Sitting of 11 July 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  NORTHAMPTON BILL [Lords]
  Read a Second time and committed.
Oral Answers to Questions
  TRANSPORT

    Pedestrians (Casualties)
    Mr. Robert G. Hughes: To ask the Secretary of State for Transport what research has been undertaken in the last two years into measures to reduce pedestrian casualties.
    The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): A lot. This is one of our highest priorities.
    Mr. Hughes: I thank my hon. Friend for that full answer to my question. When looking at pedestrian casualties, has my hon. Friend taken into account the important part that can be played in preventing casualties by using speed humps to slow down vehicles? Does he agree that it is almost impossible for a local authority to institute speed humps, because the road either has too much or too little traffic and never seems to be quite right?
    Mr. Bottomley: I may arrange to have more detailed information placed in the Official Report. This year we are spending £1·5 million as part of a £5 million pedestrian-related safety programme.
    We are on our second or third set of regulations relating to speed humps. I should be delighted to relax the regulations again. They have been made tight in the past to avoid their being rubbished because of one accident, but they can prevent many. I hope that we will find ways of reducing or eliminating the cost of drainage, which accounts for two thirds of the cost of road humps. More road humps could then come in. I will pay special attention to the degree of traffic.
    Mr. Allen: The Minister will be aware that the North report on road traffic law has been published, and he will have a copy. When will that report be brought before the House in the form of legislation, especially to avoid pedestrians being killed by reckless driving or—under the North recommendations—the new offence of "bad" driving?
    Mr. Bottomley: The House will know that my right hon. Friend has promised a preliminary report before the end of this Session—the rest will follow on. I look forward to the time when heavy goods vehicles will stop intimidating and crashing into cars; cars will stop crashing into motor cycles; motor cyclists will leave cyclists alone; cyclists will leave pedestrians alone; and pedestrians will not get so drunk and kill so many of themselves. We all need to recognise the importance of co-operation on our roads.
    Mr. Simon Coombs: Does my hon. Friend recognise that the answer to pedestrian safety lies in education? What discussions have he and his departmental colleagues had with the Department of Education and Science about pedestrian safety tuition being included in the core curriculum for all schoolchildren?
    Mr. Bottomley: It is not so much a question of incorporating that into the core curriculum, as of trying to go from one school out of five knowing what it is doing about road safety training to five out of five. The

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    Department of Transport, the Department of Education and Science and local education authorities have a responsibility to ensure that any parent, teacher or governor can work through a checklist so that more can be done to provide safety for the children in their school.

    Traffic (Central London)
    Mrs. Ray Michie: To ask the Secretary of State for Transport what plans he has to reduce the density of private motor traffic within central London.
    The Secretary of State for Transport (Mr. Paul Channon): I aim to promote measures to help the existing traffic to flow more freely. The measures that we are taking are improving trunk roads to take traffic round, rather than through, London; promoting the use of new technology to improve traffic management; encouraging more effective parking controls; and working with British Rail and London Regional Transport to improve the quality of the rail and Underground systems.
    Mrs. Michie: Does the Minister have a view on the report in the press today that four private consultant firms consider that London should have a network of new toll roads? Would it not be much better for the public to use public transport? How will he encourage them to use it much more?
    Mr. Channon: On the first part of the hon. Lady's question, that is an extremely unlikely idea. She is referring to a progress report by consultants who have been working on the project for two years and have another year to go. None of the suggestions has had the blessing of the Government. They are merely progress reports to be considered by the relevant people.
    It is absolutely essential to increase investment in public transport. I am determined that we should have a better commuter service into London and a better Underground service. That will be done by providing, as we have, large measures of investment in those services.
    Mr. Squire: In view of the congestion in the Westminster area, will my right hon. Friend confirm that his Department is looking at proposals to build a tunnel under the Thames to take through traffic well away from Westminster?
    Mr. Channon: Westminster city council and the Government have commissioned a consultants' report to examine that matter. We await the report.
    Mr. Corbyn: Will the Secretary of State take this opportunity to tell the House and the public at large that the report in The Guardian today is accurate, that he condemns the plans to demolish 5,000 homes in London and introduce toll roads in London, that he will call a halt to all major road building in London, and that instead he will put far more resources into public transport and diverting traffic around London? Is he aware that when the GLC was controlled by Labour the use of public transport increased significantly and that road traffic in London was reduced because London's transport policy was directed towards the needs of the people of London rather than towards the minority of car commuters and heavy goods vehicles traversing London?
    Mr. Channon: I assure the hon. Gentleman that the use of public transport is increasing a great deal faster now
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    than it was when the GLC was in existence. Investment in the Underground is 60 per cent. higher in real terms than it was under the GLC, which starved the Underground of investment.
    Mr. Tony Banks: Oh, come on.
    Mr. Channon: Well, I shall give the figures to the House. Today, investment is running at £365 million a year. That is 60 per cent. higher in real terms than when the GLC had control of the Underground. As for the first part of the hon. Gentleman's question, I have already made it clear that these are progress reports of studies that were announced two years ago. The sensational story in The Guardian today merely repeats an answer that my hon. Friend the Under-Secretary of State for Transport gave to the House on 27 June and information that was placed in the Library over two weeks ago.
    Mr. Cormack: But is not the time coming when my right hon. Friend will have to consider radical remedies, such as charging people extra for driving regularly into London and restricting deliveries by goods vehicles to the hours of darkness?
    Mr. Channon: I should be very reluctant to charge people for travelling into London by road. It would allow only those who could afford it to come into London by car. It would be very difficult and bureaucratic to operate and would lead to many unfairnesses. My hon. Friend may be right. One day somebody may have to do that, but it is a deeply unattractive option which I am not at all keen to pursue.
    Mr. Tony Lloyd: Will the Secretary of State, in what might be described as a moment of glasnostian candour, admit that his Department does not have a clue what about to do about getting cars off the roads of London? His response to his hon. Friend the Member for Staffordshire, South (Mr. Cormack) illustrates that fact. Does the Secretary of State admit that on the Kensington-Fulham border, where four years ago the Government refused to allow the GLC to invest £25 million to improve the rail system, the Government are now talking about an investment of £150 million to build two miles of road, which would mean pulling down houses and bringing further traffic on to an already too dense traffic system?
    Mr. Channon: I cannot understand why the hon. Gentleman should show this sudden interest in Kensington. So far as I know, he has never before asked a question about Kensington and I suspect that he will never again. I repeat that we have no new proposals for changing the road system in Kensington.
    Mr. Harry Greenway: Why is not more use made of the River Thames and other waterways in London, which would take traffic off the roads? Will my right hon. Friend take a trip to Venice and see the effectiveness of the water buses there and introduce them on the Thames?
    Mr. Channon: I cannot imagine anything nicer than a trip to Venice. My hon. Friend is on to a good point. In the past we have neglected the Thames far too much. I hope that commercial services will start very shortly. Such a service already exists between, more or less, this House and

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    docklands. I hope that it will be extended to Chelsea. It will play a useful part in carrying a proportion of the traffic that wants to come into the centre of London.

    Roads
    Mr. Blunkett: To ask the Secretary of State for Transport what action he proposes to take in the light of the Audit Commission report on local authority maintained roads; and if he will make a statement.
    Mr. Channon: The main action is for local authorities. I have already urged them to implement the commission's recommendations for spending up to their provision on maintenance, and for improving the efficiency of their arrangements. I repeated this message at a meeting with them only last week.
    Mr. Blunkett: The Secretary of State will be aware that the Association of Metropolitan Authorities has welcomed the bulk of the Audit Commission's report, but obviously some matters still cause it concern. Over the 10 years to 1986 traffic on urban roads increased by more than 20 per cent., but spending fell by 10 per cent. Deregulation has put more traffic on the roads, and revenue support for public transport fell from £512 million to £249 million between 1982 and 1987. As a consequence, and as has already been said this afternoon, there is a major crisis in road maintenance and traffic management. Does the Secretary of State have any positive proposals rather than encouraging local authorities to spend more and then penalising them when they do so?
    Mr. Channon: I am not doing the latter, as the hon. Member knows. I have provided local authorities with nearly £150 million for 1988–89 above their estimated expenditure. If only local authorities will get on and spend that money, local roads will be considerably improved. That is the action I am urging them to take.
    Mr. Brandon-Bravo: I am sure that my right hon. Friend agrees that people living in our larger cities, such as Nottingham, hold their district council responsible, when it is the county council that holds the purse strings. Will he re-examine that aspect and either insist that counties spend their full allocation, or make the money available to districts, so that they can deliver what the public demand of them?
    Mr. Channon: I shall consider my hon. Friend's suggestion, although I suspect that it might turn out to be mildly controversial. The important point is that the relevant authorities have had the money and they must spend it, or our local urban roads will deteriorate, and then the cure will be very much more expensive.

    British Rail
    Mr. Roy Hughes: To ask the Secretary of State for Transport when he last met the chairman of British Rail; and what matters were discussed.
    The Minister for Public Transport (Mr. David Mitchell): My right hon. Friend the Secretary of State last met the chairman of British Rail on 24 May. They discussed a variety of railway matters.
    Mr. Hughes: In view of the announcement that is expected this week about new investment schemes for the
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    Channel tunnel project., can the Minister give a preliminary indication that British Rail will be allowed to invest in Wales, Scotland and the north of England, and that there will not be just another bonanza for south-east England? Will the Minister bear in mind that the port of Calais is a relatively deprived area, but stands to gain considerably from the Channel tunnel project?
    Mr. Mitchell: British Rail expects to publish its study on Thursday. The hon. Gentleman will know that British Rail is planning to invest about £3,800 million over the next five years. Moreover, whatever area of the country may be the subject of viable British Rail proposals for investment, I shall consider them sympathetically.
    Mr. Gale: My hon. Friend has been instrumental in securing improved road transport facilities for north-east Kent. When he last met the chairman of British Rail, did he impress upon him the need for a rail service to replace the rather mediocre one from which we suffer at present, which, in these days of high-speed trains, transports passengers at an average speed of 40 mph?
    Mr. Mitchell: As to Kent passenger services, part of the reason for the study being published on Thursday is to ensure that British Rail can cope with Channel Tunnel traffic without damaging commuter services.
    Mrs. Margaret Ewing: Does the Minister agree that it is vital that investment in the so-called regions of the United Kingdom be increased? Is he aware of the high demand for increased electrification of the east coast line north of Edinburgh, and of continuing demand for a rail crossing at Dornoch Firth? Both are of vital importance if we are not to be disadvantaged when the Channel tunnel comes on stream.
    Mr. Mitchell: Investment in British Rail is designed to meet the volume of passenger or freight demand. In the further regions of Scotland the passenger volume is a great deal less than it is in some other parts, but wherever British Rail has a viable business project to bring forward for investment purposes we shall look at it very carefully.
    Mr. Nicholas Bennett: When my hon. Friend saw the British Railways Board, did he stress that when the board brings forward proposals for privatisation it will not be thought acceptable for British Rail merely to be transferred to a private monopoly? What Conservative Members want is competition.
    Mr. Mitchell: These are very early days in our plans for the longer-term future of British Rail, with privatisation as an option, but I shall of course keep my hon. Friend's point in mind.
    Mr. Snape: When the Minister next meets the chairman of the board, Sir Robert Reid, will he impress on him the need for proper facilities for both passenger and freight traffic arising from the Channel tunnel development? Those facilities are necessary across the provinces and regions, and particularly in the west midlands.
    Will the Minister also insist that on-train customs and immigration facilities should be provided on cross-Channel trains, in the same way as they are in the rest of Europe? Will he ignore the reactionary views of the Home Office, which predictably wants more bureaucrats than passengers on the trains?
    Mr. Mitchell: I shall of course ensure that the hon. Gentleman's comments about proper facilities for Channel traffic are conveyed to the chairman. Substantial consultation is taking place about the services, particularly freight services, that should be provided from north of London and throughout the country to maximise the benefits from the Channel tunnel.
    When I next meet the chairman, I think that I should tell him that we are very pleased to learn from his recent report that he is getting there—and getting there much faster than we expected. After all, 1987–88 was an outstanding year, with the highest operating surplus in British Rail's history. Passenger volumes were the highest for 27 years, and passenger earnings were the highest in real terms since nationalisation.

    Road Crossings
    Mr. Chapman: To ask the Secretary of State for Transport what is the Government's policy on providing equestrian, cycling or pedestrian bridges across, or tunnels under, major roads, and what criteria are laid down for such projects.
    Mr. Channon: We consider suggestions and proposals on their merits.
    Mr. Chapman: Will my right hon. Friend look sympathetically at the need for a combined equestrian, pedestrian and cyclists' crossing on the section of the A1 between South Mimms and Stirling corner, not only because it is effectively of motorway standard, but because of the volume and velocity of the traffic on the road? For example, 800 horses are stabled in that corridor of that part of north London.
    Mr. Channon: My hon. Friend has raised this difficult matter assiduously on behalf of his constituents. As he says, the Al is a very large road with a great deal of traffic, which makes it very difficult to cure the problem of horses crossing it. What my hon. Friend suggests would cost a good deal and I shall have to consider it carefully, but it is an important point and I shall certainly look into it.

    Crowlas Bypass
    Mr. Harris: To ask the Secretary of State for Transport what representations he has received seeking a bypass for Crowlas on the A30.
    Mr. Peter Bottomley: Penwith district council, the A30 Action Group, the Crowlas A30 Action Group, Ludgvan parish council and the Ludgvan conservation society have supported my hon. Friend in pressing for the inclusion in the national roads programme of a bypass for Crowlas.
    Mr. Harris: My hon. Friend will know from letters that he has received from the bodies that he has listed of the strong and entirely justifiable feeling of residents of those communities, whose lives are made a misery by the amount of traffic on the existing road that masquerades as the A30. Will he give an undertaking that the long-awaited bypass will be included in the programme to be announced, presumably, next spring?
    Mr. Bottomley: Without prejudging decisions to be made then, I can say that it will certainly be considered.
    Mr. Tredinnick: Although I am sympathetic to the problems of the A30, is my hon. Friend aware of the difficulties facing my constituents because junction 1 on the M69 goes only in a northerly direction? Will he consider pressing his Department to answer the requests made three years ago for an inquiry into why that is, and take express measures to get the southern link built?
    Mr. Bottomley: The Department will consider what my hon. Friend has said.

    Wheel Clamping
    Dr. Michael Clark: To ask the Secretary of State for Transport what guidelines and advice he has given recently on wheel clamping and the circumstances in which it should be used; and if he will make a statement.
    Mr. Peter Bottomley: Requests for wheel clamping areas may be made by local highway authorities to my right hon. Friend. We issued a guidance note on selection criteria in May 1987. Responsibility for operational matters rests with the police.
    Dr. Clark: Does my hon. Friend agree that wheel clamping should be reserved primarily for deterring motorists from parking in no-parking areas, and that clamping motor cars parked in residential areas without permits or at parking meters after the clock has run out is an inappropriate use of clamps which should have low priority?
    Mr. Bottomley: Most people will agree that what is important is that when a car should not be parked in a certain place an effective deterrent is needed—clamping is certainly that. The other matters are rather more operational and I shall make sure that they are considered in the appropriate places.
    Mr. Campbell-Savours: May we have an inquiry into how a back-street garage in Brighton managed to secure the contract for removing vehicles from the streets of Brighton?
    Mr. Bottomley: I do not have a clue.
    Mr. Higgins: While, in general, wheel clamps seem to waste an enormous amount of police time and slow down traffic even more than would have happened if the vehicles were not clamped, will my hon. Friend consider putting massive wheel clamps on coaches on Westminster bridge which discharge their passengers into the centre of the road and are likely sooner or later to cause a serious accident?
    Hon. Members: Hear, hear.
    Mr. Bottomley: The House notes my right hon. Friend's persistence in this matter. It would be appropriate if the Department encouraged the relevant authorities to get together to try to solve the problem before there is a serious accident.
    Mr. Tony Banks: Is the Minister aware that the low level of enforceability of parking restrictions in London is a matter of massive concern to hon. Members and Londoners generally? What does he think about the proposal that local authorities should take over responsibility for the traffic warden system? If we could decriminalise parking in London, the fines that could be

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    levied by the local authority run traffic warden system could go direct to paying for the cost of the system, in which case we could perhaps get somewhere with enforcing parking restrictions in London.
    Mr. Bottomley: The hon. Gentleman is good at encouraging us to suck eggs. The important part of this question and the answers to it is that the privatisation of wheel clamping and towing away has led to a higher degree of deterrence, which is to be welcomed. I know that the hon. Gentleman is against the privatisation or contracting out of anything——
    Mr. Tony Banks: Why does the Minister not answer the question? He is so stupid and smug.
    Mr. Speaker: Order.

    Driving Instructors
    Mr. Michael Brown: To ask the Secretary of State for Transport what further measures are being taken to improve the quality of driving instructors.
    Mr. Peter Bottomley: Targeting and extension of check testing; widening the syllabus and introducing a banding system in the written examination; and limiting failures in the practical tests.
    Mr. Brown: Does my hon. Friend agree that although those actions will go a long way towards increasing the quality and standard of driving instructors, it might also be a good idea to publish league tables showing how successful individual driving instructors and schools are?
    Mr. Bottomley: It is certainly true that for a market to work effectively one needs not only competition but information. The point my hon. Friend makes is being considered and discussed with the associations of driving instructors. There are problems, especially those of identifying a candidate with a particular instructor, but we shall report to the House when we have come to a conclusion on these matters.

    Inner Cities
    Mr. Sayeed: To ask the Secretary of State for Transport what action his Department is taking to aid the regeneration of inner city areas.
    Mr. Channon: We have under construction or in our plans, road schemes worth £2 billion to assist inner city areas. Transport supplementary grant is assisting local roads costing £600 million in these areas. The London Docklands light railway has shown how innovative public transport can help to attract private sector development.
    Mr. Sayeed: In welcoming my right hon. Friend's excellent answer, may I ask whether he would care to amplify it by saying what contribution he is encouraging from private finance to increase the transport systems in inner city areas?
    Mr. Channon: We are working very closely with the private sector to try to bring enterprise back to inner city areas. The best known example is Canary wharf, where the developers are jointly funding the Docklands light railway
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    extension. Another example is the Meadowhall development in the Don valley, to which my Department will contribute 30 per cent. of the cost of the access roads. I am sure that there is scope for further extending this process.
    Mr. Rees: Who will have responsibility in the UDC areas that the Government have set up for the planning of roads?
    Mr. Channon: Local highway authorities will have that responsibility.

    Public Transport (London)
    Mr. John Marshall: To ask the Secretary of State for Transport if he expects to announce a major initiative to improve public transport in London.
    Mr. David Mitchell: My right hon. Friend the Secretary of State announced a study into the overcrowding problems on British Rail and London Underground services in central London in March this year. It is too early to say what proposals may emerge from it.
    Mr. Marshall: May my hon. Friend tell the House when he expects this study to be concluded? May we have an assurance that a major factor in the study will be the proposals that have been put forward to improve the capacity on the Northern line, which has been described by the chairman of London Regional Transport as "an abomination"?
    Mr. Mitchell: We expect the central London rail study to report shortly to Ministers. We shall have to consider it before we can come to any conclusions on it. Investment for improvements to the London Underground is running at the rate of £1 million a day, and that is nearly 60 per cent. higher in real terms than in 1984–85.
    Mr. Home Robertson: Will the Minister take this opportunity to say something about the shameful chaos at London's airports? Why are the Government failing to carry out the investment programme that is required to bring air traffic control in the south of England up to the standard that ought to be required?
    Mr. Mitchell: That is a somewhat different question, but I can tell the hon. Gentleman that the problem lies, not in the airports, but in congestion in the air space.
    Sir John Biggs-Davison: Can my hon. Friend confirm the report in Private Eye that London Buses Ltd. is thinking again about the introduction of one-person operated buses in central London?
    Mr. Mitchell: London Buses Ltd. identifies appropriate services for the introduction of one-man operation. It is not the intention of London Buses Ltd. to operate such buses throughout the system. It is a question of considering the matter route by route and forming a judgment about the best method for each route.

    Ferry Crews
    Mr. Tony Lloyd: To ask the Secretary of State for Transport what steps are taken to ensure that existing procedures avoid any risk of double counting by his inspectors of crew numbers on ferries.
    Mr. Channon: Some 118 inspections of cross-Channel ferries carried out in the last six months have revealed no evidence of double counting of crew.
    Mr. Tony Lloyd: Will the Secretary of State confirm that all inspections of the ferries are done by prior arrangement with the ferry operator? Would he care to comment on what steps his Department took to examine the allegation that appeared recently in the press to the effect that crew members were being shifted from ferry to ferry in order to make up the crewing complements?
    Mr. Channon: The hon. Gentleman is wrong. The inspections are not all done by prior arrangement. I have checked carefully and repeat that some are not done by prior arrangement. My marine surveyors have found no evidence to support the allegation in the hon. Gentleman's supplementary question.
    Mr. David Shaw: Will my right hon. Friend confirm not only that the Government have implemented many of the proposals of the Sheen inquiry about ferry safety, but that all the people who work on our ferries are now working on ferries that are far safer than they have ever been in the history of Britain's ferry transport?
    Mr. Channon: We have carefully implemented a great many of the recommendations of the Sheen report. We may have to consider more. I confirm what my hon. Friend says about the immense amount of work that has been done and the immense amount of work being caried out by my surveyors to make sure that ferries are sailing safely.
    Mr. Skinner: In the past few months there have been several major accidents and lack of safety has been central to almost every one of them. Those accidents were at Zebrugge, King's Cross and now in the North sea. In the light of that, would it not make sense for the Government, instead of taking the side of Jeffrey Sterling and P and O, to institute a proper inquiry into all the complaints about lack of proper inspection on the ferries? Would it not make sense to get on with the job and carry out an impartial investigation instead of siding with the management?
    Mr. Channon: I do no such thing, as the hon. Gentleman knows perfectly well. I treat his remarks with contempt. We investigate carefully any allegations that are made, from whatever source they come.

    Coach Safety
    Mr. Cran: To ask the Secretary of State for Transport what was the outcome of his discussions in June with the Bus and Coach Council on improvements in coach safety.
    Mr. Peter Bottomley: The outcome of the discussion was that the Bus and Coach Council agreed to make progress on the safety of power doors and the need to fit seat belts.
    Mr. Cran: Does my hon. Friend agree that, as his Department's figures show that bus passengers are three times more likely to be injured than, for example, rail passengers, the cost of £1,000 to £1,500 to give seat belts to all passengers in a 57-seater bus is cheap at the price?
    Mr. Bottomley: It is worth remembering that we need to go step by step. The House passed the Motor Vehicles (Wearing of Rear Seat Belts By Children) Bill 1988. We are
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    requiring seat belts in the exposed front seats of coaches, but is has not yet been made mandatory. I prefer to see coach operators fit seat belts voluntarily and then see whether passengers are willing to use them. I agree with my hon. Friend that we need to continue to try to improve safety in all forms of transport, but travelling by coach is substantially safer than travelling by car. Perhaps we should turn our attention to car safety, even more than to coach safety.
    Sir Anthony Grant: Is my hon. Friend aware that one of the greatest contributions that could be made to safety in coaches would be to stop them going too fast in the wrong lane on motorways, too close behind other vehicles? Is he aware that, in Japan, heavy goods vehicles are fitted with lights which show when they are exceeding the speed limit and that it is perfectly possible to have a system which shows when they are too close behind another vehicle? When will he do something along that line?
    Mr. Bottomley: Very shortly. Legal speed limiters on coaches are coming in, and that is greatly welcomed. The excessive speeds of coaches have been reduced dramatically. Speeding by HGVs and by cars has come down, although not speeding by motor cycles. We should pay attention to my hon. Friend's point about automatic visibility signs on speeding vehicles. In Singapore, for example, light vehicles flash a yellow light when they are going too fast and the police just wave them in.

    Minibus Services
    Mr. Pike: To ask the Secretary of State for Transport what percentage of services in England outside London are now operated by minibuses.
    Mr. David Mitchell: Information is not available in the form requested. Deregulation has encouraged operators to introduce minibuses on their services and they now represent about 10 to15 per cent. of all PSVs used on local services. Passengers in over 400 areas are benefiting from this flexible form of transport.
    Mr. Pike: With respect, does that answer not show that the Minister does not really know what has happened as a result of the Transport Act 1985? Should the Government not do more to survey the congestion that arises in some areas, as well as boasting about the improvements achieved? Many people have suffered a deterioration of service. Why does the Minister not analyse the situation and give a full report to the House?
    Mr. Mitchell: The hon. Gentleman will be interested to know that the latest research shows an increase from 400 minibuses operating in 40 places throughout the country before deregulation to no fewer than 5,600 in over 400 places. The big advantage of the minibus is that it reaches those parts that bigger buses cannot reach.
    Mr. Hind: Is my hon. Friend aware that I, like the hon. Member for Burnley (Mr. Pike), come from Lancashire and that, in the rural parts of Lancashire that I represent, there are more minibuses than ever before, which are reaching far more customers in those areas and are greatly appreciated by the communities there?
    Mr. Mitchell: I am grateful to my hon. Friend for calling attention to one of the most phenomenally successful aspects of deregulation.

    Waste Imports
    Mr. Butler: To ask the Secretary of State for Transport what assessment he has made of the impact on the trunk roads network in Merseyside of increased heavy vehicle movements consequent upon the importation of American waste for dumping in Warrington.
    Mr. Peter Bottomley: None.
    Mr. Butler: Will my hon. Friend now proceed to such an assessment, given that 600 22-tonne lorry movements will be involved every day from Liverpool to Warrington for five years, bringing in 7½ million tonnes of rubbish to my constituency? Does he not think that that is an unacceptable strain on the road network in the area?
    Mr. Bottomley: My hon. Friend would be on stronger ground if he were to refer the House, as I will, to the clear statement made by my hon. Friend the Under-Secretary of State for the Environment on 30 June. I imagine that some cases involve a Department of Transport interest, but it is worth noting that those issues are mainly the responsibility of my right hon. Friend the Secretary of State for the Environment, with some important aspects for my right hon. Friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Social Services.

    Road Bridges
    Mr. Tom Clarke: To ask the Secretary of State for Transport how many motorway and trunk road bridges are currently in need of repair.
    Mr. Peter Bottomley: Between 5 and 10 per cent. of the department's 8,500 or so bridges need structural maintenance each year.
    Mr. Clarke: Does the Minister accept that that is quite a high figure and that those of us who use the motorways and the north-west trunk road bridges realise that, apart from avoiding accidents, there are opportunities to provide jobs in the construction industry?
    Mr. Bottomley: We can no longer say that the country has a major problem with jobs in the construction industry. Some of us consider that in some parts of the country the position is slightly the reverse. Programmes of maintenance have kept pace with the need for general repairs, and the special needs of older bridges in particular are being tackled under a 15-year strengthening and upgrading programme.

  ATTORNEY-GENERAL

    Birmingham Pub Bombings
    Mr. Mullin: To ask the Attorney-General when he last met the Director of Public Prosecutions to discuss the investigation by City of London police into telephone calls made by Dr. Frank Skuse during his appearance as a witness at the Old Bailey in the case of the six men convicted of the Birmingham pub bombings.
    The Attorney-General (Sir Patrick Mayhew): On Friday 8 July 1988.
    Mr. Mullin: Has Sergeant Paton been asked when he was last in touch with Dr. Skuse, and if so, what was his reply? If the Attorney-General cannot answer that question now, will he undertake to supply an answer later?
    The Attorney-General: I will undertake to remind the hon. Gentleman of the course that the inquiry has taken. On 17 March he made the assertion that Dr. Skuse had been in touch with the former Detective Sergeant Paton in the course of his evidence at the Court of Appeal hearing. My hon. Friend the Minister of State advised the hon. Gentleman to place any evidence he might have of any possible irregularity before the police. It was not until 3 June, in response to a request made on 9 May from the Commissioner of the City of London police for the source of the information, that the hon. Gentleman identified the source of his information. That turned out to be somebody who, in turn, had it from somebody else, anti he has refused to identify that person. Therefore, the inquiries have come to an end.
    Mr. Marlow: What is the value to IRA fund raisers in America of the campaign by subversives and muddleheaded Opposition Members to undermine the credibility of British justice? What is the cost in United Kingdom lives?
    The Attorney-General: On 20 June, when I Last answered questions on these matters, I said that I deprecated as being very harmful, determined attempts, as they are seen to be, to undermine confidence in the administration of justice. I reiterate that opinion today in response to my hon. Friend.
    Mrs. Clwyd: To ask the Attorney-General when he last met the Director of Public Prosecutions to discuss the further police inquiry into telephone calls made by Dr. Frank Skuse during the Birmingham pub bombings appeal.
    The Attorney-General: I refer the hon. Lady to the answer that I have just given to the hon. Member for Sunderland, South (Mr. Mullin).
    Mrs. Clwyd: Is the Attorney-General aware that during the previous police inquiry carried out by the Devon and Cornwall police, Sergeant Paton changed his statement to make it fit in with Dr. Skuse's version of events? Has he been asked why he did that?
    The Attorney-General: I recall that the Court of Appeal, in its judgment delivered in February, had this to say about the scientific evidence to which much of the inquiry and the fresh evidence had related. I shall cite what was said by the Court of Appeal:
    "We repeat the question which we posed for ourselves before considering the impact of the fresh evidence and answer it without any hesitation as follows: nothing has emerged from this mass of material which causes us to doubt that the scientific evidence proves that one or more of these appellants had been in recent contact with explosives."
    The conclusion of the judgment states:
    "As has happened before in References by the Home Secretary to this Court under Section 17 of the Criminal Appeal Act 1968, the longer the hearing has gone on, the more convinced the court has become that the verdict of the jury was correct.
    We have no doubt that these convictions were both safe and satisfactory."
    As to whether any witness at the main trial or at the hearing before the Court of Appeal gave conflicting

    15
    evidence in any regard, each of those matters was considered in a hearing before the Court of Appeal, which lasted longer than any similar hearing. That is the measure of the confidence that the country should have in the outcome.
    Mr. Baldry: Is not the fact of this case that my right hon. Friend the Home Secretary exercised his powers to refer the case to the Court of Appeal? Having heard all the evidence that the men's legal representatives wanted to put before the Court of Appeal, the court decided that the convictions were safe and that there was no reason to interfere with them. Having regard to the length of time that the Court of Appeal took in hearing the case, is it not now time to say, once and for all, that there is absolutely no reason why those convictions should in any way be questioned or interfered with?
    The Attorney-General: It is very important to remind ourselves that every opportunity was given to those who take the view of the hon. Member for Sunderland, South (Mr. Mullin), that there was something unsafe in the original convictions, to call fresh evidence and review the previous evidence before the Court of Appeal. I have read, because I thought that it would be helpful to do so, the opinion of the Court of Appeal on that fresh evidence. Accordingly, to keep on and on seeking to undermine the reliability of the conclusion of the Court of Appeal without further evidence is very harmful to public confidence.

    "Spycatcher"
    Mr. Cryer: To ask the Attorney-General if he will make a statement on the implications for his general policy on initiating litigation of the costs of legal actions relating to the book "Spycatcher".
    The Attorney-General: To enforce the duty of confidentiality owed to the Crown I shall, on behalf of Ministers collectively, continue to take such steps by way of civil proceedings as appear to the Government to be appropriate.
    Mr. Cryer: Does the Attorney-General accept that where there is a serious criminal seditious conspiracy, it is a civil servant's duty to expose that conspiracy, and that an attempt to bring down the 1974 Labour Government is set out in Peter Wright's book "Spycatcher"? Is it not shocking that the Attorney-General should spend in excess of £1 million trying to suppress that book, which no Government officer has tried to contradict, when those people in MI5—Tory supporters—who tried to organise the downfall of the democratically elected Government of the day are getting away with it scot-free? What is the Attorney-General going to do about law and order and maintaining the reputation of British justice if he lets those Tory people in MI5 get away with it?
    The Attorney-General: The litigation that has been conducted on behalf of the Government in these courts and in courts elsewhere in the world has resulted in an affirmation of the duty of confidentiality that is owed by those who have served in the security services. It is extremely important that, where there is reliable evidence of criminal activity, that should be investigated. The Director of Public Prosecutions has expressed his conclusions with regard to the assertions that the hon.
    16
    Member for Bradford, South (Mr. Cryer) has in mind. It is equally important that the duty of confidentiality owed by former members of the security services should be enforced. If any Government were to shrink from enforcing that duty, the cost would soon be paid, not in money, but in lives.
    Mr. Lawrence: Is it not typical of Opposition Members to attach such a low financial price to the upholding of a principle so important for a free society as the confidentiality of those secret service agents who are sworn to protect the nation's secrets?
    The Attorney-General: This is yet another example of the wide gulf between the opinions of all our constituents on the one hand and the opinions of certain Opposition Members on the other.

    Landlord and Tenant Laws
    Mr. Fraser: To ask the Attorney-General what studies the Lord Chancellor is currently undertaking into the law relating to landlord and tenant, in the light of recent reports from the Law Commission.
    The Solicitor-General (Sir Nicholas Lyell): The Government have under current consideration three recent reports of the Law Commission relating to different aspects of landlord and tenant law.
    Mr. Fraser: During his canvassing in north Kensington, has the Solicitor-General been struck by the unanswerable case for leasehold reform for flats? Since the report of the Law Commission into strata title makes it immensely easier to have a framework for enfranchisement, will the Government announce that they are now as in favour in principle of leasehold enfranchisement for flats as for houses?
    The Solicitor-General: As the hon. Gentleman knows, that is a matter for my right hon. Friend the Secretary of State for the Environment. The Law Commission's most recent report is an agenda for consultation.

    North Report
    Mr. Allen: To ask the Attorney-General what further consideration he has given to the implications for prosecuting policy of the North report on road traffic law.
    The Attorney-General: The implications for prosecution policy of the report of the road traffic law review will not become apparent until the detailed scrutiny of its recommendations now under way is complete, and my right hon. Friends the Secretaries of State for Transport and for the Home Department have made such legislative proposals as they may then think fit.
    Mr. Allen: The Attorney-General may not be aware that in Transport Questions one of his colleagues said that the North report recommendations might come before the House before the summer recess—[Interruption.] He said a lot else besides. If the Under-Secretary of State for Transport wants to contribute, he will have to wait. Does the Attorney-General—[Interruption.]
    Mr. Speaker: Order. These are questions for the Attorney-General.
    Mr. Allen: Well, I hope that we get further than we did with the Under-Secretary of State for Transport. Does the Attorney-General agree with the Solicitor-General that the courts will have the power in future to extend sentences relating to "bad driving" should the "bad driving" offence, which is one of the recommendations of the North report, be agreed by the House? Does the Attorney-General endorse that view?
    The Attorney-General: That is not a matter for me. It is a matter for my right hon. Friend the Home Secretary. However, as I am always anxious to express an opinion on something that interests me, the style of drafting recommended, by the North report when referring to "bad driving" or "really bad driving" is very much to be commended as everybody understands what that means. It is a welcome suggestion.

  OVERSEAS DEVELOPMENT

    Overseas Aid (Education Projects)
    Dr. Michael Clark: To ask the Secretary of State for Foreign and Commonwealth Affairs what proportion of overseas aid from Britain is directed towards education in the recipient countries.
    The Minister for Overseas Development (Mr. Chris Patten): In 1987 almost a fifth of the bilateral programme—some £140 million—was spent on aid for education and training.
    Dr. Clark: I am delighted with my hon. Friend's reply. However, does he agree that to spend money on education aid to Third world countries is one of the best ways of priming the pump? Bearing in mind the many excellent education hooks in English, does he agree that it is vital that there should be a supply of English language teachers, and is he giving that sufficient priority?
    Mr. Patten: I agree with my hon. Friend about the importance of English language teaching as part of our aid programme. We are expanding English language teaching and 275 English language teachers are now working in developing countries with the support of our aid programme. I am pleased that we have recently managed to increase our English language teaching programme in Sri Lanka, Tanzania, and China. I should like to pay a particular tribute to the British Council, which acts as our agent and does the job with considerable distinction.
    Dr. Reid: Is it not a shameful indictment of the Government that when the British people have shown unbounded generosity towards charitable works at home as well as abroad, the Government have halved overseas aid as a percentage of GNP? Will he match the generosity of the people who elected the Government by pledging the Government to support the 0·7 per cent. campaign to make that proportion of GNP the measure of our overseas aid?
    Mr. Patten: The premise of the hon. Gentleman's question is wrong. It is important and valuable that we are now increasing our aid programme in real terms.

    Joint Funding Scheme
    Mr. Andrew Mitchell: To ask the Secretary of State for Foreign and Commonwealth Affairs which organisations receive grant assistance from his Department under the joint funding scheme; and what criteria are applied to applications from organisations seeking assistance under this scheme.
    Mr. Chris Patten: During the 1987–88 financial year my Department provided grants under the joint funding scheme to 53 non-governmental organisations. I shall arrange for a list to be published in the Official Report.
    There are four main criteria: projects must be designed to promote economic and social development, rather than emergency relief; they must fit the local communities' aspirations and needs; the costs and benefits must be clearly identified within realistic objectives; and the projects must have the potential to become self-sustaining after our support has come to an end.
    Mr. Mitchell: Will my hon. Friend draw public attention, not only to the substantial increase in public funds forthis important scheme, but to the clearly targeted developmental work that it does? In particular, will he note that the sum available from public funds has quadrupled during the past six years and that it goes on a pound-for-pound basis to match the work that major national charities are doing in this important area?
    Mr. Patten: I agree with my hon. Friend about the importance of the work of non-governmental organisations. They can often operate at a level that is more difficult for Government-to-Government programmes. That is why this year we have increased by 75 per cent. on the original allocation for last year the sum that is going to the joint funding scheme, which is supporting about 800 projects throughout the world.
    Mr. Jack: In considering the non-governmental projects, many of which concern tropical rain forests, will my hon. Friend ensure that the Institute of Terrestrial Ecology has sufficient time for its projects on tree cloning to come to fruition?
    Mr. Patten: It may well take tropical forests slightly longer to come to fruition than I am likely to be standing at this Dispatch Box. [Interruption.] I am not sure whether I am lucky or unlucky in making that observation. I wholly agree with my hon. Friend about the importance of forestry as part of our aid programme and that is why we have increased the funds available to it. One of the areas in which non-governmental organisations can work most valuably is in environmental protection and enhancement.
    Following is the information:
    Agencies receiving grants under the joint funding scheme in 1987–88

    Action Aid

    Aga Khan Foundation

    AHRTAG

    Aid for India

    Associated Country Women of the World

    Boys Brigade

    British Red Cross Society

    CAFOD

    Care

    Cerebral Palsy Overseas

    Christian Aid

    CIIR

    Commonwealth Human Ecology Council

    Commonwealth Trade Union Council

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    Co-operation for Development

    Duke of Edinburgh's Award

    Euro Action Acord

    Feed the Minds

    Food Agricultural Research Mission

    Friends of Urambo and Mwanhala

    Hand in Hand

    Health Unlimited

    Help the Aged

    Institute of Cultural Affairs

    International Voluntary Service

    International Year of Shelter for the Homeless Trust

    Jalchatra Project

    Leonard Cheshire Foundation

    Leprosy Mission

    Mission Aviation Fellowship

    National Children's Home

    OXFAM

    Plan International

    Population Concern

    Population Services

    RCSB

    Richmond Fellowship

    Save the Children Fund

    SCIAF

    Scouts

    SOS Sahel International

    Sport Aid

    St. Johns Ambulance

    Tanzania Development Trust

    Tear Fund

    Uganda Society Disabled Children

    VSO

    Water Aid

    Work-Start Overseas

    World University Service

    Worl Vision

    World Wildlife Fund

    Y-Care

    Aid Donors
    Mr. Barron: To ask the Secretary of State for Foreign and Commonwealth Affairs what information he has as to the average percentage of gross national product given in aid in 1987 by donor nations, excluding the United Kingdom, that are members of (a) the Group of Seven leading industrialised nations, (b) the European Community, and (c) the development assistance committee of the Organisation for Economic Co-operation and Development.
    Mr. Tom Clarke: To ask the Secretary of State for Foreign and Commonwealth Affairs what information he has as to the average percentage of gross national product given in aid in 1987 by donor nations, excluding the United Kingdom that are members of (a) the Group of Seven leading industrialised nations, (b) the European Community, and (c) the development assistance committee of the Organisation for Economic Co-operation and Development.
    Mr. Chris Patten: In 1987 net aid as a percentage of GNP, excluding the United Kingdom, averaged 0·32 per cent. for the Group of Seven; 0·5 per cent. for those members of the European Community for which the development assistance committee has published figures; and 0·34 per cent. for all development assistance committee members.
    Mr. Barron: Does the Minister accept that, of the 18 OECD major industrialised countries, we now come 14th compared with 12th in 1979? Does he further accept that we are below the average on every percentage that he read
    20
    out? In 1979, when the Labour Government were in office, 0·52 per cent. of our GNP went towards the 0·7 per cent. target that was set by the United Nations 20 years ago. Now only 0·28 per cent. of our GNP is spent on that. Does the Minister understand that it is no good saying that the figures are better than last year's? We are trying to cure the evil of the wrong distribution of wealth throughout the world and we can do that only by aiming for the target percentage of our GNP, not by saying that we are giving more than we gave last year.
    Mr. Patten: It is probably the case that most of the international financial institutions to which the hon. Gentleman may have inadvertently referred would be more encouraged if more developing countries and more countries in general followed the economic policies of this Government rather than if they continued as they are. Thanks to our economic growth our aid programme is now growing in real terms. We shall spend over £90 million more this year than last year.
    Mr. Clarke: In view of the appalling nature of these comparisons, will the Minister tell the House when he last had a person-to-person meeting with the Prime Minister on these matters?
    Mr. Patten: I last had a person-to-person meeting with my right hon. Friend the Prime Minister on these matters about a month ago, since when I have been in several countries and she may have been, too. I suspect that, unusually, the hon. Gentleman may have drafted his supplementary question before he listened to my reply.
    Mr. Rowe: Is it not absolutely true that my hon. Friend the Minister is to be congratulated on the considerable progress that he has made towards achieving many of the objectives of the aid programme that were manifestly not met when the Labour party was in power? Is it not also true that there is still a large gap between rich and poor countries and that it is to all our benefit if we in richer countries share a larger proportion of our income with poorer countries?
    Mr. Patten: I agree with my hon. Friend. That is why we have to continue giving a lead on issues such as the further liberalisation of trade and debt. I am delighted that the Toronto economic summit reached the conclusion that it did, which is a great tribute to my right hon. Friend the Chancellor of the Exchequer. I hope that this week the Paris Club will make a good deal of progress in implementing the terms of the Toronto economic summit communiqué.
    Mr. Jacques Arnold: Does my hon. Friend agree that it is much better to give an increasing amount of aid? Rather than merely considering a higher percentage of a low gross domestic product, is it not better to have perhaps a slightly smaller percentage of a GDP which is now very much greater?
    Mr. Patten: I agree with my hon. Friend. As I said before, the effects of the Labour party's policies on our economic growth rate would ensure, without anything being done to the amount being spent on aid, that our aid as a proportion of GNP went up rapidly, and soon.
    Miss Lestor: Does the hon. Gentleman not recognise that there is a distinction between an intellectually attractive presentation of a policy and the reality of a performance? If he continues to argue that what is important is not the proportion of GNP but the amount

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    that he has contributed, unless that amount goes up as a proportion of GNP it follows that the gap between the countries that we are supposed to be assisting and the richer countries will widen. That is why the United Nations had a target of 0·7 per cent. of GNP. so that when GNP went up the proportion to the developing countries would also go up. That is where the Minister is failing the Third world.
    Mr. Patten: I am grateful to the hon. Lady for what I think began as a compliment. [Interruption.] Perhaps I
    22
    misjudged her. I apologise for that. It is important that our aid programme should go up in real terms, which it is doing. It is also important that our economic growth rate is now sufficiently rapid and based on sufficiently secure foundations to make sure that we can play the leading role in the international financial institutions and in issues of trade and debt that a country of our history should be able to play. Alas, under our predecessors, we were on the way to becoming a developing country.

Housing Action Trusts
3.31 pm
Mr. Clive Soley (by private notice) asked the Secretary of State for the Environment if he will make a statement on his intention to enforce the takeover of local authority housing by Government-appointed housing action trusts.
The Minister for Housing and Planning (Mr. William Waldegrave): Subject to approval by both Houses of Parliament of the Housing Bill and of the necessary designation orders, my right hon. Friend proposes to establish housing action trusts in:

Lambeth: Loughborough and Angell Town estates;

Southwark: North Peckham and Gloucester Grove estates;

Tower Hamlets: Solander Gardens, Shadwell Gardens, Berner, Boundary and Holland estates and part of Ocean estate;

Leeds: Halton Moor, Seacroft South and Gipton estates;

Sandwell: Windmill Land and Whiteheath estates; and

Sunderland: Downhill, Townend Farm and Hylton Castle estates.

Maps have been placed in the Libraries of both Houses today showing the areas that might be covered by the housing action trusts. My right hon. Friend will shortly be appointing consultants to advice him further. Final decisions on the areas to be designated will be taken in the light of the consultants' studies and of local views.
My right hon. Friend has chosen those areas taking account of the matters listed in clause 60(5) of the Ho using Bill. The combination of problems associated with the rundown council housing in those areas is such that a radical approach is necessary to give tenants decent housing, better services and more choice. It will therefore be the job of each housing action trust, in consultation with the residents, to carry out a major programme of renovation, to bring empty council properties back into use, to improve the way in which estates are looked after and generally to help improve the economic, environmental and social conditions of the area.
The creation of housing action trusts provides an opportunity to target resources on some of the areas where major concentrations of poor quality public sector stock create very intractable problems. I therefore hope that the local authorities concerned will co-operate fully in setting up housing action trusts so that tenants can gain as soon as possible from the benefits that they will bring. My right hon. Friend is writing to the leaders of the councils concerned today about the proposals. He is also writing to all local residents who might be affected.
Mr. Soley: Yet again, we have had to drag information out of a reluctant Government who are increasingly embarrassed by their housing crisis.
First, why is there no choice for tenants or residents in those areas? What has happened to the word "choice"? Secondly, why has there been so little consultation? Thirdly, what guarantees will we be given that the local communities will not be squeezed out and replaced by people from other areas? What guarantees are the Government giving to homeless people so that they will be able to get housing in those areas and to local authorities so that they can provide that housing for those people?
The Minister said that he was anxious to get empty council property back into use. Will he make sure that the housing action trusts have the same powers to bring back
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into use empty Government-owned properties, given that there are three times as many empty Government-owned properties as there are empty council-owned properties? Will housing action trusts have the same powers to bring back into use empty housing association properties—there are marginally more of those properties empty than there are council-owned properties—and empty private sector housing, given that there are nearly twice as many of those properties empty as there are empty public-sector properties?
I recognise that, in Committee, the Minister conceded that tenants would be able to go back to the local authority when a housing action trust was wound up if they so wished. It is important that he ensures that that is not just a paper promise, that local authorities have the housing finance to allow them to take those tenants back and that cuts are not imposed on local authorities which would make it impossible for them to offer to repurchase the estates.
What guarantees do we have that landlords such as Mr. van Hoogstraten will not benefit, given that he has already described the Housing Bill as a "step in the right direction"?
Mr. Waldegrave: The hon. Member for Hammersmith (Mr. Soley) knows the answers to most of those questions because he asked them in Committee and he was given the answers then. I had intended to answer a written question put down by the hon. Member for Newham, North-West (Mr. Banks), but I am delighted to answer this matter orally.
The hon. Member for Hammersmith knows very well that there will be consultation with the tenants at all stages and that all the plans and directions, if any, from the Secretary of State will be published. I believe that the hon. Gentleman would welcome that. The hon. Gentleman also knows that the interests of local people are central to the housing action trusts. I had hoped that, rather than taking the usual negative attitude, he would have welcomed what amounts to an additional £125 million over three years for six of the areas where there is most need for that money to be spent. I am sorry that he has not found it in him to welcome that. There is a duty to co-operate with local authorities on homelessness, and he is aware of that. I believe that it is slightly unlikely that there will be Ministry of Defence properties on any of the estates, but if there are, we shall hope to get them back into action as soon as possible.
The hon. Gentleman is well aware of the system for the return of the estates to local authorities if they are willing to have them back, and these authorities will be free to purchase the estates back if they wish to do so.
There was no need for the cheap remark about Mr. van Hoogstraten because the hon. Gentleman knows that any transfers out of HATs will be to "tenant-guaranteed" landlords, housing associations and co-operatives. It is a bit of a cheap scare story to bring Mr. van Hoogstraten into this.
I believe that, in the next few weeks, when the tenants in the designated areas receive the information about the immense potential benefits on offer, they will take a slightly more generous and positive view than the hon. Gentleman.
Mr. John Heddle (Mid-Staffordshire): Will my hon. Friend accept the congratulations of all the tenants in the

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areas that he has mentioned, as the opportunity that he has just announced will enable them to release themselves from the clutches of unsympathetic local authority landlords? Will my hon. Friend accept that HATs will do more to relieve the plight of the homeless? Will he further accept that those areas such as Southwark, which has rent arrears of £30 million, will be relieved from debt? Does my hon. Friend also agree that HATs will produce better housing management and more sympathetic living conditions for those who are currently homeless?
Mr. Waldegrave: I welcome my hon. Friend's support for this extremely important matter. To put it politely, it is perfectly obvious that some local authorities that cover the estates cannot grapple with the severity of the problems that they presently face—[HON. MEMBERS: "Why?"]—and central Government are now bringing resources to bear to do that. Labour Members may ask why, but the answer is exactly the same as why they and the leadership of their party would like to see different people in power in many of those local authorities.
Mr. Merlyn Rees: What will be the constitutional position of the new areas in Leeds? On Saturdays, many Leeds constituents consult their Members of Parliament about the allocation of houses and repairs, and I wish to know whether it will be in order now to table private notice questions and to write letters to Ministers. Will the Secretary of State take the place of the local authority? If he is not to do that, who is?
Mr. Waldegrave: The right hon. Gentleman is running a little ahead. The HATs will not be established until the House and another place have debated the matter. In due couse, it will be for the boards of the HATs to deal with management problems. My right hon. Friend the Secretary of State will be ultimately responsible to the House.
Sir George Young: Is my hon. Friend aware that his statement will be widely welcomed, not least by tenants in difficult-to-let estates throughout the country, who have been failed by their local authorities? Will he tell the House when the first HAT will be up and running? Will he confirm that in many instances there is a need for physical improvement and better management afterwards? Will he confirm that HATs will put into effect localised and efficient repair services to maintain the momentum that the HATs begin?
Mr. Waldegrave: My hon. Friend, as usual on these matters, is entirely right. We hope to have HATs set up early next year. If the Labour party feels that the playing of party games in opposition on all these matters is inevitable, that will delay the bringing of benefits to the tenants whom they claim to represent. The localised management of the priority states project teams and Estate Action, if carried forward, will be carried forward also in the HATs. That is what we shall be doing.
Mr. Simon Hughes: As a representative of a borough that is to have an HAT, may I say that more Government money for housing in rundown areas of England is welcome? However, I have one or two questions for the Minister for Housing and Planning. First, is this a "this is your choice" designation
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or is it a "there is no alternative" designation? Will there be a veto? Will tenants be able to approve the proposal, or will it go ahead irrespective of the views of local people.
Secondly, will representatives be on the boards of the HATs, having been democratically elected by local people? Thirdly, will the rents and the tenants' rights that are now enjoyed continue to be enjoyed in a similar way after the trusts have been created? Lastly, will local councils be able to nominate all the homeless in an HAT area, people whom they have a duty and a responsibility to house?
Mr. Waldegrave: We debated some of the hon. Gentleman's questions in Committee. First, I hope that there will be local representatives on the boards of the trusts. My right hon. Friend the Secretary of State and other departmental Ministers will be meeting local authorities to discuss these matters with them. The hon. Gentleman knows that there is no veto over the establishment of an HAT. Ultimately, it is for the House to decide whether a trust is established.
We have said repeatedly that rents will not increase before improvements have been made, and even then may increase only in line with local authority rents generally. As new money will be brought to bear—it will not be borrowing from the local authority—tenants will enjoy the benefit of smaller increases in rents than there would otherwise be for such improvements. They will remain secure tenants while they are in the HAT.
Mr. Robin Squire: Is there not a simple fact behind my hon. Friend's excellent statement: that the HATs are an imaginative way of bringing assistance to estates that have reached a level that is unacceptable? Is my hon. Friend aware that all men and women of good will will wish the initiative godspeed, not least on behalf of tenants who have suffered too much for too long?
Mr. Waldegrave: My hon. Friend puts succinctly what is surely the truth. I have visited most of the estates where HATs are to be established, and I think that, between us, I and my ministerial colleagues have recently visited them all. Opposition Members know many of them extremely well. I should be most surprised if anyone were willing to say that the estates do not merit the best efforts of the House and additional resources to bring them into a better condition.
Mr. Tony Banks: Is the Minister aware that I read out to the Secretary of State the list of estates that he presented at the Dispatch Box this afternoon during the all-night sitting on 14 June on the Housing Bill? When I read out exactly the same list, the Secretary of State said that no decision had been taken. When was the decision taken?
Mr. Waldegrave: The hon. Gentleman is amazingly perspicacious. As a matter of fact, his memory is at fault—the list is not the same.
Mr. Ian Gow: Is it not a sign or the confusion of the Labour party—not on housing policy alone—that it does not know whether to applaud or to deprecate my hon. Friend's announcement? Will my hon. Friend confirm that if—as Conservative Members believe to be the case—the housing action trusts turn out to be a great success, this pilot scheme will be extended to other parts of the country?
Mr. Waldegrave: Yes, and doubtless at that point the pushmi-pullyu opposite—which remains stationary, emitting peculiar noises—will come down on our side and join us, as it has on the right to buy and so many other policies.
Mr. Peter Shore: On many deplorable estates, not least in the borough of Tower Hamlets, the issue that the Minister must consider is whether this is the best way of dealing with those problems or whether he should pursue the previous policy of priority estate projects and begin to repair some of the housing investment programme allocations that have been so grievously reduced in the past few years.
I fear that I know already what the answer will be, but can the Minister really say, despite what he has previously said about consultation, that if both the local authority and the tenants on the estate do not wish to have a housing action trust, nevertheless it will be imposed upon them?
Mr. Waldegrave: I answered the last question when I told the hon. Member for Southwark and Bermondsey (Mr. Hughes) that it will be for the House to decide.
On the right hon. Gentleman's first question, he knows very well that if additional allocations were made to a number of boroughs—perhaps I say this in relation to his borough—the way in which that money would be spent would be extremely unpredictable, to put it politely, and it may be wasted. I believe that this is the best way forward. We shall continue Estate Action and the priority estates programme where that is the best way, but in some areas the problems are so great that a much longer and more concentrated direction of resources is now needed.
Mr. Robert Banks: I congratulate my hon. Friend on his statement today and especially on choosing Leeds. Is this not the implementation of a policy for real action that will bring tangible benefits to many people in the rundown areas? Will he especially monitor the progress of the housing action trust when they get under way, so that we can be kept fully in the picture as to their success?
Mr. Waldegrave: My hon. Friend makes a good point. We should monitor this new policy very closely, and we shall do so. I join him in saying that the policy is likely to bring real benefits, choice and hope to some areas that have been short of them for too long.
Mr. Peter Snape: Does the Minister accept that Sandwell's housing problems have been considerably worsened in recent years by the consistent underfunding of its HIP allocation? That is not politics, but fact. Can he assure us that the local authority and the local voluntary housing sector will be encouraged to set up these trusts, or will the trusts be confined entirely to the private sector, which has consistently failed boroughs such as Sandwell for many years?
Mr. Waldegrave: These trusts are not in the private sector, but are part of the public sector. They will be established by the House and they will be responsible to my right hon. Friend. We hope for good co-operation from the local authorities, the many housing associations and other housing experts operating in those areas.
Mr. Robert G. Hughes: Does my hon. Friend accept that his statement today will bring real relief and help to people in Labour-controlled areas who have been left to rot by successive Labour councils in places in which no Labour Members would wish to live? Does he
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accept that there will be some disappointment that his statement does not include more areas to be designated as housing action trusts? When does he expect to be able to extend the housing action trusts to Bradford, Manchester, Newham and other areas where the Labour party has failed the people?
Mr. Waldegrave: That remains open to us for the future. If the new policy goes well, I hope that additional housing action trusts will be nominated. My hon. Friend was entirely right when he said that if anybody can doubt that national resources are now needed for these areas to bring them back into decent—[Interruption.] If anyone believes that some of the present housing management is capable of that, he is living in cloud-cuckoo-land.
Mrs. Harriet Harman: Can the Minister assure the people who live in north Peckham and Gloucester grove that they will benefit from any additional investment in their estates? Does he recognise that, based on the experience of the London Docklands development corporation in the north of the borough, there is widespread concern that existing tenants will not benefit? It is feared that they will be driven out in favour of those who can buy.
Mr. Waldegrave: There is not all that much comparison between a UDC and an HAT. The interests of existing tenants are central to an HAT's purpose. The failure or the success of housing action trusts will be judged by whether they have brought benefits to the hon. Lady's constituents who are tenants of those estates.
Mr. Jonathan Sayeed: Why has there been no announcement for Bristol, with all its inner-city housing problems that my hon. Friend and I know so well? Could it be that it helps if there is co-operation with the local authority when establishing housing action trusts? One sees from the past actions of the Labour-controlled Bristol city council that it is more interested in bigotry than in caring for the community.
Mr. Waldegrave: My hon. Friend will well understand that Bristol was not forgotten. I was interested to hear him say that he believes that a housing action trust for Bristol might be worth considering for the future. He is quite right that we face the spectacle of Bristol city council wasting a considerable sum of ratepayers' money by pointlessly petitioning against the UDC, which most people in Bristol warmly welcome.
Mr. John Fraser: Reverting to the two estates in my constituency, if the majority of the tenants oppose the order, will that influence the Government and will they not proceed with it? Secondly——
Mr. Speaker: Briefly.
Mr. John Fraser:—if the Government are to provide extra resources for estates such as Angell town, why will the same resources be denied to similar estates in the neighbourhood, such as Tulse hill and Stockwell park? What is the difference in principle? Thirdly, will the Minister give an undertaking that all vacancies will be made available to Lambeth people, and will Lambeth be able to spend only 20 per cent. of its capital receipts, or the whole lot?
Mr. Waldegrave: The hon. Gentleman opposes these proposals but then asks why the same cannot apply to

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other estates. There were difficult decisions to make about the estates that were in most need. We have selected some estates that we believe will benefit dramatically. On the hon. Gentleman's first important point, I have already made it clear twice to his right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) and to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that it is for this House ultimately to decide whether to pursue housing action trusts.
Mr. Chris Mullin: What consultation was there with Sunderland borough council before the decision was made to designate estates in its area? Is the Minister aware that public housing in Sunderland is extremely well run and that the only problem it faces is the shortage of funds from central Government?
Mr. Waldegrave: There were no formal consultations with local authorities before the estates were designated. That has always been made clear. The time for consultation is now. My right hon. Friend the Secretary of State looks forward to discussions with the Sunderland borough council and others in the months ahead. There is nothing new about that. It is right that the proposals should be put to the House before they are discussed with outside interests. I have no doubt that had we done it the other way round the hon. Gentleman would have been jumping up and down and saying, "How dare you consult outside before coming to the House to announce the list?"
Several Hon. Members rose——
Mr. Speaker: Order. I remind the House that this is a private notice question and that we have had a long run on it. I shall give precedence on a subsequent occasion to those hon. Members who have not been called.

Type 23 Frigates (Orders)
3.53 pm
The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Tim Sainsbury): With permission, Mr. Speaker, I should like to make a statement about the Government's plans to place orders for further Duke class type 23 frigates
The type 23 frigate will form the backbone of the Royal Navy's anti-submarine warfare surface force in the future. Principal features of this ship include a towed array sonar to detect low-noise submarines, a 4·5 in gun, a helicopter capable of carrying Sting Ray torpedoes and sonobuoys, Harpoon anti-ship sea-skimming missiles and vertical launch Sea Wolf missiles to counter the air threat. The type 23 will be more capable than the types of ships it is replacing.
Tenders were sought for orders for one to four ships from the four main warship building yards in the United Kingdom. We are very pleased with the outcome of the competition. The precise value of the order is commercially confidential but the prices submitted were very keen. Following evaluation of the tenders, I am pleased to be able to tell the House that an order for three ships is to be placed with Yarrow Shipbuilders Ltd. The ordering of all three ships from Yarrow provides best value for money in terms of prices and contract conditions. The average unit cost of the three new ships is some £10 million below the average of the last three ordered in 1986. That reflects, among other things, the keenness of the competition; the benefits of batch ordering; Unproved efficiency in the shipyards, due in part to improved fabrication methods; and greater experience of building those types of vessel.
I take this opportunity to thank all the yards which participated in this excellent competition and which submitted such competitive bids. Although tenders were sought for up to four vessels in order to explore the benefits of batch ordering, an order now for four—even if all from one yard—would not be significantly more attractive in terms of unit price than an order for three. Therefore, we have decided that it is best to include the fourth ship in the next batch competition. That will enable all the yards that participated in this competition to have an opportunity to bid again for that ship, together with further possible orders.
This decision brings to 10 the number of new frigates now on order, excluding the three type 22 frigates accepted by the Royal Navy from tire shipbuilders this year. In recent days, there has been much comment in the press and from the Opposition about the size, age and availability of our surface fleet. I regret that much of it has been ill informed. My announcement today demonstrates in the best possible way the Government's commitment to maintaining a highly capable escort force of about 50 destroyers and frigates.
Mr. Allan Rogers: We welcome the Minister's statement, but we also have grave misgivings about it. We welcome it because it will mean an enhancement of our surface fleet, which has been much reduced in capability and in relative effectiveness because of the Government's gross inability properly to manage the defence economy over the past few years. We also welcome it because it will provide much-needed job

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opportunities and safeguards in Glasgow, where the vessels will be built. My hon. Friends the Members for Glasgow, Hillhead (Mr. Galloway) and for Glasgow, Garscadden (Mr. Dewar) are very pleased that Yarrow Shipbuilders has won the order, which will mean maintaining jobs in an area that is currently ravaged by unemployment as a result of the Government's policies.
However, my hon. Friends the Members for Tyneside constituencies are completely dismayed by the Minister's announcement. The recent completion of a type 23 frigate on time and within budget gave them the hope that Swan Hunter would be given one frigate out of this order, or out of the four—a point to which I shall return. Instead, Swan Hunter has been given nothing, which will mean an almost immediate loss of 700 jobs and a potential loss of 2,000 jobs in the near future, with the possible complete closure of the yard.
We note that the original announcement concerning the frigates was made at last year's Tory party conference. We are grateful that the Minister, unlike so many of his colleagues, has on this occasion used the House to make such an important announcement. In making the observation that this is the second announcement of the same order, I note that at last year's Tory party conference the Secretary of State for Defence received 32 seconds of applause for his announcement there. Are we to understand that that is now to be the Government's technique for ordering three frigates a year—once at the Tory party conference, and once in the House?
It should be remembered that the requirement for three frigates a year is a basic requirement laid down in the Select Committee's report. Are the Government returning to ordering one frigate a year, as they have done since 1981—a policy, incidentally, that has reduced the Navy even further than was envisaged by Sir John Nott in 1981? That led to the resignation of one of the hon. Gentleman's colleagues, but he is not particularly concerned.
Can the Minister give an assurance on the orders? When will the ships be delivered—or are we to have another announcement about that? If tenders were sought for four frigates and if, as the statement said, there are significant advantages in batch ordering, why are the Government ordering only three out of four? Why is the fourth frigate to become number one for next year, and how many are to be ordered next year? What is the Government's continuing policy—or are they dealing with the matter on an ad hoc basis?
As the Select Committee said in its recent report, the Navy desperately needs surface ships if it is to service our commitments in the Gulf and the south Atlantic and to NATO. Although the announcement is welcome news for some of our yards and is undoubtedly a welcome enhancement of our surface fleet, it will lead to dismay on Tyneside and is certainly not enough for our Navy.
Mr. Sainsbury: The hon. Gentleman is very hard to please. His reaction to the announcement, which he is grudgingly prepared to admit is good news, reminds me rather of the remark attributed to Oscar Wilde when he first saw the Niagara falls—that they would be more impressive if they flowed the other way.
The hon. Gentleman asked a number of questions, and it may not be possible for me to answer them all. He asked particularly when the ships would be delivered. As he
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knows, for operational reasons we do not give acceptance dates in advance, but we expect fabrication of the first of the three ships to start in about six months' time, and for work on the others to follow at roughly six-month intervals. He also asked why there should be three rather than four ships. I thought that I had explained that clearly in my statement. It is perfectly acceptable for the fourth ship to be included in the next order, for which we expect to invite tenders next year.
The hon. Gentleman referred, rather to my surprise, to much reduced capability in the Royal Navy. I entirely reject that allegation. The new ships, like others in the Royal Navy, are highly capable—much more capable than the ships that they are replacing.
Several Hon. Members rose——
Mr. Speaker: Order. May I ask for brief questions? We have a heavy day ahead of us.
Sir Antony Buck: Does my hon. Friend agree that it is not a very happy precedent for a Minister responsible for the Navy to start quoting Oscar Wilde? However, apart from his last few remarks, my hon. Friend's announcement will be warmly welcomed.
Does my hon. Friend agree that it is important to emphasise that the new types of frigate being ordered have a vast capability compared with those that they will replace? Will he be able to tell us soon when the other orders will be made, so that we can keep our commitment to a surface fleet of around 50 major ships?
Mr. Sainsbury: I am grateful to my hon. and learned Friend for his reaction. I can confirm that the ships are a great deal more capable, particularly in their antisubmarine warfare capability: they have much enhanced sonar capability, and are also much quieter. In addition, they carry a smaller crew—170 as opposed to 220, which was the complement of the previous type of antisubmarine warfare ship.
The next competition will be next year. We have not yet decided how many ships will be involved, but the number will be consistent with an ordering pattern to retain a modern and highly capable fleet of about 50 destroyers and frigates.
Mr. John Cartwright: Does the Minister include the Select Committee on Defence in his sweeping dismissal of the Government's critics as being ill informed? In particular, does he challenge the Committee's assessment that no fewer than 25 of the existing escort vessels will reach the end of their planned lives over the next 10 years, and that that means 14 orders over and above what he has announced today if the surface fleet is not to become smaller and less capable than it is now? Why do the Government not attempt a planned approach to ordering, instead of the drip-feed approach that they have demonstrated again today?
Mr. Sainsbury: I am glad to say that I did not describe the Select Committee as ill informed. I referred to the reaction to its report, much of which has been ill informed, particularly the reaction on the Opposition Benches. I am sure that the hon. Gentleman, who is I believe a member of the Committee, will know that paragraph 72 of its report refers to the 25 ships that he has just mentioned, and

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also suggests that two orders are required this year to retain the escort fleet at about 50. I have just announced an order for three.
Mr. Michael Mates: Does my hon. Friend accept that this is excellent news for the Royal Navy, for Yarrow Shipbuilders and for the hundreds of subcontractors who will benefit from the orders? Excellent as it is, however, the news does not mean that my hon. Friend is out of the wood in his determination to keep a destroyer frigate force of about 50. Does he accept that he must order a further two next year, two in 1990, three in 1991 and two in 1992 just to keep pace with the aging quality of the present fleet?
While I have no doubt that my hon. Friend can do that, would it not make sense for him to be able to tell the House as soon as possible that it is his intention, and that it is in the long-term costings? That is the best way to achieve confidence in the Navy, and among other yards that failed this time but stand to succeed in subsequent orders.
Mr. Sainsbury: I am grateful to my hon. Friend for his welcome for the announcement, and for what he said about Yarrow's and particularly about subcontractors. A large number of companies throughout the country will benefit from the subcontracting work associated with this major defence contract, which is not always the case.
I take my hon. Friend's point about the need to order new ships to keep the capability and numbers of the escort fleet up to the required level. My hon. Friend will have heard what I have said about another order next year. I think that he will understand why I do not give precise numbers or timings, looking several years ahead. I am, however, happy to repeat our commitment to retaining an escort fleet of about 50 ships, and to assure him that they will be very capable. The new ships are much more efficient and effective that those that they are replacing.
Mr. George Galloway: Notwithstanding the fully justified reservations of my hon. Friend the Member for Rhondda (Mr. Rogers), the Minister will be aware that the news will be greeted with delight and satisfaction on the Clyde, particularly in my constituency. It is certainly good news for the Clyde shipbuilding industry and the Royal Navy. It follows not from ill-informed criticism, but from extremely well-informed criticism relating to the need to keep our service fleet up to strength at about 50.
The Government's good-sense decision reflects—for once, perhaps—a recognition of Britain's real defence needs in the real world and on the real seas, rather than the nuclear preoccupation of the fantasy world in which some military strategists persist in living. This is good news for Glasgow and very good news for the constituency and Yarrow's, which is a centre of excellence. I offer the Minister thanks from my constituents.
Mr. Sainsbury: I am grateful to the hon. Gentleman for his reaction, which, as he said himself, was perhaps a little more genuine and honest than that of his hon. Friend the Member for Rhondda (Mr. Rogers), who seemed to be looking for reasons to complain about good news. I can do no better than to say that a total of 27 major naval vessels with a value of nearly £4·6 million are now on order for the Royal Navy, or under construction. Some 64 major ships and submarines have been ordered by the Government since they came to power in 1979.
Mr. David Martin: Will my hon. Friend confirm that the money saved by the very efficient procurement of these ships will be kept within the defence budget for further procurement?
Mr. Sainsbury: I am glad to be able to confirm that. One of the principal reasons for our drive for more competitiveness and value for money in our procurement expenditure is to provide for the opportunity to buy more equipment with the money saved.
Mr. Frank Field: Does the Minister need to be reminded of the bitter disappointment that will be experienced in Cammell Laird this afternoon as a result of his announcement? May I remind him of Cammell Laird's substantial order book for conventional submarines? Will he open negotiations with the yard in the near future on the timing of the placing of those orders, so that any employment effects of today's announcement can be minimised? Will he assure the House that all these orders were decided on price? Having spoken to the shop stewards before coming here, may I extend an invitation to the Minister, now that the tenders have been decided, to visit the yard in the near future?
Mr. Sainsbury: I appreciate what the hon. Gentleman says about the disappointment that will be felt by Camrnell Laird. As I said in my statement, I appreciate the contributions of all the yards that took part in the competition, and the keen bids that they put in. I can assure the hon. Gentleman that the award of the three ships to Yarrow Shipbuilders Ltd. was on the basis of price. I may add that Yarrow's bid was fully compliant in terms of contract conditions.
A number of other ships will be coming forward for invitation to tender. We recently had a presentation on the aviation support ship. I have already mentioned inviting tenders for a further batch of type 23s next year. There will be further orders for auxiliary oiler replenishment vessels, single-role minehunters and type 2400s in due course. I shall be happy in due course to pay a visit to Cammell Laird to see the shipyard.
Mr. Neville Trotter: Does my hon. Friend accept that, although there will be general welcome for this addition to the strength of the Royal Navy and the work for the contracting part of the marine industry—the subcontractors—there will be great disappointment on Tyneside that Swan Hunter, the major frigate builder, did not share in the order? Does he accept that there is a strong case for having a long-term ordering programme to avoid uncertainty, with all the problems that that rise gives to for employment?
Will my hon. Friend say a little more about the next batch of type 23s? When he refers to next year, does he mean that the process will start then or that the order will be placed then?
Mr. Sainsbury: As I said in answer to the hon. Member for Birkenhead (Mr. Field) about Cammell Laird, so I appreciate the disappointment in my hon. Friend's constituency at Swan Hunter. I am equally grateful to it for its participation and contribution to this effective competition. As I said, there will be another order next year. I shall not commit myself now to saying how many ships will be involved, but it will be a batch order and the process will start next year. It might even come to order next year—it is as yet too early to say. As with Cammell

35
Laird, there are Royal Navy ships under construction at Swan Hunter, which I hope will submit competitive tenders for the future opportunities with which it will be provided.
Mr. Bruce Millan: Is the Minister aware that what he has just said about a further batch order next year will be welcomed by every hon. Member with a naval shipbuilding interest in his constituency? In the meantime, his announcement today will be warmly welcomed on Clydeside, especially as it is clear that the order went to Yarrow strictly on merit—and as, without the order, Yarrow would have been faced with a substantial rundown in the labour force in the next few months.
Mr. Sainsbury: Of course, when I announced the intention to go out for another batch order next year it is clear that not all the yards can win if we place the orders in batches. That is the inevitable consequence of seeking the best value for money for the Navy. I hope that we please the whole House by getting effective competition and being able to order three ships at an average cost of about £10 million less than the previous group. The clear consequence is that not all yards can be successful on each occasion.
Sir Geoffrey Johnson Smith: I welcome my hon. Friend's statement this afternoon, but may I ask what reliance is he placing on the use of advanced weapons systems on surface vessels as a way of maintaining and, if possible, increasing their numbers and prolonging their lives?
Mr. Sainsbury: I am grateful for my hon. Friend's welcome for the announcement. The weapons systems and sonars and radars on the type 23s are, as, he would put it, modern and very capable. There are some advantages in some of the latest systems because they are easier to enhance and modernise than some of the older ones. That should enable us to keep some aspects of the sensors and weapons of the modern ships in the most up-to-date condition without the difficulty of refitting, which we have run into on previous occasions when we virtually had to rebuild some of the earlier Leanders.
Sir Russell Jonhston: In associating myself with the general welcome for this announcement—particularly as a Scottish Member—may I associate myself with hon. Members on both sides who have argued that there is a case for a long-term ordering programme? Does the Minister agree that, as well as getting value for money, it is of great importance to maintain our warship building capacity? Without a long-term building programme there is a risk that some of it could be lost.
Mr. Sainsbury: I am grateful to the hon. Gentleman for his welcome for the order. Of course, there are always requests for long-term programmes for this and that. He will be as aware as I am that long-term programmes tend to change, and the longer-term and more highly defined the programme, the less flexible it inevitably is. The last thing that we want to do is to commit ourselves too far in advance to ordering precise numbers of particular types of
36
ship with particular categories of arms, sonars and radars, when we are faced with an evolving threat and must continually judge what is required against it.
Sir David Price: Is my hon. Friend aware that, although his statement will give encouragement to the Royal Navy and Yarrow, it will give nothing but disappointment to my constituents in Vosper Thornycroft? May I take it that as a result of that disappointment, of which I am sure my hon. Friend is aware, his Department is bending every effort to assist Vosper Thornycroft in getting orders for both mine hunters and mine sweepers, particularly in the Gulf and for Arab states? Will he add anything in that respect?
Mr. Sainsbury: I appreciate what my hon. Friend said on behalf of Vosper Thornycroft, which is the third unsuccessful yard in this competition. I repeat to him what I said to our hon. Member the Member for Tynemouth (Mr. Trotter) and to the hon. Member for Birkenhead (Mr. Field) about the yards' participation in this competition. Like Swan Hunter and Cammell Laird, Vosper Thornycroft has an opportunity to tender for further orders that come along. Like the other yards, it has ships for the Royal Navy under construction, and it can bid for other work from overseas and from the civil sector as well as from the Ministry of Defence.
Mr. Chris Mullin: Will the Minister accept that, while no one begrudges the work going to Yarrow, there is considerable disappointment about the announcement? In fact, it is a bit of a kick in the teeth for many in the north-east that not one of the orders has gone to Swan Hunter. What hope can the hon. Gentleman hold out for the thousands of workers whose livelihoods depend on Swan Hunter? Does the Minister agree that the merciless application of market forces should not be the only criterion he takes into account when deciding where to place such orders?
Mr. Sainsbury: I am glad to note the hon. Gentleman's enthusiastic welcome for defence orders of considerable size. I appreciate that not every yard can win if a batch order is placed, but I am somewhat surprised that he should suggest that we should incur extra expense by splitting the order. Depending on how the order was divided, the extra expense to the Royal Navy would have between £11 million and £20 million if we had not taken advantage of the best offer. We have a responsibility to ensure that that money is saved to be used for other equipment to ensure that we have the best possible Navy.
Sir Ian Lloyd: My hon. Friend will be aware that, apart from recent events in the Gulf, the evidence given before a Congressional defence committee last week—that modern weapons systems depend completely on their electronic capability—reinforces the point made by my hon. Friend the Member for Wealden (Sir G. Johnson Smith). When was the specification for the electronic equipment frozen; how old will it be when it is installed; how frequently will it be updated?
Mr. Sainsbury: My hon. Friend will know better than most that it is difficult to answer that question because there are about 62 or 63 different systems in the type 23, and almost all of them have electronic components. The answer to his question would be different for each one, but

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I take on board his point about the need, when ordering complex electronic equipment. to bring to bear the sort of approach that he recommends.
Mr. Bruce George: Many—probably most—Opposition Members welcome the Minister's announcement as a step towards achieving his own target of 50 frigates. However, to achieve that goal would require ordering about two or three a year. Over the past five or six years the Government have averaged about one a year. To achieve the target would require far more than simply the ordering process that we have heard about. Does the Minister agree that perhaps his citing of Wilde was quite apt because many ships have been lost in the ordering process? To lose one was surely unfortunate, to lose two was careless, but to lose an extended family of ships amounts to neglect.
Mr. Sainsbury: In the relevant Oscar Wilde play the parents were found again. Perhaps the Select Committee's comments on the ordering rate overlooked the inevitable implications of a reduction in the overall size of the escort fleet from the figure in the 1970s down to about 50, which remains our target size. As the hon. Gentleman will be aware, paragraph 72 of the Select Committee report suggests a required ordering rate of 2·6 ships a year, which is the equivalent of two more orders this year. I have just announced three and that seems a good start towards achieving what the Committee asks for.
Mr. Jonathan Sayeed: My hon. Friend's announcement will be warmly welcomed with a great sigh of relief by the Royal Navy. That is because it is aware that it is not able to fulfil its peacetime commitments without withdrawing from some NATO exercises. It is extremely perturbed about the lack of type 23s, in particular the towed array sonar frigates required for the northern area. It is also worried about the impossibility of defending the sea lanes of communication in wartime. Will the Minister reassure the Navy by introducing into the long-term costings a clear programme of continuous ordering of surface units?
Mr. Sainsbury: While I welcome my hon. Friend's reaction to this order, may I say that I do not accept the "impossibility" as he puts it, of defending the sea lanes. The Royal Navy would feel that to say that was selling it short, given the ships that it has, let alone the new ships that we are talking about ordering. I agree that the towed array sonars, which will be one of the main weapons systems of the type 23s, give a greatly enhanced anti-submarine warfare capability, which will be of great value to the Royal Navy.
Mrs. Margaret Ewing: May I also welcome today's announcement which will be greeted with enthusiasm throughout Scotland where we justifiably regard the words "Clyde-built" as demonstrating the pride that we feel? Can the Minister say whether emphasis is being placed by the Ministry on decentralisation of defence procurement expenditure? Is he aware that recent estimates show that 68 per cent. of this massive budget was concentrated in the south-east and south-west? Surely some of the pleas that we have heard from the northern regions of England show the need for decentralisation. Will the subcontracted steel come from Ravenscraig?
Mr. Sainsbury: It is apparent that the welcome for this order is not just from Scotland but from all those who have the interests of the Royal Navy at heart. Subcontract work is a matter for the prime contractor, and where he obtains his supplies is a matter for him. I am sure that he will find, as the hon. Lady would expect, some very competitive suppliers in Scotland.
Mr. Allan Stewart: Further to the points made by the right hon. Member for Glasgow, Govan (Mr. Millan) and the hon. Member for Glasgow, Hillhead (Mr. Galloway), may I ask my hon. Friend whether he agrees that this is magnificent news for the west of Scotland and a tribute to the professionalism and dedication of the management and work force in Yarrow who have won this contract on merit? Is my hon. Friend able to say anything more about the consequences of the contract for the preservation and creation of jobs? Does he agree that the lesson for the whole of Scottish industry is that the way to preserve and create jobs is to be competitive?
Mr. Sainsbury: Indeed. I am grateful to my hon. Friend for his welcome. We estimate that about 10,000 jobs will be sustained in the defence industry by these orders. He is absolutely right that in defence equipment supply, as in other industrial and commercial activities, competitive effectiveness in meeting the customers' requirements most efficiently is the best way to ensure the preservation of jobs and to create more jobs in Scotland and throughout the country.
Mr. Frank Cook: While the Minister's announcement of the batch order will be welcomed by the Royal Navy, it will be bitter news for the community surrounding Swan Hunter, where it will immediately mean 700 redundancies in the short term and probably 2,000 in the not-so-long term. Many of those people will be constituents of mine who travel to and fro each day.
Has the Minister taken into account the fact that the three orders announced today may yet fall short of the "about 50" that the Royal Navy considers adequate, especially taking into account the increased down time in modern operations and the need to update and relit these vessels more regularly? Will the Minister also take into account the fact that we need not only to renew our vessels but to retain our capacity to renew them? If we close the yards, as is happening at present, we need never look for another conflict like that in the Falklands because we shall be unable to furnish the equipment to send to such a conflict.
Mr. Sainsbury: I appreciate that the hon. Gentleman's constituents, like other people in the area of Swan Hunter, will be disappointed that Swan Hunter has not won this order. Of course the size and shape of the work force at Swan Hunter are matters for the company, but I hope that its continuing programme to improve productivity and efficiency, of which I am aware, will enable the company to win extra orders from the Ministry of Defence, from the private sector or, indeed, from overseas.
Mr. John Wilkinson (Ruislip-Northwood): While warmly welcoming this order, which will be a valuable addition to the fleet, may I suggest to my hon. Friend that his financial problems next year may be even greater than they were this year, in that defence expenditure is projected to continue to decline in real terms as a proportion of

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Government expenditure and as a proportion of GDP? In those circumstances, how will he fulfil his worthwhile and laudable objective of a surface fleet of about 50?
Mr. Sainsbury: I am grateful to my hon. Friend for his welcome for this order. Expenditure on defence is projected to remain at about a constant level for the next two years. This order is a demonstration of one of the best ways in which we can meet the objective that my hon. Friend and I share—getting better value for money. As I said, the average cost of the three ships for which I have just announced the order is about £10 million less than the last three which were ordered in 1986. That is getting better value for money through more effective procurement, and is one of the best ways to ensure that we can meet the requirements of the Ministry of Defence and the Navy.
Mr. Tony Worthington: The Minister's statement will be greeted with great relief on Clydeside and especially by my constituents. It is not often realised that Yarrow is the largest single employer in manufacturing industry in Strathclyde. There are about 5,500 jobs in Yarrow, and subcontractors will depend on this order. It is difficult to overestimate the importance of the order, and enormous credit is due to the management and work force who have won this order on merit.
I should like the Minister to try to be a little less reticent about the batch system and about what it means to defer one of the ships into the next batch. When does he expect to be more explicit about the number of ships and the timing of the next batch? So far he has been a little reticent about that.
Mr. Sainsbury: I appreciate the hon. Gentleman's welcome for the order. Like some other hon. Members, he is seeking more information, but I am afraid that at this stage I am unable to give that to the House. Obviously, the batch system means that we order ships not singly but in groups. I have already announced that next year there will be another invitation to tender for a further batch. By normal standards that is quite precise. For the reasons that I have already advanced, I do not wish to commit myself further. I repeat our commitment to maintaining an escort fleet of about 50 ships. Those ships will be highly capable.
Several Hon. Members rose——
Mr. Speaker: Order. I appreciate the interest in this statement and I hope that I have called all those hon. Members who have a direct interest. I shall call hon. Members who are still rising but I ask them to be brief because other hon. Members wish to take part in the subsequent debate.
Mr. Robert Banks: Does not the chorus of delight from the Opposition Benches contrast with the performance of previous Labour Governments? Does my hon. Friend agree that the viability of a shipbuilding industry in this country is a major factor in securing competitiveness for the building of warships? Has he given careful consideration to the effect on Swan Hunter, in particular, as a result of his decision?
Mr. Sainsbury: My hon. Friend is right in his observation. If I recall correctly, when the Labour party was in power from 1974 to 1979, it cut the defence budget
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on no fewer than five occasions, which does not give us great confidence about what it would do in the future. I assure my hon. Friend that we are conscious of his point and that we keep under review the overall capacity of the shipbuilding industry, as we do the ship repair industry, to meet the requirements of the Royal Navy.
Mr. Anthony Nelson: Is my hon. Friend aware that his welcome statement this afternoon will mark a major enhancement of our commitment to the defence of the east Atlantic and of NATO's northern flank, as well as to the pre-eminent reputation of our Royal Navy in anti-submarine warfare? However, will he be somewhat cautious about accepting the rather superficial arguments in favour of a longer-term batch ordering policy, not only because there are other priorities in defence procurement, but because it implies a sort of Buggins's turn, which cannot be in the long-term interests of our defence procurement policy?
Mr. Sainsbury: I am grateful to my hon. Friend for those remarks, with which I very much agree. The Royal Navy contributes about 70 per cent. of the NATO surface fleet in the east Atlantic and the Channel. That is a reflection of the important contribution of the Royal Navy to the NATO Alliance.
Mr. James Couchman: This is very good news for the Royal Navy, for Scotland and for Yarrow, but may I join my hon. Friend the Member for Tynemouth (Mr. Trotter) in articulating the fact that it is bad news for Swan Hunter, which is having considerable troubles with its present orders, particularly the AOR? When will my hon. Friend order more ships of the types that he mentioned, including ships for the amphibious forces, and will he lay down a more specific timetable for the next batch of type 23 frigates?
Mr. Sainsbury: One of the reasons why I cannot fully satisfy my hon. Friend's curiosity about the precise timing of the next order is that it takes quite a long time to analyse the tenders when they come in. As he will be aware, it is not at all unusual nowadays for there to be perhaps two or even three rounds of tendering to ensure that the Royal Navy obtains the best price and that the tenders are fully compliant with the contract conditions. That can take quite a long time and it is difficult to predict in advance exactly how long it will take. Therefore, I must leave my hon. Friend with no more information than I have already given to the House.
Mr. Julian Brazier: Following the point of my hon. Friend the Member for Harrogate (Mr. Banks), may I congratulate my hon. Friend on the excellent deal that he has struck? However, may I put it to him that we must keep at least two effective frigate builders in being, if we want to be competitive in future? That will almost certainly mean that, at some time in future, we shall have to pay a little more for our frigates than the price at which Yarrow would be able to produce them because, inevitably, Yarrow now has a strong competitive advantage. I put it to my hon. Friend that Swan Hunter should be that other yard.
Mr. Sainsbury: I aware that, to retain competition, we need more than on supplier. As my hon. Friend will recognise, we went out to four yards—not just two—all of which put in bids for that batch. I hope that a number of

41
yards will continue to compete for future orders to ensure that we have competitive prices. I do not accept that that will necessarily mean that we shall have to pay more than we would otherwise do to ensure that we retain at least two yards with the capability of building new frigates.
Mr. Barry Field: I appreciate that the order is an early stage, but is my hon. Friend able to confirm that the radar contract will be awarded to Plessey, which will be good news for its employees on the Isle of Wight, and can he say whether the helicopter requirement of those new warships will be met from existing resources, or whether additional helicopters will be required, which will be even more good news for Westland employees on the Isle of Wight?
Mr. Sainsbury: As I said earlier, there are a number of subcontractors and suppliers throughout the country, including the Isle of Wight, which are likely to benefit from the announcement of the order. In due course, those new frigates will carry the EH 101 helicopter, which is currently being developed and is supplied by Westland. I hope that my hon. Friend's constituents, like constituents in many other parts of the country, will benefit from that order.

Points of Order
4.34 pm
Mr. Tam Dalyell: On a point of order, Mr. Speaker. In the light of new information, according to a headline in The Evening Standard, I wonder whether there is any possibility of your reconsidering your decision, taken at 11.30 am, when the information was not available regarding my wish to make an application under Standing Order No. 20. The headline in The Evening Standard states:
"I reported Piper gas leak".
The article contained other assertions—[Interruption.] I represent, as do some other hon. Members, those people who have been widowed in this most tragic and ghastly accident.
In the light of the new information, Mr. Speaker, I wonder whether I could make an application under Standing Order No. 20, requesting a statement regarding the urgent interviewing of those people who received telephone calls from people who later died on the rig, as the telephone calls, with all the publicity and emotion, may well be overprinted in the minds of those who received them.
Mr. Speaker: I fully understand the hon. Gentleman's concern about this matter, but I am not aware of anything new that has happened since we discussed the matter earlier today.
Mr. Eric Forth (Mid-Worcestershire): On a point of order, Mr. Speaker. Will you confirm that there is a long-standing convention of this House, which has served us well over many years, that hon. Members, particularly senior Members, when abroad, do not criticise the Government of the day? Have you been able to reprimand the Leader of the Opposition for his disgraceful comments on his recent foreign trip?
Mr. Speaker: I am responsible for order in this House. I am not responsible for what anybody may say outside it.
Mr. Tony Marlow: On a point of order, Mr. Speaker.
Mr. Speaker: It is not a matter for me. It is not a point of order at all. Is there a different point of order?
Mr. Marlow: It is a different point of order. As my right hon. and learned Friend the Foreign Secretary is present in the Chamber at the moment, would it be possible for him to make a statement as to whether it is possible for him to withdraw the passport of the Leader of the Opposition?

Points of Order

  STATUTORY INSTRUMENTS, &c.
  Mr. Speaker: With the leave of the House, I shall put together the 14 motions relating to statutory instruments.
  Ordered,
  That the Tyne and Wear Development Corporation (Vesting of Land) (Various Local Authorities) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (Borough of Sunderland) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (British Shipbuilders and British Steel Corporation) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.

  43
  That the Black Country Development Corporation (Vesting of Land) (British Steel Corporation) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (Port of Tyne Authority) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (British Coal Corporation) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (Borough of Walsall) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (Borough of Sandwell) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (British Railways Board) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (Tyne and Wear Passenger Transport Executive) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (General) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (Central Electricity Generating Board) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (City of Newcastle upon Tyne) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the draft Set-Aside Regulations 1988 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Lennox-Boyd.]

Orders of the Day

  European Communities (Finance) Bill
  Order for Second Reading read.
  [Relevant document: Fifth Report from the Treasury and Civil Service Committee (House of Commons Paper No. 358 of Session 1987–88) on European Community Finance.]
  Mr. Speaker: I have selected the reasoned amendment in the name of the Leader of the Opposition.
  4.36 pm
  The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): I beg to move, That the Bill be now read a Second time.
  As the House will appreciate, as well as the report from the Treasury and Civil Service Committee, the debate also provides scope for consideration of the Community documents specified at column 122 of the Official Report for 7 July.
  United Kingdom policy in the Community, throughout the past five years, has had three dominant aims. We have sought to put the Community's finances on a sound basis of good management; we have sought to bring discipline to CAP spending; and we have sought to make a reality of the Community's commitment to a genuine internal market, 320 million strong.
  That agenda, originally set by Britain, has become the European agenda as well, and it is being carried into practice. The House heard from my right hon. Friend the Prime Minister only ten days ago about the progress made at Hanover towards the single market, the third of the objectives that I have described.
  The Bill is concerned to implement the first two of those objectives—sound finance and control over agricultural spending—on the basis of the agreement that we achieved at the Brussels European Council last February. I believe that those achievements have been welcomed by the great majority on both sides of the House.
  Attitudes towards the Community in the country at large, as well as in this House, have indeed moved a long way in recent years. The decade of debate about the merits of our membership is well behind us. The common objective now is to see how we can make the Community work as effectively as possible. Certainly that is where the interests of the United Kingdom lie, and the interests of Europe as well.
  Of course, I do not by that imply that our perception of our interests will always be in line with the views of our partners. That is the nature of any genuine partnership. On such occasions—there have been many on the road to the Brussels and Hanover European Councils, and there will be many more—we press our country's case with vigour. So, quite rightly, do others. The challenge of Europe is to find what is best in each nation's position, and to offer that to the whole, making the most of our common strength. Real progress is being made when all can see their interests being advanced.
  Mr. Eric Forth (Mid-Worcestershire): I am grateful to my right hon. and learned Friend for giving way at this early stage. Will he assure the House that the combination of the effects of the Single European Act and the proposals in this measure will give ample opportunity for any

  45
  member state, particularly our own, still to defend what it sees as its essential national interest, whether in financial or politico-economic matters? Is he satisfied of that, and can he reassure the House?
  Sir Geoffrey Howe: Yes. I am grateful to my hon. Friend for giving me the opportunity to take one intervention at this stage. A large number of hon. Members wish to speak in the debate which, as so often, has started an hour late. I make no complaint about that, but I hope that the House will forgive me if I do not give way to a range of interventions, because I wish to set out the argument in support of the Bill as a whole.
  I begin by acknowledging the point made by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth). Incidentally, I reject the argument that it is wrong for us ever to shift our views for the sake of a common position. If 12 nations are to make the most of their separate resources and talents, each must be ready to join in the search for agreement. But equally, I reject the argument that it is somehow bad form within the Community to fight for what we think right. The suggestion is occasionally made—it was made by some in this House during our struggle for better Community budget discipline—that the right course must always be to go along with the consensus. But that obviously depends whether the consensus is right—right for us and right for the Community. For us to fall in with the majority, where we think it charts the wrong path for the Community, would be to fail the Community, as well as Britain.
  I make no apology—and the House would not expect anyone to make an apology—for the fact that the recent far-reaching review of the Community's finances and policies took place at the insistence of this country. The other member states now acknowledge, publicly and privately, just how necessary that review was. The new own resources decision and intergovernmental agreement now before the House are among its results: today's debate gives us an opportunity to review them all.
  Mr. Nicholas Budgen: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: I am normally fascinated by the points that are made by my hon. Friend. I hope that he will forgive me on this occasion, but I wish to stay within the pattern of the argument.
  The principal result is a series of deep-seated changes in the way the Community budget will in future be run. The Community now has the solid foundation which it needs in the run-up to 1992. That demonstrates the wisdom of this Government's determination to make a success of the Community through concrete internal reform, consistently and tenaciously pursued, even when many in Brussels urged us to settle for less. Our tenacity in pursuit of those objectives is in sharp contrast to the ineffectual, toothless, gnawing attitude one sometimes detects from the Benches opposite, where vacillation has become accepted as a substitute for leadership and consistency, and resolution and patriotism are conspicuous by their absence.
  Mr. Tony Marlow: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: No, but I am sure that I carry my hon. Friend with me in what I have just said about the Opposition.
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  The same contrast is evident in the attitudes of the two sides of the House to the completion of the single market. That is the next key task for the Community. It is another where the United Kingdom has set the pace, and the tone has been set by my right lion. and hon. Friends.
  Good progress is being made. In the six months of the German presidency, agreement was reached at Council level on a record number of 56 individual single market measures. That brings the total since the Milan European Council in 1985 to nearly 200. Those key measures included a number of considerable importance to the United Kingdom, such as the removal of controls on capital movements by all member states. That is a prerequisite of a genuine free market in financial services. It will be a major boon to the City of London.
  The measures included the full liberalisation of road haulage by the end of 1992. That means the end of continental lorry quotas. British firms will be able freely to compete for business, and costs to consumers will be cut. I mention as well the liberalisation of non-life insurance services—another change of major benefit to the British insurance industry.
  Why has there been the acceleration of progress on the single market?
  Mr. Stuart Holland: Lord Cockfield.
  Sir Geoffrey Howe: I am almost delighted that the hon. Gentleman is paying tribute to a British member of the European Commission. Certainly he deserves tribute.
  Mr. Holland rose——
  Sir Geoffrey Howe: I have taken the hon. Gentleman's point.
  We have made such rapid progress because, throughout the Community, there has been a growing recognition of the significance of 1992, and the benefits that it will bring, and because the completion of the future financing review, the principal reason for this Bill, has provided the foundation for single market success.
  Mr. Budgen: No dialogue—just reading out the Foreign Office brief.
  Sir Geoffrey Howe: I am delighted that my hon. Friend is taking such a close interest in what I have to say. He will find it even more fascinating, as I go on.
  The accession of Spain and Portugal on 1 January 1986 brought the Community two new members with incomes significantly below the Community average. Their entry coincided with a strong and increasing awareness of the link between the single market programme and the Community's spending plans. In particular, it was clear that the full development of the single market would best be accompanied by further expansion of the structural funds, to improve the economic infrastructure of the poorer Community regions.
  Thus, it became clear too that the ceiling on the Community's own resources agreed at Fontainebleau in 1984 would be insufficient to provide for the needs of a Community of 12 in the run-up to 1992. In consequence, the Commission brought forward, in February 1987, proposals for the comprehensive restructuring of the Community's finances and an increase in the level of the Community's own resources.
  From the beginning, the future financing review provided both threats and opportunities. On the positive

  47
  side, the Commission's proposals called for a comprehensive reform of the common agricultural policy. That included, for the first time, the introduction of automatic stabilisers in all the main agricultural sectors, with increased supervisory power for the Commission to prevent possible overshoots. The Commission also proposed improved budget management procedures. The aim here was to improve forward financial planning. To all that, the United Kingdom gave strong support.
  But the Commission's proposals also contained dangers. Chief among them was a proposal for a new method of calculating the British abatement which, on our calculations, would have left the United Kingdom hundreds of millions of pounds worse off in each year up to 1992—and by about £700 million in 1992 alone.
  The Commission also proposed an increase in the own resources of the Community to 1·4 per cent. of Community GNP. The United Kingdom argued that an increase of that scale—equivalent to a rise of nearly 50 per cent.—was not required, and would impose an unnecessary burden on taxpayers.
  Another unwelcome Commission proposal was for a new tax on the consumption of oils and fats. That was designed to lay upon consumers the burden of the Community's oils and fats support regime—by increasing the costs of margarine and vegetable oils by up to 31 per cent. We strongly opposed that tax: it would have been degressive, and it would have done little to address the basic problem of over-production.
  In the negotiations which followed, we made four points clear: first, any further increase in Community resources must be accompanied by effective and legally binding controls on expenditure; secondly, there would have to be effective measures to reduce agricultural surpluses; thirdly, there should be no oils and fats tax; and fourthly, we were determined to preserve in full the Fontainebleau abatement mechanism.
  We also made it absolutely clear that we were not prepared to agree to any element of the future financing package until we were satisfied with every individual element in the package as a whole. We succeeded on all counts.
  We succeeded in getting in place agricultural stabilisers for cereals, oil seeds and the other principal agricultural commodities. Those stabilisers have subsequently been implemented by a series of detailed agricultural regulations covering each of the crops involved. By the standards of Community agriculture in the previous two decades, that stabiliser regime is revolutionary and long overdue. For the first time, we have an automatic mechanism, with teeth, which will control the growth of financial support.
  To improve overall control of the common agricultural policy, the Brussels European Council also agreed, again for the first time, to make the financial guideline for agricultural spending legally binding. In future, the Commission's price proposals must always be consistent with the agricultural guideline.
  Mr. Jonathan Aitken: In the catalogue of success that my right hon. and learned Friend is relaying about how well we are now controlling expenditure, why has he omitted the lack of legally binding controls on the non-obligatory sector? How are the intergovernmental
  48
  discussions supposed to equate with the legally binding controls that we were promised by my right hon. Friend the Prime Minister at the Dispatch Box?
  Sir Geoffrey Howe: As my hon. Friend has acknowledged, the arrangements now coming into force provide legally binding controls for obligatory expenditure under the agricultural guideline. They also provide for legally binding limits year on year on the aggregate Community budget. The combination of those two effects provides a legally binding control on the non-obligatory expenditure. In addition, the matter is fortified by the inter-institutional agreement that was also arrived at as part of the arrangements. The point made by my hon. Friend—[Interruption.] This is the point. Even the hon. Member for Vauxhall (Mr. Holland) finds it difficult to follow the complexity of these matters. For that reason, the intervention made by my hon. Friend the Member for Thanet, South (Mr. Aitken), confirms the wisdom of my original decision to allow a relatively small number of interventions. These are technical points, and we must look at the matter as a whole.
  Mr. Marlow: Why is the package so complex?
  Sir Geoffrey Howe: With his characteristic wisdom, even from a sedentary position my hon. Friend the Member for Northampton, North (Mr. Marlow) has asked, "Why such a complex package?" It is complex to satisfy the legitimate anxieties of my hon Friends to gain effective control in the circumstances.
  In future, as I have said, spending on the CAP will be able to grow at a maximum of just three quarters of the rate of growth of Community GNP—that is, about 2 per cent. per annum in real terms. That compares with an average growth rate of 5 per cent. per annum over the years 1980–87. Crucially, it will ensure that the CAP has access to a steadily shrinking percentage of the Community's GNP.
  Mr. Teddy Taylor: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: No. I hope that my hon. Friend will forgive me. No doubt the House is looking forward with great interest to what my hon Friend has to say.
  The Brussels agreement also eliminated the general provision for additional expenditure in so-called "exceptional circumstances." Instead, the new budget discipline arrangements make specific and tightly controlled provision for a reserve of 1 billion ecu which will become available only in response to substantial in-year changes in the dollar-ecu exchange rate.
  World agricultural prices are in dollar terms, so when the dollar falls against the ecu, CAP budget costs rise. When in future such extra costs exceed 400 million ecu, the new reserve will be triggered, and may be drawn down, but only up to the limit of 1 billion ecu. The arrangement is symmetrical: when the dollar rises, the reserve will fall, automatically reducing the amount available for CAP support.
  In line with the provision in the Brussels conclusions that all these controls should be in legally binding form, detailed texts governing agricultural budget discipline, the financing of the CAP and of stock depreciation, and the financing of FEOGA intervention, have been drawn up

  49
  since February. They were formally adopted by the Council on 24 June and copies have been placed in the Library of the House.
  The conclusions of the February European Council also provided for a useful tightening of arrangements for budgetary mamagement. Those provisions too are embodied in a Council regulation adopted on 24 June and deposited in the Library of the House.
  As I explained earlier in reply to my hon. Friend the Member for Thanet, South, a helpful additional control on spending arises from the agreement between the Council, the European Parliament and the Commission on an inter-institutional agreement covering Community expenditure between 1988 and 1992. Under the agreement, all three institutions commit themselves to respect a reference framework, or financial perspective, for spending over the five-year period which is consistent with the conclusions of the Brussels European Council.
  So much for the framework. How are the new arrangements working in practice? The Commission's 1988 price-fixing proposals for support prices for agricultural products were within the agricultural guideline for 1988, as was the compromise package agreed by the Council on 23 and 24 June. The Commission's proposed provision for agriculture in the draft 1989 budget is within the guideline for 1989.
  The signal to farmers and the markets is clear. The scandal of soaring CAP costs, at the expense of taxpayers, consumers and developing countries, is at last being brought under control.
  Mr. Teddy Taylor: To preserve his superb reputation for fairness and honesty, will my right hon. and learned Friend the Secretary of State accept that on the basis of the information provided by my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food, the 2 per cent. increase referred to in 1989 actually compares with a year of 14 months and that that 14-month year was created by the £5 billion overspend under the previous strict budgetary controls?
  Sir Geoffrey Howe: It is important that my hon. Friend should give me the opportunity to deal with that matter. I heard him muttering about it, so I thought that I would give the House the opportunity to hear about it.
  A change was made last year to alter the arrangements so that the financial control of agricultural expenditure shifted from the system of advances to reimbursements. Whereas previously money used to be advanced by the Community to member states for them to pay, it is now paid by way of reimbursing expenditure actually incurred. We regarded that change as desirable because it gives tighter control. Member states are given money when they have paid it out.
  As a matter of practice in making the change, it involved reimbursing after a two-and-a-half-month delay. There was a change in the pattern of timing. If we compare the two years, we see that the figure for 1988 covers the period from 1 November 1987 to 15 October 1988. The second period for the 1989 figure covers 16 October 1988 to 15 October 1989. The two periods are comparable, and the 2 per cent. increase to which I have referred results from comparing like with like.
  I am anxious to make that point. It answers the point raised by my hon. Friend the Member for Southend, East (Mr. Taylor) and no doubt he will have an opportunity to
  50
  investigate it further. The House will understand that it is possible to make these points only with a high degree of comprehension, as characterised by the intervention made by my hon. Friend the Member for Southend, East.
  The change to which I have referred is already having a powerful effect in practice. In the dairy sector, as many hon. Members will be aware from their experience, where milk quotas were first introduced in 1984 and strengthened under our presidency in 1986, the reduction of intervention stocks has already been impressive. Between the end of April 1987 and the end of April this year, butter stocks in the Community have been reduced from some 1·1 million tonnes to about 570,000 tonnes. That is a reduction of almost 50 per cent. in 12 months. Similarly, stocks of skimmed milk powder were reduced from 766,000 tonnes at the end of April last year to just 101,000 tonnes at the end of April this year. That is an 87 per cent. reduction.
  All those important agricultural reforms have been achieved without the introduction of the oils and fats tax, despite strong support for such a tax from a number of member states.
  Mr. Rhodri Morgan: Is the right hon. and learned Gentleman implying that this is the first time that there has been a sharp reduction in the level of butter and skimmed milk stocks, or does he recall that a similar reduction took place in 1982 without such a scheme?
  Sir Geoffrey Howe: This is the first time that one has been deliberately sought in the face of market conditions that might have produced the opposite result. It has been achieved as a result of the determination with which the Government have sought this precise reform in agricultural policy. One of the most notable contributions was made by my right hon. Friend the then Minister of Agriculture, Fisheries and Food, when presiding over the December 1986 Farm Council. who brought to bear on the working of the Community all the authority that came from his experience as a Government Chief Whip and achieved a good result.
  I see this willingness to accept the reform of the common agricultural policy agreed at Brussels as an impressive demonstration of the new seriousness of purpose in the Community. However, it will have 10 be sustained and intensified for years to come. More, much more, must still be done to make the agricultural sector worldwide more responsive to market signals. The opportunity arises in the current GATT negotiations.
  Almost every one of the industrial economies needs to discover ways of promoting the health of their rural communities that do not depend upon the artificially protected production of food surpluses. That need was recognised at the Toronto economic summit. The message that the Toronto summit gave the GATT negotiators in Geneva was clear and can be put simply and graphically: that, if the countryside is to find a different way of maintaining its economic health, we should "start beating ploughshares into golf clubs". [Interruption.] Well, it is a striking phrase which should appeal to the hon. Member for Hamilton (Mr. Robertson), as it has a great appeal in Scotland.
  It is a serious point, because for too long we have been devoting resources, not just in Britain or in the Community but throughout the world, to supporting, sustaining and protecting agriculture to enable it to produce food surpluses that cannot be consumed, at prices

  51
  that are artificially sustained. The task of reform is the message that we have been driving home at the Tokyo, Venice and Toronto summits. That task must be dramatised and we must look for other ways of sustaining our rural communities. I make no apology for the phrase. Yes, let us start beating ploughshares into golf clubs. Planning permission is part of the argument.
  We want action soon, and, over and above that, we want an agreed framework for major cuts in protection and support in the longer term as well in the short run. Through the Community, Britain will be working—
  Mr. John Redwoodrose——
  Mr. Phillip Oppenheim: Will my hon. and learned Friend give way?
  Sir Geoffrey Howe: If my hon. Friends will forgive me, I shall not give way; I have given way sufficiently already.
  Through the Community, we shall be working to ensure that the GATT negotiations reach a successful conclusion.
  Mr.Oppenheim rose——
  Sir Geoffrey Howe: I shall give way for the last time.
  Mr. Oppenheim: I thank my right hon. and learned Friend for giving way. I know that he is greatly concerned to free the agricultural market, and as moves seem to be in hand to do just that, is it not also true that the Commission is taking an increasingly protectionist stand on the import of non-EEC industrial goods? At the moment, the EEC has a series of quotas, voluntary restraint agreements and spurious anti-dumping duties against a range of goods from steel to typewriters, and from photocopiers to canned mushrooms in brine. How can that help the industries which use those products, and how does it square with the Government's policy of deregulation and freeing the markets?
  Sir Geoffrey Howe: That intervention may have to substitute for my hon. Friend's speech, although I hope not. It raises a range of question. As my hon. Friend knows, the fact is that on almost every commodity for which there is an argument for anti-dumping regulations and protectionism, more often than not a United Kingdom constituency is arguing for such protection. It is important that the right balance is struck. On the whole, and certainly as far as the United Kingdom is concerned, our pressure is constantly for more liberalisation. I take as an example the removal of quotas in the steel industry, an arrangement which was operated to the advantage of the Community steel industry as a whole for some years, but which we wanted to get rid of, and we have got rid of it, pressing the Community in a more liberal direction.
  The conclusions of the Hanover Council clearly record that we want to be sure that the achievement of the single market does not amount to the erection of a new protective hedge around the Community. It is important that we should continue to work as we are doing to achieve more liberalisation of the countries of the European Free Trade Association. However, it is equally important that we should not give away a protection if we could use it to win a corresponding deal from another trading bloc. The matter should be handled intelligently. My hon. Friend's point was worth making, and will be taken on board.
  52
  As I mentioned earlier, a further important element of the review of future financing was the adoption by the Council again on 24 June, of a new regulation on the structural funds, putting into effect the decision of the Brussels Council to increase structural funds commitments by some £1 billion a year over the period 1989–92.
  The increase will go primarily to the poorest, to Greece, Portugal, Spain, Italy and Ireland, but Britain will remain a major beneficiary from the funds. We shall continue to receive more than £750 million a year——
  Mr.Redwood rose——
  Sir Geoffrey Howe: No, if my hon. Friend will forgive me, I will not give way.
  The particular problems of Northern Ireland will continue to receive special attention. Areas affected by industrial decline will still benefit from the regional and the social funds. Social fund resources will still be available to tackle unemployment, especially youth and long-term unemployment. The Highlands and Islands, mid-Wales and Devon and Cornwall will continue to qualify for support from all three structural funds.
  The final element in the Brussels Council package was the agreement to increase the level of own resouces available to the Community, and to change the way in which member states' contributions were calculated.
  The new own resources decision, the implementation of which is provided for by clause 1, gives effect to the February decision to increase the overall limit on the amount of resources available to the Community.
  As I have explained, some increase was inevitable, and always foreseen as likely, given the terms of the Fontainebleau agreement, the accession of Spain and Portugal and the increase in the structural funds required in the context of 1992. The new limit has been set this year at 1·15 per cent. of Community GNP. It will rise through a series of annual sub-ceilings to 1·2 per cent. in 1992. The original Commission proposal, strongly supported by a number of member states, was, of course, for 1·4 per cent.
  The new own resources decision also embodies a change in the structure of the Community's own resources. Under the new arrangements, the VAT rate will continue to be limited to 1·4 per cent., but the VAT base in each member state will be capped at 55 per cent. of its GNP. The remaining portion of resources due from each member state will be calculated according to its share in Community GNP. The Council has agreed a directive—a copy of which has been placed in the Library of the House —to ensure that member states' GNP statistics are comparable and uniform. Calculating an element of member states' contributions on the basis of GNP will bring the own resources structure more in line with the relative prosperity of member states—another change which the United Kingdom has consistently supported.
  Most important of all, the new own resources decision preserves the Fontainebleau abatement mechanism intact. Some member states initially argued that it should be abolished outright. Others wanted to see it greatly reduced, or made degressive so as to disappear by 1992. However, in the end all accepted that it should continue. The Fontainebleau arrangement has been worth some £3,000 million to Britain over the past three years. It will be worth some £1,600 million this year. It ensures that,

  53
  even if Community spending were to reach the new ceiling, the United Kingdom net contribution could amount to no more than about 0·25 per cent. of GNP.
  The abatement mechanism will last as long as the new own resources decision itself, and even thereafter can be changed only by the unanimous agreement of all member states. The Commission's document setting out how the abatement will be calculated in future has been deposited in the Library.
  The Bill also seeks the approval of the House for payments to be made under the 1988 intergovernmental agreement. This is needed to ensure that the Community can meet its commitments during the rest of this year, pending the entry into force of the new own resources decision The procedure of using a single Bill for the new own resources decision and the intergovernmental agreement was expressly commended by the Treasury and Civil Service Select Committee in its report of 18 May, and follows the precedent of the 1985 European Communities (Finance) Act. The present Bill supersedes and repeals that Act.
  Throughout this spring, we made it clear that we would not be prepared to recommend to this House an increase in Community own resources until all the decisions reached at the Brussels European Council had been embodied in firm and legally binding texts. With the adoption of the package of texts by the Council on 24 June, that stage has been reached.
  Effective CAP reform is at last in train. The Community's finances are at last firmly based. On this foundation the single market can be, and is being, successfully built. Three key United Kingdom aims are thus achieved or under way. The Community's interests are also being enhanced. To set our sights high was right —for Britain and for the Community. We have hit the target, and I commend the Bill to the House.
  5.10 pm
  Mr. George Robertson: I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof,
  "this House declines to give a Second Reading to a Bill which fails to provide a genuine and expeditious programme for a substantial reduction in common agricultural spending or a corresponding increase in budget allocations for the social and regional funds, for the environment or for assistance to developing countries."
  One is tempted to start this debate by saying that it is the same old debate with the same old characters at the same old time, only the figures are bigger.
  Mr. Forth: And the hon. Gentleman will make the same old speech.
  Mr. Robertson: The hon. Gentleman says that I shall make the same old speech. I hope that he has taken the precaution of looking at my 1985 speech and comparing it with what the Foreign Secretary said then.
  There is a major difference today. It is not just that the figures are much larger than they have ever been, but there is the presence of the Foreign Secretary to open the debate. That is surprising because this is not his Bill, but a Bill presented by Mr. Chancellor of the Exchequer. Where is he? Nowhere to be seen. He is not present to defend or even to describe the Bill. That has been left to the man
  54
  whose job the Chancellor is said to covet even more than a level of interest rates which may stay steady for more than 10 days at a time.
  That is all the more surprising since the Treasury has its own European Minister who could have launched the Government's flag ship today. The Paymaster General is present, giving a serious imitation of being awake, which is more than several of his hon. Friends have managed during the Foreign Secretary's speech. The Paymaster General is usually cast adrift on the parliamentary ocean at the mercy of all the sharks on both sides of the House. But he is no mean figure to sail this particular dead fish, if one is to continue with these nautical analogies. He is not a minor Treasury Minister; in his spare, unpaid, time he is the chairman of the Conservative and Unionist party. Who better to tell us of the iniquities of today's creative accountancy which will allow the Common Market once again to escape bankruptcy?
  After all, the right hon. Gentleman was appointed to eliminate the charismatic mark of the right hon. Member for Chingford (Mr. Tebbit), who won the election but lost the Prime Minister's ear for being too explicit in saying aloud what she allows only to be unattributably leaked. Even in her most demented moments she could not have appointed the Paymaster General to do for the Conservative party what he managed to do for the European Community. For all that, the Paymaster General has the clout and the prestige to launch the Bill, but he is not doing it.
  Mr. Forth: Will the hon. Gentleman give way?
  Mr. Robertson: No.
  Instead, it is the Foreign Secretary, who on 30 June opened a full day's foreign affairs debate. Today he is here to open the debate on this important Bill which has been stolen from the Treasury, and on Friday he is back at the Dispatch Box opening a full day's debate on Hong Kong.I put it to you, Madam Deputy Speaker, that three opening speeches in two weeks would make even the most sleepy Lobby journalist stop suspiciously for a moment. After weeks of speculation——
  Mr. Forth rose——
  Mr. Ian Gow rose——
  Mr. Robertson: I shall consider giving way to hon. Gentlemen who are jumping up and down when I come to an appropriate point in my speech.
  We have seen weeks of speculation. On 28 June The Sun,among the usual abuse of the Labour party which we have come to expect, had an editorial headlined, "Bye, Geoffrey", which stated:
  "In a speech Sir Geoffrey Howe claimed credit for Britain's economic success.
  But what he was really doing was fighting for his political life.
  Too late, Geoffrey. You would have done better if, instead of siding with Nigel Lawson in the row over the pound, you had supported your Prime Minister.
  Now all you can do is wait until October 17 when you're due for the chop."
  Clearly, The Sun knows more than even the right hon. and learned Gentleman about how he will go and the precise date on which it will happen.
  Perhaps the Foreign Secretary has spotted a chink in the door at No. 11 Downing street, with the fourth interest

  55
  hike in two weeks allowing a previous Chancellor a brief moment at the Dispatch Box to show up in public the present incumbent——
  Mr. Gow: On a point of order, Madam Deputy Speaker. When the Opposition Front Bench spokesman makes an opening speech on the Second Reading of a Bill should not the spokesman direct his mind and words to the Bill rather than to outrageous attacks upon my right hon. and learned Friend?
  Madam Deputy Speaker (Miss Betty Boothroyd): The hon. Gentleman will realise that a Second Reading debate is wide-ranging and hon. Members should be allowed to develop their comments as they see fit.
  Mr. Robertson: It is indicative of the embarrassment of right hon. and hon. Gentlemen that they have to stoop to such a weak debating point to interrupt a speech. The House is now graced with a predecessor of the Paymaster General, who is sitting on the Back Benches, having fallen out with the Prime Minister, as have so many sitting around him. He was in the position of making up all the fanciful tales about European Community budgets which were told to the House.
  My point is that this is a Treasury Bill and the Secretary of State for Foreign and Commonwealth Affairs is moving it. It is legitimate for the House to ask why that is and where on earth the Chancellor of the Exchequer is during this debate on his Bill.
  It is difficult to explain the Foreign Secretary's completely irrational desire to open the debate on this of all Bills, which provides so little evidence of judgment, efficiency and political or financial prudence. Is the truth that he was left with the short straw yet again because even the Chancellor, who has peddled a few secondhand policies in his time, could not face selling this particular old banger? One can see why anybody, boasting, however fraudulently, of national financial success, would want to keep far from this Bill.
  The Foreign Secretary has tried his best to confuse because, obviously, he cannot convince the House that when the bluster, jargon and funny money is set aside, the news in the Bill is not bad for Parliament and for British taxpayers.
  Mr. Forth rose——
  Mr. Redwood rose——
  Mr. Robertson: When we strip away the interinstitutional agreements, the intergovernmental agreements, the non-refundable advances, the fourth resources, the stabilisers, the green pound, the social spaces, the financial engineering and all the Euro mumbo-jumbo, the Bill permits a dramatic increase in the Common Market's budget of 25 per cent. on what it spends now. That is one extra pound for every four that the Community is spending.
  Last year, after getting everything back that we were due and after receiving the much-vaunted rebate that the Government are so proud of, Britain paid a total of £1,347 million to the Community—that was our total net contribution. For those who struggle to understand these
  56
  concepts, that is the equivalent of the total amount that the Government spent on the National Health Service's capital investment programme last year.
  Mr. Teddy Taylor: Is the hon. Gentleman aware that the figure has since been revised yet again, for the fifth time? The net contribution last year was £1,649 million. There has been a further revision—the revisions occur regularly. That, of course, is an enormous figure.
  Mr. Robertson: I am grateful to the hon. Gentleman. At least one expatriate Scot who got away from the fragile and dangerous areas for Tories north of the border makes a constructive contribution. We are now talking about considerably more than what the Government spent on the NHS's capital investment programme last year. As a consequence of the Prime Minister's negotiations and generosity at the Brussels summit, the figure is expected to go up by between £200 million and £300 million, which is the equivalent of the total arts budget of this country. That will be the extra amount paid to the European Community this year.
  Mr. Budgen: Will the hon. Gentleman comment on the increase in the structural funds? We have been helped very much by a document from Conservative Central Office, which tells us some of the things that the Foreign Office is not prepared to draw attention to. It points out that the structural funds will go up by 80 per cent. in real terms. I dare say that the hon. Gentleman, who I expect believes in plenty of industrial and social engineering, will applaud that, and he might even provide us with Tory arguments for the increases. My right hon. and learned Friend the Foreign Secretary did not have anything to say about the 80 per cent. increase in real terms.
  Mr. Robertson: I know that the right hon. and learned Gentleman did not. That is why I shall come to that. The hon. Gentleman makes a good point. I presume that the briefing that he mentions is issued under the name of the Paymaster General. I am sure that when he winds up the debate the right hon. Gentleman will be pleased to give careful attention to the material that is coming from his own researchers, buried deep in the bowels of Conservative Central Office.
  I am giving equivalents of the large sums because such large amounts are almost meaningless. They seem meaningless to the Prime Minister because she agrees to them with such aclarity—[HON. MEMBERS: "Alacrity."] I am sorry. The Euro-jargon is even getting to me.
  In the context of those remarkable increases, I should like to draw attention to an exchange in the Select Committee on Treasury and Civil Service, to which I pay fulsome tribute for producing, yet again, an excellent report on the subject. The exchange was between the hon. Member for Bridlington (Mr. Townend) and Mr. A. J. C. Edwards, under-secretary to the European Community Group in the Treasury.
  The hon. Member for Bridlington asked:
  "I just wonder what would be the attitude of the Treasury if one of the spending departments came up with a request to increase spending by 25 per cent."
  Mr. Edwards replied—these are precious words—
  "Well, it is no secret that we would not be well pleased."
  The language of Sir Humphrey permeates all this. I recently heard a Minister say at a public gathering that if

  57
  people thought that "Yes, Minister" was a comedy, he was able to vouch for the fact that it was a documentary. There is ultimate proof in that quotation.
  Mr. Nigel Spearing: My hon. Friend quoted from the explanatory and financial memorandum to the Bill, which says that the net increase in expenditure will be between £200 million and £300 million a year. Does he not agree that that is an estimate, which takes account of what the Government hope will be spent in Britain at Brussels' behest? Would it not he more accurate to say what the extra liability would be? Should not the Paymaster General tell us that? Despite that being the former job of the Foreign Secretary, he did not have the grace to tell us what the liability is.
  Mr. Robertson: My hon. Friend makes an excellent point. To spare the House the complete tangle of statistics, I left out that substantial point for the moment. As the hon. Member for Wolverhampton, South-West (Mr. Budgen) said, the structural funds will play a large part in the net calculation that will apply to this country next year. I intend to deal with that and to show that the optimistic assumptions of the Prime Minister and the Foreign Secretary have little or no chance of coming to fruition. Therefore, the £200 million to £300 million extra that we shall pay to the Community will be substantially below the amount that we shall get. Indeed, we shall pay far more than that.
  The recalculation of the budget financing on a GNP basis is welcome, being fair and much more straightforward than the previous convoluted system, but it is being used simply as a cover for the 20 to 25 per cent. increase in the Community budget that is now proposed. We remain rightly sceptical of the calculation of GNP that will apply in many Community countries, not least our own, but those figures are not the only bad news with which the Chancellor of the Exchequer does not want to be associated.
  The second and entirely separate part of the Bill puts the Chancellor's signature on a splendidly generous cheque from the Treasury to the European Community, even more generous than the cheque that the Minister for Social Security and the Disabled handed over to ITV's Telethon at prime time only a few weeks ago. That cheque to the Common Market will be for no less than £765 million. It is the intergovernmental agreement sum that we shall pay as an extra amount to the European Community this year.
  It is difficult to find equivalents to show how generous the Government are and how much they have given away, but if I say that the combination of that payment plus the extra payment that we shall give the Community will probably be close to the total spent on the roads programme in the whole of the United Kingdom, perhaps some people will get the gist of what has been conceded.
  Mr. Ian Taylor: Will the hon. Gentleman give way?
  Mr. Robertson: No.
  It should he noted that this year we intend to give close to £2 billion as our contribution to the European Community. That extra-generous cheque, which will go under the title of an intergovernmental agreement yet again, a non-refundable advance on our contribution, will add up to 57 per cent. of our net contribution. That
  58
  special, one-off payment will add up to 57 per cent. on top of our present bill for membership of the Common Market. It is small wonder that the Chancellor of the Exchequer stayed away today. Even he does not have the brass neck or the cheek to tell us how prudent or sensible that amount is.
  The expensive saga is still not over because what follows is even more reason for the Chancellor to keep out of the firing line and let the Foreign Secretary take the shellfire, perhaps all the better to benefit the Chancellor in his desire to take over his predecessor's job.
  What do those gigantic sums mean for Britain? What does the deal that was wearily accepted by the Prime Minister in the wee small hours in Brussels in February do for our country or even for the European Community? I come back to the point made by the hon. Member for Wolverhampton, South-West. For one thing, it will double the structural funds of the European Community—the European social and regional funds. Before she went to Brussels, the Prime Minister said that such an increase would be lacking in any "rational justification"
  In the House of Lords, Lord Brabazon of Tara said:
  "The proposal by the Commission for a doubling of the structural funds is in our opinion quite unrealistic".—[Official Report, House of Lords, 9 November 1987; Vol. 489, c. 1243.]
  Of course, he simply reads a script written by the Treasury, because in May the Paymaster General told the House that such a figure was "wholly unrealistic." The structural funds will not go up by 50 per cent., but by 1992, they will go up by 80 per cent., with good reason, of course.
  The House of Lords Select Committee on the European Community recently published a report "Reform of the Structural Funds" which says:
  "Differences in unemployment rates have intensified throughout the Community. Comparing the Community with the USA, it"—
  the Commission—
  "estimates that regional disparities in the Community are twice as high as regards incomes, and three times a high as regards unemployment rates."
  Mr. Budgen: What proportion of the structural funds are obligatory and what non-obligatory? I believe that almost all of them are non-obligatory and if so, they are not subject to any legally binding constraints.
  Mr. Robertson: The bulk f the structural funds are non-obligatory, but in order to reduce the amount of money in the compulsory and agricultural sector next year, the Community has transferred some of that money to the non-obligatory sector and is now claiming a triumph in reducing the agricultural component of the 1989 budget. The accountants employed by the European Community beat anyone employed by any local government organisation in Britain
  When the Prime Minister returned from Brussels she had no regrets about her volte-face on the structural funds but said:
  "We receive about £750 million from the structural funds."
  The Foreign Secretary repeated that this afternoon. However, she went on to say:
  "Indeed we do fairly well out of the funds. We hope"—
  note the word "hope"—
  "that this figure will increase to about £1,000 million in 1992." —[Official Report,15 February 1988; Vol. 127, c. 10]

  59
  The division of the structural funds is being negotiated presently and one thing is clear—Britain will not do well, whatever the Prime Minister and the Foreign Secretary may say.
  In the 1989 draft budget, 80 per cent. of the social and regional funds will be devoted to what is entitled "Objective I areas". Most of those areas are in Spain and Portugal and only one United Kingdom area, Northern Ireland, is featured. That area alone will benefit from the lion's share of the new cash that will be poured into the structural funds. Therefore, many suffering British regions and many of our acutely disadvantaged communities will be off the European assistance map for years. The Prime Minister may "hope", but our regions will suffer from her unwillingness to bargain. Her redrawing of the British regional assistance map has kept us out of the reckoning. When the intergovernmental agreement contained in the Bill is endorsed, our only real bargaining lever for a fairer deal on the structural funds will go for many years to come.
  Sir Russell Johnston rose——
  Mr. Robertson: I have given way enough and I would like to leave time for others to speak in this important debate.
  We are told that the next benefit in Santa Howe's package is the cut in the near-obscene expenditure on agriculture. Anyone who thinks that this much vaunted package will stop the unique protection from market pressures and currency fluctuations that is given to farmers and farming—a protection that is not given to any other industry or work force— will, predictably, be sadly disappointed.
  We are assured that there are to be new legally binding controls on agricultural spending. The fatal flaws in 1984 Fontainebleau package about which we and other Members of the House repeatedly warned the Government, have been supposedly spotted and eliminated. This time we are told that it is all watertight.
  Certain hon. Members have asked, "What about 1984?" Let me take the Foreign Secretary back to 25 June 1985 when we considered the European Communities (Finance) Bill of that year. In reply to an intervention by the hon. Member for Wolverhampton, South-West and describing the great momentous controls that had been negotiated, the Foreign Secretary said:
  "If that does not amount to the effective imposition of budget discipline, I do not know what does …We have achieved the fundamental change in the operation of the Community"—[Official Report,25 June 1985; Vol. 81, c. 798–800.]
  The then Economic Secretary to the Treasury went beyond that and he wrote an article in The Times that appeared on that very day. Of course, the Economic Secretary is now dealing with defence and great issues of the nation's security. I met him today on his way to Washington and he expressed a great desire to be in Washington and not in the House this evening. In that article, he said:
  "we achieved a system of budgetary discipline designed to bring the growth of Community expenditure under much tighter control … we see that the new budgetary disciplines are now beginning to bite ….Fontainebleau has changed the rules for good."
  60
  That is not what the Foreign Secretary said today, rather that Fontainebleau was rubbish. It is like Gorbachev at the all-party union conference a couple of weeks ago when he said that everything in the past was wrong, but that everything that he says now is 100 per cent. correct. Out of modesty I will not read out large chunks of my speech on 25 June when I predicted precisely the fatal flaws that the Foreign Secretary is now willing to admit in his confession today.
  We have been told that all the loopholes have been closed—we hope so. I do not believe that anyone in this House does not hope that the controls will work and that the Community will get on with tackling the necessary and urgent problems that face all European countries. However, the House should be as sceptical about those controls as the fifth report of the Select Committee on the Treasury.
  The excellent House of Commons Library reference sheet, which has been produced on this Bill, states:
  "A more likely scenario is that violation of guidelines by the Commission might be renewed pressure from some member states, already unenthusiastic about budgetary discipline, to change the rules themselves. This would require unanimous agreement; but so of course have the successively more expensive budgetary packages agreed up until now."
  That says it all.
  In his evidence to the Select Committee, the Paymaster General underlined the concept of legal enforceability by reminding the Committee that, on behalf of the British Government, he took the European Parliament to the European Court of Justice when that Parliament broke the treaty provisions on legal spending limits. He told the Committee that we won the judgment, but he conveniently forgot to remind the Committee that we had to pay the substantial cost involved in fighting that action and that the eventually agreed budget was larger than the one which he had taken the European Parliament to court to stop. If those are the guarantees on the legal enforceability of this budget, we and the Committee are right to be sceptical and suspicious about the controls—all the more so when they apply to the common agricultural policy.
  Mr. Tim Smith rose——
  Mr. Robertson: Time does not allow me to give way.
  The Foreign Secretary is aware that, on the crucial cereals threshold, the Prime Minister was forced to accept what she knew to be a ludicrously generous stabiliser of 160 million tonnes. Before she attended that summit, she had said that that level would be
  "an attack on the taxpayer and the housewife"
  The Foreign Secretary is aware that the accumulating price cuts with which the Prime Minister dazzled the House in February do not start until the year after the stabiliser limits have been exceeded. At the same time, the right hon. Lady's Government, without using the negotiating power that they had over the IGA to get a fair deal for these extra structural funds, have thrown a bonus of £750 million into the expenditure hole of the 1988 budget, the budget which the Prime Minister has despised.
  If the Foreign Secretary was trying today to get back into the limelight, to get back into the reckoning for succession to the Prime Minister, or even to survive the knives of the autumn, he chose a bad cause to plead and a bad case to present to the House. Four years and two weeks have passed since we debated the Bill which

  61
  followed the Fontainebleau summit, yet we are still offered only hopes and promises on the financing of the Community.
  The Government and the Prime Minister see no vision of a Europe that works for all its citizens, including the young, the unemployed and those whose jobs are threatened by Japanese or United States competition, who could all benefit from genuine pan-European programmes. Instead, the Prime Minister sees a deregulated, free-for-all Europe that is made easy for big business. This sad financial Bill says it all about Thatcherism at home and abroad—prudence for those who need help and profligacy for those who already have the cash.
  5.42 pm
  Mr. Terence L. Higgins: The extremely long preamble and peroration of the hon. Member for Hamilton (Mr. Robertson), in which he complained that it was my right hon. and learned Friend the Foreign Secretary who proposed the Bill's Second Reading and not my right hon. Friend the Chancellor of the Exchequer, might have been more convincing had the hon. Gentleman been the shadow Chancellor.
  It is rather difficult to regard the increase in own resources that we are debating as more than a further step on the rake's progress which the EEC has developed over the years. We must recognise, however, that the Government have been making strenuous efforts to bring matters under control. The progress that they have made with the United Kingdom abatement is to be welcomed.
  It is fundamental to the Government's policy that own resources should not be increased unless there is effective budgetary discipline. Developments on that front have been chronicled over a period by the Select Committee on the Treasury and Civil Service. On budgetary discipline, I fear that it is no consolation to any member of that Committee to say, "I told you so." The matter was made clear to the Government by that Committee at the time of the Fontainebleau agreement. That is something which none of us can rejoice about.
  We must recognise that it is extremely difficult for a Head of Government, as a lone voice, to continue saying no time and time again. It is important to view the developments that we are debating today against that extremely difficult background.
  I wish, first, to comment on a major change in the basis of our contribution to own resources from VAT to gross national product. The Select Committee on the Treasury and the Civil Service, in the final paragraph of its report, draws attention to the real dangers that accompany that, especially the GNP statistics. The Committee observes that the United Kingdom's GNP statistics are deficient. I am glad that the Treasury has agreed about that and has introduced a review that will, I hope, result in more accurate statistics. These statistics are used in governing the country and in organising the economy, and when it comes to our contribution to the EEC they mean hard cash.
  I was disappointed by the way in which my right hon. Friend the Prime Minister answered a question which I put to her following her statement on returning from the Hanover summit. I asked my right hon. Friend to check that our own GNP statistics were all right and similarly to check those for the rest of the Community. My right hon. Friend said:
  62
  "I agree with my right hon. Friend that a change from a percentage of VAT to a percentage of GNP is significant …Obviously, I cannot force the rest of the European Community to do that"—
  that is, to initiate an inquiry—
  "but we are making strenuous efforts to see that our statistics are as accurate as we can make them."—[Official Report,30 June 1988; Vol. 136, c. 528.]
  It is crucial that the review should encompass our own statistics and those of the other member states. If it does not, we may find ourselves paying more to the EEC than we should. I hope that the Treasury will take this matter on board and that we shall have more forthcoming answers in future than the one which I received to my question.
  Mr. Spearing: Will the right hon. Gentleman give way?
  Mr. Higgins: I shall give way only once. Complaints have been made that Privy Councillors speak for too long, and I am anxious not to do that.
  Mr. Spearing: Perhaps the right hon. Gentleman's remarks are illustrative of a scrutiny problem. Is he aware that the Government have produced an explanatory memorandum and that the EEC has produced a Commission working paper on GNP? If we read the titles of the documents that are italicised in the Official Report for Thursday 7 July, which the Leader of the House did not repeat, we find that they are notionally for debate today. I do not blame the right hon. Gentleman. because there is a great scrutiny problem.
  Mr. Higgins: I agree that scrutiny is tremendously important, and I pay tribute to the work of the Select Committee on European Legislation, which the hon. Gentleman heads, in that area. So many directives are being rushed through in anticipation of 1992, and this happens during any presidency of the Council. It is increasingly difficult for the House to ascertain what the directives really mean. It is a problem to which the House should give careful attention. I much agree with what the hon. Member for Newham, South (Mr. Spearing) has said.
  Should budgetary discipline be legally binding? We know that the Prime Minister was disappointed, rightly, that what she believed would be effective budgetary discipline at the time of the Fontainebleau agreement was not. She then said that it must be legally binding. I do not think that the House and the Government are making sufficient use of the legal restraints available to them in controlling those matters, while complying, rightly, with the legal restraints that are imposed on us.
  A few days ago, we had to go along with the European Court's decision on imposing value added tax on certain items. It is difficult to understand why we do not insist on imposing legal restraints on matters such as expenditure in the EEC. We have had successive debates on the reports of the Court of Auditors in the EEC, which have said that various devices used to expand the expenditure in the EEC, beyond the limits that were thought right, were illegal. However, the Council of Ministers, the Commission and the EEC as a whole have not pointed out that, if this is illegal, it should not happen. I do not like the asymmetrical way in which, on the one hand. we are complying with our legal obligations but, on the other, we are not using the legal mechanisms to ensure that the EEC stays within the legal limits that have been imposed on it.
  Will the agreement embodied in the Bill result in effective budgetary discipline? In that respect it is

  63
  important to distinguish between non-obligatory and obligatory expenditure and to ascertain whether the present arrangements provide an effective means of legal control. When giving evidence to the Select Committee,my right hon. Friend the Paymaster General said:
  "There will be a legal instrument. To take you back to the debate we have had in this committee room on previous occasions, we have previously not had legally enforceable instruments. Member States or the Council have recourse to the European Court if a legally enforceable instrument is in fact being infringed."
  When the Prime Minister originally said that we would agree to an increase in own resources only if there was a legally enforceable instrument, I do not recall that a distinction was made between obligatory and non-obligatory expenditure. The impression created was that it would apply to both.
  I shall deal with obligatory expenditure first. The agreement that we have reached imposes an arrangement whereby limits will be set on obligatory expenditure. But if the limits are exceeded in any given year, there will be a clawback over the next two years—most of it, we hope, in the following year. I understand that, but it is not a very prompt means of securing budgetary discipline.
  What is more worrying is that paragraph 8 of the guidelines submitted for a decision of the European Council that dealt with this legally binding arrangement says:
  "The budgetary effect of such exceptional circumstances shall be cancelled out within a three year period. If any overruns have not been offset by the end of the period, the Commission and the Council shall assess the situation and decide how to deal with the overrun."
  That does not seem to be an effective way of imposing a legally binding agreement. I hope that when the Paymaster General replies, he will make it absolutely clear how this mechanism will work, so that if there is an excess, it will be possible for any Government to take the EEC and the relevant authorities to the Court.
  I move from the obligatory expenditure side, which appears to be a little loosely worded, to non-obligatory expenditure. The Select Committee was told that it was not possible to make a legally binding agreement because
  "it would fetter the powers which the institutions enjoy under the terms of the budgetary articles of the Treaty."
  If I understand it correctly, this is effectively an amendment to the treaty. I am not the least bit clear why we could not amend the treaty in such a way as not to affect those bodies said to have powers that would be fettered if we were to have a legally binding agreement on non-obligatory expenditure.
  My right hon. and learned Friend the Foreign Secretary said that we need not worry about the lack of a legally binding agreement on non-obligatory expenditure, because there is a limit on obligatory expenditure and a limit on the total. Therefore, effectively there is a legal limit on the lot. Will the Paymaster General concentrate on that point in his reply?
  Mr. Holland: Wake him up.
  Mr. Higgins: I know that he is giving careful attention to it. I do not understand how the mechanism described by the Foreign Secretary will work in practice. One problem is that there are considerable doubts about the way in which it will work and how it will be made legally binding.
  64
  The increase in own resources is substantial. The limit on agricultural expenditure will only keep it in line with the increase in GNP—in contrast with earlier attempts to reduce the percentage spent on agriculture. That is worrying. However, some progress has been made in this direction and I hope that the Paymaster General will deal with those points in his reply.
  It is worrying that the periods specified for the restraints on expenditure are too long. There is a limit for a particular year and any excess is clawed back in the next year or the year after that. We should try to monitor it quarter by quarter. I hope that, in reply to this debate or in Committee, the Paymaster General will assure us that the figures will be produced each quarter, so that the Select Committee can ensure that the restraints are working within a year and, if necessary, report back to the House. Corrective action can then be taken before the annual limit is exceeded.
  The Bill contains some improvements. It is certainly an improvement on the Fontainebleau agreement, but, as the hon. Member for Newham, South (Mr. Spearing) said, we should continue to impose as tight a scrutiny as we can on the way in which the somewhat complex and nebulous proposals are put before us.
  5.58 pm
  Sir Russell Johnston: In fending off questions at the beginning of his speech, the Foreign Secretary said that we had only a half-day debate, because the statement had reduced the time available. He added:
  "I make no complaint about that."
  I suggest that he should have complained to his business managers who had allocated only a half day when, as can be seen from the number of hon. Members in the Chamber ——
  Mr. George Robertson: It is not a half day, it is a whole day.
  Sir Russell Johnston: Then I can be somewhat more relaxed. I had it firmly in my mind that it was only a half-day debate, so I withdraw unhesitatingly my first remarks.
  I welcome the Bill. It represents an important step forward in the slow but steady integration of the European Community and the development of stable financial arrangements within it. It is very much in line with the views that I and other of my right hon. and hon. Friends have expressed from this Bench over many years. In his opening speech, the Foreign Secretary referred to the virtues of consistency and their alleged absence from the Opposition Front Bench. Be that as it may, I can claim with justice and no exaggeration that Liberals have been consistent and clear on these matters since the war.
  Looking back to the successful Brussels summit in February, the fact is that, when faced with the choice of either jeopardising the achievement of the common internal market or agreeing to a modest and sensible increase in the Community's own resources, the Prime Minister chose the latter. That is fair enough, but I wonder why she was not prepared to endorse what was substantially the same agreement when it was first discussed in Copenhagen at the end of last year. The reality is that the Prime Minister's tactics held back the development of the Community by two to three months, for no reason and to nobody's benefit.

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  I must mention two related points. First, there is the continuing mystery of why Her Majesty's Government will not join the exchange rate mechanism of the European monetary system when it is known that the Chancellor of the Exchequer, the Treasury. the Foreign Secretary and most business men —most of whom support the Government—are in favour of it. Yet we continue to say that now is not the appropriate time.
  Secondly, there is the mystery of the Prime Minister's attitude to the central European bank proposition. It seems to me that that is a very natural proposition on the road to European integration, that it will certainly come to pass in time and that it will he of great benefit to all the members of the Community. Nobody was asking the Prime Minister to commit herself in advance to any specific plan. All that she was required to do was to keep an open mind and to consider the potential benefits to Britain and to the Community as a whole. This, regrettably, she did not do. She made a sweeping attack on the whole idea, saying that it was absurd and ridiculous and that it should not be entertained because it would mean casting away sovereignty.
  Perhaps the right hon. Lady had not read the July issue of Expression, which is published by American Express. It contains an article by the Minister of State, Foreign and Commonwealth Office, the right hon. Member for Wallasey (Mrs. Chalker), in which she said:
  "A truly liberal banking system throughout Europe would help—as would greater private use of the ecu."
  I am sure that the hon. Member for Northampton, North (Mr. Marlow) would welcome greater private use of the ecu. The Minister continued:
  "These are both things that we"—
  that is, the Government—
  "are encouraging in the move towards a single market."
  There is a conflict between that clear position and the Prime Minister's equally clear position. The members of the Community have committed themselves to the free flow of capital within the European Community by 1990 and this is likely to be of major benefit to the United Kingdom, but the absence of a common bank and a common currency could produce large swings in interest rates as Governments tried to avoid harmful fluctuations in the value of their currencies.
  Furthermore, from the point of view of the ordinary individual, the sheer cost and bother of changing money will cause more and more irritation as the single market develops. When my middle son, David, went on a school trip to Italy at the beginning of this year, I thought that he ought to have a few lire with him in case he had trouble changing money. I trotted off with my £10 note to the National Westminster Bank's bureau de change, where I was told, "We do not have any lire." Then I went to Barclay's bank where I was told, "We will change it, of course, but it will cost 70p. Are you a member of our bank?" When I said that I was not, I was told that it would cost me another £1. It cost me £1·70, not to buy anything but to change £10. That was immensely annoying. The Prime Minister's original dismissal of even discussions about a central bank was nothing short of ridiculous, and it bolstered Frankfurt's claim to house such an institution when it is established.
  An unspoken side of the consequences of the Bill concerns democracy. I do not think that the Foreign Secretary was at the Hague conference earlier this year. He was represented by his right hon. Friend the Member for
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  Wallasey. Perhaps she told him of the remarkable speech by the President of the Federal Republic of Germany, Richard von Weizsdcker, who said:
  "Europe needs democracy. The democratic process exists on a national level and direct elections to the European Parliament represent a significant step towards a European supra-national democracy, but we must go further in this direction. A European Union which aims to protect democratic values in the world can no longer be satisfied with a parliament whose powers are inadequate. As long as the road to Europe is bound up with a loss of parliamentary power there will be no progress, because our European aim is democracy and that means it is bound up with parliamentary legitimacy."
  Such remarks would predictably raise the ire of a number of hon. Members who object to that kind of approach. but to me the logic is inescapable.
  Mr. Spearing: The hon. Gentleman said that to him the logic is inescapable. Does his party espouse Mr. von Weizsdcker's remarks, and are they similar to the remarks of Mr. Kohl and Mr. Delors?
  Sir Russell Johnston: The short answer is yes. I shall refer in a moment to Mr. Delors
  Before making these points about European development, the hon. Member for Hamilton (Mr. Robertson) made the kind of speech that one would not hear from the President of the Federal Republic of Germany or even from an ordinary member of the Bundestag, despite the fact that Germany's net payments to the Community far exceed ours. Germany's attitude is still very different from ours. I shall not weary the House with an extended rebuttal of the hon. Gentleman's tatty argument, in which he compared individual Government expenditures with our total net Community contribution. The last time that I remember that argument being trotted out ad nauseum was when Concorde was built. People said that if Concorde was not built we should be able to do this, that or the other. It was a poor argument.
  I must comment, however, on the hon. Gentleman's strange remarks about the structural funds, which I did not understand. I presume that he agrees that the limited amount of money that is available for the structural funds, in particular for the regional fund, should go to the most needy countries in the Community, which are Portugal and Greece. Thereafter, one should look at the most needy areas and regions. Scotland has missed out considerably by not adopting earlier a more positive attitude to certain schemes that she could have implemented. However, because of enlargement, the position has changed.
  Equally, when making such remarks, the hon. Gentleman ought to recognise that one of the failures of the United Kingdom's regional fund is that we have failed to operate the addionality rule and to a large extent have ourselves undermined the regional policy's effectiveness.
  Mr. George Robertson: It is not a mean debating trick to point out the equivalent value of the payments to the European Community. I made those comparisons, but I make them more forcibly about the additional payments. The intergovernmental agreement will cover a one-off payment covering a hole in the budget about which there is severe disagreement. I know that it will appeal to the hon. Gentleman when I say that that figure is more than that for Scotland's housing programme in the current financial year. I refer to the additional payment and not to our net Community contribution, which can vary from year to year.

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  I will clarify my comment about the structural funds. Of course we are in favour of more money being paid, and we believe that it should go to the neediest countries and to the neediest areas within individual countries, such as our own. That can only sensibly be done if there is some curtailment of the money wasted on agriculture, which is a perfectly good area where savings could be made, so that the budget does not have to grow.
  Sir Russell Johnston: I do not want to engage in an extended argument, particularly because of pressures of time. The hon. Member for Hamilton must surely recognise, as do other opponents and, in some cases, justified critics of the Community's excessive agricultural expenditure, that one cannot turn that situation around suddenly and quickly. The degree of agreement now achieved gives promise that it will happen, but in a steady and organised way. If one tries to make that change suddenly, and in a draconian fashion, which certain hon. Members sometimes suggest, it would cause great social upheaval.
  I return to the democratic component. First, it remains utterly disgraceful that the United Kingdom continues distorting the whole political composition of the European Parliament by refusing to allow election to that Parliament in proportion to voting support, as do all other member countries. I see no justification for that injustice, and I regret the absence of any reference to it in the amendment in the name of the Leader of the Opposition.
  Secondly—I address these remarks to the hon. Member for Newham, South (Mr. Spearing)—Jacques Delors is right when he says that we need to look now, as we reassess the basis of our financial contributions, towards what he called "an embryonic European government". That means looking actively for means whereby the European Parliament can play a steadily more significant part in overseeing Community policy and legislation; otherwise, there will be no directly elected democratic control. I say again that Jacques Delors is right and that the Prime Minister should congratulate him on his directness and foresight. What he suggests will not happen overnight, but that prospect must be faced.
  Thirdly, it will also be necessary in the long term to examine direct finance-raising powers for the European Parliament.
  I conclude by expressing disappointment at the thrust and style of the Foreign Secretary's speech.
  Mr. John Watts: What thrust?
  Sir Russell Johnston: That is a fair point—perhaps "thrust" is the wrong word, and I do not argue with that.
  Mr. Budgen: The hon. Gentleman's speech could do with some thrust and style.
  Sir Russell Johnston: I beg the hon. Gentleman's pardon?
  Madam Deputy Speaker: Order.
  Sir Russell Johnston: I am grateful to you, Madam Deputy Speaker; I believe that there was some form of abusive remark, which I shall ignore.
  The greater part of the Foreign Secretary's speech was given over to trying to prove that the United Kingdom has single-handedly reformed the whole European
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  Community, and has done so in the face of opposition, hesitation, obstruction and goodness knows what else. Apparently, we had no allies in that struggle, because none was mentioned. It seems that we thought of it all ourselves and won the day by logic, remarkable innovative ability, and will power. Not only is that an even greater caricature of reality than is our representation in the European Parliament a mockery of the way in which people voted, but it gives no encouragement that the Government yet understand the need to begin concentrating on political solutions and arguments and to cast aside the old nationalist prejudices and out-dated nationalist attitudes that still colour our debates far too much.
  6.14 pm
  Mr. Tony Marlow: First, I congratulate the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) on the thrust and style of his speech. I know that the Labour party, such of it as is here at the moment, believes in open government, so I hope that it will not mind if I tell a little secret. Conservative Members have received a piece of paper from our Whips' Office, and under Monday night there are three black lines. Like most secrets, it is not what it seems. It is not a three-line Whip from the Government but a three-line Whip from Mr. Delors, that we should vote for this package tonight.
  Let me explain what I am saying. My right hon. Friend the Prime Minister has throughout these negotiations done more than any human being could do, from the point of our national interests and from the point of view of the Community. Time after time she has to meet the same group of people. She has to sit down with them. She has to debate with them. She has to discuss with them. She has to take account of what is happening in Europe as a whole and what is happening in NATO as a whole. She does what is best for our country in those circumstances. But we are not the Prime Minister. We are the House of Commons —part of the Parliament of the United Kingdom. It is up to us also to do what we deem to be best for the interests of the United Kingdom and for Europe.
  I should also like to congratulate my right hon. and learned Friend the Foreign Secretary—I am sorry that he is not here at the moment—on the tremendous efforts that he has made on behalf of Britain and on behalf of the European Community. It is a question of damage limitation. He comes back here when the damage has been done. Perhaps we have been defeated, but not annihilated, and that is some progress. He comes back and says, as he is bound to do, that although it did not work last time —as he said last time—it will work this time. This time, he said that it did not work last time—it is going to work next time.
  There is one point of criticism of my right hon. and learned Friend. The tax we are talking about and this financial package are complex. My right hon. and learned Friend said that of course it must be complex in order to be fair. He was for a time a very distinguished Chancellor of the Exchequer. When we have a system of taxation, to be fair it must be simple. People must be able to understand it. My constituents and the people out there do not have a clue what is being done on their behalf. One of the great criticisms of European Community finance is its complexity. People feel that they are being taken for a ride.

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  I shall he voting against the Bill for two reasons. The first reason is the less important. The two reasons are money and sovereignty. A haemorrhage of cash—that is important. But more important than that is the loss of sovereignty that is taking place, drip by drip, bit by bit, day by day—loss of sovereignty, the atrophy of a nation's soul. Take a commercial company. It can lose money. It can have a couple of years' losses, but it can still survive. But if it goes into liquidation, that is the end of it. That is what I am concerned about—the way in which we are moving in the European Community at the moment, our country is slowly, bit by bit, ceasing to exist as an independent national state.
  We all of us in the House want control of expenditure. Community expenditure was up to a level of 1 per cent. VAT, then it went up to a level of 1·4 per cent. VAT. Now we are increasing the amount of money available to the Community by another one quarter—by another £1 in £4, I believe the Minister said; £5 where it was £4 before. But that is basically for the same group of policies. This time, we are increasing regional policies. We have been doing our best to cut down regional policies in the United Kingdom, but basically this additional money is buying us the same package as it did before.
  There are two ways of looking at Community expenditure. First, there is the gross contribution—the amount of money that we spend on this fixed clutch of policies. We make a gross contribution to the Health Service and to the Ministry of Defence. Little by little, by 1, 2 or 3 per cent. a year, it goes up. But the Community gross expenditure for this area of policy controlled by the Community goes up by leaps and bounds, year after year. Surely what is good for financial control in Britain ought also to be good for financial control in the Community. If we can make it work here, why cannot they make it work there?
  Secondly, there is the net contribution. The Community budget is a zero sum. Some people put money in, and some take it out. Why do we, even now, have to pay a vast sum into the Community budget, net, for nothing—our membership fee—when richer countries such as Holland, or those with overburdened levels of public expenditure but still richer than ourselves—such as Denmark—take money out? Countries such as Greece that do not even abide by the legislation and regulations that come out of the Community put their hands in the Community bowl and take out a lot of money. Why should we have that? There is no justice in it and no good reason for it. It is just history. Why should our people have to pay net vast sums into the Community budget?
  We can control this expenditure. In an important speech, my right hon. and learned Friend talked about obligatory and non-obligatory expenditure. We can control all the expenditure in the Community. It is a simple matter. We do not have to have it on trust; we do not have to say whether the devices that my right hon. and learned Friend talked about today would work. All that we have to do is throw out the Bill today: no Bill, no money. The amount that the Community is allowed now is the amount that it would be allowed in the future. It would then have to cut its coat according to its cloth. When it has done that and we are getting value for money, we can come back to it again and see whether we want to vote it more money later.
  Mr. Budgen: Why should we? There will be no need for it then.
  Mr. Marlow: As my hon. Friend says so succinctly, if they have taken the medicine—taken the bait —got the message, they will not need the money. Let us do them a service. Let us vote against the Bill.
  There is also the important question of sovereignty. The name of Mr. Delors has been mentioned. Mr. Delors, as we know—it must be so, as I saw it in an issue of European Parliament-EP News—said that before long 80 per cent. of legislation in the economic, financial and social spheres would be of a European nature and thus beyond the control of domestic legislatures. I think that we are a domestic legislature. I believe that we used to control 100 per cent. of the laws that affected the people of this country. In future, for every five issues that we control now —if I may return to the mathematics of the hon. Member for Hamilton (Mr. Robertson)—if Mr. Delors is right, we shall only have any control of, say in or influence over one. One fifth—that is how low we shall sink if Mr. Delors has his way.
  Mr. Delors, of course, wants a united states of Europe. Do we want a united states of Europe? The hon. Member for Inverness, Nairn and Lochaber, who has just left the Chamber, wants a united states of Europe. But does the House want it? Is that what we negotiated? Is that what my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) negotiated with the Community? If it was, why did he not tell the British people? Why should the British people be dragged kicking and screaming and by default into something that they have not been told about, when they were promised something else?
  I do not believe that we want a united states of Europe. What we want—or what most of us want; some of my colleagues may not want it, but I am happy to have it—is a single European market. I am very much in favour of 1992, and of European co-operation in foreign and defence policy. We ought, with those with whom we have interests in common, to co-operate where we have those common interests. But to bring that about certain actions are necessary. Certain other actions are unnecessary, however, and those actions—those regulations, those directives—are being showered upon us day after day, week after week. Those unnecessary actions have nothing do do with a single European market or with co-operation between nation states, but they are very much to do with enmeshing us in a unified united states of Europe, which we have never requested or wanted.
  Sir John Biggs-Davison: Does my hon. Friend think that the country to which M. Jacques Delors belongs wants a united states of Europe either?
  Mr. Marlow: My hon. Friend may have a point. The country to which he belongs may or may not want a united states of Europe. But given the way in which the institutions and powers are cast in the European Community at present, that is what it will get unless it does something about it. I hope that my hon. Friend will help me in taking the first slow step towards stopping it.
  We in the House have slumbered to a certain extent while the legislation has been introduced. Because of that, we have been lumbered with various edicts with which we do not agree. Let me give a couple of examples of some of the things that have gone wrong. Recently, we were required by the European Court of Justice ——
  Mr. Hugh Dykes: These foreigners have no sense of fair play.
  Mr. Marlow: I am sure that my hon. Friend will make a very fluent and compelling speech later. In the meantime, if he will forgive me, I shall continue with mine.
  Recently, we were required to put VAT on commercial construction. That is not necessary to a single unified European market. It is not necessary to free trade between free member countries of a European community. It is Europeanisation. How did it come about? On 29 November 1976, there was a debate in the House on a directive about VAT. Let me tell the story of that directive. That directive was scrutinised by the European legislation Select Committee and was referred to the Chamber for debate. It was debated late at night, and the vote finished after midnight. About 123 hon. Members voted—less than one fifth of the number in the House. The directive that was voted on then was not the complete directive; it then went back to Brussels and was changed significantly.
  The vote that night was a vote to take note, not a vote to approve. If it had been a vote to approve, it would have been approval of something that was subsequently changed. The European Court of Justice interpreted that directive, which forced us to impose VAT on items on which the Government of this country did not wish to impose it. We were told that Parliament had had its chance, that Parliament had scrutinised it and that there had been parliamentary control over it. Nothing could be further than the truth. Parliament had no power and no control, and was not even involved in the final directive through which that VAT was raised.
  There is a second way in which important things can go wrong. Part of the package of measures will be a directive that will measure the gross national product of each Community country, so that we can assess the amount that must go into the European kitty. That directive was to be assessed by the European legislation Select Committee. There is something called a scrutiny reserve. The Government should not reach an agreement on the directive until it has been debated in the House, if that is what the Select Committee wishes the House to do.
  The Select Committee did not have an earthly. The Government overruled it. The directive has been agreed. This is an important directive: it decides how we are to assess exactly how much each Community country will have to pay into the Community kitty. There are good things in it. It is not bureaucratic. Each country will decide what is its own gross national product. Or is that such a good thing? What is Italy going to decide about its gross national product? How will we in the House be able to influence it? When will we be able to debate it? What Italy does not pay, we shall have to pay. That is it: that is the end of sovereignty. That is the end of our control over the issue.
  Mr. Delors is right when he says that there is something called the democratic deficit. There is no democratic control over these matters at all. Vitally important issues that would in the past have taken weeks of legislative time are going through on the nod because of the lack of proper democratic control. What can we do about it? We are the only people who have a chance of doing anything about it. If someone feels hard done by, he can have recourse to the law. We can take the matter to the European Court of Justice. But can we? Is it a court of justice or is it a court of Europeanisation? It is not the former; it is the latter.
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  The European Court of Justice is there to impose a centrally controlled European state on the member nations of the European Community.
  What else can we do? We can give more power, influence and discretion to the European Parliament, but will it be objective? Is not the common characteristic of almost everyone who sits in the European Parliament that, individually and collectively, they all want a united states of Europe?
  If we cannot rely on the Court or on the European Parliament, there is only one institution that we can rely on —the House of Commons. Slowly, the lifeblood of nation states ebbs away; the powers of the House are shorn just as surely as Samson had his locks cut. There is a solution, a cure to this near terminal disease. It is painful, risky and controversial. It is to throw out the Bill.
  6.30 pm
  Mr. Nigel Spearing: I can answer one of the questions posed by the hon. Member for Northampton, North (Mr. Marlow). He, like the Chairman of the Select Committee on the Treasury and Civil Service, the right hon. Member for Worthing (Mr. Higgins), referred to the gross national product directive: it is COM(88)176. It has been referred for debate by the Select Committee on European Legislation, of which I have the honour to be Chairman.
  That document is notionally being included in today's debate, but the fact that such a sharp-eyed Member as the hon. Member for Northampton, North and such a well-informed person as the right hon. Member for Worthing were not aware that the document was being debated—I must admit that until just before the debate it had escaped my memory, too—shows the extent to which the House is already not even scrutinising the matters that its own Select Committee suggests that it should. I do not blame anyone in particular. It is the mass of paper that descends on us from Brussels that has put us in this parlous state. It is a little parable of the difficulties that face us.
  The Paymaster General courteously wrote to me some time ago saying that it would be for the convenience of all to discuss this document in this debate, and my Committee acquiesced in that. Nevertheless, given the numbers of documents that we have it is easy for some of them to be overlooked, and it is hardly possible to discuss the document this afternoon——
  Mr. Higgins: It would seem from the answer that we received after the Hanover summit about GNP statistics that the Prime Minister had also failed to realise that.
  Mr. Spearing: That may well be so.
  The Prime Minister and hon. Members have forgotten several things. As recently as Thursday last the Prime Minister said:
  "the principal achievements of our forebears in 1688 remain and ensure that the will of the people be exercised through Parliament rather than by intimidation or pressure practised by any one group or faction— [Official Report, 7 July 1988; Vol. 136, c. 1231.]
  Alas, I do not believe that is so. It is clear that Parliament, perhaps through its own choice in 1972, does not enjoy that power now. Sixteen eighty-eight is a reminder to us that, in respect of the intergovernmental undertaking of which this Bills seeks to approve, we are supplying the deficit in 1988.

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  Supplying the deficit is a fundamental piece of parliamentary language: we vote supply. Originally, that was to supply the deficit incurred by the Crown, I suspect that we are back in the waters of 1688, because we are being invited by the Bill to supply the deficit in the funding of the EEC which, under article 199 of the treaty of Rome, is illegal, because it states that the budget must be in balance, which it clearly is not. If it were, the second part of the Bill would not exist.
  Mr. William Cash: Does the hon. Gentleman agree that, contrary to what he has just said about the Prime Minister's remarks about the glorious revolution, we retain the power in this House by virtue of the fact that we passed the European Communities Act 1972? That is a crucial point, and it remains. Furthermore, if we used the procedures of the House, as I have consistently argued that we should, to enable us to scrutinise what is happening more effectively, we would be able retain the degree of real control represented by what is called sovereignty.
  Mr. Spearing: The hon. Gentleman is confusing approval of a particular tax —VAT, for example—with our power of removing section 2(1) of the 1972 Act. But the real day-by-day control by voting money and creating laws has, to some extent, departed.
  Mr. Dykes: Will the hon. Gentleman agree with two quick points? First, remarkably, in February last year the Chairman of the Public Accounts Committee agreed that £150 billion of United Kingdom Government spending went through this place on the nod and unnoticed, much of it late at night, with most hon. Members paying not the slightest attention to it. On the other hand, a single pound increase in Community expenditure attracts monumental hysteria on the part of certain anti-EEC hon. Members. Is not that a reflection of double standards and hypocrisy?
  As Chairman of the Scrutiny Committee, would the hon. Gentleman agree that if there were a national Committee scrutinising every item of domestic legislation, it, too, would be swamped by the weight of legislation? So that is not a material point. Are not the hon. Gentleman's remarks tantamount to saying that he and his Committee are not doing their job properly?
  Mr. Spearing: I shall not give way again; time presses. The House has the opportunity, through its own procedures, to call a halt to expenditure or legislation at any time. Whether hon. Members choose to use that potential adequately is a matter that we can debate. I shall return to the hon. Gentleman's remarks at the end of my speech, when I deal with the prospective value added tax. Unless the House takes further steps it does not have the same degree of potential control over European matters as it has over the things that the hon. Gentleman mentioned. However, I agree that it is desirable that the Scrutiny Committee, of which he and I are members, should be able to scrutinise more deeply and that there should be more glasnost about European matters in the House, because as has been shown, we do not have the proper means to ensure transparency in what is afoot.
  I shall illustrate the degree to which we have already lost control by referring to the passing of the Single European Act, which the hon. Member for Harrow, East (Mr. Dykes) gaily voted for, whereas others, notably the
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  hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) were aghast when they discovered what they had agreed to.
  Article 100A of the treaty of Rome stipulates that any legislation relating to the achievement of the single European market can be passed in the Council of Ministers by a qualified majority. It is possible for a law passed by the Council of Ministers which is a directly acting regulation to be imposed on the House even if the ministerial representative of the British Government in Brussels votes against it.
  The hon. Member for Harrow, East has said that that is democracy, but I question that. The Council of Ministers does not meet in public; it is rather like Parliament was before 1688—or even further back. It does not yet have our democratic controls, and the debate in the House that precedes a Council of Ministers' decision has no control, as yet, over what the Minister does there. All that we can do is to have a debate brought about by the Scrutiny Committee and perhaps by the resolution, but we cannot control the Minister. The Minister goes away and decides whether the Government will vote yes or no. The Prime Minister decides whether under article 99 the new VAT excise proposed by Lord Cockfield will be imposed on the House.
  Mr. Dykes rose——
  Mr. Spearing: I will not give way to the hon. Gentleman because he will have a better opportunity to speak about the matter in Committee.
  I hope that I have illustrated to the House how we have lost detailed control of legislation from Brussels which even the Government opposed and of prospective VAT on such things as books, newspapers, water, public transport, drugs and charities. The imposition of that tax will depend on how the Prime Minister or the Chancellor of the Exchequer, whoever that may be, behaves in the Council of Ministers. The House will be able to debate only the general principle, and the Prime Minister or the Chancellor will negotiate.
  During the election campaign the Prime Minister did not say, as she could have said, that the Government would object and use their so-called veto on unanimity voting—if that operates—to prevent any increase in value added tax. If she had said that, most people would have agreed that it was right, but she did not. She said that she would veto VAT on children's clothing and on fuel and power but she did not say that she would veto the items in the list that I have read out. When the Prime Minister or the Chancellor of the Exchequer or perhaps, appropriately enough, the Paymaster General, who is competent in these matters, goes to the Finance Council, he or she will have to take the Cabinet's decision on the matter and not the decision of the House.
  There is a way out in respect of VAT and it is not by refusing to pass the Bill. I commend the method to the hon. Member for Northampton, North, who asked what we could do. It would be possible and appropriate this year when we are celebrating 300 years of the House's superiority over the Crown to tell the Ministers of the Crown that they can go to the European Councils only if they do or do not do certain things. It is quite within the power of the House to pass such a resolution and it is not outwith the treaty of Rome. That is what the Folketing in Denmark has done ever since Denmark has been a

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  member of the Community. It is a matter of the internal constitution of our land. One of the steps that we could take to ensure that the House has control in future is to pass such a resolution.
  I shall now pursue the Prime Ministerial cries. The Prime Minister is adept at persuading the British public that she somehow does not like the European Community. She reminds me of a person who loves to go racing and who perhaps spends too freely on the horses. Such a person says that he does not want to be dragged to race meetings but when he gets there he is in his element. Why is the Prime Minister in her element when she gets to the EEC? It is because she is a worshipper, as are Conservative Members, of the free market. If we are to have a single European market that is free of frontiers, as the treaty dictates, somebody must decide the rules on either side of what was a frontier. That presupposes a supranational authority and if one is not there one must be established. That is as plain as a pikestaff.
  Conservative Members talk a great deal about education and one of the matters they talk about is the need for Latin. I do not think that Latin grammar is very good but Latin vocabulary is very important. There is all the difference in the world between inter and super and extra and ultra. If we are to be international there must be something to be international about. I think that there is some agreement about that in all parts of the House. But the treaty of Rome is not international. By intent, purpose, operation and structure it is supranational. I see that the hon. Member for Harrow, East agrees. The institutions are there. Mr. Delors and Herr Kohl are quite right. Those institutions were there from the origin of the Community. There is the Council, the Commission, the Parliament and the Court, and those four institutions are growing in power day by day.
  My final point is that the House has added to the power of those institutions against its will. The Government have also done that and I shall prove it. When the Prime Minister was invited in Milan to agree to an international conference to revise the Treaty of Rome, she said that a new treaty was not needed and suggested progress by pragmatism. She was probably right, but what happened? There was an international conference and we had a new Single European Act, very detailed and full, which provides for the majority voting of which I spoke. That is in one of the important articles, article 100A. The Government did not want that Act and to some extent they managed to dilute it—or so they thought. I suppose that some people thought that it was not strong enough —people such as Mr. Tindemans and others.
  The Act was brought to the House in 1986 and put through on the guillotine, even though we have proof positive that the Government did not want it at all. Since when have the Government brought to the House a Bill with which they disagreed, and put it through on a guillotine? That is the extent to which the Prime Minister is dragged hapless into supporting an increasing tendency for power in the EEC.
  That brings me to my concluding thought, which is about 1688. In that year the monarchy was sent packing by the House because the House said that it would decide the
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  finance and the law. Today we have a new protomonarchy and a new proto-imperium which is growing daily in Brussels. It is time that the House cut off the air supply to Brussels.
  6.47 pm
  Sir Anthony Meyer: The hon. Members who have expressed concern about the Bill, none with more passion than my hon. Friend the Member for Northampton, North (Mr. Marlow) or with more remorseless logic than the hon. Member for Newham, South (Mr. Spearing), were right to express fears. The agreement on finance in the Community to which the Bill gives the force of law is a major step towards giving the European Community an independent existence and a means to sustain it. I quite understand why that process is deeply upsetting to hon. Members in all parts of the House.
  Faced with these fears and concerns, some Ministers, although not on this occasion my right hon. and learned Friend the Foreign Secretary, have sought to dismiss them as groundless or, at worst, as greatly exaggerated. People who adopt that attitude will lay up trouble for themselves in the House and in the country if they seek merely to quell those doubts by bland assurances. That will be all the more likely if those bland assurances are the reverse side of a coin, the front of which is a policy towards the Community that aims to secure all our national interests without being prepared in return to make any concessions to the national interests of others except as part of a very crude horse trade that refuses to accept that closer co-operation between member states is a good thing in itself and will bring benefits to all members of the Community.
  To be communautaire is to be an effective champion of national interests. The kind of minimalist, apologetic approach to the Community that I have been decrying is not, in the fairly short run, the best way for Ministers to avoid trouble, although no doubt it will avert any possibility of their seeing their majority shrink too much at the end of the debate. Far less is it the way to derive maximum benefit for the United Kingdom and its people from membership of the Community.
  Ministers would be far better advised to go over to the attack, as my right hon. and learned Friend the Foreign Secretary did so conspicuously in the debate. They should demonstrate the gains that can come not only to the Community as a whole but to each of its members and to the United Kingdom by a maximalist and enthusiastic policy of co-operation.
  It is true that national Parliaments are losing influence and power to the institutions of the European Community, although perhaps not to the European Parliament, which is not yet a proper Parliament in the sense that we understand it here, with the power to overthrow or effectively criticise Governments. However, even the European Parliament may have to become a proper Parliament if national Parliaments continue to behave like the Parliament of Lilliput and continue to fail so lamentably in their job of effective democratic control of the Council of Ministers, which is, of course, where power resides in the European Community, as the hon. Member for Newham, South pointed out.
  This Parliament, by treating the European Parliament and its Members as some kind of lepers who have to ring bells before they can gain entry, has contrived to achieve

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  the worst of all possible worlds. National Parliaments are losing influence because they cling so pathetically to the illusions of national sovereignty after the reality has gone. Those illusions make no sense at all in these days of nuclear defence, worldwide pollution of the environment, the overweening powers of multinational corporations and the problems of footloose hot money and Third-world debts.
  An example only the other day brought that home vividly. Our overcrowded air space is putting air travellers in danger because national air traffic control systems will not accept the overriding authority of Eurocontrol, so, as an aircraft passes from one airspace to another, it has to switch from one system of control to another.
  Co-operation is very much in our interests in respect of the European monetary system—we should have joined the exchange rate mechanism long ago—and, above all, in the calls for a European central bank, which were so summarily dismissed by my right hon. Friend the Prime Minister. Of course we can dismiss those ideas as Utopian, but they do not appear Utopian to our partners. We once dismissed the idea of a Single European Act as totally unnecessary, but we now bless it as one of the few ways in which any decisions can he taken within the Community of 12. If we continue to block agreement on such matters as the European central bank, we shall find that we are losing one of our principal assets within the European Community—the vital role played by the City of London as the principal financial centre of the European Community.
  I say to hon. Members who have expressed their doubts about or hostility towards the Bill that they were quite right. The measure is a step towards an independent, self-sustaining Community, although not, alas, towards federalism. If they can defeat it—my hon. Friend the Member for Northampton, North made no secret of his desire to do so—we could then preserve the tattered shreds of sovereignty and we could become a sort of proud, independent western European Albania. Is that really the way in which a great nation such as ours can play the part that it is called to play in one of the world's three superpowers? Is that the way to ensure the prosperity, safety and hopes of our people?.
  6.52 pm
  Mr. Peter Shore: I am sorry that the Foreign Secretary is not with us, because he would have heard some interesting speeches—the great candour of the hon. Member for Clwyd, North-West (Sir A. Meyer) about the reality of the loss of parliamentary sovereignty; the pure joy expressed by the hon. Member for Harrow, East (Mr. Dykes) whenever he hears that this nation has been stripped of, and that this Parliament has lost, more and more powers; and some good suggestions from my hon. Friend the Member for Newham, South (Mr. Spearing) about how, if we have the will to do so, we can gain greater control over Ministers before they give their consent to propositions, resolutions, decisions and directives in the Council of Ministers.
  I understand—I can hardly believe it—that the Foreign Secretary is appearing on the Terry Wogan show. I find it a strange discourtesy to the House and a strange choice of priorities that the Foreign Secretary, introducing a Bill seeking to tax the British people and hand over the proceeds to the European Commission, should leave this
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  Chamber and prefer to be summoned into the presence of Mr. Terry Wogan in some studio, wherever it may be, in London. It is as though he himself believed the prophecies of those who say that, in a few years' time, we shall be reduced to nothing more than a provincial assembly. The Foreign Secretary owes the House an apology and I hope very much that we shall hear from his right hon. Friend the Paymaster General, who will wind up the debate, that there is a reason other than a television interview to explain the Foreign Secretary's absence.
  Mr. Budgen: Does not the right hon. Gentleman think that, even in a borough council, if an important speaker in a debate went off to appear on the local town chat show, even the borough council might take it amiss?
  Mr. Shore: I have made my point, and the hon. Gentleman makes his point, which reinforces it.
  That apart, I was going to say that I thought it extremely fitting that the Foreign Secretary should introduce this Bill and debate because, after all, it is a finance Bill. The Foreign Secretary is an ex-Chancellor of the Exchequer, but this is a finance Bill of a special kind because it is a European finance Bill and the Foreign Secretary has quite a track record in that area. I t was he who last introduced such a measure European—Communities (Finance) Act—in June 1985. We are now seeking to withdraw that Bill and to substitute the measure before us today. No one more than the Foreign Secretary can claim to be, if not the author, the co-author, of the original European Communities Act 1972, which first imposed the European Community's tax regime on the British people.
  We knew then, at the end of those protracted negotiations with the EEC, that the terms of entry were heavily disadvantageous. That was shown nowhere more clearly than in the arrangements made for the British contribution to the EEC budget. Why was it so disadvantageous? The House probably knows why, but there are two clear reasons. First, EEC budget expenditure was, and still is, overwhelmingly in support of agriculture and was bound to be much less in Britain, with its comparatively small agricultural sector, than in other continental European nations.
  Secondly, although our receipts from the EEC budget would be smaller, our tax burdens would be heavier. Levies on imported foodstuffs and customs duties on third country imports were bound to fall with exceptional severity on the United Kingdom, whose pattern of food and non-food trade was much more heavily geared to the Commonwealth and other non-European countries than was the case with out continental neighbours.
  The problem that originated with the treaty of accession and the European Communities Act 1972 remain with us today. It is fitting, therefore, that the Foreign Secretary, like Sisyphus in Hades, is condemned and doomed to push up the hill the boulder of reform of the CAP and changes in the European tax system and to see it fall down again to the bottom of the hill, where he has once again to resume his labours.
  To be fair, the Prime Minister has fought hard to reduce those original burdens. She negotiated a temporary refund on a year-by-year basis for the first three years of her premiership. Then, at the Fontainebleau summit in 1984, she secured what was described as a durable system for the abatement of our contribution. That was an abatement of

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  two thirds of the United Kingdom deficit of budget payments to, over receipts from, the EEC, to be deducted from the United Kingdom VAT payment.
  But to obtain that abatement, a price had to be paid. The previous ceiling on VAT contributions of 1 per cent. was raised to 1·4 per cent. To those who questioned that virtual 40 per cent. increase in the EEC's own resources only four years ago, the Prime Minister and the Foreign Secretary gave specific assurances that CAP spending would be curbed by budgetary disciplines year by year.
  Now, in the Bill before us today, we have a re-run of 1985. Once again, the EEC has been authorised to increase its tax take. But instead of increasing the 1·4 per cent. VAT contribution to a new ceiling of 1·6 per cent.—as had been envisaged in the 1985 Finance Act—a new formula has been evolved, to cap the VAT base at 55 per cent. of GNP in each member state, while maintaining the maximum rate at 1·4 per cent. In addition, a fourth own resources tax has been added. That is to take the form of a percentage of GNP at whatever rate is needed to make up the budget over and above the yield of the other three own resource taxes. In all this, the United Kingdom abatement is to be retained. It will still consist of 66 per cent. of the difference between our payments and our receipts.
  Again, let us consider the price that has had to be paid. The Community, whose tax yield under own resources was increased by 40 per cent. only three years ago, is now to have a further increase of 25 per cent., with a new ceiling of 1·2 per cent. of Community GNP—equivalent to 1·9 per cent. VAT. Once again, we are assured that agricultural spending will be controlled by budgetary discipline, by the so-called legally binding mechanisms for each of the agricultural stabilisers.
  Judging by the Bill and its predecessor in 1985, the British bargaining has amounted to this: the United Kingdom receives some abatement of its original intolerable and unsustainable net financial burden, and in return, abandons its veto, its one power to reshape the EEC budget, and is obliged to permit an increase in EEC expenditure and taxation. Each time, of course, the United Kingdom pays more.
  What it has meant for Britain in terms of its net contribution since the Fontainebleau summit is a net contribution of £759 million in 1985, £943 million in 1986 and £1,125 million in 1987. The estimate for 1988 is £1,250 million and for 1989, £1,500 million. That is roughly a 100 per cent. increase in the United Kingdom's net contribution in four years. In the same period, the total spend of the European Community will have risen from 28 billion ecu in 1985 to an estimated 46 billion ecu in 1989 —a vast increase of some 64 per cent., but still significantly less than the increase in the United Kingdom's net contribution.
  At the same time, we note that the draft general budget of the European Community for this year, 1988, within a total of 43·4 billion ecu, will spend no less than 30·7 billion ecu on all forms of agricultural expenditure. This is made up of the guarantee expenditure, the guidance section and, in addition, the new provisions to underpin the ecu-dollar exchange rate and the amount set aside for the depreciation and disposal of existing surplus agriculture
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  stocks. The total commitment to agricultural expenditure is 30·7 billion ecu, or more than 70 per cent. of the total budget.
  I have been listening to Ministers making speeches about reforming the CAP and reducing its share of the total EEC budget since 1964. When the first Macmillan negotiation took place, Mr. Marjolin and Mr. Mansholt produced great plans for reforming a then intolerably expensive and inefficient CAP. But in those days, it did not take more than 70 per cent. of the total. Throughout the 1980s, there has been only one year in which it has exceeded the 70 per cent. that we are committed to paying during 1988. If that is an example of how budgetary disciplines work, I am not at all impressed with them, and nor should any other right hon. or hon. Member be. So much for cost control of the EEC budget.
  The House can easily anticipate within the next three years, if not before, another European Community finance bill raising still further the EEC tax ceiling and budget expenditures, and the British Government once again conceding it, and withholding their veto because of the fear of losing their abatement, in part or altogether. When the House makes its decision tonight, hon. Members should reflect on the fact that the Bill, to increase further the taxation of the British people and to transfer that tax yeild to the Commissioners in Brussels, is only a part of a continuing process of steady erosion of the rights of the House and of the British people, with a corresponding growth and extension of Community competence throughout taxation, legislation and policy decisions.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) cannot have enough of it, and mentions with regret the facts that we are not members of European monetary system, that we have not abolished altogether our separate financial institutions and that we do not have a common currency or a central European bank to look after our financial and monetary affairs. But that is not the view of most hon. Members. In the past 12 months, zero-rating provisions of our own VAT legislation have been swept aside unceremoniously by decisions of the European Court. We know, too, that the Single European Act, with its commitment to a Europe without frontiers by 1992, threatens an unprecedented harmonisation of virtually all United Kingdom indirect taxation, and a widespread extention of majority voting throughout the EEC.
  We have seen the Government's plans for the disposal of Austin Rover to British Aerospace delayed and jeopardised by the intervention of the Commission. Only last Wednesday, Mr. Jacques Delors, the President of the European Commission, before the European Assembly, told us that this House and the existing system of national Parliaments in Europe would have to give way to the embryo of a European Government within the next seven years.
  I warn the House now—I address my warning to my right hon. and hon. Friends on the Labour Front Bench as well as to the Paymaster General—that the issue of Britain's membership of the EEC, now dormant, will remain so only so long as it remains basically a customs union, with sensible co-ordination of economic, environmental and other policies—in other words, a Europe des patries. But if the trend continues towards a European union, a federal Europe, a European Government, and if our democracy and our Parliament are to be stripped progressively of the powers that make us a sovereign state,

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  of that sovereignty that belongs inalienably to our own people, to future generations as much as to those who have the rights of citizenship today, there will be a tidal wave of protest and opposition. The whole bizarre, unnatural and flimsy structure of European Commission, European Court, European Assembly and the thousand and one treaties that have burgeoned forth will be swept away.
  7.8 pm
  Mr. Nicholas Budgen: I wish that I had made as fine a speech as that of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). For many years he has spoken for so many of us who feel the pull and the inspiration of British nationalism. His was a fine statement of that nationalism which is felt in every class and every section of the British community, and which, to a very large extent, is now denied even by the Labour party.
  The main purpose of my speech is to give a sincere and unqualified apology to the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). Four years ago, when we were debating the proposed increase in VAT from 1 per cent. to 1·4 per cent., the hon. Member for Inverness, Nairn and Lochaber got up and said that his party, the Liberal party, was in favour of a very substantial increase in the take from VAT, up to 2 per cent. I remember rudely deriding all that.
  On that happy note, the whole of the Tory party present at the time agreed with me. It was ridiculous to suppose that any party should be so ridiculously and fanatically in favour of the EEC as to want to increase the rate of VAT to 2 per cent. Not only that, but the hon. Member for Inverness, Nairn and Lochaber explained that the Liberal party, and especially Lord Jenkins, who was then the right hon. Member for Glasgow, Hillhead, who was not often the flavour of the week with the Tory party, were in favour of a massive increase in the structural and regional funds.
  On that note of abuse and rhetoric, I was able to find whole-hearted support from the whole of the Tory party, as I abused the hon. Member for Inverness, Nairn and Lochaber. Now, of course, we find that these proposals are not quite the increase to 2 per cent. as the hon. Gentlemen wanted. Sadly, the increase is only up to 1·9 per cent.
  Everyone who votes in favour of the Bill tonight should be aware that the Liberal party and Lord Jenkins have entirely converted all the Tory party, and they have subverted the Prime Minister, to their views. They are owed the deepest apology. They have won in every respect. The Government have become as ridiculously Euro-fanatic as we believed the Liberal party was four years ago.
  Sadly, I am not authorised to apologise on behalf of the Government. However, I repeat my deep apology. My hon. Friend the Member for Northampton, North (Mr. Marlow) was particularly vocal about the measure some four years ago and I am certain that he will also want to apologise. We who derided the Liberal party and who continue to deride it are now a small and disgusting minority in the Tory party. Tonight, when the hon. Member for Inverness, Nairn and Lochaber enters the Lobby with the bulk of the Government, I hope that he is greeted as the friend that he should be recognised for. Most of all, he should he applauded because he has won on the structural funds.
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  My right hon. Friend the chairman of the Tory party has been very helpful. He has given all of us who wished to apply at the Whips Office a most excellent Conservative research department brief, which is much more informative than any document that the Foreign Office gave my right hon. and learned Friend the Foreign Secretary. That brief emphasises in very clear terms that, as a result of the massive increase in the funds for the Community, the structural fund will be increased in real terms by 80 per cent.
  That is a very useful figure. By increasing that part of the budget which is not spent on the CAP, it enables the Government to say that they have kept the CAP down as a proportion of overall expenditure to the derisory amount of only 70 per cent. or whatever it is. That is plainly a sign of the fundamental reforms that were promised four years ago, which are promised now again today and which will be promised again in three years' time. As my right hon. and learned Friend the Foreign Secretary said on Wednesday, we are taking concrete steps towards reforming the CAP and we will continue to take concrete, but not dramatic, steps towards reforming it.
  While a massive extension of the structural funds may pose little philosophical doubt in the minds of Labour Members, with the exception of those splendid British nationalists who want to rely on the membership of the House of Commons and the concept of sovereignty even before they are Socialists, I would have thought that for a Tory Government who are alleged to be totally dominated by Thatcherism—whatever that may be there must be—at least some explanation for he 80 per cent. increase in real terms in the structural funds before we vote.
  The structural fund is designed so that the EEC may progress towards economic and social convergence. In short, it is a practical expression of EEC Socialism. 'The concept of the structural fund means that, if we go to the toe of Italy and happen to notice that people there seem less economically active than people in Stuttgart, or if they have less money than people in Stuttgart, we may say to them, "My friends, we are going to shake you into economic and social convergence. We shall either do it by directive or by showering money on you. But in some way or another, you've got to become the same as the people in Stuttgart."
  Sir Russell Johnston: The hon. Gentleman's speech is going off course. I thought that he was redeemed.
  Mr. Budgen: I do not think so.
  When the great and the good go to the toe of Italy and try to shake the Sicilians into becoming like those people who manage the Scottish Widows' Fund in Edinburgh, they may find that the good people of Sicily simply take the money, but do not want to converge. They may want to use the money for greater leisure.
  It is extraordinary that the Prime Minister can say that she welcomes the extension of this vast social fund because she believes that we will get some kickbacks from the money that we put in. Perhaps we shall, but what has the Prime Minister to say about the handling costs? What about all those gentlemen in Brussels who will be signing the cheques, receiving the money and deciding whether Tom, Dick or Harry should receive this largesse? She does not seem to recognise that the costs will be great.
  Before the House votes for this vast increase in the structural funds, I hope that hon. Members will

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  understand that there is a fundamental ambiguity about the way in which the EEC handles its funds. That ambiguity is raised constantly whenever we debate the reports from the European Court of Auditors.
  I remember some years ago accompanying my hon. Friend the Member for Horsham (Sir P. Hordern) to talk to the splendid gentlemen who run the European Court of Auditors. We sat for half a morning listening to them. I was feeling rather tired, so I was able to contain myself for nearly an hour. I listened to a story about the number of olive trees in southern Italy. I was told that if there were that number of olive trees, there would not be one house, one field or one runway in the south of Italy. I heard all about cows in Bavaria.
  Eventually, I decided that it sounded as if there was gross fraud in the way in which money was distributed in the EEC. I asked the gentleman a few unkind questions. After that, my hon. Friend the Member for Horsham straightened his Rifle Brigade tie and asked me to go outside. He gave me the worst rocket that I had received since I was late as a national service subaltern. I stood to attention and mumbled that I was very sorry. It made me reflect even more on the ambiguity that we shall never have an EEC system for policing expenditure in the EEC.
  If, for the sake of argument, we arranged for the Metropolitan police fraud squad to go to Sicily, there would be a major uprising there against the assertion that there was some form of central control in the EEC. In the same way, I have no doubt that if a gentleman from Italy came to inquire about the amount of quota that was or was not being used on a dairy farm in Britain, there would be a strong resurgence of English nationalism and the Italian would be invited to leave the farm.
  Therefore, there will be no accountability for the bulk of expenditure on the structural fund. The House will not have proper control and there will he no philosophical agreement, because the proposal is based on a belief in equality and in social, industrial and pan-European convergence. That is completely antipathetic to everything that Conservative Members have been taught to believe in during the past 15 years or so. The Prime Minister used to oppose the extension of the structural fund, yet she comes back to the House and mouths words which imply that she approves of it.
  We should remember that, if the EEC institutions had been reformed, the Bill would be unnecessary. If we want to extend the policy of regional development, we can do so through our own national policies in the House. The Bill is unnecessary; it is, most of all, an affront to anybody who has any sense of the history of this House.
  7.22 pm
  Ms. Joyce Quin: When we debate the Bill we are examining the priorities within the EEC and, in particular, the British Government's priorities in the European negotiations in which they take part. Having listened to the Foreign Secretary, it seems that the Government's European priorities do not appeal greatly to the Opposition and I had the strong impression that few Tory Members were convinced by his remarks. The reaction was—to put it mildly—somewhat mixed.
  It is clear that the much-trumpeted budget agreement on spending and on the way ahead leaves much to be
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  desired, especially for the citizens of the United Kingdom and it does not give a particularly good deal to most of the other citizens of the EEC. The priorities of agricultural reform and control of agricultural spending are priorities which we all share, but progress seems to have been almost non-existent. We seem to have been marching in the wrong direction in the past year, as there has been an increase in agricultural spending.
  The system of export refunds and the huge gap between world and EEC prices persist, and little seems to be being done about that. We are still far from a fundamental reform of the agricultural policy or agricultural spending. We are told that the great priority for the Government is the creation of the large single market in 1992. Every time we switch on our televisions sets we are assailed by glossy advertisements telling us of the benefits that will accrue. That naive trust in the automatic benefits of a large, free market is unjustified.
  I should like to suggest four priority areas for the Government to consider in their EEC spending and policies. They are regional, industrial, social and environmental priorities and I should like to deal with each briefly.
  I do not believe that the budget settlement gives a good deal to most of Britain's regions, despite the increase in the structural funds. We have learnt that the regions will be divided into two categories. Category 1, which is basically for agricultural, underdeveloped countries of southern Europe, plus Ireland and Northern Ireland, will get by far the lion's share. While I accept that those areas have real needs and I would not like to deny them any funds, I am worried that the second priority, which is the money given to declining industrial regions, will be severely downgraded as a result of the agreement. I do not want to see that happen.
  Coming from the northern region of England, I fear that that region, which has the highest level of unemployment of any region in the United Kingdom, apart from Northern Ireland, may receive much less from the European Community budget in the future. I should like the Government to give us a commitment tonight that that will not happen and that in their continuing negotiations in the coming months they will do their utmost to promote the profile of the northern region and the other industrial regions of Britain.
  It does not help regional policy when the Prime Minister keeps telling other European countries how well we are doing. That masks the reality of Britain as we know it and the dramatic regional divisions which persist. Regional policy means more than just funds. I am concerned that unless some compensatory measures are taken, the creation of the internal market will be bad news for the regions and will simply increase the prosperity of the already prosperous areas to the detriment of the needy parts of the country.
  I should like the Government to give us a commitment that there will be a proper detailed study of the likely effects of the internal market on our least prosperous regions. The Government should not move towards the internal market unless they can come up with some detailed figures to show the benefits to the regions. No such detailed regional study has been undertaken.
  The Government's lack of commitment to regional spending and regional policy could not have been made clearer to me today with the announcement that the Marconi radar factory in Gateshead will close. The other

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  Marconi factory, in Chelmsford, is situated in an area where there are job vacancies for that type of employment. That shows on both a British and an EEC level the Government's total failure to stand by those regions that most need help and positive policies.
  On industrial policy, the United Kingdom Government have failed to provide any EEC funds to help older industries such as steel, shipbuilding and textiles to renew themselves and have woefully neglected to provide research and development money on an EEC level. In fact, the United Kingdom Government are well-known for blocking money for EEC research and development. They took a great deal of time to agree the research framework programme, and in 1986 the amount of EEC budget that was spent on energy research was only 2·1 per cent. That was lower than the amount given to support tobacco growers, who managed to get 2·3 per cent. of the budget.
  The third area of priority for the Government should be social measures. Again, they need to be considered in conjunction with the whole debate about the internal market. In the Government's desire to see common standards and freedom from barriers on trade—I concede that they sometimes have beneficial effects—there has been virtually no discussion of other matters such as the common social benefits of policies that could improve people's quality of life. That has been conspicuously absent. European Report states:
  "The Prime Minister argues in favour of deregulation on all fronts even in the social sphere. She apparently expressed her desire for no new rules in the realm of company law relating to worker participation in company structures. This dampening down of any commitment to regulate economic and social equilibrium in the Community was greeted with disappointment, notably by President Mitterand who said 'It is shocking that progress has been made to free the movement of capital but workers have been left by the wayside."'
  The Government have taken a cheeseparing, penny-pinching attitude to environmental issues and have been unwilling to campaign for or agree to an increase in moneys to fight environmental pollution which threatens us all and seems to be one of the most important issues on which EEC countries can co-operate. I am thinking of money to fight the threat of acid rain and to prevent more of it from being produced, to combat the depletion of the ozone layer, to clean up our beaches—our performance has been disgraceful—and to improve the quality of our drinking water, which still fails to meet EEC standards in many areas. The Government should have given a much higher priority to those issues.
  What are the Government trying to create? Is it a European Community which will help people or simply a Europe for big business and capital? Surely the pursuit of profit should not be an end in itself but a means to an improved quality of life for all. In terms of improving the quality of life for the general population of the EEC and particularly for those in the least prosperous regions, the Government's EEC policies and their spending priorities have been an abject failure.
  7.31 pm
  Sir Peter Hordern: The hon. Member for Gateshead, East (Ms. Quin) seemed to favour an increase in the European Community budget. If that is the case, she is the only hon. Member, except for one or two of my hon. Friends, who has so far done so in this debate.
  I thought twice about putting my name down for this debate and if I had known that my hon. Friend the
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  Member for Wolverhampton, South-West (Mr. Budgen) would refer to me in the terms that he did, I would have thought three times. My recollection of the incident differs markedly from his and the only resemblance is that I have my regimental tie on today, just as then, in order to give him a similar rebuke.
  I have not spoken in a European debate for some time because I have felt that the arguments were much the same. I approach this subject as an EC supporter, but one who is entirely cynical about the assurances given on every occasion when budget measures are introduced.
  First, as the House will know, we are invited to vote for a Bill which increases our net contribution to the Community budget by £200 million to £300 million a year. Our share under the intergovernmental agreement is some £765 million at a particular rate of exchange with the ecu. How does that square with the estimate in the public expenditure White Paper on total expenditure for 1988–89 of £1,780 million? If there is a difference, it will undoubtedly come from the contingency reserve, but I should like my hon. Friend the Minister to define what he thinks the net difference will be.
  The increase has arisen because of the increasing expense of the common agricultural policy. I was delighted to hear my right hon and learned Friend the Foreign Secretary say that he wanted to convert ploughshares into golf clubs. As the parliamentary golf champion I welcome that suggestion, but it shows the extent to which our policy has changed so that we are talking about supporting, not farmers and their production, but an agricultural community. That is important not only for internal budgetary reasons or European budgetary reasons, but for the real danger that exists of forming a tariff wall against imports of agricultural products from other countries, particularly the United States of America.
  The House will know that the United States Congress has passed a trade Act. If conditions become more difficult for the United States as they find further difficulty in reducing their budget deficit, they will certainly take countervailing measures against the EC. The best way we can help the United States and, indeed, other countries is to reform the common agricultural policy and allow more imports of agricultural products. That would do a great deal to help our cost of living and it would improve and increase efficiency, of which we stand in need.
  It is absurd that so much money has been spent on agriculture for so many years, and further work needs to be done. That not only has a serious impact on the United States and other countries, but has its worst impact on developing countries which are unable to export their agricultural surpluses to us.
  I am not an opponent of the European Community. I have watched developments with interest for some time and we must admit that we do not possess the clout within the EC that we should. We are in danger of becoming too much of an observer. Never an enthusiastic member of the EC, always thinking about the snags and difficulties, there is a risk of finding ourselves in a halfway house, neither a full member of it nor prepared to accept the progress that is going on, and at the same time jibbing at and finding fault with almost every aspect of it.
  I used to be agnostic about the European monetary system, but recently I have come to believe that it would be to our national advantage to join it. It is time that we examined our attitude and policy. It is not a question of whether one is sufficiently communautaire to join the

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  EMS. When one talks about being communautaire I always feel that that is best left to the prandialists. It is vital to our internal economic policy that we should now become a member of the EMS. I say that not from any particular enthusiasm for Europe, but because in recent times we have shed our ability to control our monetary aggregates internally and we now rely almost entirely on the interest rate to control inflation We are placing too much weight on a rather slender instrument and we need the additional strength and resources which membership of the EMS could bring.
  That important point is nowhere more important than in the current debate which appears to be taking place openly—I should like to say, behind the scenes—between the Prime Minister and other members of her Cabinet. We are not a member of the EMS—or, more accurately, we have no formal link with the deutschmark—because my right hon. Friend the Prime Minister is against it. The reason is that her advisers feel that the turnover in the foreign exchange markets is far too high for our slender reserves. If we were members of the European monetary system, most of the speculation—most of the dealings are speculative—would disappear so long as there was credibility that we had a firm policy of alignment with the deutschmark. So that is not a good argument, although it is a natural apprehension to have.
  There is also the argument that an interest rate differential would occur between the deutschmark and sterling, which the Germans would take advantage of. The only way in which they could do that would be to buy sterling in sufficient quantities. That would put up the price of sterling and then it would not be necessary to have such a high level of interest rates. So that argument is answered as well. There is also the possibility of a run on sterling that would leave us with no power to devalue.
  I do not decry any of those reasons as being entirely wrong or illogical in themselves. They all contain much force, but they fall down in that they are essentially short-term negative lawyer-type considerations—it is the views of lawyers mixed with those of academic economists of the sort who write in that admirable journal produced by the Institute of Economic Affairs. The time to read that journal is on a very long, wet railway journey when one has run out of one's other newspapers.
  It appears to me that those academic economists have more power than they are expected to have and than they properly should have. I am sorry that that should be so. It must come as a great surprise to them that anybody reads, let alone acts upon, their work. They appear to have extraordinary power to influence the course of events.
  I regret that the good, common sense approach appears to be lacking. That is the approach adopted by business men. A business man would ask what the alternative would mean, if we remained outside the European monetary system. The European countries would get closer together in some form or other of European monetary union. That is inevitable. The question is whether we should do better to remain outside or within the European monetary system. In essence, that is the argument for membership of the European Community itself.
  I any business man were asked what would happen in the European Community—the idea of a single European
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  market commends itself—he would guess that in the long run there would be closer monetary union. If that is so, surely it is much better for us to be a part of it, a full member of it, rather than standing on the sidelines, criticising the operation of the European monetary system and insisting on having what we strongly call our independent sovereignty.
  But in this issue, independent sovereignty means that we would be an offshore island of which little notice was taken by the European Community or still less by our old partners, the United States. What business would the United States have with a special relationship with an offshore island when there was a real community of nations to deal with in the European Community? So the present attitude, apparently held at the highest level, is mistaken and in the long run damaging to our interests. Therefore, I sincerely hope that it will change.
  I do not believe that we shall have the luxury of selecting which bus we shall catch in future. It would be of great importance to us, for our own internal monetary discipline reasons, to align sterling with the deutschmark as soon as possible. For the wider reasons that I have given, we should catch that bus now and help to drive it.
  7.44 pm
  Dr. John Reid: I entirely agree with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) that it is a matter of some regret that the Foreign Secretary, having opening the debate, could not stay and hear some of the contributions on the Floor of the House. I understand how pressing the desire can be to share the evening with Mr. Wogan. If the Foreign Secretary's contribution on "Wogan" is as unconsciously amazing, amusing and entertaining as his contribution in the House, we shall see "Wogan" rocketing in the viewing ratings.
  The only word to describe the speech by the Foreign Secretary is "incredible". He presented us with a veritable catalogue of victories that we had won in Europe on EEC funding over the past few years. I think that some of us can be forgiven for asking how it is that on EEC funding we seem to go from victory to victory to final defeat each and every year.
  The Bill would be the latest of those defeats, the latest in a long line of mechanisms for attempting to finance the European Community. It addresses problems raised at Fontainebleau in 1984 and at various other summits over the past few years. The fundamental problems when we entered the Community many years ago are patently getting worse. It is obvious to most people and to most hon. Members that the minutiae of the Bill do little to conceal what is happening to the EEC budget. The Opposition have tabled a significant amendment to show that little has changed since Fontainebleau in 1984 and even since 1979. The fundamental imbalances, excesses and, some would say, almost iniquities of the EEC budget have worsened and there is little hope that anything that the Government have done or are likely to do will be of significance in changing that.
  The problems addressed in 1984 at Fontainebleau and again today are nothing new and should elicit at least some frustration, if not embarrassment, from the Government Front Bench because the continuing excessive common agricultural policy spending, which seems to be on an almost inexorable rise under this Government, shows

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  nothing less than incompetence. No one would pretend that the scandalous rise in agricultural spending and the under-allocation of the social and regional funds—all we have is promises—is anything new or unique to the Government. The problem goes to the heart of our membership of the EEC.
  What is galling is the image presented by the Foreign Secretary, and by the Prime Minister on other occasions on her skirmishes in Brussels and elsewhere. We need little reminding of how many years the Prime Minister has had to fight Britain's case. We need little reminding of how many volumes of Churchillian rhetoric have been expended in attacking the EEC before she goes off to the various summits, which she presents as victories when she returns.
  Of all the quotations from the Churchillian volumes, perhaps the one that describes best the Prime Minister's attitude to the EEC in practice is that she has been "resolute in her equivocation" over the EEC budget. If I were to paraphrase an ex-leader of the Labour party, it seems that the Prime Minister is prepared to "lose, lose and lose again" to preserve her antipathy towards the Common Market budget.
  We need little reminding that as 1992 and the open market come upon us, we have hardly been able to shift the debate towards common sense in the Common Market. The Government have failed consistently to fight our case and win real concessions. How many years will it take for the Government to make real progress? Where do we stand today? We have a CAP budget which is out of control and a social and regional fund which is merely papering over the cracks of industrial decline and inner city decay in Britain.
  The Government have constantly stood by and watched the worsening imbalance between revenue and expenditure which lies at the heart of the Community's financial mess. There are two causes of that imbalance—first, a failure of budget discipline controls to check excessive expenditure, especially on agriculture, and secondly, revenue ceilings, which the Court of Auditors believed were artificial and took insufficient account of the Community's financing needs.
  The collapse of internal EEC financial control is scandalous. It is also scandalous that agricultural spending has increased two and a half times since Fontainebleau —not since the initial agreement when Britain joined the EEC, but since 1984. Many right hon. and hon. Members have already said that the waste must stop somewhere. When the treaty of Rome was signed in 1957, one in four of the working population of the then EEC was employed in agriculture. That is clearly not so now. Today the total working population involved in agriculture in the original six nations is down to about 5 per cent.; for the Community of Ten—before the accession of the Mediterranean countries—it is roughly 10 per cent.
  My hon. Friend the Member for Hamilton (Mr. Robertson) made a comparison of the amount spent by Britain on the EEC agricultural budget and the amount spent in Britain on the National Health Service. It is worth enlarging on that comparison, and to put the runaway agricultural spending in its grim perspective, we need look no further than the NHS. When the Government refuse to find £1 billion needed to get the NHS out of the current decline from which it is suffering so badly, they should remember the sickening immorality of the £11 billion a year that is spent solely on dumping, destroying and
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  storing food surpluses within the EEC. Such spending must appear increasingly beyond the control of any democratic body. What have the Government done about that imbalance?
  I notice that the Foreign Secretary has returned from addressing the masses through the medium of light entertainment. May I remind him of the fifth report of the Treasury and Civil Service Select Committee on EEC finance, which was especially instructive on the imbalance? It shows that the gap between the regional and agricultural budgets is widening. The agricultural budget for 1986 amounted to two thirds of Community spending, while the regional fund amounted to 7·6 per cent. of total spending.
  In a previous debate on this matter the Paymaster General pointed out something that he thought had gone unnoticed by me—the fact that the expansion of the social fund was agreed in Brussels by the European Council. But it was agreed as a prediction and promise, and those of us who are interested in the Common Market know that past promises and predictions from Ministers rarely bear much relationship to the reality of EEC funding.
  During a sitting of the Treasury and Civil Service Select Committee, my hon. Friend the Member for Gateshead, East (Ms. Quin), who spoke so eloquently tonight on the need for the extension of programmes on industrial, social and environmental matters, pressed the Paymaster General to come clean on the imbalance. She managed to extract from him the information that 72 per cent. of this year's budget will be for agricultural guaranteed expenditure, which represents an overall increase. The tone of that question and answer session must have been embarrassing for the Government. They seem to be taking steps in the wrong direction.
  No matter how much the Government try to belittle the annual increase in agricultural spending, it is clear that each little step forward in agricultural spending is one huge leap backwards for Britain and the British economy's contribution to overall EEC spending. We cannot rely on the Government to reduce the CAP budget and it is also depressingly clear that that budget is on the increase and out of control.
  The Chairman of the Select Committee put the matter succinctly to the Paymaster General and said that the House was
  "told some time ago … that the proportion on agriculture was going to go down, and that was the part of the original budgetary discipline package.
  On that occasion, the Paymaster General had to admit —as the Government should admit to us today—that it is common knowledge and an embarrassment for Britain that the arrangements that were secured in 1984 to restrain agricultural spending were completely ineffective. That appears to be the real story behind the sabre rattling that accompanied the return of the Prime Minister from the Brussels meeting.
  The Government are all talk and no action, just like the £7·9 million advertising circus surrounding 1992 and the open market. There is a worrying aspect to that advertising, because, although it is beneficial to alert the British public to the 1992 open market, the nature of the advertising is in grave danger of becoming the tip of a corrupt iceberg. The advertising for the open market and the advertising for the Department of Trade and Industry and the Scottish Office smooth over distinctions between the state, the Conservative party and the largest benefactors of the Conservative party, who are now

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  appearing nightly on our television sets glorifying the free market. Ministers may smile, but those smiles may disappear when they realise that the smoothing over of the distinctions between the state and the Tory party appears to be worrying one or two other people.
  Tonight I learnt that Mr. Alex Pagett, who left his job at the Scottish Office only three months ago to become the director of publicity for the Conservative party, has resigned his post. He has informed us that he is now going to work for the Reo Stakis organisation. I also understand that he informed the press that his decision is the result of his
  "taking advantage of the enterprise culture".
  Some of us suspect that he has found the blurring of distinction between the state and the Tory party too strong to take.
  The Paymaster General told the Treasury and Civil Service Select Committee that, this year, much effort has gone into reinforcing the 1984 arrangements. Why should we believe the Government when the financial forecast for CAP spending is that it will continue to increase in real terms by 2 per cent. per annum? We have been let down by the Government, not least because the corresponding loss to this country's declining regions and inner cities will be keenly felt while the farmers of France, Germany and Benelux will receive their usual annual boost.
  How can anyone deny the stark contrast between the House of Commons agreeing to increase, once again, the massive subsidies to inefficient French farmers and the fact that I have to go back to my constituency and to the county of Lanarkshire, where the steel men and the steel mills, particularly Ravenscraig, are breaking record after record, heightening efficiency, increasing output and delivering quality goods on time, and tell them that, although there is a threat over their heads, the Government cannot and will not find the money even to convince the British Steel Corporation that it has a right to survive on its record.
  That same Government, however, can find money by the barrelload to plough into Europe's inefficient agricultural sector. That contrast is so stark as almost to boggle the imagination. The Government cannot expect anyone to swallow that. They must break out of the dogmatic straitjacket that has suppressed and guided their previous actions on Europe.
  We need a certain pessimism of the intellect when we study the Government's past actions. We need also some optimism of will, which the Government seem incapable of achieving. It is possible to make a leap of the imagination and to define measures that could be taken within the EEC that would assist Britain and the rest of Europe to overcome some of our greatest industrial and financial problems.
  Some comments and criticisms have been levelled at Mr. Delors, and we need not accept everything that Mr. Delors says. For example, he said recently that he looked forward to a European Government in 10 years' time. However, there are many developments for which he has been fighting which we could usefully take on board as being beneficial to Britain. He has called for a social market, including the opening of the books by, and industrial democracy within, European big business. He has proposed new rights for European trade unionists, an increased budget share for social spending and a European
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  recovery programme, all of which would be suitably enhanced if the Government were to direct their attention to them.
  These proposals are opposed by the British Government, but not by the other member state Governments. The British Government are committed to deregulation in Europe on a scale that has not been supported even by Chancellor Kohl.
  The message to the Government should be that co-operation does not necessarily imply integration. A co-ordination of effort by sovereign states on a European scale does not necessarily imply the undermining of national sovereignty. Indeed, if it is to be a co-operative approach rather than an integrated one, the national sovereignty of the states involved could be reinforced.
  The Labour party has made it clear that it would take such initiatives and stop the trend of budget allocation being decided at the centre. A Labour Government would be involved in co-operative and co-ordinated efforts.
  Once more, we have been asked to acquiesce in a failure by the Government to secure reasonable terms for Britain. They have failed to show sufficient imagination in approaching the problem. This is a failure for Britain's industrial and social base and for the future of the EEC.
  8.3 pm
  Mr. Jonathan Aitken: The hon. Member for Motherwell, North (Dr. Reid) began his speech with a few good-natured digs at my right hon. and learned Friend the Foreign Secretary for leaving the Chamber to appear on the Terry Wogan show this evening. I am sure that my right hon. and learned Friend delighted his viewing audience of millions. I am only sorry that some of us were unable to see him and enjoy an interesting experience.
  Those of us who have sat through four and a half hours of this debate have had a remarkably interesting time, too. From whatever viewpoint a speech has been made, there has been a sense that this debate takes place at a time that amounts to something of a watershed in the affairs of Europe. It is no ordinary Bill that we are debating. It is no run-of-the-mill piece of EEC legisation, even though my right hon. and learned Friend sought to present it as a routine measure, suggesting that everything in the garden was rosy and successful.
  The Bill is a significant revision of the EEC fundamental treaty rules. It gives the House an important opportunity to take a real decision on the hitherto highly unsatisfactory spending arrangements of the Community. It should be said at the outset by way of warning that our scope as a Parliament for taking such decisions in future may be extremely limited if some Euro-enthusiasts get their way.
  As several hon. Members have warned, the debate is taking place against a background of much arrogant muscle-flexing by the EEC, especially by the Commission's President, Mr. Delors, who has emerged as the villain of the piece, according to many of those who have contributed to the debate. I see Mr. Delors in that role. He appears to be assuming the mantle of a latter-day Louis XIV, complete with a spending record that displays a consistently extravagant folie de grandeur. Some of his speeches embody the Sun King's notorious dictum, "L'etat c'est moi." We have heard repeatedly——
  Mr. Cash: Does my hon. Friend agree that he might add to these famous epigrams, "Apres moi, Delors."?
  Mr. Aitken: I hesitate to contribute further to this game of French quotations. There has been a deluge of criticism this evening and it is apres that that I am speaking.
  Criticism has been rightly directed to the remarks of Mr. Delors. Many hon. Friends, including the right hon. Member for Bethnal Green and Stepney (Mr. Shore), have referred to Mr. Delors' speech in which he said that within 10 years 80 per cent. of legislation in economic and social areas will be taken from the House of Commons and put under the control of European institutions. That gauntlet having been thrown down, many parliamentarians, quite rightly, would wish to take it up.
  Whether we share Mr. Delors's vision or whether we do not, it is certain that the EEC juggernaut is rolling in the direction that he is suggesting. If he and his fellow visionaries have their way, in 10 years this House will be no more than a glorified county council. It is certain that there would be a massive erosion of sovereignty. It would mean the loss to our Parliament of even the minimal controls on EEC expenditure that we are debating this evening. We must see the EEC treaty revision that is enshrined in the Bill not as a small rule change, as my right hon. and learned Friend the Foreign Secretary tried to present it, but as representing an important preliminary battle in the coming political war of survival, in which the issue will be whether to surrender to Euro-federalism or to retain the independence of member nation states and their national legislatures.
  From the big picture, I turn to some of the details of the Bill. One of the most worrying aspects of the Bill is the contrast between the tight way in which we control the spending of taxpayers' money at home and the loose rein that we are giving to the EEC to spend the same taxpayers' money on our behalf in Europe.
  Almost every nook and cranny of public spending in Britain has felt the threat, and sometimes the lash, of Thatcherite discipline, and rightly, too. District council treasurers, hospital administrators, DHSS managers—almost everyone in a public responsible position—have learnt to live with cash limits, budgetary restraints, ceilings, cappings and all the other instruments of Treasury torture that are handed down from the modern Court of the Star Chamber.
  This smack of firm Government has not been felt on the bottoms of the EEC bureaucrats. The big spenders of Brussels must feel that they are living in the court of King Midas. Whenever they have touched a budget limit in the past, even a so-called legally binding one, it has exploded into an El Dorado of overspending.
  Let us consider the figures that lie behind the Bill. Under the IGA, the United Kingdom taxpayer has to start by coughing up £765 million to pay for past EEC overspending. Perhaps what is past is past; there is no point in crying over spilt wine lakes today. But will overspending stop with this legislation? I think that the case for pessimism is much more convincing than that for optimism. For a start, they have mighty generous budgets over there in the EEC. At home, Ministers go before the Court of the Star Chamber——
  Mr. Win Griffiths: The hon. Gentleman has been stressing the amount of money that we pay into the EEC budget. What percentage of our gross national product do we pay into that budget?
  Mr. Aitken: I am coming to that. It is a somewhat misleading figure. In measurable terms, we were paying 1·4 per cent. of VAT, and we are now paying 1·9 per cent. That is a more measurable statistic than the GNP statistic, which I shall come to later.
  There is a great contrast here at home with our Ministers appearing before our domestic Court of the Star Chamber, cap in hand, to try to get an extra 4 per cent., 5 per cent., or, if they are really lucky, 5·5 per cent. increase for their domestic budgets. But the European Parliament has recently approved an increase in the EEC budget of 20 per cent. The Bill envisages an increase in EEC resources of 25 per cent.
  The only good thing to be said about that is that it is only half as much as Mr. Delors wanted for the own resources ceiling. He wanted an increase in own resources of 50 per cent., which is equivalent to 2·3 per cent. of VAT. The awful thing is that I expect that he will get it by one method or another in the foreseeable future. After all, we were told that the 1·4 per cent. limit would be unbreakable. There is spirit over there in the EEC—in the words of the late Mr. Wilfred Pickles—of, "Give him the money, Mabel."
  Every Commission seems to be able to get cut of national Governments more and more money by all sorts of methods, some of which have been no more than conjuring tricks in creative accountancy. Those tricks and devices have many labels—the negative reserve, the reimbursable advance and the carryover. Tonight we heard about the 10-month metric year that has been invented to give a favourable statistical comparison with the previous 14-month year.
  The new conjuring trick is that, instead of an own resources limit of 1·4 per cent. of VAT, which is upgraded to at least a measurable 1·9 per cent., we have something called the fourth resource, which is a levy of 1·2 per cent. on the gross national product of member states. As my right hon. Friend the Member for Worthing (Mr. Higgins) said, the trouble with the fourth resource is that the GNP calculations are notoriously difficult to measure. Even in the United Kingdom there are different ways of calculating it—the income method and the expenditure method—and after reading the EEC draft directive, I have grave doubts whether the statistical basis of the Greek or Italian GNP take into account the black economy and whether we are using the same methods of comparison.
  The fourth resource is a recipe for obscurity, and obscurity in financial figures is usually the mother of indiscipline. That is a worrying aspect of the calculations on which we are asked to base our approval of this measure.
  The message from the Foreign Secretary was, "Do not worry, this time we really have the big spenders under control, because their spending limits are legally enforceable." We have had legally enforceable limits before. They were enforceable by the Council of Ministers, which did not take a blind bit of notice, so the limits were never enforced, and spending soared. On this occasion, we have heard the Foreign Secretary say that the spending conrols will be written into the regulations, thus making

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  the budgetary limits strictly legally enforceable. That phrase is somewhat contradictory, because the European Court has no penal sanctions with which to enforce them.
  However, it sounds good—at least until we look at the small print. As I said in my intervention to my right hon. and learned Friend, the categories of EEC expenditure, broken down between obligatory and non-obligatory expenditure, are not on the same basis when it comes to those legally enforceable limits. Whereas obligatory expenditure is covered by the regulations, which are pretty generous, allowing agriculture to grow by 74 per cent. of Community GNP—which seems extremely generous to those who believe that agriculture has grown quite enough —the non-obligatory expenditure category is not covered by legally binding regulations.
  The budgetary discipline for the non-obligatory expenditure category depends not on law, but on what are called "inter-institutional discussions" among the European Council, the Commission and Parliament. Those inter-institutional discussions sound like one of the softest touches known to political life. Imagine Zorba, Jacques and Franz all going off to have lunch together and having an instant inter-institutional discussion on whether to have potato soup or caviare. I bet that they will end up buying the caviare.
  On the basis of the track record, who really believes that those inter-institutional discussions will mean more firm and effective spending limits for our taxpayers? The whole culture and thinking of the European Community these days is focused not on budgetary discipline, but on dreams of glory, of federalism, of 1992 and all that. The much more prosaic but essential requirements, such as spending controls, are being brushed aside as the grand designs for the future political state of Europe take priority.
  I make no apology for returning to the need to envisage the Bill in the context of the coming struggle between national sovereignty and Euro federalism. Apart from the futuristic pronouncements of Mr. Delors in favour of a European Government, we already have contemporary and concrete proposals on the table for a European central bank, a European common currency and a European economic and monetary union. There are even discussion papers circulating in the Commission with ideas on how to introduce a common system of direct European taxation. If those plans are anything like the experience of direct European expenditure, they are not likely to be beneficial to the British taxpayer and the British public, and they will put our Chancellor of the Exchequer out of a job.
  Before we vote on the legislation, which substantially amends the EEC treaty rules on expenditure, we must pause and reflect for a moment on the direction in which we are being led. In the history of the American wild west, there used to be a legendary bar known as the Last Chance saloon. I believe that that establishment was traditionally located on the edge of the frontier where the good and bad guys mingled together before going out to fight over how the west was going to be won and by whom. We are now in or close to the Last Chance saloon of the European future.
  As a sovereign Parliament, very soon we must decide whether we will slither into President Delors' vision of a federal Europe, with all the financial and legislative laxity that that implies, or whether we will take a stand and fight
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  for our national sovereignty, for the rights of our national Parliament and, on the positive side, for a different vision of Europe. The one that I prefer is General De Gaulle's "Europe des Patries".
  That Gaullist vision of a Europe of independent nation states is enshrined in the person of my right hon. Friend the Prime Minister. I have the greatest confidence in my right hon. Friend's ability to resist the worst of the current EEC proposals leading us down the primrose path of Euro-federalism. Despite some signs to the contrary, my right hon. Friend has not yet been conclusively proved to be either invincible or immortal, so her fine words and instincts need to be backed up by parliamentary action and support.
  Small in number though we may be in the Division Lobby, some of my hon. Friends are determined to sound the tocsin of alarm about the rising tide of federalism in Europe. A vital factor in reasserting some national parliamentary resistance to the federal big thinkers and big spenders is the retention of effective levers of control on EEC spending. Those effective levers of control are lamentably absent from the legislation, and that is why I shall vote against a Second Reading for the Bill.
  8.17 pm
  Mr. Win Griffiths: I shall preface my remarks by mentioning some of the constitutional issues that seem to have played a great part in the debate— the lament about the loss of sovereignty through our membership of the European Community.
  The problem is far wider than the effect on our constitutional processes since we became a member of the European Community. It is the far more fundamental one of the roles of the Executive and the legislature. Conservative Members who complain about the European Community must examine the roles of the legislature and the Executive as they have developed especially in the past decade, when measure after measure has been steamrollered through without much opportunity being given for the real will of the House to be heard.
  I dare say that not a single word of any of these agreements will be changed as a result of this debate or any of the debates that we shall have when we go into a Committee of the whole House. Conservative Members should think about that. We have become puppets of the Executive, who pull the strings as they desire and bring us agreements that have been made in secret, which they have no intention of changing, and which they want us to rubber-stamp. I look forward to the opportunity in Committee to try to make some major changes.
  There is a reference in paragraph 3(iii) of the explanatory and financial memorandum of the Bill to a new fourth resource. Do the Government accept that, if the House agrees, it should be deleted from the Council's decision of 24 June? Why do the Government feel that a fourth resource is needed? Do they believe that the budgetary agreements on discipline will not hold and that this safety net will enable them to provide more finance for the Community without having to return to the House and suffer embarrassment here? How large a part of the budget will the new fourth resource be? Will it be 1 per cent., 2 per cent., or 10 per cent.? Or might it be 20 per cent. of revenue? The Government do not have much idea, but they probably inserted the proviso to overcome any future problems over budgetary indiscipline.

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  We are told that the intergovernmental agreement provides for contributions to a monetary reserve, but that such contributions would be triggered only if the dollar depreciated against the ecu. Only last week we were told by the venerable scribes who write in The Economist that that is likely to happen. They forecast that, because interest rates in America are coming into line with world interest rates and because of the uncertainty caused by the presidential elections, the dollar's rally is likely to be short-lived. They predict that over the next 12 months the dollar will touch new lows against the yen and sterling. It will not necessarily depreciate against the deutschmark, but it might still depreciate against the ecu. Any substantial downward movement in the dollar will affect the amount of money that we spend on the common agricultural policy.
  The Foreign Secretary nailed the Government's flag to the mast of the Single European Act and to the budgetary agreement. According to the Commission's preliminary draft general budget, which has the title "General picture", the Single European Act will strengthen the Community's decision-making capacity and will set several fundamental goals. The first is
  "the completion of a large internal market by 1992."
  The Government are well and truly committed to that goal. It has been rammed down our throats in glossy television advertising every night of the week. However, whenever we ask the Government what they think the impact of the internal market will be on employment in the regions, the Government say that they are encouraging business men everywhere to grasp this opportunity, that they expect extra jobs to be created in the United Kingdom but that there is no way of telling what will happen in the regions and that they do not intend even to attempt to find out.
  In the light of the way in which the Common Market has developed, the regions are likely to suffer from the creation of the internal market. A minority of high-tech companies are located in the regions. The Japanese factories in south Wales will no doubt prosper, but the distribution of high-tech companies cannot be better illustrated than by a Hewlett Packard advertisement that appeared in several newspapers during the past fortnight. Hewlett Packard claims that it covers the nation with its high-tech services. It has 19 centres in the south-east. In Wales it has one, and in the north it has two. That is the kind of involvement that the regions have in high-tech industries. The Government are committed to the internal market, but they are not committed to employment in the regions.
  The second goal provided for in the Single European Act is
  "greater economic and social cohesion between the Member States."
  However, the United Kingdom Government have been doing exactly the opposite. There is no greater economic and social cohesion between the constituent parts of the United Kingdom. There are great disparities. The wealth gap and the employment gap are growing all the time, to the detriment of the regions.
  The third goal is
  "speeding up the development of a common policy on research."
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  The Government have had to be dragged, kicking and screaming, into supporting European Community re-search programmes, which in financial terms are chickenfeed.
  The fourth goal is the
  "development of social policy, monetary integration and environment policy."
  However, the Government have been hopelessly dragging their feet over all those aims. Because of their failure properly to apply the equal opportunities directives, they have been taken to the European Court on several occasions. They have blocked the parental leave directive. They helped to torpedo the famous Vredeling directive that would have allowed for greater consultation with workers if there were major changes in the company's activities, or if it was proposed to close it.
  Whatever we may think of monetary integration, we know that the Government want no part of it. They have declared their opposition to joining the European monetary system and the creation of a European central bank. The Prime Minister continues to refuse to countenance the United Kingdom joining the EMS. The Government have reluctantly agreed to implement the directives on bath water and tap water quality, on sulphur emissions from large industrial plants, on lead in petrol and on the ozone layer only after immense pressure from other member states.
  The Government do not support the proposal to alter the basis of the European Community's revenue. It was amazing to hear the Foreign Secretary speak about the Government's consistent approach to the structural funds. When the Prime Minister reported to the House on 8 December 1987 after the European Council meeting in Copenhagen, she said:
  "On the second aspect, structural funds, the Commission had proposed a doubling of the resources devoted to those funds by 1992 … I made it clear that this was out of the question."—[Official Report,8 December 1987; Vol. 124, c. 167]
  A few months later, an agreement was signed that will lead to an 80 per cent. increase in real terms by 1992. By 1993 there will be a doubling of the structural funds.
  I welcome the Prime Minister's conversion to a regional policy for the European Community. What worries me is how Britain will benefit from a doubling of the structural funds. We know that in all likelihood 80 per cent. of the regional fund will go to the southern states and only 20 per cent. to the north. On the basis of the projected figures for 1992, that will mean about £2·6 billion at the very most being available to help in priority two assistance for helping traditional industrial regions suffering from major job losses. Even if we receive one third of that money, we will be lucky to get the £1 billion that the Prime Minister said at one time she hoped we would get.
  The Government themselves have already halved the amount of money available for regional policies in the United Kingdom and there is a real possibility that the Government will reduce that figure even further. The regional fund contributions are on a shared basis, and there must be a commitment by the Government as well as from the Community. Even if that money were available to us, I foresee that our own spending on regional policy may be insufficient to enable us to take up all the available money. I shall be interested to know whether the Government have considered the possibility of that imbalance occurring in the future.

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  I fully endorse the Opposition's amendment, and I hope that it will receive the support of Conservative dissidents who are unhappy about the way in which their Government are moving. However, from the tenor of their remarks, I gather that they would prefer to put up some kind of iron curtain around the United Kingdom anyway.
  We need to underline the fact that the Bill will lead to a major increase in Community spending that is likely to find its way, without much diminution, into the agricultural sector, leaving the very real needs of Britain's industrial areas not being met. If the Government want to see Community spending increase, they must ensure that the balance is more towards that part of the budget that is described as non-compulsory expenditure.
  8.32 pm
  Mr. David Curry: It was inevitable that this debate would take on the tones of a constitutional argument, yet that is to disfigure it. We are not facing a choice between nationalism and federalism in the European Community. We signed a treaty, the first indent of which stated that its signatories are
  "Determined to lay the foundations of an ever-closer union among the people of Europe."
  Both the Conservative and Labour Governments spent many years travelling around Europe getting the right to sign that treaty. What is now happening flows from it. It is true that in Britain we have often made the mistake of pretending that there is a distinction to be made between economic and political development; as if one could have greater economic integration without concomitant political moves as well. Perhaps that is catching up with us.
  Tonight, we should be debating the Community's practicalities, recognising that in heading for the 1992 target, we are saying that we shall let the market be the motor. Well, the market may well lead us into directions that entail political decision-making. It may be that we shall move more in the direction of pooling our political activity, but to argue that it is a question of sovereignty against federalism is to be a generation behind the debate.
  I pay tribute to those hon. Members who have tonight made emotional speeches, many of which have been tours de force. However, they have said nothing to me intellectually, because they have not offered any vision of where we will take this island—I yield to nobody in being proud of being born a Briton in these islands—when we have a few miles away a continent that is undergoing the process of political and economic unification. That is the strategic context in which tonight's debate must be placed.
  I wonder whether the Opposition will divide the House, because I noted that the Leader of the Opposition wrote recently to the European Parliament's Socialist groups subscribing to the notion of a common manifesto for the next European elections a year from now. It has also been observed that almost all the European Parliament's Socialist groups have endorsed the deal from Brussels. I fail to see how the Labour party can square its adherance to the notion of a common manifesto with its opposition to the measures that underpin it.
  Mr. Holland: I do not know whether the hon. Gentleman would like my reply to that point now or later.
  Mr. Curry: Let us hear it now.
  Mr. Holland: Then I can tell the House that my intervention will take some time.
  Madam Deputy Speaker: Order. Interventions must be kept fairly brief.
  Mr. Holland: That is why, Madam Deputy Speaker, I suggest that the hon. Member for Skipton and Ripon (Mr. Curry) stays for the end of the debate.
  Mr. Curry: I look forward with keen anticipation to the hon. Gentleman's reply, and I am happy that he has given himself time to work it out.
  In judging the measures that are before the House, we should not look for an absolute and perfect solution, because all of us know that such is not likely to present itself. We are all rather tired of talking about the Community in terms of absolutes. It is not that kind of organisation. Instead, we need to know whether the Brussels deal is materially better than that which went before it. First, will there be a discipline in farm spending? Secondly, will it offer the Community a period of stability and an end to what seem to be interminable demands for yet more emergency funding? Thirdly, is it a good deal for the United Kingdom? Finally, is it a good deal for the whole of the Community, in the sense that it will open the way to those developments that have been endorsed, promoted and demanded by the United Kingdom? I believe that we can make a positive response on all those counts.
  The Brussels deal plugs the deficiencies of Fontainebleau, and we must be honest and admit that it did have deficiencies. Also, it introduces medium-term planned expenditure, and the inter-institutional agreement deserves rather more credit than it has been given tonight. It also reinforces the rebate mechanism and improves upon it in certain respects. It also opens the way to 1992, by establishing the political balance—which is where the increase in the structural funds comes—that will clear the way for decision-making towards that goal.
  What were the faults of the Fontainebleau agreement? It was not legally binding on the European Council or on the Commission. There was nothing to prevent the Commission from making proposals that contravened Fontainebleau's guidelines. Finally, it was not translated into specific and binding controls on the individual agricultural support programmes.
  The Brussels deal provides legally and formally binding control over agricultural expenditure, because the Brussels commitments had to be passed into legislative texts, which went their course through the European Parliament and Council and were then legislated into existence during the course of last month. They both fix an overall limit on farm spending and define it as a percentage of the growth in Community resources. Those provisions are in texts that can only be overcome by a unanimous vote of the Council, and there is no organisation in the world that will bind itself in all circumstances whatsoever and not leave the possibility of unanimity changing the situation.
  Whereas Fontainebleau was riddled with special circumstances, the Brussels deal permits the single special circumstances of the dollar-ecu relationship. It does so both ways. If the dollar starts to rise—the recent pressure on the dollar has been upwards—those economies are realised, just as, if the dollar declines, the funding will be made available, I recommend that the hon. Member for Vauxhall (Mr. Holland) reads the text, where he will find

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  that provision. Secondly, the Commission must never make proposals exceeding the guideline. Thirdly, we have in the agricultural regimes about 20 specific measures for legally bound stabilisers.
  It is easy enough to say that this is nothing but yet another rerun of Fontainebleau. The fact is that it is a radically different animal. Let us not denigrate Fontainebleau: it laid the basis for our rebate arrangements, and they came under intense pressure. It is difficult to exaggerate the unpopularity of the rebate provision at the time, but they have now been reinforced and enhanced by the Brussels agreement. Fontainebleau was a milestone along the road, although it did not provide the certainties for which many hoped at the time.
  Will the arrangement work? That is a perfectly legitimate question. I have been examining some of the agricultural sums for this year. In this year's farm price review, we have had a Council compromise, which is still hanging on the Greek distinction between points and percentages in monetary compensatory amounts, and which added 289 million ecu to the cost. That has been entirely compensated for by reduced aid for incorporation of skimmed milk powder, for milk to be fed as a liquid to calves and for liquid to be used for casein manufacture, and by savings in export subsidy. The total savings are 285 million ecu.
  The Ministers went into the negotiations saying that they would chop the green rate and play on the level playing field. What happened? They were told, "No." As a result the changes in the green rate are deferred until next year. They could not drive a coach and horses through the settlement as they had done in the past.
  Let me make a forecast for next year: I think that it will be impossible to spend the money in the agricultural guideline. I think that we will end up 1 billion ecu in the black in both 1989 and 1990. We have a 350 million ecu margin in the preliminary draft budget before we reach the guideline; the slight increase in inflation in the Community gives us another 50 million ecu to play with; the savings in the dairy sector are substantial; and the drought in the United States will have a dramatic impact on the amount that we need to subsidise production of oilseed rape and soya, and on the lower restitutions on the cereal harvest.
  That extra 1 billion ecu will permit the full depreciation of stocks and, if it is what Ministers want, the dismantling of MCAs. The importance of such an automatic depreciation is difficult to exaggerate. It introduces a step of budgetary integrity that did not exist in the past. The overvalued stock represents a disfigurement of the budget, and that is now being tackled.
  We can argue that the CAP is now palpably coming into balance, albeit slowly. There is no skim milk powder to be had. My right hon. and learned Friend the Foreign Secretary gave figures for stocks at 1 April. A telephone call to Brussels would have obtained the figures for 30 June, which show that there is no skim milk powder to be had, and that the butter stocks, which peaked at 1·4 million tonnes in 1986 and were 1·18 million tonnes a year ago, stood on 30 June at 378,339 tonnes. That is a very significant decline. What is important is that that is not reaccumulating: it is not going into stock now. It is a net decrease in the level of stocks.
  There is a good argument for saying that, although some sectors remain difficult, the general shape of the CAP is very different from that of five years ago. I invite those who regard quotas as merely a tinkering with the system to
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  visit my constituency—a dairy-producing area with many small farmers—and to propose their thesis in front of the Craven tenant farmers association. I should like them to see what response they would receive.
  The second important gain has been what can only be described as the medium-term expenditure plan incorporated in the inter-institutional agreement, which limits expenditure on a scale to 1992. Many hon. Members have said that that means that there is no budgetary discipline in the non-obligatory sector. Having lived through the negotiations with the committees of the European Parliament that wish to spend the money and having told them that the limits that were now to be enforced, I believe that there is an effective discipline, although it is different from that in the obligatory sector. It is worth noting that the only part of the non-obligatory sector in which there is any prospect of significant expansion is research. That line in the budget is the most favourable to the United Kingdom.
  The third gain is the rebate, which has been safeguarded. That was by no means an obvious achievement. It has been taken outside the framework of the budget, which gets us away from the difficult problem of the "dead money" that the rebate imposes on the budget. The gross national product scheme will benefit the United Kingdom, possibly to the tune of 500 million ecu a year.
  In a sense the most important criterion is whether the deal relaunches the Community as a growing and dynamic concern. There is striking evidence from the past six months that it does. We have had the agreements on capital movements, road haulage, the mutual recognition of diplomas and the controls on large combustion plants. The Community will always go in fits and starts; we shall never achieve a great consistent movement. The history of presidencies shows that each tends to start as a period of stagnation, with a great rush towards the end. I do not think that there is anything wrong with that. I feel that we have political lift-off, and commercial lift-off as well.
  I invite hon. Members to read the Financial Times day by day and to note the extent to which industry is positioning itself ahead of its 1992 market. The 1992 objective is a British objective. We claim that we invented it. But the Community is enlarging the horizon as it emerges as a world power. It has always been a world power waiting to be invented: now it is taking material shape. We see that in the reactions to the Reagan-Gorbachev detente on security measures, which imposes on the Community the heavy political burden of demonstrating its capacity for unity.
  The states of eastern Europe are now queuing up for Community recognition. How long will it be before Mr. Gorbachev pays a visit to the Commission headquarters in Brussels, and until the President of the Council goes to Moscow? We have already seen the first agreement signed with Hungary. The frontiers of the Community are, in a sense, extending towards the East. The Community is aleready an economic magnet to those countries. Already we begin to see the new candidate states lining up. In Norway, Austria and even Switzerland, politicians are asking, "What is the relationship with that greater Community? Can we not be a member of it?"
  A politically strong Community, competent to handle its worldwide relations as an ally of the United States, is a major British objective. What would happen if we said no—for the House could vote against the measure? First, we

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  would continue the long period of disunity and internal warfare that has so characterised the Community, just when we most need to present a united visage to the world. I apologise for the French: the word means "face".
  Mr. Holland: I om abliged to the hon. Gentleman for giving way to me, but, first, I do not need lessons in French, and secondly, several hon. Members still wish to intervene, although we have postponed the wind-up.
  Mr. Curry: I am drawing to a conclusion. The hon. Gentleman will know that I have sat through every second of the debate.
  Secondly, we would throw away our gains in budget discipline—the rebate and expenditure control. Thirdly, we would dislocate the whole movement towards 1992. The rest of Europe will not say, "What are we going to do to accommodate the British? How can we get round the problem?" They will not come galloping to us when they have just agreed one of the most difficult political compromises in the history of the European Community. The damage would be done to British objectives.
  We are no longer behind the rest of the train. We have caught up through our efforts and our negotiating skills in Brussels. This marks a new stage in Britain's full, sensible and pragmatic participation in the development of the Community, and I commend it to the House. It is part of my vision of the future.
  8.50 pm
  Mr. Tam Dalyell: I hope to catch Mr. Speaker's eye on Wednesday in the debate on short speeches, so I shall just ask six questions, five of which are friendly and may be answered by letter.
  First, the Foreign Secretary spoke with approval about the reduction of stocks—beating ploughshares into golf clubs, as he put it. That has something to be said for it, except that we have all seen the dramatic pictures from Iowa and Nebraska. What is the Government's estimate of the effect of the American bread-basket weather conditions on policy towards European stocks?
  The second question concerns European action on the environment, about which my hon. Friend the Member for Gateshead, East (Ms. Quin) quite properly asked. When reducing stocks, is there any policy of increasing habitats that might well be put to other uses? I think in particular of the wetlands and of the dramatic figures published only last week by the Royal Society for the Protection of Birds showing the likely decline and possible elimination of many European species. Has that been taken into account in policy-making?
  I am glad to see the Parliamentary Under-Secretary of State for Education and Science here. Last Thursday week we had an interesting debate in Committee during which the Under-Secretary of State for Foreign and Commonwealth Affairs spelt out policy on the ozone layer and on chlorofluorocarbons. I pay tribute to the work that has been done by British civil servants in the Foreign Office, who are internationally distinguished and who have a great reputation in Europe and around the world for their expertise on the Antarctic. In answer to a specific question the Prime Minister replied that the Secretary of State for the Environment was the lead Minister in all
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  matters relating to the ozone layer. The problem of the Arctic and the Antarctic should be handled on a European basis. Are the Government coming around to that view?
  A third matter that should be handled on a European basis—if it is not, we shall not have much effect—has to do with the rain forests. It is no good turning around to the Brazilians, the Indonesians and Laotians—my hon. Friend the Member for Vauxhall (Mr. Holland) knows a great deal about this—and telling them that the responsibility is entirely theirs. It is an international responsibility and a matter of self-interest. Is it Government policy that this should be dealt with on a European rather than a British basis?
  My third question is much shorter. The Under-Secretary will remember this from a previous incarnation when he was responsible for these matters as a Minister of the Department of Education and Science, and I believe he has a continuing interest in the issue. Clause 8 of the Bill contains a great deal of money. What is the policy towards Ispra and Karlsruhe and the other European institutions that we have debated but about which no final decision has been reached? There are certain tasks that are probably better performed on a European basis if the institutions function properly. One such task is waste management and the storage of toxic waste. For example, all the toxic waste arriving at the mouth of the Mersey creates enormous problems. Surely it would be rational to deal with that on a European basis?
  Fourthly, what is the policy towards setting aside money for a disaster fund? When I was a Member of the European Parliament I was also a member of the budget sub-committee which was responsible for going to Friuli after the earthquake. I was impressed by what the Commission did. The Parliamentary Under-Secretary of State for Education and Science will recall the disaster from his days as assistant to Sir Christopher Soames. At any rate in the early stages, the Commission did an extremely good job, whatever happened later on.
  Should not disaster operations come more and more to be done on a European basis? I am consumed by constituency problems arising from the Piper Alpha disaster, which was extremely harrowing for all concerned. Should not oil slicks, for instance, be a matter for European action rather than action by those whose rivers are most affected?
  Fifthly, as an NUR-sponsored hon. Member I ask again about policies on customs. We have trains travelling at 47 miles an hour; the French trains travel at 165 in the Pas de Calais. An all-party Channel tunnel visit takes place tomorrow and as a member of it I shall know a little more in 24 hours' time, but the briefing that NUR sponsors had from Sir Robert Reid fills us with alarm. Someone must tell the Home Office to get its act together. I believe that the Department of Transport is doing its best, but Scotland and the north of England must not be disadvantaged by inflexibility of the customs.
  My final question will be received less well. At the Hanover and Toronto summits we saw pictures of the Prime Minister. In Hanover, we saw her going up the Herrenhausen steps—that beautiful palace of Hanover—flanked as usual by Mr. Charles Powell. If Mr. Powell was so inefficient at the crucial time in January 1986 that he failed to tell his Prime Minister anything about what she should know about the role of the then Secretary of State for Trade and Industry, how is it that he remains such a crucial and powerful foreign policy adviser in the tradition

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  of Sir Horace Wilson? I surmise from the chuckles of Ministers that they know exactly what I am on about, thereby giving the game away. Enough said.
  8.57 pm
  Mr. Ian Taylor: Of the many speeches by Conservative Members I noted two in particular with some sadness. My hon. Friend the Member for Thanet, South (Mr. Aitken) got stuck on his worries about sovereignty—rather painfully stuck in the swing doors of the Last Chance saloon to which he referred.
  I also noted the speech of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), which I felt was notable for its wit, style and complete lack of facts. He addressed the central problem of whether we Conservatives want the Community and are prepared to take the consequential decisions arising from our membership of it. Those of us who believe that what the Government have achieved with the Community partners is to be lauded are not uninterested in the control of expenditure. I wish that debates on other areas of Government expenditure were treated with the same enthusiasm, pound for pound, when we scrutinise parts of our domestic budget.
  It is not surprising that the European Community budget has grown. After all, we are now in a Community of 12 member states and 320 million people. The budget, even this year after the increases, is approximately £29 billion. In relative terms, that is nearly one fifth of the United Kingdom budget. If we look at it another way, we see that our contribution to the EC budget is running at about 1 per cent. of the total United Kingdom budget.
  These are vital sums and it is important that we control them. I ask hon. Members to review them in the context of the Community that we are trying to build and the benefits that we have derived from it. The Community is leading us towards a single market, which is very much Government policy, and I suspect that it will have to be part of the policy of the Opposition if they go as far as signing the common manifesto about which my hon. Friend the Member for Shipton and Ripon (Mr. Curry) spoke. Therefore, it is not so much the magnitude of the budget that we should be discussing as the discipline required to control it and the direction that the expenditure has now taken.
  The Brussels summit in February was a notable success and showed the strength of the negotiations led by the Prime Minister and the Foreign Secretary. What did it achieve, and what are we considering? It achieved a degree of budget discipline which has not before been practised within the Community and led to a control of the common agricultural policy which has not previously been seen in the Community. It led to a shift in balance in the budget progressively away from agriculture, and that also has not previously been seen in the Community. It retained the Fontainebleau agreement and our abatement system which is of such great importance to us.
  The concept of legally binding expenditure is written into the agreement. I endorse what was said earlier. This is a new departure. There was nothing comparable in the Fontainebleau agreement. That is why we are effectively amending the treaty of Rome, an order of magnitude which gives strength to the nature of the agreements and their legally binding character.
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  Perhaps the Paymaster General will go a little further into the ways in which Britain will ensure that those legally binding measures are enacted. How will the legal options be used and what recourse will he consider having to the Court of Justice if there is a variation? Greater understanding here of the procedures would lead to a great deal more confidence about the nature of the agreements that have been reached.
  Budget discipline will also be helped by other factors in the Community, not least that France has become a net contributor to total funds. For example, if we look at the intergovernmental agreement that we are being asked to approve and at the order of magnitude of this year's contributions, we find that West Germany will contribute £1·16 billion, France £967 million and the United Kingdom £741 million. However, the United Kingdom position is even more favourable than that.
  The hon. Member for Hamilton (Mr. Robertson) did not give way to me earlier. If he had, I would have advised him that the IGA figure that we are discussing is an advance on own resources. We shall receive additional receipts as a consequence and,, of course, the differential amount will be treated under the abatement procedure. The arrangement is of great benefit to Britain.
  As I have said, under own resources the United Kingdom's gross contribution to the Community is little more than 1 per cent. of GNP after abatement, and that is well below the contribution of the other member states. Having secured our relatively favourable position, we find that the toal agreement derived from the Brussels summit has established the revised basis of own resources in the Community. It enshrines the reform of accounting practice, such as the ending of the old hoary accounting measures that are used to distort figures, such as the carry forward of unused budget appropriations and negative reserves. It has enforced budgetary discipline, especially in agriculture, by way of the guideline limits and the removal of exceptional circumstances through which under previous agreements the Commission regularly drove a coach and horses. It has established price proposals in the guidelines and automatic stabilisers and new rules for depreciation and treatment of agricultural stock.
  The results are a signal success for the Government. They show that when the Government give leadership in the Community they win support and are able to make significant progress and major changes. We are now talking about major changes in the budget and the common agricultural policy.
  Through our leadership we have encouraged the other countries in the Community to abolish capital controls on a phased basis. That is a remarkable event, which has not received sufficient appreciation in the House. The French Minister, in particular, has already acknowledged that the cost to France in 1990 of removing capital controls and liberalising exchange controls could be a net outflow of 200 billion francs, but he is still prepared to take the measure in the interests of moving the Community forward. We cannot have a single market with the capital controls that currently exist in member states other than Britain.
  I agree with my hon. Friend the Member for Horsham (Sir P. Hordern) that the problem is that this country so often treats the European Community in a half-hearted way. We are in, but we are not terribly enthusiastic. However, I urge the Government to build on their successes at Brussels and Hanover, to take advantage of

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  the agreements that are now to be ratified throughout the Community and to get stuck in and assume a proper leading role within the community.
  That will entail our deciding how the EMS is developed by becoming a member of the exchange rate mechanism. It is an incredible oversight for the Government, having succeeded in encouraging other member countries to give up capital controls, not, at the same time, to take the consequences, go into the exchange rate mechanism and take up leadership there and in the inevitable discussions about monetary policy. Moves forward are not just driven by the Commission, as if we have to fear members of the Commission as ogres. Some of us talk to businesses around the country. When they start to appreciate the benefits of the European Community, they say, "Why is it that, with those benefits, we do not take the consequences further, join the exchange rate mechanism and take the lead rather than having those questions decided by the Germans and the French?"
  If we do so, we can ensure that the Community develops on a basis of deregulation rather than on one of more and more regulation. I fear that we shall have to address that matter carefully in the next few months, during the Greek presidency, when we will hear old favourites under the new heading of social dimensions, which should be resisted.
  Finally—it is appropriate that my right hon. and learned Friend the Foreign Secretary is in his place—if we take the initiative in the economic area of the European Community, we can also continue and strengthen our role as the leader in foreign policy. This is a particularly vital period when we are beginning to open up towards the Eastern bloc and when there are many signs that that will perhaps be the key area of policy development in the next few years.
  It is not a question of giving up sovereignty; it is a question of redefining it. It is a question whether we are to be a mere outpost of a Community of 320 million people or take the leadership of that Community and ensure that the sort of policies that we as a Government would endorse will be accepted by our 11 partners.
  9.8 pm
  Mrs. Alice Mahon: Whenever I see the Government twisting and contorting over the insatiable alien that is the EEC budget, I cannot help wanting to say, "I told you so." It could not happen to a more deserving Government. The tragedy is, of course, that the Governent and the people whom they represent are not paying the full price. The full price is being paid by the skilled workers languishing on the dole. We have lost over 1 million jobs in manufacturing since we joined this expensive club. The low-paid workers in my constituency are paying a high price for food.
  I do not want to waste too much time talking about the ills of joining the Common Market because I am aware that time is short and that, whatever speeches may be made by Conservative Members, the rebellion will fizzle out when we go into the Lobbies. I want to concentrate on who will get what from the new structure and, to that end, I shall address my remarks mainly to the proposal to enlarge the structural funds.
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  Those funds are important to areas of unemployment, particularly those areas of high unemployment and deprivation, because they are still contributing to that increase in tax. My constituency lost assisted area status in 1981. Because we do not have assisted area status, certain EEC grants are not available. Halifax is in a textile closure area. Until the end of March, local firms can benefit to some extent from the regional fund, but the local authorities do not present such a cosy picture. What is the good of grants being available from Europe when, because of their spiteful attitude to local government, the Government have prevented councils from taking advantage of such grants? The councils have also lost out heavily on regional grants because of Government policy towards local government.
  In Haifax, there is to be a major factory closure, KP Foods. Conservative Members who talk about the benefits of 1992 should listen carefully. When the KP Foods factory closes in 12 months' time, it will cost nearly 1,000 jobs. In answer to a question from a colleague about the internal market in 1992, one of the directors of KP Foods said:
  "Internal market 1992.
  You are right to wonder if this had been considered in our appraisal of the future biscuit-making capacity and efficiency because it certainly has. There is no doubt that there will be increasing competition from many sources in the EEC for a share in the United Kingdom Market. This is happening now and imports from the continent are already rising".
  That is clear confirmation.
  Mr. Bob Cryer: Does my hon. Friend agree that that internal market will lose us jobs in 1992? My hon. Friend will be interested to learn that I sent a copy of that letter to Lord Young, and asked him to use it in his advertising campaign—on which he is spending £3·5 million—extolling all the alleged virtues of the internal market in 1992, to explain to people that the internal market will lose jobs in Bradford, South and in Halifax.
  Mrs. Mahon: My hon. Friend is absolutely right and I welcome his intervention. Halifax has also been subjected to the Nestle takeover of Rowntree. I attended both meetings in the House and questioned the directors of both companies in detail about the effects of the takeover. I have also received replies to letters which have confirmed that part of the reason for the takeover and the subsequent rationalisation is 1992. It will be quite devastating for towns that have already lost out because of Europe.
  Under the European regional development grant, Halifax has been caught in a Catch 22 situation. We do not have assisted area status, but in March, we shall also lose out under the European social fund. The KP Foods factory would have gained grant under the European social fund, but will now lose assisted area status in Europe also.
  It is particularly hard for the employees of that factory in Halifax because it employs mainly women and we shall now lose retraining grants which would have been available for those women, because of the changes in grant allocation. The work force is 70 per cent. women, and 80 per cent. are part-time. Approximately 550 women will lose their jobs but will not appear on the unemployment figures because of the way in which the Government calculate figures. The Government are presenting unemployment statistics that will be detrimental to our own people, because they will lose grant. That is

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  disgraceful. The Government are denying our own people the right to funds which are, after all, all that we are getting back for a very huge payment.
  I have listened to most of the debate and what I have heard does not convince me that things will get any better. I believe that things will get much worse. There is a crisis in the regions and what I will call "invisible" unemployment. The "disappeared" exist. They know that they exist and hon. Members who represent towns like Halifax know that they exist. I challenge whoever replies to this debate to come to my constituency and see the real problems caused by our being in Europe. In particular, he should come and see the "invisible" women at KP Foods who will not show up in the Government's statistics. I assure hon. Members that those women exist.
  9.11 pm
  Mr. William Cash: I welcome the Bill primarily because it is an opportunity for us, within the procedures of the House, to control legislation. Unlike so much other legislation which passes through the Select Committee on European Legislation, of which I am a member, this Bill gives us an opportunity to comment upon and consider the implications. That point has been made when we consider the wide variety of views that have been expressed on the Bill's merits today.
  When we talk about the percentage of money involved in relation to the overall United Kingdom budget, we see that, although the Bill would increase the resources available to the Community by 25 per cent., in terms of the overall volume of money passing through our economy, that is still a relatively small sum. I am far less concerned about that than I am about the other aspects of the Community and what I refer to as "creeping federalism", expressed best in the views of Mr. Jacques Delors, the President of the European Commission, only some 10 days ago.
  I wrote an article in The Times shortly before that in which I warned about creeping federalism. It is naive and absurd for us to ignore the fact that there are people in the European Community and elsewhere who would like to see a federal Europe.
  The other day I was on a television programme with a Conservative Member of the European Parliament. Quite expressly, he said that he was a federalist and that my right hon. Friend the Prime Minister had got it all wrong. He said that the Conservative party would have to come round to his point of view.
  Recently we dealt with the liberalisation of telecommunications. Despite our Government's protests and those of most member states, the European Commission is determined to ignore those protests and introduce that measure on the basis of what it wants rather than to consider the views of the Council of Ministers, the European Parliament, the Economic and Social Committee—ECOSOC—and the national Parliaments. We should take very seriously what Mr. Delors is saying.
  There are other signs of creeping federalism. I am in favour of a European Community which can provide opportunities that are exemplified by the Single European Act. It is possible to ensure that we gain the benefits and create a mutual and reciprocal Europe and at the same time retain greater effective control over what is happening in the House.
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  We had a debate on the glorious revolution the other day. We would not want to throw away the advantages that we have accumulated over the past three centuries in return for inverted control over our affairs. We must accept the opportunity to maintain the rights of the people who elected us and speak for them in this House on matters that increasingly affect them.
  Mr. Delors is right: about 80 per cent. of the industrial, commercial and social legislation affecting the electorate is increasingly being moved into the European domain. It is up to us—as I tried to point out in my article in The Times—to ensure that we are truly involved. It is through that involvement and representation that we shall be able to demonstrate our commitment to the greater purpose and to represent the electorate more effectively.
  9.20 pm
  Mr. Rhodri Morgan: I am pleased to have the opportunity to make one or two remarks that follow from the Foreign Secretary's introduction to the debate. He said that one purpose of the change in the budget system was in the increase in the structural fund required in the context of 1992. I hope that I have quoted him correctly. He implied that the gap in the standard of living between the south and east and the north and west of this country is likely to remain a serious problem for public policy. I assume that he did not mean the alternative interpretation, which is that the regional differences within the Community, between the Mediterranean regions, which have never been industrialised, and the industrial regions, will remain wide.
  If the Government had represented the whole country, rather than being dominated by the south and the east, they would have effected a different compromise between their desire to see discipline brought into agricultural expenditure and the need to explain the structural funds to solve the north-south, east-west gap in this country, as well as the problems of the Mediterranean regions.
  This is a compromise; it is not a victory. The Government love referring to victories, and Back Benchers have been falling into that trap tonight. Every time Ministers return from a Council of Ministers meeting, they are like slightly cultured football hooligans, always talking about victory, success, and leadership, but never about compromise, which is what they have just made. Obviously, the legislation is a compromise, and it is a Tory compromise. It does not take sufficient account of the needs of the regions.
  However, the Foreign Secretary said that, in the context of 1992, the north and west of this country—Wales, Scotland and the northern region, not just Northern Ireland, which he emphasised—will have serious problems. Therefore, we need a greater emphasis on the regional and structural funds. We need them to be oriented to solving the problems in the industrial regions and to addressing the question of how those regions will catch up with the south and east, which have all the geographical advantages of being next to the Channel tunnel and the centre of the Community as an economic market.
  I hope that the Paymaster General will give us an explanation of what he will do to bend the Community and its policies towards a solution of the problems of Wales and the other disadvantaged regions of the Community.
  9.22 pm
  Mr. Stuart Holland: We have had a wide-ranging debate, which is appropriate because the Bill is concerned with the Community budget until the early 1990s and the allegedly magic date of 1992. We have covered major issues, including sovereignty and whether the Community brings about a loss of sovereignty rather than its extension. We have discussed internationalism, federalism, confederalism and regional interests, and it is clear that there is division on many of those issues. Government and Opposition Members have different views on those matters and that is understandable.
  The Community itself is not an unchanging institution and has changed dramatically over the years. When the Coal and Steel Community was founded in the early 1950s, it was described by Maurice Schumann, the then French Secretary of State for Foreign Affairs in glowing terms. He said that the Coal and Steel Community would mean that war between France and Germany would be not only morally unthinkable, but materially impossible. Sadly, that forward-looking initiative was nonetheless retrospective. The main issue facing Europe was not a possible war between France and Germany, but future relations between east and west Europe, to which some hon. Members, notably the hon. Member for Skipton and Ripon (Mr. Curry) referred. They asked how the Community should now respond to the recent overtures of Comecon, the Eastern European countries and the Soviet Union.
  My hon. Friend the Member for Bridgend (Mr. Griffiths) made a telling point. When we talk about sovereignty and effective parliamentary democracy, just how effect is the democracy in this Chamber on this Bill? I am advised by those with experience of this matter that it is virtually impossible to amend the Bill. In one sense this reflects the Government's majority, in that, despite the dissenting voices of some Conservative Members, they can use it to get the Bill through. But in any effective democracy it should be possible to amend a Bill both in Committee and on the Floor of the House. It should be possible to use the scalpel rather than the steamroller. Otherwise, we are applying double standards in saying that the European Assembly is an ineffective talking shop which cannot restrain the increase in agricultural spending when it is not clear whether we can do so.
  My hon. Friend the Member for Newham, South (Mr. Spearing) also made some telling points, such as we have become accustomed to from him. He spoke about the considerable significance of the Bill, especially as it reflects the Single European Act which, in terms of public perception, has quietly transformed the long-standing Gaullist veto agreed at the Luxembourg compromise in January 1966 into the reintroduction of majority voting. It is argued that increased payments will be made which have not yet been approved by our Parliament and which may have been opposed by British Ministers in the Council of Ministers. We shall have a 25 per cent. increase in real terms in EC expenditure.
  Hon. Friends, especially my hon. Friend the Member for Hamilton (Mr. Robertson), have already pointed out that commitments at Fontainebleau have not been realised and we have not managed to restrain spending on the common agricultural policy. One of the most effective ways of reducing spending under the CAP would be to do something not yet mentioned in the debate, which is to
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  achieve a reduction in prices inside the Community. That should include threshold prices, and commodities which are produced by other countries, particularly the least developed countries, which can achieve no comparative advantage in the modern and advanced technology industries open to the Community. They are highly, if not completely, dependent on such access for an increase in their income and standard of living. The European Community has not addressed that sufficiently, just as its aid disbursement has been notoriously slow and ineffective.
  The Community has further problems with the regional fund. It may be said that the structural funds, including the regional fund, will increase by x, y or z per cent., and some of those percentages look dramatic. But we should bear in mind how ineffective the Community regional fund has been to date. In recent years it has varied between one twentieth and less than one fifteenth of the total EC budget. Since total EEC spending itself for most of that period has been less than 1 per cent. of GDP, this amounts to a very minor fraction of the Community's GDP as a whole. Granted that only one tenth of the regional budget changes hands between member countries, one then has about one two hundredth of 1 per cent. of the Community's GDP changing hands, so one is talking about one which comes within the accounting errors of virtually any well-managed international agency.
  So I am not terrified, and I think that other Opposition Members are certainly not terrified, by an increase in the spending under the regional fund. What we want to see is effective spending under that regional fund and we should get some social indicators for that spending. The issue of juste retour should be addressed in a new sense. Jacques Delors has argued for a social market and social criteria inside the Community and if we are talking about that we should make certain that there is a net shift of resources towards the less privileged people in the lesser and least developed regions of the Community. However, it does not make any sense to have such a spending programme if, as has traditionally been the case in the Community, it is only to be on infrastructure rather than on enterprise.
  It is absolutely classic to say, when in doubt, build a road. When doubly in doubt, build oneself a free enterprise zone, which is an elaborate form of the advance factory building programme that we have in the United Kingdom. We have learnt through our experience in this country and as introduced by the Labour Government in the 1970s, that one needs a much more public entrepreneurial approach. That is what we argued for in the case of the Scottish and Welsh Development Agencies. The Government have not scrapped those agencies—they have not dared to do so.
  Yet when the Community comes forward with a reasonable proposal for local and regional government sponsorship of entrepreneurial ventures to strengthen the regional fabric of the Community, as we learnt in the most recent debate touching on those issues in May, the Government will not support that. If I may say it to the hon. Member for Skipton and Ripon, that is one difference between our position and that of the Government.
  The other aspects of such difference are certainly easy to elaborate. I can illustrate them by what the Foreign Secretary said in the opening debate. I was entertained when he said that the Government would seek finance on a sound basis, that some progress had been made at

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  Hanover, and that we would find the best way of doing this. He then claimed that the agenda had been set by the British.
  I say to him and again to the hon. Member for Skipton and Ripon that that agenda was not in fact set by the British. It was set by Andreas Papandreou at the December 1984 summit in Athens and echoed by Francois Mitterrand in June 1985. It was there, when the Community was stuck in the mud of the common agricultural policy and could not set a serious agenda on any major issue affecting either the recovery of the European economy, the restructuring of European industry or our relations with the Third world, that it was put by a Socialist Prime Minister and a Socialist President that we needed fundamentally to rethink the institutions of the Community. They proposed a new Messina conference. That conference has the same relation to the Rome treaty as, for example, Bretton Woods has to international monetary affairs. It was from their arguments and their pressure that much of the recent change that we have seen has been realised.
  Jacques Delors has been mentioned more than once during the debate. The hon. Member for Skipton and Ripon argues that the proposals coming from the Government or the Community are not accepted by us and asks how our position is different. It is very different, as is Jacques Delors' position. He has argued that the liberalised internal market must be complemented by a social market, that there must be a raising of practices at work to the best standards available in the Community, that we have to achieve an opening of the books, with accountability and industrial democracy in leading enterprises in the Community, and that we have to take measures to promote small and medium firms and enable them to network and gain the advantages from mutual size through joint ventures in Community. For many years Jacques Delors has notably argued that we need a recovery programme in the European Community.
  Our Government are identified with none of those proposals. Yet such proposals could make 1992 of real interest to working people throughout Europe. At the moment all we have is the proposal for the harmonisation of passport covers, but not the abolition of tariff barriers. A harmonisation mania has taken over without the willingness for joint international action to co-operate on some of the urgent issues that face Europe, especially joint action for jobs and joint accountability of the new multinational companies that are dominating the Community.
  When I first raised the matter of multinationals with the Government I stressed the major increase in the market share held by the top 100 companies in the Community from the early 1960s to the 1980s. They have doubled their share of the market. That increase is coming home to the public, through the press, because of bids made by multinational companies for British companies. I would not say that all of my hon. Friends are against such bids, but they want a means of accountability for such bids and a public policy framework that countervails the power of multinational capital in Europe. My hon. Friends want work practices safeguarded and workers rights extended. Within that framework our position differs from the Government about what 1992 is or should be about.
  We believe that the GDP base is a better foundation for budget assessment. It is interesting to see from the proposals before us that there will be a working party of
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  the Commission, which will constantly evaluate what GDP is about. I was quite amused when one hon. Member said, almost spitting the words, "the Italians". By implication he was talking about the Italian black market and meant that the Italians' GDP would be understated and therefore their contribution would be less than it should be.
  As it happens, one reason for the increase in the growth registered in the Italian economy is precisely because the Italians have made estimates of their black economy and their shadow economy and included them within their assessment. By and large such things can be sorted out provided that we can break into the private language game between the professional economists and get some sense into the argument.
  If we are to have a new committee for accounting within the Community, we should implement articles 85 and 86 of the treaty of Rome. We should gain transparency on the activities of the octoploid multinational enterprises, which are presently not accountable to any Community procedure—they are accountable to virtually nobody but themselves. If we were to do that we would discover a lot more public interest in what is happening in the Community.
  The position that we argue is not federalist, it is internationalist. We argue for joint international action within the Community, but, in contrast with some hon. Members on both sides of the House, I would not argue that this denies one's sovereignty. Effective joint international action can extend one's sovereignty and it is a collective expression of it. The contrast therefore is not between nationalism and supranationalism. The case must be made for changing the political agenda of the Community and for putting on its agenda and of our Parliament the issues that concern not only our people, but the peoples of Italy, Spain, West Germany and elsewhere. The tragedy is that our Government will simply not join or extend that debate.
  The Prime Minister has dismayed her counterparts abroad—and I am not just talking about Socialist Prime Ministers or Heads of State. When the Prime Minister kept on about the rebate and only the rebate, Mr. Chirac made a remark that was something like "I've had enough of this cracking of nuts." It is quite clear that the Prime Minister could not co-operate with the then Prime Minister of France. She cannot even co-operate with the present Chancellor of West Germany.
  In coming to a conclusion in supporting the reasoned amendment that the Opposition have put forward, I draw attention to a report by Patricia Clough in The Independent on 8 July. I have never met Patricia Clough and I do not know her views on Community matters, but she wrote:
  "Highly influential German politicians, who wish Britain well, are intensely irritated by the way Mrs. Thatcher has been built up in Britain as the senior and most prestigious European statesperson who can speak for Europe on a world platform. They are staggered that this can be claimed of a person who has been, and is still, obstructing progress to European unity. 'She does not speak for Europeans. She does not think like a European and she does not even try to understand them' said one. 'She only speaks for Britain's narrow provincial interests.'"
  That is the bottom line of the weakness and limitation of the Government's position. It is one reason why we have argued for an extension of the structural funds—for spending on the social fund, the environment, regional

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  development and the developing countries. It is one of the reasons why I am sure that my right hon. and hon. Friends will join me in supporting the reasoned amendment in the Lobby this evening.
  9.40 pm
  The Paymaster General (Mr. Peter Brooke): This has been a colourful debate. My hon. Friend the Member for Thanet, South (Mr. Aitken) talked about Louis XIV and the Last Chance saloon. My hon. Friend the Member for Horsham (Sir P. Hordern) played a role as the parliamentary golf champion. The hon. Member for Linlithgow (Mr. Dalyell), not disagreeably, but irrelevantly, introduced Mr. Charles Powell into the debate.
  The hon. Member for Hamilton (Mr. Robertson), in opening the debate on behalf of the Opposition, spent an enormous amount of time on the presence of my right hon. and learned Friend the Foreign Secretary, a presence which all of my right hon. and hon. Friends welcomed. I can assume only that the time that the hon. Gentleman devoted to that was designed to conceal the absence from the Opposition Front Bench of the Leader of the Opposition, the right hon. Member for Manchester, Gorton (Mr. Kaufman) and the right hon. and learned Member for Monklands, East (Mr. Smith).
  I shall comment on several of the subjects that have been raised and I shall take them in the order in which they were raised. The structural funds were spoken of initially by the hon. Member for Hamilton, the hon. Members for Gateshead, East (Ms. Quin), for Motherwell, North (Dr. Reid), for Bridgend (Mr. Griffiths), for Halifax (Mrs. Mahon) and for Cardiff, West (Mr. Morgan), and by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).
  I would never describe my hon. Friend as a member of a small and disgusting minority, as he did. I thought that he was a little less than generous in his remarks about the Whips' Office and the documentation that is available there. I sensed that he might not be supporting the Government. I am sorry that he is not subject to the same military discipline as that which he described when referring to my hon. Friend the Member for Horsham at an earlier stage.
  The hon. Member for Gateshead, East raised a number of subjects when talking about the structural funds and I shall respond to the general topics. In that process, I hope that I shall deal with the contributions of other hon. Members. The United Kingdom can be expected to benefit from all of the five priority objectives which were agreed at Brussels and enshrined in the framework regulations.
  As the hon. Member for Gateshead, East said, Northern Ireland has been included in the agreed list of less-developed regions, in recognition of its special political and economic difficulties, although it does not meet the standards or criteria for inclusion under the objective. Most of the United Kingdom assisted areas should continue to be eligible for support under the second objective, which is to help with the problems of industrial decline. That includes the major areas of decline. Help for the peripheral areas, such as the Highlands and Islands, rural Wales, and many parts of south-west England, will
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  be available under the fifth objective. The third objective is to combat long-term unemployment and the fourth is to improve training, especially for young people.
  The social fund will continue to be focused on activities that are priorities for the United Kingdom, such as youth training and assistance for the long-term unemployed. In 1988, social fund commitments for the United Kingdom totalled over £400 million, and the funds as a whole total £750 million.
  As I have said, the fifth objective is to promote rural development. It is important that a link has been made between the operation of the funds and the reform of the CAP. There will also be commercial opportunities for British companies and employers in other parts of the Community in terms of the application of funds there.
  The hon. Member for Halifax invited me to her constituency. I may have to go in my capacity as chairman of the Conservative party rather than as Paymaster General, but I gladly accept her invitation. The hon. Member for Gateshead, East and other hon. Members referred to research. I stress that it is necessary to ensure that we get value for money in research and development expenditure and that we do not fund bad research.
  My right hon. Friend the Member for Worthing (Mr. Higgins) was the first to mention GNP statistics, and he was followed by the hon. Member for Newham, South (Mr. Spearing) and my hon. Friend the Member for Thanet, South. It is precisely because our statistics and those of others are not good enough that the European Council decided in February that a directive was needed on the harmonisation of GNP statistics.
  The directive's aim, which has been agreed by the Council, is to guarantee the comparability and uniformity of national GNP statistics and to provide for them to be verified and revised as necessary. The directive explicitly provides for the scrutiny of member states' GNP estimates by a management committee containing national experts of all member states. In reply to my hon. Friend the Member for Thanet, South, I should say that hon. Members must be aware that many of the weaknesses that apply to GNP statistics apply to VAT statistics, too.
  The hon. Member for Hamilton mentioned the IGA and implied that it is on top of the increase in own resources provided for in the Bill. Total payments to the budget for 1988, including the IGA and own resources payments, will be within the new ceiling of 1·15 per cent. of GNP. He seemed to forget that the IGA is a gross contribution that will give rise both to extra receipts by the United Kingdom and to extra abatement next year. Expressing the IGA contribution as a percentage of our net contribution is not comparing like with like.
  My right hon. Friend the Member for Worthing joined the hon. Member for Hamilton, and was joined by my hon. Friend the Member for Esher (Mr. Taylor), on the subject of legal enforceability. The Council can limit the exercise of its powers over obligatory expenditure, on which it has the last word, but it cannot limit the powers of the European Parliament over non-obligatory expenditure, on which the Parliament has the last word. We could not have obtained the agreement of other member states to amend the treaty to limit significantly the budgetary powers of the Parliament—nor was such a treaty amendment necessary. But by imposing own resources sub-ceilings, we can limit the amount of

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  resources available for total spending. Given the limits on agricultural spending, that limits the resources for non-obligatory expenditure, too.
  The hon. Members for Hamilton and for Newham, South mentioned the effect on our gross contribution of the increase in the own resources ceiling. On the basis of the 1988 figures, the increase in the own resources ceiling 1·2 per cent. of GNP will increase our gross contribution, before abatement, by up to a maximum of a little under £1 billion. However, that will be greatly offset by additional receipts and some extra abatement.
  The right hon. Member for Bethnal Green and Stepney (Mr. Shore) may have misunderstood the effect of moving from 1 per cent. VAT to 1·4 per cent., and described it as a 40 per cent. increase in own resources. Other aspects of own resources need to be taken into account, so the overall effect was less—some 15 or 20 per cent.
  My hon. Friend the Member for Horsham mentioned the public expenditure White Paper projection of net payments to the Community institutions in 1988–89. That projection was £800 million, not £1,470 million. The £1,470 million related to 1989–90. The Brussels package will increase our net payments by £200 million to £300 million a year, but I fear that my hon. Friend will have to wait until the Autumn Statement for a more detailed projection, giving revised figures year by year.
  The hon. Member for Bridgend referred to the fourth resource. On the basis of the 1988 figures, GNP contributions could amount to up to 25 per cent. of the budget, if expenditure were at the 1·2 per cent. of GNP ceiling. The Government could not accept amendment of the Bill to exclude GNP contributions from own resources: that would be tantamount to rejecting the new own resources decision. The Government support the introduction of GNP contributions, as they bring own resources more into line with relative prosperity.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) apologised to me for having to leave the debate early to go north. He referred first to what had been said by Mr. Delors. My hon. Friend the Member for Northampton, North (Mr. Marlow), who also apologised for having to leave early, the right hon. Member for Bethnal Green and Stepney and my hon. Friend the Member for Thanet, South also referred to Mr. Delors.
  I am aware of the statement by the President of the Commission to the European Parliament in Strasbourg on 6 July. It reflected Mr. Delors' personal view.[Interruption.] If the hon. Member for Walsall, North (Mr. Winnick), who has been here for only part of the debate, will excuse me, I have read the speech in French. Mr. Delors explained that he was speaking personally. It is important to remember the audience that he was addressing.
  Mr. Delors' views do not reflect those of Her Majesty's Government. We do not believe that in 10 years' time 80 per cent. of economic, social and fiscal legislation will originate in the Community. Mr. Delors' statement was more indicative of the audience that he was addressing than of the true facts. I suspect that his intervention was intended to stress the need for national Parliaments not to accept uncritically what is happening in Brussels. He did not include this House in his remarks.
  My right hon. Friend the Member for Worthing referred to the monitoring of agricultural expenditure and sought an assurance that agricultural expenditure would be properly monitored. I am happy to give him that
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  assurance. Under article 6 of the budget discipline decision, the Commission will submit monthly reports on the development of agricultural expenditure, sector by sector, both to the Council of Ministers and to the European Parliament.
  Mr. Higgins: Many hon. Members are puzzled by what my right hon. and learned Friend the Foreign Secretary said, and my right hon. Friend has just repeated that obligatory expenditure will be subject to binding legal restraints, or budgetary discipline, but that that will not apply to non-obligatory expenditure. My right hon. and learned Friend also said that none the less there is an overall legally binding budgetary discipline and that therefore we need not worry about the fact that it does not apply to non-obligatory expenditure. We are puzzled by that. Perhaps my right hon. Friend will spell it out. if it means merely the GNP ceiling, that is not an effective measure.
  Mr. Brooke: The inter-institutional agreement that was approved by the Ecofin Council on 13 June, and by the European Parliament on 15 June, is a political agreement on the procedural and financial framework for implementing the conclusions of the Brussels European Council on budgetary discipline and the level of expenditure. The reference framework for the agreement is the financial perspective for 1988 to 1992, drawn up in accordance with the Brussels conclusions. The perspective will be subject to technical adjustments—for example, to update it to current prices. Other revisions to individual elements can be made only by agreement between Council and Parliament and then only within the overall expenditure ceiling, plus a safety margin for unforeseen expenditure of 0·03 per cent. of GNP. The payment ceilings in the inter-institutional agreement, together with the safety margin, constitute the annual own resources sub-ceilings, set out in the own resources decision. The ORD also includes for the first time a ceiling on commitments.
  It would not be possible to have such a legally binding instrument on budgetary discipline for non-obligatory expenditure, because it would fetter the powers of the Parliament that I have described. The inter-institutional agreement is a political agreement between the institutions, and the sub-ceilings in the ORD are a legally binding constraint on both revenue and overall expenditure. Given the legally binding limit on agricultural and on other obligatory spending, the sub-ceilings necessarily limit the amount available for non-obligatory expenditure.
  My hon. Friends the Members for Clwyd, North-West (Sir A. Meyer), for Horsham, for Skipton and Ripon (Mr. Curry), for Esher (Mr. Taylor) and for Stafford (Mr. Cash) all made speeches that varied between the eloquent and the pithy in supporting the Community.
  The hon. Member for Linlithgow asked me six questions, the first five of which were rather more relevant. and serious than the last. Nevertheless, he indicated by the tone of his questions his basic support for the Community. As for his question about the American drought, it is too early to assess its precise impact on the Community budget. If the recent increase in world prices for many commodities is sustained, expenditure on Community subsidies should fall. I do not accept that occasional adverse weather justifies a policy of maintaining large food stocks in the Community. I have seen a recent report that

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  the United States has in store six months' supply of food, and there is therefore no reason to expect any serious disruption in food supplies.
  Dr. Reid: Can the Minister explain to the House what he meant by the Government continuing to monitor agricultural expenditure? Once, there was a Scottish goalkeeper named Frank Haffey who, in retrospect, could be said to have monitored the ball going into the net behind him at Wembley. Is that the kind of monitoring that the Minister has in mind?
  Mr. Brooke: I congratulate the hon. Member for Motherwell, North on his analogy. The monitoring takes the form of reporting by the Commission to the Council. As the hon. Gentleman knows, that reporting process places an obligation on the Commission and on the Council to respond to the situation in which they find themselves.
  The hon. Member for Vauxhall (Mr. Holland) referred to the amendment which the hon. Member for Hamilton moved on behalf of the Opposition. Going back into history, there was a speech made by the now noble Lord Callaghan, in the heartlands of the Labour party, in Islington, on 26 April 1975, when he said:
  "In the matter of the Budget, we made a flat request that Britain's share should be reduced in certain circumstances … Long and arduous negotiations produced a satisfactory result. Britain will now pay less."
  The effect of those renegotiations in 1974–75 was that they did not save us a single ecu.
  By comparison, my right hon. Friend the Prime Minister said at Luxembourg on 18 October 1979:
  "Britain cannot accept the present situation. It is demonstrably unjust. It is politically indefensible … the balance is not compatible with the spirit of the Community. Its continuation would undermine the sense of solidarity and common obligation which lies at the base of Community endeavour."
  As a consequence of the Government's actions, we achieved negotiated refunds of more than £2·5 billion between 1980 and 1984, and the Fontainebleau abatement has been worth £3 billion since then.
  The hon. Member for Newham, South quoted Latin. I have long been conscious that the Latin word for left is "sinister". I say to my hon. Friend the Member for Thanet, South, who placed Mr. Delors in the Last Chance saloon, that Conservative Members will recall that Mr. Delors is a Socialist.
  Question put, That the amendment be made:—
  The House divided: Ayes 184, Noes 330.

  Division No. 403]

  [9.59 pm

  AYES

  Abbott, Ms Diane

  Body, Sir Richard

  Adams, Allen (Paisley N)

  Boyes, Roland

  Allen, Graham

  Bradley, Keith

  Anderson, Donald

  Bray, Dr Jeremy

  Archer, Rt Hon Peter

  Brown, Gordon (D'mline E)

  Armstrong, Hilary

  Brown, Nicholas (Newcastle E)

  Ashley, Rt Hon Jack

  Brown, Ron (Edinburgh Leith)

  Barnes, Harry (Derbyshire NE)

  Buchan, Norman

  Barron, Kevin

  Buckley, George J.

  Beckett, Margaret

  Campbell, Ron (Blyth Valley)

  Bell, Stuart

  Campbell-Savours, D. N.

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

  Canavan, Dennis

  Bermingham, Gerald

  Clark, Dr David (S Shields)

  Blunkett, David

  Clarke, Tom (Monklands W)

  Boateng, Paul

  Clay, Bob

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  Clelland, David

  Loyden, Eddie

  Clwyd, Mrs Ann

  McAllion, John

  Cohen, Harry

  McAvoy, Thomas

  Coleman, Donald

  McCartney, Ian

  Cook, Frank (Stockton N)

  Macdonald, Calum A.

  Cook, Robin (Livingston)

  McFall, John

  Corbett, Robin

  McKelvey, William

  Corbyn, Jeremy

  McLeish, Henry

  Cousins, Jim

  McNamara, Kevin

  Cryer, Bob

  McTaggart, Bob

  Cummings, John

  McWilliam, John

  Cunliffe, Lawrence

  Madden, Max

  Dalyell, Tam

  Mahon, Mrs Alice

  Davies, Rt Hon Denzil (Llanelli)

  Marek, Dr John

  Davies, Ron (Caerphilly)

  Marshall, Jim (Leicester S)

  Dewar, Donald

  Martin, Michael J. (Springburn)

  Dixon, Don

  Martlew, Eric

  Dobson, Frank

  Maxton, John

  Doran, Frank

  Meacher, Michael

  Duffy, A. E. P.

  Meale, Alan

  Dunnachie, Jimmy

  Michael, Alun

  Eadie, Alexander

  Millan, Rt Hon Bruce

  Eastham, Ken

  Moonie, Dr Lewis

  Evans, John (St Helens N)

  Morgan, Rhodri

  Ewing, Harry (Falkirk E)

  Morley, Elliott

  Fatchett, Derek

  Morris, Rt Hon A. (W'shawe)

  Faulds, Andrew

  Morris, Rt Hon J. (Aberavon)

  Field, Frank (Birkenhead)

  Mowlam, Marjorie

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

  Mullin, Chris

  Flannery, Martin

  Murphy, Paul

  Flynn, Paul

  Oakes, Rt Hon Gordon

  Foot, Rt Hon Michael

  O'Neill, Martin

  Foster, Derek

  Orme, Rt Hon Stanley-

  Fraser, John

  Parry, Robert

  Fyfe, Maria

  Pike, Peter L.

  Galbraith, Sam

  Powell, Ray (Ogmore)

  Galloway, George

  Primarolo, Dawn

  Garrett, John (Norwich South)

  Quin, Ms Joyce

  Garrett, Ted (Wallsend)

  Radice, Giles

  George, Bruce

  Redmond, Martin

  Godman, Dr Norman A.

  Rees, Rt Hon Merlyn

  Gordon, Mildred

  Reid, Dr John

  Gould, Bryan

  Richardson, Jo

  Graham, Thomas

  Robertson, George

  Grant, Bernie (Tottenham)

  Robinson, Geoffrey

  Griffiths, Nigel (Edinburgh S)

  Rogers, Allan

  Griffiths, Win (Bridgend)

  Rooker, Jeff

  Grocott, Bruce

  Ross, Ernie (Dundee W)

  Harman, Ms Harriet

  Rowlands, Ted

  Hattersley, Rt Hon Roy

  Sedgemore, Brian

  Haynes, Frank

  Sheerman, Barry

  Healey, Rt Hon Denis

  Sheldon, Rt Hon Robert

  Heffer, Eric S.

  Shore, Rt Hon Peter

  Hinchliffe, David

  Short, Clare

  Hogg, N. (C'nauld & Kilsyth)

  Skinner, Dennis

  Holland, Stuart

  Smith, Andrew (Oxford E)

  Home Robertson, John

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

  Hood, Jimmy

  Snape, Peter

  Howarth, George (Knowsley N)

  Spearing, Nigel

  Howell, Rt Hon D. (S'heath)

  Steinberg, Gerry

  Hughes, John (Coventry NE)

  Stott, Roger

  Hughes, Robert (Aberdeen N)

  Thompson, Jack (Wansbeck)

  Hughes, Roy (Newport E)

  Turner, Dennis

  Hughes, Sean (Knowsley S)

  Vaz, Keith

  Illsley, Eric

  Wall, Pat

  Ingram, Adam

  Wardell, Gareth (Gower)

  Janner, Greville

  Wareing, Robert N.

  John, Brynmor

  Welsh, Michael (Doncaster N)

  Jones, Martyn (Clwyd S W)

  Williams, Rt Hon Alan

  Kaufman, Rt Hon Gerald

  Williams, Alan W. (Carm'then)

  Lambie, David

  Wilson, Brian

  Lamond, James

  Winnick, David

  Leadbitter, Ted

  Wise, Mrs Audrey

  Leighton, Ron

  Worthington, Tony

  Lestor, Joan (Eccles)

  Wray, Jimmy

  Lewis, Terry

  Litherland, Robert

  Tellers for the Ayes:

  Lloyd, Tony (Stretford)

  Mr. Allen McKay and

  Lofthouse, Geoffrey

  Mrs. Llin Golding.

  121

  NOES

  Alexander, Richard

  Dykes, Hugh

  Alison, Rt Hon Michael

  Eggar, Tim

  Allason, Rupert

  Emery, Sir Peter

  Amess, David

  Evans, David (Welwyn Hatf'd)

  Amos, Alan

  Evennett, David

  Arbuthnot, James

  Fallon, Michael

  Arnold, Jacques (Gravesham)

  Favell, Tony

  Ashby, David

  Fearn, Ronald

  Atkins, Robert

  Fenner, Dame Peggy

  Atkinson, David

  Field, Barry (Isle of Wight)

  Baker, Rt Hon K. (Mole Valley)

  Finsberg, Sir Geoffrey

  Baker, Nicholas (Dorset N)

  Fookes, Miss Janet

  Baldry, Tony

  Forman, Nigel

  Banks, Robert (Harrogate)

  Forsyth, Michael (Stirling)

  Batiste, Spencer

  Forth, Eric

  Beaumont-Dark, Anthony

  Fowler, Rt Hon Norman

  Bellingham, Henry

  Fox, Sir Marcus

  Bendall, Vivian

  Franks, Cecil

  Bennett, Nicholas (Pembroke)

  Freeman, Roger

  Benyon, W.

  French, Douglas

  Bevan, David Gilroy

  Gale, Roger

  Biggs-Davison, Sir John

  Gardiner, George

  Blackburn, Dr John G.

  Gill, Christopher

  Blaker, Rt Hon Sir Peter

  Gilmour, Rt Hon Sir Ian

  Bonsor, Sir Nicholas

  Glyn, Dr Alan

  Boswell, Tim

  Goodlad, Alastair

  Bottomley, Peter

  Goodson-Wickes, Dr Charles

  Bottomley, Mrs Virginia

  Gorman, Mrs Teresa

  Bowden, A (Brighton K'pto'n)

  Gorst, John

  Bowden, Gerald (Dulwich)

  Gow, Ian

  Bowis, John

  Grant, Sir Anthony (CambsSW)

  Boyson, Rt Hon Dr Sir Rhodes

  Greenway, Harry (Eating N)

  Braine, Rt Hon Sir Bernard

  Greenway, John (Ryedale)

  Brandon-Bravo, Martin

  Gregory, Conal

  Brazier, Julian

  Griffiths, Sir Eldon (Bury St E')

  Bright, Graham

  Griffiths, Peter (Portsmouth N)

  Brittan, Rt Hon Leon

  Grist, Ian

  Brooke, Rt Hon Peter

  Ground, Patrick

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

  Grylls, Michael

  Browne, John (Winchester)

  Gummer, Rt Hon John Selwyn

  Bruce, Ian (Dorset South)

  Hamilton, Hon Archie (Epsom)

  Buck, Sir Antony

  Hamilton, Neil (Tatton)

  Burns, Simon

  Hanley, Jeremy

  Burt, Alistair

  Hannam,John

  Butcher, John

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

  Butler, Chris

  Hargreaves, Ken (Hyndburn)

  Butterfill, John

  Harris, David

  Campbell, Menzies (Fife NE)

  Haselhurst, Alan

  Carlile, Alex (Mont'g)

  Hawkins, Christopher

  Carlisle, John, (Luton N)

  Hayes, Jerry

  Carlisle, Kenneth (Lincoln)

  Hayhoe, Rt Hon Sir Barney

  Carrington, Matthew

  Hayward, Robert

  Cash, William

  Heathcoat-Amory, David

  Channon, Rt Hon Paul

  Heddle, John

  Chapman, Sydney

  Heseltine, Rt Hon Michael

  Chope, Christopher

  Hicks, Robert (Cornwall SE)

  Churchill, Mr

  Higgins, Rt Hon Terence L.

  Clark, Hon Alan (Plym'th S'n)

  Hill, James

  Clark, Dr Michael (Rochford)

  Hind, Kenneth

  Clark, Sir W. (Croydon S)

  Hogg, Hon Douglas (Gr'th'm)

  Clarke, Rt Hon K. (Rushcliffe)

  Holt, Richard

  Colvin, Michael

  Hordern, Sir Peter

  Coombs, Anthony (Wyre F'rest)

  Howard, Michael

  Coombs, Simon (Swindon)

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

  Cope, Rt Hon John

  Howarth, G. (Cannock & B'wd)

  Cormack, Patrick

  Howe, Rt Hon Sir Geoffrey

  Couchman, James

  Howell, Rt Hon David (G'dford)

  Cran, James

  Hughes, Robert G. (Harrow W)

  Critchley, Julian

  Hunt, David (Wirral W)

  Currie, Mrs Edwina

  Hunt, John (Ravensbourne)

  Curry, David

  Hunter, Andrew

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

  Hurd, Rt Hon Douglas

  Davis, David (Boothferry)

  Irvine, Michael

  Day, Stephen

  Irving, Charles

  Devlin, Tim

  Jack, Michael

  Dickens, Geoffrey

  Jackson, Robert

  Douglas-Hamilton, Lord James

  Janman, Tim

  Dunn, Bob

  Jessel, Toby

  Durant, Tony

  Johnson Smith, Sir Geoffrey

  122

  Jones, Gwilym (Cardiff N)

  Portillo, Michael

  Jones, Robert B (Herts W)

  Powell, William (Corby)

  Kellett-Bowman, Dame Elaine

  Price, Sir David

  Key, Robert

  Raffan, Keith

  King, Roger (B'ham N'thfield)

  Raison, Rt Hon Timothy

  Kirkhope, Timothy

  Rathbone, Tim

  Knapman, Roger

  Redwood, John

  Knight, Greg (Derby North)

  Renton, Tim

  Knight, Dame Jill (Edgbaston)

  Rhodes James, Robert

  Knowles, Michael

  Riddick, Graham

  Knox, David

  Ridley, Rt Hon Nicholas

  Lamont, Rt Hon Norman

  Ridsdale, Sir Julian

  Lang, Ian

  Rifkind, Rt Hon Malcolm

  Latham, Michael

  Roberts, Wyn (Conwy)

  Lawrence, Ivan

  Roe, Mrs Marion

  Lawson, Rt Hon Nigel

  Rossi, Sir Hugh

  Leigh, Edward (Gainsbor'gh)

  Rost, Peter

  Lennox-Boyd, Hon Mark

  Rowe, Andrew

  Lester, Jim (Broxtowe)

  Rumbold, Mrs Angela

  Lightbown, David

  Ryder, Richard

  Livsey, Richard

  Sackville, Hon Tom

  Lloyd, Sir Ian (Havant)

  Sainsbury, Hon Tim

  Lloyd, Peter (Fareham)

  Sayeed, Jonathan

  Lord, Michael

  Scott, Nicholas

  Luce, Rt Hon Richard

  Shaw, David (Dover)

  Lyell, Sir Nicholas

  Shaw, Sir Giles (Pudsey)

  McCrindle, Robert

  Shaw, Sir Michael (Scarb')

  Macfarlane, Sir Neil

  Shelton, William (Streatham)

  MacGregor, Rt Hon John

  Shephard, Mrs G. (Norfolk SW)

  MacKay, Andrew (E Berkshire)

  Shepherd, Colin (Hereford)

  Maclean, David

  Shersby, Michael

  McLoughlin, Patrick

  Sims, Roger

  McNair-Wilson, Sir Michael

  Skeet, Sir Trevor

  McNair-Wilson, P. (New Forest)

  Smith, Sir Dudley (Warwick)

  Madel, David

  Smith, Tim (Beaconsfield)

  Major, Rt Hon John

  Soames, Hon Nicholas

  Malins, Humfrey

  Speed, Keith

  Mans, Keith

  Speller, Tony

  Maples, John

  Spicer, Sir Jim (Dorset W)

  Marland, Paul

  Spicer, Michael (S Worcs)

  Marlow, Tony

  Squire, Robin

  Marshall, John (Hendon S)

  Stanbrook, Ivor

  Martin, David (Portsmouth S)

  Stanley, Rt Hon John

  Mates, Michael

  Steen, Anthony

  Maude, Hon Francis

  Stern, Michael

  Maxwell-Hyslop, Robin

  Stevens, Lewis

  Mayhew, Rt Hon Sir Patrick

  Stewart, Allan (Eastwood)

  Mellor, David

  Stewart, Andy (Sherwood)

  Meyer, Sir Anthony

  Stradling Thomas, Sir John

  Miller, Sir Hal

  Sumberg, David

  Mills, Iain

  Summerson, Hugo

  Miscampbell, Norman

  Tapsell, Sir Peter

  Mitchell, Andrew (Gedling)

  Taylor, Ian (Esher)

  Mitchell, David (Hants NW)

  Taylor, John M (Solihull)

  Montgomery, Sir Fergus

  Tebbit, Rt Hon Norman

  Moore, Rt Hon John

  Temple-Morris, Peter

  Morrison, Sir Charles

  Thatcher, Rt Hon Margaret

  Morrison, Rt Hon P (Chester)

  Thompson, D. (Calder Valley)

  Moss, Malcolm

  Thompson, Patrick (Norwich N)

  Moynihan, Hon Colin

  Thorne, Neil

  Mudd, David

  Thornton, Malcolm

  Neale, Gerrard

  Thurnham, Peter

  Needham, Richard

  Townend, John (Bridlington)

  Nelson, Anthony

  Townsend, Cyril D. (B'heath)

  Neubert, Michael

  Tracey, Richard

  Newton, Rt Hon Tony

  Tredinnick, David

  Nicholls, Patrick

  Trippier, David

  Nicholson, David (Taunton)

  Trotter, Neville

  Nicholson, Emma (Devon West)

  Twinn, Dr Ian

  Onslow, Rt Hon Cranley

  Viggers, Peter

  Oppenheim, Phillip

  Waddington, Rt Hon David

  Page, Richard

  Wakeham, Rt Hon John

  Paice, James

  Waldegrave, Hon William

  Patnick, Irvine

  Walden, George

  Patten, Chris (Bath)

  Walker, Bill (T'side North)

  Patten, John (Oxford W)

  Waller, Gary

  Pattie, Rt Hon Sir Geoffrey

  Walters, Sir Dennis

  Pawsey, James

  Ward, John

  Peacock, Mrs Elizabeth

  Wardle, Charles (Bexhill)

  Porter, David (Waveney)

  Watts, John

  123

  Wells, Bowen

  Wood, Timothy

  Wheeler, John

  Woodcock, Mike

  Whitney, Ray

  Yeo, Tim

  Widdecombe, Ann

  Young, Sir George (Acton)

  Wiggin, Jerry

  Wilkinson, John

  Tellers for the Noes:

  Wilshire, David

  Mr. Robert Boscawen and Mr. Tristan Garel-Jones.

  Wolfson, Mark

  Question accordingly negatived.
  Main Question put:—
  The House divided: Ayes 323, Noes 195.

  Division No. 404]

  [10.16 pm

  AYES

  Alexander, Richard

  Cran, James

  Alison, Rt Hon Michael

  Critchley, Julian

  Allason, Rupert

  Currie, Mrs Edwina

  Amess, David

  Curry, David

  Amos, Alan

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

  Arbuthnot, James

  Davis, David (Boothferry)

  Arnold, Jacques (Gravesham)

  Day, Stephen

  Ashby, David

  Devlin, Tim

  Atkins, Robert

  Dickens, Geoffrey

  Atkinson, David

  Douglas-Hamilton, Lord James

  Baker, Rt Hon K. (Mole Valley)

  Dunn, Bob

  Baker, Nicholas (Dorset N)

  Durant, Tony

  Baldry, Tony

  Dykes, Hugh

  Banks, Robert (Harrogate)

  Eggar, Tim

  Batiste, Spencer

  Emery, Sir Peter

  Bellingham, Henry

  Evans, David (Welwyn Hatf'd)

  Bendall, Vivian

  Evennett, David

  Bennett, Nicholas (Pembroke)

  Ewing, Mrs Margaret (Moray)

  Benyon, W.

  Fallon, Michael

  Bevan, David Gilroy

  Favell, Tony

  Biggs-Davison, Sir John

  Fearn, Ronald

  Blackburn, Dr John G.

  Fenner, Dame Peggy

  Blaker, Rt Hon Sir Peter

  Field, Barry (Isle of Wight)

  Bonsor, Sir Nicholas

  Finsberg, Sir Geoffrey

  Boswell, Tim

  Fookes, Miss Janet

  Bottomley, Peter

  Forman, Nigel

  Bottomley, Mrs Virginia

  Forsyth, Michael (Stirling)

  Bowden, A (Brighton K'pto'n)

  Forth, Eric

  Bowden, Gerald (Dulwich)

  Fowler, Rt Hon Norman

  Bowis, John

  Fox, Sir Marcus

  Boyson, Rt Hon Dr Sir Rhodes

  Franks, Cecil

  Braine, Rt Hon Sir Bernard

  Freeman, Roger

  Brandon-Bravo, Martin

  French, Douglas

  Brazier, Julian

  Gale, Roger

  Bright, Graham

  Gardiner, George

  Brittan, Rt Hon Leon

  Gill, Christopher

  Brooke, Rt Hon Peter

  Gilmour, Rt Hon Sir Ian

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

  Glyn, Dr Alan

  Browne, John (Winchester)

  Goodlad, Alastair

  Bruce, Ian (Dorset South)

  Goodson-Wickes, Dr Charles

  Buck, Sir Antony

  Gorst, John

  Burns, Simon

  Gow, Ian

  Burt, Alistair

  Grant, Sir Anthony (CambsSW)

  Butcher, John

  Greenway, Harry (Ealing N)

  Butler, Chris

  Greenway, John (Ryedale)

  Butterfill, John

  Gregory, Conal

  Campbell, Menzies (Fife NE)

  Griffiths, Sir Eldon (Bury St E')

  Carlile, Alex (Mont'g)

  Grist, Ian

  Carlisle, Kenneth (Lincoln)

  Ground, Patrick

  Carrington, Matthew

  Grylls, Michael

  Cash, William

  Gummer, Rt Hon John Selwyn

  Channon, Rt Hon Paul

  Hamilton, Hon Archie (Epsom)

  Chapman, Sydney

  Hamilton, Neil (Tatton)

  Chope, Christopher

  Hanley, Jeremy

  Churchill, Mr

  Hannam, John

  Clark, Hon Alan (Plym'th S'n)

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

  Clark, Dr Michael (Rochford)

  Harg reaves, Ken (Hyndburn)

  Clark, Sir W. (Croydon S)

  Harris, David

  Clarke, Rt Hon K. (Rushcliffe)

  Haselhurst, Alan

  Colvin, Michael

  Hawkins, Christopher

  Coombs, Anthony (Wyre F'rest)

  Hayes, Jerry

  Coombs, Simon (Swindon)

  Hayhoe, Rt Hon Sir Barney

  Cope, Rt Hon John

  Hayward, Robert

  Couchman, James

  Heathcoat-Amory, David

  124

  Heddle, John

  Morrison, Sir Charles

  Heseltine, Rt Hon Michael

  Morrison, Rt Hon P (Chester)

  Hicks, Robert (Cornwall SE)

  Moss, Malcolm

  Higgins, Rt Hon Terence L.

  Moynihan, Hon Colin

  Hill, James

  Mudd, David

  Hind, Kenneth

  Neale, Gerrard

  Hogg, Hon Douglas (Gr'th'm)

  Needham, Richard

  Holt, Richard

  Nelson, Anthony

  Hordern, Sir Peter

  Neubert, Michael

  Howard, Michael

  Newton, Rt Hon Tony

  Howarth, Alan (Strafd-on-A)

  Nicholls, Patrick

  Howarth, G. (Cannock & B'wd)

  Nicholson, David (Taunton)

  Howe, Rt Hon Sir Geoffrey

  Nicholson, Emma (Devon West)

  Howell, Rt Hon David (G'dtord)

  Onslow, Rt Hon Cranley

  Hughes, Robert G. (Harrow W)

  Oppenheim, Phillip

  Hunt, David (Wirral W)

  Page, Richard

  Hunt, John (Ravensbourne)

  Paice, James

  Hunter, Andrew

  Patnick, Irvine

  Hurd, Rt Hon Douglas

  Patten, Chris (Bath)

  Irvine, Michael

  Patten, John (Oxford W)

  Irving, Charles

  Pattie, Rt Hon Sir Geoffrey

  Jack, Michael

  Pawsey, James

  Jackson, Robert

  Peacock, Mrs Elizabeth

  Jessel, Toby

  Porter, David (Waveney)

  Johnson Smith, Sir Geoffrey

  Portillo, Michael

  Jones, Gwilym (Cardiff N)

  Powell, William (Corby)

  Jones, Robert B (Herts W)

  Price, Sir David

  Kellett-Bowman, Dame Elaine

  Raffan, Keith

  Key, Robert

  Raison, Rt Hon Timothy

  King, Roger (B'ham N'thfield)

  Rathbone, Tim

  Kirkhope, Timothy

  Renton, Tim

  Knapman, Roger

  Rhodes James, Robert

  Knight, Greg (Derby North)

  Riddick, Graham

  Knight, Dame Jill (Edgbaston)

  Ridley, Rt Hon Nicholas

  Knowles, Michael

  Ridsdale, Sir Julian

  Knox, David

  Rifkind, Rt Hon Malcolm

  Lamont, Rt Hon Norman

  Roberts, Wyn (Conwy)

  Lang, Ian

  Roe, Mrs Marion

  Latham, Michael

  Rossi, Sir Hugh

  Lawrence, Ivan

  Rost, Peter

  Lawson, Rt Hon Nigel

  Rowe, Andrew

  Leigh, Edward (Gainsbor'gh)

  Rumbold, Mrs Angela

  Lennox-Boyd, Hon Mark

  Ryder, Richard

  Lester, Jim (Broxtowe)

  Sackville, Hon Tom

  Lightbown, David

  Sainsbury, Hon Tim

  Livsey, Richard

  Salmond, Alex

  Lloyd, Sir Ian (Havant)

  Sayeed, Jonathan

  Lloyd, Peter (Fareham)

  Scott, Nicholas

  Lord, Michael

  Shaw, David (Dover)

  Luce, Rt Hon Richard

  Shaw, Sir Giles (Pudsey)

  Lyell, Sir Nicholas

  Shaw, Sir Michael (Scarb')

  McCrindle, Robert

  Shelton, William (Streatham)

  Macfarlane, Sir Neil

  Shephard, Mrs G. (Norfolk SW)

  MacGregor, Rt Hon John

  Shepherd, Colin (Hereford)

  MacKay, Andrew (E Berkshire)

  Shersby, Michael

  Maclean, David

  Sims, Roger

  McLoughlin, Patrick

  Skeet, Sir Trevor

  McNair-Wilson, Sir Michael

  Smith, Sir Dudley (Warwick)

  McNair-Wilson, P. (New Forest)

  Smith, Tim (Beaconsfield)

  Madel, David

  Soames, Hon Nicholas

  Major, Rt Hon John

  Speed, Keith

  Malins, Humfrey

  Speller, Tony

  Mans, Keith

  Spicer, Sir Jim (Dorset W)

  Maples, John

  Spicer, Michael (S Worcs)

  Marland, Paul

  Squire, Robin

  Marshall, John (Hendon S)

  Stanbrook, Ivor

  Martin, David (Portsmouth S)

  Stanley, Rt Hon John

  Mates, Michael

  Steen, Anthony

  Maude, Hon Francis

  Stern, Michael

  Maxwell-Hyslop, Robin

  Stevens, Lewis

  Mayhew, Rt Hon Sir Patrick

  Stewart, Allan (Eastwood)

  Mellor, David

  Stewart, Andy (Sherwood)

  Meyer, Sir Anthony

  Stradling Thomas, Sir John

  Miller, Sir Hal

  Sumberg, David

  Mills, Iain

  Summerson, Hugo

  Miscampbell, Norman

  Tapsell, Sir Peter

  Mitchell, Andrew (Gedling)

  Taylor, Ian (Esher)

  Mitchell, David (Hants NW)

  Taylor, John M (Solihull)

  Montgomery, Sir Fergus

  Tebbit, Rt Hon Norman

  Moore, Rt Hon John

  Temple-Morris, Peter

  125

  Thatcher, Rt Hon Margaret

  Wardle, Charles (Bexhlll)

  Thompson, D (Calder Valley)

  Wells, Bowen

  Thompson, Patrick (Norwich N)

  Welsh, Andrew (Angus E)

  Thorne, Neil

  Wheeler, John

  Thornton, Malcolm

  Whitney, Ray

  Thurnham, Peter

  Widdecombe, Ann

  Townsend, Cyril D (B heath)

  Wiggin, Jerry

  Tracey, Richard

  Wigley, Dafydd

  Tredinmck, David

  Wilkinson, John

  Trippier, David

  Wilshire, David

  Trotter, Neville

  Wolfson, Mark

  Twinn, Dr Ian

  Wood, Timothy

  Viggers, Peter

  Woodcock, Mike

  Waddington, Rt Hon David

  Yeo, Tim

  Wakeham, Rt Hon John

  Young, Sir George (Acton)

  Waldegrave, Hon William

  Walden, George

  Tellers for the Ayes

  Waller, Gary

  Mr Robert Boscawen and Mr. Tristan Garel-Jones.

  Walters, Sir Dennis

  Ward. John

  NOES

  Abbott, Ms Diane

  Evans, John (St Helens N)

  Adams, Allen (Paisley N)

  Ewing, Harry (Falkirk E)

  Aitken, Jonathan

  Fatchett, Derek

  Allen, Graham

  Faulds, Andrew

  Anderson, Donald

  Field, Frank (Blrkenhead)

  Archer, Rt Hon Peter

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

  Armstrong, Hilary

  Flannery, Martin

  Ashley, Rt Hon Jack

  Flynn, Paul

  Barnes, Harry (Derbyshire NE)

  Foot, Rt Hon Michael

  Barron, Kevin

  Foster, Derek

  Beckett, Margaret

  Fraser, John

  Bell, Stuart

  Fyfe, Maria

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

  Galbraith, Sam

  Bermingham, Gerald

  Galloway, George

  Biffen, Rt Hon John

  Garrett, John (Norwich South)

  Blunkett, David

  Garrett, Ted (Wallsend)

  Boateng, Paul

  George, Bruce

  Body, Sir Richard

  Godman, Dr Norman A.

  Boyes, Roland

  Gordon, Mildred

  Bradley, Keith

  Gorman, Mrs Teresa

  Bray, Dr Jeremy

  Gould, Bryan

  Brown, Gordon (D'mline E)

  Graham, Thomas

  Brown, Nicholas (Newcastle E)

  Grant, Bernie (Tottenham)

  Brown, Ron (Edinburgh Leith)

  Griffiths, Nigel (Edinburgh S)

  Buchan, Norman

  Griffiths, Win (Bridgend)

  Buckley, George J.

  Grocott, Bruce

  Budgen, Nicholas

  Harman, Ms Harriet

  Campbell, Ron (Blyth Valley)

  Hattersley, Rt Hon Roy

  Campbell-Savours, D. N.

  Haynes, Frank

  Canavan, Dennis

  Healey, Rt Hon Denis

  Carlisle, John, (Luton N)

  Heffer, Eric S.

  Clark, Dr David (S Shields)

  Hinchliffe, David

  Clarke, Tom (Monklands W)

  Hogg, N. (C'nauld & Kilsyth)

  Clay, Bob

  Holland, Stuart

  Clelland, David

  Home Robertson, John

  Clwyd, Mrs Ann

  Hood, Jimmy

  Cohen, Harry

  Howarth, George (Knowsley N)

  Coleman, Donald

  Howell, Rt Hon D. (S'heath)

  Cook, Frank (Stockton N)

  Hughes, John (Coventry NE)

  Cook, Robin (Livingston)

  Hughes, Robert (Aberdeen N)

  Corbett, Robin

  Hughes, Roy (Newport E)

  Corbyn, Jeremy

  Hughes, Sean (Knowsley S)

  Cousins, Jim

  Illsley, Eric

  Cryer, Bob

  Ingram, Adam

  Cummings, John

  Janman, Tim

  Cunliffe, Lawrence

  Janner, Greville

  Dalyell, Tam

  John, Brynmor

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Martyn (Clwyd S W)

  Davies, Ron (Caerphilly)

  Kaufman, Rt Hon Gerald

  Dewar, Donald

  Lambie, David

  Dixon, Don

  Lamond, James

  Dobson, Frank

  Leadbitter, Ted

  Doran, Frank

  Leighton, Ron

  Duffy, A. E. P.

  Lestor, Joan (Eccles)

  Dunnachie, Jimmy

  Lewis, Terry

  Eadie, Alexander

  Litherland, Robert

  Eastham, Ken

  Lloyd, Tony (Stretford)

  126

  Lofthouse, Geoffrey

  Rees, Rt Hon Merlyn

  Loyden, Eddie

  Reid, Dr John

  McAllion, John

  Richardson, Jo

  McAvoy, Thomas

  Robertson, George

  McCartney, Ian

  Robinson, Geoffrey

  Macdonald, Calum A.

  Rogers, Allan

  McFall, John

  Rooker, Jeff

  McKelvey, William

  Ross, Ernie (Dundee W)

  McLeish, Henry

  Rowlands, Ted

  McNamara, Kevin

  Sedgemore, Brian

  McTaggart, Bob

  Sheerman, Barry

  McWilliam, John

  Sheldon, Rt Hon Robert

  Madden, Max

  Shepherd, Richard (Aldridge)

  Mahon, Mrs Alice

  Shore, Rt Hon Peter

  Marek, Dr John

  Short, Clare

  Marlow, Tony

  Skinner, Dennis

  Marshall, Jim (Leicester S)

  Smith, Andrew (Oxford E)

  Martin, Michael J. (Springburn)

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

  Martlew, Eric

  Snape, Peter

  Maxton, John

  Spearing, Nigel

  Meacher, Michael

  Steinberg, Gerry

  Meale, Alan

  Stott, Roger

  Michael, Alun

  Taylor, Teddy (S'end E)

  Millan, Rt Hon Bruce

  Thompson, Jack (Wansbeck)

  Moate, Roger

  Townend, John (Bridlington)

  Moonie, Dr Lewis

  Turner, Dennis

  Morgan, Rhodri

  Vaz, Keith

  Morley, Elliott

  Wall, Pat

  Morris, Rt Hon A. (W'shawe)

  Wardell, Gareth (Gower)

  Morris, Rt Hon J. (Aberavon)

  Wareing, Robert N.

  Mowlam, Marjorie

  Welsh, Michael (Doncaster N)

  Mullin, Chris

  Williams, Rt Hon Alan

  Murphy, Paul

  Williams, Alan W. (Carm'then)

  Oakes, Rt Hon Gordon

  Wilson, Brian

  O'Neill, Martin

  Winnick, David

  Orme, Rt Hon Stanley

  Wise, Mrs Audrey

  Parry, Robert

  Worthington, Tony

  Pike, Peter L.

  Wray, Jimmy

  Powell, Ray (Ogmore)

  Primarolo, Dawn

  Tellers for the Noes:

  Quin, Ms Joyce

  Mrs. Llin Golding and

  Radice, Giles

  Mr. Allen McKay.

  Redmond, Martin

  Question accordingly agreed to.
  Bill accordingly read a Second time.
  Mr. Bob Cryer: On a point of order, Mr. Speaker. When I came out of the No Lobby, two Tory Whips, led by the hon. Member for Staffordshire, South-East (Mr. Lightbown) whose rather menacing bulk can now been seen at the Bar of the House, were taking down the names of those Tory Members who voted No. That could be regarded as besetting and intimidation and, as you know, Mr. Speaker, by law that cannot be carried out by trade unionists. If the law is good enough for trade unionists, it should be good enough for Tory Members and should stop them intimidating their hon. Friends. If there is any intimidation, I ask you, Mr. Speaker, to carry out an investigation to see if there is a serious breach of privilege by those Tory thugs.
  Mr. Speaker: I have no knowledge of any intimidation. The Whips might have been inviting those hon. Members to dinner.
  Bill committed to a Committee of the whole House.—[Mr. Ryder.]
  Committee tomorrow.

  European Communities (Finance) Bill

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Court of Session Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Ryder.]

  European Communities (Finance) Bill [Money]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the European Communities (Finance) Bill, it is expedient to authorise—

  (1) any increase attributable to that Act in the sums to be charged on and paid out of the Consolidated Fund or the National Loans Fund, or payable out of money provided by Parliament, under the European Communities Act 1972; and

  (2) the payment of any sums into the Consolidated Fund or the National Loans Fund.—[Mr. Brooke.]

  10.33 pm
  Mr. Bob Cryer: The money resolution, which represents an increase in expenditure of at least £200 million to £300 million net and, according to the Minister earlier, as much as £1 billion gross, should not be allowed to pass unchallenged. That is against the background of some £4·7 billion in net expenditure to the Common Market. After all the grants, repayments and gains from rebates which the Prime Minister alleges, since 1984 we have paid out more than £4 billion, and we shall continue to do so. That money could be used for the excellent purpose of helping to rejuvenate and regenerate the National Health Service or in providing long-term jobs and stopping the continuing erosion of jobs to which the Common Market has led.
  Membership of the EEC has been a millstone around our necks. We have a deficit in our balance of trade of manufactured goods of some £11 billion. The Minister said that some of the payments in this money resolution—between £200 million and £300 million—would go to the structural funds in order to offset the adverse impact of the development of the internal market by 1992. It is patently absurd for our Government to hand to another organisation money which it then scrutinises and from which it takes a hefty percentage for administration, only to hand some, but not all, back to us for some sort of remedial action in the regions. It is no longer in the province of the elected Government.
  While I disagree with virtually everything that the Government do, they are elected and are to some degree accountable. Certainly, they will be accountable at the general election, which is not true of the Commissioners. It is largely the Commission and its machinery which decides where the money will be spent. The Council of Ministers, which meets in secret so is not publicly accountable as we are in this House, lays down only general spending guidelines. The Commission and various directorates-general decide where the money will go.
  It is absurd for us to hand over an additional £200 million to £300 million only for many local authorities to spend large sums going in good faith to Brussels to plead their case cap in hand because, continually pressed by the Government through rate support grant cuts and so on, they are short of money. It is wrong, inefficient and undemocratic to hand money over to another body only to receive a relatively small proportion of it back.
  Mr. Michael Fallon: I am more than uncommonly grateful to the hon. Gentleman for giving way. Is it not time that he straightened out his argument? Is it not a fact that most Socialist member states and
  128
  Members of Parliament and the British Labour group argue for an increase in the structural funds which the hon. Gentleman is attacking? Why is he out of line?
  Mr. Cryer: The hon. Gentleman, as usual, is badly misinformed. The vast majority of the Socialist group in the Common Market happen to be pro-Market fanatics. [HON. MEMBERS: "Oh".] They are chosen on a list system based on proportional representation which a majority in this House would reject and which gives great power to the party ladership. In most Socialist parties in the EEC, if anybody steps out of line, he is immediately knocked off the list for that political dissent. I do not take too much notice of the hon. Gentleman's views.
  The fact is that those of us in the British Labour group are critical of the maldistribution of Common Market funds—70 per cent. or therabouts goes to the common agricultural policy. Ever since we joined in 1973 members have been claiming that reform is round the corner or will come next year, but it never comes. The proportion of expenditure that goes on the CAP has been increasing, with one or two ebbs and flows, virtually since we entered the Common Market. I shall come to a report from the Select Committee which very much substantiates my claim.
  Mr. Dennis Skinner: My hon. Friend said that in the Common Market countries other than Britain have a list system in which Members of Parliament are picked off according to how they fit in with their party. My hon. Friend raised a point of order about the Tory Chief Whip standing outside the Division Lobby ticking off the names of those Tory Members of Parliament who had voted with us against the Bill. One is bound to get the impression that Tory Members of Parliament are getting ready to operate their own list system.
  Mr. Cryer: It sounds very much like that, as my hon. Friend says. I am worried about what shreds of democracy are left in the Tory party, judging by the way in which two brutal-looking thugs stood outside the No Lobby looking menacingly towards those who had voted with the Labour party.
  Mr. Eric Forth (Mid-Worcestershire): On a point of order, Mr. Deputy Speaker. The hon. Gentleman has just been talking about thugs. There is an article in today's edition of The Independent about Sergeant Bob Cryer. Will you clarify, Mr. Deputy Speaker, whether the hon. Gentleman is the Sergeant Bob Cryer referred to in The Independent? He is talking about thugs——
  Mr. Deputy Speaker (Mr. Harold Walker): Order. What appears in a newspaper is not a matter for me.
  Mr. Cryer: I am most grateful. I am best able to decide which Bob Cryer is represented in The Independent or any other newspaper.
  I should like to finish my comments about what the hon. Member for Darlington (Mr. Fallon) said. There is——
  Mr. Deputy Speaker: Order. I remind the House that it is contrary to our practice to read newspapers during debate.
  Mr. Cryer: I am grateful to you, Mr. Deputy Speaker for scrupulously carrying out the Standing Orders of the

  129
  House and preventing Tory Members who who do not seem to know much about it from driving a coach and horses through them.
  Let me get back to the hon. Member for Darlington. There is a pro-Market uncritical majority of all the parties in the Assembly, so anybody in the House who claims that the Assembly, called by some a Parliament—but it is in fact a consultative Assembly, that and no more—will act as some sort of check, is living in cloud-cuckoo-land.
  Mr. Fallon: I am grateful, and I undertake to the hon. Gentleman, who has been most courteous, not to intervene again if he will answer this specific question. He referred to the proportion of agriculture expenditure increasing. I should have drawn his attention to the fact that throughout that time not only was there a Socialist majority in the European Assembly that he despises, but he was a member of it. I shall not labour that point, but I ask him this specific question. Does he now still perceive that Socialist majority, including the British Labour group, to be uncritical, and if so, will he vote for it in next year's elections?
  Mr. Cryer: The Socialist majority that the hon. Gentleman talks about is an illusion. There is not a Socialist majority in the Common Market Assembly. The Socialist group represents about 150 out of 450 and on anybody's calculation that is a minority. When one couples up all the European democrats, the Le Pen Fascist group and the rest of the Right wing, they have a majority. When one couples up those who are Euro-fanatics and totally uncritical, there is an even bigger majority.
  As I mentioned, the Assembly does not represent a critical body. There are strong strains and pressures for federalism, and for even more power to be taken away from bodies such as this and put across to the Assemblies in Brussels and Strasbourg. Jacques Delors does not represent an isolated strain, talking to a particular audience. His view is representative of the majority of the Commission and almost certainly the majority of the Assembly.
  The Single European Act started out as a campaign by Alteiro Spinelli, a member of the Communist list in Italy, and his campaign was supported by the European Democrats, the Christian Democrats and the Liberal Democrats, but not, at any stage, by the British Labour group. That campaign by Spinelli was to wrest power from the member states and transfer it to the EEC assembly.
  Sir Jim Spicer rose——
  Mr. Cryer: We are discussing the money resolution, and I shall resist the temptation to give way.
  Sir Jim Spicer rose——
  Mr. Deputy Speaker: Order. It is clear that the hon. Gentleman does not intend to give way.
  Mr. Cryer: I just wish that some of the Tory hooligans were better behaved. They set a poor example when they stand up against your express wishes, Mr. Deputy Speaker, as well as mine.
  Sir Jim Spicer: Will the hon. Gentleman give way?
  Mr. Cryer: No.
  130
  The fifth report of the Treasury and Civil Service Select Committee was referred to in the debate. It is a Committee with a Conservative majority, and on page 7 of its report, it states:
  "We are not convinced that an inter-institutional agreement is the equivalent of a firm and legally binding text. Given the Community's failure in the past to control its expenditure and notwithstanding the many significant improvements which were agreed at the Brussels summit, we believe there are still grounds for remaining sceptical about the prospects for proper budgetary control in the future. We believe the Government should press the Community to adopt the most rigorous forms of budget management."
  Although the Government may press the case, our experience from 1973 onwards is that there is little or no budgetary control. The Select Committe, which has a Conservative majority, sets that out lucidly. Therefore I believe that we must have strong reservations about a money resolution that hands over between another £200 million and £400 million to a body that experience and its proven record has shown to be incapable of budgetary control.
  We may suppose that some of that money will come back, but to hand money to another body, which has proved itself to be inefficient, in the hope that we will get a tiny share of it back, is an extremely inefficient way in which to deal with the matter. The money resolution, in common with the Bill, is much misplaced.
  10.48 pm
  Mr. Michael Fallon: The hon. Member for Bradford, South (Mr. Cryer) has an honourable record in opposing the expansion of European expenditure.
  When I came in to listen to the hon. Gentleman I thought that he might say something that I could support. I then discovered that he was objecting to an increase in European expenditure on the grounds that the European Parliament—or "the Assembly" as he has described and criticised it—would be assenting to that expenditure. Back in 1984, he offered himself to the European electorate as a member of that European Assembly and for five long years he sat as a member of it. Had the same argument come from the hon. Member for Bolsover (Mr. Skinner), we would have treated it with slightly more respect. Instead, it came from an hon. Member who took European money, air tickets, jobs, junkets and expenses. He now has the nerve to lecture us on increases in European expenditure.
  Mr. John Marshall rose——
  Mr. Fallon: I am so shocked that I can only give way t o my hon. Friend the Member for Hendon, South (Mr. Marshall).
  Mr. Marshall: Is my hon. Friend aware that the hon. Member for Bradford, South (Mr. Cryer) voted in favour of taking note of the sixth VAT directive, which he has been so busy criticising in recent weeks?
  Mr. Fallon: That directive is outside the scope of the resolution that is before us.
  We must not disregard the fact that the hon. Member for Bradford, South was a part of the European Assembly, and voted time and time again for increases in the European budget and increases in the structural funds—the philosophy and the theory of social space, which we now hear so much about on behalf of the poorer member

  131
  states. The hon. Gentleman voted for the extra moneys. Yet he has the nerve to lecture us about increases for the funds.
  We know that we have a far greater chance of controlling the funds and regulation expenditure through our Ministers at the Council of Ministers than the Ministers that the hon. Member for Bradford, South would have supported. There may be other financial resolutions on which the hon. Gentleman and I will agree, but he should be the last person to lecture the House on European expenditure. I have one piece of advice for the hon. Gentleman before he tells us what view we should take of the resolution and before we come to vote in the European elections next May. If I were the hon. Gentleman, I would keep very quiet.
  10.52pm
  The Paymaster General(Mr. Peter Brooke): I owe an apology to the hon. Member for Bradford, South (Mr. Cryer) for not giving way to him in the concluding minutes of the Second Reading debate. I am delighted to have the opportunity of rendering that apology. I think that I have the general purport of what he would have said if he had intervened at that stage. I apologise also to the hon. Member for Linlithgow (Mr. Dalyell) for not saying that I would answer the questions which he asked subsequently to the one to which I responded. I understand that he intended his final question to be broadly rhetorical.
  Mr. Dalyell: The final question on Mr. Powell is the most interesting.
  Mr. Brooke: There was one question not asked of me during the Second Reading debate which would have been relevant to the resolution and to which I should like to allude. No one asked me what would happen if we were asked for intergovernmental agreement payments before the Bill has been enacted. It is likely that IGA payments will be requested from I August. If the Bill has not been enacted by then, the Government envisage making payments from the contingency fund, given that the House has signalled its approval of the principle of making IGA payments by giving the Bill a Second Reading.
  This would be in accordance with the purpose of the contingency fund to meet urgent services in Anticipation of provision for those services by Parliament. At the same time it would take account of the key tests on the use of the fund, including, as explained by the then Financial Secretary to the Treasury in 1974, the right hon. Member for Dudley, East (Dr. Gilbert):
  "No Government of either party would be reckless enough to incur expenditure on any subject by using the fund if they thought there was any possibility of Parliament's later rejecting the substantive proposals when placed before the House."—[Official Report, 14 May 1974; Vol. 873, c. 1250.]
  The advances from the contingency fund would be repaid through the Consolidated Fund once the Bill had received Royal Assent.
  Mr. George Robertson: Why should the Paymaster General be so presumptuous after the Bill has received a Second Reading? The Bill has two separate and distinct components and I should like to know why he presumes that the House will approve it in Committee and on Third Reading. Why was this not part of the right hon. Gentleman's speech, or that of the Foreign Secretary, on
  132
  Second Reading? The House should have been told at that stage that this strange, perverse and, I would suggest, probably unprecedented procedure would be followed in the circumstances that have been outlined by the Paymaster General.
  Mr. Brooke: It is not unprecedented, because I alluded to the guidance given by the Financial Secretary to the Treasury in the Labour Administration in 1974 as to the use of the contingency fund.
  As to the likelihood of the Bill being defeated, I draw to the attention of the hon. Member for Hamilton (Mr. Robertson) the fact that the majority on Second Reading exceeded by a substantial majority the Government's natural majority in the House. Even the presence of the right hon. Member for Islwyn (Mr. Kinnock), the right hon. and learned Member for Monklands, East (Mr. Smith) and the right hon. Member for Manchester, Gorton (Mr. Kaufman) would not be enough to make up for that deficit.
  Mr. Nigel Spearing: The question was not asked, at least in one quarter, because the contingency would not appear to arise. The Paymaster General will know that the undertaking is not given to the Commission or to the Council, but is an undertaking of member states outside the treaty. He has just told us that there may be a request for the money to be paid, but who can legally make such a request? The undertaking is outside the terms of the treaty of Rome and formally nothing to do with the EEC.
  Mr. Brooke: The hon. Member for Newham, South (Mr. Spearing) knows, because of the procedures through which we have been at various stages, including evidence that I have given to the Treasury and Civil Service Select Committee, that the procedures relating to the budget for 1988 contained an assumption that in the fulness of time there would be an IGA. That IGA has now been agreed by the member states, but I agree that it is subject to the approval of both Houses and to a request for payment. That contingency may arise on 1 August.
  Question put:—
  The House divided: Ayes 296, Noes 50.

  Division No. 405]

  [10.56 pm

  AYES

  Alexander, Richard

  Bowden, Gerald (Dulwich)

  Alison, Rt Hon Michael

  Bowis, John

  Allason, Rupert

  Boyson, Rt Hon Dr Sir Rhodes

  Amess, David

  Braine, Rt Hon Sir Bernard

  Amos, Alan

  Brandon-Bravo, Martin

  Arbuthnot, James

  Brazier, Julian

  Arnold, Jacques (Gravesham)

  Bright, Graham

  Ashby, David

  Brittan, Rt Hon Leon

  Atkins, Robert

  Brooke, Rt Hon Peter

  Atkinson, David

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

  Baker, Rt Hon K. (Mole Valley)

  Browne, John (Winchester)

  Baker, Nicholas (Dorset N)

  Bruce, Ian (Dorset South)

  Baldry, Tony

  Buck, Sir Antony

  Batiste, Spencer

  Burns, Simon

  Bendall, Vivian

  Burt, Alistair

  Bennett, Nicholas (Pembroke)

  Butcher, John

  Benyon, W.

  Butler, Chris

  Bevan, David Gilroy

  Butterfill, John

  Blackburn, Dr John G.

  Campbell, Menzies (Fife NE)

  Blaker, Rt Hon Sir Peter

  Carlile, Alex (Mont'g)

  Bonsor, Sir Nicholas

  Carlisle, Kenneth (Lincoln)

  Boswell, Tim

  Carrington, Matthew

  Bottomley, Peter

  Cash, William

  Bottomley, Mrs Virginia

  Channon, Rt Hon Paul

  Bowden, A (Brighton K'pto'n)

  Chapman, Sydney

  133

  Chope, Christopher

  Hunt, John (Ravensbourne)

  Churchill, Mr

  Hunter, Andrew

  Clark, Dr Michael (Rochford)

  Irvine, Michael

  Clark, Sir W. (Croydon S)

  Jack, Michael

  Coombs, Anthony (Wyre F'rest)

  Jackson, Robert

  Coombs, Simon (Swindon)

  Jessel, Toby

  Cope, Rt Hon John

  Johnson Smith, Sir Geoffrey

  Couchman, James

  Jones, Gwilym (Cardiff N)

  Cran, James

  Jones, Robert B (Herts W)

  Currie, Mrs Edwina

  Kellett-Bowman, Dame Elaine

  Curry, David

  Key, Robert

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

  King, Roger (B'ham N'thfield)

  Davis, David (Boothferry)

  Kirkhope, Timothy

  Day, Stephen

  Knapman, Roger

  Devlin, Tim

  Knight, Greg (Derby North)

  Douglas-Hamilton, Lord James

  Knight, Dame Jill (Edgbaston)

  Dunn, Bob

  Knowles, Michael

  Durant, Tony

  Knox, David

  Dykes, Hugh

  Lamont, Rt Hon Norman

  Eggar, Tim

  Lang, Ian

  Emery, Sir Peter

  Latham, Michael

  Evans, David (Welwyn Hatf'd)

  Lawrence, Ivan

  Evennett, David

  Lawson, Rt Hon Nigel

  Ewing, Mrs Margaret (Moray)

  Leigh, Edward (Gainsbor'gh)

  Fallon, Michael

  Lennox-Boyd, Hon Mark

  Favell, Tony

  Lester, Jim (Broxtowe)

  Fearn, Ronald

  Lightbown, David

  Fenner, Dame Peggy

  Livsey, Richard

  Field, Barry (Isle of Wight)

  Lloyd, Peter (Fareham)

  Finsberg, Sir Geoffrey

  Lord, Michael

  Fookes, Miss Janet

  Luce, Rt Hon Richard

  Forman, Nigel

  Lyell, Sir Nicholas

  Forsyth, Michael (Stirling)

  McCrindle, Robert

  Forth, Eric

  Macfarlane, Sir Neil

  Fox, Sir Marcus

  MacGregor, Rt Hon John

  Franks, Cecil

  MacKay, Andrew (E Berkshire)

  Freeman, Roger

  Maclean, David

  French, Douglas

  McLoughlin, Patrick

  Gale, Roger

  McNair-Wilson, Sir Michael

  Gardiner, George

  McNair-Wilson, P. (New Forest)

  Gill, Christopher

  Madel, David

  Gilmour, Rt Hon Sir Ian

  Major, Rt Hon John

  Glyn, Dr Alan

  Malins, Humfrey

  Goodson-Wickes, Dr Charles

  Mans, Keith

  Gorst, John

  Maples, John

  Gow, Ian

  Marland, Paul

  Grant, Sir Anthony (CambsSW)

  Marshall, John (Hendon S)

  Greenway, Harry (Ealing N)

  Martin, David (Portsmouth S)

  Greenway, John (Ryedale)

  Mates, Michael

  Gregory, Conal

  Maude, Hon Francis

  Grist, Ian

  Maxwell-Hyslop, Robin

  Ground, Patrick

  Mayhew, Rt Hon Sir Patrick

  Grylls, Michael

  Mellor, David

  Hamilton, Hon Archie (Epsom)

  Meyer, Sir Anthony

  Hamilton, Neil (Tatton)

  Miller, Sir Hal

  Hanley, Jeremy

  Mills, Iain

  Hannam, John

  Miscampbell, Norman

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

  Mitchell, Andrew (Gedling)

  Hargreaves, Ken (Hyndburn)

  Mitchell, David (Hants NW)

  Harris, David

  Montgomery, Sir Fergus

  Haselhurst, Alan

  Morrison, Sir Charles

  Hawkins, Christopher

  Morrison, Rt Hon P (Chester)

  Hayes, Jerry

  Moss, Malcolm

  Hayhoe, Rt Hon Sir Barney

  Moynihan, Hon Colin

  Hayward, Robert

  Mudd, David

  Heathcoat-Amory, David

  Neale, Gerrard

  Heddle, John

  Needham, Richard

  Higgins, Rt Hon Terence L

  Nelson, Anthony

  Hill, James

  Neubert, Michael

  Hind, Kenneth

  Newton, Rt Hon Tony

  Hogg, Hon Douglas (Gr'th'm)

  Nicholls, Patrick

  Holt, Richard

  Nicholson, David (Taunton)

  Hordern, Sir Peter

  Nicholson, Emma (Devon West)

  Howard, Michael

  Onslow, Rt Hon Cranley

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

  Oppenheim, Phillip

  Howarth, G. (Cannock & B'wd)

  Page, Richard

  Howe, Rt Hon Sir Geoffrey

  Paice, James

  Howell, Rt Hon David (G'dford)

  Patnick, Irvine

  Hughes, Robert G. (Harrow W)

  Patten, Chris (Bath)

  Hunt, David (Wirral W)

  Patten, John (Oxford W)

  134

  Pattie, Rt Hon Sir Geoffrey

  Stewart, Allan (Eastwood)

  Pawsey, James

  Stewart, Andy (Sherwood)

  Peacock, Mrs Elizabeth

  Stradling Thomas, Sir John

  Porter, David (Waveney)

  Sumberg, David

  Powell, William (Corby)

  Summerson, Hugo

  Price, Sir David

  Tapsell, Sir Peter

  Raffan, Keith

  Taylor, Ian (Esher)

  Raison, Rt Hon Timothy

  Taylor, John M (Solihull)

  Rathbone, Tim

  Temple-Morris, Peter

  Renton, Tim

  Thompson, D. (Calder Valley)

  Rhodes James, Robert

  Thompson, Patrick (Norwich N)

  Riddick, Graham

  Thorne, Neil

  Ridley, Rt Hon Nicholas

  Thornton, Malcolm

  Ridsdale, Sir Julian

  Thurnham, Peter

  Rifkind, Rt Hon Malcolm

  Townsend, Cyril D. (B'heath)

  Roberts, Wyn (Conwy)

  Tredinnick, David

  Roe, Mrs Marion

  Trippier, David

  Rossi, Sir Hugh

  Trotter, Neville

  Rost, Peter

  Twinn, Dr Ian

  Rowe, Andrew

  Viggers, Peter

  Rumbold, Mrs Angela

  Waddington, Rt Hon David

  Ryder, Richard

  Wakeham, Rt Hon John

  Sackville, Hon Tom

  Waldegrave, Hon William

  Sainsbury, Hon Tim

  Walden, George

  Salmond, Alex

  Waller, Gary

  Sayeed, Jonathan

  Ward, John

  Shaw, David (Dover)

  Wardle, Charles (Bexhill)

  Shaw, Sir Giles (Pudsey)

  Wells, Bowen

  Shaw, Sir Michael (Scarb')

  Welsh, Andrew (Angus E)

  Shelton, William (Streatham)

  Wheeler, John

  Shephard, Mrs G. (Norfolk SW)

  Whitney, Ray

  Shepherd, Colin (Hereford)

  Widdecombe, Ann

  Shersby, Michael

  Wiggin, Jerry

  Sims, Roger

  Wigley, Dafydd

  Skeet, Sir Trevor

  Wilkinson, John

  Smith, Sir Dudley (Warwick)

  Wilshire, David

  Smith, Tim (Beaconsfield)

  Wolfson, Mark

  Speed, Keith

  Wood, Timothy

  Spicer, Sir Jim (Dorset W)

  Woodcock, Mike

  Spicer, Michael (S Worcs)

  Yeo, Tim

  Squire, Robin

  Young, Sir George (Acton)

  Stanbrook, Ivor

  Stanley, Rt Hon John

  Tellers for the Ayes:

  Stern, Michael

  Mr. Tristan Garel-Jones and Mr. Robert Boscawen.

  Stevens, Lewis

  NOES

  Allen, Graham

  Lamond, James

  Barnes, Harry (Derbyshire NE)

  Leighton, Ron

  Benn, Rt Hon Tony

  Loyden, Eddie

  Bermingham, Gerald

  McAvoy, Thomas

  Biffen, Rt Hon John

  McFall, John

  Body, Sir Richard

  McWilliam, John

  Brown, Ron (Edinburgh Leith)

  Madden, Max

  Buckley. George J.

  Mahon, Mrs Alice

  Campbell-Savours, D. N.

  Millan, Rt Hon Bruce

  Canavan, Dennis

  Moonie, Dr Lewis

  Clay, Bob

  Parry, Robert

  Cohen, Harry

  Patchett, Terry

  Corbyn, Jeremy

  Primarolo, Dawn

  Dalyell, Tam

  Rogers, Allan

  Eadie, Alexander

  Rowlands, Ted

  Evans, John (St Helens N)

  Shepherd, Richard (Aldridge)

  Ewing, Harry (Falkirk E)

  Skinner, Dennis

  Flannery, Martin

  Spearing, Nigel

  Galloway, George

  Taylor, Teddy (S'end E)

  Garrett, John (Norwich South)

  Williams, Alan W. (Carm'thon)

  Gordon, Mildred

  Wilson, Brian

  Grant, Bernie (Tottenham)

  Winnick, David

  Grocott, Bruce

  Wise, Mrs Audrey

  Heffer, Eric S.

  Hinchliffe, David

  Tellers for the Noes:

  Hughes, Roy (Newport E)

  Mr. Bob Cryer and Mr. Martin Redmond

  Lambie, David

  Question accordingly agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the European Communities (Finance) Bill, is is expedient to authorise—
  (1) any increase attributable to that Act in the sums to be charged on and paid out of the Consolidated Fund or the National Loans Fund, or payable out of money provided by Parliament, under the European Communities Act 1972; and
  (2) the payment of any sums into the Consolidated Fund or the National Loans Fund.

  Rate Support Grant (Scotland)
  11.8 pm
  The Minister of State, Scottish Office (Mr. Ian Lang): I beg to move,
  That the Rate Support Grant (Scotland) Order 1988, dated 11 May 1988, a copy of which was laid before this House on 19 May, be approved.
  The order has three main purposes. As a result of local authorities' planned overspending this year in comparison with their guidelines, the first purpose is to reduce the amount of grant payable in respect of 1988–89 by £140 million and to determine revised grant payments accordingly.
  The second purpose is to adjust the rate support grant payable to Scottish local authorities in respect of the previous financial year, 1987–88. That involves the return of substantial grant penalties totalling £89 million in respect of that year in response to lower overspending by authorities at provisional outturn stage.
  Thirdly, the order implements minor adjustments in grant in respect of earlier years in the light of more up-to-date information. The effect is to decrease grant for 1986–87 by £0·1 million and to increase grant for 1985–86 by £3·2 million.
  I shall deal first with the reduction in grant for 1988–89. Let me begin by setting the issue in context. Last July my right hon. and learned Friend the Secretary of State announced, in respect of 1988–89 and for the second successive year, a rate support grant settlement based on local authorities' own budgets for the year then in operation—1987–88—uprated for inflation and certain other specific costs that were expected to arise. Provision for local authority relevant current expenditure in Scotland in 1988–89 was set at £3,640 million, or broadly 4 per cent. over authorities' total budgets for 1987–88. The grant percentage was maintained at 55·5 per cent., and aggregate Exchequer grant was fixed at £2,372 million. The provision and grant figures were respectively 9 per cent. and 8·2 per cent. above the corresponding figures for 1987–88— at a time when the projected general level of inflation was under 4 per cent. All that, and detailed proposals for grant distribution, were set out in the Rate Support Grant (Scotland) (No. 3) Order 1987, which the House approved on 18 January this year.
  In his announcement last July my right hon. and learned Friend described the settlement as "realistic and fair". That is a modest understatement, and it was clear at the time that the Convention of Scottish Local Authorities thought so too. In fact, the level of provision came very close to the figure of £3,677 million that COSLA was seeking for the year—within 1 per cent.
  We felt that with that settlement we had done our bit, and hoped that the local authorities would respond by careful budgeting, with low rate increases, for 1988–89. Many authorities did so: the number budgeting within guideline has increased from 28 last year to 34 this year. Further evidence of the reasonable response of many authorities is to be found in the low rate increases that large numbers of Scottish households have experienced this year. I think that it is very satisfactory that 50 per cent. of Scottish households have experienced rate increases no higher than the going rate of inflation.
  On the other hand, the extent of rate increases is not in itself a fully accurate indicator of underlying trends in
  138
  expenditure, as rates are only one way of financing expenditure. Another is, of course grant, but authorities also have at their disposal receipts, reserves and balances. Some authorities, even with low rate increases, have still approved budgets well over guidelines for the coming year, and authorities' planned expenditure as a whole in 1988–89 is 2·9 per cent. higher in volume terms than was their provisional outturn expenditure for 1987–88. In total, there is a planned expenditure over guideline of £136·5 million, or 3·8 per cent. It is particularly worth noting that Strathclyde and Lothian regions alone account for £116 million, or 85 per cent. of the overspend, while £130 million, or 95 per cent. of the overspend, is accounted for by only six authorities.
  That is the background against which we must consider the grant penalties. They are the consequence of high budgeted overspending. Local authorities were well warned before they drew up their budgets—not least in my speech in the House on 18 January this year—that the Government would respond to overspending with grant penalties.
  In considering the detail of the penalty proposals set out in the order, my right hon. and learned Friend and I have listened to and considered carefully the representations that COSLA has made to us, both in writing and through its officials, and a meeting which we had with the convention on 29 April. I acknowledge, of course, that COSLA opposes grant penalties in principle. But I would like to address myself to two more detailed comments which it made.
  First, COSLA disputed the effectiveness of penalties in persuading authorities to revise their expenditure during the year. That is not the conclusion that I draw from the provisional outturn figures for last year, which give rise to the grant now being returned in respect of that year. Many authorities' provisional outturn expenditure, by the end of the financial year, will be somewhat below their budget proposals. But I simply do not believe that, for example, Strathclyde region or Glasgow district would have reduced its spending so substantially last year were it not for the prospect of recovering £33 million and £12 million respectively, as they will do as a result of tonight's order.
  We are abandoning grant penalties after 1988–89, in recognition of the greater accountability to which local authorities will be subjected as a result of the community charge, but I believe that the efficacy of grant penalties in reducing expenditure during the year was amply demonstrated last year, and I am confident that the same will happen again.
  The second point that COSLA made was to point to the potentially damaging effect of grant penalties on community charge levels next year. The obvious first rejoinder to that is that there are no penalties for authorities that spend at or within guidelines. The fact is that authorities that consciously plan to overspend, knowing the consequences, cannot properly claim that. the consequences for their taxpayers are the Government's fault. The main purpose of grant penalties is to encourage authorities to reduce their expenditure in the course of the year, and to the extent that they do so the grant will be returned.
  As I see it, therefore, this last year of grant penalties should be an effective instrument for lowering local authority expenditure and hence the baseline against which the first community charges will be calculated. Ratepayers should see the penalties in that light; I hope

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  that the local authorities will do so too, and that all hon. Members representing overspending authorities will encourage them to maximise their eventual grant entitlement by reducing their expenditure as the year proceeds.
  Quite apart from these specific points which COSLA put to us on 29 April, there does appear to be a general view that local authority services are being cut to the bone. My hon. Friends who look around themselves in their constituencies will not recognise this view, and they would be right. Local authority budgets for 1988–89 have increased by 4 per cent. in volume terms over actual local authority spending in 1978–79, without there having been any significant increase in authorities' statutory burdens or responsibilities in the meantime. If, rather than adjusting for local authorities' own inflation rates, which include some excessive pay settlements, we compare local authority spending with the general rate of inflation, we come up with a real increase of 22 per cent. in council spending. That is to say that local authorities are costing the economy 22 per cent. more than 10 years ago. So it is no wonder that we have had to take action.
  I should now like to turn to details of the order. First, it reduces rate support grant for 1988–89 for authorities which have planned to overspend. The needs element of rate support grant has been reduced by £140·1 million. That reduction is concentrated entirely on the 31 overspenders.
  The grant reduction is related directly to the individual authority's degree of overspending by comparison with guideline, on the basis of a formula which is explained in the accompanying report. In arriving at the detail of our proposals, my right hon. and learned Friend and I have paid particular heed to the pattern of overspend revealed by authorities' budgets. The main features of the penalty tariff to which I would draw attention are, first, the low starting point, so that authorities planning to spend up to 2 per cent. over guideline attract a penalty rising only to 10 per cent. of their guideline excess; but there is a maximum penalty tariff of 110 per cent. for overspends of 5 per cent. over guideline and above.
  That compares with a penalty tariff last year standing at 70 per cent. and rising to 175 per cent, for spending of 3·5 per cent. in excess of guideline or above, and the reduction in grant at budget stage is broadly equivalent to the budgeted overspend. By comparison with last year, it is tailored specifically to the pattern of budgeted overspend this year. There will be limited burdens for authorities with low overspends, which may in any case be most disposed to reduce their spending to guideline as the year proceeds; but at the same time the penalty is high, with a correspondingly high incentive to economise, on those few authorities with major overspends.
  I offer the House only these two examples. Lothian region now plans to reduce its spending to 4·2 per cent. over guideline, which is the average excess over guideline for all regional councils, and as a result it will recover at the end of the year more than £33 million of the grant it is now forfeiting. If Strathclyde reduces its overspend to, say, 4 per cent. it will recover more than £47 million. These are powerful incentives to reduce spending in the course of the year, and when authorities do so, the benefit will be in reduced community charges next year.
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  I have mentioned Lothian region's decision to make a voluntary rate and budget reduction. As a result, we have less business to debate here this evening than would otherwise have been the case, and I shall say no more on the subject other than to welcome the sensible and realistic decision that Lothian regional council has now taken.
  In terms of previous years, the order contains grant adjustments to take account of provisional outturn and final outturn expenditure figures. In 1987–88, at budget stage, 28 authorities kept within guidelines and the total overspend was £123·2 million. Provisional outturns show that the number of authorities within guideline has increased to 30 and that the total overspend has come down to £74·6 million. The effect of this is to bring penalties for that year down from £202·3 million to £113·1 million, a saving of £89·2 million.
  Details of the 1987–88 penalties are given in annexes 3 and 4 to the report. For those authorities affected, the revised penalties are shown in column 7 in annex 4 with the adjustments that will be made to grant payments shown in column 9. I draw particular attention to the amounts of grant being returned to Strathclyde and Lothian regions and to Edinburgh and Glasgow districts.
  For 1986–87, final or near-final outturns show a small increase in spending. The effect of this is to increase penalties by £0·1 million. Details of the adjustments to penalties are shown in column 6 of table II of annex 5 to the report. For 1985–86, final outturns show a reduction in spending which has the effect of reducing penalties by £3·2 million. Details of the adjustments to penalties are shown in column 6 of table II of annex 6 to the report.
  There will be a continuing need to adjust grant in the light of up-to-date information in respect of 1988–89 and previous years, but this will be the last occasion on which grant penalties will be imposed. I hope that when grant, particularly in respect of 1988–89. is further adjusted, the news for local authorities will be good, reflecting a sensible response by local authorities to the order. I commend the order to the House.
  11.21 pm
  Mr. Donald Dewar: Some of us occasionally think that the economics of the European Community is obscure, obtuse and perverse. We now find ourselves looking at the rate support grant settlement of a Conservative Government and it is no improvement on what has gone before. I should make it clear that we oppose the order.
  I do not think that Conservative Governments never work; they sometimes achieve great things. I am indebted to my hon. Friend the Member for Motherwell, North (Dr. Reid) for the information that Mr. Alex Pagett, the important capture from the public sector, has just fled from Scottish Conservative party headquarters in Chester street. I am told that when challenged by the press about his reasons he said that he was taking advantage of the enterprise culture. I suppose that that proves that in this case it is not so much an alibi as an escape route. We ought to make it clear that taking Mr. Pagett was not a quid pro quo for Mr. Rio Stakis's knighthood.
  The order is offensive in principle and it is on principles that I want to start. The order and the clawback represent an arbitrary judgment based on questionable guidelines that have been manipulated by Ministers with political advantage in mind. The whole attitude of the Minister to

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  local government was well instanced in his speech. He talked about local authorities being "well warned" as if they were a collection of recalcitrant schoolchildren being reprimanded by a particularly inflexible dominie.
  The Minister talked about local authorities "costing the economy". I fear that he has the impression that any expenditure by local government is essentially wicked and can be allowed only in very special and grudging circumstances. I do not like the basis of the system. I remember on one occasion in the days when we had a Scottish Select Committee a senior official in the Scottish Office talking about objective factors subjectively applied. It might have been the other way round, but in any event it became very clear that the basis on which these guidelines have operated are anything but satisfactory and are based on expediency and not on principle.
  The global total for 1988–89 is based on the budget of the previous year plus 4 per cent. I think that there were one or two minor adjustments for the teachers' pay settlement and for the ever-burgeoning costs of administering the poll tax. It is interesting to note that the total is based on the budget for the previous year which does not suggest a vote of confidence in the basis on which the £202 million was clawed back in that financial year. It is not so much the total global figure with which we are concerned as the remarkable variations in the guidelines for individual local authorities.
  There are, for example, increases among the regions as high as 11 per cent. for Dumfries and Galloway and 10·7 per cent. for Grampian, down to 3 per cent. for Strathclyde and 3 per cent. for Lothian region. There are substantial variations among the districts. The figures vary between 3 per cent. and, in Sutherland, 44 per cent., which I concede is out of line in every sense.
  However, it is interesting to note that the authorities that have run into trouble are those whose increase in guidelines has been well below the going inflation rate and who are at the bottom of that list. Grampian, with a substantial increase in guidelines, is out of penalty altogether. Dumfries creeps in at 0·11 per cent.—that is a rather esoteric figure, if ever there was one—but Strathclyde and Lothian face the maximum penalty of 110 per cent.
  The whole matter turns on Strathclyde's position. It is being hammered for another £82 million and no one could seriously imagine that the 3 per cent. increase in guidelines this year, as against last year, could accommodate, for example, the problems that it has had and the factors to which I have already referred, such as poll tax administration and increases in teachers' salaries.
  It is simply a chaotic, artificial, vindictive and often illogical system. The Minister says that, last year, £202 million was clawed back, but some £89 million of that is now being returned. He says that as though it was a virtue, but it underlines the folly and complete irrelevance of what has been happening. The authorities have had to lie out of that money for up to a year. I am told by COSLA that the interest charges alone amounted to about £9 million. The fact that Strathclyde is getting back £33 million is not necessarily a success for common sense, although it may be a success for the Minister's spleen. That authority has had to struggle bravely to try and protect the ratepayers and has done so probably at the cost of dismantling some services and certainly of undermining financial stability. We should not applaud that or suggest that the Minister should encourage it.
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  Lothian region is in a particularly bizarre position. There has been an agreed reduction of £23 million, as the Minister said. That will come out of this year's expenditure, but the grant penalty is still being calculated on the basis that that £23 million will be spent. In addition, a penalty of 110 per cent. is being paid. Again, Lothian will have to wait for a whole year for that money to be returned, and interest charges and other expenses will accrue. How can that be in the ratepayers' interests? If the Minister is grateful for the fact that a common-sense solution, as he sees it, has been found and if, in some way, agreement has been reached with the Lothian region, surely the sensible course is to recognise what has happened and to take that £23 million out of its budget for grant calculation. I do not understand why that has not been done.
  I have no doubt that the Minister of State will argue that the penalties this year are less than they were last year. The sum of £202 million last year has been replaced with a sum of £ 140 million. The top rate penalty has come down from 175 per cent. to 110 per cent. I must make it clear that we believe that a clawback is wrong. There is no case for that during a financial year, and particularly in a year in which the average rate increase in Scotland is as low as 5 per cent.
  This is a very inappropriate order because, as the Minister pointed out, this is the last year of the old system and we face the Minister's brave new world of the poll tax. If we are to close the chapter, draw the line and start again, there is no case for carrying forward deficits into next year, the first year of the poll tax. In any event, it is a basically unsound system that has been foisted upon us without our consent and without any sort of wisdom or appreciation of the needs of Scotland or of the wishes of the Scottish people.
  However, be that as:it may, there is a practical argument that I should have thought would appeal to the Minister. It is not just the theory of the clean break. Inevitably, to some extent the penalties will be carried forward into the following year, and will fall specifically on the poll tax.
  No doubt the Minister will argue that if authorities cut expenditure, they will cut the deficit and relieve the additional burden on the poll tax. But many authorities have come down to the bare essentials. Some, such as Strathclyde last year, managed to meet their targets in reducing expenditure in the face of the Minister's threats and sanctions by one-off savings that will be difficult to repeat.
  I do not know anyone who denies that if the Minister goes ahead with the order and imposes the full penalty that is allowed, at least there will be an irreducible core of deficit that will have to be shifted into the following year, and into the calculations that make up the poll tax.
  It will be particularly serious because the burden will have to be borne not by the entire rating base, but by the poll tax payers alone. The commercial and industrial ratepayers are now linked to the RPI and cannot take a share of that increase. As a result, the burden will be carried by about 40 per cent. of the rating base and that will be entirely to the disadvantage of the poll tax payer.
  The Minister has said or implied that it is an advantage that the top rate of penalty has come down from 175 per cent. to 110 per cent. But allowing for the fact that the penalty will fall only on that 40 per cent. of the old rating base, to preserve parity, the penalty should be 70 per cent.

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  The impact of the order on the poll tax will vary from authority to authority. Those that are out of penalty will not be affected. However, COSLA tells me—and I have no reason to believe that it has not calculated carefully—that the impact on Strathclyde if the full penalty had to be met would be equivalent to £50 on the individual poll tax. Perhaps the Minister will say whether he accepts that figure. Even if Strathclyde manages to reduce the penalty that it has to pay, and even if it manages to cuts its expenditure, there will still be a significant push to poll tax levels for half Scotland's population. That is a practical illustration of a well-known and well-advertised consequence of the system that the Government have introduced.
  During our debate on the poll tax legislation, the very factors to which I am referring were explained to the Minister. It was pointed out to him by people from the press that there was a gearing effect and, inevitably, the poll tax would rise sharply to levels which the Scottish public would consider intolerable. The Minister's answer was that local authorities would not dare to do it. That says a great deal about his attitude. He is constantly expecting local authorities to respond to his wish to dismantle services and to cut provision, when, from his point of view, no doubt, perversely, but in my view very sensibly, people vote for councils that follow other policies and want the Government to follow other policies.
  It is unsatisfactory that in the last year of the present local government financial system, we will lumber local authorities and poll tax payers next year with a burden that is unfair and is a heritage from the past. The Minister knows that it is an unacceptable policy, not simply because it is the view of Opposition politicians, local government and any member of the public in Scotland who is aware and has thought through the system, but because it has been proclaimed as unacceptable by his colleagues south of the border. The Minister will be aware that when the Secretary of State for the Environment made his statement about local government finance in the House on 7 July, he made it clear that he would not follow that example. He said:
  "Under my proposals for closing down the system, grant payments to authorities will not be affected by their level of spending in 1989–90."[Official Report, 7 July; Vol. 136, c. 1200.]
  The Secretary of State for the Environment was saying very sensibly that the Government have enough problems—and, good Lord, he is right—in trying to get the crazy poll tax system off the ground without burdening it and handicapping it by enforcing a series of punitive penalties in the immeidiately preceding year which will force up the levels of poll tax. Why cannot the Scottish Office take a similarly sensible decision? We want the Minister to answer that question before we vote on the order.
  I suggest that the Minister should follow the English example on this occasion, take the same sensible decision and make it clear that he will abandon this series of punitive measures, this foraging expendition into local government finance. He should draw the line behind the present rate support grant system and start afresh next year. That would at least give the hard-pressed poll tax payer in Scotland some chance to come to terms with the unpleasant new system that has been foisted upon him.
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  This matter relates to a fundamental principle. I believe that the Government are still thirled to the idea of control, restriction and depression of local government expenditure for the sake of depression. They really look forward to inadequate services at an inflated price. We know that in 1981–82 the rate support grant settlement met 68·5 per cent. of agreed expenditure. That has now fallen to about 50 per cent. COSLA estimates that that has cost local government in Scotland about £3,000 million. Against the enormity of that disaster over recent years—a disaster for the ratepayers, despite the Government's rhetoric, and for the provision of services—the present £140 million may seem a paltry sum. This is a matter of principle and of practical importance. If the burden is passed on, it will be concentrated on those who will pay the poll tax for the first time and it may affect people who will be in the local government taxation net for the first time. That is wrong. We want none of that, and we will vote against the order.
  11.36 pm
  Mr. Allan Stewart: This important debate, regrettably, has been delayed. It should be recorded for the benefit of the people of Scotland that that delay was entirely due to the fact that a bunch of English Labour hooligans delayed the debate by forcing a completely unnecesary Division.
  The case that my hon. Friend the Minister put to the House——
  Mr. Harry Ewing: On a point of Order, Mr. Deputy Speaker. May not the comments of the hon. Member for Eastwood (Mr. Stewart) be regarded as a very serious reflection on the Chair, of which you were the occupant, when my hon. Friend the Member for Bradford, South (Mr. Cryer) was called to speak on the money resolution? Is it in order for the hon. Member for Eastwood to criticise your selection of my hon. Friend the Member for Bradford, South to speak on the money resolution? Is that not a very serious and scurrilous attack on the occupant of the Chair?
  Mr. Deputy Speaker(Mr. Harold Walker): The comments that I heard may be judged discourteous, but they were not out of order.
  Mr. Stewart: In no way was I criticising the Chair. It is a matter of regret that the hon. Member for Falkirk, East (Mr. Ewing) has delayed further the proceedings of this important debate.
  The case made by my hon. Friend the Minister was reasonable. It sounds generous almost to the point of excess. There is absolutely no doubt that the increased provision of 9 per cent. for 1988–89 over 1987–88 represents an increase of 4·7 per cent. on last year's budget. The penalty scale is significantly more generous than it was previously.
  The system under which the order operates has worked under successive Governments. Hearing the comments of the hon. Member for Glasgow, Garscadden (Mr. Dewar), one would have thought that Labour Governments had never passed rate support grants that were unpopular with Labour-controlled authorities. Indeed, the reverse is the case. I am delighted to see the hon. Member for Cunninghame, South (Mr. Lambie) in his place, because he has an unprecedented record of voting against rate support grant orders, irrespective of which party forms the Government.

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  The system has worked increasingly effectively and there is no doubt that it has been effective in Lothian and Strathclyde. It is necessary because of the lack of accountability to the electorate under the rating system. I am delighted that 1988–89 will be the last year of guidelines and that they will, in effect, be stopped by the changeover to the revenue support grant and the community charge.
  I followed my hon. Friend's reference to the real terms increase in council spending since 1978–79. I think that he said it was an increase of 22 per cent. Will my hon. Friend break down that figure because I understand that it varies considerably between different expenditure heads and that the figure for police expenditure has increased by only 10 per cent. compared with significantly higher figures for leisure and recreation, and social work?
  Mr. Brian Wilson: Does the hon. Gentleman agree that his comments and those of the Minister have ably demonstrated why Mr. Alex Pagett has preferred to move on to the exotic offices of the Stakis organisation rather than defend the system of gomeril nonsense that we are hearing about tonight?
  Mr. Stewart: That is the level of the intellectual attack on the order. That is all that Opposition Members can say. Mr. Alex Pagett can answer for himself—[HON. MEMBERS: "Can you?"] He has moved on and has said that his decision was made because he supports the enterprise culture, and so do I. It is absolutely right that people should move on when they wish to do so. The hon. Member for Cunninghame, North (Mr. Wilson) is trying to divert me from my reasoned appreciation——
  Mr. Bill Walker: Does my hon. Friend agree that none of us would be Members of this House if we had not at one point in our lives decided to change our employment? Therefore, it is humbug to criticise an individual for changing employment.
  Mr. Stewart: My hon. Friend is absolutely right, as always. He may agree that it is a pity that some Opposition Members chose to change their previous occupations.
  Will my hon. Friend the Minister of State confirm that Strathclyde is still pursuing a unique policy of keeping its police establishment below the authorised level? Such a policy is not pursued by any other police authority in Scotland, including Labour-controlled regional authorities. As I understand the position in Strathclyde—perhaps my hon. Friend can confirm or deny this—the excess in Strathclyde's 1988–89 budget is about 5·1 per cent. If the regional council reduced that to 3 per cent., I understand that that would yield a major saving to the regional council of between £65 million and £70 million, which would be of great benefit. Such a target is not unreasonable for Strathclyde.
  Furthermore, if the authority had pursued a policy of school reorganisation instead of bringing in political factors such as absurd opposition to single-sex schools which are popular with Catholics and ethnic minorities, even if unpopular with Opposition Members, it would have fared a great deal better.
  Finally, speaking as a Glasgow district ratepayer, I should like to ask my hon. Friend two questions about Glasgow district council. First, it is interesting that the director of finance of Glasgow district forecast a community charge level of £529 before the district elections and subsequently revised it downward after the
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  votes were counted. Secondly, can my hon. Friend comment on the widespread reports that Glasgow district has a substantial cash reserve, which has been put at between £30 million and £40 million? Clearly, it must have a contingency reserve, but, as my hon. Friend may know, that has been controversial and criticised not only by Government supporters but from within the Labour movement.
  Finally, next year we shall see the introduction of the community charge and an end to these orders. Will my hon. Friend confirm that over 90 per cent. of community charge canvasses have been returned and that the various assembled and spurious campaigns from the different Opposition parties have failed?
  11.45 pm
  Mr. Menzies Campbell: There appears to be a general welcome that this may be the last time we debate the system of clawbacks. The hon. Member for Eastwood (Mr. Stewart) has just stated the basis of his support and the House will undoubtedly draw its conclusions, and I have little difficulty in welcoming an end to these debates. The system of clawbacks has been deeply damaging to local government and offensive to local democracy. I say that to some extent invested with authority from the fact that the district council whose boundaries exactly coincide with those of my constituency did not until 1984, during the time when it was Conservative-controlled, contrive to produce a budget within guidelines. Only when the administration changed in 1984 and since then have budgets within guidelines been produced.
  What is deeply offensive about the present system is that it allows the Secretary of State to override the decisions of elected local councillors. The proper course is for those who make budgets and are responsible for expenditure to face the consequences of those decisions when they meet the electorate.
  The truth is that the political purpose of clawbacks has not been realised because the public in general have responded adversely to centralisation and appreciated. that a substantial part of the discretion of their local councillors is being taken away. The measure of the public's adverse reaction is found in the fact that not a single council which has been penalised under the clawback provisions has been reclaimed by the Conservative party. If anything, in authorities which have suffered most, the majorities against the Government party have increased substantially.
  The community charge is about to become part of local government finance in Scotland.
  Dr. John Reid: The poll tax.
  Mr. Campbell: I accept that it may now be called the poll tax. The hon. Member for Stirling (Mr. Forsyth), the Parliamentary Under-Secretary of State for Scotland, referred to it in those terms during Scottish questions, and on such matters he must for this limited purpose at least be regarded as something of an authority.
  I welcome the fact that the Convention of Scottish Local Authorities was consulted on this occasion and that the clawback has been less severe than in previous years. But that may not be unrelated to the fact that the poll tax is coming into operation. As the hon. Member for Glasgow, Garscadden (Mr. Dewar) pointed out, the

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  higher the penalty this year, so much higher may be the effect on the community charge next year. The burden will fall largely on those who pay the community charge or poll tax in the domestic sector, and I wait with interest, as I suspect does the House, to find out why there is to be this distinction in principle between Scotland and England. The distinction is hard to understand and I suspect that the Minister will find it even more difficult to justify when he winds up.
  The effect of clawback is to withdraw £140 million from the economy of Scotland. Its immediate effect must be a reduction in services and many of the services that will be adversely affected are those relied upon by the poor, the elderly and the disadvantaged. It is not the rich, the young or the gifted who are the beneficiaries of the services that will inevitably require to be cut. One listens to the Government explain their position, but it is notable that absent from the advice that they seem willing to give local authorities is advice on precisely what services should be cut. In a matter of responsibility, the Government seem willing to leave that problem to the duly elected local councillors.
  This is a Government who are supposed to be concerned about local government finance, responsibility and accountability. The truth is that they have presided over more centralisation and less accountability. The clawback has been an unhappy chapter in local government funding in Scotland. It has not achieved what the Government intended and it has weakened and had an adverse effect on local democracy. No tears will be shed when it comes to an end. Likewise, when the order is put to the vote, I doubt very much whether it will command support in the House other than that of the vast ranks of English Tory Members who have contrived to find compelling obligations outside the Chamber and who will troop into the Government Lobby and pass the order, just as one might expect. I wonder whether they would be as keen to pass it if the Secretary of State for the Environment had not made the announcement that he did last week.
  11.51 pm
  Mr. Bill Walker: The hon. and learned Member for Fife, North-East (Mr. Campbell) clearly showed why his party has been so long out of government and looks likely not to be in government in future years. His speech was typical of his party. It was full of aspects about what life should, could and may be, but not about good management and organisation, with accountability and responsibility.
  The hon. and learned Gentleman said that the clawback system was unpopular. I agree. It is unpopular with individuals in local government who knew full well that under the rating system there was not the accountability that the hon. and learned Gentleman talked about because under that system too few people paid and the majority did not pay, so those individuals were able to vote for expenditure, knowing full well that they would not have to pay for it. That is why there there was lack of accountability. So I am delighted that this is the last of the orders that we shall deal with.
  One of the great advantages of the community charge will be the responsibility and accountability that the hon. and learned Gentleman seems to imagine existed under the
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  rating system. He called it local democracy. There was nothing democratic about people passing massive expenditure that they knew their supporters would not have to pay for. That is what happened so often. It is gradually coming to an end, and not too soon.
  Mr. Ron Brown: Will the hon. Gentleman give way?
  Mr. Walker: I am delighted to give away to the hon. Gentleman who represents a party of one in the House.
  Mr. Brown: When we speak about the rate support grant, we must understand one thing. That contribution to local government does not come from the Tory party: it comes from the people, the working class, who pay into a kitty that should go into local government. That has been cut repeatedly by the Government. Millions of pounds have been diverted towards other areas, particularly armaments, Trident and so on. So it is dishonest of the hon. Gentleman to suggest that it is simply a matter of the rating system being discredited. Who discredited it? The system has been discredited by the hon. Gentleman's own party. If his Government owned up and made sure that the moneys were available to local government, the rating system would not be so bad.
  Mr. Bill Walker: We now know why the hon. Member for Edinburgh, Leith (Mr. Brown) is a party of one at the moment. He has clearly illustrated that he does not know how taxation works, or that the income tax reductions given by the Government have gone to ordinary people, the taxpayers. He may not believe that the people have welcomed that, but I know of no one who has given their tax refunds back to the Exchequer under any pretext.
  The Government have pursued a policy of attempting to control local authority expenditure. I stress "attempting" because it has not been possible to control it as one would wish. To suggest that, somehow, there has been a massive reduction in the services provided locally is nonsense. In my part of the world, services have improved in recent years and have not been decimated as the Opposition have sought to suggest. There have been substantial improvements in many of the sectors covered by local government and that has largely occurred because of the additional sums that have been made available to it. The money can only come from the taxpayer; there is no one else. Central Government have no money and local government has no money—it is provided either from central taxation or from local taxation. It is nonsense if the hon. Member for Edinburgh, Leith believes that there is a pot of gold that can be got at.
  I believe that my hon. Friend the Minister may have been over-generous in his approach to this matter, but whatever reason the Opposition believe lies behind my stance, I still believe that there are authorities that plan to spend much more than the guidelines. The guidelines were introduced by a Labour Government and it was a Labour Government who first ran into trouble with the local authorities about planned overspending.
  How lovely it is to have the selective memory of the Opposition, who forget the years between 1974 and 1979 and all the accompanying traumas. The only time there were massive reductions in local government expenditure was during that period. Since that time there have been substantial increases and it looks as if we are budgeting for a 9 per cent. increase. By any measure that is generous.
  11.57 pm
  Mr. Tony Worthington: Tonight we experienced the long-awaited moment when the Minister said something memorable.
  Mr. Norman Hogg: About Alex Pagett;.
  Mr. Worthington: It was nothing to do with Alex Pagett, it was when he said that, in the past three years, local government had been costing the economy more. The Government's attitude to local government has never been expressed more clearly.
  If one spends any money on local government the implication is that that is parasitical on the economy and dragging it down. Therefore, one must stop building roads. One must stop flushing the lavatory because that it is damaging the economy. One must stop running the tap because it is costing the economy. One must stop asking for a home help because that is costing the economy. One must not have a police or a fire service because that is costing the economy. If my son or daughter says that they want to continue to go to school they must be stopped because that is costing the economy. Nothing has exposed more clearly the Government's attitude to the local authorities, and it is the most insulting one that they could have. It is especially insulting to local government staff, many of whom are especially fine people doing a fine job. The same can be said of councillors. But the Government consider that local government is a cost to the economy. The Minister will suffer for his comment because it reveals clearly the Government's view of local authorities. There will be no end to the restrictions placed on local authorities because any local authority expenditure will be seen by central Government as a cost to the economy.
  We are told that this is the last time that we shall have the rate support grant farce. Is that right? Under the poll tax, there will be a similar debate next year when the Government have decided how they will distribute money among local authorities. There will have to be a formula, and the debate will be the same.
  I should like to know whether my conclusions on the Government's policies are correct. I estimate that in future about 80 per cent. of local authority expenditure will be controlled by central Government grant and that the business rate will be controlled also by central Government. I assume that about 20 per cent. of local authority expenditure will be controlled by local authorities. It is my experience in local government—I am sure that it was the experience also of my right hon. and hon. Friends—that the Government never provided adequately for inflation. The technique of control has been to say that inflation will he lower than it has turned out to be.
  If four fifths of local authority expenditure is controlled by central Government and one fifth by local government, and if the inflation level is 4 per cent. and the Government provide for 3 per cent., the poll tax will have to increase by 8 per cent. for inflation alone. Is that correct? If the level is 5 per cent. and the Government provide for 4 per cent., is it correct that the authorities will have to find 9 per cent. extra in poll tax? If the level is 6 per cent. and the Government provide for 4 per cent., will the poll tax have to increase by 14 per cent? If inflation is 6 per cent. and the Government provide for 3 per cent., will the poll tax have to increase by 18 per cent? The answer to my questions is
  150
  yes because it is easy to make the necessary calculations. That being so, how can we talk about local accountability? The behaviour of central Government will determine local government expenditure.
  In the settlement for this year, Lothian, Strathclyde and 11 district councils had a provision for inflation of 3 per cent. Inflation for local authorities is running at 6 per cent. If the pattern continues, the poll tax will have to increase by 18 per cent. The gearing effect is such that a local authority region such as Dumfries and Galloway, which this year was given provision for an 11 per cent. increase in its expenditure—that was arranged for it by a local and convenient Minister—would have to find some money for the poll tax in the circumstances that I have postulated.
  After repeated attempts to obtain an answer from the Government, I now want an answer on the uniform business rate. According to the Tory argument, high local government expenditure has driven jobs away from areas, and one reason why they control the business rate is to protect businesses. However, in Scotland, we have the worst of all possible worlds. They have said that they will take the existing business rate set by Strathclyde, Dumfries and Galloway or Lothian and index-link it. They said that they will not harmonise it within Scotland, but they will maintain it in perpetuity.
  What is the logic of that? The logic should be that one would seek to harmonise within Scotland and have a uniform business rate for Scotland, but we will not get that. Why? Dumfries and Galloway would lose—its rates would increase by 40 per cent.
  Mr. Nigel Griffiths: It is rigged.
  Mr. Worthington: As my hon. Friend says, it is rigged. However, the much bigger issue is when will the Government come clean about when they will introduce a uniform business rate for England, Wales and Scotland. It is not just the Opposition who are concerned about that, but the CBI, the Scottish Council (Development and Industry) and the chambers of commerce. They see Scotland losing substantially because, when a uniform business rate is introduced in England and Wales, there will be a transfer of resources from the south of England to the north. The substantial advantage that is already enjoyed by the north of England in comparison with rates in Scotland will become even greater.
  In Scotland, businesses pay between two and two and a half times as much in business rates as they would in the north of England. To compare the midlands with Scotland, the national exhibition centre, which is five times the size of the Scottish exhibition centre, pays the same rates. That disadvantage will be made even worse.
  When the Minister was questioned, he said that he could not anticipate what will happen, because the revaluation has not been carried out. Other sections of the Government have done that. A Treasury Paper called "Running Costs Guidance: Location of Work", issued in March 1988, said:
  "The effects of the uniform rate poundage in England are expected to include a reduction in average rates bills in much of the North and Midlands."
  That is official.
  The Scottish Council (Development and Industry), the Scottish CBI, the chambers of commerce and the Opposition cannot obtain an answer from the Government on why there will be a £300 million disadvantage to Scottish industry, starting in 1990. The

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  chief executive of the Scottish Tories, John MacKay—of beloved memory—admitted that there would be a period of at least 10 years from 1990 to the year 2000 when Scottish business would be disadvantaged to that extent, and the Government appear to be taking no note of that. Why will the Minister not tell us why a different rate of taxation is to be imposed on Scottish businesses as compared with businesses in the north of England?
  12.9 am
  Mr. Andrew Welsh: I note that the Conservative party has run out of speakers. I shall speak briefly to allow the maximum number of speakers from the Opposition, because it is important that the voice of Scotland in opposition to this disgraceful measure is heard as fully as possible.
  The point of the order is to withdraw about £140 million from the local government system in Scotland—money that could be used to provide services, create employment and allow local authorities to maintain and increase their standards of service. The people of Scotland will be the losers from the order, because it will affect the provision of services to individuals, families and the business community.
  The Government have a clear and consistent policy of withdrawing financial support from local authorities, which has the inevitable consequence of poorer services or higher rates bills, and, as the Government also operate a clawback penalty system, the inevitable consequences of the order will be poorer local government services for the people. It is yet another example of how central Government are destroying Scottish local government. By this order they are removing £140 million from local authorities' budgets, but at the same time they load new legislation and new financial burdens on the system. The idea of runaway local government spending is a myth, and apart from a few maverick exceptions, the reality is of a highly competent, professional and effective local government system in Scotland coping daily with myriad needs.
  The real culprit in rates increases—demonstrably so if one studies the excellent academic work by Dr. Arthur Midwinter and others in our universities—is the withdrawal by central Government of rate support grant funding, and with this order the Government are at it again. They have presided over a massive deliberate withdrawal of funds from Scottish local authorities. Between 1978–79 and 1988–89, the cumulative reduction in local authority grant, calculated at 1988–89 figures, was £1,930 million. Government policy has impoverished local government services at district, regional and island council levels. No national organisation can readily absorb such punishment, and the victim of the Government's policy of loading new responsibilities on to local authorities at the same time as withdrawing their funds is the provision of services to local people.
  The Government have acted unfairly towards Scottish local authorities, and their policy must affect every ratepayer. COSLA says:
  "The Secretary of State has already agreed that the penalty system will be withdrawn as from 1 April 1989 and the imposition of the £140 million penalty in the current year will create a situation whereby community charges will require to be considerably higher than would otherwise have been the
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  case. Unless service levels are reduced penalties will be carried over into 1989/90 and rest solely with community charge payers."
  We should contrast the Scottish Office treatment of poll tax payers with the position in England, where no penalties will be applied in the final year. No wonder that COSLA feels that a similar arrangement should apply to Scotland. We are entitled to ask the Government—and to receive an answer tonight—why Scotland should be treated less fairly than England over the poll tax.
  The order is typical of the cavalier and unfair treatment meted out to local authorities by successive Governments. It is unfair and it will create massive and unnecessary problems for the local authorities. It should be rejected.
  12.15 am
  Mrs. Maria Fyfe: Once again I intend to respond to the disgraceful attack on the integrity of the director of finance of Glasgow district council. This person has been accused of telling the council, and thereby the Glasgow public, what it suits the Labour administration to hear. I worked closely with Mr. English for several years. I know from direct experience that he would not shirk telling the council what it did not want to hear. He is not a person who seeks to curry favour. That attack says much more about the hon. Member for Eastwood (Mr. Stewart) than about Mr. English.
  The hon. Member for Eastwood said that he thought that the clawback of rate support grant was justified, on the peculiar ground that Glasgow district council carries a large contingency fund or surplus. That is pretty strange reasoning. The Government say that it relates purely to overspend. They would be delighted if councils amassed funds and did not spend them on services, but according to the hon. Member for Eastwood they are being punished for doing so. He knows that Glasgow district council held its rate steady for several years and that this year there was a slight decrease. It is not about vastly increased rates or about holding a surplus; it is supposed to be about excessive and unreasonable expenditure.
  As the average increase was only 3 per cent., do the Minister and the hon. Member for Eastwood think that 3 per cent. was excessive and unreasonable? [Interruption.] If the hon. Member for Eastwood wants to intervene, I might allow him to do so, but I do not intend to respond to stupid interruptions from a sedentary position. [Interruption.]
  Mr. Deputy Speaker (Mr. Harold Walker): Order. There are too many sedentary interruptions from both sides of the House. I should very much like to listen to the hon. Lady's speech.
  Mrs. Fyfe: But the sedentary interruptions on this side of the House are supportive.
  I shall put some questions to the Minister, not in the hope that he will answer them but to have them on record. I fully expect the Minister to do what he has done on previous occasions at the Dispatch Box and to avoid answering my questions. Does he accept that inflation, poll tax administration and teachers' salaries account for the majority of the budgeted excess that the order intends to penalise? If so, does he think that that is fair, or will he admit that it is a blatant attempt to force real cuts?
  Does the Minister think that a 3 per cent. increase on the previous year's budgets was excessive and unreasonable? If so, does he think that anybody else thinks that it

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  was excessive and unreasonable? If not, why is the majority of the penalty falling on those authorities whose budgets have increased by only 3 per cent.? What justification can there be for the top level of penalty exceeding more than a pound for pound loss of grant? Does he intend to impose £100 on two adults in a household in the first year of the poll tax, or does he hope that those councils will make drastic budget cuts and thereby provide a worse service than the people voted for in recent district elections, in the previous regional elections and in the general election?
  Does he believe that the domestic sector—we are talking local government jargon here, but everyone in the House ought to know that "domestic sector" means ordinary families and not business ratepayers—should bear the burden, when they represent only 40 per cent. of the total rating base?
  Finally, how can the Minister explain the imposition of this penalty on Scotland, when the Secretary of State for the Environment dare not impose any such penalty on England?
  12.19 am
  Mr. John McFall: The order concerns £140 million that is being withdrawn from 1 April 1989, but £136 million of that—over 97 per cent.—is a result of the Government's negligence in refusing to reflect the rate of inflation in rate support resettlement grants over the past six or seven years. Only £4 million is a consequence of local authorities' actions. That means that poll tax levels will have to be higher than they would otherwise have been, as the penalties will have to be carried forward.
  During the past six months we have heard that the Scottish legislation and that for England and Wales will come into line in defining such categories as the severely mentally handicapped. Why, then, can the Minister not pledge that these penalties will not be carried forward for 12 months, as the Secretary of State for the Environment did in his statement of 7 July in regard to England and Wales? Otherwise, next April, Scotland will have the poll tax along with rate capping, and it will be unique in that respect. If the Government want to be fair, why cannot they give us the same pledge that the Secretary of State for the Environment gave to England and Wales?
  The penalty figures suggest that an average couple in Strathclyde region will have to pay an extra £100. That will destroy at a stroke the so-called link between spending and accountability to which the Government have referred during the past six, 12 or 18 months. It will also destroy the link between spending and the poll tax charge.
  In future the Government will provide about 80 per cent. of local authorities' funds, with the authorities having to find the rest. If anything, that is a centralising measure. The Chartered Institute of Public Finance and Accountancy has carried out a survey over the past few months of nearly 50 local authorities in England and Wales. It found that, on the figures available, in about 26 authorities poll tax levels would go up while the authorities' spending fell. In 22, they found the opposite. There is no accountability, and carrying forward the penalties will only penalise Scottish poll taxpayers even more.
  It is said that the tariff will be reduced from 175 to 110 per cent. As my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) has said, the burden will fall entirely
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  on the domestic sector. I well remember in the past few years asking Strathclyde regional council to petition the Government to save social projects in our area—projects such as latchkey schemes and schemes to help alcoholics. Not only did the Government not save the projects but they penalised Strathclyde regional council 110 per cent. over budget because the council had a conscience and decided to save them.
  If the Government have any conscience, they should let the poll tax payers in Scotland start with a clean sheet. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, over the past few years rate support grant has fallen from 68·5 per cent. in 1981 to 50 per cent. now. If the order is passed, there will be a total loss of £3 billion. Translated into its value in terms of rates, that means that poll tax payer in Scotland from next year would be entitled to a two-year rate-free period if the money were reinstated.
  The problems of local government are nothing to do with local authorities, which have done their best to balance the books and provide services of all kinds over the past seven years. Their problems stem from the actions of the Government. If the Government have any conscience they will cancel the penalties that are being carried over to next year and let the poll tax payers of Scotland start with a clean sheet.
  12.27 am
  Mr. Thomas Graham: We have heard the Minister castigate Strathclyde regional council. It was not so long ago that the previous Secretary of State for Scotland, the right hon. Member for Ayr (Mr. Younger), went around the world praising that council as an excellent, prudent and responsible authority. The council is in an area of huge deprivation, made worse since the Government came to power in 1979. Since then, the Government have cut almost £2 billion from Strathclyde alone.
  Since 1979, deprived areas have got worse; in 1979 there were 45—now 78 are so designated. I can see the Secretary of State having a wee laugh. I can assure him that people in Strathclyde are not laughing at the damage inflicted on them by the Government.
  The Minister mentioned local government guidelines. When Dick Stewart was leader of Strathclyde regional council he said that no one could tell it what the guidelines were. The figures were mythical, picked out of a hat. The officers and councillors of Strathclyde would learn more from the "Hitchhiker's Guide to the Galaxy" than from what the Scottish Office puts out.
  It is appalling that the Minister is attacking Strathclyde, given that it looks after nearly half the population of Scotland—2,500,000 people who are waiting with trepidation for the poll tax to be implemented. If the Minister goes ahead with the clawback there will he a lot of weeping and wailing in Strathclyde because of the damage that that would inflict on the area. For the first time ever, the council would have to consider cutting home helps, concessionary fares, social work and services for the elderly—and the police. That would be a tragedy. The Government should reverse the policy of clawback and give the people of Strathclyde some hope and some future to look forward to.
  Instead of castigating Strathclyde, the Government should start to give it a bit of support. They should give

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  some encouragement to local councillors to carry out their mandate. Those councillors were democratically elected and the number of Labour councillors has increased. They have not lost seats but have gained seats at every election. The people of Strathclyde have shown that they wish to have Labour-controlled councils and no Tories.
  12.30 am
  Mr. Brian Wilson: Everything that my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) has said is true. Perhaps the most eloquent comments were the horse laughs of ignorance from Conversative Members in response to the references to poverty in Strathclyde. At other times Conservative Members, and especially Scottish Office Ministers, seek to exploit the achievements of Glasgow and Strathclyde, but when it comes to the bit, the mass of people in those places need Government financial support to give them a decent standard of living and the decent housing and services that they desperately require.
  Ministers are only too happy to participate in the PR. With one hand they seek to take the credit for the achievements of Glasgow and Strathclyde and with the other they take away the resources that Glasgow, Strathclyde and other districts in Strathclyde so badly need.
  Scottish Office Ministers are making a deliberate and cynical attempt to raise the starting point of the poll tax in Scotland. That is what the measure is about. If the people of Scotland take note of nothing else that comes out of the debate, they must take note of the contrast between what the Secretary of State for Scotland and his sidekick the Minister of State are doing compared to what is happening in England. What they are doing is in direct contrast to the words of the Secretary of State for the Environment who specifically said that no grant penalty system would operate in England in the final year before the introduction of the community charge. He said:
  "Under my proposals for closing down the system, grant payments to authorities will not be affected by their level of spending in 1989–90."—[Official Report, 7 July 1988; Vol. 136, c. 1200.]
  Those words and their contrast to what Scottish Office Ministers are about tonight could not be more specific. Ministers are forcing up the level of poll tax in Scotland in some confused hope of gaining political advantage.
  We have had news tonight of the departure from office of Mr. Alex Pagett, hired less than a year ago as the propaganda minister for the Vichy regime in New St. Andrew's house. It was discreditable for Mr. Pagett to take the job in the first place, but credit is due to him for, within a few months, saying that he has no stomach for the task of acting as propagandist-in-chief for dishonest Ministers who consistently seek to impose on the people of Scotland policies for which they were not elected. Those policies have no popular mandate in Scotland and can be imposed only by what the Secretary of State for Scotland calls the Gatling gun. If the Government choose to rule by the Gatling gun they cannot expect any respect from the Opposition or from the electors in Scotland. They cannot even retain the loyalty of the hirelings that they have brought in to retrieve the discredited name of the Conservative party in Scotland.
  12.33 am
  Mr. Lang: It is conventional to say at this stage that the debate has been interesting and sometimes productive. The only substantive point of any novelty that has emerged in this debate is the Pagett point. I am happy to be able to assure the House of Mr. Pagett's departure does not incur penalty and will not affect the guidelines of the Scottish Conservative party. Our guideline remains the prudent handling of the economy, and that is evidenced by the order.
  The hon. Member for Glasgow, Garscadden (Mr. Dewar) raised a number of matters and claimed that Strathclyde and Lothian were being hammered. He carefully played down the point that Strathclyde was budgeting no less than £75 million over its guideline and that Lothian was about £40 million over budget.
  As my hon. Friend the Member for Eastwood (Mr. Stewart) pointed out, if the authority were to reduce its guidelines by just 1 per cent., it would reduce its penalty by £44 million. If it reduced it by 2 per cent., its saving would be over £66 million. There is a strong and clear incentive to the Strathclyde local authority to reduce its spending for the sake of its ratepayers and for the sake of its community charge payers next year. As Opposition Members have said, the penalties will be carried forward to the community charge, but, by the same token, a deduction in spending will also carry forward a benefit to the community charge payers next year.
  When the hon. Member for Garscadden suggests that the local authorities would have some difficulty in meeting those targets, I should again point out to him that the guidelines this year are 4·7 per cent. up on last year's budgets and no less than 8·3 per cent. up on guidelines.
  The hon. Gentleman made a bizarre point about the gearing of the community charge.
  Mr. Tom Clarke: Will the Minister give way?
  Mr. Lang: I am sorry, but I have no time to give way.
  The hon. Gentleman also referred to the effect that the penalty would have on community charge payers. Community charge payers will face a burden next year if spending is not reduced to guideline, but it works the other way round, and the benefit to community charge payers can be considerable.
  Suddenly my right hon. Friend the Secretary of State for the Environment has become the hero of the Labour Benches, as a result of his announcement that there will be no penalty in England in the year before the introduction of the community charge. The impact of that is, of course, that grant penalty will end in Scotland and in England in the same year. I should have thought that the Opposition Benches would have welcomed that. If we do something in Scotland before they do it in England, we are being guinea pigs. If we do it after them, we are being lemmings. If we do it at the same time, we are accused of being copycats.
  Mr. Dewar rose——
  Mr. Lang: I shall not give way, as I have only two minutes left.
  The hon. Gentleman raised the question of cuts in the rate support grant and the hon. Member for Banff and Buchan (Mr. Salmond)——
  Mr. Tom Clarke: On a point of order, Madam Deputy Speaker. On a major issue of this kind—it is almost a constitutional issue—influenced by the policy in Cabinet, which the Secretary of State for Scotland has accepted, would it not be in order, even at this last minute——
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. That is not a point of order for the Chair. I call Mr. Lang.
  Mr. Lang: The hon. Member for Garscadden raised the question of cuts in the rate support grant, a familiar old story. He forgot to refer the House to the fact that the last Labour Government, in two successive years, cut the rate support grant by a total of no less than 6·5 per cent. No cut by any Conservative Government has ever come close to that. The hon. Gentleman also forgot that the average aggregate Exchequer grant has been increased considerably. Over the past five years, it has risen by 23 per cent. inflation has risen by 25 per cent., yet rates have risen by 52 per cent.
  The hon. Gentleman referred to grant penalties as artificial, vindictive and arbitrary, but let him reflect on the history of grant penalties and recall that it was a Labour Government who brought in grant penalties in the first place—admittedly, as a crude and high-handed mechanism for controlling local authorities. We have considerably improved and refined the system, first, by excluding authorities below guideline from penalty, which were penalised under the last Labour Government; secondly, by relating penalties directly to overspend, instead of the crude impost of the last Labour Government; and, thirdly, by providing for the penalties to be revised both at provisional and at outturn stages. We now have a tariff that impacts moderately on low-spending—
  It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14.
  The House divided: Ayes 242, Noes 184.

  Division No. 406]

  [12.38 am

  AYES

  Aitken, Jonathan

  Bowden, Gerald (Dulwich)

  Alexander, Richard

  Bowis, John

  Alison, Rt Hon Michael

  Braine, Rt Hon Sir Bernard

  Allason, Rupert

  Brazier, Julian

  Amess, David

  Brittan, Rt Hon Leon

  Amos, Alan

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

  Arbuthnot, James

  Bruce, Ian (Dorset South)

  Arnold, Jacques (Gravesham)

  Burns, Simon

  Ashby, David

  Burt, Alistair

  Atkins, Robert

  Butcher, John

  Atkinson, David

  Butler, Chris

  Baker, Rt Hon K. (Mole Valley)

  Butterfill, John

  Baker, Nicholas (Dorset N)

  Carlisle, John, (Luton N)

  Baldry, Tony

  Carlisle, Kenneth (Lincoln)

  Batiste, Spencer

  Carrington, Matthew

  Beaumont-Dark, Anthony

  Carttiss, Michael

  Bellingham, Henry

  Cash, William

  Bendall, Vivian

  Chope, Christopher

  Bennett, Nicholas (Pembroke)

  Clark, Sir W. (Croydon S)

  Benyon, W.

  Coombs, Simon (Swindon)

  Bevan, David Gilroy

  Currie, Mrs Edwina

  Biffen, Rt Hon John

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

  Blackburn, Dr John G.

  Douglas-Hamilton, Lord James

  Blaker, Rt Hon Sir Peter

  Dunn, Bob

  Bonsor, Sir Nicholas

  Durant, Tony

  Boscawen, Hon Robert

  Emery, Sir Peter

  Boswell, Tim

  Fallon, Michael

  Bottomley, Peter

  Field, Barry (Isle of Wight)

  Bottomley, Mrs Virginia

  Forman, Nigel

  Bowden, A (Brighton K'pto'n)

  Gale, Roger

  158

  Garel-Jones, Tristan

  Miller, Sir Hal

  Gorman, Mrs Teresa

  Mills, Iain

  Gow, Ian

  Mitchell, Andrew (Gedling)

  Grant, Sir Anthony (CambsSW)

  Mitchell, David (Hants NW)

  Greenway, Harry (Ealing N)

  Moate, Roger

  Greenway, John (Ryedale)

  Montgomery, Sir Fergus

  Gregory, Conal

  Morrison, Sir Charles

  Griffiths, Peter (Portsmouth N)

  Morrison, Rt Hon P (Chester)

  Grist, Ian

  Moss, Malcolm

  Ground, Patrick

  Moynihan, Hon Colin

  Gummer, Rt Hon John Selwyn

  Neale, Gerrard

  Hamilton, Hon Archie (Epsom)

  Needham, Richard

  Hamilton, Neil (Tatton)

  Neubert, Michael

  Hanley, Jeremy

  Newton, Rt Hon Tony

  Hannam, John

  Nicholls, Patrick

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

  Nicholson, David (Taunton)

  Hargreaves, Ken (Hyndburn)

  Nicholson, Emma (Devon West)

  Harris, David

  Onslow, Rt Hon Cranley

  Haselhurst, Alan

  Oppenheim, Phillip

  Hawkins, Christopher

  Page, Richard

  Hayes, Jerry

  Paice, James

  Hayhoe, Rt Hon Sir Barney

  Patnick, Irvine

  Hayward, Robert

  Patten, Chris (Bath)

  Heathcoat-Amory, David

  Pawsey, James

  Heseltine, Rt Hon Michael

  Peacock, Mrs Elizabeth

  Higgins, Rt Hon Terence L.

  Porter, David (Waveney)

  Hind, Kenneth

  Powell, William (Corby)

  Hogg, Hon Douglas (Gr'th'm)

  Price, Sir David

  Holt, Richard

  Raffan, Keith

  Howard, Michael

  Raison, Rt Hon Timothy

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

  Redwood, John

  Howarth, G. (Cannock & B'wd)

  Renton, Tim

  Howell, Rt Hon David (G'dford)

  Rhodes James, Robert

  Hughes, Robert G. (Harrow W)

  Riddick, Graham

  Hunt, David (Wirral W)

  Rifkind, Rt Hon Malcolm

  Hunt, John (Ravensbourne)

  Roberts, Wyn (Conwy)

  Hunter, Andrew

  Rossi, Sir Hugh

  Irvine, Michael

  Rost, Peter

  Jack, Michael

  Rowe, Andrew

  Janman, Tim

  Rumbold, Mrs Angela

  Johnson Smith, Sir Geoffrey

  Ryder, Richard

  Jones, Gwilym (Cardiff N)

  Sackville, Hon Tom

  Jones, Robert B (Herts W)

  Sainsbury, Hon Tim

  Kellett-Bowman, Dame Elaine

  Sayeed, Jonathan

  Key, Robert

  Shaw, David (Dover)

  King, Roger (B'ham N'thfield)

  Shaw, Sir Giles (Pudsey)

  Kirkhope, Timothy

  Shaw, Sir Michael (Scarb)

  Knapman, Roger

  Shephard, Mrs G. (Norfolk SW)

  Knight, Greg (Derby North)

  Shepherd, Colin (Hereford)

  Knowles, Michael

  Shepherd, Richard (Aldridge)

  Knox, David

  Shersby, Michael

  Lamont, Rt Hon Norman

  Sims, Roger

  Lang, Ian

  Skeet, Sir Trevor

  Latham, Michael

  Smith, Sir Dudley (Warwick)

  Lawrence, Ivan

  Smith, Tim (Beaconsfield)

  Leigh, Edward (Gainsbor'gh)

  Soames, Hon Nicholas

  Lennox-Boyd, Hon Mark

  Speed, Keith

  Lester, Jim (Broxtowe)

  Spicer, Sir Jim (Dorset W)

  Lightbown, David

  Spicer, Michael (S Worcs)

  Lord, Michael

  Squire, Robin

  Luce, Rt Hon Richard

  Stanbrook, Ivor

  Lyell, Sir Nicholas

  Steen, Anthony

  McCrindle, Robert

  Stern, Michael

  Macfarlane, Sir Neil

  Stevens, Lewis

  MacGregor, Rt Hon John

  Stewart, Allan (Eastwood)

  MacKay, Andrew (E Berkshire)

  Stewart, Andy (Sherwood)

  McLoughlin, Patrick

  Stradling Thomas, Sir John

  McNair-Wilson, P. (New Forest)

  Sumberg, David

  Madel, David

  Summerson, Hugo

  Major, Rt Hon John

  Tapsell, Sir Peter

  Malins, Humfrey

  Taylor, Ian (Esher)

  Mans, Keith

  Taylor, John M (Solihull)

  Maples, John

  Temple-Morris, Peter

  Marland, Paul

  Thompson, Patrick (Norwich N)

  Marshall, John (Hendon S)

  Thorne, Neil

  Martin, David (Portsmouth S)

  Thornton, Malcolm

  Mates, Michael

  Thurnham, Peter

  Maude, Hon Francis

  Townend, John (Bridlington)

  Mellor, David

  Tredinnick, David

  Meyer, Sir Anthony

  Trippier, David

  159

  Trotter, Neville

  Whitney, Ray

  Twinn, Dr Ian

  Widdecombe, Ann

  Viggers, Peter

  Wiggin, Jerry

  Waddington, Rt Hon David

  Wilkinson, John

  Waldegrave, Hon William

  Wilshire, David

  Walden, George

  Wood, Timothy

  Walker, Bill (T'side North)

  Woodcock, Mike

  Waller, Gary

  Yeo, Tim

  Ward, John

  Young, Sir George (Acton)

  Wardle, Charles (Bexhill)

  Watts, John

  Tellers for the Ayes:

  Wells, Bowen

  Mr. Peter Lloyd and Mr. David Maclean.

  Wheeler, John

  NOES

  Abbott, Ms Diane

  Dalyell, Tam

  Adams, Allen (Paisley N)

  Davies, Ron (Caerphilly)

  Allen, Graham

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

  Anderson, Donald

  Dewar, Donald

  Archer, Rt Hon Peter

  Dixon, Don

  Armstrong, Hilary

  Dobson, Frank

  Ashley, Rt Hon Jack

  Doran, Frank

  Barnes, Harry (Derbyshire NE)

  Duffy, A. E. P.

  Barron, Kevin

  Dunnachie, Jimmy

  Battle, John

  Eadie, Alexander

  Beckett, Margaret

  Eastham, Ken

  Bell, Stuart

  Evans, John (St Helens N)

  Benn, Rt Hon Tony

  Ewing, Harry (Falkirk E)

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

  Ewing, Mrs Margaret (Moray)

  Bermingham, Gerald

  Fatchett, Derek

  Blunkett, David

  Faulds, Andrew

  Boateng, Paul

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

  Boyes, Roland

  Flannery, Martin

  Bradley, Keith

  Flynn, Paul

  Bray, Dr Jeremy

  Foot, Rt Hon Michael

  Brown, Gordon (D'mline E)

  Foster, Derek

  Brown, Nicholas (Newcastle E)

  Fraser, John

  Brown, Ron (Edinburgh Leith)

  Fyfe, Maria

  Buckley, George J.

  Galbraith, Sam

  Campbell, Menzies (Fife NE)

  Galloway, George

  Campbell, Ron (Blyth Valley)

  Garrett, John (Norwich South)

  Campbell-Savours, D. N.

  Garrett, Ted (Wallsend)

  Canavan, Dennis

  George, Bruce

  Clark, Dr David (S Shields)

  Godman, Dr Norman A.

  Clarke, Tom (Monklands W)

  Golding, Mrs Llin

  Clay, Bob

  Gordon, Mildred

  Clelland, David

  Gould, Bryan

  Clwyd, Mrs Ann

  Graham, Thomas

  Cohen, Harry

  Grant, Bernie (Tottenham)

  Coleman, Donald

  Griffiths, Win (Bridgend)

  Cook, Frank (Stockton N)

  Grocott, Bruce

  Cook, Robin (Livingston)

  Hattersley, Rt Hon Roy

  Corbett, Robin

  Haynes, Frank

  Corbyn, Jeremy

  Heffer, Eric S.

  Cousins, Jim

  Hinchliffe, David

  Cryer, Bob

  Hogg, N. (C'nauld & Kilsyth)

  Cummings, John

  Holland, Stuart

  Cunliffe, Lawrence

  Home Robertson, John

  160

  Hood, Jimmy

  O'Neill, Martin

  Howarth, George (Knowsley N)

  Orme, Rt Hon Stanley

  Howell, Rt Hon D. (S'heath)

  Parry, Robert

  Hughes, John (Coventry NE)

  Patchett, Terry

  Hughes, Robert (Aberdeen N)

  Pike, Peter L.

  Hughes, Roy (Newport E)

  Powell, Ray (Ogmore)

  Hughes, Sean (Knowsley S)

  Primarolo, Dawn

  Illsley, Eric

  Quin, Ms Joyce

  John, Brynmor

  Radice, Giles

  Jones, Martyn (Clwyd S W)

  Redmond, Martin

  Kaufman, Rt Hon Gerald

  Rees, Rt Hon Merlyn

  Lambie, David

  Reid, Dr John

  Lamond, James

  Richardson, Jo

  Leadbitter, Ted

  Robertson, George

  Leighton, Ron

  Robinson, Geoffrey

  Lestor, Joan (Eccles)

  Rogers, Allan

  Lewis, Terry

  Rooker, Jeff

  Litherland, Robert

  Ross, Ernie (Dundee W)

  Livsey, Richard

  Rowlands, Ted

  Lloyd, Tony (Stretford)

  Salmond, Alex

  Lofthouse, Geoffrey

  Sedgemore, Brian

  Loyden, Eddie

  Sheerman, Barry

  McAllion, John

  Sheldon, Rt Hon Robert

  McAvoy, Thomas

  Shore, Rt Hon Peter

  McCartney, Ian

  Short, Clare

  Macdonald, Calum A.

  Skinner, Dennis

  McFall, John

  Smith, Andrew (Oxford E)

  McKay, Allen (Barnsley West)

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

  McKelvey, William

  Snape, Peter

  McLeish, Henry

  Spearing, Nigel

  McNamara, Kevin

  Steel, Rt Hon David

  McTaggart, Bob

  Steinberg, Gerry

  McWilliam, John

  Thompson, Jack (Wansbeck)

  Madden, Max

  Turner, Dennis

  Mahon, Mrs Alice

  Vaz, Keith

  Marek, Dr John

  Wall, Pat

  Marshall, Jim (Leicester S)

  Wardell, Gareth (Gower)

  Martin, Michael J. (Springburn)

  Wareing, Robert N.

  Martlew, Eric

  Welsh, Andrew (Angus E)

  Maxton, John

  Welsh, Michael (Doncaster N)

  Meacher, Michael

  Williams, Rt Hon Alan

  Meale, Alan

  Williams, Alan W. (Carm'then)

  Michael, Alun

  Wilson, Brian

  Millan, Rt Hon Bruce

  Winnick, David

  Moonie, Dr Lewis

  Wise, Mrs Audrey

  Morgan, Rhodri

  Worthington, Tony

  Morley, Elliott

  Wray, Jimmy

  Morris, Rt Hon J. (Aberavon)

  Mowlam, Marjorie

  Tellers for the Noes:

  Mullin, Chris

  Mr. Adam Ingram and Mr. Nigel Griffiths.

  Murphy, Paul

  Question accordingly agreed to.
  Resolved,
  That the Rate Support Grant (Scotland) Order 1988, dated 11th May 1988, a copy of which was laid before this House on 19th May, be approved.

  Court of Session Bill [Lords]
  Considered in Committee.
  [MISS BETTY BOOTHROYD in the Chair.]
  Clauses 1 to 51 ordered to stand part of the Bill.

  Court of Session Bill [Lords]
    New clause 1

      RESTORATION OF POSSESSION AND SPECIFIC PERFORMANCE
      'The Court may, on application by summary petition—

      (a) order the restoration of possession of any real or personal property of the possession of which the petitioner may have been violently or fraudulently deprived; and

      (b) order the specific performance of any statutory duty, under such conditions and penalties (including fine and imprisonment, where consistent with the enactment concerned) in the event of the order not being implemented, as to the Court seem proper.'. —[Lord James Douglas-Hamilton.]

      Brought up, and read the First time.
      12.49 am
      The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I beg to move, That the clause be now read a Second time.
      The Second Deputy Chairman of Ways and Means (Miss Betty Boothroyd): With this it will be convenient to discuss Government new clause 2 and Government amendments Nos. 1 to 3.
      Lord James Douglas-Hamilton: In speaking to new clause 1, I shall speak also to the second new clause and to three amendments. I intend to propose them en bloc because none involves amendments to the law.
      The main amendment is made by new clause 2, which concerns section 89 of the Court of Session Act 1868. The Scottish Law Commission's original view, as recorded in its report on this consolidation measure, was that this provision should be repealed in its entirety since it related to the Bill Chamber which was abolished in 1933. However, the commission has now reconsidered that view and wishes to restrict the appeal to those parts of section 89 which specifically relate to Bill Chamber proceedings.
      Accordingly, new clause 2 re-enacts those provisions of section 89 which cannot be regarded as wholly obsolete as relating to the Bill Chamber and which relate to the powers of the Court of Session. For example, an interdict normally prevents an action, but section 89 of the 1868 Act also allows the granting of specific relief. Therefore, it is desirable that that power should be retained so that there is no doubt about the extent of the court's powers.
      In order to achieve parity of treatment in the Bill of section 89 and section 91 of the 1868 Act, new clause 1 re-enacts also those provisions in section 91 which are not obsolete. Section 91 is similar in nature to section 89 of the 1868 Act and it should be helpful to practitioners if both provisions are dealt with in the Bill in the same manner—[Interruption.] Well, the point is that unless a provision is entirely obsolete it should not be rubbed out of existence without the House expressing a view on it. The point is that we are consolidating the law.
      Amendments Nos. 1 to 3 are purely technical amendments. They are aimed at making clear which of the repealed provisions are re-enacted in the Bill or are repealed without re-enactment.
      162
      The noble and learned Lord, Lord Oliver of Aylmer ton, the chairman of the Joint Committee on Consolidation Bills, has been consulted on the amendments. He has stated that he is of the view that they are appropriate to a consolidation Bill and further that the amendments do not change the legal effect of the Bill. That is what the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) was concerned about. Therefore, I commend the new clauses and amendments to the House.
      Mr. John Maxton: Not having understood a single word that the Minister said, I should point out that even in a Committee of the whole House, it is unusual for the Government's Deputy Chief Whip to make any intervention, whether from a sedentary position or not. I should assure the hon. Member for Penrith and The Border (Mr. Maclean) that I do not think that I was the only hon. Member who had difficulty in understanding what the Minister was saying. Indeed, I have a grave suspicion that the Minister himself did not understand what on earth he was saying. However, he read well from his notes and I accept that he is quite a good reader, but it is putting it a bit strongly to say that he actually understood it.
      This is a consolidation measure. It had its Second Reading debate and I gather was printed some weeks ago. What I want to know is what evidence has appeared in the courts in Scotland, in the Court of Session, in the weeks between the printing of the Bill and this Committee stage or even since Second Reading.
      The Minister said that it was originally believed that these clauses had fallen out of use and were no longer needed on the statute book. The only reason for reintroducing them is that in the past two weeks they have come back into use in the courts. Surely the Minister can give us examples of how this has come about. There must be a reason behind it. If not, why were they not included in the original Bill?
      The Minister's explanation is unsatisfactory. He might have given us a fuller explanation of exactly what the new clauses do and why they are now necessary when two weeks ago they were not. I hope that the Minister will spend a few minutes giving us that explanation. If that is the sort of nonsense that Alex Pagett was having to sell, I am not surprised that he chucked it.
      Mr. Menzies Campbell: Less than a week ago we heard the Minister tell the House that this was an uncontroversial consolidation measure which should not occupy the time of the House. We now find him compelled to move two new clauses and three consequential amendments. One is bound to ask what the Minister knew and when he came to know it. How is it that an uncontroversial measure suddenly requires new clauses and consequential amendments?
      The Minister's explanation of new clause 1 was less than convincing. I understand that it relates to section 91 of the Court of Session Act 1868. That section has been in use in the Court of Session since the passing into law of the Housing (Homeless Persons) Act 1977 when, in the absence of a system of judicial review in Scotland, recourse was frequently made to section 91 in an endeavour to persuade local authorities to discharge their statutory responsibilities. It is unconvincing that the draftsmen should have failed to take proper account of that when the section was in use and a matter of some judicial

      163
      controversy in the past 12 years. I hope that this is not a measure of the standard of draftsmanship that we may expect.
      The Minister knows that I have been pressing him for some time in questions and I asked again on Second Reading for a proper review of Court of Session procedure. Many people believe that that is a necessary accompaniment to the proper use of the Court of Session and its relevance to modern practice. I hope that if such a review is embarked on, the standard of draftsmanship which accompanies it will not be the same as that which apparently allowed these mistakes to occur in what we were told was an uncontroversial and consolidating measure.
      Both new clauses create remedies in the Court of Session. It is not clear in either case whether the new clauses provide that the remedies should be available on an interim basis. New clause I, which deals with the restoration of possession and specific performance, does not make any reference to whether such remedies may be available on an interim basis. Likewise, new clause 2 does not make any express reference to whether specific relief may be granted in interdict proceedings on an interim basis.
      I hope that the Minister will take a little time to answer those points, which, in my respectful judgment, have some substance and may have important legal consequences in the Court of Session and, indeed, the law of Scotland.
      It is perhaps unfortunate that these matters come before us at the end of a long day, because at another time those of us who know a little more about the procedure of the Court of Session might have been persuaded to press the Minister a little more vigorously. Perhaps the lengthy day has operated to the Minister's advantage. But I hope that he will accept that my observations are prompted by nothing other than a desire, which I have no doubt he shares, to ensure that the law of Scotland in this unitary Parliament receives the proper consideration that it deserves and that we pass into law, even by way of consolidation, only measures that are apt and appropriate and are not the subject of faulty draftsmanship.
      1 am
      Lord James Douglas-Hamilton: The Scottish Law Commission reconsidered its view because it noticed that a genuine error had been made by those responsible for drafting. I take full responsibility, although I did not draft every word personally. Acts going back to 1594 were being consolidated and obsolete provisions were being omitted, and one error was made in this case. As soon as it was picked up, we acted on it at once and came back to the House.
      Mr. Maxton: Where did the Law Commission meet to take that decision?
      Lord James Douglas-Hamilton: I am not sure whether there was a formal meeting. The Law Commission's view was firmly imparted and we are acting on it. I assure the hon. Gentleman that I am faithfully recording what that view was. It is clear that that was the Law Commission's view.
      Mr. Maxton: It may well be the Law Commission's view, but many Opposition Members do not know who
      164
      the members of the commission are, how many they are and how, if they did not have a formal meeting, they came to a decision that has been put so clearly to the Minister. How on earth did they come to the decision, or was it just the chairman or the clerk who decided that a mistake had been made?
      Lord James Douglas-Hamilton: The Scottish Law Commission does not put forward recommendations unless it has given them the most thorough and complete consideration. I have no regrets whatever about supporting the commission in this connection.
      The hon. and learned Member for Fife, North-East (Mr. Campbell) asked about whether the provisions would apply on an interim basis. The present provisions do not deal with interim orders. I should make that clear. I have no hesitation in coming back to the House to admit that there was an error.
      Mr. Brian Wilson: Has the Minister noticed that while learned people such as my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. and learned Member for Fife, North-East (Mr. Campbell) are here, only one party is not represented at this dissection of Scots law?
      Lord James Douglas-Hamilton: I note what the hon. Gentleman says about the absence of the Scottish National party.
      I end by saying that the lesser the man who is not wiser today than he was yesterday. I have great enthusiasm in proposing these corrections.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 2

      SPECIFIC RELIEF MAY BE GRANTED IN INTERDICT PROCEEDINGS
      'Where a respondent in any application or proceedings in the Court, whether before or after the institution of such proceedings or application, has done any act which the Court might have prohibited by interdict, the Court may ordain the respondent to perform any act which may be necessary for reinstating the petitioner in his possessory right, or for granting specific relief against the illegal act complained of.'.—[Lord James Douglas-Hamilton.]
      Brought up, read the First and Second time, and added to the Bill.
      Schedule 1 agreed to.

    Schedule 2

      REPEALS
      Amendments made: No 1, in page 18, column 3, leave out lines 41 to 45 and insert—

      'Section 50 to 101.'.

      No. 2, in page 22, line 20, column 3, at end insert—

      'Section 89, In section 91 the words from the beginning to "seem proper".'.

      No. 3, in page 28, column 3, leave out line 29 and insert—

      'Sections 76 to 88. Section 90.'.—

      [Lord James Douglas-Hamilton.]

      Schedule 2, as amended, agreed to.
      Bill reported, with amendments; as amended, considered.
      Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.
      Bill accordingly read the Third time and passed.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at tomorrow's sitting, the Motion in the name of Mr. Neil Kinnock relating to Telegraphs may be proceeded with, though opposed, for one and a half hours after it has been entered upon, and if proceedings thereon have not been disposed of at the end of that period, Mr. Speaker shall then put the Question.—[Mr. David Hunt.]

    STATUTORY INSTRUMENTS, &c.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 101(5) (Standing Committee on Statutory Instruments, &c.)
    STATUTORY INSTRUMENTS, &c.
      LAND DRAINAGE
      That the draft Land Drainage Improvement Works (Assessment of Environmental Effects) Regulations 1988, which were laid before this House on 16th June, be approved.
      FORESTRY
      That the draft Environmental Assessment (Afforestation) Regulations 1988, which were laid before this House on 27th June 1988, be approved.
      TOWN AND COUNTRY PLANNING (SCOTLAND)
      That the draft Environmental Assessment (Scotland) Regulations 1988, which were laid before this House on 14th June, be approved.

      FISH FARMING
      That the draft Environmental Assessment (Salmon Farming in Marine Waters) Regulations 1988, which were laid before this House on 16th June, be approved.—[Mr. Lightbown]
      Question agreed to.

    EUROPEAN COMMUNITY DOCUMENTS
    Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committees on European Community documents.)
    EUROPEAN COMMUNITY DOCUMENTS

      ROADWORTHINESS TESTING
      That this House takes note of European Community Documents Nos. 6878/86 and the Supplementary Explanatory Memoranda submitted by the Department of Transport on 8th and 27the June 1988 and 7946/87 on roadworthiness tests for motor vehicles and their trailers; and agrees that Her Majesty's Government could accept an extension of roadworthiness testing providing that the items to be added to the Department of Transport test were beneficial and could be tested to Member State's own test methods.—[Mr. Lightbown.]
      Question agreed to.

  Science and Mathematics Teachers
  1.6 am
  Motion made, and Question proposed, That this House do now adjourn. [Mr. Lightbown.]
  Mr. Patrick Thompson: I am grateful for the opportunity to have an Adjournment debate on the current shortage of physics and mathematics teachers in schools. I am also grateful to the Under-Secretary of State for Education and Science for attending at this late hour to reply. The shortage has serious implications for the education of our children and also for Britain's industrial, commercial and technological prospects in the future.
  The shortage of physics and mathematics teachers has been a matter of concern for some time and the recent publication of a disturbing report commissioned by the Engineering Council, the Headmasters Conference and the Secondary Heads Association is relevant. Over the years, the Engineering Council has been considering ways in which to increase the number of engineering places in higher education, and that matter was raised during a recent debate on engineering in the House.
  The council found that not enough young people were coming forward from the schools and inevitably it began to consider the quality and quantity of mathematics and physics teachers. There is no doubt about the potential and ability of our young people, because just over a week ago Britain won the gold medal in the international school physics olympiad held in Bad Ischl in Austria. The talent is present and our young people have the ability to do well in the subjects.
  The report was prepared by Professor Alan Smithers and Dr. Pamela Robinson of Manchester university and it serves to heighten concern about the matter. Obviously it is essential to prevent the problem from growing worse.
  The origins of our present difficulties can be traced back, in part at least, to the changes in the education system since the 1960s. The disappearance of grammar and technical schools and their replacement with comprehensive schools, many now without sixth forms, reduced the availability of some of the more challenging and rewarding teaching posts in both subjects. The recent downgrading of the requirements at A-level and GCSE makes school a less satisfactory preparation for advanced university physics and mathematics.
  A significant proportion of those teaching mathematics and physics at secondary level lack adequate qualifications to do so. Therefore, there is a hidden shortage of teachers in those subjects. The 1984 secondary school staffing survey showed that 13 per cent. of mathematics teachers and 18 per cent. of physics teachers were without higher education qualifications in those subjects. If those who study maths and physics as subsidiary subjects in higher education are included in the definition of the fully qualified, the figures rise to 28 per cent. and 29 per cent. respectively. According to the 1986 document of the Department of Education and Science, "Action on Teacher Supply in Mathematics, Physics and Technology", only 45 per cent. of mathematics tuition and 57 per cent. of physics tuition was being provided by graduates in those subjects.
  The same problem arises in other subjects, including chemistry. I am interested and pleased to note that the

  167
  hon. Member for Swansea, East (Mr. Anderson), who I know is concerned with the Royal Society of Chemistry, is in his place.
  Mr. Donald Anderson: May I intervene?
  Madam Deputy Speaker (Miss Betty Boothroyd): With permission?
  Mr. Thompson: With permission, Madam Deputy Speaker.
  Mr. Anderson: The hon. Member for Norwich, North (Mr. Thompson) will be aware of the concern of the Royal Society of Chemistry that urgent action is required to increase the supply of chemists into teaching. The hon. Gentleman will know that there are special initiatives in play in physics, for example, which have resulted in an improvement in numbers. In 1985 there were 255 post-graduate certificate of education courses, which was improved to 527. Surely the hon. Gentleman will agree that no such action is proposed by the Department of Education and Science for chemistry. That must be wrong when we take account of the public interest. The number of candidates presenting themselves for a postgraduate certificate in chemistry is down by one third this year compared with the figure for last year. Is it not proper that there should be similar bonuses and initiatives for chemistry, where the problem is even more marked than in the other disciplines?
  Mr. Thomspon: I am grateful to the hon. Gentleman for that intervention. The survey on which I based my remarks was directed especially to physics and mathematics. On receiving correspondence from the Royal Society of Chemistry, I was as surprised and concerned as the hon. Gentleman. I hope that my hon. Friend the Under-Secretary of State for Education and Science will respond to this issue along with the other matters that I am raising.
  An especially alarming feature of the results of the survey on qualifications that was conducted by Manchester university is the disparities that it has revealed. Only a quarter of the staff in maintained schools with pupils up to the age of 16 years were trained graduates. There were twice as many in schools in the maintained sectors, with students up to 18. There were almost three times as many independent schools. This means that at the earlier stage of education the hidden shortage is worst.
  It is equally clear that some schools have responded to the lack of mathematics and physics teachers by adjusting their timetables. Typically, this has been done by reducing the number of subject periods per set and by limiting the number of sets. This had occurred in five of the 26 schools surveyed for mathematics and in four of the 26 for physics that were included in the Manchester university study. We therefore have a vicious cirle. A lack of qualified teachers leads to a reduction of subject time allowed. That leads to a lack of enthusiastic young people taking these subjects to a higher level. The vicious circle can continue unless action is taken.
  We can see the impact of inadequate training in these vital areas in the number of those abandoning study. Only a quarter of those who took O-level physics went on to
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  A-level work. Significantly, there was a disproportionately high female drop-out rate. Of those who passed A-level of all pupils, roughly one in seven went on to take a degree in either subject at a university. Just over 5 per cent. of graduates in maths and physics entered teacher training in 1986.
  This winnowing process is at least partly due to the fact that unqualified and under-qualified teachers play so large a part in the process of instruction. Nonetheless, it remains disturbing that accurate figures on the number of teachers in both disciplines in service remain hard to come by. The Interim Advisory Committee on Teachers' Pay and Conditions found this to be a general problem in its recent report. There is some evidence that the wastage rates for maths and physics teachers has been rising, and this rate of loss must be of concern.
  Even more serious is the apparent gap between the demand for teachers in maths and physics and the supply. Whatever assumptions are made, it is clear that there is a shortage now, possibly more than 2,000, and that there is the prospect of an even more serious shortfall developing by the mid-1990s.
  Other countries have experienced similar problems. The teaching of maths and physics cannot be considered in a vacuum. The attraction of other professions, in status and pay, must be taken into account. If severe difficulties are to be avoided, I believe that a wider approach may be required.
  The Manchester university report showed that in mathematics under 30 per cent. of graduates were women, yet women comprised more than 50 per cent of those entering teaching. In physics the imbalance is even more striking. Given the interest in teaching among women graduates, action should be taken to increase the number of girls taking mathematics and physics in schools. I urge the Government to consider introducing a national career break scheme to encourage more women to enter teaching. I am informed that Kent local education authority has recently introduced such a scheme.
  There appear to be discrepancies between the figures of the Department of Education and Science and those provided by other bodies which require urgent resolution. I hope that the Minister can help me on that. I urge him to consider the establishment of a comprehensive database for in-service teachers. That will show the extent of subject shortages, hidden and suppressed, throughout the country.
  As a corollary, an analysis should be made of staff movements within the education system and out of it. We need to know how many teachers are moving into other posts, into administrative jobs, and how many are leaving to have children, to retire or for other reasons. Only then will it be possible to consider the shape and scale of the training programmes for new recruits and for former teachers hoping to re-enter the profession. It is, regrettably, clear that many graduates would prefer the larger salaries and better working conditions to be found in commerce and industry. It may be necessary to offer financial incentives to attract such people into the classroom.
  I know that my hon. Friend understands those issues. I fully support the Government's intentions in establishing a national curriculum in which maths, science and technology will play a prominent role.
  The measures that have been taken to provide bursaries for prospective maths and physics teachers studying for a

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  postgraduate certificate of education have my full support. Could those bursaries be transferred to those who take up posts? I hope that the Minister will consider that suggestion in his reply. The provision of in-service training and the recruitment of new teachers through the Teaching As a Career unit are useful initiatives.
  I welcome the Education Reform Bill, and many of its measures are relevant to this debate. In a recent paper that I wrote with my hon. Friend the Member for Luton, South (Mr. Bright)—"A New Strategy for Education"—we would not only have secured the place of maths and physics in the curriculum, but would have created a professional teachers' council and a local pay bargaining mechanism at school level to help to restore the status of teachers. It is with individual teachers' sense of their professional standing, of their financial rewards and of their morale that an important part of the solution lies.
  The CBI's response to the circular of the Department of Education and Science on this subject stated that the teaching profession needs to be made attractive, by giving status and appropriate conditions of service, which should include annual assessment, career development and chances of advancement. It acknowledges that teaching is a vocation and that, unless rewards are adequate in the market place, employers will up the ante by offering higher salaries elsewhere.
  We should not rule out measures to obtain the short-term secondment of staff from industry or the recruitment of qualified teachers or technicians now working outside the profession on a long-term basis. I believe that technician support for science departments in schools is important and will help with the general problem. Time does not allow me to develop that theme, but I hope that my hon. Friend will bear it in mind.
  Mathematics and physics are two of the key disciplines on which the modern industrial world rests. Britain cannot afford to be out-distanced by its competitors in passing on that body of knowledge to the next generation. The fact that the importance of the issue has been recognised inside and outside the House is encouraging. The Government have responded positively to the concerns of the teaching profession, the universities and the Engineering Council. I hope that my hon. Friend will be able to carry that process further in his reply.
  1.19 am
  The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Dunn): I congratulate my hon. Friend the Member for Norwich, North (Mr. Thompson) on a most thoughtful and constructive speech. Those of us who have known him for some time recognise that he always makes a major contribution to our debates, and his speech tonight was in that vein. I was equally pleased to hear the short intervention of the hon. Member for Swansea, East (Mr. Anderson), who spoke about his connection with the Royal Society of Chemistry. We also recognise the presence of my hon. Friend the Member for Staffordshire, South-East (Mr. Lightbown), who always takes an interest in such matters and who had a long connection with the world of local government education.
  My hon. Friend the Member for Norwich, North has introduced an important matter, and I give an undertaking that I shall pass on to my right hon. Friend the Secretary of State the points that he and the hon. Member for Swansea, East made.
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  Britain has never been in greater need of people skilled in mathematics and the physical sciences so necessary to ensure that our industry can compete in the fast-changing world of the 1990s. We shall not have those people unless we have teachers to teach them, but it is precisely because those skills are in such high demand that those who have them are eagerly sought out by employers, against whom those who recruit people into teaching must compete.
  We have long recognised that special attention must be paid to ensuring that there are enough maths and physics teachers to teach in our schools. That is why we have had a teacher shortage action programme in place for about two years, much of it built up on the basis of recommendations reaching us in response to a consultation document that we published on the issue two years ago. The result has been dramatic: since 1985 we have reversed the trend of decline in intakes to initial teacher training in the shortage subjects.
  In 1986, as the report from which my hon. Friend quoted made clear, only 741 students started postgraduate certificate of education courses in maths and 341 in physics. In 1987, those two figures had risen by 29 per cent. and 41 per cent. respectively. It can be no coincidence that that took place over the first year of our action programme to combat teacher shortages, of which the main weapons are a bursary, tax-free, to trainee teachers in these subjects paid on top of their grant of £1,200 for 1986–87, which has risen to £1,300 in the next academic year, the use of national and local advertising, and the setting up of our Teaching As a Career unit—known as TASC—to promote teaching and improve its image.
  All this had an effect on numbers last year, and is continuing to have an effect, even though applications for teacher training courses in maths and physics are not as buoyant this year as they were at the same time last year. But it is too early to say what the final recruitment figures are like, and I am still confident that the reversal of trend secured during the past two years will continue.
  We are also spending six times more money than we are spending on direct recruitment on in-service training for the large number of teachers, also mentioned by my hon. Friend, who are teaching maths and physics without being properly qualified to do so. We call this the hidden shortage, and it is in many ways much more serious than the overt shortage of unfilled teaching posts in maths and physics, which are at their lowest level for many years. We intend to continue to offer substantial retraining and upgrading opportunities for under-qualified teachers through our training grants scheme to ensure that we have the right number of teachers that we need with the right qualifications to teach these vital subjects in the 1990s.
  We have funded distance learning television-based and text-based in-service training materials in maths and science for use in upgrading the skills of those teachers who cannot be spared from the classroom.
  Attracting new undergraduate recruits to teaching and upgrading existing teachers' skills is not, however, enough. The number of young people declines for demographic reasons in the 1990s just when the pupil population increases, so we need to make sure that we are tapping other sources of teachers to the full. We cannot expect teaching to take more than its fair share of scarce young qualified manpower.
  That is why part of our action programme focuses on attracting older, experienced people into teaching from other careers. Surprisingly large numbers of people in

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  industry and other walks of life often want to change to teaching. Their experience enriches the classroom. We are also encouraging local authorities to look at ways of maximising the use of another great undertapped pool of teaching talent—those who are qualified teachers but currently out of service. Many are, typically, married women who left the profession to have a family. Many are willing to return and local education authorities and schools may need to offer job-sharing opportunities and refresher courses to tempt them back.
  All in all, we would maintain that we are already doing pretty well everything enjoined upon us by the recommendations of the report quoted by my hon. Friend the Member for Norwich, North. It is too early to say whether the coverage of our action programme, or its intensity, is inadequate. We are in any case doing rather more than the report suggests. The Teaching As a Career unit, for instance, has started to make a real impact with its catchy national advertising, well-produced literature and videos and continuous appearance on the undergraduate milk round, at careers fairs and at seminars and conferences all over the country, as well as counselling some of the very significant number of older people in other careers to whom I have referred who actually want to come into teaching.
  Contrary to what the report alleges, over 80 per cent. of our first cohort of bursary holders were teaching in maintained schools last autumn, a higher proportion than most PGCE graduates. We are, as the House knows, making proposals to simplify routes to qualified teacher status, to make changing to teaching more attractive to suitable people with financial and other commitments that make it difficult for them to undertake full-time training with no commitment of a job at the end of it.
  We shall go on doing all these things and we shall step up our activities if the reversal of the trend shows any signs of falling back into decline. In spite of the turmoil of the last few years and in spite of constant denigration of their own profession as a career by teachers themselves, people want to come into teaching. We believe that they will find
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  teaching in the new world of the national curriculum and higher standards in our schools will be much more exciting, challenging and rewarding. We are convinced that this, together with the new pay structure, which also allows incentive allowances to be paid to teachers of shortage subjects, will encourage the teachers whom we need to stay in teaching. We are making more money available than ever to enable local education authorities to make improvements to the teaching environment.
  I turn to the figures quoted by my hon. Friend. We all know that we can do anything with statistics. It is of course theoretically possible that we could be short of up to 12,000 maths teachers by 1995, as the report quoted by my hon. Friend maintains, but it is also theoretically possible for us to have more maths teachers than we need by the same date. It all depends on the assumptions that we put into the supply and demand bits of the equation. We think that those who wrote the report have missed out some key assumptions and have given an unnecessarily pessimistic weight to others.
  We shall be in a better position to assess the demand for teachers in these subjects in the 1990s when we have digested the maths and science subject working group reports that my right hon. Friend the Secretary of State for Education and Science has just received. We shall have better estimates of the current supply of maths and physics teachers when we have the results later this year of the survey of secondary teachers that we have brought forward by a year. We shall then be in a position to assess what risk there is of a shortfall and its possible extent. We are well aware, as both hon. Members have said, that we must keep up the pressure. We believe that our programme of measures to combat teacher shortages has at least a good chance of reducing the shortfall to nothing. We certainly think that it should be given more of a chance to show whether it will.
  I am grateful to my hon. Friend the Member for Norwich, North and to the hon. Member for Swansea, East (Mr. Anderson) for their contributions to the debate. We are fully aware of the problems and I believe that I have suggested some solutions to them.
  Question put and agreed to.
  Adjourned accordingly at half-past One o'clock.

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

Balance of Payments
Lord Jay Lord Jay asked Her Majesty's Government:
What is their estimate of the United Kingdom balance of payments in the latest three-month period for which figures are available.
Lord Beaverbrook: My Lords, for the three months ended May there was a deficit on the current account of £2·5 billion.
Lord Jay: My Lords, although we have large reserves now, thanks in part to oil earnings, would it not be wiser if the Government took the medium term prospect rather more seriously? We now seem to be running the largest current account balance of payments deficit in any year since 1945. Whereas oil earnings were set to rise 10 years ago, they arc now bound to fall in the 1990s.
Lord Beaverbrook: My Lords, while I agree with the noble Lord that the figure is very high, there are certain factors that make it sustainable. The deficit is easily financed, it can be readily financed, and the increase is consistent with the fact that our economy is growing faster than that of most other economies. It is a matter of record that we ran considerable surpluses during the early 1980s.
The economy is bound to have a cycle of deficits when it is growing so fast compared with other economies. Last week my noble friend the Secretary of State when answering a Question on the same subject told your Lordships that it was felt that the import of capital goods and semi-manufactured goods had a considerable impact on figures at the moment.
Lord Mason of Barnsley: My Lords, is the Minister aware that the trade figures given last May showed the worst ever monthly deficit on trading goods, the worst ever current account deficit and the highest ever total of imports at over £8 billion? They showed an increase of £165 million in one month. With such appalling trade figures there is nothing for the Government to brag about. When can the Minister forecast that we shall have a surplus in visible trade?
Lord Beaverbrook: My Lords, my right honourable friend the Chancellor of the Exchequer will no doubt have something to say in his Autumn Statement. I shall not pre-empt that and the noble Lord would be very surprised indeed if I did so. However, I reiterate that it was always expected that the trade deficit would increase as the economy has been growing so
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fast. A large part of the imports is for industry —raw materials and intermediate and capital goods.
Lord Barnett: My Lords, will the noble Lord accept that most people believe that our reserves are more than adequate, even to have a balance of payments deficit up to £10 billion? However, while his noble friend the Secretary of State is away, will the Minister take the opportunity to tell us what the department really believes? Without upsetting the Prime Minister too much, is it not true that in the Department of Trade and Industry there must at least be a twinge of concern about the fall in the level of exports from Britain? In those circumstances, does not the Minister believe that the exchange rate would be a little better if it were lower?
Lord Beaverbrook: My Lords, the noble Lord knows better than I that the exchange rate is affected by many factors. The noble Lord will know that interest rates have gone up recently and the Government's plan is to continue a policy of sustained growth combined with low inflation.
Lord Boyd-Carpenter: My Lords, will the noble Lord agree that the high exchange rate to which reference has been made is an indication that foreign financial circles take a more cheerful and robust line about the British economy than certain gloomy noble Lords opposite?
Lord Beaverbrook: My Lords, I think that the statistics show that inward investment is at a record level.
Viscount Hanworth: My Lords, will the noble Lord agree that the reduction in income tax has done nothing to help because much of the extra money has been spent on importing luxury goods from abroad?
Lord Beaverbrook: My Lords, 1 do not think there is any evidence to show that that is the case. 1 have already said that much of the high import figures has been caused by the higher level of activity in industry.
Lord Stoddart of Swindon: My Lords, does not the noble Lord understand that the Government's complacent attitude may very well cause disaster later on? Is it not a fact that with this large deficit it is likely that foreign confidence in the pound will be undermined? As this Government have only one policy to cover this—that of putting up interest rates—will it not make matters worse by dampening down investment in industry, which is the basis of a good economic recovery?
Lord Beaverbrook: My Lords, it is very difficult to draw conclusions from taking a snapshot of the economy. Things change every day. Three months ago the pound was on the way up. However, it has come down somewhat from its position a month ago. I believe that in economic matters many things are self-correcting. The noble Lord may well find that an equilibrium will be reached very soon as regards the concerns to which he addresses himself.
Lord Ezra: My Lords, the noble Lord, Lord Barnett, referred to a possible level of about £10 billion before the end of this year, which is commonly mentioned in the City. If that were to increase during the course of next year at what level would the Government become concerned, because that would start to represent 2 per cent. to 3 per cent. of our GDP?
Lord Beaverbrook: My Lords, my right honourable friend the Chancellor of the Exchequer will no doubt make mention of that in his Autumn Statement. But, as I have just said to the noble Lord opposite, I believe that many economic factors are self-correcting. The worst fears of the noble Lord, Lord Ezra, may well not come to light.
Lord Bruce of Donington: My Lords, is it not the case that the recent increases in the interest rate will do nothing at all to relieve the rate of inflation and that, on the contrary, the recent increases will tend to exacerbate the growing deficit on our visible trade account?
Lord Beaverbrook: My Lords, I do not think that the noble Lord will be surprised if I disagree with him on the Government's main weapon against any rise in inflation. The Government attach the utmost importance to keeping inflation at a low level. We believe that the use of interest rates is an effective weapon. I do not believe that the higher rates of interest that we have seen recently will necessarily increase the level of imports. The pound has come down recently and that should make it easier for British exporters.
Baroness Seear: My Lords, but if interest rates lead to an increase in the mortgage rate and that feeds through to the retail prices index and then through into wage claims, how will the Government prevent wage pressure which will be highly inflationary?
Lord Beaverbrook: My Lords, the noble Baroness has a good point. Very often in economics there is a two-way tug on these indexes. But we believe that combating inflation is the most important part of our policy. A 1 per cent. increase in interest rates would be much less damaging to the British economy than a 1 per cent. increase in inflation.
Viscount St. Davids: My Lords, can the noble Lord give me and a number of other noble Lords a short lesson in economics? Is not a country very similar to a factory? When it increases production does it not first of all take in a lot of machinery and raw materials which at that point it cannot instantly pay for? Does it not also pay a lot of people to do work which is not instantly at that moment productive, and thus is slightly inflationary? Is that not the phase that we are now going through?
Lord Beaverbrook: My Lords, I am sure the noble Viscount will agree with me that there is probably no such thing as a short lesson in economics. However, I agree with the line that the noble Viscount took. I have already tried to put that line across, but the
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noble Viscount did it in a much more succinct way than I did.
Lord Jay: My Lords, is not the Minister aware that unhappily our oil earnings are not a cycle but more like a mountain which rose to a peak about three years ago and has steadily fallen thereafter?
Lord Beaverbrook: My Lords. our oil surplus is still running at about £4 billion per annum. That is a very important contribution to our balance of payments.

Climate: Greenhouse Effect
2.45 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they will sponsor more research into ways of preventing or reducing the greenhouse effect on the climate and associated conditions.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, while the likely impact of man-made greenhouse gases on climate change remains uncertain, there are a number of measures which can help to control the emission of these gases which the Government endorse. They include improved utilisation of available energy sources. the continued development of both nuclear power and cost-effective alternative energy sources (including renewable energy) and improved management of world forest resources. Substantial programmes of government-funded research are under way in all these areas.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that helpful reply. Does he agree that this is now a very real and serious prospect and that, as carbon dioxide produced from burning coal and oil is the main cause, environmentally in the future nuclear energy may be regarded as the friendlier fuel?
The Earl of Caithness: My Lords, nuclear power is the only major source of energy for the UK which does not produce carbon dioxide. As my noble friend knows, this Government have a policy of continuing development of nuclear power on an economic basis.
The Earl of Halsbury: My Lords, do the Minister's calculations include the fact that the next ice age is slightly overdue and that the greenhouse effect may have a certain prophylactic value?
The Earl of Caithness: My Lords, that is perhaps one of the many things that is being researched at the moment. Your Lordships will of course he interested to know that my department has placed in the Library a recently compiled catalogue of climate change research in the United Kingdom, which I am sure will be of interest to the noble Earl, among others.
Viscount Hanworth: My Lords, since nitrous oxides also have a greenhouse effect, would it not be

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worth while to press forward rather faster in trying to reduce nitrous oxides produced by vehicles?
The Earl of Caithness: My Lords, the noble Lord will he pleased to know that there was a recent agreement in Luxembourg on stage 2 of the cars package which will aid in the control of nitrous oxides. At that meeting I was able to keep the door open for the lean burn engine. There is thus a possibility of reducing carbon dixoide through that means.
Lord Ezra: My Lords, as the use of fossil fuels is likely to contribute to energy production on a large scale for some time to come, would it not be desirable for the British research effort to concentrate on that impact in order to take a lead position and thereby repair the omission that we committed in not taking acid rain seriously enough when that matter first arose?
The Earl of Caithness: My Lords, as the noble Lord knows, the problems of acid rain have been taken extremely seriously. The Government recognise the important role which renewable energy sources could play. That is why we arc sponsoring research at a level of about £16 million per annum.
Lord Campbell of Croy: My Lords, is my noble friend aware that before the next ice age which was predicted by the noble Earl, Lord Halsbury, the greenhouse effect is likely to cause more melting of the polar ice caps, which will raise the sea level with potentially disastrous effects in some areas of the world? It may also cause droughts such as the present one in North America.
The Earl of Caithness: My Lords. our best estimate is that by the middle of the next century sea level will have risen by between 8 inches and 4 feet to 5 feet. The effect at the top end of those estimates could be very serious, as was shown by a recent assessment carried out for my department. The main priority is for more research to reduce the uncertainty in the estimates.
Lord McIntosh of Haringey: My Lords, in view of the key role played in research matters by the Natural Environment Research Council, perhaps the Minister will tell the House by how much government funding of the NERC has dropped in real terms over the past five years or whatever period is suitable for the answer. Will the Minister confirm that only last week 130 job losses were reported by the Natural Environment Research Council, which included serious job losses at the Institute of Oceanographic Sciences, which is very important in the study of the greenhouse effect?
The Earl of Caithness: My Lords, as I understand it, the capability of the NERC to join in international research programmes on climate change will not be affected by staff reductions.

Food and Farming Year 1989
2.54 p.m.
Baroness Sharples Baroness Sharples asked Her Majesty's Government:
What are their plans for Food and Farming Year 1989.
The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, events to celebrate British Food and Farming Year are being co-ordinated by British Food and Farming, an independent organisation launched in 1985. The Government thoroughly support its aim of creating wider understanding of the important role which the food and farming industries play in our national life. The Ministry of Agriculture is represented on the organising council for the year and I am closely involved with progress on what is planned. I believe that this special year creates a magnificent opportunity for adults and children alike to find out about every aspect of the food and agriculture industries. Perhaps your Lordships will forgive my long reply. I am terribly enthusiastic and I hope that your Lordships will be as well.
Baroness Sharpies: My Lords, perhaps I may thank my noble friend for that enthusiastic reply. Can she tell the House how children will he involved in the programme?
Baroness Trumpington: My Lords, an extensive programme of school visits to farms is being arranged. A new teacher training pack has been launched by BFF with sponsorship from a food company. It is available for schools at the very reasonable price of £4.50. A free booklet sponsored by the Crown Estate and the Countryside Commission called Learning front the Land has been published. It gives advice on how to organise a farm visit.
Lord John-Mackie: My Lords, is the Minister aware that rumour has it that the Ministry of Agriculture will only ante in £50,000? That seems to be a very unenthusiastic amount for such a major programme about which the Minister is so enthusiastic. Perhaps the British Food and Farming Year celebration can be co-ordinated with the centenary of MAFF. However, if the rumour that MAFF will be abolished is correct, perhaps that would not be suitable.
Baroness Trumpington: My Lords, although the government grant will be of material assistance, this is essentially an industry celebration. I am glad to say that several important sponsorships have already been secured from industry, notably for a major festival in Hyde Park next May. Events to mark the MAFF centenary which falls in 1989 include the publication of a specially commissioned history, exhibitions in London and the regions, a special sporting event for staff and a centenary appeal in aid of Save the Children. MAFF is contributing quite a lot of money to its own celebration.
Lord Carter: My Lords, can the Minister say exactly what her department will be doing at the food and farming celebration in May 1989? Is she aware that that will be the biggest event of its kind in London since the Great Exhibition of 1851?
Baroness Trumpington: My Lords, we look to the noble Lord's BBC committee to help us. I am sure that my plea will not fall on deaf ears. MAFF is represented on the Council of British Food and Farming and on its two key committees on policy and publicity. MAFF officials and Ministers stand ready to offer help and advice, whenever it is asked for.
Lord Cledwyn of Penrhos: My Lords, will the noble Baroness give the House an assurance that no more agricultural land will be taken out of production in 1989?
Baroness Trumpington: My Lords, that is another Question.

Radio Authority: Proposal
2.57 p.m.
Lord Gainford Lord Gainford asked Her Majesty's Government:
Whether the proposed radio authority would have any sanctions at its disposal.
The Earl of Arran: Yes, my Lords. We propose that the radio authority should have a range of sanctions, including power to issue warnings, suspend a station's licence and, for serious or persistent abuse, withdraw a licence altogether.
Lord Gainford: My Lords, I thank the noble Earl for that Answer. What information can he give the House about safeguards for listeners?
The Earl of Arran: My Lords, all stations will have to keep to a promise of performance. For example, they will not be allowed to broadcast material which incites crime, offends against good taste and decency or uses the station as a political platform. Apart from those basic consumer protection principles, we want stations to be freer to develop different and varied formats.
Baroness Birk: My Lords, since the Broadcasting Research Unit found in its recent research for the Home Office that there is as great a demand for speech on radio as there is for music, perhaps the Minister can say how the new radio authority will ensure that there are sufficient stations providing programmes with regular national news and local news and information, as well as music programmes which are much cheaper and therefore very tempting to produce.
The Earl of Arran: My Lords, it will be up to the consortium who apply to the radio authority to prove to it that they will be able to provide good, varied and diverse programmes to listeners. It is to be hoped that they will interest all types of potential listeners.

Solicitors (Scotland) Bill
Brought from the Commons; read a first time. and to be printed.

Housing Bill
3 p.m.
The Earl of Caithness: My Lords, I beg to move that the Bill be now read a second time.
The Bill is the Government's measured response to the need for change in the rented housing market. It seeks to stimulate choice and competition in a vital area of housing which has for decades been in decline. The market for private rented housing exhibits the classical symptoms of any market which is subjected to price controls. We have shortages. The goods on offer are often of poor quality. At the margins there are many landlords operating outside the law. Responsible landlords have left the market in droves because they simply cannot obtain a reasonable return on their investment. Even since 1971 the sector has shrunk from about 17 per cent. of stock to less than 8 per cent. Many private properties are either left vacant or not fully occupied.
So we face a position in which many people who would like to rent in the private sector—for example. so that they can move to a new area to find work—cannot do so. We cannot expect simply to continue the status quo: to do nothing means not that private landlords will continue to provide 1½ million homes as they do now, but it does mean that in 10 or 15 years the sector will be reduced to an unrecognisable rump.
In the public sector past pre-occupation with mass local authority housing has left us with many problems. There are many badly designed and maintained homes. Over 112,000 council dwellings are empty, yet still it is difficult for tenants to move and to exercise any real independence.
So the central aims of our policy are to increase choice, stimulate competition and, wherever possible, involve the private sector in meeting housing needs. Therefore, major elements of the Bill are measures to encourage private renting, expand the role of housing associations, give council tenants the right to seek a new landlord of their choice, and establish housing action trusts to improve conditions for tenants on some of the worst council estates.
There will be some further amendments to consider in Committee, but almost all of this major piece of reforming legislation is now before your Lordships. Together with the Housing (Scotland) Bill it will secure improvements in rented housing throughout Great Britain.
Part I of the Bill marks a fresh start for the private rented sector. The main underlying principle is that if landlords are again to provide the rented accommodation that we need they must be able to charge market rents. Noble Lords will be familiar with that principle from our consideration of the equivalent Scottish legislation. We are not so unrealistic as to believe that the sector will revive overnight, but we do believe that the supply of

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accommodation will increase if we provide a statutory framework which is fair both to landlords and tenants, housing benefit to enable people to afford market rents, and tax concessions for investors through the business expansion scheme.
Under the assured tenancies introduced by Chapter I rents will be freely negotiated between landlord and tenant. There will be long term security of tenure, and to back it up a a statutory mechanism for fixing rent increases where there is no rent review mechanism in the contract. Chapter II introduces the shorthold variant of the assured tenancy regime. Shortholds will be for a fixed term of at least six months but the landlord will have a right to possession at the end of the fixed term if he wants it. Under Clause 22 the tenant will have a right to apply to the rent assessment committee at any time to reduce the rent if it is significantly above the prevailing rent level for similar tenancies elsewhere in the area. That new regime will appy to future housing association tenants as well as to private tenants, though associations will usually pitch their rents below market level. I shall say more about that subject later.
Chapter III provides for a variety of assured tenancy for certain lettings, to be known as an assured agricultural occupancy. We have recognised the special position of farm workers in tied cottages, but I can reassure your Lordships that there should not a be a major upheaval in rural communities as a result of this Bill.
All these proposals will of course apply only to future lettings. I want to emphasise most strongly that the rights of existing tenants, in respect both of rents and security, will be protected. The Bill does, however, amend the succession rights under existing Rent Act tenancies, which in our view are very unfair to landlords.
The Bill also removes most of the remaining restrictions on lettings by resident landlords. There are a lot of householders who have spare accommodation in their homes and would welcome the extra income from letting. They no longer need fear entanglement with the Rent Act; and, where they share accomodation with the tenant, will be able to ask him to go when the agreement ends without needing a court order. We believe that there is a large demand for such accommodation.
But we are equally determined to provide adequate safeguards against harassment and other had behaviour by landlords. We are, for example, providing in Chapter IV for far-reaching changes to the civil and criminal law on harassment and illegal eviction, changes which we shall back up by issuing advice to local authorities about the use of their prosecution and compulsory purchase powers. We shall be bringing forward amendments to strengthen local authority powers to get repairs done, through, for example, being able to act earlier in undertaking necessary works which are in default, and being able to recover expenses more easily. Failure to comply with a repairs notice will become a criminal offence. We have promised to consult local authorities about streamlining, in a future Bill, their powers to bring multi-occupied housing up to standard. There will be
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a more powerful array of measures against had landlords than any Government have previously presented.
We recognise that if we are again to have a buoyant private rented sector, many tenants will need help to pay market rents. We have therefore undertaken that housing benefit will be available to support the market rents which emerge from our new policy. But we must also have effective measures to guard again exploitation of the system by landlords and tenants. The scrutiny of housing benefit subsidy claims by rent officers- -provided for under Clause 117—is designed to deliver this.
Turning to Part II, this broadens the permissible powers and objectives of registered housing associations, provides a more flexible framework for their financing, and assigns to the Housing Corporation responsibilities for grant-giving and so on which have hitherto been for the Secretary of State. The Bill also provides for the establishment of Housing for Wales to carry out the same tasks as the Housing Corporation will perform for England, strengthens the corporation's powers of supervision over registered housing associations, and empowers it to issue enforceable guidance to registered associations on housing management matters.
Housing associations currently account for only about 3 per cent. of the national dwelling stock, compared with 24 per cent. in the case of local authorities and new towns. However, their output of new and rehabilitated dwellings for rent is now beginning to outstrip that of local government, and we see them as the major providers of social housing for the future. That is what Part II of the Bill is really about.
Associations must still receive government grant, because their most important task is still to provide for lower income groups and people with special needs whose requirements cannot be met elsewhere. But the financial regime which was created for the 1970s now needs to be re-cast to give associations the freedoms and responsibilities they have earned.
Chief among these is the right to set their own rents. Of course there must be enough grant to enable associations to do their job and enough controls to ensure proper public accountability. Within that framework the association itself should decide what to spend and what to charge, taking account of tenants' views.
In this way, we are seeking to harness the disciplines of the market to a social purpose. That also goes for the sources of loan finance. There will always be a proportion of worthwhile housing association projects which cannot attract private funding and which will need loan support from the Housing Corporation or a local authority. Increasingly, as associations and financial institutions get to understand each other better, the presumption must be in favour of private finance. That is the way to get the maximum number of new homes from the available public resources.
So much for associations' role as providers of new housing. We have always envisaged another potentially important function for associations and others as alternative landlords for local authority

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tenants who would like a different landlord. But what we had not expected was that local authorities themselves would start to come to us with plans for the voluntary disposal of their entire housing stock. We expect the majority of new landlords involved to be housing associations, either already established or newly created for the purpose. That is why we are giving the Housing Corporation powers to issue enforceable guidance on housing management. This "tenants guarantee" will ensure that the best traditions of the movement as providers of new housing are maintained and carried over into the management of estates transferred from others, and that tenants contemplating a transfer proposal are given the clearest possible assurances as to what to expect.
Concern for tenants is central to the proposals contained in Part III of the Bill, which provides the framework for the establishment of housing action trusts. These will be short-life, single-minded bodies devoted to the regeneration of areas dominated by major concentrations of council estates. We are currently planning to invest an extra £125 million over the next three years to tackle the problems of those areas and improve the situation for those whose housing prospects are otherwise pretty bleak.
My honourable friend the Minister for Housing and Planning is today announcing in another place that, subject to the approval of both Houses of Parliament of the Housing Bill and of the necessary designation orders, he proposes to establish housing action trusts in Lambeth (Loughborough and Angell Town estates); Southwark (North Peckham and Gloucester Grove estates); Tower Hamlets (Solander Gardens, Shadwell Gardens, Berner, Boundary and Holland estates and part of Ocean estate); Leeds (Halton Moor, Seacroft South and Gipton estates); Sandwell (Windmill Lane and Whiteheath Estates); and Sunderland (Downhill, Townend Farm and Hylton Castle Estates). Maps have been placed in the Library today showing the areas which my right honourable friend the Secretary of State has in mind might be covered by the HATs. He will be appointing consultants shortly to advise him on this further. Final decisions on the areas to be designated will be taken in the light of the consultants' studies and of local views.
My right honourable friend the Secretary of State has chosen these areas taking account of the matters listed in Clause 60(5) of the Bill now before your Lordships. The combination of problems associated with the council housing in these areas is such that a radical approach is necessary to give tenants decent housing, better services and more choice. It will therefore be the job of each HAT, in consultation with the residents, to carry out a major programme of renovation to bring empty council properties back into use, to improve the way estates are looked after, and generally to help improve the economic, environmental and social conditions of the area.
The creation of HATs provides an opportunity to target resources on some of the areas where major concentrations of poor quality public sector stock create very intractable problems. I therefore hope that the local authorities concerned will co-operate
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fully in setting up HATs so that tenants can gain as soon as possible from the benefits they will bring. My right honourable friend is writing to the leaders of the councils concerned today about his proposals. He is also writing to all local residents who may be affected.
Moving on to Part IV of the Bill, this gives the statutory basis for the scheme we call tenants' choice. It broadens the choice open to secure tenants by giving them an effective right to seek a new landlord for their homes. It is intended also to give tenants better services, whether through a change in landlord or through the effect of competition on existing landlords; and to open up public housing stock to healthy diversity and the influence of best housing management practice.
The details are fully spelt out in the document Tenants' Choice, which was issued by my department last month and is available in the Printed Paper Office. Much of what is in the Bill concerns the identification, valuation and terms of sale by existing landlords to new ones. But very strong safeguards will also be provided both by the Bill itself and in the secondary legislation and administrative arrangements.
The Housing Corporation and Housing for Wales will be empowered by the Bill to give tenants advice and assistance, including assistance with legal proceedings in special cases. No landlord will be able to acquire property under the scheme unless approved by the corporation to standards which will be set to require high levels of probity and viability. It will be a condition of approval that applicant landlords keep tenants informed and that they offer a tenant's guarantee, including a core of guaranteed tenancy terms, on all fours with the principles of the guarantee we have announced for all housing association tenants.
Tenants will have to be made a full and binding offer of terms by the applicant before an acquisition proceeds; and the whole process, including the regulations governing the vote, will be carefully designed to ensure that each qualifying tenant can reach and express a fully informed decision. Finally, property may not be disposed of after acquisition without the consent of the Secretary of State, whose expectation will of course be that tenants' choice landlords remain in the long-term business of renting housing to those who need it.
There are strong safeguards at all stages. Moreover, it will be tenants' views that are decisive. Early on, the corporations will, wherever possible, set up an informal consultative exercise involving more than one potential applicant where there is tenant interest in transfer. Only the applicant that tenants prefer will be given clearance to make a formal application. Tenants' votes will decide collectively whether an application goes through, and if it does go through, tenants' votes will decide individually whether they transfer to the applicant or remain with their existing landlord. No secure tenant will have to transfer against his or her will.
The scheme is one more in a series dating back to 1980 of enhancements of public sector tenants' rights and opportunities and I believe that it will commend itself to your Lordships.

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I turn to Part V of the Bill, which contains a number of miscellaneous provisions. Clause 123 clarifies the Secretary of State's powers to give consent to voluntary disposals of council housing. Authorities can already dispose of property, but only with the Secretary of State's consent. As mentioned earlier. many authorities have been asking whether we would allow them to dispose of the whole or a substantial part of their housing stock and, if so, on what terms.
We are sympathetic to the idea in principle, and issued guidelines about a month ago. Among the main criteria we expect to operate, the new landlord must he fully independent of the council; tenants must be properly consulted, and a transfer cannot take place if a majority oppose it; the transfers must not perpetuate large housing monopolies; the local authority must make arrangements to fulfil its continuing statutory duties, in particular to deal with homelessness; and we would expect the sale price to be tenanted market value, subject to allowance for catching-up repairs.
These disposals will be taking place under existing powers. However, it is not entirely clear that they enable the Secretary of State to adopt all the criteria which he believes important. Clause 123 therefore simply clarifies our powers so that we shall be able to consider any proposals properly.
Another area in which we have been making valuable progress is that of measures to prevent racial discrimination in housing. We have extended the general duty to eliminate racial discrimination and promote equality of opportunity in housing, which used to apply only to local authorities. Clause 56 extends it to the Housing Corporation and Housing for Wales, although I must emphasise that this does not imply any criticism of the corporation, which has been giving an excellent lead in race relations. Clause 63 extends it to housing action trusts as well.
We also intend to bring forward later an amendment to give the Commission for Racial Equality a power to produce codes of practice on housing. We want this power to cover all housing sectors but I am advised that problems of relevance prevent us going that far in the present Bill. I understand, however, that we should still be able to cover housing that is rented, leased or occupied under licence, and to take in agencies such as building societies and estate agents in so far as they deal with these kinds of accommodation. So, in the case of ordinary private sector landlords, such codes would supplement the new anti-harassment provisions; and we aim to extend this power to the rest of the housing field when a suitable opportunity arises, which we hope will be in the next Session.
Returning to proposals already within Part V, there are a number of changes affecting tenants' right to buy. We also intend to bring forward amendments which will deal with the long delays which many tenants, particularly in London, face in exercising the right to buy. We propose that tenants should have the right to have the rent set against the purchase price when the sale is completed. To help landlords deal efficiently with right to buy applications, another amendment will allow local authorities to use the proceeds of sales to cover the administrative costs.
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Finally on Part V, Clause 122 introduces a specific power for local authorities to give cash incentives to help their tenants get other accommodation, if the authority puts Toward a scheme which is approved by the Secretary of State. We envisage such schemes will be used primarily in areas with serious homelessness problems. The experience of some authorities has shown that such schemes can be effective in freeing vacancies for reletting to the homeless or those on the waiting list.
The Government are very concerned for the homeless. This has been much on our mind in preparing this range of measures to improve choice, quality and competition and to stimulate the provision of rented property. We recognise that the numbers of homeless people are rising sharply. That is why in the last seven months we have made available an extra £74 million to help local authorities with the greatest problems.
Of course primary responsibility still rests with local authorities. We are particularly concerned at the excessive use of bed and breakfast accommodation, especially in London. Whereas only 36 per cent. of homeless acceptances are in London, 80 per cent. of the households forced to use bed and breakfast are in the capital. This sort of accomodation is a heavy burden on the ratepayer, and unsuitable for families. It is important to note that some authorties manage their affairs without it.
Let me link this concern with one about empty properties. Effective housing management remains crucial. Authorities have more than 112,000 empty properties; 28,000, or, in other words. a quarter have been empty for more than a year. That total is nearly three times the number of homeless households in bed and breakfast. If the Audit Commission's advice about reletting timetables were accepted generally, 20,000 extra properties would be ready for use. We must make the best use of our stock if we are to help the homeless.
This Bill in general provides a valuable stimulus. There are also more specific measures, such as Clause 70, which imposes on HATs a duty to co-operate on homelessness with local authorities. And I have already mentioned cash incentive schemes under Clause 122. We are also reviewing the homeless provisions in Part III of the 1985 Housing Act to ensure that they provide a sensible basis to help those in greatest need. But we are still some way from bringing forward proposals. We shall be looking also at other work currently in hand including the study by the Audit Commission due to be reported in the autumn, and my own department's research, the results of which will become available over the next few months.
I believe it is self-evident that these are not easy problems we are tackling here, but long established failings in the systems we inherited in 1979. The Government have to do more than offer more of the same recipe of local authority provision and controls that have failed in the past. Some of your Lordships may also have new proposals. We shall certainly listen carefully to any positive ideas your Lordships put forward.
Since 1979 we have been freeing our economy from the mass of obsolete controls and outdated thinking

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which imprisoned British enterprise. If we are ever to tackle this country's housing problems effectively we must adopt a fresh approach which goes to the heart of those problems. Our coherent policy, reflected in the current Housing Bill, provides this new approach, and I beg to move.
Moved, That the Bill be now read a second time.—(The Earl of Caithness.)
3.21 p.m.
Lord Dean of Beswick: My Lords, I have listened carefully to what the Minister said in moving the Second Reading of this Bill. My mind goes back over the past three or four years since I was privileged to enter your Lordships' House and I recall the number of debates that have taken place. We have had debates on reports on housing published by totally independent bodies. I believe that the first one was a report by the Duke of Edinburgh's Commission on housing. The debate was opened by the noble Lord, Lord Seebohm, who I believe is present. That was subsequently followed by the debate on Faith in the City which was produced by the Archbishop of Canterbury's Commission. The reports were by experts drawn from a wide variety of sections within the community who understood housing. All of them pointed to the fact that the housing situation in this country was deteriorating rapidly.
I should like to be able to take the view that what the Minister has revealed today will go a long way towards assisting the situation; but I see no signs of such help within his speech. It seems rather strange that all the independent bodies that deal with housing— bodies which, as I have said before, are not politically motivated—take the same view. They may say good things about little parts of it. However, on the main thrust of the Bill, the Institute of Housing, the AMA and the housing associations take the view—and the latest report from the Policy Research Institute stated this only last week—that the situation is deteriorating still further. I therefore cannot accept what the Minister has said.
I take exception not only to this Minister, but to Ministers generally using local government housing as a whipping boy for all the failures that have taken place. I take some pride in the fact that for a period I was the chairman of housing in Manchester. Since the war that great city, and others such as Liverpool and Sheffield, have demolished 80,000 to 85,000 slums. The overwhelming number of those tenants have been rehoused in good standard housing.
The Minister talked about badly designed houses. I had the impression that once again he was blaming local government for this. Ten to 15 years ago, there was bitter protest from local authorities at the housing that they were being forced to build by successive governments—both Labour and Conservative—such as industrialised, semi-industrialised, mid-rise deck access flats. We warned them at the time that they would be social disasters and would raise the slums only from street level to above floor level. It is rather naughty to hear local government strictured for something that was not its doing.
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The Minister referred again to 112,000 properties being vacant. My noble friend brought this point out in a Question last week or the week before. I am not excusing empty local authority houses. However, if one takes a percentage of housing associations property, and government-owned housing property, a far bigger percentage of the Government's property is empty than that of the local authority. In fact it is more than double. It is a good job that the Government are not publishing the football honours at the end of the season. By their standard we should have the bottom of the First Division collecting the championship cup. The situation seems strange to me.
I must remind the Minister that only last week I posed a Question on the withdrawal of money from the public sector of housing since the present Government took office. The information that I had from the AMA was £15 billion in real terms. The figure was not challenged by the Government; I must therefore accept that it was correct. Today the Minister trots out that they will fund the housing action areas with £176 million. The first estimates, going back three or four years, of the sum of money that would be required to set the public sector housing stock at a reasonable standard, was a minimum of £15 billion. What is the Minister expecting f176 million to accomplish in housing action trust areas when some of the big cities have suffered as large a cut as that in almost three years? It is a nonsense. It is rather unworthy of the Government to assume that that item will be swallowed.
I do not suggest for one moment that local authorities have done everything right. Some are better than others; of that there is no question. However, I maintain that if the cuts had not been inflicted on them, if they had been given a far larger proportion of their capital receipts to spend—which Members of your Lordships' House from all sides have requested—the situation would not have reached the current level. I believe that as regards that particular facet of the situation the Government are on the wrong course and ought to come off it. People involved in housing know the situation.
I am a former chairman of housing. Another distinguished former chairman of housing sits behind me. The noble Baroness, Lady Fisher, was chairman at Birmingham. If one proceeds with this kind of exercise, one will end up with the poorest sector of the community being looked after solely by the local authority. Every other sector will move outwards and away. The local authorities will be left with the residue, with all the tremendous demands that that will make on the rates, and so on. It is a little unfair of the Minister to talk in such terms.
Part of the Bill talks extensively about freeing the private landlord as though he has never been freed before. I remember him being freed in 1957 by the housing finance Act. That Act had started to affect the tenants in the private sector when I became a very young member of Manchester City Council. In the area of Beswick, from where I came, we traced houses, in blocks of 400 to 500, that were not owned by people in this country. They had been bought by people in Belgium and the law as it applied

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here could hardly touch them. The only way the problem could be overcome was by moving them out in a clearance programme. I have not heard anything about that from the Government today. I accept that existing tenants will receive the full protection of the law.
If the Government believe that by tilting the balance quite decisively in this new Bill—the tilt is not marginal, it is quite decisive—towards the landlord it will not adversely affect tenants of the future they are whistling. What happened after the 1957 Act was that as soon as the landlords could get occupation of the let premises they did not let them again. Most of the buildings were improved and sold off. I do not believe, and nor do the associations dealing with this problem believe, that the Government's proposals for the private sector will provide any extra houses for tenants.
While we are talking about the Government's crash programme for housing, it has been calculated that the cuts in the public sector have cost the country roughly half a million houses since 1979; houses that could have been built for letting in the public sector. I resent this badgering and harping on local authorities as though they have not done a good job. Overwhelmingly they have done so. Some have fallen by the wayside, but I know that the overwhelming percentage of council house dwellers, nine out of 10 at least, if asked whether they have enjoyed living in a council house for most of their lives will unhesitatingly say "Yes", that they have been reasonably well housed despite some of the grumbles that they have had. So we should forget about that.
As regards private tenants, the Minister said that most new tenancies would either be assured or shorthold tenancies. The result will be higher rents and less security of tenure. Landlords will find it easier to evict tenants. I heard the Minister say that some landlords are already acting outside the law— I believe he used that phrase. What does he believe will happen if the Government loosen the legal shackles on landlords? Does he believe that even the best of the private landlords will go in for a programme of self-denial? I do not see that happening, certainly not in the housing sector.
The role of the housing association will be diminished. In my opinion housing associations have been worthy supplements to local authority housing in providing for people in some cases with special need, but for those mostly at the bottom end of the social scale. I believe that the present proposals contained in the Bill, will operate against that and reduce the worthy role that the housing associations have carried out over the years.
The Minister said that he was surprised at the number of local authorities that had requested the Government to take over local authority housing stock. Perhaps when he winds up, if there are any such authorities, he will tell us who they were and how many properties they have. Some figures have been published. A few weeks ago outside your Lordships' House I received a small delegation of middle-aged people from Trafford in Greater Manchester, which is part of the metropolitan borough of Trafford. They brought me a petition of
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over 1,700 signatures showing that 90 per cent. of them wanted to stay with the local authority as landlord. Even with all the warts they thought that they were better off with the local council than with anyone else. There have been other examples. As regards Peterborough and the new town transfer, an overwhelming majority of tenants—faced with the choice between the local authority, which had been the managing agent for the new town corporation for some time, and a consortium of housing associations —voted for the local authority.
A MORI poll conducted in Telford New Town revealed that at least two-thirds of the new town tenants wanted their homes transferred to the local council. A survey in Basildon revealed that 98 per cent. of tenants wanted the council to take over. A recent Gallup poll for the National Consumer Council found little evidence of council tenants wanting to transfer to private landlords. Another recent MORI poll in Manchester found that 88 per cent. of council tenants preferred to remain with their local authority. Need much more be said about where most local authority tenants feel that their future lies?
If there has to be a ballot for an estate, a block of flats or a section of a housing estate to be taken over by a private developer or a different form of housing management, will the Government treat the local authorities similarly to the way they have treated the trade unions in their legislation on ballots and ensure that no change whatsoever will take place unless over 50 per cent. of tenants on the estate require such a change? If the minority do not want to change will the Government give them a chance to opt out?
All these tenants went into council houses on the basis of having a landlord for life. The Government gave them the privilege of buying themselves out, as some wished to do; and about 1 million have bought their homes so far. I do not believe that the Government will find the answer they are seeking and that there will be a mass lemming-like dash from the care of local authorities towards other forms of existing landlords.
There is a heavy list of speakers. I do not want to go on much longer and take up too much time. The Bill is not only flawed, but for dealing with housing as it is seen by so many, other than with the blinkered view of the Government, it is a fraud. There is nothing in it for the homeless. Figures have recently predicted that in the foreseeable future 35,000 homeless people a week will be sleeping on the streets of London, which is the New York dimension. Those predictions have been made by independent people dealing with the situation and not by people with an axe to grind. The number of homeless families has mushroomed upwards at an alarming rate and will continue to do so. If the Government believe that the Bill will stop that swelling throng sleeping at night on the streets of London and in our other inner cities they are living in cloud-cuckoo-land.
We all accept that it is not the right of your Lordships' House to vote against the Bill, but I am sure, having regard to the debates that have taken place in the Chamber over the past three or four years, that it is the responsiblity of your Lordships to examine and wherever possible amend the Bill to help where help is needed most.
3.39 p.m.
Lord Ross of Newport: My Lords, I start by readily acknowledging that this is a much improved measure when compared with the first published version. For that I am sure that much credit is due to the Minister of Housing himself—certainly not to his boss—who has been prepared to listen to the critics and to introduce sensible amendments and concessions that go some way towards alleviating our worst fears.
To suggest, as was the case at the outset when the Bill was published, that HAG— that is, housing association grant—could be cut to about 30 per cent. was beyond belief; as was the view that the private rented sector would be seriously interested in the mammoth task of providing for the younger generation and those on average and less than average income homes that they can afford. Even the Secretary of State has now acknowledged the fact that the tenants' choice proposals in the Bill will not bring about a revival of the private landlord. "Social housing"—which is the in-phrase—will comprise the third sector in the housing provisions. Rents will be very much below the market level. The Secretary of State said that recently, and I believe that his statement should be welcomed and recorded for posterity.
I should like to take up the Minister in respect of his quotes about empty houses. There may be 112,000 empty houses and I agree that that is a disgrace. As has been rightly said by the noble Lord, Lord Dean, the government department is a darned sight worse. The right honourable gentleman used to be a Minister in the Home Office department responsible for prisons. He visited my constituency, where there are three prisons and a vast housing estate. At one time over 100 of the houses were empty. I pleaded with his predecessor that they should be licensed to the local authority so that they may be occupied but I was refused point blank and they were slowly sold off. That was a disgrace because it could have helped the housing situation. That can be repeated all over the country. There are empty houses galore belonging to the Ministry of Defence, the Coal Board, and so forth.
I support the attempt now being made to resurrect the role of the private landlord, but certainly not at any price. I have never believed that it can be achieved at one attempt on a nation-wide basis. The present circumstances of a massive, uncontrolled property boom is probably the worst time to try to revive the private landlord sector.
In that respect it was interesting to read the report in yesterday's Sunday Times about the Treasury's wish to reintroduce Schedule A or capital gains tax on the sale of housing. If the balance between rent subsidies and mortgage tax relief is to be redressed, action along those lines is necessary. It is time that both main parties in both Houses face up to that because we cannot continue as we are. We are now to have the disappearance of domestic rating, which will push up house prices still higher. The only alternative is ever-higher interest rates and that is not the right answer. We have seen a rise of 2 per cent. over the past few weeks.
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If only we had a regional structure of government in this country, for which we on these Benches have consistently pressed—and I am pleased to say that welcoming noises are now emanating from the Labour Benches, which are showing an interest; and that is good—it might be possible to phase out rent control and try to revise the role of the private landlord with new lettings on a regional basis. There are a few parts of the country where housing is in surplus and where demand would be unlikely to force rents through the roof. It would bring on to the market the kind of properties which we all wish to see let: empty flats over shops and accommodation which lies empty (despite the fact that we have assured tenancies) because landlords are scared stiff of letting.
I have never believed that one can decontrol the market in London, certainly not in present circumstances. The outrageous activities of Mr. Nicholas Hoogstraten, so vividly depicted recently on Granada Television, totally reinforced me in that view. Regrettably, I suspect that there are many like him who are waiting for the opportunity to exploit some parts of the Bill. He said as much on the television programme. Anything that can he done to restrict their activities and bring the worst offenders to court must he written into the Bill before it leaves your Lordships' House. I concede that the Government have gone a little way towards that in introducing regulations about harassment and illegal eviction and in tabling amendments in this House dealing with repairs. They are welcome but we must do a great deal more if we are not to hear dreadful stories in the years ahead.
I am a founder member of a local charitable housing association and I am on its management committee. Recently I attended two meetings of the national federation's western region, of which we are a part. The vast number of us who give our time voluntarily to the movement are more than willing to continue to provide that service on the condition that our original aims and objectives—to provide decent homes at fair and affordable rents for those priced out of the market-place—are allowed to continue.
However, if the Government are determined to encourage the creation of a limited number of massive housing associations with the long-term intention that they should replace the former bad, large-scale landlords, and if it is their further intention to renounce the associations' charitable and voluntary status and look to the City for future funding of the private sector, I would rather that they said so now. Such things are now happening in housing. If that is to be the case in the future we who have volunteered our services can resign. I do not want to be there if that is what will happen in the housing association movement. I do not believe that the vast number of people who give up their time without pay wish to do so either. However, I suspect that that is the way things are shaping up, and in present conditions it can lead only to exploitation and yet more distress.
Even with 60 per cent. to 70 per cent. HAG funding rent increases in the western region—an area of low wages; lower than in the North-East—will be substantial. I cannot quote them because they are

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confidential, but I have seen them. In borderline cases where qualification for housing benefit is in doubt the increases will be almost impossible to meet. Local management structures in local housing associations may be able to help because they will fix their rents on the new lettings. At least they will be able to show considerable sympathy. However, distant executives, such as some in the bigger housing associations which have bought a great deal of GLC property and are dealing with it from a distance, cannot know the local situation. I believe that the tenants in those properties are likely to be worse off.
As has been revealed to the House, the average income of the current tenants of housing associations in the western region is of the order of £74 a week. Two-thirds of those tenants rely on state benefits of one kind or another in order to meet their rent. Therefore, I should like to reiterate what has been said elsewhere on many occasions. First, in the housing association movement the rents for our tenants must he affordable. Secondly, the level of risk to which management committees are exposed must be minimal. Why should they take on desperate financial responsibilities when they are not being paid for the job and are being forced into the situation by government policy?
Thirdly, local authorities should still be able to fund housing association schemes in addition to the Housing Corporation's. I believe that concessions have been made but I should like to hear them confirmed. Surely with their massive, if frozen, receipts from house sales that noble Lord, Lord Dean, our tenants should continue to he protected under statute so as to avoid different standards. Some will have their rents restricted because they are controlled. However, those transferring from one association to another will come under a new regime and that cannot be right. Their rents can go sky-high. The different rents will he complicated for housing associations to deal with. That is the situation at present but I do not believe that it is right. I totally support the point made about the 50 per cent. voting.
As is usual in modern legislation, too much has been left to regulations and departmental circulars. Today there has been an announcement from the Housing Action Trust and presumably appointments to various bodies will follow, no doubt made from the list of the good and true. In Committee we must seek more assurances of the definition of' affordable rents. There must be a firm commitment to meet and maintain the extra demand which will fall on housing benefit. Will the Government meet the cost of that, because it will be enormous? The voting procedures for council house tenants who wish to transfer is highly suspect and the terms of the tenants' guarantee does not go far enough or wide enough. I am sorry to see the role of the rent officer diminish. When Richard Crossman introduced the provision I believed it to be a sensible idea. The officer has played a useful role over the past 20 years and was more than able to continue to do so. It is strange that his knowledge and experience will not he used statutorily in fixing new rents.
I also support the views expressed by the National Consumer Council that many tenants should have
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the opportunity to seek free. competent, independent information and advice as many will not know about or comprehend the extent of the changes in the whole rented sector which may suddenly be thrust upon them. Matters are moving very quickly. Councils are negotiating at this very moment; Torquay is one such example. Anglesey has come up with a rather good idea, which I am not sure will be acceptable to the Government, which will involve 49 per cent. of the tenants in its own management. That seems to me to be a rather good idea. However, these matters are happening very quickly indeed and many tenants will not know what is going to hit them.
The only real answer to our housing problem is vastly more publicly-funded housing provision, whether through housing associations, co-ops or the much maligned I local authorities, which incidentally 30 years ago built some of the finest rural housing which still exists in this country. The current statistics on house starts in the public sector are an absolute disgrace. We are hack to the situation of the early 1920s and this draft is here for all to see.
One or two-bedroomed flats, maisonettes and modern hostels managed and run to decent standards are most urgently required. They should be built in the urban or inner urban areas and not by spreading vast housing estates over Berkshire and other beautiful counties. That will not solve the housing problem for those most in need. Those houses will be available at exorbitant prices and will be affordable only by people on large salaries. If the HATs scheme can achieve this regeneration in our inner cities and provide those sort of properties, that is all to the good. However, they are non-elected, undemocratic and arbitrarily appointed bodies responsible only to the Secretary of State. I do not believe that that can be right in what is supposed to be a democratic nation.
Perhaps I may finish with the problem of the homeless because, for my sins, I put the Homeless Persons Act through Parliament when I was a Member in another place. We read that it is under review yet again. In 1979 it was threatened with review by the then Secretary of State. The whole process was gone through and I am glad to say that the Act came through unscathed. Is it really being seriously considered that we should now alter that Act so that even the very limited number of people who receive protection under it may be at risk? I sincerely hope not. I ask the Minister to leave it well alone. It may not be perfect but it provides some hope for those most in need. As statistics published today show, this is a disgrace particularly in our cities. I do not wish to see children and families begging in the streets, and we are now coming very close to that situation.
3.52 p.m.
The Lord Bishop of Southwark: My Lords, I notice that the explanatory memorandum to this Bill begins with a declaration of intent. The Bill is:
"aimed particularly at transforming the rented housing market"
That was slightly paraphrased by the Minister as "the need for change in the rented market".
Those delightfully neutral phrases invite the obvious question: for whose benefit is it to be

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transformed and to what end? That there are serious problems in the rented housing market in this country is surely not in dispute by any of us. That point has already been made strongly by the Minister and the two other noble Lords. Nor can there be any doubt that we need a rented housing market. There will never be a time when everyone in this country can afford to buy their own house or flat. In any case many would dispute the desirability of that, even if it were remotely possible. The present variation in house prices in this country and the complications of buying and selling certainly make mobility much more difficult.
Even more serious is the scale of the homelessness, especially in London and the South-East, and especially as it affects single people or childless couples, who make up an increasing proportion of the population. It is all too easy t6,become numbed by the statistics and photographs of people sleeping rough or families with children in bed and breakfast accommodation. There are a great many of those in south London where I come from.
These represent only the most visible and pressing reason for trying to find a more effective way of providing more appropriate rented accommodation for those who need it and who will use it responsibly. Any Bill which attempts to improve that situation must be welcomed in principle. I gladly acknowledge the very serious efforts which the Government are making to face some of those intractable problems head-on.
Before coming to more detailed criticisms of the Bill, I believe that it is important to stress two major background problems which legislators of all political parties face in the housing sphere and of which the members of the national housing inquiry became increasingly aware as we pursued our research and reflections in 1984 and 1985. The first may seem an obvious point but is constantly overlooked by the better off in society. Adequate housing in a relatively cold and wet climate is so expensive that the market alone cannot provide it for everyone who needs it at prices which they can afford.
I say "adequate" because this is a matter of standards. We no longer live in a society which accepts one room per family, a cold tap and an outside loo as adequate for the less well off. That was how the problem was dealt with when there was no such thing as social housing. Therefore, people on low incomes, for whatever reason, have to be assisted either in person or through a subsidy on the building or both. It cannot be left to charity in a modern urban society as if private almsgiving could provide private housing for 10 million people today. Nor should we ever forget that the house purchaser today receives a handsome subsidy from the state through mortgage interest tax relief and sometimes, in addition, through the substantial deductions given to sitting tenants on the price of council accommodation.
This Bill appears to come down in favour of subsidising people rather than buildings; for example, by allowing most rents to rise in future and by emphasising the need for mixed funding for housing associations. However, it does so hesitantly,
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for understandable reasons. If we were to rely entirely on housing benefit subsidising people in an entirely competitive open market, the amount required in some places of acute housing shortage would be enormous. I have not heard the Government suggest that they are prepared to meet that. Since housing benefit is still the responsibility of another government department and is scarcely mentioned in this Bill, except at the point where rent officers may be required to cap it, there is a dangerous flaw in the underlying philosophy and thrust of the Bill which I believe we must address in this House in the coming months.
The second general point is that when the provision of rented housing is also a source of income for the provider, as in running a business or owning stocks and shares, there is always the possibility, nay the probability, of exploitation and unjust treatment of tenants especially at a time of shortage, buoyant house prices and high interest rates. Hence there has to be a balance between the need to keep the market in housing flexible and free, thereby avoiding unnecessary voids, disrepair and sometimes real injustice to small landlords, and giving the tenants reasonable security against harassment or homelessness.
As has already been pointed out, it is a very difficult balance to strike, as the struggles over this Bill in another place have already demonstrated. The one matter which is certain is that the best and just solultion will be a balance. It cannot be found in total deregulation without safeguards nor can it be found in the sort of legislative stranglehold which fosters the sort of housing blight existing in many parts of the inner urban areas of this city and others.
There are three elements in this Bill about which I should like briefly to say something. Parts I to III deal with changes in the laws about tenancies, the function of housing associations and housing action trusts. The question we must surely all be asking ourselves about these proposed changes—some of them radical and far-reaching—is whether they will produce enough good low-cost rented accommodation for our present and future needs. We are not talking simply about bringing back a few empty properties into use; we are talking, I hope, about the next 20 years. By low-cost, I mean accommodation which families on a below-average wage can afford and which those on low wages or no wage at all can afford with the help of housing benefit.
As has already been pointed out, quite justly I think, local authorities and housing associations have not only tried but have succeeded in providing this accommodation hitherto in very large measure. It could be argued that, compared with the position in almost any other country, they have been remarkably successful in doing so. The performance in the United States is much less impressive.
I recognise that in the process many people have had no choice of tenure and indeed no choice of landlord. There have been inefficient and impersonal forms of management, particularly in some of the larger housing authorities. It now seems that the councils are to be progressively taken out of the role of providing housing, or they will choose to

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relinquish it voluntarily. Instead, their place is to be taken by a variety of social landlords, many of them new housing associations of a somewhat uncertain character. Instead of housing association grant, sometimes aided by local authority assistance, there is to be mixed funding, which includes commercial investment. However, money from building societies or other investors must have a reasonably competitive return, which means that rents are inevitably set to rise, as we have heard.
As for the private sector, this will have little effect on the total supply of accommodation, except at the top of the market. How can it, when house prices are so high and it is more profitable to sell and avoid the hassle of management? Management is a hassle. Why bother with it if you have no need to and can get as good a return, or better, elsewhere.
I should like to ask the Minister whether his department has figures which tell us how many people receive housing benefit at present; how many are on low wages but just above the cut-off point; how many are on the national average wage; and so on. If mixed funding is to be the order of the day—but in varying proportions—who will ensure that the social landlords, in the country overall but especially in London and the South-East, will be enabled to provide enough housing at affordable rents for those on housing benefit or for those on below-average or even average wages at the rate the Government are prepared to pay? There is an equation here which somebody must monitor very carefully. It is imperative that this is not left to chance.
Family life for many people' is at stake. Children only grow up once. Single homeless people often turn to crime out of desperation. Housing associations are for the most part committed to providing such low-cost accommodation. I know from many in my diocese that they want to continue doing this. They do not want to be forced up-market, standing by helplessly as they have to turn away people who can neither afford the new economic rents required by mixed funding nor qualify for sufficient housing benefit to close the gap.
I can see the wisdom of beginning a process of change in the long-term provision of rented housing, hut, as Anne Power has pointed out in her book Property before People, the housing associations can only cope with so much change at a time. Change needs to be slow and steady. Housing associations must be enabled to continue their primary role if something very precious and important is not to disappear from our national life.
Secondly, it is important that, if new social landlords are to take the place of local authorities, there must be a proper social housing code or tenants' guarantee within the Bill. I do not believe it is enough to say that tenants can always seek redress in the civil courts which can be a very daunting and very expensive business for most people. It is the reason, I think, why polls have shown that such a high number of people want to stay with councils. I understood from the Minister that the Housing Corporation was to have some role here. I do not think it appears on the face of the Bill and I should be grateful to hear a little more about it.
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The Minister asked for positive suggestions. Is there not also a place for an ombudsman of housing whose task it would be to ensure that all landlords and tenants carry out their responsibilities under the law and who would have power to prosecute in cases where the law was being broken?
The National Consumer Council, among others, has pointed out that there needs to be provision in the Bill to enforce contractual obligations without requiring tenants—we are talking often about the less well-off tenants—to pursue their landlord through the courts. Without such a provision the law can, and I am afraid will, be broken with impunity, as happens now. Advice agencies and MPs' surgeries are already overwhelmed with requests for help which they cannot easily meet.
Thirdly, Part IV of the Bill deals with proposals for changing landlords if one is at present a tenant in the public sector. Speaking from a south London viewpoint, one can see the force of this proposal in some places. Tenants' choice, like the right to buy, seems an idea whose time has come. However, great care is needed. There are powerful arguments for caution. Should such a major decision be possible on what may well he a small minority vote? "Pepper potting" would he impossibly difficult, especially in large blocks of flats. Managerial skills are in short supply. Is it really wise to disperse them rather than try to improve them within an existing framework which has often worked well in the past and which may provide more accountability to the local community?
If municipal housing disappears within a particular local authority, I do not understand how the authority's obligations to house the homeless will be carried out. It is one thing to have a working arrangement with housing associations to nominate certain places against the background of one's own existing stock of housing which one is also using for this purpose; it is quite another to depend completely on the goodwill of other organisations to meet statutory requirements. Is there not a need for some provision in the Bill to indicate how a local authority will continue to do this effectively?
These are some of the concerns which I have been asked to express on behalf of many in south London. I hope that we can amend this Bill to meet these concerns as it passes through our House.
4.8 p.m.
Baroness Young: My Lords, I congratulate my noble friend Lord Caithness on introducing this Bill so clearly. The Bill provides for the deregulation of new private sector lettings, for the strengthening of the law against harassment, for the increasing of tenants' choice, and for the introduction of housing action trusts—all policies foreshadowed at the time of the last general election. I welcome the Bill.
When the history of the past nine years comes to be written, I believe that one of the outstanding achievements of this Government will be shown to have been the policy of the sale of council houses, a policy fought every inch of the way by the party opposite and, to a certain extent, by the Liberal Party. Many of us will have been asked at some time

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in our political life what we regard as one of our achievements. I was asked that about my time in local government. In Oxford, between 1967 and 1971, we sold some 10 per cent of the council's housing stock to sitting tenants and when I consider what those houses are now worth I believe that to be one of the most valuable things we could have done. It provided many families with a stake in the community and a capital investment which is now a valuable asset to pass on to their family. Therefore, I greatly welcome the proposals in this Bill which will further increase the opportunities for families to buy. It is a matter for congratulation that about 1 million families now own their own council homes for the first time.
As good as that policy has been, it is clearly not right. I believe that the country is still divided between owner occupiers—about 64 per cent. of the population—and council tenants. Of the rented accommodation, some seven out of 10 tenants are council tenants. I share with the noble Lord, Lord Dean of Beswick, a regard for housing authorities; after all, I was a member of a housing authority for 15 years. Unquestionably, local authorities have done some very good things. I accept, with the noble Lord, Lord Ross, what has been done particularly for council houses throughout the country. Some of the slum clearance policies in the cities were successful. There have been a great many difficulties, but it is not my intention to go into those.
What is true about council tenants is the fact that they are immobile. It was the Member of Parliament, Frank Field, who once described council tenants as being in a similar positions to medieval serfs. They have that similarity in that council tenants find it extremely difficult to move to another authority unless they can effect a direct exchange. Moreover, if a person moves to a local authority it is extremely difficult to become a council tenant because no authority will take in people who have not been living in the area for some time.
Therefore, we are confronted with a very real problem. The noble Lord, Lord Dean of Beswick, said that everyone says that there is a housing problem. I agree, but they have been long on analysis and exceptionally short, in my view, on positive suggestions as to what should be done. It is because this Bill offers some positive suggestions that it is greatly to be welcomed. It is, after all, worth looking at the decline and the extent of the private letting market in the United Kingdom. There has been a fall of over 50 per cent. in the past two decades alone. Excluding housing association dwellings, the private rented sector provided 70 per cent. of the housing stock in 1971 but that figure is now under 8 per cent. If the present trend continues there will be no private lettings, or virtually none, within a foreseeable length of time. This compares with 43 per cent. of the housing market as private lettings in the Federal Republic of Germany and 35 per cent. in France. It does not seem to be an impossibility to manage that. It seems obvious that we face housing problems that are unique in many respects to the United Kingdom; housing problems into which to a certain extent we have legislated ourselves.
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To be fair, some of the relative decline in rented housing is due to the dramatic success of home ownership policies, but much of it is not. I believe that it is essential to encourage and develop a vigorous private rented sector. Other prosperous countries such as Switzerland have one. The private sector will help to stimulate the public sector to greater efficiency. It will provide a measure of relative performance and increasingly should be able to provide housing where the public sector cannot.
Surely one of the terrible legacies that we have inherited at this time is the fact that we have, side by side with homelessness, some 550,000 empty private houses and about 112,000 empty council houses. If there are empty houses owned by the Government I do not in any way think that that is right and we should also address that problem.
We therefore have this incredible situation with empty houses and homeless families. It is one of the most tragic situations in this country today. No one can believe it to be right that families should be in bed and breakfast accommodation. We have had many debates in this House calling attention to the awfulness of that situation and to the undesirability of children growing up in such circumstances. I congratulate the Government on attempting to deal with what is a very real problem indeed.
To reverse the decline of the private rented sector will be difficult. It is difficult to make any great change and reverse a trend which has existed for a long time. Not surprisingly, a great many anxieties have been expressed; some by the right reverend Prelate. I have received much correspondence on the subject and I have no doubt that in the course of the debate a great many more anxieties will be expressed. Quite properly, the Government are not going into uncontrolled deregulation. This is not a 1957 Rent Act; it is entirely different.
Quite properly the Government have introduced into this series of measures a number of safeguards. Among those that I have identified is the fact that there will still be housing benefit for those who need it. There will be a greatly strengthened law against harassment, racial or otherwise. There will be a new compensation right provided for people who are illegally evicted. As my noble friend said in his opening remarks, that is to be backed up by advice. The powers of local authorities will be strengthened to enable them to have repairs carried out and so bring more houses back into the market. Above all, the Bill applies only to new lettings. Surely that must be one of the major differences between this Bill and the Rent Act 1957. I am glad to note the emphasis placed on that point by my noble friend. A tenant will therefore know the terms that he is entering into and it will be on the basis of either an assured tenancy, as defined under the Bill, or a shorter tenancy.
I should like to touch briefly on the other aspects of the Bill which I consider important. First, I refer to the housing action trust areas. Here I feel that the Government are basically saying that they are intending to put millions of pounds of extra money into helping make people's homes and surroundings a better place in which to live. Housing action trust areas must include representatives from the residents.

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I believe that once the message really sinks in we shall find a number of areas asking for housing action trusts. I was interested to hear in my noble friend's opening remarks that already a number of areas are to be designated.
Part IV of the Bill—relating to tenants' choice—will allow local authority tenants to choose a new landlord should they wish to do so. We have already discovered over the past nine years that increasing choice is not only fundamental to economic efficiency but that it is also what people want and have been shown to want. It is not altogether surprising that the Leader of the Opposition in another place has already indicated, by his apparent conversion to some of our tenants' choice proposals, that we are on to something that people want. I believe that making local authorities more responsive to the needs of their tenants will be popular and at the same time give a boost to the housing association movement, as well as reviving the private rented sector.
It would he important not to believe that this Bill is an attack on local authorities. What local authorities must do—and there are encouraging signs that some are already thinking along these lines—is to see themselves in the future as stimulating, guiding, enabling and assisting others, rather than merely being the major providers of rented housing. Indeed, in some areas the massive local authority estate management problems have clearly prevented authorities from taking a more general view on their local housing problems.
As I said at the beginning, this is a Bill to deregulate private rented housing and to bring hack private housing into the market giving a much wider choice to tenants. I believe that it is only through the policies contained in the Bill that we have any hope of providing what a vigorous market can offer to people at all levels of income, that is, an adequate supply of housing. That can never be done simply by building more houses as has been suggested by noble Lords on the Opposition Benches.
Perhaps I may give an illustration from one experience in my life. When I entered local government in Oxford in 1957, the council housing waiting list stood at some 3,500 families. I was appalled. When I left 15 years later the council had built well over 3,000 houses, but the list remained at exactly the same length as it was before. I believe that that example teaches us a number of lessons, but I do not intend to go into detail here. Simply building houses is not the absolute answer to the problem; it is a question of managing the houses that one has. Of course, councils need to build houses and no-one is saying that there should be no more council houses. They need to be properly managed. We need a flourishing private rented sector particularly for those who are young and mobile but who cannot move. Some of the most tragic instances concern those who are locked into unemployment in parts of the North and who cannot move to areas where there are jobs. We need the housing associations. We need a great deal of variety. We do not need to be locked into various forms of housing like a straitjacket from which it is impossible to get out.
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At the end of the day we should use our existing housing stock as efficiently as we can. I believe that the Bill represents a major opportunity to try to reverse a long-term trend. It is carefully balanced and it gives safeguards to the tenants. It is not total deregulation.
The Bill offers more and better quality rented accommodation; more choice to tenants; a real opportunity to help the homeless and it is the only positive suggestion which has been made. It also gives an increased opportunity to buy. These policies will take time to come to fruition, but the sooner we start the greater the chance of bringing them to a successful conclusion.
4.22 p.m.
Lord Jay: My Lords, despite the Minister's soothing words, I believe that the Bill. unless it is drastically amended, is likely to make an already bad housing situation even worse that it is already. If there is one thing of which 30 years as a constituency Member of another place convinced me, it is that had housing probably produces more hardship in the large cities in this country than any other factor. Incidentally, a great deal of that hardship falls upon growing children who are in no way responsible for their plight.
It seems to me that the Bill is largely founded on an economic misjudgment; namely, that one can decently house the greater part of a large population by relying on market forces. Experience throughout the world shows that one cannot. Even the richest countries have failed to do so. To understand that one has only to visit New York and Chicago, just to mention two large cities. In the great cities of South America where market forces rule and reign, one will find in every great city half a million people living in shanty towns. The only countries in the world that have housed their whole population in decent conditions are the Scandinavian countries. They have done it by large-scale public and collective housing and subsidised rents. This Bill will move in precisely the opposite direction. It will diminish still further the proportion of low-rented houses owned by public authorities which are accountable to the public.
Of course we need the private sector and the public sector, housing associations and private home ownership. We need all of these, but the whole population can only be properly housed by a large expansion in the number of houses available at low rents. And that can only be achieved by public authorities having adequate resources. I believe that we are all in favour of the expansion of home ownership, but that does not require the destruction or reduction of council housing. That is the mistake under which the Government labour. An increase in home ownership can be achieved without reducing the supply of local authority houses, first, by new building in the private sector for sale and, secondly, by helping council tenants, as sitting tenants, to buy their own homes if they wish—but on the condition that they can only sell back to a public authority which can still meet public needs.
I say in particular to the noble Baroness that that safeguard would have been included by any government which were really caring about the

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welfare of council tenants. The fact that that has not been done will strengthen the conviction of those who believe that the real motive behind a great deal of the Government's housing policy is not the welfare of tenants but simply party political prejudice. The Bill will intensify that suspicion. Why else do we have a repetition of the Government's favourite legislative swindle; namely, that the tenants, by right, can opt out of the local authority sector but not opt back. They can opt out on the basis of a majority so small as to be almost derisory.
The main thing wrong with local authority ownership and its housing stock—and I agree that certainly some things have been wrong—is that although that stock grew steadily in the 30 years after 1945, there was not enough money spent on maintenance and on the provision of proper caretaking staff on council estates. If in those days as much had been spent on council housing as is normally spent on private blocks of housing, today we should have a far more satisfactory stock of council houses.
Basically, the Bill seeks to revive a privately-financed rented sector. I think we all agree that that is its object. I do not believe that it can succeed. No doubt the housing associations, the housing action trusts, will all do their best, as many of these associations do now. But they are only on the fringe of the problem. They will find themselves up against an economic tide which they cannot resist. They will be unable to charge a rent low enough for the neediest families to afford unless housing benefit is increased on a huge scale. At present I see no sign of this increase.
In the present conditions in the United Kingdom that tide is inevitable for two reasons. First, there is the taxation system which almost no-one has mentioned today; and in particular the mortgage interest relief to home owners. That is making it uneconomic for any private landlord to let rather than to sell. That is why the proportion of private rented houses has declined. I believe that some years ago the total loss of public revenue from mortgage interest relief was something like £200 million a year. It has now risen to £3 billion or £4 billion. It may be that the Minister can tell us whether that is correct. I am told by my noble friend that it is over £4 billion.
We have piled three huge tax concessions on top of one another to the pampered owner-occupier. First, there is the abolition of Schedule A; secondly, the exemption of private houses from capital gains tax, and, thirdly, the mortgage relief—now almost a scandal. One or other of these tax subsidies might have been justified on its own; but the three together have made inevitable the collapse of the private rented sector.
Secondly, the shortage and the high cost of land in all the areas of the country where the demand for housing is high will also make it impractical for private landlords to provide low-rented housing for those with small incomes because the cost would be too great. Nothing in this Bill, so far as I can see, will alter those basic facts. With the present level of interest rates it is even less likely. The great private housing boom of the 1930s was based on a 2 per cent.
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bank rate lasting for ten years. I am afraid that there is singularly little co-ordination between the policy of the Chancellor of the Exchequer, who has been raising interest rates to unheard-of heights, and that of the Secretary of State for the Environment who wants to revive the private rented sector.
At the same time local authorities are not even allowed to spend 75 per cent. of their capital receipts on building new houses to rent. What on earth is the reason for that? The Prime Minister has just declared her conviction that everybody should be allowed to spend their own money as they please. I wonder why local authorities should not be able to spend more than 25 per cent. of their own money as they please.
I am afraid that this Bill, no doubt despite some good intentions, is the product partly of economic doctrinairism about market forces, partly of political prejudice and partly of the Prime Minister's almost obsessive hatred of any organisation which is elected by the public and not appointed by herself. As it stands, the Bill will worsen a very bad situation. This House will be performing an invaluable national service if it drastically amends the Bill in the next few weeks.
4.32 p.m.
Lord Goodman: My Lords, it is some years since I had the privilege of addressing your Lordships' House in formal debate. I wish to assure your Lordships that I shall not regard myself as being entitled to the time I have lost in the meantime. I think that I have some special qualifications which entitle me to speak on this subject. I was for some years chairman of the Housing Corporation. I was chairman of the National Building Agency, which is a related office. I am president of the Rent Officers' Association; I can claim to have invented that character.
I should like to pay tribute to the rent officer because this Bill is likely to reduce his function and he may be feeling a little unhappy and a little neglected. They are a splendid institution. Each year I address their annual meeting. It is my only function. I assure them how well they serve the community, how important they are and how pleased I am to see that they have multiplied. I think that they have served a very important social function. When one thinks of the amount of litigation that has been avoided because of the existence of rent officers, it is very difficult to exaggerate their social value. I do not wish to consider what their revised function will be under the Bill, but certainly in relation to housing corporations it will be rather less. The fact remains that they have done a very good job and it is a great pleasure to me to have an opportunity of testifying to that fact as their established president. How long I shall remain as such I do not know because, apart from the fact that the Almighty determines these matters, there is also the question of how long the rent officer will be there. I think that he has performed a very valuable function and I am very pleased to be able to record the fact.
When I arrived at the Housing Corporation, I recognised immediately, as any sentient human being must do, the urgency of the housing problem. I do not believe that it has abated in the slightest degree since I was there. It may be that it is more severe and

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more gross than it was in those days. I should like to make a purely practical observation. This Bill comes in this year. The present Government will, last another four years unless there is some cataclysm, either hoped for or deplored. I do not want to be too discouraging to the gentlemen on my right but there must be a reasonable prospect of their re-election. It may well be that this Bill will have to survive for 10 years before it can be substantially amended. Therefore it is futile to utter pious hopes about what we would like to see. It is important to make this Bill as good as we can at this moment in time, accepting that it has an enduring value that some of us may deplore and some of us may applaud. The fact remains that it is a fact. That being so, I should like, and hope most earnestly, to play some little part myself in the Committee stage of the Bill by making some suggestions.
I have conferred, as one might expect, with the Housing Corporation. The Housing Corporation in general terms welcomes this Bill. Housing associations in general terms do not welcome the Bill. There is an unfortunate division between the corporation as the governing body and a great many of the associations that they are governing. They are anxious on a number of scores. I do not wish to enter into a debate about whether housing associations do better for housing than local authorities. My own experience was that local authorities were so uneven in quality and approach, that it was quite impossible to arrive at any conclusion. Certainly when I arrived at the Housing Corporation many local authorities were greatly suspicious of housing associations. I think alas, that that suspicion remains to this day. By the time that I departed that situation had to some extent abated. I do not attribute that to my skill of negotiation but I attribute it to the determined effort of the immensely skilful staff of the Housing Corporation.
I am quite sure that during my several years with the Housing Corporation I never arrived at a solution to the problem or even began to think what the solution was. However, I disagree profoundly—and this is a rare instance--with the noble Baroness, Lady Young, when she says that the solution does not lie in building houses. Building houses cannot be bad. It is certainly a solution and it is a very necessary solution to build as many houses as possible.
Our problem exists because great numbers of our houses are petrified. It is no use pointing to empty houses on a national total because most of them are disqualified from occupation because the tenant is not there. The tenant is somewhere else and wants to be somewhere else. That is a very serious part of the problem. An even more serious part of the problem is the Government's obsessional belief that the sale of houses will solve the problem and that private ownership of houses will be a solution. I think that that is an obsessional belief; unfortunately it is a totally sincere belief.
The Government believe in what they call a property-owning democracy. A property-owning democracy in which some under-paid young man is striving to purchase a house on a heavy mortgage but who has not the slightest possibility of paying the
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maintenance costs, is not my idea of a property-owning democracy. I do not think that that is the way to solve the housing problem.
Baroness Young: My Lords, if the noble Lord would forgive me, I did not say that we should not build houses. I said that building houses by itself is not only the solution to the housing problem.
Lord Goodman: My Lords, the last thing in the world that I would do is engage in a debate with the noble Baroness, for whom I have such a profound admiration that, even if I thought that she were wrong, I would not say so.
The fact remains that there is an obsessional notion that by selling houses to people the problem will be solved. What has been said already is absolutely true. What is needed is a blended situation in which there are some houses for sale and some houses to be let. What is certainly required— and this is something that I earnestly hope the Government will address their attention to in this Bill—is close supervision to regulate both rents and prices. We are living in an era when prices have gone totally mad, in consequence of which great numbers of people cannot afford to buy houses. Very often the choice in connection with buying a house or not buying a house is whether the family has a baby or whether a child is sent to a better school. It is not as easy as saying that a person has the money to pay the mortgage. It is a conception that is extremely erroneous and mistaken and which can lead to disastrous consequences.
I entirely agree with the noble Lord, Lord Jay, when he says that the housing problem has been solved only in Scandinavian countries. When I was at the Housing Corporation I paid a number of visits abroad. The only countries where I felt that the problem was firmly under control were Sweden, Norway and Denmark. The United States not only had nothing to offer us but presented the picture of a hideous shambles. Certain it is that in what is the freest and most affluent democracy in the world the housing problem is worse than our own. So attaining that sort of capitalist prosperity is not the beginning of a solution.
I venture to mention my noble friend Lord Lloyd in regard to my interest in the housing problem. Some years ago—100 years ago, almost—we used to sit as a poor man's lawyer in the East End of London, at a place called the East End Mission in the Commercial Road. Three of us used to go down there—my noble friend Lord Lloyd, who was not Lord Lloyd then; Professor Gower, later Vice-Chancellor of Southampton University and the man who produced the Government's plan for investment security; and myself. We were not inadequately trained to provide free legal services. But what I learned there more than anything else was the crucial importance attributed to security of tenure and the certainty of having a home. Old people—older than I am today—came week after week for reassurance that they could not be evicted. I venture to say to your Lordships that the crucial consideration in regard to this Bill is that one should restore the social security of people having homes.

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Very offensive things have been said about the rent restriction Acts. Since 1915, however, they have created one social certainty. I believe that the absence of serious social unrest in this country is to a large measure attributable to the rent restriction Acts enabling people to know that their homes were safe. Not everyone had a home. But great numbers of people knew that their homes were safe and that their rents could not be increased.
The Bill has some excellent features. I am not proposing to analyse it here as that would mean being on my feet all night. The Bill gives great encouragement to housing associations. It gives them a better status. They will be able to make a grant as opposed to monitoring it. There will be much greater flexibility in their tenancy arrangements.
There are a lot of good things in the Bill. But the one alarming feature is the seemingly greater ease with which people can be evicted. Nothing causes more social disturbance and more local disturbance than the possibility of people being evicted. I have seen this with my own eyes. I urge the Government to give the closest supervision to the situation.
The one thing that I wish to say—and I can say it from this Bench, though nobody can from the other Benches—is that everyone in the House shares my wish that we should solve the housing problem. I do not think that that is a political wish in any sense. I think everyone wishes to do it. And the way to do it is to work in a team so far as that is possible.
I believe that housing associations have a great contribution to make. So often what is done most effectively in this country is done by volunteers. A housing association is very largely an organisation of volunteers. This we should exploit to the utmost; so any encouragement that can be given to housing associations is desirable. It does not follow that there should be discouragement of local authorities. My own experience of local authorities has been that if successfully wooed they co-operate magnificently.
Two factors seriously aggravate the problem. One is our planning requirements. The lunacy of our planning regulations, whereby a man or an organisation can buy a piece of land and hold it for three, four or five years, paying large interest costs to add to the ultimate cost of the house, is something that needs to be tackled. Another problem, although there may have been an improvement since my day, is the appalling bureaucracy relating to approvals from the Department of the Environment. The lunacy was that a housing association could spend as much money as it liked on the land. It was subject to the district valuer who did not have a divine infallibility. But when the question was the cost of a door knob, it would be analysed and regulated by 30 civil servants. I do not know whether that lunacy still prevails. I forget what it was called.
Lord Dean of Beswick: My Lords, it was the cost yardstick.
Lord Goodman: My Lords, I am grateful to my noble friend. In addressing ourselves to these self-evident problems, which have no political
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background at all, no one wishes to maintain a destructive cost yardstick. All one wishes is to build houses. I do not have an expert knowledge, but I have slightly more expert knowledge than many of the factors which make it extremely difficult and expensive to build houses and they need more regulation than the question of whether a local authority is of a particular political colour. While we go on debating that aspect, we shall never have any houses.
I welcome the opportunity of speaking here today. We are addressing ourselves to the major problem of our time. That may sound ridiculous, but it is, I believe, true. In the last few days, I have had the privilege of hearing the House debate two matters that are absolutely common. One is the Education Reform Bill; the other is the Housing Bill. The two are inter-related. Your Lordships would be horrified if I detailed my experience of visiting housing associations. Time and again, when I visited houses run by associations and owned by respectable and decent people, there was not a single book in them. Your Lordships may think that that is rather far removed from this debate. It is not. The two matters are closely related. To restore a good quality of education, you must restore a good quality of housing. That is my final message.
4.46 p.m.
Lord Moyne: My Lords, I desire to say a few words in support of the Bill from which so much is hoped, though I realise much is also feared. I am encouraged by the words of the noble Lord, Lord Goodman, on the importance of this subject about which he knows so much and about which he has spoken so eloquently. It is to be hoped that the fears can be removed as we proceed, whether by explanation or amendment.
My personal approach is as a trustee of the Guinness Trust which, like many other housing trusts and associations, hopes for great things from the prospect of drawing in, from private investment, capital which the Housing Corporation, by the nature of things, has not been able to produce as fast as we would have wished. But the trust, like other trusts and housing associations, is anxious naturally over making both ends meet in planning the new kind of development. In obtaining private capital, the confidence of investors is an important factor. It is only through confidence and security that private capital will invest in something that will not bring in high returns. Housing benefit and other factors figure in the equation but private capital can only be drawn in to help join the ends together if there is confidence and security.
It is in this context that I should like to draw your Lordships' attention to Clause 55. At first sight, I have to confess that I was dismayed by its lack of precision: it could mean anything or nothing. On consideration, however, I have come to see that in navigating the sea of our housing troubles the pilot, who is the Secretary of State, should be allowed wide freedom of manoeuvre in this particular channel.
We on this side of the House obviously have confidence in our present Minister and in his attitude.

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But it would be churlish not to have confidence in the intentions of a future Minister from an opposition party; perhaps, after all, with the same permanent officials advising. However, that might be bringing things forward too much; they might by then all have retired. The noble Lord, Lord Goodman, made the point that this party might be in office for another 10 years. If so, this party, as much as any other party, will seek to bring in another Bill to improve what has been done.
Therefore, I do not grudge the freedom of manoeuvre given by Clause 55. An assurance would however be welcome that the Minister will use it to put the grant redemption funds, or clawbacks now to be called rent surplus funds, in full at the disposal of the associations that have created them in using the housing corporation grants. The clawback will not apply, I know, to the new assured tenancies, but it applies, and will apply, to surpluses arising from existing tenancies created out of housing association grants.
As an example of the magnitude of this aspect, I am told that the Guinness Trust had to pay back £800,000 last year and will have to produce something like £1 million this year. If such sums were retained rather than cycled up and down, they could, I am told, he turned into bricks and mortar within months. However, they would be even more invaluable at present in providing a sinking fund for major repairs and as a reserve to give confidence and attract private capital into social housing. I am told that other European countries are successful in this and that sometimes they even seek investment for their social housing from the London money market. I believe that the Danes have done so.
Apart from this practical aspect, I am mindful of the Parable of the Talents. The housing corporation grants may he likened to the talents that were made to fructify by the efforts of the faithful servants—efforts made by staffs with experience built up out of our own charitable enterprises. It is surely only just that the fruits of those efforts should he allowed to be retained for the nourishment of new enterprises.
Therefore I support this far-reaching Bill. I hope that the Government may be able to give some assurance that they will exercise the wide powers given to them under Clause 55 to allow housing associations to retain their supluses in full, not only as sinking funds for major repairs but as reserves to facilitate the raising of private capital.
4.52 p.m.
Baroness Ewart-Biggs: My Lords, having listened to some very interesting speeches covering different aspects of the Bill, I wish to speak about one particular implication for the interests of women. I shall be speaking from information received from the Women's Organisations Interest Group which formed a sub-committee to look particularly at the Bill. Its members have expressed extreme concern. Perhaps I may emphasise that the groups making up the Women's Organisations Interest Group represent women of all backgrounds and of all political
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persuasions from both rural and urban areas. They total literally millions of women throughout the country.
As the director of the NCVO has said, never in her experience has there been such unanimity of concern about a piece of legislation than that expressed by this interest group regarding the Bill before us. There is little doubt that women in general are more economically vulnerable than men. Because of their relative poverty they are disadvantaged in access to housing which depends on income, such as owner occupation and the private rented sector. As a result of the Bill's proposals, both these sectors are expected to grow at the expense of social housing provided by local authorities and housing associations.
The categories of women who cannot depend on a regular wage are in general those who are going through a breakdown of their relationship or their marriage; single parents, black and ethnic minority women; women caring for dependent relatives and older women. Many will be responsible for children. This renders their need for good housing paramount, as the interest of the child is totally hound up with that of the mother. If the mother has good housing, the child will too.
I want to mention the women who are carers. It is estimated that one in five women over 40 are responsible for a dependent relative. The Government have quite rightly a care in the community policy. But the carers who arc practically always women badly need support. The Bill will have the devastating effect of either denying carers the right to succeed to a tenancy unless they have been living with the tenant for the previous two years instead of the present six months, or, where the tenancy began after the Bill becomes law, the carer will have no right of succession at all.
Apart from the sheer injustice of this, since many women have given up jobs and their own houses to move in with elderly relatives, the new proposal will strike at the heart of the Government's care in the community policy. Should this proposal remain in the Bill, many women fearing eventual homelessness will not dare move in with elderly relatives. As a result, those elderly relatives will have to be taken into institutions. I must stress the number of women who leave their own houses to move in with relatives and who little by little have to give up their jobs as the relatives need more and more care. Then, on the death of the relatives they are left with no job and no house. This is not a way of rewarding those selfless women who take on that role time and time again.
The other category of woman obviously very vulnerable is the head of the single parent family. Nine times out of 10 that person is female and also suffers poverty. There is the initial problem of finding rented accommodation which allows children. In addition, the Bill will increase risk of eviction for a landlord is given the right to repossess if a tenant were to be in arrears of three months' rent or to have persistently delayed paying rent.
It is a fact that many women, particularly lone parents, are in receipt of housing benefit and maintenance payments. In both cases, difficulties can arise when payments are delayed. So some of these

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women could be evicted through no possible fault of their own. Even under present circumstances, single parent families are disproportionately represented among the homeless. For example, in the first 4 years after the operation of the 1977 Housing (Homeless Persons) Act, one-parent families accounted for 52 per cent. of all families housed.
As drafted, the Bill may not only lead to more of these families becoming homeless, but, through the provisions legalising premiums, they are likely to spend longer in unsuitable homeless accommodation such as bed-and-breakfast, while they try to find accommodation that they can afford. Again, I must stress that the interests of children are closely bound up with these families. The kind of housing in which they are brought up means that children can experience a terrible start to their lives.
Next, through the policy of allowing rents to increase to market levels, only those one-parent families who can get help with the rent through housing benefit will be able to take out new tenancies in the private sector. The Government have given repeated assurances that on account of their continued housing benefit eligibility, low income tenants will be able to share equally in the greater choice of housing that is expected to result from the new Act, as the Minister has pointed out.
However unless the present loopholes in the rent provisions are closed so that private sector rents are payable from day one of occupation, one-parent families will be among the largest groups to be denied access to this sector and left with less choice in housing than at present. The restrictions on applications to the rent assessment committees on both assured and shorthold tenancies and the failure to outlaw premiums or key money will further exacerbate the problem for those particular families.
Another very vulnerable group are elderly women. The Women's Organisations Interest Group expresses great concern that most of the residents in sheltered housing for the elderly are women. A reduction in housing grants and the higher rents that will be required in new tenancies will mean that more elderly women will live in substandard accommodation which is totally unsuited to their needs. Older women have, after all, all their lives been victims of low wages and exclusion from occupational pension schemes. Therefore, if they face increased rents they will be forced to cut expenditure on food and heating to a dangerously low level.
There are also worries about harassment. The proposals in the Bill to control harassment by landlords is a tacit admission that such harassment may well increase under the new proposals. Women are subjected to certain types of harassment more readily than men. There is little doubt about that. But the particular concern of the interest group is for elderly tenants in protected rented accommodation, the majority of whom are women. The possibility of landlords evicting such tenants is significantly increased by the possibility of re-lets at market rents or sale into owner-occupation. The profits to be made by that, particularly in the South-East, create the environment for a whole breed of new Rachman-like
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landlords. The Bill further aids that process by the new right of landlords to move tenants to suitable alternative accommodation. Theoretically a landlord could move elderly tenants from flat to flat as blocks were gradually decontrolled. That is seen as a very real danger.
The last vulnerable group are women who suffer violence in the home. That group includes not only battered wives but also teenage daughters suffering sexual abuse. It has always been enormously difficult for them to escape from that situation. Any further reduction in low-cost accommodation will have a particularly drastic effect on the lives of that group of women, especially when taken in conjunction with the new social benefits rules.
Young women wanting to move from the parental home to seek employment or to escape from overcrowding are particularly vulnerable economically. The outcome of this Bill in higher rents and easier repossession, on top of the strict housing benefit rules governing young people, will put that group at even greater risk.
I have tried to put forward the points of view of women's organisations who fear very much that the most vulnerable elements among the groups they help will be disadvantaged by the proposals in the Bill. I believe that the Bill does not respond to the true need which exists in this country which is a requirement for low-rent accommodation. It is the lack of that which has created a crisis in the lives of so many people in this country who are at the bottom of the heap. I hope that the Bill will be heavily amended in Committee.
5.4 p.m.
Lord Winterbottom: My Lords, I am the chairman of a small housing association. It is for that reason that I only recently took advice to speak today. I have come today more to learn than to impart information. I look forward to reading the wisdom and knowledge of my colleagues when the debate has finished. However, I have several points to make.
I regret that the noble Lord, Lord Goodman, is not in his place because I wish to thank him personally for his kind words about the kind of person who handles housing associations. As regards my housing association, none of the people who are responsible for it is paid. There is also another factor which makes our association a little different perhaps from many others. It is completely free of any finance from government sources. All our funds are raised from building societies, our bank and from some local authorities— but only on the basis of a joint operation.
1 have three questions to put to the Minister. First, will he explain why Housing for Wales is split off from the Housing Corporation? I do not think that that was made clear in the Minister's opening speech. I should like to know why those two organisations are divided. I am interested in the sense that my small association always stands on its feet and does not receive the kind of support that comes from the Housing Corporation.
Secondly, can my association as an entirely independent organisation expect the same favourable

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treatment that may be granted to the Housing Corporation and Housing for Wales when the Bill becomes law, and its improvements which must come in Committee—are applicable? There is a certain resentment among associations such as mine that they do not seem to benefit as they might be able to do if they were not so determined to maintain their freedom.
Thirdly, to what extent is land price brought into consideration within the Government's examination of the problems of housing? The price of land determines so much when staff within my association set out to find sites on which to build a group of houses. The noble Lord. Lord Ross of Newport, made a remark with which I agree—that public funds are required. But he then went on to infer that the prosperous areas of Britain, such as Wiltshire, as a whole do not really need this assistance. That is just not so. The cost of land in prosperous areas such as Wiltshire or similar counties is so high that we in Wiltshire are finding it extremely difficult to build starter homes for young people. That is something that I shall wish to expand on in Committee. Otherwise, this Bill is of value. It should be comparatively free from conflict during its passage through the House and I wish it well. I look forward to hearing the wisdom of my colleagues.
5.9 p.m.
Lord Shaughnessy: My Lords, the Bill before us today represents the Government's proposals to inaugurate radical changes in housing policy designed to eradicate some of the anomalies that cast a wholly undesirable shadow upon an otherwise affluent society. In a prosperous and expanding economy homelessness remains a festering social problem, a wide disparity in the cost of housing in different regions continues to restrict the mobility of the work force; and above all, the spectacle of old and infirm people condemned to live in dilapidated and often unheated accommodation persists.
In July 1985 the inquiry into British housing which was conducted by the National Federation of Housing and chaired by His Royal Highness the Duke of Edinburgh examined the condition of housing in the nation and made a number of recommendations on how it might be improved—recommendations which were far-reaching and in some respects controversial. That report was debated in your Lordships' House on 27th January 1986.
The White Paper issued by the Government in September of last year addressed many of the recommendations of the report and forecast the changes which we are discussing today. It has taken three years to formulate the legislation, and I suspect that it will take some time yet before its proposals become effective.
One of the Government's four principal objectives announced in the White Paper was,
"to put new life into the independent rented sector".
in order that,
"the letting of private property will again become an economic proposition".
As was stated by several noble Lords (and notably by the noble Baroness, Lady Young) unlike many
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countries in Europe and North America where the private sector occupies the largest part of the rental housing market, the proportion of rented housing in the private sector in Britain has declined drastically since the War. As the Minister has said, it accounted for only 8 per cent. of the total rentable stock in 1986. I believe that the figure is now even lower. To a major extent, this decline was fuelled by a rent control system which prevented private property owners from realising a fair return from investment in rental property—as low as from 2 to 3 per cent. on capital employed—and by a legal regime governing security of tenure which deterred the private landlord because of the difficulty in regaining possession under reasonable circumstances.
The Bill seeks to make a start in reversing that situation, and I welcome that intention. However, a change of such proportions will not be achieved easily or quickly. Historically the public perception of the private rental sector is one of suspicion. That will change only gradually, as the proposals in the Bill arc implemented. Furthermore, an abrupt dismantling of the rent control system and other protective aspects of the current regime would create unacceptable social hardship and further aggravate the situation.
However, it is encouraging to note the steps in the form of housing rent assistance that the Minister has outlined to facilitate the transition. It will take time for a financial climate to develop which will attract private funds to the building of new housing for rent. and it will be necessary to prime the pump by providing incentives for private investment through such as agencies as the Business Expansion Scheme and in support of the housing associations. Even so, as long as interest rates stay at current levels (with all that that implies for mortgage costs) the desired effect will he further inhibited.
Nevertheless, I believe that the thrust of the Bill in respect to regeneration of private sector rental housing signals an encouraging beginning. The ultimate objective must be to create an orderly and flexible private market in parallel to the public housing sector. Whether the Bill will be successful in realising those objectives will depend on how resolute the Government are in implementing those policies, and how consistent any future governments are disposed to be in carrying them through in future years.
5.15 p.m.
Baroness Gardner of Parkes: My Lords, I find this a most interesting and innovative Bill. I believe that many of the provisions in it will be of great benefit to people who wish to rent property. As regards private landlords, one of the great difficulties has always been an almost complete lack of understanding of the private landlord on the part of the Labour Party.
When the Francis Committee reported on security of tenure for furnished tenants not long after security of tenure had been brought in for unfurnished tenants, there was also a minority report. The minority report was produced by one member of the committee. All the members of the committee, with the exception of one person, believed that it was

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unwise to bring in security of tenure for furnished lettings. However, the minority report stated that that should be done.
In due course, a Labour Government took it upon themselves to implement in full the minority report. At that stage, I attended a London Boroughs Association meeting. That body was Labour controlled. I gave a lift to the man who was then the chairman of that body. It was just before the implementation took place. I said to him: "Don't you understand that when you bring in security for those places on top of the security that you already have, you will see a drying up of all the furnished accommodation which is presently available?" He said: "No, no". I pay tribute to him in that I think he was completely genuine in his belief that that would not happen. That proved to me that there was no understanding of the situation. We saw very rapidly that there was no hope of young British people who wished to marry and find furnished rented accommodation being able to find it. The shorthold system which has recently been introduced has helped to some extent. However, it has not helped a great deal.
I can speak only for London. However, there is now a surplus of luxury rented accommodation in London. Many noble Lords will have seen accommodation for foreigners and company lets advertised in the glossy magazines which come through our doors. There is a wide choice in such rentals. If one has such a property to let and one contacts agents, they will say: "It is very difficult. The market is saturated and there are very few people wanting that type of accommodation. It is difficult to get a tenant". In addition, in order to get such tenants, one has to do the place up magnificently, otherwise it will not command a big rent.
I believe that there are many landlords who would he perfectly happy not to have to put in superb furnishings. When we look at the price of one settee at about £1,000 for that type of accommodation, we can see that those furnishings are not cheap. There are many landlords who would happily take a reliable tenant at a lower rent if they did not have to do luxury interior decorating. That is enormously expensive and it is a great growth industry. If a landlord is prepared to let his property in a clean, reasonable and fit condition and allow people to decorate as they wish, he will be able to accept a lower rent and still get a reasonable return.
Mention has been made of battered wives and where they are to go. I should like to take up that point because that is something about which I have been very concerned. There are shelters for battered wives but 1 do not think that the Bill covers that category. I could not quite understand the point that was made on that issue.
There are so many speakers in this debate that I do not wish to speak for long. However, I am slightly puzzled and should like to ask the Minister in summing up to clarify the position in relation to statutory housing responsibilities. He mentioned that some local authorities wished to dispose entirely of their housing stock. Will they be relieved of their
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statutory housing responsibilities or will there be a complete change in those responsibilities? Mention was made of homeless people; are they to be the only people covered?
The other day I went to buy a small piece of carpet. When I asked about this or that carpet the salesman said that I could not possibly have it because it was all on order for people providing bed and breakfast accommodation for the homeless. He said: "They are making so much money out of it; it is fantastic. They recarpet all the time because the places get pretty hard use." The present homeless situation is unsatisfactory. Within the City of Westminster there are homeless people from all over London because we happen to have bed and breakfast hotels. That is no way for people to live and it is certainly no way for people to exploit the situation and make large sums of money out of it.
I believe that the Bill will help. I can remember the hard to let GLC housing estates—run down and unattractive. I think that the HATs, as they are called in the Bill, may be able to take on an imaginative role and do something with that accommodation. I believe and hope that they will provide reasonable accommodation for homeless people. If so, that will be a great achievement of the Bill.
To me, the problem is that there is little room for new building in London, certainly in central London. Therefore we must make the best of what is already available. The solution of knocking everything down and starting again is not always the right one. I can remember when I was a candidate in Blackburn seeing whole rows of terraced houses boarded up, and other great areas of wasteland where demolition progressed much faster than rebuilding ever could. That had a drastic effect on people. In the few houses that remained, people sat on their doorsteps waiting and looking as if the world had passed them by. Therefore, I think that in London in particular the answer is not rebuilding but refurbishment. I believe that that will happen under the Bill.
The greatest thing would be to see an end to the discrimination against British people which exists today. Any Australian relation of mine, any foreigner who comes to this country, finds that housing is available. The discrimination is against the young British person wanting to marry who has little hope of finding anything.
I hope that the Bill will bring about a generally increased rented accommodation sector so that, although possession will be easier, as has been mentioned by many speakers, possession will not matter because there will be somewhere else to move on to. That is what we want to see. We do not want a situation where one has to cling like grim death to where one is because there is no alternative if one leaves. We want to see a spread of housing accommodation in such a way that one makes demands of one's landlord as to how the place should be maintained and what one should have. Then, if it is not satisfactory, one will have the choice of going somewhere else. I believe that the Bill will do those things.
5.24 p.m.
Baroness Fisher of Rednal: My Lords, I shall not be following up the remarks of the previous speaker in my observations because my experience covers perhaps a much wider area than the housing situation which exists in Westminster. As my noble friend Lord Dean mentioned, for a considerable time I was the chairman of the Birmingham housing committee. The Minister will know without my telling him that Birmingham has the largest number of local authority houses in the country.
We have talked this afternoon about houses, flats and property. We ought to be talking about people, because it is people who live in those properties. These arc not houses to them; they are their homes. I think that that is why this Bill is such an important one. Some of the observations that I shall make will be on the lines that these are homes and that what we want to provide in the future is homes.
Looking at provision that has already been made, 16 million people live in approximately 6 million properties held by local authorities. The tenancies of some of those properties could be profoundly changed as a result of this Bill. We have to remember that a high proportion of the most vulnerable members of society are tenants living in local authority or housing association accommodation. Nearly 2½ million of the people living in those properties are dependent on housing benefit. That is a very large percentage of the population that we are talking about this afternoon.
If the right reverend Prelate the Bishop of Southwark is back in his place—I am not reprimanding him because he left the Chamber; far be it from me to do that—perhaps I may give him figures for Birmingham. In June 68 per cent. of council house tenants in Birmingham were receiving housing benefit. Following the April 1988 changes, 7,000 tenants, not only of council houses but also of housing associations and private landlords, lost their benefit completely. If there had not been changes in April this year the figure would have been much higher.
If we look forward to tomorrow when the Select Committee on Social Services in the other place will report, according to the leaks which have already gone to the press that report contains charts which show quite clearly the dramatic rise in the number of families on low incomes. The numbers claiming means-tested state benefit has climbed from 4–4 million since this Government came to office until it is now nearly double at 8.2 million. Those people, who cannot possibly afford to buy, will be in the greatest difficulties if private landlords take over unless housing benefit is considerably increased.
As my noble friend Lord Dean said, there is nothing in the Bill for those people who are at the bottom of the pile—the homeless. Nothing is offered in this Bill for those people. Their numbers could possibly increase if the new mandatory grounds for possession under assured tenancies are implemented. I reiterate what the noble Earl, Lord Russell, said. If there is to be the great sell-off which the Government intend and which will no doubt come about, how on
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earth will the local authorities comply with their statutory duty to the homeless with a greatly diminished stock?
We have heard this afternoon about local authorities which keep houses empty for long periods. We have heard also that the Government themselves do not have a clean sheet. University College in London has just issued a report which shows quite clearly that housing associations are no better. In fact the figures show that in the way that they apply their re-letting policy they are worse. One in 10 properties owned by leading housing associations are empty for a longer period of time than arc local authority properties. The report shows quite plainly that the record of the associations compares unfavourably with that of local authorities.
In the Second Reading debate in the other House, the Secretary of State mentioned the "physical decay and decline" to be found in large council housing estates. Describing such places he said that they are:
"often monotonous, soulless places in which few would choose to live—if they had a choice …We cannot leave them to suffer. This is the problem we now have to tackle" .—[Official Report, Commons, 30/11/87; col. 620–621]
As my noble friend Lord Dean said, the people of Peterborough opted to go to Peterborough council when they were given the choice. He also gave us examples of that happening in Manchester, and, as the Minister knows, quite recently the residents of Telford new town voted almost unanimously to transfer to the Wrekin District Council. In Basildon 98 per cent. of tenants want to be with the local authority. A Gallup poll conducted for the National Consumer Council which is a very reliable organisation, found very little evidence of council tenants wanting to transfer to private landlords —in fact only around 1 per cent. There is no foundation for the suppositions of the Secretary of State and they are not based on any research to prove that the people who live in council housing on vast estates are suffering or clamouring to get away from them.
Yesterday afternoon, in the course of preparing my notes for this debate, I wanted to find out the meaning of "social landlords". I knew the meaning of "social" but thought that I ought to find the definition of the word in the dictionary so as to be quite sure that I knew all its meanings. The dictionary I used was a Collins New English Dictionary and under "social" it gave the meanings "companionable, affable, gay"—I did not think that that was an adjective that tenants would want to apply to their landlords—and "living in communities, for examples as ants". Of course people crush ants but I am sure that the Government do not want to crush people who live in council houses. I finally came to the definition which I thought the Government wanted, namely, "affecting the public interest", at which point I said to myself, "That's it! Now I can understand".
However, I then looked up the word "landlordism" and immediately hit a difficulty because the definition read:
"the principle of the supremacy of landed interests".
I was not sure how that tied up with "affecting the public interest". There are some noble Lords in this

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House who are much more intellectual than I am and who will be able to argue that point.
If one looks at Tenants' Choice, which is the lovely document that the Government have made available, one sees at the top of page 2 that the idea of tenants' choice is to give tenants the opportunity of taking over rented housing from the local authority so that there is diversification and competition. The first paragraph on that page finishes with words that I want to emphasise:
"and the influence of the best housing managing practices of other landlords".
I do not know who are those "other landlords". They must be somewhere because we are to look to their influence. The Government must know who they are. When the Minister replies perhaps he can tell us who they are because not only I but all tenants will want to know. I do not think he should he shy about giving us names. I am not a Londoner but I know that Haringey, Camden and Brent are very important areas of London and this Government never fail to remind us of their names. I am sure that Haringey, Brent and Camden will be interested to have details of those landlords.
Will the new landlords be housing associations? At the present time there are 4,500 housing associations, of which only some 150 have a stock of more than 800 properties. Arc they the people who will take over local authority housing? Or can we take it for granted that it will be the Housing Corporation? And let us not forget that the Housing Corporation is purely and simply a government quango; it was another way of giving money for housing provision so that it did not go to local authorities. Will that quango be charged with promoting private landlords and capital and eventually shall we see the transformation of the housing association movement into just another private sector operator?
Another point that I should like to raise is whether the social landlords have to monitor their waiting lists and report on housing need to the local authorities. Have I understood correctly—and this is a rather important point—that the landlords of those tenants who transfer to registered housing associations will continue to be monitored by the Housing Corporation but that monitoring of those who have moved over into the new "social landlord" category will not continue'?
The fears of a big Housing Corporation go back about 35 years when the plea for a giant housing corporation was squashed by the then Minister of Health, Aneurin Bevan. No doubt those plans are still on the books in the DoE after 35 years and they have been brought out by this Government to be put into operation.
As for Tenants' Choice, I heartily condemn the voting procedure of "pick a landlord". I think that it is despicable and not democratic. As for treating abstentions as "yes" votes, no government would ever be elected if they had to rely on abstentions.
Lord Graham of Edmonton: This one would not, my Lords!
Baroness Fisher of Rednal: And of course, my Lords, Age Concern are very concerned about abstentions and say:
"We feel that many elderly tenants will abstain through uncertainty about the implications, believing that this signifies their preference to retain the council as their landlord".
There are alternatives in the Bill which will inevitably lead to the loss of secure tenant status. There are succession rights and there are HATs, which are intended to introduce diversity of tenure after refurbishment, but it is imperative that the tenants should have the option to return to those properties. It is on the three issues of democratic voting, succession rights and the tenants' paramount needs on HATs, that I make a very special appeal to Members of this House. For a considerable period of time during the education Bill we dealt with what we called Christian values and the ethics of Christianity. Eventually on the final vote we decided on what I consider was the right proposal: that religion is important and that we would safeguard the rights within our schools. Although I did not enter into the debates, I like to think that I live as a Christian, having Christian values. But I hope that those noble Lords who felt so strongly about those issues in the education Bill will look upon the three issues that I have mentioned and use them as Christian moral issues. Perhaps they will consider them as socially fair and morally just.
I am drawing to a close if noble Lords are becoming anxious—
Lord Graham of Edmonton: No, no.
Baroness Fisher of Rednal: I thank my noble friend. My Lords, perhaps I may also echo the point to which the noble Lord, Lord Goodman, referred when talking about anxiety, concern and worry. I am not talking here of something I do not know. Two weeks ago the councillors of a local authority outside Birmingham had arranged meetings on two of their small housing estates to explain the Housing Bill to them. Local authorities cannot advertise any more. Therefore the councillors are having to do the job on the floor of meetings. I was invited to sit and listen. The worry. concern and anxiety were awful. There were approximately 500 tenants at the one meeting, and over 750 at the other. The concern was manifest among all the people there. They asked. "What does an assured tenancy mean? What does a short hold tenancy mean'?" These people are not politicians. They are not people who normally go to meetings. They went to a meeting because it concerned their homes. They were worried that something might happen to them and that they would not be able to return to them. They asked such questions as, "What does it mean that we are protected under the Rent Act?" One lady asked, "Will you send us a card to tell us where the voting place is, and where we have to use our votes?" These people are anxious because they do not know what will happen. They do not know when they will vote. They are even frightened of being ill in hospital, and of losing their vote.
There is anxiety creeping in among tenants on the applications on rights to buy. I refer to figures for Birmingham. If one looks at applications on rights to

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buy, between August and November of last year on average about 350 applications a month were coming forward. Since February of this year, when more details began to he made known about the Housing Bill. there has been a four-fold increase in applications. In January, the figure was 305, in February 416, in March 1,029, in April 1,015, in May 1,046; and in June 1,176 applications to buy were made. Perhaps it means that all the people in Birmingham have suddenly become rich and have decided that now they will buy; or it could easily be a fear that they will lose their properties.
In conclusion, I agree with what many of my noble friends have said. The only hope for a low-income family is social rented housing. That is what the tenants want. That is what they are voting on. However, will the Government allow sufficient public investment to enable local authorities and housing associations to get on with the job, or do they intend that council housing should increasingly become welfare housing carrying the stigma of failure? If that is the aim of this Bill—and that is what I read into this Bill—it is a very sad day, and divisions that are already apparent in the country will divide still further the haves and the have-nots.
5.45 p.m.
Lord Henniker: My Lords, I feel very inadequate to follow the noble Baroness, Lady Fisher. I am sure that we all sympathise with the many problems that she sees ahead. However. I wish to speak in particular about a matter in which I am involved: that is, rural housing. I should first declare an interest. I am chairman of the rural housing association in my county of Suffolk. It is one of 11 set up by the National Agricultural Rural Trust and the Rural Development Commission.
In speaking of rural housing, it does not mean that I am not mindful of the overwhelming problems of the inner city. I have spent the last 15 years of my life involved in charitable work basically in the inner city. I share fully all the worries of the right reverend Prelate the Bishop of Southwark and many others. However, perhaps it is not always considered that the rural areas are part of the same problem. People regard them as comfortable places where these problems do not arise.
I have been watching the situation carefully for the last few years. The problems are increasing just as quickly in the rural areas as they are in the inner city. They are not only great, but urgent. As the noble Baroness, Lady Young, said, in this respect the world is moving very fast. Until recently Suffolk was remote. In the last two years there has been a revolution. The railways were electrified. Car parks at the stations were improved. People poured in and house prices have risen on average higher than anywhere else except in London. Prices have increased two-fold. The result is that people cannot buy houses and for the first time in a highly rural county we are experiencing the problems of homelessness.
We have done some local research in my area. We have found quite a large number of young people who have jobs and want to stay but have no housing.
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It is becoming a very urgent and aggravated problem. I was always in favour of the sale of council houses. It always seemed to me, as somebody has said, that they were a petrified pool which needed stirring up. However, if we sell those houses we must provide rented housing to take their place. The rural housing associations are in the job of trying to provide rented housing. We have in our sight in small villages, schemes of six to eight houses for starter houses and for old people. The need is absolutely proven. Without raising undue hopes, we have explored a large number of villages and we find almost universally that this is what they want to do.
Being countrymen we are careful about the environment. We do not believe that increasing the housing at that rate can have any adverse effect. In a county where there are perhaps 500 villages—we think of villages comprising up to 800 people—it could produce a lot of houses. The noble Lord, Lord Goodman, referred to certain problems of bureaucracy. In three years we have only just started to complete our first scheme.
I welcome the Bill. I believe that it offers an opportunity, if we take it, of producing houses for rent. We in the country also have empty houses which cannot be used. It is a problem that needs tackling, particularly in looking after the homeless. We have an opportunity if we can make it work.
I am sure that all kinds of problems of which I am not aware will come out during the Committee stage, but I hope that we shall overcome them. I have been even more encouraged from a rural point of view by a statement made by the Secretary of State on 5th July about rural housing and the discussion document issued on village housing. That all seemed to indicate to me that there had been much mutual listening to the various people who have been involved in this problem. It seemed to me that there was little in the statement made by the Secretary of State with which I could disagree and which did not form a valuable basis for co-operation.
My only fear from what the Government have said is that they may underestimate the size and urgency of the problem. They suggest 300 units for the whole country in the first year. That is more than we have at the moment, but our speed is snail-like. I believe that 300 units will prove to be too small.
Looking forward, the numbers involved do not seem to me to be large enough. I may be wrong. It is possible that as we get more houses on the ground we, the housing associations, may be able to paddle our own canoe to find other ways of doing better.
There are some other matters in the Bill that rather bother me. I hope that we shall explore them in Committee. I am worried about the reduced role of local authorities. One can only speak from one's own experience. My experience has been that the local authority with which I deal is imaginative and sensitive both to the need for development and the needs of the environment. Like the noble Lord, Lord Goodman, I am worried about the future of the rent officer. His role has been enormously valuable. I speak as a landlord and I have a good many tenants. The rent officer has been an enormously pacifying,

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peacemaking figure and has prevented a great deal of controversy and conflict which might otherwise have come about.
Finally (and others have mentioned this) from the explorations I have made—though it is enormously in our interests to make it work—I am a little worried about the possibility of co-operating with the private sector in raising money. We have been successful in our explorations in finding a number of landlords who were not only generous but far-sighted enough to he able to let us have land reasonably cheap. But even if one takes that into account, it seems difficult to imagine that one can achieve co-operation from private sector funds which will produce rented accommodation affordable by people living in the local area. Although I expect that one day the trickle down will work (I believe that our area is at the moment at the top of the national league for economic development) it has not yet done so, and wages still appear to be very closely tied to the wage of the agricultural worker. That is a problem that will require a great deal of looking at.
I am sorry that I have concentrated on this problem, but I feel that from my point of view housing is the biggest social problem in our area. I believe also that, basically, it is perhaps the biggest social problem in the country as a whole.
5.55 p.m.
Lord Seebohm: My Lords, you probably all remember the story of the Irishman who came up before the beak and said "M'lud, before I speak, may I say something?". I should like to say that, having listened to the noble Baroness, Lady Fisher, I was very impressed and minded of what she said when speaking about homes: we are not talking about bricks and mortar or houses even. I also remember that sonic time ago we used to speak about "accommodation units". That so infuriated Winston Churchill in another place that he burst into song and said:
"Accommodation unit, sweet accommodation unit: There is no place like accommodation unit".
Now, if I may, I shall make my speech. Over 100 years ago the Royal Commission on Housing for the Working Classes started its report with the following statement which, as it is very short. I shall repeat. It read:
"At the very outset of the inquiry, your Majesty's Commissioners had testimony to prove that though there was a great improvement … in the condition of the houses of the poor, yet the evils were still a public scandal and were becoming in certain localities more serious than they were before".
That statement was reprinted on the front of the Duke of Edinburgh's report. at least on the summary of it, and the insinuation was that the situation is now just as it was in 1885.
Great improvements have undoubtedly taken place for the people of Great Britain. particularly as regards welfare generally, but for some reason we have never succeeded in finding a satisfactory solution to the housing problem. There is a strong moral element in this and it has never been generally accepted that for many people, perhaps 20 per cent.
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of the population, the provision of housing is a social problem, a social service, and not an economic one. Without a warm, adequate and watertight dwelling many families are condemned to a miserable existence which is quite unacceptable in an affluent and, I trust, caring society.
Both political parties when in office have made genuine attempts to improve matters, but frequently legislation has done more harm than good. Legislation intended to help the tenant has destroyed the private landlord. In July 1985, precisely three years ago, the Duke of Edinburgh's report was published and in January the next year I had the honour to introduce a full dress debate in the House on this report. The report made a number of important recommendations and it is worth considering how far the Bill implements the very carefully thought out recommendations in that report. The first concern of the report was devoted to rented housing. The committee pointed out that none of the pension funds, the building societies, the insurance companies and so forth has used its funds for the provision of rented housing. In western Europe and the United States of America rented accommodation is provided mainly by the private sector, but uniquely in this country it is almost exclusively the province of the state.
The committee also recognised that the past principle of subsidising houses had not been successful and that subsidies should be on people and not on bricks and mortar. I shall perhaps cross swords with the right reverend Prelate on that, but experience over the years—and this is incorporated in the report for which I was responsible over 20 years ago—has shown that subsidising bricks and mortar rather than people had not been a success. The recommendation therefore was for an allowance that should be available to everyone in need, depending on his or her resources and requirements. It would help elderly owner-occupiers and those on low incomes buying their own homes. It would help tenants of local authorities or other landlords. Then a number of reasons are given as to why this would secure fairness between tenants, owners and landlords. However, what was realised was the great cost of all this, and the committee made it clear that it should be financed at least in part by the gradual withdrawal of mortgage interest relief.
I remember that in that debate 2½ years ago the Minister on the Front Bench—I believe it was the noble Lord, Lord Elton—said that he wanted to make it absolutely clear that the Government were committed to keeping mortgage interest relief. That is something which I know will be debated for many years yet, but to my mind it is one of the matters that has prevented us from giving sufficient housing benefit to people in need.
The intention of the Bill is clear and it is praiseworthy. It is to increase the number of houses in the private-rented sector. In order to encourage that, many of the restrictions on rent levels will disappear, there being virtually none on new construction or new lettings. However, clearly the Government are not prepared to increase substantially public expenditure to meet the need for rented accommodation. In my view, past history of

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restrictions on rents and landlord powers will make individuals and financial institutions very cautious before investing in rented accommodation, even after the Bill is enacted, without considerably increased incentives. From the tenants' point of view, if rents are to have any relation to the cost of a building, there is likely to be little difference between the rent and the cost of buying a house with a mortgage.
Admittedly, since the publication of the Duke of Edinburgh's report housing benefit has been increased. In putting a ceiling on mortgage interest relief there was a move towards improving the situation and bringing a little closer the status between tenant and landlord. However, the Bill does not go nearly as far as the report recommends in bringing the status of the two types of occupation closer together.
It appears that the Government are putting a great deal of hope in housing associations expanding to provide more rented accommodation. However, a large-scale increase in that field seems to be overoptimistic because at present it consists of approximately only 10 per cent. of local authorities' stock. As the noble Earl, Lord Caithness, said, it is approximately only 3 per cent. of the total accommodation in the country. If that must be doubled it will take a long time and I do not know whether many of the housing associations are equipped managerially to deal with that. The advantage of relying on that method of expansion appears to ignore the urgency of the matter, instead of encouraging local authority expansion at the same time. The inevitable result is that homelessness will remain with us for a long time and probably at much the same level.
I do not have time to deal with the recommendations of the inquiry. It clearly recommends a strengthening of the comprehensive strategic role of local authorities which have the machinery and expertise to provide for many of the needs of the poor, elderly and disabled, provided that they are given the tools with which to do so. I am a strong supporter of local government and decentralisation of responsibilities but, clearly, that is not the Government's view at the present time.
I should like to conclude by dealing with the question of the homeless, particularly the young. I believe that there is a solution to the problem. The noble Baroness, Lady Young, said that those who criticised the Bill were good at doing so but not at providing a solution. I believe that there is no reason why we should not have a housing loan in this country. I believe that it would be well received and that there is no harm in having a housing loan which would provide permanent assets as opposed to merely budget deficits.
I believe that, if one wishes the private sector to become more involved, there is no reason why financial institutions should not provide lease-backs for local authorities which are building hostels for the young. Student-type hostels could be built at a comparatively cheap rate and they would be only half the cost of the present payment for bed-and breakfast accommodation. I believe that a double attack on the problem would be worth looking at.
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The need to provide accommodation for the itinerant young, the unemployed youth, must be dealt with with the utmost urgency. Although the Bill will provide some help I am afraid that it will not do so in the short-term. The Bill provides a medium to long-term solution, but it will not deal with the crisis which neither it nor the noble Earl appear to recognise.
6.5 p.m.
Lord Swinfen: My Lords, I welcome the general idea behind the Bill; it is to increase the amount of accommodation available for rent. With only one type of landlord throughout the nation at present the matter can only he improved. I should like to raise three points dealing mainly with disabled people. I understand that the new assured tenancies will not he liable to an assessment of a fair rent. I welcome the introduction of private sector money to help housing associations rather than only the housing corporations, but I believe that that may well cause rents to rise and to rise steeply.
Can my noble friend assure the House—not only me because I am not the only person interested—that housing benefit will increase sufficiently to cover the additional higher rents? In addition. and rather more seriously, what provision will be made for people on low incomes but who are not entitled to housing benefit, as often happens with physically disabled people who go out to work? Will the voluntary housing associations allow them to run up large debts? Housing associations cannot afford to do so, particularly the charitable associations. What provision will be made for them to cover the additional rent?
I turn from the question of rented accommodation and those who wish to stay in such accommodation to the question of the transferable discount for tenants of charitable housing associations. I believe that in Committee we must look seriously at the limit of the uplift. As I read the Bill, the amount of transferable discount obtainable by a tenant who wishes to buy another property is only the increase over eight years in the cost of building the "home". I would rather use the word used by the noble Lord. Lord Seebohm. It is much more important than a "housing unit" because we are talking about people's homes. If people wish to buy their own homes and go independent—and I understand that that is government policy—it does not destroy any of the housing stock. It leaves a flat or house available for someone of greater need and I believe that wherever possible we should fulfil that need.
During our discussions on the Housing Act 1985 I fought strongly against the right of tenants of accommodation specially adapted and designed for disabled people to have the right to buy it. I have changed my mind as regards local authority housing, and, to some extent, housing associations, except in special circumstances. A great deal of the specially adapted accommodation has only wider spaces for a wheelchair to move round, wider doors and a ramp. Not all such accommodation has special equipment, specially designed kitchens and special bathrooms with hoists, because not every disabled person needs that. I also understand that a large number of

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housing associations and, I believe, most housing authorities are now building their new houses with wider corridors, wider doors and spaces so that where no ramp is needed to enter they would not need special adaptation for a large number of disabled people. I can see nothing in the Bill to improve the right to buy for disabled people and together with noble friends I shall come forward in Committee with an amendment to that end.
In particular, we must remember that very often where a building is specially designed for a disabled person and that disabled person dies, the family continues to live in the home without needing those special adaptations. That home is then lost as a special home to the disabled community.
Lord Dean of Beswick: My Lords, I am grateful to the noble Lord for giving way. His understanding of the present situation in that he believes that houses adapted for special need are being easily sold is not in accordance with the facts. If one reads Hansard one can see that only a short while ago Members from this side of the Chamber, and maybe the other side, challenged the Government's interpretation of the very amendments which the noble Lord supported and said that the Government were avoiding the wishes of the House. The percentage of those houses being sold, as given by the noble Lord, Lord Skelmersdale, was very low indeed. Therefore, that does not accord with what the noble Lord is saying unless there has been a tremendous acceleration over the past few months.
Lord Swinfen: My Lords, I am afraid that the noble Lord has totally misunderstood me. I have been saying that it is virtually impossible for a disabled person to buy his own house because he does not have the right to buy. I have been saying that disabled people should have the right to buy; that is my view. I have changed my mind. As I said before, when we were discussing the Housing Act 1985 I fought against the right to buy specially adapted accommodation for disabled people. I have now said that I am in favour of it with one exception; that is, where there are special blocks of flats for disabled people and permanent help available in the form of a warden or someone else.
I also told the House that much modern accommodation is being built with wider doors, corridors and halls where there is room for a wheelchair to move around, but it is not being designated as special accommodation. If one can enter the building without using a ramp—and if it is on the same level as the ground outside a ramp is not needed—such accommodation would be available because it was not designated as especially for disabled people.
I hope that the House is now clear as to what I am saying. I shall now leave the matter because time goes on and we all wish to get away early for a change.
6.14 p.m.
Lord Stallard: My Lords, in a few weeks' time Parliament will rise for the long Summer Recess after
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what has been, for me at any rate, the most depressing Session of any that I can recall. Any last vestiges of the "consensus society" which has existed since the end of the War, supported by all governments, have been destroyed by an elected dictatorship in the other place supported by a huge, unaccountable majority in your Lordships' House— not very well represented this afternoon, I must confess.
On the Government Benches there is a complacent acceptance, and almost a defence, of the existence of a huge pool of unemployed men, women and youngsters in order to maintain pressure on wages and conditions and to weaken trade union organisations. The constant chipping away at social security benefits in ill-thought-out legislation has destroyed the caring atmosphere which has been nurtured carefully for decades. There is now an atmosphere of despair and hopelessness in many of our inner city areas and reductions in board and lodging benefits have resulted in many single people becoming homeless, becoming involved in drug and alcohol abuse and in crime.
Attacks on local governments and their finances with the spin-off effect that that has had on voluntary organisations has exacerbated the situation. Of course, the poll tax, which we have only recently been discussing, in my view will make all those matters worse in the inner city areas. The so-called reform of education, with the abolition of ILEA, will add to the fears and worries of thousands of decent, ordinary citizens.
If the Session had ended there, the situation would have been serious enough. If the Home Secretary did not say what the Sunday Telegraph says he said about the possibility of trouble in some inner city areas, he would probably recognise the ingredients for trouble resulting from the implementation of those policies. The gap between the haves and have-nots has never been wider and is becoming wider with every new attack which the Government mount on working people's conditions. Without doubt, the tension in many areas is increasing.
The Session did not stop there. We are about to discuss another measure, the Housing Bill, which has already been recognised as yet another savage attack on virtually the same group of people who are still worried sick and reeling from previous attacks and who are confused about the effects of all the measures to which I have referred. As a consequence of this legislation, the experiences mentioned by the noble Baroness, Lady Fisher, will be felt in towns and rural areas up and down the whole country.
Like my noble friend Lord Dean, I also resented the inference at the beginning of the Minister's remarks about local authorities: that they had fallen down in some way in doing their job. Of course, I recognise, as much if not more than most, that they have not been able to do all that they would have liked to have done for many reasons. However, their contribution to the housing stock of the nation has been enormous and has been internationally recognised as such. Many clever dedicated men and women have devoted their working lives to striving to improve still further the quality as well as the quantity of public sector housing.

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In aid of that I quote the ADC, which is not noted for its support for the kind of councils which I have represented. It said:
"The Association considers that not enough credit is given to housing authorities for the improvements in housing conditions noted in … the White Paper—an increase in the number of households decently housed, ridding the country of slums and helping to ensure that nearly all housing has the basic amenities. The record of housing authorities is generally good—they should not be blamed for any general social problems that may be manifest in urban centres. These are conditions which are found in many countries".
That is a fairly mild criticism, but it is strong coming from the ADC.
I recognise, as do most people, that it has long been a major plank of this Government's overall strategy to diminish the powers of local authorities. To this end they have been discussing over a long period how the housing responsibilities of local authorities could be removed or drastically reduced. This Housing Bill is the result of those deliberations. In a speech in Bristol on 28th August last year the Housing Minister said:
"Do we really want the state to build new saleable houses which it will then sell at a discount? For what? As a way of providing subsidised houses for first-time buyers? That would be a very elaborate way of doing that, and very random in whom it helped".
He went on to say:
"The next great push after the right to buy should be to get rid of the state as a big landlord and bring housing back to the community. The councils can then concentrate on their front line housing welfare role: buying the housing services they need, or subsidising those who need help, and undertaking the wide range of regulatory enforcement, planning and other tasks which are the essence of the public sector."
I think that those sentiments have been encapsulated in this Bill.
The Bill contains 127 clauses and 15 schedules. It is thus very difficult, if not impossible, to comment on or quote at any length or in any detail the proposals contained therein. However, I should like to elaborate on some of the issues raised by the Minister in his opening remarks.
He commented on the shrinkage of the private rented sector. This is a favourite comment of all Government spokesmen. He gave the impression that the Bill would halt that decline. Nobody who understands housing or who has worked in the field of housing believes that. The private rented sector has been in decline since 1918, and there is a wealth of evidence to prove that fact. In 1918 private rented housing constituted 90 per cent. of the housing stock of this country. Today it represents 10 per cent.
There have been numerous attempts, by various Conservative governments in particular, to introduce legislation to reverse that trend. They have all failed, and so will this one. It did not work in 1957, as my noble friend Lord Dean said, and it will not work today. The reason for this failure is well put in a document I have received from Shelter. It says that the simple reason for this is that the decline in the private rented sector is due to changes in the financial infrastructure and not due to registered rents and security of tenure discouraging landlords from letting. The rent required to produce a return comparable with other investments is so high as to be far beyond the means of most potential tenants, and we all recognise that, particularly in the inner cities. In addition, the rent a landlord will require for a
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decent return will almost always be higher than what the occupier would pay as a mortgage for the same accommodation. Why pay a high rent on an insecure tenancy when you could buy the same property with complete security and pay less for it? Those are the facts. That is the situation in the inner cities, and the Bill does nothing to improve that situation.
In his opening remarks the Minister also mentioned the security of tenure of existing tenants. Most of the documents that we have received have mentioned the problems of security of tenure. One such problem was outlined again by the noble Baroness, Lady Ewart-Biggs, who spoke earlier about the succession to a tenancy. Tenants will lose an important right which they now have, and there are other conditions attached to that. Under the proposed change of landlord system, a secure tenancy becomes an assured tenancy or an assured shorthold tenancy. It is obvious that landlords, faced with this choice and with nothing to stop them, will opt as soon and as quickly as possible for assured shorthold tenancies which will give them far more control over their tenants and will make it much easier to get rid of tenants who they do not think can afford the kind of rents they would want to charge.
Under this change of landlord system, a rent fixed by a democratically elected body at the moment at a non-profit level becomes a market rent geared to provide the landlord with a return on investment. That is something which frightens the life out of everybody in inner London, market rents being what they are.
The right to buy has been mentioned. We do not know what the future of the right to buy scheme will be under the Bill; it is not mentioned; it is certainly not clear. Tenants will also lose their right to be consulted on any matters of any significance on their tenancy. They will no longer be able to participate in the tenants' exchange scheme, which has done a good job in many areas. There will be no obligation on these approved landlords to participate in the national mobility scheme. There is no mention of that in the Bill. In short, tenants will lose many of their rights established under the 1980 tenants' charter which was introduced by the present Government. This Bill will destroy the charter which this Government introduced in 1980. That is a demonstration of how far they have gone.
The Minister also mentioned the housing benefit situation. There have been many debates in this Chamber on housing benefits in other pieces of legislation. The Minister gave the impression that the proposals in this Bill would meet the costs of tenants in need. Such tenants' costs would be met by housing benefit and therefore they would not be adversely affected by market rents. That is not true. The Bill itself makes that impossible. Rent officers will have to vet the rents of applicants for housing benefit. If the local authority pays housing benefit on the actual rent charged, and not on a lower rent officer figure, its subsidy will be cut, but the rent officer's rent will in no way be binding on the landlord.
The Bill also gives the Secretary of State the power to introduce a rent stop, as is clearly defined in the Bill. A local authority would be banned from paying

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housing benefit above a centrally determined level. The rent assessment committee would be able to register rents, but many—perhaps most—private tenants will not be allowed to apply for registration. Even where they do apply, the rent level set will not necessarily be the maximum chargeable, and there is therefore no guarantee that the housing benefit will meet the market rent situation. That again stretches the proposals in the Bill beyond belief.
Finally, the Minister spoke about the question of homelessness, which is outlined in Clause 70 of the Bill. It is simply mentioned in the Bill, and I read it to see whether I had missed something. Clause 70 of the Bill clearly states:
"In paragraph (a) of section 72 of the Housing Act 1985 (which provides that, on a request by a local housing authority for assistance in the discharge of certain statutory functions relating to homelessness, or threatened homelessness, a body of a description specified in the paragraph shall co-operate in rendering such assistance as is reasonable in the circumstances) …"
I do not know how that will help. The meaning of "reasonable in the circumstances" will never be agreed anywhere. We all know that there is no chance that this Bill will increase the stock by the amounts necessary to cater for, or cope with, the homelessness situation.
Perhaps I may remind the Minister of his own department's estimate in 1985 of houses in multiple occupation contained in a DoE report entitled, The 1985 Physical & Social Surrey of HMOs in England & Wales. That report said that at least 2½ million people live in over 350,000 houses in multiple occupation. They include people from all groups: a third of them are women; 12 per cent. are retirement pensioners; 81 per cent. of bedsit tenants are single people. There are over 10,000 homeless families in bed and breakfast hotels. People from ethnic minorities are disproportionately represented in houses in multiple occupation in many inner city areas.
The same Government report said:
"There are some exceedingly squalid conditions in HMOs, and their existence is an indictment of national and local government housing policy over many years."
Having regard to those statistics, how could this Bill even begin to cope with the situation of homelessness which exists in inner city areas and up and down the country at the moment?
Finally, the last point that I noted from his speech and which I welcomed to an extent, are the proposals to strengthen the Protection from Eviction Act 1977. However, having looked at it again, and at the Bill, and at some of my earlier notes, I do not believe that the proposals go far enough to deal with the situation in the real world, the world that most of us live in and have experienced. I hope to be able to return to that and other matters during the further proceedings on the Bill.
6.30 p.m.
Lord Monson: My Lords, although I agree with those who have criticised the voting procedure set out in Part IV of the Bill, at this time of the evening I shall concentrate entirely upon one or two aspects of Part I.
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First, I declare an interest as a landlord, albeit in a modest way. Having said that, I have more than once also been a residential tenant in my time. I am also both a business landlord and, in another location, a business tenant. Therefore, I can see both sides of the landlord-tenant question. I am well aware of the latent tensions—happily they normaly are latent—which are bound to exist to some degree between landlord and tenant. It has to be said that renting or letting out property for weeks, months or years cannot equate to renting or hiring out a car for a weekend or a fortnight.
One appreciates the Government's efforts in this Bill to be fair to both sides, but I cannot help wondering whether they have the balance quite right. I am not connected in any way with the Small Landlord's Association, but I read its literature from time to time. Over the past 10 to 15 years the association has never stopped emphasising that small landlords are not, by and large, interested in squeezing the maximum amount of rent from their properties; they are interested in having a careful and quiet tenant. If the tenant turns out unexpectedly to be a bad egg, they want to be able to replace him with the minimum degree of time, trouble and expense. In that respect their priorities are totally different from those of the large, impersonal landlords who are concerned with maximising their rents and who are not too worried about the odd bad tenant, the cost of dealing with whom can be spread over a substantial number of properties. In addition, the large landlord has access to first-class managerial and legal advice.
Small landlords—by whom I mean those having one or two houses or three or four flats to let—have perhaps inherited their properties, which therefore have sentimental associations. Often they are keeping the property for their children when they grow up and get married. Another significant point is that in many cases the house or flat concerned is adjacent to their own. Therefore, the small landlord has both sentimental and practical reasons for ensuring that, above all, he has a careful and considerate tenant, and is frequently prepared to forgo high rents in order to achieve that.
The corollary of being prepared to offer a low rent to a good tenant is the desire for an assurance that it will not be excessively difficult to get rid of a bad tenant. Unfortunately the Bill does not seem to help much in that respect. The loss of 13 weeks' rent before the landlord can be absolutely certain of repossession, under the provisions of Schedule 2, is unlikely to worry a large landlord whose gross income will be large enough easily to absorb such losses; but it might he crippling for a small landlord with only one house to let and who does not have the time or expertise to pursue an elusive former tenant through the courts.
Again, the anti-harassment clauses in Chapter 4 of Part I are certainly reasonable, even desirable, where a large landlord is concerned given the residual Rachmanism which still crops up from time to time. The noble Lord, Lord Ross, cited a notorious individual with an unpronounceable Dutch name about whom we have read so much recently. However, for the small landlord the implied assumption that he is a potential wide boy, or even a

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potential thug, can only discourage him from putting a vacant property on the market.
Let us suppose that, driven to distraction by a tenant in the next door house or flat who persists, despite frequent and repeated warnings, in playing heavily amplified music at maximum volume at three o'clock in the morning, the landlord in desperation cuts off the tenant's electricity in the small hours. Will he not find himself liable to severe penalties under the provisions of Chapter 4 for this technically illegal but all too human reaction?
I am sure that the Government's basic intentions are good. It is no accident that, as the noble Baroness, Lady Young, pointed out, most of the most prosperous countries in Europe—notably Switzerland and West Germany—have a thriving rented sector. However, the Government seem to be relying almost entirely on large landlords, aided and abetted by the recent tax concessions made within the business expansion scheme, to do the trick. If the Government's researches have convinced them that they can dispense entirely with small landlords, all well and good, but if that is not the case and assuming that they consider small landlords still have a useful role to play, I suggest that the only encouragement for small landlords is the introduction of a two-tier system. By that I mean a choice for the tenant to pay the full market rent with maximum security of tenure or a distinctly lower rent—say, two-thirds of the market rent—with a much more restricted security of tenure.
The first option would appeal most to elderly people and to young couples both of whom are earning and possibly thinking of starting a family or who already have a family. The second option would appeal to young, mobile single people—school teachers, nurses, construction workers, possibly on a short-term or temporary assignment—who would be quite happy to forgo maximum security of tenure in return for a lower rent. I urge the Government to consider the introduction of such a system when we reach the next stage of the Bill. After all, it conforms to the Thatcherite principle of maximising freedom of choice for the individual and for families.
Finally, I switch to a point made so tellingly by the noble Lord, Lord Jay—the distortions in the housing market caused by taxation. The gross disparity in the treatment by government of tenants and owners respectively cannot be defended. At the moment, every householder with a mortgage of £30,000 or more—that includes most householders—receives a substantial subsidy from his or her fellow taxpayers of approximately £16 per week. I say "subsidy" because the tax allowance is not available to any other private borrower, as distinct from business borrowers.
If the householder earns more than £22,000 to £24,000 a year depending on marital status, then the subsidy is increased to £25.50 per week at current interest rates; all this at a time when housing benefits for tenants in rented housing are being squeezed. If the mortgage relief subsidy is continued (and many of the most respected economists in this country think that it should not continue) then simple justice
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suggests that it should be extended to tenants of all rented accommodation, both public and private.
6.38 p.m.
Lord Coleraine: My Lords, I welcome Part I of the Bill as a belated attempt by the Government to breathe some life into the corpse of the private rented housing sector. It is desirable that there should be a right to rent, both for landlords and tenants. That this Bill should be before us in the 10th year of a Conservative Administration makes me wonder whether one day, perhaps by the end of the century, we shall be able to look back and say of the Bill, as once was said of the legend of St. Denys, that it is the first step which is the difficult one.
The history of the Conservative Administration and the speed with which their legislative impetus develops once they have seen the way, leads me to hope for the best. However, I shall offer a few thoughts later as to where the way ahead should lead us. On the other hand, the history of the rent Acts and the Government's failure to act earlier makes me only cautiously optimistic. Two dead hands have hung over our thinking on the right to rent since the ill-fated Rent Act 1957 introduced creeping decontrol which, had it continued and had new lettings free of control been permitted, might by now have brought about a house renting market with which we would have been satisfied.
The first dead hand is that of socialist dogma fuelled by the intervention into the housing market of Mr. Rachman and those like him. As the force of the socialist argument has receded and, as it seems to me, a closet consensus has arisen between the parties on many aspects of housing and the rent Acts, so the Treasury has more recently stepped in to impede progress, fearful that rent deregulation will blow housing benefits sky high. Now we seem to be making some progress here.
The noble Baroness Lady Ewart-Biggs and the noble Lord, Lord Monson, mentioned Mr. Rachman and doubtless his dry bones will be rattled before your Lordships on many occasions before we are finished with the Bill. In the context of this Bill, Rachmanism is a stale red herring. The provisions of the 1957 Act, which directly encouraged the abuse and harassment of tenants, are not in the Bill. It was those provisions that permitted immediate de-control subject to some transitional protection of dwellings with high rateable values. The Bill preserves and protects the rights of existing rent Act tenants. When the noble Lord, Lord Dean of Beswick, spoke he said that the effect of the 1957 Act was that when landlords got possession of houses they sold them off. The noble Baroness said that that would also be the effect of the Bill. There is nothing in either the Bill or the 1957 Act, apart from the deregulation of higher rented properties, which accounts for the predisposition of landlords to get rid of their properties when they get them back from their tenants. Landlords now sell off their houses as they did then because of the rent Acts.
What really brought Rachmanism into being was not the 1957 Act, but the relative affluence of the 1950s–1960s and the birth of a new desire for home ownership. There was the growth of the building

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society movement and the rapid development of the market for flats sold for premiums on long leases. Once it became clear that the rent Acts had killed once and for all most of what they had been enacted to preserve, there was a stampede out of renting both by landlords and tenants. Nothing short of compulsory reletting could have halted this. Immense profits were made by landlords who obtained vacant possession from their rent Act tenants and then sold.
The possibilities for speculators remain today, as we know, but the activities of those who invented the winkling game 25 years ago or more have been whittled away by legislation against harrassment and unlawful eviction. I welcome the important clauses in the Bill which increase the protection of tenants in both these cases. There are those on the Benches opposite who say that even if one were to sweep away all the panoply of rent control and security of tenure under the rent Acts, one would still not resurrect the private rented sector. I am inclined to agree with them. We have existed for far too long with government subsidies and handouts for home ownership. The economic freedom of choice which should exist between buying and renting no longer exists in any real sense.
There is a deplorable lack of fiscal neutrality in this field and I regret that my right honourable friend the Chancellor of the Exchequer seems to have finished his programme of fiscal reforms. There is also a lack of neutrality in the provision of social security benefits. Governments recognise that in the market generally the stimulation of demand is as likely to increase prices as to increase supply yet governments fail to recognise that the massaging of demand in the housing market, where supply patently cannot respond to demand as freely as it can in the manufacturing and service sectors, will even more certainly operate to stimulate prices rather than supply.
There are various factors today that are harming the house renting market. First, I mention mortgage interest relief which has been referred to already. Until about 20 years ago interest relief was available on an entirely different basis from that which applies today. Broadly, if one then received income which had borne income tax by deduction, this was treated as franking the tax on the interest which one paid so that tax did not have to he paid twice. If I remember correctly, one deducted and retained the tax on the interest one paid. That relief was restricted to house purchase interest. Later, the whole basic principle was abandoned entirely. Now, even if one were not entitled to interest under the old system, one is given a straight subsidy provided that the loan is for the purchase or the improvement of one's principal residence. There is also the only or main residence exemption for capital gains tax. Both the noble Lords, Lord Jay and Lord Monson. referred to those points.
There is also favourable treatment for home ownership in various social security provisions such as in applications for legal aid, for mandatory awards for higher education and for housing benefits for the payment of rates. All these have the effect of inflating
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capital relative to the rental values of housing and, perhaps paradoxically, driving people to buy rather than to rent.
My suspicion is that the Government tend to be blinkered in their attitude towards home ownership as against other forms of property ownership. The evidence of the Bill and of the debates in another place suggest that Government support for the house renting market is somewhat half-hearted. It is seen primarily as a way of securing the maximum utilisation of vacant property as a short-term housing measure. What is needed is a return to house renting as a respected form of tenure. I have in mind one of the principal conclusions of the inquiry into British housing to which the noble Lord, Lord Seebohm, and other noble Lords referred. In Chapter 5 of the report it states:
"Renting must therefore provide for those who cannot buy. It must also in our view provide opportunities for those who do not want to buy and those who, already owners, would prefer to rent".
In supporting the provisions of the Bill as regards the private rented housing market, I suggest that they can only be a beginning and that the way ahead must lie in honouring the words of the report which I have quoted. There must be a move towards fairer treatment of those who want to rent in terms of greater fiscal neutrality and social benefit neutrality.
6.48 p.m.
Lord Pitt of Hampstead: My Lords, in my capacity as Chairman of Shelter, I am particularly concerned with one aspect of this legislation. In my speech I intend to content myself with addressing one simple question. Will the Bill increase or decrease homelessness in this country? I regret to say that this is not an issue that the Government addressed at all in the White Paper that preceded the legislation. However, it is the issue by which the Bill should be judged. The increasing incidence of homelessness is one of our biggest immediate problems. Fine sounding phrases like giving a tenant the choice of landlord ring empty to those who can find no landlord at all.
We have a housing crisis in Britain and not a homelessness crisis. The level of homelessness is an indication of the depth of that crisis. The annual rate of homelessness, according to official statistics, is 112,730 families a year. That figure represents only the people who have been accepted as homeless by local authorities. It does not include many who are homeless but not in a priority group. It excludes the single homeless. Many families would previously have registered on council or housing association waiting lists. However, the local authority new housing programme has been cut by 80 per cent. since 1979–80. Local authorities are building 16,000 houses a year compared with 105,000 a year in the mid-1970s. If we had continued to build as we were building, we would not have the present housing crisis. Housing associations, now mentioned so favourably in ministerial speeches, have had their building programme cut by half since 1979. The housing associations could be forgiven for being somewhat bemused by this contradiction. We have therefore a housing supply problem.

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A significant percentage of people simply cannot afford to buy their own home. But this is the system of tenure being energetically pushed by the Government. Over 50 per cent. of households with a male wage-earner in London cannot afford the cheapest one-bedroom flat. In the case of households headed by women, the figure is 85 per cent. What are their choices? How will the Bill affect them?
The Government have now accepted that their original strategy to privatise all rented housing and allow a totally free market cannot work without turning the housing crisis into a housing disaster. The Government are proposing to create two rented housing sectors: private landlords and a new category of social landlords. I turn now to these specific proposals.
The Government believe that private renting has declined because of rent Act controls. That is a dogmatic belief, unsupported by the evidence. The National Housing Forum is composed of all the major bodies involved in housing, including the Association of Metropolitan Authorities, the Association of District Councils, the National Federation of Housing Associations, the Institute of Housing, Shelter and major professional bodies such as the Royal Institute of Chartered Surveyors, the Royal Institute of British Architects and others. I quote from A Future for Rented Housing published by the National Housing Forum:
"Given the financial and other attractions of owner-occupation, there is a lack of effective demand for renting private accommodation at market rents. This lack of demand, rather than rent control or security of tenure, explains the continuing decline of the private rented sector".
The real reason for the decline in private renting is two-fold. The first is straightforward. Private tenants do not wish to be private tenants. They would prefer to be tenants of local authorities or housing associations. If possible they would like to buy their own home. This is not surprising as the private rented sector includes some of the worst housing in this country and contains some particularly unsavoury landlords. I hope to show the noble Lord who has just sat down that Rachmanism is alive and well and flourishing in many areas of our cities and towns. There is plenty of evidence of this fact in the files of Shelter's housing aid centres.
Only last week, Shelter visited a privately-rented maisonette above a shop which was infested with rats. Our director, who visited the premises, is still recovering from the shock of a dog running between her legs with a rat in its mouth. This was in Manchester, the rent was £63 a week. An eight-week old baby living with its mother in those premises was protected by a net over the cot to ensure that it was not attacked in the night. This is happening in Britain in 1988.
The second reason for the decline in private rented accommodation is economic, as has been stated by my noble friend Lord Stallard. It puts paid to the Government's argument that the private rented sector can be revived by reducing rent control. Market rents will not give potential landlords an attractive enough rate of return on their investment. That is the point. The House Builders Federation explains this by saying:
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"A market rent on a terraced property in the South East worth £45,000 would have to be £86 per week to give the developer a six per cent. rate of return. A mortgage on a similar property would be £76 per week".
The landlord may accept a lower return because of the growth of the house as a capital asset, but this means that he will sell again sooner or later. It does not provide a secure financial base for renting.
In the free market proposed by the Government the landlord will rent at the highest price obtainable. In a situation of acute shortage much more money may be made from those tenants who are wholly dependent on benefit. It is even more profitable to convert large premises into so-called bed-and-breakfast hotels. Public money through housing benefit and board and lodging payments are going straight into the pockets of private landlords who arc exploiting the shortage. In the brave new world of a completely free market, the situation would get worse.
The Government's answer is to limit the amount of housing benefit that will be paid. That will simply mean that the tenants are faced with the option of topping up the rent from other sources. And the other sources are usually the money that should be spent on food and clothing. For some people, however, the sums will not add up. Many more people will become homeless as a result of defaulting on unaffordable rents adding to those who are homeless today because they cannot meet their mortgages.
Therefore the cycle of poverty, exploitation and homelessness will continue. There will he no restrictions on landlords asking for deposits or key money. As these items are not eligible for loans or grants to people on social funds, the ability of many people to obtain any kind of private rented accommodation will be restricted.
The turnover in this sector may expand to meet the needs of better-off people who want rented accommodation on a temporary basis. I agree that such people will benefit. However, to suggest that the sector will expand and reduce homelessness is misleading and dangerous nonsense. People who are unemployed or on low incomes will simply not be able to afford the new rent levels. Housing benefit will not rise to meet the new rent levels. The role of the new rent assessment tribunals will not allow this to happen. Many tenants on the new assured tenancies will have no access to any new rent setting system. Housing benefit, which provides no help at the present time for people on low incomes in work, will on deregulation of rents create a new unemployment trap for many single people on low earnings. They will simply be unable to afford new rent levels of over £50 per week and carry on working. The deregulation of the private rented sector will therefore not increase the supply of rented accommodation at a quality and a price that homeless and low income households can afford.
The proposals will in fact have the opposite effect. As rents rise, more people will be made homeless as a result of being unable to pay them. As I have already said, the housing benefit system, as currently structured, will not, as the Government have suggested, take the strain. The proposals for housing associations are equally negative. It is true that the

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Government have not, as they originally intended, pushed the housing association movement into the same jungle as private landlords. The new social landlords' charter and the recent code of practice from the housing associations state that rents should be at a level affordable for low income groups. But these statements have no legislative force and will be contradicted in practice by the new financial regime that the Government propose to impose on the housing association movement.
We have heard a great deal recently about the new sources of private finance, so it is worth reminding noble Lords that, contrary to popular belief, council houses in this country were built with private money. We have had recent restrictions—and I do not necessarily mean since this Government came into power. This was when one of our Governments were in power. But in those days, councils were able to borrow from the private financial market to build and improve property. They could borrow relatively cheaply, because they could secure the loan against their assets and taxation base. It is only the nonsense of current Treasury rules that prevents this from happening now.
It is easy to illustrate that the rules on local authority spending arc economic nonsense. If a council borrows £2,000 to install central heating in a council house and the loan is repayable through rental income, this is included in the public sector borrowing requirement. But if the person next door who has bought his house does exactly the same and borrows money and repays the loan, that is not included in the public sector borrowing requirement.
The previous Minister of Housing, Mr. John Patten, said in an interview with Shelter's housing magazine, Roof:
"That's an extremely difficult question to answer".
when asked whether there is any meaningful difference between the effects of those two forms of housing expenditure on the real economy in contrast to some abstract Treasury model.
It's a slightly different point."
he said, uncomfortably.
"Clearly it's difficult to see where the pound notes change colour between public and private."
I am quoting from John Patten's interview in Roof magazine in January 1987.
Housing associations will not be able to borrow as cheaply as councils from the private money markets, because they do not have a sufficient asset base and have no taxation base on which to secure the loan. Loans will be expensive and if index-linked may result in unacceptable repayment levels. But the associations will have to pay them to survive. They will be able to do this only through raising rents. If their future tenants cannot meet these new levels of rent, the associations will be placed in the invidious position of going bankrupt or evicting tenants who cannot pay. Economic reality will triumph over empty statements that rents should remain within the reach of low income groups. That means that housing associations will not be able to increase the supply of affordable rented accommodation for the poorest in our society.
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Those arguments apply equally to the more recent proposals to transfer local authority stock to newly-formed housing associations. Without an increase in both the total amount of housing association grant from the Housing Corporation and a higher percentage of grant for many schemes in high-cost areas, an expansion of housing in this new social sector will simply not be forthcoming. I want to draw your Lordships' attention to the fact that it is ironic that the Government's strategy for funding housing associations could only work with more—not less—central government subsidy, whereas the local authority borrowing model in many cases requires no subsidy at all to keep the rents down to reasonable levels. That is a fact.
However, the Government have made it clear that they dislike local authority housing. Indeed, they have made clear in recent years that they dislike any form of local government. The removal of housing from local authority control is merely a tenet of this faith and not, essentially, a housing issue at all.
There are some local authorities which are self-evidently bad managers of housing. However, there arc a far greater number which are better managers by any criteria than any other existing landlords. The legislation does not distinguish between them. If the Government are concerned about the standard of local authority housing management, they should try to find ways of remedying this. Instead of this, we are in the process of destroying the sector that has provided low income groups with good quality housing for decades. What we have built and paid for over the years and what has held out the prospect of a secure home for many is to be disposed of. I regard this as an act of political vandalism which is unequalled even in this Government record.
However, my central concern is how councils in future will meet their obligations to homeless people. At present some councils have fewer relets or new buildings than would be required to house homeless families, even if every single vacancy was used. This is a supply problem and not a demand problem as the Government try to suggest. Councils are losing stock and cannot replace it because the Government have placed restrictions on their spending capital receipts and on their borrowing. Hence many are forced to use bed-and-breakfast or other forms of temporary accommodation, which the Government have freely admitted costs more per annum than a new-build or a refurbished council dwelling.
We are being asked to believe that empty property is the answer. It is not. If we look at London, we find that some of the councils with the highest use of bed-and-breakfast accommodation have the least empty property that can be brought into use. Of course, by all means take every step to bring empty properties into use—we should do that in any case. But let us not pretend that this will solve the bed-and-breakfast problem. It will not.
If homeless people have a right to be housed, however limited these rights are in their present form, one crucial question remains. If homeless people cannot find accommodation in the private rented sector—and I hope I have shown you that they will not be able to—or the housing association sector, and councils are no longer to be landlords, what will

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happen? Who will meet the duty to house the homeless? I know what the Government answer is. They say that the councils can contract with new social landlords to meet the obligations. But if this sector cannot expand, it cannot meet the demand.
It does not take a genius to realise that we shall be faced with an American style problem, as described by the noble Lord, Lord Dean of Beswiek, earlier in the day, with thousands of homeless people, many of them with children, sleeping in night shelters and emergency halls. That is what happens in the States. I cannot believe that is the kind of society in which your Lordships would like to live. There are many points on which the worst effects of this legislation can be reduced. Amendments will be brought forward on these issues at Committee stage. However, I have sought in my speech to respond in general terms to my original question. Will this Bill make homelessness worse or better? (I know that I have been speaking for more than twenty minutes). I regret that my overwhelming conclusion is that it will make matters much worse.
I had intended to touch on a few other points such as the effect it would have on women, particularly single female parents and the disabled; but I believe other people will deal with that aspect.
Finally, I wish to express my fear that these proposals will exacerbate the problems of racial tension in the inner cities. Black housing organisations have been unanimous in condemnation of these proposals. I am glad that the Government have conceded that new social landlords must meet the Section 71 duties under the Race Relations Act. However, this is mere lip service, if deprived racial minorities are competing with others for the rapidly diminishing supply of rented accommodation.
The Government proposals on housing action trusts will be a testing ground for their real commitment. The proposed new housing action trusts in London and Leeds affect areas where there are high concentrations of black citizens. It is the duty of the Government to see that they are fairly treated and are not discriminated against. I hope that the fears of many black organisations are unfounded; but I am deeply concerned about that aspect of Government policy.
The housing crisis in Britain is not a national disaster. It is an inevitable outcome of government policy. The Government have ignored the evidence of the rising numbers in bed-and-breakfast accommodation and the rising numbers of homeless people on the streets visible in every city and town in Britain. This legislation offers little hope for the future. I hope that noble Lords will support the various amendments coming forward at Committee stage because it is possible to improve the Bill. However I also hope that noble Lords will support me in a plea to the Government to change their housing strategy.
7.15 p.m.
Baroness Masham of Ilton: My Lords, there is no doubt in my mind that to many people the saying, "An Englishman's home is his castle" is very true. To a disabled person this is just as true. Disabled people
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are individuals the same as anyone else, with spouses and children, or single with the pride of having worked and saved money. Yet they have been ostracised and discriminated against by not being given the right to buy their council houses.
When the Housing Bill of 1984 was amended by your Lordships, an amendment was carried which ghetto-ised disabled people into a category of second-class citizens. The late Baroness Lane-Fox and I knew that this would happen. Disabled people living in a street with other families, some of whom are elderly, living in identical accommodation, have been the only people not allowed to buy their house. That was just because they had a ramp or a few rails and a wider door added. The elderly have been allowed to buy.
I have promised many people, who have been unlucky enough to have sustained some misfortune which has left them disabled, to bring this matter up in your Lordships' House. I have had letters and telephone calls from people in many parts of the country—from Bristol, London, Harrow, Harrogate, Sheffield, Norwich, Stroud and other places. Some have taken the matter to the ombudsman. The director of the Prince of Wales Trust Advisory Committee is a disabled lady married to a disabled man who had polio. They have lived in their council house for more than 20 years, the husband having always been employed. They feel so strongly about this that they want to take their case to the European Court of Human Rights. A disabled man ends a six-page letter to me by saying:
"I am beginning to feel somewhat desperate because I cannot seem to make anyone realise the struggle that I have had to try and lead an independent life".
I hope your Lordships will be able to do something about this discrimination because it is not an easy matter. Many of these people feel that their Members of Parliament have acted like Pontius Pilate over this matter and washed their hands and left it at that. The best solution would be that if a suitable house for a disabled person were sold, the council should replace the stock. Then more houses would he built and the stock would be built up in the public and private sectors instead of there being a static situation.
There is a very serious situation. The problems of physically disabled people have been neglected in the last few years, so great are the difficulties of getting the mentally ill and handicapped integrated into the community. There is a lack of up-to-date houses suitable for physically disabled people. Maybe that is because even though councils could sell houses to disabled people, they have not. The stock has stayed static and the much-needed new houses do not seem to have been built at all.
One disabled man who has tried to buy his house which was minimally adapted has been frustrated because it has been a major operation to get any repairs done by the council. He tells me that the quality of workmanship was dismal. His wife was dismayed when for weeks they had to wait to have a slate repaired while the water dripped into a bucket. When a repair to a kitchen worktop was done, a non-matching surface was supplied, making the kitchen look a mess. There are people who would

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take pride if they owned their house and would improve the standard of that house.
Councils need some encouragement to help disabled people in all aspects; those who wish to buy so they are not discriminated against; those who need rented accommodation and those who need warden-supported accommodation. Here there should not be a right to buy as it would make the system impossible to operate.
There have been some good housing association schemes in various parts of the country. John Grooms Association for the Disabled, which is helped so much by the noble Lord, Lord Swinfen, should be congratulated on what it has done. It may be said that some accommodation for disabled people is more expensive to provide. If that is so, the price paid might have to be made to fit the bill, but people should not be refused the right the buy just because they have a disability when they are integrated in the community in a house that is surrounded by other houses which have been sold.
I hope that the Government will be able to correct this unjust ruling which has caused so much unhappiness and strife. Perhaps the number of people is small to the Government, but to the individual the discrimination seems gigantic. This Bill does not seem to help disabled people in any way; in fact, I am told that disabled people have been excluded from being able to change their landlord. If that is so, I can only say that it is piling on the agony to people who have so little choice at the best of times. I ask my noble kinsman the Minister to explain this and tell the House whether that is really the fact. I sincerely hope that it is not.
I hope that the Government will be very positive in trying to help and not hinder those disabled people who wish to live lives that are as independent as possible in an environment which is still difficult in Britain. Countries such as Canada and New Zealand are covered by legislation to make life a great deal easier in the environment should one have to use a wheelchair. On a recent invited visit to Docklands, I found it worrying to observe that no suitable housing had been built for disabled people. All sections of society should be taking their fair share of providing suitable houses. Disabled people span all sections of the community.
I wish to make one final point. Over the years I have noticed that many young people seem to have difficulty in obtaining rented accommodation within their means or that supplied through social services. I meet many young people in the course of my work at youth custody. It seems that many of the young men's girlfriends get pregnant so that they can get a house or flat. That does not seem a wise way of getting accommodation. Many of those young people do not realise the responsibility of bringing up a baby and the baby may suffer in many different ways. I ask the Minister whether there is anything in the Bill to help alleviate that situation or whether the situation is to become worse. There seems to be concern over some aspects of this Bill. I hope that the Minister will be able to give us some reassurances tonight.
7.24 p.m.
Lord Stoddart of Swindon: My Lords, I wish with all my heart that I could stand here tonight and give the Bill a welcome. Indeed, I wish I could give any Government Bill a welcome. But it seems to me that the Government's record in this respect, as in many other respects, is quite deplorable.
We have here a Housing Bill which the Government claim will assist the private rented sector. How on earth it will do that I do not know. We have heard many speakers this afternoon, but none has been able quite to work out how the private rented sector will be improved by the Bill. But I must confess that I should prefer that the Government were intent on improving the stock of houses rather than bringing in Bills which merely transfer responsibility from one sector to another. That is why the Government's record on housing is so deplorable. Everything that they have done has been designed to worsen the housing position, not only in the rented sector generally but also in the owner-occupied market as well. I shall tell the House why that is so.
The Government have taken out of the rented sector some 1 million houses. They have also, by their financial restrictions, prevented local authorities from building 500,000 houses which would have added to the stock in the rented sector. Therefore, the rented sector has lost 1,500,000 houses as a result of Government action. But what has that done? It has not only prevented people who cannot afford houses from having a decent roof over their head for rent, it has also put such pressure on the owner-occupied market, the houses for sale market, that it has forced up the price of houses and the land upon which they stand. That is why the Government's record is so deplorable.
Everything the Government have done has not really assisted housing generally. It has brought about more problems and exacerbated existing ones. Indeed, it appears to have been done because of, or in pursuit of, the Government's policy of transferring to the rich and powerful more riches and more power at the expense of those who are weak and poor. The Bill carries on that policy, and as I and other speakers have already said, it will not assist by one jot or iota the provision of housing.
Further, since the Government have been in office not only have they attacked local authorities through their powers and by the removal of finance, but they have also manipulated the market against the rent payer. Since 1980 the amount of money per annum which has gone into the public rented sector has been halved, while the amount of money which has gone into the private sector through tax relief on mortgages has doubled. Therefore, again, by their financial manipulation, the Government have taken away enormous resources from the rented sector in an attempt, presumably, to buy votes in the owner-occupied sector. In the long run that simply will not work.
I must tell the Minister that we shall one day have to grasp the nettle that was shown to us by the noble Lord, Lord Seebohm. There will have to be an equalisation between the assistance given to owner occupiers and rent payers. That must happen if we

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are to solve the problem in its entirety. The Minister and the House should understand that there is no single kind of tenure which is either good or bad.
Throughout our lives we need different forms of tenure. When we are young and starting a family, most of us cannot afford to buy a house without putting a great strain on family finances and it is proper that there should be houses available for rent. As our financial situation improves we may buy a house. As we get older, it may be right for us to sell our house and go back into the rented sector to find accommodation which suits our needs after our children have gone. To deal with the situation properly, we must have equalisation. The Government must start working on that matter. The policy may be unpopular; it may take a long time to implement. However, we should make a start.
My final point concerns the attack which the Government have been making over a long period of time on local authorities and local authority housing. In the Bill we see power being taken away from localities and given to central organisations under the control of the Government. I call that undemocratic centralism. I did not think that the Conservative Party believed in centralism, whether democratic or undemocratic. However, centralism is being augmented by the Bill. I say to the Minister that so far as local housing is concerned, local authorities have been far better providers and managers than central government ever have been or could be. Virtually everything that is bad in local authority rented housing has been imposed on local authorities by central government.
When I was the chairman of the housing committee in Reading and leader of the council, I was forced by central government to build 30 per cent. of our housing stock in high-rise fiats or industrial buildings. Those are now being razed to the ground at the behest of central government. Had we not built in that way, we would not have had an allocation for building housing. When I was in the position to do so, I ensured that we had a properly balanced housing policy in Reading. We built for rent; we built for sale; and when it was right to do so, we sold council houses. We also assisted housing associations and helped to form the James Butcher Housing Association, which is known nationally. We were able to do that because we knew the needs of our locality.
Local authorities will not be able to proceed in that way under the Bill. However, they will still have responsibilities to fulfil housing needs in their areas. Frankly, that is not on. The Government are making a serious mistake in believing that there is a substitute for proper local authority provision of houses and proper and decent management of housing resources by local councils. It is they who know the problems and it is they who know what measures and what building will solve those problems.
I implore the House to examine the Bill very carefully. I believe that some improvements can be made to it. Perhaps things which are said in this House will make the Government think again. However, I fear that in the last analysis the Bill will merely add to the housing crisis which exists in this
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country and which has been building up over the past eight or nine years. That could have been avoided if properly tried and tested housing proposals and provision had been made. I oppose the Bill root and branch. It is with regret that I sit down, knowing that I cannot go into the Division Lobby against it.
7.35 p.m.
Baroness Faithfull: My Lords, in his clear presentation of the Bill to the House, the Minister said that he would listen to what was said by your Lordships and that he would be prepared to consider any recommendations which were made. During our consideration of the Local Government Finance Bill, the Minister listened and made many concessions.
I am the 23rd speaker in this debate. Many points have been made by other speakers. I therefore propose to ask only three questions which to some extent will encapsulate the various points made by noble Lords. My first question concerns the right of council tenants to transfer to other landlords if they choose to do so. I ask the Minister what the mechanics, procedures and practicalities of the relevant clause will be. The noble Baroness, Lady Fisher, made a number of points relating to the clause.
I have received letters from council tenants all over the country. They wish to know what advantages they will gain by transferring to another landlord. Will the various people who are canvassing tenants for transfer make clear in writing what they have to offer, how they will collect rents, how they will handle alterations and redecorations and how they will deal with repairs? Tenants have asked me what basis they should use in judging whether they should stay with their present landlord or transfer to another landlord. Tenants wish to know whether they may transfer back to the old landlord if they are unhappy with the new one. It is only fair to see that tenants are clear about what they will be voting for. The noble Baroness, Lady Fisher, has already made those points.
Secondly, I wish to ask the Minister several questions about bed-and-breakfast accommodation. The provision of bed-and-breakfast accommodation will have to continue for some time, no matter what policy may be adopted by this or any other government. However, we hope that such provision will not be permanent. Perhaps I may make the point that this issue is non-political. In 1972 I called a meeting in Oxford which was attended by civil servants from the Department of the Environment, by politicians and by representatives of local government. I pleaded with them to initiate a policy which would prevent the use of bed-and-breakfast accommodation. That was in 1972; we are now in 1988.
Whatever policies we adopt, bed-and-breakfast accommodation must continue in use. Therefore, I must tell the House that such accommodation is a divisive and socially damaging way of caring for people. It damages children, parents and marriages. Health visitors find it difficult to offer advice to families who are accommodated in that way. The provision of education to children in such

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accommodation is made more difficult. Bed-and-breakfast accommodation has been a blot on our social policies since 1970.
Secondly, bed-and-breakfast accommodation is frightfully expensive. It is astonishing how expensive it is. It costs roughly—and these are very rough figures—between £200 and £250 a week to keep a family in one room in bed-and-breakfast accommodation. I let a flat in my house in Oxford. It has two double bedrooms, a study, two lavatories, a bathroom, a sitting room and a kitchen; and I charge just over £100 a week. Compare that flat with one room at the top of a building, sharing a bedroom and a bathroom. What is wrong with society that that can happen?
It is very expensive: in 1986 we spent £63 million on bed-and-breakfast accommodation, and in 1987 it was £100 million. That is throwing money away. It is a problem which I believe all parties have to tackle on a non-political basis.
These are really dreadful places. In London I think that the area which has most bed-and-breakfast accommodation is Bayswater. A number of voluntary workers have gathered together under the chairmanship of Dr. Stone—whose father the late Lord Stone was in your Lordships' House—and have attempted to alleviate the conditions. The environmental health officer has to visit the buildings, but what has the environmental health officer done? Environmentally it cannot be right to cook in the basement, to carry your food five flights up and to have to carry your dirty dishes back to the basement to clean them. A number of the locks on the doors are broken. The condition of the houses is poor. I also understand that fire officers visit; yet when I visited one or two of those places the fire hazards seemed to me appalling.
Perhaps I may ask my noble friend the Minister whether it is not possible to fix the rent of bed-and-breakfast accommodation. Alternatively, is it not possible to desire that the environmental health officer lays down rules as to how those places should be run? What is quite certain is that they cannot go on as they are at the moment.
I have spoken to a number of residents in bed-and-breakfast accommodation. They have pointed out to me how impossible it is for them to leave. First-time house buyers can buy a house for approximately £61,000. They can possibly get a mortgage on £11,500; but the gross weekly income they would need to earn in order to buy themselves a house would be £397 a week. A bus driver earns £136 a week, a shop assistant £69 a week, and supplementary benefit is £60 a week. Therefore there is absolutely no possibility of them being able to buy a house. If they are on the council housing list they may have to wait something like four years. So I ask my noble friend the Minister whether through this Bill we cannot improve the whole situation with regard to bed-and-breakfast accommodation with the ultimate aim of phasing it out altogether.
My third point concerns single women. I am bound to feel an interest in this subject. This week I have talked to nurses. I spoke to one in particular who
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passed her exams with distinction: in fact, she passed first out of the university and the hospital where she took her course. She is coming to London to take a special course. She has not been able to choose which hospital she will go to to take her course because she must first find out where she will be living. She must find out where she can live so that she does not have to walk home from the hospital late at night. She has not been able to go to the hospital of her choice to take the subject that she wants. Secretaries, teachers, nurses and other single woman are in the same position.
That brings me to the whole question of private accommodation and the present deregulated private rental sector. The cost of everything has gone up—a pair of shoes, milk, everything. I would ask my noble friend the Minister how the cost of rented accommodation can come down when it is so expensive to run rented accommodation. I have just had our house painted and I know what the cost is, although I did not do it myself because I am no good at painting. How will costs in the open market come down so that single women and families with small children will be able to find rented accommodation which they can afford?
Having said that, it may appear that I have complained about the Bill. I believe that there is a great deal of good in this Bill. Like the noble Lord, Lord Goodman, and others, I believe that this is a good Bill but I also believe that it needs a number of amendments.
7.46 p.m.
Lord Graham of Edmonton: My Lords, the Minister—who I know is a compassionate man—must have been deeply unhappy to hear most of what his noble friend Lady Faithfull said about the realities of housing, not only in London but in general.
As the noble Lord, Lord Pitt, said earlier, we have a housing crisis not a homelessness crisis. Much of the increased homelessness that we have seen in recent years has been the result of the reduction in the rented housing capacity of local authorities and housing associations. It is my fear that in the social rented sector private investment will only go where returns are the greatest, thus leaving great regions of the country starved of new rented housing. The private landlord will only meet a fringe demand. Adequate returns on investment in most areas will mean rents higher than the equivalent cost of buying. People who cannot afford to buy cannot afford such housing.
In my view other proposals in the Bill will lead to a worsening of the social indicators of the link between ill health and bad housing. The wedge between the two-thirds of our society who are well off and the one-third who are not well off will be driven in even harder. Poorer communities will be displaced by those with financial power. Housing options will be increasingly closed. The Government's proposals do not add up to a housing policy; they reflect a housing policy vacuum.
In my view, and I believe in the view of' most Members of this House, people have a right to expect

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that housing policy should meet certain key criteria. Those criteria should include the following: genuinely affordable homes with as little need for assistance with housing cost as possible; adequate security of tenure; good quality accommodation, properly maintained; and letting based on need and not on wealth.
I believe that the Bill as a whole will undermine the capacity of both local authorities and housing associations to do that which is most crucial—to plan and supply adequate levels of provision for low income households. I declare an interest as a committee member of the Co-operative Development Society, which is a housing cooperative society. I listened with great attention to the man who is known as "Mr. Housing Corporation", the noble Lord. Lord Goodman, who earlier this evening warned us of the damage and dangers that were lurking within the Bill not only for the Housing Corporation but also for housing associations.
The driving force behind the policies in this Bill is not the tenants' choice or "pick a landlord" because that does not include the option for a tenant in another tenure to choose a local authority or housing association as his landlord. The question of whether local authorities are good or bad landlords is incidental. I support the remarks of my noble friends, whose experience as councillors and managers of local authority housing—and as such they are the people who meet those who are in real housing need—is that the vast majority of local councils of all political persuasions have been good landlords, continue to be good landlords and want to provide good housing for people in need.
In my view the Government simply do not want local authorities to be landlords. They want to decrease public subsidy and borrowing, reduce local authority responsibility for housing and transfer the burden of housing provision to the private sector. Much has been made of the "social landlords' charter", but it does not apply to the private rented sector where the worst landlords are to be found. I do not wish to be alarmist, but the Minister could not begin to compare the worst landlords in the public sector and the worst landlords in the housing association sector with the worst landlords in the private sector. As other noble Lords have said, it is the evil of Rachmanism which stalks the land and many tenants, both private and public, are fearful about what this Bill will do to them.
A great deal has been made by the Minister and his friends of the idea that tenants should not be too worried about the gap that might arise should rents increase, and they have emphasised the net that the Government have provided in order to ensure that assistance is given. Of the 6·5 million rented households in England and Wales, 4·9 million receive housing benefit—50 per cent. of private tenants, 60 per cent. of council tenants and 75 per cent. of housing association tenants. Only 89 per cent. of private tenants who are thought to be eligible for full benefit, and a staggeringly low 53 per cent. of those who are thought to be eligible for partial benefit, are in fact claiming it. I venture to suggest that when this
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Bill becomes an Act those percentages will increase considerably. More and more people will be forced to claim benefit.
What have the Government done in respect of housing benefit? Since 1983 housing benefit has been cut not once, not twice, not three times, but eight times. That is a measure of the Government's concern to ensure that people are adequately housed. The latest cut, which took place on 4th April this year, was £640 million.
The worst examples of neglect by landlords are found in the private sector. There is no automatic link between high rents and good conditions. If there were, bed-and-breakfast accommodation would certainly be among the best and highest in the land.
I should like to spend a little time on the peculiar and desperate problems of London. I have been a London MP and president of the Association of London Authorities. I listened very carefully and sympathetically to what the noble Baroness, Lady Gardner of Parkes, had to say about the plight of people in desperate housing need and in particular the homeless. The Government have said very little in this Bill about the homeless. In his opening speech the Minister made some noises about it; but there is very little in the Bill which tackles the problem of homelessness. Over one-in-three of all households accepted as homeless by local authorities in England and Wales are in London. Seventeen out of every 1,000 households in inner London are accepted as homeless by a local authority. The national figure is only six out of every 1,000. Homelessness is not just an inner London issue; the fastest increase is in the outer London boroughs. The problem has been getting worse and will continue until the Government does something about it.
What have the Government done to increase the nation's housing stock and the number of new-build houses? The answer must be very little indeed. In 1975 of the 28,000 houses that were built in London, 20,000 (70 per cent.) were constructed in the public sector; yet in 1986 of the 10,000 houses that were built, only 1,200 were in the local authority sector.
The noble Lord knows that the provision of rented accommodation has certainly depended very heavily upon the public sector, yet he and his colleagues have presided over such a disgraceful situation. In addition to those single homeless who are registered there are a great many who are not registered. It has been estimated that in central London last year more than 2,000 homeless people were sleeping rough, more than 30,000 were squatting, 30,000 were in short-life accommodation and about 10,000 were in direct access hostels and night shelters.
I should like to conclude by saying a few words to augment the very wise remarks made by the noble Baroness, Lady Faithfull, about the plight of people in bed-and-breakfast accommodation and in particular in that part of London which is called Bayswater. Members of this House who have done their political duty in the past few days will have visited the Kensington by-election. I certainly did, and I am sure that so did many others of your Lordships at one time or another. That is the heartland of the biggest concentration of families in

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bed-and-breakfast accommodation. In 1982 there were only 200 families. In 1986 that number had increased to 1,500. Now 25 of the London authorities are sending more than 2,000 families into bed and breakfast accommodation there.
The noble Baroness quoted a figure of between £200 and £250 per week. Last week I was told of families that were accommodated in one room for which a charge in excess of £500 a week is met by the public purse. I endorse everything that has been said by the noble Baroness, Lady Faithfull; it is a scandal and disgrace. What kind of a life can it be for the children of those families? When the Minister looks at what needs to be done, he must immediately consider how that dreadful problem can be solved.
In my view this Housing Bill will mean higher rents, less protection for tenants, more homelessness, longer waiting lists, less council housing, fragmentation of council estates (which will lead to increased management costs), less help for the housing associations and no help for local authorities in tackling the problems which face them. Worse than that, the Bill will do nothing to deal with the housing crisis which currently faces the nation. In this Bill there are no plans to build a single extra home nor to provide money to spend on improving old or defective housing. Indeed, it seems likely that our housing problems will he made much worse. That is why I condemn this Bill unreservedly.
7.58 p.m.
Lord McIntosh of Haringey: My Lords, ever since I became interested in public affairs there have been people in positions of authority who have thought that the housing crisis—the housing problem—was capable of resolution in their lifetime and by simple means. When I was young it used to be by bricks and mortar. Harold Macmillan did a magnificent job in increasing the amount of house building. During the Labour Government of 1964 I remember being bullied mercilessly by the man who is now the noble Lord, Lord Mellish, who spoke in his capacity as Minister for Housing and Local Government not of bricks and mortar but rather of concrete and steel. However, the emphasis was on the idea that you had to build more in order to solve the housing crisis. The noble Lord, Lord Goodman, reminded us that even though that is not enough, it is certainly an essential element in any effective housing policy.
However there were also people, including I am sorry to say my hero Anthony Crosland, who had the illusion that one would reach a state in which the housing crisis would be solved and in particular when there would be a crude surplus of dwellings over households. I do not believe that any of us think that nowadays. We recognise that housing is one of those areas where people's aspirations and will to spend money on better housing for themselves and their families will continue to increase at a rate which means that for my lifetime, and I am sure for that of my children, we shall be in a period of what is seen as a housing crisis. What we have to appreciate is that it is a housing crisis of the affluent and a crisis of choices for those who have a reasonable range of
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choices before them and not the crisis that we now have: a crisis of desperation, poverty and homelessness. It will not come to an end. I yield to nobody in my belief in the inevitable advance of Socialism. I recognise that the market mechanism will continue to work in housing for as far ahead as we can see. It is a necessary part of housing policy. I hope to show that it is not sufficient; I hope to show in what way the moves of this Bill towards a market mechanism in housing are not only insufficient but dangerous.
Let us consider the problem with which the Government and all of us find ourselves faced. Let us divide it into the different sectors of housing because that is the way it presents itself. First, on public housing, as my noble friend Lady Fisher said, the important issue is that we should not turn from a public housing policy to a welfare housing policy, and to a housing policy in which being a public sector tenant involves the stigma of failure. Yet we have very nearly reached that position already. If one looks at the proportion of people who are council tenants and rented tenants among tenants generally who are on housing benefit one will see that the proportions are startling and horrifying. Fifty per cent. of private rented tenants are on housing benefit to a full or partial extent. The figure is 60 per cent. of council tenants and 75 per cent. of the tenants of housing associations. We are already too close to a dependency society which we ought not to be envisaging. I give warning that I propose to show that a so-called reform of housing, which increases housing rents and reduces housing security for those most in need, will inevitably increase dependency and will go against everything in which I thought this Conservative Government believed.
Let us consider the position of local authorities. Clearly their resources and powers to do anything about housing are critical. The housing investment programme authorisations have gone down by 75 per cent. in real terms since 1979. As my noble friend Lord Graham has just said, the housing benefit has been cut eight times, most recently in April of this year. Under those circumstances the Government have the nerve to complain to local authorities as if the number of empty properties were such a crime that it disqualified them from a real role in public housing.
Let us look at owner occupiers. Owner occupiers—and this is an issue which I am sure that no political party, including mine, will face straight on—are subsidised to the extent of more than £4 billion, as my noble friend Lord Jay said earlier. That subsidy is three-fold. It consists of the abolition of Schedule A many years ago; it involves not only tax relief at the standard rate but also at the higher rate of taxation. However, it has economic effects which are not incalculable but rather obvious and very damaging to our economy. The immediate effect has been this dramatic increase in house prices. This has very considerable social effects in the short and medium term, and even greater social effects in the longer term as it stops becoming funny money.
However, beyond that, this increase in house prices is above all what is fuelling the increase in inflation and damaging our competitiveness in world markets.

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If the Government had any rationality in their economic policy, it ought to be a danger signal for them in their ability to control and maintain economic progress, or to recover economic progress, although I should not go into a general economic policy. Here is another sector. It clearly works. It is clearly popular, but at a very great economic and social cost.
The private rented sector is a peculiar sector. We are being presented with a peculiar theory of government. The theory is that we have a carrot to extend to the private rented sector by improving the return on investment for landlords. There are two issues on that. First, as has been said by a number of noble Lords, while one has subsidies for owner occupation, the return on investment for landlords must mean that the rents must be higher than mortgage repayments. Otherwise people will not find it worthwhile. But of course the other aspect is that with public sector housing, one has a portfolio which consists of older and newer houses, those which have been totally amortised, and those which are subject to very high interest payments. With that portfolio one can have a rational rent policy because one can have a policy of cross-subsidy between the older and newer properties. A private landlord cannot do that. Housing associations have found it very difficult to do that although as they mature they are finding it easier. However, the theory that by offering the carrot of a greater return on investment to private landlords one will somehow increase private rented property is an economic nonsense. It does not hang together. When it is combined with the stick which says that by increasing rents one will drive the tenants out of the private rented sector, it is quite clear that the proposals the Government are putting forward in this Bill do not touch the real heart of the problem.
We then come to what a number of noble Lords have said is the real heart of the problem. When does our housing policy not work? In other words, I refer to homelessness. Homelessness is not referred to in the Bill; or it is conspicuous by its absence. I refer to the policy of decreased security, the problem of defaulting on unaffordable rents and the increased likelihood of eviction. I remember as a councillor sitting on doorsteps to stop landlords carrying out furniture. It will happen all over again now. How can it be said that these policies of making housing more unaffordable to the poor and less secure for the poor can do anything other than increase homelessness? If there is one element on which this Government will stand condemned when this Housing Bill is looked at calmly in later years, it will be their failure to deal with homelessness.
Perhaps I may analyse the problem of housing in a very sketchy way. It does not seem that the Government have a real answer to the problems that are facing this nation in their housing policies. Let us take the Bill quickly, part by part, to see where the answers may lie.
Part I refers to private rented property. The solution here is expansion by deregulation. That was tried in 1957. We know very well what the results of that were. Noble Lords on all sides of the House have referred to that, sometimes with a sense of expiation of guilt, and sometimes with horrific memories of the
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social injustice that resulted. It did not work then and it will not work now. What we shall have is a new type of tenancy called—with Orwellian irony—assured, which means not secure. The characteristics of that tenancy will be that there will be higher rates, higher rents, more reliance on benefit, and therefore more dependency on handouts.
There will be a restricted right of succession applied only to spouses, not to caring relatives, as my noble friend Lady Ewart-Biggs pointed out, and certainly not applied to others in very great need. There will be the excuse for eviction to a suitable alternative which means that there is a possibility of tenants being shifted around from one short-stay piece of accommodation to another. Eviction can be achieved by the courts on that basis.
Inevitably I am convinced that we shall move not just to assured tenancies but to assured shorthold tenancies. What landlord in his right mind will give a tenancy on a periodic basis when, for between six months and two years, he can give a tenancy which will enable him to get the tenant out without any difficulty at the end of the shorthold term? There will be a decrease—not an increase—in mobility and exchange facilities because it is those which local authorities, for all their faults and with all the difficulties that confront them, have sought to provide for council house tenants. By any standards Part I of the Bill is not helping the problem; it is making it worse. We shall have to seek to change it.
Part II refers to housing associations. Housing associations have been in the public sector ever since they started. Many noble Lords of all political persuasions and of none have taken part honourably and loyally in the housing association movement. I cannot believe that any of them will feel that the exchange of the housing association movement from the public sector into the private sector is a move for the better. Housing association tenants will now be assured, not secure. They will not be paying a fair rent but a market rent, as assessed if necessary by the rent assessment committees. All the integration which has been an essential part of the work of housing associations with the local authorities will disappear. It is interesting that the only appearance in the Bill of the tenant's guarantee, which features so heavily in the Government's publicity for the Bill, occurs for housing associations. One is bound to ask why it does not apply to other forms of social landlord and indeed to other kinds of landlordism. The financing of housing associations is transferred from the accountable elected authorities to the unaccountable unelected Housing Corporation.
I have no brief against the Housing Corporation: it does an admirable job. I am not against a comparable organisation being set up for Wales. I am sure that the separation will lead to decentralisation and a sense of independence in the Principality which is very worthwhile. But the fact remains that the Housing Corporation is a nominated body having great and undefined powers over housing associations which, in the Government's own estimation, are an essential part of the development of a housing policy. So Part II does not work.
Part III concerns the housing action trusts. I see from this afternoon's statement that the score is

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Waldegrave 1, Ridley nil. In other words, the idea of the Secretary of State that huge chunks of inner city housing would be handed over to the housing action trusts has, on mature reflection, been realised to be unreasonable and possibly fraught with financial difficulty. Thus, what we have is a highly selective list of areas and housing estates named by the Minister this afternoon. We shall have to see how far the department and the Government are able to extend this principle.
The principle of the housing action trusts is deeply unacceptable to us. The trusts are nominated; they are not elected like local authorities. There is no tenants' right to choose. Tenants' choice is an important part of the propaganda for the Bill. But it does not occur for housing action trusts. There are to he no nomination rights, for example, for the homeless as apply in local authority housing. There is no right of return to the local authority at the end of the period of the housing action trust—I see the Minister reaching for his pencil; I too have read the Bill—unless the local authority can afford to repurchase at the new price the property which the housing action trust will then release. That seems to me on the whole to be rather unlikely. I suspect that what we have here is not a policy but a policy gesture of a particularly damaging and undemocratic kind. I do not believe that Part III of the Bill helps.
Part IV is probably the most deeply objectionable, in a simple way, of any. What is proposed is that those local authority tenants who have had security—they may have had bad repairs, bad maintenance, bad design but have had local authorities to complain to and councillors to kick when those things have gone wrong—will lose all the rights they have had of succession, of repairs, of exchange and mobility, of fair rents and of all the functions integral to public housing. They will lose them all. When there is a transfer under Part IV all tenancies will be on the assured basis rather than on the secured basis.
A number of noble Lords have referred to the ballot. But it is the idea that we should have a ballot organised by one side, by the applicant, when there is no requirement for the applicant who is conducting the ballot to give information of the kind that noble Lords have asked for about what will be the status of the tenancy when the transfer has taken place. It is a ballot which the National Consumer Council calls inertia selling. It relies on a positive 50 per cent. negative vote to stop a transfer of an estate and permits those who are old, in hospital, away, or who have not received a ballot paper, to be counted as being in favour of the transfer when they have not expressed an opinion or even been able to express an opinion. Part IV is not a solution to our housing problems.
Part V contains a number of issues. The most important is housing benefit. This is a national scheme administered locally. It has been under attack, as my noble friend Lord Graham said, but it is on a comparable basis nationally and it is understood and clear what the qualifications for housing benefit are. However, in the Bill there are threats even to the housing benefit scheme. Clause
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117 allows the possibility of a rent stop. This means that a local authority shall not be able to pay housing benefit on rents above a certain level to be determined by the Secretary of State. Even if there is not to be a rent stop, there is threat of a subsidy loss to local authorities when rents are in excess of what is determined a proper rent by rent assessment committees. Everybody who knows about the way in which rents will be determined realises that this will happen on many occasions. There will also be many occasions when local authorities, for the best of humanitarian reasons, will have to subsidise people and pay housing benefit above the level of market rent so that old and disabled people are not thrown on to the street.
The housing benefit system is by no means secure from the Bill. We are at risk as everywhere else of having a real worsening of housing conditions rather than making them better. The right reverend Prelate the Bishop of Southwark clearly stated what our objectives on housing policy should be. He said that there should be enough good low rent accommodation to meet present and likely future need. I could not have invented a better definition than that, although I should add to it that some flexibility in tenure and movement and some say in management of one's own estate, some assurance of maintenance standards and some security of tenure are all critical parts of housing policy. I do not believe that the right reverend Prelate would disagree with that.
In summary the Bill is worse than shifting the deck chairs around the deck of the Titanic. It is actually helping the Titantic to sink. We are moving backwards in all the five parts of the Bill. In all five parts we on these Benches, with as much cooperation as possible from other poeple who are interested in housing and who understand housing, will seek to make major amendments to the Bill.
8.19 p.m.
The Earl of Caithness: My Lords, we have had a valuable debate and I should like to thank those of your Lordships who have spoken. I am grateful for the support I have received from around the House and I am grateful for the support I have received. But there have been a number of queries. I am saddened by what some of your Lordships have said in agreeing that we face a problem but do not seem to think that the private sector has any part to play in trying to solve that problem. I believe that some of that is due to political dogma. On the other hand I believe that some is due to misunderstandings of the Bill which I hope will be sorted out at Committee stage.
Before responding to your Lordships points, I should just like to make two general comments. First, we still intend to ensure that as many people as possible can own their own home. Our success has, of course, been dramatic. There are nearly 3 million more owner-occupied homes than in 1979, and approaching a quarter of a million more first time buyers in 1987 than in 1979. This process of spreading wealth throughout the community and encouraging individuals to take responsibility for key financial decisions will continue.

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While promoting such a major extension of freedom and choice it would be wrong, on moral as well as economic grounds, if we did not do something similar for those who need or want to rent. I know that the noble Lord, Lord Goodman, will support me in saying that. This Bill will help break down the monolithic local authority estates, and by increasing choice and stimulating competition we shall see a greater variety of rented property.
Secondly, and contrary to what the noble Baroness, Lady Fisher, and the noble Lords, Lord Pitt and Lord McIntosh, appear to indicate, I must emphasise again that homelessness is at the forefront of our minds. We have increased the housing capital programme to over £3·8 billion this year. Extra resources have been made available through the Government's Estate Action Programme to bring empty local authority dwellings into use to help the homeless. And I repeat that over the past seven months we have allocated additional resources totalling over £74 million to tackle homelessness.
We are now going further to tackle the question of bringing empty properties back into use. For far too long current and potential private landlords have been deterred by fears of existing rent controls and what the party opposite might do if it was returned to power. What a tenancy market needs is consistency of approach and an incentive to let. To date private sector landlords have had a legitimate excuse. Local authorities have not. The number of local authority properties empty for more than a year is nearly three times the number of families in bed-and-breakfast. I agree with my noble friend Lady Faithfull that this is an area of concern. We are therefore looking closely at what can be done to get local authority empty property back into use and thus reduce the massive social and financial burden of bed-and-breakfast accommodation. My right honourable friend the Secretary of State, has announced that we shall shortly be asking authorities to make a return giving details of their empty properties.
I know that the Government are not immune from ciriticism for having empty properties.
Noble Lords: Hear, hear!
The Earl of Caithness: My Lords, departments are fully aware of the need to bring empty dwellings back into use or, where they are no longer needed, to sell them as quickly as possible. Operational requirements are reviewed regularly and targets set to reduce the vacant stock. Where departments have no immediate operational need for empty dwellings, but disposal is not practicable, they are encouraged to let them temporarily to local authorities or housing associations so that they too may be used for the homeless.
Lord Graham of Edmonton: My Lords, it is a failure.
The Earl of Caithness: My Lords, does the noble Lord wish to speak?
Lord Graham of Edmonton: My Lords, if the noble Earl is telling the House what he intends to do but the
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reality is that it is not being done, I say that that is a failure in policy.
The Earl of Caithness: My Lords, I am glad that the noble Lord rose to his feet to say that. Many of your Lordships have concentrated on the cities and rightly so. I am grateful to the noble Lord, Lord Henniker, for what he said about rural housing. The noble Lord was right to say that there is no reason why those in rural areas should not have the right to buy. I was grateful to him for the welcome that he gave to the announcement made by my right honourable friend the Secretary of State on 5th July. We are looking to increase the supply of rural housing by expanding the role of housing associations and encouraging private investment. The housing corporations are doubling their programme in rural areas with a target figure of 600 approvals by 1991. We are also looking for more private investment in low-cost housing in villages. The deregulation of rents, combined with benefits and subsidies now available, should provide a major stimulus.
Many noble Lords opposite have said that we must have more houses. But, sadly, no one has said where. I believe that all noble Lords who have spoken are, like the Government, supporters of the Green Belt. At Question Time today the noble Lord the Leader of the Opposition specifically asked for a commitment that no more agricultural land should he taken for any kind of development. Presumably that included housing. Yes, we all agree that there is a problem and that we must use existing accommodation to the full. I contend that without the measures in the Bill to stimulate the provision of private sector rented accommodation the position will become only worse. In contrast to the position of noble Lords opposite we want the private rented sector to play an important role in increasing consumer choice and contributing to job mobility, just as it does in other prosperous European countries. Our proposals will open the way to a revival of private renting.
A good deal has been said during the passage of the Bill about harassment. Much of this comment overlooks two very important points. First, landlords who break the law are a minority, not the majority as some would have us believe. Secondly, the worst landlords make their profits as a result of the Rent Act because, just like Mr. Rachman in the 1950s, they buy houses with tenants at prices which are severely depressed by rent control with the aim of driving out the tenants and selling with vacant possession. This process has been going on for years; it is caused by the Rent Act; and the Bill will self-evidently reduce the opportunities for this sort of behaviour rather than increase them. I am sure that that will be welcomed by the right reverend Prelate, who spoke with feeling on the matter as did the noble Baroness, Lady EwartBiggs.
I am not saying that the Bill will put an end to bad landlord behaviour. Of course, it will not. There will always be some unprincipled landlords. But we believe that our proposals on harassment and repairs, and on houses in multiple occupation, will go far to discourage had behaviour and to provide the tenant with a remedy when it does occur.

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The noble Lords, Lord McIntosh of Haringey and Lord Dean of Beswick, said that we had not learnt lessons from the 1957 Rent Act. Of course it can be seen in retrospect that the Rent Act of 1957 did not achieve the objects of the government of the time. I believe that the Opposition now tend to blame the 1957 Act for the decline in the rented sector, whereas the truth is that it probably had little effect one way or the other. However, there are lessons to be learned from the 1957 Act and we have learned them.
First, the Bill, unlike the 1957 Act, does not deregulate existing lettings. The rights of existing tenants will be protected. Secondly, we are offering future tenants reasonable statutory security of tenure where in 1957 security was left entirely as a matter of contract. Thirdly, in 1957 there was no legislation on illegal eviction or harassment. Now we have the Protection from Eviction Act 1977 which we are strengthening. Finally, there is one other big difference between 1957 and today; namely in the 1950s there was no housing benefit system to help the poor tenants to pay their rents.
Housing associations will, of course, still mainly be responsible for providing lower-income groups and people with special needs with housing. Indeed, we want them to expand that role in which they are well experienced; more experienced than local authorities. Deregulation will, therefore, not result in associations raising their rents as high as the market will bear. Housing associations are non-profit making bodies and will continue to receive grant towards their development. Between 1987—does the noble Lord wish to speak?
Lord Stoddart of Swindon: My Lords, no, I apologise to the noble Earl. We were discussing something that he had said.
The Earl of Caithness: My Lords, between 1987–1988 and 1991 there will be a 20 per cent. increase in the provision for the Housing Corporation's approved development programme, taking it to £850 million.
We propose a system under which grant rates will vary according to location and scheme type so that the differing development costs are taken into account. In this year's pilot mixed-funding programme national average grant rates were about 60 per cent. With grant rates at these levels, the Government are confident that housing associations will be able to bring forward schemes, including schemes for the homeless.
We accept, however, that some smaller or special needs housing associations may not, at least initially, be able to obtain private finance. For these worthwhile schemes 100 per cent. public funding will continue to be available.
The reforms of the housing benefit system, which some of your Lordships mentioned, including the noble Lord, Lord Ross of Newport, and the right reverend Prelate, which took place in April, removed a large number of anomalies. They have helped to ensure that benefit is directed towards those who need it most and in particular they protect the most
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disadvantaged people by ensuring that their rent is met in full. Our proposals for the treatment of rent for benefit purposes after deregulation should mean that the rents charged by individual housing associations are met in full. The cut-off point for eligibility purposes will be market levels, and associations will be in receipt of grants aimed at maintaining rents below such levels wherever they would be beyond the range of lower income groups.
I am aware of concern that tenants at particular income levels may be hard hit by rent increases. The interaction between rent levels and housing benefit will clearly need to be taken into account in the Housing Corporation's administration of grants to housing associations.
The noble Lord, Lord Winterbottom, raised the important point of housing for Wales with which the noble Lord, Lord McIntosh, disagreed. We believe that it is not only appropriate but essential that, at this particular important juncture in the development of the movement, the work of the Welsh associations should be supported by a body which is wholly Welsh-based and is completely in tune with the housing needs of Wales. That idea found overwhelming support among housing interest groups in Wales when it was canvassed in the consultation paper issued at the end of last year. Therefore, I can say to the House that in our view this important measure is very timely and carries the wholehearted support of the people of Wales.
I am delighted to assure my noble friend Lord Moyne that it is common ground between my department, the Housing Corporation and the housing associations that associations should be allowed to retain such surpluses as are reasonably required to set up sinking funds which will provide for future major repairs. That is far better than making associations dependent on grants with all the bureaucracy and rationing which that entails to finance major repairs. However, I fear that he has not yet persuaded us that associations should be allowed to retain the whole of their surpluses over and above what is required to finance major repairs. They should be allowed to retain a proportion; that will help them to give the private investor his confidence which we agree is so important.
I mentioned earlier that there would be guidance from the Housing Corporation—a tenants' guarantee—which will be cleared with the Secretary of State. This will cover allocations, tenancy terms and principles for setting rents. Perhaps I may remind your Lordships of some of the relevant factors which will be included. Houses must go to those who need them most. Disadvantaged groups must receive special attention. Tenancy agreements should allow tenants to exchange homes and carry out improvements. Rents must remain within the reach of those in lower paid employment. The principles behind the tenants' guarantee will extend beyond housing associations to cover, for example, landlords who seek to take over properties from the new housing action trusts provided for in the Bill.
Lord Dean of Beswick: My Lords, I am very grateful to the Minister for giving way. The question of the designation of HATs was only sprung on us

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today. Have the Government thought through what the effects will be on some of the large local authorities which have substantial stocks of pre-war houses that are out of loan sanction and which operate pool rents? The removal of the loan obligation from some houses allows them to level a lower rent on the more modern properties. What will happen under the HATs scheme if those properties are taken over in HATs areas? Will not the rents then escalate?
The Earl of Caithness: My Lords. I know that that has been of concern to my honourable friend the Minister for Housing. Perhaps I may write to the noble Lord on that point.
I welcome the support of my noble friends Lady Young and Lady Gardner of Parkes for the proposed HATs. I am sure that both my noble friends are right that in years to come the success of the policy will lead to areas positively seeking HATs designation and the benefits which they can achieve. Anyone who has seen estates like North Peckham and Gloucester Grove in Southwark will know exactly why we have brought forward proposals to establish HATs. They will provide a window of opportunity to tenants who now live in what are often squalid and depressing circumstances.
If we decide to go ahead with HATs in the proposed areas, and the designation orders are approved by Parliament, local people will be consulted and involved in a number of ways: HATs will be statutorily required to consult tenants about their plans for the future of the area and about day-to-day management of the estates. We shall appoint to HAT boards people who know and live in the area; and we have said that we expect this to include tenant representation.
We shall be asking HATs to create tenants' advisory fora to provide a focus for channelling local peoples' views beyond representation on the HAT board and beyond other consultative arrangements. HATs will want to encourage locally-based management techniques pioneered by the Government's priority estates project and estate action programme, which will include encouraging tenant management. When HATs come to dispose of property occupied by secure tenants they will be required to consult them fully about the disposal options.
I should say to the noble Baroness, Lady Fisher of Rednal, that HATs will only be able to make such disposals to landlords approved by the Housing Corporation or back to a willing local authority. Furthermore, beyond its housing role, HATs will help to provide job opportunities and encourage the enterprise of local people. I very much hope that the six local authorities affected by today's announcement will lend their full support to the establishment of HATs in the interests of their tenants.
As regards HATs I should like to correct something said by the noble Lord, Lord Dean of Beswick. He said that £176 million was being spent on HATs. I can confirm that the figure I gave in opening the debate was £125 million which has been
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allocated to the six housing action trusts over the next three years.
The noble Lord, Lord Ross of Newport, complained that HATs were wrong because they were undemocratic. HATs will be statutorily required to consult the relevant local authority and local residents about their proposals for the area and also to consult tenants about the future management of their homes. Of course, HATs will be accountable to my right honourable friend the Secretary of State who, in turn, is accountable to Parliament.
I believe that there is some confusion about the proposed proportion of local authority stock which we believe might be taken over by those six HATS. It varies from about 4 per cent. for the London candidates to 12 per cent. elsewhere. That amounts to a relatively small proportion of local authority property in those areas. The establishment of HATs should ensure that the stock is better managed and maintained so that, for example, the many properties lying empty will be brought back into use, not least to deal with the problem of homelessness.
I disagree with the noble Lord, Lord Stallard, on the Clause 70 point which he raised concerning HATs. The key role that HATs can play in alleviating homelessness is to bring back into use stock which is currently lying empty. Beyond that we intend that the Secretary of State will make clear in his management guidance to HATs that he expects them to act positively in support of their duties under Clause 70 by, for example, entering into agreements with local authorities over nomination arrangements.
Another window of opportunity is provided by Part IV of the Bill. Probably no part of the Bill has been more misrepresented than the tenants' choice provisions. Some tenants have quite wrongly been told that they will have no choice whether to transfer or not; and that, if they do transfer, they can, at best, expect the imposition of large rent increases and, at worst, eviction. The truth could not be more different. Tenants' choice increases tenants' rights. It effectively gives tenants the right to seek a new landlord to whom they would like to transfer their homes. It will be tenants who will choose collectively, whether an application goes through; and individually, whether they want to transfer or stay. It will be tenants who will decide whether the terms on offer from an applicant are acceptable.
Tenants will also have the very substantial safeguard of knowing that, to gain approval, applicants must be prepared to commit themselves to the long-term provision of housing for rent and must meet very stringent tests of competence and suitability drawn up by the Housing Corporation.
Many of the new landlords who take part in the scheme will be housing associations. Others will be responsible private landlords. Some will be bodies which tenants will be helped to set up for themselves. Tenants must not be deterred by tales of mythical Rachmans and profiteers who would stand no chance of approval.
The noble Lord, Lord Dean of Beswick, asked which local authorities are thinking of transferring their stock to new bodies. Let me assure the noble Lord that it is not wishful thinking on the

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Government's part. The Institute of Housing has said that it has been contacted by over 100 authorities, and the department is aware of over 70.
Let us remember that in the case of voluntary transfers by councils the local authority itself will have made the choice to transfer its housing to another body when it comes to the disposals we talked of earlier. It is one thing to say that such a transfer should not happen in the face of overwhelming opposition. We agree with that. It is quite another matter to force a locally-elected authority to continue to be a landlord against its will if it has decided to opt out of direct housing provision, met the criteria laid down by the Government and convinced most of the tenants affected that there is no reason to object.
The noble Lord, Lord Ross of Newport, expressed concern that tenants of some of the councils considering large scale transfers were confused. Of course it is right that there should be safeguards for tenants, and we have provided for them. The Housing and Planning Act 1986 spells out requirements for consulting tenants. The authority must give the tenants enough information about its proposals for them to take an informed view.
To the noble Lord, Lord Stallard, and to my noble friend Baroness Faithfull, I should say that, before the ballot of tenants, the applicant will have to set out for them clearly, on a basis which binds him legally, his proposed rents under the new tenancies and the arrangements for the review of rents and also the other terms of the tenancy, including repairs. If a tenant does not accept the proposal, he or she can reject it by voting against transfer. I am sure that tenants will not vote for rents that they cannot afford, and the new landlord will only be able to charge those rents in future on the basis set out in the tenancy agreement. No tenant therefore will face unexpected large increases in rent at or after transfer. There are safeguards therefore.
Let us stress to the noble Lord, Lord Dean of Beswick, and the noble Baroness, Baroness Fisher of Rednal, that a transfer cannot happen unless tenants are fully and properly consulted and it cannot happen if a majority object. But, so long as there is that longstop, we accept the principle that a local authority may opt out of the direct provision of housing.
The Lord Bishop of Southwark: My Lords, while the Minister is dealing with the transfer by a local authority of all its housing, will he deal with the question of what will happen about the statutory duty to house the homeless? Will he come to that?
The Earl of Caithness: My Lords, I am afraid I cannot recall whether I shall come to that because I have a lot of notes that I shall not come to. However, I can assure the right reverend Prelate that if I do not come to it I shall write to him about it. It is an important point.
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Earl. Am I right in believing that
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the Bill provides that if the tenants agree and the houses are transferred to another landlord, the local authority may have to pay a sum of money in transferring those houses in the sense that they will be transferred at market value but that the amount of loan outstanding could be greater than the market value of the properties? If I am right in that, where will the additional money come from? Will it come from the housing account or from the ratepayers? If it is to come from the ratepayers, should they not have some say in the matter?
The Earl of Caithness: My Lords, that is a point that we shall be looking at in detail in Committee. As I understand it, there could be a negative value on the properties.
To my noble friend Baroness Gardner of Parkes I should say that councils will not be relieved of their statutory duty for the homeless if they no longer have any housing. But, if they have made provision through an enforceable contract to dispose of that statutory duty, then they would be relieved of it. The local authorities would have to make very adequate arrangements in order to convince us on that point.
Contrary to what some of your Lordships have said, local authorities will continue to play an important role in assessing local housing needs and in ensuring that those needs are met.
I was very interested to hear what my noble friend Lord Swinfen and my noble kinswoman Lady Masham said about the very strong desire which many disabled people have to own their own homes. I pay tribute to the way that my noble kinswoman has assiduously kept us aware of the depth of feeling there is on this subject. I have considerable sympathy with them. Why should they be denied the rights of others? I know that there are strong feelings on all sides of the House, and this is a matter which will be debated at length at a later stage.
The noble Lords, Lord Shaughnessy and Lord Seebohm, mentioned in particular the Duke of Edinburgh's inquiry into British housing. One of its recommendations was that rents in all sectors should be related to the capital value of the property. That leads us to market rents. I should like to reaffirm what the Government have said repeatedly in another place. We fully accept that, if our policy of boosting the private rented sector is to work, tenants on low incomes or who are unemployed will need help to pay market rents. We have undertaken that housing benefit will be available to enable tenants to afford market rents. There will of course need to be checks to prevent exploitation of the benefit system, and that will be the rent officer's role. However, there will be no attempt to depress the level of rents met by benefits below market levels.
To the noble Lord, Lord Seebohm, I should say that it is quite wrong to suggest that housing subsidies go preponderantly to owner-occupiers, notwithstanding the fact that the average private tenant already receives about 50 per cent. more in rent allowance than the average owner-occupier receives in mortgage interest tax relief. The noble Lord, Lord Stoddart of Swindon, wants equalisation. I do not know whether the noble Lord wants

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mortgage tax relief to go up or rent allowance to come down.
The right reverend Prelate the Bishop of Southwark asked about the number of tenants claiming benefit. About 1.1 million tenants will receive rent allowance in 1988–89. The number is likely to rise as the number of lettings at market rents increases.
I know that I have not answered all the points raised. Perhaps I might be permitted to answer the noble Baroness, Lady Ewart-Biggs. Where a tenant has a Rent Act tenancy, any new tenancy granted by the same landlord will also be a Rent Act tenancy. That was a point she raised of major concern. This applies whether the new tenancy is related to the same or different accommodation. All that is required is that the landlord and the tenant must be the same.
I promise that I shall write to those of your Lordships who raised points that I have not covered. I know that there are many. The subject of housing, as the noble Lord, Lord McIntosh of Haringey, said, is incredibly complicated and is a subject which all governments have faced. We believe that our housing policy is both caring and realistic. We are not ignoring the needs of those who cannot afford to buy or who do not wish to buy. However, the status quo is untenable. The Bill before your Lordships embodies a new strategy for the way in which rented housing will be provided in future. It will deregulate new lettings in the private sector in order to encourage new landlords into the market. It will restructure housing association finance to help them make greater use of private sector funds. It will establish housing action trusts to take over and channel resources into some of the worst areas of run-down local authority housing. It will give local authority tenants new rights to choose their preferred landlord, and it will clarify local authorities' rights to seek a new landlord. This will ensure that there is a choice of housing options available for those who want to rent their homes. I therefore ask your Lordships to agree that this Bill should now be read a second time.
On Question, Bill read a Second time and committed to a Committee of the Whole House.

Town and Country Planning (Assessment of Environmental Effects) Regulations 1988
8.49 p.m.
Lord Hesketh Lord Hesketh rose to move, That the draft regulations laid before the House on 14th June be approved [31st Report from the Joint Committee].
The noble Lord said: My Lords, I beg to move the first Motion standing in my name on the Order Paper. It may be for the convenience of the House if at the same time I speak to the other Motions standing in my name.
All these regulations implement the EC Council Directive 85/337—the Environmental Assessment or EA Directive. This directive's thoroughly commendable objective is to ensure that the
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environmental effects of a major development project are taken into consideration in a systematic way before the project is approved. The directive requires developers to assemble information about the likely environmental effects of projects including information which public authorities must make available. The decision-making body must consult bodies with relevant environmental responsibilities and also the general public, and take all the information into consideration in deciding whether to approve the project.
These provisions are similar to those of our system of development control. The effect of the directive will be to systematise the provision and consideration of environmental information a little more in the case of those development proposals to which it applies. Moreover, the types of project to which it applies go a little wider than those controlled by our planning system and include matters which we control under other systems. Hence the different sets of regulations before the House.
There has been concern about the United Kingdom's intentions on this directive. But we have never been opposed to its underlying principles. Our concern is to avoid imposing unnecessary burdens on developers and public authorities. These various regulations are designed to minimise the burdens while implementing the directive properly and improving the way in which environmental considerations are brought to hear on development decisions in those cases where it does apply.
I turn, first, to the common features of the sets of regulations. All require a developer to provide, in appropriate circumstances, an "environmental statement"; that is, a statement of the expected environmental effects of a proposed project. The information to be provided is set out in each set of regulations in terms reflecting the provisions of the directive.
All the regulations make provision for consultations. These are of three types. First, specified public bodies which have environmental information in their possession must make that information available to developers. Secondly, public bodies with environmental responsibilities may comment on the project to which an environmental statement relates. Thirdly, the public are enabled to comment on the project and its likely environmental effects. The environmental statement and the consultation responses must be taken into account in the decision-making process.
A further common element relates to the identification of the projects which are to be subject to environmental assessment. The directive requires all projects listed in its Annex I to be so subject. For those projects listed in Annex II the directive requires environmental assessment where member states consider that their characteristics so require. This provision does not give member states unfettered discretion: the directive makes clear that its purpose is to ensure that projects which are likely to have significant environmental effects shall be subject to an assessment of those effects. However, as far as Annex II projects are concerned, we do have to make a judgment in each case on whether the project is likely to have significant environmental effects.
The various regulations therefore provide procedures for deciding which individual Annex II projects require environmental assessment. It would be possible, under the terms of the directive, to specify thresholds or criteria for identifying such projects in the regulations, but they could not certainly catch all projects which are environmentally significant without also catching many which are not. We have therefore provided in the rgulations for procedures under which the decision about likely environmental significance can be taken; and we propose to back them up with guidance about what environmental effects are likely to be significant including some indicative thresholds.
I now refer briefly to the individual instruments, beginning with the town and country planning regulations. Since most of the types of project listed in Annexes I and II to the directive require planning permission, this is the most important of the instruments implementing the directive. The scope of its coverage may be gathered from Schedules 1 and 2 which respectively include all Annex I and II projects which may be the subject of a planning application.
The initial view on whether environmental assessment is required for any project will normally be taken by the local planning authority, but the developer may appeal to the Secretary of State. Local planning authorities and the Secretary of State will be able to take representations from third parties into consideration.
The regulations provide that a developer may, at any stage before submitting a planning application, ask the local planning authority for its view on whether environmental assessment is required. It will be desirable for it to know at any early stage whether environmental assessment is needed, but the procedure will not be compulsory. A developer may conclude, without consulting the local planning authority, that a project requires environmental assessment; or he may submit a planning application without an environmental statement so that the local planning authority must consider at that stage whether environmental assessment is necessary. Where it thinks it is it must notify the developer within three weeks of receiving the application and, as I have said, he may then ask the Secretary of State for his direction on the matter—which, again, must be given within three weeks if possible.
When considering whether a particular project requires environmental assessment, an authority or the Secretary of State will have to decide whether or not the project is likely to have significant environmental effects. Each case must be considered on its merits but authorities will be advised to have regard to guidance to be included in a joint DoE/Welsh Office circular. This guidance will include detailed thresholds and criteria to which I have already referred.
A draft of this circular was included in last January's consultation document. Predictably some consultees argued that the thresholds should be lower so that the environmental assessment process applies to more projects while others argued that they should be higher so that fewer developments have to go
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through the environmental assessment process. In the light of the consultation responses as a whole we are not proposing major changes in the thresholds. We will, however, keep them under review in the light of experience in implementing the regulations.
The procedure where environmental assessment is required is that the developer provides an environmental statement containing information as specified in Schedule 3. Certain bodies are required to provide information for this purpose. These are those bodies which would be statutory consultees for any related planning application together with the Nature Conservancy Council and Countryside Commission in all cases, and Her Majesty's Inspectorate of Pollution in industrial cases. These bodies will all be consulted when the local planning authority considers the statement and related planning application. Applications and environmental statements must be advertised and publicised. Finally, partly because of these consultation requirements, the regulations provide for a decision period of 16 weeks rather than the usual eight weeks for planning applications. None of these procedural requirements is far removed from what is already required for major planning applications. To an extent we are codifying what happens already with many major development proposals.
I turn now to the other regulations which I will discuss very briefly in the order in which they appear in the Order Paper. To avoid repeating myself I should say here that guidance on each of these regulations will be issued to those concerned.
The Scottish regulations implement the directive in respect of those categories of development covered by the directive which fall within the responsibilities of the Secretary of State for Scotland. The afforestation regulations will prohibit the forestry commissioners from making any grant for an afforestation project where in their opinion the project will be likely to have significant effects on the environment and may lead to adverse ecological changes by reason of such factors as its nature, size or location unless they have first taken into consideration information as to the project's environmental impact. The commissioners' opinion may be over-ruled by the responsible Minister who may direct that an environmental statement should be prepared or that environmental assessment is not required.
Where environmental assessment is required the applicant for grant must provide an environmental statement which must be publicised. The commissioners will seek representations from the public and from appropriate public authorities, before any decision is made on the application.
These provisions will in practice cover all significant new planning schemes in the private sector. While in theory an owner could plant without the benefit of grant aid, this has rarely happened in the past on any significant scale and, as a result of the recent phasing out of tax concessions for forestry and the substantial increases in the level of grant aid, it is now even less likely. Although the Forestry Commission enjoys Crown exemption, I can give an

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undertaking that it will operate similar arrangements in respect of its own afforestation proposals. Thus the procedures proposed will cover all significant afforestation.
I turn now to the salmon farming regulations. The establishment of a salmon farm in territorial waters requires a lease from the Crown Estate commissiones and the regulations require the commissioners, before granting such a lease in circumstances where the development may have significant effects on the environment, to consider an environmental statement provided by the developer and comments in it from consultees and the general public. The commissioners will issue guidance indicating the broad criteria against which they will determine whether to require the provision of an environmental statement. Although the regulations will be made by my right honourable friend the Secretary of State for Scotland, in recognition of the fact that most salmon farming development has so far taken place off the Scottish coast, they apply to England and Wales as well.
The Land Drainage (Improvement) Regulations concern proposals by drainage bodies to improve existing land drainage works, including flood defence works and defences against the sea. Unlike new works, such improvements are permitted development and so will not be covered by the planning regulations. However, I think we have to recognise that such improvements may sometimes have significant environmental effects and we concluded, following consultation, that we should make these separate regulations to provide appropriate procedures.
The highways regulations formalise and adapt existing procedures for trunk roads, under which the department concerned consults widely at all stages of a road proposal and prepares a detailed environmental analysis for consideration at any public inquiry. The regulations will amend the Highways Act and make the minor changes necessary to ensure that environmental statements comply with the directive. Statements will be published with draft line orders rather than immediately prior to inquiries. They will always be prepared for new motorways and for other new trunk roads which are over 10 kilometres in length or which are longer than one kilometre where the route passes through or within 100 metres of a sensitive area. They will also often be prepared for other schemes particularly in urban areas. Ministers will take into account the guidance on local road schemes in the forthcoming joint circular on the planning regulations.
Finally, the harbour works regulations amend the procedure for examining harbour revision and empowerment orders under the Harbours Act 1964 which give authority for carrying out specific works. Under the regulations the Minister will consider whether works proposed in a harbour order require assessment under the directive. If so, he will require the sponsor to submit an environmental statement. This will be mentioned in advertisements which give the opportunity to object to the proposals. The subsequent procedure, under which the Minister concerned may make the order if there are no outstanding objections but the proposal goes to
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special parliamentary procedure if objections remain, is essentially unchanged.
In all these regulations we are trying to strike a balance. On the one hand we need to comply with the directive in a way which will lead to a real improvement in the quality of decisions on projects which have significant effects on the environment. On the other hand, we must avoid the dangers of over-elaboration of the planning process and of adding to disputes and delays within it. These arrangements seek to guard against this danger by incorporating environmental assessment requirements into existing procedures; giving full and detailed guidance; giving developers the right of appeal to the appropriate Minister; and incorporating tight timetables for decisions.
I hope that, given these safeguards, all concerned with the planning and development process will he able to take a positive view of these regulations. As I said in opening, the objective of the directive is thoroughly commendable and I commend these regulations to the House.
Moved, That the draft regulations laid before the House on 14th June be approved. [31st Report front the Joint Committee.]—(Lord Hesketh.)
Lord McIntosh of Haringey: My Lords, I formally thank the noble Lord for introducing these regulations in this House. I say "formally" because we are far from satisfied either with some of the regulations themselves or with the brief which has been given to the noble Lord in introducing them. In at least two respects it is positively misleading. I believe that the fundamental difference between us and the Government as regards these regulations is that they seem to think of the regulations as being a burden on developers and on the authorities concerned; whereas we see them, as I believe the European Community also sees them, as possibly being benefits not only to the environment but to all of us living in it.
In order to understand the regulations we have to go back and look, first, at the EC directive of 1985. I note that the implementation date was 3rd July and that the Government have not achieved that implementation date. Then we have to look at the draft consultation document and orders which were issued earlier this year. The first point to note about the European Communities' directive and the orders relates to Annex I and the list of projects which have to be subject to an environmental assessment without any question or any certificate from the Secretary of State. It has been altered; the noble Lord did not refer to that in his speech, and he should have done.
According to the Official Journal of the European Community Item 2 includes:
"… nuclear power stations and other nuclear reactors (except research installations for the production and conversion of fissionable and fertile materials, whose maximum power does not exceed 1 kilowatt continuous thermal load)."
The Government's Annex I excludes nuclear power stations. The Government should not make that change without notifying that fact to the House. It should not be necessary for us to refer to the Official Journal in order to find out this very important fact.

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I shall expect an apology from someone responsible for this in due course.
The second matter concerns Annex II, where there may be a significant effect upon the environment. This is to be determined either by agreement between the applicant and the local authority concerned or by direction of the Secretary of State. In the consultation document the Secretary of State says that he will consider an environmental assessment to he necessary, first, when there is a major effect covering more than one local authority; secondly, when it is a smaller effect but in a sensitive location; and, thirdly, when there could be complex adverse environmental effects.
The major point we can pass over because it is clearly not to be questioned. As regards the second matter we are looking at consideration being given to a significant effect. I ask the noble Lord what is his definition of a "sensitive location"? I wish him to confirm specifically that it refers to a national park; an area of outstanding natural beauty; a site of special scientific importance; an SPA under the European Community's birds directive; wetlands covered by the RAMSAP convention; a national nature reserve; an area of archaeological importance or any green belt. In presenting these regulations to Parliament the Government should have been quite explicit as to what is meant by a sensitive location. Without it we cannot understand what is meant and we cannot accept the assurance that the Government's own provisions for sensitive locations are being adequately reflected in these regulations.
As regards the third item, namely, complex adverse environmental effects, I assume that the Government are in good faith implementing the EC directives. What worries me about all these matters is the Government's statement in their consultation document that there will be:
"possibly no more than a Few dozen projects per year".
The number of local authorities concerned and the number of sensitive locations, quite apart from the number of potential applicants, mean that the vast majority of major projects coming within Annex II of the EC directive will not be assessed by the Secretary of State as being necessarily subject to an environmental assessment. I must confess that that fills me with dread.
I turn now to the individual regulations. The town and country planning regulations, as the noble Lord said, are the most important of the regulations. He said specifically that the town and country planning regulations implement the directive. They do no such thing. They do not claim to do any such thing. The town and country planning regulations are concerned with the implementation of the directive and this is in contrast to all the other regulations which say that they are implementing the directives. Again, I must say to the House that the noble Lord's brief misled the House. I hope that appropriate action will be taken about that. It is not enough to say that they are concerned with the implementation. We are under an obligation to implement these directives and the wording used in the town and country planning regulations is simply not good enough.
I turn to the forestry regulations. The Minister
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gave an assurance that similar arrangements will be applied to the development by the Forestry Commission of the projects which come under these regulations. However, I have to say that the Minister's statement—although I have no doubt about its sincerity—is not the same thing as putting these assurances in regulations. As it stands, the regulation is totally unsatisfactory. The Forestry Commission regional advisiory committees are not impartial in this matter. Indeed they cannot be because the Forestry Commission is charged in its statutes with the duty of promoting the interests of forestry and developing afforestation, which is quite a different thing from being charged with the duty of protecting the environment. The regulations only refer to initial planting and they only refer to applications to the commissioners. There is no provision for publicity for projects whch are either deemed not to necessitate environmental assessment or which the commissioners do not themselves publicise. The regulations only apply to grant-aided projects. They exclude the Forestry Commission's own developments and they exclude any projects which do not seek grant aid. That simply does not meet with the requirements of the directive.
There is no reference in the directive to grant aid being a qualification for consideration for an environmental impact assessment. The afforestation regulations, for that reason alone, ought to be withdrawn for further consideration.
I do not have any particular difficulty with the land drain regulations. However, the highways regulation is equally unsatisfactory; it is significantly worse than the draft directive which was issued by the department earlier. In Annex II, where it deals with highway works, there is a list of types of highway development which should he considered under Article 4.2 of the directive. That was what the original draft said. Now it is only the Secretary of State who decides whether a project necessitates an environmental assessment. We are given no indication of the basis upon which the Secretary of State will make that assessment, or indeed whether there will be a significant number of highway projects which will be subject to environmental assessment. In that respect the highways regulation is quite unsatisfactory. There is also no provision to notify the Nature Conservancy Council or the Countryside Commission about any projects other than designated landscapes. That ought to be corrected.
I think that I have taken as much time as even this restricted House would wish me to take on these matters. It will be quite clear that in our view—although the convention is that we do not vote against these matters—certainly the afforestation and highways regulations ought to be withdrawn for further consideration. There ought to be further action taken to remedy the inadequacy of those regulations and the inadequacy of the way in which they were introduced.
9.15 p.m.
Lord Northfield: My Lords, I have more than a passing interest in these regulations. I was interested in what my noble friend Lord McIntosh pointed out as the inadequacy of the documents before us. My interest arises, first, because, as special adviser to the

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commission on environmental matters for many years, I worked more on the drafts concerning environmental impact assessment than on anything else. Indeed, I had to overcome as best I could the initial hostility of the Department of Industry in the United Kingdom to any form of directive.
So it was a long battle, first, to turn the Government's hostility into grudging acquiesence, and then, finally, to get the Government to accept the drafts. We went through at least 20 drafts in the working parties before they were put before the Ministers, and we went through goodness knows how many more drafts after that in order to get the text of the directive finally agreed. It was a long battle. It has taken 10 years to bring this to fruition, and that is a very long time to deal with a matter like this.
It is important to understand the significance of the directive and to say that if this had been a piece of statute law coming before the House of Commons and then going through this place there would have been quite long debates. This is another example of very significant law indeed coming in from Europe, but meriting only passing consideration here in both Houses of Parliament and, indeed, as my noble friend has said, a very inadequate response by the Government, by way of drafting to the actual directive.
I feel almost as angry as my noble friend obviously appeared. I can tell him that, nevertheless, the strength of this directive is understood abroad in the other countries of the European Community, as is its importance. Indeed this document is a standing monument to one man, Michel Carpentier, who was then the director-general of the Environmental Directorate in Brussels. It was his persistence, his skill, his good sense and indeed his dedication and enthusiasm that brought this through, despite initial British hostility, to the quite strong directive that we have today.
I must say that I am very much inclined to suggest that, if the Government's last answers are what are in this document, it will not be too long before the Government are taken to the European Court by the Commission for inadequacy of operation of the directive. Indeed, I was tempted, as the noble Lord on the opposite Front Bench knows, because I told him about it, to put down a Motion tonight to reject these orders, because they are very unsatisfactory.
Let me just make two further points before I come to the inadequacies. The importance of the directive is that it means that throughout Europe now—and I ask your Lordships to think of the impact in the Mediterranean area where great desecration of the environment has taken place—industrial siting and industrial effects will be known, will be argued about and will have to be taken into account before the industries build their installations or plant. Secondly, there will now be greater equality of competition between industries, because they will all go through similar hoops with costs and restraints more equal as a result of care for the environment.
Those are the two main aims, but there were subsidiary aims which have come out in the directive. The first was to try to make the directive able to be absorbed into present law in the member states. I
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think that we achieved that. Certainly the fact t hat we do not have any primary legislation here tonight, that we are doing this by directive, shows that we have done our best in Brussels to put this through in a form that can be absorbed, certainly into British law and I hope into the laws of the other member states as well.
Secondly, we drafted it, in particular anxiety to meet the views of the British Government, as well as other governments, in a way that stopped the fear of litigation which has given environmental impact assessment a had name in the United States. All the way through, draft after draft, we took out points where there could he litigation which would foul up the development process and, indeed, slow it down as well, on the lines of the kind of thing one sees in the United States.
Before I come to the omissions, it is worth noting that when the specialist committee of your Lordships' House, the European Affairs Committee, took evidence on this draft directive, there was at least one big utility—I cannot remember whether it was the gas industry or the electricity industry—which took a very different view from the Government. It said that its experience from planning inquiries was that a good environmental impact assessment statement prepared in advance shortened the public inquiry, let everybody clearly know what were the issues and enabled the public inquiry to go along at a much better pace and with much better results. So there are some people in this country who are more forward than the Government were at that time on this matter.
On the differences about the contents of the annex to which my noble friend referred, I am absolutely puzzled by the omission of the nuclear power stations. I am puzzled not because, apparently, they are omitted from the English regulations—I am sure that there must he some explanation for that—but because if one turns to the Scottish regulations that are before us they clearly include nuclear power stations under Annex I . How they were included in the Scottish regulations and were left out of the English ones, I do not know. There must be some explanation somewhere. Perhaps it is hidden somewhere in the text and we have not been able to find it as regards England.
When we come to Annex II the situation is very murky indeed. An example of what is missing from the British regulations but which appears in the draft directive occurs in Annex II 1(a) under "Projects for the restructuring of rural land holdings". Where is that in the British regulations? If there are big plans, for example, to break up holdings into small units or to amalgamate units and carry out vast changes in agriculture, which could well occur, they must be subject to Annex II if they are likely to have an environmental impact. The Government cannot just leave them out. All the Government are entitled to do under the directive is to exempt particular projects, not whole classes of projects. How they could leave whole classes out is completely beyond me.
Let me turn to a second example: "Projects for the use of uncultivated land or semi-natural areas for intensive agricultural purposes". That is the whole business of land reclamation and turning wild areas into cultivated areas, which should be done privately.

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It may well have the most significant effect on the environment, the natural environment in particular. Where is that in the British regulations? I cannot find it anywhere. It is just dropped, lost somewhere in the Department of the Environment.
The directive also deals with "Initial afforestation where this may lead to adverse ecological changes". It is not good enough to say that only those applying for a grant will be caught. We must cover the situation for the people acting privately who do not want a grant. They want to go ahead without government money; they may want to do significant afforestation.
I could go on. There is no excuse that I can find in these documents for excluding the most significant matters concerning agriculture, the natural environment and afforestation, all of which are in the first part of Annex II of the directive. When I add my list to that which my noble friend has made, I do not wonder that I was sorely tempted to put down a formal Motion to reject these regulations.
The noble Lord has a good deal of explaining to do—not just to this House. What will now have to happen is that the Commission must be alerted. I might say that those of us who have worked for the Commission in the past are very likely to mention it in Brussels. The Commission must be alerted to the fact that apparently the British Government are deliberately not carrying out the directive. As well as explaining to us tonight why all these things have been left out, it is very important that the noble Lord should tell us what explanation the Government are offering to Brussels. We are entitled to know what is being said on behalf of Britain to the Commission of the European Community about an apparent failure by the British Government to carry out critical parts of the directive.
I feel almost as anguished as my noble friend. I have not shown it quite as strongly as he did; he obviously felt it very strongly indeed.
Lord Rees: My Lords, I shall address my brief remarks to an environmental assessment of the afforestation regulations. My noble friend the Minister has moved the regulations with his customary lucidity and charm and I cannot say that I am moved to anger as noble Lords opposite appear to have been. I have however been a little anxious on a variety of scores.
First, as the Joint Committee on Statutory Instruments remarked, to debate these subjects in a serious vein it would have been necessary, I believe, to have had the benefit of the Forestry Commission's guidance notes. Obviously any statutory instrument is drafted in a rather hare, sparse form. As I shall attempt to develop, perhaps a little help is required for the layman or the ordinary forester who may be compelled to look at the provision critically and carefully before embarking on a project. I have no doubt that when my noble friend the Minister comes to wind up the debate, he will summarise for us the guidance notes and reassure us that they will quite
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soon be in the Library so that we can penetrate the obscurity in parts of these regulations.
Beyond that my concern, unlike that of noble Lords opposite, is with the very wide scope and the huge burden that may be placed on the embryonic forester embarking, as he may hope, on a project of initial afforestation. No doubt noble Lords will have read as carefully as I have the draft regulations under the schedule that set out what must be embodied in the statement. In the regulation to Schedule 2, paragraph C states:
"a description of the likely significant effects of the project, direct and indirect, on the environment, explained by reference to its possible impact on—human beings; flora; fauna; soil; water; air; climate; the landscape; the interaction between any of the foregoing; material assets (including the architectural and archaeological heritage); the cultural heritage".
The mind boggles at the scope of a statement that might have to be submitted as regards even quite a simple operation. The schedule goes on to mention, almost with a touch of naivety, that together with a full statement there must be:
"a summary in non-technical language of the information specified above."
The mind recoils from what the technical and fuller statement might amount to. I hope that my noble friend can give some comfort to those who may be embarked on this rather doubtful course. I studied the schedule to see who might have to receive a copy of the environmental statement, and who must be consulted. On that point the regulations state that the commissioners shall consult the Nature Conservancy Council. I understand that of course. We have indeed in this House already debated the 13th report, I believe, of the Nature Conservancy Council that dealt in a considerable measure with the impact of forestry on the environment. The regulations continue on the point of who shall be consulted:
"the Countryside Commission or the Countryside Commission for Scotland, as appropriate; and any local authority, any other public authority and any statutory body which appears to them to have an interest in the afforestation project in question."
That requirement could bring in a huge number of bodies which may have to be involved in this whole process.
I hope that when my noble friend winds up he will deal a little more fully with the matter of appeals. This is not in form a planning application; it is an application for a grant. Will the Minister elaborate on whether the vast corpus of law on planning applications will be incorporated in this matter? If so, I recoil with horror from that prospect. Any of us who have been at all involved in planning matters will know how time-consuming and expensive they can be.
There is also the question of delay. Here I come to my final and fundamental point. The Government have reaffirmed their planning targets, not only generally but those under the new farmland scheme. Many of us who are involved as I am—I have declared my interest in forestry on various occasions—are worried that these planning targets are most unlikely to be met.
I must say that I listened with a certain incredulity to noble Lords opposite who said that the regulations do not cover those who might be tempted to plant

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without grants. If one considers the economics of forestry, one can see that that is extremely unlikely to happen. I must part company with noble Lords opposite there. My concern, and it may be the concern of my noble friends too, is that if all taxation relief is withdrawn, even with the system of grants that is proposed, the Government have very little chance in the medium and long-term of achieving the targets that are set out. If these additional planning or quasi-planning burdens are to be imposed on foresters, I can see new planting in this country grinding to a halt. However, that may not be the purpose of tonight's debate. I hope that my noble friend, when he comes to wind up, will be able to give the House some reassurance about how the potentially huge scope for environmental statements will be operated in practice and that they are not to be as wide as the ambitious draftsman has set out in the schedule. Perhaps he will also give us some reassurance concerning the appeal procedures and tell us that delays will not be as significant as they are under existing planning law.
I hope that my noble friend will be able to meet those points. I would not be so brash as to suggest that the instrument should be withdrawn and reconsidered. However, we shall have to look with a very critical eye at the way in which it is implemented in practice and the practical impact that it will have on forestry in this country.
9.30 p.m.
Lord Hesketh: My Lords, I hope that I have said enough to show that we see real potential benefits in environmental assessment. We are also aware of the down-side. In particular, we recognise the risks of delay and over-elaboration. Our provisions are designed to minimise those risks. We also recognise that environmental considerations cannot in all circumstances be paramount. There are economic and social considerations to be taken into account as well. Environmental assessment does not remove the need for those factors to be balanced against one another. It does not provide a ready-made answer to the question of whether a development should be permitted. It is an input into the decision-making process.
Having said that, I hope that the response of all concerned in the implementation of the directive—industry, authorities and environmental interests—will be positive. Environmental concerns are not going to go away. A developer who promotes a major project without seriously addressing those concerns is simply asking for trouble. Environmental assessment is the opportunity for him to demonstrate to the world that he has done his environmental homework efficiently.
I believe that there can be clear benefits for industry. The study of environmental assessment in the United States, to which the noble Lord, Lord Northfield, referred, suggested that careful prior consideration and mitigation of impact has quite often led to savings in the costs of projects. Those savings have outweighed the cost of preparing the environmental statement. For example, there is evidence that the level of objection to projects is
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greater where an environmental statement is not published.
There can also be savings in time. For example, the quality of environmental assessment carried out by British Petroleum for the Wytch Farm oilfield in Dorset and the consultation which went into it was a key factor in the decision by the Secretary of State not to call the application in and not to hold a public inquiry. Even where an inquiry is necessary, an enviromental statement which assembles objective information about a project which is available to all participants can help to speed things up by clarifying areas of agreement and disagreement.
Perhaps I may attempt to answer some of the questions which have been raised. The first point which was raised by the noble Lord, Lord McIntosh, and partially cleared up by the noble Lord, Lord Northfield, referred to nuclear power stations and annexes. The noble Lord, Lord Northfield, drew to our attention the fact that those exist in Scotland. The CEGB and area board power stations and overhead electric lines are approved by my right honourable friend the Secretary of State for Energy under the electric lighting legislation, which includes all nuclear power stations. That is why those stations are excluded from the planning regulations, although normal planning applications for other power stations are possible. My right honourable friend's department is preparing new regulations to implement the directive for those kinds of projects.
The noble Lord, Lord McIntosh, referred to sensitive locations. The relationship between a project and the location proposed for it will often be a crucial consideration. For any given development proposals, the more environmentally sensitive the location, the more likely it is that environmental effects will be significant and will warrant assessment. Consideration should be given to the need for environmental assessement where a scheduled new project is likely to have a significant effect on the special character of a protected area or site such as a national park, an area of outstanding natural beauty, a site of special scientific interest, a national nature reserve or an area of monument or major archaeological importance. Any views expressed by the Nature Conservancy Council, the Countryside Commission or the Historic Buildings and Monuments Commission should be taken into account.
The noble Lord, Lord McIntosh, was not entirely happy that only grant-aided schemes should be covered in respect of forestry. The system of grant aid implemented by the Forestry Commission under Section 1 of the Forestry Act 1979 operates de facto as a control system. While it is theoretically possible, the history of the existing scheme supports the view that planting other than on a very small scale will not proceed without an application for grant aid. Moreover, as I mentioned earlier, the changes in the tax treatment of forestry contained in the current Finance Bill, coupled with the recent substantial increases in the level of grant aid introduced through the new woodland grant scheme, have further strengthened the controls operating through the grant system. It is therefore now even less likely that

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planting would proceed without an application for grant aid.
The noble Lord, Lord McIntosh, also referred to the application of regulations to the Forestry Commission. I can draw his attention once more to what I said earlier: the Forestry Commission is a government department subject to ministerial direction. I can assure your Lordships' House that it will implement the environmental assessment directive in relation to its own planting in exactly the same way as it will for private sector cases falling under the regulations.
The noble Lord, Lord McIntosh, drew our attention to the changes over consultation with the Secretary of State with regard to highways. We believe that that is no change of substance. The highways order has been brought into line with the planning regulations. It does not include formal criteria. Instead guidance will be given in a circular. Similarly, the Department of Transport will use the 10 kilometre or 1 kilometre criteria near a sensitive area as guidelines. We shall always follow the assessment procedure for roads which meet those criteria and for other roads where environmental effects seem to be likely to be significant. That will be especially true with regard to urban roads.
The noble Lord, Lord McIntosh, also referred to his concern in relation to the phrasing of the town and country planning regulations as regards implementation. The wording appears in the explanatory note, which has no legal effect by itself. By itself no regulation could implement the directive; they are all concerned with its implementation. The Department of the Environment was just rather fussier about the wording.
The noble Lord, Lord Northfield, referred forcefully to the inadequacy of implementation and the risk of European Court action. We have consulted the European Commission. Their comments do not suggest that they criticise our general scheme of implementation. On the contrary, they have been quite complimentary while other states, for example Italy, are much further behind us.
Lord Northfield: My Lords, perhaps the noble Lord will allow me to intervene. Of course the Commission is glad that everyone is carrying out the directive in a general way. I am asking whether the Government have put to the Commission its exclusions from the annexes. Those are particular matters on which we should like the Commission to comment.
Lord Hesketh: My Lords, I am just coming to the point of the noble Lord, Lord Northfield. He referred in particular to the restructuring of rural land holdings and land reclamation. Although it was not our intention when the directive was adopted in 1985, the Government arc now implementing the directive for all agricultural products in Annex II which may be of the scale and environmental significance referred to in the directive. That is permitted by the environmental assessment directive which says in Article 4(2):
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"Projects of the classes listed in Annex II shall he made subject to an assessment…where Member States consider that their chracteristics so require".
With regard to the restructuring of rural land holdings, the short answer would be to refer your Lordships to the Code Napoléon, which was the main reason for the creation of very small land holdings round French villages which are now being restructured. That is not something which is generally in existence in this country. Projects for the conversion of uncultivated or semi-natural areas to intensive agricultural use have been omitted because the changed agricultural situation and our emphasis on diversification out of agriculture also make this unlikely on any significant scale in the current circumstances.
My noble friend Lord Rees drew attention to the Forestry Commission's guidance notes. They will be issued within the next week or so and copies will be placed in the Library. We shall build on existing, procedures for consultation which are well understood. My noble friend also was concerned about the form of an environmental statement. Environmental statements need concentrate only on the significant environmental facts. As I said in my opening remarks, I hope that statements will be crisp and to the point.
My noble friend also referred to the fact that there may be a fall in the amount of planting taking place in the United Kingdom. There may be a dip in planting following the tax changes, but the woodland grants scheme is attractive and should encourage a reasonable level of planting in the future. We, for our part, shall be monitoring the new provisions closely and any evidence of costs and delays to industry. We have no wish to impose unnecessary burdens on industry or local government.
I hope that I have said enough to persuade your Lordships that these regulations are a serious and positive response to the directive which will lead to an improvement in the quality of decision-making and I commend them to the House.
Lord McIntosh of Haringey: My Lords, before the Question is put, perhaps I may say that I have been considering very carefully what the noble Lord has said in response to our criticisms. I think that on mature consideration the noble Lord may feel that he would do better to have an opportunity to consider them in more detail. After all, my noble friend Lord Northfield only started with the first section of projects under Annex II. I am sure that he could have continued. I do not believe that it would be right for the House to allow these regulations to proceed without further consideration. Accordingly, I beg to move that further consideration of these regulations be now adjourned.
Moved, as an amendment to the Motion. That the Town and Country Planning (Assessment of Environmental Effects) Regulations 1988 (draft regulations laid before the House on 14th June) be approved, That further consideration of these regulations be now adjourned.—(Lord McIntosh of Haringey.)
9.44 p.m.
The Deputy Speaker (Lord Renton): My Lords, the Question is that further consideration of these regulations be now adjourned. As many as are of that opinion will say, "Content"; to the contrary, "Not-Content"? I think the Not-Contents have it. Clear the Bar.
Division called.
The Deputy Speaker: My Lords, Tellers for the Contents have not been appointed pursuant to Standing Order No. 51. A Division therefore cannot take place, and I declare that the "Not-Contents" have it.
The Question is that the Town and Country Planning (Assessment of Environmental Effects) Regulations 1988 be approved. As many as are of that opinion will say, "Content".
Noble Lords: Content.
The Deputy Speaker: To the contrary, "Not-Content"? The "Contents" have it.
On Question, Motion agreed to.
The Deputy Speaker: My Lords, I now have to take each of the remaining Motions separately.

Environmental Assessment (Scotland) Regulations 1988
9.49 p.m.
Lord Hesketh: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 14th June be approved [29th Report from the Joint Committee].—(Lord Hesketh.)
The Deputy Speaker: My Lords, the Question is that this Motion be agreed to?
Lord Northfield: My Lords, on this Motion I believe that we are entitled to a little more explanation. When the noble Lord hared through the brief he said, when we tried to discuss this in one group, that nuclear power stations are included here, and that preparations were being made to bring the English regulations into line. Can he expand on that? Why is it not possible to put the nuclear power stations issue firmly into both orders, as should have been done in the first place?
Lord Denham: My Lords, I hope that the noble Lord will forgive me. We have had a slightly unusual procedure. Could we not just put the Motions as they are on the Order Paper?
Lord Northfield: My Lords, we are putting the Motions. As we have not had full answers in trying to debate these Motions together, I am afraid that issues arise individually on some of these orders. I have another matter to raise because the noble Lord did not deal with it, concerning the drainage of land, when we come to the drainage regulations. I have not
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yet put that point and I should like to be able to put it. I should be grateful for a reply.
Lord Hesketh: My Lords, the Department of the Environment regulations cover only matters subject to planning control. Scottish regulations also cover applications for consent under the electricity Acts. Separate regulations for projects approved under the electricity Acts of England and Wales will be brought forward shortly and will cover nuclear power stations.
Lord Northfield: My Lords, why are they not in—
Lord Denham: My Lords, we must get back to order here. It is the normal position that if orders are taken together they are debated together. We have had a slightly unusual Division called: Tellers were not appointed. I hope that the noble Lord, Lord Northfield, will not carry on with this.
Lord Northfield: My Lords, I hope we can have some answers.
On Question, Motion agreed to.

Environmental Assessment (Afforestation) Regulations 1988
9.51 p.m.
Lord Hesketh: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 27th June be approved [30th Report from the Joint Committee].—(Lord Hesketh.)
On Question, Motion agreed to.

Environmental Assessment (Salmon Farming in Marine Waters) Regulations 1988
Lord Hesketh: My Lords, I beg to move.
Moved, that the draft regulations laid before the House on 16th June be approved [31st Report from the Joint Committee].—(Lord Hesketh.)
On Question, Motion agreed to.

Land Drainage Improvement Works (Assessment of Environmental Effects) Regulations 1988
Lord Hesketh: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 16th June be approved [29th Report from the Joint Committee].—(Lord Hesketh.)
Lord Northfield: My Lords, this is where I must put the following question. It has not been answered. The noble Lord can answer this very quickly, I am sure; and if we do not receive an answer, we are bound to keep putting this question. The directive makes clear that the subjects in Annex II should cover the water management projects for agriculture whether they are grant-aided or not. All that the regulations

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do is to apply the directive where a grant is applied for. Why does it not cover land drainage matters, which are very important for the natural environment in the case of wetlands, when no grant is being applied for?
Lord Hesketh: My Lords, land drainage improvement works, unlike new works, are permitted developments under the general development order. It is far less bureaucratic to create new arrangements complementary to the agriculture department's responsibility under the Land Drainage Act 1976 and the Wildlife and Countryside Act 1981.
Environmental assessments operated through the planning system would require all works, however minor, to be considered by planning authorities in deciding whether planning effects were significant.
On Question, Motion agreed to.

Highways (Assessment of Environmental Effects) Regulations 1988
Lord Hesketh: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 20th June be approved. [29th Report from the Joint Committee].—(Lord Hesketh.)
On Question, Motion agreed to.

Harbour Works (Assessment of Environmental Effects) Regulations 1988
Lord Hesketh: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 24th June be approved [31st Report from the Joint Committee].—(Lord Hesketh.)
On Question, Motion agreed to.

Landlord and Tenant Bill [H.L.]
Returned from the Commons agreed to.
Access to Medical Reports Bill
Returned from the Commons with the amendments agreed to.
Environment and Safety Information Bill
Returned from the Commons with the amendments agreed to.
Malicious Communications Bill
Returned from the Commons with the amendment agreed to.
Protection against Cruel Tethering Bill (formerly Horses, Ponies and Donkeys (No. 2) Bill)
Returned from the Commons with the amendments agreed to.

Protection of Animals (Amendment) Bill
Returned from the Commons with the amendments agreed to.
House adjourned at six minutes before ten o'clock.

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