Sitting of 20 October 1988

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

PRIVATE BUSINESS
BRITISH RAILWAYS (NO. 2) BILL
Read the Third time, and passed.
TEIGNMOUTH QUAY COMPANY BILL (By Order)
YORK CITY COUNCIL BILL [Lords] (By Order)
CARDIFF BAY BARRAGE BILL (By Order)
FALMOUTH CONTAINER TERMINAL BILL (By Order)
PORT OF TYNE BILL [Lords] (By Order)
AVON LIGHT RAIL TRANSIT BILL [Lords] (By Order)
Orders for Second Reading read.
To be read a Second time on Thursday 27 October.
LONDON LOCAL AUTHORITIES BlLL [Lords] (By Order)
Read a Second time, and committed.

PRIVATE BUSINESS

  BIRMINGHAM CITY COUNCIL BILL
  Ordered,
  That notwithstanding that the Birmingham City Council Bill was taken into consideration by the Committee on the Bill before a report from the Attorny General on the Bill had been presented to the House pursuant to paragraph (1) of Standing Order 158 (Bills affecting charities or educational foundations) the proceedings of the Committee be deemed to have been taken in compliance with that Standing Order.—[The Chairman of Ways and Means.]

  BIRMINGHAM CITY COUNCIL BILL

    BARLOW CLOWES
    Return ordered,
    of the Report of Sir Godfray Le Quesne Q.C., to the Secretary of State for Trade and Industry on Barlow Clowes.—[Mr. Newton.]

Oral Answers to Questions
  AGRICULTURE, FISHERIES AND FOOD

    Aboriginal Whaling
    Mr. Harris: To ask the Minister of Agriculture, Fisheries and Food whether he will take further action to restrict aboriginal whaling.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Donald Thompson):
    We will go on insisting in the International Whaling Commission that the taking of whales by aboriginal communities continues to be very closely regulated. And
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    the numbers permitted to be taken should be consistent with scientific advice on the status of the stocks. We will also continue to press for any necessary improvement in monitoring such whaling or in hunting methods employed.
    Mr. Harris: While welcoming the tremendous international interest in the efforts that are taking place to rescue the three whales off Alaska, may I ask whether my hon. Friend agrees that the best way in which we can save the whale population as a whole is through organisations such as the International Whaling Commission? Does he think that possibly the time has come when we should stop whaling altogether?
    Mr. Thompson: The United Kingdom Government's record on whaling is second to none, and we support the International Whaling Commission in all its efforts. However, many aboriginal communities still live off the whale and depend on it for their whole lifestyle. It would be wrong to think of those communities becoming dependent on the state rather than on their own commerce and industry. Nevertheless, I agree with the broad thrust of my hon. Friend's suggestion.
    Mr. Tony Banks: I associate myself with the views of the hon. Member for St. Ives (Mr. Harris). I am sure that there is enormous support on both sides of the House for the banning of all whaling. As certain aboriginal communities clearly depend on whale hunting, would it not be appropriate for countries such as our own to give them adequate financial compensation, so that they will not have to make any sacrifices in achieving something that we want? It will be very useful if the Minister can send a message to the United States Government, commending them for their noble efforts in trying to save the three grey whales in Alaska.
    Mr. Thompson: I am sure that those associated with the United States Government read Hansard very carefully and will be pleased and surprised to learn of that last comment by the hon. Member for Newham, North-West (Mr. Banks). They need not have me slingshotted all the way across to Alaska. Besides, I have enough to do.
    I cannot entirely agree with the hon. Gentleman's first suggestion, which was that we should put aboriginal communities on the dole, as it were, rather than let them follow their natural and long-established commercial practices. There is a time period over which we can change old-fashioned industries to modern ones. As we in the House all know, that pays dividends in the long run.

    Common Fisheries Policy
    Sir Michael Shaw: To ask the Minister of Agriculture, Fisheries and Food what is his assessment of the effectiveness of current policing of the common fisheries policy.
    The Minister of Agriculture, Fisheries and Food (Mr. John MacGregor): As my hon. Friend knows, the United Kingdom Government have always taken the lead in advocating effective measures for enforcing the common fisheries policy. There are clear signs that other EC member states are now taking the steps necessary, as we have done, to achieve proper enforcement.
    Sir Michael Shaw: Is my right hon. Friend aware that, while the industry as a whole appreciates that better steps

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    are now being taken, in some countries those steps are being taken from a very low base? There is still anxiety, particularly in this country, about the reduction in quotas, which is causing real hardship to many of our fishermen.
    Mr. MacGregor: We take steps to reduce quotas only when scientific advice suggests that it is necessary for the long-term conservation of stocks, which is clearly in the interests of our own fishermen. As for enforcement, I am sure my hon. Friend has noticed that the Netherlands, for example, has made a big increase in the manpower of its inspection service, has strengthened its control system, is improving restrictions on its fleet's capacity and effort and is taking a number of its fishermen to court. There is no doubt that considerable efforts have been made in that country.
    We are very vigilant. A recent problem related to reports of quota hopping by one or two member states, but I am glad to say that action on that was agreed at yesterday's Council.

    Farming Unions
    Mr. Geraint Howells: To ask the Minister of Agriculture, Fisheries and Food when he last met representatives of farming unions to discuss the state of the agriculture industry.
    Mr. MacGregor: I meet representatives of the farming unions frequently to discuss agricultural matters. For example, I have met many of them from different parts of the country, including the president, on various occasions in the last fortnight alone.
    Mr. Howells: What plans has the Minister to ease financial pressures on our agriculture so that it can compete on equal terms with its counterparts in Europe?
    Mr. MacGregor: I am aware that in some sectors of the industry there are problems of declining incomes, and that others, such as the pig industry, also have real difficulties —although that is the case throughout the European Community. On the other hand, some sectors have experienced improvements in incomes in the past year or so, and in one or two earlier years. The overall picture is not one of declining incomes.
    Obviously there have been pressures as we have dealt with the reforms of the CAP—which the hon. Gentleman, I think, agrees are necessary—but in this year's price negotiations we secured a better outcome on green currencies for the United Kingdom than for any other country, and it will come into operation on 1 January. That of itself will add £120 million to United Kingdom farm incomes.
    Mr. Marland: Is my right hon. Friend aware that there is genuine concern among British farmers that our green pound may not achieve parity by 1992? The fear is that if it does not do so by then some Socialist Eurocrat may decide to freeze values as they are, in which case it would never do so. Can my right hon. Friend reassure the farmers that he will maintain pressure for devaluing the green pound?
    Mr. MacGregor: Yes, I can. As my hon. Friend knows, the Commission and the Council have both committed themselves this year to the phasing out of MCAs and their elimination by 1992. I have made it clear that I strongly
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    support that, and that I do not believe that there can be a proper single market in agriculture unless it is done. I assure my hon. Friend that I shall use every appropriate opportunity to continue working to that end.
    Mr. Martyn Jones: In view of his further rejection of direct income aid at the last Agriculture Council—which, I believe, took place a couple of days ago—has the Minister any plans to help hill farmers in my constituency to keep up their incomes, which are among those that are diminishing?
    Mr. MacGregor: I was by no means alone in making some strong criticisms of the Commission's current proposals for a direct income-aid scheme. Many other Ministers, including those from some of the bigger countries, also chimed in with different criticisms. I believe that the current proposals would not be cost effective, are not directed at the right ends and do not fulfil all the conditions that we were asked to carry out.
    Rev. Ian Paisley: Will the Minister inform the House of the present position on his promise that he would work towards the elimination of pigmeat MCAs? Is he aware of the proposals now being ventilated in Europe concerning changes in sheepmeat and beef regimes, which would result in serious agricultural conditions in Northern Ireland? Will he keep in mind that feed stocks for the intensive sector in Northern Ireland are now soaring almost out of control, and that the intensive farmers are in great difficulties?
    Mr. MacGregor: I argued strongly, and with some good arguments, for the elimination of pigmeat MCAs as quickly as possible. There was still a blocking minority on that, but I am sure the hon. Gentleman will be delighted to know that, as a result of the changes that we did secure, pigmeat MCAs will be down to zero on 1 January if sterling remains at its current level. That is a big change from a negative MCA of 28 points only about 18 months ago.
    On the hon. Gentleman's second point, the proposals have just been presented to the Council. We had a brief discussion about them earlier this week and I believe that it will be a long negotiation. I shall certainly be fighting hard for all the United Kingdom's legitimate interests.
    On the third point, the particular problem has been the American drought and its effect on soya, which has had an effect on feedstuffs for the intensive livestock sector—a problem that exists throughout the EC and elsewhere. I understand the problems that that unfortunate element is creating for our producers.
    Dr. David Clark: When the Minister met the farming unions' leaders, did he discuss with them the Commission's proposals to abolish the sheep variable premium and the consequential increase in the ewe premium? Will he confirm that the ewe premium will be based on a European, not a British, level, and that many farmers will get only half as much as they are expecting? If that is the case, how will the Minister ensure that we keep sheep farming in the hills and keep the areas attractive for people to enjoy and live in?
    Mr. MacGregor: As I said earlier, I think that we shall have some complex negotiations on the sheepmeat proposals. There were criticisms from many sides, so I suspect that we shall see changes as they go through.

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    However, it is early days to be sure about that, as we have had only the most preliminary reactions. It is clear that budgetary discipline has to apply to the sheepmeat sector as to any other, and costs have been rising considerably. However, within that overall requirement, I am determined to ensure that we secure the best possible arrangements, which may well include the continuation of the variable premium. We have still to negotiate that. I am determined to ensure that we secure the best possible arrangements in the new regime for the United Kingdom sheep producers.
    Mr. Charles Wardle: Can my right hon. Friend reassure NFU members who are milk producers that Britain's highly efficient Milk Marketing Board will not be subjected to the reforming zeal of EC bureaucrats?
    Mr. MacGregor: From time to time there have been problems in ensuring that the Milk Marketing Board conforms with Community requirements, but, as far as I can recall, the main issue in that respect does not arise from the EC, but may follow from a court case in Northern Ireland, on which I cannot comment because it is sub judice. That is the issue to which the Milk Marketing Board may have to address itself before too long.

    Milk Quotas
    Mr. Matthew Taylor: To ask the Minister of Agriculture, Fisheries and Food if he has had any representations regarding the implementation of the Agriculture Act 1986 concerning compensation for milk quotas.
    Mr. Donald Thompson: I have received a number of representations on this subject.
    Mr. Taylor: Is the Minister aware that real hardship is being caused to tenants by excessive delays in the payment of compensation by some landlords? Does he agree that that could be best tackled by requiring interest to be paid on that compensation?
    Mr. Thompson: I know very well the hon. Gentleman's concern for the matter in general and for some of his constituents in particular—and why not? I have with me the relevant correspondence. The matter is best settled by arbitration. Some cases will have to go to court, and that is the time when interest can be discussed.
    Mr. Maxwell-Hyslop: I wrote to my right hon. Friend the Minister for Agriculture, Fisheries and Food on a specific question and asked him to take it up personally with the Chancellor of the Exchequer. In some parts of the country the commissioners of Customs and Excise are trying to charge value added tax on those compensation payments, which is wholly outwith the undertaking given by the previous Minister for Agriculture, Fisheries and Food when they were introduced. Can my hon. Friend tell me what progress the Minister has made in his representations to the Chancellor of the Exchequer on that important matter?
    Mr. Thompson: My right hon. Friend received my hon. Friend's letter last night and we have managed to have only the briefest of discussions on it. However, my right hon. Friend will be writing to the Chancellor of the Exchequer and others on that important matter.
    Mr. Molyneaux: Has the Ministry entirely forgotten about the additional quota that was allocated to Northern Ireland, which seems to have been misappropriated and distributed over the whole of the United Kingdom?
    Mr. Thompson: These questions seem to run on for a long time in Northern Ireland. I think that I have answered this question on about four previous occasions. The answer has not altered. I can see no hope of a future re-distribution.
    Mr. Nicholas Bennett: In view of the substantial decline of the surplus of dairy products, does my hon Friend envisage that there will be further cuts in the milk quota?
    Mr. Thompson: The substantial decline in milk products came about on purpose. Therefore, we shall monitor very carefully the supplies of milk, butter, skimmed milk powder and other dairy products and, in consultation with our European partners, review the position.

    Water Pollution
    Mr. Pike: To ask the Minister of Agriculture, Fisheries and Food what further steps he is taking to reduce water pollution from farm sources; and if he will make a statement.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Richard Ryder): In our response to the Environment Committee's third special report the Government announced a number of measures to deal with the farm pollution problem, including a commitment to draw up regulations to ensure proper containment of silage and slurry.
    Mr. Pike: I congratulate the Minister on his first reply from the Dispatch Box. I am sure he will be aware that in many parts of the country nitrate in the water supplies is already at an unacceptably high level. There are problems in the aquifers, which will show up for some considerable time. What steps do the Government intend to take to introduce protection zones and to encourage the proper use of nitrates by farmers and environment-friendly farming?
    Mr. Ryder: I thank the hon. Gentleman for his kind words. The Government are looking at a range of options. We have not yet reached any conclusions, and before we do we shall consult various bodies. We look forward to finalising those conclusions in the relatively near future.
    Mr. Conway: Does my hon. Friend agree that the attitude of the National Farmers Union and the Country Landowners Association to nitrogen pollution is positive? We are getting fed up with the Opposition kicking the farmers round the block all the time. The farmers—not the whingers opposite—are the true safeguarders of the environment.
    Mr. Ryder: My hon. Friend is quite right. I particularly welcomed the speech made last month by Mr. David Naish, the vice-president of the NFU, in which he warned farmers that by continuing to pollute the rivers they were undermining their reputation in the countryside. Also, I draw attention to the fact that the maximum fines

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    available to the courts for farmers who pollute the countryside are £2,000 and that many courts are not using those full penalties.
    Mr. Duffy: Is the Minister aware that farming pollution has risen steadily in Yorkshire and Humberside in recent years and that the Yorkshire water authority has been hampered by that extraordinary section in the Control of Pollution Act 1974 that he apparently has in mind? Is the Minister saying that his right hon. Friend intends to repeal that section, which has enabled farmers to evade prosecution if they pleaded acts of omission arising from good agricultural practice? A similar defence was not available for industrial spillage.
    Mr. Ryder: The hon. Gentleman has misunderstood my reply. I was reminding the House that £2,000 is the maximum penalty for polluting the countryside and that the courts are not using the maximum penalty. In the south-west, which has one of the worst pollution problems, the average fines that are dished out by the courts are £140, so it is quite clear that those penalties are not being used.
    Mr. Michael Brown: I congratulate my hon. Friend on his appointment. After so many years, we are delighted to hear his voice again in the Chamber. Does he agree that there is a far greater danger of water pollution from fluoride than from nitrates?
    Mr. Ryder: I thank my hon. Friend for his kind remarks. He knows that my views on fluoride do not coincide with his.
    Mr. Ron Davies: I offer the Minister the Opposition Front Bench's congratulations on his appointment.
    As the Minister clearly recognises that there is a problem with nitrate pollution, can he explain why the Government are embarking on a programme of cuts in research and development, much of which is directly related to optimising fertiliser application and therefore minimising pollution risks? Will he confirm that if the Barnes report is accepted, about 1,000 scientists, many of whom work on environmental protection, will be sacked? In view of the Prime Minister's recent conversion to the cause of environmental protection, does he think that he ought to ensure that his Department's actions support her views?
    Mr. Ryder: I thank the hon. Gentleman for his kind words of welcome.
    In part, the answer to the hon. Gentleman's question depends on the amount of industry funding. I emphasise that Britain has an excellent record in this sphere—we spend more money than any other country in Europe bar Germany on research into pollution. We aim to keep up to that mark.

    Bass
    Mr. Summerson: To ask the Minister of Agriculture, Fisheries and Food what steps he is taking to protect the bass nursery stocks.
    Mr. Donald Thompson: As I announced on 27 July, we shall increase the minimum landing size for bass and introduce restrictions on the use of gill and similar nets with a mesh size between 65mm and 89mm. These
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    measures are to take effect from 1 January 1990. There will be further consultations with local interests about establishing nursery areas to protect juvenile bass stocks.
    Mr. Summerson: I thank my hon. Friend for that reply. He will be aware that sea bass is a slow-growing fish and that it is essential that stocks be conserved. Will he therefore consider the matter rather more urgently and designate nursery areas for these fish to come into effect before 1990?
    Mr. Thompson: The matter is complicated because of the various sections of the community who have an interest in bass stocks and catch bass. I think that it will take a couple of years before we can reconcile the various interests.
    Mr. Ward: My hon. Friend will be aware that fishermen on the south coast are not convinced of the need for the measures that he is about to introduce. More important is the fact that the measures will not apply to our EEC partners. That seems to be one more example of unfair competition with other members of the Community. On reflection, will my hon. Friend agree to withhold the new measures until they are applied throughout the EEC? Will he ensure that fishermen in places such as Poole are given the maximum, not the minimum, time to make the adjustments?
    Mr. Thompson: You, Mr. Speaker, have just heard both sides of the argument. It is vital that bass stocks be protected from as early a date as possible after proper negotiations. We must try to persuade the Europeans to come along with us while we are trying to persuade some of my hon. Friend's constituents to be more enthusiastic about the future of the industry on which they place such great reliance.

    NFU Horticulture Committee
    Mr. Jack: To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the National Farmers Union horticulture committee; and what matters were discussed.
    Mr. MacGregor: My noble Friend the Parliamentary Secretary last met the chairman of the NFU horticulture committee on 20 September, when the main subject under discussion was horticultural research.
    Mr. Jack: My right hon. Friend will be aware of the considerable concerns expressed in horticulture about his proposals for revised funding arrangements. This is a highly competitive industry. Can my right hon. Friend give me an assurance that any changes to the funding arrangements will be phased in to allow the industry adequate time to adjust to the new regime?
    Mr. MacGregor: There is a later question on the Order Paper about research and development generally, but it is entirely right to ask the industry—whatever the sector—to undertake more of the near-market research. I recognise that a higher proportion of horticultural research and development has been classified as near-market because a high proportion of the work is close to commercial application. We are engaged in intensive discussions with the horticulture industry on this point, and I can tell my hon. Friend that timing is one of the matters that are being discussed.
    Ms. Armstrong: I wonder whether the Minister will give some definition of precisely what is meant by near-market research for horticulture? Most of the horticulturists whom I have met in my constituency are bewildered. They have pursued the matter with the Ministry, but they are no nearer to understanding precisely what it is that they have been asked to do. They feel, and I support them, that 60 per cent. from the industry within the next three years is the death knell for it.
    Mr. MacGregor: That is a big exaggeration. The broad definition of near-market research is that it is work that offers the possibility of commercial exploitation or application within a short enough time to justify investment by industry. That is what is happening in many industries outside horticulture and agriculture. We have specified in detail the kind of research projects that we believe come within the definition of near-market research. That is one of the subjects that is also part of the discussion with the industry—to agree on which of the projects should come within the definition.
    Mrs. Roe: Is my right hon. Friend aware that Hatfield polytechnic has recently launched a unique, new BSc degree course in horticulture, in collaboration with Writtle agricultural college? It is the first horticultural degree course that has been mounted outside the university system. Will my right hon. Friend take the opportunity to congratulate all those involved in the initiative, which will provide a steady stream of highly trained experts to ensure that horticulture is equipped to meet the challenges of the 1990s and beyond?
    Mr. MacGregor: I am grateful to my hon. Friend for raising that matter. I am happy to congratulate those involved.
    Many sectors of horticulture are facing expanding markets. It is important that they are competitive and that they meet the changing requirements of consumers. I am sure that the higher the skills involved, the better placed the industry will be.

    Ministry's Centenary
    Mr. Lord: To ask the Minister of Agriculture, Fisheries and Food what plans his Ministry has to mark its centenary during 1989.
    Mr. MacGregor: The Ministry will be arranging a number of events which will be co-ordinated with the programme for Food and Farming Year, which also takes place in 1989. There will be exhibitions in London and in the regions, a centenary history of the Ministry and a special centenary appeal in aid of the Save the Children Fund.
    Mr. Lord: I thank my right hon. Friend for that answer. Many hon. Members can probably remember the days of food rationing—[HON. MEMBERS: "Speak for yourself".] I am not speaking personally. Will not the celebrations present us with an ideal opportunity to congratulate all farmers on the magnificent efforts that they have made over the years to provide the country with sufficient food —always at the urging of Conservative Governments?
    Mr. MacGregor: I entirely agree. One of the problems is that because we have had to grapple with the farmers' success and the penalties that that has brought, with
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    surpluses and the CAP, there has been too much public emphasis on the problems of the CAP and not enough on the contributions that have been made by our farmers and food industry over the past 40 years. Especially in the past few years, the range and quality of food have been improving and the price increases of food are well below the general level of the RPI. There is a good record on production, quality, price and exports, and I believe that 1989 will give us a good opportunity to put that ease across.
    Mr. Grocott: Will the Minister find time to reflect in the centenary year that for most of the past 100 years Britain's food policy was determined in Britain and not in Brussels? Does he agree with me that consumers were better served when the policy was determined in Britain?
    Mr. MacGregor: It is the case that we have moved faster towards self-sufficiency in those products that we can grow in the past 10 years than in earlier periods. Our farmers have used the opportunity of entering the Community to continue to expand our food production.
    Sir Charles Morrison: To ensure that the Ministry of Agriculture, Fisheries and Food and the industry can celebrate their bicentenary, will my right hon. Friend mark his Ministry's centenary by ensuring that he extracts from the Treasury adequate resources for agricultural research, in the interests both of farm production and of the countryside?
    Mr. MacGregor: My hon. Friend will know that a large contribution is made to agriculture, food and fisheries research and development from public funds at present. The sum is currently running at about £200 million a year, which is a substantial contribution.
    Mr. Skinner: I wonder whether, when this centenary is celebrated, a plaque will be unveiled on the wall of the Ministry of Agriculture, Fisheries and Food and whether tribute will be paid to this industry, subsidised during the whole course of its 100 years. Will the Minister tell us what the exact amount of subsidy has been over the past 10 years, during which the Prime Minister and the Cabinet have talked about leaving matters to market forces, and during which time more than £10 billion has been ploughed into the industry from the taxpayer?
    Mr. MacGregor: The figure has been too high, especially in relation to the production of surpluses. That is why we have been playing a leading part in the Community in achieving the reform of the common agricultural policy. As a result of our recent efforts, savings of more than £1,000 million will be made over the next four years in the United Kingdom alone, compared with what would have happened had we not undertaken the reforms.

    Farm Diversification Grants
    Mr. Paice: To ask the Minister of Agriculture, Fisheries and Food what types of projects have been most popular among farmers applying for farm diversification grants.
    Mr. Ryder: Good quality holiday accommodation accounts for just over 30 per cent. of applications and recreational and educational facilities for about 20 per

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    cent. Food processing, farm shops and livery are also popular choices; indeed, there is a widespread interest in most of the enterprise for which grant-aid is available.
    Mr. Paice: I thank my hon. Friend and welcome him to his new post, but may I suggest that many of the ventures that he described—indeed, probably all of them—could lead to many farmers falling foul of the planning legislation and that there is a great need to give guidance to farmers on planning and for a much more open-minded approach on the part of many planning and highway authorities?
    Mr. Ryder: I thank my hon. Friend for his kind welcome. I agree with his judgment of farmers' appreciation and understanding of planning laws. It is precisely for that reason that we shall be publishing a farmers' guide and leaflets dealing with the planning system later this year. I very much hope that they will help farmers to understand the planning system better.
    Mr. Allen McKay: In diversification, what emphasis is being given to organic farming?
    Mr. Ryder: The answer is, "None at the moment."
    Sir Geoffrey Johnson Smith: How sure is my hon. Friend that the most popular diversification grant will not go towards housing, and what safeguards can he give?
    Mr. Ryder: I can give my hon. Friend an assurance that diversification grants do not go towards housing. On the other hand, I would point out that there is one grant which to the best of my knowledge, has not been made so far, and that is a grant for martial arts.

    Sea Fish Industry Authority
    Mr. Worthington: To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Sea Fish Industry Authority; and what subjects were discussed.
    Mr. Donald Thompson: I have not yet had an opportunity, since assuming my new responsibilities, of meeting the chairman of the Sea Fish Industry Authority, but look forward to doing so soon.
    Mr. Worthington: I hope that the Minister will meet the SFIA chairman very soon, and that during that meeting he will impress on him the need for him to meet the leaders of fishermen's organisations and to involve them fully in the training programmes that are to be mounted. The Minister will be aware that the European Community is urging that there should be training programmes across the EC, but it is crucial that those training programmes should meet local needs. Will the Minister do what I ask?
    Mr. Thompson: I am glad to welcome a question such as that. I agree with every word of it in thought and substance.
    Dr. Godman: When the Minister meets the chairman of the Sea Fish Industry Authority, will he offer that gentleman the assurance that the Government have no intention whatever of abandoning the vessel building scheme? May I point out to him that there is growing concern among fishermen that the Government intend to
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    abandon the scheme, except to provide replacement vessels for vessels lost at sea. Will he, here and now, dispel those genuine and growing fears of our fishermen?
    Mr. Thompson: The Government put no restrictions on people building their own boats. However, there is an EC moratorium on the priorities for boat building. We have to consider the size of the British and European fleets. It would be ridiculous to continue building bigger, better and faster boats with greater capacity for a diminishing fish stock. We must put conservation first and boat building second.

    Set-aside Scheme
    Mr. Andrew Mitchell: To ask the Minister of Agriculture, Fisheries and Food what the response of farmerss has been to the set-aside scheme launched in June.
    Mr. MacGregor: The response has been satisfactory. I will be announcing figures of applications and registrations as soon as they are available following the 21 October closing date
    Mr. Mitchell: Does my right hon. Friend accept that there may be substantial environmental benefits from a temporary policy of land set-aside? All too often, modern farming practices can result in the destruction of our great national landscapes and habitats.
    Mr. MacGregor: I very much agree that there are big opportunities through set-aside for those environmental benefits. In drawing up the scheme I was very careful to have environmental conditions written into it which will help to ensure that. One interesting point from our early analysis of applications received is that the most popular choice so far is permanent fallow. I hope that farmers who undertake set-aside through permanent fallow will use the opportunity to improve the conservation value of land set aside in precisely the way that my hon. Friend has described.
    Mr. Cryer: Are the Government thinking of introducing a set-aside scheme for factory owners whose factories have been set aside under this Government, causing the loss of 2 million jobs in less than 10 years? Will the set-aside scheme giving farmers up to £ 100 an acre for watching the grass grow apply only to farmers? Is it being denied to City institutions with offices in Mayfair which are taking Government money? They do not even see the grass grow—they are too far away.
    Mr. MacGregor: It applies to all those who actually farm the land. There is a cost involved in looking after land and keeping it in good agricultural condition as well as environmentally attractive. The set-aside payments recognise that cost.

    Country Landowners Association
    Mr. Marland: To ask the Minister of Agriculture, Fisheries and Food when he last met the president of the Country Landowners Association; and what subjects they discussed.
    Mr. MacGregor: I last met the president of the Country Landowners Association on 5 October. We discussed various matters of mutual interest.
    Mr. Marland: My right hon. Friend will know how enthusiastic the Country Landowners Association is that voluntary set-aside should succeed. Although it is now almost too late for arable farmers to register for set-aside, is there a message that my right hon. Friend would like the CLA and hon. Members to convey to arable farmers who would like to register at this late stage?
    Mr. MacGregor: Yes. I know that the CLA has been very helpful. I have been seen press reports that suggest that the president of the CLA has applied to set aside part of his land. The CLA is also helpful in assisting us to monitor—indeed, it will do some monitoring for us—what some people fear might be a problem in relation to tenants on set-aside land. I do not think that there is a problem yet, but the monitoring will be helpful. Although registrations have to be in by the closing date, that is only to help farmers who may wish to apply for set-aside in future years. It will still be possible for them to do that, but it will be more difficult if they do not register.
    Mr. Campbell-Savours: How does the Minister respond to the CLA's latest proposals for an automatic system of compensation for land blighted during nuclear incidents such as Chernobyl?
    Mr. MacGregor: We are looking at several proposals made by the CLA, and my hon. Friend the Parliamentary Secretary will meet the CLA at the end of the month.
    Mr. Gale: Bearing in mind the recent anniversary of the October hurricane, did my right hon. Friend take the opportunity to discuss with the CLA the number of trees still lying on the land, particularly in Kent? Was he able to reassure the CLA that his efforts will continue unabated until the trees are removed and new trees are planted in their place?
    Mr. MacGregor: I have not only discussed that with the CLA, but, to coincide with the anniversary, I have visited many areas that have been affected. Although I recognise the difficulties, substantial efforts have been made by woodland owners and others to do the clearing up, and I believe that by early next year we may well see half the clearing up done. There is also a good prospective take-up of the schemes that we have introduced to help with replanting.

  PRIME MINISTER

    Engagements
    Mr. Beaumont-Dark: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today, including one with the Premier of the State of South Australia.
    Mr. Beaumont-Dark: Does my right hon. Friend accept that the television and radio strictures upon Sinn Fein, the propaganda arm of that evil machine the IRA, have been widely welcomed in the country, as it has in the House, among thinking and feeling people? Will my right hon. Friend also accept that that is only one step on the road to
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    its defeat, because anybody standing for public office in the United Kingdom should have to swear an oath renouncing violence and upholding the primacy of Parliament and the ballot box?
    The Prime Minister: I am grateful to my hon. Friend and agree that the measures announced yesterday have been widely welcomed in the country by people who do not wish terrorists to have direct access to the broadcasting media. On the second point about those who wish to stand for local elections taking an oath to renounce violence, a similar proposal was put forward previously by my right hon. Friend the Secretary of State for Northern Ireland. If we go ahead with it, we shall do so by way of legislation and introduce it at the earliest opportunity.
    Mr. Kinnock: In the argument between those who want to raise child benefit and those who want to freeze it, on which side is the Prime Minister?
    The Prime Minister: The right hon. Gentleman knows full well that child benefit is reviewed every year. He knows that there will be an anouncement at the proper time. He knows what the proper time is, and he must await it accordingly.
    Mr. Kinnock: Child benefit was reviewed last year and resulted in its being frozen. I am not asking for detail from the Prime Minister, I am asking for a statement of principle from her. Does she want to raise child benefit, or does she want to freeze it? How can a Government give £3 billion to top-rate taxpayers and not give an undertaking to increase child benefit?
    The Prime Minister: This year, as the right hon. Gentleman is aware, we directed £200 million in net extra resources to families in income-related benefits, especially for the children. That was against the £120 million that uprating child benefit this year would have cost. If the right hon. Gentleman wants a general increase in child benefit, it would also go to the topmost people on top tax.
    Mr. John Greenway: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Greenway: Is my right hon. Friend aware that her recent remarks in Bruges and in Brighton last week reflect the opinion held by the overwhelming majority of people in this country and, if the truth were known, throughout Europe? Does she agree that other European Heads of Government would do better to concentrate on practical measures towards economic progress and their agriculture policies rather than harp on about ideological European union ideas?
    The Prime Minister: Yes. The speech was greeted by an avalanche of support, as well as some criticism. I firmly believe that the best way to secure forward movement in the European Community is by active co-operation between sovereign states. Furthermore, we have concentrated on practical measures, and in doing so have often been way ahead in achievements—beyond those who talk in woolly terms about European union.
    Mr. Ashdown: Inflation is now running at four times the level of that in West Germany and is 50 per cent. above the

    1009
    EEC average. Interest rates in Britain are nearly twice as high as they are in France and three times as high as in West Germany. Wage rates in Britain are rising two and a half times as fast as in France, and as an average are 50 per cent. higher than in the EEC. What grounds can there be for the Government's smug complacency about the economy?
    The Prime Minister: I understand that the hon. Gentleman put a lot of work into his question, but he seems, at one and the same time, to be criticising both higher inflation rates and higher interest rates. Does he not know that the way to get inflation down is by higher interest rates?
    Mr. Burt: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Burt: Does my right hon. Friend agree that no responsible Western Government would allow the right to strike or trade union activity to interfere with the security services? Bearing in mind the disruption caused at GCHQ and the genuine efforts that the Government have made to deal with legitimate trade union concerns, is my right hon. Friend aware that the overwhelming majority of British people will fully support the necessary action that has recently been taken by the Government at GCHQ?
    The Prime Minister: Yes. The original decision that we took on GCHQ was upheld by the highest court in the land and the European Court of Human Rights. As my hon. Friend the Minister of State, Foreign and Commonwealth Affairs, said in the House yesterday, about 10,000 man days were lost at GCHQ in the period 1979 to 1981 as a result of industrial action that had nothing to do with GCHQ. We have made strenuous efforts to accommodate those who did not uphold the new conditions of service. Only about 18 did not, while 7,000 people accepted those conditions. The action that we have taken is correct.
    Ms. Short: Will the Prime Minister please explain what will seriously be achieved by not allowing the British people to hear and understand why both communities in Northern Ireland engage in violent conflict? At the time of the Anglo-Irish Agreement she promised reforms to reduce the alienation in Northern Ireland, but we have not seen them. We are now promised a series of measures that many of us believe will increase the conflict. Does she have a strategy to remove the causes of the violence, or will she allow it to rip under a blanket of censorship?
    The Prime Minister: It would be a great help if we received full support for the measures that we have taken against terrorism, including the support of the Labour party for the Prevention of Terrorism Act.
    Mrs. Roe: Following the Labour party's abject failure over the Dundee episode, does my right hon. Friend agree that Ford's recent announcement of investment at Bridgend shows that foreign firms believe in this country, which is good for jobs and for Britain?
    The Prime Minister: Yes. We all welcome Ford's decision to site its main engine investment in this country. We were very concerned when forces in the trade union movement—though not in Scotland—stopped Ford from
    1010
    going to Dundee. I am delighted that it has decided to make much investment in this country, which is a vote of confidence in the United Kingdom Government.
    Mr. Roy Hughes: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hughes: Will there be any reconsideration of the Government's proposal to impose charges for eye tests? Does the right hon. Lady appreciate that there is particular worry about the plight of pensioners who, because of charges, will be deterred from seeking tests? Is she also aware that, because of that, there is a serious risk of an increase in the number of cases of glaucoma? Does the right hon. Lady realise that there is considerable concern on this issue among her Back Benchers? Bearing in mind the right hon. Lady's eye affliction some time ago, can she tell the House whether she shares that concern?
    The Prime Minister: Those on low incomes will not have to pay the charge, as the hon. Gentleman is well aware. It seems reasonable that those who can afford to pay should pay about £3 twice a year on dental charges or up to £10 on spectacles, although competition among opticians may result in virtually no charge. The hon. Gentleman is aware of the enormous increase in prosperity this year. Indeed, the Labour party voted against tax reductions, including some that would have affected older people. It would seem reasonable that those who can afford it should pay this small, modest charge for something that is fundamental to their health.
    Mr. Paice: Will my right hon. Friend confirm that if she were to undertake a 10-day speaking tour she would do so during the recess? Does she assume that the only reason why the hon. Member for Yeovil (Mr. Ashdown) waits until we reassemble is——
    Mr. Speaker: Order. The hon. Member can ask questions only about the Prime Minister's responsibility. She is not responsible for that matter.
    Mr. O'Brien: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. O'Brien: The Prime Minister is well aware of the unfairness and cruelty that will be inflicted on people on low incomes when the poll tax is introduced. Is she aware of the unfairness and cruelty that will be inflicted on a pensioner couple when they will have to pay twice the poll tax while their income will be only 50 per cent. more than that of a single pensioner? Will the right hon. Lady do something to arrest this cruelty that will be inflicted on people on low incomes?
    The Prime Minister: Community charge is the way of paying for a part of local government services. It is therefore an obligation that falls on all citizens unless they are unable, because of low income, to afford the whole amount, in which case they will get an 80 per cent. rebate. In the last resort, they will get an average of 20 per cent. of the community charge on their social security benefit to enable them to pay it. The hon. Gentleman loses sight of

    1011
    the fact that it is a citizen's duty to pay towards the cost of local income and that there are full rebates for those on low incomes.
    Mr. Stanbrook: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Stanbrook: Will my right hon. Friend consider the suggestion that the ultimate solution to the problems of Northern Ireland lies in a re-drawing of the border, generous resettlement grants, its restriction to those British who wish to remain British, and thereafter its treatment on exactly the same terms as any other region of the United Kingdom?
    The Prime Minister: We have not considered that approach. I do not think that it would work. There have been countries and incidents where it has worked in the past—for example, with Greece and Turkey afer the first world war—but previous efforts to do this in Northern Ireland have failed. We must carry on with our present pledge to the people of Northern Ireland, which is that there will be no change in their status, except at their wish
    1012
    and through their express consent and the express consent of the House. Northern Ireland is part of the United Kingdom and must be governed in that way.
    Mr. Haynes: To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Haynes: Does the Prime Minister remember lecturing the nation—something that she does quite regularly—on spending money that it does not have? Why, then, do she and her Chancellor encourage people to spend money that they do not have?
    The Prime Minister: I congratulate the hon. Gentleman on being able so frequently to secure the last question at Prime Minister's Question Time. I do not know quite how he does it.
    I do not think that it is right to encourage people to borrow more than they can afford—nor, I believe, does the hon. Gentleman. The steps that we have taken on interest rates will reduce borrowing and increase saving, and that is necessary both to get inflation down and to reduce the trade deficit. It is the right step to take.

Barlow Clowes
3.30 pm
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Tony Newton): With permission, Mr. Speaker, I wish to make a statement on Barlow Clowes.
Many people have been badly affected by the collapse of the Barlow Clowes operations. The extent of the suffering and distress has been fully set out in the letters I and my colleagues have received from Members of both Houses and direct from those concerned. We share the deep concern expressed on all sides, and sympathise with those who have suffered loss.
The story is very complex: it stretches over many years and involves many different participants. The House will recall that, following my right hon. and noble Friend's statement on 13 June, he appointed Sir Godfray Le Quesne QC to prepare an independent report on the facts of the Departments handling of this matter. My right hon. and noble Friend is today publishing Sir Godfray's account, subject to minor deletions made on legal advice in order to avoid possible prejudice to criminal proceedings. His report is one of the most open and exhaustive ever volunteered by a Department of State into its handling of a matter of this kind, and contains a full account of the Department's role.
I should make it clear to the House that, while the Government attach importance to maintaining the normal rule that officials' confidential advice to Ministers should not be made public, we have decided that, in the quite exceptional circumstances of this case, it is in the public interest to include the submissions to Ministers and other material which would not normally be published. In accordance with normal practice, the names of officials involved have been excluded.
We are extremely grateful to Sir Godfray Le Quesne for the thoroughness and speed with which he produced his report. In accordance with his terms of reference, the report is purely factual. The Government have studied it with great care and have taken legal advice, including that of leading counsel, and I would now like to set out to the House the key events and our conclusions.
It is only possible to judge the events that occurred in the light of the regulatory system in place at the time. The legislative framework within which all but the final events of this case took place was based on an Act of 1939, which was consolidated in the Prevention of Fraud (Investments) Act 1958. There was very little change in the way it operated until 1983. Then, against the background of Professor Gower's much broader review of investor protection, commissioned in 1981, the Government introduced new regulations. These regulations required, among other things, first, much more information about prospective licence holders; secondly, a certificate from a qualified auditor as to the firm's ability to operate as a going concern during the lifetime of the licence; and thirdly, regular financial monitoring returns, verified by a qualified auditor, covering the proper holding of client money and investments. The regulations were designed to enable the Department to rely on the verification of prescribed information by qualified auditors and solicitors.
Sir Godfray's report shows that Barlow Clowes first came to the Department's attention in 1975–76. It received
1014
advice which, due to a misunderstanding within the Department, did not adequately cover the point at issue and it did not then apply for a licence to deal in securities. The consequences of this have been carefully examined. Had it applied in 1975–76, it is almost certain that a licence would have been granted, given practice at the time. If Barlow Clowes had received a licence in 1975–76, the first monitoring return of the sort I have described would have been required by the end of December 1984. In the event, Spicer and Pegler certified in July 1985 that it had obtained verification of the clients' investments and cash, and that the statement of clients' funds gave a true and fair view of their composition as at 28 December 1984. There is no reason to think that the fact that Barlow Clowes was not licensed in 1975 had any material effect on the course of subsequent events.
The partnership again came to the Department's attention in late 1983. The review and tightening up of the system in 1983 had brought large numbers of unlicensed dealers to light. Wholesale prosecution would have been unjustified and, as Sir Godfray's report explains, it was the policy to bring unlicensed firms into the regulatory net and to take other action only where there was evidence of wrongdoing or that investors' funds were at risk. The Department originally believed that the partnership was applying for membership of the National Association of Securities Dealers and Investment Managers (NASDIM), which would have meant that it did not need to be licensed directly by the Department. When it became apparent that the partnership was not doing so, the effective choice open to the Department lay between prosecution of Barlow Clowes for not holding a licence—the only sanction provided by the legislation—and licensing the firm if it could meet the regulatory requirements. As Barlow Clowes was a partnership, the Department—even where grounds existed—had no powers to investigate it or to apply for a winding-up order, nor was there any provision for intervening to protect investors' funds if a licence were refused.
The Department therefore decided to seek to bring the partnership within the regulatory framework. In doing so it had four main aims. The first was to subject the partnership to the conduct of business rules (strengthened in 1983), the second to secure examination of its affairs by qualified auditors, and the third to persuade the firm to incorporate a limited company so that the powers available under the Companies Acts would become available. Fourthly, it was also necessary for Barlow Clowes to make arrangements which satisfied the Bank of England that the partnership was not in breach of the Banking Act 1979. When all these objectives had been met, licences were issued in October 1985 to the partnership and the company. In issuing the licences the Department made clear to the Barlow Clowes' solicitors that it had been heavily influenced by the assurances received from or through them. The Department also took full account of the report from Spicer and Pegler on clients' funds as at December 1984.
In 1986 new licences were issued to Barlow Clowes after it had submitted applications accompanied by the verifications and auditors' certificates required by the legislation. Although the majority of the powers under the Financial Services Act 1986 did not come into force until 29 April 1988, stronger and wider powers of investigation contained in that Act became available on 18 December 1986.

1015
By the time of Barlow Clowes' licence applications in 1987, the Department had received material from the stock exchange and others that caused concern about Barlow Clowes' United Kingdom business. The Department did not at that time have the power to apply for a winding-up without first conducting a statutory investigation. Even if there had been such a power, there was not at that stage sufficient evidence to be confident that an application to wind up the company would be successful.
The Department had three courses open to it. It could refuse the licence. This would have stopped the company from lawfully taking on new business. But because the Department could not apply for a winding-up, there would have been no way of securing existing investors' assets. This action could therefore have precipitated a disorderly collapse of the business, which would have damaged existing investors' interests—[HON. MEMBERS: "But that happened anyway."]
The second course was to grant the licence but immediately to issue notice of intention to revoke it. The company could have referred that to the licensed dealers tribunal, which would have meant that it could carry on trading until the tribunal had decided the case.
The Department therefore adopted the third possible course. This was to institute an investigation under the powers newly available under the Financial Services Act and to issue a new licence, subject to review, pending the outcome of that investigation. The investigation proceeded but even six months later, in April 1988, with all the information the investigators had by then uncovered, there were legal doubts whether sufficient grounds existed for a winding-up petition to succeed. By May 1988, the combination of the investigation and new information on the company's solvency had yielded enough evidence to secure a winding-up order.
We are informed by the liquidators of Barlow Clowes Gilt Managers that on current information investors are likely to receive in excess of 75p in the pound, and they are hoping to make a substantial distribution before Christmas.
I now turn to Barlow Clowes International. This company was based in Gibraltar, and was not licensed. Any offshore company dealing with expatriates, and not holding itself out as dealing in securities in the United Kingdom, would not need a licence. The question, therefore, is whether the Department had reason to believe that BCI required a licence. As Sir Godfray's report shows, no firm evidence came to the Department indicating that this was so, and the information provided by the United Kingdom company from 1984 to 1987 indicated that BCI serviced expatriates and non-residents. During this entire period there were no complaints from investors, no questions about whether BCI was licensed, no approaches from intermediaries that would have revealed that BCI was dealing with United Kingdom residents.
From 1984 the Department decided that, as part of its licensing function, it would adopt a policy of sample monitoring of advertising in the national and financial press. No advertisements from BCI came to light as a result of this monitoring. Subsequently, it has emerged that a single advertisement was placed by BCI in one general supplement of The Times devoted to Gibraltar. This was not picked up by the sampling system. It has since transpired that BCI received business as a result of advertisements placed by authorised intermediaries, not in
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the general or financial press. These advertisements did not mention BCI, which was named only in subsequent private correspondence. No example of such correspondence was referred to the Department before the Barlow Clowes collapse.
The liquidators of Barlow Clowes International predict that there will be sufficient funds realised to make a distribution in excess of 30p in the pound. The complications in BCI will take some considerable time to resolve but the liquidators are hoping to make a small interim distribution early in 1989.
I should now like to turn to the main conclusion that the Government draws from Sir Godfray Le Quesne's report. Within the constraints of the old legislation and the information available to the Department at the time, the Department's general handling of the licensing of Barlow Clowes and Partners, and Barlow Clowes Gilt Managers Ltd., was careful and considered and its actions reasonable. Barlow Clowes International had no licence: only since the company collapsed has it emerged that its activities were such that it probably should not have operated without one. Sir Godfray's report shows that the Department did not have reason to know this.
I must also inform the House that the legal advice the Government have received on the question of liability to investors with all these businesses is clear. The Government have no legal liability.
In view of the hardship that has been caused, the Government have considered carefully whether there is a case for ex gratia compensation. The facts set out in Sir Godfray's report in the Government's view provide no grounds for concluding that the Department's handling of the matter was unreasonable or caused the losses experienced by investors, and therefore provide no justification for using taxpayers' money to fund compensation.
We are aware that the Parliamentary Commissioner for Administration has said he is considering whether to investigate complaints of maladministration in the Department's handling of the matter. My right hon. and noble Friend has today sent him a copy of Sir Godfray Le Quesne's report. If he decides, in the light of that, to carry out an investigation, the Government will, of course, co-operate fully with him and consider carefully any report he may make.
My right hon. and noble Friend is also sending copies of Sir Godfray's report to the Institute of Chartered Accountants in England and Wales, the Securities and Investments Board and FIMBRA, for them to see whether there are matters for them to consider.
It is all too clear from the account of events in Sir Godfray Le Quesne's report, and from the points I have made so far, that there were a number of significant weaknesses in the legislative framework of the Prevention of Fraud (Investments) Act 1958, even after the regulations were greatly tightened in 1983. There were no provisions for injunctions to slop unauthorised businesses or breaches of the rules, or powers to restrict business, safeguard assets or appoint trustees. Nor was it possible to investigate unincorporated investment businesses. The Government have acted to correct those weaknesses in the Financial Services Act 1986, whose main provisions came into effect in April this year. These improvements do not mean that the present system of investor protection is completely risk-free. No regulatory system can eliminate fraud or guarantee investors against loss. But the

1017
legislative framework has been radically revised and strengthened since the chain of events covered by Sir Godfray's report took place.
Hon. Members: Resign.
Mr. Tony Blair: For the 11,000 investors in Barlow Clowes who have waited for more than four months for this report, who expected not only a factual narrative but some accompanying conclusions from Sir Godfray and who hoped, not for a set of ministerial excuses but for a statement of ministerial responsibility, this report will come as a profound and bitter disappointment. Their sense of grievance will be all the greater in that Sir Godfray's report is not the report that we were promised.
Will the right hon. Gentleman comment specifically on the following words of the Secretary of State:
"This is an inquiry to determine the facts of what actually happened within the department and to determine whether or not the department is to blame in any way"—[Official Report, House of Lords, 13 June 1988; Vol. 498, c. 11.]
Why do we not have such a report? [HON. MEMBERS: "Yes, we have."] We have not. Why, instead of an independent objective judgment of the facts, have we been given the Government's shamefully partisan, self-serving interpretation of the facts? Does the right hon. Gentleman not know that it is all very well to refer to the parliamentary ombudsman, but that what the investors wanted above all today was some sense of finality—not to be shunted from one investigator to another in a game of ministerial pass-the-parcel?
As for the Minister's claim that Sir Godfray's report shows that the Department was not negligent, I ask him to deal specifically with the following points. From my brief examination of the report I believe that it bears out each one of them. Is it not true that when the licence was first issued to Barlow Clowes in October 1985 the Bank of England had raised objections to the company, and that NASDIM, the City watchdog, had said that Barlow Clowes was unsuitable for a licence? Is it not true also that the DTI had been given assurances and had discovered that they were false? Barlow Clowes had then been trading illegally for more than 12 months under the Prevention of Fraud (Investments) Act 1958. How on earth was it given a licence in 1985?
Is it not right to say that in 1986—and I ask the Minister to answer this point specifically—the stock exchange expressed misgivings? The deputy head of the Bank of England's banking division said that he thought that there was a possible "fraud". The accountants to Barlow Clowes said that they thought clients' money was being misused. The monitoring returns submitted to the DTI were, according to the Minister's own inspector, seriously inadequate—but the licence was reissued.
In 1987 the stock exchange inquiry report stated, as Sir Godfray says, that there were "serious doubts" about whether Barlow Clowes was fit and proper. The police investigated Barlow Clowes, according to Sir Godfray. The Inland Revenue investigated Barlow Clowes. The DTI sent in its own inspectors. Yet in October 1987, when virtually every single body, private or public, with any responsibility for regulation was shrieking warnings at the DTI, the licence was reissued.
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Is it not further the case that when the monitoring returns came in from Barlow Clowes in December 1987 —as, again, Sir Godfray finds—they were unsigned, unaudited, and then the firm was allowed to trade for a further six months, taking in millions of pounds, until in May this year the new SIB shut down in three weeks what the Minister's Department had left open for three years? What about the "disorderly collapse" that happened then, in May 1988? I may tell the Minister that in the light of all that, confirmed by Le Quesne, his denial of any negligence on the part of his Department is so brazen that it is risible.
I turn to the question of the ombudsman. Will the Minister undertake that the Government will abide by any compensation order made? Does he agree that the ombudsman should look also at the offshore investors, who, I may tell the Minister, had their funds managed in the United Kingdom, advertised in the United Kingdom, and run by residents in the United Kingdom? Will the Minister also, even at this stage, accept a proposal that I believe would command support from all quarters of the House—that the Government are bound to have some liability and should be using their good offices now to convene all those with a potential liability so that the spectacle of long, drawn-out legal proceedings can be avoided and a proper lifeboat scheme mounted? Is that not both a fair and a wise course?
Finally, I may tell the Minister this. The file in my hand is only of letters that I have received from investors over the past few months. Many right hon. and hon. Members will have received similar letters. Those who sent them are not get-rich-quick speculators. I doubt that many of them are drawing £1,000 per week for living expenses. They are Britain's new class of investors. They are the elderly couple with an accumulated nest egg. They are the young couple who have been left a small inheritance, perhaps from the sale of their parents' home. They are the mine workers or steel workers made redundant. Is it not the case that they are the very people whom the Government have encouraged into the market place of investment? The question asked by thousands of Barlow Clowes investors who are victims of malpractice today is echoed by millions more in this country who fear that they may be victims of malpractice tomorrow. Will the Government stand by them, or will they let those investors fall? Today, they have their answer, but we on the Opposition side of the House will not let them down.
Mr. Newton: Let me seek to comment on the points made by the hon. Member for Sedgefield (Mr. Blair) in the order in which he raised them.
First, it was made entirely clear in Sir Godfray's terms of reference that the purpose of his inquiry was to establish the facts on which judgments could be made. Inescapably, in a matter of this kind, those judgments will differ. Manifestly—and I understand this—the hon. Gentleman's judgment differs from the Government's judgment, which I have outlined to the House. However, it is a comprehensive description of the facts, which I believe will assist everyone in the House in considering in detail—and I hope that people will study the report in detail—the sequence of events against the background of the legislation existing at the time. I repeat that that is a very important point.
I well understand that people would have preferred some sense of finality, to use the term employed by the hon. Gentleman. But it is in the nature of an event such as

1019
this—with all the potential that it creates for legal action of various kinds—that it is very unlikely that one single statement can bring the sense of finality that he has sought. I certainly do not pretend that my statement could have done that today.
The hon. Gentleman raised a good many points about the detail of particular comments at particular times, which are set out clearly in the report. Let me make two observations that I do not consider were properly reflected in his remarks. First, as is very clear from the report, the majority of those comments did not come in the form of anything that could be construed as evidence in the context of the action that the hon. Gentleman suggests that we should have taken. [Interruption.] I hope that all hon. Members will study the report. It is very clear that in general what came to the Department consisted more of rumour and speculation than of evidence. The Department's duty was to seek to establish evidence on which proper decisions could be made, and that is what it sought to do.
Let me make it absolutely clear that there was no question of the Securities and Investments Board precipitating action that the Department had been unwilling to take. It was decided, in the light of powers that had become available at the end of April 1988, under new legislation passed by this Government, that the best way of producing an orderly conclusion—an orderly winding-up of Barlow Clowes—was for the SIB to take the action that it accordingly took.
There was some laughter in the House when I referred to the issue of a disorderly collapse, which was the likelihood under the previous powers on the occasions to which the hon. Gentleman has referred. The suggestion was made, I think probably from a sedentary position below the Gangway, that what happened was a disorderly collapse. Let me make the difference clear. What happened was a collapse in which a proper winding-up order was made in circumstances in which equitable dealing between all the investors in the companies could be secured. A disorderly collapse would have occurred if the Department had taken action that would have precipitated a position —[Interruption.] I hope that the House will listen to this point—[Interruption.]
Mr. Speaker: Order.
Mr. Newton: —which would have caused the collapse in circumstances in which no action could have been taken to safeguard and freeze the assets. The more sophisticated investors would have got all their money, and the rest would have got nothing. That is what I mean by a disorderly collapse, and that is one of the risks that the Department was concerned to avoid.
It is not for me to suggest what the Parliamentary Commissioner should investigate, how he should investigate it or what he should conclude, but I have no doubt that he will have noted the hon. Gentleman's comments.
Lastly, the hon. Gentleman asked me what view the Government took of the need to ensure proper protection for that growing army of investors that we are rightly proud of having brought about. The answer is that we have already passed a comprehensive Act which has dramatically improved the framework of regulation in this
1020
whole sphere—and that comes after a period in which the Labour Government, as far as I can discover, did nothing whatever with a framework that went back to 1939.
Sir William Clark: Is my right hon. Friend aware that most hon. Members will have sympathy with him in handling this case when he was not in the Department when all these things happened? Does he agree that when the DTI had its reservations about Barlow Clowes, without winding it up with a disorderly collapse or whatever, the advice from the civil servants to Barlow Clowes should have been "Don't take any more investments from the public until we have satisfied ourselves that you are safe and sound as an investment instrument"?
The report refers to expatriates, but, in all kindness to my right hon. Friend, I can assure him that the investors in Barlow Clowes who live in my constituency are not expatriates. Consequently, for civil servants to suggest that the overseas fund was being used only by expatriates really is beyond belief.
Secondly, many invested their money unwittingly not knowing the full facts, yet those facts were known by the Department, which had reservations. Not giving that advice must be a dereliction of duty. Can my right hon. Friend assure the House that whichever officials were responsible for that dereliction of duty are no longer in that section?
Mr. Newton: First, there must have been a risk, which would have weighed with the Department, that action during most of the period of the kind for which my hon. Friend asked in the first part of his question would itself have contributed to the company's collapse, and that would necessarily have been a disorderly collapse, given the legal framework at the time.
Of course, I am not suggesting that my hon. Friend's constituents, or the many others who so unhappily have been caught up in this wretched business, are expatriates, because manifestly they are not. The issue is whether the Department could reasonably have been expected to know that those non-expatriates were being invited to invest in Barlow Clowes in the way that subsequently transpired. In the passage of my statement on the advertising that took place and the way that that was done, I think that I have shown why, in my judgment, the Department could not reasonably have been expected to know.
On the question of facts and civil servants, I should tell the House that the permanent secretary at the Department —it is a matter for him to investigate rather then for Ministers—has considered whether the facts set out in Sir Godfray's report give rise to a case for disciplinary action, and has decided that they do not.
Mr. David Steel: Are Ministers in the Department satisfied that the people in the Department who are having to deal with these sharks and the rumours and speculation—to use his own phrase—which were drawn to the Department's attention, have sufficient expertise and qualifications to do so?
Secondly, the Minister tells us that the Government are advised that there is no legal liability, but does he agree that a particular feature of this tragic collapse is that many of the thousands of investors were elderly people, such as my own constituents, who put all their redundancy pay

1021
into the fund believing that they were buying British Government securities with the DTI's stamp of approval? In those circumstances, is there not a moral liability?
Mr. Newton: It is precisely because we had doubts about the overall adequacy of the previous regulatory system that such an immense amount of effort went into producing the Financial Services Act 1986 and to bringing it into effect. An important part of that Act is to improve the regulatory system by bringing to bear on it the expertise of those who really are involved in the field. Hence, the establishment of the Securities and Investments Board, and, of course, FIMBRA, regulating the sort of people about whom we are talking in important respects of the statement.
I have made the position on legal liability clear. I have also made it clear that the Government have considered the issue of compensation on other grounds but arrived at the conclusion that I gave in my statement.
Several Hon. Members rose——
Mr. Speaker: Order. There can be hardly an hon. Member whose constituents are not involved in this, including my own. May I ask those hon. Members who are called not to repeat questions that have already been asked and, furthermore, to ask single questions rather than a range of questions?
Mr. Michael Grylls: Does my right hon. Friend agree that those who press for compensation to be paid by the Government should bear in mind that compensation will come from taxes paid by all taxpayers and we should be cautious before we go down that route? However, is it surely not right that there should be a thorough investigation into the role of the financial intermediaries who made such rash recommendations, and, perhaps, the auditors, who should have known what was going on in Barlow Clowes throughout?
Mr. Newton: I obviously acknowledge my hon. Friend's first point. Whether it would be right to ask taxpayers to compensate is an issue to which the Government gave close consideration. I hope that my hon. Friend and the House will realise that in making the statement I labour under the difficulty, among others, that further action of various kinds may well arise from the facts revealed by the case. The point that my hon. Friend has in mind is perhaps best covered in the statement by my having said that my right hon. and noble Friend the Secretary of State has referred the report to the Institute of Chartered Accountants in England and Wales and to other regulatory bodies. I think that my hon. Friend will understand that I cannot go much beyond that, but I am sure that his point will have occurred to others.
Mr. Robert Sheldon: Is not the point encapsulated by one of my constituents who, at the age of 50, put all his redundancy money into Barlow Clowes, having gone to an intermediary, been informed that this was Government gilt-edged, that the company had its certificate and that its certificate had been renewed? Is not there clearly some sort of duty upon the Department to make some sort of compensation to such people?
Mr. Newton: I agree entirely with the right hon. Gentleman that the problem is encapsulated in the case
1022
that he has set out. However, I am afraid that I cannot agree that on the basis of the account of the Department's actions within the legislative framework—I am sorry to have to emphasise this again—that existed at the time the Department's behaviour gives rise to a case for asking taxpayers to fund a compensation scheme.
Mr. Nicholas Winterton: I warmly welcome the factual content of my right hon. Friend's statement, but does he accept that many hon. Members find his conclusions completely unjustifiable and con-fused? How is it that the Department granted a licence to a group of companies about which it had been warned by me, among other hon. Members, and when clearly, before granting the licence, there was inadequate monitoring, incompetent accountancy advice and inadequate auditing? Despite all that, the Department still gave the licence. Is it not correct to say that this was not an official decision but a political decision because the Department knew that something was wrong with the company and if it did not grant the licence some people would lose, whereas if it did grant the licence people might come out of it all right? Was not it a gamble—a gamble that went wrong for which the Government should accept liability?
Mr. Newton: I can readily accept, because it is made clear in the report, that at certain points in time decisions were put to and taken by Ministers, not by officials, which is entirely right. That is not at all the same as saying that they were political decisions in the sense that my hon. Friend rather implied in his remarks. They were decisions made in good faith on the basis of the information available and applying a necessary judgment about the balance of advantage and disadvantage, including to investors in general, arising from different courses of action. I have explained why judgments were made which led to the decisions that were taken at the time. I hope that my hon. Friend will study the report with care, which I recognise he has not yet had time to do, before continuing with suggestions of the kind that he made in his question.
Mr. Alfred Morris: Is the Minister aware that it was the case of my constituent, Mr. Leslie Mullard, aged 75, and his wife, who have lost £65,000, which went to the ombudsman as a test case, and of the reply to me from the ombudsman of 8 July? If the Government are not prepared to offer compensation, will they at least give a plain assurance in the House today that they will abide by any recommendation for compensation which may be made by Sir Anthony Barrowclough? What does the Minister say about the remark of the right hon. Member for Chingford (Mr. Tebbit) that he was minded to refuse the licence? How could the offshore fund have existed without the licence for the onshore fund?
Mr. Newton: I was of course aware, because it had been reported in the press, although I am not sure that it has been confirmed by the Parliamentary Commissioner, that the right hon. Gentleman had referred a case to the Parliamentary Commissioner. I have no doubt that a number of other cases have been referred to him as well. I made it clear in my statement, and I readily reiterate it, that the Government will co-operate, as they rightly should, and that they will consider with great care any report that the ombudsman may make. Beyond that, I am not prepared to engage in speculation about the

1023
hypothetical conclusions of a report that we do not yet know is going to be written without any opportunity to consider what it says.
Mr. Norman Tebbit: I remind my right hon. Friend, and I ask him to make it plain, that although I was not at the Department at the time that the licence was granted and that although it was reported in the press —and no doubt it will be dealt with in the report of the inquiry—a document during my time at the Department said that I was minded not to grant a licence. As anybody who has been in Government will know—I realise that few of those who sit on the Opposition Benches have been in Government——
Hon. Members: Is it in your book?
Mr. Speaker: Order.
Mr. Tebbit: As anybody who has been in Government will know, such an expression is a commonplace expression in correspondence, whether a Secretary of State has or has not minded himself to grant a licence. [AN HON. MEMBER: "Wriggling."] The hon. Gentleman says that I am wriggling. I think that he has forgotten that the correspondence said that I was minded not to grant a licence. What I am making plain is that I cannot take credit for having made a decision not to grant.
Mr. Newton: I think that I would simply like to thank my right hon. Friend for his observations.
Dr. David Owen: Popular capitalism, which this Government and many hon. Members support, surely depends on trust in institutions. How can we trust an institution, in this case the Department of Trade and Industry, when we know that the Bank of England and the stock exchange raised very serious questions? Can the right hon. Gentleman really come to the House and say that, given the background to these events, its actions were careful, considered and reasonable? Is it not time for this House, as an institution of Government, now to demand ex gratia payments for these small investors?
Mr. Newton: I hope that the right hon. Gentleman will —as I am sure he will—read, in the case of the Bank of England in particular, the text of the letter that it wrote, which is contained in the report. The suggestion in that letter on which I think his comments rely is of the form that "it occurs" to the writer that something may be the case. I think that the right hon. Gentleman will accept that that is not a basis on which a Department could launch action that would precipitate the collapse of a company or, in this case, a partnership. As for the stock exchange, my statement made it absolutely clear that once the concern began to have some flesh put on it, which was only at a relatively late stage, the Department not only took it seriously but set in hand the action that ultimately brought about the winding up of the company.
Mr. Stephen Day: Is the Minister aware that over 400 investors in my constituency have been affected and is he also aware that the majority of these people are not City whizz-kids? They put their life savings into Barlow Clowes largely because of the guarantee that they thought they had of a DTI licence. Will the Minister comment on the fact that if the Financial Services Act 1986 had been fully in operation when Barlow Clowes
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collapsed, many of these investors would probably have been protected by the fund that was established under the provisions of that Act? As the Government recognise the principle and the need for such funds to be available in those circumstances, will they not accept that principle and do something about it, not because they are legally required to do so but because they have a moral duty to help people who are now in extremely dire circumstances?
Mr. Newton: It is certainly the case that, had the full framework of the Financial Services Act been in place, the position would have been a great deal better than under the legislation as it existed at the time. I cannot quite endorse the precise proposition that my hon. Friend has put to me. It would have depended on whether or not this or any other firm was duly authorised under the Financial Services Act. In the light of v/hat we now know, it appears to be highly unlikely that that would have been the ease, but what is very clear indeed is that the new legislation —the improved regulatory system—should make it very much less likely—even though, in the nature of things, it cannot make it totally impossible—that events of this very unhappy kind for my hon. Friend's constituents and others will occur again.
Mr. Brian Sedgemore: Is it a fair summary of the Minister's 17-minute statement that for a long time members of the DTI knew that Barlow Clowes were criminals but could not prove it and that when they could prove it and had the option of prosecuting or granting a licence they chose to grant a licence? Is that the acceptable or the unacceptable face of Thatcherism?
Mr. Newton: The short answer to the hon. Gentleman's question is that that is not true. When he has had a chance to read the report I think that he will recognise that that is not true.
Mr. Anthony Nelson: Is my right hon. Friend aware that his very full and detailed statement will be studied with care not only by Barlow Clowes shareholders and investors but by investors throughout the country in many other concerns? I put it to my right hon. Friend that the lesson to come out of this is that we should not wait for the horse to bolt before we close the stable door. Whether it is the Department of Trade and Industry or the Securities and Investments Board, I think that investing members of the public would like to feel that at an earlier stage of the proceedings the whistle was blown on fraudsters and rip-off merchants such as this. When this matter was discussed in the House during the passage of the Financial Services Bill, hon. Members on both sides of the House argued the case for the Securities and Investments Board to be able to play a much more incisive and investigative role in these matters, but that argument was resisted by the Government who said, "We are too afraid of a more powerful body overseeing the City." I believe, as do many other people, that the time has come for a rethink.
Mr. Newton: First, I agree with my hon. Friend that there is material in this report and in the sequence of events for large numbers of people to study. I hope that the report will be studied by many intermediaries and by all those who are concerned with the regulatory system. Secondly, if my hon. Friend is suggesting that we waited for the horse to bolt before we shut the stable door, may I make the

1025
simple point that this Government, after decades during which no previous Government had tackled this problem, set up the Gower committee on investor protection in 1981 and introduced new regulations under the existing legislation in 1983. The Government have now produced a comprehensive framework. Far from waiting until the horse had bolted, we have got on with the job and a new framework is now in place.
Mr. James Lamond: When the Minister remembers that many thousands of small investors have lost at least a quarter of their capital, some of them perhaps 75 per cent. of it, together with the income that they derived from it, and when he recalls the crocodile tears that have been wept over the years, by the Prime Minister in particular, over the erosion of old people's capital by inflation, and also the very substantial "lifeboat" that was launched in the past to assist the banks who got into trouble, does it not smack a little of hypocrisy for him now to speak of protecting taxpayers' money in order not to compensate the small savers who have lost their savings?
Mr. Newton: The hon. Gentleman will, I hope, recall from my statement that I made it clear that we considered very carefully—I mean that—whether it would be proper to compensate for just the sort of reason that he has outlined. We came to the conclusion that, on the basis of the facts set out in Sir Godfray's report, we could not properly do that.
Sir Peter Emery: My right hon. Friend will recognise the concern felt on both sides of the House, which is justified, but we must not reach a judgment until people have had time to study the report. Sir Godfray was asked:
"to investigate … with particular reference to … the monitoring of the activities of the licence holder."
We have not heard anything from my right hon. Friend about the activities of the licence holder, which many of us believe were extremely dubious. If he conducted his business in a doubtful way, ought that fact not to be made clear from the Dispatch Box? If it is believed from the report that there are liabilities attaching to the auditors and to the financial advisers, can the Government bring together those who are liable—many of whom are insured, so the insurance factor will deal with the liability—so that we can finalise the matter quickly and not have it drag through the courts for years and years?
Mr. Newton: I note my hon. Friend's latter suggestion. I hope that people will read this extremely comprehensive report thoroughly. With regard to monitoring, my hon. Friend will realise that he is taking me back to the ground, over which I skated delicately some questions ago, concerning possible issues of liability in various directions arising from the report. My hon. Friend will realise that I cannot speculate or comment further on that, having made it clear that the report has gone to the relevant regulatory bodies.
Mr. Jack Ashley: The Minister has given us his interpretation of the facts and mentioned a possible reference to the ombudsman. May I suggest that he goes much further and assures the House that, if the ombudsman finds a different interpretation of the facts
1026
and also finds maladministration, there should be full compensation? If he does not, the right hon. Gentleman is saying that the Government will accept the ombudsman's findings only when they suit them.
Mr. Newton: I do not think that I have implied any such thing. I have said very clearly that we shall consider carefully any report which the Parliamentary Commissioner produces. I repeat what I said to the right hon. Member for Manchester, Wythenshawe (Mr. Morris) —I am not prepared to engage in speculation about hypothetical reports before we have had a chance to study them.
Mr. David Howell: We shall obviously have to examine the report in great detail and not rush to instant judgments. Is my right hon. Friend aware that he does not sound quite right, and nor, from what he says, does the Le Quesne report, when he makes such a clear distinction between the Barlow Clowes UK portfolios and its Gibraltar portfolios? Is he aware that some investors had their funds switched between the two, often without their knowledge, and that there was not the clear distinction that seems to be implied in the report? Will my right hon. Friend take that into account? My right hon. Friend is aware that the reference to the ombudsman will take several months, so will he not rule out the idea of temporary support and help for real hardship cases while this affair drags on?
Mr. Newton: With regard to the latter part of my right hon. Friend's question, I cannot add to what I have already said about the compensation issue as a whole. Of course I accept—it is clear with hindsight—that funds were switched from one portfolio to another and that a number of things that happened should not have happened. The issue that Ministers have had to consider is whether the Department, exercising its regulatory functions, could reasonably have been expected to know that that was happening when it was happening. That is the point to which my comments were directed.
Several Hon. Members rose——
Mr. Speaker: Order. I appreciate the House's anxiety about this matter but I have to balance it against today's business. There was great distress among hon. Members last night who were unable to speak in the debate on the Defence Estimates. I shall therefore allow questions on the statement to run for a further 10 minutes when we shall move on to business questions. I shall endeavour to ensure that hon. Members who cannot be called to ask a question on this statement will be called then.
Mr. Joseph Ashton: Is the Minister saying that his Department monitored only sample advertisements in the financial press? Was it unaware of massive advertising in trade union magazines and others aimed at professional and managerial people nearing retirement or taking large lump sums on redundancy? Was no check made on those advertisements to establish how many people might be caught?
Mr. Newton: I think that I made it clear in my statement that the Department's monitoring rested on sampling the national and financial press. Some of the advertising to which the hon. Gentleman refers was not covered by that sampling system. I am advised that there are about 8,500 periodicals and publications in Britain which carry heaven

1027
knows how many advertisements. I think that the hon. Gentleman will understand that monitoring each and every advertisement in each and every publication would be a task on a scale which would present great difficulties.
Mr. Ian Gow: Is it really the Government's view that no fair-minded person reading Sir Godfray's report could believe that any blame, let alone any negligence, attaches to my right hon. Friend's Department? If the Parliamentary Commissioner should decide to investigate a complaint of maladministration against his Department, is there any information over and above that already provided by his Department to Sir Godfray which could be provided to the Parliamentary Commissioner?
Mr. Newton: I am certainly not aware of any additional information which the Department could make available because—I hope I need hardly say it—the Department has made available to Sir Godfray for his inquiry all the information and papers that it has on this subject. That is not to say that nothing further could conceivably emerge from other quarters. We have co-operated with Sir Godfray in good faith, just as we shall co-operate with the Parliamentary Commissioner for Administration if he decides to investigate.
The report sets out a set of facts on which, necessarily, a judgment has to be made. As I have said to one or two hon. Members on both sides of the House, it is obviously possible for judgments to differ, but I have given the Government's judgment on these facts.
Mr. Harry Ewing: Is the right hon. Gentleman aware that I have a great deal of sympathy for him as he has been landed with this problem although he had no ministerial responsibility during the course of events which led to his statement?
It is extremely important that the right hon. Gentleman should take up the point made by hon. Member for Croydon, South (Sir W. Clark) about civil servants in the Department, and the announcement from the Dispatch Box that the permanent secretary is examining whether civil servants should be moved or removed. Is he aware that it is highly undesirable for Ministers to come to the Dispatch Box and make such statements about civil servants? If heads are to roll, they ought not to be civil servants' heads but ministerial heads.
Mr. Newton: I thank the hon. Gentleman for his initial comments but, to judge from the rest of his question, I think that he may have misunderstood what I said. I was asked about the position of civil servants. I made it clear that that is a matter ultimately for the Head of the Civil Service, but in the first instance it is one for the permanent secretary to the Department of Trade and Industry. I said what conclusion the permanent secretary to the DTI had come to.
Sir Peter Hordern: Will my right hon. Friend confirm that in the face of warnings from the Bank of England and the stock exchange his Department issued a licence in 1987, and that it did so on the balance of advantage, to avoid turmoil? What is the position of those investors who would have been saved had the Department taken action in 1987 and refused a licence, but many of whom invested their life savings thereafter? Does my right hon. Friend really feel that no moral responsibility attaches to the Government in that case?
Mr. Newton: My hon. Friend has rightly made a point that came up on numerous occasions in my statement and during the questions on it. Any decision on these matters had to be made on the basis of a balance of considerations and the consequences that would flow from alternative action. I hope that he will weigh the possibility at least —perhaps even more—that had Ministers made a different decision at the time we should be debating not his point about those who invested subsequently but instead the plight of those who had suffered from a disorderly collapse of the kind that I outlined earlier.
Mr. D. N. Campbell-Savours: Is not the real reason why the Government do not want to pay compensation that the matter has implications for investors in Investor Discount Brokerage, Afcor Investments and Harvard Securities, all of which have closed down over the past 12 months? In each case, investors allege—and have sent evidence to the Department—that Department inspectors had refused to act when they clearly should have acted to protect investors' interests.
Mr. Newton: No, I do not accept that interpretation in any way. As I said in my statement, the Government have carefully considered the case for compensation against the background of the facts revealed in Sir Godfray's report and decided that against that background it was not possible for us to conclude that taxpayers should be asked to fund compensation.
Mr. David Shaw: Does my right hon. Friend accept that, from the point of view of anyone with experience of the investment industry, there is no question but that his Department acted in accordance with the correct and proper procedures, from all that he has said? However, the real issue surely is that the blame must lie substantially with the firms of accountants and solicitors that gave false assurances to his Department. I note that he did not say that he was referring the report to the Law Society, and I trust that he will assure us that he is. He must surely accept that the real question is not where the blame lies but how quickly old-age pensioners—the elderly investors who might die before they can get their money back—will receive compensation. Will my right hon. Friend look at the legal procedures and all the problems that those investors will face in getting quick compensation?
Mr. Newton: I referred in my statement to the estimates that we have been given by the liquidators in respect of this country and Gibraltar, both of the current position and of the timing of any payments to investors. In particular, the liquidator of the United Kingdom operation hopes to make an interim distribution before Christmas. I hope that that will be some encouragement to my hon. Friend. We shall certainly do anything that we can to ensure that the process is completed as soon as possible.
On my hon. Friend's first point, I refer him to what I said earlier in these exchanges about the position of the various advisers involved. I have no doubt that the Law Society will have its attention drawn to his remarks.
Mr. Bill Michie: The Minister has outlined the long period of fiddling by Barlow Clowes and the dithering of the Department of Trade and Industry but then said to the House that there would be no compensation for those affected by this illegal action. On

1029
behalf of those of my constituents who have written to me, I must ask how the Minister and the Government can justify allowing £1,000 expenses a week for Clowes when some of the victims are now having to manage on social security.
Mr. Newton: I can certainly give the hon. Gentleman an undertaking that we shall do everything in our power to encourage the liquidator—the decisions in these matters are his—to ensure that the expenses are kept to a minimum. I do not accept the hon. Gentleman's description of the Department's handling of the matter, which was a very difficult matter involving complex issues. As I have said repeatedly, the matter involved courses of action all of which were bound to have some disadvantages. I believe that reasonable judgments were made at the time against the background of the information available at the time and in the context of the legal powers available at the time.
Mr. Tim Smith: Could my right hon. Friend do a little more than take note of the suggestion made by my hon. Friend the Member for Honiton (Sir P. Emery)? Given that people who have just lost all their life savings are not the best placed to take legal action, and that the Department relied heavily on assurances given by Spicer and Pegler and Herbert Smith, could he not get together some of the professional advisers to decide whether there should be some sort of out of court settlement?
Mr. Newton: I note that that suggestion has been made for a second time. However, in the circumstances and for reasons that my hon. Friend will understand against the background of my remarks, I do not think that I want to go further on the role of the various special advisers involved.
Mr. George Foulkes: After the Minister's long statement and all the answers that he has given I am still not clear how to advise my constituents who invested in Barlow Clowes and felt safe to do so because the DTI had given the company a
1030
licence in 1985. Will the Minister amplify what he said in reply to my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris)? Is some kind of compensation one of the options that he will eventually consider when he gets the ombudsman's report or should my constituents and all the other investors now abandon hope of any compensation and realise that they have been abandoned by the Government?
Mr. Newton: I should make clear what I said in my statement about the current expectations of the liquidators concerning the amount that will be returned to investors. As I suggested, in the case of the United Kingdom operation in particular, that amount is expected to be really quite substantial. I am sorry, but beyond that I cannot add to what I have already said about the Parliamentary Commissioner and the report that he may possibly produce.
Mr. Alastair Goodlad: Does my right hon. Friend accept that the sorry sequence of events that he has recited will give no comfort to the unfortunate victims of the affair, who may have hoped for compensation from his Department, for which there are clearly no grounds whatever, or for ex gratia payment, for which there are clearly no grounds whatever——
Mr. Robin Maxwell-Hyslop: There are excellent grounds.
Mr. Goodlad: —but that in what my right hon. Friend has said about the position of the solicitors, accountants and intermediaries of all sorts there are grounds for hope? More generally, does my right hon. Friend accept that in the regime following the enactment of the Financial Services Act 1986 events such as these could not be repeated?
Mr. Newton: I am grateful to my hon. Friend for the first part of his remarks. I should perhaps make it clear that I have not—in the sense in which he implied—said anything about the accountants or the solicitors. I have also made it clear that there are issues which will need to be—and which no doubt will be—considered by the relevant regulatory bodies.
I note my hon. Friend's last point.

Business of the House
4.37 pm
The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): With permission, Mr. Speaker, I should like to make a statement about the business for next week:
MONDAY 24 OCTOBER—Consideration in Committee of the European Communities (Finance) Bill.
Motion relating to the Local Government (Prescribed Expenditure) (Amendment) (No. 2) Regulations.
TUESDAY 25 OCTOBER—Opposition Day. There will be a debate on an Opposition motion entitled "The State of the Econony".
Second Reading of the Road Traffic Bill [Lords], the Road Traffic (Consequential Provisions) Bill [Lords], and the Road Traffic Offenders Bill [Lords], which are consolidation measures.
WEDNESDAY 26 OCTOBER—Consideration of Lords amendments to the Housing (Scotland) Bill.
Motions relating to Scottish community charge regulations. Details will be given in the Official Report.
THURSDAY 27 OCTOBER—Remaining stages of the European Communities (Finance) Bill.
Motion on the Housing (Northern Ireland) Order.
FRIDAY 28 OCTOBER—There will be a debate on the disposal of radioactive waste on a motion for the Adjournment of the House. The Environment Committee's first report Session 1985–86 on radioactive waste (HC 191) and the Government's second stage response (Cmnd. 9852) will be relevant to the debate.
MONDAY 31 OCTOBER—Second Reading of the Rate Support Grants Bill.
The House will wish to know that it is proposed that Government business will be taken in the week beginning 14 November. The new Session will open on Tuesday 22 November.
[Debate on Wednesday 26 October 1988: Abolition of Domestic Rates (Domestic and Part Residential Subjects) (Scotland) Regulations 1988; Community Water Charges (Scotland) Regulations 1988; Community Charges (Registration) (Scotland) (No. 2) Regulations 1988; Standard and Collective Community Charges (Scotland) Amendment Regulations 1988; Personal Community Charge (Exemption for the Mentally Impaired) (Scotland) Regulations 1988; Community Charges (Registration) (Scotland) (No. 2) Amendment Regulations 1988.]
Mr. Frank Dobson: I thank the right hon. Gentleman for his statement, and, in particular, for the Opposition day set down for next week. In view of the fact that the parliamentary year is scheduled to last no fewer than 18 months on this occasion, will he tell us whether we shall have an Opposition day every week during the spillover period to go some way towards compensating for and matching the enormous extension of time made available for Government business?
In view of the widespread concern over today's statement about Barlow Clowes, and the number of hon. Members who wished to ask questions after the statement and did not get in, can we expect an early debate on the matter?
In view of the Prime Minister's recent much-vaunted conversion to protecting the environment, can we expect
1032
an early debate on that subject in Government time, or will her conversion prove to be about as authentic as the Turin shroud?
Does the right hon. Gentleman recall that he has still failed in his duty to the people of Scotland in not getting enough Tories to serve on the Select Committee on Scottish Affairs? When can we expect the promised debate on his failure to set up that Select Committee?
Finally, in view of the growing crisis of homelessness, and the likely further increase in homelessness as many people cannot find the money to meet their mortgage repayments, can we expect a debate on homelessness and housing in Government time?
Mr. Wakeham: The hon. Gentleman asked me five questions on the business for next week. First, he asked me about an Opposition day. I recognise that it has been a long Session, and that we have already provided one extra day over that required by Standing Orders. I suggest that we discuss the question of additional time through the usual channels.
The hon. Gentleman raised the matter of Barlow Clowes and the report. I recognise that it is a very important matter, which the House will want an opportunity to discuss. I suggest that we spend the weekend reading the report, and perhaps have discussions through the usual channels to decide how best to proceed, as clearly many important issues have emerged from the exchanges that we have just had.
The hon. Gentleman's remarks about the Prime Minister and the environment are not really worthy of him, from his present position, but there will be a number of occasions when those issues will be debatable in the near future. I have no doubt that opportunities will be taken in the debate on the Queen's Speech, and so on.
With regard to Scotland, the hon. Gentleman, representing a London seat, seems continually to misrepresent the position. As he knows, proposals were put to the Opposition which were unacceptable to them. I regret that. I gave an undertaking that there would be a debate on it, and I shall honour that undertaking, but I consider that discussions through the usual channels will be the best way to proceed.
In regard to homelessness, I am conscious that a debate did not take place as intended, as a number of Opposition Members wished to raise an earlier matter at considerable length. That presents us with some difficulties. I think it is a matter best discussed through the usual channels.
Mr. Julian Amery: Would my right hon. Friend arrange for a general debate on Northern Ireland before the summit meeting between our Government and the Government of the Republic of Ireland to review the Anglo-Irish Agreement so that Her Majesty's Government will have the benefit of the views of the House on the matter?
Mr. Wakeham: I fully recognise my right hon. Friend's concern, and the force of his argument. I shall have to look into whether I can provide time, but of course there will be occasions when Northern Ireland issues can be raised. I shall look into the matter for my right hon. Friend.
Mr. Menzies Campbell: In view of events during the summer Olympic games, and certain remarks attributed to the Minister of State, Home Office since then, will the Leader of the House find an early date

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for a debate on drugs in sport? When he is considering that, will he bear it in mind that 179 hon. Members, in the current Session, have signed an early-day motion supporting in principle the proposal that anabolic steroids should become controlled drugs under the Misuse of Drugs Act 1971?
[That this House notes with concern the evidence of mounting use of anabolic steroids by sportsmen and women which is recognised as having dangerous medical side-effects including the risk of death; is concerned that such drugs are freely available in the United Kingdom and are a source of temptation to naive competitors, unscrupulous coaches and over-ambitious parents; and expresses its support for the principle of making anabolic steroids controlled drugs under the Misuse of Drugs Act 1971.]
Mr. Wakeham: That is a suitable subject for debate. I cannot promise an early debate on it, but I shall certainly bear the hon. Gentleman's suggestion in mind.
Mr. Patrick Cormack: As my right hon. Friend and his ministerial colleagues are preparing for the Barlow Clowes debate, will they consider not just what Ministers and officials could reasonably be expected to know, but what investors could reasonably be entitled to think?
Mr. Wakeham: I do not think that I shall stray any further into the matter than my right hon. Friend the Chancellor of the Duchy did when speaking at the Dispatch Box a few moments ago. However, I shall certainly take note of my hon. Friend's point and draw it to his attention.
Mr. Dennis Skinner: When this debate on Barlow Clowes takes place, can we have a guarantee that by the time we have the debate the Secretary of State will have got the sack and been replaced by an elected Member who can carry the can? Will the Leader of the House ensure that the Chancellor of the Duchy does not take part in the debate, in view of the fact that it will not be lost on the British people that that Minister spent a lot of time at the Department of Health and Social Security when 138,000 people were arrested and tried under this Government——
Mr. Speaker: Order. Questions, not statements.
Mr. Skinner: I am just suggesting that we do not have that Minister in the debate, because the British people understand that if a Minister can be part and parcel of 138,000 people being arrested and convicted for fraud on the DHSS when the Government do not have the guts to deal with licences——
Mr. Speaker: Order. This is an abuse of business questions.
Mr. Wakeham: The hon. Gentleman's question is not much about next week's business, but I think that I can answer him. In a fairly uncertain situation, one thing is certain. As far as I know, my right hon. and noble Friend will still be Secretary of State when we have any debate on the matter, and almost certainly my right hon. Friend the Chacellor of the Duchy will reply to any debate in this House, and he will do it extremely well.
Mr. Michael Latham: Before we have a debate on Barlow Clowes, be it the week after next or whatever, will the Minister, whose statement today, frankly, was extremely disappointing and sounded too much like civil servants protecting their own backs, come to the Dispatch Box next week and announce what he will do about the specific suggestion made by two Conservative Members—that the affected interests should be called in to see if they can sort it out as the Minister is not prepared to do it himself?
Mr. Wakeham: I shall certainly pass that suggestion to my right hon. Friend, who has already taken note of it from the questions raised with him. I do not think I can add anything more at this stage.
Ms. Joan Walley: Does the Leader of the House have any proposals to bring forward a Bill for the removal of Crown immunity from the Palace of Westminster? In the light of the removal of asbestos from offices in the Tea Room corridors, will he make arrangements to report back to the House meetings he has had with Ministers at the Department of the Environment to make sure that hon. Members and their staff who are working in the Tea Room buildings can be sure that there are no asbestos fibres there, and, rather than depending on random sampling of asbestos, will he ensure that each office has been sampled so that the same safeguards apply that would apply to local authorities throughout the land?
Mr. Wakeham: There are two parts to the hon. Lady's question. First, on bringing forward legislation on the matter, I can assure the hon. Lady that at this stage in the Session, I am very anxious to get existing legislation through and I have no proposals to bring any further forward at this stage. Secondly, I recognise her concern and perhaps that of other hon. Members. I am looking into the matter, and I shall be in touch.
Sir Philip Goodhart: There has been considerable anxiety about the Government decision to repatriate 9,000 Vietnamese boat people who are now in Hong Kong. Can we have an early debate or a statement by the Foreign Secretary so that we can probe the assurances that have been given that those unfortunate people will not face punishment or starvation?
Mr. Wakeham: I recognise the concern expressed by my hon. Friend. It is an important matter. I cannot promise an early debate, but I know of occasions in the near future when such matters could be raised when the Foreign Secretary will be taking part in a debate in the House.
Mr. Alex Salmond: In considering the case for an early debate on the bid for Scottish and Newcastle Breweries by Elder IXL, will the Leader of the House take note of the unity of Scottish opinion on that matter across party boundaries? Will he take note of the fact that the Secretary of State for Trade and Industry has powers under the Industry Act 1975 to prevent, by prohibitive order, the transfer of control of important manufacturing concerns? Given the unity of Scottish opinion, is there not a substantial case for early action to end the uncertainty that should be tested in an early debate in the House?
Mr. Wakeham: As the hon. Gentleman knows, the proposed acquisition is being considered by the Director General of Fair Trading. He has a statutory duty to advise

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my right hon. and noble Friend the Secretary of State. It would not be appropriate for me to say anything more at this stage.
Mr. Patrick McLoughlin: May I draw my right hon. Friend's attention to early-day motion 542 which deals with the appointment by Derbyshire county council of a former Labour Member of Parliament to the post of county director at £45,000 a year?
[That this House deplores the appointment by Derbyshire County Council of Mr. Reg Race, former hon. Member for Wood Green, former Research Officer for the National Union of Public Employees, former head of the Greater London Council's programme office, former consultant to the Association of Cinematograph, Television and Allied Technicians and former researcher to the Labour-funded London Government Information Unit, to the £46,000 a year post of County Director; and believes that all local authority employees should be politically impartial and that Derbyshire County Council is making appointments on the basis of whether or not candidates are acceptable to the ruling group 's left-wing views and not on the basis of merit and experience.]
Would it be possible to have a debate on the conduct of local government, bearing in mind that unsatisfactory appointment? The man has now resigned—[Interruption.] Well, he has resigned. The people of Derbyshire are wondering how much it cost to appoint him and how much has been spent on removal expenses for what has turned out to be an unsatisfactory nine-month political appointment. Is it not time for proper debates on the conduct of local government?
Mr. Wakeham: My hon. Friend has raised an important point. Effective local government rests solidly on the tradition of politically neutral officers, serving with equal commitment whichever party is in political control. There is increasing concern that in some cases appointments are politically motivated. The Widdicombe committee has put forward proposals aimed at preventing such abuses and the Government are considering them carefully.
Mr. Tony Banks: Is this a statement?
Mr. Wakeham: I have a note on every early-day motion on the Order Paper, and I propose to give the right answers.
Mr. Max Madden: In view of that interesting reply, will the Leader of the House arrange for Law Officers or Ministers in the Department of the Environment to make a statement tomorrow morning, hopefully having persuaded the Bradford Conservative council overnight to drop its plan to restrict public entry to next Tuesday's Bradford council meeting? Does the Leader of the House realise that many of my constituents and hon. Members will be denied access to that council meeting if the plan is allowed to be introduced?
Does he not realise that, however much Bradford Conservative council attempts to stop the public from witnessing its proceedings, it will not conceal the fact that it has no electoral mandate or popular support for the 9,000 redundancies and other deeply damaging policies it is hoping to steamroller through at next Tuesday's
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meeting? Incidentally, it will be breaching a Bill which was sponsored by the Prime Minister soon after she was elected as the Member of Parliament for Finchley.
Mr. Wakeham: I know that this afternoon the hon. Gentleman has been in touch with officials at the Department of the Environment. Those are matters for the council, but I will ensure that the Minister for Local Government is aware of the hon. Gentleman's view.
Mr. Robin Maxwell-Hyslop: Will my right hon. Friend, without fail, arrange for the Chancellor of the Duchy of Lancaster to appear next week again at the Dispatch Box because his statement today was so inadequate and important questions remain unanswered? In his statement, will he address himself particularly to his Department's negligence, reported in paragraph 5.1 of the Le Quesne report, in which it is clear that the Department of Trade and Industry agreed to the two devices which enabled any fraud that took place to take place, namely electronic rather than written records and a system of obviating the necessity for issuing contract notes, without which any fraud would have been revealed before a lot of people had bought these securities?
Mr. Wakeham: I believe that my suggestion that we should all read the report over the weekend and then decide how best to proceed is the best suggestion I have for the House.
Mr. Jack Ashley: As the freezing of child benefit will have serious implications for the future of poor people and for the political future of the Secretary of State for Social Security, would it not be wise to debate that subject next week?
Mr. Wakeham: The wise course is to wait until the statement on such matters is made in the normal course of events.
Mr. Phillip Oppenheim: I wish to reinforce the request made by my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin) for a debate on the recent sudden and surprising resignation of Reg Race, former Labour Member of Parliament, from his position as chief officer of Derbyshire county council. Will my right hon. Friend bear in mind that there is grave concern in Derbyshire that the resignation of Mr. Race is not unconnected to a large secret investment that the county council pension fund has made in a business operated by Owen Oyston, a former estate agent from Manchester? Will my right hon. Friend bear in mind the great concern in Derbyshire about that matter?
Mr. Wakeham: These are not matters for me, but I note what my hon. Friend has said.
Mr. David Clelland: Notwithstanding his previous answer on the subject, will the Leader of the House make arrangements for an early statement on the Government's position on the hostile takeover bid for Scottish and Newcastle Breweries, the Newcastle half of which is in my constituency? Is he aware that, although the people of Tyneside may be willing to accept Australian Neighbours, they are not willing to accept Australian Foster parents?
Mr. Wakeham: My right hon. and noble Friend the Secretary of State has a statutory duty in these matters, and it would not be right for me to comment while he is considering his duty.
Mr. Nicholas Budgen: Since the European Communities (Finance) Bill, with which the House will be dealing on Monday, envisages an 80 per cent. increase in European structural funds, a measure that will finance Euro-Socialism, will my right hon. Friend say, in view of the change in the Government's position as signalled by the Prime Minister's recent speeches about Europe, that the Government will be voting against that 80 per cent. increase?
Mr. Wakeham: The appropriate Minister will deal with the Bill on Monday when it comes before the House. However, I know that my right hon. Friend the Prime Minister fully supports the Bill, and I hope that my hon. Friend does as well.
Mr. Allan Roberts: Will the Leader of the House arrange for a statement to be made next week on the privatisation of Girobank? Will he ask the Minister to explain why the short list of those who have put in bids has not yet been announced, although it was promised that it would be announced during the recess? Will he ask the Minister to say whether there is any truth in the fact that the Bank of Scotland was on the short list and has withdrawn and that great difficulties are being experienced by the Government in their attempt to privatise Girobank?
Mr. Wakeham: I do not know whether that is correct. I do not believe it to be so. I shall refer the matter to my right hon. Friend the Minister, who I am sure will make a statement, if a statement is needed.
Sir Michael McNair-Wilson: Is my right hon. Friend aware that during the summer recess I had an opportunity to visit a unit at the Royal Berkshire hospital which is keeping premature babies alive? I was told that it is now possible to enable a 22-week-old baby to survive. In view of the grave implications of that, in terms of the Infant Life (Preservation) Act 1929, for medical teams which may be terminating pregnancies after that age, may I suggest that he should find time for the House to reach a final decision on the Abortion (Amendment) Bill introduced by the hon. Member for Liverpool, Mossley Hill (Mr. Alton)?
Mr. Wakeham: I recognise the concern, but I cannot add anything to what I have said before. Private Members' Bills are dealt with under procedures that the House has agreed. I cannot arbitrarily make a change in those arrangements.
Mr. Tony Banks: Will the Leader of the House arrange for a debate next week on the corrupt and incompetent policies being pursued by Tory-controlled Westminster city council, so that we can have an opportunity to discover more about the scandalous deal between Westminster city council and the Conservative party over the freehold sale of the office in Smith Square? It is clear that that cost Westminster ratepayers a great deal of money. If we are to talk about efficient local government, the activities of Westminster city council deserve much wider discussion.
Mr. Wakeham: The partial way in which the hon. Gentleman asked his question showed that he does not expect me to be very forthcoming in my answer. I cannot promise such a debate, but no doubt he can find a way of raising any points that he believes to be important.
Mr. John Browne: Does my right hon. Friend recall that, in his statement, our right hon. Friend used the word "exceptional" to describe the Barlow Clowes affair? Quite apart from any legal obligation that may or may not come from reading the report and further investigations, many Conservative Members feel that the Government have an exceptional moral responsibility. Would it be possible to make the proposed debate on Barlow Clowes a matter of urgency before the Government make further statements on proposals without having sensed the feelings of Conservative Members?
Mr. Wakeham: I still think that the advice that I have given to read the report over the weekend and consider how best to proceed is the right advice for the House.
Mr. Bob Cryer: May I suggest that the Leader of the House resurrects the Salmon commission's report on standards of conduct in public life? It would enable us to discuss the responsibility of the Secretary of State for Trade and Industry in the Barlow Clowes affair and why he has not resigned, as used to be the case when Ministers behaved in a crass and incompetent way. It would enable us to discuss the responsibilities of members of local government and the lord mayor of Bradford, who is using his casting vote in an unscrupulous and cheating way to maintain the Tories in office so that they can sack 9,000 employees, close 25 community centres and half a dozen benefit shops and make savage cuts elsewhere. Surely it is a matter of concern for the House that these massive cuts and attacks on the city of Bradford are being made in this unfair, cheating and gerrymandering way. We should discuss the matter, and the Salmon report contains the basis on which to do so.
Mr. Wakeham: I am sure that, when Lord Salmon wrote his report, he did not expect it to be used in the sort of question that the hon. Gentleman puts to me today.
Mr. Peter Thurnham: May we have an early debate on the need for legislation to deal with the dumping of toxic and other waste materials and for heavier fines to stop illegal dumping?
Mr. Wakeham: This is an important matter. I cannot promise a debate specifically on this subject, but, with a little skill, my hon. Friend might be able to make a point or two on Friday 28 October.
Mr. Ivor Stanbrook: Since my right hon. Friend says that he has a note on all motions on the Order Paper, will he say what progress has been made with the implementation by the Government of what is required under early-day motion 6?
[That this House deplores the fact that, alone among public service pensioners, those whose service was overseas cannot count pre-appointment war service towards their pensions; and calls upon Her Majesty's Government to remedy this injustice to a dwindling group of elderly people whose working lives were spent in adverse conditions while dedicated to the service of British interests overseas.]

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It calls on the Government to end the anomaly whereby all public servans receive credit for war service unless that public service was abroad. Surely it is time for the Government to honour their implied moral obligations. Between the "court of Star Chamber", the Treasury and the Foreign Office, will he kindly ensure that this early-day motion is accepted and that the money is paid?
Mr. Wakeham: My hon. Friend raises early-day motion 6, and I shall tell him what my note says. My hon. Friend has had a long-standing interest in this matter and has raised it in the House on a number of occasions. We recognise how strongly the colonial service pensioners feel about the issue and we shall keep it under careful review. As my hon. Friend will appreciate, however, there are many claims on public expenditure resources.
Mr. Jonathan Sayeed: Does my right hon. Friend agree that it is a policy of enlightened self-interest that education be involved in business and business in education? If he agrees that that is the case, will he arrange for an early debate on the decision of Customs and Excise to charge VAT on gifts by business to universities?
Mr. Wakeham: I think that my hon. Friend is in luck. If he attends tomorrow and catches your eye, Mr. Speaker, this subject will be appropriate to the debate on education and industry links.
Mr. David Martin: Does my hon. Friend appreciate the strength of feeling about the inadequacy of the law and the state and practice of sentencing those who drink too much, get into a car, drive away and kill someone? May we have an early opportunity to debate the North report's proposals and hear the Government's conclusions on those proposals and, thereafter, have an early opportunity for legislation?
Mr. Wakeham: This is an important matter, and, as my hon. Friend probably knows, I have some responsibility for these matters. At present, we are considering the recommendations of the North report. When we have reached our conclusions we shall report to the House and decide how best to proceed from there.

Written Answers
5.6 pm
Mr. Roy Hattersley: On a point of order, Mr. Speaker. Earlier this afternoon the Home Secretary and the Secretary of State for Northern Ireland distributed in the Press Gallery what purported to be written answers to parliamentary questions. Both concerned the future of the right to silence within the United Kingdom system of justice. One was not a written answer, for no question on the subject had been placed on the Order Paper. Both amounted, with varying degrees of ingenuity, to stratagems to avoid making a statement in the House. I do not wish to debate the merits—nor would you allow me to do so—of what the statements proposed, although it is important to my point of order to mention that until now the right to silence has been an essential aspect of our free society.
My point is simply that the prospect of a change to our legal system as fundamental as that should have been announced to the House in the proper and usual way. I therefore ask you, Mr. Speaker, first, what can be done to prevent the Government behaving in this hole-and-corner way and, secondly, whether we may have an explanation tomorrow from the Government about how something described as a parliamentary answer, which was not a parliamentary answer, was circulated in the Press Gallery, and what are the consequences of that mistake.
The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): I shall certainly look into the matter. As I understand it, two written answers have been made today by my right hon. Friend the Home Secretary and my right hon. Friend the Secretary of State for Northern Ireland that were perfectly in order.
Mr. Frank Dobson: No.
Mr. Wakeham: May I finish by saying that if I find that that is not the case I shall communicate it to you, Mr. Speaker.
Mr. Speaker: I have looked at one of the written answers. Written answer No. 249 says "pursuant to a reply on 20 July." I am not aware of the second written answer.
Mr. Kevin McNamara (Kingston-upon-Hull, North): Further to that point of order, Mr. Speaker. I appreciate that the Secretary of State for Northern Ireland had difficulties, but nevertheless he circularised a written answer without a question being put down, and the question was not headed "pursuant to" anything.
Mr. Speaker: If it was any fault of the Table Office, I shall look into the matter.
Mr. Hattersley: Perhaps I might help the Leader of the House through the dark passage of his ignorance. The question to which I referred was allegedly laid by the hon. Member for Nuneaton (Mr. Stevens). While he received an answer to his question, which was circularised, he did not ask a question.

Barlow Clowes Report (Copies)
5.8 pm
Mr. Robin Maxwell-Hyslop: On a point of order, Mr. Speaker. I understand from the authorities of the House that there has developed a considerable laxity in Government Departments, who are omitting to lay on the Table of the House—which, for this purpose, means Journal Office—as soon as the House has passed a notice of motion for an unopposed return, the document concerned so that it is available to hon. Members. I understand the position to be that, although Ministers can control the time of release from Vote Office of documents which they are putting into Vote Office, from time out of mind it has been the rule of the House that when the House has passed a notice of motion for an unopposed return —as the House did at about 2.26 pm today—there should have been a copy of the Barlow Clowes report by Sir Godfray Le Quesne available to hon. Members in the Journal Office.
When I went to Journal Office to get it, it was only with some difficulty that the Clerk of the Journal was able to get a copy from Vote Office, who were under the impression that the embargo on release to hon. Members from Vote Office in some way covered Journal Office, which it does not. Would you, Mr. Speaker, therefore use such machinery as is appropriate to make it known—because I believe that it is a matter for you, Mr. Speaker, to make it known—to all Ministers that when they put such a motion on the Order Paper it is incumbent on them to ensure that there is a copy available to the Table of the House—which means the Journal Office in this context—right away and that that copy will not be delayed because, for their own reasons, they wish to delay delivery to hon. Members from Vote Office?
Mr. Speaker: The hon. Member raises an important matter. I shall certainly look into it.

Private Bills
5.9 pm
Mr. Dennis Skinner: On a point of order, Mr. Speaker. You will recall that before July we had one or two discussions in the House about the propriety of the private Bill procedure as it affected the North Killingholme Cargo Terminal Bill and the Associated British Ports (No. 2) Bill and about whether Members with an interest could serve on the Committee. For instance, because the National Union of Mineworkers opposed the legislation, sponsored members of the union would hardly be likely to serve on the Committee.
It has been drawn to my attention that a former member of the private Bill Committee on the North Killingholme Cargo Terminal Bill, the hon. Member for Luton, South (Mr. Bright), has now become a PPS, so he has been taken off the Committee and a substitute found. This matter should be considered again because of the complications resulting from the appointment of the new Chairman.
Simon Engineering is the company that sponsors the North Killingholme Cargo Terminal Bill. That company's subsidiary, Simon Carves, is part of the British Chemical Engineering Contractors Association. The parliamentary
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adviser to that association is none other than the Member who has replaced the hon. Member for Luton, South—the hon. Member for Rochford (Dr. Clark).
We must look into this matter. I suggest that the present Chairman should not be able to preside over this private Bill Committee. It would be better for all concerned if this murky private Bill procedure were abandoned, together with these two Bills, because of the complications which have arisen during the past six months.
Mr. Speaker: I think that that matter should correctly and properly be drawn to the attention of the Chairman of the Committee of Selection. That is what the hon. Member should do. We must now move on.
Mr. Frank Dobson: Surely, Mr. Speaker, an alleged breach of the Standing Orders applying to private Bills is a matter that is reasonably addressed to you. Members who become members of opposed private Bill Committees are required to sign a declaration saying that they have no personal or constituency interest in those matters. It is perfectly legitimate for my hon. Friend the Member for Bolsover (Mr. Skinner) to bring this point to your attention at the earliest opportunity, and that is what he did.
Mr. Speaker: I do not appoint Members to chair private Bill Committees. I shall look into the question of whether a declaration has been signed. I fully accept that this is an important matter.
Mr. Skinner: The reason for the urgency is simple. The private Bill Committee has been set up and will meet in the next few days. I suggest that the matter must be dealt with as soon as possible.
Mr. Speaker: So far as my responsibility is concerned, I give an undertaking that I shall look into the matter.

BILLS PRESENTED
  RATE. SUPPORT GRANTS
  Mr. Secretary Ridley, supported by Mr. Secretary Walker, Mr. John Major, Mr. John Selwyn Gummer and Mrs. Virginia Bottomley, presented a Bill to make further provision about rate support grants: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 216.]
  HAEMOGLOBIN DISORDERS (SCREENTNG AND COUNSELLING)
  Mr. Tony Lloyd, supported by Mr. Keith Vaz, Sir George Young, Mr. Bernie Grant, Mr. Dafydd Wigley, Mr. Paul Boateng, Mr. John Bowis and Mr. Peter Pike, presented a Bill to oblige health authorities in England and Wales and Health Boards in Scotland to provide screening and counselling services for people at risk from inherited haemoglobin disorders and to draw to the attention of those people and of medical practitioners and registered nurses the availability of such services: And the same was read the First time; and ordered to be read a Second time on 28 October and to be printed. [Bill 217.]

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the Liverpool and Wirral Urban Development Area Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Wakeham.]

Orders of the Day
  Defence Estimates

    SECOND DAY'S DEBATE
    Order read for resuming adjourned debate on amendment to Question [19 October]:
    That this House approves the Statement on the Defence Estimates 1988 contained in Cm. 344.
    Which amendment was, to leave out from "House" to the end of the Question and to add instead thereof:
    "believes that the plans outlined in the Statement on Defence Estimates, Cm. 344, and in particular the Government's acquisition of Trident which is neither British nor independent, are already having a deleterious effect on the conventional defences of the United Kingdom, especially the Royal Navy surface fleet, and on related defence procurement industries; calls upon the Government to cancel Trident and use resources to secure our non-nuclear defences and to work actively for the reduction and abolition of nuclear weapons in Britain and elsewhere and the adoption by the North Atlantic Treaty Organisation of a strategy of No First Use; applauds the signing of the Intermediate Nuclear Forces Treaty by the Governments of the United States and the Soviet Union and would be opposed to any nuclear arms deployment which would undermine the effectiveness of that Treaty; welcomes the progress being made towards a Chemical and Biological Weapons Ban Treaty, and the anticipated 50 per cent. cuts in ballistic missiles which would result from the Strategic Arms Reduction Talks; and further believes that the Conventional Stability Talks will provide the means whereby North Atlantic Treaty Organisation and Warsaw Pact troop numbers can be asymmetrically reduced, forward troop deployments can be withdrawn, and short-range ground and air launched dual capable systems can be eliminated."—[Mr. O'Neill]
    Question again proposed, That the amendment be made.
    Mr. Speaker: As this debate is starting later than we had expected, because of an important statement and business questions, I appeal to the Front Benchers to make brief contributions to give a lead.
    I propose a limit of 10 minutes on speeches between 7 O'clock and 10 minutes to 9. I hope that that limit will be followed by all Members who are called, in view of the late start and the great demand to take part in the debate.
    5.13 pm
    The Minister of State for the Armed Forces (Mr. Archie Hamilton): Although I have addressed the House as a Defence Minister before, this is the first time that I have done so without the right hon. Member for Llanelli (Mr. Davies) sitting on the Opposition Front Bench. I regret his resignation. He is an honourable man—too honourable, I suspect for today's Labour party. As he said on BBC 2's "Newsnight" programme on 17 June this year, three days after his resignation:
    "I felt it was going to be impossible for me. I would have been the person in the House of Commons who would have to draft the amendment to the defence White Paper. I would have found that difficult to do. I would have had to have stood at that Dispatch Box and argue the case. I think this year I would have found it impossible to do."
    How many other members of the Labour party share the right hon. Gentleman's views on Labour's defence policy, but dare not speak out?
    The amendment in the name of the Leader of the Opposition, which the right hon. Member for Llanelli did not draft, alleges that Trident is neither British nor independent. That is, of course, nonsense. Trident missiles
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    will be purchased from the United States, as indeed will other equipment for the submarine, and the British Government will control the operation of our strategic nuclear force. The critical factor is that a large proportion of our missiles will always be on our submarines ready for use and under the absolute control of the Government.
    The hon. Member for Clackmannan (Mr. O'Neill) suggested yesterday that, with an 18-day period needed to service Trident in the United States, he hoped that the Soviet Union would give us three weeks' warning of a nuclear attack. That is also nonsense and I suspect that he knows that it is nonsense. Just in case he really wants to know what provision is being made to service Trident, let me tell him.
    We regard the agreement to service Trident missiles at King's bay as very satisfactory. It will save some £770 million in capital costs as well as running costs. Of course Trident missiles will need to be returned to King's bay. but only once every seven to eight years. Our requirement is, and has always been, to maintain at least one submarine on deterrent patrol at any one time and I can assure the House that we shall have more than sufficient missiles to meet that requirement.
    Mr. Martin J. O'Neill: I am grateful to the hon. Gentleman for giving us that information. Was there at any time the option of these missiles being serviced anywhere else, for example, on the Clyde at Coulport or Faslane?
    Mr. Hamilton: As I have said, that option existed, but it would have cost us serious sums of money to set up those facilities here. Significant savings have been made by getting the servicing done at King's bay.
    Mr. Tony Benn: Before the Minister leaves the point about the independent nature of the deterrent, will he tell the House plainly whether those missiles can be targeted without the use of the worldwide American satellite system? Sir Frank Cooper, former permanent secretary to the Ministry of Defence, made it clear in the Zircon film that there would be no capacity to target those missiles unless the American satellite system were switched on for that purpose.
    Mr. Hamilton: The right hon. Gentleman knows quite well that we do not comment on the targeting of our missile systems.
    I should like also to take the opportunity to make it clear that, although construction work at Vickers Shipbuilding and Engineering Ltd. on the two Vanguard class submarines so far ordered was suspended during the recent strike, we do not expect that there will be any slippage in the planned in-service date.
    There were a number of interesting contributions in yesterday's debate. The hon. Member for Liverpool, Walton (Mr. Heffer) reminded the House how his family had been affected by Europe's two world wars. For the hon. Gentleman's family, and indeed for many other British families, those experiences were not unusual. The hon. Gentleman and I are united in our conviction that Europe must never witness another world war. Where we part company is on how that should be ensured.
    The hon. Gentleman advocates a nuclear-free world, but does he not accept that the fear of a nuclear exchange has actually preserved peace in Europe? No one can afford to start a war that may end in massive nuclear destruction.

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    But remove the nuclear weapons and Europe becomes free for conventional war, and more likely to experience the third world war which we are all determined to prevent. In the debate yesterday, my right hon. Friend the Secretary of State described in some detail the extensive improvements that we are making to the armed forces. I should like to concentrate on the many different activities carried out by the services over the past year, in the United Kingdom, NATO, and in many other parts of the world.
    Mr. Bob Cryer: If Polaris kept the peace, as the hon. Gentleman claims, why do we need Trident, which is between four and 10 times more powerful in its extermination capacity than Polaris? Why should we go to this expense when we have Polaris which, the hon. Gentleman claims, deters people from embarking on nuclear war? Why do we need Trident?
    Mr. Hamilton: As the hon. Gentleman knows, Polaris is a relatively short-range missile system, and we cannot guarantee that it will remain undetected in the relatively shallow waters in which it has to operate. Therefore, we need a successor system which will operate much more widely.
    Regular participation by United Kingdom forces in major NATO exercises not only helps to establish the sort of co-operation between allies that would be vital in war, but provides a visible demonstration of Alliance solidarity in peace. I should like to mention just a few of the many NATO exercises our forces have participated in during the year. The United Kingdom contingent of the allied command Europe mobile force, which represents some 25 per cent. of its total strength, took part in joint exercises in both Norway and Turkey. The 19,500-strong United Kingdom mobile force took part in September in a large NATO reinforcement exercise in Denmark.
    At sea, a number of Royal Naval ships and submarines played their part in Teamwork 88, a major NATO maritime exercise which also involved RAF aircraft and some 5,200 Royal Marines. In the UK air defence region, RAF Jaguars, Buccaneers and Tornados were also involved in exercises Elder Forest and Elder Joust in April and earlier this month.
    In Britain, a series of national exercises designed to test our current plans for military home defence has been taking place since 7 September, involving the Regular Army, elements of the Royal Navy and Royal Air Force, and members of the United States forces based in this country. They were joined by volunteers from the Territorial Army, the Home Service Force and by individual reservists.
    I should like to take this opportunity to express my gratitude to all those employers who have released people to take part in these exercises. The importance of the reserve forces to our defence effort cannot be over-estimated, and it is vital that we keep these forces fully trained. I am also most grateful to those non-military organisations, including the police, fire and ambulance services, and the voluntary aid societies, who have found the time and resources to participate. Their contribution to the success of the exercises is very much appreciated.
    Mr. Robert Key: Is my hon. Friend aware of how successful exercise Drake's Drum was? I was one of the hon. Members who were privileged to see that exercise
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    on Salisbury plain, and we were particularly struck by the way in which the home defence forces and the territorialists quickly knitted back into the regular military pattern. Is he also aware that any attempt to move the military from Salisbury plain to the north would be heavily resisted in my constituency? The Army is welcome to stay there for as long as it wishes. The local community is well aware of the great contribution that the military makes to conservation, of the environmental impact of the Army on the south of England, and of the role that the Army takes, for example, in preserving Stonehenge, with English Heritage. I hope that my hon. Friend will have something to say about that later.
    Mr. Hamilton: I am grateful to my hon. Friend for his remarks, and I know that the Army will be particularly grateful that it is so welcome in his constituency.
    The House will be aware that earlier this month the Soviet Union issued a challenge inspection request to the United Kingdom under the terms of the Stockholm document. We responded positively, and within the time limit laid down. The exercises taking place within the specified area were not included in the annual Stockholm calendar of notifiable military activities for 1988 since the troop levels in the field did not approach the 13,000 threshold for notification. The inspection lasted for 48 hours and was conducted in a professional and congenial spirit. No difficulties arose and we welcomed the opportunity to demonstrate our willingness to contribute further to such confidence-building measures.
    Although our defence efforts are rightly concentrated in the NATO area, it is important not to forget our commitments and activities that lie in other parts of the world. The past year has been an important one for deployments and exercises by our forces outside the NATO area. Such deployments not only test the capabilities of our forces, but provide an excellent opportunity to renew professional links with our friends and allies throughout the world.
    Even as I speak, ships of the Navy's Outback 88 task group deployment are preparing to return to the United Kingdom from the far east. The three warships and three Royal Fleet auxiliaries, headed by HMS Ark Royal, represented the Royal Navy at the fleet review in Sydney on 1 October as part of the Australian bicentennial celebrations. It was particularly appropriate, of course, that the 60-odd vessels in the review were led to their stations by HMS Sirius, the namesake of the Royal Navy ship that led the first fleet to Australia 200 years ago.
    It is a matter of regret that the visit to Australia has been marred by the activities of trade unions in Melbourne which prevented HMS Ark Royal entering Melbourne harbour. As the House knows, we have a policy of neither confirming nor denying whether our ships are carrying nuclear weapons and we are not prepared to alter that policy to meet the demands of the Australian trade unions. I believe that many Australians in Melbourne were extremely disappointed not to have Ark Royal contributing to their 200th anniversary celebrations.
    Earlier in their deployment, ships from Outback 88 were able to demonstrate the Government's firm commitment to the five power defence arrangements by joining our allies—Malaysia, Singapore, Australia and New Zealand—in two major exercises: the maritime exercise Starfish in the South China sea, and the impressive

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    air defence exercise Lima Bersatu. They also joined units from the Hong Kong garrison and the Sultan of Brunei's armed forces in exercise Setia Kawan, or "Loyal Friend".
    The RAF also mounted an impressive overseas deployment to the far east during this, its 70th anniversary year. This deployment, nicknamed Golden Eagle, is still under way and involves four Tornado F-3 air defence aircraft, with tanker and Hercules support. The aircraft took part in exercise Lima Bersatu, and will return home via the USA, thereby completing a circumnavigation of the earth.
    Sadly, there have been a number of natural disasters around the world this year. Where the services have been in a position to help, they have done so. In August, there was a severe earthquake in northern India and Nepal. The British military hospital at Dharan became the focal point of medical support for the local population, helped by emergency medical teams flown in from Hong Kong and the United Kingdom. The hospital was expanded from 70 to 250 beds and has been working non-stop over the past few weeks, treating several hundred casualties. This extra activity is now winding down, but it has been an outstanding example of the professionalism and skill of the armed forces.
    In September, following the devastating passage of Hurricane Gilbert across the Caribbean, the West Indies guardship, HMS Active, sailed to the Cayman Islands and Jamaica to provide emergency relief assistance, and a team of Royal Engineers flew from Belize to Jamaica to help restore the Princess Margaret hospital, near Kingston, to working order.
    Yesterday, my right hon. Friend the Secretary of State paid tribute to the efforts of the Royal Navy and the Armilla patrol. I shall mention in particular our mine countermeasure vessels. To date, they have discovered and destroyed 10 mines in the waters of the region. Without their efforts, ships might have been lost or seriously damaged, almost certainly with loss of life.
    Western European Union partners have made a real contribution to maintaining the freedom of navigation in the Gulf and to upholding regional stability. Members have continued to co-ordinate closely over their assessments of the changing situation in the Gulf and about their plans for national naval contingents there. I am glad to inform the House that mine countermeasure vessels of Western European Union countries are currently checking a new merchant shipping route in the Gulf. This will be an important contribution to freedom and safety of navigation in those waters.
    Another difficult but continuing task for our armed forces is, of course, in supporting the Royal Ulster Constabulary in the fight against terrorism in Northern Ireland. The Government are determined to carry through their efforts to restore peace and order to the Province, and all three services, including the Royal Marines, have a part to play in combating, within the rule of law, the men of violence whose aim is to destroy any hopes of peace or a normal life for the people of Northern Ireland.
    The main responsibility for the military element of maintaining security in Northern Ireland rests with the Regular Army and the Ulster Defence Regiment. There are currently some 11,100 regular service personnel and some 6,300 Ulster Defence Regiment personnel in the Province.
    I should like in particular to pay tribute to the Ulster Defence Regiment and the role which it plays in
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    supporting the RUC. Since its foundation just over 18 years ago, the UDR has been continually on operations —a unique record for a regiment of the British Army. During that time, the regiment has been transformed from its original role as a part-time local defence force. Today, nearly half of the soldiers in the regiment are full-time soldiers, carrying out almost exactly the same duties as the Regular Army, but with the benefit of local knowledge and considerable experience. In over 80 per cent. of the Province, the UDR now provides the primary military support to the RUC.
    A few brief details will serve to illustrate the increasing professionalism and the continuing commitment of members of the UDR. First, in the past two years, all new UDR permanent cadre officers have completed the standard military course at Sandhurst, some of them, I may say, with distinction. Secondly, from a strength of some 6,300, nearly 1,000 members of the UDR have now served for 15 years or longer under the most dangerous and stressful conditions. Thirdly, nearly 30 per cent. of the permanent cadre have previous experience with other regiments of the Regular Army, and nearly 40 per cent. in the case of officers and senior NCOs. Finally, this year alone there have been 43 awards for gallant and meritorious service in Northern Ireland made to members of the UDR, including 19 mentions in dispatches.
    I believe that these figures speak for themselves in showing how the UDR has developed into a highly motivated, professional and experienced regiment of the British Army. The military value and capability of the UDR is increasingly being recognised on both sides of the water, and I applaud the special efforts that the regiment has been making recently to win the support of the whole community of Northern Ireland, which it serves with such distinction. It is a matter of regret that some members of the Catholic community are reluctant to join and that they presently form only a small element of the regiment.
    The past year has, however, seen an upsurge in brutal acts of terrorism. Inevitably, this has taken its toll of members of the security forces, as well as those they work so bravely to protect. So far this year, a Royal Navy recruiting officer, 21 members of the Regular Army and 11 members of the UDR have been murdered by terrorists in Northern Ireland. Outside the Province, one soldier died in a bomb attack on Mill Hill barracks in north London. Another was killed as he drove to catch a ferry home in Ostend and three RAF personnel were murdered while off duty in Holland.
    Hon. Members will recall in particular the barbarous and shameful act on 20 August this year against a bus carrying 35 off-duty soldiers from 1st Battalion the Light Infantry returning from leave to their base in Omagh. The bomb killed eight soldiers and injured 27 others. I know that the House will support me in condemning this kind of cowardly attack against young men who have chosen to serve their country.
    The House will be well aware of the review of security in Northern Ireland that has been carried out. I shall not comment further on that now.
    Events such as these do not, however, weaken our resolve to defeat terrorism. The campaign against the men of violence in Northern Ireland continues and some notable successes have been achieved. A significant number of terrorists continue to be arrested and charged with serious offences.

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    Since the beginning of the year, the security forces have also recovered nearly 500 weapons from terrorists, the highest total since 1977, over 86,000 rounds of ammunition, the highest total since 1974, and over 6 tonnes of explosives have been found or neutralised. In addition, some 300 kg of the powerful military explosive Semtex has been recovered in the Republic by the Garda.
    Despite the significant recoveries that have been made by the security forces on both sides of the border, the large quantities of arms and explosives that reached Ireland in the pre-Eksund shipments still pose a serious threat. By the end of September, for example, some 400 kg of Semtex had been used by terrorists to make 160 lethal or potentially lethal devices, which were either exploded by the terrorists or made safe by the Army.
    Over the past year, a considerable number of planned terrorist attacks have been successfully thwarted. Just last month, for example, three armed terrorists were intercepted at Drumnakilly in the act of attempting to assassinate the driver of a coal lorry. Hon. Members will have noted that the Provisional IRA has admitted that the terrorists were on so-called active service when they were killed. I believe that that statement speaks for itself in demonstrating the viciousness of the current terrorist campaign. The incident also demonstrates the risks that the security forces face in Northern Ireland as they try to halt the terrorists' campaign of violence and murder. Many lives have undoubtedly been saved by the bravery, vigilance and dedicated hard work of the security forces.
    This vigilance needs to be constant, though, and the hard work needs to be effective. To increase the effectiveness of our counter-terrorist operations in the border area, a new brigade was formed earlier this year, with special responsibility to improve the co-ordination and direction of security force activity along the border. It will also allow the other two brigades to concentrate on areas of high terrorist activity in the rest of the Province. We continue to build on the Anglo-Irish Agreement and on the improved crossborder co-operation with the Irish security forces, which is vital to our efforts to prevent the border being exploited by terrorists.
    The most telling recent example of the Provisional IRA's utter callousness when it comes to the murder of innocent civilians was the plot to detonate a massive car bomb in Gibraltar in March. Had this attempt not been thwarted, it is possible that there would have been hundreds of civilian and military casualties. I welcome the clear and conclusive verdict of the Gibraltar jury, which was reached after an exhaustive public examination of all the relevant facts. I should also like to take this opportunity to pay tribute to our special forces. Because of their covert nature, very little is usually said about them. It is often forgotten that they are ordinary people with families and are no different from anyone else. They are, however, highly trained, they have to take great risks and, as a fighting force, they are the envy of the world.
    In Gibraltar the SAS showed great courage and determination. They had a difficult task and they carried it out within the law. I have no hesitation in saying that they are a credit to the country and I join in my right hon. Friend the Prime Minister's recent tribute to their bravery in going back to Gibraltar to give evidence at the inquest.
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    I must say that the Government made it clear all along that the inquest was the proper place for a full examination of the events of 6 March and that prior "trial by television" was highly undesirable. The facts as they emerged at the inquest have amply demonstrated that the television programme "Death on the Rock" was manifestly flawed with significant inaccuracies, casting a shameful slur for a number of months on the reputations of the soldiers concerned. The timing of the programme was, moreover, unjustified and prejudicial to potential jury members. I therefore very much welcome Thames Television's inquiry under Lord Windlesham into the making of the programme.
    Mr. Eric S. Heffer: I find what the Minister says very interesting in relation to the overall debate on defence expenditure, but, as he is pursuing this matter, has the Index on Censorship been drawn to his attention? Over the years, that journal has concentrated on analysing undemocratic regimes in Eastern Europe and other parts of the world, but one of its recent editions analysed the failure of the Government to protect human and democratic rights in this country. Is he aware that that is a new departure for the Index on Censorship and that, in this respect, this country has the worst record in the West? We are increasingly finding that the Government are taking away our democratic rights step by step. It is the duty and responsibility of our defence forces to uphold democracy and not to allow the Government to undermine it.
    Mr. Hamilton: I should have thought it was clear to any hon. Member that the people who are trying to undermine democracy here are the terrorists and that we must do everything we can to oppose their dastardly acts.
    The terrorist attacks on the continent over the past year have reinforced the need for vigilance. I can assure the House that the safety of service personnel, wherever they are, is of paramount importance to this Government, and that we are taking all reasonable steps within our power to protect them. Service men and women are given regular and timely briefings on the level of the terrorist threat, and particular emphasis is put on practical steps which individuals can take to minimise the risks to their safety.
    Much wider initiatives are being implemented. As I announced on 23 August, we have decided that service personnel, their families and British civilians working with British forces Germany should now use British civilian number plates on their private cars, as they do in this country. Action is well in hand to carry out this change as soon as possible. About 95,000 vehicles are involved, and to get the maximum benefit from this initiative the numbers must be issued randomly, so the change will inevitably take time. We aim, however, to complete the greater part of the changeover before the Christmas leave period begins.
    Mr. John Wilkinson (Ruislip-Northwood): I have corresponded with my hon. Friend on this issue. Would it not be wise for the Ministry to encourage service personnel in Germany to buy German cars and register them locally rather than to drive British cars with British number plates, albeit not service plates, which are readily identifiable?
    Mr. Hamilton: I take my hon. Friend's point. Most of our service men in Germany want to buy their cars there

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    so that they can enjoy the tax advantage of that arrangement. They then bring them back to Britain. They are under threat anyway when their cars are in bases, and we are trying to protect them when they are on the open road or coming across the Channel on the ferries.
    Mr. Frank Cook: Did the Ministry consider that the use of English number plates would identify service personnel as being fish in a different pond? Was it not considered possible to use United Nations plates, which would have allowed service personnel to enjoy tax concessions and an added degree of anonymity?
    Mr. Hamilton: I am not sure whether the hon. Gentleman wishes to refer to United Nations plates or NATO plates. The use of NATO plates was an alternative that was considered, but it was thought that the IRA might decide to treat all members of NATO as targets. The cars bearing such plates would still have been identifiable when crossing the channel by ferry and on the open road away from British bases, with which we were mainly concerned.
    Our primary defence commitment is, of course, NATO, and for that reason the actions of the Soviet Union are of the utmost importance. As my right hon. Friend the Secretary of State said yesterday, a fact that needs to be faced is that the recent Soviet rhetoric has yet to be matched by substantive action. It is therefore essential for us, and for NATO, to ensure that our conventional and nuclear forces are kept up to date.
    People have now seen through the arguments of CND and those of the Opposition parties. The clear lesson of the INF treaty was that success in arms control comes from being able to negotiate from strength, not from weakness. This is not nuclearphilia, cold-war mongering or sabre rattling. NATO's nuclear stockpile in Europe has been reduced by about 35 per cent. since 1979 and now stands at its lowest level for over 20 years. There can be no clearer demonstration of our determination to maintain only the minimum forces necessary for effective deterrence.
    Equally, however, those minimum forces must be effective and properly structured. Weapons that are seen to be outdated or ineffective simply serve no good purpose. Let there be no mistake, therefore. Now is not the time to drop our guard. The need to ensure that our defences are effective and up to date, as this Government have been doing for the past nine years, has not now gone away, even with such an important development as the INF treaty.
    Mr. Tony Marlow: My hon. Friend has just said that weapons that are outdated serve no useful purpose. Are not we reaching the stage now whereby the development of anti-tank missiles and the development of helicopter technology will render the tank a lump of metal constrained within small areas of the battlefield, totally vulnerable and irrelevant to future defence needs? If the Government, quite rightly, are going to spend money on defence, should it not be spent on aerial defence through helicopters rather than on these blundering great antiquities?
    Mr. Hamilton: I have been aware for some time that my hon. Friend takes a jaundiced view of the future of the tank. He held the view when I was last a defence Minister about 18 months ago. His views have been taken into consideration by all those who are in the place where I work, and their view is that the tank still has a useful future.
    Mr. Edward Leigh: Will my hon. Friend give way?
    Mr. Hamilton: No, I shall not give way. I must bring my remarks to an end. I have undertaken to make a short speech.
    The Government's defence policy since 1979 has been clear and unequivocal. I wish I could say the same of the Opposition's policy. Yesterday, they tabled two amendments to the Government's motion. One, in the name of the Leader of the Opposition, set out what he would like Labour policy to be. The other, in the names of the hon. Member for Islington, North (Mr. Corbyn) and other Members generally reckoned to belong to the hard Left of the Labour party, represents what Labour policy as agreed at the Labour party conference actually is. As usual, the Labour party is split on defence.
    Let us make no mistake about this. Whether we consider the policies of the soft Left or the hard Left, they are equally dangerous and damaging to the security of the United Kingdom. Labour's defence policy has played a key role in losing it two general elections, and it looks to me as if it will sink it in the next one, too.
    5.46 pm
    Mr. Allan Rogers: First, I welcome the Minister's return to the Government Front Bench. I am sure that his recent stint as Parliamentary Private Secretary to the Prime Minister will fit him well for his post as Minister in charge of the SAS.
    I join the Minister in the tributes that he has paid to our service men and women. They have played an important part in the defence of this country, and my right hon. and hon. Friends and I offer our gratitude and congratulations to all those whose professionalism and skill has contributed so much to the quality and image of our armed services. We have great regard for those who serve in Northern Ireland in most difficult circumstances. We heard last night from my hon. Friend the Member for Stockport, North (Mr. Cook) of the appalling conditions that some of our soldiers and service personnel generally have to endure, and I am sure that there may be ways of improving these conditions. I hope that the Secretary of State for Defence and the Minister will consider what my hon. Friend said and perhaps improve conditions.
    We offer our condolences and sympathy to the families of those who have been killed over the past year in service for our country.
    We understand that this year the Ministry of Defence begged for an extra £1·4 billion. That is money that the Secretary of State says is vital for our defence, but the claim has been turned down. We understand also that the hotel room, or bedroom, negotiations at Brighton have failed and that he has a somewhat smaller sum than that for which he argued. The right hon. Gentleman said yesterday that he was under severe financial constrictions and that he needed the additional money badly. Will he or the Minister let us know how he fared? Will one or other of them let us into the secret and tell us what the deal is so that we can comment on it? It would be interesting information. I am sure that the House would like to know the details of the deal.
    The issue of Royal Ordnance sites was dealt with ably yesterday by my hon. Friends the Members for Clackmannan (Mr. O'Neill) and for Renfrew, West and Inverclyde (Mr. Graham). They posed critical questions,

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    none of which was dealt with either by the Secretary of State or his property adviser, the Under-Secretary of State for Defence Procurement. Perhaps the questions will be answered today. There is extreme concern about the aura of connivance, corruption and irregularity that is beginning to surround the issue. I can assure the Minister and Conservative Back Benchers that the problem will not go away. Yesterday, the Under-Secretary of State for Defence Procurement claimed that there are major offsetting costs in relation to the two sites that are being sold. I intervened to ask whether he could provide details of these costs and he replied that
    "it would be a waste of time to quantify the costs."—[Official Report, 19 October 1988; Vol. 138, c. 976.]
    Why would it be a waste of time to quantify the costs? Will the Minister explain the reasoning behind that ludicrous statement? Surely the costs were important in assessing value or pricing when the Ministry of Defence was selling the Royal Ordnance sites. Are we to understand that Royal Ordnance was sold without an examination of both sides of the balance sheet? Why is it a waste of time to quantify these negative costs? Surely they should have been a vital factor in assessing what the asking price should be——
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Tim Sainsbury): The hon. Gentleman has only quoted one sentence of what I said last night. I reminded him then that, when trying to quantify costs, one has first to discover what costs are being quantified—what decontamination is required, what planning permission might be available, what development costs such as access roads and sewerage might be. Those things are not known; they are uncertain, and until they have been determined the costs cannot be quantified. All that we know for certain is that they are substantial.
    Mr. Rogers: I have never heard so much codswallop in my life. Is the Minister suggesting that it is beyond his and his Department's wit to assess what the costs of access roads or of site development would be? Any developer who is going to develop land—whether previously developed or on a green field site—could come up with those costs. The Minister is merely illustrating his Department's incompetence in this matter.
    The facts revealed in The Independent are as follows. There were two sites in the south-east, including the historic Enfield site. They were sold to British Aerospace on a valuation of £3·5 million, and are now worth £400 million. Representations were made by British Aerospace, in its desire to take over Royal Ordnance, to the effect that it would protect jobs. It has now reneged on that promise. These serious allegations strike at the heart of the Government's competence and integrity. They warrant a full and public inquiry. Will the Secretary of State or his Ministers now give the House an assurance that such a public inquiry will be held? I shall be happy to give way to them, should they want to do so. Their silence illustrates that they do not want an inquiry because of the incompetence that would be revealed—but the problem will not go away.
    I also want the Minister to give us an assurance that he will co-operate fully with any Public Accounts Committee investigation into this matter. I see that he is nodding his assent, and I am glad of that. May we also have an
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    assurance from the Minister that none of his officials who were involved in the sale will be employed by British Aerospace when they leave the MOD? Such a thing is not unknown.
    In his wind-up speech yesterday the Parliamentary Under-Secretary of State for Defence Procurement said that he sought to emulate Cato the Elder by using in every speech the phrase
    "Value for money must be obtained"—[Official Report, 19 October 1988; Vol. 138, c. 973.]
    The British taxpayer wishes that, when he sells off Royal Ordnance—and other public assets—he would espouse not "value for money" but getting "money for value"—the value of British assets which are being given away.
    I want to concentrate on the management aspects of defence and of the defence economy: procurement, competition in procurement, the Government's so-called efficiency drive and the so-called monetary savings that have accrued to them from it. Those things bear directly on the operations and capability of our forces.
    Procurement decisions lie at the heart of defence matters and are an area of defence that the Government do not particularly like having discussed. When pressed on such issues they retreat during discussion of the vital points behind the barricades of security or commercial confidentiality. That is why it suits them for the Opposition to have differences over the pace of nuclear disarmament. It is understandable that they should make much of those differences—one would expect nothing else from them. No one is in politics to help other parties, especially not the Conservatives, whose ethic is one of helping themselves. Our differences suit them because they shroud their deficiencies. They shroud their cut-backs, their overruns, their delays and their bad management of the defence economy. They give them an escape route from their failures. Apart from the activities of the Opposition and of some newspapers such as The Independent, discussion of the scandal of procurement mistakes, fraud and irregularities is going by default.
    Mr. Dick Douglas: I hesitate to interject but thank my hon. Friend for allowing me to do so. As a member of the Select Committee on Defence I may say that we produced a substantial report on procurement and enjoyed substantial co-operation. Indeed, we could not have produced it without the MOD's co-operation. So I cannot really see how differences in the Labour party help the MOD to hide anything to do with this matter. The MOD was forthcoming in its replies, which substantiated virtually everything that the Select Committee said.
    Mr. Rogers: I thank my hon. Friend for his timely and helpful intervention.
    While this might be excusable in some parties, it is surely not excusable in the Tory party, the party of big business. Conservatives pride themselves—we hear this every day—on being the shrewd, hard City slickers, the tough streetwise people who are capable of taking tough decisions. When the last Secretary of State for Defence was appointed, the then Minister of State said in a defence debate at the time that it was nice to have a Secretary of State who knew his way around the business world. Let us grant the Tories the fact that they are shrewd, hard City slickers, capable of taking tough decisions that affect nurses, hospitals, the sick and needy, and child benefit. But

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    when it comes to defence they fail lamentably to take the tough, hard decisions that are required for the defence of this country.
    I want to speak briefly about the Governments spending proposals, and in doing so to pay tribute to the Select Committee on Defence for highlighting much of what was wrong about these Defence Estimates. The Government say there is no need for a defence review and that all commitments and roles will be maintained—the forward defence of West Germany, the protection of the east Atlantic, the defence of the United Kingdom home base, Northern Ireland, Polaris and Trident, out-of-area operations, the Falklands garrison and sea and air bridge. But many hon. Members on both sides now say that we cannot maintain these commitments and carry out these roles without an increase in expenditure. Yet expenditure is falling in real terms. On the Government's figures it will fall by more than 7 per cent. in real terms between 1986 and 1989.
    The Government gave a commitment—carried on from a commitment made in May 1977 by the Labour Government, as was pointed out yesterday by my hon Friend the Member for Sheffield, Attercliffe (Mr. Duffy) —to 3 per cent. growth a year in real terms. In practice we know that that 3 per cent. growth has not taken place since the Falklands episode. Defence spending has fallen considerably in recent years, it is still falling and it will continue to fall. As table 1 of the Select Committee's report on the 1988 Estimates shows, in 1979 defence as a share of GDP was 4·5 per cent. In 1987–88 it was also 4·5 per cent., but in 1990–91 it will be only 4 per cent. There has been no extra effort or allocation made by the Government. In other words, defence is receiving a diminishing share of a larger cake.
    Mr. Keith Mans: Does the hon. Member for Rhondda (Mr. Rogers) agree that the reason the Defence Estimates have stayed the same in terms of GNP is because of the growth in the British economy? In terms of real increases in defence expenditure, the figure is substantially higher today than it was in 1979.
    Mr. Rogers: Yes, but in real terms the figure has fallen. [HON. MEMBERS: "No".] I will not engage in some puerile argument. I suggest that Conservative Members look at the Estimates, where it will be seen that, as a share of GDP, the amount of money being spent on defence is less than in 1979.I am glad that the Minister says that is right, and perhaps he should give a lesson to his hon. Friends.
    That trend should also be viewed against a background of increasing inflation. In its observations on the buying power of the defence budget and on the relative price effect, the Select Committee observed that the budget takes no account of recent and continuing inflation. They are rises that will decrease spending in real terms over the next few years.
    Another factor highlighted by the Select Committee was the generation-on-generation cost increases to which my hon. Friend the Member for Clackmannan referred yesterday.
    The Secretary of State for Defence (Mr. George Younger): I am sure that the hon. Gentleman would wish to give the House the complete picture. I am sure that he would not like to have said all that he has without adding that, nevertheless, the level of defence spending today is some 20 per cent. higher in real terms than it was under the
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    last Labour Government. I am sure that the hon. Gentleman would want the complete picture to be before the House.
    Mr. Rogers: The figure is still 8 per cent. less than in 1984. My argument does not depend on historicial comparisons with 1979, 1945, or 1920. My comparisons are with recent history. More importantly—and it is typical of the Government and of some of their not so bright supporters to ignore this fact—the real argument is about what is to be spent in the next three or four years. Everyone will agree that defence spending is falling.
    I return to my argument concerning generation-on-generation cost increases, which concerns the factor by which the cost of a new generation of defence equipment exceeds the cost of its predecessor in real terms. The Select Committee commented that,
    "there is every reason to believe that it is increasing substantially."
    As we know, the type 22 frigate is costing about four times as much as the Leander. That will have a significant negative effect on the Estimates, and it is one that the Government are not redressing. That is not surprising, because we see exactly the same phenomenon in the Health Service, where the Governments reaction is exactly the same. Their response, as we have heard today, is, "We're spending more money," and a refusal to acknowledge, as is demonstrated in their own figures, that they are spending a diminishing amount of an expanding GDP.
    As a result, the technologies have a substantial negative effect on the rest of the Departments expenditure. That is why service men's pay, like nurses' pay, is suffering. It is also why service men, like nurses, are voting with their feet. One hon. Member who spoke yesterday made mention of the Royal Air Force pilots who are leaving to take jobs with civil airlines, and he put his finger right on the problem. Terms, conditions and pay outside are far better than those which service men currently have. The Select Committee was right to point out that awards must now be found from within the defence budget. In other words, "You can have the pay rise if the money is there to fund it." It must be a matter of great concern to right hon. and hon. Members in all parts of the House that the number of skilled and trained personnel of all ranks and abilities who are leaving the Royal Air Force is steadily increasing. The level of pilot loss from the Royal Air Force is causing substantial concern.
    Yesterday, the Secretary of State for Defence and the Under-Secretary of State for Defence Procurement spoke of competition for procurement. May I ask them to harden up that comment and also to remove some of the wooliness from the comments made by the Parliamentary Under-Secretary of State for Defence Procurement earlier. The Secretary of State does not know how much is being saved. On 30 June 1986, he stated:
    "As the Select Committee rightly observed, it is, of course, difficult to quantify the precise savings that we make."
    He went on to say that,
    "nobody knows what we would have had to pay in the absence of competition."—[Official Report, 30 June 1986; Vol. 100, c. 714.]
    The Secretary of State was right. Nobody knows what can be saved—not the Secretary of State and not the Procurement Executive. It is a farce. What the Government are claiming is not really verifiable.

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    We all know about MOD estimates. Presumably they can be set at any convenient level. Certainly they have been in the past. The Select Committee rumbled that fact. It stated:
    "First, there is the problem of estimating what MOD would have paid for an item if it had not been competitively procured."
    The permanent under-secretary of state rejected the suggestion that what may appear to be good competition might have been bad estimating. He went on to state:
    "What you have to safeguard against is deliberately inflating the estimates so that the eventual figure looks good."
    I must admit that the thought had occurred to us, too.
    I do not believe that the Secretary of State knows what he is really saying. In the 1986 debate, he tried a little harder at a later point, when he commented:
    "The introduction of competition for the supply of missile pallets,"—
    and I am not sure how big or small are missile pallets—
    "which we had previously bought non-competitively, has led to the price being cut by half."
    I accept what was said by the Minister, and the logical conclusion of his statement—and it was his statement, not mine—is that previously we had been overcharged, either honestly or dishonestly. If that is the case—and the Secretary of State appears to be amused, so certainly he is not resenting my comments—let the right hon. Gentleman say how much of the money from that honest or dishonest fraud has been recovered. What action, if any, has been taken against the firms that overcharged? Are they still MoD contractors? Why is it that those fraud investigations are taking so long? If there is so much money to be saved, why do not the Government post-cost all non-competitive contracts instead of the miserable percentage that are currently being post-costed?
    Procurement fraud is a recurring theme in the history of the British defence industry. No doubt certain villainous shipwrights attempted to defraud the taxpayer when fitting out Sir Francis Drake's fleet. More recent scandals included the excess profits made by Ferranti on open-ended contracts for the Bloodhound missiles in the 1960s. They were discovered and Ferranti was forced to make a repayment, although nobody went to prison for perpetrating that massive fraud on the British taxpayer.
    In the past 12 months, the biggest potential scandal has been the possible multi-million pound frauds carried out by Marconi. The Marconi investigation has been going on for more than 12 months. There are only seven other possible frauds currently under investigation, so why is the Marconi inquiry taking so long? Is it because the number of officers in the MOD's serious crime squad is only 28? Why is that so, when there are thousands of social security investigators probing people who have defrauded the DHSS of only £5 or £10—while the big boys in the City are getting away with murder? Do the Government accept the recommendation of the Public Accounts Committee that a telephone hotline be established for whistle-blowers on contract fraudsters? Have they ever paid any compensation to the whistle-blowers who have been sacked while helping to save British taxpayers millions of pounds? No.
    For many people the distinction between irregularity and fraud is difficult to discern; nevertheless, the Ministry of Defence, for some peculiar reason, insists on such a difference. Over the past 14 years, the main irregularity —so we are told—has been contractors overcharging
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    without—we have been told—dishonest intention. Between 1972 and 1985, 1,100 contracts were re-examined or post-costed, and in 114 of those cases refunds were secured, totalling approximately £30 million.
    The first question that I should like to ask the Secretary of State is this: why does the MOD admit that only a small percentage of contracts are post-costed? A second and more important question is why the irregularities occurred. We are told by the Department that administrative difficulties lead to such irregularities. If that is the case, why do those administrative difficulties always result in overcharging, never in undercharging? There can never be a mistake for the benefit of the taxpayer. Mistakes are always for the benefit of big business—the friends of the Tories.
    Are not the Tories a little suspicious about the fact that the contractors are always overcharging? I think that they ought to be. Mr. Peter Levene, the chief of the Procurement Executive, is suspicious; if he is, why is not the Secretary of State? Why does the Minister of State find it amusing that I should bring to his attention such gross frauds on the British taxpayer? Oh, yes, it is a very laughable position. We have just heard the Government refusing to help pensioners over the Barlow Clowes affair. They say that they cannot pay compensation to them— that they cannot recover and pay out taxpayers' money —but they will allow taxpayers to be robbed by big business.
    Mr. Peter Levene has said that he feels that the penalties for overcharging are not large enough. He has said that he wants to be charged on money that the contractor has to repay. The Government refuse to implement his suggestion. Why? Why will they not act on the recommendation of their senior officer? Can the Secretary of State explain it? It is obvious that the problems of fraud and irregularity will not be cleared up by a Government who will never reveal the cosy relationship between defence contractors and the MOD, and between big business and the Tory party.
    Let us leave procurement and equipment. The Government next tried to make great play of presenting an aura of efficiency, suggesting that they had saved considerably on manpower while still alleging that the services were not merely maintaining capability but extending and increasing it. The Estimates state:
    "The programme"—
    of manpower cuts, that is—
    "will enable us to improve our front-line capability, without any increase in total manpower".
    Let us have a look at that proposition. Let us examine what is happening to the Royal Navy, for example. The Government have stated that since 1981 the proportion of Royal Navy personnel serving on the front line or immediately in its support has increased to 70 per cent. From what has it increased? Was it 69·5 per cent. last year? That is a rather nonsensical statement.
    Mr. Bill Walker: Will the hon. Gentleman give way?
    Mr. Rogers: I shall do so later.
    The Estimates then state that the services' uniformed strength has been reduced by more than 8,000. Indeed it has: we now have 8,000 fewer sailors. That is nothing to be proud of.
    Mr. Bill Walker rose——
    Mr. Rogers: I have told the hon. Gentleman that I will give way to him afterwards. If he will stop bleating I shall do so, but he really must wait until I have finished.
    The Royal Navy also contains 28,000 fewer civilians. Its manpower strength has fallen by 36,000 since the Government came to power. It is shrinking in manpower as well as ships.
    Mr. Bill Walker: The hon. Gentleman is showing the House very clearly his complete ignorance of defence matters. Does he not realise that the purchase of modern, sophisticated equipment means that fewer people are required to operate it? We require fewer pilots today than were required to defend the United Kingdom 20 or 40 years ago, because we have much more expensive sophisticated equipment flown by much more highly skilled and trained individuals. Fewer people are doing a much more effective job.
    Mr. Rogers: I was just coming to that point, and I thank the hon. Gentleman for providing me with an introduction. I am sure that he can well remember 40 years ago.
    In order to obscure the truth, the Estimates state—and now I am coming to the point that the hon. Gentleman is bleating about—
    "Less manpower-intensive ships are also being introduced into the Fleet; for example, on current plans, the crew of a Type 23 will be two-thirds of that needed in a Type 22."
    I am sure that the Secretary of State consulted the hon. Member for Tayside, North (Mr. Walker) when he drew up the Estimates. But the hon. Gentleman cannot get away with that now, and neither can the Secretary of State. We are not going to let them get away with it. They have been rumbled by the Select Committee, and they are twisting and wriggling.
    The past and present falls in manpower that we see in the Estimates, and which the Secretary of State and the hon. Member for Tayside, North are talking about, have nothing to do with the ordering of ships. We have no type 23 frigates, and we shall not have any until next year. We shall not get the rest of them until the late 1990s. The Select Committee rumbled that. It said:
    "The quotation above might have its place in the SDE 91 or 92, but it carries little conviction this year."
    It does not carry much truth either. The Secretary of State ought not to produce estimates containing statements that are manifestly untrue and simply seek to obscure the truth.
    Mr. Leigh: Will the hon. Gentleman give way?
    Mr. Rogers: No, I am afraid that my time is limited. Other hon. Members want to speak.
    The same tale applies to the Army and the Air Force: cutbacks and more cutbacks, with the same allegations of increased capability and efficiency. The Select Committee is right to point out to us—I ask hon. Members to read the report—that the services are being overstretched, with commanders having to do more with less, a greater burden being imposed on individual service men, front-line manpower having to take on additional tasks and skilled men having to carry out less sophisticated ones. That is the problem of the Government's cutback in manpower. Our front-line service men have not the capability to carry out their tasks.
    We would require another debate to talk about the mismanagement of procurement. The list of delays—or what the Select Committee has called "fairly widespread
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    slippage"—is a long list indeed. Time prevents me from going into detail, but we need only look for examples to find them. There is the £288 million overspend on the Rapier, the £40 million overspend on the Harrier GR5, the £260 million overspend on the ALARM system and its slippage of several years. There is the three-year delay in bringing the Foxhunter radar into service, which has resulted in 32 Tornado fighters being put into storage. The £17 million spent on the command system was wasted, meaning that our type 23 frigates, when they actually go to sea, will not have a computer-automated command system allowing them to operate with full effectiveness.
    I could go on for a long time about procurement delays, but it would be wrong for me to leave the debate without referring to the sorry plight of the merchant navy, to which my hon. Friend the Member for Dunfermline, West (Mr. Douglas) referred yesterday. The Select Committee has brought the problems to the Governments attention. Suffice it to say that the merchant navy, both in ships and men, is an extremely vulnerable part of our defences.
    This debate is one of the few opportunities to examine the Governments stewardship of defence matters. Once again this year the Government are talking big and acting small. The cuts, delays and mismanagement mean that our defence commitment and roles are there only in name. If we were called upon to fulfil those roles, to honour our commitments, we would be found sorely lacking. That is the main basis of the Opposition's criticism of the Government.
    6.20 pm
    Mr. Julian Amery: When the hon. Member for Rhondda (Mr. Rogers) came to the Dispatch Box I had not expected him to press for more defence expenditure. I had not expected him to criticise the shortfall in real terms in what we have been spending. I am sure that all that he has said on that will be a great help to my right hon. Friend the Secretary of State and his colleagues when they present their dossier to the Star Chamber. His speech will be honoured in the file that is put before the Secretary of State for Energy.
    Of course, it was natural and right that he should try to avoid—I shall not say "evade" because it is a bad word —the great strategic issue that has divided his party by dwelling primarily on procurement. But it was a bit of bad luck that his hon. Friend the Member for Dunfermline, West (Mr. Douglas) intervened. It stuck in his hon. Friend's gullet to accept that the Government really have been quite decent in making information on procurement available to the Select Committee.
    The whole subject of defence is weighty and grave. Just occasionally there is a ray of light which relieves it. I want to start my remarks by saluting the brilliant young German pilot who managed to land an aircraft in Red square. If I had to nominate anyone for the Nobel prize, he would be the one. He made monkeys out of all the top brass in the Soviet Union; and I hope that our top brass will have considered whether the same thing might have happened over here.
    We have to try to reconcile two developments. There clearly has been a major change in the Soviet Union's foreign policy. General Secretary Brezhnev tried to export the internal problems of the Soviet Union by expansion. Afghanistan, Angola, Aden, Ethiopia and Nicaragua were all symptoms of that. It now seems that President

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    Gorbachev wishes to change that policy, convinced as he has become that expansion does not solve the problems. Brezhnev used to talk about seizing the oil of the Gulf as the minerals of southern Africa. Well, that has not worked. It has proved to be a no-win operation, as Mr. Gorbachev appears to recognise.
    At the same time, as my right hon. Friend the Secretary of State pointed out yesterday, the deployment of Soviet forces on the ground shows that they are just about the same as they were under Mr. Brezhnev—perhaps a little more sinister, because they are being modernised.
    Therefore, there is a problem here. The conclusion that we must clearly draw is that our foreign policy must be as flexible as possible, seizing every nuance of improvement in what the Soviet leaders say, and even appear to do. But our defence policy must mirror and reflect exactly the situation on the ground. It may be that Mr. Gorbachev's concentration on reconstruction inside the Soviet Union will lead to disarmament. It may mean that he is prepared to beat the swords into ploughshares. But that is a slow process. Making swords, as I know from my experience in procurement, is slow, and to turn them into civil equipment is equally slow. If there is to be a real reconstruction in the Soviet Union, it will mean the transfer of its best managers and scientists from the defence industries to the civil industries.
    Therefore, my right hon. Friend is right to go on as we are. There could be a reversion in the Soviet Union to the policy of externalising internal problems, and we would be fools if we built our defence policy on hopes as distinct from facts.
    Even taking a hopeful view, we have to recognise that changes are not only taking place in the Soviet Union. Whatever the outcome of the American presidential elections in November, I suspect that there will be great pressure in the United States to limit its overseas commitment to Europe. I do not think that it will abandon its commitment. I do not think that it will abandon our allies. But, over the years, it has carried a disproportionate amount of the burden, and with its trade and fiscal deficits we must expect that it will reduce its effort, particularly as problems are increasing at the other end of the world—the Pacific rim—where it is, economically, financially and security-wise, as interested as it is in Europe.
    Therefore, we in Europe will have to fill any gaps that may arise. This is not the occasion to go into what kind of European union we want—I shall have plenty to say on that subject in another debate—but I think that we are all agreed that there will be a European union. That comes out just as much in the Prime Minister's speeches as in others. Therefore, we must give thought to how, collectively, we Europeans will protect and promote the joint interests that we are in the process of forming. Protection and promotion mean defence, and there is a gaping hole in the heart of it. Europe cannot be defended without France, and France, although an Atlantic ally, refuses to take part in the defence organisation that has been created for the defence of Europe. President Mitterrand re-emphasised that in a speech the other day.
    Frankly, I think that the French are mistaken. I can understand that, when the Americans were in a position of hegemony, when they dominated the European scene, General de Gaulle felt uneasy about it. But that is not the
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    situation today. The Americans are asking, almost begging, us to play a bigger part than we do. Therefore, I think that the French are wrong, but we must live in the world as it is. Interesting Franco-German defence agreements are being made. I hope that there are an increasing number of Anglo-French and Anglo-German projects under review. But, somehow, all that wants bringing together.
    Since 1946 I have been a believer in Europe. I am the last survivor of the little group that sat with Churchill in the autumn of 1946 and decided to start the European movement. Would not the best way be to put more weight into the Western European Union? That was, after all, a British conception. It was launched by Anthony Eden when the French rejected the idea of German rearmament. We persuaded them to agree to German rearmament by committing a corps and a tactical air force to the continent on a permanent basis. Our concept was simple, and its importance is only now beginning to become clear. There was a memorandum that persuaded Eden that we needed two boxes—a box to keep the Russians out, which was NATO, and a box to keep the Germans in, which was the Western European Union. That is what we went for.
    I do not think that boosting the WEU will weaken the American commitment. The Americans are in Europe because it is in their interests to be in Europe. A very big European effort indeed would be needed before the Americans could feel safe enough to withdraw massively from Europe. However, if we strengthened the WEU, that might anchor West Germany still more firmly into the western European family. That is important, at a time when the siren voices of neutralism are being heard quite loudly in different parts of Germany.
    There is another reason why it is important to strengthen the WEU. If the bipolar world—the world that has been dominated by the two super-powers—is to recede, though I am not sure that it will, and if a more multipolar world is to take its place, we must expect problems to arise for states that were previously subordinated to the two great alliances. Even during the time of the bipolar world, that has been happening. The Falklands and the Iran-Iraq wars are examples, but new crises may arise between countries that are now less subordinated to the two super-powers.
    The newspapers are full of stories about Serbian nationalism. I do not intend to weary the House by discussing that problem, apart from recalling that world war 1 started with an outburst of Serbian nationalism that culminated in the assassination of the archduke. The Balkans are still a possible powder keg. So is the middle east, so is Africa. Europe will not be the policeman of the world—at least, I hope not—but Europe has worldwide interests and it is our duty to protect and promote those interests. The Gulf war demonstrated that fact.
    When my right hon. Friends consider their defence policy, I beg them to keep seriously in mind the importance of the Western European Union. We need to keep the Germans in the western bloc and strengthen the European pillar of the Atlantic alliance. We need an organisation in which we can give thought to how European interests outside the area can best be protected and promoted.
    6.33 pm
    Mr. Menzies Campbell: Unexpectedly, I found that I was unable to be present for the opening speeches yesterday evening. I have written to the Secretary of State and to the hon. Member for Clackmannan (Mr. O'Neill), who opened the debate for the Opposition, offering apologies for my absence.
    Throughout the debate generous tribute has been paid to those who serve in our armed forces. I am happy to associate myself with that tribute. However, I wish to pay a particular tribute to those who perform search and rescue operations around the coasts of the United Kingdom. I have a particular constituency interest in that matter, but it is also a matter of national significance. Many hon. Members will know that a review of such operations is taking place. The Under-Secretary of State for the Armed Forces who is to reply to the debate knows of my particular interest in the apprehension that is felt about the future of the search and rescue operations at RAF Leuchars in my constituency. A flight of 22 Squadron, flying Wessex helicopters, provides that search and rescue facility.
    Until this year, 138 missions have been flown and 98 people have been rescued. On average, 90 per cent. of rescues are civilian rescues. On a daily basis, the pilots and their accompanying observers and winchmen have to display great skill and courage—almost always in very unpleasant and dangerous conditions. As we have heard, a review is taking place. Some of us, including the hon. Member for Tayside, North (Mr. Walker), who has taken a keen interest in the matter, had hoped that before the debate we might be told the precise result of that review.
    The Minister was extremely courteous when he listened to what we had to say. In particular, he received from Fife a delegation comprising the district council, the regional council and me. We welcomed that, but we should welcome all the more a decision that the existing service is to be retained.
    Mr. Bill Walker: I do not want anybody to think that it is only in Fife that the civic authorities are concerned about this matter. The hon. and learned Gentleman knows that he has the full support of Tayside in all the efforts that are being made to retain the Wessex helicopter squadron. Many of the rescues are carried out in Tayside, and it is fair to say that the majority of those rescues take place in my constituency.
    Mr. Campbell: The Minister will be in no doubt about the strength of feeling at every level of government in central Scotland about the issue.
    The Government's announcement of February 1988, to the effect that search and rescue would be retained so long as there was a military requirement for it, has not alleviated much of the concern. I do not expect the Minister to tell us today about the results of the review, but can he say when he will be able to give us the results? Since the review has not yet, I presume, been completed, I can do no better than to refer him to the last sentence of paragraph 10.6 of the seventh report of the Select Committee. It says that
    "the withdrawal of SAR facilities from Leuchars would mean that large areas of central Scotland would have no daylight SAR coverage within an hour from call out."
    The last sentence of the following paragraph is in heavy type, which I suppose means that it is emphasised. It says:
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    "It would not be acceptable for military SAR facilities to be withdrawn from RAF Leuchars without there being a requirement that any civilian facilities should use aircraft as capable, and have readiness states and back-up at least as good, as those provided by the military."
    I intend also to refer briefly to the closure of the Royal Ordnance factory at Bishopton. The case concerning the property elements of that closure have already been eloquently deployed. Last night the hon. Member for Renfrew, West and lnverclyde (Mr. Graham) spoke most movingly about the consequences of the closure to his constituents. However, my concern relates to the possible strategic consequences of that closure. I understand that Bishopton is the United Kingdom's prime manufacturer of gun propellants and that it has a unique nitroglycerine manufacturing facility. It employs 1,100 skilled, experien-ced and loyal workers.
    What consideration has been given to the consequences to our defence capability if the factory goes out of production? What assurances have the Government received about continued production and supply? And is it really true that we might find ourselves, in extremis, having to rely on foreign manufacturers? At best that would make us vulnerable. At worst it would put us at severe risk.
    Tribute has already been paid to the Select Committee's work. I can do no more than say that in its consideration of the Royal Navy's surface fleet, in its sixth report to the House, that tribute is more than amply justified. It behoves all of us to read that report and the Governments response to it and form a judgment as to where the truth lies. I do not understand the Select Committee to have changed its conclusions because of the terms of the response. Perhaps it was hardly encouraged to do so when the Government's practical response to its report was to order three new type 23 frigates.
    I ask the Government to lake account of the fact that great uncertainty surrounds shipyards such as Yarrow and Swan Hunter as a result of the Government's current shipbuilding programme. Building the ships that the Royal Navy requires necessarily involves high levels of investment and skill. To justify such investment and to maintain such skills there must be long-term orders or at least an expectation of them. Skills are frequently difficult to acquire but easy to lose.
    There is also uncertainty about helicopters. On 9 April 1987, the Secretary of State for Defence announced an intention to place an order with Westland for 25 utility EH101 helicopters for delivery in the early 1990s. The EH101 is a basic design. Since the announcement, the Ministry of Defence has, I understand, attempted to define its detailed requirements and may even now be embarking on project definition studies. The result is that 1995 is probably the earliest achievable delivery date.
    I am sure that I am not the only hon. Member to have received representations on this matter, but I must tell the House that the company views the delays with considerable concern. I hope that the Minister can give the company some comfort today and assure it that further delays are unlikely.
    It is inconceivable that the secure defence of the United Kingdom can be ensured other than through our membership of NATO. For the foreseeable future, NATO will be a nuclear alliance. I find myself in almost total agreement with the right hon. Member for Brighton, Pavilion (Mr. Amery); any contact with officials or politicians in the United States makes it clear that,

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    whoever wins the presidential election next month, the issue of a greater European contribution will undoubtedly be on the agenda. There is a risk of overemphasising the United States position. I do not believe that there is any mood of isolationism, but there is a mood of realism brought about by financial circumstances there, particularly the budget deficit.
    We cannot ignore the possible political consequences of the economic changes of 1992. There are undoubtedly uncertainties in that connection, but there may be opportunities as well. A more integrated Europe might find itself compelled and encouraged to make a greater contribution to its own defence. It is clear, however, that, by 1992, all but £1·8 billion of the expenditure on Trident will have been incurred. Just as Polaris could not be towed out to sea and sunk—which I think was suggested at one stage—we will not be able to switch Trident off as if it were a conveyor belt. Whichever party is in government by 1992, it will have Trident effectively, if not completely, in place.
    No matter what is said in the debate or outside the House, the party that forms the Government in 1992 will not unilaterally remove Trident. The intermediate nuclear forces treaty has changed all that and the debate in 1992 will be about keeping a strategic nuclear deterrent in the United Kingdom or being willing to dispose of it if one is satisfied that that is safe. It is wrong to think that that debate will necessarily be domestic, because if the United States and the Soviet Union achieve a START I treaty and move on to START II, it is almost certain that there will be great pressure on the United Kingdom to put her weapons on the table.
    Leaving aside the difficult question whether we should own or lease the missiles, we cannot ignore the fact that the United States might, because of its commitment to START II, be unwilling to remain co-operative in those respects in which the United Kingdom relies on it for the servicing of missiles.
    It was not always popular in my party to be in favour of deployment of cruise missiles. There was a curiosity in the opinion polls of the time—they showed that a majority of people opposed cruise but favoured retaining the independent nuclear deterrent. The Government take great credit for the INF treaty. It is partly justified, but the issue is not quite as simple as they claim. It is clear, however, that if there had been unilateral withdrawal of cruise missiles during the time of Mr. Brezhnev it is unlikely that there would have been any response.
    My criticism of the Government is that they seem to be unduly pessimistic. I accept the need for caution in these matters but caution and optimism need not be mutually exclusive. We must accept that Trident will effectively be in position by the next general election. The weapon's life goes beyond the end of the century. It is highly unlikely that any Government will be capable of removing or be willing to remove Trident unilaterally. If a safe means of arms reduction can be arrived at without prejudice to our safety, we should adopt it, but there can be no reduction unless there is satisfaction, in so far as one can be satisfied, that our safety will not be prejudiced.
    6.46 pm
    Dr. Alan Glyn: I should like to pay tribute to my right hon. Friend the Secretary of State for Defence and his colleagues for the excellent colour and quality of the Estimates.
    Defence consists of strategy and tactics. Strategy is the ability to estimate the strength of one's enemy now and in the future. Tactics are through NATO and the flexible and dual response and the retention of Trident.
    We all welcome the historic summit between President Reagan and Mr. Gorbachev in December 1987. We note that it might be the first step towards some form of arms reduction, both conventional and atomic. We must remember, however, that in the same month as that summit, my right hon. Friend the Prime Minister met Mr. Gorbachev at Brize Norton, where bilateral negotiations were made possible. We should give credit to our Prime Minister for that, and it was a step in the right direction.
    We all know that the Warsaw pact has more than 3:1 superiority in artillery, 2:1 superiority in tactical aircraft and hundreds of thousands of chemical weapons. It also has nuclear warheads targeted towards NATO. My right hon. Friend the Prime Minister has always maintained that until we can get a lasting and satisfactory disarmament agreement, we must retain our nuclear deterrent. I entirely agree with her.
    My right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) mentioned the United States. I agree with him that they have problems on their doorstep in central and south America. They sometimes chide us and say that we should spend more on defence, but I think that they will always be our main ally in NATO—let us hope so.
    Mr. Gorbachev has achieved an incredible victory in his own country by beating the conventional Communist clique. He realises that unless he can achieve a powerful industrial and agricultural output he has no future. With such a background, it would be possible to pay for increased arms production. Let us not forget that the Soviet Union is increasing arms production day by day.
    There is also the possibility that the satellites, on which Mr. Gorbachev places so much importance, could either give him difficulties or strength, according to their wish. Their will and their degree of independence—and their independent views—have already become apparent to the world. A change in leadership could mean an alteration of policy.
    I shall now turn to what I regard as one of the most dangerous things happening now. Hostile relations between Russia and China have resulted in at least 500,000 troops being stationed on the Sino-Soviet frontier. If an agreement was made between those two countries—and it looks as if there will be one—we would be faced with an estimated 500,000 troops who could be deployed under the Warsaw pact. Far more importantly, if that agreement was to go even further and there was a military alliance between Russia and China, we should be faced with one of the most powerful combinations and an enormous defence problem. That is why it is terribly important that we should always anticipate that possibility in our defence strategy.
    My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) said yesterday that we should anticipate possible and future alignments and that we should always ensure that we have sufficient in our

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    armoury to defend ourselves. That is why reductions must be verified, and must, at the same time, not reduce in any way our ability to make our contribution to NATO and our own defences. I referred to the United States earlier. It will always play its part in Europe.
    I wish to speak next about the Reserve. I welcome the national employer liaison committee, although I am not sure whether it will work, because of factors beyond the Governments control. The Government will have to think again about how we can build up a sufficiently strong Reserve and Territorial Army that can take its place in NATO and fulfil its essential commitments in the defence of this country.
    I thank my hon. Friend the Under-Secretary of State for the Armed Forces for coming down to Victoria barracks and helping me. I hope that he does not have to face the Star Chamber for long when it comes to rebuilding the barracks. We visited the Life Guards together on the way and learnt two lessons there. One important lesson that we learnt was that the versatility of the Army today is quite incredible. The second lesson was appreciating the difficulties of manning equipment such as tanks that are highly sophisticated and require a great deal of training. One has to balance sophistication and training to ensure that there are enough men to absorb the complicated technology that is now incorporated in almost all weapons.
    I fully support the Government. I support their retention of Trident and I support almost everything that they say in the defence review. I hope that this country will be able to play its part not only in NATO and in other parts of the world that people tend to forget, but that we shall be able to assist in the process of world disarmament.
    6.54 pm
    Mr. A. E. P. Duffy: The Defence Estimates before the House represent a reduction in real terms of 2·6 per cent. a year. Inevitably, hon. Members yesterday expressed anxiety about how long the Government can keep the lid on defence spending while meeting current commitments. The Secretary of State for Defence himself admitted that difficult choices cannot be avoided.
    Yet the existing gap is nothing like the chasm that is likely to open up between commitments and resources in the next few years. The scale of some forthcoming procurement decisions will prevent the Secretary of State from finding relief in slippage, cutting some marginal tasks out of area or the more efficient management of procurement. It is little wonder that a leader in The Daily Telegraph this summer described the "Statement on the Defence Estimates 1988"as
    "bland and … self-congratulatory as ever"
    or that Mr. Leon Brittan, in his pamphlet "Defence and Arms Control in a Changing Society", said:
    "The Government should not put off a wide-ranging review of defence policy."
    We are witnessing once again the syndrome that existed in the 1970s, which was so soundly criticised by Conservative Members when they were in opposition, as well as by this Administration when they came to power. In the 1970s, the resources that successive Governments were prepared to justify to Parliament were never quite sufficient to meet the commitments and capabilities that those Governments equally thought it necessary to maintain. I experienced that phase when I was on the
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    Treasury Bench, but I was part of the Government who eventually took steps to match resources with commitments.
    Whereas in the 1970s commitments were pruned—as they were following the 1974 review; there is no doubt about that—they have now been kept at roughly the same level for the past six years, and in certain cases even increased. At the same time, we are edging into a very expensive phase of procurement, involving, for example, the completion of the Tornado programme, the arrival of Trident, the replacement of the aging Chieftains, the maintenance of amphibious capability and the development of the European fighter aircraft—not to mention a large and increasing number of quite unnerving cost overruns to be found in table 2 of the Estimates. Yet competitive tendering actually fell over the past year, as is also revealed in table 2.
    The outcome is bound to have a harmful effect on training, activity and professional standards, governed as they are by such factors as petrol, spare parts and ammunition—the only respects on which money can be saved in the short term. In consequence, there is an effect on morale and retention rates, which are already worsening quite significantly, as was confirmed in our exchanges yesterday. That is the natural consequence of overstretch and curtailment of activity.
    Let us consider briefly the three services. The role of the Royal Navy cannot be filled by any other ally. Nevertheless, the Navy will account for only £2·5 billion of the Estimates, compared with the more than £4 billion that is to be spent on British forces in the central region. Hon. Members on both sides of the House must be concerned, therefore, that doubts should continue to arise year after year about the size and effectiveness of the fleet, especially in view of its NATO-assigned role and the escalating size and power of the Soviet navy. NATO is a maritime alliance; the Warsaw pact is not. Yet the Government's inadequate provision for the Navy is something to which every independent expert bears witness. Plainly, that provision is now inadequate to allow us to discharge our NATO role, much less continue to meet out-of-area commitments. SACLANT says that he is now 45 per cent. short of the escorts that he needs and the Commander-in-Chief, Fleet does not have adequate operational assets, according to the Select Committee on Defence.
    The surface fleet of destroyers and frigates numbers "about 50", the Ministry of Defence says—in itself a change from the previous absolute commitment to 50 ships. Currently, there are 13 destroyers and 35 frigates available—48 vessels. But of these, three destroyers and 11 frigates are in refit, on trial or being used for training, leaving just 34 operational. In other words, almost all the Nott proposals of June 1981, to which both sides of the House were then opposed, have been achieved by 1988. Nott recommended only two carriers, and we are just about to mothball one. We do not have the men to run the carrier that is about to be mothballed.
    Caught out by the statement on the Defence Estimates in 1988 by the Select Committee, the Secretary of State rushed to announce the ordering of three more type 23 frigates. Yet he invited tenders for four frigates just a year ago. That is an example of slippage. Because the defence statement is so professional—look at it, Mr. Deputy Speaker—because it is so glossy and so presentational, seemingly full of information, graphs and essays, it is so

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    potentially lulling, comforting and even deceiving. The only way in which hon. Members can deal with it is really to study it—as most demonstrably do not, as can be seen from debates year after year—and ask questions.
    With the greatest respect to the Minister who opened the debate, we got the kind of speech that we get every year under this Administration—a long speech that bears little relation to the subject. What he had to say is very important but it can be said under two other departmental headings. What we are here to do—we cannot do otherwise—is to discuss the statement. The best way in which we can address it is to raise questions.
    That is the best way in which hon. Members can assist the ongoing debate on defence—to go on raising questions such as what is the present age structure of the surface fleet? How many vessels are operational, in dockyard hands or on disposal lists? We do not always have up-to-date information on what ships are on disposal lists. How many of the minesweeper orders planned under a £1 billion modernisation scheme will be completed by the 1995 deadline? How many type 23 frigate orders are envisaged by 1991, before, as my hon. Friend the Member for Rhondda (Mr. Rogers) reminded us, they are overtaken by the NFR90 programme? Is it true that the first two type 23s will probably sail without an effective central command and control system? That was the whole purpose of the type 23 programme, because, of course, the NFR90 ships will have another role to play. Above all, why is British sea power apparently more highly prized by the Kuwaiti Government than by Her Majesty's Government?
    The Army, according to The Economist on 27 May this year, "is seriously underequipped". The problem of replacing Chieftan tanks is well known, but the Army has a vital need also for modern artillery and air defence weapons. Three questions arise: first, given the stress laid on air mobility on page 24 of the statement, when will the EH101, to which the hon. and learned Member for Fife, North-East (Mr. Campbell) referred, succeed the Puma in that role? Secondly, when will the multi-launch rocket system, referred to on page 312 as "under order", come into service? Thirdly, does the full development of the third generation of anti-tank guided weapons, mentioned in paragraph 4.4, allow for the latest Soviet tank technology, notably the FST1?
    The RAF has received more favourable funding in recent years, but there remain two significant gaps in the RAF's aircraft inventory. The delays in acquiring a modern airborne early warning aircraft are well known. We heard yesterday from the Secretary of State that we cannot afford the full complement. I should like to know when the first E3A aircraft will be delivered. That would be helpful to the House. Will it just slip? The other gap is the lack of specialised electronic warfare aircraft, such as the EF111 or the F4G "Wild Weasel". If West Germany sees the need to acquire a Tornado variant for the job, why are we preventing our own tactical air force in the central region from having one?
    I have other questions. First, when will Tucano production catch up on the original schedule? Secondly, when will the much-delayed tail end of Tornado GR1 deliveries finally occur? Thirdly, how long is the Tornado ADV radar expected to remain a problem? What is the
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    future of the 32 mothballed Tornado F2s? When is the improved UKADGE mentioned on page 23 of the statement expected to become operational? Finally, when, oh when, will we have a modern IFF?
    Compared with last year's hawkish treatment of Soviet foreign policy, the present Estimates display considerably greater willingness to accept the reality of change in the Soviet Union. Yet the Government are still saying that, as East-West relations improve, as the Russians withdraw from Afghanistan and as they implement the INF treaty, it is appropriate to respond with a vast increase in Britain's nuclear capacity.
    That is a gross misjudgment of our real security needs, as the North Atlantic Assembly—of which I am a member —composed of Members of Parliament from 16 member nations, recognises in a new report. It considers that those needs are to improve the conventional balance in Europe, to strengthen the European pillar and to acknowledge and encourage the very welcome developments in the Soviet Union. That is the view of the parliamentary side of our alliance.
    I recommend that report to hon. Members. It is a fascinating blueprint for a new and more equitable relationship between the transatlantic members of the alliance. They see that relationship as having changed. Therefore, they ask how NATO is to change with it. Should we not start with a strategic rethink with a view to greater flexibility and seek a strategy of flexible, minimum deterrence? I hope that in next year's Defence Estimates we shall have an essay on those issues, because the permanent under-secretary in the Ministry of Defence is eminently qualified to address those vital questions. In conclusion, perhaps the biggest threat we face currently is the danger of the status quo.
    Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the House that the 10-minute limit on speeches is now in operation. I ask hon. Members who are called to keep an eye on the clock.
    7.7 pm
    Mr. Cyril D. Townsend: The House always listens very attentively indeed to the hon. Member for Sheffield, Attercliffe (Mr. Duffy) as he has a great knowledge of defence matters and, as I said in March this year when I followed him in a debate on the Royal Navy, he has a genuine determination to see the Royal Navy enhanced and strengthened. But, alas, he is in an impossible position. Only a few weeks ago at the Labour party conference a resolution was passed proposing that Britain's defence expenditure should be brought down into line with our European partners. As all my hon. Friends know, that would mean massive cuts in Britain's defence equivalent to about the cost of running the Royal Navy.
    We mark this year the 71st anniversary of the Bolshevik revolution which brought about the Soviet Union. I do not think that I am going too far in saying that at the moment the Soviet Union is in danger of being a Third world country with First world weapons and the First world's best space programme. It is a country in chaos with a bloated bureaucracy and a military and industrial complex out of control. Of course we all wish the secretary general the best of luck in trying to reform and modernise his system and cut back on the defence effort of that country, but I am not sure I would give him more than a 51 per cent. chance of succeeding.

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    Lord Carrington, who has just completed a very successful period with NATO, said:
    "When it comes to plain facts, there has been no reduction yet in Soviet military power, no diminution in the rate at which new tanks, ships and aircraft are flowing off the production line. Expenditure on procurement continues to grow at nearly 3 per cent. a year, despite Mr. Gorbachev's peace rhetoric and his interest in slowing down the military machine."
    The same noble Lord said in a speech in Oslo in 1985 —it is worth drawing his remarks to the attention of the House—that if there is an elephant in one's neighbour's garden, it may make sense to study its intentions but equally it makes sense to have a strong fence to protect one's flowerbeds. We are right to keep our guard up in these changing circumstances while hoping for the best.
    In August this year—this is a sign of the times—the United States Defence Secretary, Mr. Carlucci, gave an address at the Soviet military academy in Moscow. While speaking to the assembled company he said:
    "we have difficulty in reconciling a defensive doctrine with what we see in Soviet force structure and operational strategy as an emphasis on the offensive—especially on surprise and manoeuvre. I refer to such things as the operational manoeuvre group concept, forward-based bridging units, and the heavy emphasis on tanks and artillery. At the same time, we see no shift of emphasis to the kind of forces typically associated with defence."
    I hope that the House and the country will ask the basic question as to why, in October 1988, the Soviet Union constantly practises the river-crossing exercise with its shock armies. Why does it base so far forward and so close to the German border so much ammunition and petrol, oil and lubricants? If we cannot get a satisfactory answer, surely we have no alternative but to keep on strengthening our own defence effort and improving our co-ordination with our allies.
    I want to draw attention to the enhancement of the weapons systems of the Soviet Union. We used to say, with some confidence, "We do not need to match the Soviet Union tank by tank, aircraft by aircraft or submarine by submarine because we have a technological edge." Sadly, we are losing that edge. I remind the House of the new Typhoon submarines that the Soviet Union has deployed. They are quiet and hard to detect. It will be difficult for our submarines to keep abreast of that stealth technology. We talk about our reactive armour. The Soviet Union has the same thing. We must spend our money on gaining and keeping a technological gap. If we do not, without the numbers behind us, we will be in real trouble.
    I cannot claim great enthusiasm for deciding on the new tank for the British Army of the Rhine. I suggest to my hon. Friends on the Front Bench that the way forward is through improved surveillance methods and precision-guided missiles. In this day and age, if one can find, one can hit and if one can hit, one can destroy.
    I want to draw attention to the lack of helicopters in the British Army. There was a recent display and exercise on Salisbury plain which drew attention to this. Many of my hon. Friends will have further details. We have allowed the British Army to fall behind other armies in NATO and the Warsaw pact in this respect. The time has come to improve helicopter capability.
    Saint Cyril was once described as a fearless and courageous preacher of the orthodox, in theological terms. I have tried to be the same in defence matters. I hope that I may be allowed to raise two further points which are not quite so orthodox. The first concerns the need for a defence
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    review. I am by no means a lonely voice among Conservative Members on such topics. My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), before clearing his desk to move to Brussels where I hope he will keep Kent suitable and safe for grazing heifers and Tory voters, called for a defence review. He was wise to do so. It should not be an issue between the parties. Sir John Nott carried out the last defence review under great pressure from the Treasury. He had to find big cuts in a short time. The inter-service mechanism was not at the advanced stage that it has now reached and the results of that review are well out of date. For example, there has been the INF agreement. It would be wise of the Government and in their own political interest to recognise that. The previous election is over one horizon and the next election has not yet appeared on the other one. This is a good moment to study Britain's defence capabilities and the new challenges we face in the new world to see how we can best proceed.
    The second matter—this is one of my many lost causes but I am happy to bring it forward for consideration by my hon. Friends—is the need for Britain to place less emphasis on its continental effort and more on its maritime effort. I have considerable firepower behind me on that issue. However, at least three Secretaries of State for Defence have quietly taken me aside and said, "Cyril, you are wrong. Please understand that you just harm everything by talking like that. Don't you understand that the United States is under great pressure to cut back on its 327,000 service men in Europe and that Germany does not want to carry our burden in Europe?" Since the time of Marlborough standing armies in Europe have not been popular with the British people. I do not believe that it is the best use of limited defence resources. We would be true to our traditions and would be looking after the best interests of the defence of the free world if, over a period of time, we could disengage from the continent and increase our maritime effort. I should like to see the Cabinet discussing that matter and I should like lo see a cautious Civil Service statement in the defence White Paper that, in the long run, that is where Britain's defence interests lie.
    .17pm
    Dr. John Gilbert: The debate has come far too late in the year. It is a scandal. It is wrong for defence to be pushed back into the mop-up session just because of the incompetence of the Government's business managers. I hope that we shall be given an assurance that there will never again be five months between the publication of the White Paper and the debate. If we do have the debate this late, let us have it when the Secretary of State has some idea whether he has won his annual battle with the Treasury.
    It will not surprise many hon. Members to know that I find myself unable to support the amendment in the names of my right hon. and hon. Friends merely because of one phrase which relates to the cancellation of Trident. I do not propose to weary colleagues with explanations of my reasons for that because I am sure that they are fairly well known. I want to place on record that I am content with the rest of the amendment. I am delighted that it calls on the Government to
    "use resources to secure our non-nuclear defences and to work actively"—
    those are beautiful words—

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    "for the reduction and abolition of nuclear weapons in Britain and elsewhere".
    I congratulate the Front Bench spokesmen for not mentioning unilateralism or saying that we should have no nuclear weapons in our hands, in our territories, or on our territorial waters. I welcome the slow move back towards the traditional defence policies of my party. However, there was one extraordinary passage in the speech of my hon. Friend the Member for Clackmannan (Mr. O'Neill). I gave him notice that I intended to raise the matter. He talked about a peace wing and war wing in the Labour party. I do not know of anybody in my party who is in a war wing or who wants a war. I hope that it was a slip of the tongue because he will be hard put to identify anybody in the Labour party who wants a war with anyone.
    I congratulate my hon. Friends the Members for Sheffield, Attercliffe (Mr. Duffy) and Rhondda (Mr. Rogers) on their catalogue of inquiries of Ministers about the state of our defence equipment programme. I notice that not a single Minister had the courtesy to make a note when either of my hon. Friends was speaking, so I suppose that we cannot expect answers to their extremely important questions. The only other explanation is that Ministers know the list already and are preparing the answers anyway, but I should be surprised if that were the case.
    My hon. Friend the Member for Attercliffe produced a superb list of problems in the Ministry of Defence and I shall add a couple, one of which is at least a scandal. At least one Minister in the Ministry of Defence must be extremely grateful that the DROPS affair has not been considered in detail by the Select Committee on Defence.
    I am concerned that a choice will have to be made between an American and British tank. This country has had a dismal history of tank production since the Chieftain tank was introduced in 1966. We have no record of which we can be proud of co-operation with our allies over the debate on smooth and rifle bore, and what should be the size of the bore of the tank gun, and we have had a dismal record in selling tanks abroad. Unless the new owners of the Royal Ordnance factories can do something about selling more tanks, we should get out of the tank-making business altogether; we would probably be far better off buying German, if not American, tanks. MBT80 was on the stocks when I arrived at the Ministry of Defence in 1976, but we have not progressed much further with it.
    I am worried about the state of the fire control systems that are available to the Royal Navy. I cite in aid the appalling disaster in the Gulf not long ago when an American warship, which had the most modern fire control systems, shot down an innocent airliner. I do not seek to place blame on any of the individuals concerned, but an article in New Scientist of 5 May reports—I should be grateful for some response from the Minister on this —that the Ministry of Defence has had to cancel an order for a computerised command and control system for the new type 23 frigates. The article says that the Ministry of Defence has
    "spent £30 million on the project, but the system could not cope with orchestrating all the weapons and sensors on the frigates.
    This means that the officers on board four Type 23 frigates that will be launched between now and the 1990s will have to rely on operating each sensor and weapon independently."
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    If that is so, we are faced with a serious problem, with no guarantee that the disaster that overtook that airliner and American warship could not happen to one of our own warships.
    I have never concealed my scepticism about the European fighter aircraft, which was known as the AST403 in 1976. It was supposed to be a Harrier-Jaguar replacement and to be optimised in the ground-attack role. It is now to be optimised in the air-superiority role, but I have never heard a single satisfactory word of explanation from a Minister of why that U-turn in the function of the aircraft has taken place. I strongly suspect that it is to do with industrial and political considerations in terms of co-operation with the French or German defence industries rather than being related to the needs of the Royal Air Force. It would be extremely interesting if Ministers said whether the United States is releasing its stealth technology for the EFA project or, if it is not, whether they are confident that our stealth technology matches that of the Americans.
    On page 65 of the White Paper—the Minister need not look it up, as it is not a point on which I want a reply —there is mention of the forces in eastern Europe that are not on the central front. I do not take issue with the figures given for the central front or eastern Europe, but it is a fact that the other Warsaw pact land forces—I recently returned from a trip to Hungary, Bulgaria and Romania —are, for all practical purposes, no more than supernumerary agricultural workers. They spend most of their time in the fields digging ditches and cutting hedges. I cannot foresee their being of any serious military use, other than in the defence of their country—certainly not in any forward deployment.
    The hon. Member for Bexleyheath (Mr. Townsend) made the extremely valuable point that the quality of Soviet material is now outpacing ours in various directions. He drew attention to the Typhoon submarine, about which we have known for some time, but there are serious suggestions that the Soviet Union is outpacing us in the quality of battlefield munitions, and that must be of considerable concern. It gets most of its technology from breaches of COCOM.
    I am concerned that the Ministry of Defence does not put nearly enough resources at the disposal of the COCOM office inside the Ministry. The Select Committee on Trade and Industry has taken a little evidence about this matter, and, as I understand it, there are three officers on full-time duty in the Ministry of Defence attending to COCOM matters. Anyone who has visited the office of technology assessment in the Pentagon, as I did recently, knows that the United States has about 200 people devoted to this extremely important work, and it is high time the Ministry of Defence paid more attention to it.
    I can understand why the Secretary of State is experiencing difficulty agreeing his defence Vote with the Chief Secretary to the Treasury. One reads in the newspapers that the Secretary of State is cooling his heels in the Treasury's ante-room. I take it that that is another of Mr. Bernard Ingham's insulting briefings about Cabinet Ministers. I can believe that the Treasury is unsympathetic to the politics of burden-sharing, and I very much agree with the right hon. Member for Brighton, Pavilion (Mr. Amery) and the hon. and learned Member for Fife, North-East (Mr. Campbell). Whoever wins the next election will come under enormous pressure for a reduction in American ground troops in Europe. Had I

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    been speaking yesterday, I would have made a different peroration because I understand that Vice-President Bush has given a firm commitment—if he has been reported accurately—that there will be no reduction in the American military presence in Europe. I foresee no reason for complacency because there will be enormous pressure on the matter in Congress, which controls the defence vote. Our budget, despite the efforts of Ministers to pretend otherwise, is on a downward trend in real terms, and I hope that the Secretary of State will win the fight that he must win with the Treasury to obtain an adequate defence Vote.
    7.27 pm
    Mr. John Wilkinson (Ruislip-Northwood): To some extent, our debate is a victim of the peace process. Increasingly, the people of Western Europe are coming to take at face value the statements of General Secretary, and now President, Gorbachev.
    The general secretary expressed the hope that all in western Europe will live in the same house. The people of eastern Europe have a different wish. They do not wish to live in the same house as the Soviet Union. More and more, they are asserting their different identities and reverting to their historic and national roots. There are nationalist movements in the Baltic states, the Ukraine, Byelorussia, Armenia, Georgia and in the Balkans, to which my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) alluded. They are movements of fundamental significance, but, as I have said before, empires in decline can be at least as dangerous to their neighbours as empires that are expanding. If one looks at the history of what has happened in the periods of decline of the Ottoman empire, the Austro-Hungarian empire, the French empire, the British empire, the Portuguese empire and many others, one sees that the processes of decline were accompanied by conflict. We cannot be sure that such conflict in Europe will not overspill, with dramatic consequences. We must, therefore, be vigilant, as my hon. Friend the Member for Bexleyheath (Mr. Townsend) so wisely reminded us.
    At the same time as change is afoot in the Soviet Union, the Soviets new peace policy is encouraging western Governments to increase their credits to the eastern bloc, to increase the flow of high technology to the eastern bloc and greatly to expand East-West trade without predetermined quid pro quos being demanded. The result of the process could be a much strengthened Sovied Union in economic terms. In military terms, it is clear that the capability of the Soviet armed forces continues to grow across the spectrum—in both strategic and conventional weaponry. As yet, there has been no sign of substantial changes in military doctrine or of substantial reductions in force posture by the Soviets. It is important that we be vigilant and that, as resources are so constrained, we should seek ever better value for money.
    I am afraid that this will be a difficult affair for the British Government. They have shown great responsibility in their conduct of the nation's defence. I praise my right hon. Friend the Secretary of State for Defence and his ministerial team. I know as a Western European Union committee chairman how helpful they have been, for example, in organising the WEU symposium on military research in London in March and in providing for visits by my committee to the tri-national Tornado training
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    establishment at Cottesmore and to the Aeroplane and Armament Experimental Establishment at Boscombe Down. They have been helpful, positive and encouraging in every way, but they are up against a fundamental problem—lack of resources.
    The pay of the armed forces must go up at least in keeping with the rate of pay in the civil community. The cost of weapons increases rather more than inflation. All this happens at the same time as our defence budget decreases in real terms and, although I acknowledge that the decrease is a fairly recent development, it is a fact that the Government must face. This squeeze on resources is impelling my right hon. Friend the Secretary of State yet again to go cap in hand to the Treasury in this expenditure round to ask for more money. My right hon. Friend knows that unless he gets more money the circle cannot be squared.
    Unless my right hon. Friend gets more money, it will be dificult to honour the Government's pledge in their answer in Cm. 443 to the report of the Select Committee on Defence on the surface fleet. The Government said:
    "The Government has provided substantial additional resources for defence, including additions in the last Public Expenditure Survey round, so that commitments can be sustained. There is thus no need for or question of a defence review, whether 'by stealth' or otherwise."
    Over the past six years I have spent much time—I have co-authored two books and chaired the Omega committee report of the Adam Smith Institute—vainly trying to suggest that it would be wise for the Government to embark upon a review. For a long time this budgetary bind has been plain for all to see. I have suggested that we should examine radically in concert with our allies—not unilaterally as we did in 1981 when Defence Secretary Nott presented Cmnd. 8288 "The United Kingdom Defence Programme: The Way Forward"—how best as good, faithful members of NATO, determined to enhance the European contribution to our common Atlantic defence, we could make better use of our resources.
    The strategic defence of our nation in nuclear terms must be sacrosanct, and we all understand that. The Opposition's amendment is plainly totally irresponsible. We cannot ignore the defence of the home base. The Government have improved Britain's air defence, with the Tornado F3 coming into service, improvements in our radar infrastructure and the fact that the Home Service defence force and Royal Auxiliary Air Force Regiment squadrons are exercising well.
    Defence of the east Atlantic and English channel is crucial for NATO. We play a key part, with 70 per cent. of the naval forces in those areas coming from the Royal Navy. Unless these command areas are secure, how can western Europe be reinforced in time of tension or war? Without such certain reinforcement, how can a defence of western Europe be sustained?
    We must also consider our overseas intervention force capability. The capability to intervene on the flanks with the AMF and Marines is crucial. Our Norwegian friends are particularly vulnerable, adjacent as they are in the north to the Soviets and with the Kola peninsula base complex right on their doorstep—the base from which the Soviets' strategic submarine force and northern fleet sail. Intervention forces are vital for Britain. We have repeatedly seen how necessary they are, most recently in 1982 in the south Atlantic conflict.

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    Last, but not least, there is our Brussels treaty commitment. Are we for ever and for aye to keep a tactical air force, plus 55,000 men on the continent of Europe, as though nothing has changed? It is not as though the foreign exchange costs are met by our German friends. Since 1980 they have been absolved of the offset requirement which was incumbent on them. Paradoxically on the autobahns one sees the Germans proceeding on their stately way in BMWs and Mercedes while the Americans and British, who are there to defend them, drive along in their old jalopies. The Germans spend about half as much as the British on defence as a proportion of GNP.
    I am suggesting only that the balance between the offence and the defence is changing in favour of the defence with precision-guided weapons, as my hon. Friend the Member for Bexleyheath pointed out. The helicopter used against armoured vehicles is especially effective. We no longer have a conscript army as we did when we undertook the Brussels treaty commitment. There is a baggage train of families to maintain. One need only read the National Audit Office report "Costs and Financial Control of British Forces in Germany" to realise how expensive that baggage train is. Furthermore, in peace-time these forces are stationed in the wrong place, so it will be difficult for our forces in Germany to get to the right place in time of war.
    My right hon. and hon. Friends in Government should not eschew a review. There is nothing wrong in re-examining strategy as international affairs develop. In fact, it is the responsible and right thing to do. If my right hon. and hon. Friends bite the bullet, forget what they may have said in answer to the Select Committee and conduct such a review, they will conclude that three divisions in Germany are too much for the United Kingdom. We should do rather more at sea and in the air and with our intervention forces. If we reduced our forces to a division west of the Rhine covering the clutch of Royal Air Force stations, Laarbruch, Bruggen and Wildenrath, that would be appropriate. We are not shirking our duty. We are one of the two European nuclear powers in the Alliance and shall continue to play a vital part.
    7.38 pm
    Dr. John Reid: I am grateful for the opportunity to contribute to the debate, first, because I know that many hon. Members wish to speak, and, secondly, because I cannot claim the comprehensive and detailed knowledge shown in many speeches, like that of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy).
    However, I wish to raise once again the defence implications of the closure of the royal ordnance factories, especially, but not exclusively, that at Bishopton.The case has been put both inside and outside the House, most recently and with most passion last night by my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) who has a direct constituency interest.
    I have an interest, first, as someone concerned with the defence and security of our nation, and, secondly, as someone concerned with the defence of my nation's employment. Thirdly, like other hon. Members, I am concerned to see that fair play is given to the taxpayer over
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    this. Finally, I have a particular interest as a Member of Parliament whose constituency depends on the steel industry, which, while it is less strategic in a defence sense than the ROFs, is strategic in an industrial sense, and is about to go through the same privatisation process as that faced by the royal ordnance factories. As a result of all these concerns, I find the Governments attitude towards defence in general, and the royal ordnance factories in particular, at best wrong in priorities, and at worst negligent of the national interest.
    Over the past few years, the defence posture of the Government has been characterised by three main features. First, they have consistently shown a preference for nuclear weapons, even if it is at the expense of conventional forces—what Lord Carver referred to as their delusions of nuclear grandeur. Secondly, the Government have consistently preferred the encourage-ment of private gain even when, in the defence sector, it may be at the expense of national defence needs. Finally, they have shown an increasing preference for using the private market as the arbiter of national defence requirement when it should only, and can only, be determined by public discussion, public policy and public ownership.
    The history of the Government is littered with examples of dereliction of duty, from the Westland affair to the sell-off of the royal dockyards. Nowhere is that dereliction more obvious, and nowhere is the concern felt more, than in Scotland, and nowhere is it more obvious than in the proposed closures at Bishopton and Patricroft. In yesterday's press we read even more horrifying reports that another 10 British Aerospace factories, including two royal ordnance factories, could be under threat. Thus, despite the assurances of Ministers at the time of privatisation, and despite all the promises and pledges of British Aerospace, Bishopton is to close.
    The fact of closure is galling enough on its own, but the excuse for the closure makes it even more unacceptable and unpalatable. The reason given—the need to reduce so-called spare or surplus capacity—serves only to underline once more the necessity for public sector control of the royal ordnance factories. While they were in the public sector and operating in the broad national interest, the existence of spare capacity within the royal ordnance factories was not a handicap but a bonus. Reserve capacity was a requirement of good defence provision, not because of any sympathy or sentimentality towards the work force, but for the good, sound strategic defence reasons that a nation with insufficient means to increase defence production in an emergency is a nation incapable of responding to an emergency.
    Nothing illustrated that fact better than the conflict in the Falklands. Whatever side we take in the debates on the merits of that war, there was surely something bizarre and demeaning about a maritime nation scouring the ferry and fishing fleets of Britain to muster an adequate naval force to send into action. Let us not forget that during that emergency the royal ordnance factory at Bishopton was working 24 hours a day, seven days a week to supply the additional requirements made necessary by that conflict.
    With the ordnance factories, the Government are going down the same mistaken road they followed with the Falklands. It is not as if the Government were unaware of the danger to reserve capacity when they privatised the factories. The matter was specifically raised during the debate on the Second Reading of the Ordnance Factories

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    and Civil Services Bill, as far back as 16 January 1984, by my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) and others. The answer from the then Under-Secretary of State for Defence Procurement now looks quite staggering in its complacency. The Minister said, when he was challenged about the threat to reserve capacity:
    "There has been far too much unwarranted negativity".
    Incidentally, he may not have been a good manager of the interest of the defence force, but he was an expert in the use of words. I was talking to some people from Bishopton and they are greatly relieved to know that they face not unemployment but "unwarranted negativity". The Minister said:
    "There has been far too much unwarranted negativity of this sort in discussion of the future of the ROFs. The right hon. Gentleman suggested that, once privatised, the ROFs could not be relied upon to supply the guns, fighting vehicles and ammunition they have supplied in the past; that in a time of tension or war we in the Ministry of Defence would look to the ROFs to step up production and suddenly find that they were not there. That is patently absurd. The ROFs are not beingsent anywhere."—[Official Report, 16January 1984; Vol. 52, c. 101.]
    Well, I have news for Ministers. If they continue their present course, the next time we have an emergency or, in the words of the Minister, in a time of tension or war the Ministry of Defence looks to the ROFs—like Bishopton —they will not find them. They are going somewhere. In private hands, they are going down the tubes. Ministers cannot say that they were not forewarned. The tragedy is that normally forewarned is forearmed. In the case of this Government, forewarned means disarmed.
    All this might be understandable if there had been fair treatment of the taxpayer, but the reality is that British Aerospace profited by untold millions because of undervaluation of land alone.
    There are those who believe in a conspiracy theory of history. I am inclined to attribute what has happened not to that, but to another theory of history, beginning with a capital C. Whatever the reason for it, there should have been some humility from Ministers last night. Instead, the present Under-Secretary of State for Defence Procurement boasted of his prowess at property management. If that is a manifestation of expertise of property management by the Government, thank God the hon. Gentleman is not my estate agent.
    Even at this late stage, the Government have a chance to restore the faith of workers at Bishopton and the other factories and to secure a good reserve capacity on a sound basis for the conventional support of our armed forces. They owe that duty not only to the work force of Bishopton, but to the safeguarding of the defence of this country.
    7.48 pm
    Mr. Robert Hayward: I wish to deal with one or two points that relate particularly to my part of the country, but, initially, I shall comment on some of the contributions made so far. I find the contributions from hon. Members on the Opposition Back Benches far more honest than the contributions from hon. Members on the Opposition Front Bench. That is also true of the contribution from the Liberal Benches because, although the hon. and learned Member for Fife, North-East (Mr. Campbell), who is not in his seat at the moment, acknowledged that Trident would be in existence up to
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    1993, he did not say whether his party believed that that weapon would be used. His party leader has flatly refused to give an answer to that question when it has been put to him on a number of occasions on television. I therefore hope that, sooner or later, the Liberals will decide whether they would intend to use that weapon, as well as simply acknowledging its existence.
    The hon. Member for Clackmannan (Mr. O'Neill) was challenged yesterday by my hon. Friend the Member for Bristol, East (Mr. Sayeed) about the level of expenditure to which the Labour party would commit itself. In reply, he said:
    "I confirm the first question. I shall reply to the second question in the course of my remarks."—[Official Report, 19 October 1988; Vol. 138, c. 917.]
    I sat through his speech, and I have read it in the Official Report twice since then and can find no attempt to answer the question from my hon. Friend the Member for Bristol, East about the amount of GNP that the Labour party would commit. I listened with interest to see whether the hon. Member for Rhondda (Mr. Rogers) would touch on the matter today, but we still have no indication of approximately what proportion of GNP the Labour party intends to commit.
    There may be a vast range of opinion among Opposition Members as to how that money should be spent. On the one hand, we heard it stated honestly by the hon. Member for Liverpool, Walton (Mr. Heffer) and, on the other hand, by the right hon. Member for Dudley, East (Dr. Gilbert), who made an excellent contribution to the debate, but Labour Front Bench Members have at no stage given an approximation of the amount of GNP that the Labour party would commit. They reel off all the problems saying, "We haven't got enough frigates or ammunition. We have problems with helicopters, the Army and the Air Force", but there is no indication as to whether they would be willing to put in more money, the same amount of money, or less money than the Government are currently doing. It is patently dishonest to list that catalogue of questions without attempting to deal with that general financial point.
    I wish to mention two specific points about which there have already been a number of comments. I agree with the comments yesterday of my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) about the Territorial Army. I have been in correspondence with my hon. Friend the Under-Secretary about the Territorial Army because, although I appreciate the efforts made by the Ministry of Defence to recruit people into the Territorial Army as an extra reserve of expertise that we genuinely need, I am concerned about the demands being put on individuals who join the Territorial Army. I believe that the Minister has been advised about this matter. I do not expect a reply this evening, but I am willing to discuss the matter with him later.
    The impression is given that people recruited into the Territorial Army are told that they will be required for a certain number of days. The minimum is 27 days, plus at least six weekends. From my conversations with a number of people involved in the Territorial Army, it has become clear to me that that is not the expectation of the Territorial Army. One of those people said to me yesterday, "If you don't do at least one weekend every month, then you are useless to the Territorial Army." It was clearly indicated to the person about whom I wrote to the Under-Secretary that he would be required for at least

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    16 weekends a year and that anything less than that would not be of any major benefit to the Territorial Army. I checked that with other people whom I know belong to the Territorial Army and they all gave that clear indication.
    It is therefore hardly surprising that, if people are recruited into the Territorial Army, expecting to give six, seven or eight weekends a year, which is quite reasonable, and then find themselves confronted with substantial pressure from officers in the Territorial Army to attend for 16 or 20 weekends a year, they find that demand too great and therefore give up. That partly explains the high turnover that we are currently facing. If we resolve that problem, many people currently leaving the Territorial Army will be willing to stay and those who have left would rejoin.
    The other comments that I wish to make relate to recent purchasing decisions. I particularly welcome the commitment made yesterday by the Secretary of State to the European fighter aircraft. The Under-Secretary will be well aware of the importance of that to Bristol, like the importance of the Tornado programme, in terms of engines, and we greatly appreciate that. Much comment has been made about helicopters. Like my hon. Friends the Members for Bexleyheath (Mr. Townsend), for Ruislip-Northwood (Mr. Wilkinson) and for Weston-super-Mare, I am somewhat confused because I do not believe that the Ministry of Defence knows what it wants to do with helicopters. As my hon. Friend the Member for Ruislip-Northwood said so lucidly, aspects of defence policy are changing and, therefore, the requirements for tanks, helicopters and other armaments.
    I particularly welcome the decision announced during the summer recess regarding the RTM 322 engine and the EH101 helicopter. I hope that that will go a long way towards guaranteeing sales of that helicopter, not only in Europe, but in other parts of the world. Like other hon. Members, I am not sure that the Ministry of Defence has a clear understanding of what it wishes to do with helicopters. I am not a military expert. I am not able to say whether it should do X, Y or Z, but the lack of clarity of policy comes through over and over again in all the documents with which I have been confronted.
    There is a time limit for speeches in this debate. I hope to give extra time to other hon. Members and will not, therefore, comment on the royal ordnance factories, about which a number of hon. Members have spoken. However, I hope that my comments are of help in respect of the Estimates, which I commend to the House.
    7.56 pm
    Mr. Tony Benn: Many important questions have been raised in the debate, but the main one is, "Are we right to tax the British people by £19 billion, which is £441 per elector, for the purposes set out in the defence White Paper?"
    There is some disagreement, which I have tried to follow, between the two Front Benches about the balance between conventional and nuclear forces. I find no great disagreement—indeed, a wide measure of agreement— between the two Front Benches about the level of defence spending. I listened very carefully and I too picked up the idea that the Opposition were saying that more money should be spent on defence. If this debate were confined to
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    that narrow question, it would not reflect the deeply held views of those people living in this country who believe, as I do, that the time has come for a much bolder, more imaginative and far-sighted review of Britain's defence and foreign policies.
    I make no complaint, because we are not allowed to do so, that the amendment tabled by me and my hon. Friends has not been called for debate and will not be voted on, but that does not prevent me from referring to it. We said that our group of hon. Members
    'declines to accept the Defence Estimates; believes that the Trident and new nuclear weapons programmes should be cancelled and the finance saved diverted to health, education and housing budgets; further calls for the removal of nuclear bases, weapons and facilities from Britain and an end to all participation in any nuclear programmes or systems; further resolves to reduce arms expenditure by £7 billion to the same level as other Western European countries and to divert the money saved to social spending and the arms manufacturing facilities released to socially useful production; and believes that reduction in arms spending will help to promote peace and the elimination of poverty and hunger throughout the world.'.
    The thinking behind that was reflected clearly and overwhelmingly, not only at this year's Labour party conference, but at a succession of Labour party conferences. It has been put before the electorate and all of us in the House have been party to manifestos that have contained some or all of those proposals, but the real argument is about whether we should look again at the whole basis on which we propose to tax the British people.
    The time has come to re-examine six assumptions upon which the foreign and defence policies of all Governments have been based since 1945. I say "all Governments" because, in a strange way, this is not in any sense a party matter. These assumptions are, first, that there is a Soviet military threat; secondly, that the United States, as the leader of the Western Alliance, has a world policy designed to uphold democracy and human rights all over the world; thirdly, that nuclear weapons make us safer; fourthly, that Britain has an independent deterrent; fifthly, that we can well afford to pay the cost of these arms; and finally, that our defence policy has protected and nourished democracy at home. All these assumptions need to be re-examined, for I believe that they are significantly false.
    First, there is the issue of the Soviet military threat. Does anyone in this place seriously believe that, while Mr. Gorbachev is wrestling with long-overdue reforms in the Soviet Union, the Red Army is planning to land in Britain or to attack western Europe? I shall turn to what the public think about this because there are means of knowing that. The Soviet Union lost 20 million people during the second world war, and I am of a generation that will never forget that the liberty that we now enjoy was won in part by Russian blood in defence of their own territory in 1941. The purpose of the bombing of Hiroshima was not to bring the Japanese to their knees. I learnt when I was in Japan that the Japanese had offered to surrender weeks, if not months, before the bomb was dropped. It was dropped to warn the Russians.
    The reason that Mr. Gorbachev is credible now is because—[Interruption] The hon. Member for Tayside, North (Mr. Walker) laughs, but he should read the record of the tribunal trying the Japanese leaders after the war in Tokyo. The Japanese offered through the Swiss to surrender months before the atomic bomb was dropped. The only condition that they laid was that Hirohito should remain. The hon. Gentleman should read the record

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    before doubting the accuracy of what I am saying. I discovered the fact only five years ago, but it is all on the record. The great theory that the bomb was used to save about 250,000 American lives is not true. Instead, it was used to tell the Soviet Union that we, the West, had an overwhelming weapon.
    Mr. Gorbachev is credible because he says that he wants to cut defence expenditure to improve the standard of living of the Russian people.
    Mr. Mans: Will the right hon. Gentleman give way?
    Mr. Benn: I shall not give way to the hon. Gentleman because of the time limit.
    The second argument is that the United States advocates and upholds democracy and civil rights throughout the world. I hope that I shall not be misunderstood when I say that America is an empire as Britain once was. America, in Vietnam, Cuba, Chile, Grenada, and in its relations with Franco and the Greek colonels, was not upholding democracy. Instead, it was protecting its world interests.
    I was born in 1925, when about 20 per cent. of the world's population was governed through this Chamber. This place was the heart of the British empire, but we now live in a far-flung colony of the American empire. Those outside the House know this. The fact that we have no vote in the American presidential elections is a reminder of our colonial status.
    The third argument—[Interruption.] Conservative Members laugh at what I am saying. They should remember that when we governed India the Indians had no say on how they were governed from this House. When Mr. Gandhi came to London in 1931, he was asked what he thought of civilisation in Britain. He said that he thought that it would be a good idea. That was a sign of the anti-colonial pressures of the time. The House must face facts.
    The third argument is that nuclear weapons make us safer. After Chernobyl and the clear risk of accident, that is an unsupportable point of view. I say to my hon. Friends who contend that we must have the bomb because the Russians have it that when a Labour Prime Minister decided that we should build the bomb, the Russians did not have it. We decided to build nuclear weapons when the Soviet Union did not have them. That argument is a part of the history of the post-war years.
    Fourthly, do we have an independent nuclear deterrent? We do not. We do not make nuclear weapons. The Americans supply them and refurbish them. Sir Frank Cooper was the permanent secretary at the Ministry of Defence and he must know more about these matters than anyone else. In the course of the Zircon film he said that we could not fire Polaris without the American satellite system. That was the secret, or the breaking of it, that made the Government wish to ban the film. Sir Frank made it clear that the Zircon satellite was an attempt to replace or supplement the American satellite system. The price that we paid for that, as we heard yesterday, was American control of the British security service and the situation that now prevails at GCHQ.
    Fifthly, can we afford an independent nuclear deterrent? The answer is that we cannot. I am one of the few Members who sat in this place to listen to Aneurin Bevan's resignation speech. He resigned in 1951 over the high defence budget, which was at the expense of the
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    welfare state. The cost is massive because it involves 60 per cent. of our scientists and engineers. If we compare that with the average level of expenditure in Western Europe, £7 billion more is spent here than by our allies, who are equally keen to defend their countries.
    The transfer of resources would enable us to meet pressing needs. Does anyone think that more people will die in Britain as a result of the Red Army landing here than as a result of AIDS, cancer or heart disease? The people know that the nation's health is a national interest and that it is being starved of resources in part for the purpose of maintaining the defence budget.
    Finally, is democracy protected by the present system? It is not. Militarism destroys liberty or erodes it. Let us consider, for example, the role of James Angleton in "Spycatcher", who came to London and told MI5 that the then Labour Prime Minister was a Soviet agent. There was the former Secretary of State for Defence who ordered Cathy Massiter to tap the phones of CND. These examples tell us that the military state infringes domestic liberty. The war in Ireland is a most vivid example.
    What do the public think? There are those who say, Mr. Benn, what you say may be right, but what do the public think?" I am not a believer in opinion polls but they are available for examination. The latest opinion poll findings tell us that only 9 per cent. of the British people think that a Soviet attack is likely. When it comes to causes of war, 58 per cent. of the British people think that. the cause may be nuclear attack by accident. It seems that 6 per cent. think that the likely responsibility for such a war would rest with the Soviet Union, while 27 per cent. think that it would be with the United States. These are not hard Left arguments. I am referring to the figures that have been published by Dr. Gallup, who is no particular friend of mine.
    It appears that 41 per cent. of the British people have confidence in the world role of the Soviet Union while only 24 per cent. have confidence in the United States. When it comes to desire for world domination, 17 per cent. consider that to be the main interest of the Soviet Union and 32 per cent. think it to be the main interest of the United States. When asked about credit for the disarmament agreement—the INF—only 10 per cent. think that the United States should get the major credit——
    Madam Deputy Speaker (Miss Betty Boothroyd): Order. The right hon. Member has precisely 20 seconds left.
    Mr. Benn: I appreciate the time constraint that is upon us, Madam Deputy Speaker, and I shall draw my remarks to a conclusion.
    For 40 years the cold war has dominated the politics and economics of the House and the country. We have hope in 1988, and it must be our task to seize the possibility of looking to the 1990s and the next century so that we can reallocate the money and the skills that are wasted on weapons of mass destruction to create the means of life for those who are condemned to die because resources are being wasted instead of being made available to meet their needs.
    For these reasons I shall be voting against the Defence Estimates tonight. I believe that they represent a burden that the British people should not pay, and a burden that world events make it unnecessary for us to pay.
    8.9 pm
    Sir Hector Monro: If there were time, I should take great pleasure in shooting down in flames the right hon. Member for Chesterfield (Mr. Benn) point by point. Will he never learn? Three general elections have not shown him what the British public want. He is not the only person to be out of step with the British nation. That highlights how fortunate we are to have my right hon. Friend the Secretary of State for Defence and his ministerial colleagues, who are pursuing sensible defence policies, cutting out waste and maintaining security for Britain now and in future.
    I support the efforts that my right hon. Friend the Secretary of State is making to persuade the Treasury, and perhaps the Star Chamber, to maintain our defence spending, or perhaps to increase it. We must be careful about expenditure, but defence spending is falling behind other areas of spending and there is much to do if we are to support the United States and NATO and look after our own responsibilities.
    In exchange for this support for the Secretary of State I ask him to make one or two small switches of emphasis. We should move marginally away from our hi-tech weapons, some of which are of doubtful effectiveness, towards personnel. Recruiting will be tight in the 1990s; we must retain what we have; we shall have to compete in a difficult market for new recruits. Pay is not the essential aspect. Conditions of service and fringe benefits are. We must examine them carefully and help our forces in every way. Housing is always a prominent issue among service men. They all want to own their houses, but need to know where and how they can do that on mortgages. Our service men frequently have to move, and hence their children must frequently change schools. They need support for that. All these things are terribly important. We always hear—rightly—from Ministers about how they are trying to help with the simplification of service life, but that always seems to be about to happen tomorrow. When will it happen today?
    The second tiny switch of emphasis has to do with the value for money that we obtain from our reserves. They are extremely effective and cost effective, and a small change in the amount of money available to them would be highly beneficial. Many hon. Members have spoken about the TA, the RNVR and the Royal Auxiliary Air Force and the Home Service Force, together with the cadets in those forces. They deserve excellent equipment, the best facilities and a proper promotion structure in each service. Too often experienced officers in their forties find they have nowhere to go.
    The great initiative of recent months under Brigadier Tommy Macpherson to highlight to the nation the importance of our reserves and their value to the MOD is highly commendable, and I hope that it will be successful with our employers, who have a significant part to play in the promotion of our reserves.
    I am delighted that my hon. Friend the Under-Secretary of State for the Armed Forces is coming to the south of Scotland next month to talk about low flying, which is an important issue there. I am sure that he will strike the right balance and explain how essential it is for Royal Air Force pilots to maintain a significant level of low flying. The hon. and learned Member for Fife, North-East (Mr. Campbell) mentioned how important it is to maintain the search and rescue facility at Leuchars for
    1086
    central Scotland. It would be inconceivable if 22 squadron were removed from Leuchars or 202 squadron from Lossiemouth. I am quite sure that the distinguished Air Officer (Scotland and Northern Ireland), Air Vice-Marshal David Brook, is fighting his corner hard over what is an important issue for Scotland—not only for the services but for the community at large. My hon. Friend the Member for Tayside, North (Mr. Walker) and others—and I—have all paid tribute to the search and rescue service.
    Turning to Royal Ordnance, I am as concerned as anyone else about the closure of Bishopton, because of the large number of lost jobs that will ensue in an area of high unemployment. I want to discuss the knock-on or knock-off effect that that will have on the Royal Ordnance factory at Powfoot in my constituency, which is managed effectively and efficiently by ICI Nobel. It has a full order book and is the only factory in the United Kingdom manufacturing tubular propellant for all British small arms ammunition. It was the subject of a five-year agreement between RO and the MOD. I stress that it is the only indigenous provider of the propellant that we require for our small arms ammunition.
    In 1985 Royal Ordnance gave ICI notice to quit. I went to see my right hon. Friend the Member for Henley (Mr. Heseltine), then Secretary of State for Defence, and he gladly gave me a stay of execution into the 1990s, which was good news. This year, however, Royal Ordnance said that it would remove the production line in 1990 to Bishopton. Then, a few weeks ago, came the announcement that Bishopton was to close. Where is this production line to be taken now? It is quite wrong that we should buy the propellant that we need from America or the continent—for example, from Czechoslovakia, where it is manufactured with Communist Government subsidy —given that it is a crucial powder for our ammunition. Will the Minister examine the matter, not in terms of Royal Ordnance's rights as a company, but in the light of the factory's being the only supplier of this gunpowder in this country. Surely we cannot go into the 1990s without it. I hope for a response from the Minister as soon as possible.
    A further knock-off effect will be that if we do not have Powfoot we shall not need to make nitrocellulose at Dumfries, which will mean a further loss of jobs. Royal Ordnance must not lose sight of its reponsiblility to the community as well as to the MOD and its shareholders. I am not climbing on the bandwagon of those who complain about property development. RO is jolly lucky if it can sell Powfoot or give it away after it has been sterilised following years and years of high explosives production.
    I am delighted with the firm policies developed by my right hon. Friend for this country. He is on the right lines and has my entire support. I hope that he will look into support for personnel in the services, at their conditions of service, and will give me a favourable reply on what is to become of the unique production line in my constituency which now seems severely threatened and stands to lose 140 jobs. I hope that my right hon. Friend will be able to reverse that decision.
    8.18 pm
    Miss Joan Lestor: The hon. Member for Dumfries (Sir H. Monro) nicely opened the way for me to follow him by discussing the Royal Ordnance factories.

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    Today, a lobby of working men and women from Bishopton and Patricroft in my constituency was here. They came to protest at the closure of the factory, pointing out the effect that the loss of their jobs would have on communities that already suffer, in many cases, from unemployment that is well above the national average.
    The workers also asked, and I repeat their request, for an inquiry by the Public Accounts Committee into the background of the privatisation of Royal Ordnance and what has flowed from that. If the speculation in The Independent and the fears that were first expressed in the MOD's report about the sale of the Royal Ordnance factories, which was commented on by the Comptroller and Auditor General, is all wrong, the Government have nothing to fear. They will hold a public inquiry, we shall have egg on our faces and they will come out of it with no more stains on their rather spotty characters than they have now. I do not understand the resistance to such an inquiry. The disclosures since the leak during the week of the Labour party conference, where I first picked up the news on the television, have given people cause for concern about what is happening.
    My concern about the background to the privatisation started some time ago. When I took over the Eccles constituency from Lewis Carter-Jones, he handed me a file on the subject. I also raised the matter with the Leader of the House. who was standing in for the Prime Minister on 11 February. I asked him to put pressure on his colleagues in the Ministry of Defence
    "to answer the criticisms of the Comptroller and Auditor General about the privatisation of the Royal Ordnance Factory"
    because the Minister had refused to answer them. I pointed out the cheapness of the way in which the deal was carried out, and the fact that
    "dividends were waived to make the company more attractive and … the delay in the transfer of pension rights and redundancy pay made this whole operation exceedingly expensive."
    The Leader of the House replied:
    "I think that the hon. Lady misses the important point. The important point is that there were difficulties in the armament procurement industry. That industry will be much better under privatisation than it ever would under state control."—[Official Report, 11 February 1988; Vol. 127, c. 498.]
    A few months later we were told, as the hon. Member for Dumfries stressed, that two factories—others have already closed—were to close. In particular, that at Patricroft is to be closed. There are grave doubts surrounding the background to this matter and the way in which the Royal Ordnance factories were sold off to British Aerospace.
    Earlier, one of my hon. Friends mentioned the soothing noises that were made by the Ministry of Defence. I have a letter dated February 1987 from Lord Trefgarne to Lewis Carter-Jones stating:
    "Whilst your constituents may be concerned about the introduction of competition into the procurement of ammunition, Royal Ordnance with its long history of producing these stores will stand a good chance of winning the orders for our further requirements."
    Lord Trefgarne went on to comment on how well Royal Ordnance was already doing. Soothing noises were made, and I can refer to another letter dated 30 November, which made similar soothing noises.
    When the leak finally came and the unions took up the matter, they were told that production at the closed Royal Ordnance factories would go to other Royal Ordnance factories. However, we now know that the company is
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    looking both nationally and internationally for other plants. Three joint ventures are planned. I should like an assurance that none of the work from Patricroft or Bishopton will go to the planned joint ventures in Chile, Brazil and Kentucky. If we are to have an armaments industry, and if we are to supply our defence forces, it appears, if those reports are true, that we shall be moving production to non-NATO countries where there is no agreed quality assurance in respect of propellant and ammunition standards. If we are saying—and of course we are not—that an arms industry is no longer needed in this country, the talents of the highly skilled men and women who have been employed in it should be applied elsewhere. There is plenty of social and other need in the community which those skills could be used to meet. But no, we now find that those goods are to be bought elsewhere.
    My constituency has an above average level of unemployment. It has been starved of investment and of growth, and over the years its traditional industries have declined. We had a spark of hope when £160 million was invested in the Trafford park development scheme, which begins just 100 yards from the Royal Ordnance factory that is to be closed with the loss of more than 1,000 jobs. It makes a nonsense of putting money into a development scheme in the hope of producing more jobs when at the same time the door is closed on more than 1,000 jobs nearby, in a situation that has very shady surroundings.
    Skills there are to be left lying dormant. The knock-on effect on the community will be colossal in respect of both employment and local trading losses. Families will be plummeted into poverty. More and more youngsters in that area are being left without hope. They have looked to Patricroft and other places for some form of apprentice-ship and for hope for the future. As was said by one of my hon. Friends yesterday in respect of Bishopton, the Royal Ordnance factories have become family concerns employing fathers and sons, and so on. Already large numbers of young people in my constituency have been left without hope for the future.
    We shall soon hear Conservative Members saying that those unemployed could work if they wanted to do so and that they are not getting on their bikes looking for jobs. The truth is that there is no more work available in my area. If that industry had declined, we would want to use the skills of those people in some other way. However, that is not the case, because that production is being sent elsewhere. People are being denied the right to work, and we are robbing our defence industry of assured equipment quality.
    As far as we can tell, British Aerospace is making a financial killing by selling out the jobs of my constituents. That is how we see it, and that is how the people of Eccles see it. That is how it is viewed by the people in all the areas affected. It is nonsense for the Government to shrug it off. Every Conservative Member who has spoken, with the exception of the hon. Member for Dumfries, has said, "It is a pity about the unemployment, but…" There should be no "but" about unemployment. I say again to the Minister that if the stories about the background to this development are wrong, if we are wrong, and if the unions are wrong, the Government have nothing to fear from an inquiry, because we shall be the ones made to look silly and not them. I urge the Government to think again.
    8.24 pm
    Mr. Neil Thorne: I shall not attempt to go down the path followed by the hon. Member for Eccles (Miss Lestor) in respect of the Royal Ordnance factories, particularly with reference to that in her own constituency, except to say that it is vital that a large number of alternative industries are available in towns so that they are not dependent on one particular type. That is certainly the case in Eccles. Corby is a marvellous example of a town that was wholly dependent on one industry, but which is no longer so dependent—and it is now a boom town. I hope that the hon. Lady's constituents will find that in the not-too-distant future other employment opportunities are made available to those who are dedicated and who wish to use their skills. Therefore, I am not as pessimistic as the hon. Member for Eccles.
    I thank my hon. Friend the Minister of State for his mention of the work and assistance given by the Royal Army Medical Corps following the Dharan earthquake. The services provide important assistance in emergencies, which is often not appreciated or realised by the agencies that demand that we provide more aid. We have those forces and resources readily available in many parts of the world. It is important that we should be able to provide assistance at short notice. That is what happened in Dharan, and I am delighted that our services did so well there. Complete surgical teams were promptly ferried out from Hong Kong, supplemented by experts from this country, and a permanent base was established. I hope to visit Dharan next month, when, I understand, the services there will be running down because they are to be relocated. Had the earthquake occurred six months later, it would have been much more difficult to provide assistance. I hope that in reviewing the services that the Army was able to provide my hon. Friend will seek to ensure that there is some continuity and that those people who have settled near Dharan will not be left without medical cover of the kind upon which they have come to rely for such a long time, when the British Army moves its Gurkha recruitment base, as it plans to do in the next few weeks.
    Under the same heading, we must also give credit to the work of the Royal Navy after the recent hurricane in Jamaica. It was able to send in a patrol vessel and to provide substantial assistance at short notice. Such help does not appear in any acknowledgement of the aid that we provide. A number of other countries provide more aid in pounds, shillings and pence, but they do not have on hand the type of services that we can provide in emergencies.
    The second point I wish to address concerns our reserve forces. Other hon. Members have mentioned the extremely good value for money that our reserves represent. I recall that the last time a calculation was made at my request the cost of providing a reserve soldier was only 10 per cent. of that of providing a regular soldier because of the extra provision made for accommodation, pensions and education.
    Therefore, reserve soldiers represent extremely good value for money. It is not possible for them to take over completly because a minimum number of regular soldiers must always be provided to fulfil the role of the regular forces. All through our history, over many hundreds of years, the reserve forces have had an important role to play. However, because of our NATO commitments, we
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    have come to expect a very great deal from them. We have been using them as a trade-off because of the lack of national service, and that has put an enormous strain on the lives of those part-time soldiers, sailors and, in some cases, airmen. That is one of the main reasons why we are having difficulty in retaining recruits.
    Plenty of young men and women are able and willing to offer their services, but often they sadly find that the commitment does not fit in with their domestic lives. We must do some serious thinking about that, because those young people are vital if we are to ensure that we need not call upon a national service, which most regular forces would regret.
    One aspect to which we do not pay enough attention is the social side, particularly for junior ranks. The training required is often onerous, because the soldiers and their commanders are of course anxious that their service should reach virtually "regular" quality. I well understand that the commanders want to achieve that standard, but it often means that families are neglected. We must try to make up for that by ensuring that there are extremely good clubs for junior ranks, particularly for the benefit of their wives and families. In my view, the reserve forces should have the best club in any neighbourhood, without exception. I think we should then find that many who have passed through their service would wish to contribute by coming back to help with the facilities.
    I know that time is limited and that many others wish to speak, so I shall not detain the House for long, but I should like to raise one or two other matters. The first concerns helicopters. I know that 25 utility helicopters have been ordered. Continuity is important to the helicopter industry if it is to exist. The helicopters were originally due to start being delivered in the early 1990s, but I understand that delivery may now be put back to the mid-1990s. If that happens there will be further employment repercussions, for without continuity it is impossible to keep together the skilled work forces that are so essential. I hope that my hon. Friend the Under-Secretary will have something to say about that later.
    There is also the question of the offset for the Boeing AWACS deal that was done in 1986. Let me refresh my hon. Friend's memory. It was agreed that Boeing would provide new expenditure of 130 per cent. of the cost of the AWACS, which would have meant a total expenditure in this country of £1,300 million. I should be grateful if my hon. Friend would say a little about that. I should like to be reassured that things are going well and that progress will not be too prolonged.
    I congratulate the hon. Member for Stockton, North (Mr. Cook) on joining the Opposition Front Bench team, and thank him for the kind remarks that he made about me yesterday in connection with the armed forces parliamentary scheme. I am delighted that everything in which he has been involved has been going so well. It is possible, of course, that his appointment had something to do with it; nevertheless, it is very good news. I hope that the scheme will be expanded, and that other hon. Members on both sides of the House will have an opportunity to participate when it is launched officially later in the year.
    In this connection I am most grateful to my hon. Friend the Parliamentary Under-Secretary of State for all his help and encouragement.
    8.34 pm
    Mr. Harry Cohen: The glossy cover for the Defence Estimates, with three nuclear submarines in a wonderful setting, shows how much the Government romanticise and glorify the nuclear arms race. Nuclear weapons are the Governments steroid fix. They would fail any drug test because they are addicted to the magic mushroom—the nuclear one. The Prime Minister wants every new one that is going: Trident, battlefield nuclear artillery, the Army tactical missile system, short-range nukes to follow on from Lance, the replacement of free-fall bombs—TASM—nuclear depth charges, submarine-launched cruise missiles, more United States F111 hydrogen bombers, and the air-launched cruise missile to follow. The Prime Minister calls it modernisation, but it is cheating on the spirit of the INF agreement. She is rearming when the people of the world want disarmament.
    This new arms race, embodied in the Defence Estimates, goes against the grain of Britain's and the world's interests. A good deal of environmental pollution is nuclear. Chernobyl and Sellafield are examples of the abysmal record, and we can now add another example, that of Fernald in Cincinnati, Ohio, where thousands of tonnes of nuclear waste have been released into the atmosphere and the water supply in the production of material for nuclear weapons. The Government are at present sitting on a report of significantly higher than normal leukaemia and other cancer clusters at Aldermaston and Burghfield.
    Tackling the poverty and famine that so scar the face and conscience of the world is not compatible with massive arms expenditure. The economies of the super-powers are overburdened. What perestroika is all about is to get money to the people, the consumers, in the Soviet Union, but that cannot be done while there is such high spending on defence. The United States is one of the biggest debtor nations of the world, and its defence commitments contribute to that.
    There is also the serious danger of nuclear proliferation. The Governments flying of plutonium to the Japanese is a scandal if ever there was one. I was on a delegation led by my hon. Friend the Member for Islington, North (Mr. Corbyn) to see the Iraqi ambassador about Iraq's use of chemical weapons. He virtually said to us, "If we had nuclear weapons, we would use them in defence of our country. You in Britain have them; why shouldn't we?" Government practice is encouraging that sort of attitude. Instead of getting out of the nuclear arms race and encouraging others to do so, we are moving more and more to politically usable nuclear weapons.
    The MOD is on record as saying that nuclear weapons can be used
    "to demonstrate that NATO has the capability and will to use its nuclear weapons in a deliberate, politically controlled way … (with the objective of restoring deterrence by inducing the aggressor to make the decision to terminate his aggression and withdraw)".
    Presumably that would justify the use of nuclear weapons against Argentina in a future Falklands conflict.
    The new nuke-speak refers to the "single shot" or "selective strike". The Prime Minister is aiming towards another Hiroshima, or perhaps a future attack against a troublesome Third world nation. That would truly be a third world war. The Government even contemplate the use of Trident—the equivalent of 2,000 Hiroshimas, a global orgy of world death including our own.
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    Trident is not independent: its missiles are targeted and serviced by the United States and are under NATO—in reality, US—control. It is a potential first strike weapon. Trident's use, and our obliteration as a consequence, is in reality in the hands of the United States President, perhaps even Dan Quayle, who, in his inexperience, may be tempted to use it in the European theatre while he stays in his bunker avoiding the draft, so to speak.
    The Foreign Secretary talks of Trident being an irreducible minimum deterrent, but when he is asked to define "irreducible", he says that it relates to what the environment has to face. I will tell him what the environment has to face. It is the super-powers reducing their nuclear weapons. So why are the Government going for the massive increase that Trident is all about? They even refuse to put it on the negotiating table. The Government's stance is:
    "no further reductions in nuclear weapons in Europe until imbalance of conventional forces has been removed and a global ban on chemical weapons achieved."
    What a foolish set of conditions. There should be simultaneous negotiations on all three aspects. That condition amounts to a block on further nuclear disarmament.
    In their evidence to the Select Committee on Foreign Affairs the Government talk of
    "the need for residual force entitlements to rcmain at, or near, current NATO levels."
    Again, that is the minimum necessary. It says that after reductions residual ceilings will have to be near or at the current NATO force levels. The Ministry of Defence is blocking serious negotiated reductions by saying that it will not make any. That is the MOD's perpetual bleat, despite the opportunity for substantial reductions on both sides. One of those opportunities is in conventional forces, where there is a great opportunity for reductions.
    A West German paper entitled "Security for Europe" talks about a phased reduction in tanks coming down from about 80,000 to 10,000 on each side by the year 2000. That would be an asymmetrical phased reduction. Front-line strike aircraft and helicopter gunships would be cut to an equal ceiling of 500 on each side. Then it says that we should reduce the armed forces and their associated armaments by exchanging military data, by mutual at-site inspections in the process of verification, and by reducing the number of troops and officers in Europe by half, with either totally demilitarised zones or at least partially demilitarised zones where the most offensive and dangerous weapons are taken out. It also talks of confidence-building measures so that we set up a European military danger reduction centre of the sort that was agreed between the United States and the Soviet Union in September 1987. We could perhaps set up international fax hot lines. One has been in existence between the United States and the Soviet Union since 1963.
    In addition, there need to be measures to avoid a technological arms race. That is the basis for negotiation which should be actively pursued by the Government to bring down enormously our defence costs and those of the world.
    In conclusion, I recommend a pamphlet produced by Labour Action for Peace entitled "Welfare or Warfare? Cutting the cost of militarism". It talks about how the cost has increased 28 per cent. in real terms under the Government. Since the war, £240,000 million has been spent on war preparations. It describes how we

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    consistently spend more than our industrial competitors and how our military commitments overseas plunge us into debt on our balance of payments. It also points out that, if we cut defence spending to the level of Japan or Germany or other of our competitors in western Europe, £6,000 million a year would be released for spending on civilian industries, health, education and other welfare services.
    That is the direction in which we should be going. It is time that we turned back those high defence costs and made Britain, Europe and the world a safer place.
    8.44 pm
    Mr. Edward Leigh: The hon. Member for Leyton (Mr. Cohen) is a likeable chap but his speech was absurd. My right hon. Friend the Prime Minister does not want any weapon systems that are not strictly necessary for defence. She does not want to use nuclear weapons, but it is her public pronouncement that she would use them if necessary which prevents not just nuclear war but all war. That is a fact and the hon. Gentleman cannot escape it.
    This debate has been characterised by some interesting speeches from the Labour Back Benches. It has also been characterised by a speech from the hon. Member for Clackmannan (Mr. O'Neill), notable for what it did not say rather than for what it did.
    The right hon. Member for Chesterfleld (Mr. Benn) is an honest man. He represents the "peace at any price" movement in the Labour party, but at least he is honest. The right hon. Member for Dudley, East (Dr. Gilbert) is honest. He represents the "peace from strength" movement in the Labour party, although I question whether it is still a movement. I suspect that it is a dwindling band of people.
    But the hon. Member for Clackmannan, who speaks on behalf of the Labour party, seems to represent the "peace at any price unless it might lose us the next general election" movement within the Labour party. He spoke for 50 minutes. His speech was masterly. He dealt with a number of interesting issues which were not central to what the House should be talking about. He did not touch at all upon nuclear strategy, on which I am sure the House would have wanted to hear his views. When I pressed him all he said was:
    "I am whole-heartedly behind the present moves to reduce the threat of nuclear war on the continent and throughout the world."—[Official Report, 19 October 1988; Vol. 138, c. 918.]
    What does that mean? It means nothing and it was designed to mean nothing. That statement, which I enticed, was the only statement made by the hon. Gentleman on nuclear policy. It could have been made by the right hon. Member for Chesterfield or my right hon. Friend the Prime Minister. It is meaningless.
    The hon. Member for Lewisham, Deptford (Ms. Ruddock) also made an interesting speech. We all know that she used to lead the Campaign for Nuclear Disarmament. Her speech was also like the dog that did not bark in the night. Is she ratting on her unilateralism? Why did she not mention it? She is rather like a person who has wandered into a desert, sees a mirage in the distance and rushes helter-skelter for it. The desert that she has wandered into is the unilateralism that she espouses and which she realises, as a shrewd and ambitious politician, is
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    losing the Labour party election after election. The mirage to which she and the whole Labour party are rushing towards is the belief that recent developments in the Soviet Union, glasnost and perestroika—those expressions that have a cosy Slavic ring about them—have fundamentally changed the ball game when it comes to defence policy.
    When I listen to the Labour party I am reminded of a story that I was told recently in Lincoln cathedral of the rabbi and the poor man. The poor man goes to the rabbi and says, "Rabbi, rabbi, how can I live in dignity with eight children in two rooms?" The rabbi says, "Go out and bring your cow in from the field and you will live with dignity." He does it and things get worse. He goes to the rabbi and the rabbi tells him to bring in his chickens. Things get worse. The rabbi tells him to bring in his pig. Things get even worse. The poor man goes to the rabbi and tells him, "Things are desperate." The rabbi tells him, "Go back to your home. Take away the cow, chickens and the pig." The poor man comes back and says, "Yes, rabbi, things are perfect. I can live in peace and dignity."
    Why is that relevant? It is simply because, like the poor man in that parable, the Labour party in the shape of Ernie Bevin in 1948 said that such had been the violations of Yalta by the Soviet Union that we had to form NATO. For 40 years violation after violation is heaped upon Europe. The Prague spring, Hungary—[Interruption.] It is no good Labour Members jeering. This is what lies behind the need for a strong defence policy. Finally, those developments culminated in the invasion of Afghanistan and the unilateral deployment of SS 20 missiles without provocation targeted on western cities. Those missiles are now being withdrawn, thanks to the wise statesmanship of my right hon. Friend the Prime Minister and President Reagan. Incidentally, the hon. Member for Deptford made an extraordinary comment on that yesterday.
    The Soviet Union has withdrawn from Afghanistan —no thanks to Mr. Gorbachev but thanks to the brave resistance of the Mujahidin, resourced by western nations. Just because those two developments have taken place. like the poor man in that parable the Labour party says that all is now sweetness and light.
    But what is the true test of detente? What is the true test of what is happening in the Soviet Union and Eastern Europe? Has the Berlin wall been taken down? Is there freedom in Prague? We were reminded only yesterday of current troop strengths. The internationally respected International Institute for Strategic Studies reminded us that the Soviet Union is not reducing its conventional forces in Europe to produce the reasonable sufficiency that is required for peace. It reminded us that NATO countries have 22,000 tanks and the Warsaw Pact 53,000. In terms of artillery, NATO has 10,000 and the Warsaw Pact 35,000. NATO has 4,000 combat aircraft, whereas the Warsaw Pact has 7,000. NATO has 864 helicopters, whereas the Warsaw Pact has 1,165.
    The recent developments in the Soviet Union have changed nothing. In many ways, things are worse than they were in the late 1970s. I say to my right hon. and hon. Friends on the Treasury Bench, and in particular to my right hon. Friends at the Treasury, that we would give the wrong message in the current climate, and during this delicate stage as the presidential election in the United States moves towards its climax, if there were to be a significant cut in the Defence Estimates and if they did not

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    keep pace with inflation. We have to keep on the plateau that was decreed when we formulated our NATO commitments.
    My hon. Friends the Members for Weston-super-Mare (Mr. Wiggin) and for Northampton, North (Mr. Marlow) dealt with the tank issue. I do not believe that they were entirely serious when they said that the Chieftain tank should not be replaced. That would be absurd. By the year 2010 the Chieftain tank will be 50 years old. There has to be a replacement for it. I hope that my right hon. and hon. Friends on the Treasury Bench will bear in mind the serious logistical and manpower problems that would arise if a British tank were not ordered. It is unthinkable that a decision could be taken not to order a British tank.
    I hope also that my right hon. and hon. Friends will deal with the problems that would arise if undue pressure were to be put on certain companies not to provide a British gun. The negotiations are at a delicate stage. I suspect that I am preaching to the converted on the Treasury Bench, but British companies would be very seriously affected if the policy were to change, particularly with regard to exports to the middle east.
    As for land disposal, an editorial in The Daily Telegraph this week pointed out that the Ministry of Defence is the third largest landowner in the country. It has about 3,000 sites. The Ministry needs to do much more about realising its precious assets. If necessary, a Minister must concentrate full-time on realising them. I have seen an example of the non-realisation of assets in my constituency at Hemswell. The saga has continued for about 10 years. Hemswell was abandoned by the Royal Air Force. Since then, very little has been done. Luckily, progress is now being made, thanks to free enterprise. RAF Binbrook, which the RAF is vacating this year, will provide the opportunity for a £100 million development of private housing. I hope that my right hon. and hon. Friends will grasp the opportunities that have been provided.
    To return to my theme of peace through strength, if the viper withdraws its fangs the wise man does not lay down his stick. He does not throw it to the ground, as the right hon. Member for Chesterfield would do. Furthermore, he does not do what the leader of the Labour party wants to do—throw it to the ground and multilaterally offer part of it to the viper in return for one fang. Instead, the wise man adopts the statesmenship that has been followed by the President of the United States and the Prime Minister—to talk peace and modernise defences. As long as we have that, I shall have confidence in the Estimates and in the Treasury Bench.
    8.54 pm
    Mr. Bob Cryer: The argument that we should negotiate from strength is very dangerous. It might be mirrored exactly by those in the Soviet Union who hold the same daft ideas as have been put forward today. They might argue, "We need more nuclear weapons in order to negotiate with Thatcher and her cronies."
    The Tories are talking about a totally immoral and un-Christian threat of mass extermination. They rise to their feet when there are terrorist outrages in Northern Ireland and decry the loss of human life and limb. They do it time after time, yet tonight they are talking about the use of weapons that would destroy millions of men, women and children. The hon. Member for Gainsborough and
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    Horncastle (Mr. Leigh) confirmed that the Prime Minister is prepared to use nuclear weapons for international policy purposes. That is outrageous. The argument is that we should never use them but that they are there. If, however, nuclear weapons are to be a deterrent, there must be an intention to use them whenever the chiefs of staff and the Prime Minister decide that it is right to do so. The threat of mass extermination, involving the possession and deployment of nuclear weapons, is immoral.
    The Minister failed earlier to answer the question that I put to him. If, as the Government claim, Polaris has kept the peace, why are we embarking on a replacement for it that will be between four and 10 times more powerful, depending on the number of missiles to be used? The expenditure on it is massive. Prestige—nothing else—is involved. The Government are spending £11 billion on Trident, yet some of their poodles in Bradford are to sack 9,000 workers just to save £3 million or £4 million. What are the correct priorities—to preserve jobs and services in Bradford or to spend £11 billion on producing an even more effective means of mass extermination?
    The House welcomed the INF agreement and the legislation that provides immunity for Soviet inspectors to observe the reduction in nuclear forces. The Opposition welcomed it with enthusiasm, but modernisation is a euphemism for cheating. The Government are going behind the back of the INF agreement in order to increase and develop nuclear weapons. They were not involved in the INF agreement, apart from a few telephone calls between the Prime Minister and the President of the United States and a cup of tea with the bold and courageous leader, Mr. Gorbachev, on the tarmac at Brize Norton. However, by their foolish actions, the Government are potentially prejudicing a very important beginning; it affects only a tiny proportion of the nuclear weapons that are held in stockpiles throughout the world —about 3 or 4 per cent.
    How does the Minister reconcile massive expenditure on nuclear weapons with our signature on the United Nations nuclear non-proliferation treaty? We are told that treaties involve a solemn obligation. We signed that treaty, as did 133 non-nuclear nations. They signed it in good faith, on the basis that they would not manufacture or deploy nuclear weapons. If that is good enough for them, why does the United Kingdom always have to have nuclear weapons?
    What will the United Kingdom say to nations that have rejected nuclear weapons—"It is all right for us to have them but it is not all right for you to have them."? That argument can be turned around. Non-nuclear nations could say, "If the United Kingdom feels that it is necessary to have nuclear weapons for defence, why should we not do the same and break the treaty?" They have said in two review conferences that the nuclear signatories—the United Kingdom, the Soviet: Union and the United States —are breaking the treaty. The Soviet Union and the United States, however, are following clause 6 of the treaty which commits signatories which are nuclear powers to negotiate in good faith to remove nuclear weapons. The only nuclear signatory to the United Nations nuclear non-proliferation treaty which is in breach of it is the United Kingdom
    Do the Government care about their international obligations or do they not? When will they satisfy the 133

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    non-nuclear nations that they will follow clause 6 and, more important, by their actions persuade the non-nuclear nations not to follow our terrible example and go nuclear?
    Mr. Rhodri Morgan: One way in which the United Kingdom could meet its obligations is for it to include in the Estimates an item for arms conversion. The matter should not divide the House. Whether arms reduction is achieved through multilateralism or unilateralism, it must be possible that, by the early 1990s, Britain will have dispensed with Trident and other nuclear warheads. I refer to warheads and other parts manufactured in such places as the atomic weapons establishment in Cardiff.
    There should be an item in the Estimates to prepare nuclear establishments such as Aldermaston, Burghfield and Cardiff, which are heavily involved in the manufacture of the British nuclear deterrent, for the possibility of converting to civilian production. They have done it before. Space age materials such as uranium, beryllium, zirconium and titanium are of great value to the hospital service and for specialised machinery used elsewhere.
    Madam Deputy Speaker: Order. This is becoming a speech, not an intervention.
    Mr. Cryer: I am most grateful to my hon. Friend, who has made a valuable point. If the Government intend to support moves towards peace, they should provide in the Estimates for some skills to be transferred. Although only a nominal number of people may be involved at first, it is an important principle. The Government could usefully embark on retraining for peace as a demonstration of what they often proclaim, although their actions indicate the reverse.
    Why can other NATO countries be non-nuclear? The Prime Minister went to Canada and spoke to the Canadian Prime Minister. Did she rebuke him because the Canadians do not allow nuclear weapons on their soil? They will not, for example, have nuclear-powered cruise missiles. The only time that there were cruise missiles on Canadian soil, there was an absolute embargo on their use for nuclear purposes. They were flight-tested only as a contribution to NATO. The Canadians' stance remains that they will not have nuclear weapons on their soil.
    Canada is not the only member of NATO. The Government have an opportunity to push NATO away from what is called "flexible response", but which involves first use of nuclear weapons. Roughly speaking, the idea is that if the Soviets book Sealink and the rest to come here to take us over and we fail to hold them with conventional forces, we should use nuclear weapons and effectively blow up the world.
    NATO's first use of nuclear weapons should be stopped. We should move back from the brink, not endorse the idea of first use, which is potentially disastrous.
    If those who believe in nuclear weapons are so frightened of the Soviet Union—their leader has described Mr. Gorbachev as bold and courageous—they should take a suicide pill, not support mass extermination. Nobody will come to the House saying that we will have a Division on whether to use nuclear weapons and that hon. Members should go to the Aye or No Lobby to establish who makes the decision. The Prime Minister and perhaps
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    the Secretary of State for Defence and a few cronies from the chiefs of staff will make the decision. How undemocratic that is! It is an affront to civilisation.
    Those who believe in the threat of mass extermination should commit suicide and let us get on with living. There might be much enthusiasm for the Prime Minister setting an example. That might be more widely welcomed on Conservative Benches than she thinks. There is a very strong case for getting rid of nuclear weapons.
    I have been a unilateralist since the early 1960s, when I was a member of the Campaign for Nuclear Disarmament. I believe that we can persuade the vast majority of people in the United Kingdom of the sense and sensibility of this course. That is the principle that we should stick by.
    9.4 pm
    Mr. John Browne: Before beginning my six-minute speech, may I declare an interest as an active member of the Territorial Army.
    In three weeks' time, we shall observe Remembrance Sunday. This year, it will be of special significance because it will be the 70th anniversary of 1918—the end of the great war, or the war to end all wars. Unfortunately, at the same time, we shall be remembering the dead of the second world war, a war brought about by an aggressor who gained encouragement from our apparent weakness. We should all remember that and vow, this Remembrance Sunday, to ourselves and for future generations that no apparent weakness on our part will lead to war. We really should remember that, particularly when we come to defence budgets.
    Peace is always under threat and I would like to mention as many of the threats as time allows. First, there is the change in the perceived military threat. History shows us that there are three basic kinds of peace. There is the peace of death that greeted Germany at the end of the second world war. There is the peace of deterrence under which we live now on an East-West basis. Thirdly, there is the peace of détente—for example, the present peace between Germany and France. On a strategic European basis, we have grown accustomed to the peace of deterrence, but Mr. Gorbachev appears—and I emphasise the word "appears"—to offer a chance to move towards a new type of peace, a peace of détente.
    What are they really up to in the Russian camp? Since the INF treaty we hear increased talk not about defence but about defensive defence. Meanwhile, the Soviets maintain their teaching, tactics, organisation and equipment for fast, surprise attack. As yet there is no reality in defensive defence.
    Secondly, I would like to mention the cultural threat. Mr. Gorbachev is not only popular, but very well-known throughout the West. He is known not merely as Gorbachev, but as Gorby. He has proposed a new type of peace, that of detente, which is very attractive to the western grass roots. It sounds good, as if it might be cheaper. He also has great ability, using his western style charisma, to talk over the heads of Western leaders and negotiators directly to the grass roots throughout the western world. He is widening the defence debate from out of chambers like this to the grass roots throughout the Western world.
    Today, everyone seems to have a view on defence. Unfortunately, many of those views are based on a woeful lack of knowledge and a belief that defence is somehow

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    simple when, in reality, it is extremely complex. I believe that the Government have a duty now to improve not only the knowledge but the quality of thinking about defence in this wider debate. We must not be content merely to issue information from the Ministry of Defence on a passive basis but must take an active role in teaching, organising seminars, and bringing trade union leaders, lawyers, school teachers, bankers, students and those sort of people into these seminars so that they learn to think in a more informed way about defence and to participate in quality debate. In this respect I very much support the parliamentary armed services scheme.
    My third point is about defence spending. At a time when the strategic East-West peace of deterrence is changing—even, apparently, towards a peace of detente —new and hitherto unexpected enemies may be tempted to threaten us. It would be very unwise for us to assume that the Soviet Union is, or will remain our sole enemy. I note with interest that the intended exercises in Switzerland this year are not only against the orange forces from the east but against the blue forces from the west.
    Defence spending in the United Kingdom is a measure not just of our money or wealth but of our national commitment and will to defend ourselves. It is watched worldwide. Costa Mendez saw that before the Falklands. It is an example to our NATO allies. It is a message to our potential enemies. Any effective cut in our defensive capability would be a staggering thing to contemplate at the moment, particularly in the light of the forthcoming American presidential election and the problems of burden-sharing. I therefore strongly support my right hon. Friend in his struggle with the Treasury for the realistic funding that he asked for at the very beginning.
    Mr. Morgan: £1·4 billion.
    Mr. Browne: Yes, £1·4 billion. Obviously, we must strive for value for money and cutting waste. But cutting waste is not the same as cutting costs. Some costs are necessary to do business.
    There are many things that I would like to suggest, but one I should like to make in the last ten seconds is this: why do we not allow the men and women on the spot in the armed forces to suggest cuts, and give them a financial incentive for doing so—maybe 50 per cent. of the cut achieved in the first year—as a bonus to their pay? Then we would get cuts made by people inside the armed forces and not exclusively by people outside the armed forces who have little or no practical experience, and often risk in their recommendations the cutting of bone rather than fat.
    9.10 pm
    Mr. Sean Hughes: It is customary in defence White Paper debates to pay tribute to the men and women in our armed forces, and I add my support and that of my party to that which has been expressed by right hon. and hon. Members on both sides of the House.
    I also echo the demand made so eloquently by my hon. Friends the Members for Eccles (Miss Lestor), for Renfrew, West and Inverclyde (Mr. Graham) and for Motherwell, North (Dr. Reid) for an inquiry into the circumstances surrounding the sale of two former Royal Ordnance factories. My hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy), in a very powerful
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    speech, spoke of the lulling, almost deceiving, presentation of the White Paper. My only disagreement with him is that I would remove the qualification "almost".
    After the hilarity which greeted the 1987 White Paper's attempt at historical perspective, some of us thought that the Secretary of State, or at least his script writers, might have been a bit more circumspect this year—but not a bit of it. This year we are not given just history; we are entertained to a consideration of theory.
    As I read through chapter 1 of this year's White Paper, I was reminded of a similar publication which established historical fact and arrived at a considered judgment in much the same way, "1066 And All That" by Sellar and Yeatman. Hon. Members familiar with that classic will recall how the authors were able to classify everything as either "Good Things" or "Bad Things" so that the Norman conquest, the great plague and the American war of independence were all good things, while Mary Tudor, political economy and Napoleon were all bad things. The defence White Paper is written in exactly that style. The big difference is that Sellar and Yeatman wrote their classic as a spoof. I take it that the Government are deadly serious.
    Let us remind the House of just one gem from the White Paper, although as The Observer review of "1066 And All That" said:
    "Quotation is hopeless: every sentence clamours for it."
    In paragraph 4 on page 5 of the White Paper is a confident assertion that
    "Soviet operational art … has its roots in a long-standing tradition of defending the homeland by taking the offensive."
    I do not want to exaggerate, but that is a bit rich coming from the Tories. If we take the year 1815 as the date when we became top nation—I cannot remember whether that is a phrase from the White Paper of from "1066 And All That"—a cursory glance at the history books suggests that we have been involved in at least 52 significant wars. In all our 52 wars of self defence, we have had two opium wars, two Sikh wars, two Maori wars, three Burmese wars and four Ashanti wars. We completed a third Maratha war and the eighth and ninth Kaffir wars. We even managed an invasion of Afghanistan. Indeed, to prove to the Russians that anything they might do we could do better, we invaded and occupied that country twice. [Interruption.] Not since 1815.
    It gives me no pleasure to recall those unsavoury events which earned our country such a sinister reputation in so many parts of the world and prompted so many people to suspect our motives and fear our ambitions. If we use history to demonstrate the threat perception of the enemy, we must have the gumption to realise that our enemy will use our history to demonstrate their threat perception of us. It helps to have a more balanced view. It helps to move away from the infantile historical perspectives that seem to characterise the Government's defence White Papers. The Prime Minister had the cheek to tell the Conservative women's national conference in May this year that the Labour party needs to have a better understanding of history. Even the Prime Minister's impertinence pales in comparison with that of the Secretary of State for Education and Science who, on his recent visit to a Moscow school, declared to his hosts, with Mellor-like diplomacy, that we all had to acknowledge that history was a problem for the Soviets. It is not half as much of a problem for them as it is for the Tory party.
    It is not just the Government's historical background that is inaccurate. In their statistical comparisons between

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    NATO and the Warsaw pact inaccuracies abound. The Government constantly talk up the preparedness of the Warsaw pact compared to NATO. I should say in passing that that is a dangerous line of argument for a Government who have been in a position to so domething about that for nine and a half years.
    According to the White Paper, it is not just in military doctrine that the Warsaw pact displays a great conformity. It is displayed in economic structures, personnel reliability and inter-pact co-operation. The casual White Paper reader must be under the impression that the Warsaw pact is some great monolithic cohesive mass. There is not even a hint, despite the speech of the hon. Member for Ruislip-Northwood (Mr. Wilkinson), that events in Poland, Hungary, Romania or Czechoslovakia are suggestive of some diversity, to say nothing of events within the Soviet Union itself from as far apart as Latvia on the Baltic to Azerbaydzhan in the south.
    I have no inclination to argue that the Warsaw pact represents a loose association of democratic states, free to come and go as they please. However, for the Government to argue that the pact is a great monolith is nonsense. All the military experts I have read now argue that any comparison between the armed strength of the Warsaw pact and NATO, if it is to be meaningful, must take account of the potential for unreliability within the pact.
    A similar word of caution must be given to the casual White Paper reader when the Government indulge in their annual bean count of who has what and where. The White Paper make a slight genuflection to the problems inherent in comparison by stating that
    "the complexities of comparing capabilities of specific equipments are well illustrated in the case of tanks."
    However, 12 paragraphs later it dismisses that acknowledgement by saying:
    "older Warsaw Pact tanks, for example, are more easily written off on paper than on the North German plain … it is a false and dangerous delusion to discount the reality of numbers."
    That is the problem with the way in which the White Paper argues. We are back to a black and white interpretation of everything. No one is suggesting——
    Mr. Julian Brazier: Twenty years ago the imbalance in the number of tanks was frequently thought by experts to be balanced by the supposed technological superiority of Western tanks. Today the modern Soviet tanks—they are building many new ones at a much faster rate than the West—are, in some respects, superior to ours.
    Mr. Hughes: I shall come to the qualitative comparison in a moment.
    No one is suggesting that we discount the reality of numbers. We are simply saying, as my hon. Friend the Member for Clackmannan (Mr. O'Neill) said yesterday, that if we are to have a meaningful defence debate we should try to discover what the reality is. As the White Paper makes specific reference to the complexities of the tank comparison, I shall take that as an example. According to the Pentagon's 1988 assessment of the Soviet threat, there are 53,000 Soviet main battle tanks in the area from the Atlantic to the Urals. The same figure is given in the International Institute for Strategic Studies report that was published yesterday. According to the report of
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    Senator Carl Levin, the chairman of the Senate arms services sub-committee on conventional forces and alliance defence, there are 52,200. According to the White Paper, there are 51,000, which is proof that it is easier to wipe off between 1,200 and 2,000 tanks on paper than it is to wipe them off of a north German plain.
    Perhaps the Minister will explain that discrepancy, because normally the White Paper talks of the Warsaw pact's capability. Why is there an underestimate, unless it is to enable the Government to back their claim that over half the Warsaw pact's tanks are modern?
    The White Paper claims that in the Atlantic to the Ural region and on the central front more than half the Soviet tanks are modern, but the Pentagon claims that the figure is about 40 per cent.
    To prove that the Warsaw pact not only has a quantitative lead but is catching up with NATO's qualitative lead, the Government not only flagrantly wipe out between 1,200 and 2,000 tanks but change their definition of "modern". By their definition, the Chieftain tank, which was introduced in the mid-1960s—to which my right hon. Friend the Member for Dudley, East (Dr. Gilbert) referred and which the hon. Member for Weston-super-Mare (Mr. Wiggin) yesterday referred to as an aging weapon—is not sufficiently modern for Britain and needs to be replaced by the Challenger tank. In the same breath, they argue that all Warsaw pact tanks introduced in the mid-1960s must be classed as modern and so, QED, they prove that over half the Warsaw pact's tanks are modern.
    Everything that I have read suggests that the greatest danger from the Warsaw pact is a surprise attack, although it is difficult for the layman to imagine a surprise attack of over 50,000 tanks. As the decision to go nuclear would be taken early in the hostilities, speed is of the essence. When we talk of large numbers of tanks, we must cope with what Mearsheimer has identified as the "crossing-the-T" phenomenon. Simply put, there is not enough room for the attacker to place all of its 24 divisions at the point of the attack. As the size of the attacking force increases, the logistical as well as the command and control problems increase proportionately:
    "Although the notion is perhaps counter-intuitive, bigger divisions are not necessarily better divisions when an attacking force is attempting to effect a blitzkrieg. A Pact defensive would have to traverse the obstacle-ridden terrain which covers almost all of Germany and restricts the movements of large armoured units."
    In other words, there is a danger of a monumental traffic jam in the middle of central Europe. Instead, the White Paper conjures up the nightmare of swift, massive progress.
    In a section of the White Paper entitled "Quality of Men", paragraph 16 makes a dismissive comment that
    "Soviet military doctrine … does not require the soldier in the field to show initiative … ".
    The observation on Warsaw pact training does not exactly fit the Governments nightmare of a huge, monolithic, well-trained and up-to-date machine.
    The White Paper declares that the Warsaw pacts plans are as well-rehearsed as NATO's. The Warsaw pact declares 22 exercises involving 13,000 or more soldiers, while the White Paper lists 23 major NATO exercises in 1987. No reference is made to the fact that, as Jonathan Dean, the former American ambassador to the mutual and

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    balanced force reductions talks reminded us last year, NATO's annual exercises of 250,000 men and more are over twice the size of the largest Warsaw pact exercises.
    The White Paper refers to the geographical advantages enjoyed by the Warsaw pact, with consequent benefits for its reinforcement capability. In terms of the Warsaw pacts ability to achieve a quick victory—we cannot overemphasise the importance attached to speed when considering the doctrine of flexible response—geography works to NATO's advantage. That is why, as General Bernard Rogers, who until last year was supreme allied commander of NATO forces in Europe, said:
    "It is important to remember when assessing the role of non-strategic weapons that numbers per se are not critically decisive. It would be as foolish for us to try to match each Soviet nuclear system with one of ours as it would be foolish for us to try to match them man for man and tank for tank at the conventional level … As a defensive alliance we do not need to match the Warsaw Pact one for one in any category of forces".
    Why then has the defence debate been conducted throughout the country at that level? It is because that suits the Government. The Government do not want a defence debate. They simply want an exchange of slogans. Some Conservative Members' speeches towards the end of the debate were a perfect example of that. We should all remember that, when we relegate the defence debate to an exchange of slogans, we play into the Government's hands.
    The Conservative party acts as though it has a monopoly on patriotism. The tone is set by the Prime Minister. Returning from a NATO summit in March this year, she said that the Labour party had
    "no memory, no stomach, no spine and no guts".
    The Conservative party had already plunged into new depths in the general election last year with its now infamous poster, depicting a young soldier with his hands raised in surrender, and entitled, "Labour's defence policy." Conservative Members may think that is smart, but that poster and their attitude, which was repeated tonight, are deeply offensive to millions of Labour party members and supporters whose patriotism is unchallengeable.
    Sir Antony Buck: Some of us are prepared to concede that we do not have a monopoly on patriotism, but we are interested in knowing the defence policy of the hon. Gentleman and his colleagues.
    Mr. Hughes: The great divide in defence polices in Britain cannot be so shamefully characterised as being between the patriotic and the treacherous, nor can it be so ridiculously dismissed, as the Prime Minister seems to think, as between those with stomach, spine and guts and those without those attributes. The great divide is between those who want to find a way of removing the nuclear option from the strategy of the two blocs and those who believe that the possession of nuclear weapons, however tenuously independent, somehow confers on the owner the title of super-power.
    The White Paper pompously declares on its opening page:
    "More open internal policies, which bring the Soviet people more information about their own country and the world outside, are self-evidently desirable"
    —and that from the Government of GCHQ, "Spycatcher" and Zircon.
    The misinformation should stop. The ludicrous warping of history should stop. The implication, the very
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    meaning of the doctrine of flexible response should be spelt out so that the people of this country know what it is. General Rogers has written:
    "the people of the sixteen sovereign nations that constitute the Atlantic Alliance have a decisive role to play concerning our strategy. No NATO strategy wil be credible or effective unless there is a broad-based consensus within the Alliance that it is appropriate, unless there is substantial support for it, and unless there is a firm commitment to provide whatever measures are necessary to sustain it."
    I do not disagree with that. But we cannot have a broad-based consensus, substantial support or firm commitments for and about strategies which are deliberately obscured. That is why the claim at Brighton last week by the Secretary of State, that we must all admit that the Governments defence policy was the will of the British people, is so ludicrously absurd.
    We could make a start tonight. We could see how much time the Minister allocates to the doctrine of flexible response. We could see how much time he devotes to commenting on the recent words of Robert McNamara, the former American Secretary of State and the man who, more than any other human being alive, was responsible for formulating the doctrine of flexible response. We could see how much time he devotes to agreeing with or rebutting McNamara's comments that most Americans, and to that we can add Britons,
    "are simply unaware that NATO strategy calls for early initiation of the use of nuclear weapons in a conflict with the Soviets. Eighty per cent. of them believe we would not use such weapons unless the Soviets used them first. They would be shocked to learn that they are mistaken. And they would be horrified to be told that senior military commanders themselves believe that to carry out our present strategy would lead to the destruction of society. But those are the facts."
    Whenever we press the Government about this, they reply that it is not the use of nuclear weapons that is of value but their deterrent effect. The doctrine of flexible response is mentioned on three occasions in the White Paper. Most of us had believed that the nuclear weapon was always a weapon of deterrence, and was used as a threat to prevent the enemy from using their nuclear weapon first. That is not the role of nuclear weapons in flexible response. There is a clear commitment that, faced with a conventional attack from the Warsaw pact. NATO would go nuclear at some stage.
    I am under no illusion that the 1 million Warsaw pact soldiers assembled in the central region are there for their health, or that the 50,000 or so tanks are there for lack of garage space, but common sense tells me that the Warsaw pact must have the odd suspicion about us. It should be the role of the British Government to reduce tension, and they should not lag behind in every initiative for peace. We hear a great deal from the Government about the need to modernise our weapons. We hear nothing about the need to modernise our strategy.
    The White Paper proclaims 1987 as a successful year for the Conservative defence policy and points to the INF treaty as proof. I have always held that it is one of the more endearing characteristics of Conservative Members that, while they resolutely refuse to accept responsibility for any of their own actions, they consistently claim credit for the achievements of others. It ought to be remembered that, since the death of Stalin, the influence of the Soviet military in the formulation of Soviet defence policy has grown. That is why the dismissal of Defence Minister Sokolov and Marshals Koldunov and Konstantinov, after

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    the Matthias Rust affair, facilitated an improvement in East-West relations. It is a particularly fitting verdict on the Government that the aerobatics of a West German adolescent have done more for international peace and rapprochement than nine and a half years of Conservative Government. It is no wonder that there is an obligatory Churchill quotation in every defence White Paper, because the Government are set in a cold war time warp. The exciting things that are happening in the world are passing us by.
    I believe that changes taking place in the Soviet Union would have taken place, and will take place, with or without hiccups, whether Gorbachev is there or not, because we are seeing there a collapse of a societal model. Nevertheless, we should not underestimate Gorbachev's personal contribution. The Prime Minister has to come to the terms with the fact that he is there, and with the fact that Brezhnev is no longer with us, even if there is speculation about the length of his absence. She has to come to terms with the fact that Stalin is no longer there.
    Everything that the Government do is geared to the nuclear pretence. To that end, they unilaterally reduced spending on conventional armaments, bilaterally agreed to rent missiles from the United States and multilaterally agreed at Montebello to modernise the nuclear stock. Unilateral, bilateral and multilateral, all at the same time. What a shambles. To hide the shambles of their policy, Conservative Members try to turn these debates into discussion of a Labour Governments defence estimates —as if the Tory party had not been in power for nine and a half years.
    We are in the second year of this Parliament. If recent experience is anything to go by, we are probably three years away from the next general election. It is the duty of the Opposition, in scrutinising the Governments plans, to set out their own objectives. Our objectives are clear. We believe in a well-defended Britain. We remain committed members of NATO and we want to move this country and ultimately both power blocs away from nuclear dependence.
    Conservative Members have pressed my hon. Friends to say what proportion of GNP we would spend on defence. It would be irresponsible, and anyway impossible, to say precisely how much it will cost to do this and precisely how much it will cost to do that. We do not have the advice which is available in government from professional advisers. We do not know what the world situation or the domestic situation will be when we come to office, and before acting we will want to consult our allies, but our objective is clear.
    I do not know why Conservative Members are getting so excited, because I chose my words very carefully. Lest the same thing befalls me as befell Senator Biden, let me refer to the document from which I took those words. On page 67, under the title "Defence", it is stated:
    "It would be irresponsible, and anyway impossible, to say by precisely how much we shall do this, and precisely how much it will cost. We do not have the advice which is available in government from professional advisers; we do not know what the world situation—or the domestic economic situation —will be when we come to office; and before acting, we should want to consult our allies. But our objective is clear."
    That comes from "The Right Approach", a statement of Conservative aims published two and a half years before the 1979 general election. As usual, it is one rule for them
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    and another for the rest of us. I have great pleasure in commending to the House the amendment in the name of my right hon. Friend the Leader of the Opposition.
    9.36 pm
    The Parliamentary Under-Secretary of State for the Armed Forces (Mr. Roger Freeman): The hon. Member for Stockton, North (Mr. Cook), who made a maiden appearance as defence Whip at the Dispatch Box last night, referred to the armed forces parliamentary scheme which is, as he explained to the House, a trial programme to give Members of Parliament a chance to be assigned to an armed forces unit for three weeks a year. It provides experience of the forces, particularly for those, like myself, too young to have done national service. I am glad that he found it a success, and I hope that the scheme continues. The late Member for Epping Forest, Sir John Biggs-Davison, would have approved of the scheme. We miss him tonight. We miss his expert and cogent contribution to this annual debate.
    Many questions have been asked during the debate, and I shall try to cover as many of them as I can. The hon. Member for Sheffield, Attercliffe (Mr. Duffy) asked me 14 questions in a very brief speech. He would not expect me to answer all of them, but I shall ensure that Ministers, including myself, respond to all the points that he has raised. I shall ensure that either I or one of my colleagues responds to the question that my hon. Friend the Member for Dumfries (Sir H. Monro) put to me.
    The hon. Member for Knowsley, South (Mr. Hughes) —if I could have his attention for a moment—argued that the Ministry of Defence and NATO have in some way overestimated Soviet conventional capacity in Europe, particularly tank capacity. If he is right, then obviously the Soviets pose less of a threat, but how does that square with the official Opposition's argument throughout the two days of debate that they want increased spending on conventional weapons? Why did he not mention the increased Soviet capabilities in their submarine fleet and long-range aircraft, presumably on account of a perceived threat on the central front? He took in isolation one category of weapons system and did not paint a fair picture.
    The hon. Member for Stockton, North and my hon. Friend the Member for Dumfries also spoke about the well-being of the young men and women of our armed forces and, particularly, about their pay, allowances, accommodation and opportunities for house purchase. I can assure both hon. Members and the House that we treat those matters most seriously.
    On coming into office in 1979, the Government put service pay on a level that was based on the earnings of those in comparable civilian employment. In every year since then, although there was staging in two years, the Government have honoured the recommendations of the independent Armed Forces Pay Review Body. We believe that service men and women generally regard their pay as both fair and reasonable.
    The House will know that earlier in the year my right hon. Friend the Secretary of State announced the outcome of a comprehensive review of armed forces' allowances. It was the first review of that sort to be carried out for many years. It was designed to ensure that service allowances would be up to date, cost-effective and appropriate to the requirements of modern service life. As a result, some

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    significant improvements have been made. For example, we recognise that nowadays many service personnel choose to buy and live in their own homes. We have therefore substantially increased the financial assistance that is available to them when they are required to move home following a posting to a new location. We have removed many differences which existed between the treatment of single and married personnel. It will take some time for the full effects of these changes to become apparent. We believe that the majority of service personnel recognise that the broad thrust of what we are doing is right.
    The hon. Member for Clackmannan (Mr. O'Neill) referred yesterday to the demographic trough and the effect that this would have on recruitment and on service manning. The three services have recognised the implications of the trough for many years. We take it seriously, and are taking active steps to ensure that we can compete with private sector employers in what, as far as the armed forces are concerned, is a voluntary service. About 5 per cent. of our armed forces' personnel are women, and the figure is much higher in the United States and in Canada. We have no intention of changing our rules on no combat duty for women. We do not intend to change the rules about discharging women when they become pregnant. There is room, however, for the employment of more women in the armed forces. That will go some way to dealing with the demographic trough.
    Mr. Wilkinson: It is much to be welcomed that women are to fly as rear crew members in AWACS. Other armed forces allow women to fly communications aeroplanes. As the Royal Air Force has a pilot shortage, could it not do the same?
    Mr. Freeman: I cannot give my hon. Friend any assurance that women will occupy cockpits. I cannot give him any comfort on that score. However, we shall keep the matter under review. He is right to say that women will fly in AWACS.
    The hon. Members for Rhondda (Mr. Rogers) and for Attercliffe referred to defence expenditure. I repeat for the benefit of the House the three salient features that are expressed clearly in the "Statement on the Defence Estimates". First, since 1979 to the current year there has been a 20 per cent. increase in real terms in the defence budget. Secondly, we spend 4·7 per cent. of our gross domestic product on defence. That is a higher proportion than that of any of our major European allies. Thirdly, when it comes to the future—I share the frustration of the right hon. Member for Dudley, East (Dr. Gilbert) that this debate comes first—the House must await the Autumn Statement.
    My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) asked for a defence review. Gone are the days when, especially under the last Labour Government, there were periodic reviews. The process of budgeting and reviewing commitments is a much more sophisticated system nowadays. It is a continuous process. We shall not take any special steps to have a major defence review. My right hon. Friend the Secretary of State has to face difficult decisions all the time, and we shall take them regularly. As regards BAOR, there are no steps afoot to change the role of 1st British Corps or our commitment to NATO.
    The right hon. Member for Dudley, East mentioned the problems of developing a command system for the type 23
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    frigate. They have been faced up to with the cancellation last year of the contract for the original command system and the subsequent placings of competitive project definition contracts for a solution based on the latest technology. It is true that the first type 23s will enter service without a fully operational command system, but their weapons and sensors will be capable of independent action, enabling the ships to fulfil their operational tasks.
    Mr. O'Neill: I am grateful to the hon. Gentleman for conceding that the command and control system will not be available to more than the first of fleet, because the impression we received last year was that only the first of fleet would not have the command and control system. As he has now admitted that this is so, what limitations will there be on the operational capabilities of the frigates when they come into service?
    Mr. Freeman: We expect no significant operational limitations. The number of ships affected will depend on the success of the contracts that we have placed.
    My hon. Friend the Member for Ilford, South (Mr. Thorne) raised the subject of the Gurkhas. I repeat the commitment which Ministers have given before about the future of the Gurkhas after we leave Hong Kong. I know that the Select Committee plans a visit to Nepal towards the end of the year, and I hope to follow it there. The Government will announce their conclusions next year about how that commitment to the Gurkhas will be fulfilled.
    My hon. Friend also asked about the AWACS offset deal. Boeing's first report listed contracts totalling $141 million, and, following our evaluation, we have allowed a total offset credit of $96·5 million. The second report listed contracts totalling about $192 million, bringing the cumulative total of contracts placed to $333 million. We are now evaluating the second report—[Interruption.] There is a long way to go, but a long time is still available.
    My hon. Friend the Member for Dumfries and many other right hon. and hon. Members spoke about low flying and aircraft safety. The need for training in low flying has been recognised by all for some time and accepted by successive Governments. There is understandable public concern about the risks in low-flying training. It came to the fore as a result of the tragic accident on 9 August in the constituency of my hon. Friend the Member for Penrith and The Border (Mr. Maclean), when two Tornado aircraft engaged in training at night were involved in a mid-air collision and four aircrew were killed. A board of inquiry is still sitting. As a result of that accident, a detailed re-examination of the procedures for low-flying training at night has taken place.
    It is important to bear in mind that, of major aircraft accidents in the past five years, only about one in four has occurred when the aircraft was engaged in low-flying training. In those cases, the primary cause of the accident was not always attributable to the low-flying training itself. Nevertheless, changes have been made following the re-examination.
    With effect from 10 October, steps have been taken to allocate separate days by command: strike command, Royal Air Force Germany, and the United States Air Force; and aircraft will move, well separated, broadly in a clockwise direction around the United Kingdom low-flying system.

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    In future we intend to introduce a computerised notification and warning system in the United Kingdom low-flying system, based on a central computer with a larger network of terminals extending to every low flying squadron. Such a system will accept notification of sortie details and in return provide information on other aviation activities, warnings and restrictions in low flying areas— information which is now fed manually into the system. I hope that the House accepts that the steps that we have taken as a result of the tragic accident have been in the right direction——
    Mr. Bill Walker: As my hon. Friend knows, I fully support the necessity for low-flying operations, which are carried out extensively throughout Scotland and in my constituency. Will he bear in mind the good public relations that we obtain from the use of the helicopter flight at Leuchars, which substantially offsets the aggravation caused by low, noisy and fast jets? We can explain it by saying that they both come from the same air force, and therefore that the benefit of the helicopters substantially offsets the disadvantages of the jets.
    Mr. Freeman: I can give my hon. Friend the Member for Tayside, North (Mr. Walker) and also the hon. and learned Member for Fife, North-East (Mr. Campbell) and my hon. Friend the Member for Devon, North (Mr. Speller) that assurance.
    Dr. Reid rose——
    Mr. Freeman: No, I am answering my hon. Friend.
    I can give an assurance that when we reach a decision —and we have not done so yet—about search and rescue deployment for those areas of the United Kingdom about which we have not made an announcement we will take into account the benefit that, in the minds of the public, search and rescue is perhaps the acceptable face of low flying.
    Dr. Reid rose——
    Mr. Freeman: I am sorry, but I have only 10 minutes left. I am sure that the hon. Gentleman will forgive me, but I must make progress.
    I shall deal briefly with the points raised by other hon. Members concerning the reserve forces.
    Mr. Michael Jopling rose——
    Several Hon. Members: Oh!
    Mr. Jopling: My hon. Friend has made a most important statement regarding low flying, which causes immense difficulties in many parts—especially the north of England. Will he give an undertaking that the welcome and important announcement that he has made tonight means that never again in future ought pilots of low-flying aircraft find that there are other low-flying aircraft in the same area without their knowledge?
    Mr. Freeman: No, I cannot give my right hon. Friend that assurance. The assurance I can give him is that, in a particular area, both aircraft will be well separated and flying in the same direction. I hope that that answers his concern.
    Dr. Reid rose——
    Mr. Freeman: No, I must finish answering the remaining points.
    I must answer my hon. Friends the Members for Weston-super-Mare (Mr. Wiggin) and for Kingswood (Mr. Hayward), who raised the question of the reserve forces. The equipment used by the Territorial Army and the Regular Army is the same as they have the same role. We have taken positive steps to increase the bounty, particularly for those who have served for more than three years.
    My hon. Friend the Member for Kingswood specifically asked me about over-commitment of the Territorial Army. We shall ensure that all TA units are made well aware that the minimum requirement is clearly explained. It is wrong that TA soldiers who are giving their own time should become over-committed and be expected to do too much. That way lies bad recruitment.
    This has been a one-sided debate, because most of the debate has been on the Opposition Benches. [Interruption.] Then Opposition Members have not been listening. The hon. Member for Dunfermline, West (Mr. Douglas) rightly said that there is room on the Labour Benches for only two positions that, to use his words, are credible, and that the electorate would understand. He said that the first was to keep Trident. That is not only the policy of this Government but has, by extension to Polaris, been the policy of all Governments, both Labour and Conservative, since the war. I may say to the right hon. Member for Chesterfield (Mr. Benn), who asked a specific question about targeting and Trident, that Trident does not depend—I repeat, does not depend—on a United States satellite system for its operation and targeting. It is independent of that system. The right hon. Gentleman does not believe me, but I give the House that assurance.
    The second of the credible options to which the hon. Member for Dunfermline, West referred was to scrap our independent deterrent, and by definition to scrap also United States bases. That is what he talked about as being the credible alternative. That is in the amendment of the hon. Member for Islington, North (Mr. Corbyn). That is the neutralist position that the hon. Member for Dunfermline, West believes is the second alternative. The neutralist position is unacceptable to the British electorate, and any political party that adopted that platform would become permanently unelectable.
    Dr. Reid: On a point of order, Mr. Speaker. May I bring to your attention the fact that the Minister is not replying to the debate? He has refused to give way to me, and has refused to answer questions about the Royal Ordnance factory in Bishopton.
    Mr. Speaker: Order. There are five minutes to go, and we have no idea what the Minister is going to say. As far as I am concerned, what he has been saying is in order, and that is my responsibility.
    Mr. Freeman: The hon. Member for Dunfermline, West also said that there was no room for shilly-shallying as far as the Opposition Front Bench was concerned. He was referring directly to his right hon. and hon. Friends on the Front Bench. I think that shilly-shallying, by his definition, is what we get from the Opposition Front Bench. As far as my hon. Friends and I can understand, their policy is to believe in complete nuclear disarmament in return for an

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    insignificant Soviet nuclear disarmament. That is what "something for something" means. It means all our strategic nuclear capability in return for some of the Soviets' capability.
    According to the right hon. Member for Leeds, East (Mr. Healey), who spoke at the Labour party conference, that equation is four of our submarines—Polaris or Trident—in return for eight Soviet submarines. That is an inadequate policy to place before the House and the electorate. Furthermore, their policy would be to shelter under the United States nuclear umbrella, which is a dishonest policy.
    Mr. Cryer: Will the Minister give way?
    Mr. Freeman: No. The hon. Member for Liverpool, Walton (Mr. Heffer) said yesterday that he did not know into which Lobby he would pass tonight when we vote on the Opposition's amendment. He said that he would be thinking very carefully about which way he, and presumably some of his colleagues, would be voting in the first Division. Presumably, by definition, the right hon. Member for Chesterfield will also be thinking very seriously. I ask both of them, and their colleagues, to consider three aspects of the Opposition Front Bench policy that we have been discussing in the past two days, and to decide whether they can support that policy. First, the Opposition Front Bench——
    Mr. Cryer rose——
    Mr. Speaker: Order. The Minister is not giving way.
    Mr. Freeman: First, the Opposition Front Bench specifically made no commitment to scrap Trident on coming into office, which they will not in 1992. Instead, they have suggested an inadequate barter compromise: all our nuclear capability in return for some of the Soviets' nuclear capability. Secondly, there is no mention in the Opposition's official policy of removing American bases. Thirdly, there is no promise to switch any defence savings to social programmes in the United Kingdom. If the hon. Gentleman votes with them tonight——
    Mr. Rogers: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. It is two minutes to ten.
    Mr. Rogers: On a point of order, Mr. Speaker. Five right hon. and hon. Members have brought up the issue of Royal Ordnance factories, and the Minister has not the guts to answer.
    Mr. Freeman: The hon. Gentleman's point of order was born of his frustration about the differences of opinion on the Opposition Benches between Opposition policy and the policy suggested and espoused by the hon. Member for Walton.
    The policies advocated by the Opposition Front Bench spokesmen do not represent united Labour party policy. If they are offered to the electorate at the next general election, the Opposition will surely lose. Unless there is a radical change, the Labour party will remain permanently unelectable.
    Question put, That the amendment be made:—
    The House divided: Ayes 197, Noes 321.

    Division No. 448]

    [10 pm

    AYES

    Abbott, Ms Diane

    Grant, Bernie (Tottenham)

    Adams, Allen (Paisley N)

    Griffiths, Win (Bridgend)

    Allen, Graham

    Grocott, Bruce

    Archer, Rt Hon Peter

    Harman, Ms Harriet

    Armstrong, Hilary

    Hattersley, Rt Hon Roy

    Ashley, Rt Hon Jack

    Heffer, Eric S.

    Ashton, Joe

    Henderson, Doug

    Banks, Tony (Newham NW)

    Hinchliffe, David

    Barnes, Harry (Derbyshire NE)

    Hogg, N. (C'nauld & Kilsyth)

    Barron, Kevin

    Holland, Stuart

    Battle, John

    Home Robertson, John

    Beckett, Margaret

    Hood, Jimmy

    Bell, Stuart

    Howell, Rt Hon D. (S'heath)

    Benn, Rt Hon Tony

    Hoyle, Doug

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

    Hughes, John (Coventry NE)

    Bermingham, Gerald

    Hughes, Robert (Aberdeen N)

    Bidwell, Sydney

    Hughes, Roy (Newport E)

    Blair, Tony

    Hughes, Sean (Knowsley S)

    Boyes, Roland

    Illsley, Eric

    Bray, Dr Jeremy

    Ingram, Adam

    Brown, Gordon (D'mline E)

    Janner, Greville

    Brown, Nicholas (Newcastle E)

    John, Brynmor

    Brown, Ron (Edinburgh Leith)

    Jones, Barry (Alyn & Deeside)

    Buchan, Norman

    Jones, Ieuan (Ynys Môn)

    Buckley, George J.

    Jones, Martyn (Clwyd S W)

    Caborn, Richard

    Kaufman, Rt Hon Gerald

    Campbell, Ron (Blyth Valley)

    Kinnock, Rt Hon Neil

    Campbell-Savours, D. N.

    Lambie, David

    Clark, Dr David (S Shields)

    Lamond, James

    Clarke, Tom (Monklands W)

    Leadbitter, Ted

    Clay, Bob

    Leighton, Ron

    Clelland, David

    Lestor, Joan (Eccles)

    Clwyd, Mrs Ann

    Lewis, Terry

    Cohen, Harry

    Litherland, Robert

    Coleman, Donald

    Livingstone, Ken

    Cook, Frank (Stockton N)

    Lloyd, Tony (Stretford)

    Cook, Robin (Livingston)

    Lofthouse, Geoffrey

    Corbett, Robin

    Loyden, Eddie

    Cousins, Jim

    McAllion, John

    Crowther, Stan

    McAvoy, Thomas

    Cryer, Bob

    McCartney, Ian

    Cunliffe, Lawrence

    Macdonald, Calum A.

    Darling, Alistair

    McFall, John

    Davies, Rt Hon Denzil (Llanelli)

    McKay, Allen (Barnsley West)

    Davies, Ron (Caerphilly)

    McKelvey, William

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

    McLeish, Henry

    Dewar, Donald

    McNamara, Kevin

    Dixon, Don

    McTaggart, Bob

    Dobson, Frank

    McWilliam, John

    Doran, Frank

    Madden, Max

    Douglas, Dick

    Mahon, Mrs Alice

    Durfy, A. E. P.

    Marek, Dr John

    Dunnachie, Jimmy

    Marshall, Jim (Leicester S)

    Dunwoody, Hon Mrs Gwyneth

    Martlew, Eric

    Eadie, Alexander

    Maxton, John

    Eastham, Ken

    Meacher, Michael

    Ewing, Harry (Falkirk E)

    Meale, Alan

    Ewing, Mrs Margaret (Moray)

    Michie, Bill (Sheffield Heeley)

    Fatchett, Derek

    Moonie, Dr Lewis

    Field, Frank (Birkenhead)

    Morgan, Rhodri

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

    Morris, Rt Hon A. (W'shawe)

    Fisher, Mark

    Morris, Rt Hon J. (Aberavon)

    Flannery, Martin

    Mullin, Chris

    Flynn, Paul

    Murphy, Paul

    Foot, Rt Hon Michael

    Nellist, Dave

    Foster, Derek

    Oakes, Rt Hon Gordon

    Foulkes, George

    O'Brien, William

    Fyfe, Maria

    O'Neill, Martin

    Galbraith, Sam

    Orme, Rt Hon Stanley

    Galloway, George

    Parry, Robert

    Garrett, Ted (Wallsend)

    Patchett, Terry

    George, Bruce

    Pike, Peter L.

    Godman, Dr Norman A.

    Powell, Ray (Ogmore)

    Golding, Mrs Llin

    Prescott, John

    Gordon, Mildred

    Primarolo, Dawn

    Gould, Bryan

    Quin, Ms Joyce

    Graham, Thomas

    Radice, Giles

    1113

    Rees, Rt Hon Merlyn

    Steinberg, Gerry

    Reid, Dr John

    Stott, Roger

    Richardson, Jo

    Strang, Gavin

    Roberts, Allan (Bootle)

    Taylor, Mrs Ann (Dewsbury)

    Robertson, George

    Thompson, Jack (Wansbeck)

    Robinson, Geoffrey

    Turner, Dennis

    Rogers, Allan

    Wall, Pat

    Rooker, Jeff

    Walley, Joan

    Ross, Ernie (Dundee W)

    Wardell, Gareth (Gower)

    Rowlands, Ted

    Wareing, Robert N.

    Ruddock, Joan

    Welsh, Andrew (Angus E)

    Salmond, Alex

    Wigley, Dafydd

    Sedgemore, Brian

    Williams, Rt Hon Alan

    Sheerman, Barry

    Williams, Alan W. (Carm'then)

    Sheldon, Rt Hon Robert

    Winnick, David

    Shore, Rt Hon Peter

    Wise, Mrs Audrey

    Short, Clare

    Worthington, Tony

    Skinner, Dennis

    Wray, Jimmy

    Smith, Andrew (Oxford E)

    Young, David (Bolton SE)

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

    Snape, Peter

    Tellers for the Ayes:

    Soley, Clive

    Mr. Frank Haynes and

    Spearing, Nigel

    Mr. Alun Michael.

    NOES

    Aitken, Jonathan

    Clark, Dr Michael (Rochford)

    Alexander, Richard

    Clark, Sir W. (Croydon S)

    Alison, Rt Hon Michael

    Clarke, Rt Hon K. (Rushcliffe)

    Allason, Rupert

    Colvin, Michael

    Amery, Rt Hon Julian

    Conway, Derek

    Amess, David

    Coombs, Anthony (Wyre F'rest)

    Amos, Alan

    Coombs, Simon (Swindon)

    Arbuthnot, James

    Cope, Rt Hon John

    Arnold, Jacques (Gravesham)

    Cormack, Patrick

    Ashby, David

    Couchman, James

    Aspinwall, Jack

    Cran, James

    Atkins, Robert

    Critchley, Julian

    Baker, Nicholas (Dorset N)

    Currie, Mrs Edwina

    Baldry, Tony

    Curry, David

    Banks, Robert (Harrogate)

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

    Barnes, Mrs Rosie (Greenwich)

    Davis, David (Boothferry)

    Batiste, Spencer

    Day, Stephen

    Bendall, Vivian

    Devlin, Tim

    Bennett, Nicholas (Pembroke)

    Dickens, Geoffrey

    Bevan, David Gilroy

    Dicks, Terry

    Biffen, Rt Hon John

    Dorrell, Stephen

    Blackburn, Dr John G.

    Douglas-Hamilton, Lord James

    Blaker, Rt Hon Sir Peter

    Dover, Den

    Bonsor, Sir Nicholas

    Durant, Tony

    Boscawen, Hon Robert

    Eggar, Tim

    Boswell, Tim

    Emery, Sir Peter

    Bottomley, Peter

    Evans, David (Welwyn Hatf'd)

    Bottomley, Mrs Virginia

    Evennett, David

    Bowden, A (Brighton K'pto'n)

    Fallon, Michael

    Bowden, Gerald (Dulwich)

    Favell, Tony

    Bowis, John

    Fenner, Dame Peggy

    Boyson, Rt Hon Dr Sir Rhodes

    Field, Barry (Isle of Wight)

    Braine, Rt Hon Sir Bernard

    Finsberg, Sir Geoffrey

    Brandon-Bravo, Martin

    Fishburn, John Dudley

    Brazier, Julian

    Fookes, Miss Janet

    Bright, Graham

    Forsyth, Michael (Stirling)

    Brooke, Rt Hon Peter

    Fowler, Rt Hon Norman

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

    Fox, Sir Marcus

    Browne, John (Winchester)

    Franks, Cecil

    Buck, Sir Antony

    Freeman, Roger

    Budgen, Nicholas

    French, Douglas

    Burns, Simon

    Gale, Roger

    Burt, Alistair

    Gardiner, George

    Butcher, John

    Gill, Christopher

    Butler, Chris

    Gilmour, Rt Hon Sir Ian

    Butterfill, John

    Glyn, Dr Alan

    Carlisle, John, (Luton N)

    Goodhart, Sir Philip

    Carlisle, Kenneth (Lincoln)

    Goodlad, Alastair

    Carrington, Matthew

    Goodson-Wickes, Dr Charles

    Carttiss, Michael

    Gorman, Mrs Teresa

    Cartwright, John

    Gorst, John

    Cash, William

    Gow, Ian

    Chapman, Sydney

    Gower, Sir Raymond

    Churchill, Mr

    Grant, Sir Anthony (CambsSW)

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

    Greenway, Harry (Ealing N)

    1114

    Greenway, John (Ryedale)

    Marshall, Michael (Arundel)

    Gregory, Conal

    Martin, David (Portsmouth S)

    Griffiths, Sir Eldon (Bury St E')

    Mates, Michael

    Griffiths, Peter (Portsmouth N)

    Maude, Hon Francis

    Grist, Ian

    Maxwell-Hyslop, Robin

    Ground, Patrick

    Mayhew, Rt Hon Sir Patrick

    Grylls, Michael

    Mellor, David

    Gummer, Rt Hon John Selwyn

    Meyer, Sir Anthony

    Hamilton, Hon Archie (Epsom)

    Miller, Sir Hal

    Hamilton, Neil (Tatton)

    Mills, Iain

    Hampson, Dr Keith

    Miscampbell, Norman

    Hanley, Jeremy

    Mitchell, Andrew (Gedling)

    Hannam, John

    Mitchell, David (Hants NW)

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

    Moate, Roger

    Hargreaves, Ken (Hyndburn)

    Monro, Sir Hector

    Harris, David

    Morris, M (N'hampton S)

    Haselhurst, Alan

    Morrison, Sir Charles

    Hayes, Jerry

    Morrison, Rt Hon P (Chester)

    Hayhoe, Rt Hon Sir Barney

    Moss, Malcolm

    Hayward, Robert

    Mudd, David

    Heathcoat-Amory, David

    Neale, Gerrard

    Heddle, John

    Needham, Richard

    Heseltine, Rt Hon Michael

    Nelson, Anthony

    Hicks, Mrs Maureen (Wolv' NE)

    Nicholls, Patrick

    Higgins, Rt Hon Terence L.

    Nicholson, David (Taunton)

    Hind, Kenneth

    Onslow, Rt Hon Cranley

    Hogg, Hon Douglas (Gr'th'm)

    Oppenheim, Phillip

    Hordern, Sir Peter

    Owen, Rt Hon Dr David

    Howard, Michael

    Page, Richard

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

    Paice, James

    Howarth, G. (Cannock & B'wd)

    Parkinson, Rt Hon Cecil

    Howell, Rt Hon David (G'dford)

    Patnick, Irvine

    Howell, Ralph (North Norfolk)

    Patten, Chris (Bath)

    Hughes, Robert G. (Harrow W)

    Patten, John (Oxford W)

    Hunt, David (Wirral W)

    Pattie, Rt Hon Sir Geoffrey

    Hunt, John (Ravensbourne)

    Pawsey, James

    Hunter, Andrew

    Peacock, Mrs Elizabeth

    Irvine, Michael

    Porter, Barry (Wirral S)

    Irving, Charles

    Portillo, Michael

    Jack, Michael

    Powell, William (Corby)

    Jackson, Robert

    Price, Sir David

    Janman, Tim

    Raffan, Keith

    Jessel, Toby

    Raison, Rt Hon Timothy

    Johnson Smith, Sir Geoffrey

    Rathbone, Tim

    Jones, Gwilym (Cardiff N)

    Redwood, John

    Jopling, Rt Hon Michael

    Renton, Tim

    Kellett-Bowman, Dame Elaine

    Rhodes James, Robert

    Key, Robert

    Riddick, Graham

    King, Roger (B'ham N'thfield)

    Ridley, Rt Hon Nicholas

    Kirkhope, Timothy

    Ridsdale, Sir Julian

    Knapman, Roger

    Rifkind, Rt Hon Malcolm

    Knight, Greg (Derby North)

    Roberts, Wyn (Conwy)

    Knight, Dame Jill (Edgbaston)

    Roe, Mrs Marion

    Knowles, Michael

    Rost, Peter

    Knox, David

    Rowe, Andrew

    Lang, Ian

    Ryder, Richard

    Latham, Michael

    Sackville, Hon Tom

    Lawrence, Ivan

    Sainsbury, Hon Tim

    Leigh, Edward (Gainsbor'gh)

    Sayeed, Jonathan

    Lennox-Boyd, Hon Mark

    Scott, Nicholas

    Lester, Jim (Broxtowe)

    Shaw, David (Dover)

    Lightbown, David

    Shaw, Sir Michael (Scarb')

    Lloyd, Sir Ian (Havant)

    Shelton, William (Streatham)

    Lloyd, Peter (Fareham)

    Shephard, Mrs G. (Norfolk SW)

    Lord, Michael

    Shepherd, Colin (Hereford)

    Luce, Rt Hon Richard

    Shepherd, Richard (Aldridge)

    McCrindle, Robert

    Shersby, Michael

    Macfarlane, Sir Neil

    Sims, Roger

    MacGregor, Rt Hon John

    Skeet, Sir Trevor

    Maclean, David

    Smith, Sir Dudley (Warwick)

    McLoughlin, Patrick

    Smith, Tim (Beaconsfield)

    McNair-Wilson, Sir Michael

    Speed, Keith

    McNair-Wilson, P. (New Forest)

    Speller, Tony

    Madel, David

    Spicer, Sir Jim (Dorset W)

    Malins, Humfrey

    Spicer, Michael (S Worcs)

    Mans, Keith

    Stanbrook, Ivor

    Maples, John

    Stanley, Rt Hon John

    Marland, Paul

    Steen, Anthony

    Marlow, Tony

    Stern, Michael

    Marshall, John (Hendon S)

    Stevens, Lewis

    1115

    Stewart, Allan (Eastwood)

    Wakeham, Rt Hon John

    Stewart, Andy (Sherwood)

    Walker, Bill (T'side North)

    Stewart, Ian (Hertfordshire N)

    Walker, Rt Hon P. (W'cester)

    Stokes, Sir John

    Waller, Gary

    Stradling Thomas, Sir John

    Walters, Sir Dennis

    Sumberg, David

    Ward, John

    Summerson, Hugo

    Wardle, Charles (Bexhill)

    Tapsell, Sir Peter

    Watts, John

    Taylor, Ian (Esher)

    Wells, Bowen

    Taylor, John M (Solihull)

    Wheeler, John

    Taylor, Teddy (S'end E)

    Whitney, Ray

    Tebbit, Rt Hon Norman

    Widdecombe, Ann

    Temple-Morris, Peter

    Wiggin, Jerry

    Thatcher, Rt Hon Margaret

    Wilkinson, John

    Thompson, D. (Calder Valley)

    Wilshire, David

    Thompson, Patrick (Norwich N)

    Winterton, Mrs Ann

    Thorne, Neil

    Winterton, Nicholas

    Thornton, Malcolm

    Wolfson, Mark

    Thurnham, Peter

    Wood, Timothy

    Townend, John (Bridlington)

    Woodcock, Mike

    Townsend, Cyril D. (B'heath)

    Yeo, Tim

    Tracey, Richard

    Young, Sir George (Acton)

    Tredinnick, David

    Younger, Rt Hon George

    Trippier, David

    Twinn, Dr Ian

    Tellers for the Noes:

    Vaughan, Sir Gerard

    Mr. Tristan Garel-Jones and

    Viggers, Peter

    Mr. Michael Neubert.

    Waddington, Rt Hon David

    Question Accordingly negatived.
    Main Question put:—
    The House dividend: Ayes 311, Noes 34.

    Division No. 449]

    [10.15 pm

    AYES

    Alexander, Richard

    Carlisle, John, (Luton N)

    Alison, Rt Hon Michael

    Carlisle, Kenneth (Lincoln)

    Amery, Rt Hon Julian

    Carrington, Matthew

    Amess, David

    Carttiss, Michael

    Amos, Alan

    Cash, William

    Arbuthnot, James

    Chapman, Sydney

    Arnold, Jacques (Gravesham)

    Churchill, Mr

    Ashby, David

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

    Aspinwall, Jack

    Clark, Dr Michael (Rochford)

    Atkins, Robert

    Clark, Sir W. (Croydon S)

    Baker, Nicholas (Dorset N)

    Clarke, Rt Hon K. (Rushcliffe)

    Baldry, Tony

    Colvin, Michael

    Banks, Robert (Harrogate)

    Conway, Derek

    Barnes, Mrs Rosie (Greenwich)

    Coombs, Anthony (Wyre F'rest)

    Batiste, Spencer

    Coombs, Simon (Swindon)

    Bendall, Vivian

    Cope, Rt Hon John

    Bennett, Nicholas (Pembroke)

    Cormack, Patrick

    Bevan, David Gilroy

    Couchman, James

    Biffen, Rt Hon John

    Cran, James

    Blackburn, Dr John G.

    Currie, Mrs Edwina

    Blaker, Rt Hon Sir Peter

    Curry, David

    Bonsor, Sir Nicholas

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

    Boscawen, Hon Robert

    Davis, David (Boothferry)

    Boswell, Tim

    Day, Stephen

    Bottomley, Peter

    Devlin, Tim

    Bottomley, Mrs Virginia

    Dickens, Geoffrey

    Bowden, A (Brighton K'pto'n)

    Dicks, Terry

    Bowden, Gerald (Dulwich)

    Dorrell, Stephen

    Bowis, John

    Douglas-Hamilton, Lord James

    Boyson, Rt Hon Dr Sir Rhodes

    Durant, Tony

    Braine, Rt Hon Sir Bernard

    Eggar, Tim

    Brandon-Bravo, Martin

    Emery, Sir Peter

    Brazier, Julian

    Evans, David (Welwyn Hatf'd)

    Bright, Graham

    Evennett, David

    Brooke, Rt Hon Peter

    Fallon, Michael

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

    Favell, Tony

    Browne, John (Winchester)

    Fenner, Dame Peggy

    Buck, Sir Antony

    Field, Barry (Isle of Wight)

    Budgen, Nicholas

    Finsberg, Sir Geoffrey

    Burns, Simon

    Fishburn, John Dudley

    Burt, Alistair

    Fookes, Miss Janet

    Butcher, John

    Forsyth, Michael (Stirling)

    Butler, Chris

    Fowler, Rt Hon Norman

    Butterfill, John

    Fox, Sir Marcus

    1116

    Franks, Cecil

    McCrindle, Robert

    Freeman, Roger

    Macfarlane, Sir Neil

    French, Douglas

    MacGregor, Rt Hon John

    Gale, Roger

    Maclean, David

    Gardiner, George

    McLoughlin, Patrick

    Gill, Christopher

    McNair-Wilson, Sir Michael

    Gilmour, Rt Hon Sir Ian

    McNair-Wilson, P. (New Forest)

    Glyn, Dr Alan

    Madel, David

    Goodhart, Sir Philip

    Malins, Humfrey

    Goodlad, Alastair

    Mans, Keith

    Goodson-Wickes, Dr Charles

    Maples, John

    Gorman, Mrs Teresa

    Marland, Paul

    Gorst, John

    Marlow, Tony

    Gow, Ian

    Marshall, John (Hendon S)

    Gower, Sir Raymond

    Marshall, Michael (Arundel)

    Grant, Sir Anthony (CambsSW)

    Martin, David (Portsmouth S)

    Greenway, Harry (Ealing N)

    Mates, Michael

    Greenway, John (Ryedale)

    Maude, Hon Francis

    Gregory, Conal

    Maxwell-Hyslop, Robin

    Griffiths, Sir Eldon (Bury St E')

    Mayhew, Rt Hon Sir Patrick

    Griffiths, Peter (Portsmouth N)

    Mellor, David

    Ground, Patrick

    Meyer, Sir Anthony

    Grylls, Michael

    Miller, Sir Hal

    Gummer, Rt Hon John Selwyn

    Mills, Iain

    Hamilton, Hon Archie (Epsom)

    Mitchell, Andrew (Gedling)

    Hamilton, Neil (Tatton)

    Mitchell, David (Hants NW)

    Hampson, Dr Keith

    Moate, Roger

    Hanley, Jeremy

    Monro, Sir Hector

    Hannam, John

    Morris, M (N'hampton S)

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

    Morrison, Sir Charles

    Hargreaves, Ken (Hyndburn)

    Morrison, Rt Hon P (Chester)

    Harris, David

    Moss, Malcolm

    Haselhurst, Alan

    Mudd, David

    Hayes, Jerry

    Neale, Gerrard

    Hayhoe, Rt Hon Sir Barney

    Needham, Richard

    Hayward, Robert

    Nelson, Anthony

    Heathcoat-Amory, David

    Nicholls, Patrick

    Heddle, John

    Nicholson, David (Taunton)

    Hicks, Mrs Maureen (Wolv' NE)

    Onslow, Rt Hon Cranley

    Higgins, Rt Hon Terence L.

    Oppenheim, Phillip

    Hind, Kenneth

    Owen, Rt Hon Dr David

    Hogg, Hon Douglas (Gr'th'm)

    Page, Richard

    Hordern, Sir Peter

    Paice, James

    Howard, Michael

    Parkinson, Rt Hon Cecil

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

    Patnick, Irvine

    Howarth, G. (Cannock & B'wd)

    Patten, Chris (Bath)

    Howell, Rt Hon David (G'dford)

    Patten, John (Oxford W)

    Hughes, Robert G. (Harrow W)

    Pattie, Rt Hon Sir Geoffrey

    Hunt, David (Wirral W)

    Pawsey, James

    Hunt, John (Ravensbourne)

    Peacock, Mrs Elizabeth

    Hunter, Andrew

    Porter, Barry (Wirral S)

    Irvine, Michael

    Portillo, Michael

    Irving, Charles

    Powell, William (Corby)

    Jack, Michael

    Price, Sir David

    Jackson, Robert

    Raffan, Keith

    Janman, Tim

    Raison, Rt Hon Timothy

    Jessel, Toby

    Rathbone, Tim

    Johnson Smith, Sir Geoffrey

    Redwood, John

    Jones, Gwilym (Cardiff N)

    Renton, Tim

    Jopling, Rt Hon Michael

    Rhodes James, Robert

    Kellett-Bowman, Dame Elaine

    Riddick, Graham

    Key, Robert

    Ridley, Rt Hon Nicholas

    King, Roger (B'ham N'thfield)

    Ridsdale, Sir Julian

    Kirkhope, Timothy

    Rifkind, Rt Hon Malcolm

    Knapman, Roger

    Roberts, Wyn (Conwy)

    Knight, Greg (Derby North)

    Roe, Mrs Marion

    Knight, Dame Jill (Edgbaston)

    Rost, Peter

    Knowles, Michael

    Rowe, Andrew

    Knox, David

    Ryder, Richard

    Lang, Ian

    Sackville, Hon Tom

    Latham, Michael

    Sainsbury, Hon Tim

    Lawrence, Ivan

    Sayeed, Jonathan

    Leigh, Edward (Gainsbor'gh)

    Scott, Nicholas

    Lennox-Boyd, Hon Mark

    Shaw, David (Dover)

    Lester, Jim (Broxtowe)

    Shaw, Sir Michael (Scarb')

    Lightbown, David

    Shelton, William (Streatham)

    Lloyd, Sir Ian (Havant)

    Shephard, Mrs G. (Norfolk SW)

    Lloyd, Peter (Fareham)

    Shepherd, Colin (Hereford)

    Lord, Michael

    Shepherd, Richard (Aldridge)

    Luce, Rt Hon Richard

    Shersby, Michael

    1117

    Sims, Roger

    Tracey, Richard

    Skeet, Sir Trevor

    Tredinnick, David

    Smith, Sir Dudley (Warwick)

    Trippier, David

    Smith, Tim (Beaconsfield)

    Twinn, Dr Ian

    Speed, Keith

    Vaughan, Sir Gerard

    Speller, Tony

    Viggers, Peter

    Spicer, Sir Jim (Dorset W)

    Waddington, Rt Hon David

    Spicer, Michael (S Worcs)

    Wakeham, Rt Hon John

    Stanbrook, Ivor

    Walker, Bill (T'side North)

    Stanley, Rt Hon John

    Walker, Rt Hon P. (W'cester)

    Steen, Anthony

    Waller, Gary

    Stern, Michael

    Ward, John

    Stevens, Lewis

    Wardle, Charles (Bexhill)

    Stewart, Allan (Eastwood)

    Watts, John

    Stewart, Andy (Sherwood)

    Wells, Bowen

    Stewart, Ian (Hertfordshire N)

    Wheeler, John

    Stokes, Sir John

    Whitney, Ray

    Stradling Thomas, Sir John

    Widdecombe, Ann

    Sumberg, David

    Wiggin, Jerry

    Summerson, Hugo

    Wilkinson, John

    Tapsell, Sir Peter

    Wilshire, David

    Taylor, Ian (Esher)

    Winterton, Mrs Ann

    Taylor, John M (Solihull)

    Winterton, Nicholas

    Taylor, Teddy (S'end E)

    Wolfson, Mark

    Tebbit, Rt Hon Norman

    Wood, Timothy

    Temple-Morris, Peter

    Woodcock, Mike

    Thatcher, Rt Hon Margaret

    Yeo, Tim

    Thompson, D. (Calder Valley)

    Young, Sir George (Acton)

    Thompson, Patrick (Norwich N)

    Younger, Rt Hon George

    Thorne, Neil

    Thornton, Malcolm

    Tellers for the Ayes:

    Thurnham, Peter

    Mr. Tristan Garel-Jones and

    Townend, John (Bridlington)

    Mr. Michael Neubert.

    Townsend, Cyril D. (B'heath)

    NOES

    Abbott, Ms Diane

    Jones, Ieuan (Ynys Môn)

    Banks, Tony (Newham NW)

    Livingstone, Ken

    Barnes, Harry (Derbyshire NE)

    Madden, Max

    Benn, Rt Hon Tony

    Mahon, Mrs Alice

    Bidwell, Sydney

    Michie, Bill (Sheffield Heeley)

    Brown, Ron (Edinburgh Leith)

    Parry, Robert

    Campbell-Savours, D. N.

    Patchett, Terry

    Clay, Bob

    Primarolo, Dawn

    Clwyd, Mrs Ann

    Salmond, Alex

    Cohen, Harry

    Sedgemore, Brian

    Cryer, Bob

    Skinner, Dennis

    Cunliffe, Lawrence

    Wall, Pat

    Ewing, Mrs Margaret (Moray)

    Welsh, Andrew (Angus E)

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

    Wigley, Dafydd

    Flannery, Martin

    Wise, Mrs Audrey

    Gordon, Mildred

    Grant, Bernie (Tottenham)

    Tellers for the Noes:

    Heffer, Eric S.

    Mr. Eddie Loyden and

    Hughes, John (Coventry NE)

    Mr. Dave Nellist.

    Question accordingly agreed to.
    Resolved,
    That this House approves the Statement on the Defence Estimates 1988 contained in Cm. 344.

    Trade Barriers (European Community)
    Motion made, and Question proposed, That this House do now adjourn. —[Mr. Fallon.]
    10.26 pm
    Mr. Phillip Oppenheim: I begin by expressing a measure of sympathy for my hon. Friend the Minister who is to reply to the debate. He is having to defend a position to which the Government are acquiescing but which goes against virtually all their stated objectives of encouraging consumer choice, deregulating and fostering industrial efficiency.
    Although we have heard a great deal of noise over the past year or so about 1992 and the opening of the European market, we have heard less about the corollary of that, which is that many civil servants within the European Commission believe that as we open our internal market we should steadily close the external market to prevent non-EEC manufacturers from taking advantage of our more open internal market. Therefore, as we are seeing barriers within the European Community being broken down, we are seeing a fortress-Europe mentality being introduced by many within the EEC establishment.
    For example, many car manufacturers are already talking about introducing a 15 per cent. EEC import quota for Japanese cars after 1992 to replace the series of national quotas which currently exist. Britain now has an 11 per cent. import quota for Japanese cars, France has a 3 per cent. quota and Spain and Italy allow only a few thousand Japanese cars to be imported each year. Most of the other EEC countries have no quotas or import restrictions. Therefore, a 15 per cent. quota in 1992 will in many cases mean less consumer choice and more protection than at present.
    Apart from the quotas being proposed there is already a wide range of EEC-wide quotas. The EEC currently imposes quotas on imports of compact disc machines, videos and televisions. Significantly and topically, there are also quotas on imports of steel. It is almost impossible for non-EEC producers to import steel into the European Community. That has severe ramifications for steel-consuming industries within the EEC.
    Apart from the quotas already in existence and those being proposed and taken seriously within the Commission, the increasing use of what I consider to be spurious anti-dumping duties by the Commission is dangerous. In recent years, the Commission has imposed severe anti-dumping duties on imports of photocopiers, computer printers and electronic typewriters. I understand that it is proposing duties on imports of facsimile machines and microchips.
    The 1982 regulations, which are the basis for the anti-dumping regulations, have been drawn so widely that the Commission can say that almost anything is dumping. I should like to draw the Minister's attention to two particular examples. The first concerns constructed prices. Rather than send its investigators to Japan and Europe to find out at what prices the products are being sold, the Commission artificially constructs prices. The structures by which it does so are different in Japan from those in Europe. In Japan, the price includes much of the overheads and marketing costs, but in Europe it does not. That obviously makes the European cost at which the

    1119
    Japanese are selling far lower than that of their home market, thereby making a large dumping margin when in reality there is none.
    The second example is the system whereby the Commission can say that any company or industry selling products on the EC market at a loss is automatically dumping. It is well known that start-up companies, especially when they are opening a high-volume factory, may for the first year or two not reach full economic volumes. By the Commission's regulations, they will be selling their products at a loss on the European market and will therefore be dumping. A penal anti-dumping duty will be imposed on them, with the result that the Commission will have the power to strangle almost any new non-EC entrant to the market at birth.
    In its defence, the Commission says that the European Court has ruled that it is imposing its anti-dumping duties legally, which is right. Companies that fought the Commission in the European Court found that the court expressed much sympathy but said that the Commission was working well within its own regulations, even though they are drawn up unfairly.
    The other excuse that is used is that the anti-dumping regulations fall within the general agreement on tariffs and trade. The problem is that the GATT guidelines are drawn so widely and vaguely that almost any regulations would fall within their parameters. I do not consider that to be a defence to the Commission's stance.
    I have mentioned these problems to European industrialists, European civil servants and the many defenders of protectionism, including many Socialists. In their more candid moments, they admit that these measures are blatantly protectionist, but their main justification for them is that the Japanese have been protectionist so we must be protectionist ourselves. Everyone knows that the Japanese were very protectionist in the 1950s and 1960s, but we fool ourselves if we believe that Britain, Europe and the United States were not and are not extremely protectionist in a variety of ways. The fundamental difference is that, while the Japanese are making genuine efforts to reduce their protectionist barriers, we in Europe, and to a large extent America, are erecting ours.
    One of the reasons why people mistakenly believe that Japan is a protectionist country is that the Japanese market is difficult in a variety of ways and many western manufacturers have come to grief by trying to sell the wrong product and not persevering. The Japanese, with a relatively small home market, have had to sell their products in the west, whereas for many western manufacturers it has been far easier to sell into the linguistically and culturally similar markets in Europe and the United States, or to old colonial markets, which were protected and offered substantial advantages. There has not been the incentive for western manufacturers to sell into the Japanese market in the same way that there has been a necessity for Japanese manufacturers to sell into western markets. That is one reason why Japanese export penetration into Europe has been higher than western penetration into Japanese markets. Anyone who studies the Japanese market will find many examples of western companies, producing the right product at the right price, that have done extremely well.
    Before being fortunate enough to be elected to this place, I worked in the information technology industry, editing a business consumer magazine which covered
    1120
    many of the products that are subject to EEC Commission anti-dumping investigations or have had duties imposed on them. I know that the Japanese succeeded primarily because they produced the right products at the right price and marketed them creatively.
    The Japanese have done well with photocopiers because they produced in volume. Because they did that, they were able to incorporate features in their machines which were formerly the preserve of the top name products. The Japanese also marketed creatively, cutting costs by introducing dealer marketing rather than direct sales. Many European industries and even Xerox, the American-owned company, were slow. They did not sell the right products and were not agile in marketing. The Japanese have succeeded not through predatory guile but by producing and selling the right products at the right price and delivering on time.
    Unfortunately, it is far easier for European manufacturers who have failed in the Japanese market, and failed against Japanese competition in their home markets, to whinge, whine and complain about unfair trade practices. If they can palm the blame off on to the Japanese, it obviously means that they are not at fault.
    The other major argument to justify protectionism is that protectionist barriers forced the Japanese to set up in Europe. Examples in Britain which have recently been given much publicity are the Nissan car factory in the north-east and a variety of typewriter and office equipment factories. I make it clear that I welcome with open arms foreign investment of all types. If that investment is represented only by assembly plants, that is better than nothing. If that foreign investment comes into this country only to jump over import barriers, the rest of the economy must pay the price.
    I should like to quote Nissan as an example. Obviously, it has been of great benefit in the north-east and people there have warmly welcomed the Nissan factory. The company has also been of benefit in a wider sense by its example to the British economy in general. But it is important to recognise the disadvantages. Although it may deny this, Nissan came to Britain largely because of Britain's 11 per cent. import quota on Japanese cars, the so-called gentleman's agreement which was introduced in 1976 by a Labour Government, supposedly to give Austin-Rover a breathing space. However, that plan does not seem to have done much good. I believe that it is a good argument against protectionism.
    Although Nissan brought many benefits in its train, the quotas which brought the company here in the first place have resulted in an annual extra cost by distorting the market for United Kingdom car buyers by about £1 million a year. That sum represents the costs over and above the costs that should be paid by British industry which are diverted from efficient and productive industry into less efficient, less productive industry.
    Import barriers can also be damaging to the rest of the economy because they limit choice. Once again, I shall adduce Nissan as a good example. Nissan produces in relatively low volumes in this country. It has to have longer product runs to make those volumes competitive and economical. The company cannot introduce in the British market the new models that it would introduce in a free market. For example, the Nissan Bluebird, which is produced in the north-east, is. an obsolete model. In far eastern markets, Nissan introduced a new Bluebird more than a year ago. Nissan denies this, but the fact is that,

    1121
    because the company needs long production runs to make its plants economic, it cannot introduce new models as quickly as it might otherwise do, so choice is limited.
    Exactly the same has happened with the Rover Group, which has an agreement to assemble certain Honda products. Most of the group's product line are Honda-designed and developed.
    Rover produces a car called the Rover 200 that is effectively the same car as one that it assembles for Honda, which is called the Honda Ballade. That, in turn, is the old Honda Civic model, which has long since been replaced in other markets but because the Rover Group had to have long runs of this model it will be unable to replace it until next year. By limiting consumer choice, such practices make our market less competitive, and that damages not only consumers but the industry.
    Mr. Christopher Gill: My hon. Friend said that the Nissan car company came to this country because in doing so it was able to leap the protection barrier. Would he say that the grants that were made available to this company when it came here were not significant or did not enter into the company's thinking when it planned to open the new plant?
    Mr. Oppenheim: My hon. Friend is right. I said that import quotas were one of the reasons why the company came here, but I agree that another was generous assistance from the Government. Furthermore, it found that Britain, compared to other countries, was a good place in which to do business, and we should recognise that. However, import quotas were a major element when it made the decision to come here, although the company might deny that.
    Mr. Gill rose——
    Mr. Oppenheim: I hope that my hon. Friend will forgive me if I do not give way again, but I have to leave enough time for my hon. Friend the Minister to give me a considered reply.
    I know that the Minister is concerned about screwdriver and anti-dumping duties. On top of proposing a series of protectionist duties, which, to an extent, encourage Japanese industry into Europe, now that the Japanese have come to Europe, the Commission is saying that they must use a high proportion of local components. That is not necessarily in the interest of the assembling country, and it is not always possible for the companies to find high quality components locally. That is damaging, and it compounds the damage already done by the protectionism that is the result of many of the Commission's policies.
    The casual listener—I accept that there are not many casual listeners here tonight, but I trust that I am not immodest in hoping that some people will read this debate —may think that I am arguing on behalf of Japanese industry. I should like to emphasise that I am not. I am arguing for our industry because I believe that protectionism damages our industry in a number of ways. First, it increases prices, often of industrial feedstocks. For instance, the import quotas on non-EEC steel mean that our steel consumers, which include the car industry, have to pay more for their steel than they would if they were buying it in another country.
    1122
    Another good example are microchips. Not only has the EEC placed anti-dumping duties on Japanese chips, but there is already a ludicrous system whereby the import duty on non-EEC chips is higher than the import duty on fully built computer boards and computers. That means that it is often far cheaper to import fully built-up boards than to import the chips, which can be used to build products here. That is largely the result of lobbying by the big European chip makers—Siemens, Philips, Thomson and SGS ATES. The result is that assemblers of products using chips, such as the Amstrad company, find it cheaper to import fully made-up products, whereas, if the duties were equal, they would find it more economic and preferable to assemble the products here.
    Protectionism not only increases the cost of feedstock to our industry, but indirectly helps the Japanese, by creating artificially high markets from which they are able to profit. The Japanese make huge profits out of selling cars to the protected European markets—Britain, France, Italy and Spain—and those profits are repatriated to Japan, so that helps. Ultimately, protectionism does not help the industries that it is supposed to protect. It puts off the time when those industries have to sort out their own houses and become efficient and effective. Thus, it compounds and continues their inefficiencies. If a company cannot compete in its home market with the Japanese, how does it expect to be able to compete in overseas export markets?
    There is a further danger in protectionism because, if we allow ourselves to be convinced by failed European industrialists that the Japanese have succeeded as a result of predatory trading practices, we shall have no incentive to improve ourselves and to learn the many valuable lessons that they can teach us to help us sort out our industrial problems. Some of the real reasons for the success of the Japanese are not so much predatory guile, but rather the fact that, ever since the war, they have had consistently right of centre Governments who have followed extremely sound economic policies. They have a first-rate education system which churns out a highly skilled and literate work force, and the country as a whole has not suffered from Socialist anti-business and anti-profit attitudes, but has a solidly and robustly pro-business, pro-enterprise ethos.
    I therefore urge my hon. Friend to look carefully at the protectionism which exists and is being built up by the Commission because that protectionism runs counter to the Government's avowed policy of deregulation, industrial efficiency and consumer choice. I accept that my hon. Friend probably does not know a great deal about the protectionism because much of it that arises in the Commission probably comes on to his desk or those of his colleagues with a little note from civil servants saying, "This is all right. Sign." Many anti-dumping orders are probably signed without my hon. Friend and his colleagues knowing what they are signing. I am sure that, if they realised what they were signing, they might well have second thoughts. Ultimately, it is extremely dangerous for European industry, if it knows that it has an easy path, to go whingeing to the Commission asking for protection rather than sorting itself out.
    10.46 pm
    The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude): I congratulate my hon. Friend the Member for Amber Valley (Mr. Oppenheim), first, on having gained this opportunity and, secondly, on having used it so skilfully and, in his usual measured way, having deployed a formidable and detailed range of knowledge of a difficult subject. He will understand that one or two other matters were occupying my mind today, but, none the less, I am grateful to have the opportunity to reply to the serious and well thought out points that he has made.
    There is not all that much difference of opinon between my hon. Friend and me. He knows that the Governments stance is essentially a liberal one in respect of trade. We are not a protectionist Government. We reject protectionism, for very much the reasons that he set out. He talked about the way in which the single European market is likely to develop; and the way in which it is perceived to be developing is as important as the way in which it does develop. There is no doubt that it is crucial to the long-term success of completing the single market that it conducts its external trade relations after 1992 in a sensible way.
    With the United States and Japan, the Community is one of the world's three great trading blocs, and that imposes great responsibilities which we have to live up to. We are already deep into the Uruguay round of trade negotiations which aims to reinforce the system by which the international rules of trade are multilaterally agreed and applied. We are seeking major reforms in that system so that it can better serve the interests of all trading nations in the decades ahead. The Community, and especially the United Kingdom Government, are well aware of the benefits that we draw from open trade in terms of growth, investment, technological advance and consumer satisfaction and we have therefore made it clear right from the start that, in our view, there can be no question of a "fortress Europe" or of us using the completion of the single market to raise external trade barriers. That would make no sense and would tend to isolate the Community from developments elsewhere.
    The Secretary of State made our position absolutely clear in the White Paper, "The Department for Enterprise", which he published in January. It is worth pointing out that the European Council strongly reaffirmed the same principle at Hanover in June of this year, as did my right hon. Friend the Prime Minister in her speech at Bruges last month, but, as I have said before, it is not just what the Community does; it is how it is perceived that matters.
    A fear is often expressed in countries outside the Community that the development of the single market will be paralleled by increased protection against outside competition, especially from the United States and Japan. I have recently visited two or three countries in the far east, where I found that it was accepted as a certainty that that would happen. I hope that I managed to instil a doubt in the minds of those to whom I spoke. Their preconception is very much that Europe is turning itself inwards and closing itself to trade from outside. We must resist such moves. The single market process must help to reduce external barriers, not increase them. Raising Community barriers would be self-defeating. It would encourage
    1124
    inefficiency and a lack of competitiveness. Whatever we were to gain at a cost to consumers and our economies, we would lose internationally.
    There is a real danger, if our trading partners misunderstand our intentions, that there could develop a retaliatory spiral of protectionism, with the various trading blocs, which are increasingly developing around the globe, erecting ever more severe trade barriers. I do not need to spell out the disastrous consequences that that would hold. We could suddenly find that there was a clamp on world trade, with serious effects on economic growth worldwide. I hope that all our partners in the Community will express as robustly as we do a commitment to a liberal policy in trade. The consequences of doing otherwise could be severe.
    There is already misinterpretation on this side of the Atlantic of the American Trade Bill. It is interpreted as being more protectionist than it is. There is misinterpretation in the United States of what is happening in Europe. Similarly, there is misinterpretation in the far east. Whenever uncertainty and discordant voices emerge from one of the trade blocs, there is a tendency for our trading partners to make an interpretation that is in the worst possible light. There is thus the danger of a retaliatory round of trade barriers being erected. That could happen suddenly and without notice, with serious consequences for world trade.
    It is clear that the removal of the internal barriers in the Community will bring great benefits to nationals of other countries and to the subsidiaries of foreign firms that are established in the Community. They will profit from the single market in the same way as Community nationals. That gives the lie to some of the more exaggerated fears that have been expressed, especially in the United States press. Foreign-based firms play a dynamic part in the economies of all the member states and we need to encourage the dynamism, not seek to repress it.
    We can look to our partners to continue the process of liberalisation, and we must do so. We are doing this already in the way in which we are negotiating in the GATT to extend the multinational rules to services, with the aim of progressively opening services markets worldwide. We in the Community as a whole will continue with this process. The Uruguay round provides the mechanism with which it will be possible for the Community, in an appropriate instance, to claim credit for the external liberalisation that will occur with the completion of the single market.
    My hon. Friend the Member for Amber Valley referred to imports. It is part of the Government's policy to provide an economic climate that promotes the enterprise and prosperity that will enable both the manufacturing and service sectors to compete in world markets. A policy of open markets—of free but fair trade—is an indispensable element in this policy. Imports at fair market prices provide both a significant input to our manufacturing effort and a competitive spur, which help to keep costs down for both consumers and industrial users and to widen choice.
    Since 1985, as part of our initiative of competition, we have been reviewing the justification for the voluntary restraint agreements that have typically been concluded between a United Kingdom industry and its counterpart overseas. I answered written questions on 30 March and subsequently which were tabled by my hon. Friend the Member for Darlington (Mr. Fallon), whom I am

    1125
    delighted to see on the Government Front Bench. I am sure that the whole House will wish to join me in congratulating him on his elevation to the Whips' office, even if, as a result, we shall be denied the pleasure of his contributions to our debates for the time being. As I explained in my answer to the questions that he so pertinently asked, in assessing the costs and benefits to the United Kingdom economy, we concluded that in most cases such arrangements were not in our interests, and we advised the industry concerned accordingly. But in the cases in which we believed that there was some justification, we continue to keep those arrangements under review.
    My hon. Friend spoke about anti-dumping. He is absolutely right that anti-dumping measures must not be used as an easy way out. When complaints about dumping are made, we have to ensure that the proper procedures are followed. In case my hon. Friend has any doubts about this, I can assure him that I have at no stage signed an
    1126
    anti-dumping order, whether I have read it or not. And I know that my hon. Friend the Minister for Trade, before whom these matters may come, exercises great diligence and care before committing his name to anything.
    We need to ensure that these processes are not abused and that, when complaints are made, the proper procedures are followed. For the most part, we believe that that happens. The danger is that, if the procedures are thought to be abused—there is no doubt that in some parts of the world they are thought to be used too freely, and conclusions that meet the anxieties of the protectionist lobby are thought to be too freely reached—great damage will be done to the reputation of the European Community, which is based on economic liberalism.
    It was right of my hon. Friend eloquently to raise the other side of the coin. Too often, for Governments and public authorities generally——
    The motion having been made after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at four minutes to Eleven o'clock.

ENVIRONMENT

  Private Housing (Basic Amenities)
  Mr. Pike
  To ask the Secretary of State for the Environment if he will list those local authorities in whose area more than 5 per cent, of the private housing stock are without basic amenities.

  Mr. Trippier
  The information requested is not available.

  Unfit Dwellings
  Mr. Pike
  To ask the Secretary of State for the Environment if he will list those local authorities by areas in which 4·5 per cent, or more of the dwellings are considered unfit.

  Mr. Trippier
  The following 56 English housing authorities have reported, in their 1988 housing investment programme returns, that 4·5 per cent, or more of the total stock in their areas at 1 April 1988 was unfit:—Allerdale, Barnsley, Birmingham, Blackburn, Bolsover, Bolton, Bradford, Brent, Brighton, Bristol, Bury, Camden, Caradon, Cleethorpes, Ealing, Gedling, Great Grimsby, Hackney, Hammersmith and Fulham, Haringey, Hastings, Hyndburn, Islington, Kensington and Chelsea, Kingston upon Hull, Lambeth, Leeds, Leicester, Malvern Hills, Manchester, Mendip, Mid Suffolk, Newcastle upon Tyne, Newham, Oswestry, Penwith, Preston, Reading, Richmond upon Thames, Rochdale, Rossendale, Rugby, Salford, Sandwell, South Herefordshire, Southwark, St. Helens, Stoke on Trent, Sutton, Tameside, Thurrock, Tower Hamlets, Walsall, Waltham Forest, Wandsworth, Wolverhampton.

  Five authorities have not yet made a return and a further 21 have not provided estimates of the numbers of unfit dwellings covering their private sector stock.

  Public Sector Housing
  Mr. Pike
  To ask the Secretary of State for the Environment when he will publish the report his Department has now received from Glasgow university's centre for housing research on public sector housing; and if he will make a statement.

  Mr. Trippier
  The report will be published by HMSO in the new year.

  Mr. Pike
  To ask the Secretary of State for the Environment what was the cost to his Department of the report he has now received from Glasgow university's centre for housing research; and if he will make a statement.

  Mr. Trippier
  The contract is estimated to cost about £180,000 excluding VAT.

  Rural Development Commission
  Mr. Baldry
  To ask the Secretary of State for the Environment what progress has been made by the Rural Development Commission in encouraging and diversifying rural enterprise.

  Mr. Ridley
  The Rural Development Commission came into being on 1 April 1988 through the merger of the Development Commission with its main agency, the Council for Small Industries in Rural Areas. The annual report of the two constituents bodies for 1987–88 has been published today, and I have placed copies in the Library of the House.

  I am grateful to the Lord Vinson and his fellow commissioners for the efforts which they have devoted to fostering the economic and social development of rural areas and which have led to the achievements described in the report. There is now a general recognition of the important part that small-scale industry must play in maintaining economic activity in rural areas and there has been a considerable increase in prosperity in many rural development areas. I welcome the commission's intention to review its objectives in the light of changed conditions in order to maximise the stimulus it provides for rural enterprise. I shall also take full account of advice given by the commission about other problems of rural areas and possible approaches to resolving them.

PRIME MINISTER

  Hillmorton, Rugby
  Mr. Pawsey
  To ask the Prime Minister if she has any plans to make an official visit to Hillmorton, Rugby.

  The Prime Minister
  I have at present no plans to do so.

  Neutron and Proton Therapy
  Dr. Bray
  To ask the Prime Minister what advice she has received from the Medical Research Council, the Imperial Cancer Research Fund, the Cancer Research Campaign, the United Kingdom Co-ordinating Committee for Cancer Research, the Advisory Council on Science and Technology or any other body regarding the £6 million grant to a London hospital for a cyclotron for neutron and proton therapy; and if she will make a statement.

  The Prime Minister
  The Minister for Health announced on 7 June the award of a grant to the Cyclotron Trust as a contribution towards the charitable funds it is raising to provide a cyclotron at St. Thomas's hospital to improve the care of cancer patients. I have received a letter from Sir Raymond Hoffenberg, chairman of the United Kingdom Co-ordinating Committee on Cancer Research, and a reply has been sent today.

  Engagements
  Mr. Barry Field
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  Mr. Wigley
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  Mr. Butler
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.
  979
  Mr. Ieuan Wyn Jones
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  Mr. Skinner
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  Mr. Harry Greenway
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  Mr. Pike
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  Mr. Stern
  To ask the Prime Minister if she will list her official engagements for Thursday 20 October.

  The Prime Minister
  This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today, including one with the Premier of the state of South Australia.

  Dental and Optical Examinations
  Mr. Barry Jones
  To ask the Prime Minister if she will take steps to seek to exempt Wales from the provisions of the Health and Medicines Bill concerning charges for dental and optical examinations; and if she will make a statement.

  The Prime Minister
  On enactment the provisions of the Health and Medicines Bill will apply throughout Great Britain. The Government see no reason to vary that.

TRADE AND INDUSTRY

  Barlow Clowes (Report)
  Mr. Nicholas Winterton
  To ask the Chancellor of the Duchy of Lancaster when he now expects to be able to publish the report of the internal inquiry into the role of his Department in the collapse of the Barlow Clowes companies.

  Mr. Maude
  I refer my hon. Friend to the statement made today by my right hon. Friend the Chancellor of the Duchy of Lancaster.

  Trade Descriptions Act 1972
  Mr. John Marshall
  To ask the Chancellor of the Duchy of Lancaster when the terms of the successor regime to replace the Trade Descriptions Act 1972, will be laid before Parliament.

  Mr. Forth
  I laid before Parliament yesterday the Trade Descriptions (Place of Production) (Marking) Order 1988. This will require goods to be marked with or accompanied by a statement of the place of production, if the goods are presented in a way which is likely to give consumers the impression that the goods were manufactured or produced in a different place. Subject to the parliamentary procedures, the order will come into force on 31 December, at the same time as the repeal of the 1972 Act. The order bringing into force the repeal of the 1972 Act was laid before Parliament in draft on 29 July.

  Regional Development Grant
  Mr. John Marshall
  To ask the Chancellor of the Duchy of Lancaster whether he will make a statement about payment of regional development grant.
  980
  Mr. Newton
  My right hon. Friends the Secretaries of State for Scotland and for Wales and I have decided that the current two-month waiting period for interim payments under the revised regional development grant scheme will be lifted tomorrow. Payments which are at present held up by the waiting periond will be made as soon as practicable. This will be of immediate benefit to companies operating in the development areas, particularly in the light of the increased case processing times which have resulted from the surge in applications before the scheme closed last March.

  Small Companies
  Mr. John Marshall
  To ask the Chancellor of the Duchy of Lancaster if he is yet in a position to announce the outcome of the Government's review of audit requirements for small companies.

  Mr. Maude
  On 22 May 1986, my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) announced that the Government had decided to retain the statutory requirement for small companies to have their accounts audited. Since that announcement, the Government have considered again the arguments for and against the compulsory audit of small companies. We still believe that the involvement of an independent professional accountant such as the audit requirement entails is likely to improve the reliability of accounts and provide a continuing protection against fraud. We have looked at possible alternative ways of achieving these objectives without requiring a full-scale audit, but have concluded that none of the alternatives offers sufficient advantages over the audit. We do not, therefore, propose to remove the statutory requirement.

EMPLOYMENT

  Coal Industry
  Mr. Skinner
  To ask the Secretary of State for Employment what steps he is taking together with British Coal to reduce the 130 per cent, increase in underground fires between 1979 and 1986; and if he will make a statement.

  Mr. Nicholls
  The number of underground fires in mines owned by the British Coal Corporation increased from 68 in 1979 to 77 in 1985–86, an increase of about 13 per cent. The increasingly intensive use of plant during this period meant that the reduction in the number of mines had no significant effect on the potential of fire.

  Reducing the number of underground fires is a primary objective of the Health and Safety Executive which is actively monitoring measures taken by British Coal. These include the application of more sophisticated inspection and detection techniques, the raising of standards in the specification, design, installation and maintenance of machinery and equipment and the continuing development of fire-resistant materials.

  Labour Statistics
  Mr. Kirkwood
  To ask the Secretary of State for Employment whether he will consider decentralising the statistical function in his Department dealing with Scottish jobless totals to a separate unit located in Scotland.
  981
  Mr. Lee
  The unemployment statistics are a by-product of the Great Britain wide system for paying unemployment-related benefits. Dissemination and briefing on the figures for Scotland are already the responsibility of a unit located in the ofice of the Training Agency's director for Scotland.

OVERSEAS DEVELOPMENT

  China (Overseas Aid)
  Mr. Harry Greenway
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he has any plans to make an official visit to China to discuss overseas aid; and if he will make a statement.

  Mr. Chris Patten
  I visited China from 17–23 September during which time I signed on behalf of the United Kingdom a new memorandum of understanding providing aid and trade provision support for development projects up to a total value of £300 million. Soft loans and mixed credits will be available for projects to be agreed by the British and Chinese Governments. I also visited a number of British aid activities—particularly English language teaching and science and technology consultancies—which are providing excellent value for money and are strengthening Britain's growing political and commercial links with China.

ATTORNEY-GENERAL

  County Court Judges (Northern Ireland)
  Mr. Stanbrook
  To ask the Attorney-General what remuneration is paid to county court judges in Northern Ireland.

  The Solicitor-General
  The salary of a county court judge in Northern Ireland is currently £45,800. County court judges are presently in group 6 of the judicial salary structure. The Government have decided that they should be paid at the higher group 5 rate for as long as they are required to carry out significantly different work from their counterparts elsewhere in the United Kingdom, as is currently the case. They will therefore be paid £50,180 with effect from 1 April 1988, increasing to £50,900 with effect from October, in line with the Government's implementation of the recommendations on judicial salaries in the 1988 report of the Top Salaries Review Body.

HOME DEPARTMENT

  Right of Silence
  Mr. Devlin
  To ask the Secretary of State for the Home Department whether he intends to propose amendments of the law concerning the right of silence in England and Wales.

  Mr. Hurd
  I told the House on 18 May at columns 465–66 that I saw a strong case for changing the law in relation to the inferences which may be drawn from a failure to answer questions put to a suspect by the police. I considered that more careful work needed to be done before I could bring forward with confidence a specific proposal for legislation, and I set up a working group
  982
  (comprising officials, members of the legal profession and a senior police officer) to carry out that further work and submit an early report with a view to legislation.

  My right hon. Friend the Secretary of State for Northern Ireland has similarly reached the conclusion that the law of the province needs to be changed. He has laid before the House a draft Order in Council containing provisions to this effect.

  I will seek the earliest opportunity after receiving the working group's report to bring forward legislation on this subject for England and Wales. Although the timing of change will inevitably be different in the two jurisdictions, the Government see a clear need for substantial changes to be made in both if the law is to be effectively enforced.

FOREIGN AND COMMONWEALTH AFFAIRS

  Lincolnshire-Australia Links (Exhibition)
  Mr. Quentin Davies
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he has considered an application for an exhibition relating to Lincolnshire links with Australia to be held in the Upper Waiting Hall, in the week beginning 31 October.

  Mr Eggar
  I understand that, under procedures agreed by the Services Committee, arrangements have been made with the authorities of the House for the exhibition to be held in the Upper Waiting Hall from 31 October to 4 November.

  Departmental Staff
  Mr. Sean Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs what are the latest available figures for his Department in the London pay area of the number of vacancies by grade and the proportion this is of the grade complement in London.

  Mr. Eggar
  In the diplomatic wing, there are currently 145·5 vacancies in all grades amounting to 2·6 per cent, of total complement. The majority are in clerical and technical support grades though the number in any grade fluctuates from month to month with changes in operational requirements and the recruitment cycle.

  In the aid wing, there are 58 vacancies in all grades amounting to 10·9 per cent, of total complement. The majority are in clerical, secretarial and other support grades.

  Mr. Sean Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will provide the latest available figures for his Department for(a) numbers of staff in receipt of local pay additions, by grade, (b) location of those offices awarding local pay additions and (c) annual cost.

  Mr. Eggar
  In the diplomatic wing of the Foreign and Commonwealth Office, local pay addition is being paid to a total of 927 members of staff, in the following grades:

  Number

  Administrative Assistants

  82

  Administrative Officers

  261

  Diplomatic Service Grade 10 Officers

  272

  Secretarial Staff

  307

  Teleprinter Operators

  5

  983
  All the staff work in FCO buildings in central London, and at Croydon. The annual cost is £462,100.

  In the aid wing, local pay addition is being paid to a total of 189 members of staff, in the following grades:

  Number

  Administrative Officers

  104

  Typing Managers

  3

  Secretarial Staff

  82

  All the staff are working at ODA headquarters at Eland house, London, SW1. The annual cost is £120,400.

  Palestine
  Mr. Atkinson
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the situation in Palestine.

  Mr. Waldegrave
  The continuing violence in the occupied territories underlines the urgent need for a just and durable solution to the Arab-Israel dispute. This would be best achieved by the holding of an international conference, as the framework for negotiations between the parties concerned.

  Anglo-Soviet Relations
  Mr. Harry Greenway
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is his latest assessment of the effect upon Anglo-Soviet relations of the Union of Soviet Socialist Republics' policies of glasnost and perestroika; and if he will make a statement.

  Mr. Waldegrave
  Bilateral relations have greatly improved since Mr. Gorbachev assumed power in the Soviet Union. A more pragmatic Soviet approach to contentious issues such as Afghanistan and human rights, and greater Soviet willingness to facilitate exchanges of people and ideas, have contributed to this improvement. We have combined readiness to make use of these new opportunities with a realistic view of what has not changed, including Soviet military capabilities and the need for secure defence. This consistent approach has earned respect and brought results.

WALES

  Welsh Development Agency (Asset Sales)
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will list in the Official Report the annual amount of cash raised by the Welsh Development Agency from the sale of assets for each of the years 1980 to 1988; if he will list for each of those years the details of the assets sold, including buildings and support services; if he will indicate the current target for such sales; and if he will make a statement.

  Mr. Peter Walker
  I refer the hon. Gentleman to the annual accounts of the Welsh Development Agency for the years up to and including 1987–88. The target for property and investment disposals for the current financial year is just over £15 million. Details of the assets sold to date could be provided only at disproportionate cost.

  Pharmacy Technicians
  Mr. Barry Jones
  To ask the Secretary of State for Wales how many pharmacy technicians are employed in each of the health authorities in Wales.

  Mr. Grist
  The information which relates to whole-time equivalents as at 30 September 1988 is given in the following table:

  District health authority

  Pharmacy technicians

  Clwyd

  24·4

  East Dyfed

  5·8

  Gwent

  38·1

  Gwynedd

  10·0

  Mid Glamorgan

  21·8

  Pembrokeshire

  1·0

  Powys

  2·0

  South Glamorgan

  34·2

  West Glamorgan

  21·9

  Mr. Barry Jones
  To ask the Secretary of State for Wales (1) what steps he will take to enhance the status of pharmacy technicians with the National Health Service; and if he will make a statement;

  (2) if he proposes to improve the salaries of pharmacy technicians; and if he will make a statement.

  Mr. Grist
  The salaries of pharmacy technicians are negotiated within committee "C" of the professional and technical staffs "B" Whitley council. The staff side has rejected an offer of a 5·5 per cent, increase in pay with effect from 1 April 1988, but further discussions are being arranged for later this month.

  In recognition of the difficulties which are being experienced in some parts of the country in the recruitment of staff for hospital pharmacies, the management side of the Whitley council is undertaking a review of the duties and grading structure of pharmacy technicians.

  Blood Supplies
  Mr. Barry Jones
  To ask the Secretary of State for Wales (1) if he will make a statement concerning the supply of blood to north Wales hospitals during the recent industrial dispute involving donor staff; and if he will list the numbers of staff employed in the blood donor service as it affects north Wales;

  (2) what is the requirement of individual blood units for (a) Clwyd and (b) Gwynedd per week for the efficient running of the donor centres; and if he will list the numbers of individual donors for each of the months of 1988.

  Mr. Grist
  The collection of blood from donors and the supply of blood products to hospitals in Clwyd and Gwynedd is undertaken by the Mersey regional blood transfusion service. The information requested is not held by the Welsh Office although the Department maintains contact with the north Wales health authorities on the adequacy of blood supplies.

  ROSPA (Wales)
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will increase his grant aid to the Royal Society for the Prevention of Accidents (Wales); how much he has given annually in real terms since 1979; what are his plans for funding levels for the years 1989–90, 1990–91 and 1991–92; and if he will make a statement.
  985
  Mr. Wyn Roberts
  In order to secure best value for money, the amount of grant in aid to the Royal Society for the Prevention of Accidents up to 1992 is being reviewed and negotiations are still in progress. The annual grant paid since 1979 in real terms is as follows:

  £

  1979–80

  68,892

  1980–81

  52,099

  1981–82

  46,815

  1982–83

  51,584

  1983–84

  54,742

  1984–85

  52,424

  1985–86

  49,469

  1986–87

  47,851

  1987–88

  45,558

  Mr. Barry Jones
  To ask the Secretary of State for Wales how many representations he has received concerning the funding of the Royal Society for the Prevention of Accidents (Wales); and if he will make a statement.

  Mr. Wyn Roberts
  My right hon. Friend and I have received 15 representations from 12 different sources.

  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will meet the Road Accident Prevention Federation for North and South Wales to discuss grant aid to the Royal Society for the Prevention of Accidents (Wales) up to 1991–92; and if he will make a statement.

  Mr. Wyn Roberts
  The amount of grant in aid given is a matter for discussion between the Royal Society for the Prevention of Accidents and the Welsh Office. The Road Accident Prevention Federation for North and South Wales has conveyed its views in writing to my right hon. Friend and these will be taken into account.

  Road Accident Statistics
  Mr. Barry Jones
  To ask the Secretary of State for Wales how many fatal road accidents in Wales there were in each of the years 1979–88; and if he will make a statement.

  Mr. Wyn Roberts
  The number of fatal road accidents is as follows:

  Year

  Number

  1979

  295

  1980

  252

  1981

  243

  1982

  260

  1983

  228

  1984

  227

  1985

  224

  1986

  214

  1987

  196

  1988 to June

  193

  1 provisional.

  The downward trend is most encouraging.

  Carers
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will list those health authorities and social service departments that make provision for carers in Wales; what initiatives he will take to ensure that the needs of carers in the community are recognised; and if he will make a statement.
  986
  Mr. Grist
  It is necessary for all health and social services authorities to take into account the needs of carers in providing suitable care for their patients and clients. We have made this clear in our published strategies and initiatives for those with mental handicaps, the elderly and our proposals in respect of the development of mental illness services. Income support for carers is available in certain circumstances unde;r arrangements which are the responsibility of my right hon. Friend the Secretary of State for Social Services.

  Mr. Barry Jones
  To ask the Secretary of State for Wales what estimate he has on the number of people who would enter long-term hospitals or institutional care if carers were not available; and if he will make a statement.

  Mr. Grist
  Information is not available on the form requested. There can be no doubt, however, that without the care and support which families and friends often provide, many more people would require additional support from caring agencies. We would not accept, however, that this would necessarily lead to admission to long-term hospital or institutional care. Our policies and programmes are designed to ensure that care is provided in people's own homes and communities rather than in institutions, wherever possible.

  Clwyd Community Health Council
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will meet the Clwyd South community health council to discuss the implications of charging for dental and optical examinations in Clwyd; and if he will make a statement.

  Mr. Grist
  I do not believe that a meeting with Clwyd CHC on this matter would serve any useful purpose, since it has been debated so thoroughly both inside and outside Parliament.

  Dental and Optical Examinations (Pensioners)
  Mr. Barry Jones
  To ask the Secretary of State for Wales what is his estimate of the number of pensioners in(a) Clwyd, (b) Wales, (c) the United Kingdom and (d) Alyn and Deeside district council area who will be (i) obliged to pay for dental and optical examinations and (ii) exempt; and if he will make a statement.

  Mr. Grist
  This information is not available.

NATIONAL FINANCE

  Local Pay Additions
  Mr. Sean Hughes
  To ask the Chancellor of the Exchequer if he will provide the latest available figures for Her Majesty's Stationery Office for(a) numbers of staff in receipt of local pay additions, by grade, (b) location of those offices awarding local pay additions and (c) annual cost.

  Mr. Brooke
  The following is the information:

  Number

  AO

  89

  AA

  17

  Senior Personal Secretary

  1

  987

  Number

  Personal Secretary

  4

  Typist

  1

  (a) Numbers of staff in receipt of local pay additions, by grade.

  (b) Location of those offices awarding local pay additions:

  Holborn Bookshop, 49 High Holborn, London, WC1V 6HB

  Britannia House, 7 Trinity Street, London, SE1 IDA

  Hansard Press, 11 Steedman Street, London, SE17 3AF

  Parliamentary Press, Mandela Way, London, SE1 5SS

  Macaulay Press, Unit 2A, Tideway, 87 Kirtling Street, London, SW8
  5BP

  Parliamentary Liaison Office, Lower Ground Floor, Norman Shaw

  Building (North), Victoria Embankment, London, SW1A 2JF

  Golden Cross House, Duncannon Street, London, WC2N 4JF

  Controller's Suite, Room 1–15, 24 Whitehall, London, SW1A 2ED

  Publications Centre, 51 Nine Elms Lane, London, SW8 5DR

  (c) Annual cost:

  1 June 1988–31 March 1989–£50,000

  1 May 1989–31 March 1990–£63,400

  Gross Income
  Mr. David Nicholson
  To ask the Chancellor of the Exchequer what proportion of gross income was represented by the amount of income tax and employees' national insurance contributions payable on incomes(a) half average earnings, (b) average earnings and (c) 1½ times average earnings in the financial years 1963–64, 1973–74, 1983–84 and 1988–89, using the latest data on average earnings for 1988–89.

  Mr. Norman Lamont
  The information is in the tables.

  Income tax and income tax and NIC as percentages of Gross Earnings

  Multiples of average earnings1

  0·5

  1

  1·5

  Single person

  1963–64

  Tax

  7·3

  17·3

  21·6

  Tax & NIC

  13·6

  22·4

  25·0

  1973–74

  Tax

  14·2

  22·1

  24·7

  Tax & NIC

  21·0

  27·9

  29·2

  1983–84

  Tax

  18·0

  24·0

  26·0

  Tax & NIC

  27·0

  33·0

  34·2

  1988–892

  Tax

  14·8

  19·9

  21·6

  Tax & NIC

  23·8

  28·9

  29·1

  Married3 couple

  1963–64

  Tax

  1·3

  12·5

  18·4

  Tax & NIC

  7·6

  17·6

  21·8

  1973–74

  Tax

  9·4

  19·7

  23·1

  Tax & NIC

  16·2

  25·6

  27·6

  1983–84

  Tax

  11·1

  20·6

  23·7

  Tax & NIC

  20·1

  29·6

  32·0

  1988–892

  Tax

  8·9

  17·0

  19·6

  Tax & NIC

  17·9

  26·0

  27·1

  1 Earnings are average earnings of full-time adult males working a full week on adult rates in all occupations

  2 Provisional

  3 Assumes wife not in paid employment

  Balance of Payments
  Mr. Harry Greenway
  To ask the Chancellor of the Exchequer what is his latest estimate for the balance of payments in the current year; and if he will make a statement.

  Mr. Major
  My right hon. Friend the Chancellor of the Exchequer will be making a new forecast in his autumn statement.

  PAYE and VAT
  Mr. Robert Banks
  To ask the Chancellor of the Exchequer what has been the outcome of the pilot study of joint pay-as-you-earn and value added tax visits which the Inland Revenue and Customs and Excise undertook in the Nottingham area.

  Mr. Norman Lamont
  The pilot study, which took place in the last quarter of 1986, was designed to test the Keith committee's suggestion that joint visits, rather than separate visits for PAYE and VAT purposes, could be mutually beneficial to traders and to the Inland Revenue and Customs and Excise.

  The findings are that, while joint visits are feasible and acceptable to most of the traders who received them, in only 2 per cent, of cases would a joint visit replace two separate visits. So, in most instances, a joint visit would add to, rather than reduce, the inspections of a business's records. Furthermore, a system of joint visits would add substantially to the departments' costs.

  In the light of these results, it is not proposed to implement a programme of joint visits at this stage. But both departments will continue to improve the information and other services they provide, especially to small businesses.

  European Communities (Finance) Bill
  Mr. Thurnham
  To ask the Chancellor of the Exchequer when notes on clauses for the European Communities (Finance) Bill will be made available to the House.

  Mr. Brooke
  Copies have been placed in the Vote Office today.

  EC (Advance Payments and Overdraft Facilities)
  Mr. Yeo
  To ask the Chancellor of the Exchequer if he will make a statement about the advance payments and overdraft facilities granted by the United Kingdom to the European Commission in August, September and October.

  Mr. Brooke
  In each of the three months August, September and October the Commission had cash flow problems because its spending obligations exceeded the revenue available under the 1988 budget. The Commission therefore requested member states, by reference to article 10(2) of regulation 2891/77, to advance by one month the payment of own resources other than VAT. The United Kingdom accordingly made advance payments from the Consolidated Fund on 22 August, 20 September and 20 October, under section 2(3) of the European Communities Act 1972.

  In August and September the Commission also overdrew its accounts with member states, by reference to article 12(2) of Council regulation 2891/77. The overdraft with the United Kingdom currently totals £159·8 million. The Government have met this obligation from the Consolidated Fund, again in accordance with section 2(3) of the European Communities Act 1972. Overdrafts are unwound by corresponding reductions in subsequent own resources payments.

  The table shows the level of advance payments made under article 10(2) in August, September and October; and the extent of the outstanding overdraft under article 12(2) at the end of each month.
  989

  £ million

  August

  September

  October

  Early payment of non-VAT own resources under article 10(2) (reimbursed in the following month)

  163·8

  145·8

  140·4

  End-month overdraft under article 12(2)

  96·9

  3·9

  n/a

  The total amount which the Community is authorised to spend in 1988 remains as set out in the 1988 budget and supplementary budget. There is, therefore, no net addition to public expenditure arising from the Commission's use of these advance payment and overdraft facilities.

  The Community's cash flow difficulties in 1988 should be resolved when member states are in a position to make available their contributions under the intergovernmental agreement on the financing of the 1988 budget.

  Tax Cuts
  Mr. Matthew Taylor
  To ask the Chancellor of the Exchequer if he will estimate the effects of the tax cuts announced in the Budget, on the rate of inflation.

  Mr. Lilley
  [holding answer 19 October 1988]: The budget gave no fiscal stimulus to inflation. It left the overall burden of taxation as a percentage of GDP unchanged. In the longer run, the tax reforms and reductions in tax rates, by improving supply, will help the Government to achieve their aim of reducing inflation.

  Crown Estate Commissioners
  Mr. Macdonald
  To ask the Chancellor of the Exchequer what are the annual salaries and allowances payable to each of the part-time Crown Estate Commissioners.

  Mr. Lawson
  [holding answer 19 October 1988]: The combined salaries and allowances payable to the part-time Crown Estate Commissioners are as follows:

  First Commissioner and Chairman of the Board—£25,524 a year.

  Two part-time Commissioners—£9,940 a year each.

  Four part-time Commissioners—£7,940 a year each

HEALTH

  Occupational Therapists
  Mr. Barry Jones
  To ask the Secretary of State for Health what initiatives he will take to enhance the status and salary of occupational therapists; how many occupational therapists there are in(a) the United Kingdom (b) England and (c) Wales; how many have qualified in each of the years 1979 to 1988; what plans he has to increase occupational therapist trainee places; and if he will make a statement.

  Mr. Mellor
  The remuneration of occupational therapists is determined following recommendations of the pay review body covering nurses, midwives, health visitors and the professions allied to medicine which was set up by my right hon. Friend the Prime Minister in 1983. Since that date the average rates of pay of occupational therapists, in common with those of the other professions 990
  allied to medicine, have increased by 24·1 per cent, in real terms. This reflects the importance that the Government place on the work done by these groups of staff.

  At 10 October 1988 there were 10,540 occupational therapists in the United Kingdom on the state register maintained by the occupational therapists board of the Council for the Professions Supplementary to Medicine. Separate figures for England and Wales are not available.

  Numbers of students qualifying in the years 1979 to 1987 (figures for 1988 are not yet available) are as follows:

  Number

  1979

  463

  1980

  508

  1981

  538

  1982

  557

  1983

  593

  1984

  592

  1985

  673

  1986

  667

  1987

  660

  On 15 May 1987 the Government announced detailed plans to increase the number of occupational therapy training places. The number of funded training places is expected to have risen by 100 a year by 1990–91. In addition, health authorities are funding a number of conversion courses for occupational therapy helpers and the Department is partly funding a shortened course for graduates at the London hospital.

  The joint DH-NHS manpower planning advisory group has commissioned a study of staffing and skill mix in occupational therapy. Preliminary results will be available in late 1989 and this will enable us to review the need for training places.

  Nursing Sisters
  Mr. Spearing
  To ask the Secretary of State for Health What is the approximate number of nursing sisters who under the current proposals will be designated(a) as being in charge of a ward or being a senior sister in an assignment and (b) those designated as having equal responsibility at the same proposed grade, together with the respective figures which reflect the current distribution of responsibilities; and what representations he has received from persons with extensive nursing qualifications and experience which favours the change to sole responsibility, giving their names and the terms of such representation.

  Mr. Mellor
  On the information currently available, a clear majority of hospital sisters and about two out of three of all sisters and charge nurses in England will be graded at the higher level on the basis that they carry continuing responsibility for the management of a ward or that they are responsible for the provision of specialist clinical advice. Returns from regional health authorities indicate that there are, in addition, some 3,500 wards where two or more sisters currently share responsibility for the management of the ward and where authorities plan to create one post which will carry continuing responsibility and attract the higher grading. Once that process is complete, some three out of four sisters and charge nurses will be on the higher grade and about two out of three of those working in hospitals.

  I understand from regional chairmen and general managers that a large majority of nurse managers and

  991
  senior nurses have expressed support for the principle of one post carrying continuing responsibility for a ward as set out in the new grading definitions.

SOCIAL SECURITY

  Benefits and Allowances
  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on industrial disablement benefit in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure that was due to(a) increase in real value of the basic pension, (b) increase in number of beneficiaries and (c) other factors.

  Mr. Scott
  Expenditure on industrial disablement benefit (including special hardship allowance and its successor, reduced earnings allowance), at 1987–88 prices, is estimated to have been £448 million in 1978–79 and £449 million in 1987–88. Available information is that an increase of £22 million due to the real increase in average awards of benefit was offset by a decrease of £21 million due to a fall in the number of beneficiaries over the period.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on invalidity benefit in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure which was due to(a) an increase in real value of the basic pension, (b) increased payments of additional component, (c) and increase in number of beneficiaries and (d) other factors.

  Mr. Scott
  Expenditure on invalidity benefit at 1987–88 prices grew from £1,705 million in 1978–79 to £2,985 million in 1987–88. Of this increase, £1,120 million (87 per cent.) was attributable to increased numbers of beneficiaries; and £160 million (13 per cent.) to a real increase in the average amount of benefit paid. This latter increase was the net result of £260 million growth in additional pension offset by £100 million attributable to the following changes in the other elements of invalidity benefit, including basic pension: adjustment of child dependancy increases to take account of child benefit; the 5 per cent, abatement of invalidity pension from November 1980 to September 1985; and the reduction of invalidity allowance in respect of any entitlement to additional pension.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on attendance allowance in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure that was due to(a) an increase in real value of the allowance, (b) an increase in number of beneficiaries, (c) any change in the proportion of beneficiaries receiving the higher rate and (d) other factors.

  Mr. Scott
  At 1987–88 prices, expenditure on attendance allowance rose from £340 million in 1978–79 to £850 million in 1987–88. Of this increase, £475 million (93 per cent.) was attributable to increased numbers of beneficiaries and £35 million (7 per cent.) to a real increase in the average amount of benefit paid. This latter figure subsumes the expenditure consequences of a change in the 992
  proportion of higher rate allowances from 43 per cent, of total awards in December 1979 to 40 per cent, in March 1987.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on mobility allowance in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure that was due to(a) the difference between the increase in the retail price index and the index of motoring costs, (b) and increase in the number of beneficiaries and (c) other factors.

  Mr. Scott
  Expenditure on mobility allowance, at 1987–88 prices, rose from £95 million in 1978–79 to £595 million in 1987–88. Of this increase, £400 million (80 per cent.) was attributable to increased numbers of beneficiaries; and £100 million (20 per cent.) to a real increase in the average amount of benefit paid. Any difference between the rise in the retail price index and motoring costs did not contribute directly to the increased expenditure.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on NCIP/severe disablement allowance in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure that was due to(a) an increase in real value of the allowance, (b) an increase in the number of beneficiaries, (c) the change in the qualifying conditions and (d) other factors.

  Mr. Scott
  The expenditure on non-contributory invalidity pension, at 1987–88 prices, was £140 million in 1978–79. This benefit was replaced by severe disablement allowance and expenditure on the latter in 1987–88 was £305 million. Of this increase, £105 million (64 per cent.) was attributable to increased numbers of beneficiaries; and £60 million (36 per cent.) to a real increase in the average amount of benefit paid. I regret that detailed information is not readily available on which to base a reliable analysis of how far changes in the qualifying conditions or other factors contributed to these increases.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on invalid care allowance in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure that was due to(a) an increase in real value of the allowance, (b) an increase in the number of beneficiaries and (c) other factors.

  Mr. Scott
  At 1987–88 prices, expenditure on invalid care allowance rose from £8 million in 1978–79 to £165 million in 1987–88. Of this, £22 million (14 per cent.) was attributable to a real increase in the average amount payable whilst £135 million (86 per cent.), attributable to increased numbers of beneficiaries, was largely the result of the extension of the allowance to married women in 1986.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on war disablement pension in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the change in expenditure that was due to(a) an increase in real value of the basic pension, (b) a change in number of beneficiaries and (c) other factors.
  993
  Mr. Peter Lloyd
  Estimated expenditure on war disablement pensions and allowances, including gratuities for disablement of less than 20 per cent, at 1987–88 prices, was £452 million in 1978–79 and £399 million in 1987–88. It is estimated that there was a reduction in expenditure of about £132 million, or 29 per cent., due to a reduction in the number receiving war pensions and allowances from 287,000 at December 1978 to 203,000 at December 1987. This was offset by an estimated increase in expenditure of about £79 million, or 17 per cent., due to an increase in the real value of the average war pension and allowances, mainly because of the introduction of a new allowance, mobility supplement, in 1983 and a 12 per cent, increase in the proportion of war pensioners receiving an age allowance.

  Mr. Alfred Morris
  To ask the Secretary of State for Social Security if he will give the expenditure on supplementary benefit (housing) paid to long-term sick and disabled people in 1978–79 and 1987–88 at 1987–88 prices; and if he will state the amount and proportion of the increased expenditure that was due to(a) an increase in real value of the benefits, (b) an increase in number of beneficiaries and (c)other factors.

  Mr. Peter Lloyd
  We do not keep records specifically of long-term sick and disabled people in receipt of supplementary benefit, only of people whose reason for claiming supplementary benefit was sickness. Information for 1978 and 1987 is not in any case comparable because of the introduction of the housing benefit scheme in 1982–83 which now provides help with rent and rates. The term "housing costs" in 1978 therefore includes rent and rates as well as mortgage interest, ground rent, and so on, whereas the term "housing costs" in 1987 excludes rent and rates.

  The information available, based on the annual statistical inquiries, shows that the amount of housing costs included in the assessments of people claiming supplementary benefit because they were sick was £42 million in 1978 and £39 million in 1987. These figures do not reflect the amount actually paid in supplementary benefit for housing costs—this would have been less if the claimant had other income or had any dependent adults living in his household.

  In 1987–88 housing benefit expenditure for people in receipt of supplementary benefit because of sickness amounted to some £200 million.

NORTHERN IRELAND

  Abortion
  Mr. Nicholas Bennett
  To ask the Secretary of State for Northern Ireland, pursuant to the reply of 22 July,Official Report, column 563, what information he has about the policy of the Northern Ireland branch of the British Medical Association on the extension of the Abortion Act 1967 to Northern Ireland.

  Mr. Needham
  I understand that the Northern Ireland branch of the British Medical Association follows the national policy of the association and therefore does not have a separate policy on the extension of the Abortion Act 1967 to Northern Ireland.

  Regent House School, Newtownards
  Mr. John D. Taylor
  To ask the Secretary of State for Northern Ireland how many pupils at Regent House school, Newtownards, live in the constituencies of(a) Strangford, (b) South Down, (c) North Down, (d) Belfast, East and (e) elsewhere.

  Dr. Mawhinney
  The information requested is not available.

  Criminal Law Reform
  Mr. Lewis Stevens
  To ask the Secretary of State for Northern Ireland if he has any proposals for the reform of the general criminal law in Northern Ireland; and if he will make a statement.

  Mr. Tom King
  [pursuant to his reply, 20 July 1988, c. 641.]: I have today laid before Parliament a draft Order in Council which proposes amending the general criminal law of Northern Ireland relating to evidence both before and during trial.

  The provisions of this draft order would allow the courts to attach whatever weight they think proper to the fact that someone remained! silent when questioned—for example, where circumstances were such that an innocent person might reasonably have been expected to protest his innocence and draw attention to facts which served to establish it.

  The draft order proposes amending the criminal law to permit the courts in Northern Ireland to draw whatever inferences would be proper from the fact that an accused remained silent in four situations. Two are dealt with by provisions that have the same effect as provisions recommended by the Criminal Law Revision Committee in 1972. The first is the "ambush" where, having remained silent during police questioning, the accused offers an explanation of his conduct for the first time at his trial when he might reasonably have been expected to offer it when being questioned. The second provides that once the prosecution has established that there is a case to answer, the accused should be warned that he will be called to give evidence and that if he should refuse to do so the court may draw such inferences as would appear proper.

  The other two situations are covered in provisions which have the same effect as provisions in the Criminal Justice Act enacted by the Irish Parliament in 1984. One allows a court to draw such inferences as would appear proper from an accused's failure or refusal to explain to the police certain specified facts such as substances or marks on his clothing. The other makes similar provision where an accused fails or refused to account to the police for his presence at a particular place.

  My right hon. Friend the Home Secretary has also announced today his intention to bring forward legislation on this subject for England and Wales at the earliest opportunity.

  Royal Belfast Hospital for Sick Children
  Rev. Martin Smyth
  To ask the Secretary of State for Northern Ireland when he expects the remainder of the £4·5 million promised for the upgrading of the Royal Belfast hospital for sick children to be made available; what sums have been spent so far and on what; when he expects work to be completed; and if he will make a statement.
  995
  Mr. Needham
  [holding answer 19 October 1988]: The present position regarding the programme of seven improvement schemes for the Royal Belfast hospital for sick children is as follows:

  Cost (£000)

  Spent to date (£000)

  Completion date

  Extension to X-Ray Department

  441

  441

  August 1983

  Barbour Ward

  200

  200

  November 1984

  Day Care Unit

  578

  578

  January 1987

  Engineering Services

  340

  340

  October 1987

  Musgrave & Paul Ward

  1,347

  638

  March 1989

  Total

  2,906

  2,197

  The two remaining schemes, the operating theatres/ intensive care unit and the out-patients department/A&E department have now been presented by the Eastern health and social services board as a composite scheme which is currently being considered. I cannot state at this time when this scheme will be completed.

  Irish Sea
  Mr. John D. Taylor
  To ask the Secretary of State for Northern Ireland on what basis tests are carried out to establish the level of pollution in the sea off the Northern Irish coast; whether he seeks the opinion of independent monitoring organisations; and if he will make a statement about the level of pollution in the water around the coast of Northern Ireland.

  Mr. Needham
  [holding answer 19 October 1988]: Tests to assess the level of pollution in the sea off the Northern Irish coast are carried out on the basis of requirements set out in the relevant national legislation, EC directives and international conventions and for the purpose of public reassurance. The opinion of independent monitoring organisations is not sought. The tests have shown that the water around the coast of Northern Ireland is generally of good quality.

EDUCATION AND SCIENCE

  Departmental Staff
  Mr. Sean Hughes
  To ask the Secretary of State for Education and Science what are the latest available figures for his Department in the London pay area of the number of vacancies by grade and the proportion this is of the grade complement in London.

  Mrs. Rumbold
  On 1 October 1988 there were the following vacancies against the formal complement for administrative and support staff in the Department's London divisions. The proportions of the grade complement that this represents are shown in brackets.

  Numbers

  (per cent.)

  Grade 5

  1

  (2)

  Grade 7

  4

  (3)

  Senior Executive Officer

  3

  (6)

  Senior Professional and Technical Officer

  4

  (25)

  Higher Executive Officer

  8

  (4·5)

  Information Officer

  1

  (8)

  Executive Officer

  16

  (7)

  996

  Numbers

  (per cent.)

  Graphics Officer

  1

  (17)

  Librarian

  1

  (50)

  Assistant Librarian

  2

  (33)

  Personal Secretary

  2

  (2)

  Administrative Officer

  15

  (7)

  Administrative Assistant

  10

  (9·5)

  Paperkeeper

  5

  (15)

  Reprographics Operator

  3

  (15)

  Senior Messenger

  1

  (7)

  Typist

  6

  (9)

  Mr. Sean Hughes
  To ask the Secretary of State for Education and Science if he will provide the latest available figures for his Department for(a) numbers of staff in receipt of local pay additions, by grade, (b) location of those offices awarding local pay additions and (c) annual cost.

  Mrs. Rumbold
  The number of staff by grade awarded local pay additions in my Department is as follows:

  Number

  Administrative Officer

  200

  Administrative Assistant

  105

  Senior Personal Secretaries

  9

  Personal Secretaries

  104

  Typing Managers

  9

  Typists

  79

  506

  The awards are made to those in the above grades working in central London, Croydon and Isleworth. Of the above, one administrative assistant, one personal secretary and four typists are at the Croydon local office and one personal secretary and three typists are at the Isleworth local office. The full-year cost is estimated to be £186,000.

  Students (Fees)
  Mr. Straw
  To ask the Secretary of State for Education and Science (1) whether he has any plans to introduce arrangements so as to approve proposals from the Universities Funding Council by which home students or their families would be required to pay the whole or a part of their tuition fees for final degree and other advanced further education courses at universities, polytechnics and other colleges;

  (2) whether he has any plans to permit certain universities to charge higher fees, payable by the student, for tuition.

  Mr. Kenneth Baker
  There is a developing debate on the method of funding higher education. The Government have no proposal to require students in receipt of mandatory awards to meet part of their tuition fees. Institutions do not need permission to charge tuition fees higher than those met under the mandatory awards arrangements.

  Surplus School Places
  Mr. Straw
  To ask the Secretary of State for Education and Science what steps he has taken to encourage local education authorities to reduce surplus school places; and what financial mechanics are in force to support this.

  Mr. Kenneth Baker
  Circular 3/87, issued in May 1987, emphasised the high cost of underused capacity at schools
  997
  with a substantial proportion of surplus places, urged LEAs to consider rationalising provision by closing and amalgamating schools where appropriate, and set new national targets, since revised, for the removal of surplus places.

  Mr. Straw
  To ask the Secretary of State for Education and Science what estimate he makes of the number of surplus school places; and what savings would be achieved if these were removed.

  Mr. Kenneth Baker
  It is estimated that in January 1988 there were approximately 620,000 surplus primary school places and 800,000 surplus secondary school places in England. Savings in premises-related costs of approximately £240 million a year would be achieved if these places were removed.

  Maintained Schools (Expenditure)
  Mr. Straw
  To ask the Secretary of State for Education and Science (1) what allocation or planning figure has been made, for capital expenditure for grant maintained schools, for the current and any subsequent financial year;

  (2) by what criteria he proposes to judge applications by grant-maintained schools for capital expenditure; and in what way these criteria will differ from those he applies in respect of approvals for capital expenditure by local education authorities on their schools.

  Mr. Kenneth Baker
  There will be no grant-maintained schools in the current financial year. Allocation will be made for future financial years; the total will depend upon the number of schools. The needs of the first grant-maintained schools will be considered on a case-by-case basis. As numbers build up, schools within the grant-maintained sector will participate in a bidding system similar to that now operated for voluntary-aided schools.

  Departmental Officials (Statistics)
  Mr. Straw
  To ask the Secretary of State for Education and Science if he will list in the Official Report the number of officials, including Her Majesty's inspectors, their grades and duties, who work for the whole or part of their time on grant-maintained schools; and if he will estimate their cost.

  Mr. Kenneth Baker
  The Department has established a division to deal with policy on grant-maintained schools. The division currently consists of nine staff (one grade 5, one grade 7, one senior executive officer, one higher executive officer, two executive officers, one personal secretary and two administrative officers) working full time on all matters relating to grant-maintained schools. Their estimated annual salary cost at 1988–89 prices is about £150,000. Other members of the Department, including HM inspectorate, will in the course of their wider territorial, specialist or other policy functions devote some time to grant-maintained schools matters. It is not possible separately to quantify or cost this element of their work.

  Grant-Maintained Schools Trust
  Mr. Straw
  To ask the Secretary of State for Education and Science what grant from public funds has been made to the Grant-Maintained Schools Trust.
  998
  Mr. Kenneth Baker
  The Grant-Maintained Schools Trust is not at present in receipt of any grant from public funds. If the trust were in due course to make an application to my Department for financial assistance towards specific activities intended to provide support or advice for schools which had acquired grant-maintained status, the Department would be prepared to consider it.

  School Closures and Reorganisations
  Mr. Straw
  To ask the Secretary of State for Education and Science if he will list in the Official Report details of all applications made to him since June 1986 for the closure or reorganisation of any school in England, with the name place and type of school, the local authority area, the number of pupils of the school, the decision which he made and whether it was for closure or reorganisation, the dates when the application was first submitted to his Department, and when his final decision was made, and including any applications still pending.

  Mr. Kenneth Baker
  I will write to the hon. Member as soon as possible.

AGRICULTURE, FISHERIES AND FOOD

  Research and Development
  Mr. Haynes
  To ask the Minister of Agriculture, Fisheries and Food if he will summarise the results of his Department's review of funding for agricultural research and development.

  Mr. Darling
  To ask the Minister of Agriculture, Fisheries and Food if he will summarise the results of his Department's review of funding for agricultural research and development.

  Mr. MacGregor
  The Barnes review of the agriculture departments' R and D programmes is part of a wider review of priorities for all Government-funded R and D against our belief that industry should bear the responsibility for funding work which is close to commercial application and thus of direct benetit to it. Consultations are proceeding on the funding of near market R and D with all sectors of industry involved. My noble Friend has asked for considered responses from each sector by the end of this month. Further discussions will then take place.

  Mr. Buckley
  To ask the Minister of Agriculture, Fisheries and Food what is the current annual financial commitment by the agriculture industry to agricultural research and development.

  Mr. Allen McKay
  To ask the Minister of Agriculture, Fisheries and Food what is the current annual financial commitment by the agriculture industry to agricultural research and development.

  Mr. MacGregor
  The agricultural and horticultural industries fund about £20 million of R and D annually, about half of which is raised directly from producers through levies and similar arrangements and the remainder through contributions or contracts from producer organisations. The industries supplying agriculture also undertake substantial investment in R and D, estimated to be in the order of £200 million a year.
  999
  Mr. Maxton
  To ask the Minister of Agriculture, Fisheries and Food by how much he expects the financial commitment of the industry towards agricultural research and development to rise over the next five years; and if he will make a statement.

  Mr. Home Robertson
  To ask the Minister of Agriculture, Fisheries and Food by how much he expects the financial commitment of the industry towards agricultural research and development to rise over the next five years; and if he will make a statement.

  Mr. Donald Thompson
  I cannot yet say. We have asked industry to provide considered first responses by the end of October to our proposals for withdrawal of Government funding for near market R and D.

  Mr. Corbyn
  To ask the Minister of Agriculture, Fisheries and Food what proposals he has for modifying research and development programmes in agriculture and fisheries; and if he will make a statement.

  Mr. Donald Thompson
  Advice from the Priorities Board for R and D in agriculture and food, together with the regular review cycle of all the agriculture and fisheries research programmes, provides a strategic view of the national research needs of these industries. In addition, we have recently undertaken an internal review of expenditure by the agricultural departments on R and D to identify near market work. It remains our policy that the Government should be responsible for funding basic and strategic research as well as work in support of policy and statute; but we believe that near market work which offers the prospect of commercial application within a short enough time scale to justify investment by industry should be funded by industry. Detailed information about our near market programmes has been made available to industry and meetings have been held with the sectors concerned but final decisions have not yet been taken.

  Mr. Doran
  To ask the Minister for Agriculture, Fisheries and Food what is the latest estimated total level of spending by his Department on agricultural research and development in 1988–89.

  Mr. Donald Thompson
  The latest available estimate of spending by my Department on agricultural research and development in 1988–89 is £87·3 million on a full economic cost basis out of an estimated total Government spend on R and D on agriculture, fisheries and food for 1988–89 somewhat in excess of £225 million. Further information on R and D funded by my Department is given in the "Annual Review of Government Funded R and D 1988".

  Mr. Boyes
  To ask the Minister for Agriculture, Fisheries and Food what was the average total amount of public spending on agricultural research and development in each of the last five years.

  Mr. Donald Thompson
  Public spending on agricultural research and development in the last five years, on a full economic cost basis, was as follows:

  £ million

  1983–84

  166·1

  1984–85

  170·0

  1985–86

  165·0

  1986–87

  165·7

  11987–88

  162·3

  Average

  165·8

  1000
  1 Provisional

  Details of spending by each Department and by the research councils are published in the "Annual Review of Government Funded R and D."

  Meat and Livestock Commission
  Mr. Latham
  To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Meat and Livestock Commission; and what matters were discussed.

  Mr. Donald Thompson
  My right hon. Friend and I maintain regular contacts with the chairman of the Meat and Livestock Commission to discuss matters of mutual interest.

  Dry Sow Stall
  Mr. Hanley
  To ask the Minister of Agriculture, Fisheries and Food what discussions he has had with the pig industry on progress towards the abolition of the dry sow stall.

  Mr. Donald Thompson
  My Department has consulted the industry and other interests on the Farm Animal Welfare Council's assessment of pig production systems.

  Council of Agriculture Ministers
  Mr. George Howarth
  To ask the Minister of
  Agriculture, Fisheries and Food what topics were discussed at the last Council of European Community Agriculture Ministers; and if he will make a statement.

  Mr. Nigel Griffiths
  To ask the Minister of Agriculture, Fisheries and Food what was the outcome of the last European Community Council of Agriculture Ministers; and if he will make a statement.

  Mr. MacGregor
  Decisions were taken on olive oil consumption aid which will produce a saving of 102 million ecu. Other matters were discussed but no decision taken.

  Small Farmers Association
  Mr. McLoughlin
  To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Small Farmers Association; and what subjects they discussed.

  Mr. Ryder
  My right hon. Friend has not met the chairman recently. But he is kept regularly in touch with the Small Farmers Association's views.

  Council of Fisheries Ministers
  Mr. Wray
  To ask the Minister of Agriculture, Fisheries and Food when he last attended a meeting of the European Community's Council of Fisheries Ministers; and which subjects were discussed.

  Mr. Donald Thompson
  Together with my noble Friend, the Minister of State, Scottish Office, I represented the United Kingdom at the meeting of the Council of Fisheries Ministers on 19 and 20 October 1988 in Luxembourg. The Council dealt with many issues. In particular, we welcome the agreement reached on improvements to the control
  1001
  regulation to facilitate better enforcement. The Commission is committed to produce proposals to increase the precautionary TAC for Channel cod. For reasons of conservation the Council agreed to the extension of the mackerel box off our south-west coast and to a reduction in cod quotas off Svalbord and north Norway. We also raised again the importance of having flexibility for fishing for Western mackerel across the 4° W line.

  Mr. Harry Barnes
  To ask the Minister of Agriculture, Fisheries and Food when he next expects to attend a meeting of the European Community's Council of Fisheries Ministers; what matters he expects to discuss; and if he will make a statement.

  Mr. Donald Thompson
  The next EC Council of Fisheries Ministers is to be held on 28 November 1988. Present plans are that fish product guide prices for 1989 are to be discussed. Other items have yet to be tabled.

  Non-alcoholic Drinks
  Mr. Thurnham
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement about the current level of sales of non-alcoholic beer and wine.

  Mr. Ryder
  There are no official statistics, but these sales have clearly increased substantially over the last few years. Technical developments in the industry have contributed to improvements in quality of the products. The recently announced reductions in excise duties chargeable on lower strength drinks should encourage the development of this sector.

  United Kingdom Harvest
  Mr. Bowis
  To ask the Minister of Agriculture, Fisheries and Food if he can give an estimate of the likely size of the current United Kingdom harvest.

  Mr. Yeo
  To ask the Minister of Agriculture, Fisheries and Food what is his latest forecast for the 1988 cereal harvest.

  Mr. Boswell
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the 1988 harvest.

  Mr. Parry
  To ask the Minister of Agriculture, Fisheries and Food what estimates he has of the size of the 1988 harvest.

  Mr. MacGregor
  My Department currently estimates the 1988 cereals harvest in the United Kingdom to be 21 million tonnes.

  Milk Production Hormone
  Mr. Clay
  To ask the Minister of Agriculture, Fisheries and Food when he expects the current trials of the milk production hormone BST to end.

  Mr. Cunliffe
  To ask the Minister of Agriculture, Fisheries and Food when he expects to be able to announce the final results of the trials of the milk production hormone BST.

  Mr. Ryder
  These trials are being conducted by the companies concerned. Their purpose is primarily to 1002
  produce evidence as to the efficacy of the products. This evidence will be presented to the Veterinary Products Committee which advises Ministers on applications for product licences. It is up to the companies to decide when to submit their evidence to the Veterinary Products Committee.

  Mr. Martlew
  To ask the Minister of Agriculture, Fisheries and Food what advice he has received from the Veterinary Products Committee concerning the milk production hormone BST; and if he will make a statement.

  Mr. Ryder
  The Veterinary Products Committee was consulted, as is required under the provisions of the Medicines Act 1968, concerning applications for animal test certificates for BST. It advised that it was completely satisfied with all aspects of the safety of BST. So the present trials are designed to assess not the safety of the product, but its efficacy under field conditions.

  Two applications for product licences for BST have been received and these are being considered in accordance with the provisions of the Medicines Act and EC legislation.

  Tenant Farmers Association
  Mr. Knapman
  To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Tenant Farmers Association; and what subjects they discussed.

  Mr. Ryder
  Although I have not yet met the chairman of the Tenant Farmers Association, I am glad to say that I shall be addressing the association's annual conference next February. In the meantime, the Department is in regular touch with the association on a wide range of issues.

  National Farmers Union
  Miss Emma Nicholson
  To ask the Minister of Agriculture, Fisheries and Food when he last met the president of the National Farmers Union; and what subjects they discussed.

  Mr. Campbell-Savours
  To ask the Minister of Agriculture, Fisheries and Food when he last met representatives of the National Farmers Union; and what subjects were discussed.

  Mr. Sean Hughes
  To ask the Minister of Agriculture, Fisheries and Food when he last met representatives of the National Farmers Union; and what subjects were discussed.

  Mr. MacGregor
  I meet the president of the National Farmers Union frequently to discuss a wide range of agricultural matters. I last met him on 11 October.

  Mr. Knox
  To ask the Minister of Agriculture, Fisheries and Food when next he is due to meet the president of the National Farmers Union to discuss the dairy sector.

  Mr. Donald Thompson
  I have no present plans to do so.

  EC (Surplus Food and Drink)
  Mr. Canavan
  To ask the Minister of Agriculture, Fisheries and Food what is the total volume and value in pound sterling of surplus food and drink in the EEC.
  1003
  Mr. Ryder
  A note setting out the volume of EC intervention stocks of agricultural commodities, which includes only the surplus quantities held in United Kingdom and EC intervention and assisted private storage, is deposited in the Library of the House and is updated monthly. The estimated value of the EC stocks listed in the most recently deposited note, depreciated as now required following the February European Council agreement, is £3·12 billion.

  Whale Hunting
  Mr. David Martin
  To ask the Minister of Agriculture, Fisheries and Food what further steps he will take to encourage more humane whale hunting in the Faroes.

  Mr. Donald Thompson
  We continue to pursue this matter within the International Whaling Commission which we regard as the primary forum for the discussion of all whaling issues, including those concerning killing methods.

  British Wool Board
  Mr. Kirkhope
  To ask the Minister of Agriculture, Fisheries and Food when he last met with the chairman of the Wool Board; and what subjects they discussed.

  Mr. MacGregor
  I meet the chairman of the British Wool Board regularly to discuss matters relating to the marketing of wool in the United Kingdom.

  Horticultural Research
  Mr. Hind
  To ask the Minister of Agriculture, Fisheries and Food if he has any plans to meet the chairman of the Horticultural Development Council to discuss horticultural research; and if he will make a statement.

  Mr. Ryder
  My noble Friend the Baroness Trumpington met the chairman of the Horticultural Development Council in June to discuss horticultural research. The chairman continues to make an input into discussions through his membership of two Ministry working groups which are considering particular aspects of horticultural R and D (future HDC funding and rationalisation of facilities for horticultural research).

  Forestry Commission
  Mr. Page
  To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Forestry Commission; and what subjects they discussed.

  Mr. MacGregor
  I last met the chairman of the Forestry Commission on 3 October when we discussed progress in the task of clearing and replanting woodlands damaged by last October's storm in south-east England.

  Dairy Trade Council
  Mr. Brandon-Bravo
  To ask the Minister for Agriculture, Fisheries and Food when he last met the president of the Dairy Trade Council and what subjects they discussed.

  Mr. Donald Thompson
  My right hon. Friend the Minister and I have regular contacts with the president of the Dairy Trade Federation to discuss various issues affecting the dairy industry.

  Scottish National Farmers Union
  Mrs. Ray Michie
  To ask the Minister for Agriculture, Fisheries and Food when he last met the president of the Scottish National Farmers Union; and what matters were discussed.

  Mr. MacGregor
  I meet the president of the Scottish National Farmers Union whenever I go to Scotland, the last occasion being on 7 to 9 July. A range of matters were discussed. I also meet him from time to time elsewhere.

  Countryside Commission
  Mr. Batiste
  To ask the Minister for Agriculture, Fisheries and Food when he last met the chairman of the Countryside Commission; and what subjects they discussed.

  Mr. Ryder
  My right hon. Friend and other Ministers of my Department have frequently met the chairman of the Countryside Commission for discussions on a wide variety of issues. I look forward to meeting him soon.

  Beef and Sheepmeat Regimes
  Mr. John Greenway
  To ask the Minister for Agriculture, Fisheries and Food what progress has been made in the negotiations in Brussels on the review of the beef and sheepmeat regimes.

  Mr. MacGregor
  Little progress has been made on the basis of the proposals on sheepmeat produced by the EC Commission in October last year. The Commission has just presented proposals on beef and revised proposals on sheepmeat, but no texts are yet available. I expect negotiations to resume shortly.

  Potato Marketing Board
  Mr. Conway
  To ask the Minister for Agriculture, Fisheries and Food when he last met the chairman of the Potato Marketing Board; and what subjects they discussed.

  Mr. Ryder
  I refer my hon. Friend to the reply given to my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin) on 9 June, at column 677.

  Fishing Vessels
  Mr. Terry Lewis
  To ask the Minister for Agriculture, Fisheries and Food how many fishing vessels were constructed in the United Kingdom, with financial assistance from the Sea Fish Industry Authority and FEOGA grants in 1984, 1985, 1986 and 1987; and how many fishing vessels have been built or are under construction in the current year with this kind of financial assistance.

  Mr. Donald Thompson
  The information requested is as follows:

  Number of vessels awarded both United Kingdom and EC aid

  Number

  1984

  33

  1985

  43

  1986

  35

  1987

  24

  1988

  19

  1005
  The 1988 figure includes vessels whose construction is expected to be completed by the end of the year.

  Fishing Industry
  Mr. Dunnachie
  To ask the Minister of Agriculture, Fisheries and Food what recent discussions he has had with fishermen's organisations concerning the present circumstances of the fishing industry.

  Mr. Donald Thompson
  We are in frequent and regular touch with fishermen's organisations. Most recently this month I discussed the North sea fishing industry at a conference with representatives of the major organisations.

  Home Grown Cereals Authority
  Mr. Allan Stewart
  To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Home Grown Cereals Authority; and what subject they discussed.

  Mr. MacGregor
  I last met the chairman of the HGCA on 10 October and when I addressed the authority's pre-harvest luncheon on 12 July. We discussed a number of topics concerning the cereal sector.

  Women's Farmers Union
  Mr. Nicholas Bennett
  To ask the Minister of Agriculture, Fisheries and Food when he last met the president of the Women's Farmers Union; and what subject they discussed.

  Mr. MacGregor
  I met the national chairman of the Women's Farming Union on 11 July and discussed various subjects of concern to it.

  Set Aside Scheme
  Mr. Gill
  To ask the Minister of Agriculture, Fisheries and Food what indications he has of the level of uptake under the Set Aside Regulations 1988; and if he will make a statement.

  Mr. Livsey
  To ask the Minister of Agriculture, Fisheries and Food how many farmers registered under the set aside scheme by 30 September; and if he will make a statement.

  Mr. Charles Wardle
  To ask the Minister of Agriculture, Fisheries and Food how many of those farmers who had registered for the voluntary set aside scheme by 30 September had decided to take up the scheme for the 1988–89 crop year.

  Mr. MacGregor
  I refer hon. Members to the answer given earlier today to my hon. Friend the Member for Gedling (Mr. Mitchell).

  Imports (Northern Cyprus)
  Mr. Cox
  To ask the Minister of Agriculture, Fisheries and Food what have been the items and quantity of agricultural produce imported into the United Kingdom from the occupied area of northern Cyprus during the last 12 months.

  Mr. Donald Thompson
  United Kingdom imports of agricultural produce from the different regions of Cyprus are not recorded separately.

  Bovine Spongiform Encephalopathy
  Mr. Flynn
  To ask the Minister of Agriculture, Fisheries and Food what is the number of cases of bovine spongiform encephalopathy to date in the United Kingdom.

  Mr. Donald Thompson
  Up to 14 October 1988, 1,193 cases of bovine spongiform encephalopathy had been confirmed since the disease was first identified in November 1986.

  Mr. Patchett
  To ask the Minister of Agriculture, Fisheries and Food how many cases of bovine spongiform encephalopathy have now been notified to his Department.

  Mr. Donald Thompson
  Since the disease was made notifiable on 21 June, 1,232 suspect cases of BSE have been reported to the Ministry. Because there is no diagnostic test in live animals affected cattle are slaughtered on clinical evidence of infection. Confirmation is dependent on the examination of brain tissue after death; since 21 June, of the 502 animals for which laboratory results have so far been received 454 have been confirmed as having been affected with BSE.

  Farmers (Diversification)
  Mr. Steen
  To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the case for measures to improve communication between farmers wishing to diversify and local planning authorities.

  Mr. Ryder
  I believe there is a case for improved communication in this area. To this end agriculture Ministers have taken every opportunity to meet planners and farmers to encourage a better understanding between them. We will soon be publishing, in association with the Department of the Environment and the Welsh Office, a farmers' guide to the planning system as my right hon. Friend the Minister of Agriculture, Fisheries and Food announced on 25 July in his reply to my hon. Friend the Member for Hyndburn (Mr. Hargreaves). This will encourage farmers to present their applications effectively and discuss their ideas with planning officers, local councillors and their neighbours at an early stage.

  Country Landowners Association
  Mr. Hunter
  To ask the Minister of Agriculture, Fisheries and Food when he last met the president of the Country Landowners Association; and what subjects they discussed.

  Mr. MacGregor
  I refer my hon. Friend to the reply I gave today to my hon. Friend the Member for Gloucestershire, West (Mr. Marland).

  Common Agricultural Policy
  Mr. Alan W. Williams
  To ask the Minister of Agriculture, Fisheries and Food what steps he takes to ensure that consumer and environmental interests are taken into account in decisions concerning the common agricultural policy.

  Mr. Ryder
  I receive advice and representations from many sources, including bodies representative of
  1007
  consumers and of environmental interests. I take these fully into account when decisions are being taken on CAP matters and, as appropriate, urge the Commission and other member states to do the same.

  Cereals Co-responsibility Levy
  Mr. Alexander
  To ask the Minister of Agriculture, Fisheries and Food if he will press for the European Community cereals co-responsibility levy to be applied to imports of cereal substitutes, and in equal measure.

  Mr. MacGregor
  Extending the cereals co-responsibility to imported cereals substitutes would be difficult to achieve, contrary to the European Community's international obligations and would be inconsistent with the Government's efforts in the current GATT negotiations to liberalise agricultural trade. The United Kingdom Government have consistently opposed a co-responsibility levy as being the wrong way to tackle the problem of cereal surpluses.

  National Federation of Fishermen's Organisations
  Mr. Wall
  To ask the Minister of Agriculture, Fisheries and Food when he last met representatives of the National Federation of Fishermen's Organisations; and which subjects were discussed.

  Mr. Donald Thompson
  My right hon. Friend the Minister met representatives of the National Federation of Fishermen's Organisations at their annual general meeting on 7 May 1988. A number of issues of importance to the United Kingdom fishing industry were discussed including TACs, licensing systems including under 10 m vessels; part-time fishermen; fishing vessel registration; technical conservation measures and mesh sizes including minimum landing sizes for nephrops; North sea plaice; Channel cod; water authority privatisation; pollution and dumping; the Grimsby National Dock Labour Board scheme; the bass fishery; loans; safety; light dues and the ban on the carriage of monofilament nets. Members of the NFFO also attended a conference in North Shields on 5 October on the North sea fishing industry at which I discussed the Government's fisheries policy and pollution.

  Agricultural Workers
  Mr. Strang
  To ask the Minister of Agriculture, Fisheries and Food if he has any plan to meet the national secretary of the agricultural and allied workers trade group of the Transport and General Workers Union to discuss problems affecting agricultural workers.

  Mr. Donald Thompson
  I have no plans at present to do so.

  Mr. Rogers
  To ask the Minister of Agriculture, Fisheries and Food what topics were discussed at the last Council of European Community Agriculture Ministers; and if he will make a statement.

  Mr. John Evans
  To ask the Minister of Agriculture, Fisheries and Food what was the outcome of the last Council of European Community Council of Agriculture Ministers; and if he will make a statement.

  Mr. MacGregor
  I refer the hon. Members to the reply I gave to my hon. Friend the Member for Daventry (Mr. Boswell) on 18 October 1988.

  Sheep
  Mr. Alex Carlile
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the current state of the sheep sector.

  Mr. MacGregor
  The sheep sector remains buoyant. Returns are good and exports are encouraging.

  Sea Fish Industry Authority
  Mr. Graham
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement concerning the financing of the Sea Fish Industry Authority.

  Mr. Donald Thompson
  Following consultation with interested organisations, the authority has now published its intentions to make regulations increasing the present rate of levy from £3·50 per tonne to £7 per tonne with effect from 1 April 1989. In deciding whether to confirm these regulations, fisheries Ministers will take into account any industry objections made to them.

  Toxic Waste
  Dr. Moonie
  To ask the Minister of Agriculture, Fisheries and Food how many licences were issued for the incineration of toxic waste at sea in 1985, 1986 and 1987; how many such licences have been issued so far in the current year; and if he will make a statement.

  Mr. Donald Thompson
  Licences were issued for 24 wastes in 1985 and for 20 wastes in 1986; 14 licences were issued in 1987 and 12 in 1988.

  United Kingdom waste has accounted for only about 5 per cent, of the total incinerated at the one, internationally agreed, incineration site in the Dutch sector of the North sea. At the ministerial conference on the North sea in November 1987 all North sea states including the United Kingdom agreed that marine incineration should be substantially reduced, by not less than 65 per cent., by 1 January 1991, and phased out by 31 December 1994. Remaining United Kingdom licensed wastes are therefore being reviewed to identify satisfactory alternative options for disposal of the waste on land.

  GATT
  Mr. Curry
  To ask the Minister of Agriculture, Fisheries and Food what progress he expects in the general agreement on tariffs and trade negotiations prior to the mid-term meeting in December.

  Mr. MacGregor
  With a view to further reform of agricultural policies in both the short and long term, GATT members are working actively towards a framework of principles to guide the negotiations, which are due to continue till 1990, and on first steps to implement them. I have consistently emphasised the importance of securing progress at the December meeting and will continue to work for a constructive outcome.

  Farm Woodland Scheme
  Mr. David Nicholson
  To ask the Minister of Agriculture, Fisheries and Food what response there has been from farmers to the new farm woodland scheme.

  Mr. Riddick
  To ask the Minister of Agriculture, Fisheries and Food how many farmers have expressed interest in the new farm woodland scheme since its introduction on 1 October.
  1009
  Mr. Ryder
  As the scheme has only been operational since 1 October, it is too early to give any figures for uptake. There has, however, been substantial interest amongst farmers and the scheme's information literature has been in demand.

  Clyde Fishermen's Association
  Mr. Foulkes
  To ask the Minister of Agriculture, Fisheries and Food when he last met representatives of the Clyde Fishermen's Association.

  Mr. Donald Thompson
  I have not met the Clyde Fishermen's Association.

  Agriculture
  Mr. David Marshall
  To ask the Minister of Agriculture, Fisheries and Food what discussions he has had with environmental organisations to discuss the future of agriculture in the United Kingdom.

  Mr. Ryder
  My right hon. Friend and other Ministers of my Department have frequently met representatives of environmental organisations for discussions on a wide variety of issues. I look forward to meeting the organisations soon.

  Wildlife
  Mr. McCartney
  To ask the Minister of Agriculture, Fisheries and Food what discussions he has had with wildlife organisations about the future of the countryside.

  Mr. Ryder
  My right hon. Friend and other Ministers of my Department have frequently met representatives of wildlife organisations for discussions on a wide variety of issues. I look forward to meeting the organisations soon.

  Milk Marketing Board
  Sir Hal Miller
  To ask the Minister of Agriculture, Fisheries and Food when he last met the chairman of the Milk Marketing Board; and what subjects they discussed.

  Mr. Donald Thompson
  My right hon. Friend the Minister and I have regular contacts with the chairman of the Milk Marketing Board to discuss various issues affecting the dairy industry.

  Agricultural Land (Classification and Grading)
  Mr. Chapman
  To ask the Minister of Agriculture, Fisheries and Food when he intends to make a statement about agricultural land classification and grading, following the publication of his consultation document in February.

  Mr. Ryder
  We hope to publish the definitive guidelines and criteria before the end of this month.

  East Craigs Seed Testing Station
  Mr. Ron Brown
  To ask the Minister of Agriculture, Fisheries and Food what representations he has received since 22 July from the trade union movement and local representatives about the future of East Craigs seed testing station, Edinburgh; and if he will make a statement.
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  Mr. Ryder
  None. I have nothing to add to the reply given to the hon. Member on 22 July 1988 at columns 879–80.

  Dairy Herds
  Mr. Hardy
  To ask the Minister of Agriculture, Fisheries and Food what information he has about the present number of dairy herds in the United Kingdom and in each member state of the EEC; and what equivalent information he has for each country 10 years ago.

  Mr. Donald Thompson
  The most recent data available are for 1986. No comparable data are available for 1976, so the following table compares the 1986 figures with those for 1977.

  Number of dairy herds in the EEC

  Country

  Year

  Number of herds

  Year

  Number of herds

  Germany

  1977

  519,000

  1986

  369,000

  France

  1977

  576,000

  1986

  329,000

  Italy

  1977

  453,000

  1986

  338,000

  Netherlands

  1977

  83,000

  1986

  61,000

  Belgium

  1977

  66,000

  1986

  45,000

  Luxembourg

  1977

  4,000

  1986

  2,000

  United Kingdom

  1977

  72,000

  1986

  53,000

  Irish Republic

  1977

  120,000

  1986

  77,000

  Denmark

  1977

  56,000

  1986

  32,000

  Greece

  1977

  n/a

  1986

  73,000

  Spain

  n/a

  n/a

  Portugal

  n/a

  n/a

  Source:

  (a) The Agricultural Situation in the Community 1987 Report.

  (b) Eurostat Yearbook of Agricultural Statistics 1978.

  Storm Damage
  Miss Widdecombe
  To ask the Minister of Agriculture, Fisheries and Food what help he plans for farmers still facing substantial costs for clearance as a result of the storm on 16 October 1987.

  Mr. Ryder
  The Government believe that the package of measures which they introduced after last year's great storm provided a comprehensive and appropriate response. Applications have already been received for the replanting of 5 million trees under the special Forestry Commission replanting scheme and it is expected that a half of the fallen timber will have been cleared by the end of next spring. In addition, expenditure of some £2·5 million is expected under MAFF's storm damage recovery scheme for environmental features such as shelterbelts and orchard replacement.

  Southall Horse Market
  Mr. Harry Greenway
  To ask the Minister of Agriculture, Fisheries and Food what information he has as to the conditions at the Southall horse market; and if he will make a statement.

  Mr. Donald Thompson
  During recent visits to the market by the Department's veterinary staff no problems affecting the welfare of horses have been noted or brought to their attention.

  Sheepmeat
  Mr. Speller
  To ask the Minister of Agriculture, Fisheries and Food if he has any plans to review the operation of the sheepmeat regime; and if he will make a statement.

  Mr. Donald Thompson
  The sheepmeat regime is due to be reviewed by the Council of Agriculture Ministers later this year. I expect negotiations on this review to resume shortly on the basis of proposals by the EC Commission.

  Upland Planting
  Mr. Harris
  To ask the Minister of Agriculture, Fisheries and Food whether he has provided the chairman of the Forestry Commission with guidance on planting in the uplands of England.

  Mr. MacGregor
  I have written to the chairman of the Forestry Commission in the following terms:"You will recall that in his announcement of 16 March setting out our joint view about future planting in the uplands of England, the Secretary of State for the Environment said that I would be writing to you to give further guidance on the matter. This is now set out in this letter.
  As you know, a large proportion of the land in England has been used for agriculture as either arable or improved grassland, and we therefore attach a high value to conserving the habitats provided by the limited remaining area of unimproved land in the uplands.

  General Criteria
  Where unimproved land lies above the 800 ft contour, approval should not normally be given for new planting which consists predominantly of conifers, other than for the planting of small areas, as defined below, where it is clear that this would be environmentally acceptable. An exception may also be made for planting on unimproved land between the 800 and 1,000 ft contours if the Commission agrees with the local authority and any other authorities consulted—or, in the absence of such agreement. Ministers so decide—that this would be justified in the interests of improving forest landscaping. More generally, there may be some scope in the uplands for the planting of broadleaves and mixed woodlands.
  These criteria should apply both to plans for new planting by the Commission and to all future approvals of applications for grants for new planting by the private sector.

  Unimproved land
  For the purposes of this letter, unimproved land is defined as land which has not been converted to arable use or, in the case of grassland, has not been cultivated and reseeded within
  1012
  the ten years prior to the date of this letter, and any future improvement of land now defined as unimproved will not alter that definition.

  Predominantly conifers
  Since the establishment of broadleaved woods in the uplands is crucially dependent on planting conifers as nurses, often in the ratio of two conifers to one of broadleaves, the term 'predominantly' should be taken to mean the use of more than two conifers for every broadleaved tree at the initial planting stage.

  Exception for small areas
  The term 'small' should normally be taken to mean any area not exceeding 10 hectares. In appropriate circumstances this exception may also cover an area not exceeding 40 hectares where the Commission agrees with the local authority and any other authorities consulted (or Ministers decide) that this would allow the proposed planting to blend sympathetically with the landscape or to ameliorate over-regulate or oddly-shaped woodland boundaries.

  Planting in the industrial Pennines
  It is recognised that conifers may also have a role to play in ameliorating the environment of the industrial areas of the Pennines where conditions are not suitable for growing broadleaves. Conifer planting may be permitted in these areas, which for the purposes of this exception should be defined and agreed between Forestry Commission and Department of the Environment officials.

  Replanting
  In providing grants for replanting, the Commission should encourage practices which will convert forests of even age into attractive and more varied landscapes with a mixture of types and ages of trees. To encourage the conservation, rehabilitation and regeneration of ancient woodlands, applications for grant-aid for their replanting will be expected to follow the Commission's published Guidelines for the Management of Broadleaved Woodland. The Commission should continue to follow similar practices in respect of its own replanting programmes.

  Consultation Arrangements
  The Commission should introduce arrangements, where these do not already exist, to consult local authorities in England on all new planting proposals above 800 ft where such proposals would involve the planting of more than 10 hectares predominantly with conifers. Otherwise, this letter does not affect the Commission's current arrangements for consulting local authorities and other bodies as appropriate, and individual applications will continue to be considered on their merits under the terms of the general guidance I have given."

  I have arranged for copies of my letter to be placed in the Library of the House.

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Guildford): The LORD CHANCELLOR on the Woolsack.
Viscount Rothermere—Took the Oath.

Postal Charges
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
Whether they will direct the Post Office to withdraw the recent increase in postal charges.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, I do not consider that the exercise of this power of direction is, in the circumstances, either necessary in the national interest or appropriate given that this is the first price increase in almost two years.
Lord Boyd-Carpenter: My Lords, does not my noble friend consider that it might be a good idea to tell the Post Office that it cannot increase its charges until it at least arrests the decline in the standard of services?
Lord Young of Graffham: My Lords, I am well aware of the opinion which has been expressed on all sides of your Lordships's House and the concern which exists about the quality of the services of the Post Office. The Post Office Users National Council was consulted earlier this year about the tariff proposals. It had no objection to the scale of increases provided that the quality of service was improved. I believe that we all earnestly wish to see that.
Lord Mellish: My Lords, is it not extraordinary that the Post Office introduced new charges during a strike?
Lord Young of Graffham: My Lords, I know that that coincidence was not in the interests of the Post Office and I suspect that it was not because of the conduct of the management. The increase in the prices was set some time before.
Baroness Strange: My Lords, does the Minister agree that it might be a prettier way to compensate the discomfort and dissatisfaction of the general public about the Post Office strike by returning the postage charges to their old rates over the Christmas or festive period?
Lord Young of Graffham: My Lords, I suspect that there is more concern about the quality of service than about the cost. I believe that we all wish to see the quality of service rapidly restored, if not improved upon.
Lord Grimond: My Lords, I wholly agree with the Question. If the Minister will not take up the issue, will he represent to the Post Office that, because it is unable to give any guarantee that first-class mail will be delivered within 24 hours—a good deal is not so delivered—it is unreasonable to add an extra penny to the charge? I believe that in any event the differential charge is totally unjustified.
Lord Young of Graffham: My Lords, I appreciate that there is a considerable difference, but surely the important point is to try to regain the quality of service. The increases remain below the level of inflation and second-class post is only 1½ pence more than it was six years ago.
Lord Nugent of Guildford: My Lords, is my noble friend aware that we are not impressed by the rate of progress of the mechanisation of postal handling and the universal introduction of the postal code? Is he also aware that if that were achieved there would be a massive saving in manpower and that it would speed up the handling of letters? What is the prospect for the universal postal code being in position and that mechanisation being introduced?
Lord Young of Graffham: My Lords, I am grateful to my noble friend, but that is another Question. I believe that we all wish to see the quality of service improved. How the Post Office management and the Post Office accomplishes that is secondary because, above all else, we are concerned that our letters arrive on time.
Lord Orr-Ewing: My Lords, does my noble friend recall that his important Ministry has a responsibility for competition policy and for the Post Office? Is it not time that we had a radical restructuring of the Post Office so that we can match other communications? Every other form of communication is becoming faster, quicker and more accurate, but the Post Office is becoming steadily worse. When letters are posted early on a Saturday they are sometimes not cleared until the first post on Monday and at best do not arrive until Tuesday. In this age we cannot have a postal service which is so desperately slow for the efficiency of industry and everything else in this country.
Lord Young of Graffham: My Lords, I am not sure how the Post Office compares with the international standards of performance of other post offices. We are living in a world where it is steadily becoming more and more difficult for such a labour-intensive service to be carried out. I have heard my noble friend's question clearly and I shall take it away and consider it.
Lord Ferrier: My Lords, is my noble friend aware that the service is becoming worse and that I now receive on a Saturday important correspondence which I used to receive on a Friday?
Lord Young of Graffham: My Lords, I am aware that my bills are arriving later and later. It is not an unmitigated disaster.
Lord Peston: My Lords, if the objective of govern-ment policy is to ensure that the quality of service is improved, why do they not show a more sympathetic response to the noble Lord's Question, because it is not obvious that allowing the Post Office to raise charges will act as an encouragement to improving the services? It will encourage it to stay with its unsatisfactory ways.
Lord Young of Graffham: My Lords, nor is it equally obvious that denying it an increase will improve the quality. We wish to see quality increased. The price increases remain below the level of inflation. The second-class post is only 1½ pence more than it was six years ago.
All those matters are beside the point. We wish to see the quality improved and we have expressed that wish most strongly to the management of the Post Office.
Lord Boyd-Carpenter: My Lords, arising out of that answer and my noble friend's earlier reference to the views of the users council which he quoted with approval—to the effect that it would not object to the increase provided that efficiency was improved—is the collorary that if efficiency is not improved, and it shows no signs of being so, the increase will be withdrawn?
Lord Young of Graffham: My Lords, if that would have the effect of improving quality there might be something to commend it. I believe we should ensure that quality is improved, and after today I shall make that message doubly plain to the chairman of the Post Office.

Care in the Community
3.9 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
When they intend to publish their response to the Griffiths Report entitled Care in the Community.
The Earl of Arran: My Lords, we are conscious of the public feeling that our response should not be long delayed and I can assure the House that the Government have not been idle on this issue. They are giving careful consideration to the way forward and taking careful account of the numerous representations they have received. However we cannot yet say when we shall be able to put forward our own proposals.
The Countess of Mar: My Lords, perhaps I may thank the noble Earl for that slightly encouraging reply. We have now been waiting nearly 10 years for a comprehensive community care policy from this Government. Will the noble Earl say whether or not they accept all that is in the Griffiths Report, how much communication there will be between the Department of Health, the Department of Social Security and the Department of the Environment, all of which are involved in producing a new policy?
The Earl of Arran: My Lords, we recognise the concern that the uncertainty should be ended. We certainly acknowledge the need for vigorous action after this period of scrutiny and review has concluded.
Baroness Cox: My Lords. is my noble friend aware that many health care professionals are deeply worried about some of the recommendations in the Griffiths Report and rather hope that they will not be implemented? They are especially concerned about the lack of clinical expertise in the social services and their appropriateness for providing for the growing number of patients coming into the community with very complex clinical problems.
The Earl of Arran: My Lords, I take very careful note of what my noble friend has said.
Lord Ennals: My Lords, apart from the point made by the noble Baroness, will the Minister broadly accept that across the political spectrum and within the statutory and voluntary organisations there is a consensus that the proposals of Sir Roy Griffiths are about right? Does he further accept that the main organisations involved with community care recognise that there is a growing crisis in providing the services needed by some of the most vulnerable people in our society? Finally, will he accept that some of the concerns are now turning into anger that for so long the Government have refused to give a lead?
The Earl of Arran: My Lords, in response to the points made by the noble Lord, Lord Ennals, as I say, we recognise that the state of uncertainty is worrying but there is no reason why health authorities should not press ahead with existing plans and seek to continue their progress.
Lord Renton: My Lords, is my noble friend aware that since 1980 it has been the Government's policy—and they have done something about it—to get mentally handicapped people out of long-stay hospitals? Is he further aware that the most satisfactory means of achieving that is to enable the voluntary associations, such as MENCAP, to set up small establishments where those people can be looked after as part of the community? Can he say to what extent the Government are helping in the pursuit of that policy?
The Earl of Arran: My Lords, in response to my noble friend's point, I am aware of those matters but I stress that it would be wrong and inappropriate to pre-empt our decisions on Sir Roy's report by debating individual proposals now.
Baroness Turner of Camden: My Lords, does the Minister agree that nowadays community care mostly falls very heavily on the shoulders of women often in late or middle age and that without adequate support services, as recommended, the position of such people can rapidly become quite intolerable, as much of the recent publicity has shown? Would the Minister care to comment on that?
The Earl of Arran: My Lords, once again, all I can say in response to the point made by the noble Baroness is that I take careful note of it and it is one of the points under consideration in Sir Roy's report.
Lord Cledwyn of Penrhos: My Lords, the noble Earl has said that the reason for the Government's delay in responding to the Griffiths Report is that they are working very hard indeed on this, taking advice, listening to people and so on. Can he say, therefore, that at the appropriate moment when the studies are over, the Government will produce a White Paper on Government policy on community care?
The Earl of Arran: My Lords, I do not believe that I can exactly answer the question put by the noble Lord the Leader of the Opposition. However, I should like to make one point because there has been a certain amount of criticism in your Lordships' House this afternoon. In dealing with the community care situation we are dealing with government expenditure of some £6 billion. To act too hastily would be improper and unwise.
Baroness Masham of Ilton: My Lords, referring to the mentally ill, will the Government look very carefully at the very worrying increase in arsonists and will they work very closely with the Home Office to see where those people should be treated, whether in health or penal institutions?
The Earl of Arran: My Lords, I pay attention to the point raised by my noble friend.
Lord Dean of Beswick: My Lords, will the Government give very deep consideration to those parts of the report which suggest that some of the community services which were taken away from local authorities during the last reorganisation of the National Health Service could be returned to those local authorities, which in the main carried them out exceedingly well and were closer to the needs of people than the National Health Service could ever he, no matter how good it is?
The Earl of Arran: My Lords, that again is among the points that the Government are currently considering as a result of Sir Roy's proposals.
Baroness Macleod of Borve: My Lords, there is a recommendation in the report that a great number of managers should be put in place. If the report is implemented will the noble Earl ensure that those managers are trained and qualified, unlike the ones now serving in the NHS?
The Earl of Arran: My Lords, once again I believe that it would be wrong for me to give any decision upon that until we are aware of the Government's response to Sir Roy's proposals.
Lady Kinloss: My Lords, can the Minister say whether the Government are satisfied that local authorities will have sufficient funds and expertise for care in the community in view of the report of the
1252
Office of Population, Censuses and Surveys, Social Services Division, which finds that there are more adult disabled in Great Britain than it was thought?
The Earl of Arran: My Lords, that is a particularly close point and I believe it to be somewhat wide of the Question on the Order Paper. However, it is a point on which I shall undertake to write to the noble Lady.
The Countess of Mar: My Lords, in answer to a previous question the noble Earl said that there was no reason why the health authorities should not press ahead with plans to put people into the community. If that is the case, will he please tell the Department of Social Security and the Department of the Environment that they must co-ordinate their policies, because people are being discharged into the community and the Department of Social Security is refusing to pay for them?
The Earl of Arran: My Lords, that is something of which we shall certainly take note.

Schoolchildren: Assessment Tasks
3.17 p.m.
Lord Peston Lord Peston asked Her Majesty's Government:
When the standard assessment tasks for pupils at or near the end of the first key stage in mathematics, science and English will be publicly available.
Viscount Davidson: My Lords, specification for development of standard assessment tasks (SATs) for key stage 1 pupils were issued on 10th October, and contracts will be let in December. The SATs should be available by Easter 1991 in preparation for the first full assessment the following summer.
Lord Peston: My Lords, in thanking the noble Viscount for his Answer, perhaps I may remind him how controversial this subject is—
Noble Lords: Question, question!
Lord Peston: My Lords, does the noble Viscount agree—well, he will not agree. Perhaps I may ask him whether the tasks will be made known publicly and in particular how they will be interpreted. Will they be placed in the public domain?
Viscount Davidson: My Lords, in answering the noble Lord, the best I can do is to advise him that the department has sent a draft circular to a wide range of organisations. The circular sets out the provisions on curriculum and assessment in Sections 1 to 25 of the Education Reform Act 1988. He will find the answers to both those questions in that particular document which has been placed in the Library.
Lord Ritchie of Dundee: My Lords, is the Minister aware that there is widespread bewilderment among teachers of children with special educational needs as to how testing and assessment of their progress can at the same time be standardised and adapted to their

1253
special needs? Can the Minister make any reassuring statement on that point?
Viscount Davidson: My Lords, I can make a reassuring statement by saying that I have read the draft circular and the answer to the noble Lord's question lies therein.
Baroness David: My Lords, is the Minister aware that that draft circular dropped onto my desk yesterday, as it has no doubt dropped on many other desks around the country, and another draft circular dropped on my desk today? I should like to ask the Minister, because it is not clear, whether the general public are being made aware of what is going on, because there is a great deal of anxiety among parents who are not governors and other members of the general community. Can he give any assurance that that information, which is causing a great deal of work in education authorities, is also being spread to members of the public generally?
Viscount Davidson: My Lords, I will certainly draw the remarks of the noble Baroness to the attention of my right honourable friend. However, this draft circular has been sent to all local education authorities and other interested bodies for their comments. They are free to make all the comments that they wish. The final circular, based on those comments, will be published in the new year.
Lord Peston: My Lords, may I press another matter? One worry of parents, as the noble Viscount is well aware, is privacy of the assessment. Can he reassure the House that the assessment of young people at the age of seven will be entirely a private matter between teachers and the parents and that it will not become public knowledge?
Viscount Davidson: My Lords, that is an assurance I can give.

Housing Bill: Ballots
3.20 p.m.
Lord Stallard Lord Stallard asked Her Majesty's Government:
Further to exchanges on 10th October (HL deb. col. 604), whether other organisations besides the Electoral Reform Society have been approached concerning Housing Bill ballots, and if so which organisations and in what manner.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, so far only one other expression of interest has been received from a specialist ballot services company, with which the Housing Corporation is in contact. Other organisations which may be interested in the duties of the independent teller are invited to contact the Department of the Environment or the corporation.
Lord Stallard: My Lords, I thank the Minister for that reply. However, it does not take us much further. I had hoped to hear the noble Earl say that there would be some kind of approval of the organizations
1254
asked to take on this task. Approval or acceptance would mean that the organisations themselves accept a voting system stipulating that all abstentions, for whatever reason, shall be counted as "yes" votes in favour of a landlord's proposals to acquire existing tenancies. This means that the proposals contain an in-built incentive for landlords to encourage abstentions, the more so when, as I understand, the landlords will be financing the operation and administration of the balloting schemes. Is that not therefore pointing to a further danger that these societies mentioned by the Minister—
Noble Lords: Question!
Lord Stallard: My Lords, "Is there not a danger?" appears to me to be a question. Is there not a danger that the societies will be seen to be less than impartial, thus encouraging that incentive?
Noble Lords: Reading!
Lord Stallard: My Lords, I made notes while the Minister was speaking; I have merely glanced at them. It is a sad fact that whenever—
Noble Lords: Question!
Lord Stallard: My Lords, is it not a sad fact that Ministers and noble Lords opposite jeer whenever the problems of tenants of housing associations are mentioned? Would it not be better if they listened and became involved in some of these serious problems?
The Earl of Caithness: My Lords, the noble Lord, Lord Stallard, asked some questions which I hope I answered during the debate on 10th October when we were in Committee on the Housing Bill. It is Parliament's duty to lay down the rules, and it will be for the independent teller to see that those rules are interpreted properly and fairly.
Lord Elton: My Lords, is my noble friend aware that the greeting given to the last intervention of the noble Lord who tabled this Question was not directed at the content of his intervention but at its manner and length?
The Earl of Caithness: My Lords, I think that was clear to the whole House.
Lord Denham: My Lords, it may be for the convenience of the House—
Noble Lords: Order!
Lord Stoddart of Swindon: My Lords, I am most obliged to the Government Chief Whip for giving way. Does not the Minister agree that it is an outrageous electoral principle that the votes of those not voting should be added to one side of the argument? Indeed, is it not a dangerous precedent to set? Will the Minister take this supposition into account? Let us say that on a strike ballot all the abstaining voters were added to the "yes" vote, as is proposed in the Bill. Is that not a principle that the Government themselves would not adhere to?
The Earl of Caithness: My Lords, the noble Lord, Lord Stoddart of Swindon, will know that I disagree with him for the reasons that I set out in Committee. Of course, he has failed to point out to the House that those who wish to remain with their existing landlords can opt to do so.
Lord McIntosh of Haringey: My Lords, will the Minister make a better attempt to answer the supplementary question put by my noble friend Lord Stoddart? He asked whether, in the circumstances where an applicant, a private landlord, has an interest in a high number of extensions, there is not a contradiction in having the applicant pay the costs of the independent monitoring body?
The Earl of Caithness: My Lords, no. I disagree with the basis on which the noble Lord formulates that question.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that Her Majesty the Queen will open the new Session of Parliament on Tuesday, 22nd November.
The date of Prorogation of the present Session will he subject to the progress of business but it is expected that the House will sit into the week beginning Monday. 14th November.

Barlow Clowes Group
3.25 p.m.
Lord Young of Graffham: My Lords, I wish to make a statement on Barlow Clowes.
Many people have been badly affected by the collapse of the Barlow Clowes operations. The extent of the suffering and distress has been fully set out in the letters I and my colleagues have received from Members of both Houses and direct from those concerned. We share the deep concern expressed on all sides and sympathise with those who have suffered loss.
The story is very complex: it stretches over many years and involves many different participants.
The House will recall that, following my Statement on 13th June, I appointed Sir Godfray Le Quesne, QC, to prepare an independent report to me on the facts of my department's handling of this matter. I am today publishing Sir Godfray's account, subject to minor deletions made on legal advice in order to avoid possible prejudice to criminal proceedings. His report is one of the most open and exhaustive ever volunteered by a department of state into its handling of a matter of this kind. It contains a full account of my department's role.
I should make it clear to the House that, while the Government attaches importance to maintaining the normal rule that officials' confidential advice to Ministers should not be made public, I have decided that, in the quite exceptional circumstances of this case, it is in the public interest to include the submissions to Ministers and other material which
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would not normally be published. In accordance with normal practice the names of officials involved have been excluded.
I am extremely grateful to Sir Godfray Le Quesne for the thoroughness and speed with which he produced his report. In accordance with his terms of reference, the report is purely factual. The Government have studied it with great care and have taken legal advice including that of leading counsel; and I should now like to set out to the House the key events and our conclusions.
It is only possible to judge the events that occurred in the light of the regulatory system in place at the time. The legislative framework within which all but the final events of this case took place was based on an Act of 1939 which was consolidated in the Prevention of Fraud (Investments) Act 1958. There was very little change in the way it operated until 1983. Then, against the background of Professor Gower's much broader review of investor protection, commissioned in 1981, the Government introduced new regulations. These regulations required, among other things, first, much more information about prospective licence holders; secondly, a certificate from a qualified auditor as to the firm's ability to operate as a going concern during the lifetime of the licence; and thirdly, regular financial monitoring returns, verified by a qualified auditor. covering the proper holding of client money and investments. The regulations were designed to enable the department to rely on the verification of prescribed information by qualified auditors and solicitors.
Sir Godfray's report shows that Barlow Clowes first came to the department's attention in 1975–76. It received advice which due to a misunderstanding within the department did not adequately cover the point at issue and it did not then apply for a licence to deal in securities. The consequences of this have been carefully examined. Had it applied in 1975–76 it is almost certain that a licence would have been granted, given the practice at that time. If Barlow Clowes had received a licence in 1975–76, the first monitoring return of the sort I have described would have been required by the end of December 1984. In the event, Spicer and Pegler certified in July 1985 that it had obtained verification of the clients' investments and cash, and that the statement of clients' funds gave a true and fair view of their composition as at 28th December 1984. There is no reason to think that the fact that Barlow Clowes was not licensed in 1975 had any material effect on the course of subsequent events.
The partnership again came to the department's attention in late 1983. The review and tightening up of the system in 1983 had brought large numbers of unlicensed dealers to light. Wholesale prosecutions would have been unjustified, and as Sir Godfray's report explains, it was the policy to bring unlicensed firms into the regulatory net and to take other action only where there was evidence of wrongdoing or that investors' funds were at risk. The department originally believed that the partnership was applying for membership of NASDIM, which would have meant that it did not need to be licensed directly by the department. When it became apparent that the

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partnership was not doing so, the effective choice open to the department lay between prosecution of Barlow Clowes for not holding a licence (the only sanction provided by the legislation) and licensing the firm if it could meet the regulatory requirements. As Barlow Clowes was a partnership, the department—even where grounds existed—had no powers to investigate it nor to apply for a winding-up order. Nor was there any provision for intervening to protect investors' funds if a licence were refused.
The department therefore decided to seek to bring the partnership within the regulatory framework. In doing so it had four main aims: the first was to subject the partnership to the conduct of business rules (strengthened in 1983); the second to secure examination of its affairs by qualified auditors; and the third to persuade the firm to incorporate a limited company so that the powers available under the Companies Acts would be available. Fourthly, it was also necessary for Barlow Clowes to make arrangements which satisfied the Bank of England that the partnership was not in breach of the Banking Act 1979. When all these objectives had been met, licences were issued in October 1985 to the partnership and the company. In issuing the licences the department made clear to the Barlow Clowes's solicitors that it had been heavily influenced by the assurances received from or through them. The department also took full account of the report from Spicer and Pegler on clients' funds as at December 1984.
In 1986 new licences were issued to Barlow Clowes after it had submitted applications accompanied by the verifications and auditors' certificates required by the legislation. Although the majority of the powers under the Financial Services Act 1986 did not come into force until 29th April 1988, stronger and wider powers of investigation contained in that Act became available on 18th December 1986. By the time of Barlow Clowes's licence applications in 1987, the department had received material from the Stock Exchange and others that caused concern about Barlow Clowes's UK business. The department did not at that time have the power to apply for a winding-up without first conducting a statutory investigation. Even if there had been such a power, there was not at that stage sufficient evidence to be confident that an application to wind up the company would he successful.
The department had three courses open to it. It could refuse the licence. This would have stopped the company from lawfully taking on new business. But because the department could not apply for a winding-up, there would have been no way of securing existing investors' assets. This action could therefore have precipitated a disorderly collapse of the businsss which would have damaged existing investors' interests. The second course was to grant a licence but immediately to issue notice of intention to revoke it. The company could have referred this to the Licensed Dealers Tribunal, which would have meant that it could carry on trading until the tribunal and decided the case.
The department therefore adopted the third possible course. This was to institute an investigation
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under the powers newly available under the Financial Services Act and to issue a new licence, subject to review, pending the outcome of that investigation. The investigation proceeded but even six months later, in April 1988, with all the information the investigators had by then uncovered, there were legal doubts whether sufficient grounds existed for a winding-up petition to succeed. By May 1988, the combination of the investigation and new information on the company's solvency had yielded enough information to secure a winding-up order.
I am informed by the liquidators of Barlow Clowes Gilt Managers that on current information investors are likely to receive in excess of 75p in the pound and they are hoping to make a substantial distribution before Christmas.
I now turn to Barlow Clowes International. This company was based in Gibraltar and was not licensed. Any offshore company dealing with expatriates and not holding itself out as dealing in securities in the United Kingdom would not need a licence. The question therefore is whether the department had reason to believe that BCI required a licence. As Sir Godfray's report shows, no firm evidence came to the department indicating that this was so, and the information provided by the United Kingdom company from 1984 to 1987 indicated that BCI serviced expatriates and non-residents. During this entire period there were no complaints from investors, no question about whether BCI was licensed, no approaches from intermediaries that would have revealed that BCI was dealing with United Kingdom residents.
From 1984 the department decided that as part of its licensing function it would adopt a policy of sample monitoring of advertising in the national and financial press. No advertisements from BCI came to light as a result of this monitoring. Subsequently it has emerged that a single advertisement was placed by BCI in one general supplement of The Times devoted to Gibraltar. This was not picked up by the sampling system. It has since transpired that BCI received business as a result of advertisements placed by authorised intermediaries, not in the general or financial press. These advertisements did not mention BCI, which was only named in subsequent private correspondence. No example of such correspondence was referred to the department before the Barlow Clowes collapse.
The liquidators of Barlow Clowes International predict that there will be sufficient funds realised to make a distribution in excess of 30p in the pound. The complications in BCI will take some considerable time to resolve but the liquidators arc hoping to make a small interim distribution early in 1989.
Perhaps I may now turn to the main conclusion the Government draw from Sir Godfray Le Quesne's report. Within the constraints of the old legislation and the information available to the department at the time, the department's general handling of the licensing of Barlow Clowes and Partners and Barlow Clowes Gilt Managers Ltd. was careful and considered and its actions reasonable. Barlow Clowes International had no licence: only since the company

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collapsed has it emerged that its activities were such that it probably should not have operated without one. Sir Godfray's report shows that my department did not have reason to know this.
I also inform the House that the legal advice the Government have received on the question of liability to investors with all these businesses is clear. The Government have no legal liability. In view of the hardship that has been caused, the Government have considered very carefully whether there is a case for ex gratia compensation. The facts set out in Sir Godfray's report in the Government's view provide no grounds for concluding that my department's handling of the matter was unreasonable or caused the losses experienced by investors, and therefore provide no justification for using taxpayers' money to fund compensation.
I am aware that the Parliamentary Commissioner for Administration has said he is considering whether to investigate complaints of maladministration in my department's handling of the matter. I have today sent him a copy of Sir Godfray Le Quesne's report. If he decides in the light of that to carry out an investigation the Government will of course co-operate fully with him and will consider carefully any report he may make. I am also sending copies of Sir Godfray's report to the Institute of Chartered Accountants in England and Wales, the Securities and Investments Board and FIMBRA for them to see whether there are matters for them to consider.
It is all too clear from the account of events in Sir Godfray Le Quesne's report and from the points I have made so far that there were a number of significant weaknesses in the legislative framework of the Prevention of Fraud (Investments) Act 1958 even after the regulations were greatly tightened in 1983. There were no provisions for injunctions to stop unauthorised businesses or breaches of the rules, nor powers to restrict business, safeguard assets or appoint trustees. Nor was it possible to investigate unincorporated investment businesses. The Government have acted to correct these weaknesses in the Financial Services Act 1986, whose main provisions came into effect in April this year. These improvements do not mean that the present system of investor protection is completely risk-free. No regulatory system can eliminate fraud or guarantee investors against loss. But the legislative framework has been radically revised and strengthened since the chain of events covered by Sir Godfray's report took place.
Lord Williams of Elvel: My Lords, the House will be grateful to the Secretary of State for making that Statement but I am afraid that we on this side find it wholly unsatisfactory. It will come as no comfort at all to those thousands of investors, many of them elderly, who have put their life savings into Barlow Clowes funds.
The Secretary of State said that the report of Sir Godfray Le Quesne is purely factual; but were not the facts largely known? Did we all not know that it was a complex matter stretching back over years? Did we all not know that officials in the licensing section of
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the DTI were stretched, overworked and undersupervised, and had to rely on outside information for granting licences? Did we all not know that after the grant of the licence in October 1985 the DTI failed to insist on more regular reports than the annual monitoring returns, relying again on outside representations? Did we all not know that this situation persisted right through to the collapse, even during the noble Lord's tenure of office, right up to May of this year during an investigation by the Department of Trade and Industry? Did we all not know that the auditors of the company had acted with a certain degree of incompetence in their failure to conduct a proper examination of the returns made by Barlow Clowes to the department? Finally, did we all not know that there was a distinction between the offshore and the onshore business but that it was a distinction which could not be appreciated by those United Kingdom residents who, as the noble Lord said in his Statement, were dealing through intermediaries with BCI?
The noble Lord's Statement was purely factual. The report of Sir Godfray Le Quesne is purely factual. The noble Lord gave the Government's view of what was the Government's responsibility in the light of the facts revealed by Sir Godfray in his report. However, when the noble Lord made his Statement on 13th June of this year he said in response to my probing, and I quote from col. 11 of the Official Report of that day:
"This is an inquiry to determine the facts of what actually happened within the department and to determine whether or not the department is to blame in any way Jr whether procedures could be improved in the future".
In other words, this independent inquiry was to determine whether the department was to blame in any way. It was not to establish the facts, and then for the Government to take a view. It was an independent inquiry which would take that view. That is perfectly clear from what the noble Lord said on that day.
We are entitled to rely on ministerial assurances about the content of an inquiry, assurances given to this House, and those who have invested their funds in Barlow Clowes are also entitled to rely on those assurances. Therefore I ask the noble Lord directly: what was the opinion of Sir Godfray Le Quesne, the independent inquirer, on whether the department was in any way to blame? Until that question is answered fully and fairly in this House we on this side will continue to return to the matter and will continue to insist that the Government have not done their job properly.
3.45 p.m.
Baroness Seear: My Lords, we on these Benches are grateful to the Secretary of State for making this Statement, but we are handicapped by the fact that we have not seen the actual report and have only the Statement—no doubt a correct Statement but we do not know how full a Statement—from the Secretary of State. We understand that the report will be fully published although there is a reference to certain omissions for legal reasons. We should like to know how extensive those omissions will be when the

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report is made public and therefore can be more fully discussed if necessary in your Lordships' House.
The gravamen of the case that the noble Lord puts forward is that the Department of Trade and Industry was in no way incompetent in that it did not have the powers to do the kind of investigation that was needed. That may or may not be the case, but in the report he has given us there are at least two references which lead one to have doubts at least about the efficiency with which the matters were handled. We are told at one point that there was a misunderstanding within the department. Paragraph 7 of the Statement says:
"They received advice which due to a misunderstanding within the department, did not adequately cover the point".
We are told in paragraph 8 that the department,
"originally believed that the partnership was applying for membership of NASDIM",
and then found that there was another misunderstanding. These references in the report to misunderstandings lead us to wonder how many other misunderstandings there were.
It may indeed be the case that the powers for protecting investors were at that time totally inadequate in that we had to rely on the Department of Trade and Industry, which we are told did not have the legal powers to do the job that was necessary. It can be argued that this is borne out by the fact that subsequently a very much more extensive and thorough system has been introduced under the Financial Services Act. However, the very fact that the Department of Trade and Industry was handling these matters must have led to a false sense of security among investors. A government department was seen to be investigating matters of the greatest possible concern. Although it was inadequately equipped to do it in terms of its legal powers, people must have been led to believe that they were better protected than in fact they were.
It is very much to be hoped that if this is indeed the case, the Government in considering compensation will not hide behind narrow legalities and make the case that they have no responsibility but will accept the argument— and we on these Benches hope that the Parliamentary Ombudsman will pursue his inquiries to establish these facts—that the public were under a misunderstanding about the security that was being offered at the time and that that fact in itself gives some moral claim to compensation which we very much hope the Government will be prepared to honour.
The report raises the question of whether the Department of Trade and Industry is staffed in such a way that it is capable of dealing with the highly professional people in the financial world, both those of a high level of integrity and those who are not of a high level of integrity, who are in the professional game of investment. All through the report the message comes out that they had to refer to professionals outside in the hope presumably that from that advice, which they were not themselves professionally competent to assess, they would be able to make an adequate decision as to what ought to be done. It raises the question of the staffing of the department when undertaking these extremely intricate and professionally demanding jobs.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, for what he said, but I can only assume—I expect all in your Lordships' House are in the same position— that he has not had the opportunity to read this most detailed report. I must apologise to all Members of your Lordships' House for that, but it is because of the parliamentary procedure under which the report is published, which is by notice of Motion for an unopposed return in the other place. Moreover, because it is not a government White Paper but an outside report, it would only formally become available to anyone from half-past three this afternoon. Nonetheless I hope that all Members of your Lordships' House will take advantage of looking at and reading the report, and will then see that it is unparallelled in terms of openness.
There is everything in the report to show exactly what my department did all the way through. It is a full disclosure of the facts. Indeed, it is what I promised your Lordships' House when I came here last June.
It is not for anyone, no matter how distinguished, to act as judge in this case; there are legal procedures. What Sir Godfray Le Quesne has done is to go through all the papers in my department. He had access to all the civil servants involved so that he could see exactly what my department has done over the period of many years. I am sure that when any noble Lord, or any investor, has the opportunity to read the report, he will see that my department has not been negligent in carrying out its duties and that it has gone to a great deal of trouble in order to do so.
The noble Lord, Lord Williams of Elvel, would have me extend this matter so that we should leave it to the opinion of Sir Godfray Le Quesne and then be bound by his opinion. However, we have many other ways of determining whether the department is liable. We have taken advice from leading counsel. Indeed, leading counsel have informed me that the Government are not liable in this instance. However there are methods in that connection which are being tested. No doubt those who wish to dispute that decision can put it to the test.
I turn now to the remarks made by the noble Baroness, Lady Seear. The misunderstanding of the department was back in 1975, even before I arrived in the department. It was one, as we went to great pains to point out in the Statement, which was possibly due to incorrect advice given to Barlow Clowes at the time, and the company should perhaps have been licensed then. As the Statement points out, it was the practice of the department to license almost anyone who asked. Therefore it is quite likely that the company would have been licensed. If it had been licensed, it would have been liable to send a return as at the end of 1984, which as events subsequently transpired it did.
The noble Baroness queried the quality of the staff in my department over the period of years when they were supervising the matter. I must inform her that the whole of government works in almost every instance upon the basis of accepting the audit reports, the audit certificates and the undertakings of reputable, professional people. If we did not accept

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the auditors' certificate on accounts, on income tax returns and on many other matters, indeed it would be impossible for our society to operate.
However, I am sure that if the noble Baroness, or any other Member of your Lordships' House, has an opportunity of studying the report it will be seen that time and time again the staff in my department had assurances from very reputable bodies; namely, from accountants, solicitors, banks and many others. That is the only basis upon which the system of licensing operated at that time.
The noble Lord, Lord Williams of Elvel, wishes us to say that we will pay out of sympathy. I have considerable sympathy for those who have suffered. My boxes at night have been accompanied for week after week with perhaps a hundred letters a night from individuals who have suffered. The tales those letters contain are indeed harrowing. Many people who have retired are actually put into great financial stress in the last stages of their lives. I have every possible sympathy with them.
However, I have another responsibility: I must judge the matter from the point of view of taxpayers generally and particular sections of our society. I must then say that if it is the responsibility of the Government, the Government should pay. But the report discloses that my department carried out its duties and proceeded correctly. Moreover, even until the company actually collapsed we did not have the kind of complaints which, if it was as widely known as the noble Lord, Lord Williams of Elvel, surmises, we would have been entitled to have.
I commend all Members of your Lordships' House to read the report with great diligence. If then any noble Lords think that my department has been found wanting I shall be happy to return to the House to answer that charge.
Lord Marsh: My Lords, does the Minister accept that no one in the House will be at all surprised to find that no legal liability rests with the Government in this respect? The report—which we have not had the opportunity to read—is purely factual. I ask the noble Lord whether he agrees with this. What is at issue here is the moral responsibility of the Government, who introduced and administered a licensing system which small investors, quite understandably, saw as a good housekeeping seal of approval. However, it failed to protect the investor, and indeed virtually encouraged people to invest on a basis upon which they should never have done. Does the noble Lord agree that it is not a question of sympathy, nor of the law? Many people believe that the Government—and the taxpayer generally who is behind the Government—have a moral responsibility for this failure.
Lord Young of Graffham: My Lord, I am most grateful to the noble Lord, but I think we must be careful as to how far we take that principle. After all, just because the Department of Transport issues driving licences that does not mean to say that it has any moral responsibility in a road accident. I am being most careful in what I say here. It is not the principle of licensing itself; it is what is carried out.
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We have two separate cases in issue here. We have Barlow Clowes UK where licences were issued, and my department received auditors certificates each year certifying that the funds were correct and properly handled. No complaints were received until the very end when we were looking for legal ways by which we could wind up the company. As regards the other instance, we had no knowledge, and nor does Sir Godfray Le Quesne think we should have had, that the company was actually trading and raising money in this country. That is a different matter.
It is true that in the first instance the company was licensed. It is true, whether or not it is because of the licence, that the loss happily appears to be far less in this country. However, we can do not more than rely upon the system which we have and upon the auditors' certificates which we receive and then see how we can act in order to save the position within the law.
I am happy to say that the position is far better under the law today because, if an intermediary wishes to solicit funds for an offshore investment, investors will be warned of the dangers involved, the fact that it will not be covered by the compensation fund and that they must be aware of the risks which are often run in those circumstances.
Lord Hailsham of Saint Marylebone: My Lords, at the outset of the Statement my noble friend said, obviously rightly, that there were matters in the report which referred to the possibility of criminal proceedings. Can we know with whom the responsibility for bringing such proceedings or not bringing them will ultimately rest? Will it be the Director of Public Prosecutions, the Attorney—General or some other statutory body? Further, within what sort of time frame shall we know whether such proceedings are to be brought?
Lord Young of Graffham: My Lords, that is a matter for the Serious Fraud Office and for those authorities which look at such matters; it is not a matter for me.
Lord Diamond: My Lords, while all of us on these Benches are most grateful to the Secretary of State for having made the Statement, I think that I must preface my comments by saying that the main conclusion to be drawn from this sad affair is that it underlines what we already fully know. Anyone who invests has to invest with caution, and any investment which attracts above normal returns generally carries above normal risks. Further, anyone who invests should never put the whole of his eggs in one basket in any circumstances.
Having said that, is it not clear to all of us that as a result of the Government having given in general terms a stamp of respectability to the name of this partnership, they bear a measure of responsibility in looking after—I go no further than that—those who have suffered grievous losses?
Can the Secretary of State therefore tell us who—either the Government or an appropriate department—will ask the necessary questions of those intermediaries who, knowing the

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circumstances, or who should have known them if they were not negligent and liable therefore by being so negligent, advised clients to invest? They advised them not merely to invest but to invest the whole of their savings and to take such savings from a safe investment such as a building society and put them into this highly speculative venture. I cannot imagine any respectable intermediary doing that. What is happening about the further questioning of those individuals? As to the future, under the present so-called protective system of the investor, is the Secretary of State satisfied that, were those circumstances to repeat themselves, the losses would not occur, or would not occur to anything like the same extent?
4 p.m.
Lord Young of Graffham: My Lords, I listened with great interest and understanding to the noble Lord, Lord Diamond. It is not for me to comment this afternoon upon the behaviour of the intermediaries, but I agree with much that the noble Lord said. Since the coming into full effect of the Financial Services Act the conduct of intermediaries has been under the care of their own self-regulatory body (FIMBRA). The chairman of that body is a Member of your Lordships' House, and he may be able to throw some light upon the matter.
Many things have changed since the passing of the Financial Services Act and so the same circumstances would not repeat themselves. In the case of doubts, it is now much easier to administer the funds for the general protection of the body of investors. We were in a difficult position. Under the then state of the law we were unable to take steps to protect those funds if the licences were withdrawn. Since August a compensation fund has been in operation and so people who invest in such funds know that to an extent they are obtaining cover. There is now a health warning in respect of those funds which are not covered by the compensation fund. The general principle remains the same. Investment for safety is something that should surely be spread above all that.
Lord Elton: My Lords, the noble Lord, Lord Diamond, referred to the organisation formerly known as NASDIM, of which in its present form I am now chairman. He asked who was to ask questions of those who had had dealings with the affair under the old provisions. The current responsibility lies with my association. I can assure your Lordships that the rules of the association and the provisions of the statute will be enforced on any member without fear or favour. However, I remind the noble Lord that we are talking about a system which no longer exists. The old PFI Act has been repealed and replaced by the Financial Services Act. Your Lordships will agree that recent events have shown that the need for that Act was paramount and urgent. There can be no doubt that it should have been passed. Under it, my association has much greater control over the behaviour of its members. It has nothing to do with the investment companies, which fall to another association, but it is responsible
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for intermediaries and has made a scale of categories corresponding to the scale of risks in the business dealt with.
We regard dealing with offshore funds as a very high category. There are much closer controls now than there were. May I in conclusion say—
Noble Lords: No!
Lord Elton: My Lords, may I in conclusion ask—in fact, the Procedure Committee recommended that Statements be dealt with only in the interrogative and your Lordships rejected that recommendation, but I shall however observe it—whether the noble Lord is aware that I share his and everyone else's concern for the victims of that collapse, and welcome the fact that there may be an early pay out for the onshore operation. Where individuals have substantial amounts invested in the offshore operation, and the liquidators can give a firm statement of what will eventually become due, I hope that the Government will recognise that the effects of having one's money frozen are exactly the same for the time being as having lost it all. If an arrangement could be made for an early payment on that side also, perhaps there could be a letter from the liquidators to the investor stating his expectation which could he presented to a clearing bank as evidence of money to come to hand. I hope that the liquidators recognise that many of the people involved have no financial experience and that they should be told that the letter should go to a clearing hank and not to a loan shark.
Lord Young of Graffham: My Lords, we are all concerned about the status of those who invested all their funds in either of the funds. I know that those who are now responsible for putting in order the affairs of both funds and for repaying the investors are equally aware of that. I am informed that there will be a substantial payout of the United Kingdom fund before Christmas. Alas, there cannot he a payout of the Barlow Clowes International fund until the New Year. I shall certainly pass that message on to the liquidators.
Lord Peston: My Lords, I am bound to say that the Secretary of State's Statement sounded as if he were much more concerned to protect the great department of state of which he is in charge than to protect investors. The investors in this case could at least ask the question: if the Department of Trade and Industry was not there to protect us, and if no one else was there to protect us, who was there to protect us? After all we are not dealing here—the Secretary of State should not make the point—with normal risks. The investors involved are not fools. They were perfectly aware of the fact that these things were risky. They are concerned about the misuse of funds and misinformation.
To be told either that we did the best we could or we did all that we could although it was not the best we could do, and it still ended this way, does not sound satisfactory to me and it will not sound satisfactory to the investors. It is all very well to express sympathy, but without 50p all the sympathy in the world will not buy one a cup of coffee.
Lord Young of Graffham: My Lords, I did not say that we did the best we could. I pointed out that we followed the law at that time. The basis of the system was that we relied upon annual returns supported by auditors' and other statements. We received those statements. When it started to come to light that the position was more serious, as I outlined in considerable detail in my Statement, we took such steps as were open to us at that time to try to resolve the position.
It was not until May 1988, when sufficient evidence was available, that we could go in to wind up the company. Those were difficult situations. The law is easier today than it was at that time. The liquidation of the company is being carried out under the present law. However, the law is not arbitrary. Before any department of state can move it must have the necessary evidence. The way this affair was conducted, especially the way the funds were raised for the Gibraltar company, raises considerable questions as to whether that was by accident or otherwise.
Lord Cledwyn of Penrhos: My Lords, I am sure that the noble Lord the Leader of the House will agree that there is a strong case for a debate. The exchanges thus far have underlined that need. I am sure that he will further agree that it would be best to have a debate after the matter has been considered by the ombudsman, if indeed it goes as far as the ombudsman. I am not pressing at this stage for a debate, which would in any event be a matter for the usual channels.
The Secretary of State urged us to read the full report. We shall of course do that now that it is available to us. At the moment, our exchange is based upon the Statement which the noble Lord made to the House. On the basis of that Statement, does the noble Lord at least agree that a very grave error of judgment was committed last November when Barlow Clowes was relicensed at a time when his department was investigating the firm's affairs against a long background, expecially since 1983 of dubiety about the firm?
The noble Lord's Statement refers to a possible collapse if the licence had not been granted in November. Does he not agree that even a collapse, had it occurred, would not have been as serious as the debacle which has now taken place with all the consequences for the small investors, to which the noble Lord, Lord Marsh, has referred?
Finally, one agrees that the law has changed and that the law today is better than it was before. However, will the noble Lord confirm that he, as Secretary of State, and his honourable friends the other Ministers were responsible for the licensed dealer system under the 1958 Act which was valid until the end of April this year?
Lord Young of Graffham: My Lords, I am very grateful to the noble Lord the Leader of the Opposition. I think that all Members of your Lordships' House will be able to assess the position of my department and will be all the better for reading the report. It is not an easy report to read. The noble Lord the Leader of the Opposition
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criticised my department for renewing the licence last November. My Statement made clear that we had two other alternatives. One was not to renew the licence. I said that that would have precipitated the disorderly collapse of the business. It is true that that is no less than the position that occurred a few months later. Once it was known that the business was no longer licensed, it would have collapsed. However, there is the great difference that we would not have been able to administer the funds, as we were able to in May of this year when we applied for the winding-up order. That was the time when we were able or the liquidators were able, to seize the funds and to ensure that they would then be liquidated and returned to investors. The report shows that at the time we could not have done that because we did not have the powers.
The other course was to grant the licence but immediately to issue a notice of intention to revoke it, which would have given us slightly stronger powers. However, under the state of the law at that time the company could have applied to the licensed dealers' tribunal and could have carried on trading until the tribunal had decided its case. That is something which often takes many months to determine.
The noble Lord has referred to the old legislation. We have been aware for a long time of the defects of that legislation. Professor Gower was asked by the Government to prepare a report in 1981. In the early 1980s that report came before your Lordships' House. In 1983 we made the regulations stronger. They were the first regulations that required the return of auditors' certificates and other verification in this field, and that was finally brought into the Financial Services Act 1986, where the law stands today. That is why I say that these precise circumstances will not recur. There are different remedies and different steps. That does not by any means suggest that fraud will never occur again.
Lord Merrivale: My Lords, perhaps I may ask Her Majesty's Government or the Secretary of State a question relating to Barlow Clowes International. Bearing in mind the Government of Gibraltar's keen interest in attracting investors to Gibraltar and the greater tax advantages in Gibraltar compared with those granted by the Channel Islands, damage could have been done to the image of Gibraltar as an offshore base. Therefore will the Secretary of State carefully consider compensation to those who invested in Barlow Clowes International, bearing in mind the final remarks of my noble friend Lord Elton? I feel that those elderly investors who invested in the Gibraltar area should be looked after.
Lord Young of Graffham: My Lords, I am grateful to my noble friend but I am not the Secretary of State for Gibraltar, which is outside our jurisdiction. The Government have been impressing upon the Government of Gibraltar that they should introduce legislation in order to ensure that the funds there are properly managed. Under an impending directive to come through from the European Community, if Gibraltar does not do so, I suspect that it will not be able to operate as freely within the Community. I do not believe that it is for me to take any measure of

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responsibility for those who go to Gibraltar for reasons which only they can give.
Lord Stoddart of Swindon: My Lords, can the noble Lord tell me whether Mr. Clowes is suffering the same financial hardship as the investors in his company? Is it true—as has been alleged—that Mr. Clowes is receiving from the liquidators in excess of £1,000 per week for his living expenses?
Lord Young of Graffham: My Lords, I can answer for much of your Lordships' House but not for Mr. Clowes. I am not in a position to answer for him. The arrangement to which the noble Lord refers is a matter between the liquidator and Mr. Clowes.
Lord Morris: My Lords, is my noble friend the Secretary of State satisfied that the United Kingdom and European regulations deal adequately with the problems of disclosure caused by the exploitation of countries such as Gibraltar and Luxembourg for the registration of companies? We have seen this, for instance, in the case of Barlow Clowes and Minorco S.A.
Lord Young of Graffham: My Lords, these are two entirely different matters. Nobody was in any doubt about the ownership of the Barlow Clowes International shares. The issue with Minorco, which is a Luxembourg company, is disclosure of interests in shares. The European Community has recently adopted a common position which is just short of agreeing on a directive which, while it will not bring the rest of the Community up to our standards, is a very substantial improvement. Gibraltar will have to bring itself at least up to the standards of the European Community.
If we are looking at investment in Gibraltar in the future under the sort of circumstances we have been describing, investors, who only receive details of this investment, as I understand it, not by looking at advertisements but after responding to advertisements about nameless funds received in communications in writing from intermediaries, will have to be warned that if they invest in such funds they will not be eligible for the compensation fund. I should have thought that that should be a clear enough warning.
Lord Diamond: My Lords, perhaps I may—
The Lord Privy Seal (Lord Belstead): My Lords, perhaps we can make this the last question. I think we have had a good run round the course and if the noble Lord, Lord Diamond, will put his point, we can move on to the next business.
Lord Diamond: My Lords, I was merely going to ask the Secretary of State whether he is aware that I am most grateful to him for the hint that he gave to the noble Lord sitting behind him. I am particularly grateful to the noble Lord. Lord Elton, for the very useful series of non-question information he gave us.

Housing Bill
4.17 p.m.
The Earl of Arran: My Lords, I beg to move the Motion standing on the Order Paper in the name of my noble friend Lord Caithness.
Moved, That the amendments for the Report stage be marshalled and considered in the following order—

Clause 1

Schedule 1

Clauses 2 to 7

Schedule 2

Clauses 8 to 24

Schedule 3

Clauses 25 to 39

Schedule 4

Clauses 40 to 46

Schedule 5

Clauses 47 to 59

Schedule 6

Clauses 60 to 62

Schedules 7 and 8

Clauses 63 to 76

Schedule 9

Clauses 77 and 78

Schedule 10

Clause 79

Schedule 11

Clauses 89 to 107

Schedule 12

Clauses 108 to 117

Schedule 13

Clauses 118 to 126

Schedule 14

Clauses 127 to 129

Schedule 15

Clauses 130 to 134

Schedules 16 and 17

Clause 135

The title—(The Earl of Arran.)
On Question, Motion agreed to.

School Boards (Scotland) Bill
4.18 p.m.
The Earl of Dundee: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Earl of Dundee.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 18 [Financial powers of Boards]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 55:
Page 11, line 31, at end insert ("Accounting procedures for the recording of the said funds and gifts should he agreed with the education authority and should he subject to internal or external audit.").
The noble Lord said: This amendment deals with the accounting procedures for moneys raised by the school boards. We believe that it is essential that any moneys generated by the school boards which are not forwarded to the education authority but retained for distribution by the boards should be accounted for in a proper manner. Accounting records and procedures should be standard throughout the education authority. Therefore it would be appropriate for the education authority to issue standard guidelines to ensure that these procedures are adhered to and that the books of accounts, documentation, etc. should be the subject of an annual audit. I think that would be a helpful measure for school boards. I am sure that most of them would appreciate having something to help them keep their own finances in order and to make it quite clear to everyone else that the moneys collected, donated or accrued to them were properly spent. I beg to move.
The Earl of Dundee: I am grateful to the noble Lord for his concern in this matter. However, I think we should be quite clear about exactly what it is that is under discussion. School boards could have two sources of funds. First, there are the sums provided to boards by their authorities for running their affairs and discharging their delegated functions. Those sums are governed by Clause 17. Any such moneys will remain within authorities' financial control mechanisms and will be subject to authority audit procedures in the normal way.
Secondly, there is the opportunity for boards, under the powers conferred by Clause 18, to seek to raise funds for the benefit of their schools. These powers are very limited. For example, a board may not borrow; it may not levy charges on parents for education; a board may not take an interest in land. In short, Clause 18 funds are the kind of thing with which we are already familiar in the activities of parents' associations and similar bodies. They are the funds which result from a dinner dance, a raffle, a school fete and similar functions.
I quite agree that such funds should be managed with appropriate care and should be properly accounted for. If boards want advice on how this should be done, I am quite sure that authorities will be happy to advise them. They may receive good advice from their own schools' parents' associations, too. However, I quite agree that Clause 18 funds should be the subject of appropriate management and accounting procedure. What I am not sure about is the suggestion that formal local authority audit procedures and audit by the commissioner for local authority accounts is a good idea for the results of a school fete. I am sure the commissioner would have little relish for the prospect. Is it not more appropriate for guidance and training material to advise boards that proper accounting for such funds is good practice, and perhaps also to suggest some methods and techniques? That is what we intended. I commend it to the Committee as the best approach.
Lord Carmichael of Kelvingrove: I had no desire to use a sledgehammer to crack a nut in this situation.
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I certainly appreciate that it is undesirable to exercise too much control over school funds. However, throughout the course of the Bill Ministers have been speaking in two different ways. On the one hand they talk about great powers being given to school boards, but on the other hand they talk about money raised by school boards only coming from such events as raffles. They say that school boards cannot invest, borrow money or have an interest in land.
However, if boards become as important as Ministers have suggested they will become as a result of the Bill, they may gather quite considerable funds. My amendment was intended to be a safeguard and not a means of minutely overseeing school funds. It was intended to be a form of guidance for school funds.
The Minister, towards the end of his contribution, appeared to suggest that there was scope within the Bill for proper auditing by education authorities to take place at a later date. If that were the case, it could act as a safeguard. At the first collapse or difficulty of a school fund people might be only too quick to say, much as they said about the Barlow Clowes affair, that the Government had the opportunity to put the correct machinery in place but they did not do it. School funds may not be in the same class as Barlow Clowes investments, but to individuals they could be just as important. However, I do not think the Minister is going to go any further on this point.
Baroness Carnegy of Lour: Before the noble Lord decides what he wishes to do with his amendment, I wish to ask my noble friend whether the Government have any picture of the limit up to which gifts may be received. Clause 18(1) of the Bill states:
"A School Board may—

(a) raise funds by any means (other than borrowing); and

(b) receive gifts,

and may expend any sums so received at their discretion.
Schools may, in due course, receive quite a large gift. As that situation could arise, would it not be wise to include in the Bill some provision as regards the auditing of money? I do not know whether that provision is implied elsewhere in the Bill. I make that point because it occurs to me that we may be talking about more than the proceeds of a fête.
Lord Carmichael of Kelvingrove: The noble Baroness described this matter rather better than I did. No one wants to make this procedure unnecessarily cumbersome, but there is a point at which protection becomes necessary. The Minister seemed to hint that there were powers in the Bill in this regard. Will he expand on that?
The Earl of Dundee: Certainly. As regards limits on gifts I can say that there are none. A substantial gift could be made, but boards will always have to consider a head's advice on how they spend a gift. In addressing the concerns of the noble Lord, Lord Carmichael, again, it might be helpful if I remind him that boards have a duty to abide by correct procedures for accounting and accounting management. If they were to do otherwise they would be in direct breach of that duty as referred to in the Bill.

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It might also be helpful if I remind the noble Lord of the right of parents to bring a board to heel if they feel that the board in any way is guilty of malpractice, and certainly if such malpractice should include mismanagement of funds and accounting procedures. In context I feel that measure provides the right balance. If we were to go further than that, in the words used by the noble Lord earlier, we might run the risk of using a sledgehammer to crack a nut.
Lord Carmichael of Kelvingrove: I have no desire to prolong this discussion. However, I remind the Minister that these boards do not even need to make annual reports to parents according to the Bill. Therefore I do not know how the parents would know about any malpractice. But perhaps this is something we can look at again.
The Earl of Dundee: The noble Lord will recall that at a previous stage of the Committee my noble friend Lord Sanderson of Bowden undertook to look at Clause 12 and consider putting boards under a duty to report to parents at least once a year. With that undertaking to look at the matter, I think we have gone some way to meet his concern.
Lord Hughes: If the noble Lord, Lord Sanderson of Bowden, decides not to call for a report, the one proviso that helps the situation would be removed. In those circumstances will the Minister undertake to have a look at the situation suggested in the amendment?
As the noble Baroness, Lady Carnegy of Lour, said, boards may well be the recipients of substantial gifts. My noble friend Lord Carmichael referred to the Statement we heard earlier about financial matters that had gone wrong on an enormous scale. In such circumstances it is no consolation to parents to know after some such event has occurred that they had been told about it. There is an obligation on the Minister, if he does not produce the suggested safeguard, to look seriously at the alternative as suggested in this amendment.
The Earl of Dundee: I am grateful to the noble Lord. I take his point that if gifts were to be substantial, if we were to fall foul of a time factor—that is to say that the malpractice had already occurred before parents heard of it—and if boards were not to heed whatsoever the advice which had been given to them on correct accounting procedures, there would be an unsatisfactory situation.
However, conversely it does not necessarily follow—and particularly due to existing safeguards to which I have already referred—that, even if my noble friend Lord Sanderson is not able to arrange that there should be an annual report by the boards to parents, the situation is unsatisfactory. But I certainly take on board what the noble Lord has said and I shall link the matter with our current endeavours to improve the Bill as best we can.
Lord Carmichael of Kelvingrove: We shall watch for the publication of the amendments for Report
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stage with great interest. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove: Amendments Nos. 56 to 59 inclusive have already been debated and disposed of.
[Amendments Nos. 56 to 59 not moved.]
Clause 18 agreed to.
4.30 p.m.
Clause 19 [Allowances for members of Boards]:
Lord Addington Lord Addington moved Amendment No. 60:
Page 12, line 16, leave out ("section") and insert ("sections 45 and").
The noble Lord said: In moving Amendment No. 60 I wish to speak also to Amendment No. 61. The aim of the amendment is to ensure that loss of earnings incurred by those attending hoard meetings will be no deterrent to attending such meetings and that anyone who loses earnings will be recompensed for those, and only for those earnings. A system under which someone lost wages or salary for attending such meetings might result in some people being barred from attendance because of financial considerations. Although I accept that such meetings would normally be held out of working hours, it might bear rather heavily on people doing shift work or part-time work outside normal working hours.
I grant that the numbers affected would be fairly small. Nevertheless, for the boards to be most effective membership must be an attractive prospect to all those who would be willing to serve on them, regardless of financial considerations. I beg to move.
Baroness Carnegy of Lour: I hope that the Committee will not accept the amendment. I entirely understand the point made by the noble Lord. He made it very succinctly. However, perhaps he has not realised that Section 45 of the Act—which I looked up this afternoon—relates to attendance allowances and is not about refunds for loss of earnings.
Attendance allowances are part of the structure of local authorities in Scotland. Local authorities involve councillors in very many more meetings and hours of work than will school boards. They also have the rather unfortunate effect that, because everyone receives an attendance allowance if they attend a meeting, people want rather more meetings than perhaps are necessary. I believe that school boards would be very susceptible to that tendency. I hope that the number of meetings will be limited and that they will be held at times which are convenient for the members of the boards. I do not believe that it would be at all a good idea to pay an attendance allowance.
The Earl of Dundee: I appreciate the intention of the amendment. However, I believe that we need to distinguish between the kinds of body for which allowances of different kinds are appropriate. Clearly board members may be involved in some activities—training for example—which will require

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them to travel and incur subsistence costs. In that they are similar to members of local authorities and many other kinds of body. It is therefore right that members of school boards should qualify for travel and subsistence allowances. The Bill provides for that. In order to give a degree of tidiness, it relates board members' rates of subsistence etc. to those used in local government.
However, there seems to me to be a very great difference between boards and local authorities in terms of the likely frequency and duration of their meetings and in the other calls which will be made on members. Board members will in no way be like elected members of authorities in those terms. My noble friend Lady Carnegy has already made that point. Therefore it seeems right that board members should not qualify for financial loss allowances simply because such allowances, like the attendance and special responsibility allowances which are also covered by Section 45 of the 1973 Act, are not relevant to the position of board members.
Lord Hughes: One of the points made by the noble Lord, Lord Addington, was that the proposal would not affect many people because most meetings would almost certainly take place in the evening. Therefore the loss of earnings would be limited, as he has suggested, perhaps to people who may lose evening work by attending a meeting. As it stands, the Bill refers to payment of subsistence allowances. If a man or woman loses wages he or she has lost subsistence for that period. Therefore, should such payments not fall quite naturally under the payment of a subsistence allowance?
I must agree with what the noble Baroness has said. Section 45 does not apply because it relates to attendance allowances. However, loss of wages used to be the common basis for payment. I believe that the Government could well consider whether there is a way in which people involved could receive compensation under the terms of payment of the subsistence allowance.
Lord Carmichael of Kelvingrove: I hope that the Minister will give sympathetic consideration to the amendment. There is always concern about abuses, and there have been cases of abuse of attendance allowances in local authorities. I am sure that the problem occurs more widely. It should be remembered that the idea behind the introduction of the allowances was to try to achieve some equity and a reasonable spread of representation. Because someone happened to have a private income it was almost an abuse of their comfort and security that they were able to take on certain jobs that others were not able to do because of the necessity to earn a living. I think that we should always remember that a great many people who were in the position of having to have an attendance allowance almost certainly gave up the chance of promotion by taking part in public service. I know hundreds of such people.
There is another aspect of this matter. There will be instances where a good deal will be involved in attending meetings, particularly in Highland areas. I
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can imagine meetings in Highland areas being too far away for some members if the board covers a collection of schools because the individual schools are too small to have their own boards.
I hope that the Minister will give the amendment a fair amount of consideration. We all know that payment for public work is a difficult matter, but I hope that the Minister will at least give the remarks of the noble Lord, Lord Addington, the care they deserve.
The Earl of Dundee: I believe it is appropriate to consider whether membership of a school board is service which should be recognised for special leave from employment. The Government hope that employers will take an enlightened view of that possibility. Not only is it a valuable local service but there will be many employees who will learn much and develop many useful skills as a result of their participation in the work of boards.
In order to give a positive lead in this matter I can assure the Committee that the Government themselves will act as an enlightened employer in this respect and will regard service on a school board as an appropriate reason for civil servants to claim special leave.
Perhaps I may just return to the remarks about subsistence made by the noble Lord, Lord Hughes. Subsistence payments are for expenses incurred away from home and are not a replacement for earnings.
Finally, in answer to the noble Lord, Lord Carmichael, I think that the kernel of the argument is that, in encouraging people to take an interest in school boards, we hope that they will act on a voluntary basis. We have very much in mind the dissimilarity from local government of school boards, which may be served by volunteers. When people join boards on a voluntary basis it is inconsistent that they should be paid for doing so.
Lord Addington: I regret that the Minister cannot accept the arguments put forward. Although I accept that people would join boards on a voluntary basis, there may be cases, even if they are few and far between, in which someone will have to forgo attendance on financial grounds. The point has been made about the amount of time spent in travelling, especially in rural areas, and the time taken in order to attend meetings. That point should be borne in mind. However, as the Government are not prepared to accept this amendment I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 61 not moved.]
Clause 19 agreed to.
Clauses 20 and 21 agreed to.
Clause 22 [Interpretation]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove had given notice of his intention to move Amendment No. 62:
Page 13, line 35, at end insert—
(""Community School" means a school designated by an education authority as a community school and which, during the normal school day for pupils of school age, provides one

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or more of the following activities: formal further education, informal further education, or community education for those beyond statutory school leaving age.").
The noble Lord said: We have already discussed Amendments Nos. 62 to 64.
[Amendment No. 62 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 63 and 64:
Page 13, line 40. after ("region") insert ("or of an islands area").
Page 13, line 43, at end insert—
("'islands councillor" means a councillor elected for an electoral division of an islands area, in terms of section 5(1) of the 1973 Act;").
The noble Earl said: These amendments have already been spoken to. I beg to move.
On Question, amendments agreed to.
Clause 22, as amended, agreed to.
Clauses 23 and 24 agreed to.
4.45 p.m.
Schedule 1 [Electoral Procedure]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 65:
Page 15, line 6, leave out ("(subject to paragraphs 4 and 6 to 9 below)").
The noble Earl said: This is simply a detailed drafting amendment which follows from changes made in another place to make authorities' electoral schemes subject to guidance from the Secretary of State. Paragraph 1 of Schedule 1 contains the reference:
"(subject to paragraphs 4 and 6 to 9 below)"
but, since the paragraph goes on to state that arrangements are to be in accordance with this schedule, the detailed references are not necessary. I beg to move.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 66:
Page 15, line 22, at end insert ("including the date at which such eligibility is to be determined in respect of any particular election.
5A. For the purposes of paragraph 5 above, the education authority shall, in respect of each school in their area, establish and maintain a list of the names of the parents of pupils in attendance at that school, and unless a parent's name appears on the list on the date determined by an authority under paragraph 5 above for the purposes of any election he shall not be eligible to be a candidate or to vote in that election.").
The noble Earl said: It is our intention that the electoral procedures for school boards should be secure, safe and efficient. During debates in another place there was much agreement on the need for the smooth running of the electoral procedure. The Government accepted amendments specifically requiring authorities to appoint returning officers and also provided that they should not submit electoral schemes for approval by the Secretary of State. Instead authorities would be required to draw up schemes in conformity with the Bill and in accordance with guidance on schemes which would be issued.
The purpose of this amendment is to give authorities a duty to compile an electoral roll for parent election and a specific power to set a date by
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which eligibility to vote and to stand can be determined for any particular election. For practical purposes it will be important that authorities should be able to set such a date a little way ahead of an election, by which time eligibility to stand or vote will have been determined. This will allow a definitive electoral roll to be established.
All these matters could be secured by provisions in the guidance on electoral schemes which the Secretary of State will issue or indeed inferred from authorities' general powers and duties in regard to board elections. However, we thought it right that these central provisions should appear on the face of the Bill, leaving the guidance to deal with more detailed issues. I beg to move.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Schedule 2 [Appointment of headteachers, deputies and assistants]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 67:
Page 16, line 18, leave out sub-paragraph (h) and insert—
("(b) in any other case, of an equal number of persons nominated by the education authority and by the School Board; and one of the nominees of the education authority shall act as the Chairman of the Committee and one other shall be the headteacher.").
The noble Lord said: It may be for the convenience of the Committee if we deal with Amendments Nos. 67, 68 and 69 together. As regards Amendment No. 67, the principle adopted generally by education authorities in making senior appointments in schools has been to consider that where elected members are involved in the appointment, one of their number should act in the capacity of chairman. This principle is based on the fact that since the ultimate responsibility and accountability to the public rests with the elected members, they should have a say in the appointment. That principle is recognised in Schedule 2 in the case of the appointment of a head teacher but the chairmanship in respect of the appointment of a deputy and an assistant falls to the headmaster.
It is believed that this system is inappropriate, for the reasons advanced above, and also that it would put the headmaster in an invidious position. He would be in a position of authority over those to whom he is accountable—namely, the elected member—and those whom he is advising—that is to say, the school board. In practice, quite correctly, great weight is given to the views of the headmaster. The opportunity to express those views and be involved in the decision to appoint can adequately be secured by his membership of the appointment committee without the need for him to act as chairman. In all the circumstances the public accountability of the committee would be more appropriately reflected by the chairmanship in all cases being exercised by an elected member of the authority.
Amendment No. 68 will have reference to, among other things, the sick pay scheme of the Scottish joint negotiating committee for teaching staff in school education, by whose terms a headmaster may, subject

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to medical certification, be on sick leave for a period of at least one year. If paragraph 3 remains unaltered, any functions of the head teacher in relation to staff appointments might be incapable of being exercised and deputy and assistant head teacher posts might have to remain vacant for long periods. Where that happened it would have a damaging effect on the running of the schools. I shall not bore the Committee with numerous examples of cases in which for perfectly legitimate reasons head teachers have been away from school for a considerable time. I ask the Minister to reflect on that point.
As lines 22 to 28 of the Bill stand, the provision conflicts with the existing line management arrangements and consequently would place the head teacher in a potentially difficult position. The procedures adopted generally by education authorities in making senior appointments in schools have been to consider that where elected members are involved in the appointment one of their number should act in the capacity of chairman. This practice rests upon the basic proposition that the ultimate accountability to the public rests with the elected members. In addition, in view of the possible conflict of interest in the case of appointments of deputies and assistant head teachers, it is recommended that here again the head teacher should not be the chairman of the appointments committee. I stress that the head teacher is a very important person in the school. However, in the instances that I have given, and with the position proposed in these amendments, while his point of view must be seriously taken into account, nevertheless we feel that in almost every case the chairman should be an appointed member. I beg to move.
Baroness Carnegy of Lour: Schedule 2, paragraph 2, proposes somewhat different arrangements for the appointment of the head teachers and of depute and assistant heads. I am happy that, for the appointment of head teachers, the committee should consist of an equal number of people nominated by the authority and by the board, and that the chairman of the committee should be one of the authority nominees. I can see that arrangement working very well.
I have been in some doubt about the arrangements for the appointment of deputes and assistant heads to which the first amendment refers and on which the noble Lord has spoken. This proposal also allows for equal numbers of members of the committee from the authority and from the board. In addition, the head teacher is chairman. When I first studied this schedule I was extremely surprised by the proposal. I gather that I was not the only one. All over Scotland in local authorities people were surprised and interested. They wondered how it would work. The idea that the head teacher should chair the committee for the appointment of his own depute or assistant was unfamiliar to me.
Members of the Committee will know that every local authority in Scotland has chosen to do this in a somewhat different way. I was familiar with the position where the head teacher was not a member of the appointments committee, but its adviser. When the committee had interviewed candidates and was
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discussing whom it might appoint to be the depute, if he or she would prefer not to work with one of the candidates, he or she could imply a preference but need not commit himself or herself to who should be appointed. This meant that if there were one or even two internal candidates the head teacher need not express an opinion for or against one of those people.
When I discussed this with CoSLA and with the EIS—the biggest teaching union— agreed with them at that time that this amendment was a good idea in part. I did not think that it was a good idea for the head teacher to be a member of the interviewing panel and not the chairman. However, I thought that for the head teacher not to be the chairman was sound. I have now heard that the associations which specifically represent head teachers of the secondary and primary schools—apart from the EIS who have some members who are head teachers—are very much in favour of this idea. When my noble friend replies to this amendment, perhaps he will confirm this fact if he knows that it is correct. I have not been able to speak to the associations myself.
If that is the case, it is necessary to consider the matter further. I realise that head teachers will be operating in a very different situation from that which applied hitherto. There will be much more delegation to the schools. They will be operating in a very different atmosphere with much less to-ing and fro-ing with councillors, but more with the board and the directorate.
I suspect that gradually the appointments system will become even less political than it has been hitherto. It has varied in different parts of the country. In some places it has been rather political. Therefore to chair the committee which interviews one's potential deputes and assistants is very helpful in this new atmosphere. For someone who has experience of the old system, as does the noble Lord, Lord Carmichael, one has to think oneself into that situation. However, it could work better than the noble Lord suggests and perhaps better than the present arrangement. If the associations representing head teachers want this arrangement I should not like to stand in the way and vote for this amendment.
On the point raised by the noble Lord about the head teacher who is in post but who is unable to be there, perhaps through illness, for as much as a year—as I have known happen from time to time—an extremely difficult situation is created by the Bill. I do not agree that the acting head teacher should chair an appointments committee for a depute or an assistant. Perhaps my noble friend will look at the Bill to ensure that it provides for an adequate operation of the system when the head teacher is off for some weeks or months. That can crop up and I cannot see that it is allowed for in the Bill, as has been referred to by the noble Lord, Lord Carmichael.
I cannot support this amendment for the reasons that I have given. I ask my noble friend whether he will confirm that the head teachers have indicated through their associations that they are in favour of this arrangement for appointments. Perhaps he will also consider what will happen when head teachers are off duty for a prolonged period.
Lord Hughes: Unlike the noble Baroness, Lady Carnegy, I do not attach the weight to the views of the head teachers that she does. It would be astonishing if they were to write to the Secretary of State to say, "No, we do not think a head teacher should be the chairman". It would be almost like crying, "stinking fish" in their own shop.
However, I wish to tackle the issue in a different way. Paragraph 2(a) requires the committees to be equally composed of persons nominated by the education authority—and one of them will be the chairman—and by the school board. But paragraph 2(b) begins by stating that it will be,
"an equal number of persons nominated by the education authority and by the School Board; and the headteacher of the school, who shall be chairman of the committee".
If one takes that at its face value it will no longer be a committee of equal numbers unless the assumption is made that either the education authority or the school board must nominate the headmaster as one of their nominees. I do not think that that is the most logical interpretation.
I assume that under paragraph 2(b) it will be an unbalanced committee, with the head teacher automatically becoming a member of the committee in addition to the two groups of nominees. Although my name is on this amendment, along with that of my noble friend Lord Carmichael, on thinking about the matter again I am not happy about the part of the amendment which puts the head teacher on the committee as a member. I know that in the past there have been occasions in local government when officials have been suggested as members of a subcommittee. In practice they did not like it because when they were present as the official they were the professionally qualified adviser to the committee. Anything they had to say was treated with the respect that the position gave them. In those cases where they became just members of the committee that is how they were regarded. The education authority members, the education committee members or the members of whatever committee it was, tended to say, "After all, you are no more qualified than I am".
On a different point, I should not like to be a headmaster chairing a committee who had the duty of falling out with a member of his education authority. It may not matter very much on one occasion in the appointment committee; if it happened regularly it would not stand the headmaster in very good stead in future. It would be very much better—I hope that my noble friend will agree—that in either case the headmaster should be in attendance as the professional adviser and the chairman of the committee should be a member of the education authority.
5 p.m.
The Lord Advocate (Lord Cameron of Lochbroom): As the noble Lord, Lord Carmichael of Kelvingrove, has made clear, the purpose of the amendment is to take away the role of the head teacher as chairman of the appointment committee which is to select members of the senior management team at his school; that is, the deputy and assistant head teachers. In parenthesis I should point out to the
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noble Lord, Lord Hughes, that there will be no head teacher at the time when an appointment of head teacher is being considered. I suspect that the noble Lord was aware of the difficulty in this regard.
Lord Hughes: Indeed, I can read, and I noted that. I was talking about the second instance where it would be three, three and one, or where one of the three was to be the head teacher.
Lord Cameron of Lochbroom: As I understand the justification for this series of amendments, it is effectively to preserve the existing role of the education authority in these appointments. The noble Lord, Lord Carmichael of Kelvingrove, referred to ultimate accountability and public accountability. I do not understand the logic of the case put forward; nor, indeed, do I see the force of it.
Let us consider how Schedule 2 stands as drafted in the case of a vacancy arising when a deputy or assistant head teacher post comes to be filled. In paragraph 1 we are told that it is the education authority that advertises the post. We are then told that the education authority, having decided to proceed further with the appointment, sets up a committee for the purpose of considering a short leet of candidates provided by the education authority. I see little here that removes any of the proper rights or responsibilities of the authority. It seems to me that at this stage the authority has had every opportunity to satisfy itself that all the candidates on its short leet are acceptable to the authority. Indeed, I find it hard to believe—as I understand it, this was not suggested—that the authority would include candidates that it did not find acceptable. As pointed out, at this point the appointment committee is made up of equal numbers of members nominated by the education authority and the school board concerned. The head teacher takes the chair.
The noble Lord, Lord Carmichael of Kelvingrove, said that this places the head teacher in an invidious position, to use his term. The Opposition ask us to envisage that the appointment committee will operate on an adversarial basis with the so-called education authority members ranged against the school board members leaving the head teacher to hold the ring and take a difficult decision. I should have thought that that was a travesty, a caricature, of the position. It suggests that that members of the appointment committee would act in an entirely improper way.
Members of the appointment committee are selected with a single, clear task. It is to select from the short leet drawn by the education authority the candidate who in the view of the committee is best suited to the post in question. At that point the members are not there in a representative capacity. If the authority has particular views about the criteria for suitability of candidates, these will already have been exercised at the stage when the authority draws the short leet. At the point under discussion, what is in question is a collective effort to select the best person for a particular post from a group of candidates, all of whom are eligible and all of whom are considered acceptable by the authority that will be the employer.

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It may well be that this committee will require direction and guidance. And that is what we have provided. Who better to direct the deliberations of the committee than the head teacher of the school at which the vacancy arises? It is entirely right that the head teacher should have this role. He is the senior manager of the school; he should have the opportunity to wield substantial influence in the selection of his colleagues. I repeat that this selection is being made from a leet drawn up by the authority. There is no question of the head teacher being set over against his employers.
I was distressed at the suggestion of the noble Lord, Lord Hughes, that there would be any question of falling out with an education member. It may be that members of the appointment committee will have different views as to who is the better person, but that will be as members of the committee, not as members of the education authority or of the school board.
I ask the Committee to bear in mind another important provision in paragraphs 14 and 15 of the schedule. They provide that the director of education should be notified of all appointment committee proceedings with a right to attend meetings and give advice, which must be considered. Section 78 of the Education (Scotland) Act describes the director of education as "the chief education officer of the authority". Again I wonder how we are to believe that these provisions remove or weaken authority responsibilities.
Two other provisions in the Bill have a bearing on the matter. There is a small but significant provision in paragraph 17, which reserves the right of appointment to the authority. It is not given to the appointment committee. We shall discuss this further in relation to Amendment No. 71.
There is the far more substantial provision of Clause 15(2)(b) which prevents the selection of a head teacher, deputy or assistant being delegated to a school board. In other words, the careful provisions governing the proper rights and responsibilities of the authority in relation to these appointments are preserved. They may not be replaced by more local arrangements under delegation.
Upon a proper reading of the Bill, in particular Schedule 1, it is clear therefore that the rights and responsibilities of the authority as employer are in no way weakened. It is equally clear that the position accorded to the head teacher is an entirely proper one. Only if we conceive of an appointment committee acting in a quite improper manner does the view of the headmaster as a "ringmaster" have any context whatever.
The noble Baroness, Lady Carnegy of Lour, asked about head teachers' unions. The provisions of the Bill have been warmly welcomed by head teachers' representatives. In an article in the Glasgow Herald of 30th September this year, the President of the Head Teachers Association in his presidential address to the association's conference, is recorded as saying,
"Hope burns brightly …that come next November when school boards are in place headteachers will recover some discretion to do what they were appointed to do, manage their schools".
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What is more germane to the management of the school than to play a leading role in the selection of senior staff? As I have indicated, this entirely proper role can be given to the head teacher without causing any harm to the rights and responsibilities of the education authority. Another point that was raised was what will happen if the head teacher is not available to chair an appointment committee. Concerns were expressed by all three of the noble Lords and the noble Baroness who have spoken.
The effect of paragraphs 3 and 19 of this schedule is that no committee may be formed even if the head teacher's post is being filled by one of his senior colleagues. I know that it was argued opposite that this could cause problems. Perhaps we may look at this in a little more detail to see the extent of the problem. It can only arise, I suggest, if, as suggested by the noble Lord, Lord Carmichael, there was the possibility of the head teacher being on extended sick leave. There is no problem there. There would have to be a combination of other factors. First, he would have not only to be on sick leave but on extended sick leave. Secondly, he would have to be so ill that he could not attend the appointment committee. Thirdly, a vacancy for a senior appointment would have to occur during that period.
Obviously I accept from the noble Lord opposite that there are occasions when the head teacher is on sick leave, and there may be other occasions when that sick leave has to be extended. However, the likelihood of all those factors coming together to cause significant delay must be fairly minuscule. I have no doubt that there are occasions when during a period of extended sick leave a senior appointment vacancy may become available, but the question then is the length of delay. How long will it be before the head teacher comes back to take his proper place or a new head teacher is appointed?
Let us make the assumption that this combination of factors occurs. What happens then? The answer is simple. The deputy head teacher vacancy must be filled on a temporary basis until the head teacher returns or is replaced; then a properly constituted committee can sit. That is not so unreasonable because it reflects the importance which we attach to the head teacher having a major role in the choice of his senior colleagues. I agree that filling senior posts on a temporary basis is unsatisfactory, but it has to be done as a matter of fact. I think that it is still less satisfactory for the senior team in a school to be selected by an appointment committee chaired by someone who is himself only temporarily in charge. Certainly the number of times that that would occur is so limited that it simply does not provide a basis for taking the head teacher out of the chair of the appointment committee.
My noble friend Lady Carnegy spoke about a conflict of interests. If we allowed an acting head teacher to chair a depute head teacher appointment committee we would be causing considerable difficulty. Let us assume the situation of a head teacher on sick leave; the depute head teacher post is vacant; an assistant head teacher is acting for the head in the absence of a depute. In the normal course of events the assistant head would be a candidate for the vacant depute post, but because he is acting head

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teacher he has to chair the appointment committee for that very post. That indicates quite clearly that the way in which we have proceeded is the most sensible way and the one that should stand. The difficulties which it may cause in, I should have thought, almost hypothetical cases, are such that can be resolved by using temporary measures. The difficulties which would be caused by removing it could not readily be remedied.
I have spoken for some time because I recognise the concerns which Members of the Committee have expressed about this matter. However, we take the view that this is a new Bill which is intended to give school boards a proper place in the running of the school and the head teacher a proper place in the running of his school. That is secured by the provisions which are already in the schedule.
5.15 p.m.
Lord Hughes: I thought that the amendment was an important one, but it did not occur to me for one moment that it was so important as to justify this lengthy intervention by the noble and learned Lord, in the course of which he demonstrated that he is well qualified to keep us on our toes so far as the law is concerned.
However, I would suggest that in two respects he is riot as well informed as perhaps he thought he was. First of all, he said that it was most unlikely that an education committee, in putting forward a leet of three, would be doing other than nominating three people, any one of whom would be qualified to do the job. In this matter the Lord Advocate shows his ignorance of local authorities. A predecessor of mine as Lord Provost of Dundee was for many years a very successful and distinguished chairman of the Dundee Education Committee. It was almost unheard of for Sir Garnett not to have the person of his choice appointed. Why? He was very much concerned, as chairman, in drawing up the short leet. Once he made up his mind who should be appointed, he made certain that the other two candidates on the list had not a hope in hell of getting the job. I doubt very much whether that practice died with Sir Garnett Russell.
Secondly, the Lord Advocate glided over the possibility of a difficult situation arising due to a prolonged absence of a head teacher. My noble friend referred to particulars that had been given. There were three given by the convention. The third of these is perhaps the most acute problem that would be created.
The head teacher of a primary school was absent though illness from June 1987 until September 1987. That is a very short period indeed. However, she was again absent from February 1988 until her death in June 1988. The Lord Advocate said that in these circumstances there would have to be a temporary appointment. Who is going to make the temporary appointment? He has stressed the importance of the head teacher being the one who is most involved in the appointment of these members of his staff. Yet we will have a situation where there cannot be an appointment committee because the head teacher is not available and the head teacher therefore is out of
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the count. How is the temporary appointment made? By whom is it made and under what circumstances?
Unless the Lord Advocate can produce an answer to the second point—and I see that he is sending for help—it would be better if the Minister would at least give some further consideration to this matter.
Baroness Carnegy of Lour: I think that the noble Lord is correct in what he has just said. I hope that my noble friend will look to make quite sure that when the head teacher is off sick there are no holes left in the system so that it is not possible to operate these senior appointments while he is away. I do not see how it is going to work either in this respect.
On the question of the drawing up of the leet, with great respect to the noble Lord, Lord Hughes, this Bill is going to create a situation where the local authority will not be able to use that old trick of weighting the leet so that the chairman of the committee stands a good chance of getting the person he wants. I do not think that it has happened in Tayside for quite a while. The Dundee habits died a little when Tayside came into operation. They may be coming back now.
I think that this system, where the local authority produces a leet and the committee makes a recommendation to the local authority, is equally balanced between the authority and the board. The head teacher will be in the chair so the local authority must first produce a short leet of people whom it believes can do the job. I believe that that will be good and more suitable for modern practice. I take comfort from it and believe that it is a good system.
I noted that if there were to be an equal number of members with a head teacher as chairman, he should not have to give a casting vote because there will be seven people.
Lord Hughes: I do not believe that the noble and learned Lord has answered the question. Will there be an equal number plus one, or is it assumed that the headmaster must be a nominee of one of the groups?
Lord Cameron of Lochbroom: It is quite clear from paragraph 2(b) that it is an equal number of persons who are nominated by the education authority and the school board. In addition it is the head teacher of the school who shall be chairman of the committee.
I take up the point made by the noble Lord, Lord Hughes, about the short leet. I believe that he fell into error, which he seldom does, by talking of a short leet of three in relation to the topic which we are discussing; that is the type of appointment committee under paragraph 2(b). It is covered by the terms of paragraph 13 of the schedule which states:
"In every other case the authority shall prepare the short leet (in the case of the appointment of a deputy or assistant headteacher, in consultation with the headteacher) and shall send the short leet to the appointment committee".
I should not like to think of education authorities acting in quite the way he suggested. It may have happened in the past and perhaps it indicates that we are now putting a better system in place.
Temporary appointments are not covered by Schedule 2. That is plain when one looks at the

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function delegated to the school boards which is, effectively, permanent appointments. The education authority would propose the temporary appointments to fill the gaps until such time as the proper appointment is made, which would fall under Schedule 2.
Lord Hughes: Is it clear that the education authority would have the power to make a temporary appointment? That is not stated in the Bill but is it stated elsewhere?
Lord Cameron of Lochbroom: It is not stated in the Bill because the Bill does not deal with that. It deals with permanent appointments.
Lord Carmichael of Kelvingrove: We should be grateful to my noble friend Lord Hughes for his openmindedness because he has said that he has changed his mind about one or two matters to which he had put his name. He spoke powerfully and with a great deal of experience of appointments and short leets.
I do not believe that the noble and learned Lord is as naive as he tried to pretend. He has read too many political biographies and diaries from across the political spectrum not to know that such matters are not unusual. My noble friend Lord Hughes is merely pointing out what we all know.
I suggest that there is another way of looking at the matter. The short leet is merely the education authority saying that three, four or five people are suitable for the job of assistant headmaster or headmaster in its authority. However, one is not merely choosing a headmaster but one is choosing a headmaster for a specific school. Therefore they are not necessarily equal. There are two levels. The first level is the short leet which states that they are suitable for an appointment. The second is the specific level where they are stated as being suitable for a particular school
I should like to suggest to the noble Baroness, Lady Carnegy, that I do not know how many head teachers are members of the EIS. I imagine that there is a high proportion of Scottish assistant head teachers and head teachers who are in the EIS and who may also be in the other organisation.
Baroness Carnegy of Lour: Many head teachers who are members of the EIS also belong to the Head Teachers Association. It is through that organisation that they have expressed an opinion.
Lord Carmichael of Kelvingrove: I should not like to say which is the parent body, but it is obvious that head teachers are concerned and involved parties in the procedure for making appointments. The noble Baroness suggested that she wanted people to move to and from the school board, and we should also like to see that. However, we had to drag out of the Government correspondence and information—which we have been promised only later—from the school boards to the parents. I earlier gained the impression that there may not even need to be an annual report because nothing may have been done.
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Therefore, the parents may not know who are the members. It is difficult enough to know who are councillors but it is more difficult to know who is the school board's chairman when, up until now, there has been no necessity for it to issue even an annual report.
I believe that we were perfectly correct in tabling the amendments and in emphasising the role of the elected member. Despite the fact that there will be school boards, I am sure that the elected member will still be considered to be more available. It may be a long time before many parents will dream of going to the chairman of a committee because, for sad, difficult and historic reasons, even going to a school to see the headmaster is a trauma. However, to go to a local councillor can be a great deal easier.
I am sorry that the noble and learned Lord has not seen fit to say that he will at least take back the amendments. Despite the eloquence with which he put the case, I believe that the fairly simple suggestions made in the amendments would have created a smoother way of solving the problems which have been discussed. However, I realise that we shall not get very far with them and I beg leave to withdraw.
Amendment, by leave, withdrawn.
[Amendments Nos. 68 and 69 not moved.]
5.30 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 70:
Page 17, line 14, leave out from ("Board") to end of line 16.
The noble Lord said: The reason for tabling Amendment No. 70 is that it is inequitable that a staff member should be excluded from the appointment procedure unless he is a candidate for appointment. Unless that is so there is no conflict of interest. If there is to be any kind of partnership among the various interests represented and the boards, one group of members should not have a second-class status. I beg to move.
Lord Cameron of Lochbroom: I do not detect in the noble Lord's utterances and the strength of his arguments the usual note of confidence, and I am not entirely surprised.
We are here dealing with the provisions apertaining to the appointment of a head teacher. Under the schedule, the school board has two stages of involvement in the selection of a new head teacher. First, it may consider the short leet drawn by the authority. Within certain limits it may adjust that short leet. Secondly the school board may nominate half the membership of the appointment committee for the post. As the Bill stands, the staff members of a board may not take part in either of these stages of consideration.
I do not think it is necessary to explain the reasons for this exclusion in any detail. We believe that it is wrong in principle to involve the representatives of staff of the school in the process of selecting their head teacher. This is not an elective office any more than is the captaincy of a ship. We also believe that it is unfair on the staff representatives themselves to

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be so involved. The pressures on them to discuss the details of applications received and perhaps the detailed curriculum vitae of colleagues at the same school with other members of the staff would be intolerable. I believe that the noble Lord would accept that.
It has been argued that the staff member of a board will have an invaluable role in advising the board about what is required in a head teacher for that school. That is as may be. But this advice could be sought and given in general terms before the appointment comes before the appointment committee. We take the view that it would be wrong in principle to involve the representative staff members in that part of the school board's considerations for the reasons that I have given. Therefore, I cannot accept the amendment.
Lord Carmichael of Kelvingrove: I believe that the noble and learned Lord is probably correct. This is a probing amendment to obtain the Government's view. There is a role on the board for the staff member who has been on the board continually, who knows how it works and has the feel of it and who also knows the feel of the school in general and so perhaps can help in that intangible way in deciding whether or not someone will fit in. However, I believe that there are difficulties in that another member of staff could be applying for the post. I shall look with care at what the noble and learned Lord said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 71:
Page 18, line 4, leave out paragraph 16 and insert—
("16. The Appointment Committee shall, unless they consider that no person on the short leet is suitable for the post, make an appointment; other than where the preferred candidate for a Headteacher appointment was not on the short leet submitted by the authority but was added by the School Board.
17. Where the preferred candidate for a Headteacher appointment was not on the short leet submitted by the education authority the Appointment Committee will recommend the candidate to the authority. The education authority will appoint that person accordingly unless it appears to them that the candidate is not, for good reason, eligible or suitable for the post, in which case they may refuse to appoint him.").
The noble Lord said: Although the stages in the procedure differ as between the head teacher and the deputy or assistant head post, those stages conclude with an identical procedure involving interview of the leet by the appointment committee and subsequently a recommendation of an appointment to the education authority. That latter element appears to me unnecessary. It would be in the interests of all concerned if the procedure could be short-circuited to the extent that the appointment committee was empowered, where the preferred candidate had been included on the orginal leet by the education authority, to make an immediate appointment following interview without reference to the authority. That would automatically include all posts of deputies and assistants along with the majority of head teacher appointments.
The only appointment not covered by this proposal would be where the preferred candidate had
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not been included on the authority's short leet but had been added by the decision of the school board. I am not quite sure from where the power for this arises. However, in those circumstances it would be appropriate to safeguard the position of the education authority in terms of its established responsibilities by including a reference-back clause requiring confirmation of the appointment by the authority.
In those circumstances, if the reference is to be meaningful it will not only be on the basis of eligibility, as provided for in the Bill, but also upon that of suitability in order to permit the proper assessment of qualifications and capabilities of the candidate. I hope that, this is not revolutionary and that it will perhaps save a great deal of anguish and backstair bargaining, which is not unknown, if once a candidate selected from the short leet had been selected by the board then a firm appointment could be made. I beg to move.
The Earl of Dundee: I believe that this amendment has two aspects. First, it suggests that the appointment committee should make appointments directly. If I may say so, this is a little misconceived. Schedule 2 has been drafted specifically to reserve the right and power of appointment to the authority itself. This emphasises that appointment—rather than selection—is a matter for the authority alone and preserves the authority's rights as an employer.
Secondly, the amendment gives the authority the right to decline to appoint a candidate chosen for the post of headteacher. This is the most important feature of the amendment. It may allay some fears if I explain the appointment process. The schedule is complex and it is difficult to see the whole process in the words of the Bill. I hope that I can explain the procedure clearly and briefly.
The Bill provides that an authority will advertise the post and draw up a short leet. The leet is then passed to the board who will consider it and can subtract or add names from among eligible candidates. The leet is then passed to the appointment committee who will make a selection provided it considers a candidate suitable. The authority is obliged to appoint the chosen candidate if he or she is eligible for the post. Eligibility in effect means being registered with the General Teaching Council but for certain posts—for example, in a special school—eligibility might also include a specialist qualification. But such cases will be rare.
It is important to distinguish between suitability and eligibility. They are not one and the same. Although suitability is a more subjective judgment, it does have strong professional components and that is why we have included in the schedule express provision for the director of education to advise both the board and the appointment committee in the exercise of their functions.
The authority will have its own view as to a candidate's suitability. Similarly, the board will have its view. The authority will be able to declare its view by drawing up the short leet. the board when it considers the leet. The appointments committee then has the final say, based on the revised leet. And here

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the authority has the major say. As the Committee is made up of half board and half authority-nominated members with the authority in the chair, it will be the authority's view on suitability which prevails in the final analysis.
There is therefore ample scope for the authority to have a decisive voice in regard to the suitability of a candidate and yet another opportunity to declare its view is unnecessary. At the same time, I believe that a good balance of input is able to be made by the board.
Lord Carmichael of Kelvingrove: The Minister will realise that he made a very important and detailed reply with many references and cross-references. At this stage I believe the best that I can do is to withdraw the amendment and read what he said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Schedule 3 [Delegation Orders]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 72:
Page 18, line 19, leave out paragraph 1 and insert—
"1. Where an education authority propose making a delegation order under section 15 of this Act on their own initiative, they shall provide a draft of the Order to the School Board.
2. The School Board shall then call for a ballot of all parents of pupils in attendance at the school to determine whether a majority of the parents voting in the ballot are in support of the request for delegation of that function.
3. The education authority shall carry out the ballot under paragraph 2 above by providing to all parents of pupils in attendance at the school:

(a) a ballot paper;

(b) a statement of the education authority's proposals and of any reasons for them given to the Board by the authority;

(c) a statement of the School Board's position on the proposals, and the parents shall be invited to vote "yes" or "no" to the proposals.

4. Schedule 1 of this Act shall apply (with the exception of paragraph (9) and of references to candidates) to a ballot under paragraph 2 above as it applies to an election of parent members held under that Schedule.
5. Only if a majority of parents voting in a ballot under paragraph 2 above express support for the delegation order will the order be made.").
The noble Lord said: It will be convenient to discuss at the same time Amendments Nos. 73, 74 and 75. The purpose of these amendments, which have been suggested by the Lothian Parents' Action Group and Education Alert, is to increase accountability of school boards to ordinary parents, particularly with regard to the important area of delegation orders.
As the Bill stands, school boards may take on delegated functions without consulting the parents at the school when an education authority initiates such a proposal and the school board agrees to it, or where the school board requests the delegation of a function and the education authority agrees. Only in the latter case, where an education authority refuses a request from a school board, may a ballot of parents be called.
These amendments are proposed on the sure basis that the representative views of the majority of parents are expressed during the consultation process and that the board should be properly accountable. It is further supported by the results of the survey conducted by the Lothian Parents' Action Group and Education Alert in June when a very high percentage of those asked were opposed to the board being able to apply to the local authority for, and being granted, extra powers without consulting or advising the schools' other parents or teachers.
When discussing the results of this survey in another place the Minister said that the survey statement was unfounded and untrue. However, when asked to explain this the Minister replied in subsequent correspondence with the Lothian Parents' Action Group that the Bill puts,
"a general duty on Boards to…consult parents…and would certainly include any proposals a Board might have for increasing the range of its functions which were likely to be of interest to parents of pupils at the school".
It is clearly the Minister's intention that consultation should take place in all cases where delegation of functions is sought, not just where there is a dispute between the school board and the local authority.
However, parents must feel that such an important point should not depend on a general duty. It should be clearly stated in legislation that the School Boards (Scotland) Bill will be used as a reference document by parents who will understand what they read but will be unaware of any further duties that may be required of them by the general legal principles that govern all statutory powers and duties. It is therefore important that it is both the wish of parents and the Minister's intention that school boards should consult parents on any proposals for delegated functions and that provision for such consultation should be clearly made in the legislation itself.
I make one further comment. The Minister originally sought to suggest that the survey of the Lothian Parents' Action Group and Education Alert was perhaps not as general or as powerful as claimed and had not been carried out as scientifically as it might have been. Nevertheless, he agreed that the general duty should be to consult parents. Therefore, I believe that the Minister has largely conceded the case made by these bodies that delegated powers should be notified to all the parents of the school and that the proposal to seek delegated powers should be noted by other parents in the school. I beg to move.
The Earl of Dundee: I can understand the noble Lord's concern in this respect, but the effect of this group of amendments, if adopted, would be to produce a recipe for democracy run riot. They appear to require that a ballot of all parents is held before a board takes on any additional functions, no matter how small.
I think that the amendments rather miss the point of the ballot procedure. It was not included in this schedule as a consultative mechanism or as a substitute for proper communication between a board and parents locally. Rather it is a part of the specific procedures which apply when a board seeks additional responsibilities but cannot gain the agreement of the authority that these functions

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should be delegated. Support of a majority of parents in a ballot is then a necessary pre-condition for the board to appeal to the Secretary of State.
The Bill already provides separately for boards to have a duty to communicate with parents. There is a general duty to this effect in Claue 12. In correspondence with the Lothian Parents' Action Group, the Scottish Minister responsible for education and health has clearly stated his view that a board which is considering taking on substantial functions would need to let parents know about its proposals as part of its discharge of that duty; and the general duty is backed up by a power for parents themselves to call for a meeting with a board if the board fails in its duty to communicate.
It is always theoretically possible that some board somewhere will act in a way that is unacceptable to parents in its locality. We have included in this Bill a range of safeguards and provisions to ensure that boards are representative and accountable: half the parent members demitting office every two years; secret postal ballots; the duty to communicate in Clause 12, and so on. All of these are reasonable and sensible provisions which will guarantee that boards behave in an appropriate and reasonable manner. To legislate—as this group of amendments would have us do—for the wildly extreme case, would be to risk producing a Bill full of chaotic, jumbled and bureaucratic procedures. In view of those comments I ask the noble Lord to withdraw his amendment.
5.45 p.m.
Lord Hughes: There is some merit in what the Minister said and I am inclined to think that my noble friend will accept it, subject to reading those comments later. In the great majority of schools the parents will fairly quickly become aware of what is going on. The difficulty will be in the large schools in the cities and in the senior secondary schools in the county areas. It will not be so easy, informally, to contact the parents.
However, I am reassured. I do not think there is any great danger that the authorities will be rushing in to delegate further powers to the school boards. They will want to be satisfied that the school boards are working in a satisfactory manner before they divest themselves of their own powers and pass them on to the school boards. There will therefore be plenty of time to come back to this point if it should prove that the boards are not working as we hope they will work.
Lord Carmichael of Kelvingrove: I agree with my noble friend that in the light of what the Minister said my amendments would be taking rather more powers than are required. However, it should also be accepted that the Lothian Parents' Action Group and Education Alert were putting these amendments forward when there was a great inadequacy of routes for allowing parents to be aware of what is happening in the schools.
I draw the attention of the Minister to the fact that Clause 12, when we were debating it on Tuesday, was shown to be woefully inadequate and needed a great deal of beefing up. The noble Lord, Lord Sanderson
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of Bowden, therefore said that he would look at the possibility of giving more formal duties to the board to keep parents involved. Perhaps that will solve the problem. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 73 to 75 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 76:
Page 19, line 11 after ("school") insert, ("and having regard to the duty of the authority to operate within its budget and to run the whole education service efficiently").
The noble Lord said: This is an important amendment. From August 1989 the education authorities will have to have submitted a number of services to compulsory competitive tendering in order to comply with the provisions of Part I of the Local Government Act 1988. These services—or, as they are known, "defined activities"—include, specifically, school cleaning, the provision of school meals and ground maintenance.
In order to achieve value for money and to avoid being challenged by private contractors for acting in a manner having the effect, or intended or likely to have the effect, of restricting, distorting or preventing competition, an authority may have to package contracts for the provision of defined activities in a way which would not allow it to delegate responsibility for these services to individual school boards.
Therefore the Secretary of State should have regard to the requirements placed upon education authorities by the 1988 Act when considering a request by a school hoard for the delegation of a function. The Minister will be aware that the problem is that large contractors will claim that they are able to take on a group of schools for, say, school meals, ground maintenance or other functions, and that the task will be much more profitably done by a firm that has the equipment and the resources to take on a number of schools rather than individual ones. Obviously, in some areas it would be more profitable for the school board to have the job done by a local contractor. However, in some cases—this may be even more so in the future—central depots may be set up by the big contractors. They may think that there was unfair competition if they were allowed only to tender piecemeal for each school in the area instead of for the schools en bloc. I beg to move.
Lord Cameron of Lochbroom: I am grateful to the noble Lord for making clear the purpose of this amendment. Let us consider the manner in which Schedule 3 is set out. If the kind of considerations that he has put forward are material as regards certain functions requested by school boards and as to whether they should be delegated, they would have two bites of the cherry. First, under paragraph 4 of this schedule they are able to put their reasons for refusing the request before tie parents. The parents are then able to see the counter proposals and to vote upon them. If a majority do not support the reasons for the authority's refusal, the matter has to go before the Secretary of State.

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Paragraph 8 makes it clear that the Secretary of State has only to reach a decision after considering the views of the education authority and the school board. If those considerations are germane, again the Secretary of State is required to consider them before he reaches a view on the proper basis which is consistent with the overall intention of the Bill; namely, that the delegation would not prejudice the good running of the school. The effect of this amendment in other circumstances might allow the excuse of administrative inconvenience to feature in the matter of the refusal of delegation.
We take the view that here we are putting the matter on a proper basis; namely, that the decision has to be taken in what is the interests of the school concerned. That situation is reached only after the education authority has an opportunity both to influence the parents and subsequently the Secretary of State. For those reasons I feel that this is an unnecessary provision.
Lord Carmichael of Kelvingrove: I am grateful to the noble and learned Lord the Lord Advocate. I assume that I can take it from his words that there is no conflict with the schedule and with the Local Government Finance Act 1988. If that is the case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Schedule 4 agreed to.
[Amendment No. 77 not moved.]
House resumed: Bill reported with amendments.

Ozone Layer: ECC Report
5.56 p.m.
The Earl of Cranbrook The Earl of Cranbrook rose to move, That this House takes note of the report of the European Communities Committee on The Ozone Layer—Implementing the Montreal Protocol (17th Report, 1987–88, HL Paper 94).
The noble Earl said: My Lords, this report deals with proposals for joint action by the international community, the European Community and member states to overcome a serious threat to the global environment posed by the release into the atmosphere of a group of synthetic chemicals commonly and conveniently known as CFCs and halons. The major uses of CFCs are in aerosols as propellants, as foam-blowing agents and as refrigerants in freezers and air conditioners. The main use of halons is in fire extinguishers.
The report before your Lordships has been prepared by sub-committee F which is the environment sub-committee of the Select Committee on the European Communities. The sub-committee is grateful to its specialist adviser, Mr. Nigel Haigh of the Institute for European Environmental Policy. I should also like to thank our witnesses who were of great assistance. I look forward this afternoon to hearing the noble Lord, Lord Bridges, make his maiden speech on this subject. It is my great regret
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that we cannot have with us today two Members of this House who took part in this committee; namely, my noble friend Lord Sandford, and the noble Baroness, Lady White. I am sure that your Lordships will join with me in wishing them a speedy recovery to good health.
There are two sets of issues, scientific and political. On the scientific issues the sub-committee accepted the specialist evidence that had been given to the House of Commons Select Committee on the Environment a little earlier in the year. This was supplemented by the executive summary of the Stratospheric Ozone Review Group's second report which was released in advance of the full report and printed in the Select Committee's report on page 17. The scrutiny of the Select Committee therefore focused on the political processes both international and internal within the European Community. These are the points that I wish to emphasise in the main today.
First, I shall deal with the international background which is covered in paragraphs 7 to 12 of the report. The framework is the Vienna Convention for the Protection of the Ozone Layer which was agreed in 1985. After this convention has been agreed there was a period of international dispute when the leading producers and users of CFCs fell into two camps. First, there was the Toronto group which included the United States, Canada, Norway, Sweden and Finland, that wished to see a ban on aerosol propellants. This was opposed initially by the European Community which felt that the best way to tackle the problem was by production controls. Ultimately a compromise was reached and this compromise appears as the Montreal Protocol under the convention which was agreed in September 1987.
Under the Montreal Protocol, production and consumption of designated CFCs and halons are to be frozen immediately at 1986 levels and subsequently reduced by stages to 50 per cent. by 1999. To come into force the Montreal Protocol must be ratified by at least 11 parties representing at least two-thirds of global consumption. These figures will both be achieved (as is made clear in Table 1 on page 6 of the report) if the United States and the member states of the European Community collectively ratify. The protocol, once ratified, includes mechanisms for periodic review of target reductions, but it must be ratified before the review process can begin.
Within the European Community developments have been as follows. On 16th June of this year the Environment Council adopted a resolution, which is printed on page 16 of the report, calling for further research into the subject and urging voluntary methods to achieve reduction in CFC use. Further steps had to be taken in order to achieve ratification of the Montreal Protocol, and the Commission proposes, first, a Council decision. This decision will enable the Community to become a contracting party to the convention and to the protocol. Secondly, the Commission has proposed a regulation to ensure consistency in the law in all member states. Details of the regulation are laid out in paragraphs 17 to 18 of the report.
Our witness, Mr. Patrick Szell, who is from the Legal Directorate, explained to the sub-committee that, in terms of treaty obligations, problems could arise if all member states do not ratify simultaneously. This is one of the declared objectives of the Commission's proposals. Certainly, in the case of the United Kingdom, and very likely in the case of other member states, were it not for the fact that a regulation is proposed, new legislation in some form would be needed. The regulation undoubtedly makes progress more rapid.
So much for the political nuts and bolts. Since our report was published there have been advances on several fronts. Since 3rd October the full version of the Stratospheric Ozone Review Group's second report has been available. In a covering press release my noble friend the Minister called for an accelerated review and a target reduction in emission of CFCs of at least 85 per cent., thereby carrying the target well beyond what at present is laid out in the Montreal Protocol. In view of news, as recent as October 1988, that ozone depletion in the Antarctic atmosphere this year has been less than predicted, does my noble friend feel that he needs to change his target for reduction? His press release also stated that the United Kingdom, together with its dependent territories, has completed the necessary formalities and is ready to ratify the protocol. In view of Mr. Szell's remarks, it is important to know whether all other member states are also ready. If they are not ready, will ratification be delayed beyond the expected date of 1st January 1989?
The third development in the United Kingdom and in the Community at large is widespread public recognition of the danger of damage to the ozone layer by CFCs and halons. Consumers are looking for substitutes for aerosols, and the United Kingdom aerosol industry has announced its intention to phase out harmful CFC propellents for non-essential uses by 1989. Some imaginative substitutes have also been brought on to the market. Similar moves are being made in other member states. As aerosol propellents account for about 60 per cent. of CFC use in the United Kingdom—and only slightly less in the European Community as a whole—these changes will have a considerable effect of consumption. Can by noble friend assure the House that CFC production will fall in step with consumption in the United Kingdom and in the European Community as a whole? It is important to note that if production is not reduced in this way, the prompt responses of consumers and of manufacturers will bring no environmental benefit.
In other countries, particulary those of the so-called Toronto group where aerosols have already effectively been phased out, the next stage in reduction is much harder. It will be equally hard in the United Kingdom and other member states of the European Community.
In the use of CFCs as blowing agents there has been work on substitute gases. It is also possible to devise methods of containing the gases so that they are not released to the atmosphere. The problem is probably also soluble by seeking substitute materials which do not involve the use of CFCs in their manfufacture.
The remaining major use of CFCs is in refrigerators and in air conditioners. Throughout the Western world and more widely refrigeration is indispensable for the food industry. We have come to depend on frozen food for economic reasons, and much more importantly perhaps, for reasons of public health. It would be wrong to dismiss air conditioning as a trivial use. In large areas of the world with seasonally or permanently hot climates modern architecture has created buildings which are uninhabitable without cooled atmospheres. Many car drivers now rely on air conditioning, which is standard in all but the most temperate parts of the world. The disposal of refrigerators and the breakdown of air conditioners in cars provides a major route by which CFCs are released into the atmosphere.
It is unfortunate that for these important uses CFCs are remarkably suitable. It is also unfortunate that developing countries naturally and understandably aspire to the standards of the Western world. The Montreal Protocol recognises such ' aspirations. Although the term "developing country" is not defined in the protocol, if it were to be applied to the Peoples' Republic of China the threshold allowance of 0·3kilogrammes per head within the next 10 years, which is considered necessary to meet basic domestic needs, would mean at least an additional 300,000 tonnes of CFCs. As Miss McConnell, the head of environmental protection of the international division of the Department of the Environment, said in answer to our question, "That would be very serious". Does my noble friend agree that the search for substitutes must be given high priority? How will he promote the necessary research.
A further fear must be aired. Certain countries may choose to remain outside the group of contracting parties and may deliberately enlarge their production of CFCs for export to other non-signatory developing countries. Does my noble friend anticipate such a development? Is Hong Kong, for instance, among the "dependent territories" that will be signatories along with the United Kingdom? If so, what will be the status of Hong Kong in this respect after 1997?
Finally, in looking at the scene more generally, it becomes increasing obvious that the most alarming threats to the environment are now global in their scope. This case will be the precursor of others. It is important to note again the view of Miss McConnell that the process of forming a consensus in the Community and subsequent action by the Community as a single negotiating body at Montreal was,
"extremely successful and profitable, not only for the Community but I would like to think for the environment".
It is vital that we should recognise the legitimate aspirations of developing countries. It is essential therefore that we contribute to the solution of a global problem by striving to find alternative and environmentally less damaging means by which those developing nations can catch up with the rest of the world in standards of living. In those key aspects, I believe that the action now being taken to protect the ozone layer will be a model for future international

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measures of environmental protection. It must succeed. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on The Ozone Layer—Implementing the Montreal Protocal(17th Report, 1987–88. HL Paper 94).—(The Earl of Cranbrook.)
6.11 p.m.
Lord Cocks of Hartcliffe: My Lords, I should like to thank the noble Earl, and the committee, for all the work that has been done and also for the most comprehensive way in which he introduced the report. Despite the decision of the House over a year ago that maiden speeches should not be trailed, which seems to be honoured more in the breach than in the observance, I should also like to say that I am looking forward to the maiden speech of the noble Lord, Lord Bridges.
I should perhaps inform your Lordships that I have recently become associated with a major attempt at environmental rehabilitation in London Docklands. Those noble colleagues who attended the memorial service this morning for our dear late colleague Lord Peart will recall that during the address it was mentioned that he was one of the few science graduates in the other place. However, there is another science graduate there now; namely, the Prime Minister. She is not only a graduate in chemistry but had as a tutor a woman who won a Nobel Prize in X-ray crystallography and went on to become Chancellor of Bristol University.
I do not share the cynical remarks which were made when the Prime Minister made her seminal speech about the possibility of a global catastrophe. I believe that she assessed the available scientific evidence and realised that urgent action and awareness were necessary. Concern about the environment is on an exponential curve, not only in this country but in many other parts of the world. I believe that the problem is so serious that we must do our best to adopt a by-partisan approach towards it. It must not be regarded as a political football to be kicked about for temporary party advantage. Indeed, there may well be a temptation to do so because, on the face of it, there would appear to be a contradiction between the philosophies of the two sides of the House. There are those who tend towards the free market economy and those who prefer rather more planning in our affairs. That apparent difference on opposite sides of the House must not be allowed to cloud the issue.
We must also recognise that the solutions to such problems will be most expensive. They will be expensive in terms of the research required and also in terms of the counter-measures which will be needed. Therefore we must all be prepared to stand up and justify that fact whatever the position we are in. The effort will require a strong economy. It will also create a tremendous problem in identifying to the general public the problems which we are dealing with and the need for everyone not only to become interested in the matter but to make his own contribution towards the solutions. However the
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response of motorists to the availability of unleaded petrol has hardly been encouraging in this respect.
Many years ago I was not in the least enthusiastic about the prospect of this country joining the EC. In fact, I voted against it consistently. However, in the autumn of 1974 the noble Lord, Lord Mellish, sent me to the General Assembly of the United Nations—more for rest and rehabilitation than anything else, because I had been the pairing Whip in the other place during a time when we did not have a majority in the House. While I was there I learnt to appreciate the advantage that the EC, which was able to speak on issues with a common voice, had over a number of disparate voices issuing from separate countries.
While I recognise the difficulty, I feel that the point touched upon by the noble Earl towards the end of his address is one to which we must give serious thought; namely, the problems of the Third World. There is an enormous potential source of friction here, because the developed countries—I do not wish to be drawn into a definition of that—or the industrialised West, in fact all industrialised countries, have built up their economic strength by the use of resources from the Third World. Certainly in the case of a number of West European countries, including our own, a great deal of that was done during the colonial phase. The countries were exploited for their resources and our strength was built up on that basis, although I must say in this respect that the record of this country was far better than many others that I could name if tempted.
We now face the danger of lecturing such countries. They will say to us, "It is all very well for you because you have a standard of living where even your poorest people are living in conditions which our people would regard as luxurious. Now you tell us that we have to be careful about using this and that." Obviously, fossil fuel is one of the major problem here. We must recognise such problems and be sympathetic towards them, otherwise we shall enter a phase of stress with those countries which could be disastrous.
The debate is about the issue of CFCs. They are actually made in Bristol. When concern about the matter first arose I recieved a number of representations from people who worked in the manufacture of CFCs regarding their job prospects, and so on. That sort of problem must be faced and overcome. It is so serious that, while people must be looked after if their livelihood is affected, the overall concept is the one which we must embrace.
The question of production havens abroad is mentioned at page 10 of the Report. It is no good trying to cure the problem in countries where we have some say if it is only to be exported abroad. There is also the problem of exports themselves. It is not enough to say that the countries of the West must cut down on usage. We must be prepared to cut our usage far below a pro rata basis. We cannot expect the Third World to take us seriously unless we say, "We have reached a certain standard of living and therefore we are prepared to make a much more substantial sacrifice than people who have yet to catch up with us".

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In conclusion I must say that with the problems we are now facing, together with other matters such as the build-up of CO2 in the atmosphere, we are entering a phase which adds a new dimension to the whole concept of overseas aid and the need for planetary co-operation.
6.18 p.m.
Lord Winstanley: My Lords, today we are debating a matter of great complexity but one which is of the utmost importance to each and every one of us. Therefore we should all be most grateful to the noble Earl for giving us the opportunity to debate such flatters. I am especially grateful to the noble Earl, Lord Cran brook, for giving so clear an exposition of the difference between the Vienna Convention and the Montreal Protocol—matters which previously seemed to me to be somewhat obscure. He has certainly clarified the issue for me.
In his introductory remarks the noble Earl referred to the report and also to the matters which we are discussing. He said that there were two sets of issues involved: scientific and political. I shall deal briefly with both of them.
As regards the scientific aspect, let may say at once that I am no more a scientist than is any other medical doctor. That means of course that I am hardly a scientist at all. However, I do know scientists. Indeed, I have a brother who is by way of being a mad scientist and it is many years since he curdled my blood by telling me what might happen were the ozone layer to be seriously damaged. That was a long time ago.
Knowledge of the threat of damage to the ozone layer has been with us for much longer than some of us think. We had clear quantitative information in 1984 and further information this year with regard to the thinning, or the hole if it is indeed a hole, of the ozone layer over Antarctica and to a lesser extent over the Arctic. We were aware of the problem a long time ago.
I was once unwise enough to mention the possibility of damage to the ozone layer in a debate on the environment in another place way back in 1969. My words were not treated with derision, but they were regarded with great scepticism. I believe that I am right in saying that in another place at that time we did not have the benefit of outstanding scientists such as the noble Lord, Lord Zuckerman, and the noble Earl, Lord Halsbury, who will speak to us later. Perhaps I may at once say how much I am looking forward to hearing what they have to say. Like all noble Lords, I am also looking forward to hearing the maiden speech of the noble Lord, Lord Bridges.
In the House we have an expertise which is a little different. There are those in the House who have perhaps been aware of the danger for much longer than have the public. I remember a long time ago that the late Lord Ritchie-Calder, when he was the president of the Conservation Society, gave a splendid address in which he referred to the possible dangers of damage to the ozone layer. It was a wonderful speech. I have read it several times since with, of course, proper attribution. It is worthy of reading.
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I mention all that to demonstrate that here is a potential danger to the environment in which we hope to live of which some people have been aware for a long time, but that it has taken a very long time to achieve any real measure of public awareness of the threat, as indeed it took a long time to make the public aware of other types of threat to which we are exposed. I am talking about the greenhouse effect and other matters, but we do not want to talk about all of them now.
I shall move straight away to the second of the issues mentioned by the noble Earl; that is, the political aspect of the problem. This timely debate gives us an opportunity to discuss the problem in the present climate of opinion following the Prime Minister's recent statement, which, sitting where I do, I welcome most warmly and which I hope all will welcome warmly. Noble Lords will remember that it was only on Tuesday that a question was asked by my noble friend Lord Ezra and answered by the noble Earl who is to reply to the debate. It is possible that in the debate we may take a little further some of the matters which were discussed at Question Time.
It is my recollection that in the course of his replies the noble Earl was taken to task by some noble Lords for having said that these were the kind of matters which were the responsibility of everyone and not just government. I absolutely agree with him. However it is important that everyone should have an understanding of the fact that conservation costs money; and that one can do almost anything at a price. If we do not pay the price now, we shall all have to pay a much heavier price later on.
Looking at the political side of this matter, how often we have seen that happen in the past. I am straying from the subject, although the point is related, but perhaps I may mention the subject of clean air. As a Manchester man, I can speak with some pride. As many noble Lords will know, Manchester was the first city in the world to be covered entirely by smokeless zones. It made a dramatic change. As a boy at Manchester Grammar School I expected to walk home from school every night in November because of the thick black fog which made it impossible to see and impossible for trains, buses or anything else to run. After a few years when smokeless zones had been introduced one went through thick fog until one reached the city centre, where suddenly there was sunshine again. The atmosphere was clean.
I have mentioned that because it took a long time to make the British public understand that it was worth paying the price to have clean air. Once there was a general realisation by the public that it was worth paying that price, which was a high price that had to be paid not just by central government but by ordinary individuals, then it was easy to take effective action. It was easy for governments of whatever political complexion to take action, and they took action.
We are faced with a similar dilemma with regard to this matter. It undoubtedly costs money to pioneer and develop substances which are ozone-benign to replace CFCs and refrigeration gases. I understand that the only danger from those gases in a refrigerator

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is when the refrigerator is finally broken up. There is no threat when the refrigerator is in use. ICI has done a great deal of work on benign alternatives to CFCs for aerosols and into gases used in cooling plants and refrigeration. That work takes time, and it costs money.
Here I return to the exchange which we had at Question Time the other day. The noble Earl will remember that a pointed question was put to him by the noble Lord, Lord Barnett, who asked whether he was entitled to assume from the Prime Minister's words that there would be increased public expenditure on the general matter of environmental protection. I hope that at the end of the debate the noble Earl will be able to give a categorical "yes" to that question, which he did not have an opportunity to answer at Question Time on Tuesday.
In answering that "yes" we must all understand that there is a price to be paid not just by government but by each individual. That applies to almost everything in this field. We must take public opinion with us. We must get people to understand that it is worth paying the price and that unless they pay that price the long-term consequences could be absolutely catastrophic. I hope that a highly intelligent report such as that produced by the committee which we are discussing, and the publicity related to it, will have played a part in increasing public awareness of the problem.
There are many other problems. People are slowly becoming used to the idea of the greenhouse effect. At the moment that is not necessarily changing people's attitudes towards such things as nuclear power, but they will possibly have to change in the end as we realise the potential dangers of burning fossil fuels and so forth. There must be public awareness.
There must also be a slight change in industry's attitude. I do not wish to embark upon political matters such as those touched upon by the noble Lord, Lord Cocks, in his interesting speech. Sitting where I do in your Lordships' House, I have no objections to profits, especially if I have an opportunity to share in them in any way, but we must realise that in many fields what is profitable in the short term can be desperately damaging in the long term. That is the kind of message which must be got over to industry. The kind of message which must be got over to ordinary people is that if they want a world fit for their children and grandchildren to live in, they will have to pay a price for the kind of steps which must be taken with regard to the matters which the noble Earl has brought to our attention today.
6.28 p.m.
Lord Bridges: My Lords, I begin by asking your Lordships to extend your customary indulgence to a maiden speaker. In my case the indulgence is perhaps rather greater than your Lordships realise; it was some 15 years ago that I took my seat in your Lordships' House, but I have not been able to make a speech until now, not because of any lack of respect to your Lordships' House or any lack of interest in its proceedings, but rather because of the rules and
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regulations that I had to observe as an employee of the Crown for nearly 40 years.
As the noble Earl, Lord Cranbrook, has said, I am a member of the sub-committee which produced the report. My purpose in speaking today is to endorse its conclusions and to support the Motion which stands in the noble Earl's name. It is a rather unusual report, dealing as it does with broad and difficult environmental questions, and it makes some precise and concrete suggestions. That is something which we can all welcome. I do not intend to follow the noble Earl in the more detailed and precise points which he made, but wish to raise some more general issues about environmental policy which should, I think, be in our minds when we consider the report.
The first observation I wish to make is that in general I think all governments, not only the British Government, find it difficult to deal with these environmental questions. They raise issues which are very large in extent, very far-reaching and very complicated. It is difficult to get a grip on the issues in the lifetime of an average government around the world; the remedies tend to be both partial and very expensive. Moreover, many governments may feel—and with reason—that the causes of these problems lie in the very distant past. When we consider the problems of the pollution of the atmosphere, for example, it is reasonable to suppose that the origins lie many decades ago, probably at the beginning of the Industrial Revolution. These problems have come home to roost in our time because of the success of other government policies: governments in this country and elsewhere have for many years been committed to the expansion of industrial production, with growth in prosperity and improvement of transport and other means of communication. In all these causes we have registered some successes. However we have only lately come to realise that consumption of fossil fuels which has contributed to our success is also a cause of pollution.
Thus now we turn to governments around the world and expect them to accomplish another miracle; namely, that the pollution must be removed but the prosperity which has been created must be continued. That is a very hard task because it calls for a fundamental change in human attitudes. I think that it will take some considerable time before those attitudes can be changed. All of us can illustrate this from our own experience.
The point was made very graphically for me some 20 years ago when visiting the Tretyakov Gallery in Moscow where there was on show at that time a picture which I suppose dated from the era of socialist realism. The picture portrayed in the foreground an elderly woman clad entirely in black, reaping corn with a scythe. In the background an enormous factory dominated the horizon. Above it stood a vast chimney belching smoke. I think that the attitude of many Russians at that time was very well compressed by this picture. They were looking for the abandonment of subsistence agriculture; they were looking for the prosperity which industrial life could bring. I do not think that they have the same opinions today; nor indeed do we. However the point I am making is that such basic notions cannot be changed quickly. Responsible governments will try to act as

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the agents of change but they do not find their task easy here or elsewhere.
Another cause of the difficulty we have in solving these international problems lies in the need for international action. It is fairly obvious that if we wish to reduce the scope of pollution, which extends well beyond national frontiers, it can only be done by international action. We might suppose that at least within the European family, and within the EC in particular, it should not be difficult to agree on programmes of joint activity. Experience shows, however, that this is not as easy as it might seem at first sight because the circumstances of national industries differ, as we have found, for example, in trying to deal with the motor-car exhaust. Also, the geographical circumstances of the member states are different when effluents are handled. Historically they would be dealt with in a different way depending on whether one is living in a continental country or whether one has, as we have in our country, an extensive coastline.
So although the urgency of the problems like the one we are considering today—the ozone layer—is there for all to see, the timetable is often slow. I think that that is particularly noticeable in this coutry. We have a distaste for hasty decision; we have a preference for extensive debate. We prefer convincing standards of proof. However that is not perhaps always the right approach. As a contrast, when I was living in the United States in the late 1970s, 10 years ago, a formal ban on the use of CFCs in aerosols was imposed. Perhaps it is a pity that we could not have moved more quickly on this side of the Atlantic.
That said, it is highly satisfactory to see that progress is being made on the ozone layer. As the report rightly says in paragraph 21, the Vienna Convention and the Montreal Protocol represent milestones on the road to effective international cooperation, and the achievement deserves our support. There are of course a number of issues to be followed up and the questions put by the noble Earl, Lord Cranbrook seem to me to be very relevant. I look forward to hearing the Government's reply in due course. I shall also be interested to learn whether the Government feel able to follow the recommendation made in paragraph 26 of the report about the need to seek amendment to the protocol and the regulation so as to prevent diversion of CFCs to the export market. That would be a valuable reinforcement of the work already done.
In short, it is encouraging that some definite progress is now in train to limit the damage to the ozone layer. The growth of scientific opinion about the dangers facing us has been impressive. It is unusual that governments can make a contribution to so large a world problem by phasing out the production and use of an article—the CFC aerosol can—which we can all do without. But the next steps—the replacement of CFCs as refrigerants—will be much more difficult, as other speakers have observed.
I wish to make one other point about the effect of damage to the ozone layer on the population of this country. Those of us who live, as I do, in East Anglia are aware of the long, exposed coastline of Eastern
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England. It is a low coastline. I think that those of us living there are conscious of the dangers which this country faces if damage to the ozone layer continues at the current rate. As the Government know, I speak of a particular region of the nation where defences against the sea are already weak. They require further investment to protect them. Other major investments already made by the Government, such as the major investment in the Thames barrier, could be at risk if deterioration of the ozone layer continues. I say these things not to advance a particular interest of my own but to suggest to your Lordships that we have a strong national interest in accelerating the tempo of work on this subject, and that our interest is perhaps more marked and more evident than that of other European countries, with the possible exception of the Netherlands.
In conclusion, perhaps I may say how encouraged I am to have read the recent statements by the Prime Minister which underline the importance of our environmental issues. I am sure that she is right in thinking that these problems will assume increasing importance for the citizens of this country. I suggest to your Lordships that the measures described in the report are in the right direction and I hope that there will be more of them. I thank your Lordships for your attention.
6.38 p.m.
Lord Kennet: My Lords, it falls to me on behalf of the House to congratulate the noble Lord, Lord Bridges, on an interesting and thoughtful maiden speech. I do so with particular pleasure, which we all share, that he has been able at last to break an enforced 15-year silence, although it was in a good cause. It is a personal pleasure to see that he is well, since we have shared for many years the membership of a distinguished but little known body, the governors of the British School in Florence, of which he was ex officio chairman while ambassador in Rome—and a very good chairman he was. The House must also be grateful to the noble Earl, Lord Cranbrook, for introducing this debate so skilfully and in such a balanced way.
I wish to address myself for a moment to the noble Earl, Lord Caithness, because about 19 or 20 years ago I sat in the chair he now occupies. I had the duty which the noble Earl now has of trying to co-ordinate government policy towards the environment in general from a non-Cabinet Ministerial post. It was not the easiest thing in the world then, and I do not suppose that it is now.
In 1969 and 1970 we created the plan which led to the formation of the Department of the Environment itself. We set up the Royal Commission on Environmental Pollution and the Central Pollution Control Unit, as I believe it was called, in Whitehall. Sir Martin Holdgate was able to report directly from that unit to the Secretary of State. That arrangement lasted for a long time.
In all that time, we relied heavily on the advice and skills of the noble Lord, Lord Zuckerman, who I am glad will shortly be speaking. We felt sometimes, and we were very glad of it, that we were being skilfully stage managed by him. Even then he had greater

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experience of Whitehall than any Minister in the Government. I believe we got it about right then. I am very glad that subsequent governments of both parties were for long able to use the structure that we devised, part of which was carried into effect by the succeeding Heath Government.
Perhaps it is partly due to all those factors that we have not had the trouble with militant Greens which has occurred in France and Germany over the past 20 years. To a certain degree, at least structurally, the British Government have been green enough to avoid that.
It is disquieting that the report states that no decision has yet been taken as regards the department which will take the lead in dealing with the ozone layer, and presumably the greenhouse effect also. These matters cannot be left to the interdepartmental reactions of civil servants, who generally wish to increase their turf. It is not fair to do so; it is not their duty. In any case interdepartmental divisions are part of the problem, and their adjustment cannot be part of the solution. I stray a little from the subject of this evening's debate when I say that the glaring example of that at the moment is the Ministry of Agriculture. That ministry cannot be allowed any longer to continue protecting the environment from the abuse of farm chemicals as it is so closely tied to the short-term economic advantage of farmers.
There are two basic doctrines here, the neglect of which will lead inevitably to the ruination of the human environment. One is the polluter-pays principle, which means that we have to identify the polluter and make sure that he does not offload the cost of his pollution on to either the taxpayer or the ordinary citizen, in so far as that is possible. We must make sure that provisions are always in place to ensure that if a polluter slips through the net he or his successors in the same industry will have to find the cost of posthumous cleaning-up operations.
The second doctrine is quite simply that a stitch in time saves nine. If the polluter does not want to make a stitch in time, he must be in no doubt that he will have to pay sooner or later. The polluter must realise that the later it is, the closer to nine times as much will be the bill.
These two cardinal laws are matters of politics and economics. This is not, as the Government have been inclined to say until recently, a matter of science. The noble Earl, Lord Caithness, is in a very happy position. Although he has held his present important position since January, he is now largely responsible for putting flesh on the bones of the Prime Minister's remarkable speech. After nine years, suddenly, for the first time, the Prime Minister has showed that she is aware of the global implications of these matters. She has demonstrated that she is aware of the general outline that solutions must have. That is a very major change. We wish the noble Earl the best of luck in his task. It gives him a remarkable opportunity to shift a lot of logjams.
This is a matter of politics and economics and not of science. The noble Earl in a Written Answer to me last week stated that the Government's,
"first priority is to improve our scientific understanding".
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With due respect, that has been for too long the theme-song of governments. Scientists do not, cannot and will not know all there is to be known about the causes of various pollutions, let alone about the best way of putting them right. They will advance their best hypotheses, and answer questions put to them about known facts. That is all they can do. This is a matter of political economy. Politics is the art of taking good decisions on insufficient evidence. The evidence will always be insufficient, and it is up to politicians to do the best they can with it. That is how they are judged, and will be judged later.
Let us take, for instance, the three-phase history of the ozone hole itself. When it first began to worry people 10 or 12 years ago, scientific opinion held that CFCs were indeed guilty. Then there was a change in that opinion. Now scientists have returned to the orginal opinion, with the difference that it is now believed the effect is achieved by the CFCs by another chemical path from that which was orginally surmised. As it turns out, it would have been good to do whatever could have been done 10 years ago. However, it is better to do something late than never to do it. Perhaps it is not too late. Having said that we should indeed carry out scientific research. But politicians must not wait for that to be perfect in every respect.
The Stratospheric Ozone Review Group has the initials SORG. What a wonderful name that is incidentally. Sorge in German means concern or worry. That is a happy acronym. The SORG report states about its field of study:
"Indeed the promotion and proper resourcing of fundamental research … has been quite inadequate. The majority of scientific initiatives since 1985 have been taken elsewhere."
That means that they have been taken outside Britain. Let us hope that as a result of the Prime Minister's recent speech and the future efforts of the noble Earl, Lord Caithness, such things will no longer be said in major British scientific reports.
Market forces do not help and will not help. By definition they operate within too small a time frame. The Treasury must lengthen its view. It must adjust its general concept of taxation, and what taxation is for, to encourage the stitch-in-time approach to these matters. Its economic analysis must now learn to cope with cost-benefit comparisons where the factors are not quantifiable. That is difficult, but it is not impossible. Its difficulty must not be allowed to prevent it. If the Treasury pleases, let it call that no longer cost-benefit analysis but cost-benefit topography, which implies an understanding of where the costs fall—whether now or later, whether on us or on others.
I now mention specifically the ozone layer which we are discussing. The exemption for low-use countries for 10 years strikes a chill into my heart, as does the.3 kilograms annually a head for China which has already been mentioned in the debate. The non-limitation of exports strikes another chill. The words:
"Satisfying the basic needs of developing countries"
strike a chill. What on earth is a basic need? How is it that both developing and developed countries got

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by very well without CFCs for the whole of human history minus 15 years? A bit of small print in the Community instrument which is very difficult to make out is that the report was considering that after a certain date exports are to be subtracted from our own consumption. Does that mean that if we export X tonnes of CFCs to the third world we are counted as having consumed it ourselves? How does it work? It is not at all clear from the documents we have before us.
The phrase "non-essential use" does not really strike a chill because it seems so ridiculous. What is an essential use for a CFC or a halon? I believe it was the noble Earl, Lord Cranbrook, who pointed out that public health depends to a certain extent on refrigeration. He also said that in certain countries driving around in an air-conditioned car has become quite normal. Indeed it has. That is not to say that the use of CFCs for that purpose is essential.
It would then be another step to prove that air-conditioning is essential; it would be another step to prove that driving around in an air-conditioned car is essential. It would be another step again—pace earlier speakers in the debate—to prove that even the largest, most centralised air-conditioned modern building is essential. If we are dealing with the future of the human race itself and the future of mammalian life on earth, which we are, then it might be thinkable to blow up those modern buildings and have others which would be habitable without air-conditioning, let alone CFC-based air-conditioning. The use of the word "essential" in a matter of this importance is truly ridiculous.
When the new substances come along—which the report tells us will cost four or five times as much—what will be the situation about commercial secrecy, intellectual property and all that? May we hope —I think that we ought to hope—that they will be in the public domain in order to hasten the spread of their manufacture and use throughout the world?
We are told in the report that the third world is even now building CFC plants. Who in the third world is doing that? It is obviously not financed by third world capital; it must be multi-national corporations. Are they American based or British based? Are pollution havens being set up in this respect, as in so many others before? How many plants are being built, and of what capacity? The report gives figures only up to 1986. What is the most recent figure?
A word to our own CFC industry. It has been kind enough to circulate, no doubt to many noble Lords, evidence of all the good things it is doing and the ways it is beating the gun over reductions and so on. That is all very much to be welcomed. However, it ought to avoid phrases such as CFCs which are "thought to damage" and "alleged to damage" the ozone layer. That is tobacco-industry language, and the CFC industry would be wise to avoid it. There are plenty of other ways to express that without using hackneyed and discredited language of that kind.
Lastly, our committee wants the protocol tightened up. That is the gist of the report. It is difficult to pick one's way through the international bureaucracy. Can it be done? How can it be done? Do
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the Government want it to be done, and have the Government identified how to do it and the timetable for doing it? I think that that is the answer which most of us would wish to hear from the noble Earl, Lord Caithness, at the end of the debate.
6.54 p.m.
The Earl of Liverpool: My Lords, I should like to join in thanking my noble friend Lord Cranbrook for enabling us to discuss this matter tonight and so clearly outlining the contents of the report. I should also like to say how much I enjoyed listening to the speech of the noble Lord, Lord Bridges. It is apparent to me that he knows a great deal more about the subject than I do—and most of your Lordships also. As I say, I am not an expert in this matter. However, as I grow a little greyer, I grow a little greener. I am happy to find myself in such good company.
As we move towards the 21st century and beyond, it is apparent that the good management of our habitat and environment will become vital to us and more particularly perhaps to future generations. Whatever happens we must mount every effort to reduce pollution, which if allowed to go unchecked could literally asphyxiate us.
Unfortunately, in the case of the ozone layer the stratosphere has become polluted with chlorine and bromine from CFC and halon emissions, as we read in the report. We must try to redress the balance. However, the damaging qualities of those emissions are long lived and we cannot gather up what is already there. We must therefore take every possible step to reduce future emissions.
I am very much encouraged by the statement of the noble Earl, Lord Cranbrook, that the Minister's efforts will be directed to seeking a faster reduction than that proposed by the Montreal Protocol. I believe he referred to an 85 per cent. reduction. That will be a great achievement. However, as I understand it, the current objectives of the Montreal Protocol are to freeze the manufacture of CFC gases at 1986 levels. Globally production in 1986 totalled just over 1 million tonnes of CFC gases. That figure will remain stable for four years and will then reduce by 20 per cent. in 1993 or 1994. Surely that is not good enough; it is a case of not even beginning to shut the stable door after the horse has bolted.
I want to be brief, but I should like to quote from Appendix 3 of the report which seems to me to be very worrying. Item 8 states:
"Models predict that, even with CFC emissions assumed to result from the Montreal Protocol, chlorine in the stratosphere will double within the next 50 years. To stabilise chlorine at present levels would require an 85 per cent. cutback on CFC emissions".
I suppose that that is the origin of the figure which the Minister is seeking to achieve. I wish him the very best of luck in achieving it. I believe that it was widely felt by those who served on the committee with the noble Earl, Lord Cranbrook, that this was too slow but that the department advised that it would not be possible to revise the protocol until after it comes into effect.
The greatest area of concern lies with refrigerants and air-conditioning. CFC used in aerosols is apparently diminishing at quite a rapid rate. That is

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the most encouraging fact that I have learnt tonight. However, when one considers the number of refrigerators in use both in this country and globally, and then adds the number of refrigerators which may come into use in third world countries and China, the mind boggles. So far as I know there is no current control on methods of disposing of redundant refrigerators. Therefore presumably, as noble Lords have already observed, each time a refrigerator is destroyed its CFC gases are emitted into the atmosphere, adding to the problem.
I do not wish to detain noble Lords further tonight. I should just like to wish the Montreal Protocol well. I hope that it will come into effect, that the necessary signatures will be obtained and that it will have enough teeth to deal with the global pollution of the ozone layer.
6.58 p.m.
Lord Zuckerman: My Lords, perhaps I may add my word of thanks to the noble Earl, Lord Cranbrook, for bringing the attention of your Lordships' House to the problem of the ozone layer. I should also like to add my congratulations on the most statesmanlike maiden speech of the noble Lord, Lord Bridges.
As we all know, the ozone layer is only the most recent of a series of environmental challenges which have suddenly become matters of general interest. They are also matters that intrude uncomfortably into the inventory of more immediate political problems with which the Government have to contend. What makes them even less welcome is the fact that they are problems which cross international boundaries, as previous speakers have pointed out.
The main editorial in this week's Economist opens with the sentence: "Green is the world's political colour". We are told that this is the second time in the course of 20 years that it has become "fashionable to worry about ecology"—as a scientist I find that a rather odd way of putting the problem. The first time was 20 years ago when a body calling itself "The Club of Rome" published a book entitled Limits of Growth, which foretold the imminent doom of mankind as a result of unrestrained population growth, the exhaustion of resources and environmental pollution. That particular doom has not come about. We have managed so far to get along with our resources. The market mechanism has been able to help deal with that problem. On the other hand, the underlying problems remain. There is the same unrestrained growth of population and, naturally enough, increasing worldwide demand for better standards of living, and ipso facto of course, for the use of more resources.
New problems of pollution, of which the ozone layer is only one, unfortunately keep revealing themselves. There is the question of the disposal of radioactive waste, about which your Lordships have heard a great deal but for which we have not yet heard a solution. There is the matter of the destruction of tropical forests, to which the noble Lord, Lord Vernon, drew attention toward the end of the last Session of your Lordships' House. There is
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the greenhouse effect, to which reference has been made in the course of this debate, with the threat of the flooding of vast coastal areas due to a rise in sea levels. That is a real threat because, strangely enough, in advanced industrial societies most people happen to prefer to live in areas which are threatened by the possible rise in sea levels. There are other problems also.
The editorial in the Economist tells us that the Government have three main weapons for dealing with these problems. The first is the imposition of regulations, the second the levying of pollution taxes and the third selling companies what they call tradable permits which allow them to pollute up to a certain aggregate level. The old, old story of making the polluter pay is merely allowing the polluter to engage in a certain level of pollution for which he can afford to pay but his competitor cannot.
We are told that the most effective anti-pollution programme is one that has both rules and charges and that these need not put a brake on economic growth. But we have heard references made to the third world. What is said in that editorial may well be true of specific issues like dumping toxic wastes in coastal waters, but I doubt whether the measures to which the article referred are adequate to deal with longer term dangers, such as the depletion of the ozone layer.
Diffuse long-term environmental problems are not matters that can be left to be decided by the forces of the marketplace. They demand governmental action. The question now is whether we can rely upon governments—not just our Government but governments—to display the courage to take action as rapidly as they can and should do. Previous speakers quite correctly have already said that any measures will cost money, by which is meant the use of resources which might otherwise be put to different purposes. One cannot have a no-risk world. One has to pay in order to eliminate any risks, whether they be short term or long term.
I have asked whether governments have the courage to take necessary actions. But past history provides no great cause for optimism. I recall that many years ago a member of the Central Electricity Generating Board came to me to tell me that an American concern was ready to put up money—I think it was half a million ounds—provided that the sum was matched pound for pound, in order to design scrubbing plants to extract sulphur from the flue gases in fossil-fuel power stations. Despite the most powerful advocacy I could bring to bear, I was unable to persuade the Treasury of those days to release the money to the then Department of Energy. It is only now that we hear about scrubbers being added to our power stations. We knew about them then, and know they are absolutely essential now.
The noble Lord, Lord Winstanley, referred to the fogs of Manchester. That is another example. For years we knew the cause of the fogs and their deleterious effects upon health. But it took years, and a disastrous spell of fog in London over a period of about three days owing to an inversion which cost the lives of several thousand elderly people before real action was taken and a clean air Act was passed.

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Governmental action to guard against possible environmental disaster has never turned out to be either premature or unnecessary. I can well remember hearing that there was no need for the costly Thames barrage. The chances against the kind of North Sea surge that would flood London that was spoken about then were infinitesimal. One could calculate them on the basis of the rises in water levels that had been measured at Tower Bridge for years and years. It is perfectly true that the barrage has not been called upon to prevent London from flooding. However, if the pace with which the greenhouse effect reveals itself increases and leads to a rise in sea levels, we certainly will not regret that the barrage was built.
The paper which the noble Earl, Lord Cranbrook, has brought before us leaves the impression that the Montreal Protocol, which was agreed only two years ago, is not stringent enough, as indicated by new information. One needs to ask therefore what action the Government propose to take to encourage stiffer and more urgent international action to prevent the situation from worsening. One has to ask: how much notice do we need to avert possible disaster? One might well ask how much notice Noah had before he started to build the Ark which allowed him and his cargo to ride the floods—and was he subject to discordant scientific advice about the likely dangers. We cannot afford any longer to stand back and wait for better scientific evidence than we already have about the dangers that now affect the biosphere.
Sometimes scientists have been able to see further than politicians when it comes to predicting the deleterious consequences of the application of new scientific knowledge. I shall not however go into that matter. There are one or two outstanding examples. After all, it is new scientific knowledge which has brought about the problems that we are now discussing: the problems of the ozone layer and the greenhouse effect—and we know their causes.
It is always possible to delay political action of the kind recommended in the report on the ozone layer on the excuse that we do not yet have all the scientific evidence that we need to decide what the best action should be. The major environmental concerns of today will not be changed as we wait for more scientific information to explain their nature. We need action now, not debate.
7.10 p.m.
Lord Reay: My Lords, despite what the noble Lord, Lord Winstanley, had to say about himself and his brother and their evidently remarkable prescience in this matter, the committee records a date no earlier than 1974 for the discovery by scientists of the battle that was raging in the stratosphere between chlorine and ozone and the terrible danger of defeat that our good friend and protector, ozone, was in as a result of the reinforcements that we were sending to his mortal enemy chlorine.
This Miltonian conflict, with the fate of mankind hanging on its outcome, having been revealed to us by those prophets qualified to discern the truth and warn us in these obscure and distant matters, we on earth have been in a great state of anxiety, erecting partial bans in this group of countries and that, and
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eventually negotiating the Vienna Convention and the Montreal Protocol. For so long as scientists have the same story to tell—as I have no reason to suppose that they will not—this is what we must continue to do, perhaps, as several noble Lords have warned, even more stringently than is currently proposed.
The Prime Minister, in her speech to the College of Europe at Bruges in September, said of the Community:
"I want to see us work more closely on the things we can do better together than alone".
As the noble Lord, Lord Cocks of Hartcliffe, discovered in the United Nations, one thing we in the Community, normally speaking, can do better together than alone is to negotiate international agreements. The Community is a major weight in international negotiations; an equal party to the United States, for example. In this instance the Community succeeded in getting the United States to replace its own preferred principle of a ban on non-essential uses of CFCs with the principle of production control of all CFCs.
The Single Act gave the Community new powers, indeed new duties, so far as policies relating to the environment are concerned. Article 130, paragraphs 1 and 4, require the Community to take action "to preserve, protect and improve" the quality of the environment to the extent where this can be attained better at Community level than at the level of individual member states. This was the first introduction of environmental considerations and objectives into the Treaty of Rome.
Apart from the common sense of making use of the Community to try to reach a desirable international objective when it is more efficent to do so, there are economic reasons for tackling some of the issues at Community level. For one thing, all environmental restrictions impose costs on industry. It is contrary to the principle of a single market ruled by the spirit of fair competition, for an industry to suffer legally imposed restrictions and costs in one member state which it can escape in another.
In addition, industry must manufacture to a single specification throughout the Community. If different sets of requirements, deriving from national environmental legislation, were to apply to the same basic products in different member states, we would have fragmented markets in which none of the promised cost savings of a single market would hold good. Hence the Single Act, whose primary purpose was to assist in attaining the single market, introduced for the first time in treaty form environmental policies into Community competence, it having been recognised that increasingly environmental considerations were going to impinge on economic activity.
Incidentally, the Single Act deals with the question of environment quite soberly. It enjoins the Commission, in preparing any action it judges necessary, to take account of the potential benefits and costs of action or lack of action. It does not call for measures to be introduced regardless of expense. It is not a charter for blank cheques to be written for all those with bees in their bonnets—as the Prime Minister succinctly put it in her speech to the Royal Society.

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As a final justification for many forms of action being taken on the environment at Community level, there is the fact that pollution knows no frontiers. Polluted air drifts from one member state to another; rivers and lakes, and even seas, are shared; and the interests of each demand action by all. International action above the level of the Community may often be preferable but Community action is generally more easily obtained, although, as the noble Lord, Lord Bridges, in his notable and wise speech made plain, even at Community level agreements on environmental legislation are not easy, so numerous and disparate are the interests involved.
Action to protect the ozone layer is a case where Community-wide action is both an important component of wider international action, and also a constructive and often an essential step towards it.
The Montreal Protocal envisages the progressive reduction of CFC production to 50 per cent. of current levels by the end of the century. However, the British Stratospheric Ozone Review Group hypothesises that CFC emissions would need to be reduced by 85 per cent. to stabilise the quantities of chlorine in the stratosphere and to be phased out altogether if the stratosphere is to be given a chance to recover.
This suggests that an eventual ban may be necessary. A ban may also be preferable for other reasons. Quotas are not satisfactory in the long term as they freeze patterns of production. They also foster the growth of bureaucracy. No limit is to be placed in this case on Community exports of CFC products but, in the words of the sub-committee:
"figures on exports (together with data on production, sales, imports, stocks and quantities destroyed) are to be given to the Commission. Separate figures are to be given for countries that are not parties to the Convention. This regime enables each producer to calculate exactly how much it can produce, sell or use within the Community".
This sounds suspiciously like an example in miniature of that bureaucratic, over-centralised state which was correctly anathematised by the Prime Minister. Such arrangements for rationing production should surely therefore only be temporary.
As several noble Lords have pointed out, the convention contains a derogation in favour of so-called developing countries although no list or definition is provided. I find it unsatisfactory that a major derogation should be made in favour of unspecified countries although it is not surprising that no definition of "developing" countries was reached since "developing" in fact is a euphemism for "economically backward". Some, like China or India, are developing. Some are regressing. Others are static. Such lists in the past have included countries like Romania, or some in Africa, whose evil and/or incompetent policies are responsible for them being on the list in the first place.
I think that it is undesirable to excuse any group of countries, whether backward or distinguished in some other way, from having to adopt standards of international behaviour required of the remainder. The committee identifies a danger that "production havens"—in the words of the committee—might be established in certain countries which are not parties
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to the protocol, and which would cater for the demands of other countries not party to the protocol, and for the economically backward countries which are excused. It is to be hoped that this will not happen, but in any case there will be plenty of further tests for international co-operation in this field.
I should like to end with a question to the Minister who is to reply. The Stratospheric Ozone Review Group in its report calls for a co-ordinated European programme of further research into the ozone layer and the environmental Council of Ministers meeting last June also called for further research by the Community and member states in consultation with industry. Climatology evidently now calls for more of our resources.
Can the Minister say what the Government's research programme is and in particular what its principal effort is intended to be? Is it intended to be a national effort—and British research has produced some important results in Antarctica—or a contribution to a Community-wide effort that would have the advantage of avoiding costly duplication?
7.20 p.m.
The Earl of Halsbury: My Lords, as I speak towards the end of a debate that began rather late, I shall be as brief as I can. I start with thanks and congratulations to the noble Earl for bringing the matter before your Lordships. I offer a double measure of congratulation to the noble Lord, Lord Bridges, for participating in the work of the committee and for giving an excellent maiden speech.
The noble Earl took the words out of my mouth about the disposal of refrigerators. These are closed systems with the offending liquid inside, which cannot be removed unless the refrigerator is left to rot on a dump or heap. Refrigerators should be designed so that they can be decommissioned at the end of their useful life.
I agree with the noble Lord, Lord Cocks of Hartcliffe, in his commendation of the bi-partisan approach, which was echoed by the noble Lord, Lord Reay, and other noble Lords.
As to the third world, I agree with everything that was said. In order to convice the third world, we have to confess our own sins, namely, greed and ignorance and that we left a lot of mess lying about. If third world countries want help to catch up with us now that we have become reformed characters, they have to agree to do this in terms of thinking that it is not right to leave things lying about.
The noble Lord, Lord Winstanley, referred to the complexities of the matter. I know how complex they are. I had the pleasure of entertaining Sir John Mason over lunch yesterday. He was director general of the Metereological Office during the 12 years when I was chairman of the advisory council. He has retired. He is now the chairman of the organising committee for world climates research. He is director of the UK-Sweden-Norway acid rain research programme. He is chairman of the co-ordinating committee of marine science and technology, the chancellor of UMIST and the chairman of the Royal Society's national committee for world climatic research programmes. When he had given me a

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briefing, I realised that some of the expressions are complex, and total knowlege on a number of subjects is not yet with us.
There are things that we do not understand. I do not think that it helps to introduce what I would call journalistic over-simplifications into the discussions. It is fashionable, for instance, to talk about the hole in the atmosphere. There is no hole in the atmosphere. There is a depletion of ozone during the Antarctic winter. Ozone is synthesised in sunlight and is immediatly attacked by anything that can oxidise, so that it is depleted. When two processes work in opposition, of course, a working level of ozone is established in the atmosphere. It migrates to and fro. The circum-polar vortex on the South Pole is so strong that ozone generated in more temperate latitudes cannot reach the South Pole. That is why depletion occurs. It is wrong to talk of a hole in the atmosphere. It confuses the issue.
I entirely agree with the noble Lord, Lord Kennet, that militancy on these matters does not help. It gets the emphasis all wrong.
I end on this note. Cleanliness and tidiness are cultural acquisitions. They are not genetic endowments. We have no inherited instinct towards tidiness and cleanliness. One has to be brought up by a house-proud mum who keeps the house clean and then one learns to do the same: one cleans up one's own kitchen, desk or whatever. When I was young there was a little notice in every public lavatory saying, "Please leave this place as you would like to find it". That is what we should do with mother earth. We are born into it, we live on it and we depart on our way in due course. Let us leave it tidy.
7.25 p.m.
Baroness Nicol: My Lords, for all its brevity this is probably one of the most important reports before the House, certainly in my time as a Member. We are grateful to the committee for its work and to the noble Earl, Lord Cranbrook, for the way in which he presented the report.
I am aware that the noble Earl asked about the present status of the protocol; I am not clear whether he asked about the status of the convention. It was my understanding that the protocol could not be activated until the convention had been signed by 20 contracting parties. The last news I had was that only 19 have signed. If there has been a delay in signing the convention, can the Minister say whether that will hold up the starting date of the protocol? As we have heard, the protocol is of vital importance. It is now perhaps more an expression of acceptance of the existence of the problem than a blueprint for action. I know that we have to wait for it to be activated; I think that we are wise to look ahead of that. Events are moving with speed, as the noble Earl said, and later evidence proves the need for more urgent action.
I do not intend to be sidetracked about whether the Prime Minister had said anything about the environment at some earlier time or had a particular reason for saying what she did on 27th September; the fact is that she said it, and it was very important that she did. She is a lady of considerable influence in this country and elsewhere. We should all welcome
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the fact that an impetus—even if we choose to say that it is an added impetus—will now be given to what we are trying to do.
We welcome the positive statement of the Minister on 3rd October that he is convinced of the need for a reduction of at least 85 per cent. in the emissions of CFCs as a matter of urgency. We fully support his wish to speed up the first review of the Montreal measures. Can the Minister say what hope there is of that and how it can be done as an exercise?
In the last few days it has been suggested—I think that the noble Earl referred to it—that there is a lessening in the visible effects of ozone damage in Antarctica. I took informal advice yesterday from the department of physical chemistry in Cambridge. I am advised that fluctuations take place because of variations in the strength of anticyclones— this has happened before—but the trend continues to be downwards, and it is now very alarming that the holes are growing steadily deeper as well as wider. It is apparently considered that the fluctuations reported this week are not important.
Increasing awareness of the size of the problem is shown by public reaction to the use of aerosols and by industry's response to general concern. As the noble Earl mentioned, the British Aerosol Manufacturers Association reported this month that many manufacturers have moved in advance of the protocol. Many aerosols in use are already propelled by gases other than CFCs. By the end of 1989 the BAMA estimates that only 10 per cent. of aerosols will use CFCs. A new label will help customers to choose when they buy.
My noble friend Lord Cocks of Hartcliffe was concerned about the loss of employment in making CFCs. Alternatives will have to be found. These surely will create employment.
We welcome the moves by the aerosol industry and commend it for its efforts, but they will be wasted if the reduction in CFC use in aerosols simply allows increased uses in other ways. The protocol uses consumption as the control target. As can be seen in the report, consumption is defined as production plus imports minus exports. Savings on aerosols in this country therefore could be exported to be released elsewhere.
It seems that the availability of "surplus" from the aerosol industry may lessen the urgency of finding alternative chemicals for other industrial uses. We would welcome assurances about this. It would be wrong if so much public concern and co-operation were to be side-stepped.
We note with interest the new CFC recovery plant at Glossop. Can the Minister give an indication of the capacity of this new plant and say whether it represents an increased capacity within the recovery industry; or is it a replacement for existing facilities? I gave notice of this question and I hope that he has been able to find an answer. Can he tell me what the overall position on recovery is? Is he satisfied that disposal of residues from this industry after recovery is satisfactory?
These may seem to be small matters, but we have been talking about saving small quantities in aerosols

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and in other ways. It is important that every effort should be made to conserve waste within the industry.
Are there arrangements yet for small users of solvents to have their wastes collected? I understood as late as mid-1987 when I raised this question before that users below a certain level could not obtain the services of the waste disposal authority for special wastes. When one thinks of the enormous number of small technological firms that we have at present, this represents a considerable amount. I wonder whether the waste disposal authorities are now taking a more enlightened view than they did last year.
As we are trying to put our house in order, we hope that the United Kingdom Government will take a responsible line on exports and on advice to United Kingdom industries with foreign subsidiaries. We feel that the Government should use their considerable influence to persuade underdeveloped countries—and I hope that the noble Lord, Lord Reay, will find that a more acceptable description than "developing"—not to go in for inessential uses of CFCs such as aerosols and foams. However we recognise the importance of refrigeration both here and in other countries and the present lack of alternatives for that use.
As the noble Lord, Lord Cocks, explained so eloquently, and indeed the noble Lord, Lord Bridges, and many others, there is a major job of persuasion to be done. We have to explain why we have been so long in putting our house in order. We have to persuade other countries that they cannot enjoy the advantages that we have enjoyed for so long, although this seems to be unjust. One can understand the difficulties of transitory governments, as the noble Lord, Lord Bridges, said, who have to face these long-term problems and persuade their people to make a restriction in their living conditions.
The protection of the ozone layer, as almost everyone has said, is a global problem. This, together with the emerging menace of the greenhouse effect, to which CFCs also contribute and which has been mentioned by the noble Lord, Lord Zuckerman, among others, may present the planet with a threat which transcends commercial, national and certainly party political considerations.
Others have asked for a bipartisan approach. We will encourage and support government measures to meet our national and international responsibilities. However, we will be forthright if we consider that the measures that are taken are inadequate or that the situation is being used for party political ends.
7.32 p.m.
The Earl of Caithness: My Lords, I agree with the noble Baroness, Lady Nicol, that this has been a most stimulating and interesting debate. The expertise of your Lordships has again been demonstrated. I very much welcome this opportunity to debate the committee report on the Montreal Protocol. I should like to echo the point made by so many of your Lordships that the environment is too important to be treated as a political football. I am all for criticism at the right time when it is justified, but to use it for
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political purposes, as the noble Earl, Lord Halsbury, and the noble Lord, Lord Cocks of Hartcliffe, said, would be entirely inappropriate. I mentioned that point in a press interview the other day and the press reporter looked at me blankly as though I had come from a different planet.
The report quite rightly describes depletion of the ozone layer as a global environmental issue of the greatest seriousness—and matters are moving very fast indeed. The representatives of the scientific community. industry and governments, including the UK, are meeting in The Hague to take stock of the science, to study the development of alternatives to CFCs and halons and to begin work on the first review of the protocol, currently scheduled for 1990.
I fully share the committee's view that the protocol and its parent Vienna convention are milestones in environmental policy-making. The convention has now come into force—on 22nd September to be precise—and the number of signatories to the protocol now stands at over 40. The UK and the EC were of course among the initial signatories in Montreal last September. I welcome the committee's recognition of the key role played by the Community in the negotiation of the protocol and of the crucial importance of the member states acting together as a single bloc. I have no doubt that the Community's solidarity in negotiating the protocol, and indeed the convention before it, was a major factor in reaching global agreement.
In the relatively short time since Montreal we have seen much new scientific evidence about the damage to the ozone layer, including depletion in the Antarctic and the role of CFCs. The committee was able to take into account the executive summary of the second report of the department's stratospheric ozone review group. This made it clear that as an essential step to prevent further depletion of the ozone layer we must stabilise chlorine in the stratosphere, which itself requires an 85 per cent. cut in CFC emissions.
We have always believed in basing policy measures on sound science. Having studied the review group's full report, I announced earlier this month that the Government agreed that worldwide emissions of CFCs must be reduced by at least 85 per cent. as soon as possible.
I agree with the noble Lord, Lord Zuckerman, and indeed other noble Lords that the Montreal Protocol must be significantly strengthened. Indeed, ICI has called for an urgent review with a view to phasing out CFCs. We have proposed that in order to accelerate action the international community should consider bringing forward the timing of the protocol's 20 per cent. and 30 per cent. cuts. We should like the first review of the protocol to be speeded up so that work can be completed in 1989 rather than 1990. The report of our review group will be a major input to the review process. I have written to my fellow EC environment ministers commending the report and urging them to follow our lead. At my request there will be substantive discussion of this issue at the Environment Council in November.
Although we have taken the initiative, in line with the central recommendation in the committee's

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report, we must work with our EC partners. The challenge will be to maintain the momentum and to follow the initiative through in the months that lie ahead. But, as the committee observed, the resolution of the Environment Council on 16th June is a clear signal that the Community accepts the need to make reductions over and above those required by the Montreal Protocol.
There is the wider dimension of global warming, which cannot and must not be ignored, and to which my right honourable friend the Prime Minister referred in her speech to the Royal Society last month.
The noble Lord, Lord Bridges, in what I thought was an excellent maiden speech. said that we were suffering from a legacy of the past. He is absolutely right, and he was right to point out that we might also be inadvertently suffering from modern technology.
Your Lordships will be interested to know that molecule for molecule, CFC12, for example, is 10,000 times more powerful a greenhouse gas than carbon dioxide. If countries outside the protocol increase their emissions, CFCs could rival carbon dioxide as the dominant greenhouse gas in the next century. Climate change is potentially the greatest global environmental challenge of all and makes the further international action to control CFCs, for which we are all calling, doubly important. The UK is making an important contribution to international efforts to evaluate potential effects or ozone depletion and climate change. Our research on these two linked issues currently totals more than £6½ million.
The noble Lord, Lord Winstanley, said that it is going to cost a great deal of money to put right what has happened in the past. I can tell him that it is going to cost a lot of money because we are planning virtually to double the department's funding in the next year.
The Government's action on these recently recognised problems should be seen against a background of real progress on air pollution issues that have a longer history. We are taking extensive action on acid rain. We have a programme initiated domestically for a £billion 10-year power station clean-up programme to cut emissions of sulphur dioxide and nitrogen oxides. On top of this we have agreed further substantial measures in the EC to reduce sulphur dioxide and nitrogen oxide emissions from large combustion plants and nitrogen oxide and hydrocarbons from vehicle emissions.
We should not forget that these major reductions in our output in atmosphere pollutants will have important knock-on effects in other environmental media. For instance, there will be corresponding reductions in the deposition of airborne contaminants in the North Sea. Such interactions between the environmental media and the transfers of pollutants between air, land and water underline the great environmental gains to be achieved by taking an integrated approach to pollution control. The proposals we published in July for giving Her Majesty's Inspectorate of Pollution a cross-media role in pollution control make us the world leader in this field. And I trust that other countries—particulary in the EC—will be encouraged and guided by our example.
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Our immediate priority on CFCs is to ensure that the Montreal Protocol enters into force at the beginning of January as planned. It is vital to have the widest possible participation, including Eastern Europe and developing countries with large populations like China and India. I ask noble Lords to pause and consider that China alone could neutralise the effect of a complete CFC phase-out in the EC. We have therefore, as the committee recommended, been encouraging other countries to join and to focus on alternatives to the Montreal substances.
That is why we believed that it was right to make derogations for developing countries and I know that that matter concerns some noble Lords. However. surely it was right to entice them into the protocol. At the meeting in The Hague this week we are working on a definition of all criteria for developing countries, but we must have them on board. I believe that the noble Lord, Lord Cocks of Hartcliffe, was right to say that they are not to be lectured. If we do so they will turn round and say, "You are the developed part of Northern Europe. It is all right for you but it is not very good for us". Practical help is needed and we welcome ICI's plans to hold a seminar on substitutes in Peking in December, when my right honourable friend the Secretary of State will be there to give government support.
On the commitee's other recommendations, I am afraid that we do not agree that the Commission should propose a Community-wide ban on nonessential use of CFCs in aerosols. The approach in the EC regulation to implement the protocol is to control consumption through the control of overall supply of CFCs (and halons) in the Community. The Government fully support this approach as the most efficient and effective method and I note that the committee's report considers this an efficient approach. We do not favour the control of specific uses of' CFCs—which leave other uses of CFCs uncontrolled—and prefer market forces to determine the use to which available supplies are put. Indeed, as the noble Lord, Lord Bridges, reminded the House, the United States banned the non-essential use of CFCs in aerosols some 10 years ago. But I question whether that helped, as overall US per capita use of CFCs remains on a par with that in the EC. A ban is in any event simply not necessary. In the UK and some other EC member states action has already been taken on a voluntary basis to reduce use of CFCs in aerosols: the UK aerosol industry expects to phase out non-essential use of CFCs in aerosols by the end of 1989. Given that aerosols constitute over 60 per cent. of CFC use in the UK, this will give us a head start in achieving the Montreal reductions. I am sure that the House will join me in commending the efforts of UK industry generally and our aerosol industry in particular.
The committee also suggested that the Government should consider means for reducing emissions by industrial users in conjunction with Her Majesty's Inspectorate of Pollution. We are strongly encouraging CFC users to reduce use of CFCs to the maximum possible extent, and officials of my department and of the Department of Trade and Industry are discussing with them the steps they are

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taking. Chlorine and fluorine compounds are already included in the list of noxious and offensive gases in the Health and Safety at Work Act but before HMIP could set requirements on emission levels it would have to be satisfied that practicable and reliable abatement technology was available. The noble Baroness, Lady Nicol, reminded us that there are encouraging developments with regard to recovery and recycling of CFCs emitted during the production of polyurethane foam and, as the committee noted, the DTI has given a grant towards the cost of installing a large-scale activated carbon absorption unit in the UK. My honourable friend the Parliamentary Under-Secretary of State for Industry and Consumer Affairs officially opened the first phase of the project in September. The company expect that when fully operational well over 90 per cent. of CFCs used in the plant will be recoverable for reuse. The Government will keep the overall situation under review in conjunction with HMIP.
My noble friend Lord Reay reminded us that the committee recommended that the Government should review the adequacy of their support for scientific research on the ozone layer. We are reviewing the situation in the light of the recommendations of the Stratospheric Ozone Review Group. Research must be carried out efficiently and effectively. It needs to be co-ordinated in both the UK and Europe to avoid unnecessary duplication of effort and to make the best use of research funds and expertise in the field of stratospheric ozone. The UK took the initiative almost one year ago in offering to act as a focus to co-ordinate research in EC and EFTA countries. That initiative matured last weekend in The Hague and the UK, Norway and the EC Commission agreed to fund and establish a coordinating unit which I am delighted to say will be located in the UK.
In addition, four UK members of our review group took part in The Hague in this week's first scientific meeting to review the protocol. I understand that our desire to speed up the review process was well received, as was the UK's offer to host further review meetings.
I should like to answer some of the questions which have been asked. I know that I shall be unable to answer them all and I shall write to noble Lords who have asked questions that I do not answer. I assure the noble Lord, Lord Kennet, that the Department of the Environment is the lead department in terms of policy on both the ozone layer and climate change. The uncertainty in the report is merely about which department will implement the Montreal controls, such as the import and production licences. That is a decision for my department, DTI and Customs and Excise.
My noble friend Lord Cranbrook, who so brilliantly introduced the debate, referred to the recent report on what appears to be the less serious depletion of the Arctic ozone layer. It is true that according to some reports it appears to be slightly less deep this year than last. But scientists tell us that this is probably due to natural variability. Let there be no mistake: there is no cause for complacency or slowing down action. Indeed, quite the reverse, because some
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of the evidence from last weekend's meeting in The Hague was disquieting.
As regards entry into force of the protocol, I can tell the House that the United Kingdom and its dependent territories are ready; most member states are ready; procedural delays in France, Greece and Belgium are expected to be overcome very shortly; and the Community expects simultaneous ratification next month. This will enable the protocol to come into force as planned next January and then we can officially start the review process. I should like to say to my noble friend Lord Liverpool that the action that we have already taken has in its own way already started that review.
As regards the non-signatories taking up the production of CFC, I can offer no guarantees to your Lordships. However, I repeat that our independent territories, including Hong Kong, wish to be associated with the United Kingdom ratification. The Chinese have assured us that after 1997 the protocol will continue to be applied in Hong Kong.
I can appreciate the concern that reduced United Kingdom or Community consumption could leave more CFCs available for export. However, exports from one member state to another will count as Community consumption, as the Community consumption will be calculated in a block form. Exports to a country that is party to the protocol will count towards that country's consumption. From 1993 exports to non-parties will be added to the exporting country's consumption. In addition, the acceleration of the protocol's 20 per cent. and 30 per cent. cuts that we are seeking will be for both production and consumption.
As regards the search for substitutes, I am glad to say that British industry has already responded positively. The United Kingdom producers, ICI and ISC are expanding their research and development work to find substitutes and have joined international consortia of producers worldwide to hasten the process of commercial development. The Government are encouraging producers to bring substitutes on to the market as quickly as possible but it is essential that those are not only suitable but safe and that adequate time is given for toxicity and environmental testing. I am sure your Lordships would agree that it would be quite wrong to substitute for something which is causing damage something else which is equally, or more, damaging. It is important that producers maintain the dialogue with user industries, both to ensure that new chemicals meet their requirements and to assist the process of developing technology to use new substances as quickly as possible.
My department is holding regular meetings with representatives of all sectors of industry who are aware of the criteria for seeking funds from the Department of Trade and Industry. It is also important to stress the scope for replacing CFCs with existing substances, for switching to existing technology and for reducing unnecessary or wasteful use by better housekeeping, recovery and recycling. The protocol has given strong emphasis to developments in all those areas as well as to the search for substitutes. I am confident that British

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industry will continue to play a leading role stimulated by public concern and encouraged by the Government.
Finally, I should like to thank the committee both for producing such a concise and focused report and for having agreed in advance of the debate to the UK removing our parliamentary reserve on the Commission's proposals thus paving the way for their formal adoption by the Council. I should also like to thank the committee's scientific adviser for his work. I believe too that we owe a debt of gratitude to the department's officials. They have ploughed a lonely furrow in the lead for some time. They are thoroughly respected throughout the world: much of the work that has gone on over the last couple of years or so has now come to fruition and I am delighted at the lead that they have been able to take on Britain's behalf.
British scientists discovered the ozone depletion problem in the Antarctic. We have come a long way in a short time but we have a lot more to do.
The Earl of Cranbrook: My Lords, I welcome the way that this debate, which was initiated on a topic of fairly narrow scope, has been widened to cover so well and so broadly a field of great importance in environmental concern. I welcome the words from my noble friend the Minister and I commend the Motion to the House.
On Question, Motion agreed to.

Sheepmeat Regime: ECC Report
7.53 p.m.
Lord Gallacher Lord Gallacher rose to move, That this House takes note of the report of the European Communities Committee on the Review of the Sheepmeat Regime (18th Report, 1987–88, HL Paper 98).
The noble Lord said: My Lords, the proposal now before us by the Commission to vary the sheepmeat regime is not in itself new. I recall that your Lordships' Select Committee reported on this subject in 1984 and, as a matter of interest, reached much the same conclusion then as does the present report now. The significant difference, if any, is that the reception of the proposals from interested parties by the Select Committee has been much more favourable than it was in 1984. So there has been a change of thought in the intervening four years.
I hope that I shall not be accused of wasting time at this late hour if I say a word about the regime as such. Sheepmeat has had a Community regime since 1980. It is not a major source of Community expenditure. In that respect it does not rank with cereals, milk, wine or meat. Nevertheless, it represents a growing source of expenditure by the Community and, although the Community is not yet self-sufficient in sheepmeat, undoubtedly under present pressures the Commission feels obliged to keep the cost of sheepmeat under review. That in part is one reason for the present proposals.
It is a significant proposition from the point of view of Britain because we have a regime for sheepmeat
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which differs from that of other member states. It differs because instead of a single ewe premium as a basis for remuneration, under the regime we have a smaller ewe premium and an additional premium known as the variable premium which is in the nature of a deficiency payment. Again, those familiar with the subject will know that under the variable premium there is a market price for sheep set week by week throughout the year, and if qualifying lambs fail to reach that market price then a variable premium is paid. In consequence that has, as I say, something of the character of the old deficiency payment scheme.
One difficulty about the variable premium from the point of view of the completion of the internal market by 1992 is that, given the fact that common producer prices are the basis of the CAP, there is of necessity a system of claw back when the lambs are exported. That system works at present but will not fit in so readily with the completion of the internal market by 1992. I think we should also state that in Britain we are the largest producers of sheepmeat in the Community and are also the largest consumers.
I should also say, although it is spelled out in the report, that in fact the production of sheep and sheep farming represents a very important industry, given the stratification which exists in Britain whereby in hill, upland and lowland areas we have a system which works in harmony. In consequence the industry is well integrated and has prospered since the introduction of the regime in 1980. Any disturbance of a severe character would present problems and your Lordships' Select Committee asked witnesses what upland and hill areas could do in the event of any serious deterioration as regards the production of sheep. We were assured that at the moment it represents the only viable kind of agricultural activity which those areas can undertake. Therefore, we have an industry which is important both economically and socially, and your Lordships' Select Committee is mindful of that fact.
The main proposition which the Commission makes under the present review is that the variable premium in Britain should be phased out by 1992. I am told that that has now been extended to 1993. After taking fairly wide evidence—and we express our appreciation to those organisations which gave evidence—your Lordships' Select Committee have reached the conclusion that the phasing out of the variable premium in this fashion is acceptable but on conditions. There are already a number of conditions in the proposals and I shall mention some of them as I go through the piece. We felt it prudent to attach additional conditions and I shall also mention those.
The first condition which we feel is necessary is that if there is to be a single annual ewe premium then it must be increased to compensate British sheep producers for the loss of the variable premium. In addition, under the stabiliser regime—and already the stabiliser has been activated as regards sheep—we feel that the calculation of the stabiliser in Great Britain should be based on the Community ewe flock and not simply on the Great Britain ewe flock alone. We feel that the voluntary restraint agreements which currently apply to sheepmeat need to be renegotiated.
I should mention that in addition to home produced sheep, the Community is a substantial

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importer of sheepmeat from a number of countries and in the case of Britain the New Zealand frozen lamb trade is a very important part of our diet. It is a traditional trade and one which has been well conducted over the years so that the British housewife not merely has a choice between home produced lamb but also imported New Zealand lamb. In addition she has the benefit, during the period when prices of home produced lamb are high because of scarcity, of a fall-back if she wishes in the form of New Zealand lamb.
Under the voluntary restraint agreements which have been negotiated by several countires and the Commission, they enjoy a reduction on the tariff which they would otherwise have to pay of 20 per cent. Under the VRAs that tariff has been fixed at 10 per cent. We took evidence from the New Zealand High Commissioner on this subject and we were very familiar with the problems confronting New Zealand not merely as regards its exports to Britain but worldwide in this regard. While we are very conscious of the necessity for renegotiation of the voluntary restraint agreements under the proposed review of the sheepmeat regime, we stressed in our report—and I do so again this evening—the importance of fairness and equity as regards the voluntary restraint agreements and, in particular, as regards the important imported trade from New Zealand.
We also feel that a new method for calculating the ewe premium must be achieved. At the moment the Commission is proposing that there should be only two regions for calculating the ewe premium and that in those two regions—roughly the north and south of the Community area—the co-efficients should be arrived at. These co-efficients are then applied to give the premium which will be payable under the proposed new arrangements.
That represents a reduction in the number of regions and a new method of calculating the premium. I understand that the two regions have now been increased to three, but that has been on the basis of dividing the southern region into two and we still think that it does not meet the problem for Britain. The system proposed by the Community is, in our view, both simplistic and unfair to Great Britain and we commend to the Government the suggestion that they should advocate, as part of the renegotiation of the regime, a region for the calculation of co-efficients based on Great Britain, Northern Ireland and the Republic of Ireland, which should constitute one region.
We do not accept—indeed, we reject categorically—the Commission's proposals that there should be a limitation on the number of eligible ewes per farm under the proposed new regime. We feel that that is designed to be specifically unfair to the United Kingdom, which conducts its farming on a much larger scale than many other member states, and any such limitation would bear harshly upon us. We feel that the ewe premium should be paid more frequently to farmers in the absence of a variable premium. I understand—no doubt the Minister will confirm this when she replies—that that has already been conceded and that two payments are
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contemplated. This will improve the cash flow position for farmers and ease the transition for them from the variable premium to the ewe premium.
We believe that the current definition of eligible ewes in the United Kingdom should continue so that yearling lambs qualify. We would not wish to see any change in the current definition of eligible ewes without good notice to take account of farming practice and breeding requirements.
we agree that intervention arrangements for sheepmeat should be abolished and although we feel that storage aids which currently exist should be preserved, we do so only in so far as these do not lead to stockpiles of frozen lamb. On past evidence that situation is not likely to arise, but if it does your Lordships' Select Committee would review its present belief that private aids for storage should continue.
There is the question of the volatility of sterling against other currencies of member states who are in full membership of the European monetary system. Noble Lords will be aware that there is not a monetary compensation system for sheepmeat. Consequently, the divergencies between green rates and actual currencies reflect at once in prices paid. In view of the emphasis which has been placed on the importance of exports for the United Kingdom after the elimination of the variable premium, we feel that any volatility as regards these exchange rates could reflect adversely on farmers. Therefore, we feel that this problem must be faced, although we are diplomatic and discreet enough not to suggest to Her Majesty's Government the manner in which it should be faced. However, it exists and we feel it right that it should be mentioned.
We felt that there was a view widely held among those who gave evidence that the DG6 directorate in Brussels did not have extensive experience of the sheepmeat industry in Britain. This, of course, is in marked contrast to our own Ministry of Agriculture where there is a clear and keen appreciation of all that the industry involves. Given the nature of this question and the importance of it, as I have already said, on both social and economic grounds we feel that it would be advantageous both now and in the future if experience of this kind existed by way of an addition to the staff in DG6.
We make the recommendation, again based on the evidence given to us, that United Kingdom producers, with an eye to export markets, need to improve the quality and marketing of lamb by 1992 if the full export potential of the industry is to be realised. For example, when we asked for evidence of the grading system which currently applies before the variable premium can be paid—specifically, whether this qualification had raised standards—there did not appear to be a view at all within the farming unions to which we spoke. That seems to be an indication of a complete lack of awareness by the producer of the ultimate market.
That contrasted sharply with the evidence given to us by the New Zealand High Commissioner, who, when questioned about this appreciation of the British market, was able not merely to tell us how much New Zealand had sent to us, how much was

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charged for it and what economic grouping in the British market he was seeking to supply, but also how much he spent on advertising, where he was advertising and how the division of the advertising budget was made. All in all, as chairman of the subcommittee I had the impression that the New Zealanders were much better organised vis-à-vis our market than we are vis-àvis, say, the French market. Therefore, we have made this recommendation in our report which we hope will be noted.
For example, in looking at who does what and who is responsible for what in this area in Britain, I find that the Meat and Livestock Commission has an interest and that the Food from Britain Organisation has an interest, both on its marketing side and its co-operative development board—though judging by recent replies to Written Questions in your Lordships' House the prospects for Food from Britain, in the long-term at least, seem to be somewhat less than rosy. Therefore, I believe it would be unwise to regard that organisation as being a natural source for an extension of the kind of activity that we should like to see in this area.
Finally, there is to be a lamb promotion council, funded from the bolt-on levy and thus I have the personal impresssion that this is everybody's responsibility and that, in the end, nobody in particular does anything about it. Certainly there is nothing comparable in my experience to the New Zealand Meat Producers' Board or even, come to that, the Irish Meat Producers' Board.
I hope that the report as it stands is a clear and concise document which will commend itself to your Lordships. I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on the Review of the Sheepmeat Regime (18th Report, 1987-88, HL Paper 98).—(Lord Gallacher.)
8.6 p.m.
Lord Stanley of Alderley: My Lords, I speak as a shepherd— or I try to be a shepherd—and I thank the Select Committee, and the noble Lord, Lord Gallacher, in particular, for bringing this very valuable report to the attention of the House and the sheep industry. I shall confine my remarks to just two aspects.
First, the report repeats the previous report made by your Lordships on the sheepmeat regime in the 1983–84 Session which stated that if our industry is to survive we must export and we must produce what the customer wants. To do that, it is of prime importance to remove any obstacles to our export trade. While we operate a system that is different from the rest of Europe it allows our European competitors—I repeat, competitors, because they most certainly are—to discriminate against us, which they delight in doing.
Therefore, I totally agree, as I did in 1983, that subject to the conditions laid down in the report and which have just been enumerated by the noble Lord, Lord Gallacher, the variable premium must go unless, of course, it is operated by the rest of Europe and that, as your Lordships report states so clearly, is tantamount to asking for the moon. It is the old
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story—if you cannot beat them, join them. I shall therefore be fascinated to hear what my noble friend Lady Trumpington says on this matter. When subcommittee D recommended such a change in 1983 —mentioned by the noble Lord, Lord Gallacher with a smile on his face; and there was a smile on my face, too—we had a discreet note back from the Ministry of Agriculture politely asking whether we were out of our crazy little minds. I hope that the department was referring to the report and not to your Lordships!
Having said that, I realise that at that time most sheep farmers preferred to keep the variable premium. Indeed, they still do today. Therefore, whose side are the Government on now? Secondly, on a rather less important point, although the report is remarkably consistent with the previous report produced in 1983–84, there is one matter that is not now emphasised to the same extent. I refer to recommendation 74(j) in that report. That states that all grading should be done on a deadweight basis. I presume that the reason is that it is assumed that once the variable premium is done away with there will be no need for any grading of livestock. I agree that liveweight grading should be done away with. I believe it has aided and abetted the industry in producing poor quality lamb as a similar system did after the war in the pig industry. That allowed the Danes to capture our bacon market. We, as sheep producers, should look back to the period from 1947 to 1950 to see what happened to the pig industry.
However, some system of deadweight grading should be preserved so that the producer and the retailer know what they are producing and buying. I ask my noble friend Lady Trumpington that should there be an end to the variable premium for sheepmeat and, for that matter, the premium for beef, the Government should ensure that there is an independent system of grading so that the producer knows what the trade wants. That was a point made by the noble Lord, Lord Gallacher, so forcefully. It is an important point; in many instances, I regret to say, there is little confidence or love between the farmer and the slaughterer. It may be that the Meat and Livestock Commission can continue to do this job, but it must prove beyond doubt that it is unbiased, incorruptible. And it must be given the powers to do the job fairly and properly.
There is of course the question of who will pay. However, as your Lordships are told not to discuss money, I do not intend to discuss that matter now. If the industry is to adjust to these changes and win the export battle, I implore the Government to continue to fund research on the scientific methods of grading carcasses now being so successfully developed.
8.12 p.m.
Lord Hooson: My Lords, unlike the noble Lord, Lord Stanley of Alderley, I cannot claim to be a shepherd, but I am a sheep farmer in a less favoured area. "Less favoured" in this context of course is within the terms of the agricultural policy of the EC. I congratulate the noble Lord, Lord Gallacher, and his committee upon the report. I apologise for the fact that my noble friend Lord Mackie of Benshie, who was a member of the committee and who would

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have liked to have spoken in the debate, is unable to be here. It must not be thought that my views and those of my noble friend Lord Mackie coincide on every point with regard to the report.
The report is one with which I largely agree, although I have some reservations. The committee has marshalled the evidence very well in its comments and the evidence itself is extremely interesting. When I was in the other place I represented an area which has probably more sheep per acre than any other part of the United Kingdom. I know how valuable the EC sheep regime has been for agriculture generally in the United Kingdom. I believe that it was getting into a fair state of chaos before the sheepmeat regime came about. We should not underestimate the enormous contribution it makes to the stability of the economy of country areas particularly the hill and upland districts.
From recollection I believe that the variable premium system was introduced when Mr. Peter Walker was Minister of Agriculture. It suited this country very well. It benefited not only the producer but also the consumer. I believe that there is a great deal to be said for it. We are by a long way the largest sheep producers within the EC. I was rather horrified to read in the report and in the evidence that few members, if any, in the office that deals with sheepmeat in Brussels are British or have any detailed knowledge of the British system. I wonder how correct is the bald statement which I quote from paragraph 37 at page 15 of the report. The committee says:
"However they feel bound to acknowledge that the likelihood of all other Member States being able to adopt the variable premium system as used in Great Britain is so low that it may be inevitable that British sheep producers will have to depend on the annual ewe premium as the instrument for income support in the sheep sector".
That is a bald statement, but is it actually correct?
What are the efforts that have really been made to persuade the Common Market countries of the benefits of the variable premium system? I suggest that when the Minister of Agriculture next goes over to discuss matters with his fellow ministers, it might not be a bad thing to take with him the present Secretary of State for Wales, Mr. Peter Walker, who is responsible for the sheep industry in Wales, to try to persuade the Commission of the benefits of the variable premium system. I believe that there is a great deal to be said for that system. I am very glad that it is to be extended until at least 1993 which gives some longer period for adaptation than was originally feared.
I am a great supporter of Europe and a great believer that we must aim at common economic and agricultural policies as in regard to other products of the Common Market. So long as the money that is to come to the sheep producers of this country does not exceed pro rata what is to be allocated to other countries, I wonder whether it would be possible to negotiate within the EC to divide the money between the annual premium on ewes and the variable premium as we have done in the past. That would not do any harm to the EC sheep system because it would still leave the question of the clawback. Other than that I cannot see any great disadvantage in it.
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One of the problems is that support has been based entirely on the annual ewe premium which is to be paid twice a year under the arrangements. It seems that one of the dangers of this is that it tends to encourage people to overstock. We have seen this happen in parts of Wales in the past where one simply has a payment on headage. There is also a tendency for more and more people to go in for sheep in order partially to get the benefit of the headage payments. Is it really meant to be a social payment or one made in order to bring about some kind of economic stability?
If it is intended that it should be a social payment to alleviate some of the effects of the market, then there is a great deal to be said for the recommendation of the Commission that it should be limited as regards numbers. I appreciate that it will adversely affect some producers in this country but if it is intended to be a social payment then I cannot see why there should not be a limit upon it. There should be a limit of 500 for lowland flocks and 1,000 for upland flocks. That seems to me to be about right. I believe that we should give further thought to that question.
Another point is our relationship with New Zealand and the agreement that we negotiated at the time of our entry into the Common Market. That agreement needs very careful review. I believe that we should not finally agree a new sheepmeat regime without the Common Market having first negotiated with New Zealand. It would be a very strange thing indeed if we agreed the sheepmeat regime with all its details and then negotiated with New Zealand. That would be putting the cart before the horse. This aspect needs to be looked into.
One of the greatest worries among farmers is the enormous increase in the national sheep flock. We have a structured sheep industry. The hardy sheep come down from the hill breeds and are then crossed to produce the Mule and other crossing ewes. They are then used with the terminal sire for the fat lamb. The evidence of the Ulster Farmers' Union showed that since the new premium has been paid in Ulster the flock has increased by 40 per cent. That is quite a large increase. Farmers did not have the variable premium because the sheep industry was a relatively small part of the Northern Ireland agricultural economy. It was not on the same scale as the industry in Scotland, Wales and certainly in the hill areas of England. From the evidence of the representative of the Ulster farmers it appeared that the flock had increased by 40 per cent. That seemed to flash a warning light and there are sudden fears in the agricultural community that, with the restriction on milk production and the attempted restriction on grain production, more and more farmers will rush into sheep production and add yet another headache to the Common Market of excessive lamb production. I do not know how far the committee went in addressing that problem.
The committee is to be congratulated on the report. It is helpful in setting down certain guidelines for this country to follow and in particular in marshalling the evidence.
8.22 p.m.
Lord Northbourne: My Lords, I should like to congratulate the noble Lord, Lord Gallacher, on his firm but tender chairmanship of our committee and on the excellent distillation of our discussions which constitute the report under discussion. I shall restrict my comments to one issue—fairness to the British producer and British consumer. In his evidence Henry Fell wrote:
"The British sheep industry has all the natural and structural advantages which should enable it to dominate the sheep market within the Community. A perfect example of a product which fits the commercial logic of the Common Market, whereby movement between member countries enables the best possible use to be made of resources. It has happened with fruit and vegetables, but not with sheep. It would he greatly to the advantage of the British sheep industry if this blockage could be cleared".
This country has a natural and structural advantage in sheepmeat production. We have a relatively efficient industry. Are the Government going to allow these advantages to be neutralised by conditions imposed by our partners in the Community or by missing this opportunity to remove some of the current restrictions? I should like to refer in particular to the proposal that new premiums should be paid only on the first 500 ewes in lowland areas and on the first 1,000 ewes in the hills. I must respectfully disagree with the noble Lord, Lord Hooson. In its evidence the National Farmers' Union said:
"The Commission's proposal that the payment of the ewe premium should be limited to the first 500 ewes per holding (1,000 in less favoured areas) appears to be a deliberate attempt to penalise the United Kingdom. It should be rejected outright".
The acceptance of a limit on the number of qualifying ewes would undoubtedly discriminate most damagingly against British producers. It would not even make a very substantial saving in the cost to the Community. The likely saving would be about £16 million out of a total expenditure of £700 million. It would also be a subsidy on inefficiency.
In this respect my experience is very much confirmed by the evidence to the committee of Mr. Gourlay, the president of the NFU. A lowland shepherd can comfortably manage 600, 700 or even 800 ewes. In the uplands 1,200 to 1,500 is not uncommon. To encourage any lower level of stocking per unit, or indeed per labour unit, is to penalise efficiency, or to penalise the specalist producer.
My second point is touched on in the report and has been referred to by the noble Lord, Lord Gallacher. I refer to the basis of calculation for the new premium. I shall not recite the proposals of the Commission as these have already been covered. The evidence received by the committee shows that the Commission proposals would result in a significant drop in the amount of new premium payable to British producers. The committee recommends—and I urge the Government to pay serious attention to the recommendation—that a list of Community regions distinguished by the characteristics of their sheepmeat production should be drawn up and that the United Kingdom, or the United Kingdom combined with Ireland, should constitute a separate unit. The Commission's proposals as they stand represent an unjustifiable penalty on United Kingdom producers. They must be resisted.
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I should like also to refer to stabilisers. The so-called stabilisers are a device for penalising overproduction and came into operation last May. Increases in production over the base quantity are penalised by reductions in the headage payment. Because Britain is the only country in the Community to have variable premiums, it was originally agreed that the United Kingdom flock should be treated separately for the purpose of calculating the stabiliser penalty. It is clear—and it is recommended by the committee—that if the variable premium is to go, the separate national flock basis for calculating the stabiliser penalty for the United Kingdom must go too. Any other solution would be totally inequitable. The Commission's proposals do not address this point.
I should like to say a few words about the external aspects of the proposals. Paragraph 46 of the committee's report sets out clearly the difficult issues involved in the United Kingdom's close and traditional links with New Zealand as a source of supply. I have spoken to French sheepmeat producers who believe passionately that British imports of New Zealand lamb are responsible for British sheepmeat being available on the French market at prices lower than those to which they have been accustomed and to which the French consumer has been accustomed. It may well be that this is true in the short term. In the slightly longer term, if New Zeland supplies are cut back there is a considerable capacity for expansion of efficient sheepmeat production in this country, which will ensure that, in the slightly longer term, both the home market and the French market will be supplied with sheepmeat at reasonable prices. The problem with the French sheepmeat industry is that it is inefficient. Artificial protection will only perpetuate that inefficiency and seems to be contrary to the principles of the Common Market.
Finally, I should like to ask the noble Baroness whether she can give an assurance that the British sheep industry will be given a fair opportunity to compete on equal terms with our European partners and to benefit from its relative efficiency and from those natural and structural advantages which it enjoys.
8.28 p.m.
Lord Middleton: My Lords, the noble Lord, Lord Gallacher, has given such a lucid account of our report that I wish merely to expand on the first of our conclusions set out on page 20. It is the one on which my noble friend Lord Stanley of Alderley has concentrated. I find myself in close accord with him in what he has said.
I am not at all surprised that the noble Lord, Lord Hooson, has expressed concern about the idea of phasing out the variable premium, because it was seen by all those who gave evidence to the committee as the proposal which would make the greatest difference to the way in which the sheep regime would operate in Great Britain.
The farmers' organisations expressed strong misgivings. The Farmers' Union of Wales was an unequivocal advocate of the variable premium,

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which it regarded as a safety net. The CLA said that the variable premium had proved itself and that its replacement by a single new premium would be harmful. The National Sheep Association said that it would be a disaster if it were to be removed. The Scottish Farmers' Union feared massive disruption and the National Farmers' Union was opposed to the proposal, giving as two of its reasons, first, that the variable premium encourages quality in lamb production, and, secondly, that it makes for efficiency.
As members of the sub-committee we were not convinced. We felt especially that the two reasons given by the National Farmers' Union which I have just mentioned should be looked at more closely. We believed that the achievement of a single market for sheepmeat in 1992 would require that change and therefore to expect all the other member states to adopt our system was unrealistic. Indeed, the National Farmers' Union admitted that fact in evidence.
With certain qualifications—to which the noble Lord, Lord Gallacher, has referred—we took the view that the removal of the variable premium would present an opportunity of which the British lamb producers were well capable of taking advantage. So far from encouraging quality, we believe that the present grading system on which the variable payments are made—here I found myself in agreement with my noble friend behind me— has the opposite effect.
Mr. Volans of the Edinburgh School of Agriculture, who has made a special study on the marketing of sheepmeat, told us that the present certification was, "a very crude quality mark". In answer to a question that I put to him, he said he thought that the present lamb grading system had been an obstacle to improvement in the market.
In his written evidence Mr. Volans said that the removal of the variable premium could lower the average market price because the range of quality would be greater but the spread of prices between high and low quality lambs would be larger. That opinion confirmed our view that the market would play a significant part in encouraging a better product. There would be increased opportunities for British exporters. We already have a thriving export trade in lamb, especially to France. We were told that freer trade between member states and the effect of the removal of clawback would be likely to result in increased exports from Great Britain.
However, because British consumption would be likely to fall as our lamb prices increased, there was a real need for development of the marketing of lamb in this country. This of course has already been stressed by the noble Lord, Lord Gallacher, who is an authority on the matter.
As we say in the report, there has been little adoption by producers of the Meat and Livestock Corporation lamb classification system; there has been little communication between producers and consumers; there has been little promotion of new lamb products, and presentation for consumption has been poor.
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Here lies the challenge. If our farming organisations are hesitant to dive into the colder waters of market competition, then they should take heart from the Ulstermen. As the noble Lord, Lord Hooson, reminded us, in Ireland the annual ewe premium system now applies as in the rest of the Community—that is, apart from Great Britain. The Ulster Farmers' Union told us in evidence that if the chance to return to the variable premium system were offered it would not be taken. The ewe premium system gave money direct to hill and upland breeders in Ulster and their farmers' union suggested that the loss of the variable premium and the consequent focus on returns from the market was the key to improved breeding and marketing.
As regards exports, farmers in Great Britain already have certain advantages over both Southern and Northern Ireland. They have a classification system in being. They have a far larger stock of lambs from which to select a smaller proportion for the export trade. I think that that summarises the reasoning behind our recommendations that the variable premium be phased out and there should be a major drive, starting now, to improve and increase the quality of British lamb-marketing channels so that British sheep producers can gain the maximum benefit from the completion of the single market.
Perhaps I may echo the sentiments expressed by the noble Lord, Lord Gallacher, by saying that we were perturbed by features both in the stabiliser proposals and in the scheme for the reform of the sheepmeat regime which showed a great lack of understanding of the British sheep industry. As the National Sheep Association reminded us, ours is the largest and most important in Europe in terms of live numbers, volume of production and home consumption. Not only is there lack of understanding in the Commission but many proposals in both schemes—that is, the stabiliser scheme and the proposals for the new sheep regime—discriminate against British producers.
First, the sheepmeat stabiliser for Great Britain is calculated on an unfair base quantity of sheep. Secondly, the calculation in the new sheep regime proposals for the ewe premium would penalise our farmers. Thirdly, the proposal to limit the number of eligible ewes bears no relation to the reality of economic production in Great Britain and is quite unacceptable.
As we say in the report, bearing in mind the dominant position of the UK with regard to sheepmeat production and consumption, every effort should be made, if possible, to include more British nationals in that part of the Commission's directorate which deals with sheep.
Finally, while I am very bad at remembering figures and statistics, there is one which should always be borne in mind where British agriculture is concerned; that is, that only about 40 per cent. of Britain is capable of being ploughed. The rest, apart from urban land, is upland grassland and, in the Highlands, grass or heather moorland. A large proportion of those who farm some 50 per cent. of our land area depend on sheep for their livelihood. Therefore there are the strongest possible economic

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and social reasons for ensuring that the new sheep regime does not put them at a disadvantage. We believe that the recommendations which we have made in the report will ensure that that does not happen.
8.39 p.m.
Baroness Elliot of Harwood: My Lords, I should like to start by congratulating the noble Lord, Lord Gallacher, on the way in which he conducted the inquiry and the writing of the report. It was absolutely first class. Those of us who were members of the committee enjoyed the experience very much indeed and were deeply interested in the subject. I should also like to congratulate the noble Lord, Lord Middleton, who will now take the place of the noble Lord, Lord Gallacher, as our chairman. I am quite sure that we shall enjoy his skilful work equally as much. I also hope that he will enjoy working with us.
The report deals with one of the most important sections of British agriculture. If one looks at the map of England, Wales and Scotland, the hill land in Scotland includes the whole Border area, the Highlands and the islands. In England and Wales it is Northumberland, Cumberland and all the other areas there. It is the same in Wales. To date sheep production is one of the agricultural products not in surplus. It also provides some of our exports—although that, as I am sure your Lordships will know, depends on what the French do.
In 1972, our self-sufficiency was 42·2 per cent.; in 1987 it was 78·6 per cent., and the forecast for 1988 is that it will be 83·9 per cent. Therefore we are still within the 100 per cent. level. Further, the areas where sheep are raised are generally the so-called less favoured areas. That means that even in the hill country land can be used wisely and profitably, although subsidies are necessary on the breeding stock.
Sheep production keeps the hill land in good condition, and even the most enthusiastic preservation societies do not complain about us. The idea that all that land should grow trees would be disastrous for the conservationist and for the consumer. In this country we still consume more sheepmeat than any other European country. That is noted on page 8 (figure 4) of our report. We still consume a considerable amount of New Zealand lamb, but not so much as in the past. New Zealand now exports to countries in the Far East, which helps consumption. We import in the winter months when our production is hardly on the market, and we can sustain trade in that way.
In the most recent programme sent to us from Brussels, the worst aspect for the United Kingdom sheep industry is the proposal to limit farms to 500 ewes and in the hill areas to 1,000. Speaking as a hill farmer in the heart of the Border country, that would be a disaster. The 1,000-ewe limitation means more blanket afforestation, which would be Sitka spruce, and a further depopulation of the Border lands, because in an area where one can run only two ewes to one acre a hill farm with 2,000 or 3,000 acres or more would have no alternative but to sell land for afforestation, thus reducing the employment of shepherds and farm workers, as trees do not provide
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nearly as good employment as sheep farming. That would be a disaster for all hill land in England, Scotland and Wales.
There is much controversy about doing away with the variable premium scheme; but our committee, after much inquiry and discussion, came to the conclusion that if the variable premium were done away with the ewe premium must go up and should be related to the demand for hill sheep and the consumption. That involves the arable areas which buy the store lambs, fatten them and put them on the market. It is a system which suits everyone and should be continued. Those recommendations are in paragraphs 61 and 62 of our report.
Paragraphs 63 and 64 suggest that ewe premiums should be paid more frequently. That would help farmers during the year when sheep are not ready for sale—until July, August and September. A further proposal that I support is that in the agricultural section of the EC in Brussels there should be more staff with direct experience of the sheepmeat regime. I have been to Brussels twice with committees from this place. Each time we have commented on the fact that few civil servants, or whatever they are called in Brussels, know anything about this type of hill farming.
With the permission of the chairman, I should like to mention a new suggestion as an alternative to sheep; that is, the production of cashmere fibres through the growing of cashmere goats. That is not in our report, but I mention it because the Nuffield Farming Trust gave a scholarship to my nephew Andrew Lubbock to go to New Zealand and Australia to investigate the proposal as a possible alternative to sheep.
The report is technical, but my nephew came to the conclusion that cashmere goats could graze happily with sheep, but the climate here would mean that they would have to be housed in winter. At present the greatest quantity of cashmere fibre comes from Mongolia and China. In New Zealand, Australia and India there are areas where cashmere goats are raised. Our hosiery industry could take more cashmere wool. The Chinese are beginning their own production, so there will be a shortage of cashmere fibre for the United Kingdom hosiery trade. The cashmere fibre is desperately wanted by companies such as the Dawson Company in the hosiery trade.
In the report there is an interesting analysis of the production of cashmere goats. There is a possibility of breeding cashmere goats for export to areas in southern Europe such as Spain, Italy and Greece where the climate would be more favourable. We could produce the breeding stock for export. That could be profitable. The report goes into interesting detail but it is rather outwith our debate tonight. If any of your Lordships are interested, I can obtain copies of the report for your information.
Finally, I hope that the Government will not agree to the limitation of sheep numbers in areas where sheep production is the one vital product and the best way to produce mutton and lamb, which are still in strong demand. I implore the Minister to see that that point of view is strongly put because it represents the opinion of the whole sheep industry.
8.45 p.m.
The Duke of Somerset: My Lords, perhaps I may add my thanks to the chairman, the noble Lord, Lord Gallacher, for his skill and expertise and the manner in which he organised the assimilation of the evidence in this report, as in past ones.
I fully agree with the committee's opinion as to the central feature of the proposals; that is, as we have heard, the phasing out by 1992, or 1993 now, of the present variable premium system. A number of qualifications, which are highlighted in the report, are needed to safeguard our farmers. They have also been mentioned by one or two of your Lordships tonight.
I should like to draw the attention of the House mainly to the social side of the debate. The most important aspect of that is discussed in paragraph 39, which notes that the proposed ewe premium system directs money directly to the hill and upland breeders in a way that the variable system cannot do. It goes along in hand with the social benefits of the hill livestock compensatory allowance headage payments. As that paragraph also notes, it is in those geographical areas that British farming is at its most difficult. The climate and topography preclude many alternative farming enterprises except for afforestation, as we have heard. It is surely essential to allow the chance of an economic existence to a sustainable industry in the hills. That ensures a viable rural population. Pressures from all sides threaten those communities. One of the worst of those is house prices brought about by outside money from those retiring from town properties and those seeking second homes in the countryside. No one on an agricultural wage can afford to get into that market and landlords naturally succumb to the temptation to sell, thus diminishing the letting market.
Weekenders rarely take part in village life and so there is no one to run the youth club, the village hall or the sports club. I feel that that type of social decline is happening in many of our rural counties. Here we have a wonderful way to help to reverse the trend—by putting the money where it will do most good. It will provide income support for farmers in the hills without also benefiting the more advantaged farms in the lowland areas—those that merely finish the animal.
Many of your Lordships have been interested in the evidence of the Ulster Farmers' Union and I too noted what they had to say, namely, that the annual premium now in force in Northern Ireland is favoured by their members although they had at first opposed it. Many witnesses indicated that payments under the sheepmeat regime were often the main source of income in the less favoured areas. Sheepmeat production is a very important sector of the UK agricultural scene and for the Community to start looking for financial savings in this marginal sector can be seen as a direct attack on this country. So I feel that both the proposal to limit eligible ewes per farm and the proposed new method of calculating the premium by the use of just two or possibly three north-south regions should be most strongly resisted.
Perhaps I may comment on one other aspect or issue raised in this report. It is that of certification or grading. As we have heard, this system is under threat
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from the new regime. The committee received opposing evidence as to whether or not this procedure produced better quality lamb and more uniform marketing. I believe that there is a need for a more vigorous and clever marketing of lamb and sheepmeat products.
One of the ways in which this can be achieved is an expansion into the fringe market for the specialist buyer. Not everybody believes in the modern trend for all lean and no fat on meat. It is fat that gives the flavour and as in beef this, together wth proper hanging, is much sought after by consumers who want to get away from the all-encroaching blandness of much of today's food. The abolition of certification would allow for a wider choice at a competitive price. Do the graders really know what the consumers want?
An additional bonus to the impetus of marketing would be given to the export trade by the removal of the clawback system. So I feel that all the advantages lie with the UK sheep farmers adopting these measures. They should be welcomed, subject to the caveat that has been mentioned already tonight. British farmers and their unions should look again at the implications and the possibilities.
8.52 p.m.
The Earl of Radnor: My Lords, speaking this late in the debate, I find it rather difficult to know quite what is left to say. It is certainly not easy to follow any preconceived ideas. However, I intended to say and would very much like to say that it has been a real pleasure and very instructive to work on Sub-Committee D under the chairmanship of the noble Lord, Lord Gallacher.
Having listened to the speakers, the only point that I have missed in this debate is any real emphasis on the fact that in Europe there is not self-sufficiency in sheepmeat. I am a very keen Marketeer and I am also a patriot. I am very keen to see Great Britain and nobody else filling that need in Europe over the coming years. It is for that reason that I am very keen that the variable premium should be phased out. I think that there are reasons, which I shall come to, within this country, most of which have been mentioned. But the abolition of the clawback would be an added advantage to the one that we already seem to have in this export market. I believe I am right in saying that there is an advantage in putting ourselves right in the marketplace and having to find out exactly what is wanted, rather than having animals graded. There may be an awkward period before we fall into that habit. It is very salutary to have to find out what the Frenchman wants to eat. If our livelihood depends on it we shall find out.
Parochially, in England, I think it is good that the variable premium goes. The ewe premium, so long as it is at the right price and frequent enough, is directed straight to the person with the ewe flock and not to the perhaps richer fattener in the lowlands.
I take the point of the noble Lord, Lord Hooson, that a premium of that sort could lead to overstocking on the hills. It is possible that this is something we shall have to put up with. If we are to fill this export gap we want a bigger ewe flock. And

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we need that bigger ewe flock if cereals, as to a certain extent they are now doing, go down the drain. For those reasons primarily, I am very much in favour of getting rid of the variable premium. Like everybody else I found interesting the only example—from the Ulster Farmers' Union—of moving from one regime to another and never wanting to return.
I believe that there is a very serious thread running through all this argument. It is not entirely to do with the sheep regime. It has been seen over cereals, and it will be seen again when beef is discussed. To put it bluntly, in my opinion it is the discrimination against Britain by other EC countries, for whatever reason—presumably for political reasons. Clearly, it is present in the limitation of ewe numbers; it is present in the way that stabilisers have been drawn up; and it is present in the way that the ewe premium is calculated. Every single time, these forms of calculation and rules militate against the English farmer who is larger and better. There is no point in mincing words. Broadly speaking the English farmer is larger and better. And, again broadly speaking, as far as I can see, Europe is always protecting its own; that is, the smaller and not so efficient farmer.
Noble Lords may remember that it happened in respect of cereals over the co-responsibility levy and letting off farmers below a certain acreage which would have been disastrous to us. I am told, or I suspect, that when the beef regime comes before us we shall find that animal numbers will be limited again. I should like an assurance from my noble friend. I should like to be told what is happening to counter this very undesirable move within Europe, this feeling against us which is bad from our point of view and extremely bad from the point of view of Europe as a whole.
We must face up to the fact that Europe is a protectionist area: the Common Market is a protectionist area with a tariff harrier around it. One day, as a Community, we shall have to acknowledge the rest of the world. We might as well prepare ourselves, little by little, by becoming slightly more efficient in agriculture. Let Europe follow us, so that one day we shall be able to look the rest of the world in the face and possibly even compete. That is harsh. And, politically, it is unacceptable. Other countries have passed through that period, or they are in the middle of it. In the Cairns group, New Zealand and Australia farmers are allowed to go bankrupt. No one comes to their aid. I must ask my noble friend what steps we are going to take to have better official representation in Brussels so that these matters can he dealt with as efficiently as possible. That question is not disconnected with our present discussion.
Those are the salient points that I wished to mention. There is also a minor point about which I warned my noble friend. I know from my farming activities, particularly fish farming, that when a product from a certain area is thought to be bad in some way the market disappears for a period. The market disappears very severely. I am thinking of the case of a gentleman who ate a badly smoked trout and died of botulism. My fish farm manager visited a fishmonger's the next day. He heard someone in the queue in the fishmonger's say about some trout, "Don't have those. Those are the ones that kill you."
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As my noble friend knows, there is a problem in Wales and Cumbria as yet unresolved. In 1986 the Chernobyl incident occurred and the pastures in those two areas were polluted. I have no doubt that all the right steps were taken to counteract the effects of the pollution. I shall not go into the details. But a relatively small number of farmers both in Wales and in Cumbria still have worries and face hardship as a result of that incident.
Would it not be better if that matter were tidied up—the expense is not that great—as soon as possible? When we start our exporting no one can then say, "Oh, don't have sheep from Wales. Those are the ones that kill you", or, "Those are the ones that are radioactive." We do not want such remarks to be made. That is a small but perfectly valid point from a commercial point of view.
Having said that, I support everything in the report. I have just two small further points to make. I hope that the voluntary agreement entered into with New Zealand will be maintained. I say that on purely emotional grounds. I do not see why one should not show a certain amount of emotion every now and again and put New Zealand above other countries. Further, I cannot for the life of me understand why we have to subsidise storage. That has not been explained to me satisfactorily, either in the report where it obviously should have been as I was a member of the committee, or this evening.
9.3 p.m.
Lord John-Mackie: My Lords, the noble Lords, Lord Stanley of Alderley and Lord Hooson, and myself are the three non-members of the committee who are speaking tonight. The three of us must congratulate the noble Lord, Lord Gallacher, and his committee. Fifty per cent. of the members of that committee have spoken here tonight on this report. I should like to congratulate them from a technical point of view. The report is less than 16 pages long, but it provides a tremendous amount of information. If a few more government reports were less than 16 pages long, it would save an awful lot of time. Therefore I congratulate the committee not only on the content of the report but also on its terseness.
I left this Chamber at about a quarter to midnight last night. I do not want another late night and I do not want to say too much as members of the committee and other speakers have gone over the main points of the report very well. Therefore, there is no point in my repeating them. The main bone of contention concerns the variable premium versus an increase in the ewe premium. It is the old story of where one puts one's money—on the source of production or on the product itself. The argument goes that if one puts one's money on the product itself, one obtains a better result because one produces more and therefore obtains more of the premium.
The Ulster Farmers' Union made a very interesting point. The committee took particular note of it and it came down in favour of putting the money on the source of production, which is the ewe. Although there are arguments on the other side, I think that that was the right decision. The noble Baroness, Lady

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Elliot of Harwood, and the noble Lord, Lord Middleton, mentioned the tremendous variation in sheep production. The difference in production between low ground sheep and sheep in the Highlands of Scotland is tremendous. Therefore, a ewe premium would be the fairer option. The committee was right to come down in favour of that.
Although I did not notice this point in the report, I was intrigued to discover that because of the variable ewe premium, the size of sheep flocks in Ulster had increased by 40 per cent. I do not know what flock size was like before. If a flock consisted of only a few hundred sheep, a 40 per cent. increase is not a lot; but if it was large, a 40 per cent. increase would make a big difference.
The matter of a high ewe premium and its effect on various matters was raised, as was the overstocking point. Overstocking is a very real concern. In the early days of ewe premiums there were all kinds of rumours about people who took the wool off them and the premium and never had a tup near the sheep. But there is something to be said for the premium. After all, we are paying arable farmers to set aside arable land, so why should we not pay a sheep farmer for setting aside his ewes? There may be a point in that. The premium helps farmers in less favoured areas to survive. The noble Duke, the Duke of Somerset, was very anxious that they should. He is right to be concerned about that.
There is the matter of the ewe lamb getting a premium in the case of low ground sheep. I believe there was some argument about the date that had to be proved for the ewe lambs in order to receive the premium. But hill farmers cannot put young ewes in lamb at the same age and at the same size as low ground farmers. There is an anomaly there which should be looked at. That matter is set out in paragraph 52 of the report. I believe it is important to look at that.
I turn now to the question of postponing the premium until 1993. I often think that it is a bad idea to postpone things. People say "Oh, I have another year" and do nothing. I have done that myself. The Government postponed set-aside registration for three weeks; I thought that I had plenty of time and found myself tearing around to get my registration in a day before it was due. I should have thought that the thing to do would have been simply to fix the date for 1992. However, that is perhaps something of a digression.
I should like to take the noble Baroness, Lady Elliot, to task on the question of afforestation. She does not like blanket afforestation. But blanket afforestation was created because farmers would not co-operate in forestry. That is the long and the short of it. I can give any number of examples of individual farmers—and I could give the noble Baroness their names—who have co-operated in their forestry for many years and doubled their sheep production because of the shelter and of the accessibility by forest roads to areas which they could improve, to grazing and so on.
The noble Baroness's point about labour will not bear examination. Forestry takes three to one in
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labour as against agriculture. I know that it is argued that much of it is contract labour, which does not stay in the area. That could be got over if every hill farm had a forestry policy. I should just like to make that point.
The noble Baroness's point about goats is very interesting. However, they have to be on low ground under grazing control because if you let goats loose on land in the hills they will ruin the pasture before you know where you are. The greatest example of that is Yugoslavia where Tito was advised that he would need to get rid of the goats if he was to have a decent sheep policy. Unfortunately, being a dictator, he got rid of the goats and slaughtered them all before he bought his flock of sheep. It was slightly disastrous.
I believe that the noble Duke is looking for the ideal if he wants people to eat sheepmeat which is well covered with fat, well hung and of an age that would give the proper taste— in other words, a three year—old wether from the hills of Scotland, which of course is now extinct. Nevertheless I like to think that someone is thinking of the value of fat on any sort of meat. However, the price of doing that is very high indeed.
Perhaps I may finish on the subject of currency. There is no doubt that all the arguments that have gone before about the green pound have needled British farmers more than anything else. There are very great differences in prices because of the green pound. If we just joined the EMS, we could have fair competition and we could look forward to 1992. However, if the Government are going to dig in their toes on joining the European Monetary System that problem will continue.
Again I should like to congratulate the committee on an excellent report and I hope that we shall see some good results from it.
9.11 p.m.
The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, so far as I am aware, this is the first time—either awake or asleep that sheep—have crossed my path in a debate such as this. First, I should very much like to congratulate the noble Lord, Lord Gallacher, on his committee's valuable report on the sheepmeat regime. As others have said, they have tackled a complex subject and have produced a clear and well reasoned report which could not have been more helpfully timed both for this House and for my colleagues who will be negotiating on this subject in Brussels. I am also grateful for the many thoughtful and constructive interventions which your Lordships have made this evening.
I should like to add my best wishes to those of my noble friend Lady Elliot to my noble friend Lord Middleton —I think that this is the second time I have done so but it is always worth doing a good thing twice—and join in her tribute on his taking over the chairmanship of the committee.
The work of the committee is very important, since sheep farming is one of the major success stories of British agriculture. After listening to the noble Lord,

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Lord Hooson, and my noble friend Lord Middleton, I am mindful that sheep farming in the hills is particularly important. The committee's report reflects the determination—which I know we all share—that the review of the Community sheepmeat regime should result in arrangements which enable our industry to continue to capitalize on its natural advantages and superior efficiency.
Some noble Lords may not be aware of the fact that the EC Commission has just produced revised proposals for the review. They were presented to the Council of Agriculture Ministers in Brussels earlier this week. I hesitate to suggest that the Commission was trying to act in time for our debate today, but it is helpful to have proposals on the table at last, even if we do not yet have the legal text.
It may help your Lordships if I start by briefly outlining what is now proposed, since it differs in some respects from the Commission's earlier proposals which were considered by the committee.
Variable premium and clawback would be phased out over a four-year transitional period by progressively reducing the guide price which determines the rate of payments. From the 1993 marketing year, the variable premium would cease altogether. The Commission also proposes a progressive reduction in the frequency of payments. The reduction in the rate of variable premium would result in a progressively higher rate of annual ewe premium being payable in Great Britain. From the start of transition in 1989 two advances of annual premium would be payable during the marketing year to all eligible producers.
The Commission has also proposed some new arrangements for making the transition to a single ewe premium calculated on the basis of a Community-wide income loss. The existing seven regions would be reduced to four: Italy and Greece; Spain and Portugal; Great Britain; and the other northern member states. Each region would have a ewe premium calculated on the basis of the regional income loss and a regional lamb productivity coefficient. From 1993, Great Britain would be integrated into the larger northern region so that only three community regions remained. Each would have their own lamb productivity coefficients, but these would be applied to a Community-wide income loss to derive three separate rates of premium.
The other internal aspects of the Commission's proposals remain broadly as suggested by the Commission in 1987. These are principally the redefinition of "eligible ewe", the introduction of a limit on the number of ewes per flock which may receive annual premium, the phasing out of the intervention system in tandem with the variable premium, and retention of the possibility of private storage aid.
The Commission is also proposing for Council approval a mandate for negotiations with third country suppliers on the future arrangements for access to the Community. The Commission has illustrated its ideas by setting out what it has in mind following initial talks with New Zealand, the Community's principal third country supplier.
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I hope that your Lordships have been able to follow me so far. The essence of what the Commission proposes is that most regional and local variations in the sheepmeat regime would be phased out by the end of a four-year period. The underlying assumption must be that this will result in a better alignment of market prices in the Community. This would then justify a single ewe premium on the basis of a Community-wide income loss; and permit the abolition of barriers to free trade. The only regional difference thereafter would be in the three separate lamb productivity coefficients. These would reflect the agricultural and practical differences in production patterns, and generate a different rate of ewe premium per head in each of the three separate regions.
It is evident from the committee's report and from your Lordships' comments on it—and indeed from the many public reactions to it—that the element of the Commission's ideas which is of most concern to British interests is the abolition of the variable premium. The noble Lord, Lord Gallacher, spoke in depth about the variable premium and for my part I would say that we have greatly valued this over the years. It enables market support to be paid to finishers of lambs as well as to breeders, a feature which is very well suited to the particular characteristics of our national system of sheep husbandry. It enables market support to be limited to lambs which meet particular quality standards. It provides an incentive to production out of the peak season while giving support to producers throughout the year. It gives confidence to the market, and so enables orderly disposal of our lamb production. These have all been very significant benefits for producers and consumers in Great Britain.
I listened with care to my noble friend Lord Radnor and indeed the committee has very correctly pointed out that there may be difficulties in retaining the variable premium. No other member state has chosen to operate it, and there is reluctance elsewhere in the Community to accept a situation in which one region of the Community has a different system of market support. There is also the difficulty that the Commission sees the export charge which is used to claw back variable premium as incompatible with the establishment of a single market.
I must reply to the challenge of my noble friend Lord Stanley of Alderley and say that I am not going today to anticipate the Government's position on the variable premium in the negotiations in Brussels. They are only at the very earliest stage. What I will say—and I think that this is really at one with the committee's recommendations—is that we must ensure that the future regime, whether through variable premium or by some other means, enables our industry, including the industry in Northern Ireland, to prosper and to gain the full advantage of its excellent structure, efficiency and expertise.
I can, however, however, be more categorical in responding to the committee's remarks about intervention. This is in theory available to other member states instead of variable premium. No one wants even modest foothills of frozen lamb, let alone mountains. We quite agree with the committee's conclusions on

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intervention and equally on the potential usefulness of private storage aid.
One particular concern expressed by the committee, and this evening by the noble Lord, Lord Northbourne, was that the Commission made no provision for the future abolition of the separate stabiliser currently applied to Great Britain. We understand the committee's views on this. The separate stabiliser is certainly an undesirable feature of the present arrangements. But I can offer your Lordships some reassurance on this point. The council regulation introducing the stabiliser contains the provision that the separate stabiliser in Great Britain applies only as long as the variable premium is operated. If the variable premium were to end we would certainly insist that this corresponding termination of the separate stabiliser was adhered to.
Turning now to the proposals for the future of the annual ewe premium, the committee has drawn attention to the Commission's ideas for headage limits on the number of ewes per holding which may receive the ewe pemium. I listened with great care to the words of noble Lord, Lord Hooson, but I have to say that in our view this is a highly objectionable proposal. Because of our agricultural structure, UK producers would bear the brunt of the budgetary savings which resulted. Yet the fact is, as my noble friend Lady Elliot said, farmers with more than 500 ewes in the lowlands or with more than 1,000 ewes in the less favoured areas still need support. We are talking in particular in the LFAs about producers who are often making the only possible agricultural use of the resources at their disposal.
The proposals would result, very simply and directly, in a reduction in sheep flocks, a consequent reduction in jobs, and thus in further rural depopulation. I hope that what I have just said responds to the points made so eloquently by my noble friend Lady Elliot and the noble Duke, the Duke of Somerset. This is not consistent with other broad Commission policy objectives. We shall again be opposing this proposal which we have had to fight off in the Council of Ministers on various previous occasions.
The other annual premium issue on which the committee felt strongly was the Commission's proposal for premium to be based in future on a Community income loss rather than a regional one. We agree with the committee that the Commission's proposal for a single income loss would indeed be disadvantageous for the UK if it were introduced now. However, the Commission's revised proposals envisage that, during the four-year transitional period, regions would continue to have their rates of annual premium calculated on the basis of regional income losses. The single income loss would only be introduced in 1993 when Community market prices had aligned more closely. I do not think that we can be entirely confident that that will happen. We shall therefore have to look very carefully at the proposal for a Community income loss.
The committee drew attention also to some other points on the detailed operation of the annual ewe premium. It suggested that the imposition of just two
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regions for the purpose of setting productivity coefficients for ewes might be simplistic, inefficient and unfair. The Commission's new proposals in a way acknowledge the force of this in that they now propose three regions, the southern region now being split into two. We need to examine whether this goes far enough. However, we shall most certainly have to ensure that the arrangements for income loss and coefficients are fair and equitable from the British point of view.
As the noble Lord, Lord John-Mackie, will no doubt agree, the proposed redefinition of "eligible ewe" is a very technical issue but nonetheless an important one. As the committee pointed out, the present definition has the advantage to producers that in certain circumstances it includes ewe lambs put to the ram for the first time. Set against that are control problems that arise, which have led the Commission to propose a change. We shall seek to achieve a sensible definition that is fair to all producers within the Community and that enables them to secure the premium to which they are entitled without having to comply with requirements that constrain sensible husbandry practices.
We would agree with the committee, whose views were so ably expressed by the noble Lord, Lord Gallacher, on the cash flow benefits that would accrue to farmers as a result of the Commission's proposal for two advances of ewe premium to farmers during the marketing year.
I turn now to the question of access for third country sheepmeat. The committee was right to focus on the sensitivity of imports and the need to take account of producer and consumer concerns as well as those of the traditional suppliers of our market. We can welcome the way that the Commission is handling negotiations. It is seeking mutually acceptable arrangements with third country suppliers, starting with New Zealand, which is by far the most important. This shows proper respect for the Community's obligations under the general agreement on tariffs and trade. The emphasis on mutual agreement should achieve the fairest possible deal for consumers and suppliers alike. It is encouraging that by all accounts the Commission sees prospects of progress with the New Zealanders in this area. This is doubly so since the absence of progress on the third country element has been seen previously as an important obstacle to progress on the internal market review.
My noble friend Lord Radnor spoke of Chernobyl. We sympathise with the problems faced by farmers after Chernobyl. He will admit that the Government did a lot to help. We have paid out £5·5 million so far. Schemes are still operating to assist sheep farmers.
The committee—this point was taken up by the noble Lords, Lord Gallacher and Lord Hooson, and my noble friend Lord Radnor—regretted the lack of Britons in the services of the European Commission dealing with sheepmeat. I must stress that Commission officials do not serve in a representative capacity. It would be wrong to view their work in that light. Of course I quite agree that anyone who does work on sheepmeat cannot operate effectively without a thorough knowledge of the British sheep

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sector, which is after all the largest in the Community. I assure noble Lords that my officials are in close and regular contact with Commission officials to ensure that they are aware of what is happening on our market.
My noble friend Lady Elliot of Harwood mentioned a cashmere fibre report made by her nephew. She was kind enough to give me a copy of this useful document, which is now being studied by officials. Any new crop that is economic and profitable is always of interest to us. My noble friend's nephew should be congratulated on the excellent report.
I should like to close by stressing that the Government welcome the forthcoming Community review and the opportunity that it provides for all concerned to consider how the Community sheepmeat market can best be organised. It is understandable that on an occasion like today we should perhaps focus on the details of what is proposed and in particular on the aspects that concern the future of our industry. We should not forget that the review offers the opportunity to create a unified Community sheepmeat market and that progress in that direction should offer us the prospect of better access than we have at present to continental markets. For that reason I think that the stress placed by the committee on the importance of improving the marketing and the quality of British lamb is something that all of us who are concerned with the British sheepmeat sector should take to heart. This has been recognised in the Meat and Livestock Commission's strategic objectives and in the work of the MLC's Lamb Promotion Council, which has helped to increase British lamb's share of the domestic market and to boost our exports.
My noble friend Lord Stanley of Alderley will appreciate from what I have already said that the variable premium is still with us, as are the quality standards which certification gives us. One can always improve quality and grading, and I hope that the industry will do all that it can to move in that direction. I agree with the noble Lord, Lord
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Northbourne, that potentially no sheepmeat industry within the Community is better placed than ours to take advantage of a single market. We must make sure that that potential is fulfilled.
I should like to stress to the noble Lord, Lord Northbourne, that the Government for their part will be guided by three principles with which I believe your Lordships will agree. Here I should like to speak to all noble Lords. There must be free but fair competition. Market support must be provided, and at reasonable cost. Finally, and most important, the new regime must allow our sheep producers, whether in highland or lowland, to continue to capitalise on their natural advantages and their superior efficiency, as they have done so successfully in the past.
Lord Gallacher: My Lords, I thank all members of your Lordships' House who have taken part in this important and interesting debate. The speeches that have been made have filled out the details of the report before the House. I express my thanks to the Minister for the manner in which she has replied to the debate and for updating us so effectively on events subsequent to the drafting of our report. In the jargon of this place, I should like to say that I will study what she has said. Unfortunately I cannot promise to write to her because I have a lifelong rule never to put anything in writing to a lady, and particularly to one as attractive as the noble Baroness. I commend the report to your Lordships.
On Question, Motion agreed to.

British Railways (No. 2) Bill
Brought from the Commons; read a first time, and referred to the Examiners.
House ad journed at twenty-seven minutes before ten o'clock.

  RIGHT OF SILENCE
  RIGHT OF SILENCE
  NORTHERN IRELAND: COUNTY COURT JUDGES' SALARIES
  NORTHERN IRELAND: COUNTY COURT JUDGES' SALARIES
  RURAL DEVELOPMENT COMMISSION
  RURAL DEVELOPMENT COMMISSION
  RENT OFFICERS
  RENT OFFICERS
  CONSOLIDATED GOLD FIELDS PLC: TAKEOVER IMPLICATIONS
  CONSOLIDATED GOLD FIELDS PLC: TAKEOVER IMPLICATIONS
  FORESTRY PLANTING IN UPLAND ENGLAND
  FORESTRY PLANTING IN UPLAND ENGLAND