon. Friend the Prime Minister was mistaken in her view that, because a number of other countries — Germany in particular, and France — had also become net contributors, that would be the most effective discipline that we could think of. It has not happened and it will not happen now unless we stand firm. It is tremendously important that we should do so.
  I hope that the Minister, when replying to the debate, will clear up the mystery that I raised with the hon. Member for Newham, South (Mr. Spearing) in my intervention. We all know that the 1·4 per cent. of VAT was increased from 1 per cent. of VAT, so why on earth are we talking about 1·4 per cent. of gross national product, except that that is the number that we first thought of—or, more accurately, the number that we last thought of? I cannot see why it should suddenly be 1·4 per cent. of GNP. What is clear is that it will be a massive increase in own resources. After all those various adjustments are made, even if our contributions reflect a sort of refurbished rebate system, the absolute amount will still go up substantially. I have yet to hear why the resources going to the Community should go up. We received no real answer why the proportion went up from 1 per cent. to 1·4 per cent. of VAT. We have a proposal for a huge increase in resources, but we have had no explanation why that should be so.
  I do not think that any hon. Member who took part in the debate on the increase from 1 per cent. to 1·4 per cent.,

  1139
  when we were told that the whole thing would be reviewed by the Commission, thought that it would come up with the sort of extravagant proposal that it has come up with. One can say that it might soon be up to 1·6 or 1·8 per cent. We did not expect an increase of the sort proposed, with a totally different system related to gross national product.
  I fear that my right hon. Friend the Minister of State, Foreign and Commonwealth Office is deluding herself. She said a number of clear things about the fact that what is proposed is not acceptable, but she did not indicate what I believe to be the sensible answer, that there should be no increase at all in own resources. I believe that she is deluding herself in thinking that, because we are making some improvements in agriculture, that somehow represents effective control.
  In such negotiations, the problem is that, if one thinks that one can get a better deal than that first put forward, one thinks that that is success. That is not true. With all the various manoeuvres and devices on the agricultural side—I hope that the Minister will tell me if I am wrong —at the end of the day there is no device for preventing the Community from spending money that it does not have. That has been the constant problem — that one puts a limit on own resources but one does not put a limit on how much the Community can spend because, particularly on agriculture, it is open-ended.
  The detail of the proposals is spelt out in the annex to the Select Committee's report:
  "The agricultural allocation shall be respected each year. However, if the allocation is exceeded in the course of a financial year, the overrun shall be offset by equivalent savings over the following two years."
  We have heard that argument before. If there is an overspend and it is possible to claw it back, why can we not claw back the overspend that we already have? We have not heard how that is to be done. It is interesting that in the next paragraph we find that, if there is an underspend, it does not suddenly come back the other way:
  "If an annual allocation is not fully used, the margin available may be drawn on in a subsequent financial year."
  Whether it is needed or not, it goes into the next year. Frankly, by no stretch of the imagination is that effective financial discipline.
  It is recognised that much of the problem in agriculture results from changes in the exchange rate between the ecu and the dollar. That really means a degree of protection and special treatment for agriculture. However, we do not give that special treatment to the British shoe industry, the soap industry or any other industry. They do not suddenly find special provisions to protect them from changes in the exchange rate. Therefore, why should we say that, whatever happens to the exchange rate, it will affect every industry except agriculture? The Government believe in the market mechanism and the way in which prices reflect events and bring supply and demand into balance. Therefore, it seems to me that the proposal is inconsistent with the philosophy that the Conservative party ought to adopt.
  It will be immensely difficult for my right hon. Friend the Prime Minister to go to the summit and say no as she did at the last summit, subject to some abuse. It is not too difficult to go to that sort of summit, even if one is the only person sticking out for a certain thing, to say no. However, it is difficult, if one is outnumbered, to say no at
  1140
  subsequent summits. The debate is important today because I think that the House must reinforce the Prime Minister in her determination to get effective budgetary discipline, I hope with no increase in own resources, because, as I have already said, we have already paid the price for effective budgetary discipline. We should not be saying that, as a guarantee, there should be yet more resources and a massive increase of the kind put forward in the proposals.
  I hope, therefore, that my right hon. Friend the Prime Minister, having been disappointed by the outcome of the Fontainebleau agreement—which came as no surprise to the Treasury and Civil Service Select Committee, but was a surprise, regrettably, to the Government — will appreciate the lesson that is to be learned and strike the matter at a fundamental level and produce an alternative proposal which will give us effective budgetary discipline without an increase in resources to the Community. That should be balanced against the many other claims on resources in this country which must be met from our financial resources. It is very important to bear that in mind.
  8.40 pm
  Mr. Ron Leighton: It is a great pleasure to follow the right hon. Member for Worthing (Mr. Higgins). The House has been indebted to the work of the Treasury and Civil Service Select Committee over the years, and for the enlightenment that it has given us on many of these complex matters. The sooner that that Select Committee is re-established and able to examine some of the issues that we have debated tonight, the better.
  The Common Market is again in a financial mess, and again in crisis. Once again to use the words of the Scrutiny Committee, it is on the "brink of bankruptcy". The cost of the common agricultural policy has again increased and again yet more money is being demanded from us. So what's new? It was ever thus, except that it has now got worse. The Common Market demands more money every year. That is the nature of the beast. It was predictable and was predicted. I predicted in 1984 at the time of Fontainebleau that this would happen. We all remember the ballyhoo at the time and the great victory that we were told had been achieved and would solve the problem because it would impose budget discipline. Of course, that was not so. Fontainebleau has proved a complete and utter failure in every way.
  The cost of the CAP has gone further out of control. Since Fontainebleau, Britain's net payments position has become worse. We are paying more now; indeed we are paying twice as much this year as we were then. Fontainebleau was an utter disaster. Of course, there was the famous clause which stated that account should be taken of "exceptional, or aberrant circumstances". However, the whole of the EEC is an aberrant circumstance. It was obvious that such circumstances would occur every year, and that has happened. It is in the nature of the CAP that it cannot be controlled. The CAP is demand led and open-ended and no one knows what it will cost each year until the end of that year. It depends on all manner of intangibles—for example, the weather and the strength of the dollar. Previously, when we imported food from the world market, a cheap dollar meant cheap food and we benefited. Now, a cheap dollar increases our costs because it costs us more to dump the food surpluses on the world market.

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  That is a crazy system and very much against the British interest and damaging to us. The truth is—and unless we grasp this simple fact we will never get anywhere—the CAP cannot be reformed ; it can only be scrapped. It is impossible to impose budget discipline on the CAP. People have been chattering for years about that but all to no avail. Each year the costs go up and they are rising again this year. To talk of a thorough reform of CAP is chasing a rainbow and a chimera.
  The Heads of State at Fontainebleau did not understand that. They did not understand that the EEC budget is not really a budget at all. The right hon. Member for Worthing was an excellent Treasury Minister and he will understand that in the United Kingdom the Treasury and the Chancellor decide the Budget and they tell the Departments what they can spend. That is the position with which we are familiar. When we use the word "budget", we understand what we are talking about. However, it is not like that in the EEC. There are several ministerial councils and they, particularly the Council of Agriculture Ministers, decide what they are going to do and spend. All the obligations are laid end to end and the Finance Ministers come along and I understand that they take about 30 minutes or so to agree to foot the bill. What they fancifully call a budget is really an estimate. It is a guess at what it will all cost. So-called "budget discipline" is a meaningless phrase.
  The EEC budget is not a disciplinary measure. Apparently the Heads of State thought that if a figure was included in the budget, that meant something. However, that was in no way legally enforceable. Indeed, it works exactly the other way round in the EEC; it is the intervention payments which are legally enforceable. They are automatic and they take priority. If they are not paid, the producers can take their Ministers to court.
  The Finance Ministers in the EEC are powerless to impose discipline. Often the Finance Ministers have no idea and are not consulted on what the Agriculture Council decides. Their sole role is to pick up the tab on our behalf. The only way to alter that is to scrap the market regulations of the CAP. Every time that that is mentioned, we are told that they are sacrosanct, they are the ark of the covenant and they are what allegedly holds the EEC together. However, unless they are scrapped, we shall never get budget discipline. Of course, we should scrap them.
  Why not scrap intervention altogether? Why should not producers produce for consumers, demand and markets? Why should they produce for something called "intervention"? Why should we not have a healthy dose of market forces? Why should we not have some free trade and not this rigid protection? Recently—
  Sir Russell Johnston: Will the hon. Gentleman give way?
  Mr. Leighton: Not at the moment.
  Recently, in the crisis over the sale of BP, the House had a discussion about underwriters. Controversially the Government have underwritten the underwriters. However, we do that all the time in the CAP. The state underwrites the whole crazy shooting match. Basically, whatever is produced, whether it is needed or not, it is underwritten by the taxpayer. It is not even as if that incredible largesse goes to the farmers. Conservative Members who represent farmers are aware that most
  1142
  farmers are becoming worse off. Some 50 per cent. of the money goes uselessly on storage costs, export subsidies and the depreciation of stocks. Depreciation this year costs 1·5 million ecu. Vast sums are wasted to pay for past stocks while the system piles up even bigger stocks, especially, as we have heard tonight, in cereals. There is no way forward by further chatter about the reform of the CAP. if we do not learn that experience shows us that that has failed, we will not learn anything.
  I believe that if other countries want that system, that is their business. However, if we are serious about ending the appalling waste of our money, we must extricate ourselves from the crazy system and return our agriculture to the jurisdiction of this House.
  It has always been common ground that money which can be better spent at the national level should be spent there. Can anyone claim that the vast amount spent: on agriculture is spent more effectively in the EEC than it could be at home? Can anyone say that we could not devise a better system than the CAP? The only rational policy is to repatriate agriculture to Westminster. That is the only realistic approach if we are serious. All else is doomed to failure and disappointment.
  What is the Government's policy? They say that they will not pay more until effective budget control is established. However, as the right hon. Member for Worthing explained, that is exactly what they told us in 1984. They were kidded that that was going to happen. Therefore, they increased our VAT contribution by 40 per cent. from 1 per cent. to 1·4 per cent. However, although we paid, we did not get what we paid for. We did not get the budget discipline.
  Now we are offering to pay again, but should we pay twice for the same thing—and, I would wager, still not get it? In addition, if the CAP were really reformed, and financial discipline imposed, it would not need extra money. Why encourage the monster by throwing more money at it? That is self-defeating. If we continue to throw more money at it, that will be a guarantee of further slippage and failure. Surely we know that any extra money would simply disappear down the black hole of the CAP. We should not waste an extra penny.
  I turn to what is happening now and to the Commission's proposals in the documents that we are considering. The Commission has performed extraordinary contortions in its attempts to balance the books. The Scrutiny Committee stated:
  "It has sunk into a morass of budgetary malpractices".
  It has indulged in prodigious creative accountancy that would have left a British company or local authority in court. Incidentally, it has incurred the condemnation of the European Court of Auditors. The Commission has invented something called a "negative reserve." It has changed the system of agricultural payments from payments in advance to payments two months in arrears because it ran out of money. The effect of that is to save two months' payments, which means that this year's budget will pay for only 10 months, not for 12. The Commission has postponed until the following year payments to member states for the cost of collecting customs duties. That conjuring trick is a way of taking money from the future.
  The Commission has resorted to regular inter-governmental agreements to raise extra money outside the official budget. That has had the effect of Britain paying partly for its own rebate. By those tricks the Commission

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  has sought to balance the books. It has used methods to which no auditor would have agreed. To pay for this year's excesses the EEC would have needed 1·7 per cent. of VAT and not the 1·4 per cent. that was agreed at Fontainbleau.
  What of the future? The Commission's proposals are outlined in Cmnd. (87)100 and Cmnd. (87)101, the so-called Delors package. The main ingredient is more money, lots more money, and lots more money from Britain. Incidentally, the House should be reminded that at the moment nine countries pay nothing in net terms. It is a funny club in which only three members pay anything and in which we are the second biggest payer, even after our rebates. I studied the Paymaster General's evidence to the House of Lords Select Committee and commend him on it. He is appropriately described as the "paymaster" because he is the paymaster of Europe. We are the second biggest payer. Most countries do not pay anything. However, the Paymaster General went along and coughed up vast amounts of our money. I should like to ask him why we pay anything at all because, after all, we are one of the poorer countries. Why should we not be a net beneficiary like the other nine? But no, according to the documents, lots more money is demanded from Britain.
  Let us consider Cmnd. (87) 101 which proposes not only more money but new taxes. Elements of a country's GDP that are not subject to VAT arc to be taxed. There is also to be another entirely new tax, as yet unspecified. There is to be an end to the 10 per cent. refund which is the cost of collecting duties and levies. The Commission also wants to change the way in which our rebate is calculated. As the Paymaster General knows, the Treasury gave evidence to the House of Lords Select Committee which calculated that that would give us only half of what we get now, so our rebate would be cut in half.
  The next point is most significant and was raised by the right hon. Member for Worthing. The Commission wants to substitute for 1·4 per cent. of VAT 1·4 per cent. of GNP. If one reads that quickly, one might think that it is the same. However, the Minister of State, Foreign and Commonwealth Office told the House of Lords Select Committee that that would be equivalent to 2·25 per cent. of VAT, compared with the present 1·4 per cent. That is an increase of roughly 50 per cent.
  The Treasury also told the House of Lords Select Committee — again I must commend the Paymaster General for the full and frank way in which he answered questions— that the proposed change would leave this country about £900 million worse off. Knowing the Common Market as we do, we know that, with a little slippage, about £1 billion more would be required from this country. That is the proposition before us and that is the amount that the Prime Minister has been asked to pay when she goes to Copenhagen.
  The Minister of State, Department of Trade and Industry has recently explained to the House why he would not commit us to paying another £200 million to the European space project, although we should have got something back from that. He said that that sum of money was equivalent to 12 National Health Service hospitals and that it was as much as we spend on text-books for all our secondary schools. He asked how we could consider spending that £200 million. In that case, what are we to say
  1144
  about this colossal and stupendous sum of £1 billion? We cannot possibly contemplate throwing that money down the drain.
  On agriculture, the Commission documents state that the plans would reduce agricultural spending as a percentage of the budget, not by reducing agricultural spending — that would increase — but by doubling expenditure on everything else. Agriculture is saying, "If all of you race forward faster than I do, it will look as if I am falling back." That is the only way in which there would be a reduction on agriculture spending as a percentage of the budget. I am sure that the Paymaster General would agree that that would be an extremely expensive conjuring trick.
  The only possible attitude that this House and the Government can take is "not a single penny more"—not a single pfennig or centime — nothing. We want a reduction, not an increase. We do not want to pour more money down that black hole. We have had enough and it is time to call a halt. What action will the Government take? We have had posturing and position-taking, but are the Government prepared to take the right action?
  When the Prime Minister returned from the last summit, I caused some consternation on the Opposition Benches by saying that I gave the Prime Minister eight out of 10. I said that she had lost two points. The first was because she had returned from the summit at Fontainebleau saying that she had solved the problem. She had not and she lost a point for that. She lost the second point because, after the initial bluster that we normally get, the Prime Minister usually gives way. She is normally kidded. I said then that the Prime Minister could retrieve that point if she resisted and stuck to what she was saying, and carried out the general views that have been expressed in the House from both Front and Back Benches and said, "Not another penny." I hope that that is what we get. If the Prime Minister comes back having done that, I shall give her 10 out of 10.
  Of course, we want co-operation with the European nations, but we will never get it satisfactorily on the basis of the treaty of Rome. It will have to be changed, but in the interim, at Copenhagen, we must say no to more money for the Common Market.
  8.58 pm
  Mr. Michael Fallon: Opposition speeches in debates on the European Community seem to vary. Some Opposition Members dislike the European Community altogether. Some do not like spending in some areas, but want more in others. They are keen on Community spending on the social and regional funds. A third category of Opposition Members like Community spending, but want to repatriate it. They want the same amount of Community spending to be organised and controlled by Whitehall. A fourth category would like some areas of Community spending to be abolished and given over to market forces. It is perhaps a unique tribute to the hon. Member for Newham, North-East (Mr. Leighton) that he embodies all four elements.
  Debates on the EC are often criticised as being predictable. But they are predictable, by their nature, because they deal with the six-monthly White Papers and are held at odd times during the year. On this occasion, more than 12 months have elapsed since the beginning of the period covered by the first six-monthly White Paper that we are debating tonight. The debates bear no relation

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  to the decision-making processes of the Community. I should like those who are in charge of our procedures— the Scrutiny Committee, for example—to give some more thought to the matter. Perhaps instead of having post facto debates on the six-monthly White Papers we should relate such reviews of Community activities to the European Council and debate what is on the Council agenda. Perhaps we should debate such matters before the Prime Minister and the Foreign Secretary attend European Council meetings. Indeed, we could debate them after the event, just as we debate the Autumn Statement after it has been made. Perhaps we should have these debates on a more fixed agenda.
  The most predictable thing of all is the attitude of the Opposition, which contains the four strands that I mentioned. Conservative Members are entitled to comment on the policy of the Opposition Front Bench. For four or five years we have had to put up with the problem that if the Prime Minister does reasonably well at a European Council, the Opposition say that she has not done well enough. If she does very well, they are still disappointed and will nit-pick with the small print.
  That is how we should consider the speech of the hon. Member for Hamilton (Mr. Robertson). He talked about penny-pinching short-sightedness. Indeed, he entertained us with many such phrases. He did not talk about the internal market and the huge opportunities for our great industrial companies in that market of 300 million people. He used the words "penny-pinching short-sightedness" in terms of European space policy. He said that we should spend more in Geneva — which is outside the Community — on our subscription to a bunch of European scientists.
  I tried to draw the hon. Gentleman's attention to the inconsistency of his amendment. It bemoans the lack of budgetary discipline in the Community, which was a fair point for him to make — indeed, many of my hon. Friends made similar points during the speech of my right hon. Friend the Minister of State, Foreign and Commonwealth Office — but he went on to call for additional Community spending on many different things; joint action on this, that and the other; joint ventures on steel and shipbuilding.
  It is time that the Opposition set out their policy on the European Community budget. It is not enough to say, "We will watch what happens when the Prime Minister goes to Copenhagen." The play is the thing with the Opposition. They are perennial spectators in the Community debate, but they will have to come up with a policy on the Community budget. Either the hon. Member for Hamilton believes— as I suggested he should—that finance determines expenditure, or he believes that expenditure should determine finance. Of course, he believes the former at home when he is arguing in domestic terms and trying to win an election—we noted his visit to Darlington during the general election campaign— but he believes the latter when he is talking about the United States. I feel that it is time the Opposition decided whether they are at home or abroad when it comes to the European Community. Are they playing here, or are they playing away?
  If Opposition Members believe in budgetary discipline in the United States, they should believe in budgetary discipline in the Community. Some of them do. Some of them clearly believe that my right hon. Friend the Prime Minister is right. The hon. Member for Hamilton clearly
  1146
  believes that my right hon. Friend is right to go on fighting her corner and arguing that further resources should not be released until we have effective controls over budget discipline. Other Opposition Members, however, do not believe that. The hon. Gentleman's hon. Friends continue to argue for increased expenditure for social and regional purposes, but he will have to sort that out with them.
  The hon. Gentleman gave us only one indication of Labour's budgetary policy. He implied — in answer, I think, to my intervention—that he was satisfied with the present level of expenditure, but would like to reform the agricultural policy to reallocate some of that expenditure to other areas. If that is not the hon. Gentleman's policy, I hope that he will be given an opportunity to intervene and correct me. He seemed to imply that he was happy with the present ceiling on Community expenditure and simply wanted to reallocate that expenditure.
  Mr. Robertson: If it will help to truncate the hon. Gentleman's speech, which keeps laboriously going over the same ground, let me make it clear that I said nothing of the sort. I am saying that there is plenty of scope within the existing European budget, or with a lower ceiling, to accommodate many desirable developments in the areas that I have identified. That can easily be achieved with the discipline of which we are all in favour, and which I advocated in my speech.
  Mr. Fallon: I take it from the hon. Gentleman's intervention that he wants a lower level of Community expenditure than we have at present, and, therefore, a much lower level than the Commission is proposing. However, he has not told us how he would make it possible to increase expenditure where he wishes to increase it. He has simply uttered the platitude that he wants the agricultural policy to be reformed. He has not said whether he is prepared to support the various policies for which we have been arguing with the Commission, and now with some of the other member states—not all of them led by Centre-right Governments—for continuing restraints on price, for stabilisers in areas that are subject to over-production and for further measures to take agricultural land out of production altogether. The hon. Gentleman has given us no indication of the extent to which he supports Her Majesty's Government in the achievement of those policies.
  There will be a final speech from the Opposition Front Bench. The Opposition spokesman will therefore have an opportunity to set out that budget policy and to explain exactly what savings will be necessary, under all the necessary budgetary headings, to reduce the present level of Community spending. That would he a service to the House if the hon. Member for Hamilton is to continue to contribute the same old line in these European Community debates.
  Let me refer briefly to a second aspect — the opportunities presented by the creation of the internal market. These are points, not for the Opposition Front Bench, but for my hon. Friends. I congratulate my right hon. Friends the Foreign Secretary and the Minister of State, Foreign and Commonwealth Office on the awareness campaign that is being launched next year, but the more that we enjoin British industry to wake up to the nearness of the opportunity of a single large internal European market, the more there is an obligation on the

  1147
  Government to continue to deal with the structural problems of the state sector — the other side of the European market.
  First, there is an obligation to continue to make competition policy at European level increasingly compatible with competition policy at domestic level. It is not enough to say that partitions within the Community market are being dismantled. Equally, it is not enough to say that one can go to the courts, because the courts of the member states award differing amounts in damages for infractions of the internal market and apply different procedures.
  Secondly, it is not enough to reach an agreement on the transparency of financial relations. For example, there are the various subsidies that member states give to the shipbuilding and steel industries. We must ensure that there is more than transparency. There must be an agreement between member states equally to reduce these subsidies.
  Finally, as our privatisation programme proceeds well ahead of those of the other member states, various derogations from the treaty, in telecommunications, transport and energy, begin to be ended. With the opening up of the internal market, competition policy in the three areas to which I have referred must begin to be applied as fully in the member states that have not yet privatised as it is in those that have.
  9.12 pm
  Mr. Bob Cryer: I listened to the Minister of State's speech with a good deal of interest. She gave the impression that she was living in a fairy-tale world. She talked, as her fellow Ministers have done in the past, about the new budgetary discipline of the Common Market. The last attempt at budgetary discipline failed completely and the Common Market finds itself in yet another crisis. That is why it is asking for more money. Why should we believe on this occasion that there will be budgetary discipline? The Common Market wants more money and the Minister has given us no evidence that there has been real and radical change. Her speech consisted of empty platitudes.
  We know that the storehouses are full of food and becoming ever fuller, but the Minister claimed that their intake is slowing down. The hon. Member for Southend, East (Mr. Taylor) explained that the greatest cause of the "disappearance" of food is its destruction or its dumping in various parts of the Third world instead of being directed to the storehouses.
  It has been said that quotas represent development in the dairy industry. However, with the introduction of quotas, butter stocks in the United Kingdom increased from 205,208 tonnes in January 1986 to 252,289 in December 1986. During the quota period, there was an increase of 50,000 tonnes over 12 months in the United Kingdom alone. If the Commission is anxious to demonstrate that it is well disciplined, it is reasonable to expect that it will make strenuous efforts to get rid of food stocks, especially when there has been an outcry throughout the world in response to the obscenity of the Common Market having massive food stocks.
  Throughout the year, the EEC has on average a stock of 10 million tonnes of cereals, and it would be possible to dispose of at least a proportion of those cereals to
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  various areas of the world where people are starving in their thousands. Ethiopia is only one example. Instead, the Commission buys cereals on the open market, although there are suitable cereals in store throughout the Common Market for this purpose, for conveying to the starving of the world. This is an absurdity. The Commission has not demonstrated its competence in pursuing such a policy.
  The Commission has no plans for phasing out stocks. I ask the Minister to tell us how long it will be before we see the disappearance of the 218,000 tonnes of butter in intervention stores in the United Kingdom, as at 30 June. How long will it be before the 13,000 tonnes of skimmed milk powder, the 57,000 tonnes of beef and the 2,266,209 tonnes of cereal, which were all in stock in the United Kingdom, disappear? Perhaps the Minister will tell us how long, during this period of discipline, it will take for the 23,000-tonne tobacco mountain that it has managed to acquire to be phased out. We know that these stocks might vary by 1 or 2 per cent., but they are an integral part of the common agricultural policy.
  The Minister described the internal market as a new step forward. The Common Market represents only a small proportion of Europe. It is misleading and mischievous for people to keep referring to Europe as though it is the Common Market. It is arrogant to suppose that countries that are not in the Common Market do not have a valid life and identity of their own.
  Around the Common Market and the internal market, which is so supported by the Minister, a barrier will cut us off from countries in Europe that are not members of the Community. As one of the documents points out, the European free trade area has managed to reach a trading agreement with the Common Market, so there is life outside the Common Market. The commonly propagated notion that trading relations would be impossible if we were to withdraw from the Common Market is denied by evidence in a Government document.
  I maintain that membership of the Common Market has been a burden and a millstone around our neck. It has cost us hundreds of thousands of jobs. The internal market will not increase safety from terrorism, the shifting trade in arms or the increase in drug trafficking. Surely it makes sense to have half a dozen barriers to scrutinise potential drug trafficking rather than one single barrier over which a drug smuggler can leap to achieve complete freedom of movement within the 12 member states.
  Rabies and other diseases were mentioned. Once the internal market is complete—which will allegedly be by 1992, although mercifully that seems doubtful — a certificate will accompany an animal saying that it is rabies-free, and that will have to be accepted. As to the scrutiny of live animals that are exported for slaughter —a matter of great concern—we have heard assurance after assurance in the House about scrutiny, but time after time the RSPCA has demonstrated that no standards are adopted universally throughout the Common Market. If the customs barriers are removed, where will the checks and examinations take place? It is an illusion that the drive towards the internal market will not be accompanied by harmonisation of VAT. It will be so accompanied, and the Minister knows that full well.
  As to our membership of the Common Market, we have a £10 million deficit in manufactured goods. How do the Government explain that away? What will they do to

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  remedy that imbalance, which in the Government's term of office has cost us about 2 million jobs in manufacturing industry?
  Labour Members have been talking about getting money back from the Common Market. It is crazy for us to be continuing supplicants when our local authorities spend thousands of pounds on going to Brussels to plead with the Commission to get some of our money back. Since 1984, our net contribution has been £4·4 billion. I should have thought that that was a very important sum, but apparently the Euro-fanatics do not mind spending such an amount of money.
  The hon. Member for Esher (Mr. Taylor) graphically demonstrated that point. He does not mind all sorts of money going to the Common Market. He said that we should have a greater vision and spend even more money. Yet the self-same hon. Member would attempt to batten down the local authorities that are seeking money because they are starved of resources to provide housing facilities for the mentally handicapped, social services, and a whole range of other services that local authorities provide. They are being denied that money. Over the past three years, we have spent £4·4 billion on mostly propping up the Common Market and the bureaucracy that goes with it.
  As several of my hon. Friends have clearly and graphically pointed out, the proposals mean a massive increase in our contribution to the Common Market. Year after year, they have been fiddling the budget. The Common Market is running out of money, and it is now coming back to us for a massive increase in own resources to prop up the miserable millstone around our neck. It is time that we clearly said no. I fear that the Prime Minister will not do that.
  9.20 pm
  Mr. Stuart Holland: I congratulate the hon. Member for Skipton and Ripon (Mr. Curry) on a felicitous maiden speech. It reflected the fact that he has been the Conservative spokesman in the European Parliament, especially in terms of its philosophy of standing on one's own feet and relying on the internal market, but being cautious about exchange rates. I may have time or occasion to refer to some of those points later.
  I am glad to dissociate myself and Opposition Members from the arguments of the right hon. Member for Strangford (Mr. Taylor). My hon. Friend the Member for Hamilton (Mr. Robertson) has just closed "Dod's Parliamentary Companion". It may be worth referring to it, because the listed interests of the right hon. Member for Strangford are extensive. It states that his special interests are:
  "Irish Politics, EEC, Regional and Agricultural Policies, Turkey, Cyprus, Asia and Gibraltar."
  We got the lot in one speech tonight. As for his would-be welcome for Turkey as a member of the European Community—I am not sure whether this comes in the European rather than the Asian part of his interests—he would open a revolving door. Any self-respecting Government in Greece would be likely to leave the Community on that occasion, but let us leave that point for the time being.
  As for the hon. Member for Darlington (Mr. Fallon), it is amazing that in any other respect Conservative Members condemn trying to solve problems by spending public money, yet when it comes to the EEC and the Community budget they not only throw money at the
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  problems, but are prepared to pile it high. The essence of the answer that he wants is economic growth in the European Community. He is quite able to grasp and accept the point that we need growth in the Community as a whole and in Community GDP. We shall need at least an additional one point of GDP in next two years, rising to a 2·5 per cent. increase in GDP growth in the Community in the early 1990s just to offset a world recession and its effects on trade if there is a cut in the United States budget deficit. If we had such growth, any share less than 1·4 per cent. of GDP would mean an increase in real resources. That is the key point.
  That is the budget that we need — not simply a budget that is spent by the Commission, but a budget that is jointly spent by member Governments in the Community so that we can counter the deepening recession in the world economy, preserve jobs and defend and extend employment. The overall world economic situation is severe, not only in United States' budget terms, but in wealth-effect terms — lower spending, slower growth and, if we are not careful, beggar-my-neighbour deflation of trade, with increased pressure for protection.
  Mr. Graham Riddick (Come Valley): Will the hon. Gentleman dissociate himself from the comments of the hon. Member for Newham, North-East (Mr. Leighton), who clearly believes in market forces determining how resources should be spread throughout Europe? The hon. Gentleman argued that market forces should determine how agricultural resources are spread. Should that apply also to steel, coal, the motor car industry and other industries?
  Mr. Holland: It is my eternal loss that I was not in the Chamber during the few moments in which my hon. Friend the Member for Newham, North-East (Mr. Leighton) spoke. When I want to learn his views on the market versus intervention, I shall gain them from him rather than from the Member for Colne Valley (Mr. Riddick).
  The plain facts are these:
  "the Community has sunk into a morass of budgetary malpractices needed to conceal or postpone the real financial implications of Community policies. Thus, the budgetary effect of the unprecedented build up of agricultural stocks has been disguised by gross over-valuation of the stocks; actual budgetary deficits have been carried forward and only covered belatedly by ad hoc solutions; and Community commitments have been allowed to accumulate without proper financial provision".
  That view, which is our view, was expressed in those terms by the Commission itself. That shows how dire is the present financial crisis in the Community.
  Knee-deep as it is in the mud of the common agricultural policy, there are those who think that the Community can be freed at one bound, and that bound is towards the internal market. On what reasoning and on what economic rationale is that argument based? We know the old argument for the internal market in terms of internal economies of scale and increased efficiency, but that was bypassed years ago. It was the argument of the 1950s. It cannot be the argument of the 1980s and 1990s. Those who argue for recourse to the internal market should tell that to the Japanese, with 75 million consumers. What does the internal market mean to them? The whole world is their market, both by sales over tariffs and by

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  foreign direct investment behind tariffs. We do not need a single internal market in the Community to achieve efficiency.
  In the argument about whether we need to harmonise VAT rates in different countries, it seems to have been overlooked that the United States, which is a vast internal market—no one has claimed that the United States has blocked entrepreneurship, efficiency or initiative — has different local state taxes. It does not have harmonised rates. It even has different corporation taxes, which is why Delaware can boom despite the fact that it has no natural advantages to help it to compete with stronger areas. There is a case for a differentiated fiscal policy as a stimulus to attract industry to various regions. The case for harmonising VAT alone is not adequate.
  The argument about economies of scale has been rendered completely outdated by flexible automation. One used to need massive plant—the old Fordist model—to achieve economies of scale. That is not the case any more. Flexible automation and computer-aided production have made entry to markets much easier in technical terms. However, in market terms, that entry is blocked by big business, and it is blocked for the small firm in the European Community as much as it is anywhere else.
  I was very amused when the Minister opened the debate by saying that the internal markets would result in
  "more jobs … the opportunities will not just be for a few companies or in a few sectors."
  I was very entertained by that. Is it really the case? On what basis? The reality is that the share of the top 100 European companies in the EEC Ten — before the accession of Spain and Portugal — increased from just over a fifth to one third of the Community's gross domestic product from 1963. Big business has been winning in the competition stakes in the European Community.
  The Minister said that we were talking not just about "a few companies". In fact, the top companies are doing very well. It may be of interest to the Minister, if not to the House, to recognise that the share of Community gross domestic product now commanded by 10 firms — I repeat, just 10 firms—is equal to the entire agricultural output of the European Community. We pay a lot of attention to agriculture. Why, then, do we not pay attention to the fact that the internal market increases concentration, centralisation, unequal competition and barriers to entry to the small firms that are supposed to flourish in such larger market areas? The Minister's claim that not just a few companies will benefit is contradicted by the facts.
  The right hon. Lady says that there will be more jobs. Let us consider what the big firms have done on jobs since 1969. [Interruption.] The Minister says that there will be more jobs in the future — the future then will be a contradiction of the past — and there will be a great qualitative change in the internal market, reducing the minuscule barriers to the free movement of goods which serve some social purpose. But there will be no such change. Concentration and centralisation will continue apace. The weak will go to the wall and the big will benefit.
  Let us consider jobs. Since 1969 the profits of the top 100 companies now accounting for so major a share of community GDP have gone up by nearly three and a half times, by 340 per cent., but their employment has gone up
  1152
  by only 16 per cent. It is clear what will benefit from the internal market. It will be the profit rating of bigger business, not the creation of jobs.
  On the internal market, I was sorry not to hear the Minister refer to the transparency provision in the Community, which is covered in articles 85 and 86 of the Rome treaty. We want more transparency. Data such as I have just cited are not published by the European Community. If we were to put together the studies of the Commission's competition division, they would cover the Floor of the House. But the competition division gets information at national, not at Community, level, so companies such as IBM are counted 12 times in the concentration studies of the Community. The figures that I have given are the result of assiduous private academic research and not of the Commission's publication.
  I hope that the Paymaster General will be able to assure us that the Government are concerned about competition and transparency and that they would welcome the sponsorship by the Commission of studies on the share of big business in the Community and what it is doing. For inasmuch as the profits of big business are high, its industrial investment is not high. We do not have evidence that those profits are being translated into innovative, pace-making investment of the kind that has made Japan a world leader.
  There is no joint European industrial strategy. It has been blocked since 1967 by the Commission. For example, the French were concerned, and the President was very concerned, that there were double taxation penalties on mergers of companies in the European market. The French proposed to the Commission that the double penalties should be suspended — an obvious commonsense pragmatic measure. The Commission, with its federalist vision of the world, said, "Thanks for telling us that you would like European mergers to compete with American and other firms, but the tax must be paid to Brussels and not to your national treasuries." Since the Government had been losing tax in the first place by paying double tax on mergers, this was hardly attractive to the French.
  So instead of pragmatic, international joint action for new industrial initiatives, we got a federalist fantasy which has meant that since 1967 not only does the Community not have a common industrial policy, or CIP, to match the CAP, but it has not even managed to define a common industrial statute. We know the fate of the Vredeling proposals for more openness and more transparency. What has happened is that on the lowest common denominator basis of Community decision-making those have fallen off the edge of the table.
  Let us take the question of the Community budget. To get a European industrial strategy and joint ventures in Europe the Community should not only be spending its own budget; we also need an expansion of budgets by member states through their own industrial policies. The Community has a role to play by sponsoring such interfaces and making it possible by doing its own studies in research and its own input. But it is only on an international basis that such joint ventures will occur, as they have already occurred between Japanese and European firms.
  The same applies to the Europe of the regions. Spending money is not the only way to get resources into the regions. Some of us, including myself, some 20 years ago studied regional policy in the Community. We found

  1153
  that regional incentives did not sufficiently attract firms to southern Italy or northern England. We got that evidence again from the Select Committee on Expenditure in 1972. Firms went to those areas if they needed more labour, and now they do not need more labour because unemployment is high. In Europe we need a networking of the regional, public enterprise agencies, such as we have in this country in the Greater London enterprise board, the West Midlands enterprise board and the Lancashire enterprise board.
  I recently attended a conference in Catalonia of 150 people, including local authority officials, concerned with such networking of regional enterprises in Emiglia Romagna, the German Länder, the British regions and Greece. This is a Europe of the regions, built by the people in the regions with public money guaranteeing their share of investment in joint ventures on a regional basis, rather than all their money being spent by Brussels. We do not have to go to Community level to network for a new Europe of the regions. The funds do not have to go to the top—to Brussels—to come down again. It can be done at the base, provided that we change the way in which we think about the Community and do not always try to pass all spending through the eye of the needle in Brussels.
  The same applies to agriculture. We have been talking tonight about production quotas to limit budget spending on agriculture. There is an alternative, which is called bringing prices down. We can afford to bring prices down. When the treaty of Rome was signed in 1957, one quarter of the Community's working population were engaged in agriculture. It is now less than 10 per cent. and, for the Community of 10, it is now about 7·5 per cent. so a major rural constituency has changed to an overwhelmingly urban constituency.
  We should bring prices down. It is possible to combine the best of price reduction with deficiency payments systems and quotas, but that should be done for smaller firms and for peasant farmers, especially when the average age of farmers is 55 years or more. There is a strong case for the social and regional funds supporting such agriculture within certain production limits on environmental and social grounds, but we now have major agriculture combines, as reflected in the concentration figures that I gave earlier. From those figures, we can see the dominance of agribusinesses in the Community, making monopoly profits out of the CAP. They are ripping off the consumer, and the Community should deal with them. We need not spend another penny on the food budget if we bring prices down.
  In one of its background documents the Community admits that it has failed to provide the proper financial depreciation of the book value of stocks and that it is in dire distress in terms of budget spending. Community document 87 (101) Final states:
  "all these factors imply that the Community must engage itself in medium term planning and more effective management. Planning is needed to obtain the desired level of management of expenditure policy, because management does not make sense without medium term policy objectives".
  Opposition Members agree with that. The Community needs planning for expenditure on agriculture, industry and the regions and to expand jobs. The Community needs to follow what was well established in 1964 by the then Vice-President Robert Marjolin. As Vice-President of the Community, he set up the medium-term economic committee. There was no reference to it in the treaty of
  1154
  Rome. I once asked Marjolin what justification he got for it in the treaty of Rome. He replied that he could not remember and said, "We looked around for a while and found some clause which more or less fitted at the time."
  There is a supra-nationalist vision that integration goes through various stages of a free trade area, a customs union, an internal market or the common market, economic union, monetary union —God knows this is not five steps on stairs. It is a downward running escalator and we are going backwards rather than forwards. If so, why do we not get back to where Marjolin was and set up that very pragmatic, medium-term economic policy committee as a powerhouse inside the Community, so that we are not simply reliant on Community summits? Heaven knows that much is wrong with Community summits. It is well known that summiteers are glad to be seen going to the top for a photo call. They get photographed, make their statements, come down and nothing has changed since they went up. That is what is wrong with the kind of photo call summitry that is presently taking place in the Community.
  If we restored the medium-term economic policy committee on the Marjolin basis, we could have decision-making that did not have to be majority or minority because it aimed for a consensus on the recovery of mutual spending, trade and beneficial policies that affected those in the less-developed regions as well as those in the declining areas. What is wrong with majority voting in the Community is that, so long as it binds the minority, the Community will always move at the pace of the slowest. So long as the Community must be unanimous or bind the minority, little progress will be made.
  We need a new kind of majority voting, whereby if certain countries want to go for expansion they should do so and be aided by the Community, but if others do not want to they do not have to go along, although they would benefit from the recovery programme anyway. We need to co-operate rather than integrate policies. With a deepening international economic crisis, such co-operation rather than integration should now be on the Government's agenda.
  9.40 pm
  The Paymaster General (Mr. Peter Brooke): There are maiden speeches to which one looks forward because of the ability of the hon. Member to speak to the subject for which he patiently waits; that was the case with the maiden speech of my hon. Friend the Member for Skipton and Ripon (Mr. Curry). He spoke with charm, vigour, relevance and knowledge—all four characteristics which are of a particular utility and advantage to our debates on these matters and are not always universal in them. I welcome the hon. Member for Vauxhall (Mr. Holland) to the Dispatch Box and I look forward to meeting him on future occasions.
  This has been a good debate, at times fiercely argued, but always interesting and closely reasoned. The Government's broad approach to the future financing negotiations is well known. We are clear that there must be agreement on effective budget discipline on agricultural and other expenditure before the question a raising the own resources ceiling can be addressed sensibly. We continue to hope that Heads of Government will be able to reach a satisfactory agreement at Copenhagen in December. Some progress has already been made in the preparatory discussions, but much remains to be done.

  1155
  The hon. Member for Hamilton (Mr. Robertson) spoke of my right hon. Friend in terms of the froth of synthetic outrage. I must say that there is an aphorism about glasshouses that applies to those remarks coming from that hon. Gentleman's lips. He referred to a temporary bandaged package of fudges, and that seemed to me to be an eloquent account of Labour party policy on a wide variety of subjects. He said that, in future, Government policy would be subject to microscopic examination. That will be a change with regard to these matters because, prior to the election, the Labour party took no interest in them. It may be that the arrival of the hon. Member for Vauxhall has stimulated competition on the Opposition Front Bench.
  The hon. Member for Hamilton said that this is a gloomy time for the European Commission. I must tell him that, in every report that the Commission has issued on economic matters this year, it has revised upwards the economic growth of this country — although I acknowledge it has revised downwards the economic growth of the Community as a whole.
  The hon. Member for Hamilton asked about the discrepancy between the £700 million quoted by my right hon. Friend and the £800 million to £900 million that I quoted in evidence to the House of Lords. Taken altogether we estimate that the proposals put forward by the Commission could increase our net contribution by some £800 million to £900 million, at today's prices, in 1992 alone. The extra cost of the new correction mechanism and structural own resources would be between £600 million and £700 million. The increase in the size of the budget would account for the rest.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) introduced UNESCO, which has nothing to do with this debate, although I realise it is the cathedral of the Liberal party. The hon. Member for Hamilton made a reference—as does the amendment—to space. He introduced the European Space Agency, but it is neither a project nor an institution of the European Community. I hasten to say that we on the Conservative Benches will continue to be interested in value for money from public expenditure.
  The hon. Member for Hamilton raised a series of matters relating to the harmonisation of VAT. However, the microscopic examination that he has promised did not lead to his understanding the cases before the European Court, whereas my hon. Friend the Member for Southend, East (Mr. Taylor) rightly said that no veto can be applied.
  The hon. Member for Hamilton also raised the issue of excise duties. The Commission's proposals were made available in August 1987; they were presented by Lord Cockfield to the ECOFIN Council earlier this week. We have fundamental difficulties with the Commission's approach. We have misgivings about the implications of its excise duty proposals and we shall be ready to enter discussions with our Community partners about the role of appropriate tax measures in the completion of the internal market. We are not alone in finding difficulties in those proposals. The hon. Gentlemen said that the United Kingdom rebate should be protected. One would not think from his words that that rebate had been secured by this Government, and not by a Labour Government.
  My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) spoke about the Government's good record
  1156
  in keeping pressure on the budget to the forefront. However, he expressed distress about the rebate. The deterioration in the figures relating to our contributions, to which some of my hon. Friends referred, seems to be a justification for us to maintain our emphasis upon it. I agree with the emphasis on 1992. Hon. Members will be aware of the new steps being taken by my right hon. Friend the Secretary of State for Trade and Industry to alert the country to these issues.
  The right hon. Member for Glasgow, Govan (Mr. Milian) asked me three specific questions about shipbuilding. The first was about the limits on aid, and possible cuts in the aid ceiling below 28 per cent. The aid ceiling is subject to annual review, and the negotations about next year's ceiling have not begun. The Government are considering our position, but we shall resist any attempt to reduce the ceiling below 28 per cent. The right hon. Gentleman asked about Brittany Ferries, and the French bid. The Commission has not completed its investigation, but we shall continue to press vigorously for the matter to be taken up, and we will keep the House informed. I shall do as was suggested, and draw the attention of my hon. Friend the Under-Secretary of Trade and Industry to the right hon. Gentleman's comments.
  As to the programme for shipbuilding areas that are in decline, negotiations are currently taking place at Brussels about a Community programme, under the regional fund, for areas affected by the decline in shipbuilding. It is now called "Renaval". The regions of the United Kingdom affected by the restructuring of the shipbuilding industry can expect to benefit considerably from that programme.
  My hon. Friend the Member for Skipton and Ripon asked specific questions about the United Kingdom abatement. I am glad that he supports the Government's line that the Commission's proposal is unacceptable. He suggested financing the abatement outside the own resources ceiling. That would have the advantage of avoiding the fluctuations, currently caused by the abatement, in the money available for spending programmes. We would welcome that sensible improvement.
  We accept the need to provide Community help for poorer regions. However, we must distinguish Spain and Portugal, and countries such as Greece and Ireland which already receive massive handouts from the Community. In 1986 Greece's receipts from the Community were 4·8 per cent. of GNP, and Ireland's were 7·1 per cent. The United Kingdom's receipts were only 0·7 per cent. of GNP.
  Mr. Budgen: Will the Minister give way?
  Mr. Brooke: No; I have too much to get through.
  The hon. Member for Inverness, Nairn and Lochaber balanced discipline and resources. He was longer on asservation than he was on tactical counsel. His speech was in the general Liberal tradition of running with the hounds and apologising to the hare when they caught up. He asked a specific question about ham imports. We have rigorous controls on the commercial import of meat and meat products as part of our policy of avoiding the introduction of diseases. The changes to the so-called personal concessions for the import of meat products simplify the rules and help to avoid the inadvertent introduction of serious diseases. Only fully-cooked products and those in cans or hermetically sealed containers up to a total of 1 kg can be brought in.

  1157
  The hon. Gentleman described the Liberal vision of Europe and demonstrated his weight of effort in its pursuit by confessing that he did not have the stamina to answer the questions from my hon. Friend the Member for Southend, East, a process which I greatly enjoy. The hon. Gentleman's stamina on behalf of Europe quite clearly was not equal to that of my hon. Friend.
  I welcome the new voice of my hon. Friend the Member for Esher (Mr. Taylor) in our debate. He made a thoughtful speech, which will bear further study. He remarked on the absolute size of our contributions and said that the budget was not that large. The Government must be concerned about the size of the budget. Our net payments to Community institutions this year are expected to be £1·4 billion, as my hon. Friend the Member for Southend. East said. That is not a negligible sum. There must also be continuing concern about waste.
  The hon. Member for Newham, South (Mr. Spearing) asked me several questions about the United Kingdom abatement. If I understood him correctly, he drew attention to the fact that the Commission's proposal would compensate the United Kingdom only in respect of its net budgetary burden on agriculture spending. That is one of the unsatisfactory aspects of the Commission's proposals. Our net contribution before abatement is high, and it is right that we should continue to be compensated in respect of our burden on all spending allocated to member states. The proposed compensation rate of 50 per cent. is unacceptable, and we shall insist that any change to the Fontainebleau abatement is for the better.
  The hon. Gentleman also asked whether unanimity is needed on changes to the abatement or the ceiling. The answer is that it is needed on both. The abatement mechanism, the system of own resources and the ceiling are all contained in the own resources decision, which has treaty status and can be amended only after unanimous agreement of the Council and subsequent approval by national Parliaments, including, of course, the House.
  The hon. Gentleman asked about the figure of 1·4 per cent. of GNP. That seemed to be a question for the Commission rather than for me, but I shall come back to it in the context of my remarks about the speech by my right hon. Friend the Member for Worthing (Mr. Higgins).
  The hon. Member for Newham, South attributed to his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) attention to certain aspects of Lord Cockfield's package. That is intruding on private grief, in terms of the right hon. Gentleman's leadership of the Labour party's tax campaign during the election, but I shall not dwell on that subject.
  My hon. Friend the Member for Southend, East said that unemployment was high in Europe. The major reason why unemployment levels in Europe have remained stubbornly higher than in the United States or Japan is that the European market, unlike the other major trading blocs, is not yet a single unified market with all the economic advantages and economies of scale that such a market brings. The Government support the internal market because it will be good for jobs in this country and, indeed, throughout the Community. I acknowledge my hon. Friend's remarks about the trade balance, but the changes in our trade with the Community are more or less in line with the changes in our trade with the rest of the world.
  1158
  My hon. Friend asked me a specific question about exceptional circumstances. In our view, the guideline limit must be an effective constrant on expenditure. We are not convinced of the necessity for provision to be made for exceptional circumstances. There is a serious danger that such a provision, unless it is tightly defined, would undermine the budget discipline agreement.
  I cannot predict what precise conclusion the European Council will reach on that or any other matter, but I assure my hon. Friend that the Government would much prefer to have no exceptional circumstances clause. We shall not settle for anything that we regard as unsatisfactory.
  My hon. Friend asked about butter stocks arid the Court of Auditors. I share his respect for that court. We have discussed that subject before in parliamentary questions. The Government believe that in that instance the Community was right to regard it as an exceptional circumstance, as a basis for its agreement.
  My hon. Friend criticised the fact that we were using stabilisers as a new solution to the agriculture problem. The Commission joins us in proposing stabilisers. The evidence so far is that they are working. With regard to general agriculture expenditure, I cannot improve on the words of my right hon. Friend the Prime Minister at the Lord Mayor's banquet earlier this week:
  "Agriculture cannot be a no-go area for common sense, where the laws of supply and demand cease to apply."
  Effective control of agricultural spending in Europe is vital to the future of the Community, allied to a drive to ensure that agricultural subsidies throughout the developed world are reduced. We are determined to achieve that end.
  My hon. Friend asked me some questions about the VAT court cases. In the words of Queen Victoria during the Boer war, we do not believe in the possibility of defeat. However, given that we live in an uncertain world, if the court came down against us on the matter on which the hon. Member for Hamilton believes that we can exercise a veto—my hon. Friend the Member for Southend, East knows better—we would honour the treaty, study the judgment and frame our next actions accordingly. However, at present that is a wholly hypothetical result, as we have long had every intention of winning.
  My hon. Friend specifically asked me whether the matter could be taken further by the court. The current infraction proceedings concern the interpretation of existing VAT law, and are therefore quite separate from our obligations under the Single European Act. The challenge relates only to a small proportion of total zero rating, which the Commission maintains is not for clearly defined social purposes and the benefit of the final consumer. The Commission would be hard put to challenge on such grounds our zero rates for food and gas and electricity and so on supplied to domestic consumers.
  The right hon. Member for Strangford (Mr. Taylor) raised the issue of shipbuilding, to which I have already responded. He was complimentary to my right hon. Friend the Member for Wallasey (Mrs. Chalker). He also raised the issue of the tax on oils and fats. In the spring, we opposed the Commission's proposals for such a tax, and we would oppose any new proposal for one. The United Kingdom has suggested that a better alternative for restraining expenditure in this sector is a flat-rate aid, subject to a maximum guaranteed quantity of production.
  The right hon. Member for Strangford is, of course, familiar with the islands of Cyprus and Ireland. The

  1159
  protocol on the customs union between the Community and Cyprus was signed on 19 October. It is an integral part of the association agreement, article 5 of which rules out discrimination between nationals or companies of Cyprus. Upon signature, the Danish presidency reaffirmed that the protocol will apply to the whole population of Cyprus.
  Thanks to my right hon. Friend the Minister of Agriculture, Fisheries and Food, the United Kingdom— including Northern Ireland — has done better in the current year on MCAs than has Ireland, notably in beef. The Government took up with the Commission the border issue to which the right hon. Gentleman referred. It has now taken the first steps to bringing legal proceedings against the Irish Government, on the grounds that their unilateral measure is incompatible with European Community law. If the right hon. Gentleman will excuse me, I shall deal with the matter of Gibraltar outside the debate.
  Finally, the issue of the 1·4 per cent. and the GNP definition was raised. That is really a question for the Commission rather than the Government, but, contrary to the views of the right hon. Member for Strangford, a GNP basis would be more favourable to Britain than the present VAT method, because of our relative shares of GNP and VAT.
  I can tell my right hon. Friend the Member for Worthing that I could advance a whole series of reasons why the Commission might want to change the ceiling—but those are questions for the Commission and not for us.
  Mr. Higgins: There must be some reason why it chose the figure of 1·4 per cent.
  Mr. Brooke: The simple answer is that the Commission has produced a five-year spending plan, including a doubling of expenditure on the structural funds, and argues that own resources of 1·4 per cent. of GNP are required to finance that. That is not a good argument ; the Commission's detailed plans need only 1·3 per cent.
  I can tell the hon. Member for Bradford, South (Mr. Cryer) that the stocks—on an August to September, year-to-year basis—are now falling and are lower than they were a year ago. As regards his question about rabies, the agreements that have already been reached allow the Government to maintain their own controls in these areas.
  The hon. Member for Vauxhall discussed various aspects of the internal market. As far as the British Government are concerned, the areas identified by the Brussels Council as immediate priorities are public purchasing, insurance, liberalisation of capital movements, freedom of establishment for the professions, and progress on technical harmonisation and standards.
  We have heard pleas from all parts of the House for the interests of British taxpayers and consumers to be adequately protected. The Government will defend those interests and in that spirit I ask all hon. Members to support the motion and to reject the Opposition amendment, which, in several parts, is irrelevant to the debate or a travesty or both.
  Question put, That the amendment be made :—
  The House divided: Ayes 157, Noes 233.

  Division No. 74]

  [10 pm

  AYES

  Abbott, Ms Diane

  Allen, Graham

  Adams, Allen (Paisley N)

  Archer, Rt Hon Peter

  1160

  Armstrong, Ms Hilary

  Hughes, Robert (Aberdeen N)

  Ashdown, Paddy

  Illsley, Eric

  Banks, Tony (Newham NW)

  Ingram, Adam

  Barnes, Harry (Derbyshire NE)

  Johnston, Sir Russell

  Barnes, Mrs Rosie (Greenwich)

  Jones, Martyn (Clwyd S W)

  Barron, Kevin

  Kaufman, Rt Hon Gerald

  Battle, John

  Kilfedder, James

  Beckett, Margaret

  Kirkwood, Archy

  Beith, A. J.

  Lamond, James

  Benn, Rt Hon Tony

  Leadbitter, Ted

  Bennett, A. F. (D'nt'n & R'dish)

  Leighton, Ron

  Bermingham, Gerald

  Litherland, Robert

  Bidwell, Sydney

  Livingstone, Ken

  Boateng, Paul

  Livsey, Richard

  Boyes, Roland

  Lloyd, Tony (Stretford)

  Bradley, Keith

  Loyden, Eddie

  Bray, Dr Jeremy

  McAllion, John

  Brown, Gordon (D'mline E)

  McAvoy, Tom

  Brown, Nicholas (Newcastle E)

  McCartney, Ian

  Bruce, Malcolm (Gordon)

  Macdonald, Calum

  Buchan, Norman

  McFall, John

  Buckley, George

  McKelvey, William

  Caborn, Richard

  McLeish, Henry

  Callaghan, Jim

  McWilliam, John

  Campbell, Menzies (Fife NE)

  Madden, Max

  Canavan, Dennis

  Mahon, Mrs Alice

  Carlile, Alex (Mont'g)

  Martin, Michael (Springburn)

  Clark, Dr David (S Shields)

  Martlew, Eric

  Clarke, Tom (Monklands W)

  Maxton, John

  Clay, Bob

  Meale, Alan

  Clwyd, Mrs Ann

  Michie, Bill (Sheffield Heeley)

  Coleman, Donald

  Millan, Rt Hon Bruce

  Cook, Frank (Stockton N)

  Moonie, Dr Lewis

  Cook, Robin (Livingston)

  Morgan, Rhodri

  Corbett, Robin

  Morley, Elliott

  Corbyn, Jeremy

  Morris, Rt Hon J (Aberavon)

  Cousins, Jim

  Mowlam, Mrs Marjorie

  Crowther, Stan

  Mullin, Chris

  Cryer, Bob

  Murphy. Paul

  Cummings, J.

  Nellist, Dave

  Cunliffe, Lawrence

  Oakes, Rt Hon Gordon

  Darling, Alastair

  O'Brien, William

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

  Patchett, Terry

  Dewar, Donald

  Pike, Peter

  Dixon, Don

  Powell, Ray (Ogmore)

  Doran, Frank

  Prescott, John

  Duffy, A. E. P.

  Primarolo, Ms Dawn

  Dunnachie, James

  Quin, Ms Joyce

  Dunwoody, Hon Mrs Gwyneth

  Randall, Stuart

  Eastham, Ken

  Rees, Rt Hon Merlyn

  Evans, John (St Helens N)

  Reid, John

  Ewing, Mrs Margaret (Moray)

  Richardson, Ms Jo

  Faulds, Andrew

  Robertson, George

  Fearn, Ronald

  Rogers, Allan

  Field, Frank (Birkenhead)

  Ruddock, Ms Joan

  Fields, Terry (L'pool B G'n)

  Sheldon, Rt Hon Robert

  Fisher, Mark

  Short, Clare

  Flynn, Paul

  Skinner, Dennis

  Foot, Rt Hon Michael

  Steel, Rt Hon David

  Foster, Derek

  Stott, Roger

  Foulkes, George

  Strang, Gavin

  Garrett, Ted (Wallsend)

  Taylor, Mrs Ann (Dewsbury)

  George, Bruce

  Taylor, Matthew (Truro)

  Godman, Dr Norman A.

  Vaz, Keith

  Golding, Mrs Llin

  Wall, Pat

  Gordon, Ms Mildred

  Wallace, James

  Gould, Bryan

  Walley, Ms Joan

  Grant, Bernie (Tottenham)

  Welsh, Andrew (Angus E)

  Griffiths, Win (Bridgend)

  Williams, Rt Hon A. J.

  Grocott, Bruce

  Wilson, Brian

  Hardy, Peter

  Winnick, David

  Harman, Ms Harriet

  Wise, Mrs Audrey

  Haynes, Frank

  Worthington, Anthony

  Heffer, Eric S.

  Young, David (Bolton SE)

  Hinchliffe, David

  Holland, Stuart

  Tellers for the Ayes:

  Home Robertson, John

  Mr. Allen McKay and

  Howells, Geraint

  Mr. Alun Michael.

  Hoyle, Doug

  1161

  NOES

  Adley, Robert

  Greenway, John (Rydale)

  Arnold, Jacques (Gravesham)

  Gregory, Conal

  Arnold, Tom (Hazel Grove)

  Griffiths, Peter (Portsmouth N)

  Atkinson, David

  Ground, Patrick

  Baldry, Tony

  Hamilton, Hon A. (Epsom)

  Beaumont-Dark, Anthony

  Hampson, Dr Keith

  Beggs, Roy

  Hargreaves, A. (B'ham H'Il Gr')

  Bennett, Nicholas (Pembroke)

  Hargreaves, Ken (Hyndburn)

  Benyon, W.

  Harris, David

  Bevan, David Gilroy

  Haselhurst, Alan

  Boscawen, Hon Robert

  Hawkins, Christopher

  Boswell, Tim

  Hayes, Jerry

  Bottomley, Mrs Virginia

  Hayhoe, Rt Hon Sir Barney

  Brandon-Bravo, Martin

  Hicks, Mrs Maureen (Wolv' NE)

  Bright, Graham

  Hicks, Robert (Cornwall SE)

  Brooke, Hon Peter

  Higgins, Rt Hon Terence L.

  Brown, Michael (Brigg & Cl't's)

  Hind, Kenneth

  Bruce, Ian (Dorset South)

  Hogg, Hon Douglas (Gr'th'm)

  Buck, Sir Antony

  Holt, Richard

  Budgen, Nicholas

  Hordern, Sir Peter

  Carlisle, John, (Luton N)

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

  Carlisle, Kenneth (Lincoln)

  Howarth, G. (Cannock & B'wd)

  Cash, William

  Howell, Rt Hon David (G'dford)

  Chalker, Rt Hon Mrs Lynda

  Howell, Ralph (North Norfolk)

  Channon, Rt Hon Paul

  Hughes, Robert G. (Harrow W)

  Chapman, Sydney

  Hunt, David (Wirral W)

  Clark, Sir W. (Croydon S)

  Hunt, John (Ravensbourne)

  Clarke, Rt Hon K. (Rushcliffe)

  Irvine, Michael

  Colvin, Michael

  Jack, Michael

  Coombs, Simon (Swindon)

  Janman, Timothy

  Cope, John

  Jessel, Toby

  Cormack, Patrick

  Jones, Robert B (Herts W)

  Cran, James

  Jopling, Rt Hon Michael

  Currie, Mrs Edwina

  Kellett-Bowman, Mrs Elaine

  Curry, David

  King, Roger (B'ham N'thfield)

  Davies, Q. (Stamt'd & Spald'g)

  Kirkhope, Timothy

  Davis, David (Boothferry)

  Knapman, Roger

  Day, Stephen

  Knight, Greg (Derby North)

  Devlin, Tim

  Knight, Dame Jill (Edgbaston)

  Dickens, Geoffrey

  Knowles, Michael

  Dorrell, Stephen

  Knox, David

  Douglas-Hamilton, Lord James

  Lang, Ian

  Dunn, Bob

  Latham, Michael

  Durant, Tony

  Lawrence, Ivan

  Dykes, Hugh

  Lee, John (Pendle)

  Evans, David (Welwyn Hatf'd)

  Leigh, Edward (Gainsbor'gh)

  Evennett, David

  Lester, Jim (Broxfowe)

  Fallon, Michael

  Lilley, Peter

  Favell, Tony

  Lloyd, Peter (Fareham)

  Fenner, Dame Peggy

  Lord, Michael

  Field, Barry (Isle of Wight)

  Luce, Rt Hon Richard

  Finsberg, Sir Geoffrey

  Lyell, Sir Nicholas

  Forman, Nigel

  McCrindle, Robert

  Forsyth, Michael (Stirling)

  Macfarlane, Neil

  Forth, Eric

  MacKay, Andrew (E Berkshire)

  Fox, Sir Marcus

  Maclean, David

  Franks, Cecil

  McLoughlin, Patrick

  Freeman, Roger

  McNair-Wilson, M. (Newbury)

  French, Douglas

  McNair-Wilson, P. (New Forest)

  Garel-Jones, Tristan

  Madel, David

  Gill, Christopher

  Malins, Humfrey

  Gilmour, Rt Hon Sir Ian

  Mans, Keith

  Glyn, Dr Alan

  Marland, Paul

  Goodhart, Sir Philip

  Marshall, Michael (Arundel)

  Goodson-Wickes, Dr Charles

  Martin, David (Portsmouth S)

  Gorman, Mrs Teresa

  Maude, Hon Francis

  Gow, Ian

  Maxwell-Hyslop, Robin

  Greenway, Harry (Ealing N)

  Mayhew, Rt Hon Sir Patrick

  1162

  Mellor, David

  Skeet, Sir Trevor

  Meyer, Sir Anthony

  Smith, Sir Dudley (Warwick)

  Miller, Hal

  Soames, Hon Nicholas

  Miscampbell, Norman

  Speed, Keith

  Mitchell, Andrew (Gedling)

  Squire, Robin

  Moate, Roger

  Stanbrook, Ivor

  Monro, Sir Hector

  Steen, Anthony

  Montgomery, Sir Fergus

  Stern, Michael

  Morrison, Hon C. (Devizes)

  Stevens, Lewis

  Morrison, Hon P (Chester)

  Stewart, Andrew (Sherwood)

  Moss, Malcolm

  Stradling Thomas, Sir John

  Moynihan, Hon C.

  Sumberg, David

  Needham, Richard

  Summerson, Hugo

  Nelson, Anthony

  Taylor, Ian (Esher)

  Neubert, Michael

  Taylor, Rt Hon J. D. (S'ford)

  Newton, Tony

  Taylor, John M (Solihull)

  Nicholls, Patrick

  Taylor, Teddy (S'end E)

  Nicholson, David (Taunton)

  Tebbit, Rt Hon Norman

  Oppenheim, Phillip

  Temple-Morris, Peter

  Page, Richard

  Thompson, D. (Calder Valley)

  Patnick, Irvine

  Thompson, Patrick (Norwich N)

  Patten, Chris (Bath)

  Thorne, Neil

  Pattie, Rt Hon Sir Geoffrey

  Thornton, Malcolm

  Pawsey, James

  Thurnham, Peter

  Peacock, Mrs Elizabeth

  Townend, John (Bridlington)

  Porter, Barry (Wirral S)

  Tracey, Richard

  Porter, David (Waveney)

  Trippier, David

  Portillo, Michael

  Twinn, Dr Ian

  Powell, William (Corby)

  Waddington, Rt Hon David

  Raffan, Keith

  Wakeham, Rt Hon John

  Raison, Rt Hon Timothy

  Waldegrave, Hon William

  Rathbone, Tim

  Walden, George

  Redwood, John

  Waller, Gary

  Renton, Tim

  Ward, John

  Rhys Williams, Sir Brandon

  Wardle, C. (Bexhill)

  Riddick, Graham

  Watts, John

  Ridsdale, Sir Julian

  Wells, Bowen

  Rifkind, Rt Hon Malcolm

  Whitney, Ray

  Roberts, Wyn (Conwy)

  Widdecombe, Miss Ann

  Roe, Mrs Marion

  Wilkinson, John

  Rossi, Sir Hugh

  Wilshire, David

  Ryder, Richard

  Winterton, Mrs Ann

  Sackville, Hon Tom

  Winterton, Nicholas

  Sayeed, Jonathan

  Wood, Timothy

  Scott, Nicholas

  Yeo, Tim

  Shaw, David (Dover)

  Young, Sir George (Acton)

  Shaw, Sir Giles (Pudsey)

  Shaw, Sir Michael (Scarb')

  Tellers for the Noes:

  Shephard, Mrs G. (Norfolk SW)

  Mr. Mark Lennox-Boyd and

  Shepherd, Colin (Hereford)

  Mr. David Lightbown.

  Sims, Roger

  Question accordingly negatived.
  Main Question put and agreed to.
  Resolved,
  That this House takes note of the White Papers on developments in the European Community July to December 1986 (Cm. 122) and January to June 1987 (Cm. 205), and European Community Documents COM(87)100 on making a success of the Single European Act, COM(87)101 on the future financing of Community Budget, and Nos. 8248/87 on Budgetary Discipline, 8249/87 on Own Resources, 8251/87 on Structural Funds, and 8087/87 and 8940/87 on amendments to the Financial Regulations, all relating to the future financing negotiations ; and endorses the Government's objective of securing effective and binding control of Community expenditure.

  Family Credit
  10.14 pm
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Michael Portillo): I beg to move,
  That the draft Family Credit (General) Regulations 1987, which were laid before this House on 3rd November, be approved.
  The regulations represent a further key element in the new income-related benefit structure which is to come into effect from next April.
  As the House will already be aware, family credit is a new benefit for working families with children. It will replace family income supplement, which has, over the years, brought valuable help to low-income working families. However, FIS was introduced in 1971, originally on a temporary basis, and has served its purpose. What we now need for the late 1980s and beyond is a new benefit which is part of a coherent structure of income-related benefits, designed to achieve a more rational approach to the assessment and delivery of benefits to people in and out of work. Family credit, together with the family premium in income support, represents a major improvement in the help to low-income families with children.
  The draft regulations contain the detailed rules for the new scheme, and build upon the framework set out in part II of the Social Security Act 1986. The Act provides that awards should normally last for 26 weeks rather than the 52 in FIS. That will make family credit more responsive to changes of circumstances and will, for example, mean that extra amounts following the birth of a new child, or following a benefit uprating, can be paid more quickly.
  One major improvement of the reforms is that, for the first time, the provisions of the three income-related benefits — income support, housing benefit and family credit—will be properly aligned. For example, the child rates in family credit are derived directly from the income support children's rates and the family credit threshold is aligned with the income support married couple rate. All three benefits will apply a common approach to the treatment of capital. All will be based on net earnings and, wherever possible, other detailed rules are applied consistently across the benefits.
  One advantage of closer alignment of rules and rates is to ensure that there will in future be far greater consistency in the treatment of people whether they are in or out of work. So, for example, the draft regulations stipulate that the claimant or partner must be in remunerative work to qualify, and that work is defined as 24 hours a week or more. Income support uses the same definition and excludes people from that benefit if the hours worked are above that level. So the two schemes are complementary, which will be a significant improvement on the present position where FIS and supplementary benefit can overlap in this area.
  Part III of the regulations, which deals with circumstances in which persons can be treated as members of the claimant's family, is very much in line with the provisions for income support and housing benefit. Family credit, like FIS, is paid only where there is a dependent child. For that purpose, the regulations also include a young person, defined as a person aged 16 to 19, who is still receiving full-time, non-advanced education.
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  Most of the rules relating to the family's income and capital in part IV of the regulations are the same as those in income support. I shall therefore confine myself to pointing out where the family credit rules differ from those for the other two benefits. The differences arise from the need to arrive at what is a normal income, because of the fixed nature of family credit once awarded. This is, of course, particularly relevant in the case of earnings, and the regulations provide detailed rules about the period over which earnings should be looked at to establish normality. They also provide that, in the case of a person who has just started a new job, we can ask the employer to forecast what the wages will be and to make an award on the strength of that, rather than waiting until a pattern of actual earnings has been established. This will be of particular help to those leaving unemployment and taking up work.
  Family credit is payable to the self-employed as well as to those working for an employer. For the self-employed, the regulations provide for the income from the business to be determined simply by reference to the cash flow of receipts and expenditure during the six months before the claim. This will be simpler and more straightforward than requiring the production of commercial accounts. The new proposals for assessing the income of the self-employed were the subject of consultation with several representative organisations and were generally welcomed as providing a more straightforward procedure than the present arrangements in FIS.
  Finally, on earnings, I remind the House that we shall have regard to earnings after deduction of tax and national insurance, and also after one half of any contribution to an occupational or personal pension scheme. Assessment on the basis of net wages ends the worst effect of the poverty trap—the absurd position where an increase in gross earnings can lead to a reduction in overall income because of the knock-on effect on benefits.
  At present, about 70,000 families are in that position. What is more, by replacing benefits with extra cash for working families, we are ending the cliff edges which can leave a family significantly worse off when its income takes it just above the cut-off level for free school meals and milk. These are significant improvements. We also believe that, after next April, only a tiny number of families with children would be worse off working than out of work and on benefit.
  That brings us to part V and to the calculation of the amount of entitlement. Each family has a maximum credit, made up of an adult credit and a credit for each child depending on his age. Those credits are set out in schedule 4. The maximum credit is payable in full where the family's income is less than the threshold: this will be £51.45, the same as the income support rate for couples. Where the income is more than the threshold, a percentage of the excess is deducted from the maximum credit and the balance remaining is the amount payable. Regulation 48 lays down that this percentage taper shall be 70 per cent.—unchanged from the 1985 White Paper proposals.
  The children's rates in family credit are based on those in income support, but take account of the rate of child benefit. That ensures alignment with income support and also means that any change in the rate of child benefit would not affect the net position of those receiving family credit.
  Mr. Brian Wilson: In arriving at those complex arrangements about taking people beyond the threshold of the poverty trap, did the Minister take into account how the poll tax will disrupt all his calculations? By forcing poor people to pay a minimum of 20 per cent. of the poll tax, any marginal benefits will be cancelled out and more. The Minister will have to do all his sums again.
  Mr. Portillo: People will be much better placed if they live in an area where the authority imposes reasonable rates.
  The extra amount that we are putting into family credit is much more important for low-paid families and a higher rate of child benefit would be of no net value to them.
  The child rates also include a cash element in place of the free school meals and free milk which are available to FIS families now. That cash element is £2·55 for each child and reflects the latest information, from a recent survey of local education authorities, about the charge for a fixed price school meal. The average worked out at 65·6p a day. Given that the cash is paid in every week of the year, not just in term time, the £2·55 is slightly more than the amount shown by the average charge. The cash element is the same for all ages of children and is especially generous to families with young children below school age, who at present receive only free milk, worth about £1·82.
  Take-up of free school meals by families receiving FIS has never been more than about 70 per cent. Family credit will now put money into the hands of all family credit mothers, including those whose children, for whatever reason, have not been taking advantage of free school meals.
  Mr. Frank Field: The Minister said that the claiming of free school dinners has never been above 70 per cent.. hut for family credit he claims only a 60 per cent. take-up. If a 70 per cent. take-up is so poor, why is this scheme so good?
  Mr. Portillo: I did not say that it was poor. I said that, whereas 70 per cent. of those claiming FIS take free school meals, 100 per cent. of people claiming family credit will get the cash. That is the important difference.
  Mr. Field: But the Minister says that only 60 per cent. of those who arc eligible will claim; his phrase was "only 70 per cent.", which is slightly dismissive. Yet he advocates this measure because it will have a 60 per cent. take-up.
  Mr. Portillo: I was not in the least dismissive. I was pointing out the advantage of 100 per cent. of those people taking school meals—
  Mr. Field: But it is only 60 per cent.
  Mr. Portillo: It is 100 per cent. of the 60 per cent., but under family credit the take-up of the money is estimated to be 70 per cent. That is the advantage.
  We estimate that many more children—up to 100,000 more—will benefit from the extra cash, compared with the numbers receiving free school meals from FIS and local discretionary schemes combined. A further 100,000 under-fives will benefit from the cash, compared with the number receiving free milk under the FIS passport and the low-income schemes. I should, perhaps, add that there will be no changes in the entitlement to free school meals or welfare milk for the most vulnerable families of all, those receiving income support.
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  Part VI of the regulations deals with the very few instances in which family credit has regard to changes of circumstances during the period of an award — death, and certain circumstances in which a family breaks up and a new claim is made for family credit or income support.
  No doubt the House will wish to know what all this means in terms of the number of people who will benefit. and how much they will receive. Virtually all family credit recipients will receive more—often substantially more—from family credit than they would have from FIS, if it continued.
  Mr. Wilson: Is that before or after the poll tax?
  Mr. Portillo: For example, a single parent with two children aged 12 and 14 and earning around half average earnings—£90 net, or £110 gross—would receive family credit of over £27, compared with FIS of under £5. A couple with children the same age and earnings of around £103, or about £130 gross would receive no FIS, but will now stand to receive family credit of over £18. A family with three older children and earnings of £l10 net, or £140 gross, will now receive £23 family credit compared with nothing from FIS.
  Mr. Field: If they claim.
  Mr. Portillo: The hon. Gentleman keeps returning to that point, but we are directing the benefit to twice as many families as have been taking up FIS. We think that the take-up will be higher, but, even if it is not, it will go to many more families than FIS. I should have thought that it would be welcomed for that reason, and was riot something at which the hon. Member for Birkenhead (Mr. Field) or his hon. Friends would carp.
  Mr. Field: Where do the Government get their confidence that the take-up rate will be higher? Where did the figure of 60 per cent. come from?
  Mr. Portillo: The figure is based on the fact that, as a more generous benefit, family credit will be more widely available. If it is more widely available, more people will know about it. There will be more talk about it at workplaces, and there will be a publicity campaign to launch it.
  I admit to the hon. Gentleman that we have to guess what the take-up will he, but I think that it is reasonable to assume a fairly modest increase from 50 per cent. to 60 per cent. of families, and from 60 per cent. to 70 per cent. of expenditure.
  Mrs. Margaret Beckett: Why?
  Mr. Portillo: Time will tell. In a year's time, we shall argue about facts rather than theories. but I consider that quite a reasonable assumption.
  Overall, we expect that over twice as many families should receive family credit as received FIS: about 470,000 instead of 200,000. We shall be looking for significant improvement in take-up. We shall have a major publicity drive, and the fact that it will be more worth while to claim the credit will also be helpful. Apart from ensuring that help reaches those for whom it is intended, we are anxious to ensure that family credit plays its full role in improving work incentives, and encouraging people to take available jobs.
  Finally, I should like to remind the House of a point covered not in these regulations but in the Social Security (Claims and Payments) Regulations which the House

  1167
  approved last week: that family credit will normally be paid to the mother. That is important as background to our decision not to uprate child benefit in April 1988. Family credit will cost £220 million more than FIS. By not uprating that child benefit, we save £120 million net. We are putting an extra £220 million into the hands of almost half a million mothers. By contrast, a general increase in child benefit would have cost much less, but would have spread the money far more thinly across millions of mothers, most of whom are clearly not those in the greatest need.
  Family credit is a bigger scheme than FIS, and I believe that I can say confidently that it is a better scheme. It encourages breadwinners with families to stay in work, and stimulates those out of work to look for work without the fear of losing more than they might gain. It puts more money towards families who need it most. For those reasons, I commend the draft regulations to the House.
  10.29 pm
  Mrs. Margaret Beckett: It is not the Opposition's intention to erect artificially high standards by which to judge the family credit scheme. The standards that the Government have set for themselves will do very nicely, thank you. We shall judge by the standards that they have set and by the fulsome compliments that they have paid themselves over the past few months when referring to the generosity and scope of the scheme. I must concede that the scheme is the nearest thing to a success that the Government have drawn from the most fundamental reform for 40 years, the most fundamental since the Beveridge report. I suppose that it could be said that it is the jewel in the crown of the Government's package of reforms. It is the one area in which there are a few more gainers than losers.
  What even a keen observer might not discern at first glance from the ecstasies that we have heard from the Government over recent weeks is that there will be about 270,000 losers as a result of these proposals. About 130,000 single parents and 140,000 couples in full-time work, with children and claiming family income supplement and/or housing benefit will lose from the overall package of changes. The observer might not discern also that a good deal of the generosity for which Ministers have praised themselves so highly in recent weeks will be at the expense of families with children. Thirdly, the Government claim that they are being far more generous in the overall payment of family credit as opposed to FIS, the benefit which is being replaced, because the take-up will be significantly higher than that of FIS. This issue has been taken up by my hon. Friend the Member for Birkenhead (Mr. Field) in several interventions.
  We hope that the take-up of family credit will be higher than that of FIS. Whatever doubts we may have, and we have many, about the Government's overall strategy, and whatever reservations we may have about whether they are reducing dependence on benefits while their policy is so heavily dependent on making resources available primarily through family credit to low-income families in work, we must all hope for the maximum possible take-up. It is difficult, however, to determine on what basis that hope should be assessed. The Minister has said—this has been said by the Government ever since the family
  1168
  credit scheme was first proposed—that it is expected that take-up will be at least 60 per cent. The take-up of FIS is about 50 per cent., so the Government can be pressed over and over again to justify their claim that the take-up of family credit will be substantially higher than that of FIS. Ministers seem to find the distinction between justification and repetition a fine one that eludes them.
  There was a time, in the bold early days, when the Government were determined to pay family credit through the pay packet, and there were echoes of that in the Minister's speech this evening. When responding to my hon. Friend the Member for Birkenhead, he replied in terms that were used when family credit was intended to be paid through the pay packet. I think that in those days it was only the Monday Club that supported that proposal. It was not even supported by the Institute of Directors and the few other organisations that the Government were able to drum up express agreement with from time to time. Finally, the Government were forced to drop the proposal to pay family credit through the pay packet. They accepted that it would continue to be paid to mothers.
  It was at that time that the Government claimed that the take-up of family credit would be higher than that of FIS because it would be paid through the employer and the pay packet. Everyone else said that it would lead to a reduced take-up. Whether it was the Government or others who were right, it seems that there is no argument for increased take-up. No further argument and no alternative justification has been advanced for a higher take-up, and the figure remains at at least 60 per cent. It should be said, however, that in the uprating statement the Secretary of State implied that take-up might rise to as high as 70 per cent. I am not sure whether the Secretary of State misunderstood the figures that he was given. The Government have put forward no justification for this measure, as the Minister demonstrated tonight.
  In the hope that some new form of words had been devised, I tabled a question to the Secretary of State. I must commend the person who drafted the reply ; if family credit is the jewel in the crown in the Government's package of reforms, this is a gem of a parliamentary answer:
  "The assumption reflects that used in the technical annex to the White Paper 'Reform of Social Security'. Because family credit is a more generous benefit than family income supplement and will go to many more families, we expect it to become much better known." — [Official Report, 5 November 1987; Vol. 121, c. 867.]
  That is a circular argument. I ask the Government why it will go to more families and they say, because it will go to many more families. That is a gem of a parliamentary reply, but an argument it ain't.
  I remind the Minister, who spoke about how we will have to view the scheme in the light of experience—it is on experience that we should occasionally draw—that when family income supplement was introduced, levels of take-up were predicted as high as 85 or 90 per cent. Certainly, I remember the figure of 85 per cent. being predicted by the then Secretary of State, and my hon. Friend the Member for Birkenhead (Mr. Field) assures me that the Secretary of State said that if take-up were only 85 per cent. the scheme would be a failure, and that he was confidently expecting 90 per cent. As the level of take-up is currently about 50 per cent., perhaps we can expect take-up of family credit to be about 35 per cent.

  1169
  Whatever the upturn in the take-up of family credit, it is noteworthy that even on the Government's wildest claims it will be less than the take-up of the benefits that are being raided to divert resources into family credit. Take-up of child benefit is almost 100 per cent. Take-up of free school meals, whatever it may be among families drawing family income supplement, is running generally at about 66 to 75 per cent.
  One of the most inexplicable of the unexplained changes that the Government have made—no argument has been advanced to justify it — has been the withdrawal of the right of local authorities to supply free school meals to low-income families who are not necessarily to draw them as a right. It is a mean debarring that will rule out schemes presently run by two thirds of local authorities in Britain, presumably because the Government feel that it is something from which low-income families in their areas will benefit. About 500,000 children not on supplementary benefit, according to the latest available figures, receive free school meals. Ministers have argued that those on family credit will get some compensation, but nevertheless there are 300,000 children not currently on family income supplement getting free school meals, and it seems unlikely that they are all in families that will qualify for family credit, even if they are in families who will claim it. In addition, the right to welfare milk is abolished in the present Social Security Bill.
  The Government have justified freezing child benefit by their claim that the increased resources — about £120 million, according to Government figures—that would have been needed to increase child benefit are required for family credit. I noticed that the Minister advanced a slightly different argument — that apart from that argument, which I presume he supports, it is all right to freeze child benefit because it is paid to the mother and the money is going into family credit, which is also paid to the mother. How would the Minister have justified it if the Government had got away with their original proposal and paid the benefit through the employer? No doubt the Minister would have discovered some other ingenious justification.
  If one adds the £175 million a year that the Government saved the last time they froze child benefit a couple of years ago to the £120 million that they are saving now, families with children have probably provided all the extra money that the Government claim to be putting at the disposal of the family credit scheme.
  The Secretary of State said in the uprating statement —the Minister echoed it in opening the debate—that an increase in child benefit would not have helped children in families on benefit. Families on family credit are, at best, merely being compensated for the loss of an increase in child benefit. They are not receiving extra money, because child benefit was not increased over and above the amount that they would have received had it been inflation-proofed. Families entitled to family credit but not claiming it will enjoy only the loss and not the compensation.
  I do not intend to dwell on the value of child benefit as a useful benefit as opposed to the means-tested and targeted approach to family poverty implied by family credit, but I am sure that the House will be aware that it has been estimated that the freezing of child benefit alone has pushed 10,000 more families into dependency on benefit. That has been done by a Government and a Secretary of State who claim that they want to reduce dependence on benefit.
  1170
  The Minister referred to the depth of the poverty trap that can exist with family income supplement. Indeed, the Government are reducing the worst of the depth of the poverty trap by the better rates at which family credit will be paid. But if we look in a little more detail at the impact of the rates, in particular the impact of the rates taken in conjunction with other changes that the Government are making, we shall see that, although they have removed the situation in which a rise in gross income could lead to an actual fall in net income, to someone facing a marginal tax rate of over 100 per cent., unfortunately, they have greatly increased the number of those with high marginal tax rates.
  In most cases, the number of those with high marginal tax rates are facing far higher rates than the maximum rate paid by the richest taxpayers, whom the Government loudly and often deplore. Also, the rates at which marginal tax will be paid by such families are considerably higher than those that were paid in the past under the family income supplement by those who are not actually subject to the highest rate of over 100 per cent.
  Under the Government's proposals, a two-child, low-paid family on family credit alone faces a marginal tax rate of 81 per cent. That means that they will lose 81p of every £1 of increase in income. If they get housing benefit also, the tax rate is increased to 85p in the £1, even for an owner-occupier who gets only rate rebate. For a family in exactly the same circumstances, on family credit and receiving riot only rate rebate but rent rebate because they are in rented property and not in their own home, the marginal tax rate—the rate of withdrawal—rises to 98 per cent. They lose 98p of every £1 increase that they receive. Such a family may not be as grateful as the Minister seems to expect for the 3p or so in the £1 saved from the worst rates of withdrawal under the old scheme.
  The Minister gave us two or three interesting examples. Unfortunately, I was not able to write quickly enough to take down all the details of the examples that he quoted, but they compare with some of the examples that I have been given. It is an interesting comparison.
  On the figures that I have, a single parent earning £90 gross, with two children of nine and 12, and drawing housing benefit, will gain £15·38 from the change from family income supplement to family credit. The Minister explained to the House what a generous Government they are to be giving such a person such a great increase. He gave an example of somebody with slightly older children, and drawing family credit of about £27. That is a lot of money. It is extremely unfortunate that, owing to the package of changes that the Government are putting before us, that single parent, who will gain £15·38 from the change to family credit, will lose £15·40 from the changes in housing benefit. That is a net reduction in income of 2p. Perhaps Conservative Members will not consider that figure significant, but it is not quite the same as the glowing picture that the Minister painted.
  A family on £110 gross, with average rent, rates, water rates and so on, will gain £12 to £13 on family credit, compared with what they would get today on family income supplement. What a pity that, when housing benefit is taken into account, after meeting their housing costs, they will face a net loss in income of £5·89 a week.
  In another place, the Government acknowledged that, indeed, such problems might arise. They said, "What a pity it is. It does not affect the fact that it is a terribly generous scheme, but it is inevitable." Rubbish. There is

  1171
  nothing inevitable about making changes in a scheme that will give a substantial improvement in the income that is paid to people at work directly as between family credit and family income supplement, and taking it back on housing benefit. The proposal was not cast on tablets of stone. It did not come down from the Mount with Moses. It is a choice that the Government have made to save far more — hundreds of millions of pounds — on housing benefit. At the same time, they want substantial credit and pats on the back from the House because of what they are doing, through family credit, for low-income families in work. If the family credit taper had been less harsh—and the savings from housing benefit less substantial—the poverty trap could have been more substantially reduced, or perhaps even eliminated.
  We shall not vote against the regulations at the end of the debate because for once there will actually be more gainers than losers. However, I remind the Government of the comments made consistently — whenever the regulations have been described and whenever the family credit scheme has been discussed or assessed—by every commentator from the Select Committee on Social Services to Conservative Back Benchers and Conservative party organisations. Whether the Government can claim family credit to be a success even in their terms will depend heavily on whether the take-up of the scheme for once meets expectation. I remind the Minister how much he and his Government have reduced their expectations since the family income supplement scheme was introduced.
  We welcome improvements for those families who will get more money from the scheme. However, we deeply deplore the loss to the many families who are being conned by the Government and told how generous they are being—at the expense of child benefit—to low-paid families in work. Those families will find, that they are no better off—or, indeed that they are substantially worse off—as a result of the regulations.
  10.47 pm
  Mr. Ronnie Fearn: It would be churlish of me not to admit that family credit will do something to eliminate poverty for low-income families with children. That is why alliance Members have always regarded family credit as one of the more acceptable provisions of the Social Security Act 1986. My greatest worry about family credit is the Government's complacency over the take-up rate. When they introduced the idea of family credit the then Secretary of State proudly announced that it would have an estimated take-up rate of 60 per cent. As I understand that the take-up rate for family income supplement is about 40 per cent., I concede that the increase would be a great improvement.
  However, I am far from convinced that family credit will reach that estimated figure and, having heard the Minister's remarks, I am even more keen to find out how the Government reached the figure. I am sure that it was not plucked out of thin air.
  I am sure that the whole House will be concerned about the plight of the 40 per cent. who, according to estimates, will not claim their entitlement to family credit for several reasons. Of course, many who fall into that category will not claim it because they feel, wrongly, that there is a stigma attached to claiming benefits. It would help enormously if there were less talk of scroungers in relation
  1172
  to those who claim benefit. Those entitled to claim benefits are getting what is legally theirs and there is no shame in that.
  What steps do the Government intend to take to improve the take-up rate of family credit and benefits in general? It seems that there is plenty of money to be found to provide wall-to-wall coverage explaining how to take part in the Government's major share issues. If millions of pounds are available to help individuals to improve their position by making small investments, the Government must be prepared to show the same enthusiasm for helping those on low incomes, and, indeed, those who depend on benefits. The obvious answer would be to spend a reasonable amount on advertising to explain the changes in social security next year and to explain who is entitled to claim.
  Perhaps the Minister could tell the House how much he intends to spend on advertising. All too often, that job is left in the hands of organisations such as the citizens advice bureaux. The groups do a fine job, but their resources are already stretched to their limits and they have many responsibilities. One way in which the Government could help would be by providing the CABs with extra resources to help them to cope with the massive increase in the number of people who wish to know their entitlements. Last year the CABs dealt with 1·25 million inquiries on social security alone.
  Groups that have the job of explaining these difficult rules should have the clear support of the Government.
  There is anxiety that the Local Government Bill may affect the ability of local authorities to launch campaigns to explain what benefits people are entitled to. The concern is that the clause dealing with political campaigns may be so wide that it will make a take-up campaign illegal. I should be grateful if the Minister could assure me that that will not be so. If not, will he tell the Secretary of State for the Environment what a harmful proposal it could be?
  When the Secretary of State told the House of his highly unpopular decision to freeze child benefit, he attempted to defend the indefensible by directing more money to income support and a further £220 million to family credit. The arguments about the merits of universal benefits and the demerits of means-testing have been made many times in the House in recent weeks and I shall not repeat them. If the Government are determined to divert resources to means-tested benefits it would be fairer if the poorer families such as those on family credit were given a respectable increase rather than merely compensation.
  10.50 pm
  Mrs. Virginia Bottomley: I am grateful for the opportunity to pay tribute to the initiator of the benefit that has led to family credit. It was my right hon. and noble Friend Lord Joseph who established family income supplement. It was a remarkable recognition of the plight of many thousands of families who were in greater poverty in work than they would have been if dependent on social security benefits. It was a recognition of that position, which offends all our basic instincts, that led my right hon. and noble Friend to introduce that benefit. In the debate on the modification of family income supplement into family credit and the way in which it was financed I do not think that sufficient recognition was given to this point.

  1173
  Nor do I think that we have sufficiently recognised that one major improvement is that family credit gives greater benefit to older children. For many years teenage children, who are much more costly than younger children, were not catered for adequately by the social security system. I am glad that this has been dealt with in the development of family income supplement into family credit.
  I appreciate the points made by my hon. Friend the Under-Secretary of State that the benefit will be more responsive and that there will be greater simplification. The use of net wages will lead to greater justice, and fewer families will be better off out of work than in work. It would be churlish not to acknowledge all those important points.
  At the same time, I have reservations about the justification for diverting child benefit increase money to family credit. It is the misfortune of children that the way the tax and social security system recognises their existence is regarded as a cost by the Treasury. It is the fortune of house owners that mortgage interest relief is not regarded in the same way. I feel more strongly about the arguments for diverting mortgage interest relief payments into housing benefit than I do about changing child benefit into family credit payments. It is not of major importance at the moment, but the whole system needs fundamental assessment and investigation before we move any further.
  Those are only minor points compared with the need to point out sufficiently that the regulations, by improving and developing the family credit system, make for much greater benefits for those impoverished families in work. I warmly welcome the regulations.
  10.55 pm
  Mr. Portillo: With the leave of the House, I shall reply to the debate. First may I say how much I appreciated the speech of my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley) it was the model of an ungrudging speech. I know how strongly my hon. Friend feels about child benefit, yet she was generous enough to pay tribute, none the less, to what we have done under the family credit draft regulations.
  I was disappointed that the hon. Member for Derby, South (Mrs. Beckett) did not adopt the same spirit. The hon. Lady was rather grudging in her welcome, despite the fact that the regulations will bring a tremendous advantage to a large number of families. I found it confusing that the hon. Lady should argue that, because the take-up of the benefit is less than 100 per cent., we should spend the 120 million more wisely by raising child benefit and spreading it thinly over both those in need and those not in need.
  I appreciate the argument that the hon. Members for Derby, South and for Birkenhead (Mr. Field) have made about take-up. We all wish that take-up could be higher. Granted that we intend to do everything we can to make it higher, I do not see that there is a conclusive argument for saying that it would be better to give 4p a day per child in child benefit to families who do or do not need that benefit—or rather, only to those who do not need it because that money would not affect those on income support or family credit. It is a weak argument.
  I was not sure in the end whether the hon. Member for Derby, South was saying that she thought that FIS had been a good or bad benefit. She quoted the argument that if there had been less than an 85 per cent. take-up it would be judged a failure. I cannot imagine that she believes that
  1174
  it has been a failure, as it is self-evident that it has provided a great deal of help to working families. If the Labour Government had thought it a failure, doubtless they would have scrapped the benefit. As family credit is bringing more relief to more families, I cannot believe that the hon. Lady does not, in her heart of hearts, believe that it is a move in the right direction.
  Mr. Frank Field: Let us leave the lop spreading thinly and the rest of it as a good debating point. Will the hon. Gentleman respond to the points made by my hon. Friend the Member for Derby, South? We were given some figures that presented some massive increases in income for families claiming the new benefit. My hon. Friend thought that perhaps the Minister had misled the House unintentionally or did not understand the interaction with housing benefit. Were the figures that he gave us those reached after the clawback of other changes in social security benefit?
  Mr. Portillo: No, they were not.
  Mr. Field: Ah.
  Mr. Portillo: The percentage of families on family credit who are receiving housing benefit is about 20 per cent. The percentage who are receiving both a rate rebate and a rent rebate or rent allowance is about 4 per cent. I am perfectly prepared to admit to the hon. Gentleman that the credit that some people gain is, to some extent, clawed back. The extremely high marginal rates of withdrawal that have been quoted apply to 4 per cent. of families. In fact, 80 per cent. of families are outside housing benefit altogether; that is partly an achievement of the family credit system.
  One of the problems that the Opposition appear to have all the time is their inability to welcome anything that produces a large number of gainers if an extremely small minority of people will gain less.
  Mrs. Beckett: The figures that I have show that there is only a marginal proportion of gainers to losers — perhaps a few tens of thousands. According to the figures that I have been given, there are a substantial number of losers.
  If the Minister is correct, only a tiny percentage of people may face marginal tax rates of 98p in the pound. If that proportion is so tiny, and the Government are being so generous, it is a pity that they could not have put in just that teeny-weeny bit of extra money so that that did not happen. I had a feeling that I would be told that I had been grudging, but the Government congratulate themselves so heartily that I thought that anything further from me would be superfluous.
  Mr. Portillo: I take the hon. Lady's point. On take-up, the hon. Member for Southport (Mr. Fearn) asked how much money we would spend on advertising family credit. It will be £3 million, or perhaps a little more. He also asked whether we would support the attempts of citizens' advice bureaux to publicise the benefit. The Government also already provide substantial support for their excellent work. A sum of £7 million springs to mind, but I would want to check that. We recognise their excellent work. The hon. Gentleman asked whether the Local Government Bill would affect local authorities' ability to promote take-tip campaigns. I shall happily refer that question to my right hon. Friend the Secretary of State for the Environment. I am sure that he will want to consider the matter carefully.

  1175
  We have had a short and interesting debate. The lateness of the hour and the lack of whole-hearted onslaught by the Opposition tends to show that the Government are providing a benefit which will be of great value to working families and redress many of the problems which hon. Members on both sides of the House take seriously —those facing people in work or those thinking of going back into work. The draft regulations provide real improvements. For that reason, I commend them warmly to the House.
  Question put and agreed to.
  Resolved,
  That the draft Family Credit (General) Regulations 1987, which were laid before this House on 3rd November, be approved.

  DUCHY OF LANCASTER BILL
  Order for Second Reading read.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 90(6) (Second Reading Committees), That the Bill be now read a Second time.
  Question agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House. —[Mr. Alan Howarth.]
  Committee tomorrow.

  STATUTORY INSTRUMENTS, &c.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).
  That the draft Welfare of Battery Hens Regulations 1987, which were laid before this House on 6th July, be approved.

  WELFARE OF CALVES
  That the draft Welfare of Calves Regulations 1987, which were laid before this House on 15th July, be approved.
  Question agreed to.

  Rebecca Field
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Alan Howarth.]
  11.1 pm
  Mr. Colin Shepherd: I am grateful to my hon. Friend the Under-Secretary of State for coming to the House tonight to grapple with a difficult problem about which I feel strongly and which has been running on for far too long already.
  The problem is similar to one I raised in the House almost exactly six years ago, which involved an untoward incident which affected my then constituent, Mr. David Woodhouse, who, distressingly has made no recovery. The problem revolves around the birth. three years ago last Wednesday, of Rebecca Field at the Hereford county hospital, as a consequence of which she is partially paralysed and totally dependent on artificial ventilation.
  I want to pay tribute to the courage and determination of Rebecca's parents, who have set out to give her the best life they possibly can on very limited means. They have spared themselves no effort. I should like to take this opportunity to thank all the agencies, such as social services, who have contributed in such a variety of ways to improve the quality of life for the Field family. There have been financial contributions to establish a trust fund, and the Ben Hardwick fund has helped towards specialist family transport. There has been a community effort to get the family on a normal keel.
  There still remains, however, a fundamental and unsolved problem — the unsatisfactory investigation of what happened in that "untoward incident". I believe that it is perfectly understandable that there should be acute frustration in the Field family at the present state of affairs. In the Woodhouse case, the problem was cracked, if not broken, by the setting up of a sort of eminent persons group, who sifted through the evidence and formulated an opinion of what had gone wrong. In that case, it was sufficient to facilitate the start of legal proceedings by the family, but it is worth observing that the patient was, and is, in no position to disagree with the findings. My hon. Friend the Minister will appreciate that there is a difference in the Field case.
  I shall recap the events. The birth took place on 11 November 1984. As a consequence of what happened at the birth, the experienced midwifery sister saw fit to put her objections in writing and make a report to the hospital administration — an extraordinary move, which was brought about by her distress. I believe that the staff midwife also submitted a report, although I do not know how that came about.
  I presume that some form of preliminary investigation was done, because the eminent persons group investigation was set up, including among its members Professor Turnbull and Dr. Joan Andrews — both eminent members of their profession of gynaecology. They reported on 15 April 1985. The difference between the Woodhouse case and this one is that Woodhouse is in no position to express an opinion, whereas Mr. and Mrs. Field certainly are. They cannot reconcile themselves to the uncomfortable analyses and conclusions of the report, even though it contains severe criticisms.
  It is worth while reiterating that the Fields were not the original complainants. Perfectly reasonable questions have still not been addressed. Is it not a reasonable assumption,

  1177
  for example, that the registrar—the locum—got into difficulties during the delivery? Was the registrar perhaps negligent in not seeking assistance from the duty consultant obstetrician and gynaecologist; and was the registrar negligent in, apparently, not having considered the caesarian section option when it became apparent that a forceps delivery was indicated? To what extent did the non-executed order to perform an episiotomy constitute negligence or professional incompetence?
  The Turnbull-Andrews report mentions what appears to be a misleading curriculum vitae for the locum registrar. To what extent was the health authority negligent in failing to note or take account of that? In the words of the report, the authority
  "did not really make it clear that she had not held a formal Registrar's post."
  What is more, no references were available or taken up. To what extent was the health authority negligent about the way in which it staffed its obstetrics and gynaecology unit in the hospital? All those questions are unresolved, and need resolving.
  There are disturbing references in the report to differences of opinion about how gentle the delivery was. The mother was physically hauled down the bed three times by the force exerted during the forceps delivery and had to be held hack by her husband—he is no slight figure himself — and two nurses. It is not surprising, therefore, that the parents attach little credibility to findings that the delivery was gentle.
  The parents do not identify themselves with the description of events during the crucial part of the delivery. It bears no resemblance to their traumatic experience. It is disturbing that the conclusions about the registrar's handling of the delivery should use the words "unsatisfactory enough" — that surely means that the delivery was riot handled satisfactorily. I can understand the family's frustration at being stymied in their quest for compensation, which would enable them to lead a life that is as near normal as possible.
  The Fields retained the services of a solicitor at an early stage, and, through the offices of legal aid, were able to seek expert medical opinion. In this they appear to have been hampered by their inability to furnish the independent expert whose advice they sought with all the paperwork relating to the case—medical records, case notes, reports and submissions by the staff midwife, the midwifery sister, the junior doctor, the paediatrician and the senior house officer.
  I exclude the registrar from the list, as professional incompetence or negligence might lie with her—among others. To my knowledge, only rather incomplete case notes have been furnished, and I am bothered about the position of the obstetrician in Manchester, who interviewed the Fields and discussed the Turnbull-Andrews report with them. As a result of scrutinising the rather inadequate case notes, he told the Fields that he felt unable to continue to give them advice. That was their one opportunity torpedoed.
  Persistence with the Law Society has resulted in that society being impressed by the Fields' situation, which I believe has been buttressed by a submissions, from recollection, by the midwifery sister. The Fields are now at the point where they have been facilitated to take out writs but not to serve them. Therefore, the matter is not
  1178
  yet sub judice. However, they cannot go ahead without medical evidence and at present there appears to be no easy way of getting it. Therein lies the log jam.
  In the wider context, it seems quite clear that the eminent persons' group approach to this sort of problem has been less than fully satisfactory. Where there is a genuinely held difference of opinion among the lay people involved, it will always be difficult to find professional people who perhaps feel strong enough to take on people as powerful in their professions as those who are appointed to eminent persons groups. Therefore, it is possible that medical evidence will not be easy to find at any time.
  In an excellent private Member's Bill, my hon. Friend the Member for Newbury (Mr. McNair-Wilson) brought forward the Hospital Complaints Procedure Act 1985. However, I have found that this does not fit the bill; besides, it does not really relate to this sort of case and has not yet been brought into force. There is on the Order Paper early-day motion 256, which calls for a Royal Commission to look into medical accidents. However, that is a lengthy attempt to put forward solutions that may not necessarily help in this instance because such a Commission would be set up long after the event. As far as I am aware, no progress has been made on the new DHSS guidelines on untoward incidents.
  I am sure that my hon. Friend will be sympathetic to the plight of this family. We are now no nearer to knowing how Rebecca came to be damaged, but severely damaged she undoubtedly is, and doubts about negligence, wherever it occurred, have clearly not been dispelled. To deal with this, we need to be able to reopen the inquiry, so that all the documents can be examined and witnesses cross-examined. I hope that my hon. Friend will feel able to instruct the health authority to make available to the Fields all the papers from the start to the present time.
  I think that the Fields are totally financing the ventilator and its maintenance, upon which Rebecca depends entirely for her existence. I understand that about 100 other people in Britain also depend on 100 per cent. ventilation, but in each of those cases the cost is fully borne by the National Health Service. Can my hon. Friend tell me if there is any reason why the Field family should be any different or whether I have got this wrong? I should certainly welcome advice on this matter. I know that my hon. Friend will be moved by this tragic event that happened to a decent family in a nice part of the world. I hope that she will be able to help.
  The Parliamentary Under-Secretary of State for Health and Social Security (Mrs. Edwina Currie): I congratulate my hon. Friend the Member for Hereford (Mr. Shepherd) on his success in the ballot and I am grateful to him for bringing the sad case of Rebecca Field before the House. All hon. Members will sympathise with the family who have been involved in what should have been a joyous event but which turned out to be a most tragic incident.
  Mrs. Field was admitted to Hereford county hospital for the birth of her third baby, and on Sunday 11 November 1984 she was transferred to the labour ward. Her progress was monitored throughout the day. By the early evening, it had become clear that Mrs. Field was becoming increasingly distressed and tired. Medical staff were informed and asked to assess Mrs. Field for assistance with the delivery. On delivery the baby, a little girl called Rebecca, appeared to experience breathing

  1179
  difficulties and she was immediately incubated and placed on a Resuscitaire machine. Within 25 minutes of delivery, Rebecca had been transferred to the special care baby unit so that she could be placed on a ventilator. Since then, Rebecca's breathing has been maintained by mechanical ventilation. It appears that the spinal cord was broken and as a result she is paralysed from the neck down, although she appears to be mentally normal. I understand that she may have a normal life expectancy.
  I have listened carefully to the points made by my hon. Friend and applaud the way that he has made them. I have also read the reports of the independent consultant and the district health authority, and the statements of the midwifery staff and others. Through my advisers, I have been in contact with the regional health authority both yesterday and today. Therefore, perhaps he will allow me to comment briefly on some of the points that he made.
  Most complaints are investigated and dealt with by officers of the district health authority, in this case Hereford. This is a long-established procedure that has been followed in thousands of cases. Complaints relating to the clinical aspects of a patient's treatment may be referred, under a more recent procedure — circular HC(81)5— to the regional medical officer, in this case the West Midlands regional health authority. If the RMO considers it appropriate, he may appoint two consultants from another region to investigate and report to him about matters of clinical judgment. The RMO was following established procedures. The procedure is not normally considered appropriate if legal action is contemplated. I understand that, as my hon. Friend said, as of today no writs have been issued.
  Unusually in this case, the regional medical officer's action was a response to concerns expressed not originally by the family but by staff present at the birth. Thus, both the district health authority and the regional health authority are involved. The purpose of such inquiries is to establish facts and to ensure that account is taken of lessons learned. They are not substitutes for court action.
  Two reports have been produced by the regional and district health authorities. The first report was produced by Mr. Key, who was then district administrator, for the chairman of the health authority. The purpose of the report was to enable the chairman of the DHA to decide what further action should be taken. The report was copied also to the regional medical officer and to the regional health authority chairman, and, as a report of an untoward incident, was considered by the district health authority. At that stage no formal complaint had been received from Rebecca's parents. I understand that no formal complaint has ever been received from them.
  Nevertheless, it was considered appropriate that a further inquiry should be held. The regional medical officer Commissioned the inquiry under the circular that I mentioned and invited two independent experts — Professor Turnbull of the Nuffield department of obstetrics and gynaecology and Miss Joan Andrews, consultant obstetrician from St. David's hospital, Cardiff — to conduct it. Both those consultants are eminent authorities and I have no doubt about their impartiality or ability.
  The report was completed by April 1985 and sent to the regional medical officer, and from there to Mr. Key. Copies were also made available to the family.
  1180
  Subsequently, the medical records have also been made available to the family's legal adviser. Therefore, I make two points. First of all, I understand that documents have not been withheld. If my hon. Friend was to tell me that anything has been withheld, if it is within my power I shall endeavour to ensure that it is made available.
  Mr. Shepherd: I confirm that the report made by the midwifery sister and the staff midwife have been made available to the family's legal adviser, together with a copy of the interim report made by Mr. Key to the chairman of the health authority.
  Mrs. Currie: My hon. Friend did not mention whether Professor Turnbull's report has been made available. If it has not been, I will ensure that it is, as it should have been.
  Mr. Shepherd: It has been made available, although I understand that was done unofficially, so as to help the family at the time.
  Mrs. Currie: Officially or unofficially, I am glad to hear that it has been made available.
  My second point is that there have already been two inquiries—the one by the district health authority and the one by the regional medical officer under the circular. I hope that my hon. Friend will understand if I resist any temptation to ask for a third. I have looked at a copy of the report and in my view it provides a comprehensive review of the unfortunate incident surrounding the birth of Rebecca Field. The regional medical officer has found the report to be
  "first-class, comprehensive and a model of its kind."
  All the documents were available to Professor Turnbull and Miss Andrews. All the staff concerned were interviewed and were helpful, and there were no barriers to an efficient inquiry.
  A number of recommendations were made and changes have been introduced both in practice and procedures. The regional medical officer is satisfied that the district's response to the recommendations is satisfactory, and so are my medical and legal advisers. While possible legal action is being contemplated, my hon. Friend will understand if I am cautious in what I say about the details of the matter. We should also be sensitive that we are talking about a handicapped little girl and her future.
  Nevertheless, it is open to Mrs. Field's legal advisers to consider how the report can be used and to seek further independent advice if that seems appropriate. In advising the House tonight, I want to put it on record that I and the health authorities concerned have every sympathy with Mr. and Mrs. Field and with Rebecca. Regardless of the outcome of any possible court action, the district health authority has always been prepared to provide all the care that Rebecca needs in hospital. There she would have 24-hour attention and the necessary equipment. Understandably, Rebecca's parents prefer to have her at home. That means that the DHA cannot provide precisely the same level of care around the clock without lessening the service for others in need.
  Regardless, therefore, of the circumstances surrounding Rebecca's birth, we have a dilemma about the delivery of services to that child and her family which has been going on now for two and half years since Rebecca came home. I understand the difficulties on both sides, especially as Mr. Field has given up work to care for the child. Therefore, I asked my officials today to consult the regional and district heath authorities to discover whether

  1181
  there is any way that assistance can be provided more flexibly and a proper care plan drawn up for Rebecca's future. In my view, that should include appropriate arrangements for ventilation, so that the problem to which my hon. Friend referred should not be a burden on the family. I believe that the parents should be involved in the development of such a plan—perhaps I should say must be involved, in view of some of the circumstances that I have seen outlined in the papers.
  I hope that what I have said tonight shows that I have looked carefully at the documents concerned and am well
  1182
  appraised of the issues. Sadly, there is no good outcome to this tragic case and all our thoughts are with the family concerned. However, I have initiated certain discussions to add to those that are currently under way. I am sure that my hon. Friend joins me in hoping that these matters will be brought to a satisfactory conclusion as speedily as possible.
  Question put and agreed to.
  Adjourned accordingly at twenty-one minutes past eleven o'clock.

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  Bank of England (Equity Capital)
  Bank of England (Equity Capital)
  Bank of England (Underwriting)
  Bank of England (Underwriting)
CIVIL SERVICE
  Employment Bill
  Employment Bill
THE ARTS
  Business Sponsorship
  Business Sponsorship
  Wales (Expenditure)
  Wales (Expenditure)
  British Library
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  Objects in Lieu of Tax
  Objects in Lieu of Tax
  Thomas Webb Museum
  Thomas Webb Museum
ENERGY
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  International Atomic Energy Agency Convention
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FOREIGN AND COMMONWEALTH AFFAIRS
  European Commission
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  African National Congress
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  USA/USSR (Summit)
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  United States of America
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  China (Prime Minister's Visit)
  Cyprus
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  South Africa (Detentions)
  South Africa (Detentions)
  Mr. Douglas Forsyth
  Mr. Douglas Forsyth
  BBC External Services
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  South Africa (Death Sentences)
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  Settlers (Interviews)
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  Postal Communications
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  China (Ministerial Visit)
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  Gulf War
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  Gulf (Ministerial Visit)
  Gulf (Ministerial Visit)
  Soviet Union (Divided Families)
  Soviet Union (Divided Families)
  Arms Sales
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  Locally Engaged Staff
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  Torture
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  Terrorist Organisations
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HOUSE OF COMMONS
  Members' Interests
  Members' Interests
  Press Gallery
  Press Gallery

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ely.
Viscount Blakenham—Took the Oath.
Lord Tedder—Took the Oath.

Business Leases: Service Charges
Baroness Phillips: 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 assist small businesses by amending the laws which enable property developers to levy unlimited service charges on tenants with business leases.
Lord Hesketh: My Lords, service charges are limited to the extent of the expenditures which have been incurred and which would normally be clearly identified within the terms of the business lease, which has been entered into willingly by the tenant and the landlord. Legislation is not required and would be contrary to the Government's policy on business lettings of non-intervention in a free market.
Baroness Phillips: My Lords, bearing in mind that Her Majesty's Government are dedicated to helping small businesses, may we at some stage have an amendment to the Landlord and Tenant Act? I ask this question because whereas a tenant in a house has a limit, a business has no limit, and property developers (which are taking over the whole of London to the detriment of small businesses) are in full sway at the moment.
Lord Hesketh: My Lords, the Government concluded a review of the main legislation in Part II of the Landlord and Tenant Act 1954 as recently as 1985. The review looked at the working of the Act with particular regard to small businesses. It found that generally the balance between the rights and obligations of landlords and tenants was being maintained. Monitoring of the Act continues.
Lord Strabolgi: My Lords, has the owner of a small business the right to examine the books, like a private tenant?
Lord Hesketh: My Lords, I am not sure to which books the noble Lord is referring.
Lord Strabolgi: My Lords, the books on which the service charges have been based. If the noble Lord makes himself familiar with the 1980 Act, he will see that private tenants have the right to consult the books on which the service charges are based. I am asking whether the business tenant has the same right. If the noble Lord does not know the answer, will he write to me?
Lord Hesketh: My Lords, I shall have to write to the noble Lord.
Baroness Phillips: My Lords, as I am not going to have any support from my Front Bench or the Back-Bench opposite, I should like to say—
Noble Lords: Question!
Baroness Phillips: My Lords, it is a question. I do not want the Chief Whip to tell me that. This is a question which is relevant to the previous one. Service charges can be questioned if one is a tenant in a private property. If one is in a business enterprise, they cannot be questioned. Do Her Majesty's Government consider that there is a difference which should be looked at?
Lord Hesketh: My Lords, I shall certainly look into the remarks that the noble Baroness has just made.

BR Sleeper Services: Grant
2.40 p.m.
Lord Stodart of Leaston: 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 subsidise the provision by British Rail of night trains carrying sleeping berths.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, sleeper services are provided by BR's InterCity sector which is still grant-aided by the Government. Losses on these services are thus covered by grant. However, it has been the policy of successive governments that inter-urban travel should not be subsidised, and InterCity, and thus sleeper services, will not receive any grant after the end of this financial year.
Lord Stodart of Leaston: My Lords, I thank my noble friend for that reply. Will he consider bringing to the attention of British Rail the widespread mystification of many people at what they think is their extraordinary financial strategy? Does it make sense to spend a fortune on up-grading the east coast route from Kings Cross to Edinburgh and then permanently to re-route the night sleeper by a longer run from Euston through Carlisle, thus depriving a large area of South-East Scotland and North-East England of the ability to use those services?
Lord Brabazon of Tara: My Lords, that must be British Rail's decision. They are responsible for the day-to-day operation of the railways. I shall draw my noble friend's remarks to the attention of British Rail; but it would be wrong for Ministers to intervene in such operational matters.
Lord Glenamara: My Lords, is the Minister aware that for many years governments of both parties, Members of Parliament, Members of your Lordships' House and many other people, have tried

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to persuade industry to invest in the North-East of England? This decision by the British Rail Board not to have a sleeper service from London to the North-East of England (Newcastle) is a body blow to all their efforts. Will he try to persuade British Rail to change their minds on this matter? If they are immovable, will the Government use their statutory power to give them a directive to retain that sleeper service?
Lord Brabazon of Tara: My Lords, British Rail's decision to electrify the east coast main line was, I should have thought, a very satisfactory one for Newcastle. It is a large investment and it is going well. The fact is that nowadays hardly anybody is using these sleeper services. British Rail estimates, according to the figures it has given me, that it loses about £35 a head on the sleeper services to that part of the country. It must be right, especially as the ordinary trains have become faster and there is increasing competition from airlines and coach services, to remove the sleeper services.
Lord Marsh: My Lords, will the noble Lord agree that the transfer of the management of British Rail to this House might not be an unlimited blessing?
Lord Brabazon of Tara: My Lords, the noble Lord has a great deal of experience with the management of British Rail. However, I have tried to make it clear that Ministers should not become involved in day-to-day operational matters. Otherwise I suspect that no one at all would be prepared to run British Rail.
Lord Carmichael of Kelvingrove: My Lords, while I accept that the sleepers, according to those who use them a great deal, tend to be underused for large parts of the week—although they are very busy at certain times, in particular at weekends—I should like to ask the Minister whether he has any figures to show the intensity of the utilisation of sleepers. Is there any likelihood of his advising British Rail to look at the possibility of repricing and perhaps allowing discount fares, as the airlines do, for the slack periods of the week?
Lord Brabazon of Tara: My Lords, that is a possibility for British Rail to look into. The sleeper service will continue to Edinburgh, using the west coast route. British Rail believes that it can provide a better service in that way. It is worth pointing out to noble Lords—I do not have a total figure for usage—that, for instance, if one takes a station such as Berwick on the east coast route, less than one person a train uses that station on the sleeper service. It therefore hardly makes sense to keep it going.
Lord Gainford: My Lords, has the Minister experienced sleeper travel recently, in particular with the diminished dimensions of the sleeping berths and the luggage space? The only way of ensuring a comfortable night is to be fortunate enough to have a two-berth second-class sleeper berth and to sleep in the lower berth with one's luggage at the top.
Lord Brabazon of Tara: My Lords, most recently I travelled on a sleeper to Plymouth. British Rail has said that it will make sleeping compartments more comfortable. As Minister for aviation, I always try to travel by air whenever possible.
Baroness Elliot of Harwood: My Lords, if British Rail wants to continue to make the railways pay it should give attention to those of us who use British Rail every single week. Otherwise, people will turn to the airlines, which in my opinion will become more crowded and less satisfactory. I hope that the Government will press British Rail to continue these services because they are vital to a great many people.
Lord Brabazon of Tara: My Lords, as I have said, it is a management decision for British Rail. The services to Edinburgh will continue but they will use the different route which British Rail considers will be more satisfactory.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord pay greater heed to the plea made by my noble friend Lord Glenamara, taking account of the serious unemployment situation in the North-East and the importance of a proper sleeping berth service to that area? Will he at least say that he will convey this plea to the chairman of British Rail, in spite of what the noble Lord who is a former chairman of British Rail has just said? It is interesting that the use of the North-East route is minimal.
Lord Brabazon of Tara: My Lords, as I said earlier, I shall certainly draw the remarks that all noble Lords have made this afternoon to the attention of British Rail. However, I tried to explain to the noble Lord, Lord Glenamara, that British Rail is investing a good deal of money in the east coast services. The fact that there will no longer be sleeper services on that line should not make that much difference. The route has become much faster over the past few years and fewer people appear to want to use sleeper car services.
Baroness Faithfull: My Lords, on behalf of those who are frail and elderly, I should like to ask the Minister whether some porters can be supplied for those of us who find luggage heavy to carry.
Lord Brabazon of Tara: My Lords, I think that strays a little away from the Question that I am trying to answer today. It will be included in British Rail's reading of Hansard.

Birmingham Health Authorities: Renal Units
2.48 p.m.
The Countess of Mar: 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 are aware of the proposal by the Central Birmingham District Health Authority to ban new dialysis treatments in the renal unit at the Queen

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Elizabeth Hospital until April 1988 as a cost-cutting exercise; and what advice should be given, should the ban proceed, to patients outside the catchment area of the district health authority who would normally be treated at this hospital.
The Earl of Arran: My Lords, I understand that on 15th September Central Birmingham Health Authority decided, for financial reasons, not to accept new patients for renal dialysis for the remainder of the financial year. However, following discussions with my honourable friend the Minister for Health, the chairman of the West Midlands Regional Health Authority announced on 30th October that an additional £250,000 would be earmarked this year for the renal units in Central and East Birmingham Health Authorities to enable them to continue to take on new patients. This has come out of the waiting list money that the department has already allocated to the West Midlands region.
The Countess of Mar: My Lords, I thank the noble Earl for his Answer to that Question. I am indeed very grateful as are up to 100 kidney patients in the West Midlands area.
Perhaps I may ask the noble Earl whether he still agrees with the Secretary of State's responsibility under the 1977 National Health Service Act as outlined in Section 1 of Part I? That section states:
"It is the Secretary of State's duty to continue the promotion in England and Wales of a comprehensive health service designed to secure improvement in the physical and mental health of the people of those countries; and in the prevention, diagnosis and treatment of illness".
Section 3 of that Act states:
"It is the Secretary of State's duty to provide throughout England and Wales, to such extent as he considers necessary to meet all reasonable requirements"—
Noble Lords: Reading!
The Countess of Mar:—I am reading from the Act, my Lords. May I please quote this because it is very important?
Noble Lords: Too long! Question.
The Countess of Mar: My Lords, the Secretary of State, is required to provide hospital accommodation and medical services. Does the noble Earl consider that the concern which has been expressed in the West Midlands Regional Health Authority area is not outwith the Secretary of State's responsibility to provide health services for everybody in England and Wales? Is he aware, as seen in the Birmingham Post this morning, that the area health authority is complaining that it has not had enough information from its offices—
Noble Lords: Order!
The Countess of Mar:—and that it will have to find another £2 million through cuts? Is the noble Earl satisfied that the health service is being provided for these people?
The Earl of Arran: My Lords, with respect, that was a somewhat long Question. I shall just answer one of the points raised by the noble Countess on the basis, as I interpret it, of robbing Peter to pay Paul. Any increase in funding for one specialty must mean less for another. This year, however, the West Midlands is receiving over £3 million from the national waiting list fund. Even by diverting some money to renal services, I am confident that West Midlands will build on its record of reducing waiting lists. Good progress has been made here, with a 12 per cent. reduction since 1979 in the number of patients waiting for treatment and a 31 per cent. reduction over the same period in the numbers waiting for over a year.
Lord Molloy: My Lords, is the Minister aware that people will be grateful for his reply to the noble Countess and that it is a very good thing in so far as it means that regional authorities, who think that they are the apex of the NHS. in reality are not so? Is it not the DHSS which makes the ultimate decision? This time it made the right decision and it should be thanked for doing so. Is the Minister aware that this decision will bring so much relief and contentment to those who are suffering? That is something that I feel I should say in this House?
The Earl of Arran: I apologise, my Lords, but I am not too aware of the question that the noble Lord put.
Lord Ennals: My Lords, if, as the noble Earl said, this very serious problem raised by the noble Countess has been solved by digging into the waiting list money, what will happen next year? Will there be another freeze on cardiac patients being treated over a very large area? Will there be no funds to relieve waiting lists? Or will the Government provide some money to enable the health authorities to do their job? Will the Minister explain the situation so that we ensure that such tragic stories which have been repeated across the country are not heard again next year?
The Earl of Arran: My Lords, in response to the noble Lord, Lord Ennals, I feel that the noble Lord forecasts a somewhat alarmist situation. All these considerations, if indeed they happen, will be taken into account at the time.
Baroness Masham of Ilton: My Lords, is the Minister aware that two weeks ago when we had a debate on children in hospital I brought up this very same question concerning leukaemia children in Leeds? Is he aware that it is a problem across the country with regional services landing in one particular district? Sometimes that district is not able to fund them. Will he seriously look into this question and perhaps answer my question by letter?
The Earl of Arran: My Lords, of course I am aware of the comments of the noble Baroness. Indeed I shall write to her along those lines.
Lord Molloy: My Lords, is the Minister aware that the department and he should be congratulated for

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reversing a very bad decision? They do it only once in a blue moon, but this time they have picked on the right issue to assert themselves by not letting regional or local authorities think that they rule the roost.
The Earl of Arran: My Lords, with respect, I am still not totally clear about the question.
Lord Underhill: My Lords, is the Minister interested to know that I have received a communication from a patient in the Queen Elizabeth Hospital, Birmingham—the subject of this Question—who is himself a renal patient on dialysis and an officer of the Kidney Patient Support Association? These patients are concerned not with the next few months, but that support will be given not only for present months but for future years. Is the Minister aware that my noble friend's Question is very important for sufferers in this area?
The Earl of Arran: Once again, my Lords, I am not sure of the question posed.
Lord Molloy: Then resign, my Lords.
Lord Underhill: My Lords, I should have thought that the simple point of my question is clear. It is not sufficient to give promised assistance for the next few months. The people who are patients in this area—and there will continue to be dialysis patients in this area—want to know what will be available in the future, next year and the year afterwards? That is what we are asking the Minister to tell us.
The Earl of Arran: My Lords, to make a decision now based on next year and the year after is a little too early. If any problems that have been outlined do arise, they will be considered at the correct moment in time.
Baroness Seear: My Lords, I am sure that the noble Earl realises that this is literally a life and death matter for dialysis patients. What developments, if any, have been made in transferring people across the boundaries of health authorities because there are shorter lists in some places than in others? In so doing is he aware that that will be reducing the costs? Is the noble Earl aware that it was as regards this unit that I was told that there was no difficulty in such a move except the restraint of financial bureaucracy?
The Earl of Arran: My Lords, I thank the noble Baroness for her question. I am just as sensitive and as deeply aware of the deep misfortune that such patients suffer. During the time of the ban patients were referred to one of the other six centres in the region at East Birmingham, Stoke, Coventry, Dudley, Luckfield and Wolverhampton. The regional health authority is keen to develop other renal centres in the region so as to relieve pressure on the Queen Elizabeth unit.
The Countess of Mar: My Lords, is the noble Earl aware that kidney patients in this area were told that they could not be treated because the regional health
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authority could not afford to pay the fees for transferring them from one region to another? Is he also aware that Sir James Ackers on Midland Television News last week said that next year they are heading for a £17 million deficit in the region? Do the Government propose to support the National Health Service in the West Midlands area or not?
The Earl of Arran: My Lords, of course the Government propose to help the West Midlands Health Authority at all times like all other health authorities. If such fearful problems pose themselves they will be looked at immediately and the correct remedies taken.
Lord Prys-Davies: My Lords, is the Minister satisfied that the Queen Elizabeth Hospital renal dialysis unit is adequately funded to provide services in accordance with the DHSS criteria?
The Earl of Arran: My Lords, the unit which the noble Lord, Lord Prys-Davies, mentions, is only one of seven in the region. It is for the regional health authority to determine how much money to invest in each unit. The authority is investing £640,000 of new money in its renal programme this year.

Salmon Stocks: Parasite Control
2.57 p.m.
Lord Moran: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to prevent the spread to the United Kingdom of the parasite gyrodactylus salaris, which has drastically reduced salmon stocks in an increasing number of Norwegian rivers, and whether they are in touch with the Government of the Republic of Ireland to concert measures to protect wild and farmed salmon stocks in the British Isles against it.
The Minister of State, Scottish Office (Lord Sanderson of Bowden): My Lords, I am aware of the effects which the parasite gyrodactylus salaris is having on Norwegian salmon stocks.
The parasite is transmitted among live salmon in fresh water. Imports of such fish into Great Britain are prohibited under the diseases of fish legislation and very strict health controls also operate in Northern Ireland. These controls provide an adequate means of preventing the spread of the parasite to Great Britain. However, as was indicated in another place earlier this week, the Government have, as a precautionary measure, decided that we should bring this parasite within the control provisions of the Diseases of Fish Act 1937.
As far as I am aware, there is no evidence to suggest that salmon stocks in the Republic of Ireland are affected by the parasite, but I have no reason to think that the authorities there will not enforce such measures as are available to them to prevent the introduction of this parasite into their waters.
Lord Moran: My Lords, I am grateful to the Minister for that broadly reassuring reply. Is it correct that this organism, related to that unsatisfactory creature, the liver fluke, has spread rapidly in Norwegian rivers since 1985 and is now affecting at least 29 rivers, and that scientists are still not certain how it spreads? Is he aware that the Norwegian authorities have found that the only way to control it effectively is the drastic measure of removing all the hosts; that is, poisoning all the fish in a river system with Rotenone?
If that is so, is it not essential that we should take the most stringent measures to prevent it spreading to rivers, hatcheries or fish farms in this country? Will the Minister confirm that we are talking to the authorities in the Republic of Ireland about this problem, which could easily spread across the border either way?
Lord Sanderson of Bowden: My Lords, I can confirm that this is a serious matter for the Norwegian authorities. There is no evidence that the parasite can be transmitted through salmon ova, which is an important point in terms of our import controls. Secondly, no imports of live salmonids from the Republic of Ireland are permitted. As a matter of course we consult with other laboratories, both in Norway and in other countries, which deal with these diseases. I underline the importance the Government attach to dealing with this kind of disease, which has been devastating in Norwegian waters.
Baroness White: My Lords, has there been any consultation with the Atlantic Salmon Trust, a very reputable body, which I believe drew the attention of the Ministry to this problem?
Lord Sanderson of Bowden: My Lords, the noble Baroness is quite right. We keep in close touch with such organisations, which have been very helpful. I understand that they welcome the move the Government have made this week in this direction.
Lord Chelwood: My Lords, is my noble friend aware that the Government's failure to licence salmon dealers has opened up so many different ways in which poachers can get rid of wild salmon that the chances of inspecting them for signs of disease are absolutely nil?
Lord Sanderson of Bowden: My Lords, I am well aware of the passing of the Salmon Act 1986 and of the fact that the salmon dealers' licensing has not yet come into effect. I hope that my noble friend will be reassured that the days when this will take place are near.
Viscount Thurso: My Lords, can the Minister tell us what quantities of live salmon are exported from Norway and to which countries they are exported?
Lord Sanderson of Bowden: My Lords, I cannot give the noble Viscount any indication of the amounts of fish that come from Norway, save to say that we have strict regulations on imports. Our current import controls for live fish and eggs are effective, however, and in my view there would be no
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justification for applying a complete ban on Norwegian imports. I cannot give the noble Viscount the actual figures for imports but I shall write to him with that information.
Lord Moran: My Lords, is it correct that this parasite can also live on rainbow trout? If that is so, is there a danger of it spreading through the movement of live trout in Europe?
Lord Sanderson of Bowden: My Lords, as far as I am aware, the answer to that question is, no. However, there is a problem with regard to cold water ornamental fish and we are looking at the problem quite closely. It is intended to review the existing licensing controls for these fish.

Business
3.2 p.m.
Lord Denham: My Lords, with the leave of the House, I shall arrange for a Statement that will be made in another place this afternoon on training for the unemployed to be printed in the Official Report.
With the leave of the House, I should like to say a word about the length of speeches in this afternoon's debate standing in the name of the noble Lord, Lord Sherfield, to which your Lordships have agreed to apply a five-hour time limit. On the principle that the mover is allowed approximately 20 minutes and that the Minister should rise to reply not less than 25 minutes before the scheduled end of the debate, all other speeches should he limited to a strict upper limit of 12 minutes. If any noble Lord should speak at greater length he would be doing so at the expense of other speakers in the debate.

Training for the Unemployed
Following is the Statement fir the Secretary of State for Employment (the Right Honourable Norman Fouler):
"With permission, Mr. Speaker, I should like to make a Statement on a new training programme for unemployed people.
"Unemployment has now fallen for 16 months in succession by a total of nearly 500,000. Over the past 12 months long-term unemployment has shown a record fall and the latest figures for unemployed young people also show that we are well on the way to eliminating the problem of school-leaver unemployment. This September there were fewer unemployed school-leavers than for 13 years.
"I believe that this is the right time to review the Government's programmes for unemployed people. We need to be sure that we have the right programmes to meet the demands of an improving labour market. We need to be sure that we are giving unemployed people the help they need to take advantage of the increasing number of jobs now becoming available. And we need to be sure that the programmes we operate are helping to provide the skills we require to compete in world markets.
"I am clear that the priority now must be to provide training for the long-term unemployed. The emphasis should be switched away from providing temporary jobs as an alternative to unemployment and towards providing training to help unemployed people to get back into permanent jobs. But more than that, we must ensure that the training we provide is geared both to the needs of the individual and to those of the economy.
"We already have a unified programme for young people—the youth training scheme. I have now decided to bring together all the existing programmes for unemployed people over 18 into a single new programme. It will involve the substantial reform of the community programme, including a major enhancement of its training content. This new programme will offer up to 12 months training for anyone who has been out of work for more than six months. Entry to the programme will be through the Restart interviews and jobcentres. Training agents will then assess the needs of each person and training providers will arrange a suitable programme. There will be special arrangements for disabled people and others with special needs.
"This new programme will involve employers and a range of other organisations like chambers of commerce and voluntary and training bodies. I hope that managing agents now in the community programme and the job training scheme will play a full part. The programme will provide training and practical experience with employers and on projects. The emphasis will be on practical learning to help people get back into employment. Accordingly, the training will range from basic working skills, including numeracy and literacy, to training at craft and technician level. The aim is that the new programme should improve significantly on the number of people who obtain jobs when they leave.
"For all its merits, the community programme in its present form does not attract unemployed people with dependants and with higher benefit entitlement. It has become increasingly a programme for single people rather than the family man with children. It has also become overwhelmingly a part-time programme with very little opportunity for training. We need to tackle these problems at the root. It is essential that unemployed people who join the new programme know that they will be better off than they were on benefit. I therefore intend that all trainees in the new programme should be paid a training allowance which will give them a lead over their previous benefit entitlement.
"The budget for the new programme will be just under £1½ billion a year, so maintaining the provision for the schemes it will replace. When the new programme is fully operational it will be possible to provide training for some 600,000 people a year. It will therefore make a major contribution to fulfilling the Government's commitments to the long-term unemployed. And it will also help to ensure that we train the workforce
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with the skills that we shall need in the 1990s and into the next century.
"I am asking the Manpower Services Commission for its comments on the new programme and to let me have proposals for introducing it from September next year. I propose to publish a White Paper early next year setting out the detail of the new programme and putting it in the context of the Government's overall strategy for employment and training.
"At a time of rapid growth and change in employment opportunities, training through life is of key importance. That means training for the young and for adults; for the unemployed and for the employed. The programme I am announcing today focuses on the long-term unemployed and complements the youth training scheme for young people and our efforts through employers to improve and increase training for employed people.
"No other country has a programme on this scale. It will provide new opportunities for long-term unemployed people to obtain the skills and qualifications employers need. This programme will benefit unemployed people, employers and the economy as a whole, and I hope that it will command the support of the whole House".

Civil Research and Development
3.3 p.m.
Lord Sherfield Lord Sherfield rose to call attention to Command Paper 185 on civil research and development and to the consultation paper A Strategy for the Science Base; 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 make no apology for moving this Motion today. In the discussion of the Autumn Statement in another place, the Chancellor of the Exchequer referred to science as, and I quote, "the fashionable cry". If the subject has become fashionable it is because of the concern which the Government's policies for research and development have created among the academic and scientific communities. It was indeed this concern which led your Lordships' Select Committee last year to produce its report on civil research and development.
Although it may seem like yesterday to the Government Front Bench the subject of science and technology was last debated in your Lordships' House nine months ago, within a day or two. The committee's report was published in January of this year and received wide and generally favourable publicity. It was then debated in the House on 17th February. This debate gave noble Lords an opportunity to give their views on the report, but I did not ask and certainly did not expect the Government to make any substantial reply on that occasion. They undertook to give a considered reply to the committee's recommendations before the Summer Recess. They were as good as their word and presented Cmnd. Paper 185 at the end of July.
I wish to express my appreciation on behalf of myself and the members of the committee for this full and constructive reply to the committee's recommendations. I shall not go into detail. Noble Lords will have read the response. Suffice it to say, as regards the objectives for science and technology policy and the organisation needed to pursue those objectives, the Government accepted the main thrust of the committee's report; not, of course, precisely in the manner that the committee proposed—that was too much to expect—but in a way which satisfies me at least that policy for science and technology will now be given the priority in government thinking which it ought to have. I am glad that that is recognised today in the fact that the noble Viscount is to speak next in the debate.
I welcome particularly the establishment of a high-level Cabinet committee under the Prime Minister's chairmanship, and the setting up of a fully representative advisory council on science and technology, already dubbed ACOST, with which the Prime Minister will meet from time to time. I note, too, that ACOST will establish working arrangements with departmental advisory bodies, including the Advisory Board of the Research Councils. I am also glad to see the strengthening of the position and authority of the chief scientific adviser in the Cabinet Office, and the widening of the remit of the Committee of Departmental Chief Scientists.
As regards the research councils, the Government again welcomed the main thrust of the committee's report, but in paragraph 15 of their response they drew particular attention to the paper by the Advisory Board of the Research Councils entitled A Strategy for the Science Base, which was published on the same day as the Cmnd. Paper. This contains some far-reaching proposals, in the words of paragraph 15 of the Cmnd. Paper:
"for strengthening the framework within which the funding and management of interdisciplinary research in institutions of higher education can flourish".
Some of those proposals have proved to be highly controversial. The paper is a consultation document, and obviously I do not expect any substantive reply from the Government in this debate. But it seemed to me to raise issues of such moment for the organisation of scientific research in universities and polytechnics and is so closely linked with the Government's response to the Select Committee, that I thought it would he useful to draw attention to it in the Motion. I understand that the time limit for consultation expired last week.
The Select Committee in other circumstances might well have wished to make a report to the House on the ABRC's recommendations but the duration of the recess has made that impracticable. I hope, however, that several noble Lords will give their preliminary views on the report's recommendations, and I have no doubt that it will not be too late for the Government to give due consideration to them as part of the consultative process.
I now turn back to the new central structure for the formulation of policies for science and technology, and I should like to ask one or two questions about
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its progress. First, I understand that the advisory committee, ACOST, has been constituted, and I can only wish it well and express the hope that the Prime Minister will take the first opportunity to meet with it and demonstrate publicly the close ties with the Cabinet Committee which should be, and I am sure will be, established.
Secondly, I assume that by now the Science and Technology Assessment Office in the Cabinet Office is fully staffed up and running, and I should like confirmation of this. Thirdly, I ask about the health of two important adjuncts of the central structure. First, how about the LINK initiative to encourage collaborative programmes between the universities, government research establishments and industry, and, in the White Paper's words,
"to foster strategic areas of scientific research directed towards the development of innovative products, processes and services by industry"?
In the earlier debate the House was informed that one such programme had been approved. To what extent has this initiative gathered momentum since then?
The second adjunct is the new national Centre for Exploitation of Science and Technology. It was announced last week that the headquarters of this organisation will he in Manchester, but the staffing and modus operandi of this centre are, I understand still being considered by a group under Sir Robin Nicholson.
How is this getting on? It seems important that the centre should be set up as soon as possible since its views will be urgently needed by the advisory committee and indeed by the Government. This project had the endorsement of the Select Committee. It is essential that it should be a success. The fate of the Technical Change Centre, admittedly a somewhat different animal, will no doubt be much in the minds of the sponsors of the new body.
Paragraph 21 of the Government's response deals with the application of the so-called customer-contractor principle laid down in the Rothschild Report of 1971. Lord Rothschild recommended that a surcharge averaging 10 per cent. should be added to contracts to provide for general research; that is, some contractors would receive more and some less than 10 per cent. According to our evidence this surcharge was seldom, if ever, added to contracts by departments, so I find the government response mildly encouraging because it seems to indicate that the surcharge is being awarded in accordance with the report's recommendations. But have I correctly construed the paragraph? Perhaps the Minister would confirm the position.
Lastly, I should like to ask whether the Government have anything fresh to say about paragraphs 32 to 34 of the command paper dealing with the civil implications of defence research and development, and in particular whether the inquiry which was being conducted by ACARD is continuing under the supervision of the new Advisory Council on Science and Technology.
Of course it takes time for a new structure to be set up, to acquire authority, and to show results, and in the meantime the world marches on and decisions have to be taken without the benefit of it. A prime

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example has been the Government's space policy. This is a current subject for inquiry by the Select Committee and I shall leave it to the Chairman, the noble Lord, Lord Shackleton, to deal with it if he wishes to do so. But it illustrates the delays and confusion to which the present system of policy making can give rise.
The other main issue raised by the Select Committee was the funding of civil research and development. Here the position is much less satisfactory and my welcome muted. The committee concluded from its evidence that research and development was in many cases underfunded, and in some cases seriously underfunded. It made a number of proposals for increasing resources on the part of both government and industry and not, as was stated by a Minister in another place in reply to a question on 28th October, by industry alone.
The government response outlines what the Government are contributing in various fields, but without making a commitment to the provision of additional resources which the expanding and evolving nature of scientific research and development requires. In this connection there is a need for clarification of the projected financial provision for 1987–88 and 1988–89 referred to in the Chancellor of the Exchequer's Autumn Statement in another place on 3rd November. He said initially that there would be an additional £45 million for science in 1988–89 and £65 million in 1989–90. Later on, in reply to a question, he said that the science figure he had given was for university research and that in fact the total extra government spending on civil science and technology was an extra £200 million a year.
On 4th November the Save British Science Group published an analysis of the provisions in which they claimed that in real terms the money available for research would actually decrease by £19 million in 1988–89 and by £10 million in 1989–90. There have been other press reports giving various accounts of the position.
If the Save British Science figures are anything like accurate, the Government have ignored the most recent and urgently worded recommendations of the Advisory Board for the Research Councils and the thrust of the Select Committee's report, and apparently may not even have adhered to their policy of maintaining the level of the science budget in real terms. It is most important that the position should he clarified for the benefit of the House and the public. The figures given for the increased provisions for the universities are equally difficult to penetrate and also need to be elucidated.
I shall now venture a few preliminary comments on the document, A Strategy for the Science Base. Your Lordships will doubtless have seen that a central recommendation of this paper is that institutions of higher education should be graded into three groups, or strata, and that this has met strong opposition from the Committee of Vice-Chancellors and Principals, from the Royal Society, from the British Association for the Advancement of Science and from other interested bodies—and there are really quite a number of them which I have here.
Some of your Lordships may not be aware that a sighting shot at the same target was fired earlier this year in a report commissioned by the University Grants Committee on the future organisation of teaching and research in the earth sciences produced by a group under the chairmanship of Professor Oxburgh of Cambridge University. This recommended, inter alia, that earth science centres should be set up in universities at three levels roughly equivalent to the three strata recommended in A Strategy for the Science Base. This proposal was also strongly criticised and has now been abandoned in favour of another method of bringing about a concentration of teaching and research resources in this discipline.
It is my view that this precedent should be followed in the wider context. I believe that it is not feasible to give formal gradings to institutions as complex and diverse as universities, each of which will have elements of relative strength and weakness. For my part, I think that it is desirable that the required restructuring should proceed organically with the minimum of central regimentation and the maximum of discussion and negotiation between departments or groups of departments.
There is a general consensus that a concentration of resources in science and technology, teaching and research is needed. There is a considerable difference of view as to how this concentration can best be achieved. Although in the time available it has not been able to comment on the specific proposals contained in A Strategy for the Science Base, the Select Committee has identified some principles and formed some broad views based upon its previous reports and experience. Those have been communicated to the Secretary of State for Education and Science.
I have spoken for long enough, but I should like to make one final observation. If national spending on civil research and development by the public and private sectors were adequate, some of the choices proposed by the Advisory Board on the Research Councils would be unnecessary. If public expenditure on the science base matched that of our competitors, and was rising instead of lagging behind and falling, some sacrifices contemplated in the ABRC report could be avoided. In the circumstances, there is a clear need to be selective between fields of research and to be selective between institutions at departmental level. I shall leave it to subsequent speakers to enlarge upon those themes. I beg to move for Papers.
3.22 p.m.
The Lord President of the Council (Viscount Whitelaw): My Lords, I should like to thank the noble Lord, Lord Sherfield, for introducing this important Motion, and also for chairing the Select Committee which produced the full and considered review of civil research and development to which the Government replied in July in Command Paper 185. I am sure that I do not need to remind your Lordships that the noble Lord also chaired the Select Committee which produced another major report five years earlier on science and government. The main thrust of that report was accepted by the

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Government in July, 1982, and has largely determined science and technological input to government policy-making since then. As the noble Lord, Lord Shackleton, has taken over the chairmanship of the Select Committee on Science and Technology from the noble Lord, Lord Sherfield, we also look forward with particular interest to hearing his contribution in this debate.
I shall be addressing the first part of the Motion which concerns the Command Paper, while my noble friend Lady Hooper will largely concentrate on the Advisory Board for the Research Council's consultation paper, A Strategy for the Science Base. I very much regret that a longstanding prior engagement prevents me from staying until the end of the debate this evening, although I hope to be present for the greater part of it. I shall certainly read the remainder of the debate in Hansard tomorrow.
I am grateful to the noble Lord, Lord Sherfield, for the warm welcome that he has given to the announcement in the Command Paper of a strengthening of the Government's central machinery (with collective ministerial consideration under the leadership of my right honourable friend the Prime Minister) for science and technological priorities, and the establishment of the Advisory Council on Science and Technology known as ACOST. The council, chaired by Sir Francis Tombs, has been given a very wide remit. It will advise across the whole of scientific and technological endeavour, international as well as British, with the membership drawn from the business and academic worlds. The council has now met twice, the second meeting being yesterday. The Prime Minister will hold periodic meetings with ACOST and she hopes to hold the first of these early in 1988.
The Government's purpose in strengthening the central machinery for science and technology is, as the Command Paper states,
"to increase the contribution of government-funded R&D to the efficiency, competitiveness and innovative capacity of the United Kingdom economy".
This gives a new emphasis to establishing priorities for science and technology. The new machinery is now getting underway and the Government are conducting a searching review of their R&D programmes, with a view to decisions being taken on the level and distribution of R&D expenditure in the next public expenditure round and announced in a year's time. One decision that has already been taken for the future is to increase civil R&D's share of the total. The plans announced two weeks ago in the Autumn Statement will mean civil R&D increasing to more than 50 per cent. of planned R&D expenditure in the next few years. The main additions are for universities, research councils and launch aid. Spending on civil science and technology will rise by some £200 million a year, including increases already announced, compared with the plans in the January public expenditure White Paper. Launch aid is expected to account for about half the increase. In reply my noble friend will say more about the points raised by the noble Lord, Lord Sherfield, and will deal particularly with the figures that were published questioning what the Government were doing.
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The noble Lord, Lord Sherfield, also asked about the Centre for the Exploitation of Science. I know that the Select Committee welcomed the establishment of this centre in July. The centre, which is a national agency independent of government and largely funded by industry and commerce, will help identify at an early stage scientific developments which look likely to become commercially significant. The centre will develop a close relationship with ACOST, with the Advisory Board for the Research Councils and with the Department of Trade and Industry. Sir Robin Nicholson, who is chairing the steering committee of founder members, announced last week that the centre will have its headquarters in Manchester where a consortium of universities, polytechnics and companies will offer the support of a range of facilities and additional expertise. I think that your Lordships will agree that that is an excellent development which should be used to the full.
Both the Select Committee's report on civil research and development and the Command Paper put considerable emphasis on industrial R&D. My noble friend the Secretary of State for Trade and Industry is currently reviewing his department's policy in supporting and encouraging innovation. The prime need is for industry to increase the level of R&D that it funds and the department's policies will promote this. UK industry still spends too little on R&D in comparison with its competitors. In 1985 UK industry's own funding of R&D was only 1 per cent. of our gross national product, compared with 1.3 per cent. for the United States, 1.6 per cent. for Germany and 1.8 per cent. for Japan.
The noble Lord, Lord Sherfield, also asked about progress on the LINK programme under which the Government will support up to half of the cost of collaborative R&D programmes between the scientific community and industry. Five programmes developed by departments and research councils are at an advanced stage of preparation. They are in the fields of industrial measurement, electronics and biotechnology. More details will be given when my noble friend the Secretary of State for Trade and Industry announces the results of his review of innovation policy in the New Year. Proposals in some 20 other areas are presently under active consideration.
In the Command Paper we also welcome the Select Committee's support for international collaboration in R&D. The international dimension has always been important in science. We can learn much from our colleagues in other countries and an element of competition with the best minds from overseas can prove a healthy stimulus. However, as must always be the case where questions of the allocation of government funds—taxpayers' money—are concerned, we must be certain that collaborative projects make the best use of scarce and valuable resources.
The Government have been accused of having too tough an attitude in the negotiations over the European Community's framework programme for research and development. Certainly the Commission's initial ideas were far too ambitious. But we have always supported the fundamental

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concept and we believe that the tightly monitored programme that has now been agreed will make a real contribution to industry in the Community.
The Government have also taken a firm stance in the European Space Agency negotiations at the ministerial meeting in The Hague last week. While our commitment to European co-operation has not changed, what has changed is the scale of the European Space Agency's aspirations. Of course, we recognise that space research is expensive. However, the huge increase in cost of some of the European Space Agency's programme proposals relating especially to manned space does not appear justifiable on scientific, commercial or financial grounds. We have made it clear that we shall support those parts of the established programmes which give due weight to such considerations. We also put forward a case for greater involvement of industry and users in the planning and financing of programmes. Other member states supported our aims to the extent that several of our points were incorporated in the final resolution.
The Government agree with the Select Committee that it is important to increase the civil spin-off from defence R&D, which brings me to another of the questions raised by the noble Lord, Lord Sherfield. I should like to give your Lordships the latest figures from Defence Technology Enterprises Limited, which is the private sector company jointly set up in 1985 by the Ministry of Defence and the City. That company has privileged access to the four largest defence research establishments and looks for exploitable ideas. The company now has some 500 items on its database. In addition, some 35 licences/options for exploitation have been let or are in the final stages of negotiation. I hope that the noble Lord will feel that this is encouraging progress, at least as a start.
I should like to conclude by once again thanking the noble Lord, Lord Sherfield, for initiating this debate. I should also like to thank the noble Lord, Lord Shackleton, and the other members of the Select Committee for its continuing work. I have sought to give answers to some of the points raised by the noble Lord, Lord Sherfield, and also to give some further information to your Lordships' House. I have tried to do that very carefully within the 12 minutes allotted to me. I am very well aware of the theories of red lights and other ideas that have been put forward in recent debates. I shall not offend. Therefore I end by saying simply that the field of science and technology is one in which your Lordships' House makes a most valuable contribution to the policy-making process and to the encouragement of improvement and innovation.
3.34 p.m.
Baroness David: My Lords, we are indebted to the noble Lord, Lord Sherfield, for initiating this debate on civil R&D and to the efforts that he and his committee have consistently made to direct the Government's attention to the need for better co-ordination and more purposeful direction in the management of R&D and to the need for increased funding for science and research if this country is to
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maintain the high reputation that it enjoys worldwide on account of its scientists, their discoveries and the benefits of those discoveries.
As the noble Lord, Lord Sherfield, said, the committee's recommendations have been partially accepted, but I do not believe that its efforts to achieve substantially greater financial backing have been rewarded as they deserve. I doubt whether the timing of this debate, which is just after the Chancellor has announced the Government's public expenditure plans in his Autumn Statement, is right for the furthering of the committee's objectives in that way. Sir David Phillips, chairman of the Advisory Board for the Research Councils, described his reaction to the Statement as one of acute dismay. Even so, I hope that today's debate may have some effect in persuading the Government to reconsider their attitude towards science and the universities.
Before I turn to the two papers that we are to consider, I should like to echo the remarks made by my noble friend Lady White in February when the report of the Select Committee on Science and Technology, to which these new papers are the response, was debated. Hitherto, this House has had the benefit of many speakers with specialist knowledge in the field of science. I am not one of them and therefore I shall not speak for very long. However, in the words of my noble friend Lady White:
"we are in real danger of running short of Members who have the knowledge of science in its very rapidly changing modern manifestations—knowledge which is needed to enable this revising and advisory Chamber to do its work as effectively as we all wish".—[Official Report, 19/2/87; col. 1290.]
This House tends to see the same list of speakers time and again and, though the recent addition to our ranks of the noble Lord, Lord Dainton, and my noble friend Lord Peston, is welcomed, this Chamber, as well as the universities, needs an infusion of new blood if it is to keep in touch with a field of knowledge which is as rapidly developing and as vital to the interests of the country, and indeed of humanity, as science is today. I hope that the noble Viscount the Leader of the House, whom we are lucky enough to have speaking in this debate today, will make sure that that message gets through to where it matters.
Of the two papers that are before us today, the White Paper is the Government's response to the Select Committee's report on civil R&D which was issued last November; the ABRC's paper entitled A Strategy for the Science Base is supplementary to the Government's paper and is a detailed plan produced at the request of the Secretary of State to enable him to support and amplify his answer. I am somewhat confused, as was the writer of an article in last Friday's Nature, about whether the strategy advice was considered when finalising the budget. Two rather contradictory statements from the Secretary of State are quoted. Perhaps the Minister can enlighten us on that point when she replies.
However, the Government seem to be saying that British science can expect no additional funds from them—if it needs more funds they must come from industry, from an internal source, from economies and from improved management. The plan expounded in the ABRC's report is a suggestion on

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how that could be managed, but the report adds that additional funds to the tune of £103 million are necessary to put the plan into action. My noble friend Lord Peston will be going into the details of finance when he winds up the debate.
Although there seems to be general agreement on the need for more concentration and more purposeful direction, the ABRC's proposals have met with widespread criticism. The Royal Society, the Council for Industry and Higher Education, and another 19 distinguished bodies, as well as eminent individuals such as Max Perutz, have come out against those proposals, and particularly the suggestion that there should be a three-tiered range of universities—types R, T and X.
I am not a scientist and I shall not go into details, but laymen can appreciate that the liveliest teachers will be those who themselves are at the leading edge of research in their subject and that the suggested separation of teaching in universities and research in universities is not a useful or even a realistic concept. The rigid division into first, second and third class scientists which would follow that plan is unlikely to improve either teaching or research. Universities are dynamic not static institutions and circumstances change. Today's standard university could be tomorrow's centre of excellence. The three-tier structure is too rigid to allow for this dynamism.
The proposal for inter-disciplinary research centres has had a mixed welcome. The Royal Society suggests it would work in some areas, in some subjects, but not in all; and that not more than 10 per cent. of the science budget could go into them. They say, "It is vital that the responsibility for determining the direction of the IRCs research programmes should not be imposed from above by the research councils. There must be the opportunity for an input by the ground level scientific community and the universities in order to ensure a healthy balance between directed and curiosity-driven programmes". Some IRCs, as I understand, have already been set up, and we shall watch them with interest.
On another tack, is there no possibility that universities could fuse with polytechnics when they are in the same town and therefore concentrate effort? Incidentally, I regret that polytechnics get very little attention in the documents that we have before us. We on this side of the House accept that there has to be some concentration of effort and that good management of ultimately limited resources is essential. The UGC has already made a start by classifying departments—not exactly a popular exercise in some quarters—and their grants follow a highly selective pattern; more than half go to 12 universities and only 10 per cent. to what the Royal Society calls the bottom 15. As a member of the UGC said to me last week: "The exercise of trying to concentrate excellence into a limited number of departments is difficult, and if it is done clumsily it could concentrate them into Southern California."
The research councils also have distinguished centres of excellence and have funded them accordingly. But these policies, to quote the Royal Society's admirably crisp and pointed submission:
"Whilst beneficial in some respects, have also disadvantaged some individual research workers and some areas of research. We are
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concerned that a further concentration would prejudice the quality of curiosity-initiated research".
I should like to raise the question of the need for more explicit policies for the management of research manpower—that comes in paragraph 140 of the ABRC Report. It refers to over 10,000 research assistants in universities in 1984, which is a 70 per cent. increase over 1974. They work on short-term contracts and there are difficulties in recruiting in certain fields because of lack of prospects. The report sees the need to keep talented young scientists in play until permanent academic posts become available. It says that in the physical sciences and engineering there is an urgent need to develop a limited number of opportunities comparable with those in the biological and environmental sciences, through AFRC, MRC and NERC. Perhaps more thought should be given to the plight of the talented people who are on those short-term contracts. One suggestion made to me was that just as the business schools keep records of achievement of former students, the research councils also should keep a record of their post-doctoral employees. There is at the present time no personnel department or staff development function which could provide very useful information.
A more revolutionary idea was suggested to me at the week-end, and I thought I would try it out on your Lordships. It was that there should be two tiers of pay: first, low pay with tenure given indefinitely; and, secondly, five-year contracts, without tenure, but with significantly higher pay, perhaps 50 per cent. higher. These non-tenured jobs should be open to competition; those finishing their contracts could re-apply. As the person who suggested this said, "Lords Rutherford and Raleigh would have had no difficulty in being re-appointed". Those who were bright would be in no danger of being lost. However, I suspect that this suggestion would not meet with AUT approval.
The thing which ultimately determines the quality of scientific research is the quality of the people engaged in it; and, likewise, the quality of their training. A few really gifted individuals will not only he inventive in themselves but will also inspire the others with whom they work: without such team work few solid advances are usually made. Organisation and concentration are all very well but they must not be allowed to stifle individual flair, discourage morale and cramp basic training. The Government, in their policies for science, seem to be doing just this. Many potential leaders, seeing their prospects so limited in this country, are being lost to other countries which are prepared to devote a larger share of their GDP to university research; for the rest, what should be an adventure becomes a chore. Restrictions on universities and polytechnics, although both have made valiant attempts to provide more places despite the cuts, mean that the supply of properly-qualified scientists—to say nothing of science teachers and the skilled technicians so desperately needed by industry—is still woefully inadequate.
In this sphere, as in so many others, the Government seem to remain obsessed by what I may call the battery technique: design your coop. pack the

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hens in and they are bound to fulfil all your requirements. However, the general view is that battery hens do not poduce good eggs; or, at any rate, they produce eggs which are not as good as those laid by free-ranging hens.
3.46 p.m.
Lord Flowers: My Lords, we are all grateful to the noble Lord, Lord Sherfield, for initiating this very timely debate. Your Lordships' Select Committee asked that science and technology should be given a higher profile, both pure and applied and both civil and defence. We also asked for the personal commitment of the Prime Minister. In the new Advisory Council on Science and Technology we have been given, essentially, what we asked for and are delighted that the Prime Minister, herself, is to take such a close interest in its work. That has been confirmed today by the noble Viscount, Lord Whitelaw, and it is most encouraging. From these Benches I should like to wish Sir Francis Tombs well in his new responsibilities in the chair of ACOST.
The first public pronouncement of ACOST concerned the long-awaited Centre for Exploitation of Science and Technology, which has already been referred to. It is a discussion forum created by government but to be led by the private sector, which will encourage industry and higher education to develop shared perceptions about priorities for scientific research. This is to be in Manchester, in their science park. As a competitor myself—having hoped that it might be associated, somehow, with the University of London—I should like to congratulate my friends in the University of Manchester who have formed such a powerful and promising partnership with industry and the other universities and polytechnics in their region.
I would pass now to paragraph 18 of Cmnd. 125 which makes a very clear commitment about overheads being chargeable on research contracts. This is not, however, quite the same as the surcharge referred to by the noble Lord, Lord Sherfield. May I ask whether that paragraph does represent government policy and. if so, why certain departments —MA FF in particular—are still unwilling to pay appropriate overheads?
The response of the Government to the Select Committee relies upon the discussion document, A Strategy for the Science Base. This document has generated a lot of discussion and the ABRC are to be congratulated on that. It would be wrong, however, to assume that it contains newly-revealed truths, attention to which will result in miraculous benefits to the pursuit and application of science in this country. I well remember taking part in the writing of somewhat similar documents 20 years ago or more. We were keen then, as now, to select fields of timeliness and promise—to use the jargon of those days—and to concentrate resources upon them in order that scientific advance, technological development and economic benefit should follow (as, indeed, in some cases they did) when our competitors with greater resources or a sharper sense of profit did not get there first as they often did and sometimes do today.
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Of course, much has happened since that time. Nowadays many universities are winning substantial research income under contract to industry. Only this Monday, at the conference centre in Parliament Square, we heard how universities as disparate as Cambridge and Salford had succesfully tackled the problems of industrial exploitation of academic research; the one with the science park, and the other with its campus company, and there are many other examples.
If a policy of selectivity and concentration has been advocated and practised so long, why does it need to be re-emphasised today? It is not merely that money for research is nowadays much harder to come by; nor is it because in comparison with our competitors abroad we are still slow to exploit our discoveries. Of course these are both important factors. But it is also because a centre for exploitation selected for some particular purpose is not especially likely to become a growth point for some later purpose. And that is especially so with the precisely targeted interdisciplinary centres so strongly advocated today, not least in the ABRC document, and now being promoted by the research councils in the guise of university research centres. New groupings of basic disciplines have continually to be sought and new policies promulgated accordingly.
The ABRC has gone completely overboard, however, when it advocates that whole universities should be classified as referred to by the noble Lord, Lord Sherfield. It has been roundly condemned by almost everybody, including your Lordships' Select Committee. We do not want permanent centres with brass plaques proclaiming their predetermined excellence. We accept the need for selectivity, but want centres of genuine opportunity determined in accordance with the merits at the time of the decision.
I can put it no better than my distinguished colleague, Sir James Lighthill, Provost of University College London. He said:
"[The] Advisory Board … is concerned whether exellence should be recognised at the level of the individual department or subject or subject group (a scientist would call this 'high resolution' discrimination) or whether excellence should be recognised for an institution as a whole. On this issue we … believe we have the efficiency argument on our side: such 'high resolution' discrimination must tend at any one time to direct research support most precisely into areas which are successfully achieving excellence at that time".
Therefore while we applaud the creation of interdisciplinary centres when projects are manifestly ripe for exploitation or when techniques are ready for wide application, let us not suppose that they are any substitute for the generous support of basic scientific discovery in well-established disciplines. How convenient it would be if one could always predict which fields were the most useful to pursue. Unfortunately, science is not so obliging. The ABRC document quotes a revealing passage from the earlier Kendrew Report. It states:
"It is not meaningless to assert that research on black holes is less likely to provide utility by the turn of the century than research on self-organising systems".
No, not meaningless, but possibly misleading.
In the early years of this century one might have have said that Einstein's explanation of certain planetary observations was less likely to provide utility than research on the chemistry of combustion,

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but within 40 years, through the relativistic equivalence of mass and energy, these observations were to lead to nuclear power. Science moves faster nowadays, so while trying hard to be intelligently more selective let us be humble about it and remember that nature provides more unexpected opportunities than any of us will ever imagine. Selectivity has its limits, a point which, to be fair, the ABRC itself proclaims before hastily passing on to less perplexing matters.
Most of the work for which the ABRC is responsible is performed in or in close association with the universities. As the first academic to speak, I must remember that university reactions to government policy have been said by a DES Minister to range from hysterical opposition to extreme sycophancy. Well, they would (would they not?) fall somewhere within that wide spectrum?
Pressing on regardless, then, I will first compliment Mr. Kenneth Baker for having squeezed out of the Treasury a little extra money for the universities. We are grateful for his encouragement. Much of the extra money will have to go towards managerial objectives, especially the funding of early retirements, if we are to balance our books by reducing still further our recurrent expenditure. But however difficult it may be, as the noble Baroness has emphasised, some of it must go towards the recruitment of young people destined to become the future leaders of teaching and research—and there are plenty of excellent candidates. To do otherwise is a certain recipe for ossified mediocrity.
Mr. Baker's efforts on behalf of the science Vote have been less commendable. When due allowance is made for prior commitments, such as agreed salary awards and the effect of currency movements on international subscriptions, only about £5 million, according to my calculations, remains for new science, which is what it is all about. That is a truly paltry sum if research in this country is to maintain comparability with that of other countries. I should like to know whether the Government consider it enough to cover even the cost of the new university research centres that we have all worked so hard during the summer to qualify for, or whether they are to be covered by still further reductions in the money available for normal grants.
Our international commitments, as has already been said, bear upon us especially hard when, contrary to the practices of our partners, they are treated in competition with domestic expenditure. Nevertheless, they represent the inevitable and indispensable summit of a policy of selectivity and concentration. We have many difficult decisions before us at the present time: whether to remain in CERN, as I profoundly hope we do, whether to be excluded from the European space programme and so on, none of which can endear us to our partners in Europe who must see us as increasingly unreliable.
And now we have a fine new opportunity also to take part in the proposed European synchrotron radiation facility which has been under intensive study for several years. This is a machine that produces intense radiation and in the X-ray region is ten thousand million times more effective than the
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best X-ray tubes available. It is to be used for the study of condensed matter, not least of biological materials, by physicists, chemists and biologists. It is too expensive to provide except on an international basis, but it offers immense advantages to those who will use it and the time is ripe. I hope we may be told today that the Government are giving it their urgent attention.
3.58 p.m.
Lord Dainton: My Lords, the concluding sentence of the Government's response to your Lordships' Select Committee's report on science and technology includes the phrase:
"They"—
by which is meant the proposed changes—
"will not be effective without the support of the scientific community".
It is no exaggeration to say that the members of that community have been anxiously awaiting this response and have carefully scrutinised it and the simultaneously published ABRC report A Strategy for the Science Base. Both those reports have been the subject of intense discussion in laboratories, common rooms, learned societies, university senates and academic planning committees. There is a remarkable convergence of opinion.
It is generally felt that there is much to applaud in the response, including especially the proposed ministerial consideration of science and technology under the Prime Minister's leadership, the establishment of ACOST—the Advisory Council on Science and Technology—which has already been referred to, with higher status and wider terms of reference than any precedent body, the acceptance of the idea of a science budget, the attempt to identify exploitable areas of science for national economic benefit and the exhortation to industry to spend more on research and development. However, there was little in the Government's response to reassure those scientists who have noted the steady decline in the past 15 to 20 years in the percentage of the gross domestic product of this country which is spent in support of research and development.
There have been many indicators of the consequential diminishing quality and quantity of UK scientific research. Indeed, the last of these was published in Nature less than a week ago. In the early summer many of these scientists were also recipients of letters from a research council telling them that although their research was regarded and ranked as being of alpha quality, which is the highest quality, it could not be supported financially. However, they received some comfort three days later, after the government response was issued, when the ABRC published its advice to the Secretary of State for Education and Science and gave cogent reasons for reversing the decline in funding for the science base. It stated categorically:
"The ABRC believes this [financial] constriction runs entirely counter to the increases necessary to meet national needs".
The ABRC asked for increases in funding of £100 million in the first year, 1988 to 1989, £130 million in the second year and £165 million in the third year. Alas, any such hopes that that hid may have

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engendered were dashed just 15 days ago when the Secretary of State announced in another place what the grants would be. Not only were the increases less in cash terms than those which the ABRC had requested, but, to the expert eye, when allowance is made for special factors such as AIDS research, the British Antarctic survey, the transfer of responsibility for the Natural History Museum from the science Vote to the Office of Arts and Libraries and when those sums are done, it is plain that the remaining increases in cash will be insufficient to meet price inflation, some of which is already built in through pay settlements. As regards an expert eye, having been a member or chairman of the ABRC over a period of 15 years and chairman of the University Grants Committee, I think that in these matters I can claim the requisite degree of visual acuity.
Such financial parsimony as this settlement represents does not accord with the fine sentiments of the Government's response. Nor is it likely to elicit that support from the scientific community which the Government so explicitly desire. It will be a tragedy for this country if, once again, able scientists, their morale still further reduced by what they judge to be their prospects here, should seek their futures elsewhere and carry away from this country the benefits of their education, experience, skills, creativity and, possibly even more important, their ability to instruct, educate and enthuse younger scientists. As Sir John Harvey-Jones and fellow industrialists commented only recently, those young scientists are now in such great demand and in such short supply.
It will no doubt be argued that the money sought by the ABRC cannot be afforded. Given the buoyancy of the United Kingdom economy to which the Chancellor constantly alludes, and the great magnitude of the sums displayed in the Autumn Statement, I find it difficult to accept that a mere £100 million extra which the ABRC sought for the first year cannot be found. Indeed, I would go further and assert that the damage which the present grant will inflict on the science base is out of all proportion to the money saved.
At this juncture in our history, when the success of much of our industry depends increasingly on recent scientific advances, when the time-lag between publication in scientific journals and patent applications is diminishing—in critically important areas this has become as low as two years—what we cannot afford is this false economy. I hope that even at this late stage the Government could be persuaded to change their mind and grant the ABRC those extra resources it so desperately needs to enable basic science to make its contribution to the national wellbeing.
I have great sympathy for the ABRC and a fellow feeling for its current chairman in the predicament that it has had to face in trying to do better and more with less. It was wise to try to develop an explicit strategy for the science base. It had to cut its coat according to the financial cloth, and since merely to reduce funding uniformly is to produce general debility all round the only course open to the ABRC
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was the dual strategy of greater selectivity in funding and concentration of expensive resources in either national or international centres. Those are strategems with which the scientific community is already familiar and to which it has successfully adapted in many so-called "big" sciences such as particle physics, radio and space astronomy and others.
The secret of success in those fields has been the accessibility of those research facilities to researchers interested in a field, whatever their parent institution. Participation in research at scientific frontiers has the added benefit that the enthusiasm and the knowledge which the researcher consequently brings to his teaching at his home base kindles the enthusiasm and strengthens the motivation of his students in a uniquely beneficial way, a way which is not open to the academic whose contact with his subject is only through the printed word.
That there should be more such centres, especially in burgeoning multidisciplinary fields, and that wherever possible these should be located in institutions of higher education is undeniable. But it is not necessary to do this in every field. There are many areas of "small" science in which intellectually significant or industrially important advances can be achieved by small groups for which the relatively inexpensive experimental work needs to be not episodic by visits to a centre but continuous and carried out in the home base.
The value of such curiosity motivated blue-sky research, as it is sometimes called, impelled by gifted individuals has been fully recognised by the United States National Academy of Sciences in my own subject of chemistry. To make that point clear perhaps I need only remind your Lordships of that product of such inexpensive work in a small, relatively undistinguished university which is to be found in the liquid crystal display on your Lordships' watches and clocks and in the pocket computers of those noble Lords who have them.
Alas, the ABRC has gone much further than this. It proposes that institutions of higher education should be graded into R for research institutions, T for primarily teaching institutions and X for a kind of in-between category. It is perhaps not without significance that the letter X, which is traditionally reserved as a symbol in mathematics and science for an unknown and yet to be determined quantity, was chosen for this intermediate, amorphous being.
In making such a classification the ABRC made a cardinal error. It forgot that universities are not homogeneous collections of departments of uniform quality, high or low, but comprise a variety of departments of differing qualities. Moreover, the quality of a department fluctuates over time as staff change. Therefore if selectivity is to be exercised then, first, choices must be based on the quality of departments or research groups within them and not on the institution as a whole. Secondly, those who make such decisions must be prepared to withdraw support when, as not infrequently happens, the chosen research has declined in importance or in opportunity for advancement or the quality of the staff has decreased.

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To classify whole institutions, as the ABRC proposes, is likely to induce an entirely undesirable rigidity into the higher educational system, denying today's lowly institutions the chance to improve and undeservedly preserving departments in highly rated universities whose intellectual arteries have hardened.
Furthermore, it is certain that the costs involved in restructuring universities and polytechnics on that scale to achieve such a stratified classification would be high. What the ABRC proposes is a remedy which is worse than the disease. I ask the ABRC to withdraw the proposal. It is a drastic mutation of the dual support system. When it reconsiders its policy, perhaps at least the biologists will remember the maxim that in evolution large mutations are usually lethal.
In these hard times, the money that will have to be found for restructuring will be far better spent in making the best use of the science departments which we have by continuing in an intensified form the policy of selectivity based on the demonstrated ability of individuals or groups of researchers, as well as by encouraging interdisciplinary research, more effective links between university departments and industry and augmenting the existing LINK programme.
4.13 p.m.
Lord Beloff: My Lords, unlike most speakers taking part in debates on science, I am not a member of your Lordships' Advisory Committee on Science and Technology. That is not of my own choosing. However, it gives me the opportunity to approach the subject in a way which implies no collective responsibility.
There is widespread agreement both in your Lordships' House and in the scientific community on two matters. The first is that this country spends too little on the sciences as a proportion of its wealth and income. Whether one believes that that expenditure should be Government money or industrial money makes little difference. After all, the money which the Government have is, in large degree, money derived from taxing industrial properties.
The second matter has been referred to by more than one noble Lord speaking in the debate and it is that we are increasingly a net exporter of scientific talent. That is a matter of great importance to the future of the country and perhaps the single most damaging symptom of our present plight.
If those two facts are agreed, one has to ask how we got into that state. Why are we alone among advanced industrial countries in facing that dilemma? When some future historian looks at the tragic story of Britain's decline in this and other fields, he will not point to a lost battle, an Act of Parliament or a treaty. He will point to a Treasury circular dated 19th September 1919. By that circular the grip of the Treasury was fastened round the throat of every other domestic department. Since then this country has been ruled by the Treasury.
What is the Treasury?—it is, if you like, a bunch of promoted bank clerks who think that they are mandarins. That is their illusion, because the
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mandarin was appointed to run Imperial China on the basis of the breadth of his knowledge and the depth of his experience. But we are dealing here with a very narrow field of knowledge— namely, bookkeeping—and often no experience at all.
It is possible for someone to transcend that system. Indeed, the noble Lord, Lord Sherfield, to whom we owe this debate, has done that, having been promoted from being Permanent Secretary to the Treasury to running something really serious such as our atomic energy programme. We are grateful to him for once again giving us the benefit of his experience.
However, that is a very serious matter from two points of view. The first one is relatively mundane and appears in the report from the advisory board which points out that even the limited resources available to the research councils cannot be properly used because of the continual interference by the Treasury in the way in which they manage their own limited funds. That is a page in the report which is certainly worth reading and to which I do not think any previous speaker has referred.
There is also something more important: namely, the attitude of that dominant department to science. There is the constant refrain that science can only be justified in terms of very short-term achievements. Those cannot be, in the nature of things, achieved by much scientific research. That attitude inspires the reply to the suggestions of your Lordships' committee, to the suggestions made in the advisory board report and indeed to every representation made from the scientific community through the Committee of Vice Chancellors and Principals and other such bodies.
Until we have a national voice for science which can impress not only Government but also the public at large with the importance of this facet of our national life, we shall go on suffering the kind of difficulties we read about in the report and which we are hearing about this afternoon.
In my view, the second major disaster—as I said at the time and may therefore say again—was the decision in the early 1960s to abandon the idea of a Minister for Science. I believe that my noble and learned friend Lord Hailsham was the last holder of that post. That broke the link with the Lord Presidency of the Council, and science was made part of the responsibility of the Department of Education and Science. That was a tragic error. No Secretary of State can be responsible for two basically different kinds of work and do them both successfully. It is no criticism of the present Secretary of State or indeed of his distinguished predecessors to say that inevitably, given the size of the budget and the number of people involved, they have spent more time on schools than on universities and research.
I agree with the Select Committee when it states that a Minister for Science and Technology is not appropriate. What would be appropriate would be a Minister for higher education and science. If we were fortunate enough to have that attached once again to the Lord Presidency of the Council, that would mean that in this House, where such scientific talent as Parliament has is largely concentrated, we should

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have the responsible Minister before us with full knowledge of the subject and the ability to deal with it.
What we have at the moment, despite the proposals for the new central organisation which the noble Lord, Lord Sherfield, has mentioned, is a situation in which science, alone of the major occupations and interests of this country, has no independent voice in the Cabinet. The armed forces, health, the social services and education have a voice. But to say that the Prime Minister, with all her other responsibilities—bearing in mind that the first meeting that she is to have with this new body will not take place until next year—can also be the voice of science in the Cabinet is to ask us to believe the impossible.
It seems to me to be essential that Her Majesty's Government—and I speak as one of their political supporters—should understand that there is no confidence in their present handling of science and the science budget. The arguments given for those economies, which lead inevitably to making absurd selections of priorities that the Advisory Board for the Research Councils suggests, are not acceptable and do not do us credit either nationally or internationally. The Government must begin by thinking again. The primary concern should be with the central machinery of Government where responsibility lies for Britain's place in the world's scientific community, for preventing our talented young people having to seek careers overseas and for understanding the way in which science operates. It is clear from the kind of language that Ministers use that how a university works, how scientific research is done and how scientific discoveries are made is a field totally alien to them.
To take up the opening words of the noble Lord, Lord Sherfield, if the Chancellor of the Exchequer thinks that science is a fashion he really should think again.
4.20 p.m.
Lord Gregson: My Lords, we are once again in debt to the noble Lord, Lord Sherfield, for initiating a debate on science and technology in the House. Now that the froth has been blown away from the financial sector, it has exposed the extent to which we as a country depend on the manufacturing sector to support our underlying economy. Although that underlying economy shows some of the short-term manifestations of strength, in the medium long-term there are already danger signals strongly indicating the potential disasters that lie ahead. The most important danger signal is the drastic deterioration in our overseas trade figures as demonstrated in the excellent report of your Lordships' committee chaired by the noble Lord, Lord Aldington.
All the activities that support wealth creation, which is the essential factor that provides the underlying strength of our economy, rely absolutely on the United Kingdom's comparative position in science and technology. That is true of agriculture and it is true of the abstractive industries—whether they be concerned with the coal mines or the North
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Sea—but, more than all, it is the absolute essential to the manufacturing industries of the country.
As I have said before in your Lordships' House, I believe that the country is becoming technologically obsolescent. Compared with our position over the past 200 years, we lead in fewer and fewer of the important branches of science and technology and I believe that we are heading for the day not too far distant when we shall lead in none of them. That is what I mean by obsolescence. It will be a sad day indeed for the country both economically and scientifically when we reach that point. Wealth creation needs technology; technology feeds on research in science and those two components are inseparable. I accept the Government's suggestion that industry is the place where development of technology should take place. I do not accept that. unlike every other country in the world, we can prosper without the Government supporting science in the universities and other institutions of higher education.
I welcome the Government's response to its Select Committee on Science and Technology in setting up ACOST and the other structural changes that they have since put in train. I hope that the Prime Minister will take the earliest opportunity to chair ACOST and provide the leadership in science and technology that we so desperately need.
I also accept that the policy of total equality among institutes of higher education is misguided because it has certainly led to the emergence of the lowest common denominator when we are desperately in need of excellence. We must therefore concentrate our efforts and our financial support on creating centres of excellence whether they are based on institutions in Japan or on departments as is more closely followed in the USA and Germany. I do not believe that it is important to differentiate between the two. What I believe is important is that they should be brought into being just as soon as humanly possible.
I have no doubt that to recover from our overall state of gradual obsolescence both industry and Government must spend more money than is projected at present. One of the Government's defensive tactics when looking at their spending on science and technology compared with other countries in the world is to include the £2.4 billion which is supposedly spent by the Ministry of Defence on R&D. I believe that the Government have been sadly misled by this figure. Other countries in the OECD comparisons have very strict definitions either by the use of the Frascati definition or by the use of strict accounting standards required by the Government in the case of Japan and Germany or by the Stock Exchange Commission in the case of the United States.
It is now becoming recognised that by these definitions less than half the £2.4 billion spent by the Ministry of Defence is spent on R&D that would be included in the statistics produced by the countries with whom the Government are comparing our spending. I believe, because it is so important and because these figures are used by so many politicians on both sides of the House, that the Government

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should inquire into this on an urgent basis and report back to the House. I should point out also that launch aid is not—I repeat, not—included in the international definitions of R&D.
It is axiomatic that to increase our real spending on science and technology we shall need more scientists and technologists. I therefore believe that it would be totally misguided to suggest that one can create centres of excellence in our institutes of higher education by robbing Peter to pay Paul. It will cost money to create excellence in the selected departments of our institutions, but it must not he at the expense of the money expended on all our institutions to provide scientists and technologists of the highest calibre, which cannot be done without combining research with teaching.
It is also extremely shortsighted to think that industry should contribute more to our science spending when what it should be doing on an even more urgent basis is spending more of its money on developing technology to create new products and new processes. It is also wrong-thinking to suggest that industry can conjure up this spending out of thin air when it is dominated by the "short-termism" of its shareholders in the City of London irrespective of the CBI whitewash. Almost every other country in the world provides tax incentives for R&D spending by industry. Despite, or perhaps because of, that dreadful little paper produced by the Revenue as part of the Government's response to the Select Committee report, the Chancellor must reconsider and introduce tax incentives at the earliest possible opportunity.
We shall not halt and reverse the comparative decline of this country's standard of living unless we halt and reverse the decline in our science and technology. It will require the strongest possible leadership from the Prime Minister. It will require a great deal of effort from many, many people. It will require more expenditure from the Government for science and more expenditure by industry to be drawn through into technology and subsequently into products and processes. If this does not occur our children will never forgive us.
4.30 p.m.
Lord Kearton: My Lords, like the noble Lord, Lord Sherfield, I welcome the thrust of the Government's White Paper. I hope that when ACOST is fully functioning its deliberations are fairly transparent so that we know not only the results of its discussions but also the reasons for its decisions. Although the Government accept the thrust of the report of the Select Committee it is very coy on the question of finance. The hamburger customer would say, "the bun is very nice, but where is the beef?"
The ABRC report is also a very excellent analysis. It makes specific recommendations. There is room for a great deal of argument and even disagreement on, some of its suggestions. As suggested by many previous speakers, the three-tier university proposal is really a non-starter. I have some doubts whether we should rush ahead too fast with multi-disciplinary units and go overboard on targeted research.
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Like many speakers, I have had some experience of multi-disciplinary units. They tend to have a limited life. A unit with a large building, a large establishment and a brass plaque is not really the sort of thing we want. I have doubts, too, about targeted research. I suppose that the military have done more targeted research than anybody. And, by jove, have they not had some colossal bloomers? One needs only to recall a recent example like Nimrod to realise that throwing money away in billions of pounds does not necessarily give results in connection with targeted research.
Reference has been made to the later report from the ABRC on science and public expenditure. The reply from the Government is very disappointing. The Government must think the scientific community a hunch of nestlings—mouths always wide open. It is an enormous selection of mouths. There is hardly any scientific endeavour that is not asking for more money.
The Government may have been right to restrict money in the last few years. Anyone with direct experience knows that most research establishments in receipt of government funds, and, for that matter, most universities, are much better run, much better organised and more tied-in to the real world than they were nine or 10 years ago. There is better management, better choice of priorities. In fact the universities, commerce and industry are probably closer together now than they have ever been. The contribution of the universities has probably never been greater.
In paying this tribute to the universities, I should like to say that the UGC has done a wonderful job. For that matter, so have the principals and vice-chancellors of most of our universities. For nearly 10 years, they have been under more pressure than almost any other body of people in the country. And, for the most part, they have responded magnificently. They have gone out to get industrial support; and industrial support has increased. The dialogue has led to much closer identification of research activities with both local and national industry.
Something that strikes me is that nowadays there is a shortage of spectacular benefactors among today's rich men. Patronage has always been a powerful underpinning in the past of scholarship and research, universities and colleges. One only has to think in one's own lifetime of the effort of the Nuffields, the Wolfsons and the Robinsons to see that there is still a major place for rich patronage.
One of the Select Committees dealing with medical research at the present time had reason to note the extraordinary run-on from Sir Henry Wellcome's benefactions of two or three generations ago which are even now producing one of the great contributions towards medical research in this country. One hopes that some of our extremely rich men—I am told we have more millionaires and billionaires than ever before—might like to think about carrying on with the traditions of the past.
It is very pleasing that the big companies (including nowadays the financial institutions) are also becoming much more closely involved with management and organisation of research in

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universities and institutes. We all welcome the centre for exploitation of science in Manchester. It is on the same lines as the new institute for information technology set up at Milton Keynes which again was sponsored by industry and managed by Cranfield Institute of Technology.
I see that the noble Lord, Lord Kings Norton, is in his seat. Cranfield was the child of Lord Kings Norton's initiative 40 years ago. It has grown to be one of the most prestigious establishments for technology and the development of technology in this country. Under the leadership of our absent colleague the noble Lord, Lord Chilver, it, has now reached world status. When one visits Cranfield, one finds that it is almost entirely financed by outside contributions. These contributions come from America, Japan and Europe. It has become a centre of world excellence.
Perhaps I may make a reference to the extraordinary achievement at Warwick University of the noble Lord, Lord Butterworth. Warwick University is almost unique and a model of the kind of university which the Government wish to see in the future. Many years ago the noble Lord, Lord Butterworth, saw what was needed. He has built up a university which comes out top of the assessments made by the UGC, and others in recent years.
I should also like to mention one of the newer technology universities; namely, Aston. That has been transformed by Sir Frederick Crawford. Sir Frederick Crawford came to Aston after 20 years at Stanford University, one of the great private universities of America. Stanford was, as it were, really the parent of silicone valley; and nowadays, when one goes to see it. it is almost the parent of everything going on in molecular biology. Sir Frederick Crawford's intent is that Aston should become the Midlands' Stanford.
I mention this to show that we are in many ways now moving in the right direction. Having said that, I feel it is high time that we encouraged some of our universities for what they have done, and most important of all, rewarded them.
We have no shortage of talent in this country. Statistics show that we do not have the same proportion of people going into higher education as is the case with many of our rivals. But the standard of entry of the people going into our higher education is probably the best in the world. If one looks at the recent report of the University Council for Admissions one can see that the standard of admission has gone up appreciably in the past eight years. It has gone up to the present level which is the highest it has ever been.
I occasionally have to look at examination papers, and although I am a university graduate, as most of your Lordships are, I think that a great many of us would have trouble in gaining entry into university today. The standards are really extremely high. What has underpinned our universities has been the dual support system. It has worked well in the past; it is working better now than it ever has done. But both the universities, the UGC and the research councils are bedevilled by a most acute shortage of funds. The
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fruit has been squeezed and the pips have squeaked. It is time to stop the process of death by a thousand cuts. We have the most valuable single asset in this country in our universities. I appeal to the Leader of the House that the Government must act to restore morale.
How much money is going to be needed? A figure of £100 millions for research and a figure of £100 millions for the UGC would absolutely transform the situation and would suffice to give the whole of our university system a great leap forward and a great increase in morale. After the developments of the past few years, the money would have been very well spent.
The Government may say: "We have not got the money". I agree very strongly with my noble friend Lord Dainton who said that if we are doing so very well, as the Chancellor keeps on telling us, it is a shame that we cannot find a comparatively paltry sum to keep the universities flourishing and in good heart.
Assuming one is challenged and is told "We haven't got the money" what does one cut if one is not going to get the extra money? I spent a lifetime in atomic energy research. To go on spending £100 million a year at Dounreay on a fast reactor when it has been announced that we are not going to build a fast reactor within the next 20 years is mad. That expenditure really is mad. Equally, I think that technology, the science and the engineering, at Culham and JET is out of this world. I repeat the phrase; it is out of this world. Its practical use may be 50 or 100 years ahead. If we are saving money, I would save some there. CERN has been mentioned. It ranks with Culham as one of the great intellectual wonders of the world. No one is going to tell me that finding out more about quarks and bosons, and all the rest of it, will do much in the next 10 or 20 years for the industrial wellbeing of this country or Europe. CERN should continue; but I think we should reduce our subscription and get more people to share the burden.
More than anything else, I hope that the Government will finish this debate by saying that in view of the strength of feeling in all parts of the House, yes, they will provide the university system with more money.
4.40 p.m.
Lord Trafford: My Lords, I hope that the noble Lord will forgive me if I do not follow his remarks directly, but I wish to comment upon one or two other points. Paradoxically, I feel that one of the areas that needs research is that of research and development itself. We mean a number of different things when we refer to research. The Select Committee and both papers that we are discussing broadly follow the division into fundamental, strategic and applied research.
One of the questions that we have not been asking ourselves is: what is the value of the basic research (the most expensive research)? I trust that none of your Lordships would dispute the virtue of science; the virtue of the acquisition of knowledge for knowledge's sake, even if there were no obvious end

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product. A classic example of how wrong one could be was given to us by the noble Lord, Lord Flowers, who pointed out how many of us might have made the wrong decision if we had sat on a government committee considering Einstein's theory of relativity and an alternative which seemed to be a more immediate prospect in the earlier part of this century. That is not the question we are being asked. The question is: what is the value that the Government and the public should put upon their support of fundamental research? It is not a question of the virtue of that research.
Unfortunately, we do not have the answer to that question. The Select Committee, with considerable courage, looked at that question. I am sure that the noble Lord, Lord Beloff, will not be surprised to know that the Treasury said that there was no relationship between the amount of money put into basic research and the subsequent economic and social benefits to the nation. That is what one might expect the Treasury to say. But the committee looked further than the Treasury answer. A few other answers were studied.
One can only say that they were equivocal. It is extremely difficult to put a quantitative value on such a price. The committee came to the conclusion, after considering the representations made to it, that the consensus of opinion was that basic research was of great value. That is not surprising because of course the committee was talking to the people involved. It was talking to scientists. If we ask generals whether they think an army is of any value, the answer would probably be "Yes". We might even ask the clerics whether they think the Church is of value. The answer would be "Yes". But to the question: of what value? I have no doubt that they would have different answers.
However, there is one disturbing historical analogy, Japan. Japan never spent much money and was not especially renowned, during the earlier years from its renaissance to its economic success, for its basic research. It has since changed some of that expenditure, but in the earlier years, when all the dramatic results came through in terms of the Japanese economic and social success, it did not spend much on basic research. It has always been exceptional in the field of development and, to a certain extent, in applied research but not in basic research, which is the most expensive.
In one sense we could say that the Japanese opted for a different approach. They decided to buy in—most of it American—rather than to do the research inhouse. The argument put forward by many of your Lordships today has been that we should have been doing more research inhouse. The Select Committee concluded that basic research, on the balance of probability, was a Good Thing. That is what one might term, a "1066 and All That" remark. It is a good thing. I must confess that I have the same gut feeling—it must be a good thing.
However we must always bear in mind the division of the science budget—the element that goes on fundamental research and the element that goes on strategic and applied research. I shall say no more about that subject now.
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This country is bad in the development, marketing and making of products. The story is as old as the hills—the penicillin, the jet engines and everything else that someone else develops, and someone else eventually markets better than we do. Even in more direct fields we are still left asking one question. Please articulate to us as taxpayers if you want our money pumped into this exercise: what is its benefit, or, if we do not do it, what is it that we miss?
I listened carefully to all the protagonists of the European space programme. The arguments lasted about an hour last week. At the end of the day, I could not have said what on earth it is that we are supposed to be missing if we do not put in all this extra money. What will we gain if we do put in all this extra money? We were told that we would lose out in terms of space and all the spin-off technology for the next 30 years. That cannot be true, because at the same time we were told how well we were doing with satellite technology, and how effective we are in industrial terms in that connection. I was not convinced by such an argument.
Having made those remarks about the question that we should always keep before our minds, not of the virtue, but of the value of what it is we are trying to buy, it is essential that we have a proper, central direction for our research efforts. I therefore especially welcome the development of a central Cabinet committee—and we hope that the Prime Minister will attend it as frequently as possible—that will enable considerable drive and direction to be given in this field. I hope that it will also help to overcome some of the criticism of the ABRC by some of the research councils for the way in which it was putting forward many of its proposals and acting, in some respects, almost as a super research council.
There are difficulties in the research councils' bureaucratic structure. Anyone who has had the experience of applying for a research grant will he aware of how one is inundated with paper and how thick is the volume one has to fill in even for the most minimal research and the smallest grant. In the end, one is probably better off trying to obtain it from somewhere else. I shall add, in answer to the noble Lord, Lord Kearton, that there are plenty of sources—not necessarily rich men—of what one might call "minor money".
The research councils are somewhat stereotyped in their responses. They tend to back those who are already in position without considering the coming people in the universities or other places who might merit a little support at the right time.
Another criticism could be that the Medical Research Council is too fond of pumping money into institutions. Once that is done, how do we know—although we have a continuing commitment—that the value we expect to obtain (if we obtain it at all) from that institution will continue? So it goes on.
I know more about medical research than others, and I should have said that most of the valuable advances in medicine have come not from MRC foundations or universities, but largely from research, sponsored, funded and supported, by the pharmaceutical industry which has not received much credit for that aspect of its activities.

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I turn to the question of the universities and the necessity for developing what the ABRC called exploitable sciences. Everybody agrees that this requires restructuring in universities. It requires flexibility, new blood and a change in morale. But what do we do? We shoot ourselves in the foot.
If we require flexibility in the restructuring of universities then we need to tackle other problems in the universities: the problems of tenure and a fairly rigid structure. One can do it by means of a rather brutal knife; it happened to Salford where it lost, I think it was, 33 per cent. of its grant in fairly sharp turns. As a result of such a threat, it made a massive change. We need to build into this flexibility. However, I have not yet heard of any suggestion, except the most minimal tinkering with the problems of tenure, that is likely to come forth in the expected Education Bill. This is a weakness. It means that it will be years before one can effect the restructuring necessary to give the emphasis to the exploitable sciences idea.
I turn again to the question of the three-tier university system. I do not like this system. I share the views expressed by my noble friend Lord Beloff and other noble Lords who have spoken, and in particular the noble Lord, Lord Flowers. There is no place in a university system for a teaching university without research. It is not a university at all. It becomes a limited college with limited abilities.
There is an argument for saying, "There are 50 centres of excellence which are called universities. Do we really need 50? Are we not spread too thinly"? Perhaps we are. Perhaps we should get rid of 10. Then let us have the courage to say so. Get rid of 10; get rid of 15, my Lords. Do not call them universities and give them a role contrary to the fundamental task of a university.
There are many points that I should like to raise here. Before I sit down perhaps I should declare an interest in this subject. I happen to be the chairman and Pro-Chancellor of a university. I make the plea therefore that whatever universities we keep should remain universities. Let us have the courage to change those others into whatever it is we wish them to be. Noble Lords can say that is a plea in part with a vested interest. That is a matter I criticised earlier when I was commenting on the army and generals.
In summary, we always need to keep before us one major question. Are we talking about the return on the value of the money we are spending in the social and economic context, or are we talking about the virtues of knowledge for their own sake? These are two quite different things and it is the former to which the Government should address themselves.
4.53 p.m.
Lord Perry of Walton: My Lords, I must first apologise to the House as I very much regret that I shall not be able to stay to the end of this fascinating debate.
My colleagues on the Select Committee and other noble Lords have already covered many of the points that I should have wanted to make, but many of them
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bear repetiton. I do not think that I or any other Members of the House have said a word about the welcome that we all give to increased concentration on the exploitable areas of science. It seems to me that it is being done at the expense of neglecting the non-exploitable areas, or the non-immediately exploitable areas.
I suppose what bothers me most about the proposals for more selective funding is that I believe that funding has always been selective and in many ways is already selective enough. There has always been a large measure of selectivity in the research funding of individual departments. This has stemmed not only from the research grants from research councils which are subject to peer review but also from within universities, because universities in my experience support their better departments rather more than they support their weaker ones.
The critical fact about this variability is that the pattern can change extremely quickly. Just as a new headmaster can make or mar a school very quickly, so a new professor can make or mar a department. Good research is, I believe, more dependent on people than on anything else.
When I was a young man—it is a very long time ago now—I was fortunate enough to work in the National Institute for Medical Research in the laboratory made world famous by Sir Henry Dale. In it there was a constant excitement, an exhilaration, a ferment of ideas. It was impossible for anyone to work there and fail to be enthused. Indeed, every one of my colleagues at that time have gone on to achieve great distinction in their own fields, to make great contributions to research, and they have fired the enthusiasm of those in the departments that they headed in the various universities in the country.
Neither in these departments nor in the national institute was there any massive expenditure. Research was not "big" in that sense, but it was basic. It was not felt necessary that it should have any immediate exploitability, but it often did. I believe passionately that to lose that atmosphere is to lose something of extreme value and immense importance. Despite the fact that the noble Lord, Lord Kearton, has suggested that the management and organisation of universities have improved a great deal in the past eight years, I observe nothing but a loss of enthusiasm and an increase in disillusionment and bitterness about the cuts, not only in the university budgets but in the budgets that are available from the research councils.
What worries me is that the drive to make research more exploitable—a thoroughly admirable drive—may well make matters worse. The ABRC report states in paragraph 1.25:
"We recognise that Councils wish to support good science wherever it arises and that, in departments with an overall rating"—
that is the UGC rating—
"of only average or below, there may well be one or more outstanding individuals or teams who merit support. But this kind of approach. while we can understand the reasons for it, is not conducive to the concentration of effort which we believe generally to be in the national interest".
That frightens me silly. That the research councils should turn their backs on outstanding individuals is extremely dangerous and ignores the most precious

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of all the resources of the country—those very outstanding individuals.
Turning to selectivity between institutions, if we look carefully we find once again a very large measure of selectivity. There are already alpha institutions, or, to use the new ABRC terminology, R universities. This has happened quite spontaneously without any categorisation or management at all.
If noble Lords will forgive me—I seem always to do it in this House—perhaps I may refer to the Open University yet again. There was a case—it was made very strongly, in particular by the Treasury—that the university should not have a research base at all but should be a teaching institution. It should be a T university. I fought this extremely hard for many years. We advertised jobs as though they were in a proper university, with the encouragement of the government of that time. However, obtaining the facilities to back that up became extremely difficult. Despite all that, one of my colleagues, Professor Gass, had the enthusiasm about which I talked and succeeded in bullying not only the research councils but also me to such an extent that we gave him more and more money. His department of earth sciences is now one of the most distinguished in the country; one that is referred to in the report mentioned earlier. So it turned out to have been a worthwhile fight to insist that the university be not a T university.
It is worth pointing out that if it had been categorised as a T university the following sequence might well have happened. We should not have been able to attract staff of quality from the existing universities. Perhaps I should also mention that the earth sciences department was not only a good research department but it turned out some of the best teaching material now used all over the world. We probably should not have been able to provide good teaching materials and we probably should not have become a reputable university or achieved credibility in the academic world. There would have been even fewer science and technology graduates in the country than the number which is already said to be too few. Finally, there would have been fewer Open University systems throughout the world which have needed science and technology graduates.
In paragraph 1.32 the ABRC report says of the proposal overtly to differentiate universities:
"In proposing this differentiation … we recognise that it may give rise to concern about the creation of a rigid hierarchy of institutions".
It goes on to claim that this need not be the case, but the arguments to this effect are far from convincing. I believe there are very good grounds indeed for concern. My plea is for a continued flexibility, even if it costs more.
My second point refers to paragraph 29 of Command Paper 185. This concerns technology transfer. It says:
"The Select Committee urge the Government to expand their present effort in aiding the inward flow of technology".
There was a time not so long ago when a large proportion of all the major advances in science and technology originated in the United Kingdom. The provisions made for research in the United Kingdom were looked on with envy by the rest of the world, but while this was true of the R it was not true of the D.
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As others have said, there was little tradition of industrial investment in development and little government stimulation of it.
Much of British industry at that time continued to rest on the lead it had established in the industrial revolution. In the United States, in Japan and in Germany there was lots of money for development, so the fruits of British research were developed abroad to the commercial advantage not of the innovator but of the developer. This was a net outward transfer of science and technology from the United Kingdom and it depended on two things for its successful exploitation in the United States and elsewhere. It depended on lots of money for development being available, but it also depended on enough people being able to understand and to exploit the research that was imported. Since neither of these was true in the developing countries, there was no net transfer of technology to them.
Paragraph 29 proposes a net inward transfer to the United Kingdom of research done abroad. I am afraid that we in Britain are now in the same position as the developing countries were in some years ago. We still have far too little industrial investment in development and we are already approaching a point where we have too few people trained to understand and exploit the research that we hope to import. This is because of restrictions in university support and because of the renewed brain drain.
This is a devastating situation that must be put right. There may be a case for the Government to claim that development must be funded by industry. But it still is not. Research is now so depressed that in the United States, where they are very aware of our new situation, they look on the provision for British research not with the envy of former times but with frank pity. Research funding is a responsibility of the Government, not of industry. It desperately requires more support.
5.5 p.m.
Lord Hunter of Newington: My Lords, the noble Lord, Lord Sherfield, was as stimulating today as he was when he chaired the Select Committee. The House owes him a considerable debt. As has been said, two of the substantial successes of your Lordships' Select Committee on Science and Technology have been to get government agreement, some years ago, that there should be an annual report and publication of departmental research and more recently, that there should be annual consideration of R&D across the board as part of the public expenditure survey by ACOST and the Prime Minister's committee on civil science. Today we are looking at the response and the question of the science base which is substantially in the universities and in the research council institutes.
But other things are happening which are relevant to the situation we are debating. There is the Croham Committee report, which has been debated in the House, on the future of the UGC and university funding. That committee was right to take as its starting point the political and financial realities of the day rather than an idealised situation based on the universities' view of themselves on their

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aspirations of yesterday. One matter I should like to return to later is the recommendation regarding collaboration between the Department of Education and Science and the health department in relation to the science base in medicine.
There has been a series of reports by the ABRC and, importantly, one which I do not think has been mentioned this afternoon, the ABRC/UGC report on university research published in 1982. This report pointed out:
"general support of university research has allowed academic staff to keep in touch with their subjects, has enabled new researchers to become established, has provided continuity of research support and has enabled 'a wide spread of initial and innovative investigations to be carried out from which future growth points will emerge'."
On the future funding of the research councils and more recently as strategy for the science base, the ABRC makes radical proposals on the future of universities, far exceeding its original role of advising the Secretary of State on research council expenditure. It is now proposing the radical changes which have been mentioned in the science base which conflict with its own views in 1982, and one wonders why those views have changed.
Before one considers this further—with special reference to the medical science base—one must emphasise the undoubted success of the system of funding research in the universities for well over 50 years. It cannot be stressed too often that the success of the research councils has, to a substantial degree, depended on picking up bright ideas and bright people in the universities who have begun their work with UGC funding, encouraging and exploiting them and then when they begin to falter sometimes dropping them. The first victim of university cutbacks was the sacrifice of the well-founded department staffed and equipped by UGC funds to carry out this primary role. In fact, universities had already begun to accommodate change by linking departments and by aggregating resources into larger units. They are not against rationalisation or competition, but they have strong views as to how this can be done to preserve the research base.
Universities are also acutely aware of the necessity of getting value for money but they recognise that in basic research resources must be cast upon the waters or sometimes used to back up a promising individual. They recognise that in these circumstances the result may be disappointing and the resources apparently wasted, but they recognise very clearly in the field of basic research the ineffectiveness of peer review, as well illustrated by the UGC's awards of new blood posts to the universities. More than half the time the priorities they gave were different from the universities' own. They tended to back established developments, which is one of the consequences—some would say dangers—of peer review.
Loss of this flexibility is the overwhelming effect of the ABRC's proposals. As I have already said, the new blood schemes of the UGC of a couple of years ago substantially supported the established, not the new, ideas. There is widespread concern that, with the new proposals, the Universities Funding Council would be unable to cope with this situation.
The Croham Committee said of the UGC:
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"Dual leadership by a non-excutive Chairman and a executive Director General would ensure that the Council was able to speak with authority to the Government, the universities and their customers".
It also stated:
"It is essential that the post of Director General should have equivalent status to the present post of UGC Chairman, should carry at least an equivalent remuneration, and should be filled by a person of the standing and experience of successive Chairmen of the present Committee".
Where does this take us? Most would agree that the chairmen of the UGC over the years have been an outstanding success. Why are the ABRC proposals about grading being introduced at this time? Would it not have been reasonable to consult the new chairman of the universities funding body? Universities will support the UGC's present activities in examining vigorously the different disciplines in the universities but not the labelling of universities which may be good in engineering and appallingly bad in another area such as physics.
In evidence in recent weeks to the Select Committee looking at medical research, the DES emphasised,
"the need to ensure that there is a healthy foundation of basic science and an assured programme of strategic research".
The department did not say that so impoverished is the MRC that the resources provided to train medical
students in science are now practically non-existent. Then the department said:
"The best way forward is evolutionary change within the present system rather than radical changes in either organisation or funding".
If that is the Government's view, one awaits with great interest their response to the ABRC's science base proposals.
Because the Government have obviously departed from the traditional situation with the well-founded departments, the question must be asked: where are the vital resources going to come from? This has been mentioned. Will they he provided by industry or research foundations, as is substantially the case in the United States? That the UGC is no longer in a position to do so will doubtless increase the emigration of young scientists to the United States and elsewhere where substantial funds for their training are available. Many may not come back.
The ABRC report states that the strength of the Research Council Institute of concentrating effort in areas of strategic national importance needs to be built on. It also says in paragraph 1.39:
"Schemes should be developed to enable talented young academics to concentrate on research".
All this sounds wonderful but none of it has been costed. One does not see how different parts of the report fit together.
One has also to consider the time-scale of changes of the kind that have been proposed. The Todd Report recommendations of 1968 come to mind. Following the recommendation that London medical schools should be merged and the postgraduate institutes moved to the medical centres to concentrate resources—somewhat similar to the present proposals—I prepared the first plan of the UGC to do this. What happened? Four plans and two inquiries later, as the noble Lord, Lord Flowers, will know, the changes proposed 20 years ago are now

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taking place. The ABRC proposals will give rise to controversy and no savings in the lifetime of this Government or the next. The only immediate way of making savings, as has been hinted at or suggested by the noble Lord, Lord Trafford, so that there is money to create new developments, new flexibilities and aggregations is to shut five or six universities and spend perhaps £100 million next year to fund the changes. Can the Government face this practical possibility?
Against the background of all this uncertainty and failure of the support system, the medical schools face an additional complication. Twenty years ago it was government policy to embed medical teaching and research facilities provided by the UGC in NHS teaching hospitals. These hospitals were run by boards of governors directly responsible to the Secretary of State. The Pater formula dealt with costs. The Croham Committee noted this and recommended it should continue but that it should not he itemised.
What it did not say was that the board of governors disappeared in 1974. The teaching hospitals carry out most of the National Health Service research and development. In fact, having regard to the constant battles of recent years about academic clinical salaries between departments, one wonders whether the costs of clinical medicine teaching and research and development should be funded by the NHS through hoards of governors. This would eliminate a number of other difficulties. The NHS staff have very generous removal expenses; university staff do not. The disappearance of the well-founded clinical department funding of the UGC makes the matter urgent if National Health Service research and development is not to falter.
If my suggestion was implemented there would be no difficulty in ACOST knowing exactly how much money was spent on research and development in the clinical schools and in the National Health Service. This could be accurately accounted for in a way that is quite impossible at the present time.
5.17 p.m.
Baroness Lockwood: My Lords, as a member of your Lordships' Select Committee on Science and Technology, I should like to thank the noble Lord, Lord Sherfield, for introducing the debate and to endorse much of what he has said, particularly the welcome that he gave to the Government's response in Cmnd. 185 in relation to restructuring central machinery for government policy on science.
The response has also taken up positively the Select Committee's recommendation that approximately 1 per cent. of all Government R&D expenditure should be devoted to evaluation. We understand that the Science and Technology Assessment Office will discuss with all public funding bodies of research and development the need for adequate resources to be devoted to the assessment process, including ex-post evaluation. This is to be welcomed. The Select Committee saw this process involving not only programme and project efficiency but economic, social and scientific returns and the relevance to explicit policy goals—in other words, the value about which the noble Lord, Lord Trafford, was speaking.
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The committee was keen to see the evaluation process accepted as a discipline and not as a threat. If these objectives can be achieved, they will make an essential contribution to both the focusing of our research effort and to a more effective outcome. While I welcome the structural changes and the Government's apparent understanding of the crucial importance of science and technology to our country's future, like the noble Lord, Lord Sherfield, and others, I regret that the Government, who apparently will the end, do not appear prepared to will the means.
Your Lordships' Select Committee was concerned with two aspects of funding. The funding of basic research, which is largely dependent on public funding, and the application and development of that research, which is largely the responsibility of industry. The noble Viscount the Leader of the House referred to the very strong case that there is for more industrial investment in R&D, and I am sure that we would all agree with him.
A paper presented to the annual meeting of the British Association in Belfast this year examined the decline in British R&D expenditure as a proportion of GDP between 1967 and 1983. It also examined the ratio of profit devoted to R&D compared with other countries. It shows the decline of the United Kingdom's share of European patenting in the USA. This all indicates how Britain's position has deteriorated not only in relation to the United States and Japan (with whom we are often compared) but also in relation to our European partners as well.
Among other causes, it ascribes this to the weak commitment of British management to increase its share of profits and of growth to R&D compared with foreign competitors. But the fact that industry, with some honourable exceptions, has failed to invest in R&D to the extent that it should, should not provide a shield behind which the Government can hide for their failure to provide adequate resources. We have heard, however, that there is a chink of light. Other noble Lords have referred to the establishment of the Centre for the Exploitation of Science and Technology, which is largely industry funded; and one hopes that this body, together with ACOST, will be able to help change the direction of British investment policy. But I enter one caveat about CEST—as I understand it is to be called.
In competition with other universities, as the noble Lord, Lord Flowers, indicated, Manchester has been successful and its science park will house the centre. Manchester, with its former pre-eminence in industry and commerce and, I hope, with the prospect of restoring that pre-eminence, and with the support of the strong academic base in the North-West, is a sound choice. But as one who had the responsibility for setting up a national body in Manchester (the Equal Opportunities Commission) I recognise the problems. Establishing a high profile for a national agency in the provinces requires extra effort on the part of the agency itself and those who support it. This new agency will depend on companies, large and small, academic institutions of all kinds, and government departments throughout the whole of the country, south of Watford as well as north of Watford.

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I turn now to some aspects of the ABRC's consultative document. In my experience, universities have recognised the need to bring more direction and concentration in our scientific effort; but it must surely give us pause that the university community as a whole, and many of our eminent societies, have all reacted critically to the proposal of a three-tier system in our universities. I must say that I share their concern. It seems to me inappropriate to classify institutions on the proposed RXT basis for the purpose of funding research, and that the only sensible way seems to be on a subject basis as the UGC attempted to do in its first research selectivity exercise.
Like the noble Lord, Lord Perry, I should like to look at this by illustrating the possible consequences for one of the universities with which I am associated. Bradford is one of the new technological universities. It has a high proportion of sandwich courses and has strong links with industry. It ranks second in the list of the top 10 universities with the highest percentage of graduates entering long-term jobs as at 31st December last.
But Bradford is acutely conscious of the fact that if it were rated on the basis of its income from research councils alone it would not stand very high. On the other hand, the proportion of its external funding coming from industry is higher than the average for universities as a whole in the country. This, one would have thought, would be regarded as a plus; but as many universities close to industry have also found, it does not rate substantially high in relation to calculating UGC recurrent grant.
My noble friend Lady David and others referred to the fact that universities are not static. They are dynamic organisations. In the UGC research selectivity exercise Bradford, a small university which since the 1981 cuts has under 30 departments, had three rated above average—that is, chemical engineering, modern languages and management. All three are recognised as ranking among the best in the United Kingdom, and all three are relevant to the known priorities of the Government. What would happen to these departments if the university were not given an R ranking? Would they continue to attract the same top quality academic staff and the same high level of external financial support? It is doubtful.
Another danger to which the ABRC report refers, and somewhat glibly passes over, and one which was referred to in paragraph 1.32 by the noble Lord, Lord Perry, relates to rigidity. Arranging universities into these three types of institution would, I believe introduce a quite inappropriate degree of rigidity into the system. It is not realistic to assume that institutions could move between the different types of category given the great investment that is proposed in the R type university.
I give another illustration of what might happen. Bradford University's civil engineering department was given a below-average rating by the UGC; but in 1985, because the university recognised that as a technological university it could not afford to have a weak link in its engineering school, it decided to invest from within its recurrent grant (as the present
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system allows it to do) in the civil engineering department. A new head of department, Professor Littlejohn, was appointed. He moved from a directorship in industry. A new team has been recruited and brought together in the department.
In two years the department's publication rate has quadrupled and is still rising. Its annual income has increased over 15-fold with half coming from industry. The number of research students has risen from seven to 34. It has an impressive programme of continuous education for industry, and it has established academic links with many countries throughout the world and also with many industries throughout the world, making opportunities for British industry to follow it.
Such a transformation of a department would be almost impossible if the rigid structure envisaged were to be adopted. I suggest that we need to build on the strength that we have and that this must be done by building and developing our present departments in all the institutions rather than imposing on them a rigid system.
5.30 p.m.
Lord Swann: My Lords, given the present unhappiness of the scientific and academic world, the initiative of the noble Lord, Lord Sherfield is particularly timely. I regret having to apologise to your Lordships for the possibility that I may have to leave before the end of the debate.
There are some things in the Government's response to the Select Committee report and in the Advisory Board for the Research Councils' discussion document that I welcome; but there are some features in both that I do not welcome at all. It is these that I want to talk about, touching inevitably from time to time on points that various noble Lords have made.
When I left the academic world of Edinburgh for the BBC I soon discovered that governments, of no matter which party, cannot resist tinkering with the BBC. In order to inform them how to tinker, they set up committees of inquiry, large and small. Over the past 30 years, believe it or not, they have been set up at the average rate of one every year-and-a-half. I begin to think that science looks like suffering the same fate. Twenty years ago we had the ACSP, superseded by the CSP, superseded in turn by the ABRC with, at about the same time, the invention of ACARD. Now, the Government promise ACOST instead of ACARD, fortified by CEST and assisted—I do not think that this has been mentioned so far—by STAO, the Science and Technology Assessment Office. For good measure, the UGC is to be replaced by the UFC.
Will all this tinkering with the acronyms make things better? Will research flourish and become more relevant? Will industry leap ahead? I am not at all sure. On the contrary, I fear that things could become worse for two simple reasons. From the papers before us, it would seem that neither the Government nor, more surprisingly, the ABRC, show much understanding of how research works nor of how industry makes use of. or rather does not make use of, research.

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Research, by definition, is finding out things that we do not know. It follows that it is unpredictable and, hence, not amenable to tidy planning for the future. It is, moreover, notoriously difficult to judge how valuable any research will actually prove to be.
The history of science is littered with examples of research ignored and unvalued which, in due course, proved to be crucial. The most extreme and classic case is Mendel whose experiments on the breeding of peas laid the foundations of genetics and now molecular biology—hence the vast benefits to medicine that we now enjoy. But Mendel's paper, despite the fact that he sent it to all biologists of consequence in 1860, was totally ignored until 1900.
Mendel retreated to his monastery in what is now Czechoslovakia. But what, I wonder, would happen to a modern Mendel? He would certainly not be recruited to some new high-profile, selective, concentrated, interdisciplinary research group in a research university. At best, I suppose he might hope for a modest job in one of the ABRC's proposed teaching-only universities.
The only conclusion one can draw from such cases is that the very best research is liable to pop up in the most unexpected places and that carefully contrived, concentrated centres for research are, by no means, necessarily the best way forward. By definition, they would tend to think on pre-determined lines and, while this may not matter where one is hoping for advances on pre-determined lines (that is to say, research that is derivative rather than boldly innovative) it is by no means a sure route to major advances.
There are a few conspicuous exceptions, of course, but it is no accident that many concentrated research institutions have not been a great success. A multiplicity of smaller centres and, where possible, a multiplicity of sources of funding (at least one of which may make the wise decision in any given case) is a more promising way forward.
It follows that I, like many noble Lords and others, deplore the ABRC's ideas about establishing three grades of university, ranging from substantial research activity throughout to teaching with a little research, or, in reality no doubt, practically no research at all.
As every academic knows, university departments go up and down, and so do universities. Even the supposedly best universities have their dim corners. I recall that when the present chairman of the University Grants Committee retired from being Vice-Chancellor of Cambridge University, he said, rather boldly, that even that great centre of learning had its share of dead wood. It has even been rumoured that this indiscretion had something to do with his being made chairman of the UGC.
Human nature being what it is, it does not require much insight to guess what would happen if a university were to be firmly labelled as top grade and, thereafter, automatically funded accordingly or, conversely, firmly labelled as third-class. It must surely pass belief that a government devoted to competitiveness in the industrial scene could ever agree to anything so foolish. Universities need their competitive pressures as does industry. To exempt
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some from having to try, and deny others even the chance of trying, is a sure recipe for universal stagnation.
I should like to turn briefly to one of the Government's concerns set out in their response to the Select Committee. They want, quite rightly, more research that is relevant to industry both in the short and longer term. But their solution seems to be a proliferation of committees pointing the way and a clutch of accounting measures to persuade industry to spend more on R&D.
For reasons that I tried to explain a moment ago, I am none too hopeful that committees will necessarily choose the right areas for exploitation. I fear that, on the contrary, they may dissuade people from working in unfashionable areas that might well yield to individual inspiration. In short, once again, I believe that the best hope of progress will stem from having the greatest number of research workers pursuing their own ideas in a wide range of environments. Committees impose the ideas of a handful of people; progress stems from the interplay of ideas of a lot of people.
I believe that a further misunderstanding underlies the Government's ideas. It is not so much the amount of R&D that determines industrial efficiency and competitiveness, it is the use that managers make of R&D. Indeed, without managerial understanding and enthusiasm, money spent on R&D benefits one's competitors and not one's own company. I believe that managerial attitudes are just as important, if not more important, than spending on R&D.
What ideas have the Government in this area? So far as I can make out, none. A few groups in universities and a few private bodies are carrying out good research in this crucial area. One small research organisation, mentioned briefly by the noble Lord, Lord Sherfield, with which I was connected, and which did some excellent research on these problems, was the Technical Chain Centre. It was recently closed down by its governmental funding body, the Economic and Social Research Council. It is a disgraceful little story on which I hope the last word has yet to be heard.
What, then, do we do in this difficult area of improving R&D in universities, in government laboratories and industry, whether funded by government or industry? More money is needed of course. But there is no simple answer. For the reasons that I have tried to explain, we certainly do not want a lot of centralised decision-making, but rather a system which allows able researchers to see the opportunities and to develop their own ideas, preferably within supportive environments.
As I said earlier, we shall do best with a range of research groupings, large and small—preferably, not too many of them large—and a range of sources of funding in the hope that good ideas that are turned down by some may be taken up by others. In this context it is clear that the private charitable foundations have a crucial role to play.
Lastly, I believe that we should stop worrying quite so much about the amount that industry spends on R&D. We should worry a good deal more about managerial competence in industry and the blindness

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of the City to the factors that make for long-term industrial success. Without any doubt, all those areas need to be researched. I can only hope that the Government will cease uninformed tinkering and fund much more practical research into making the whole system work better. That is what the social sciences are about and if there is any area in which more money and more wisdom are needed, it is that one. Yet, astonishingly, it secures scarcely a mention in either of the documents that we are debating today.
5.41 p.m.
Lord Butterworth: My Lords, I should like to deal with three points raised in the document A Strategy for the Science Base: selectivity, the research centres, and the proposal to transfer research funds from the UGC to the richer research councils. Those three points are very closely related.
I think it has emerged this afternoon that many noble Lords agree that selectivity should be applied not to institutions but rather to individual departments after subject review. However, that is precisely the approach now being adopted in the new UGC allocation process and the research assessments which form a crucial part of it. The present chairman of the UGC recently gave an interesting example of that when he said that by 1989 a department which had been rated as outstanding would attract a research component of UGC grant which was three or four times as large as a weak department of the same size in the same subject.
I am not a scientist and it seems to me to be rather arrogant on the part of the scientists in the ABRC that they should propose that whole institutions should be shorn of their research when maybe in a given university at least one-half of the academic activity takes place in the humanities. In some universities the proportion devoted to the humanities rises to almost two-thirds.
In so far as the ABRC proposal rests upon the escalating costs of science, it must be remembered that scholarship and first-class research can be conducted in most subjects in the humanities with quite modest resources. Indeed, the same is true of many science subjects. It is true, for example, in many areas of mathematics.
I should like to take up a point made by my noble friend Lord Trafford, with whom I agree entirely, that if at some stage a government were to decide that the universities were becoming too expensive, the remedy would be to reduce the number of universities. Universities should not be cut down indirectly by a masquerade which divides them into different types or categories. There is an important reason for saying that. In many subjects the quality of teaching, even at undergraduate level, is influenced by the research undertaken by the academic staff, and in many subjects the teacher who is involved in research can influence an able undergraduate, thus enabling him to develop an analytical power and depth of intellectual penetration which can be achieved in no other way. In short, remove research from an institution and immediately there is introduced a different kind of teaching. In my
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submission it would be misleading to continue to call such an institution a university.
I turn to a point touched upon by the noble Lord, Lord Hunter. It seems to me that the proposals of the ABRC come near to being a constitutional "foul" because they trespass dangerously upon the area which is the responsibility of the University Grants Committee. The Jarratt Committee and the Croham Committee showed how better quality and greater efficiency could be achieved in universities, but that it entails a delicate balance. Boards and committees should be discouraged from assuming the role of the University Grants Committee. The University Grants Committee is crucial to the health of a university system which has succeeded by protecting the reasonable independence of universities and by placing real responsibility upon those who undertake research and those who teach.
I come to the second point of research centres. There is no doubt that in suitable instances research centres would have an important part to play in the concentration process. The advice of the ABRC on this year's public expenditure survey further elaborates its proposals; namely, six university research centres in each of the next three years, making a total of 18 centres, presumably with many more to come. Indeed, in A Strategy for the Science Base the ABRC envisages that:
"a large part of Council support for university research should eventually be channelled through these inter-disciplinary centres".
A little later the report suggests that most centres would have a director in whose appointment the relevant research council would be involved, and that each centre would employ:
"a small core of research and support station a mix of short-term and career (not tenured) appointments".
Most of the research would be undertaken by what are called visiting research teams of university scientists whose salaries would be met by their own universities, which is a novel extension of the dual support system. It is pointed out that new money will be needed for equipment and capital facilities and that some centres will even need new buildings. No precise estimates can be given but it is clear that the system would involve very heavy expenditure. It is expected that in part the cost will be met by redeploying expenditure on existing programmes.
I suspect that we should all agree that there has to be more selection and that we should encourage the councils to move to what is promising and what is exploitable. But concern has already been expressed about the management and funding of these centres. If they are to proliferate in the way that was suggested in the ABRC's advice, there is a danger of them consuming too high a proportion of the resources available to the research councils. All too often in the past attempts have been made to solve real problems by creating structures. Once structures exist they take on a life of their own and are often difficult to close down when priorities and opportunities change.
The councils should not try to manage science. It is wiser to leave the responsibility for science to the scientists themselves and the universities because often, when an attempt is made to manage science centrally, we find that we do not have enough

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first-class administrators who are willing to operate such a bureaucratic system.
My final point—my third point—is the proposal to transfer some of the research support from the UGC grant to the research councils. I should like to point out this evening the whole range of services which universities must provide from UGC funding for the essential underpinning of good research. For example, the provision of libraries, specialised laboratories and computer and animal facilities as well as providing the relevant portions of the central administration. In addition, UGC funding allows universities to support new research initiatives and to undertake the commercial exploitation of discoveries and inventions. But much more important, it enables the universities to train the scientists needed for the future and to sustain and train young staff until they are experienced enough themselves successfully to apply to the research councils for research grants. Furthermore, if—as I think it is probably right, and as the ABRC project—there are to be fewer individual grants, the burden of supporting and nurturing young scientists during their early training will fall more exclusively upon the universities for an even longer priod.
Selectivity and the concentration of research are vital but they should not require further funds to be removed from the universities and transferred to the research councils. Any funds that are needed by the research councils could, in my submission, be obtained by improving the management of the councils restraining them to their missions and generally sharpening the focus of the present system.
5.53 p.m.
Lord Thurlow: My Lords, it is perhaps rather a cheek for a layman, such as myself, to intervene in this discussion among such a galaxy of academic distinction. Far be it for me to seek to comment in any way on the difficult questions of structure that are covered in the two papers before this House.
Perhaps I may in passing say on structure that on one general point, as a former civil servant, I was greatly attracted by the suggestion of the noble Lord, Lord Beloff, that we should take away the central responsibility for financial control from the Treasury and transfer it back to the Lord President of the Council. I welcome our movement into the enterprise culture. But, what does the enterprise culture require? First and foremost, it requires creativity. How are we to get the creativity which our research and industry needs? Creativity cannot, by definition, be planned; it comes from a form of inspiration: you cannot get creativity by pre-selective programme direction or any other of the high-sounding, and no doubt admirable, processes that have been recommended.
I am associated with a small research foundation which, after some 20 years of pure research, came up with an application of one of the ideas which I hope and believe is going to be of the utmost value to the industry in this country and may even escalate into a billion dollar industry. This was spun off from pure research, and I venture to ask your Lordships to give your blessing to pure research as the fundamental requirement of the whole of our research process.
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In coming to this debate, I look back at the report of the Select Committee and the very disquieting general statements in the early part of the report. During the past five years, the general state of science and technology has not improved; in some areas it has become even worse. Morale is low in the scientific community and a brain drain among the best graduates is again evident. Therefore I picked up the two papers which are before this House full of hope that now we would have a response which would hold out to the lay public, such as myself, the prospect of a reversal, a breakthrough and a real fundamental change.
The noble Lord, Lord Sherfield, in introducing our debate, was very restrained. He welcomed the general thrust of the report having been accepted. Another noble Lord has referred to movement in the right direction. However, I am afraid that looking through these papers and, even more, listening to your Lordships this evening, my conclusion is that we are nowhere near the breakthrough that is required and these kinds of structural changes can help.
It is splendid that the Prime Minister is going to associate herself with the direction, and this may result in far reaching changes in the future. But they are not in sight yet. So I ask that the Government should pay great attention to the request for more resources that has been made this afternoon.
I was impressed by what I think was a comparatively modest quantification given by a noble Lord who is well qualified to form a judgment—that is, £100 million to the UGC and £100 million to the research councils. That may sound quite a lot of money; but it is not a lot of money in the context of what the Chancellor has just told us he has. This is a time in which unusually there happen to be available resources. So I hope that the Government will give the most serious consideration to the request for a really substantial increase of resources.
There is I think an entirely false antithesis between pure and applied research in the context of what the taxpayer supports. The noble Lord, Lord Flowers, referred to this point. But the Government's responsibility covers, above all, the long-term, and creating the right kind of environment. There is, I suppose, an analogy between the onset of a deep-rooted illness and the long period that may ensue before any of the serious symptoms of mortality show themselves. In some illnesses it may be 20 years. I suspect that there is a very real analogy here with the condition that we may be in in that, as the Select Committee's report stated, there are the most alarming possibilities, and there is a need for really vigorous action in the fields that have been recommended; but, above all, in the field of additional resources.
6.3 p.m
Lord Tedder: My Lords, I am concerned with a very small feature of the recommendations in the paper before us. One of the two papers, A strategy, for the Science Base, covers a very wide field. I wish to restrict my comments to the organisation of research in universities and to a particular type of research. The paper reports in paragraph 1.15 that the councils

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are beginning to place less emphasis on the traditional small project grant awarded for a fixed three-year period in favour of longer-term, larger programme grants. Project grants are typically widely distributed, going to individual scientists working in relative isolation, and usually providing only enough funds for one or two research assistants and a modest investment in scientific materials and equipment. The same point is made again in the next paragraph.
However, it is just not true that all the major developments are made in large departments. I could give a lot of illustrations of very important developments that are taking place in small universities, but I think your Lordships all know that that is true. So often what happens is that, having made a reputation, a distinguished scientist goes to one of the big universities and people forget where he made his name.
The division of departments into three types of institution is full of difficulties and the report is not consistent. Broadly, the three classes suggested in the paper are R, the privileged, with research funds across the board; X—I am not sure why "X"—research supported, but not across the board; and T, no research. As regards the possibility of an association of academic staff in group T with more advanced research centres elsewhere, do the authors of the report really believe that good scientists will be willing to become second-class hacks? I hope that no one in your Lordships' House really believes in anything so preposterous.
The real difficulty, so far as I am concerned, lies in trying to apply research criteria suitable for the large sciences to chemistry and similar small sciences. An organic chemist requires access to a 300-mHz nuclear magnetic resonance spectrometer, and a mass spectrometer will probably cost £120,000, which is a lot of money. However, this apparatus is not used just by one group but by everyone doing organic chemistry in the department. If this apparatus is so expensive, which it is, then universities can share. It is not terribly satisfactory, but they manage to do it and I think that that must be the way. For the rest, the majority of the current research in organic chemistry is carried out on a conventional bench with conventional apparatus and is done by quite small groups.
Your Lordships may say that there are big groups in some of the big universities but on the whole they are called big groups because they are led by a particular professor; and if you investigate you find that the professor is a general supervisor and members of the staff are doing the actual day-to-day direction. As an aside, the response of the Committee of Vice-Chancellors and Principals, which I only received late on Monday, is an excellent document which I hope people will take notice of.
The future of Britain will depend more and more on the quality of its scientific research. We must do all we can to see that the glamour of big science does not direct funds away from useful small-scale science.
6.8 p.m.
Viscount Caldecote: My Lords, two main themes run through this debate—scientific research to expand knowledge and use of that knowledge by industry and government to increase national wealth and prosperity. On the first, three important questions arise. Are we doing enough research and devoting adequate resources to it; are the resources that we devote to it used to the best advantage, and are we training enough research workers to meet future needs?
The first question—the "enough" question—is difficult because there is no clear measure of what is enough. But there are several indications that suggest that we are not doing enough, as has already been mentioned by many noble Lords in this debate. There is the comparison with competitors, the loss of talented people and, above all, the grave difficulty often impossibility—encountered by too many promising young research workers doing first-class work in attracting support, even on the very small scale which is adequate in the early stages of research.
I have some personal experience of that as chairman of the Research Corporation Trust, a charity which makes small grants to promising young research workers. Over the past two years, we have had applications amounting to some £7 million in value. These are evaluated by distinguished panels of engineers and scientists. They rate 50 per cent. good, 25 per cent. outstanding and most worthy of support. That adds up to a value of £1.75 million. But owing to limited funds over two years we have only been able to make grants of about a quarter of a million pounds. Those have been mainly subscribed by founding partners of businesses who have invested in industry and a research corporation of America which has generously contributed. We very much hope that we can raise more money over the next few years and increase the percentage of support for those very excellent young research workers who have been disappointed. It seems a tragedy in the present circumstances that such small amounts are not available and that the Government restrictions on expenditure in this field have had such a deplorable effect.
My second question concerning whether we make the best use of available resources is another difficult one. It is related to my third question which concerns the training of research workers. As other noble Lords have pointed out, the Advisory Board for the Research Councils has been struggling to make ends meet. A great restriction has been imposed on its funds. Sometimes a restriction on funds is healthy because it ensures that the wheat is separated from the chaff. No doubt the ABRC has done its best. But I believe that the restrictions on funds have gone far too far. They have driven the ABRC to make proposals the wisdom of which is gravely in doubt.
Like other noble Lords, I refer particularly to the segregation of universities which leads to minimal research support in some of them. Selectivity is no doubt desirable, for standards vary; but to restrict so drastically support for research in whole universities on a long-term basis surely cannot be wise. As the noble Lord. Lord Sherfield, has indicated, standards of faculties and of departments vary both at one time

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and at different times, and people come and go. Although the link between good teaching and research may perhaps have been exaggerated in times gone by, I very much agree with the noble Lord, Lord Butterworth, on this issue. The abandonment of support for research in many universities (which will lead to those universities being stripped of almost all research) will make them exceedingly dull places which are unlikely to attract or bring out the best in either teachers or students.
What of the need to train the next generation of research workers? We have had many warnings and clear evidence that the supply of trained research workers is inadequate for self-sustaining purposes let alone to meet the requirements for future growth. This is a very serious and urgent problem, for it casts its shadow so far ahead. Any action taken will take a long time to become effective. I cannot believe that the creation of teaching-only universities will contribute anything at all towards solving that very urgent problem.
I now wish to turn to the use of scientific knowledge and to the fruits of research in industry. I do not always agree with the Government's comments on the reports of independent organisations and Select Committees; but I am wholeheartedly in support of the comments in paragraph 4 of Command Paper No. 185. The Government states:
"The primary problem, however, is the low level of industry's investment in R&D."
That sadly is very true.
As indicated in that Paper, it is industry's task to devote adequate and far greater resources to the design and development of new products and processes through exploiting scientific knowledge. In spite of the growth in the economy, it is a sad fact that our share of world trade in manufactures has declined very seriously over the past 20 years. It is now I believe showing a sign of levelling out which is encouraging, but we still have a growing deficit on manufactures between imports and exports. In general, there is some evidence that our exports are of lower added value than our imports.
We cannot be satisfied, however much the economy grows in economic terms, until those trends are reversed. No doubt there are many factors causing industry to invest inadequate resources in innovation and in design and development for world markets. There are many reasons, some of them historical, as to why that is so. We still have a little of the shadow of the tied markets of the old Commonwealth and Empire which were convenient and easy. But that applied a long time ago now. We have had too low a return on capital employed. We have had high inflation and inflexible trade unions but those excuses are no longer relevant or significant.
It is true that interest rates still remain too high and they provide some disincentive to risk investment in innovation. I hope that they will come down again soon. However, I believe that the main disincentive is still pressures on managers for short-term performance and continuous profit growth. Expenditure on innovation creates problems for both of those.
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The response of the CBI's task force to that problem was not sufficiently robust. That task force recommended that the disclosure of R&D expenditure in company accounts should be voluntary. I prefer the Government's much more positive statement in Command Paper No. 185. They state that they:
"welcome the publication by the Accounting Standards Committee … of a revised Statement of Standard Accounting Practice … requiring companies to disclose in their annual statements the amounts they spend on R&D. Assuming that this leads to the accountancy institutions' adoption of a SSAP substantially along these lines, the Select Committee's objective will have been effectively achieved without the need for legislation."
Some oppose that requirement on various grounds, but I wish to point out that it is the current practice and has been the practice in the United States for many years to disclose expenditure on R&D. That has a very beneficial effect because when money is spent on innovation and R&D profits go down. In this country that almost always has a depressing effect on share prices. It makes a company a possible and sometimes attractive target for a takeover. That deters managers from making the investment. In America however, the expenditure on innovation and research and development is compulsorily shown. When that figure increases, the analysts look at it and consider that the company concerned is a good company because it is forward-looking and it is investing in the future. As a result, the share price goes up. Therefore that is an incentive to invest.
The sooner that change is made in company accounting practice in this country the better. I very much hope that we shall adopt that practice soon. If the accounting institutions do not carry through this exposure draft into practice I hope that the Government will take whatever action is necessary —either through amendment of company law or through amendment of taxation law—to ensure that that becomes effective.
In my humble opinion there is nothing more important for British industry than the increase in investment in innovation and in the design and development of new products and processes for world markets. Only in that way shall we recover our share of world trade and put British industry, and particularly manufacturing industry (which plays such a big part in employment and in our prosperity) on a sound footing.
6.18 p.m.
Lord Adrian: My Lords, this evening I intend to confine myself to the document from the Advisory Board for the research councils, A Strategy for the Science Base. But before I do so may I say that I am very much in agreement with what the noble Lord, Lord Sherfield, said in welcoming Command Paper No. 185 on Civil Research and Development. A Strategy for the Science Base was published in the summer and comment on it was asked for by the end of October.
We do not yet know how far its proposals will be adopted and there has hardly yet been time to grasp its very wide implications which are a radical grading of universities and the setting up at some universities

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of interdisciplinary research centres managed by the research councils.
Almost as soon as the ABRC had published A Strategy for the Science Base, the Science and Engineering Research Council asked universities to submit bids for university research centres in a number of subjects. Those bids had to be with the SERC at the end of September—or in one case by mid-September. In effect, universities were asked to apply for centres for which there seemed to be no money, which had no clear structure and whose relationships with the universities was wholly vague. The universities may be forgiven if they feel that the research councils are not serious about consultation and that their management of the science base is less than skilled, at least in this matter.
I make that point because a basic premise of the ABRC document, and one that the ABRC hardly bothers to document or to support with argument, is that universities have failed to manage their scientific endeavour. Since management, it says, is what is necessary, funding and responsibility for managing university science should be transferred from universities to the research councils.
Research council institutes at universities are familiar enough, have been very welcome, and in certain fields are an entirely appropriate mechanism for supporting research. But I am wholly unconvinced that they should form the main element of research council support for university science. Basically, the trouble is money. The research councils and the universities are short of it and the research councils see the universities as a possible source of more. There is in A Strategy for the Science Base more than the hint of a claim to control the whole basic science enterprise and to reduce the role of universities simply to teaching.
There is a seductive logic to such a division. It was the path adopted many years ago in Soviet Russia, with consequences which they now regret and are attempting to reverse. The Russians recognise that their universities and especially their research institutes have become both rigid and isolated. To be sure, the ABRC recognises that danger. Siting its research centres at universities may initially avoid some of the dangers of mission-oriented research institutes. But little thought has been given by the ABRC to the effect of their proposals on universities.
The noble Lord, Lord Butterworth, has mentioned paragraph 1.46 which states:
"a large part of Council support for university research should eventually be channelled through these inter-disciplinary centres".
In this context, council support must be understood to include at least a part of funds now going to universities for science directly via the DES and the UGC. It is very unclear how much money will be left over for research in university departments, even in Type R universities. But if funds for research in university departments are severely curtailed, there will eventually be few university staff with appropriate experience and training to man the council's university research centres. The notion that the universities will provide cheap but expert manpower to work as "visitors" from time to time on
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a grace-and-favour basis in university research centres and be expected to retire gracefully to their teaching departments when no longer needed, is simply unrealistic.
But what saddens me most about A Strategy for the Science Base is how far its authors seem to have forgotten that science is an intellectual endeavour, with its own traditions and excitements, and that scientists have their own reasons for doing science; and how far it seems to have forgotten the traditions that have sustained science in this country and made it one of our great achievements.
The ABRC has been persuaded to believe, as do the Government, that, as is stated in paragraph 2.38:
"The primary justification for public support for the science base is to provide knowledge and trained people needed to develop useful applications across the whole range of public life—for example better informed management of the economy, improved clinical practice, new products and industrial processes, and more efficient agriculture".
However true that may be, it is also true that such are not the primary aims of most of those who face the considerable rigours of a training in science and subsequently the relative disadvantages of university salaries. To them, teaching and finding out how things work is much more important than finding better ways of making things for someone else to sell.
The best basic science is driven by curiosity and not by profit, even if profit may ultimately be made by someone with the wit to see how. The Government may lament that scientists think in this way and it is entirely reasonable for them to seek to spread the transfer of ideas from universities to industry. But the ABRC should have warned much more clearly that by insisting too much, in respect of the science base, on exploitability, on central management, on selectivity, on big science, and too little on the originality and drives of individuals, it will run the risk of making an education and an academic career in science even more unattractive than it seems already to have become. If science, as the practice by individuals of finding things out, is to be seriously reduced in universities, the supply of scientists to teach and eventually scientists to do science, whether in the science base or in the economy, will dry up.
Instead of having a first-rate record in basic science and a mediocre record in exploitation by industry, we shall finish up with a poor performance in both. If we are to improve our ability to exploit in the future, we had better have something to exploit and people in industry who can understand what they are exploiting.
6.25 p.m.
Lord Shackleton: My Lords, like the noble Lord, Lord Thurlow, I feel that it is a slight impertinence on my part both to take part in this debate and even more to succeed the noble Lord, Lord Sherfield, as Chairman of the Select Committee on Science and Technology. I was comforted at one point when I thought that most of our distinguished scientists and Fellows of the Royal Society were unable to stay the course. However, I see that some of them have returned.
I am also comforted by the quite admirable speeches of the noble Lords, Lord Butterworth and

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Lord Beloff. I have the impression that your Lordships understand what we have been hearing in the most eloquent and pleasing speech of the noble Lord, Lord Adrian. Those of us who are not scientists have an obligation, whether we are politicians or distinguished historians from Magdalen, to make our contribution.
I should like to query some of the remarks made by the noble Lord, Lord Swann. It was because of our view, that some of the earlier institutions, such as the advisory council, were perhaps more effective than the dispersion of responsibility and advice through too many institutions that we recommended the setting up of ACOST. We do not know how ACOST will work. It has had only one meeting and it has yet to be chaired by the Prime Minister. Nonetheless, we think that that development in structure is a desirable one.
I should like to say to the noble Lord, Lord Beloff, whose speech I very much enjoyed, that I agree with him on the matter of ministerial responsibility. The Select Committee opposed the idea of a separate ministry. However, it was in favour of designating a specific Cabinet Minister to speak for science and technology, possibly in conjunction with other activities. It is absurd, delighted though we are that she is taking an interest, to expect that the Prime Minister can give the attention that these issues require.
I would point out to the noble Lord, Lord Swann, the powerful passage in the report on the subject of the role of shareholders and management. We concluded that what must be changed is the attitude of shareholders and the outlook of management in average and below average British firms. We pointed to the responsibilities of the management schools—responsibilities that they have been slow to recognise. We await with interest the result of these changes.
As the noble Lord, Lord Sherfield, made clear, a major part of the recommendations of the committee was for more finance. As several noble Lords have made clear, the Government have not come clean. They have implied that there has been a real increase. Even if we do not accept the figures of the Save British Science organisation, the fact remains that at most it represents an increase of £5 million. I hope that the noble Baroness will deal with this in her reply.
I am concerned about the number of ignorances—I shall not say dishonesties—about the whole question. It is the role of the House of Lords, of the Select Committee and of Parliament to scrutinise the activities of the executive and to help put it right when it has gone wrong. The noble Lord, Lord Beloff, made some interesting remarks on the Treasury. As the noble Lord, Lord Gregson, said, the report of the Inland Revenue on incentives is a rather despicable one. It admits that the evidence is thin and proves nothing at all. I hope that the Minister will consider this in her reply.
The general level of R&D in industry is too low, as the noble Viscount, Lord Caldecote, has said. On that the Government and your Lordships' House agree. The Select Committee has been seeking ways
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to increase this expenditure, not by long-term subsidy but by help for a limited period. The Inland Revenue concluded that other countries that give tax incentives have got it wrong. Have the Government any other suggestion on tax incentives?
That leads me to another point on which there is some misunderstanding and to which other noble Lords have referred. As your Lordships know, the Government's line is that industry must invest more in R&D. We are all agreed on that. The committee said that neither the Government nor industry is spending enough on R&D. Here I take exception to something that has been said, as some noble Lords have already done. I hope that the Minister will deal with it in her reply. A government Minister much involved in government support for industry said, in reply to a prepared Question in another place that,
"the main responsibility for spending more on civil R&D should continue to rest with industry, as the House of Lords Select Committee on Civil R&D recognised in its recent report".
The committee said nothing of the kind. We said that the main responsibility for funding development rests with industry. If the Department of Trade and Industry does not know the difference between development and research, it offers little hope that the Treasury will get the message right.
I turn briefly to the Rothschild Report which has not yet been mentioned. There is a lack of understanding of the Rothschild 10 per cent. The committee recommended that a 10 per cent. surcharge should be added to all government contracts for commissioned research. Failure to implement rigidly the recommendation made by the noble Lord, Lord Rothschild, has been one of the chief failings of the customer-contractor principle.
Command Paper 185 at paragraph 21 stressed the need for flexibility in applying the surcharge. The Government were obviously thinking about flexibility on the part of customer departments. That was not the purpose. It is the contractors who need the flexibility and facility that the surcharge can permit. A recent report takes this up with the Department of Transport. The point has clearly been missed altogether. It is said that departments have evolved different arrangements with their research contractors in response to the recommendation and there is concern that the Road Research Laboratory will not be able to spend the money properly. The whole purpose was to give researchers a degree of flexibility to do their own thing and to have the freedom that researchers need. Perhaps the noble Baroness will note the point, although the committee, having taken up the matter, awaits a reply from the Minister. There is clearly a message for the Chief Scientific Adviser in the Cabinet Office and all those who have responsibility for the methods by which the Government commission research. I hope that that message is clear.
While on the subject, I should point out that one of the failures of the Rothschild principle related to the field of geology. One of the tragedies is that the contractors, depedent on contracts from departments, were not forthcoming, which had the most serious effect. I imagine that it led in part to the Oxburgh report and, subsequently, to the ABRC report. It is interesting to note that the Butler report

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calls for independence for the British Geological Survey. I hope that the Government will give the matter consideration. Some of my geological friends have expressed the fear that it will be ignored and swept under the table.
I had not intended to speak about space as the Select Committee has yet to report. Once more we find a lack of understanding. I urge the Minister, if she has not already done so, to read the excellent evidence on the subject of space submitted by the University of Southampton.
As a committee we are not anxious to spend all our time nitpicking and chasing the Government. But it is worrying to note the praise for certain projects—the development of remote sensing—when we know that all the available money is committed. Some work in relation to the ground stations for ERS I and ERS II already may not be available, which is worrying. I ask the Lord President to consider this. We shall be happy to forward copies of evidence submitted to the committee on the subject.
I am grateful to the noble Lord, Lord Sherfield, for his chairmanship of the committee and for the valuable report. I wish to make one point on which all members of the committee would surely agree; that, despite the minute resources available—a matter that has been raised in another debate—we have been well served by some very able people.
6.40 p.m.
Lord Kirkwood: My Lords, I shall not apologise for referring again to the matter of funding for civil R&D, because it seems to me to be crucial both in the ABRC discussion document, A Strategy for the Science Base, and in the report of the Select Committee on Civil R&D. It is a matter which, shamefully, the Government have chosen to ignore in their response.
The report of the Select Committee gave some useful statistics on the comparative spending on civil R&D by various competitor countries in the EC. Whether one calculates this on the basis of absolute amounts spent, on per capita spending or on the more pertinent basis of the spending as a proportion of the GDP, the United Kingdom comes behind both France and West Germany.
I think the last figures of government spending on civil R&D as a proportion of the GDP are worth highlighting. According to the report, Germany, France and the Netherlands all spend about 1 per cent. of their GDP as compared with 0.7 per cent. in the United Kingdom. In other words, we need to spend about 50 per cent. more to catch up with our competitors. As an industrial and manufacturing nation which makes so much of its wealth by selling products of high technology, can we really afford to spend less than our competitors on maintaining and improving our scientific and technological infrastructure?
In A Strategy for the Science Base the ABRC complains of continuing under-indexation and the steady contraction of the science base. It suggests that in order to maintain at least the current levels of
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scientific activity the science budget should be linked to the GDP. I think this is a suggestion which merits very serious consideration. Furthermore, I should like to see this link much closer to the 1 per cent. of GDP that other nations which are strong both in science and in technology have maintained.
If the science budget is linked in this way it can hardly be argued that we cannot afford it. Of course it would deny the Government the annual opportunity of haggling over funding and remove the power which this position can give. In the last resort, the amount of funding must be a decision made by the government of the day. In establishing a norm through a link to the GDP they would then be required to justify any deviation that they intended. I think that such a policy would give much-needed stability and continuity to the funding of science.
Finally, there is another concern which is voiced by the ABRC in its discussion document and with which I have strong sympathy. That is the emphasis which has been put upon the exploitability of R&D, rightly in my view, which has clearly been endorsed by the Government. This has left basic science in a vulnerable position since by its very nature it cannot defend itself on these terms. I speak as an applied scientist. The consequences of this vulnerability worry me very much because of the effect this might have on the general quality of all research carried out in the UK. I also have in mind the possibility of losing out on future exploitable technologies which always seem to emerge from fundamental curiosity-driven science.
The nurturing of vigorous habits of thinking and of careful experimentation required to test imaginative theories are essential to good basic science. They should not be undervalued in themselves or in their influence on other activities in research and development. The document itself calls for an explicit policy to protect basic science by providing an agreed minimum level of funding. I think the Government would be wise to accept that recommendation.
I did say "finally", but perhaps I may indulge in a second "finally". I should like personally to support, as has the noble Lord, Lord Shackleton, the suggestion put forward by the noble Lord, Lord Beloff, for the creation of a minister of higher education and science who would be a Member of your Lordships' House. I know that my noble friend Lord Flowers supports this suggestion as well. I believe this could be a most valuable contribution. Perhaps the Select Committee itself might find time to look at that proposal.
Much has been said on the need for selectivity in research and development; the need for priorities to be established; and the need for good management if we are to use the available funds effectively. I am certainly all for this. It makes good sense, particularly for a nation of limited means as we are now. The long-term prosperity of our nation requires a healthy, thrusting, scientific and technological base to be developed and maintained. This itself requires adequate and proper investment in civil research and development.
6.45 p.m.
Lord Peston: My Lords, our debate today has been about such mundane matters as finance and the economic impact of science. It has been a debate in which some six Fellows of the Royal Society have spoken. I feel I must echo very strongly what the noble Lord, Lord Adrian, said; namely, that we must never forget that science is valuable in its own right. It has played a great part in the glorious intellectual history of our country. Even in the present conditions of adversity it will surely continue to do so.
More generally, I believe in the virtues of knowledge for its own sake. In Victorian times when we were very much poorer than we are now, all but the most vulgar would have accepted that. Surely there is no need to apologise for reiterating such values today.
On a peripheral matter, perhaps I may also say as someone who is about to take early voluntary retirement that I strongly believe in tenure in the higher education system. I believe it to be an indispensable ingredient of a serious and successful university system.
My noble friend Lady David said that I would deal with the resource side of this matter. As someone who used to fancy himself as an expert on public expenditure "deal" is not really the right word because I am as puzzled as anybody about the factual situation concerning available resources. I have scrutinised the figures as best I can and I really cannot determine precisely what is the real position.
I can more or less put the figures together to suggest that perhaps next year at best we will have level funding. When we take out the wage element I do not believe what the figures say. I think that we shall have real cuts next year. The year after there might just be an epsilon more than level funding so to speak. I feel that if this debate is to continue over the years then a government department should accept responsibility for providing us with a full table of all the public sector sources for at least the nominal figures for expenditure on scientific research. If the department will give us at least the nominal figures I can assure it that at least some of us are capable of converting them into real resource figures for ourselves.
For some reason these days the Treasury wishes to operate just with cash budgets or to deflate by the so-called RPI. If one wishes to ascertain what happened to the volume of resources available for science it is necessary to deflate by a science-price index. I understand from scientific colleagues that the evidence is that the prices of the kinds of things which scientists buy have risen faster than the RPI. Therefore deflating by the RPI is seriously misleading.
I should like to make one other point in connection with what we ought to be spending on resources and which follows what the noble Lord, Lord Kirkwood, said. We have to see ourselves in a competitive situation in two senses. We are in a competitive situation in terms of economics and we are in a competitive situation in terms of science itself. In order to stand still as it were, we have to use resources on much the same scale as our main competitors in
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science. That is again another way of seeing the right perspective in which to place the budget.
I must apologise to the noble Lord, Lord Beloff, for not being present to hear his important remarks. He made one significant point with which I strongly agree and upon which I have changed my mind. Post-Robbins, I was one of those who felt that higher education and science should come under the DES, where the noble Baroness is our Minister. I still just about believed that when I was an adviser at the DES. I am now convinced that the noble Lord, Lord Beloff, is right and that the right place for higher education and science is no longer the DES. There is a serious point to make about having a major Cabinet level voice for higher education and science.
I shall now turn to finance from industry. I wonder whether anyone in this country at present seriously believes that major funding for basic research could come from British industry. From my experience—and most noble Lords agree with this point—I have found that it is almost impossible to persuade British industry even to invest in research which is of direct benefit to it and its profit margins. The notion that industry would start to invest in fundamental research—much as it is desirable—is preposterous. It therefore follows that if fundamental research is to go ahead, and bearing in mind that we are told—although on other occasions I have disagreed with this—that the economy is doing so well, surely we can afford a properly-funded public sector science budget.
I am one of those who strongly support the concentration of effort. It does not seem to me that the definition of a university must be one which covers every conceivable academic topic known to mankind. I believe that universities can specialise. The main criterion for where resources should be put will then be at the individual department level and not at university level. Indeed, there is nothing more misleading than the halo of the university as a whole being translated into individual departments, some of which are often distinctly second-rate.
Almost all noble Lords are agreed that we should reject the proposal that we should judge "research worthiness" by the university itself, but that we should look more specifically at what the individual departments are doing. On the whole, I like the idea of research institutes and of concentration, but I follow the noble Lord, Lord Dainton, and agree that those places where the concentrated effort is to be found must be open and accessible.
One of the dangers is that many universities may think that once they have a particular activity it is somehow theirs. That would be an unsatisfactory state of affairs. I do not say that it happens to a great degree; but it is a danger that we must always bear in mind.
On science and the economy, there is no doubt that with most of the rather pathetic research that us economists do we find it difficult to find a causal relationship between science and economic performance. If one stands back, one finds that the position is paradoxical. I would not jump to the conclusion that science does not make an economic impact merely because at the moment we find difficulty in establishing that causal relationship. I

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come more to the conclusion that economics might need to become rather more effective as a research science to discover it. Following that, let me say that of course, as an economist, it was music to my ears to hear the noble Lord, Lord Swann, suggest that we should pay some attention to the social sciences when we consider further developments in funding.
The relationship between scientific research and economic performance is a subtle one. We will not obtain the answer by looking for a crude correlation from one to the other, especially as we all accept—it is made clear in the history of science—that so much happens by chance and serendipity that we must create the circumstances in which those beneficial effects can occur.
I am not one who is against asking what value we get from specific projects. On the contrary, I have always believed that we should scrutinise such matters. However, close management of research effort in which we are constantly asking what we are getting out of it—especially in the short term—will be immensely damaging to science.
On that, I shall echo one or two remarks about what I am almost inclined to call amazing research, which claims to show that there are no benefits from providing tax incentives to the private sector to engage in research and development. I have scrutinised paragraph 27 of the Government's response. The sentence that is missing is again, as it were, the scientific questioning sentence from the Government themselves, "Perhaps this result is not right", because in a curious way—I do not say this to be even more annoying than usual—given the Government's own philosophy, tax incentives should work and be extremely effective. If they are not, it should be a puzzle for the Government. They should not sit back and say, "That is all okay". I am most disappointed in the Government's response to that point.
I do not speak as someone who believes that everything science and scientists do is right and must never be questioned. I agree with my noble friend Lady David that we should scrutinise more closely what the research councils do, and in particular ask what happens to some of the post-doctoral fellows whom they finance and some of the research that they undertake. I am not entirely convinced that the present structure of the research councils is satisfactory. If we are to have these multi-disciplinary operations going on, I do not see how they will fit into all the separate research councils. We should also look at whether research councils might change, not necessarily to be replaced by an overall research council but by someone to do something of a broader kind.
Another area in which we should monitor scientific research spending—I agree it is a sensitive one—is in defence. A great deal of the money we are talking about goes on defence. I accept that potentially there are positive spin offs from research in defence; but I should like to believe that someone was deeply scrutinising what was going on. If we are talking about obtaining value for money, I should like to see that we obtain it there as well as everywhere else.
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I shall utter one more gloomy remark before concluding. I shall draw your Lordships' attention to an extraordinarily interesting article in the current number of Nature, "The continuing decline of British science". It is devoted to the publication and citation record of science and states:
"One can see that the areas of strength—whether judged in terms of publications or citations—are almost entirely in medical and biological specialities, although geology and electrical-electronic engineering are also quite strong. In contrast, the weaker subfields are generally in industrially related scientific and engineering specialities such as metals and metallurgy, chemical engineering, solid-state physicis"
and so on. The article points alarmingly to the considerable and rapid decline in several of those areas.
Such evidence should not be thrust on one side. We hope that 50 years from now people will not be discussing why Britain became an even more backward nation, despite the evidence available in 1987, because I hope we shall have taken it into account.
I strongly believe in our future as a nation, in terms of our intellectual and economic endeavours on science and our investment in human capital. I can think of no better way to close my remarks than to quote the remarks made by the Secretary of State in the debate on the copyright legislation only last week when he said:
"Intellectual property is of substantial economic significance. It forms the foundations of major industries … Our future prosperity depends on the people who make things happen, the people with ideas, and those who apply them".—[Official Report, 12/11/87; col. 1476.]
The people with ideas are overwhelmingly our scientists. They provide the science base without which industry and commerce would be ineffective. They deserve more and better than we are currently offering them.
7 p.m.
The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper): My Lords, I should like to add my thanks to those already expressed to the noble Lord, Lord Sherfield, for introducing this very valuable debate. It has been both interesting and stimulating, and I am most grateful for the many positive and constructive contributions that have been made from all sides of the House.
When your Lordships last discussed civil research and development in February the Select Committee's comprehensive and carefully argued reports had just been issued and noble Lords were seeking to impress on the Government the need for change in the way they approached their responsibilities for these matters. As Command Paper 185 has since demonstrated, as has been acknowledged by many noble Lords today, and indeed as my noble friend Lord Whitelaw indicated in his opening address, your Lordships' views have been taken very seriously by the Government and considerable change has occurred in the direction advocated.
I am glad that much of that change and of the Government's response has been welcomed and I can reassure the House that equally careful note will be taken of the many points raised in today's debate.

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My noble friend Lord Whitelaw spoke mainly about issues arising from our July White Paper. I propose now to address issues which arise in connection with the consultation paper "A Strategy for the Science Base". In the course of the debate your Lordships have raised many interesting questions on both these papers and on some matters outside, and I shall also seek to answer these as best I may in the time we have available.
As your Lordships are aware, the Advisory Board for the Research Councils offers advice each year to the Secretary of State for Education and Science on his responsibilities for civil science. This advice has usually taken the form of advising, first, on the overall size of the science budget and later in the year, when public expenditure decisions are known, on the distribution of the science budget between the councils and other science budget bodies. I explain this because it is perhaps common knowledge here but with the wider public this may not be so. However, this year the board decided to supplement its annual advice with strategic advice about the future organisation of the science base. The term "science base" covers all the research for which the Secretary of State for Education and Science provides funding; that is to say, in the universities, polytechnics and higher education institutions generally as well as in the research councils.
Why did the ABRC decide to offer strategic advice? It was certainly not to cause the constitutional foul co which my noble friend Lord Butterworth referred. I hope that this may go some way to answer the question raised by the noble Lord, Lord Hunter of Newington. It was primarily because the board had become very concerned that the present distribution and organisation of funds for the science base was not appropriate to the level of funds available. The board was aware of course that the scientific community believed that the Government should increase their funding for the science base. But it was also aware that the Government were providing more money for the science base, after allowing for average inflation, than they had ever done before. It is not difficult to find reasons for this apparent paradox. First, in some areas of science at least the costs of pursuing research at the frontiers of knowledge are rising much faster than average inflation. This has been recognised in the course of the debate. Secondly, the number of opportunities for undertaking important research are also increasing very rapidly, giving rise all the time to further calls for funds. But as has been recognised by some in the debate, there is always a limit to the funding for anything and this applies equally to funds available for science.
Industry's role in this respect is of great importance. That has been referred to by a number of noble Lords. In referring to industry, perhaps I may take up the point raised about my right honourable friend the Chancellor of the Duchy of Lancaster's remarks in another place. I can reassure the noble Lords, Lord Sherfield and Lord Shackleton, in particular, that they may rest on the fact that in the Government's response to the Select Committee's report the Government agreed with the committee's conclusion that the main responsibility for the funding of the "D" in R&D rests with industry. I can
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reassure them that this remains the case and I regret that the remarks of my right honourable friend may have given rise to misinterpretation.
The ABRC presses the case for more funds on the Government, and not without success. It would not surprise me if it continued to do so. But the board came to the conclusion that it could not reasonably plan on the expectation that the Government would be able, or be prepared, to provide all the funds which scientists wanted. The ABRC recognises that the rapid growth in science funding in the 1960s and early 1970s will not recur in the foreseeable future. No government, of whatever party, would be likely to find the vast sums involved. The board believes therefore that a new positive and declared strategy is needed. The main elements of the board's strategy are for greater selectivity and concentration, more interdisciplinary research, greater attention to the potential for exploitability and applicability, and more purposeful management of research. There are other elements to the strategy and I hope that I have not done the board a disservice by this oversimplification of its detailed and carefully argued document.
The Government welcomed the ABRC's initiative in preparing strategic advice, and decided to issue the document as a consultative paper in July this year. The closing date for comments was the end of October. We have received over 200 responses, many of them addressing the ABRC's arguments very carefully and at some length, and with a clear dedication to the cause of maintaining the health and enthusiasm of British science. We are very grateful to those who have responded in such a committed way. Not surprisingly, perhaps, the replies concentrate heavily on the board's proposal for differentiation of higher education institutions by research role types R, T and X, as indeed have many of the contributions from your Lordships today. It will not surprise you to know that a substantial number is not attracted to that proposal. But in spite of some requests I hope that noble Lords will understand if I do not seek to express a government reaction to the ABRC's proposals today.
The noble Lord, Lord Adrian, said that it was not clear how many of the proposals will be adopted. I can assure him and other noble Lords that we wish to consider all the responses very carefully and to take account of the many valuable contributions in today's debate. These include the points made on the proposal to transfer funds from the UGC to the research councils to improve selectivity. I can say, however, that the Secretary of State for Education and Science attaches great importance to the ABRC recommendation for interdisciplinary research centres and believes that there should be scope for a worthwhile start on these within the science budget settlement he has recently announced.
This brings me naturally to the question the noble Lords, Lord Sherfield and Lord Shackleton, asked about the breakdown of the increase announced for the science budget. I should first make clear that any increases in the science budget from previous planning figures can be justified only if the Government are convinced that important science would be lost unless additional funds were made

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available. Such losses might occur because of the need to curtail programmes in order to absorb cost increases, or because important new opportunities have arisen which justify support from new funds rather than redeployed funds. The Government must then balance any increase they are prepared to consider for the science budget against their overall policies on public expenditure, and the call on taxpayers' money.
It cannot be assumed in advance that new money will be found. In particular, there can be no expectation that the Government will automatically make available additions to the science budget to cover rising costs, whether of pay or anything else. In response to the noble Lord, Lord Kirkwood, and other noble Lords who raised the question of funding I should like to repeat what my noble friend Lord Whitelaw said concerning the new central machinery. He said that it is just,
"getting under way and the Government are conducting a searching review of their R&D programmes, with a view to decisions being taken on the level and distribution of R&D expenditure in the next public expenditure round".
The Government look primarily to the ABRC to advise it on the case for any increase in funds in relation to the science they believe should be supported. The Government take the ABRC's advice very seriously, and as a result have made significant additions to the science budget in recent years—although I accept that these have been less than those asked for by the ABRC. The increase in the science budget for 1988–89, compared to plans published in the last public expenditure White Paper, is £47 million, giving a science budget for 1988–89 of £696 million. The planning figures for 1989–90 and 1990–91 are now £729 million for each year.
Within the increase of £47 million for 1988–89 is an increase of £6 million for AIDS research, which had been announced previously, and an increase of £8.6 million for the research programme in Antarctica. The planning figure for 1989–90 is £65 million more than previous plans. This increase includes £8 million for AIDS research and £17.7 million for research in Antarctica. The planning figure for 1990–91 is £48 million more than previous plans, including £3.7 million for research in Antarctica, but no addition for AIDS research. As my right honourable friend the Secretary of State said in his statement on 3rd November, additional provision for AIDS research in that and later years will depend on the agreed evalution of the programme.
Such provision will not, however, have to be found from within the science budget baseline. The increases, net of AIDS and Antarctica research—on the distribution of which the ABRC will be advising the Secretary of State in the coming weeks—are thus £32 million, £39 million and £44 million, for the years 1988–89, 1989–90 and 1990–91 respectively. Taking account of projected average inflation, this will provide roughly level funding for the science budget. This therefore confirms the validity of the analysis of the noble Lord, Lord Peston. I trust it goes in some way to reassure other noble Lords who raised that question.
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The Government consider that this is a very fair settlement, especially considering that they have yet to reach their conclusions on the ABRC's proposals for reshaping the science base. As some of your Lordships have already observed, this may seem at odds with the calculations made by the Save British Science society and widely reported in the press. These purport to show that the effect of the settlement, as the noble Lord, Lord Sherfield, mentioned, is to make available £19 million less for research in 1988–89 than in 1987–88. That is not the case and my department's examination of the SBS figures reveals that it is not comparing like with like. In particular, in making its various deductions from the increase in the science budget between this year and next, in order to give what it calls the real increase, the SBS in effect deducted certain sums related to pay increases twice.
I refer at this point to the question raised by the noble Baroness, Lady David, and echoed by the noble Lord, Lord Dainton, and others as to whether the additional funds for the science budget announced on 3rd November constitute the total response of the Government to the ABRC's proposals. As I have already said, the Secretary of State for Education and Science made clear in his statement that the ABRC's proposals are still under consideration. He wishes, however, to take careful note of the consultations and will announce the Government's response in due course. The hope he expressed that a start could be made on interdisciplinary research centres does not in any way preclude this further response.
Turning to the university settlement for a moment, perhaps I may remind your Lordships that the recurrent grant to universities in the current financial year, 1987–88, is 10 per cent. higher in cash terms than that in 1986–87. The Government statement on 3rd November announced a further cash increase for 1988–89 of 8 per cent. That figure includes provision to help meet the costs of the 1987 academic pay settlement and is therefore conditional upon satisfactory progress in improving arrangements for staff appraisal, promotion and probation. In total, however, the additional funds provided are well ahead of inflation. Additionally, over the period 1988–89 to 1990–91 the Government are providing some £155 million for a targeted programme of restructuring in the universities which will benefit both teaching and research.
In view of the discipline of everybody else on the matter of timing, I can deal with a number of specific points in addition to the more general ones. In response to the question of the noble Lord, Lord Flowers, about overhead payments in research contracts with universities, I can confirm the Government's view that institutions should not subsidise their clients. The Committee of Vice-Chancellors and Principals proposals are still subject to consultation and the Government are prepared in principle to give those proposals sympathetic consideration in relation to research which it commissions from universities. I hope that industry will do likewise.
The noble Lord, Lord Gregson, questioned the accuracy of the Government's statistics on R&D.

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The Organisation for Economic Co-operation and Development does not share his doubts. Indeed, its figures for 1985 show that the Government's total R&D funding as a percentage of GDP was higher than that of Japan, Germany and the United States. I hope this in some way goes to reassure the noble Lord, Lord Peston, also.
On tax incentives, a matter which the noble Lords, Lord Gregson and Lord Shackleton, and other noble Lords raised, I must point out that R&D expenditure is already favourably treated in the United Kingdom for tax purposes. Over 90 per cent. is allowed against tax in the year incurred either as revenue expenditure or under the special scientific research allowance. I shall of course give special consideration to the ideas for economies put forward by the noble Lord, Lord Kearton. In relation to CERN, I should say that we do not question the scientific quality of the work at CERN, but the United Kingdom's subscription is a significant proportion of the budget available for basic and strategic science and engineering research, as the noble Lord pointed out.
Both the Advisory Board for the Research Councils and the Science and Engineering Research Council have recommended that the cost of staying in CERN should be reduced. At the United Kingdom's request the CERN council set up a review under Professor Abragam and we are expecting a report within the next few weeks. We shall then be considering future United Kingdom relations with CERN in the light of that report's conclusions.
The noble Baroness, Lady Lockwood, and other speakers referred to industry's reluctance to invest in R&D on the same scale as our overseas competitors. The Accounting Standards Committee's proposals to companies to disclose the amounts they spend on R&D should, we feel, help to emphasise to shareholders and managers the value of R&D, an incentive supported by my noble friend Lord Caldecote.
The noble Lord, Lord Swann, also mentioned the importance of changing managerial attitudes to R&D. We believe that if the accountancy profession adopts the proposals—the Government are optimistic that it will—R&D will have to be disclosed in companies' accounts. This will achieve one of the aims of the Select Committee without, as was pointed out, the need for any legislation.
It is difficult to know what to say to the suggestion of my noble friend Lord Beloff to remove science from my department. I shall offer to draw his remarks to the attention of my right honourable friend the Secretary of State, although I do not think his suggestion will be too popular with him.
In the course of his defence of the dual support system of research funding, the noble Lord, Lord Hunter of Newington, mentioned that universities were not against rationalisation and were aware of the need for value for money. The Government recognise the efforts made by the universities and the research councils to restructure their operations. Many noble Lords have referred to individual universities and their successes, stimulated, as I think noble Lords will recognise, by government policies. The noble Lord, Lord Dainton, said that the
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Government wanted to have the support of the scientific and academic community in their reforms. I can confirm that we want that support and that we are conscious of the successful efforts that individual universities are making.
The noble Lord, Lord Shackleton, criticised the amount spent by the Government on space. The Government currently spend some £112 million a year on space R&D. We have to balance the longer-term benefits of expenditure on space against alternative uses of the funds in support of other areas of research. I am glad to be able to say that industry has responded to the call by my right honourable friend the Prime Minister for further resources in this respect, and discussions will be taking place between government and industry about space funding.
Lord Shackleton: My Lords, I am not arguing about the amount. I am just saying that the Government have locked themselves into an impossible position. The present level of funding is all committed and yet there are areas which they would obviously like to go into. It is a fact that they took a decision without examining the details of how the money was already committed. I do not ask the noble Baroness to comment further, but just to note that.
Baroness Hooper: My Lords, I am grateful to the noble Lord for clarifying his remarks.
The noble Lord, Lord Peston, and the noble Baroness, Lady David, referred to the Nature article on Britain's declining world share of scientific publications. The article confirms the outstanding record of Britains scientists. The volume and impact of their work remains second only to that of the USA, with its vastly superior resources. The main reason for the decline in Britain's share of scientific publications is the increase in output by other countries. I especially welcome the fact that Japan is now making a fuller contribution to the advancement of knowledge worldwide.
Lord Peston: My Lords, while I accept that point, it reminds me so much of the apologies that have been put forward over the past 20 years for almost everything else to do with our relative decline. It is always to do with the relative expansion somewhere else. In some sense, as it were by definition, it is, but that does not mean it is not a serious matter.
Baroness Hooper: My Lords, we fully recognise that this whole area Of research and development is a serious matter.
My noble friend Lord Whitelaw has responded to many of the questions raised by the noble Lord, Lord Sherfield. I should like to add briefly that the Science and Technology Assessment Office is fully staffed and running, that the ACARD defence R&D study is continuing with the same chairman, Dr. Charles Reece, under ACOST. The study is scheduled for completion by October 1988. The noble Lord also asked about CEST. Announcements on senior posts at CEST are expected before the end of the year.

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I fear that I may not have responded to each point made in the course of the debate, but I trust that I have covered a fairly representative selection. After studying Hansard tomorrow, I shall write if necessary, During the past year a number of important initiatives have been taken which will improve the position of British science. Many have been referred to during this debate. They will take time to develop fully but there is no doubt that we are moving in the right direction. The Government have stated on a number of occasions that they value greatly the contribution that science and technology makes to national life and the economy and that they intend to maintain and enhance the strength and quality of the science base. That will remain their intention as the strengthened leadership and new initiatives stimulate the changes needed for success in the 1990s.
7.25 p.m.
Lord Sherfield: My Lords, I should like to begin by expressing my appreciation of the action of the noble Viscount, Lord Whitelaw, in speaking first for the Government in this debate. I ask the noble Baroness if she will be so kind as to convey that appreciation to the Leader of the House. Secondly, I should like to thank all noble Lords who have taken part in this debate. We have had some interesting and constructive speeches. Some valuable suggestions have been made, and I welcome the noble Baroness's assurance that these observations will be taken into account in the consultative process which is still I think in progress.
The noble Baroness, Lady David, drew attention to the fact that many of the speakers in this debate belong, so to speak, to a stage army. I should like to say two things about that. First, I agree with her fully that the more fresh blood that is brought into these debates on important subjects, the better. Secondly, I had hoped to persuade a couple of noble Lords to make their maiden speeches in this debate, but unfortunately both my candidates could not manage the date. Nevertheless they are waiting in the wings.
We have had some interesting speeches from noble Lords, who are not members of the stage army. I especially enjoyed the speech of the noble Lord, Lord Thurlow. I wish that more noble Lords who are not directly connected with the specific subjects of the Select Committee reports would add their observations and make contributions to these debates.
The noble Lords, Lord Beloff and Lord Peston, referred to the transfer to the Department of Education and Science of the responsibility for science policy. I remind noble Lords that it was Lord Haldane who laid down the principle that responsibility for science and science policy should be non-departmental. For that reason it was given to the Lord President of the Council. It was a kind of turning point when in 1965 that practice was discontinued and the responsibility was made departmental. That was an important change. I shall make no further comment on it.
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I should like to thank the noble Baroness for a full reply to the debate. We shall look at her figures with a great deal of interest. I have only one comment to make on what she said. Even if the ABRC's recommendations in its rather urgently worded request for additional funds had been met in full instead of being virtually ignored, it could not by any stretch of the imagination be described in her words as a "vast sum". It may be more than the Government think they can afford but it is not a vast sum.
I will say no more except again to express my thanks to all the speakers in the debate. Might I just perhaps say as a concluding remark that I hope that the Government will pay more attention to the recommendations of ACOST than they have in the past to those of the ABRC. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Strategic Arms Reductions
7.30 p.m.
Lord Kennet Lord Kennet rose to ask Her Majesty's Government what is their policy towards strategic arms reductions by the nuclear powers.
The noble Lord said: My Lords, all those who think that disarmament is a sensible way of making war less likely—and they are many—must favour the INF agreement which will probably be signed quite shortly between the United States and the Soviet Union. It is now perhaps time to look beyond that to the shape of the world that it will usher in.
Many questions about the future political and military shape of Europe will have to be faced. Will it make France more Atlantic? Will it make Germany more European? What will be our own right course if either or both of these things happen given that, as the Foreign Secretary has put it, the
"whole development of world events [now] underlines the importance of increasingly effective European unity on political as well as economic matters"?
Many national questions will also arise, and those are what I want to put to the Government tonight.
Since the House last debated these matters, we have had the news that our Trident missiles are to be returned to a sort of United States pool for servicing whenever they need it, and that we shall not actually know whether we are getting the same one back again. It is worth reminding the House of the sequence of revelations in this matter. First of all, the missiles were to be serviced in Scotland, and that was a lot of work for British dockyards. Then they were to be serviced not in Scotland but in the United States, and bang went another bit of British work and another bit of British sovereign control over the whole system.
Then they were to be returned for servicing as part of the US cycle. The Government call it servicing, but admit that includes complete rebuilding. So in fact we should simply be using a rolling part of the United States stock: US-made and US-serviced from the moment a missile is first fitted into one of our boats by US experts until the final junking of that missile or

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its successor, or its successor's successor, say 30 years later.
The fact that, as the Government have emphasised, there will be some sort of agreement that in some way the things belong to us is neither here nor there. Negative physical control of them will be at all times in the hands of the United States. Moreover, the US agreement to sell us the missiles in the first place does not bind any administration after next year. The system is supposed to last, say, 30 years. That is eight administrations. Many noble Lords will know—and some may even remember personally—that the United States has twice before now gone back on its agreements to collaborate with us in nuclear ventures: once at the end of the war under President Truman, and once with Skybolt under President Kennedy.
The Government are now putting us at risk of being unilaterally disarmed by the United States at their convenience, which is a position Churchill and Attlee were careful never to put us in. Let me repeat that: the Government have put us in a position where the United States will be able, at its convenience, unilaterally to disarm this country.
Now, my Lords, how likely is this to happen? The superpowers are agreed in principle to proceed next to 50 per cent. reductions of strategic nuclear weapons, and they have even agreed and published their agreement on some of the details. This cannot but call the United States-United Kingdom pool of Trident missiles into question. Maybe all new missile production will have to be stopped when the 50–50 agreement is reached. Even if not, a 50 per cent. cut in the intended size of that pool would affect us immediately and severely.
Since the missiles which we have been promised by this Administration will be coming out of the common pool there is no way the American negotiators can refuse to talk about them with the Russians. The whole pool is under American control, and that is that. The Prime Minister only yesterday was saying that there is:
"no question of putting Britain's independent deterrent into the [50 per cent.] equation."
The fact is that it will unavoidably be in the 50 per cent. equation because it will be in the United States' pool.
As a matter of fact, it is already clear that the overall reduction of 50 per cent. may be going to be obtained by different percentage reductions in different legs of the triad. I hope that your Lordships follow me. It is complicated, but not all that complicated. Opinions will differ but my own opinion is that the proportion by which the Trident pool is likely to be cut, if anything is cut at all, is more than 50 per cent.
As Ambassador Lehman has told us, the Soviet Union is pressing the United States to shape its reduced strategic triad more like the existing Russian triad. As everyone knows, the Russian one has a proportionately smaller submarine element than the American one. The United States will no doubt stand out for the so-called "freedom to mix", but many of the political and strategic arguments are going to push it to reduce that common UK-US submarine
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launched maxi-missile pool by more than 50 per cent., not less.
Then there are all the old Scowcroft arguments: still valid. Too many warheads on too many missiles carried on too few platforms is still the classic recipe for strategic vulnerability and will continue to be so during a disarmament process.
Then too there are the economic pressures on both superpowers to disarm very rapidly—perhaps more rapidly than either has yet contemplated. The United States deficits—I use the plural—now dominate the world economy. In this matter I declare myself a Lawsonite, not a Thatcherite. I do not see why Germany and Japan should be required to finance US Government expenditure when the United States is historically, and still potentially, the strongest economy in the world, and when its military spending dwarfs that of all other nations. Just because Germany and Japan are efficient and were once defeated does not mean that they have a duty to present the American voter for ever with low taxes and colossal armed forces. And I do not think they will, either.
It is strange to see a Conservative Prime Minister of this country veering towards approval for an international effort to help the United States maintain and increase these super-colossal para-Keynesian stockpiles. That the Soviet Union needs disarmament for economic reasons is a commonplace, but in this context what is the difference between "economic" and "financial"? My Lords, it is just this: when the Russians beggar themselves for arms they suffer alone. When the Americans do, they pull the world economy down with them. Already Mr. Carlucci is speaking of smaller US military forces and his enthusiasm for the strategic defence initiative seems quite modest.
Then there is the greatest, and perhaps least discussed, question of all. The US aerospace industry is going through an alarmingly bad patch which started with the shuttle disaster. MX has major faults; the B1 bomber has major faults. What if Trident does not work? It has not yet even been test fired from underwater. I submit that the Government are pinning their hopes to a very risky set of propositions indeed.
Since its foundation, the SDP, together with the Liberal Party, has said that Trident was a bad decision. We said that then and we still say it now. We also said that we would cancel it if and when we were in a position of power. We are not in a position of power, though we fully intend to be by 1992. If we are, and if Trident is there—that is to say, if the opportunity to receive Trident missiles out of the pool is still there, despite all the political, military and physical risks—then we should have to see whether the disarmament scene at that time gave us a world in which it would improve our national security to discontinue that project, or, on the other hand, a world where our national security demanded that it be continued. If disarmament had made it safe to do so, we should discontinue the project; if not, then we should not do so.
That is not enough. There has to be a fall-back plan. It is now our duty, as an opposition party, to

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point out to the Government that it is their duty to have a fall-back plan. If the US decides to break the Trident agreement because the Scowcroft reasoning prevails in a world of heavy strategic reductions, or if they are forced to by debt, or because Trident does not work, or, most likely of all, if all those things happen to some extent and combine to force a switch in American policy, what will our Government do? That question is as real today as it was before the election, perhaps even more real.
The fall-back policy has to be worked out now and it has to be valid throughout the proposed lifetime of the Trident system: 30 years; eight American Administrations. It is just as likely to be needed in 20 years' time as it is now. The fall-back policy could be an Anglo-French airborne standoff system, though the Government's mulish rejection of European space development—and indeed, of Britain's own—may have made that very difficult. The fall-back could be many other things.
The Government will make the country safer only if they agree to share their thoughts a little. What is against taking the country into the Government's confidence? If INF comes, if 50–50 comes, there will first have to be multilateral negotiations among the nuclear powers, and then among others, in order to shape and fulfil the third stage. For 40 years I have hoped to be around at that time, and I still do—just. It has been short sight, narrowness of vision, lack of continuity in the relevant jobs in all our countries and in Russia which have prevented progress so far. I wonder what the Government will have to say tonight.
7.45 p.m.
Lord Jenkins of Putney: My Lords, I congratulate the noble Lord, Lord Kennet, on introducing the subject, unamusing and positively paralysing though it is. Those of us who, in spite of that, force ourselves to bring our minds to it on occasion can perhaps understand the fact that the television companies have decided to protect the wider audience from the subject. They would prefer people to be entertained with more local horrors and other forms of violence, rather than the generalised violence which we are discussing—the possibility of the extinction of the human race. It is clear that the television companies do not want the people of this country to think about that matter.
I do not want to think about the matter much either, because none of us finds it easy to bring our minds to it. However, in the back of our minds we know that that possibility—which is there continually for the first time in the experience of the human race—ought to engage us more closely, more carefully and more particularly than any other subject.
We ought not to be too hopeful. The wording of the Motion and the remarks of the noble Lord, Lord Kennet, more or less assume that the INF Treaty is in the bag. I hope that it is, but there is many a slip. The noble Lord, Lord Kennet, touched on another consideration that we ought to bear in mind; namely, the fact that the United States is making sure that the
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loss of its land-based intermediaries is more than covered by air and seaborne missiles. Almost certainly, they are more deadly than those they are replacing. It would be reasonable to suppose that the Soviet Union may be doing something similar.
What are we likely to be celebrating? Can we say that this is the beginning of the outbreak of peace? I fear that that statement would be a little overoptimistic. If we are celebrating anything—and I sincerely hope that we are—it is not so much a reduction in the totality of the threat as the beginning of a process of negotiation. I think that the noble Lord, Lord Kennet, implied that. It is the negotiation between the super powers and other nuclear powers which could, if all goes well, eventually lead to a real and general reduction in arms and, conceivably, to the elimination of the nuclear threat. We are a long way from that state at the present time. The odds seem to be increasingly stacked against ultimate success. Nevertheless, I welcome the first sign by the super powers of a readiness at least to try to eliminate a particular group of nuclear weapons.
The game is played in terms of nomenclature and euphemism. Even a cruise missile changes its nature according to its location. If the INF agreement is reached, the Greenham Common cruises go, but a similar missile located on a submarine in Holy Loch becomes a strategic nuclear weapon. It can stay there and be added to because it is not covered by the INF Treaty; hence the importance of what was said by the noble Lord, Lord Kennet, in drawing our attention to strategic nuclear missiles. That is the next stage that we must travel if the process upon which we hope we are embarking is not to prove an empty failure.
What are the nuclearphiliacs worried about? Not all noble Lords will be aware that about 70 members of the European raving Right, plus (I do not include them in that description) such luminaries as the noble Lords, Lord Chalfont and Lord Orr-Ewing, and the noble Baroness, Lady Cox, have placed an advertisement in the Washington Post. That advertisement suggests that they think that the conclusion of an INF agreement will have the end result of sovietising Western Europe. Are they really quite so barmy? Well, some of them are, and they are probably already envisaging the snow on Russian boots.
However, the less imaginative members of the group are perhaps more reasonable, and perhaps more dangerous. They are people who do not want any kind of agreement with the Soviet Union about anything and to whom anti-sovietism and anti-communism have become a way of life and a raison d'être. They would be at a loss for something to hate if, as an inevitable sequence of events, they were to discover to their horror that there was not any Russian threat at all.
Yet of course there would be a threat. A friendly and unfrightening Soviet Union might be most alarming of all. It could be that the people actually came to like the kind of society that they found in the Soviet Union, which could improve—and there are signs of it happening already—to the point at which it is thought a good idea to import some of the Soviet ideas into this country. At worst, they might start voting communist. At best, it would shake the Stock

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Exchange gambling on which our acquisitive society rests, and shake it to its already shaky roots.
So what do such people want? They want a continuation of the arms race. They do not want peace at any price. Their world would collapse with the arrival of real and permanent détente leading to friendship between peoples and nations. To ensure that nothing of the sort takes place, Mrs. Thatcher has ordered Trident—I am sorry; I nearly called her Mrs. Trident—which represents a fourfold increase in the throw-weight of Britain's nuclear weaponry and which has a first strike capability.
Let us suppose the situation were reversed. Would we conclude an INF agreement if a nuclear submarine weapon capable of annihilating London and all Londoners were located in a Bulgarian port and said to be excluded from that agreement? Mrs. Thatcher has said that she will never give up our independent nuclear deterrent. The noble Lord, Lord Wilson, blew the gaff on that argument, as the noble Lord, Lord Kennet, suggested, when years ago he said that we did not have an independent nuclear deterrent. We probably do not have one now, as the noble Lord, Lord Kennet, has suggested. Are our nuclear submarine communications under American control? Can we target without using American-controlled satellites? What about the missiles? Mrs. Thatcher is talking nonsense, and very dangerous nonsense at that.
The situation in the Middle East contains an increasing nuclear element. I do not know whether any of your Lordships watched the recent Channel 4 programme called "The Plutonium Black Market". That programme suggested that there is a market—curiously enough, based on Khartoum—in which weapons-grade plutonium and enriched uranium is being traded. According to that programme, there seems to be good reason for believing that not only Israel but also Iraq and Iran now possess weapons-grade plutonium. If that is the case, the outbreak of nuclear war between the super powers, about which we are always concerned in this Chamber, may not be the start of the process which might destroy us all. That may take place elsewhere because, as we have learnt from Chernobyl, one does not need a nuclear weapon to create a situation in which life on earth may become difficult to sustain, to say the least.
The situation is dangerous in the extreme. In this country we ought to give an air of urgency to these matters and not appear to be dragging our feet and arguing that we do not want to proceed along that path. We do want to proceed along that path, firmly and surely, and we want to go on and on until we reduce the nuclear threat if we cannot eliminate it altogether.
If humanity is to survive, we must go on from an INF agreement to conclude other agreements. I think that that is the message brought to us by the noble Lord, Lord Kennet. Mrs. Thatcher and her supporters who want no agreement are a danger to the future of the world.
I have spoken with unusual frankness, which perhaps some of your Lordships may think unbecoming to this Chamber; but it is because I
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believe that the subject is of such supreme importance that I have not hesitated to say what I think on this matter. I hope that your Lordships will at least take into consideration and recognise the position in which we find ourselves today. We are not on the edge of the abolition of nuclear weapons but on the edge of a situation in which we must say to ourselves once again that we must get rid of the nuclear weapon before the nuclear weapon gets rid of us.
7.56 p.m.
Lord Gladwyn: My Lords, I listened with attention to the interesting speech of the noble Lord, Lord Kennet; and I am in very great measure in agreement with him. However, I think that he will understand that my own approach may be a little different. One can have different views on such a tremendous subject.
We are considering the specific subject of a possible reduction in strategic nuclear arms by the super powers. Personally, I feel that although the question will certainly come up once agreement, (which we all hope will take place) is reached on intermediate weapons at the coming summit meeting, it is quite unlikely, in view of its complexity, that similar agreement will be reached on strategic arms before the end of the present American administration—if then. And it is still less likely that senatorial ratification, which is essential, will be possible before that time. Apart from anything else, verification (which is difficult enough, as we know, in respect of intermediate weapons) will be considerably greater in respect of strategic weapons. That is undeniable.
Having said that, it seems to me that it is also true—and in this regard I agree entirely with the noble Lord, Lord Kennet—that once discussion on strategic arms limitation between the super powers gets under way, for the reasons given by the noble Lord, Lord Kennet, and other factors, it will inevitably bring up the future role of the strategic nuclear weapons now possessed by the United Kingdom and France. In any case, it is on the assumption that it will do so that in the 10 minutes at my disposal I should like to make a few general observations which might serve as a background to what our defence policy in such circumstances—I repeat, in such circumstances—might reasonably be held to be.
The first point I should like to make is that, as I have often said before, the incessant piling up of arms on both sides of the Iron Curtain, presumably in order to guard against the possibility of a nuclear first-strike by one side or the other, is a dangerous absurdity. Neither side in practice is capable of indulging with success in such suicidal action at the moment. Nor is there any reason to suppose that the capability to do so will exist in the foreseeable future. The only people to benefit from a contrary assumption are those running the arms industry on both sides of the Iron Curtain.
The one factor that might conceivably drive one or the other super power to contemplate the elimination of all or most of its rival's strategic nuclear weapons could be the prospective installation by the latter of a space based anti-ballistic missile system which, in

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theory at least, could render any nuclear first strike by it useless or largely inoperable while at the same time exposing it to the possibility of such an attack.
We simply must hope that there will be early agreement not to develop, still less to deploy, such space systems, the renunciation of which intention could, after all, be very easily verifiable. One either knows the system is going out into space or not. It is the easiest thing in the world to verify. The next point concerns the possible first use in war of nuclear weapons. NATO's doctrine of flexible response is of course based on the assumption that first use might well be inevitable. But what is almost certain is that if such action were ever taken, the Russians would reply in kind, in which case not only would Central Europe, at least, be devastated, but the whole world might eventually be wrecked as well. So even if this dire possibility is left open as a threat, we should in practice act on the alternative assumption that if an East-West war unhappily should ever break out, it would, in all probability, be non-nuclear.
The present assumption is in that case that we should inevitably be at the mercy of the Russians, who would then, with comparative ease, invade and occupy Western Europe owing to their immense superiority in conventional arms. This is very doubtful, and indeed a defeatist theory. In the first place, if it is probable the last thing that the Soviet Union wants is any kind of war with America which, even if it were at first successful, would entail the virtual cessation of trade with, and imports of grain from, the outside world and, presumably, the occupation of a ruined, resentful and potentially rebellious sub-continent—to say nothing of the possibility of a war with Japan and perhaps even in alliance with China.
For as long as the United States forces remain in Europe in substantial numbers, war is therefore, in my opinion, quite unlikely. However, to guard against it fully—which we should do if we can quite simply as a precaution—there should be some immediate increase in the conventional means of waging it involving, among other things, the strengthening of all vulnerable points and ports against non-nuclear bombardment and possible attacks by paratroopers; harmonising the production and deployment of all weapons and munitions; increasing the number of the latest anti-aircraft and anti-tank weapons at our disposal; and in general creating in West Germany what might be called, in someways, a hedgehog method of defence.
That should not be beyond our financial capabilities. It would certainly not be necessary, as some people suggest, for us to provide another armoured division for the British Army of the Rhine, or even to reinforce our existing air forces in Germany. What is really required is more co-ordination and co-operation between the European members of NATO which, as such, would cost nothing at all. But, assuming that some extra expenditure would be required, there should be room for cutting expenditure on Trident, I would suggest, and certainly on the Force de Frappe. One possible way of doing this was suggested in my last speech to
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this House on this subject, and I shall not repeat it. But there could well be other methods as well.
My final point concerns the British and French nuclear deterrents themselves. At the last election it was clear—unless I am wrong—that some 65 per cent. of those who voted wanted, pending general nuclear disarmament, to retain at any rate some kind of British nuclear deterrent. Of these, the majority no doubt followed the line of the Government. That, broadly speaking, was that the stronger the United Kingdom deterrent (that is to say, Trident), the better. More especially, since, if by any chance we were left alone—the Americans having gone back to America—we should at least have the capacity by means of the threat of or the use of this tremendous power, to prevent the Soviet Union from exercising what is always described as nuclear blackmail, and in any case dissuading them from ever attacking Western Europe by conventional means. That is the present theory.
However, the minority believe that Trident was in effect—as I think the noble Lord, Lord Kennet, said—a wasteful over-insurance that in some way should be replaced, if possible, by something less imposing and less expensive. So at this point we approach the rather vital question—in fact the most essential question. For what real purpose is our existing nuclear deterrent actually designed?
I suggest that whatever may be the present policy, in practice our nuclear deterrent can only have second-strike capability; namely, that its essential, and indeed very vital purpose, should be to remove all chance that the Soviet Union could ever use its own forces against us in the event of war. To put the case more bluntly, the first-use in war of nuclear weapons by the Americans—though no doubt unlikely, as I have already suggested—is after all possible in the sense that the threat to do so might conceivably, in view of the immense strength of America, be regarded as credible. I do not think it is likely but it is perhaps possible. However, a similar threat by the Europeans would simply not be taken seriously by the Russians, who would rightly assume that any Prime Minister or French President who was contemplating such action would be instantly repudiated by Parliament and by public opinion.
If Europeans were left alone in Europe, so to speak, we could thus only do our best to defend ourselves by conventional means. The Russians still might not want to invade in such circumstances—they might not even want to do so even then. The most likely danger I think was actually hinted at by the noble Lord, Lord Jenkins, when he said that the most likely possibility was the emergence, perhaps as a result of a world slump, in Western Europe of governments prepared to do a deal with a possibly reformed or Gorbachevian Russia.
Therefore, my conclusion is quite simple. At all costs the Americans must be persuaded to stay in Europe—even, if necessary, in reduced numbers. If only in order so to persuade them the European members of NATO should now make much greater efforts to co-ordinate and harmonise their own conventional forces.

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Finally, it must be recognised that since the United Kingdom and the French nuclear forces have only, in practice, a second strike capacity, ways and means should he found of spending less on them and concentrating more on conventional defence. In a word, if we go ahead on such general lines, we are more likely to assist progress towards a more stable relationship between the super powers than if we contemplate ensuring peace on empty threats of individual nuclear action.
8.8 p.m.
Lady Saltoun of Abernethy: My Lords, I am most grateful to the noble Lord, Lord Kennet, for raising this subject this evening. I agreed with a great deal of what he said but I cannot possibly match his expertise on the subject. I agreed with the noble Lord, Lord Jenkins of Putney, on only one matter—I think he will be surprised to hear that—and that is that it is a subject of supreme importance. Otherwise, I am afraid I did not agree with him, and he will therefore just put me down as barmy.
I am very sorry that the noble Lord, Lord Chalfont, has not been able to speak this evening because I hoped very much that his speech would save me from speaking.
Until Russia gets its paws off Eastern Europe and withdraws its forces from Afghanistan, no sensible person can be expected to believe that it is totally devoid of territorial or ideological ambition—whatever Mr. Gorbachev may say or write in the British press. I am thinking particularly of his article in the Mail on Sunday, which appeared, I believe, a week ago last Sunday.
Many years ago, Lenin said that in the pursuit of revolutionary objectives,
"We must be ready to employ trickery, deceit, law-breaking, withholding and concealing the truth".
More recently, Mr. Andropov, Mr. Gorbachev's predecessor, said:
"Marxism-Leninism is the textbook for achieving socialist world revolution, and the building of a new society in every country in the world".
If that is the Marxist-Leninist code of conduct and those are their stated aims, how can we believe anything that any Soviet leader says unless his actions match his words? So far, Mr. Gorbachev's actions have not altogether matched his words. And we should not be misled by the fact that to Western eyes Mr. Gorbachev is a presentable and urbane figure who patronises a good tailor and has an attractive and well-dressed wife. It is just naive to be misled by this into thinking that the Russian bear has lost his teeth, his claws and his hug, unless and until there is concrete evidence that he has.
In these circumtances, I am concerned lest the proposed nuclear disarmament treaty between the Soviet Union and the United States will leave Western Europe with an inadequate deterrent against the overwhelming superiority of Russia's conventional forces. As I see it, Russia has nothing to lose and everything to gain by this treaty. I am only amazed that they did not see this before now. President Reagan has little to lose and a lot to gain.
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He is under pressure to reduce his budget deficit; he does not want to increase taxation; if he cuts social security his party will suffer in the forthcoming presidential election. What better than to be able to reduce his defence spending? In addition to this, he probably has no objection to going out on a cloud of glory as the president who was responsible for the nuclear arms treaty.
The Western powers' nuclear umbrella has kept the peace in Europe for 42 years, which I believe to be the longest period of peace in Western Europe since the dawn of history. I may be wrong, but I think it is. Will our own nuclear umbrella be an adequate deterrent without the United States weapons, which will be reduced if the treaty is signed? And will we retain that umbrella until Russia has withdrawn from Afghanistan, freed Eastern Europe from bondage, reduced her conventional forces to match those of Western Europe and freed her political prisoners?
In The Times this morning there was an article by Mr. Robert Legvold, director of the W. Averell Harriman Institute for the Advanced Study of the Soviet Union, Columbia University, New York. He said:
"Within the last 12 months the Soviets seem to have started to wrestle with the issue—not merely reducing conventional forces within the existing structure of the military balance but altering their basic pattern of deployment".
I should be very interested to know how far Russia has in fact reduced her conventional forces. I should also like to be reassured that we will back Mr. Reagan in retaining his strategic defence initiative as long as Mr. Gorbachev has his; for I understand that he has one.
8.14 p.m.
Lord Kagan: My Lords, I hope your Lordships will forgive me for speaking without entering my name on the list of speakers, but I shall keep you for only a few minutes. Even on the assumption that we can absolutely trust Mr. Gorbachev's intentions, as I do, can we, or indeed he, trust his political future? Is he in a position to commit any potential successors? That is something to keep in mind. What Mr. Gorbachev is trying to do is what Moses did. The right reverend Prelate will be able to corroborate this. Moses led the Jews out of Egypt, after three centuries of slavery. But he stopped in the desert for 40 years. He decided that those generations had to die before the people entered the promised land. Moses promised it to the Children of Israel, not to the people of Israel.
The Soviet people have been in bondage and have lived as slaves for 400-odd years under the Tsars and, almost without an intervening period of respite, went into total bondage and slavery under the Soviet system for 70 years. What Mr. Gorbachev is trying to do is to create free men at a stroke. As I said, Moses had the wisdom to say that that could not be promised. If perestroika is to succeed it will help Mr. Gorbachev in his councils with his opponents inside the party, with his hawks, if he is able to point to a credible deterrent in Europe; that is, Britain and France. It would strengthen his argument against people who would be reckless and think that Europe can be overrun.

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We can pray for Mr. Gorbachev. We can trust him as a person, but we cannot trust a situation in which he cannot commit his successors. Russian history has always taken a zig-zag course and we have to be careful that on the zag we do not go down.
8.16 p.m
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Lord, Lord Kennet, for initiating this important debate and for his well-informed speech. His analysis of the Trident saga was particularly telling and interesting. For several years, there has been talk of the urgent need to reduce the super powers' nuclear armoury; but what we have witnessed, as the noble Lord, Lord Gladwyn, reminded us, is a race between the United States and the USSR to increase their stockpiles and to make them more sophisticated. In the past 10 years, the SS.20s have confronted the build-up of cruise and Pershing missiles and this country and other NATO allies are involved in that exercise.
I am not proposing in this debate to castigate one side or the other; there is fear and suspicion on both sides, and some speeches made from time to time by national leaders do nothing to dispel this atmosphere. But, like others, I believe that we are on the threshold of possibly the most historic postwar agreement when President Reagan and Mr. Gorbachev meet in Washington on 7th December to sign the proposed INF agreement. American and Soviet arms negotiators have been meeting in Geneva to try to iron out the final snags.
The chief US and Soviet arms negotiators, Max Kampelman and Yuri Vorontsov today left Geneva without having finalised an agreement on the proposed INF treaty. The main sticking point, as I understand it, appears to have been a US demand that inspectors be allowed to visit sites at which Soviet strategic intercontinental missiles are built. It is understood that officials will continue to talk on the outstanding issues in Geneva, and that there may have to be a further meeting between United States Secretary of State George Shultz and Soviet Foreign Minister Eduard Shevardnadze before the December summit. We can only note that United States officials say that the treaty is 98 per cent. complete and urge that no effort be spared to reach agreement on the few remaining points at issue. I hope that that will be the view of Her Majesty's Government, and that they will do their utmost to press for agreement on the remaining points.
I should like to make clear that we on this side of the House warmly support the proposed agreement; we have been advocating something on those lines for many years. The agreement, if it is signed on 7th December, will not resolve all the problems. Massive nuclear forces will still remain. It is however worth noting that Mr. Ronald Lehman, the chief negotiator at the START talks in Geneva, said recently that:
"there is a very real chance to conclude a super power agreement on 50 per cent. cuts to their strategic arsenals early next year".
He also went on to say that the Soviet attitude to SDI might well frustrate this. I will come back to that in
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a moment. The fact is however that the impending agreement which would do away with the whole category of intermediate range nuclear force missiles based in Europe would be an immense achievement. The fact that it is intended to include verification arrangements with on-site inspections by both sides would make it even more significant. I believe that this agreement would reduce tension between the super powers and increase mutual trust. At last they are proposing to reduce their nuclear capabilities.
It is to the credit of the United States and Soviet leadership that they have come thus far. We certainly should not overlook the fact that while 300 US warheads are to be eliminated, about 1,500 Soviet warheads are to be destroyed.
I agree with the Foreign Secretary when he said:
"this asymetry is an important precedent for future arms control negotiations".
He further said:
"The Government's verdict on the prospective agreement is …it is a very good agreement".
We concur with that verdict and welcome it.
A number of questions arise and some have been dealt with by noble Lords in the course of this debate. As I see it, the two most important considerations will be, first, the effect of the agreement on NATO strategy and philosophy; and, secondly, its influence on further moves towards the kind of significant disarmament to which the noble Lord, Lord Kennet, has referred.
The NATO countries, apart from the United States, have not been at the negotiating table. Mainly because of our absence we have been reacting, as have our allies, in various ways. Mr. Ian Davidson, the able defence correspondent of the Financial Times said on 10th November:
"the allies go round sounding as if they had swallowed a battery of fevered frogs".
That sounds improbable, but the deal has left a feeling of uncertainty and nervousness. That nervousness was reflected in the speech of the noble Lady, Lady Saltoun of Abernethy. The agreement does herald a huge change. The world has moved on and the simple belief that nuclear weapons are a cheap and easy way to guarantee national security no longer holds good. It is upon this that I would value the comments of the noble Lord, Lord Glenarthur, when he winds up.
What is our strategy to be? Are we now to build up our conventional forces, and if so can we afford to do so given the huge expenditure which Trident will inevitably involve? The Government have made plain that following the agreement (which we hope will be signed on 7th December) they will place greater emphasis on conventional military resources. That seems to us to be a sensible development; but can they afford to do so? The present policy is to buy Trident outright but, as has been said, to return them every seven years or so for servicing. That will also involve replacing some vital parts.
The House knows our attitude on Trident, but I should like the noble Lord to tell us within which category Trident will fall. Is Trident a strategic weapon? I remind the noble Lord, Lord Glenarthur,

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that the Prime Minister said on 11th March last year in the House of Commons:
"Trident is not an intermediate weapon, but a strategic weapon".
The Foreign Secretary has said that Trident would not be put into any US/USSR negotiations. During Question Time in another place yesterday, the Prime Minister repeated that. It is obvious that some years must elapse before Trident is on station in this country. A good deal can happen during the next few years. Britain's position—and indeed that of France—will need to be clarified very soon.
Let me pose the crucial question to the noble Lord. Will not the Government have to review their commitment to Trident after the agreement is signed on 7th December and later on? By later on I mean later on during the START negotiations. If the START negotiations are as successful as Ambassador Ronald Lehman believes they might be, the situation is then completely changed. Indeed if the US Government sign a strategic arms reduction agreement can they then supply Britain with Trident, which is a strategic weapon? Those are the issues to be pondered upon.
I must turn finally to Ambassador Lehman's cautious optimism. The obstacle, as he said, is SDI. That has been referred to by the noble Lord, Lord Gladwyn, and others. Mr. Davidson (whom I quoted earlier) describes it as "an immensely dangerous dream". At the moment it is on the shelf, partly because of its cost, partly because of its technological uncertainty and lastly because of the Senate's concern on arms control. It should certainly not be allowed to stand in the way of progress on START. As the noble Lord, Lord Kennet, has said correctly, Mr. Carlucci (whom we welcome and wish well) appears intially at least to be adopting a more realistic attitude to SDI. We must hope that that is true.
It has frequently been said when SDI is criticised that the Soviet Union is secretly working on its own strategic defence projects. That has been said by noble Lords on the Front Bench opposite. That in my view is unhelpful because there is an unacceptable vagueness about the argument. No firm evidence has so far been produced. If the noble Lord has any I should be glad to hear it. Has the USSR anything on the drawing board that can be compared in terms of cost to what the United States has spent on SDI? That is the question to which the House will need an answer.
I cannot believe that reasonable men can allow that to stand in the way of progress, and I hope that the noble Lord will agree with that when he winds up. Nor should our limited involvement in research be allowed to colour our own decision, which is of such immense political significance. I have a sense that we have reached a watershed which is crucial to the international community. If the INF treaty goes well, as we all hope it will, then we expect that the US and the USSR will move rapidly to the next stage. Our country will have an increasingly important role to play as that negotiation develops.
We welcome the Government's positive response to the INF treaty, and we trust—indeed, we assume—that they will react constructively in the
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later stages of disarmament. We cannot afford not to be constructive. The cost of failure is far too high. The awful reality is that there are stockpiles of 50,000 warheads in the world, enough to wipe out humanity several times over. Britain must use what influence and skill she has to ensure that real disarmament takes place and that the momentum is not lost.
8.28 p.m.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur): My Lords, we will all be grateful to the noble Lord, Lord Kennet, for asking this Question. It concerns a subject of fundamental importance and enormous topical interest, which reaches to the core of our own security and that of the Western Alliance as a whole.
Despite the Soviet Union's fancy footwork in trying to claim the credit—including much skilful playing to the arms control gallery—we must remember that it was NATO that set the arms control agenda. We should not lose sight of the fact that the zero-zero option of INF agreement, which we hope to see signed in a matter of weeks, was a NATO proposal. It has of course entirely to do with INF and it has nothing to do with Trident, if I can make that plain to the noble Lord, Lord Cledwyn of Penrhos.
Some of us may have forgotten the origins of the proposal precisely because it has taken the Russians eight years to come round to it. But much better late than never.
Be that encouraging advance as it may, we must also now seek progress on our other priorities—priorities agreed by my right honourable friend the Prime Minister at her meeting with President Reagan at Camp David in 1986, and since endorsed by NATO ministerial meetings. They seek to make the world an even safer place than the hoped-for INF treaty alone should achieve—to encompass the elimination of disparities in conventional weapons and lead to a more stable balance of forces at lower levels, a global ban on chemical weapons, as well as the subject of this debate, an agreement to reduce the super powers' nuclear arsenals by 50 per cent.
I must reject the suggestions made by the noble Lord, Lord Jenkins of Putney, when he seemed to claim that in some way either my party in general or my noble friends in particular sought to maintain in a curious way—and I shall be interested to read his comments in full tomorrow—some Soviet preponderance or Soviet effort for want of something to vilify. That may be shorthand for what he said. However, that was the burden of his remarks. With respect, that is absolute rubbish. I do not believe that the sort of affection which he seemed to bring forward in those remarks would really be shared, for example, by people such as those who are at the moment suffering at the hands of the Soviet Union in Afghanistan.
Lord Jenkins of Putney: My Lords, may I interrupt the noble Lord? If he reads the advertisement in the Washington Post signed by the people to whom I have referred, he may see what the real burden of my remarks was.
Lord Glenarthur: My Lords, I shall study the noble Lord's remarks. I must confess that I became more and more astonished, as he went on, by his remarks and not those which he claimed were made by my noble friend.
I very much agree with everything which the noble Lady, Lady Saltoun, said. Her remarks were followed by those of the noble Lord, Lord Kagan. I think that what they say sets the whole matter very much in context.
Let me take first the strategic arms reduction talks agreement. The advantages of an agreement are clear. It would rid the world of what we all agree is a surfeit of strategic nuclear weapons belonging to the super powers. By most estimates they at present exceed 25,000 strategic warheads. Only 12,000 of those would be maintained, with 6,000 on each side.
An agreement would bring to an end the unlimited strategic nuclear arms race which has bedevilled the world for over 20 years. It would provide for enhanced security and promote stability, with provisions on sub-limits and verification to ensure that heavy intercontinental ballistic missiles capable of carrying over six warheads will be constrained, as will the proportion of warheads permitted on all sorts of ballistic missiles. That will serve to increase confidence and stability. Each side will be obliged to adjust its mix of land, sea and air-based systems within the overall ceiling.
The US authorities are also proposing reductions of the throw-weight—that is, destructive power—of missiles, so that it will not just be the numbers of missiles but also the load they carry that will be constrained. All those provisions will increase the exchange of data between East and West. We also hope that, through verification provisions, they will contribute to confidence building. Verification will of course be critical to the success of a START agreement. If a regime can be agreed which will allow strict verification of residual levels of missiles, covering deployment sites and different types of systems, that surely will represent a major achievement and advance.
The noble Lord, Lord Cledwyn, and the noble Lady, Lady Saltoun, referred to the SDI linkage. It is widely known that the major obstacle to achieving a START agreement is Soviet insistence on linking progress to constraints on SDI. We consider it unacceptable that progress towards those reductions is being held up because of Soviet opposition to research into defensive technologies. Not only is research undoubtedly permitted by the ABM Treaty, but the Soviet Union has already been undertaking such research for years, as the noble Lady hinted.
The Russians have argued that such US research will nullify their strategic arsenal, and that no cuts can therefore be contemplated. That seems fanciful, to say the least. Fifty per cent. cuts in strategic weapons would be fully consistent with the maintenance of security of each super power. Each would maintain its freedom to mix systems within the overall ceilings. As the noble Lord, Lord Kennet, well knows, the number of Soviet strategic warheads increased by five times in the 1970s. Besides, the
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Soviet Union has for years undertaken extensive research into ballistic missile defence.
The noble Lord, Lord Cledwyn, asked for examples. The Soviet Union is the only country in the world to have a land-based system installed. The one around Moscow is permitted under the ABM Treaty. The Russians also have a sophisticated space technology. They currently undertake over 80 per cent. of the space launches made anywhere in the world. There are indications that they have programmes under way in most of the fields, such as directed energy weapons, which would permit a ballistic missile defence capability, including a system based in space.
The ABM Treaty permits research. Deployment of defensive systems is a different matter, and one for negotiation. The Americans have acknowledged this. Of course a greater predictability about research on strategic defences would be welcome. But START reductions should not be held hostage to arguments about an ABM treaty.
The Question of the noble Lord, Lord Kennet, refers to the Government's policy towards cuts in strategic arms by the nuclear powers. We have made it clear that Britain will remain a nuclear power for the foreseeable future. My right honourable friend the Prime Minister has said that we shall not give up our nuclear deterrent. That merely confirms our opposition to unilateral disarmament. The United Kingdom deterrent is the minimum we judge necessary to deter an aggressor. It is based on a small number of submarines carrying the minimum number of warheads necessary to penetrate the defences of a potential aggressor.
The noble Lord, Lord Kennet, referred to alternatives which have been suggested by the Alliance and by others. I should have thought that matter was decided on 11th June.
Trident from the mid-1990s will continue our long-standing policy. The Trident D5 missile will provide, into the next century, a modern and credible deterrent for the UK. The same principles will continue to apply. Trident will do the same job for us in the 1990s that Polaris did in the 1970s, and is doing in the 1980s—no more and no less. It is the system we need, despite the fears of the noble Lord, Lord Kennet. We are confident that it will serve us well. The noble Lord will remember (although it seemed to me that he had forgotten) that we manufacture the warhead and the guidance systems. We would be playing into the hands of the Soviets and placing all our fellow countrymen at risk if we adopted a less than credible alternative.
The Government's position on associating the UK deterrent with arms control is well established. Just as important, it is recognised and respected by our partners in NATO and in the Western European Union.
Mr. Gorbachev at Reykjavik in October 1986 also recognised that. Noble Lords will recall that he said:
"Let the UK and French missiles remain as an independent force; let them increase and be further
improved."
There can therefore be no question of including Trident in INF as the noble Lord, Lord Jenkins, suggested. If it is good enough for Mr. Gorbachev

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that that should be so, I confess to some surprise that it is not good enough for the noble Lord, Lord Jenkins, let alone others.
We have said we would consider associating the United Kingdom deterrent with arms control only if there were very substantial reductions in the strategic arsenals of the super powers and no change in the defensive capabilities of the Soviet Union. But I must stress that even after 50 per cent. cuts in the super powers' strategic arsenals—which we would warmly welcome—the United Kingdom deterrent would, even assuming maximum deployment of warheads on Trident missiles, still represent a lower percentage of the Soviet strategic arsenal than Polaris did when first introduced. The noble Lords, Lord Cledwyn of Penrhos and Lord Kennet, were concerned that the United States in some way could revoke Trident at a later stage if an INF agreement is signed on 7th December and START makes successful progress.
The noble Lord, Lord Kennet, raised the prospect that any feelings he may have about the United States attitude would be 30 years away from now. President Reagan reaffirmed to my right honourable friend the Prime Minister at Camp David the United States Administration's commitment to honour the Trident purchase agreement. This was after the Reykjavik Summit at which the 50 per cent. cuts framework agreement was first discussed. Clearly no administration anywhere can commit its successors to anything. However, we have heard no suggestion—indeed, I believe it to be fanciful—that any likely successor adminstration would not honour the Trident agreement.
The noble Lord, Lord Kennet, spoke of 30 years ahead. The UK -US co-operation has certainly worked well under successive administrations in the past 30 years. I have every reason to believe with the utmost confidence that our historical links will be maintained and built upon as we all wish them to be.
As to the noble Lord's suggestion that the United Kingdom's Trident might fall within the 50 per cent. cuts, the United Kingdom will own a fixed number of Trident missiles. This has been agreed with the United States. The terms of the START agreement are not yet agreed. Nobody can presume, as perhaps the noble Lord did, that some things will be included and others not. We know that only United States-owned strategic weapons will be included in the 50 per cent. reductions. The warhead ceiling will of course allow the United States to keep a significant number of its existing sea-launched ballistic missiles.
As to the noble Lord's concern about the servicing pool at King's Bay, the servicing cycle of Tridents will be every seven or eight years. I do not think that the noble Lord should ignore the important fact that there are savings to the taxpayer of over £700 million. The United Kingdom has purchased and will always have a fixed number of Trident missiles. The servicing is of the missiles only, not of the warheads or guidance systems, which will remain in the United Kingdom where they are manufactured. I do not think that the noble Lord can argue that it is better in all circumstances to retain a missile shell, so to speak, even if its inside does not work. That surely is
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nonsense. Servicing means exactly that: replacement as necessary. That is what it is surely important to achieve.
Lord Kennet: My Lords, the Minister must not suggest I said that bad servicing is to be preferred to good servicing. I said that British servicing is to be preferred to American servicing because it would keep things under our control at all times.
Lord Glenarthur: My Lords, the noble Lord seems to forget that we still have the number of missiles that we purchased. If they go back and are replaced immediately, we still have the same number of missiles. I think that the noble Lord is tilting at a windmill in this instance.
As to the suggestion by the noble Lord, Lord Gladwyn, that Trident may become some kind of second strike force I do not think that that is a sensible idea. I am sure your Lordships will agree that we should not describe how we intend to use our weapons. We have said all along that we should never he the first in any circumstances to use nuclear weapons.
Lord Gladwyn: My Lords, do the Government really believe that, if the Americans leave Europe and go back to America and we by any chance find ourselves at war with the Soviet Union, we could induce the Soviet Union to withdraw its troops by threatening to use our Trident bomb on Moscow or other cities in the Soviet Union?
Lord Glenarthur: My Lords, the noble Lord makes a hypothesis about what the United States might do in any circumstances. While the noble Lord is free to speculate, I think that the scenario he paints is more than unrealistic.
We have nuclear weapons to deter anyone from launching any kind of war, conventional or otherwise. We accept that there is overwhelming Warsaw Pact conventional superiority. We judge that the best way for democratic countries which cannot seek to match the conventional force levels of totalitarian states to defend themselves is with the minimum number of nuclear weapons. We cannot, as the noble Lord, Lord Gladwyn, seemed to suggest, in some way make Europe safe for conventional war by de-nuclearising.
It has been a valuable debate and we have covered a great deal of ground. I am grateful to those who have taken part. We are at an exciting point in an exciting period in terms of progress over arms control. Nobody should lose sight of that. As the noble Lady, Lady Saltoun, said, we cannot afford to be lulled into a false sense of security. We shall still need the reassurance and security that only an effective deterrent can offer. Hence the Government's insistence that not only nuclear arms reductions are necessary or desirable; our security is threatened by imbalances in conventional weapons and chemical weapons. We have a full and worthwhile agenda for arms control covering all these area as well. Like the noble Lord, Lord Cledwyn of Penrhos, I hope that what is proposed goes well. We and our partners in NATO are determined not to be deflected from the purpose that we seek to achieve.
Lord Kennet: My Lords, can the Minister give some answer to the main question that I put to the Government? Do the Government think that there might be an argument for a fall-back plan in case we simply do not get the Trident missiles, or is such an idea quite unnecessary?
Lord Glenarthur: My Lords, I explained that we have every confidence that what has been agreed with the United States is going to go ahead. The noble Lord may dream up all kinds of ideas as to what could happen in certain circumstances. The Government do not believe that that is a realistic hypothesis.
House adjourned at twelve minutes before nine o'clock.

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