Sitting of 25 April 1989

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  WESLEYAN ASSURANCE SOCIETY BILL
  As amended, considered; to be read the Third time.

  KINGSTON UPON HULL CITY COUNCIL BILL [LORDS]
  Orders for Second Reading read.
  Read a Second time, and committed.

Oral Answers to Questions
  HEALTH

    GPs (Contracts)
    Mr. Jack: To ask the Secretary of State for Health what subjects have been raised with him by doctors making representations on the proposals for their new contracts.
    Mr. Anthony Coombs: To ask the Secretary of State for Health if he will make a statement on the current situation in the negotiations on general practitioners' contracts.
    Mr. Hunter: To ask the Secretary of State for Health what progress has been made in negotiations on general practitioners' contracts.
    The Secretary of State for Health (Mr. Kenneth Clarke): Discussions on the new contract have now lasted for more than 12 months. I last met the General Medical Services Committee negotiators on 20 March. In the light of the discussions my officials are now preparing amendments to the relevant NHS regulations and to the statement of fees and allowances, on which they will be consulting the General Medical Services Committee negotiators. A conference of local medical committees is being held this week and the negotiators will no doubt consider whether to seek any further meetings with me in the light of the outcome of that conference.
    Mr. Jack: Will my right hon. and learned Friend confirm that in his future negotiations and deliberations on this subject he will take fully into account the representations made by many Conservative Members following meetings with their doctors, who have expressed
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    concern about the contract? Will he also take this opportunity to put at rest the minds of the many patients who have written to me and my hon. Friends about the effects of the contract and assure them that the principles of the National Health Service will be maintained as a service free at the point of consumption with medicine supplied without let or hindrance because of budgets?
    Mr. Clarke: I am grateful to my hon. Friend and to other hon. Members who have informed me of the views of the practitioners in their constituencies. We have taken on board many of the present representations which have already been made in the course of the discussions and we will certainly take on board all constructive representations now. I agree with my hon. Friend that it is most unfortunate that, in the course of negotiating the contract, some doctors have gone out of their way to cause needless alarm to patients, because no threats to patients will arise from this.
    Mr. Coombs: Does my right hon. and learned Friend agree that there are 5,000 more doctors than in 1979, they are far better paid than ever before and the number of ancillary workers working for them has doubled, and therefore the disgraceful statements made in a pamphlet by the British Medical Association are often untruthful, alarmist and verging on the paranoid? Will he confirm once again that, under the proposed Health Service reforms, no patient will go without a comprehensive local health service, adequate drugs or appropriate treatment?
    Mr. Clarke: I agree with my hon. Friend. We now have more doctors than before. They are better paid and their average list sizes have gone down. That is why it is right to concentrate on a contract which rewards fairly those who carry the largest work loads and one which also encourages new services for patients, which we offer in the contract. In contrast, the leaflet produced by the BMA to which my hon. Friend referred, contains scurrilous nonsense. It is a long time since I have encountered a trade union which is prepared to spend millions of pounds of its members' money on spreading untruths among its consumers in that way.
    Mr. Hunter: In the light of a general practitioner telling an elderly constituent of mine that, under the new contract, he may not be able to treat her, will my right hon. and learned Friend emphasise the fact that the elderly will be well looked after under the provisions of the new contract?
    Mr. Clarke: Yes. If such an allegation has been made —and of course, I accept what my hon. Friend has said—it is totally untrue. The contract is so designed to give extra payments to those doctors who take on elderly patients. The contents of the new contract that we are discussing include new services which are expressly aimed at elderly people to ensure that they—particularly those over the age of 75—have more regular contact with their GPs. The contract is designed to improve services to the elderly. It is scandalous nonsense to claim that any elderly patient is threatened by it.
    Mr. Fearn: What representation has the Secretary or State received from women doctors? Does he not agree that the new contract could harm women doctors' practices, which tend to be smaller?
    Mr. Clarke: The contract proposals recognise explicitly the prospect for job-sharing. We also acknowledge the right for someone to have the full status of a principal when taking on part-time obligations. The contract is designed to encourage women doctors in general practice. An ever higher proportion of GPs will be women. The difficulties arise from the changes in basic practice allowance, not from the contract. They stem from the fear of some women that partners will not take on female partners unless the BPA is so constructed as to give all partners a financial benefit when a part-time partner is taken on. Women have no reason to be fearful of their colleagues' prejudice. Nothing in the contract would encourage that.
    Mr. Dalyell: Are GPs to be cash-limited?
    Mr. Clarke: No they are not.
    Mr. Loyden: Does the Secretary of State accept that the only reassurance that he could give to National Health Service users would be to cease the stupidity of trying to transform doctors into accountants? The public's clear answer is that they want no part of this crazy scheme.
    Mr. Clarke: Doctors are independent contractors. It is my duty, on behalf of the patient, to negotiate a contract which rewards heavy work load and encourages good performance. The rest of the population are paid according to the work that they do and the standards that they attain. Many doctors can see no reason in principle why the same criteria should not apply to general practice. The result of the new contract will be an improved service for the patients, because the best and most go-ahead practices will be rewarded. We shall also introduce into the contract up-to-date services in disease prevention, health promotion, and closer surveillance of young children and elderly people.
    Dame Elaine Kellett-Bowman: Will my right hon. and learned Friend accept my thanks for putting at rest the fears of my 84-year-old constituent, who had been informed by his doctor that if this contract went through his doctor would no longer be able to visit him at home in a rural area?
    Mr. Clarke: The new contract will place the doctor under an express duty to keep in touch with the elderly patient and keep himself well informed of his home circumstances. By its capitation payments, the new contract will pay the doctor extra to enable him to carry out that new duty. I can only assume that if the doctor in question has put out such information, he has been totally misled by the information from Tavistock square.
    Ms. Harman: Is it not the case that a patient receives better care if a GP has more time to spend with each patient? Is it not going in completely the wrong direction to give financial incentives to doctors to have as many patients as possible on their lists?
    Mr. Clarke: I quite agree that patients will wish to join practices that give them adequate time and care and, I hope, offer the new services, for which the new contract is an encouragement. With respect, the arguments about list sizes constitute a complete red herring, which has been put in the forefront of many of the discussions. Under this contract, there is no reason why anyone with an average size list should wish to acquire new patients. A doctor
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    seeking to enhance his income would go for the new services and seek to hit the new performance targets. The hon. Lady and hon. Members on both sides of the House should not be misled by the simplistic argument that this is all about increasing list sizes. The new contract is aimed at raising the standards of general practice to the general public, and the best GPs will respond to that.

    "Working for Patients"
    Mr. Pawsey: To ask the Secretary of State for Health how many representations he has received from members of the public about his White Paper "Working for Patients."
    Mr. Kenneth Clarke: I have received well over 2,000 representations from members of the public, expressing a wide range of views. I shall take these into account as part of the process of implementing the proposals.
    Mr. Pawsey: Can my right hon. and learned Friend estimate how many of those representations are based on complete inaccuracies? Will he join me in deploring the black propaganda circulating among so many of our constituents, and causing such fear and distress to the elderly? What further action can he take to reassure the British people that the White Paper will improve the Health service?
    Mr. Clarke: I regret to say that a proportion of the representations that I have received are indeed based on inaccuracies. They come from two main sources. One is the campaigning literature about the contract, which suggests that somehow the elderly will be turned away and that other damage will follow; the other is the Labour party, which is carrying on a private and eccentric campaign of its own, claiming that it is rescuing the Health Service from privatisation. I have never proposed its privatisation, and nor has any other member of the Government.
    Mr. Wigley: Surely the Secretary of State accepts that all the GPs who are responding negatively to his proposals —as the overwhelming majority are—are neither paranoid, to quote the hon. Member for Wyre Forest (Mr. Coombs), nor scurrilous, to quote the Secretary of State. They are genuinely concerned about the future of a service to which they have given their lives, and it is time for the right hon. and learned Gentleman to respond more sensitively to their representations.
    Mr. Clarke: Very few GPs, I think, would challenge my aims of improving general practice. Very few do not accept, for instance, that we should seek to attain World Health Organisation standards of vaccination for children and should not get cervical screening to a level of 80 per cent., which will help to tackle the biggest single avoidable cause of death among women in this country.
    I think that those aims have the support of the great body of responsible GPs, and it is a pity that their representatives believed recently that they were supporting their interests by putting around scurrilous leaflets. I hope that those representatives will now come back to discuss the serious aims of general practice with me and with my colleagues.
    Dame Jill Knight: Are not so many GPs behaving as they are because they have been totally misled, misinformed and disinformed by their own leaders in the

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    British Medical Association? Will my right hon. and learned Friend constantly try to fight off those lying attacks, particularly the claim that the aim of the review is to cut back expenditure in the National Health Service?
    Mr. Clarke: The Government have increased expenditure on the NHS more than any Government. I assure my hon. Friend—if she needs reassurance—that all our plans for the future are based on the expectation that expenditure on the NHS will need to increase in line with rising demands and changes in demography.
    Similarly, my proposals are not aimed at any cutting of costs in general practice, and are certainly not aimed at cutting the average remuneration of doctors. What we are seeking to do is use resources to the best effect for patients, and to use rewards for doctors in a way that encourages higher standards of service.
    Mr. Leighton: Is the Secretary of State aware that I have conducted a poll among all the doctors in my constituency, in which 47 voted against his proposals and three in favour? Is he aware that their letters were accompanied by impassioned criticism of his proposals? What notice is he prepared to take of their representations?
    Mr. Clarke: I am meeting thousands of doctors, and so are my ministerial colleagues. We are taking serious account of all constructive representations put to us. It is pointless to consider accounts of straightforward votes of the kind to which the hon. Gentleman has referred unless we know whether they concern the contract or the White Paper; if the White Paper, what part of it; and what proposals they are putting forward.
    I find that discussions with doctors who are seriously committed to the Health Service—as the great body of doctors are in this country—lead to much more productive results than votes, leaflets or the campaigns to which we have been subjected in the past week or two.

    Patients (Treatment)
    Mr. Knox: To ask the Secretary of State for Health how many patients were treated in National Health Service hospitals in the most recent year for which figures are available; and what were the comparable figures for 1978.
    The Parliamentary Under-Secretary of State for Health (Mr. Freeman): Between calendar year 1978 and fiscal year 1987–88 total annual in-patient cases for England increased by 23 per cent. from 5·4 million to 6·6 million. Over the same period, day cases rose by almost ½ million and out-patient attendances by over 2¾ million.
    Mr. Knox: Does my hon. Friend agree that these figures provide the best evidence of the improvement and expansion of the National Health Service since this Government came into office because they show a substantial increase in the number of patients being treated?
    Mr. Freeman: The figures underline the success this Government have had, with a 40 per cent. increase in real terms in expenditure on the National Health Service. For the year just commenced, there is a £2 billion increase in resources.
    Dr. Moonie: Can the Minister comment on the waiting lists in the corresponding period and say what he will do about them?
    Mr. Freeman: Over the last 10 years, waiting lists have gone down by 8 per cent.—[Interruption.] True. Regarding the west midlands, waiting lists in my hon. Friend's constituency and the surrounding region have gone down by 19 per cent.
    Mr. Hayes: Is my hon. Friend aware that the South Glamorgan health authority has contracted out all its open-heart surgery to a private hospital in Southampton? This means that patients are getting speedy care absolutely free to the patients and at a lower cost to the National Health Service. Is that not precisely what we are trying to do in the White Paper?
    Mr. Freeman: There are many examples—arid doubtless there will be more—of good co-operation between the private and public sectors.

    "Working for Patients"
    Mrs. Ray Michie: To ask the Secretary of State for Health what further representations he has received from doctors in rural areas about his National Health Service reform proposals in the "Working for Patients" document.
    The Minister of State, Department of Health (Mr. David Mellor): We have received a number of representations and will take them carefully into account in implementing our proposals.
    Mrs. Michie: Will the Minister give details of the people and institutions that he consulted before he produced his White Paper document and proposals, particularly those in relation to rural general practices?
    Mr. Mellor: I do not know whether the hon. Lady is referring to the White Paper or the contract. There were considerable discussions of the contract prior to its publication by the Secretary of State after no less than 12 months' negotiations with the doctors' representatives. That document includes most of the material about rural practices. The process of consultation has not yet ended. The Secretary of State has already made it clear that he and his fellow Ministers are meeting regularly with general practitioners, and we shall certainly bear in mind the points that they make on those issues.
    Sir Michael McNair-Wilson: General practitioners' income is to rely to a greater extent on capitation. Will this not mean that doctors in rural areas will be rather worse off as a result of the change and, in those circumstances, should not the rural allowance be left in place?
    Mr. Mellor: I do not believe that doctors will be worse off, because we intend to pay a rural supplement to recognise the particular problems of doctors in rural areas. There has been some concern because of the aged definition of "rural" used in some cases. Areas that are actually no longer rural have been benefiting from some of the rural payments. We believe that our policy will enhance the position of rural practitioners. All points to the contrary are being borne carefully in mind before we make our final decision.
    Rev. Martin Smyth: I welcome that assurance, but is the Minister aware that there is great concern that the small

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    rural practices which have been giving good service believe that they will be penalised under the new system? Will the Minister accept that the consultation time of 20 hours face to face in surgery may not really be a useful basis on which to work, especially when one allows for home calls?
    Mr. Mellor: In making that determination, we have borne home calls in mind but, as I have said, all points are being considered. In a number of cases rural practitioners have smaller lists, and to make allowance for that we intend to pay an enhanced capitation fee for practices between 500 to 1,500. In the exceptional circumstances of highly rural communities, where it is justifiable that the practitioner has under 500 patients, it might be possible to pay such a person under the inducement payment scheme, which recognises the exceptional problems of highly scattered areas. I hope that in that respect we shall ensure that rural practice is enhanced and not diminished by our proposals.
    Mr. Bill Walker: Will my hon. and learned Friend accept that in the rural areas the quality of medicine, and particularly the motivation of the general practitioners, has been very high, because the quality of life has encouraged good GPs to take up practice? There is nothing to the contrary in the Government's White Paper. Certainly the proposals we have for Scotland show clearly that all this is taken on board and we shall continue to enjoy this quality of service.
    Mr. Mellor: I warmly endorse my hon. Friend's remarks.

    NHS (Leicestershire)
    Mr. Vaz: To ask the Secretary of State for Health if he will make a statement on the state of the National Health Service in Leicestershire.
    Mr. Mellor: Leicestershire has benefited substantially from the extra money that the Government have made available—almost £200 million this year to Leicestershire health authority compared with £177 million last year, which is a real terms increase of some 2·4 per cent. There has been a substantial investment in new and improved facilities, including a new community hospital at Coalville opened in 1988 at a cost of £3·3 million, and further phases of Glenfield general hospital and Leicester royal infirmary, which are due to open in August 1990 and July 1991 respectively.
    Mr. Vaz: Is the Minister aware that, despite those mythical millions, currently 16,000 Leicestershire people are on the waiting list, more than 1,000 of whom have been waiting for longer than one year? Is he aware also that in Leicestershire, it takes 12 months to have a hearing aid fitted after referral from a GP? The Leicester royal infirmary has overspent its budget by £750,000 to protect local hospital services. Is the Minister further aware that last Friday I met general practitioners in my constituency, many of whom were lifelong supporters of the Conservative party, and many of whom said that their patients will suffer and in some cases die if the Government's doctor-capping proposals are brought into effect? When will the Government defend the National Health Service rather than destroy it?
    Mr. Mellor: There can be nothing mythical about the work being done at Glenfield and at Leicester royal infirmary, which will result in 700 new beds at a cost of more than £30 million. There can be nothing mythical about the fact that in the years 1982–86, some £47 million was spent on capital works in that district. However, there was something mythical about capital spend in the late 1970s under the Labour Government, when only £1 million was spent in 1978–79. We have increased that figure tenfold every year.
    Mr. Latham: Is my hon. and learned Friend aware that Rutland people warmly welcome the offer of my hon. Friend the Under-Secretary of State for Health to visit Oakham and—in view of Leicestershire health authority's regrettable decision to close Oakham maternity unit—to talk to people there about rural services? Can an early date be set for that visit?
    Mr. Mellor: My hon. Friend the Under-Secretary of State is for ever using his Away Day ticket to travel to such meetings. It is a regrettable fact that when there is massive capital expenditure on major facilities in a district such as Leicestershire, it is necessary also to close smaller facilities. That is particularly so with maternity units, where the necessity to continue reducing perinatal mortality means that larger maternity units are needed. I understand the stress and difficulty that such decisions sometimes cause local communities, which is why we have a system in which community health councils can object and in which, ultimately, Ministers can make a separate determination as to whether a closure is justified.

    NHS (Performance-related Pay)
    Mr. Hinchliffe: To ask the Secretary of State for Health if he will now make public details of performance-related payments made to managers in the National Health Service and state in each case why such payments have been made.
    Mr. Mellor: No, Sir.
    Mr. Hinchliffe: Does the Minister accept that the 100,000 Wakefield people who petitioned against the proposed closure of Snapethorpe hospital in my constituency have a right to know whether a district health authority general manager having a salary of £35,000 per year will receive a cash bonus for achieving the closure of that hospital?
    Mr. Mellor: Snapethorpe hospital has not had a patient in it since 1984. I know that the hon. Gentleman has been pursuing a vendetta against the district general manager concerned but he cannot blame that manager for obeying the instructions of the health authority rather than those of the hon. Gentleman.

    Consultants
    Mr. Bellingham: To ask the Secretary of State for Health what progress is being made with the plans to create 100 new posts for consultants.
    Mr. Mellor: On 13 April we wrote to all regional health authorities setting out the criteria and inviting them to "bid" for those posts. The posts will be targeted on the six specialties that account for 80 per cent. of patients who have waited more than one year for treatment, but bids

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    can be made for any specialty. We expect to inform regions by October which of their bids have been successful. The first new consultants under the scheme could be in post by the end of the year.
    Mr. Bellingham: I am grateful to the Minister for that helpful reply, which will be particularly welcomed by junior doctors. However, when it comes to considering the bids from the regions, may I ask him to look very carefully at west Norfolk, where expenditure on the Health Service has risen very sharply in real terms, but where the growth of population is among the fastest in the country?
    Mr. Mellor: My hon. Friend makes two good points. I certainly agree with what he says about his region. It is important to bear in mind not only the 100 new consultants proposed in the White Paper, but the massive expansion in the number of consultants proposed under "Achieving a Balance". The number of consultants in this country, which was 14,500 in 1987, will increase to 19,500 by 1998. That will increase the ability of junior hospital doctors to become consultants—which, of course, is a legitimate ambition of all of them—and will mean that consultants can play a fuller part in covering some of those duties which at present lead to junior hospital doctors being on call for unacceptable periods.
    Mr. Janner: Will the Minister's proposals have any impact whatever on the vast number of people waiting for consultant or other services in physiotherapy? Will they help the children in special schools—such as the Emily Forty school, the Greenacres school, the Long Close school and the Western Park school in my constituency —who cannot walk, and many of whom can scarcely move? There are not enough consultants, doctors or physiotherapists to look after them.
    Mr. Mellor: I have already pointed out to the hon. and learned Gentleman, but I think it is worth repeating, that the number of consultants in the country is scheduled to go up by 5,000, or over 30 per cent., over the period. There has never been so much expansion, and, of course, it will take place across the board. [HON. MEMBERS: "Answer the question."] I have answered the hon. and learned Gentleman's question.

    British Medical Association
    Mr. Adley: To as the Secretary of State for Health when he next intends to meet the British Medical Association; and what he intends to discuss.
    Mr. Kenneth Clarke: I have no plans to meet the BMA, but I have arranged to meet representatives of the medical profession through the joint consultants' committee tomorrow to discuss the implementation of the NHS White Paper "Working for Patients".
    Mr. Adley: While thanking my right hon. and learned Friend for that reply, may I ask him please to obtain from the BMA an apology for the distortions with which it is frightening patients? Does he agree with me that if the purpose of its campaign is to persuade Ministers and Conservative Members of Parliament by the mindless barrage of propaganda that it is putting out, it is singularly unsuccessful? The main beneficiary of this propaganda appears to be the advertising agency handling the account. Will my right hon. and learned Friend accept from me
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    that, he and I having been in the House together for more than 19 years, I am more than happy to recommend his advice rather than that of the BMA to my constituents?
    Mr. Clarke: I have written to all GPs under contract in England, setting out why we disagree strongly with the five principal assertions made in that leaflet, and why we say that they are all untrue. I have invited GPs to consider whether they want to carry on putting the leaflet in their surgeries, and I am glad to say that I think that many of them do not. I look forward to having sensible negotiations with the BMA, if it will return to constructive proposals, about how to improve general practice in this country. Some of the campaigning on which it is spending such money is not really helping to improve the atmosphere, or the prospects for patient services either.
    Mr. James Lamond: When the Secretary of State meets the consultants, as he has said he will, will he ask them if the people appointed to the new consultant posts that he intends to agree to—the 100 posts that have just been mentioned—will accept that they must devote 100 per cent. of their time to the National Health Service, and not, as at present, be permitted to devote as much time as they like to private medicine, using National Health Service facilities, and charging old people, who cannot wait in the queue any longer, exorbitant prices for operations that should be performed free?
    Mr. Clarke: Consultants are able to enter into contracts on the present basis with the National Health Service. They can be full-time, and maximum part-time, and so on. What we have ensured in the White Paper is that district health authorities will agree a job description with each consultant each year and will act as the agents of the regional health authorities in ensuring that that job description is, indeed, fulfilled by the consultant. So the consultant will be paid according to the extent of his commitment to the National Health Service, and the district health authorities will be able to ensure that that commitment is carried out.
    Mr. John Greenway: Does my right hon. and learned Friend agree that much of the confusion in the minds of the public in relation to the proposed reforms of the Health Service stems from a mixing of aspects of the general practitioner contract with proposals set out in the White Paper, and that this misinformation is largely perpetrated by some GPs who do not understand the differences themselves? Will my right hon. and learned Friend take the opportunity for further negotiations to get the GP contract settled, so that discussions about the White Paper reforms may continue, and the beneficial ideas in the White Paper may be discussed and put into practice?
    Mr. Clarke: I agree entirely with my hon. Friend's analysis. My experience in discussions has been the same as his. I sent to all general practitioners a copy of the White Paper on the National Health Service review and the relevant working papers that related to the White Paper. I sent out separately the proposals for a new contract, in which I described the stage that we had reached in our discussions and negotiations. I asked all general practitioners to read whichever parts that interest them but to keep them apart and made it quite clear that discussions on the contract—where we hope to reach a reasonable conclusion, if people will accept the aims of the new

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    contract—are one thing and that the evolution of the Health Service review is quite another. A great deal of discussion still has to take place on that while we are getting the details in place. The sooner that we can settle the contract and stop this protracted negotiations battle, the sooner we shall get on with implementing the NHS review.
    Mr. Galbraith: When the Minister next discusses the general practitioners' contract with the British Medical Association and the general medical services committee will he deal with the concessions that have been made in the tartan contract—the concessions on basic practice allowance, the retention of the rural practice allowance and the lowering of screening targets? Will those concessions be offered throughout the United Kingdom so that they become the basis for a United Kingdom contract?
    Mr. Clarke: I discussed the details of the tartan contract, as the hon. Gentleman described it, with my right hon. and learned Friend the Secretary of State for Scotland before he issued it. That contract reflects in part our reactions to the submissions that we had received on the contract and expresses Scottish conditions. Average list sizes in Scotland are smaller so doctors have, on average, fewer patients. The average level of vaccination is lower and targets are adjusted accordingly. Moreover, doctors serve many scattered rural areas. I shall be interested in the reactions of the general medical services committee and of anybody else to the provisions in the Scottish contract. The Government sought to react to the representations made to us. We have tried to meet local conditions in order to ensure that good practice is encouraged.

    NHS (Privatisation)
    Mr. David Nicholson: To ask the Secretary of State for Health whether he has any plans to privatise the National Health Service.
    Mr. Kenneth Clarke: No, Sir, and I never have had any such plans.
    Mr. Nicholson: Will my right hon. and learned Friend sanction a modest amount of public expenditure to enable a special courier to take, by motorcycle, a copy of this exchange to BMA house, Tavistock square, because the BMA may not be aware of that fact? Is it not highly regrettable that those who are in a position to know the truth should seek so fundamentally to mislead their patients and our constituents?
    Mr. Clarke: I agree with that, but I do not think that the BMA believes that we have any intention of privatising the NHS, or that we ever had any such intention. I think that the courier should be diverted to Walworth road. As we have seen this afternoon, the Labour party has no particular contribution to make at this stage to the evolution of the review or the doctors' contract. It is continuing to fight a totally bogus battle against a proposition that only the Labour party believes was ever made.
    Mr. Campbell-Savours: Has the Secretary of State seen a copy of the report that I am holding in my hand from the General Audit Office in America—the American National
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    Accounting Office—to the House of Representatives? It deals with private health care in America, roundly condemns the principle of fixed budgets and says that they lead to a reduction in health care. Will he send a copy of the report to every Member of the House before the next debate on these matters so that we can learn the truth from the experience of general practitioners in the United States of America?
    Mr. Clarke: I believe that the British health care system is superior to that in the USA. There are centres of excellence in the United States where extremely high standards of medical care are achieved. There are also centres of excellence where extremely high standards of management and use of resources exist. We could learn from that experience. However, my White Paper proposals have nothing whatever to do with taking the National Health Service in the American direction. We remain firmly committed to the principles upon which the National Health Service is based.
    Mr. Nicholas Bennett: Given that there are wide differences in cost between different hospitals for the same operation, and that waiting lists vary so greatly, has my right hon. and learned Friend received from the BMA—or, indeed, from the Labour party—any suggestion as to how this matter might be dealt with? Is not the Labour party's only vision of the future of the NHS one that is safe for COHSE and NUPE?
    Mr. Clarke: My hon. Friend touches on one of the important problems in the National Health Service, and given that there are these apparently inexplicable differences in performance from place to place, it must be a worthwhile objective to so organise the Health Service that we raise standards everywhere to the high level achieved in some places now. I have most certainly received no proposals from the Labour party on that or on any other subject relating to the review. I look forward to receiving constructive proposals from the BMA which address the main point of how to raise standards everywhere for the benefit of patients.
    Mr. Robin Cook: Has the Secretary of State read his own White paper? Is he not aware that it is dripping with commitments to privatisation? Will he put the record straight and confirm that GPs with practice budgets will be expected to use NHS money to buy private treatment? Will he confirm that opt-out hospitals will be expected to use NHS facilities to bid for private patients? Will he further confirm that today's Finance Bill contains a cash subsidy to private medicine? Does it not speak volumes for this Government's lack of commitment to a public Health Service that the very first proposal from the White Paper to be brought before the House is a straight cash hand-out to private medicine?
    Mr. Clarke: The right hon. Gentleman has impaled himself on a hook by making such an allegation about privatisation, and he can find no factual basis in the White Paper or anywhere else to justify it. What he is describing are proposals which ensure that patients and GPs have the maximum choice to use National Health Service money to get the best quality service where they can find it, and provided as quickly as possible. That cannot be described as privatisation. It is using the taxpayers' money to the best advantage of the patient, and it is absurd to claim that we should exclude doctors and patients from high-quality

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    operations provided quickly because we are using excess private sector capacity at a low cost. That is an enhancement of the service and no kind of privatisation at all.
    Mr. Robert B. Jones: My right hon. and learned Friend's answer will be regarded as what it is—clear and the truth. Would it not have been better if the BMA had kept to the truth instead of launching an outrageous campaign to frighten little old ladies and other poor pensioners?
    Mr. Clarke: I certainly would welcome it if the BMA withdrew its untruthful leaflet and substituted one which tried to make constructive proposals on the contract. I certainly hope that all doctors will forbear from making untruthful allegations to elderly and vulnerable patients, so causing them needless alarm. The contract seeks to enhance services to elderly people and I trust that doctors will acknowledge that and seek to build on it.

    Mentally Handicapped and Mentally Ill People
    Mr. Ashley: To ask the Secretary of State for Health what representations he has received regarding the numbers of mentally ill and mentally handicapped people who, after being discharged from hospital, subsequently became homeless.
    Mr. Freeman: We have received representations from voluntary bodies and individuals about the level of support available to patients discharged from hospital, some of these expressing concern that such patients risk becoming homeless.
    Mr. Ashley: Has the Minister read the report "Slipping through the Net" by the National Schizophrenia Fellowship? Is he aware that it is a terrible condemnation of the Government that schizophrenics and other mentally ill and mentally handicapped people are so deprived of community care that they end up on the streets, in prisons or in coffins? Does he accept that the only answer is first, to stop closing the hospitals and secondly, to provide adequate resources for these very desperate people?
    Mr. Freeman: I have read the report that the right hon. Gentleman cites and I can make it quite plain that no mental illness hospital should or will close unless there are adequate facilities in the community for the care of those who have been discharged from hospital, or have not been in hospital. Next week, we shall be issuing guidelines to district health authorities as to how they are to put in place by 1991 adequate community care facilities for the mentally ill.
    Mr. Nicholas Winterton: In associating myself entirely with the remarks of the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) I must tell my hon. Friend that his remarks are totally untrue. Many mentally ill or mentally handicapped people are homeless or in prison because psychiatric hospitals and hospitals for the mentally handicapped have been closed prematurely without adequate accommodation and trained personnel in the community to look after them. Will he ensure that no further psychiatric hospitals close?
    Mr. Freeman: Perhaps my hon. Friend did not catch what I said in reply to the right hon. Member for Stoke-on-Trent, South (Mr. Ashley). I repeat that we
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    endorse the policy which has been in place for 30 years of moving those who are mentally ill from the large, isolated Victorian asylums to proper facilities in the community. I agree with my hon. Friend that the challenge is to provide proper community care facilities.

  PRIME MINISTER

    Engagements
    Mr. Callaghan: To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Callaghan: Is the Prime Minister aware that the Select Committee on the Environment recently produced a report about the disposal of toxic waste and that the chairman said that only God knows what time bomb we are sitting on because of fears that toxic chemicals will get into our water supply? Is she further aware that the Select Committee unanimously condemned the Department of the Environment for its lack of leadership and control? In view of the Prime Minister's statement that the present Secretary of State for the Environment is the best there has ever been, how does she reconcile those two views? Who is telling the truth?
    The Prime Minister: I speak from my recollection of reading that full report, but if the hon. Gentleman looks at the list of action taken, he will find that action by the Government goes back to 1983. Our action in regard to beaches goes back to 1979. The Labour party did nothing about the beaches directive for four years and we had to take immediate action. As I have pointed out, there will be another major Bill to implement the consultation that we have had this year.
    Mr. Dickens: Does the Prime Minister agree that our doctors are the custodians of the nation's health but that by the same token, they are also procurement officers on behalf of the taxpayer and the National Health Service, collectively placing orders worth millions of pounds every day? If we are to have a cost-effective and efficient Health Service, we have to make provision for an aging population. Is it not therefore a pity that we are subjected to the politics of fear, envy and myth which, in one word, is Socialism?
    The Prime Minister: I am very glad to see my hon. Friend back, clearly absolutely recovered. In addition to what he has said, for every £1 that was spent on the Health Service in 1979, £3 is spent today, on more doctors, more nurses, more and better hospitals and very much better care of which he has probably been a recent beneficiary.
    Mr. Kinnock: When two thirds of the people of West Germany are against the modernisation of short-range nuclear weapons, are not the German Government absolutely right to act on their view?
    The Prime Minister: Short-range nuclear weapons are part of the NATO strategy. NATO strategy is being discussed and NATO strategy cannot be determined by any one country.
    Mr. Kinnock: When we are told that the Warsaw pact has a 16:1 advantage in short-range nuclear weapons, does it not make sense for Britain and for NATO to gain the most by negotiating their verifiable removal?
    The Prime Minister: I thoroughly agreed on that point with an early-day motion which appeared on the Order Paper on 9 February 1989 congratulating
    "the Socialist Prime Minister of France on his … statement … that 'conventional and nuclear weapons are jointly necessary for the security of Europe',…that 'despite some initial signs of an unquestionable desire for disarmament in the Soviet camp, we are still far from seeing the reasonable sufficiency or the defensive posture that they claim', and that we must avoid having disarmament 'become a smokescreen for denuclearisation.'"
    That was tabled by a Labour Member.
    Mr. Kinnock: I am glad to hear the Prime Minister quoting a Socialist President. I quote to her a Conservative Chancellor. Does she agree that there should be
    "'early negotiations on short-range nuclear weapons based on the goal announced by the Alliance in Reykjavik in 1987 and in Brussels in 1988 to achieve equal numbers at lower levels' and … 'negotiations on nuclear artillery with the aim of achieving equal ceilings at levels that are drastically reduced'"
    That is the view of Chancellor Kohl.
    The Prime Minister: I do not think that the right hon. Gentleman could have heard my first answer to him—[Interruption.] The strategy that we are discussing is the strategy of NATO, which has protected peace for 40 years. It is the strategy which the right hon. Gentleman does not accept and which he wishes to throw away. The strategy on which he is engaged is to get the denuclearisation of Europe and to have no safety left in defence in NATO for this country.
    Sir Geoffrey Johnson Smith: Is my right hon. Friend aware that there are many parliamentarians both here and on the continent of Europe who share her deep concern about the West German Government proposal to start talks on short-range nuclear weapons with the Warsaw pact countries unilaterally in advance of reductions in chemical weapons and conventional forces?
    The Prime Minister: I agree with my hon. Friend. NATO has played a vital role in maintaining Germany's freedom, which started the day the second world war ended, and I do not believe that the German Government want to put NATO at risk.
    Mr. Illsley: To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Illsley: In view of the fact that in February of this year the south Yorkshire police instructed Barnsley football club to admit 2,000 spectators to an FA cup match at one minute before the kick-off without payment and without tickets, will the Prime Minister now consider delaying the Football Spectators Bill until after Lord Justice Taylor reports or, even better, withdraw it altogether as such police action clearly makes that Bill unworkable?
    The Prime Minister: I answered some questions from this Dispatch Box last week pointing out that there had been nearly 300 deaths in the post-war period from crush and hooliganism in football, that unless we had a Bill we
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    should be unable to take any action contained in the measure apart from the national membership scheme and that I believed that, against that number of deaths, for the House to wash its hands of such a Bill would be negligent in the extreme.
    Mr. Nicholas Baker: Does my right hon. Friend agree that anyone of reputable character—a public company, a national newspaper or a child playing in the street—on finding documents or property lost, stolen or fallen off the back of a lorry, would, as their first action, seek to return it to its rightful owner?
    Mr. Tony Banks: Not in my constituency.
    Mr. Baker: Should not all thieves be treated equally before the law?
    The Prime Minister: What my hon. Friend says is correct and most people would agree.
    Mr. Ashdown: What is the limit, if any, below which the Prime Minister would not be prepared to let child benefit be cut?
    The Prime Minister: Our policy on child benefit has been set out. We increased child benefit to the poorest families, which gave them far more help than they would have had if there had been an across-the-board increase. I am happy to say that that policy was endorsed by a majority of 100 yesterday evening.
    Mr. Patrick Thompson: Bearing in mind that we are this month marking the 40th anniversary of NATO, will my right hon. Friend take the opportunity to discuss with her colleagues at the Department of the Environment the recent decision by Norwich city council to throw out an exhibition which was installed to mark the 40th anniversary of NATO? Does she agree that that Labour-controlled council has pointed up the Opposition's confusion on defence matters?
    The Prime Minister: My hon. Friend makes his point effectively. NATO has kept the peace in Europe for over 40 years. We are firmly behind NATO's strategy—which is a mix of conventional and nuclear weapons—as, I believe, are the United States and the overwhelming majority of NATO members. Anything that undermines NATO would be highly damaging to the defence of liberty.
    Mr. Pawsey: To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Pawsey: Does my right hon. Friend agree that one of the principal achievements her three Administrations has been the way in which the trade unions have been firmly brought under the rule of law? Would she care to say what the effect would be on the economy and on employment of a return to the secondary picketing advocated by Opposition Members?
    The Prime Minister: The effect would be utterly devastating. We would go back to secondary strikes, in which there was no dispute between the employer and the employee and we would see again some of the massive strikes that we had in Labour's last period of office, during

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    which about 13 million days a year were lost through strikes— a situation that would not have been encountered under a Tory Government.
    Mr. Tim Smith: To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Smith: Does my right hon. Friend agree that some doctors have behaved in a most irresponsible and non-professional nammer in their treatment of elderly and vulnerable patients—[Interruption.]
    Mr. Speaker: Order.
    Mr. Smith: The doctors have frightened their elderly and vulnerable patients about the effect of the National Health Service review. Will my right hon. Friend emphasise to the British Medical Association—the doctors' trade union—before its conference on Thursday, that it should stop using patients as a political battering ram and should instead sit down to discuss the proposals with the Department of Health?
    The Prime Minister: Yes, I wholly agree with my hon. Friend. My right hon. and learned Friend the Secretary of State for Health answered the doctors effectively in some of the letters which he sent in reply to them. There are more doctors with more resources than ever before in the Health Service and the objective of the National Health Service White Paper is to give better health care, to give greater choice and to produce greater satisfaction and rewards for those who work in the NHS and who successfully respond to local needs. The changes proposed in remuneration before the White Paper are planned to distribute the same amount of money to doctors, but by way of distributing more to those who have a bigger case load than to those who have a smaller case load. That seems eminently just.
    Mr. Tony Banks: To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Banks: Is the Prime Minister aware that there is an important Roman site in Upper Thames street near St. Paul's cathedral, which is the site of the palace of Julius Agricola, a former governor of London?
    Mr. Speaker: Order. The question must have to do with the Prime Minister's responsibilities.
    Mr. Banks: The site is threatened by office development and there are difficulties with English Heritage and the developers about compensation that might be paid if the development is kept in abeyance while archaeological inspection continues. Will the Prime Minister please look at the matter urgently because the site is of great significance not only to London but to the nation?
    The Prime Minister: I am aware of the site and of its importance. I am sure that the hon. Gentleman will be in touch with the Department of the Environment, under which English Heritage comes. If it comes to a final decision on planning, that would be for my right hon. Friend the Secretary of State for the Environment to determine.
    Mr. Frank Field: Is the Prime Minister aware that the first compensation payments will shortly be paid from the Hillsborough disaster fund? Is she also aware that the poorest families may—[Interruption.]
    Mr. Speaker: Order.
    Mr. Field: Is the Prime Minister aware that the first payments will shortly be paid from the Hillsborough disaster fund? Is she also aware that the poorest families may, as a result of gaining help from that fund, lose their entitlement to social security payments? As I cannot believe that the nation contributed generously to that fund so that the Treasury would be the net beneficiary, and because I do not believe that the Treasury would wish to be the net beneficiary, will the right hon. Lady undertake to review the disregard rules so that the poorest families can gain help from that fund and keep their social security payments?
    The Prime Minister: First, I am not sure what the status of the Hillsborough disaster fund will be. As the hon. Gentleman will be aware, other funds have chosen to have charitable status, but I am not sure what decision has been made about the Hillsborough fund and that will affect the way in which the payments are made. Secondly, as the hon. Gentleman knows, other disaster funds have had charitable status and they must have worked out a reasonable way forward on this matter. I do not think that we can change the rules and regulations, but I shall look to see how similar funds have worked.

Points of Order
3.32 pm
Mr. Jack Straw: On a point of order, Mr. Speaker. This morning the Secretary of State for Education and Science published a consultation document proposing that university and college tuition fees should more than doubled. Under the guise of measures allegedly aimed at bringing market forces into higher education, the Secretary of State's announcement marks the beginning of the end of free tuition—[Interruption.]
Mr. Speaker: Order. I want to know what the point of order is for me.
Mr. Straw: I am just coming to the point of order, if I am allowed to do so. The hon. Member for Lancaster (Dame E. Kellett-Bowman) seems to think that she is the Speaker.
That announcement marks—[Interruption.]
Mr. Speaker: Order. I must hear what the point of order is.
Mr. Straw: That announcement marks the beginning of the end of free tuition in higher education, as the Under-Secretary of State, the hon. Member for Wantage (Mr. Jackson), said.
The Secretary of State held a press conference this morning at 10 o'clock, at which he said that those changes were "big and exciting".
Have you, Mr. Speaker, had any intimation of an oral statement by the Secretary of State? Do you agree that if big and exciting changes are to be announced, before any press conference is called the Secretary of State should come to the House—[Interruption.]
Mr. Speaker: Order. I must be allowed to hear what is being said.
Mr. Straw: Is not the Secretary of State's failure to come to the House to make a statement one more example of the way in which Ministers increasingly seek to avoid their responsibility to the House, the elected Chamber, and through us to the public?
Mr. Speaker: I have had no indication that there was to be a statement, but I am aware that a consultation document has been issued and that it is in the Library.
Mr. Straw: Further to that point of order, Mr. Speaker, You, have responsibilities to the House for the rights of hon. Members on both sides of the House who are not in the Government. According to the Secretary of State, there are "big and exciting" change. My point of order is: should announcements like that be made at a press conference seven hours before they could be made in the House? Should the Secretary of State then avoid his responsibilities by refusing to make a statement in the House where he could be questioned on the changes?
Mr. Speaker: I am aware that a consultation document was issued. I always deprecate the fact that statements are made to the press before they are made in the House. That is not my responsibility, but I hope that it will not occur.
Mr. Neil Kinnock: Further to that point of order, Mr. Speaker. Obviously this is no reflection on the Chair, but as the months pass we witness Ministers having
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to be dragged to the House to make important statements. We all bear in mind the inner cities statement, which eventually we got made in the House, and last week's Prime Minister's Question Time when the Prime Minister started to read what was obviously a statement. Will you take advice from senior Members on both sides to ensure that we do not have a repetition of constant contempt for the House by Her Majesty's Government?
Mr. Jerry Hayes: Further to that point of order, Mr. Speaker. We have witnessed two appalling abuses of the system. If the Labour party wishes to bring to the attention of the House important matters, as is its right, the proper way to do it is through a private notice question. Anything else is sheer laziness.
Mr. Speaker: A private notice question is a matter for me.
Mr. Eric S. Heifer: Further to that point of order, Mr. Speaker. When an hon. Member gets up to make a point of order, he may be right or wrong. That is a decision for you. Will you draw to the attention of hon. Members, particularly those on the Government Benches, the fact that when the Reichstag decided to shout down every opposition Member it led eventually to no freedom, no democracy and a form of Fascism—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman is making an important point, and I wish to hear it.
Mr. Heffer: Equally, the same thing happened in Italy under Mussolini. I do not intend—[Interruption.] What is happening now is an example of what I mean. Will you, Mr. Speaker, explain to hon. Members that democracy means freedom of speech and that in the last analysis you are the judge of what is a point of order, instead of hon. Members screaming their heads off because they do not agree with it?
Mr. Speaker: We have a very heavy day ahead of us. Many right hon. and hon. Gentlemen wish to participate in the Second Reading debate on the Finance Bill. Points of order will delay the debate and will mean, unhappily, that some hon. Members will not be called.
Several Hon. Members rose—
Mr. Speaker: I call Mr. Baldry. It must be a point of order that I can answer and not a comment upon what has been said.
Mr. Tony Baldry: Further to the point of order of the hon. Member for Liverpool, Walton (Mr. Heller), Mr. Speaker. Because of the brouhaha to which he referred, it was difficult to hear whether the hon. Member for Blackburn (Mr. Straw) was objecting to the fact that the Government intend to provide more funds for higher education, increase participation in higher education and increase access for higher education.
Mr. Speaker: It is a well-known practice over many years for the Chair to be asked on a point of order, whether there has been any indication that there is to be a statement. That is what I was asked. That is in order. What is not in order is to do that with a long preamble. In the circumstances I do not believe that it was an over-long preamble today. I listened to the point of order and I ruled upon it.
Mr. Alan Williams: On a point of order, Mr. Speaker. Is it not clear that the Chair is being constantly embarrassed by a practice which you, Sir, and the Committee on Procedure have deplored? You, as you rightly say, have very limited powers, but I suggest that you have two powers which could perhaps strengthen your approach to the Government about Ministers and their duties to the House. Will you make it clear, in backing up what you have said in deploring Ministers' actions, that when Ministers ignore the House, as the House was ignored this morning—you will use your powers to grant PNQs and SO20 applications? In this way you will give back to the House the rights of which the Government are trying to rob it.
Mr. Speaker: It has long been the convention that information should be given to the House before it is given to anyone outside. I hope that that will continue to be the case. I have made my views known very clearly on this point.
Several Hon. Members rose—
Mr. Speaker: I shall take one more point of order from each side.
Mr. Hugh Dykes: On a point of order, Mr. Speaker, I am sure that you were aware that the objection was not to the reference by the hon. Member for Blackburn (Mr. Straw) to lodgment in the Library of statements about new policy but to the highly charged political preamble to the point of order which he made and to which Government Members quite rightly objected.
I want to ask a question which is linked to that but perhaps raises a more important point of order. Is it not the convention that when hon. Members cannot be here they let your Office know so that you do not have the embarrassment of calling their questions? Further to that, there appeared to be—unwittingly on your part perhaps —a certain amount of confusion when you called my hon. Friend the Member for Bristol, East (Mr. Sayeed), who was not here, and then did not go on to call the next Member with a question on the Order Paper but called another hon. Member to ask a supplementary question on the previous question.
Mr. Speaker: As to the first point, I suspect that what happened was that the hon. Member for Blackburn (Mr. Straw) heard the news at 1 o'clock in which it was stated that a Government statement had been made outside the House. I also heard that. I think that that was what his point of order related to.
As to the second point, I decide who is called at Question Time. I do it as fairly as I can to ensure that every hon. Member, particularly those who have not yet had an opportunity to put a question to the Prime Minister, shall be able to do so rather than call those who have perhaps been able to ask several questions.
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. You will know that yesterday I managed to table three early-day motions relating to the phone-tapping activities by Mr. Coghlan on behalf of Lonrho against the A1 Fayeds. Today I went to the Table Office and was told that a motion written in precisely the same terms could not be accepted on the basis—indeed I
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had been told last night that there was some concern about these matters—that it summarised statements made by persons outside the House.
I understand, Mr. Speaker, that you are in the course of a period of consultation and that it is likely that, following upon that consultation, you may seek to change, or reinterpret, the rules governing the tabling of early-day motions in such a way that I would be unable to table the motion. I regard any attempt to interfere with my right to table a motion of this nature as an intrusion on my rights as a Member of the House. I am joined in that view by many of my hon. Friends, whom I consulted this morning and who feel very strongly about this matter.
Mr. Speaker: The hon. Gentleman should not have raised this point of order today when, as he correctly said, I am considering the whole matter. The hon. Gentleman has three motions on the Order Paper today which quote extracts from speeches made by others outside the House. It is not the function of an early-day motion to have written into the record speeches made by persons outside the House. An early-day motion, by definition, must be capable of debate. Long quotations from speeches by people outside the House are not capable of debate. I am, as I said, considering the matter. It is not a question of denying the hon. Gentleman's rights. I am trying to protect the rights of the House by ensuring that the Order Paper is not abused.
Mr. Bill Walker: On a different point of order, Mr. Speaker. You are aware of the difficulties that we have had in this Parliament over the staffing of Scottish business Committees, including Select Committees and Standing Committees. I seek your advice and guidance.
This morning in the Scottish Standing Committee considering the Self-Governing Schools etc. (Scotland) Bill, a Labour Back-Bench Member was also serving on another Committee—not an unusual situation; I have had to do it many times myself. A Division was called in the other Committee which was debating purely English business and a Division was simultaneously called in the Scottish Committee. The proceedings in the Scottish Committee were held up and the Chairman had to keep the doors open to allow the Labour Back Bencher—[Interruption.] This is very important, Mr. Speaker. I have been locked out of Committee Rooms in similar circumstances.
I want your guidance, Mr. Speaker. Hon. Members from Scottish constituencies are serving on two Standing Committees. This morning the hon. Member concerned was the hon. Member for Dundee, East (Mr. McAllion) and the Committee doors were kept open to allow him back to vote in the Division. I want a clear ruling from you, Mr. Speaker. Does that apply to all hon. Members? I would like that practice to be extended to me when I am serving on two Committees at the same time.
Mr. Speaker: As the hon. Gentleman knows, I am not responsible for what happens in the Committee Corridor. I can see that the hon. Gentleman may have a serious problem. He should refer it to the Procedure Committee.
Mr. Bob Cryer: Further to an earlier point of order, Mr. Speaker. On the question of early-day motions, would it be a preferable alternative to refer the matter to the Procedure Committee instead of accepting

809
the entire responsibility yourself? That is the advice that you usually give if difficulties arise on the Floor of the House.
As you will appreciate, the early-day motion procedure is a very important and much cherished means of raising issues which we know will never be debated, although there is the saving grace that there is a possibility of debate. However, no early-day motion has been debated since I have been in, or out of this House, since 1974.
I recall when the Consolidated Fund gave rise to a genuine debate and was not arbitrarily divided into Adjournment debates. That change was not brought about by the Procedure Committee submitting its recommendations to the House. It was arrived at by dealing with the various Back-Bench groups. As Back Benchers have over the years lost a significant number of opportunities in this House which has traditionally always provided opportunities for individuals to raise issues, it would be better if the early-day motion matter went to the Procedure Committee and for the House to consider its report.
Mr. Speaker: An early-day motion on the Order Paper must be capable of being debated. It is an abuse of the Order Paper to table three early-day motions which effectively writes someone else's speech into the Order Paper. I am considering the matter and perhaps the Procedure Committee should look at it. The sadness is that, if the Procedure Committee considers it, it may make the procedure more restrictive than I would by bringing it back strictly to what it always was.
Mr. Neil Hamilton: On a point of order, Mr. Speaker. I hope that you will agree that Members of Parliament can hardly be expected to carry out the onerous functions of their office if they are dying of thirst. Therefore, you will have every sympathy with the three Labour Members who brought the Leeds to King's Cross express to a halt at Huntingdon last week—
Mr. Speaker: Order. They may have done, but they did not do it in this Chamber. That has nothing to do with me, not by any stretch of the imagination.
Mr. Hamilton rose—
Mr. Speaker: Order. I am not having that; I am sorry.
Mr. Max Madden: On a point of order, Mr. Speaker. I wish to revert to the matters raised by my hon. Friends the Members for Workington (Mr. Campbell-Savours) and for Bradford, South (Mr. Cryer). Will you, Mr. Speaker, make clear for the sake of accuracy and the record, that the three early-day motions under consideration do not directly quote anyone and, clearly, in their present form are capable of debate? I ask you, Mr. Speaker, not to take any decisions on this matter in principle until you have had the opportunity to consider a further early-day motion from my hon. Friend the Member for Workington. If the motions were in order, as they clearly were when accepted, it would be unfair and a removal of our rights if you changed the rules overnight.
Mr. Speaker: The hon. Gentleman was not present when I discussed with the hon. Member for Workington, his early-day motions. He is well aware of my views on the other two motions, which he did not table last night—and he agreed not to proceed with them.
Mr. Tony Favell: On a point of order, Mr. Speaker. Any move by you to restrict the number of early-day motions would be most welcome to the vast majority of hon. Members.
Mr. Speaker: I am seeking to restrict not early-day motions, but the use to which they are put. I have come to no firm conclusion about this, and am still considering the matter. It is certainly not my intention to make matters more difficult for Back Benchers. As the House knows, I believe that Back Benchers should be given every opportunity, within the rules.
Mr. Andrew F. Bennett: Further to that point of order, Mr. Speaker. I understand that my hon. Friend the Member for Workington (Mr. Campbell-Savours) has attempted to table a further early-day motion today—
Mr. Speaker: Order. The hon. Gentleman may have done, but I have not seen it yet.
Mr. Tony Marlow: On a point of order, Mr. Speaker. I think that what I have to say is of general interest to the House. When the Leader of the Opposition seeks to catch your eye, Mr. Speaker, he always does so, which is quite right. When the right hon. Member for Yeovil (Mr. Ashdown), the leader of the Liberal party, who is one of the more boring and irrelevant politicians in this place, seeks to catch your eye, he always seems to do so—be that as it may. What concerns me is that when the right hon. Member for Plymouth, Devonport (Dr. Owen), the leader of the Social Democrats, who, although we may disagree with him, normally has something interesting to say, seeks to catch your eye, he is not always called. On behalf of the House, may I ask you, Mr. Speaker, to be more sympathetic with your eye to the leader of the SDP than to the leader of the Liberal party?
Mr. Speaker: The House would be wise to proceed with the Finance Bill debate. I have the difficult task of deciding who is called at Question Time. I seek to be as fair as possible.
Mr. Dennis Skinner: On a point of order, Mr Speaker. If my hon. Friend the Member for Workington (Mr. Campbell-Savours) or anybody else decided to put down what is known as a take-note early-day motion, may I take it that, providing that it contained no exact quotations, it would be allowed? As some of the take-note motions put down by the Government are of that kind, would you, Mr. Speaker, say how many words attributed to statements would be allowed? Would it be 20, 30, 40, or what? Will you assure me that, if I signed those three motions today, the names would be accepted because they are on the Order Paper? Will you bear in mind that my hon. Friend's new motion does not contain any quotations?
Mr. Speaker: The hon. Gentleman is a distinguished chairman of another assembly, and I shall take note of what he has said. Whether he signs the motions will not have any direct influence on my decision, but I shall take note of what he has said.
Mr. Andrew Faulds: Further to that point of order, Mr. Speaker. We live in a somewhat authoritarian political climate. You have the unique

811
responsibility of defending the rights of Members. Sir, you and I have been friends for some years now —[Interruption.]
Mr. Speaker: Order. I think that this point of order may be helpful.
Mr. Faulds: I say with my usual love and admiration for you, Mr. Speaker, that your responsibility in these particularly difficult times is not to allow Members' interests and rights to be diminished but to try to extend them.
Not having spoken in the House since 30 November last year, I rise today to say that I must make the comment, with all charity—this is very relevant—that there has been a change in the conduct of matters within the House. You, Mr. Speaker, have changed the taking of points of order; you have allowed quotations in supplementaries. Sir, when you and I had a slight tiff at the end of last year, I wanted, having damaged the door and having immediately agreed to pay for it—which I have since done, by kind permission of my bank manager—to make a statement to the House apologising personally to you, Sir, and to my colleagues for my slight tantrum. The door, of course, had suffered damage on previous occasions; it was only my Scottish shoulders that actually budged it. But you, Sir, did not allow me to make a personal statement when I very much wanted to do so.
Now that I am on my feet again, and intend to rise frequently on a number of occasions, I think that the conduct of these matters—which has changed, Sir, under your Speakership—should really be examined by the relevant Procedure Committee—
Mr. Speaker: Order. The hon. Gentleman is very helpful, and I am touched by what he has said. He wrote me a very full letter of apology, and I was grateful for it.
I must stress to the hon. Gentleman and to the House that I am not in the business of changing the rules; I am in the business of upholding them. If there is an abuse of any matter in the Chamber, it is my undoubted duty to look into it carefully, and that is exactly what I am doing.

Unique Personal Identity Number
3.56 pm
Mr. Jacques Arnold: I beg to move,
That leave be given to bring in a Bill to introduce a unique personal identity number for all persons born after 1st January 1990 and for other residents on application.
The Bill would provide for a universally applied identity number for all persons born after 1 January 1990, and for any other United Kingdom resident on application. That would allow public authorities and private institutions increasingly to utilise a standard reference which would assist in the detection of benefit, tax and credit fraud, and other crimes. Furthermore, it would provide opportunities to facilitate passport issuing, crowd control—not least at football matches—and the rapid identification of accident victims, together with their medical records and intentions relating to organ donation.
At present, a multiplicity of reference numbers applies to every one of us. We start off with the registrar, who no doubt puts a number on our birth certificate. We then move on to the NHS, which provides yet another number. We then progress to the education authorities, some of which apply a number. We may call on the services of the social services departments; a minority of us will then receive yet another number. At the age of 16 we are given a national insurance number. When we start work, the Inland Revenue provides us with a number linked to the PAYE system, and should we fall on hard times the Department of Social Security will apply yet another number—and the district council will give us a housing benefit number, to boot.
We are given another number for our driving licence, this one giving away our date of birth to those who can interpret it. When we travel abroad we are given yet another number—a passport number—and, by the grace of the Government, we are shortly to have a community charge number. Finally, if we fall foul of the law, we are given a police national computer number.
Sir John Boreham, head of the Government Statistical Service, said in 1985 that the process was "all rather ramshackle." We have no common denominator; the whole system is confused. Every Member of Parliament finds himself weighted down, his pockets bulging with different cards of identification. My Bill recommends that the Registrar General at the time of birth should record for every individual a number with six digits showing the date of birth, two letters showing registration district and numbers to differentiate uniquely between individuals. The registrar would solely register the full name of the individual, the date and the place of birth and his current address—this last being the only variable that would be changed; at the time of change of address, with forms issued through the Post Office for that purpose. The data would be available for the verification of other organisations, which would be able to check off their data against the list and a charge to them would fund the whole exercise. The sophisticated computers we find nowadays in so many organisations would enable the matching of records with the provision of exception reporting.
Which organisations should have access to the use of such records? They should be the public authorities authorised by this House: they should be those involved in criminal inquiries and recognised credit institutions authorised by the Bank of England, and this for

813
verification of data provided by the individual only. The advantages of such an identity number would be to combat benefit fraud, for there is nothing so corrosive to our constituents than the knowledge that some of their neighbours may be effectively fiddling the benefit system by exploiting the lack of verified information by different organisations. Far too frequently the left hand does not know what the right hand is doing, and this fact is compounded by the revenue-collecting agencies, particularly in respect of moonlighting activities.
Equally, we should make this facility available to the credit-granting agencies. Their inability to verify sources of funds and liabilities of potential borrowers not infrequently leads to fraud. A common reference number would facilitate both positive and negative checking of the existence of alternative accounts. For Labour Members who may be in some doubt, I point out that this system would provide potential for stamping out multiple share applications and the like.
The Lindopp committee, which reported in 1978, said:
"It can be argued that if a single and unique identifier were given to every member of the population and if it were to be used by all data users on all occasions, the overall cost to users might be reduced. It could also be argued that the citizen too would benefit by not having to remember or record different means of identification for each of his many activities.
But the use of such a universal identifier in many different data handling activities would also create another facility. It would make it easier and cheaper, especially with the use of computers, to relate or merge the information about individuals held in different sets of records. This could be said to yield a substantial gain in administrative efficiency both in the public and the private sector, especially for organisations dealing with large numbers of people."
Perhaps more succinctly Philip Redfern, in a paper to the Royal Statistical Society last year, claimed that
"the principal advantages to be found in such a system would be that it would provide a brake on fraud, crime and illegal immigration, and lead to a fairer society so that burdens and duties were fairly shared and benefits and rights went only to those entitled to them. To put it another way, freedom should not extend to the freedom to cheat the rest of the community."
I believe that this Bill is particularly relevant in light of the Hillsborough disaster and the Taylor inquiry, and the Football Spectators Bill currently before Parliament. Clubs would have a common identifier which they could use to ban undesirable elements by means of their own issue of magnetic cards or otherwise. Equally, in the tragic case of fatal accidents, victims could be identified by reference numbers on documents, for instance on driving licences. An inquiry made by radio by the emergency services to central records would identify important factors such as the victim's blood group, allergies or other medical conditions. In the event of death, organ donation intentions—which often involve critical time factors—would also be known.
What of 1992 and the European context? Identity cards are compulsory in Belgium, West Germany, Luxembourg, Portugal and Spain, and, in accordance with those countries' laws, must be carried at all times. In Italy and Greece, identity cards are issued but need not be carried —right hon. and hon. Members can make what they will of those two countries. Cards are also presumed to be compulsory, but actually are not, in France. The use of an identity number such as that which I propose is the
814
practice adopted in Denmark and in Sweden. It is only in the United Kingdom, Ireland and the Netherlands that no identity number system exists.
The Bill provides an opportunity to air an important subject, and it is a nettle that the House should grasp. Admittedly it will create problems in safeguarding civil liberties. They must be overcome, but the proposal offers terrific practical advantages. I hope that the debate will commence.
4.5 pm
Mr. David Winnick: It is interesting that a party that is supposedly concerned with the rights and freedoms of the individual should be associated with such a proposed measure, which is totalitarian in concept. Listening to the hon. Gentleman's comments about "undesirable elements," "blood groups," and the rest, one is reminded that last week marked the centenary of Hitler's birth. Hitler also was fanatical about identity numbers, blood groups and undesirable elements. As one listened to the hon. Gentleman making his insane proposals, one wondered whether the identity number he proposes for every person born after 1 January next year will perhaps be tatooed on their wrists or arms. No doubt that would be a better and more effective way of identifying the individual concerned.
It may be argued that the hon. Member for Gravesham (Mr. Arnold) does not represent mainstream Tory opinion.
Mr. Dennis Skinner: Yes he does.
Mr. Winnick: My hon. Friend says that he does. We shall know very shortly whether that is so, because there will be a Division. We certainly have no intention of allowing such a proposal to go through on the nod.
Many right hon. and hon. Members are genuinely and increasingly concerned about the way in which the state controls information about the individual. We are concerned about the effects of information technology and about the way in which civil liberties may be eroded, even without inane proposals of the kind made by the hon. Member for Gravesham.
How many times have we been told that the Government are opposed to state interference, and all the rest of it—yet along comes a Conservative Member suggesting that every individual born from next year should be given a "unique personal identity number."
Mr. Skinner: Mark Thatcher should have had one when he got lost in the desert.
Mr. Speaker: Order. The hon. Gentleman has not been called to help in this debate.
Mr. Winnick: Today, the hon. Member for Gravesham introduces a Bill that will no doubt be defeated. However, how long will it be before No. 10 Downing street comes to the same view and introduces a Government Bill, as it has in respect of an identity card for football spectators? The poll tax and other Government measures originally arose from ten-minute Bills.
My right hon. and hon. Friends should be very much on their guard. In defeating the hon. Gentleman's proposed measure today—and no doubt Ministers will abstain—we should be very much on our guard that No. 10 does not get the idea into its head, so that before long a Minister will come to the Dispatch Box saying, "In all the

815
circumstances, and bearing in mind undesirable elements, we believe that there should be a unique personal identity number for all people born in this country." The House should defeat this nonsense and no more should be heard about it.
Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 47, Noes 129.

Division No. 174]

[4.09 pm

AYES

Alexander, Richard

Janman, Tim

Arnold, Jacques (Gravesham)

Kellett-Bowman, Dame Elaine

Beaumont-Dark, Anthony

Kilfedder, James

Boswell, Tim

Lloyd, Sir Ian (Havant)

Braine, Rt Hon Sir Bernard

Marlow, Tony

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

Nicholson, David (Taunton)

Buck, Sir Antony

Page, Richard

Burt, Alistair

Patnick, Irvine

Butler, Chris

Shaw, Sir Michael (Scarb')

Clark, Sir W. (Croydon S)

Spicer, Sir Jim (Dorset W)

Colvin, Michael

Stanbrook, Ivor

Conway, Derek

Thornton, Malcolm

Dickens, Geoffrey

Townend, John (Bridlington)

Dykes, Hugh

Vaughan, Sir Gerard

Evennett, David

Walker, Bill (T'side North)

Fairbairn, Sir Nicholas

Whitney, Ray

Favell, Tony

Widdecombe, Ann

Gow, Ian

Wilshire, David

Grant, Sir Anthony (CambsSW)

Winterton, Nicholas

Greenway, Harry (Ealing N)

Woodcock, Mike

Griffiths, Peter (Portsmouth N)

Young, Sir George (Acton)

Hague, William

Hargreaves, Ken (Hyndburn)

Tellers for the Ayes:

Hicks, Mrs Maureen (Wolv' NE)

Mr. Bob Dunn and

Howell, Ralph (North Norfolk)

Mr. Julian Brazier.

Hunter, Andrew

NOES

Abbott, Ms Diane

Brown, Gordon (D'mline E)

Adams, Allen (Paisley N)

Brown, Nicholas (Newcastle E)

Ashdown, Rt Hon Paddy

Buckley, George J.

Ashton, Joe

Callaghan, Jim

Banks, Tony (Newham NW)

Campbell, Menzies (Fife NE)

Barnes, Harry (Derbyshire NE)

Campbell-Savours, D. N.

Battle, John

Carlile, Alex (Mont'g)

Beith, A. J.

Carrington, Matthew

Bell, Stuart

Clark, Dr David (S Shields)

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

Clarke, Tom (Monklands W)

Bennett, Nicholas (Pembroke)

Clay, Bob

Bermingham, Gerald

Clwyd, Mrs Ann

Blunkett, David

Cohen, Harry

Bradley, Keith

Coleman, Donald

816

Corbyn, Jeremy

McAllion, John

Cousins, Jim

McAvoy, Thomas

Crowther, Stan

McKay, Allen (Barnsley West)

Cryer, Bob

McLeish, Henry

Davies, Rt Hon Denzil (Llanelli)

Madden, Max

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

Mahon, Mrs Alice

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

Marek, Dr John

Dewar, Donald

Martin, Michael J. (Springburn)

Dixon, Don

Meacher, Michael

Dobson, Frank

Michie, Bill (Sheffield Heeley)

Doran, Frank

Michie, Mrs Ray (Arg'l & Bute)

Dover, Den

Moonie, Dr Lewis

Eadie, Alexander

Mullin, Chris

Eastham, Ken

Murphy, Paul

Ewing, Mrs Margaret (Moray)

Nellist, Dave

Faulds, Andrew

Oakes, Rt Hon Gordon

Fearn, Ronald

O'Brien, William

Flannery, Martin

Orme, Rt Hon Stanley

Flynn, Paul

Patchett, Terry

Foot, Rt Hon Michael

Powell, Ray (Ogmore)

Foster, Derek

Radice, Giles

Foulkes, George

Redmond, Martin

Fraser, John

Rees, Rt Hon Merlyn

Galbraith, Sam

Reid, Dr John

Godman, Dr Norman A.

Richardson, Jo

Golding, Mrs Llin

Robertson, George

Graham, Thomas

Ross, Ernie (Dundee W)

Griffiths, Nigel (Edinburgh S)

Ruddock, Joan

Harris, David

Salmond, Alex

Hattersley, Rt Hon Roy

Sedgemore, Brian

Haynes, Frank

Sheerman, Barry

Heffer, Eric S.

Sheldon, Rt Hon Robert

Hinchliffe, David

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

Hogg, N. (C'nauld & Kilsyth)

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

Home Robertson, John

Soley, Clive

Hood, Jimmy

Spearing, Nigel

Hoyle, Doug

Steel, Rt Hon David

Hughes, John (Coventry NE)

Stern, Michael

Hughes, Robert (Aberdeen N)

Strang, Gavin

Hughes, Roy (Newport E)

Vaz, Keith

Hughes, Sean (Knowsley S)

Wall, Pat

Hughes, Simon (Southwark)

Wallace, James

Illsley, Eric

Walley, Joan

Irvine, Michael

Welsh, Andrew (Angus E)

Janner, Greville

Wigley, Dafydd

Jones, leuan (Ynys Môn)

Williams, Rt Hon Alan

Kaufman, Rt Hon Gerald

Winnick, David

Kirkwood, Archy

Wise, Mrs Audrey

Lamond, James

Leighton, Ron

Tellers for the Noes:

Livsey, Richard

Mr. Dennis Skinner and

Lofthouse, Geoffrey

Mr. Tony Worthington.

Loyden, Eddie

Question accordingly negatived.

Orders of the Day

  Finance Bill
  Order for Second Reading read.
  [Relevant document: Second Report of the Treasury and Civil Service Committee of Session 1988–89 on the 1989 Budget (HC288)]
  Mr. Speaker: Before I call the Minister, I must announce to the House that a very large number of right hon. and hon. Members wish to participate in this debate. In view of the late start, I propose to limit speeches between 7 and 9 o'clock to 10 minutes, but I hope that hon. Members who may be called before that will bear the limit in mind.
  4.21 pm
  The Chief Secretary to the Treasury (Mr. John Major): I beg to move, That the Bill be now read a Second time.
  This Bill embodies the legislation that flows from my right hon. Friend's Budget. Over the past 10 years we have seen a transformation in economic policy and performance. Policies of demand management and state intervention that failed have been replaced by policies of free enterprise within a sound medium-term framework that have succeeded. The underlying performance of the economy has improved dramatically as a result.
  The evidence for this is overwhelming: output has expanded by over 20 per cent. since 1979, business investment has risen to its highest ever level as a proportion of GDP, the public finances are now in large surplus and not in large deficit and there has been a marked rise in productivity and employment and a drastic reduction in inflation. As a result, real living standards are now much higher than they were 10 years ago and have every prospect of improving further.
  There are two measures that illustrate the improvements we have seen. First, the performance of our economy has been transformed compared with its own performance in earlier years; but, secondly, and equally importantly, it has also been transformed when compared with the current performance of our competitors. That is why in the 1980s output and investment have grown faster here than in any other major European Community country, a marked contrast to earlier decades, particularly the 1960s and 1970s; and manufacturing productivity has grown faster here than in any other major industrial country, including Japan. In all these measures the United Kingdom was bottom of the league of performance in the 1960s and 1970s. Our position has now dramatically improved.
  Also, in the 1980s, small businesses are being created at an unprecedented rate. In the year to March 1989 the net increase in the number of firms registering for VAT was nearly 70,000, an increase of over 40 per cent. on the previous year, which was itself a record. This means that on average over 1,300 new firms are being established every week. I cannot imagine that this has ever happened before in this country. It is noticeably higher than the 1,000 new firms a week we previously claimed.
  This is by any yardstick an outstanding record of success and this year's Budget seeks to build on it. But there are difficulties as well which we acknowledge. The Budget was framed against a background of an
  818
  unwelcome increase in inflation at home and abroad. Inflation in all the major nations is currently at its highest level for three and a half years. In the United Kingdom, current inflationary pressures, although much exaggerated by the perverse effect of mortgage interest payments on the RPI, had their roots in the events of October 1987. At the time of the stock market crash commentators feared that is would precipitate a world wide slide into recession, as it had done in 1929. That fear was shared by many right hon. and hon. Members.
  It was precisely to avoid that risk that we, along with the other major industrialised countries, deliberately made sure that monetary conditions at that time were not too tight. We were successful in that aim, in that the effects of the crash were not remotely as bad as we, or anyone else, including Opposition Members, feared. It is clear that the current strength of the world economy owes much to the prompt and co-ordinated action taken by the major nations in the wake of the crash. But it is also clear that in response to the inflationary pressures there has been similar prompt action to tighten monetary policy around the world. I hope, believe and expect that that reflects a worldwide determination to get inflation under control, and to keep it under control.
  The Budget was also framed against the background of the current account deficit. This largely reflects an excess of private sector investment over private sector saving, and not the reckless public spending which was the hallmark of previous deficits. It is thus fundamentally different from those of the 1960s and 1970s. The investment boom we are now experiencing underlines the confidence which domestic and foreign investors have in the United Kingdom economy and will stand us in good stead for the future.
  Against an international background of rising inflation, this had to be and was a prudent and cautious Budget. That was undoubtedly the right judgment, and it is generally shared. Our long-term aim is a balanced budget, but in the current circumstances my right hon. Friend judged it appropriate to budget for a further year of substantial debt repayment. That means that, in three years, we will have paid back roughly one sixth of the public debt accumulated over two centuries, thus saving about £3 billion a year in interest payments. That saving will continue in each and every future year. The burden of debt interest as a share of GDP will be the lowest since 1915. That both lightens the burden on the shoulders of future taxpayers and, at the same time, leaves room for further tax reductions, further debt repayment or for higher spending on areas we judge to be priorities, and those decisions can be taken in each successive year.
  Much of the economy's success is a direct response to the favourable tax structure created by my right hon. Friend and his predecessor in the past 10 years. Successive Budgets have broadened the tax base, lowered tax rates and made the tax system more coherent, more intelligible and a great deal simpler. The tax climate is undoubtedly a significant factor in attracting the stream of welcome inward investment recently and magnificently continued by Fujitsu, Bosch and Toyota. That inward investment, as a result of tax and other changes, should be welcomed by hon. Members in every part of the House—[Interruption.] —or nearly every part of the House.
  The 1989 Budget made further progress. It contained a major reform of national insurance contributions and the abolition of the pensioners' earnings rule. Those two

  819
  measures were considered during the Report stage of the Social Security Bill yesterday. Both have received widespread support. Both will remove significant distortions and disincentives. The reform of national insurance contributions will also increase take-home pay for the majority of those in work by about £3 a week; and the abolition of the earnings rule, long necessary and now effected, will give significant help to pensioners, who will also benefit further from other measures in the Bill.
  In his 1987 Budget, my right hon. Friend recognised the special needs of older pensioners by introducing a new and more generous age allowance for those aged 80 and over. Clause 29 extends this higher allowance to people aged between 75 and 79. This will take an additional 15,000 elderly single people and married couples out of tax altogether. In real terms, the age allowance for those aged 75 and over will be 19 per cent. higher than in 1978–79. Three quarters of all those aged 75 and over will not be liable to income tax at all.
  The clause also reduces the rate at which the age allowance is withdrawn for those with incomes above the income limit. It is clearly right to concentrate the benefits of the age allowance on elderly people with relatively modest incomes, but we received a number of representations from hon. Members calling for a reduction in the marginal tax rate faced by those with incomes in the withdrawal band. I am pleased that the Budget met these concerns, which were expressed forcibly by hon. Members—among others—in Committee on last year's Finance Bill.
  These changes ensure that pensioners keep more of their own money. They also build on what is already an impressive increase in pensioners' incomes. Between 1979 and 1986, the average net incomes of pensioners increased by 23 per cent. in real terms. By contrast, despite the concern I know exists among Opposition Members, pensioners had an increase of only 3 per cent. in the years of the Labour Government between 1974 and 1979.
  The Budget has been hailed as a Budget for the elderly —[Interruption.]—a view endorsed by the director general of Help the Aged in a recent letter, which I will quote for the benefit of Opposition Members. He wrote:
  "I thought you would appreciate hearing how much we applaud the actions you have taken in your Budget to help pensioners. We are especially pleased at the abolition of the age related earnings rule and are grateful too for the changes you have made in VAT regulations in connection with charities. This will be of considerable assistance to us in our efforts to help elderly people, both in this country and overseas."
  That letter was from Mr. John Mayo—[Interruption.]—and I read the whole of the letter.
  This Bill contains one other measure to help the elderly. Clauses 51 to 54 will give tax relief for private medical insurance premiums for the over-60s. Unlike Opposition Members, I do not want to endow this measure with a false importance. It accounts for just 1 per cent. of the tax reductions announced in the Budget. It addresses a very real problem, and I make no apology for the measure, for I fully support it.
  In recent years, employers' health insurance schemes have expanded rapidly, and I welcome that. It is attractive to see independence and choice increasing, and I regret that Opposition Members are hostile to that. It is largely due to such schemes that some 50 per cent. more people are covered by medical insurance schemes today than in 1980. But membership of these schemes usually ends on
  820
  retirement. People are then faced with a double increase in costs: not only do their employers cease to pay their premiums, but the premiums tend to rise at precisely the moment when people's incomes fall.
  We have had a large number of representations over the years from people caught in this trap who did not think it was fair that they should suffer this double penalty. I agree with them, and the relief is designed to deal with that specific problem. It also encourages the overall provision of health care and investment in it, and thus eases the demands in that fashion on the NHS.
  Indeed, in a curious way, the greater the take-up of this relief, the more that effect will be apparent. In particular, pressure on waiting lists will be eased, which will benefit all of us who continue to depend overwhelmingly on the NHS for medical treatment. Even non-taxpayers will benefit because they, too, will pay their premiums net of tax relief.
  The medical insurance industry has begun to introduce policies which are aimed at those who cannot afford, or do not want to take out, more expensive cover. Some of the policies are intended specifically for people in retirement, and I welcome that extension of choice for them.
  Although this measure is important, it needs to be seen in perspective. Our public expenditure plans mean that, overall, the NHS will have an extra £2,500 million in 1989–90, and a further £2,500 million in 1990–91—a total of £5 billion—before resources for it are reconsidered in subsequent public expenditure rounds. The cost of tax relief is nothing in 1989–90 and £40 million in 1990–91—less than 2 per cent. of the increase in planned spending on the NHS. I must say to the Opposition in all charity that if they have chosen to target their attack on the Budget on this measure, it serves simply to underline how little they find to criticise both in the Budget and the Bill.
  Mr. John Battle: Can the Chief Secretary tell the House why the Secretary of State for Health and the Minister of State for Health welcomed the measure in lukewarm fashion, saying that, at best, it was an interesting detail in the Bill, and, at worst, would damage attempts to sell the White Paper on health about which the Government are struggling to convince the country?
  Mr. Major: It is within my knowledge that both my right hon. and learned Friend and my hon. and learned Friend strongly support this measure. There is no doubt about that.
  A dominant feature of the Bill is the improvement of the taxation of savings. It contains a series of measures to increase and deepen the ownership of shares, especially by employees and smaller investors. In the post-war period up to 1979, there was one clear trend in the composition of personal savings and that was the dramatic decline in direct share ownership. In 1957, shares and unit trusts accounted for around 20 per cent. of personal sector wealth. By 1979, their proportion had fallen to 8 per cent. That decline had nothing to do with the pre-tax return on equities because, historically, they have tended to out-perform other savings instruments. But it had a great deal to do with the post-tax return that investors received on their investments.
  In contrast to saving through large tax relieved institutions, such as occupational pension schemes, direct equity investment subjected the saver to a range of punitive taxes. A top rate of tax of 83 per cent., combined with an investment income surcharge of 15 per cent.,

  821
  meant that direct investors in equities could receive as little as 2p in the pound of dividend income. On top of that, they were taxed not only on real capital gains, which I am afraid were few and far between from 1974 to 1979, but also on inflationary gains, which were in considerably more plentiful supply. If the investor wanted to hand on his shares to his children, he was subject to yet another confiscatory tax in the form of capital transfer tax, where rates could be as high as 75 per cent. It is hardly surprising that direct share ownership went out of fashion in the 1970s; the only surprising thing is that it survived at all. Since 1979, my right hon. Friend and his predecessor have given share ownership a dramatic boost.
  The trend has changed— I hope irreversibly. Shares and unit trusts now account for a growing share of personal wealth. Moreover, share ownership has widened dramatically. There are now 9 million shareholders. That represents 20 per cent. of the adult population, compared to only 7 per cent. in 1979. That has come about partly through a programme of privatisation which has proved immensely successful and which will continue in this Parliament and the next. But even more important for the longer term has been the creation of a more sensible tax system. Now that no tax rate is higher than 40 per cent., investing in shares is again a worthwhile proposition.
  We believe that it is right to go further to promote private saving through equity investment. Direct share ownership must be allowed to compete with institutional saving. That is why my right hon. Friend introduced personal equity plans in 1986 and further improved them in the Budget. The increase in the overall investment limit from £3,000 to £4,800 and in the unit trust and investment trust limit from at best £750 to £2,400 will give PEPs an additional impetus. Unit and investment trusts allow investors to spread risk and are a good introduction to equity investment for the small saver. Along with the important PEP deregulation measures announced by my right hon. Friend, the changes have been widely welcomed. More plan managers are setting up plans and a number of new products are being marketed. As the chairman of the Unit Trust Association has said:
  "PEPs should now be the major success that for investors they deserve to be."
  We all look forward to that.
  Employee share schemes are specifically designed to encourage direct share ownership by workers in their own companies. As such, I know that such schemes have supporters in each and every part of the House. They have the particular advantage of giving employees a direct stake in the company that they work for, and have been an important factor in breaking down the "them and us" mentality which pervaded British industrial relations, resulting in great damage, in the 1960s and 1970s. That mentality is going, and good riddance to it. The sooner it is gone, the better. The House will know of the success of all-employee share schemes, 1,600 of which have been approved to date against only 30 in 1979. Clauses 59 to 62 are designed to give them added impetus by increasing the limits for relief and relaxing the material interest rules.
  Employee share ownership plans, known generically as ESOPs, provide an alternative means of encouraging employee ownership. Clauses 64 to 71 and schedule 5 provide a statutory basis for tax relief for company contributions to those plans. For some companies they
  822
  offer more flexibility than normal all-employee share schemes. The point is that ESOP trusts can borrow to acquire shares rather than relying entirely on funds provided by the company. That enables a substantial number of shares to be held in trust for longer-term distribution to employees. Those clauses ensure that payments by a company to an ESOP trust, set up to acquire and distribute shares to its employees, will qualify for corporation tax relief, provided that certain qualifying conditions are met.
  The most important of those conditions is that the shares must be distributed to employees within a maximum of seven years of their acquisition by the trust, and on an all-employee, similar terms, basis. ESOPs have a number of enthusiastic supporters on both sides of the House, and I am sure that those clauses will be welcomed. As the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said on Second Reading of the Finance Bill three years ago:
  "I wish to make it clear that I support genuine extensions of share ownership schemes which enable and encourage employees to acquire stakes in their companies. The schemes that I want would carry voting rights proper to share ownership, and would be available to all company employees".—[Official Report, 29 April 1986; Vol. 96, c. 819.]
  I hope that the right hon. Gentleman will use his voting rights to support this measure because I agree with what he said three years ago and it is contained in this Bill.
  The changes to the taxation of pension schemes set out in clauses 72 to 74 complement the wider share ownership measures. They will increase pensions choice and encourage greater personal responsibility for pension provision. They will also deregulate an area of savings which has become excessively and undesirably circumscribed by Inland Revenue rules.
  The Government's record on improving private pension provision has been substantial over recent years. We have introduced personal pensions and free-standing additional voluntary contributions. We have made it easier for employees to contract out of the state scheme if they wish to do so, and we have improved the rights of scheme members, in particular those of early leavers.
  Those clauses build on that record. The rules for additional voluntary contributions, or AVCs, will be greatly simplified, reducing the administrative burden on employers' schemes; and the anomaly whereby successful investment performance of the AVC led to a reduction in the employee's occupational pension will be ended. In future, excess AVC funds will be returned to the employee subject only to a special tax charge.
  Ending the link between Inland Revenue limits and the maximum pension payable by employers also makes the pensions regime more flexible. Employees and employers will now be free to negotiate whatever pension package they jointly think is appropriate. Inland Revenue rules will no longer constrain the size of the pension, only the extent of the tax relief.
  The cap on tax privileged pension benefits completes the changes begun by my right hon. Friend the Chancellor in 1987. Based on earnings of £60,000, the cap has been pitched at a generous level. It will still be possible to receive a privileged pension of £40,000 a year, or, where benefits are commuted, a maximum tax-free lump sum of £90,000. Moreover, the limit will be indexed annually to prices. The transitional arrangements are equally generous. Only new

  823
  schemes and new members of the existing schemes will be subject to the cap on benefits. Most ordinary scheme members will simply not be affected.
  I believe that a cap is necessary. Although we are committed to widening private pension provision, that should not he at an ever-increasing cost to the majority of taxpayers who do not receive such large pensions themselves. There is a limit beyond which tax-privileged saving is unfair and crowds out other ordinary saving. Other tax reliefs are subject to monetary limits, and it is time the tax relief for pensions was put on a similar basis.
  These changes have also provided an opportunity to redress the balance between occupational and personal pension schemes. Many members of personal pension schemes start contributing late in life, for reasons well understood in the House. They have no access to the accelerated accrual available in the best final salary schemes, and often have lower pensions in retirement as a result. Although tax-relieved contributions to personal pension schemes will be subject to an annual cash limit, we also propose that the limit on contributions be raised as a percentage of earnings for those aged 36 and over.
  To take the example of someone aged 56, under the old rules he received relief on contributions up to 22·5 per cent. of his earnings; under the new rules he will receive relief up to 35 per cent. of his earnings. This change will give a further boost to personal pensions and will be of special value to those who, in their earlier working life, need to plough back every penny available into building up their business. On Budget day, my right hon. Friend the Chancellor reported that more than 1 million people had taken out personal pensions by the end of 1988. I am pleased to tell the House that that number has risen to 1·5 million.
  The Bill also contains important measures for business. In his first Budget my right hon. Friend introduced a major reform and simplification of corporation tax which enabled the main corporation tax rate to be reduced to 35 per cent., one of the lowest in the industrial world. That low rate, together with the removal of the old bias against employment inherent in the old system, has made a significant contribution to rapid economic growth, employment growth and the high investment that we have seen in recent years.
  Of no less importance was the reduction in the small company corporation tax rate from 42 per cent. in 1978–79 to 25 per cent. today. It is now right to extend the benefits of that rate to more companies. Clause 33 therefore raises the profit limit by 50 per cent., far more than was required to keep pace with inflation. That measure will enable firms to make profits of up to £750,000 a year before paying the average rate of 35 per cent.
  Mr. Dennis Skinner: In this and in other Budgets in recent years, many in the Government would argue that they have given large sums of money through taxation relief to the top salaried people. The last set of figures shows that the salaries of company directors have increased by 26 per cent. Does the right hon. Gentleman take the view that those company directors who have been fed pretty well by the Government in the past few years are perhaps biting the hand that feeds them? What has the right hon. Gentleman to say about the 26 per cent. increase when low-paid workers are being packed off with increases of 4, 5 or 6 per cent.?
  Mr. Major: We have made significant changes in taxation affecting people at all levels of income and not just those on high incomes. The basic rate of taxation, which affects all the 20-odd million people at work, has been reduced from 33 per cent. to 25 per cent. The hon. Gentleman will know—perhaps in view of what he has just said he will support it—that it remains our objective to reduce that as soon as we prudently can from 25 per cent. to 20 per cent. I am pleased that he thinks that that is a desirable objective. I hope that he carries the support of his colleagues.
  Mr. Gordon Brown: Will the Chief Secretary confirm that the very people who have been calling for wage restraint from the workers have seen their standard of living rise, after tax, by 26 per cent. in the last year? Is he aware that, according to the British Institute of Management, the standard of living of senior directors has risen by 47 per cent. in a year and that, according to another study, the standard of living of those on unearned income has risen by 87 per cent. in one year alone? Will he condemn those rises?
  Mr. Major: The hon. Gentleman should bear in mind that payments to directors of companies are not a matter specifically for the Government. Taxation rates are legitimately a matter for the Government to determine. Incomes are not directly under the control of the Government. I have no intention of responding in detail and directly at the Dispatch Box on each of those points.
  Mr. Neil Hamilton: Does my right hon. Friend agree that that little exchange shows with the greatest possible clarity the difference between the Opposition and we on this side of the House on taxation? Opposition Members see taxation as a fine on success regardless of whether it brings more money to the Treasury. The decrease in taxation rates on higher levels of income has increased the amount of money brought into the Treasury, which is then available for redistribution to those on lower incomes.
  Mr. Major: My hon. Friend is entirely correct in what he says about the tax yield. It is equally true to say that under the management and guidance of the people criticised by the hon. Member for Bolsover (Mr. Skinner) there has been a dramatic increase in investment, employment, the profitability of companies and the general well-being of people in this country. We see tax changes, at both the upper and the lower level, as supply-side measures, and they have proved to be so over recent years.
  Mr. James Lamond: What my constituents in Oldham cannot understand is that, in the midst of this success story which the Minister has just told us about, last year, when they went on holiday to Spain, they got 202 pesetas for their pound, while this year they are getting only 192·5 pesetas. Does that reflect a strengthening of our economy?
  Mr. Major: What the hon. Gentleman misses out of that interesting illustration is how many more of his constituents have been able over the past 10 years to afford to go abroad as a result of the policies of this Government.
  Returning to the necessary, if perhaps esoteric, area of small companies corporation tax from which I was unruly ripped, I was about—
  Mr. Nigel Griffiths: Untimely.
  Mr. Major: I am grateful for that Shakespearian memory. "Untimely ripped" is the correct quotation from "Macbeth", appropriately coming to me from a Scottish Member.
  The measure in clause 33 will enable firms to make profits, as I reminded the House a few moments ago, of up to £750,000 before paying an average rate of 35 per cent. What is relevant about this is that it strengthens once again Britain's claim to have the most favourable tax regime in Europe for small companies and it has been very widely welcomed by business men and managers, who, as the director general of the British Institute of Management wisely said—and the Opposition should listen to this—
  "prefer stability and good sense to histrionics."
  How wise the director general was.
  A substantial chunk of the Bill will complete the reform of the administrative framework for the main taxes, which began with the setting up of the Keith committee in 1980. Clauses 138 to 165 simplify and update the system of interest and penalties for tax offences and revise the information powers of the Revenue. They will help to ensure that the operation of the tax system is effective and efficient, while at the same time remaining fair and just. They are the product of an almost unprecedented degree of consultation on tax matters and have been widely welcomed in responses as achieving a proper balance between the rights and obligations of the taxpayer and between the powers of the Revenue and safeguards for the citizen.
  Clauses 17 to 21 implement last June's judgment of the European Court on VAT zero rating. As my right hon. Friend said in his Budget statement, we have made every effort to minimise the unwelcome burden of tax that we have been obliged to impose on businesses and, more especially, charities. Again, we have consulted widely with those who will be affected; indeed, consultation began on a contingency basis even before the judgment was given. I am glad to say that my right hon. Friend was able to meet their main proposals for minimising the judgment's impact. We have delayed implementation for as long as is possible and the transitional arrangements are said to be and are generous.
  One of our main concerns has been the effect of the judgment on charities. We have managed to ensure that for their basic non-business activities charities will continue to benefit from zero-rated construction services and fuel and power. Homes for children, the elderly and the disabled will continue to be zero rated. In addition, charities will be relieved from VAT on fund-raising events, classified advertising and sterilising equipment for medical use. These measures have met with the approval of many charities. As a Royal National Lifeboat Institution spokesman put it:
  "We stage all sorts of fund-raising events where the admission charge carries VAT. It will mean a good few thousand saved for our coffers."
  I certainly hope so.
  Mr. Robert Sheldon: The right hon. Gentleman has been speaking for more than half an hour in dealing with the details of the Finance Bill much more fully than is normal on Second Reading. When will he turn to the critical report of the Treasury and Civil Service Committee?
  Mr. Major: The right hon. Gentleman is entirely correct in saying that I have been speaking for half an hour, but a considerable part of that time has been taken up by interventions. He says that I am dealing in detail with the Finance Bill. That is what we are discussing, and it is a courtesy to the House to deal with what we are discussing.
  There are a number of other provisions in the Bill which will benefit charities. Clause 25 exempts from car tax vehicles leased to the disabled. This will reduce the cost of each car by £400 and it has been widely welcomed. I quote from the deputy chairman of Motability:
  "Without doubt this measure will help to enhance mobility for disabled people, especially those with very limited resources."
  As a former Minister of State for the disabled, this gives me particular pleasure.
  The best way to help charities is to encourage people to contribute to them. In recent years in budgetary measures we have improved relief for charitable covenants, introduced relief for companies making one-off donations and, most recently, introduced relief for payroll giving.
  The response has been encouraging. Between 1978–79 and 1987–88 covenanted giving to charities grew by 140 per cent. in real terms. Payroll giving has also grown steadily since its introduction in 1987. There are now over 3,600 schemes in operation covering 100,000 participants. Clause 55 gives a further encouragement to this form of charitable giving by doubling the limit for relief. I am delighted that this measure has met with considerable approval among charities. It also shows that tax reductions and growing net incomes have increased charitable giving and that we are by no means the selfish and materialistic society that the Opposition sometimes claim.
  Finally, and perversely, I would like to draw Members' attention to clause 1. This contains the measures designed to promote unleaded petrol, which have met with universal approval.
  Despite the growing availability of unleaded petrol, its lower price and clear environmental benefits, at the time of the Budget it still accounted for only around 5 per cent. of petrol sales. That was, frankly, extremely disappointing and it prompted my right hon. Friend to try a new approach. He made it clear that he expected the full tax reduction of 3·6p a gallon on unleaded to be passed on to consumers. This has happened. The price differential at the pumps between four-star and unleaded is now generally between 9p and 10p per gallon compared with 6p before the Budget. Furthermore, the increase in duty on two and three-star has raised prices to at least the level of four-star, leading to a reduction in the market for these two grades and creating more capacity for unleaded.
  All the signs are that those changes are having the desired effect. The proportion of garages now selling unleaded petrol is close to 40 per cent. and is expected to top 50 per cent. by mid year. I hope and expect that that will increase still further. The onus is now firmly on individual motorists—be they two, three or four-star users —to ensure that, where they can, they switch soon to the cleaner fuel. I hope that they will do that.
  The Bill contains a series of measures to improve the taxation of savings, to widen share ownership, and to help small businesses. It will simplify and modernise the administration of the tax system. It underpins the continued strength of our public finances, takes forward

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  our programme of tax reform, and improves the supply performance of the economy. It is a Bill well worthy of support, and I commend it to the House.
  5 pm
  Mr. Gordon Brown: We welcome some of the measures contained in the Finance Bill as explained in what I suppose the press may call a less than robust defence of the Chancellor's policies by the Chief Secretary to the Treasury.
  We welcome and will support the improvement in the age addition for pensioners and the change in the earnings rule for pensioners. We welcome and will support the differential in unleaded petrol, although many of us believe that the Chancellor could have gone further in that. We welcome and will support, with regard to the Chancellor and the Bill, the changes in the management of the Inland Revenue recommended by the Keith committee. Although we do not believe that they go far enough, we will welcome the changes in national insurance set out in the Social Security Bill.
  However, we cannot support a Finance Bill, an economic strategy and a Budget which has done little for the vast majority of people throughout the country and which will do nothing to tackle the underlying weaknesses of the British economy.
  Ten days ago inflation crept up to 7·9 per cent. when at this time last year it was half as much at 3·9 per cent. Tomorrow, even if the best hopes of the Chancellor are realised, we will still be running the worst trade deficit in our history and certainly a worse trade debt than our European competitors.
  Ten months after interest rates began rising, home owners could be excused for hoping that it was time that they came down. However, once again they fear that interest rates are in danger of rising, even when interest rates are 5 per cent. in Japan, 6·5 per cent. in Germany, 10 per cent. in America, but are already 13 per cent. in Britain.
  Interest rates have been at 13 per cent. for five months and they have been above 10 per cent for nine months. Inflation has been rising for 13 months in a row. The balance of payments deficit has been worsening for just about all the time that this Chancellor has been in office. As a result of the need to finance that deficit, the high interest rates have meant that 9 million mortgage holders have had to pay on average an extra £40 a month in mortgage repayments.
  In the face of all that, people will want to know why, after 10 years of this Government, after 10 years of North sea oil revenues when the Government have received £76 billion in tax returns from the North sea, we are going to end this decade with the highest inflation, the highest interest rates and the worst trade deficit of our major competitors. Is it not therefore surprising that the Treasury and Civil Service Committee, whose report I will mention even if the Chief Secretary to the Treasury would not, said that the Chancellor is walking on a tightrope? Is it not also surprising that almost all the expert evidence which the Committee has been able to assemble has been critical of the Chancellor's policies? I commend the Chairman and his Committee for doing such a thorough job in examining the economy.
  Is it surprising that at least one Cabinet Minister has deigned to come above board and criticise the full thrust
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  of the Chancellor's policies when referring to the Chancellor's high interest rate strategy and the impossibility of one simplistic economic dogma solving a nation's economic problems? The Secretary of State for Wales called for regional and industrial investment and expressed his fears about what is happening in the economy at the moment. He said:
  "Capitalism could be severely damaged if we continue a system where currency exchange rates fast fluctuate as a result of the decisions not of Governments or of major industrialists but of those who command the vast flows of hot money circulating throughout the world."
  The Chancellor has brought us to that as a result of his policies.
  Perhaps the most astonishing criticism among the growing criticisms of the Chancellor was that made in a recent speech by the director general of the Confederation of British Industry, Mr. John Banham—[Interruption.] The Chancellor may laugh at Mr. Banham, hut Mr. Banham may read the report of our debate in Hansard.
  Mr. Banham compared Britain in the 1980s, not, as the Chancellor does, with Japan in the 1980s, but with Britain in the 1930s. He said that the Chancellor's policies reminded him of Churchill's phrase about the 1930s—the "locust years." He questioned whether the "locust years" was a term which could be applied to the 1980s. He questioned also whether we are in danger of making the same terrible mistakes today and being guilty of the same short-termism for which we have rightly criticised Chamberlain and Baldwin.
  Mr. Tim Boswell: Did the hon. Gentleman also notice that John Banham is quoted in the CBI's house journal as saying that this Budget is a
  "cautious responsible budget with some useful measures for business which will help smaller companies in particular."?
  How is that consistent with the slashing attack which he has recently given?
  Mr. Brown: Mr. Banham was referring to the kind of measures which we have welcomed. Mr. Banham, in his speech of 16 March, criticised the Government for bringing us to a position where the 1980s may be the "locust years."
  Mr. Banham has been even more critical of the Government's record on inflation. He blamed the Government for water and electricity price rises as being the single most important factor in pushing up inflation. He said that the Government are creating inflation in a way which will postpone vital investment which could deal with the underlying causes of inflation. The hon. Member for Daventry (Mr. Boswell) cannot look for much comfort in Mr. Banham's comments. He should reflect on the remarks by the CBI. He should also consider the results of surveys like that carried out in Scotland which showed that investment intentions are now the worst for 18 months and that there are worries that manufacturing employment may fall.
  Mr. Tim Yeo: Will the hon. Gentleman give way?
  Mr. Brown: No, I want to proceed.
  We have the highest interest rates of our competitors, the highest inflation rate and the worst trade deficit in our history. I believe it was the Chairman of the Treasury and Civil Service Committee who first said in November that

  829
  the jury was out on the Chancellor. That was almost six months ago. Three weks ago the Governor of the Bank of England said that the jury was still out.
  The jury has been out for a long time now. It has been out so long that the Chancellor has had the benefit of one of the longest trials in recent experience and undoubtedly, for the nation, one of the most expensive. It is about time that the jury returned. Is the verdict not now overdue? Perhaps the verdict on the Chancellor's performamce will be delivered in the expected Cabinet reshuffle. Perhaps the best that he can hope for is leniency and that he may get off with a suspended sentence or probation under the personal supervision of Sir Alan Walters, who is due to provide what he calls his "independent advice" on 1 May.
  Inflation is twice what it was a year ago and twice what it was when the Chancellor took office and pledged to eliminate it. It is 7·9 per cent. in Britain, 1·4 per cent. in Japan and 2·6 per cent. in Germany. Despite the freezing of excise duties, which will prevent the rate rising by 0·5 per cent., the inflation figures have yet to show the nine price rises that came in the first weeks of April, for most of which the Chancellor was directly responsible. Those include the 7 per cent. rise in electricity, 3 per cent. rise in gas, 10 per cent. to 30 per cent. rise in water, rate and rents, prescription charge rises, television licence fee rises, the new health charges and the petrol price rises, about which the Chancellor has been strangely silent when faced with the behaviour of oil companies as they push up petrol prices.
  Perhaps the Chief Secretary regrets saying in the Second Reading debate last year:
  "What is vital, and unusual for post-war recoveries … is that this … sustained growth in the economy has been achieved without a resurgence of inflation."—[Official Report, 26 April 1988; Vol. 132, col. 215.]
  The tragedy is that the inflation that he did not forecast is the inflation that he and his Ministers caused. Last July—
  Mr. George Walden: The hon. Gentleman paints a bleak picture of the British economy. If, for the sake of argument, one accepts his analysis, will not the position grow even worse than he describes it if higher-than-inflation wage settlements are reached? What would the hon. Gentleman advise those unions seeking higher-than-inflation wage settlements?
  Mr. Brown: The hon. Gentleman is joining me in criticising the 26 per cent. post-tax rises for directors and the 47 per cent. rises to senior directors. I shall tell the hon. Gentleman how the Chancellor could begin to tackle inflation. He could postpone the electricity and water price rises, imposed for one purpose only—to fatten up the industries for privatisation. When the hon. Gentleman looks at the figures, I think that he will agree with me and others that the Government have been responsible for most of the inflation from which we now suffer.
  Mr. Keith Mans: The hon. Gentleman mentioned rate rises. Does he agree that the majority of rate rises have been due to Labour councils?
  Mr. Brown: The hon. Gentleman shows a strange misunderstanding of what has been happening to central Government expenditure in relation to local authorities. Over the past 10 years the Government have not only cut
  830
  their contribution but cut their proportionate contribution to local authorities so that rates have been forced up for those local authorities trying to maintain services. In Scotland, we now have the final result—the poll tax, which is basically a flat rate charge, and is being imposed against the wishes of the vast majority of people in Scotland.
  Our case against the Chancellor and the Government is not merely that we have the highest inflation and interest rates, and the worst trade deficit, or that we have returned to stop-go economics even before North sea oil has run out. It is not only, although this is bad enough, that the Chancellor's solution to the problem—creating high interest rates and by discouraging investment—is part of the problem rather than the solution. Our case against the Chancellor is more than that. It is that, having made all these mistakes by engineering a consumer boom that was not properly backed up by adequate investment, he has no greater desire in life than to keep his job and to repeat them at a later stage.
  Mr. Yeo rose—
  Mr. Brown: I shall not give way.
  Having engineered a consumer boom that was preceded by high interest rates, and having used for tax cuts resources that should have been used for investment, the Chancellor intends to engineer another pre-election boom, preceded by the present high interest rates, which are so damaging to investment. He will use the Budget surplus not for investment in our future, but for tax cuts. That is the mistake that the Chancellor makes when planning the long-term future of the economy. The result is—
  Mr. Yeo rose—
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. The hon. Gentleman has made it clear that he is not giving way.
  Mr. Brown: The result is that we end the 1980s in the astonishing position in which household consumption has increased by 30 per cent. during the past 10 years, but industrial production has increased by only 10·5 per cent. The obvious result is that imports have had to increase by 50 per cent., giving the trade deficit that is causing all the problems that the Chancellor will sooner or later have to face.
  Even more astonishing is the fact that in the past 10 years manufacturing production has risen by only 8 per cent., while manufacturing imports have risen by about 100 per cent. That is the position to which the Chancellor's policies have brought us. The problems are due to the neglect of investment over a long period, the inability to prepare our industry for the future. We face the 1990s and the harsher marketplace of 1992 with the worst trade deficit in our history and a Chancellor who has no policy for sorting it out.
  Our complaint against the Chancellor does not stop there. Even when he has a Budget which he claims will help the low paid, he ends up, as usual, helping the higher paid. National insurance changes mean that there is nothing for anyone earning less than £43 a week. There are about two million people in that position. There is £1·50 less in some cases, far less than £1·50 a week for those earning less than £115 a week. None of that will be paid until October, whereas the Chancellor was very keen to give his top-rate tax cuts of last April in April. The figures show that those at the top benefit far more than those at the bottom.

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  The Budget was not one for low income Britain, but one which compounds last year's errors by giving most to upper income Britain. It does not do anything for people faced with high mortgage repayments, many of whom as a result of building society decisions saw their mortgage rates rise on April 1, on the annual basis used by companies such as the Halifax building society.
  In a lecture, the Governor of' the Bank of England said that it was unlikely that last year's experience with mortgage arrears would be sustained. He said that building societies were already reporting an increase in short-term arrears and that the full impact of higher mortgage rates was yet to be felt. Last year, for the basic rate taxpayers, those who are home owners, tax cuts amounted to about £1·5 billion in a full year, but the mortgage rises for that period would be about £4·5 billion. For 118 out of the 120 months of the Chancellor's period in office, mortgage rates have been above 10 per cent. As we work out the figures, we realise that for the vast majority of home owners the tax cuts have already been clawed back by the mortgage rises and the vast majority of people are already worse off and suffering a deterioration in their standard of living as a result.
  What do the Government say about this? Far from helping home owners or the majority of pensioners—although we welcome the changes in the earnings rule and age addition—and far from unfreezing child benefit, about which there was a debate last night in which the Government took a hard line, the Finance Bill gives far more to those who have than to the majority of people who have not. It seems that the Chancellor is not content with the £2 billion that he gave to the top 1 per cent. in last year's Finance Bill, the £26 billion that he has given over 10 years, the £10,000 each that those in the top 1 per cent. have received each year, or the £100,000 that he has given cumulatively in tax cuts to the typical person who falls within the top 1 per cent.
  The Finance Bill contains a series of changes which can only be said to raise the incomes of those who are already rich, without doing anything for those on low incomes. The changes in inheritance tax will cost £35 million but will cover only 39,000 taxpayers. There are changes in capital gains tax, from which any personal possession that is sold off and is worth up to £6,000 is exempt. The Government have closed the obvious and glaring loophole in closed company tax relief in relation to the business expansion scheme, but have not made the change retrospective although they have been aware of the abuse for some time. They have not dealt with the fundamental flaws of the business expansion scheme, which provides rented housing at a far greater cost than if local authorities or housing associations were given the same money to build.
  We shall support the Government's attempts to implement the recommendationss of the Keith committee. We regret that they have not faced up to a number of its recommendations, such as the power of entry and inspection of business records in respect of transfer pricing. We might have expected them to act on the taxation of non-residents as well, especially after the Treasury paper issued last summer which said that the current loopholes
  "encourage the setting up of arrangements overseas which can be more or less artificial."
  There is nothing of substance in the Bill to deal with that abuse, and we shall press the point in Committee.
  832
  What justification have the Government for failing to sign the OECD agreement on an international campaign to clamp down on tax evasion?
  The Financial Secretary to the Treasury (Mr. Norman Lamont): Can the hon. Gentleman name any country that has signed?
  Mr. Brown: A number of countries are very concerned that the agreement be signed. Why has Britain refused to sign it? Why have the Government given us the explanation that they are doing quite enough about lax evasion already, when all the available evidence suggests that massive evasion on an international scale is taking place and is not being properly dealt with, and that international agreements are required for it to be so dealt with? When that matter is raised in Committee, I believe that the Economic Secretary will be persuaded of the need for further action.
  Another proposal that the Chief Secretary said had achieved a false importance in debates on the Budget and the Finance Bill is the proposal for private medical insurance. We shall, of course, discuss that at length later, as we are entirely opposed to the relevant clause. Last week the Treasury issued an explanatory memorandum, although the regulations which are vital to an understanding of how the scheme will work have yet to be issued in full. The Treasury said that the test for private medical insurance was that the £40 million or more—we believe that it is more—would
  "relieve pressure on the National Health Service".
  I will tell the Minister the best way of relieving pressure on the National Health Service—give the money to the National Health Service. Is it not clear that the best way of providing health care for anyone is to provide it for everyone? That is the proper way in which to use the available resources.
  We shall debate all these matters in Committee, both upstairs and on the Floor of the House. It is interesting to note, however, that this Finance Bill ends a 10-year period under the present Government in which Ministers have claimed that there has been an economic miracle and an industrial resurgence, and that Britain has been transformed by their policies. The Chief Secretary started to say that earlier this afternoon.
  What sort of economic miracle is this? Despite all our revenues, the growth rate of the British economy has been only 2 per cent. a year in the 10 years since 1979, half that of Japan. It has been 2·5 per cent. in Italy, 2·5 per cent. in the OECD countries as a whole, 2·7 per cent. in America and 4 per cent. in Japan. What sort of economic miracle is it when manufacturing output has grown by 1 per cent. a year in Germany, by 1·5 per cent. a year in Italy, by 2·5 per cent. a year in America, by 4 per cent. a year in Japan and by 2·2 per cent. a year in the OECD countries, but by only 0·8 per cent. a year in the country that the Chancellor claims is hosting an economic miracle? What sort of miracle is it when exports have increased by 3 per cent. in Italy, by 4 per cent. in Germany, by 5 per cent. in America and by 7 per cent. in Japan, but by only 2·8 per cent. in Britain?
  On all those indicators, Britain is not leading the world; it is very near the bottom of the table—and the reason is that the policies of the Chancellor and his predecessors have been wrong.
  Yesterday the Government voted to freeze child benefit for 7 million mothers and 12 million children. In the past

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  few weeks, half a million pensioners and others on benefit have been denied any uprating at all. This month, destitute teenagers who have already lost their unemployment benefit are now losing many of their housing benefits. Pensioners faced with price rises that are way above their pension rises are seeing their living standards fall.
  On top of that, this month has brought the new health charges. We have already experienced housing benefit cuts, and, in Scotland, the imposition of the poll tax. Yet at the same time—as the British Institute of Management confirmed yesterday, and as was pointed out by my hon. Friend the Member for Bolsover (Mr. Skinner)—huge windfall bonuses have been paid to people who are already rich as a result of tax changes made last year which the Government have been prepared to maintain this year.
  For directors the average pay rise, with the tax cut included, has been 26 per cent. According to the survey, the increase for those in the senior directors' grade has been 47 per cent. For those with unearned income—the top 1 per cent.—it has been 86 per cent. I can think of no occasion in this century when the living standards of pensioners and others on fixed benefits have fallen at the same time as there has been such a huge and disproportionate increase in the benefits of those at the very top.
  In this Finance Bill, the Chancellor had a unique opportunity to correct last year's errors and to introduce a truly radical element into Tory Budget policy—fairness. By failing to apply that test the Bill compounds rather than corrects those errors, which is why we shall vote against it this evening.
  5.26 pm
  Mr. Terence Higgins: On Second Reading of the Finance Bill, every Chief Secretary faces the dilemma of whether to be extraordinarily dull by going through every single clause or whether to be highly controversial. Given the experience of my right hon. Friend's predecessor, who tried the second course, I well understand why he thought it right this afternoon to take a more balanced approach.
  None the less, my right hon. Friend did not resort entirely to going through the Bill from clause 1 to the end. He made a number of points at the beginning with which I certainly agree. He was right to stress that the Bill is of substantial importance to the elderly, and also to point out the extent to which the Government have succeeded in repaying the national debt, and the scope that that will provide in future years in relation to taxation or public expenditure on priority items.
  I do not wish this afternoon to concentrate on the details of the Bill. Let me just say in passing, in reply to the points that my right hon. Friend stressed about investment in equities and shares, that it is important to strike a balance between them and more institutional forms of saving.
  This is a mammoth Finance Bill, with 250 pages. The Select Committee on Procedure, which I chaired some years ago, considered whether we should have a separate tax Bill—perhaps in the autumn—which would be dealt with at a more leisurely pace than is necessary under the Provisional Collection of Taxes Act 1968. We must consider carefully whether it will be possible for any
  834
  Standing Committee to give the Bill the attention that it needs if our financial legislation is to be properly scrutinised.
  The report of the Select Committee on the Treasury and Civil Service is based on evidence given to us by the Chancellor, the Governor of the Bank of England and officials. It is undoubtedly the case that the evidence we now get subjects the Chancellor, the governor and officials to far more intensive scrutiny than was ever the case. That is an advantage for this House when it comes to consider matters connected with this Bill.
  The Select Committee report is unanimous. It brings out the various problems inevitably being faced at present. The report also draws attention to matters affecting the origin of the present financial situation. The hon. Member for Dunfermline, East (Mr. Brown) referred to the remarks made by Mr. Banham about the 1930s. We must be clear that many of the present problems are the direct result, as the Chief Secretary pointed out, of action taken by the Chancellor in conjunction with other Finance Ministers, with virtually unanimous support—with the exception of perhaps one of my hon. Friends—to prevent a world slump of the 1930s type after the stock exchange crash in autumn 1987. As we make it clear in paragraph 11 of the Select Committee report—and we quote the Chancellor and the governor·mistakes were made at that point in relation to monetary policy. In a way, we are now suffering a hangover from the stimulus which was given to the economy in 1987, for the reasons that I have explained. In that context, hon. Members must appreciate the point stressed by the Select Committee again and again, that the statistical basis on which the Government and, indeed, Parliament are taking decisions is seriously defective. I welcome the fact that an inquiry has been conducted and that the Government have responded, but the statistical situation must be improved, otherwise inevitably mistakes of the kind recorded in the Select Committee's report will be made.
  It is also important to appreciate the speed with which the economy accelerated following the stimulus given to it. As the Select Committee's report points out, the Government and the House are now on a tightrope, with a real danger on either side. On the one hand, if the measures the Chancellor has taken on interest rates have a rapid and too dramatic effect the country could fall into recession. On the other hand, if those measures take too long to produce an effect, confidence in sterling will weaken, and the decline in the value of sterling will generate inflationary pressures. The essence of the problem, as the report makes clear, is essentially one of timing. The dilemma is that we do not know at what rate the increase in the interest rate will actually have effect. As the report makes clear, this situation is likely largely to affect those who have mortgages, having borrowed on an appreciation of house prices. Therefore, there is a lagged effect. It is important that the Chancellor should therefore seek to maintain the balance that he is presently achieving. He should take appropriate action as the occasion arises.
  We need to ensure that we do not rush hastily into other measures that push the economy on one side or the other of the tightrope to which the Select Committee has drawn attention. In that context, what is clearly needed is significant evidence that a slowdown in the economy is taking place. In his evidence to the Committee, the Chancellor referred both to house prices and the extent of house purchase transactions. He also referred to the

  835
  indicator MO on the money supply. I hope that action will he taken to ensure that such evidence as we have on these matters is also improved.
  It is also of grave concern that we are likely to suffer from the actions of foreign Governments. Against the background of international monetary co-ordination, which the Chancellor has played a prominent role in fostering, I hope that there will be some co-ordination. The hike in German interest rates last week was unfortunate. The response of the international community generally to that development seemed rational in the circumstances.
  The Committee's report also brings out clearly the fact that, in addition to treating interest rates as its main instrument, the Government have taken appropriate action on the fiscal front. We are undoubtedly running a budget surplus of totally unprecedented size. My personal view is that it does not seem reasonable to argue that last year's Budget was too slack if we end up with an all-time budget surplus. However, the Committee's report brings out the fact that we are operating against a background in which consumers are being inundated with appeals to borrow more money. So last year's Budget created an air of confidence that had a greater effect on the economy than could easily have been predicted. I believe that the Chancellor's monetary measures are likely to have an effect. Labour Members have rightly pointed out that interest rates have been increased successively to a very high level. It is right and proper that we should maintain that position.
  In many respects, we are in a dangerous position. The balance of payments situation certainly gives cause for concern. Unlike some members of the Select Committee, I do not believe that the solution to the present problems is to be found in a depreciation of the exchange rate. I believe that the Chancellor's attitude in this respect is correct. If we were to have a sterling depreciation when the economy is operating close to capacity, the danger would be that the inflationary pressures would become quite uncontrollable.
  A policy of no depreciation of the currency combined with deflation will inevitably take a considerable time to have effect, and this is a cause for concern. The deflation in this case is against the background of very high profit levels, so that the resistance to wage settlements by the private sector is likely to be a rather lengthy process. Overall there are causes for concern, but I believe the Chancellor is right to say that the exchange rate should be maintained at the present level. None the less, he should take deflationary action to deal with the inflationary pressures and bring the economy back into equilibrium.
  I believe that the stress the Chancellor is putting on the ability of capacity effect to improve the export side is likely to be an over-estimate. The Select Committee seeks to bring out this point. There are likely to be effects with regard to the import side of the equation.
  Basically, I believe that we must hope that international events do not disturb the present equilibrium. We shall need to maintain the exchange rate and keep interest rates at a very high level for a considerable time. None the less, my hope is that it will be unnecessary to increase them further against the background I have just outlined.
  Mr. Tim Smith rose—
  Mr. Higgins: I will not give way. I was about to say that short speeches are in order.
  836
  I want to make one final point in a wider context about the Delors committee report. The argument has been put forward by Delors that we should progress from 1992 into a situation where we eventually end up with monetary and economic union. Once we have begun going down that path there is to be no turning back. I feel bound to say, in the context of a debate on Second Reading of a Finance Bill, that the whole basis of authority of this House has always rested on the control of money—the control of taxation on the one hand and of expenditure on the other. The ultimate aim sought to be achieved by the Delors committee report is one where there are constraints on the budgetary policies of national Governments. In that context the Chancellor is right to have responded as he has to the Delors committee report. The matter is of great importance. It does not mean that we should not proceed to 1992 and seek to make progress and, if need be, go along with some of the other proposals—for example, the exchange rate mechanism—at whatever may be an appropriate speed. But we should not commit ourselves to a course of action that is explicitly designed to take from this House the fundamental authority that it has in respect of money matters. I hope that my right hon. Friend will put that point clearly to his colleagues in the European Economic Community. I find it extraordinary that the French Prime Minister should attack us for going too slowly when we abolished exchange controls about 10 years ago, and when France still has a considerable way to go in that regard.
  Finally, as the Treasury Select Committee report makes clear, as does the evidence from my right hon. Friend the Chancellor and the governor, we are in a difficult economic situation. I hope that as a result of the policies now being pursued we shall see our way out of the present difficulties, albeit that they are very considerable.
  5.40 pm
  Mr. A. J. Beith: It is a pleasure to follow the Chairman of the Treasury Select Committee, who guides that Committee so well. There was an indication in his comments that we disagree on some matters. I disagree with the right hon. Gentleman about the need for a move towards economic and monetary union in Europe. The illusion that the House has autonomy and that the Government possess sovereignty over many economic matters is at the root of many of our difficulties. What sovereignty is there when a 0·5 per cent. rise in the Bundesbank's interest rate sends tremors through the whole of our system? We are very interdependent. However, it remains the case that a Select Committee whose members hold many different views as to what precisely should be done analysed the situation and arrived at common, shared conclusions on some of the weaknesses and dangers that exist. The Chancellor of the Exchequer cannot be as dismissive of that as he originally sought to be.
  The Finance Bill is lengthy, but that is not a tribute to its gravity or radicalism. The Bill does not achieve any of the radical, tax-reforming changes that remain to be effected. I refer to proper integration of the tax and benefit systems, for example. The Bill does not even integrate properly the tax and national insurance systems. Instead, it turns aside from elements of normal taxation policy, such as indexation of excise duty on alcohol and tobacco.

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  We all know why that was done—because the Chancellor was so terrified of what might otherwise happen to the retail prices index.
  My right hon. and hon. Friends and I, along with others, will seek to amend the Bill in a number of respects. We shall strongly oppose tax relief on health care, which the Chief Secretary to the Treasury said is not as important as has been widely suggested. It is like the housemaid's baby—just a little baby. But it is intended that that baby will grow. It is certainly the Prime Minister's intention that it will be the starting point of a much wider system of encouraging people to get out of the National Health Service and to provide for their health needs by private insurance. That is being done in the knowledge that that will be a wholly inadequate way of providing for the health care of many people, and one that will fatally damage the Health Service itself.
  We shall seek also to correct other faults in the Bill. The Chief Secretary made mention of the clauses dealing with charities. I still believe that more can be done under the European ruling to ease the position of village halls, for example, without completely defying that ruling. I hope that the Government have not closed their minds to the charitable aspects and that they will be examined in more detail.
  We want to close some of the loopholes in the business expansion scheme. One wonders whether anybody will use that scheme to invest in manufacturing while it is so heavily loaded towards property investment, which is protected from serious depreciation by the value of the property itself. The use of the business expansion scheme in manufacturing is no longer seriously attractive and it needs to be modified.
  We want to consider also the matter of nursery care, where we believe there is scope for tax relief—particularly as we enter a period of potential labour shortage.
  Most right hon. and hon. Members view this not as an occasion to debate Committee points but to examine the background to the Finance Bill and the Budget. Had the situation not changed so dramatically, we might have expected an announcement from the Dispatch Box as to the current state of the economic miracle. That is what the Government used to talk about, but there was nothing miraculous about the Chief Secretary's comments. The "Oxford English Dictionary" defines the word "miracle" as
  "A marvellous event exceeding the known powers of nature … an act … exhibiting control over the laws of nature, and serving as evidence that the agent is either divine or is specially favoured by God."
  We now clearly see that control over the laws of nature is not within the grasp of the Prime Minister and that she is not a divine agent.
  As was seen last year, too much money chasing too few goods produces classic inflation. High interest and high exchange rates increase the difficulty for industry in its efforts to improve exports and achieve the turn-around that the Chancellor requires. None of those laws of nature has been changed. It is time to examine the miracle.
  We start with the Government's strong point, which is said to be productivity. That is where the Government say they have achieved the greatest transformation. The Government have a tendency to choose the base year for their statistics very carefully. In 1979, productivity fell by
  838
  more than 2 per cent. Last year it increased by only 1 per cent. Average growth in productivity since 1979 is only 1·8 per cent., compared with 2·2 per cent. in the previous 20 years. The improvement in productivity has been nothing like as good as the Government suggest.
  There have been certain improvements, but some of them are the painful results of a recession that the Government themselves brought about. Others are associated with the ending of restrictive practices and with changing much of the climate of wage bargaining. The situation is not all bad, and there have been some significant improvements. However, the end result is not a more competitive industry. Unit labour costs have not been reduced as a result of productivity gains, and British industry is still not sufficiently competitive. So the Government's productivity record, which is said to be their strongest point, is not really very good.
  Inflation is the Government's highest priority, but the picture there is appalling. We have inflation of 7·9 per cent. under a Government who think that they have removed all the basic causes of inflation. The situation is bound to worsen. Wage inflation has seriously taken off. Average earnings last month rose 9·25 per cent., and the danger of a wages spiral is clear. Commodity prices internationally are strong, and the Government themselves are increasing public sector prices. Water charges, transport costs, electricity costs and many other increases are dictated by other Government policies. They are not the result of increases in costs to those industries but of the Government's desire to restructure the water industry, for example. Water industry chairmen—particularly those already in the private sector—are imposing increases of 20, 30 or even 40 per cent. on the basis that they are necessitated by Government changes rather than by cost increases. It is estimated that without North sea oil inflation would be 11 per cent. higher than it is. The Government rely on the benefits of North sea oil to hold at bay a very worrying situation.
  The Government's high interest policy may have become a necessity because of their fear of what would happen to inflation if the exchange rate fell. It may not slow the economy enough, or may take so long to do so that the prescription will be worse than the cure. The monetarists within the Government face something of a crisis. Traditionally, they are both monetarists and free marketeers. That was all very well when one could attribute inflation to a high public sector deficit. Then, the monetarists could say, "We shall deal with that. It is in the public sector." But when monetary expansion occurs mainly in the private sector, it is difficult to sustain a monetarist policy and to apply remedies. The Government are frightened of applying remedies to monetary expansion in the private sector.
  The Chancellor's fears are illustrated by the extent to which he concentrates on the instrument of high interest rates. We argue that Government policy should be more broadly based. We say that they should drop those public sector price increases that are dictated other than by inevitable cost increases and take steps to stop by persuasion the aggressive marketing of credit. Having advanced that view several times in debates, I have at last evoked some response from the Financial Secretary, who told the Finance Houses Association that its members' advertising gives the impression of "profligate and imprudent" lending. The Government are moving towards

  839
  what the Japanese call firm administrative guidance. Why not? Why should not the Government exert some pressure on banks and other lenders to improve the situation?
  We have argued that the Government, as an obvious anti-inflationary discipline, should have already got Britain into the European monetary system, and we argue that there is still scope for improving the attractions of saving in order to reduce the rapid credit expansion in the private sector. There is scope for increasing saving. The Government themselves concede that what they have done on the PEP scheme, for example, is more likely to "deepen" than to "widen" share ownership. I quote the Chancellor's words. The Economic Secretary to the Treasury is so used to my pressing this argument that he must recognise that there is no real sign that the measures in the Budget will bring about a wide increase in savings.
  In addition, the Government have scope to use investment in prudent, non-inflationary ways to tackle the trade deficit problem. Unless they do something like that, there is no sign that anything else will do so. The Government's prophecies about the trade deficit are really quite extraordinary. Having moved from a forecast of a £4 billion trade deficit, they now recognise that we will have a trade deficit of at least £14·5 billion. But they see it going down to £3 billion by 1991. That is the implication of the figures that they have given us. The assumption is that there will be a massive switch in capacity from the home market to exports. There is no evidence to suggest that anything like that is beginning to happen, or is likely to happen, at a time when world trade growth is forecast to slow down, and United Kingdom cost competitiveness is likely to slow down as well. Indeed, there is some danger that the United Kingdom now has a structural deficit, which cannot be changed unless other measures also are taken. It requires far more of a miracle than there has been any sign of so far to bring about that change in competitiveness.
  The other star point of the Government's miracle is supposed to be the surplus—the ability to repay public sector debt on a considerable scale because of the budget surplus. But this surplus is derived, in very large measure, from asset sales. Certainly, half of it can quite clearly be attributed to asset sales. It cannot be sensible steadily to diminish our national public investment at such a rate, and on such a scale, when there are obvious needs that the public sector can meet. Maybe those needs are different from those that the public sector has traditionally met.
  I would go some way with the Government in saying that there is, indeed, a logic in releasing resources trapped in earlier forms of public investment, and shifting them into other forms, and, indeed, arguing each case on its merits. But there is clearly an urgent need for investment in training, in transport, and in communications—in things that can help to make industry more competitive. The Government should be identifying the areas of difficulty—areas like skills shortages and transport costs arising from weakness in the transport system—and directing public investment into those areas.
  Of course, one of the illogicalities of the present system, to which the Treasury Select Committee has pointed in previous years, is that we never consider these things at the same time. If there is any stronger reason for considering expenditure and revenue at the same time than suddenly finding a surplus far greater than the Government themselves predicted we would have, it is hard to find. When the Government find themselves with an immensely
  840
  larger surplus, surely there is a case for considering again the expenditure decisions that were made at the time of the Autumn Statement.
  Hon. Members of all parties have spent a lot of time over the years telling various groups of constituents that they are in favour of what those constituents suggest, that their ideas are very good, but that the nation cannot afford them. The situation now is that the nation could afford a number of things if—and only if—it could manage the economy in such a way as to ensure that the spending on those things was not inflationary and did not generate dangerous economic pressures. That is the challenge to the Chancellor, but it is a challenge that he is totally failing to meet, because he does not accept the case for public investment in those areas that could make industry more competitive.
  The Treasury Select Committee report has helped to remove a lot of the flannel and waffle that have surrounded recent discussion on economic matters and has, I hope, dispelled some of the myths and fallacies. It has attributed quite a bit of blame to last year's Budget, but also to decisions that were taken last year in the aftermath of the stock market crash. To that extent, nearly all of us must accept some share of the blame, because the Chancellor had very few critics for his interest rate policy a year ago. But, having embarked on that policy of lower interest rates, he himself should have realised that to take measures which would give people the expectation that borrowing would be easier, and a very good thing for them, and at the same time to take measures that put a time limit on people rushing out to buy houses and get multiple tax relief on them, would be bound to exacerbate the situation. That is detailed and set out in the Treasury Select Committee's report, and the Chancellor cannot escape the blame for it.
  I think that, for that and other reasons, the Chancellor now finds himself, in the Committee's words, "on a tightrope". But he is not alone on the tightrope; also on it are all those people who do not know how they are going to carry on paying their mortgages, and all those people who do not know whether they will still have a job if the only way in which the economy sorts itself out is by a slump. When they fall off the tightrope, it will hurt them a great deal more than it hurts the Chancellor. It is to those issues that the Chancellor must now address himself.
  5.56 pm
  Mr. Tim Smith: When I went canvassing in part of my constituency on Friday evening—it was an area that my agent had recommended because, he said, the Social and Liberal Democrats were putting up the strongest challenge there—it was with some trepidation. Recently my postbag has not been full of letters congratulating the Government on the excellence of their policies. I have received a lot of criticism and a lot of complaint. I know very well that, as we have been told during the course of this debate, all those who have mortgages, including, no doubt, many hon. Members, have had to put up with much higher monthly mortgage payments. That can never be popular.
  I was, therefore, very pleasantly surprised to discover that support for the Government is holding up very well. I believe that the reason for that is well illustrated by this debate. Although the speech of the hon. Member for Dunfermline, East (Mr. Brown) on behalf of the Opposition was effective at the most superficial level, he

  841
  told us absolutely nothing about the Labour party's alternative to the Government's policies. I believe, and I think that opinion polls show that the electorate believe, that if at present we do have some economic difficulties to cope with, it is the Conservative Government and their Treasury Ministers who are best equipped to cope with them.
  In a sense, it would be a little unfair to direct that comment to the hon. Member for Berwick-upon-Tweed (Mr. Beith), who has just spoken for the Social and Liberal Democrats, because he at least put forward a number of constructive alternatives to the Government's policies. However, I have to tell him that the people to whom I have spoken are not too enthusiastic about his party, simply because it cannot agree with the other party that is supposed to be in the centre—the SDP—about anything, and because two candidates are being put up, not just in the current by-election but all round the country in the forthcoming elections. The hon. Gentleman needs to think about that, but at least he did put forward some constructive proposals.
  Yesterday, as I read the Treasury Select Committee's report on the Budget proposals, I felt—and I hope that my right hon. Friend the Member for Worthing (Mr. Higgins) will forgive me for saying this—that there was an element of using the benefit of hindsight about the way in which what had occurred was being looked at.
  Mr. Higgins: We said that several times.
  Mr. Smith: I think that the report says so, but the way in which it was portrayed in the press today was such that one would think that the Committee had been extremely critical of the Treasury's handling of policies. But anybody who listened to my right hon. Friend's speech just now will have noticed that he did not criticise the present exchange rate policy or the present interest rate policy. Although there is an element of trying to balance on the tightrope in respect of what is going on at the moment, he did not make any major criticism of the way in which the policy is being handled. Everybody needs to be a little modest, a little humble, about the present situation. As the hon. Member for Berwick-upon-Tweed has just said, there was a pretty good degree of consensus about all this just over a year ago, after black Monday. Then the concern was really that we would have a repeat of what had happened in the 1930s. We knew that if we were to make a mistake, the right mistake would be to have too lax a policy rather than a major recession on our hands. We just need to reflect a little on that as we find ourselves in the present situation. Naturally, everybody is frustrated. People want to see the effects of the present policy coming through.
  We have been told that the jury has been out for an awfully long time, and people have asked whether it is not time that it came back with a verdict. Unfortunately, the verdict on these policies is that we shall have to be a little patient, because the policies will take time to work through. The danger is that we shall over-react. The Treasury should hold the line with a 13 per cent. interest rate. The policy of the last five months should be allowed to continue and to work itself through. It will eventually lead to a satisfactory outcome.
  Ms. Diane Abbott: The hon. Gentleman urges us to wait and to
  842
  allow the policy to work itself through. People in my inner London constituency who last year took on an average mortgage are now paying £133 a month more in mortgage interest repayments. Many of them cannot meet their basic domestic commitments. How long must my constituents wait for this policy to work itself through and how high is the hon. Gentleman prepared to see interest rates go?
  Mr. Smith: I have every sympathy with the hon. Lady's constituents. Many hon. Members have had to face that problem. First-time buyers mortgaged themselves up to the hilt when interest rates were relatively low. It must be very painful for them at present, but I have had a mortgage for about 17 years and I know that it gets better. It will get better for the hon. Lady's constituents, but they will have to be patient. If experience is anything to go by, the proportion of their monthly income that people spend on mortgage interest repayments reduces. The fact that people took on such high mortgage commitments last year was a reflection—perhaps a misguided one as it turned out —of their confidence in the future. Had it been otherwise, they would not have made such a decision in the first place.
  Mr. John Heddle: Does my hon. Friend not agree that the best advice that he can give to the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) to pass on to her inner London constituents is that they should put their problem to their building society or to the institution from which they borrowed their money? They are likely to receive a very charitable and most understanding response. Their capital and mortgage interest repayments will probably be frozen; an accommodation will probably be reached over a short-term period.
  Mr. Smith: I am most grateful to my hon. Friend, who is an expert on these matters. Lending institutions of all kinds are always sympathetic. The loan will have been taken out over a long period. Lending institutions may well be prepared to consider such an accommodation as my hon. Friend suggests.
  I share the concern of those who have complained about the length and complexity of the Finance Bill. It amounts to 250 pages. The House needs to reflect on how it will consider future tax legislation. It is 10 years or more since my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), who is now the Foreign Secretary but who at that time was the shadow Chancellor of the Exchequer, suggested that we should have a technical tax Bill. I understand why the Treasury does not relish that prospect. It is bad enough having to deal with one Finance Bill a year; to have another would perhaps be a bit much. It would not fit into the parliamentary timetable. However, it will not be easy adequately to consider all the clauses in this long Bill.
  The Select Committee on Procedure—if that is the right Committee—should consider how the House ought to deal with tax legislation. We want it to be simplified. My right hon. Friend the Chief Secretary told us that this measure will simplify matters, but the net result will be a substantial addition to the quantity of tax legislation. I have come to the conclusion that the best and perhaps the only way to simplify tax legislation is to abolish whole taxes. We do not seem to be able to make progress in any other way.

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  The Red Book shows which taxes raise the largest proportion of revenue. Far and away the largest revenue raisers today are income tax, corporation tax and value added tax.
  Mr. Chris Smith: And national insurance.
  Mr. Smith: Yes, but national insurance is paid into a separate fund. The community charge will also raise a large proportion of total revenue.
  At the other end of the scale, inheritance tax raises only £1·1 billion and capital gains tax raises only £2·1 billion. In an ideal world there would be no taxation. The only object of taxation is to raise revenue for spending. I believe that we should tackle some of the taxes that raise relatively small amounts of revenue and get rid of them, not just to simplify matters but because every tax that has ever been raised affects people's economic behaviour. Taxation changes make people change their economic behaviour. That is particularly true of capital taxes; they have a disproportionate effect on people's economic behaviour.
  I am concerned about the capital gains tax rate. A 40 per cent. capital gains tax rate is too high. Such a high rate of tax deters people from investing. If someone were to say to me, "I have £1 million in cash that I should like to invest, so can you tell me what is the most tax-efficient way to invest it?" I should say to him, "The best thing to do is to buy the largest possible house that you can afford." It is no wonder that estate agents in London still have queues of people who want to buy houses in the home counties at £1 million or more. It is because it is tax-free.
  If that person then said to me, "I've still got some cash over", I should feel bound to say to him, "You had better put your money into a business expansion scheme, because you will get up front income tax and capital gains tax relief." If he then said to me, "I should really like to invest in my own business—in a high-risk, high-tech business start-up", I should have to tell him that there was no tax relief up front for his investment and that if he were successful he would have to pay 40 per cent. capital gains tax as the price of his success. That seems to me to be a crazy sense of priorities.
  Mr. Boswell: I am following my hon. Friend's argument with interest and some sympathy. Does he not agree that many hon. Members have received representations from their constituents about specific proposals in the Finance Bill that are connected with the treatment of settlements and discretionary trusts and about the possibility of reallocating the affairs of a taxpayer and the settlement of a will after a death? Are these not matters that we shall have to consider carefully, together with the point that my hon. Friend has made about the high level of capital gains tax that is now in force?
  Mr. Smith: My hon. Friend has raised an extremely important point that we shall want to consider in detail in Committee.
  Clauses 51 to 54 deal with tax relief for medical insurance. My right hon. Friend the Chief Secretary said that in some ways the debate on the subject had been inflated out of all proportion. I have major reservations about the introduction of such a tax relief. I have read the submission of the Royal College of Nursing, which many hon. Members received today. I sympathise with the view that if £40 million is available, it would be better to spend
  844
  it on the National Health Service. There are good tax reasons why this would not be a sensible change to make. I believe strongly in having as wide a tax base as possible and, therefore, rates of tax that are as low as possible. Before we introduce a new tax relief such as this, we need the clearest possible evidence that it would be effective and that the change is genuinely needed.
  We are told that when the change is introduced in 1990–91 it will cost £40 million. Almost all of it will be a deadweight cost. In other words, the relief will go to people who are already making those payments without tax relief. The Red Book says that the Treasury has assumed that in 1990–91 the number of people paying premiums, as a result of the relief, will rise by 10 per cent. I do not believe that that is a sufficiently large percentage; if it were a much larger percentage, there might be some justification for it. I do not believe that the case for the new relief has been proved. It sets an unfortunate precedent.
  All hon. Members have received representations from constituents who believe that there ought to be tax relief on the cost of commuting into London. The only result would be that people would move even further out of London. We have also received representations about tax relief on the cost of private education. The same argument is used—that it would relieve the pressure on the state-maintained education sector.
  I am all in favour, of course, of allowing people to make a choice whether or not they use the National Health Service, but I have never understood the argument used by the Leader of the Opposition, who complains that the Prime Minister does not use the NHS. Anybody who does not use it is obviously relieving it of a certain degree of obligation and a certain amount of work.
  It is quite another thing to take a further step and to use taxpayers' money—because that is what it is—to give one group special relief. Not only could we give this £40 million to the NHS, but we could give it to all retired taxpayers rather than discriminating. I do not believe the case has been made, but of course there will be a major debate on this in a couple of weeks' time, and we shall be able to explore the arguments more fully. I look forward to hearing what my hon. Friends have to say to support this in rather more detail.
  Finally, I make it clear that, subject to that one proviso, I support this Finance Bill. I support all the measures in it. Many of them have been welcomed, particularly those which help old people and charities. Many of them make further changes which will help the performance of the economy. I therefore support Second Reading.
  6.10 pm
  Mr. Robert Sheldon: The hon. Member for Beaconsfield (Mr. Smith) made two points which interested me particularly. We can admire him for his stand on medical insurance and look forward to his further contributions on that. This kind of tax law is wrong, as he rightly says, as well as the other things which we on the Opposition Benches also believe to be wrong. However, he left out stamp duty. After all, if there were a tax I would have expected this Government to do something about, the £2 billion raised by stamp duty might have been one of the front runners.
  The Chief Secretary today broke a long-standing tradition, which has been going ever since the Treasury and Civil Service Committee came into being, of

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  congratulating the right hon. Member for Worthing (Mr. Higgins) on his work. We heard neither the congratulation nor any mention of the report, which was quite surprising, particularly since the Order Paper for today says:
  "Finance Bill: Second Reading
  The Second Report of the Treasury and Civil Service Committee of Session 1988–89 on the 1989 Budget (HC288) is relevant."
  However, it was not relevant to the Chief Secretary to the Treasury, who did not mention it at all. What we have had instead of useful discussion and debate is a mammoth Finance Bill. I believe one always gets a mammoth Finance Bill when a Government run out of ideas. Experience over 25 years has taught me that.
  Such a Bill deals with the boring detail at which a Government start looking when they do not know what else to do. The Inland Revenue pours out representations which would produce a Finance Bill of thousands of pages if they were all accepted, but what a resolute Chancellor of the Exchequer, Chief Secretary and Financial Secretary should say is, "This is nonsense. We cannot have this," and run the Finance Bill according to the wider policies. It did not happen on this occasion.
  I support the Chancellor of the Exchequer strongly on one matter. I supported entry into the Community but, like the right hon. Member for Worthing, I am wholly against economic and monetary union as proposed in the Delors report. If we were to get it—and that is a very big if at the moment—the question would arise as to who controls it, who implements the decisions, who really decides these matters. We had the argument right up to 1945 with the Bank of England. We had the gold standard. The bankers were in charge. They ran the whole show, because no Government knew very much about it, and the Bank of England was a powerful body with that level of expertise; it knew how markets operated, and in the end generally got its own way.
  The crucial thing we learned was that banking decisions are political decisions. Exchange rates and interest rates are not decisions for bankers alone. To control the banks with a strong, united British Government even now is not an easy matter, as any Chancellor of the Exchequer or Treasury Minister will confirm, but to control a Eurobank, with inevitable disunity among the 12 states, means in effect that the bank will make the decisions. There is no other central body powerful and knowledgeable enough to contend with such authority.
  In Britain it is thought that the Government decide and the bank influences. That is far too simplistic a view. In fact, there is an inter-relationship with the power of the Chancellor of the Exchequer, who, after all, can appoint the governor and has many other powers as well. This inter-relationship is very complicated. It is only in recent years that we have had in the Treasury a level of expertise which can take an overview of the bank's problems and involvement. Until the last 10 years we did not even have that; the governor view was the only view based upon experience and understanding. We now at least have in the Treasury something that contends with that view; not wins but contends. As a result, there is a more useful dialogue than there used to be when the bank jealously protected its power through the knowledge and understanding it had.
  Let us not be fooled by those who will tell us we should have our own voice in the central bank and we will all be part of the decision-making process. It will be another
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  British banker's voice, and my guess is that it will be indistinguishable from that of the others who will find a dominant role as a consequence of the transfer of functions. We should be aware that there is no power to give the politicians in any of these countries the ability to operate the bank for the interests of the Community as a whole and of the individual member states. So I welcome the strong views expressed by the Government and support them fully.
  Turning to the balance of payments, my criticism that what the Government did was wrong was not to do with the consequences of the stock exchange fall. What they did was right but too late. There should have been a credit squeeze last autumn. It was a terrible mistake. They could have introduced credit controls. Of course, we know that none of these measures is perfect. Nothing a Government ever did is perfect. They take certain actions which are better than others, but they could have had an immediate impact.
  We all know, of course, that they can borrow from overseas banks, but the question we have to ask ourselves—the sensible political question which, after all, we are here to ask—is what the ordinary person would do if, having been told by Curry's or some other high street store that there was a deposit to be paid on a new video, he was told that his British bank would not allow the loan. Would he go straight to an overseas bank and negotiate a dollar loan? Of course not. We are politicians; we see our constituents. How many of them would do that?
  Mr. David Shaw: Some of mine would.
  Mr. Sheldon: Over time of course there would be some; there would be some like the constituents of the hon. Member for Dover (Mr. Shaw), who would go straight to the overseas bank, but that is not true of my constituents. Over a period of time they would begin to learn and understand about these things, but by that time something would have been done. There would have been an immediate impact. It is no use coming seven months later, when we still have those high levels of sales in the high street. It is a disgrace. The Chancellor of the Exchequer has failed miserably in doing now what should have been done seven months ago, and it is because he had a simplistic approach. Of course, we all know that if exchange rates are kept long enough and high enough they will reduce the level of economic activity. But they do not discriminate.
  There were methods by which the Chancellor could have brought about a quicker change. Every month we have delayed, the adjustments to high spending have made the landing much more likely to be hard. This should have been the overriding principle: the sooner we act, the softer the landing is. The Chancellor of the Exchequer ignored that, and the results are there for us to see.
  As my hon. Friend the Member for Dunfermline, East (Mr. Brown) and others pointed out, we have not heard much about the economic miracle today. We heard a little about it, but not much. We know that the economic miracle was based on North sea oil, which produced the balance of payments surplus.
  We can forget about the revenue, as that is small stuff compared with the balance of payments surplus which allowed the Government a profligate spending spree and permitted the elevation of financial services, with money passing from hand to hand with bits sticking to fingers on

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  the way. It allowed us a stature in excess of our true position and it allowed us to scorn our manufacturing industry. The Government call it an economic miracle. North sea oil solved the balance of payments problem for the seven fat years, but now we may have to prepare for the seven lean years. Obviously, North sea oil will continue but it will not provide the cushion or the feather bed that it has provided so far, and we do not have the manufacturing industry that we once had.
  Ten years ago things were very different. The Government destroyed one third of the companies in my constituency, which had levels of pay and employment far better than most parts of the country, and high skills and medium technology industries which, alas, exist no longer. If I were superstitious I would instance the curse of oil —the way in which so many countries have abused that wondrous gift. Iran, Iraq, Libya and Mexico have reacted to the unexpected arrival of the fortunes of oil by abusing their good fortune. It might have been expected that a mature economic and political power would have had the good sense to avoid folly when arriving at great fortuitous wealth by using it to prepare for the future. Well, the future has arrived and the Government do not know how to deal with it because they did not prepare for it.
  The memorial to the Government's lack of foresight is our balance of payments deficit, compounded by our dilapidated society with unmade roads and railways, where accidents happen and schools are not properly maintained, while countries such as Germany, Japan, Italy and France have flourished without the oil. The oil revenues have some of the characteristics of capital rather than income, which can be renewed and increased. Through depletion, our oil rigs and the fuel they provide represent a finite resource which, like the nationalised industries being privatised, can be sold only once. In the selling-off we should have obtained true lasting value for those precious assets, rather than the meretricious goods we have obtained.
  What should have happened is that our industry—our main renewable source of wealth—and the educational advancements which are its main protection should have been the beneficiaries of the capital windfall. But we face the future in a worse position than when North sea oil was just a gleam in the eye of the Treasury.
  I shall deal briefly with the monetary mania which we do not hear quite as much about as we used to. I have noticed with amusement the changing patterns of sterling, M3, M1 and MO. It is like a person trying to lose weight who changes his diet at every meal and then is surprised and confused when he remains overweight. But M3, M1 or MO have been dealt with with unbelievable naivety. Those hard-headed men and women of the world are supposed to be knowledgeable about markets as well. I would not trust them in the Petticoat lane market let alone the Chicago futures market or the London metal exchange. That view was reinforced when the former Chancellor of the Exchequer had his trousers stolen on the London to Manchester sleeper. Despite their formidable presence at international meetings, the Government are naive in their adulation of what they do not understand—the way in which the market system operates.
  When the Government applied those naiveties to public expenditure, first they aimed to cut total expenditure, but they did not. Then they decided to stabilise public expenditure in real terms, but they did not achieve that either. They then decided that public expenditure as a
  848
  proportion of national income should fall. It moved from 43¼ per cent. in 1979 to 47 per cent., although it is coming down now. None of those crucial elements of the operation of the economy—whether crucial is defined by the Opposition or by the Government—has been at all successful. I am not sure whether the presence of Alan Walters will improve matters. It is rather humiliating to have as one's next-door neighbour someone who has been brought in to examine the way one is running things.
  Despite what has been said, the outlook is not rosy, the economic miracle has not happened and the optimism is ludicrously misplaced. The Finance Bill has failed to deal with a truly serious position, and we shall have to return once again to our basic economic problems.
  6.24 pm
  Mr. James Arbuthnot: I thought at the time that last year's Budget was the best Budget I had ever heard. This year's Budget continues what has now become an established tradition—sound financing of the economy, sensible, far-reaching tax reform, repayment of some of the national debt to the benefit of future generations, and more help to pensioners, particularly through the abolition of the earnings rule.
  I shall concentrate on two points, one a major matter and the other less so. The major matter concerns the thresholds of taxation, the points at which low earners enter tax. It is important to make sure that the thresholds of taxation do not bite too hard. The higher the thresholds, the greater the incentive to work and the less damaging the effect of the poverty trap. So the Government were absolutely right gradually to increase the thresholds of income tax over the years in a way which has removed or at least reduced the poverty trap. But this year my right hon. Friend the Chancellor of the Exchequer increased the thresholds by introducing a major and welcome reform of national insurance thresholds.
  National insurance is a quite extraordinary animal. In the past two years I have called on my right hon. Friend to abolish it outright, and perhaps my hon. Friend the Member for Beaconsfield (Mr. Smith) should add it to his list of taxes which should be abolished. Nevertheless, my right hon. Friend the Chancellor severely weakened my case for abolition by removing the steps between 5 per cent., 7 per cent. and 9 per cent. and by reducing the initial payment of national insurance from £2·15 to 86p a week, while preserving the entitlement to contributory benefits which result from paying national insurance.
  As so often, my right hon. Friend has found a solution which seems obvious but which had eluded us for a long time. I believe that there are still grounds for examining the long-term value of national insurance and whether we need to keep it separate from income tax with separate bureaucracy and paperwork. I join the hon. Member for Birkenhead (Mr. Field) who yesterday hoped that my right hon. Friend the Chancellor would not rest on his laurels. Nevertheless, I warmly welcome the Government's latest move, which is a major step forward which will benefit the low paid and improve the economy.
  And now to minor matters, as Lady Bracknell would say, although the point I wish to raise is not so minor. It concerns clause 167 which limits the value of instruments of variation for the purpose of inheritance tax. I should declare an interest as I am a Chancery barrister and see quite a few wills and applications to the court by

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  dependants who feel that they have not received sufficient or reasonable provision from someone's estate. I see a number of these instruments of variation, or deeds of family arrangement as they used to be called. They are agreements between the beneficiaries of a person's estate to rearrange the way in which that estate is divided between those beneficiaries. As the law stands, that rearrangement is given retrospective effect, as though the testator had included that rearrangement as part of the provisions of his or her will.
  It has been said that people have been using these instruments of variation to avoid tax, and in a sense they have. But the great value of instruments of variation is that they allow people to be relatively relaxed about the contents of their wills. They do not have to keep updating their wills to keep up with changing tax legislation or changing family circumstances.
  If people do not have to change their wills every six months or so, they do not have to incur significant legal fees, and I wonder whether we want to produce the effect of childen prodding their 80-year-old parents into rearranging their wills every six months or every year. As each grandchild is born, a new will may be needed; and as each Finance Bill is published, people may have to consult their lawyers—the lawyers always benefit; I admit that —to see whether a new will is needed.
  As a Chancery barrister, I shall do well out of it, and perhaps I should not complain, but as one who hopes to see the Finance Bill as a whole become law, I question whether what is proposed is a sensible way of going about what the Chancellor wishes to achieve. If people begin to change their wills more often, the natural effect must be that clause 167 will not produce the yield of £15 million which was suggested in the press release. It is a small enough yield anyway in some respects, and if it does not materialise the whole business may be pointless. Not only will people have to change their wills more often, but it will be unacceptable for a person to die intestate. That was previously acceptable because one could simply rearrange one's affairs if the provision on intestacy were irrelevant or if it were not advantageous from a tax point of view.
  Further, the clause as drawn will be easy to avoid by the skilful—indeed, even by the not very skilful—drafting of a will. Disclaimers, for example, have been left untouched by the clause. One can think of extraordinary ways of including in a will contingencies by the use of a disclaimer. That would have exactly the same effect as an instrument of variation, yet would produce no tax benefit for the Inland Revenue. The only benefit would be for the lawyers, who, as usual, would earn their fees.
  We should be sure that new legislation will have some effect and will hit the target at which it is aimed. If it does not, it will not produce the yield expected of it. If it does, it will produce that yield only from those who are not properly advised. That will mean that the relatively poor will suffer and the rich will not, and that is not a sound basis for changing our tax law.
  The Bill says that the change will not affect certain variations, being variations which are ordered by the court, which are bona fide settlements of applications to the court or which could have been ordered by the court. Those provisions are, if not absolutely meaningless,
  850
  verging on meaningless. In any event, they will be the cause of an enormous amount of litigation. Again, those who will benefit will not be the Inland Revenue.
  Therefore, despite my general support for the Bill and for another excellent Budget, I urge the Chancellor to reconsider the clause about which I have been speaking, because it is aimed at a mischief which, rather than being a mischief, is a benefit; because it does not stop even the supposed mischief at which it is aimed; because it penalises those who cannot afford good advice, while leaving richer people untouched; and because it will represent an absolute bonanza for lawyers.
  6.34 pm
  Mr. Giles Radice: For all its length and detail, the Bill can hardly be described as epoch-making. For that reason, and because I am a member of the Treasury Select Committee, I shall devote my remarks to the economic background to the Bill.
  As usual, I begin by congratulating—I almost called him my right hon. Friend—the right hon. Member for Worthing (Mr. Higgins) on his chairmanship of the hearings and proceedings which led to the Select Committee report, which was unanimous. We owe our unanimity, at least in part, to the Chairman's skill. Another reason is the concern felt by all members of the Committee about the seriousness of the economic situation which faces the country, and I was surprised that the Chief Secretary did not refer in his speech to the report.
  I wish to underline what I see as the three most important messages of the report. The first is that the country now faces difficult problems in two connected, though separate, areas—the rate of inflation and the balance of payments deficit. The Chancellor and the Government accept that our inflation rate, which is the worst of the major industrial countries, is far too high.
  But there has been a great reluctance, particularly on the part of the Chancellor, to admit that the balance of payments deficit represents any difficulty at all. The report makes it clear that the Treasury Select Committee considers that a current account deficit of over 3 per cent. of GDP—not only in 1988 but in 1989 and probably in 1990 as well—is an extremely serious matter which cannot be shrugged off.
  The second message of the report is that the Chancellor is, at least in part, to blame for what has happened. As we say in the report, in the months leading up to the 1988 Budget, domestic demand was allowed to become unsustainably high, in part because of excessive monetary relaxation. The 1988 Budget then added fuel to an already overheated situation. As we point out in paragraph 50,
  "the combination of intense competition in retail credit and the expectations generated by the announcement of tax cuts seem likely to have added to the growth of credit and had a powerful effect on demand through its effect on consumers' confidence."
  The Chancellor himself admitted to us that mistakes were made in monetary policy in the period leading up to the Budget and that the four months' grace allowed before the ending of multiple mortgage relief gave a large boost to borrowing. Had the Chancellor come completely clean, he would also have accepted that his fiscal prudence of 1989 was in itself an admission of the malign impact of his 1988 Budget.
  It is often said that the Chancellor's critics are speaking only with hindsight. That is factually incorrect—here I

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  disagree with the right hon. Member for Worthing—because many economists and City commentators, as well as Opposition spokesmen, urged the Chancellor last year not to make tax cuts.
  I hesitate to quote my own speeches, and I do so only to demonstrate that those who adduce the hindsight argument are wrong. On 14 January 1988, before last year's Budget, I warned the Chancellor that if he cut taxes imports would be sucked in at a time when our balance of payments was already beginning to deteriorate. In the Budget debate in March, I criticised the Budget as being not only morally repugnant but economically risky. I pointed out that tax cuts, coming on top of a consumer boom, fuelled by an explosion of credit, would make the balance of payments deficit worse.
  I also remind hon. Members that the Treasury Select Committee warned in paragraph 24 of its report on the 1988 Budget that tax reductions could contribute to overheating and, therefore, to our trade deficit. In paragraph 29, we also stressed the risks of allowing the balance of payments deficit to deteriorate. The Chancellor cannot claim that he was not warned about the gamble that he was taking with the direction and balance of the economy in his 1988 Budget.
  The third message from our report is also an uncomfortable one for the Government. We are frankly sceptical about the Government's predictions of a rapid slowdown in inflation or a reduction in the current account deficit. On prices, we point to the underlying inflationary pressures in the economy, including those from labour costs, increased prices in nationalised industries and other Government-induced prices. On the current account, we find the Chancellor's prediction of accelerated export growth in manufactured goods over-optimistic. As the right hon. Member for Worthing mentioned, the Chancellor is over-estimating the so-called "adjustment effect" by which, as demand is squeezed, firms automatically switch from domestic to external production. Our witnesses could provide little evidence of that process taking place.
  As a Committee, we have been criticised for not coming up with any firm policy recommendations drawn from our agreed analysis—that the Chancellor is on a tightrope between a recession and a collapse of the currency. It would be wholly unreasonable to expect a Committee drawn from such a wide variety of opinions to agree on solutions, especially when they go to the heart of the party political debate. The fact that we have agreed broadly on what is happening to our economy and what is wrong with our economy should, in itself, be a benefit to the House and a warning to the Government.
  I shall now turn to policy recommendations and I shall concentrate on one of the main aspects of the problems facing the Government—the balance of payments deficit. I accept that one cannot isolate the balance of payments from other aspects of the Chancellor's policy, especially his strategy for inflation. As my right hon. and hon. Friends have pointed out, the Chancellor is now in a cleft stick. On the one hand, he has stressed the importance of raising interest rates and maintaining a strong pound to bring down inflation. On the other hand, as our report points out in paragraph 31, there is no evidence that it is possible to bring about an improvement in the current account without either a currency depreciation or rising unemployment and falling output.
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  I will deal with the balance of payments deficit because it represents the most immediate danger. We shall need to tackle our enormous balance of payments deficit much sooner than the Chancellor seems to envisage. If we do not, we run the danger of allowing our economic policy to be dictated by the holders of sterling, who may start to lose patience with the Government's handling of the economy. A run on the pound and a precipitate fall in the value of currency could follow, with all that that could mean for inflation and the economy. Our problem is that the balance of payments deficit reflects not merely an overheated economy, but a growing lack of competitiveness and, possibly, a fundamental gap in the range of goods that this country now produces.
  The director general of the National Economic Development Office has pointed out recently that our current account may be suffering both from an overvalued currency and from not producing the kind of goods that people want to buy. There is evidence of that in table 3.2 and chart 3.4 of the Red Book, for example. There is evidence both of lack of competitiveness—or loss of competitiveness—and of growing import penetration. Those are serious matters. It will clearly take some time to improve the range of our goods, but it is possible, by depreciation, to compensate for our lack of competitiveness.
  I want to quote what I consider to have been wise advice:
  "our problem is that, taking the trade cycle as a whole … imports have a persistent tendency to rise faster than exports. We are, as a nation, uncompetitive in the only economically meaningful sense of the word: namely, that if we are to expand our national wealth at the rate of which we are physically capable, … then our balance of payments is in deficit … Conservatives … may feel that this is a field in which market forces and the price mechanism may ultimately be preferable … They may feel, in short, that the chronic imbalance in our international payments … is best dealt with by altering the price of the pound in the foreign exchange markets of the world."
  That was written by a well-known teenage scribbler called Nigel Lawson, writing in 1966. The House should take note of his wise advice.
  I accept that there are inflationary risks involved in devaluation and that is why we should consider not only devaluation, but joining the exchange rate mechanism of the European monetary system, which could act as an effective counter-inflationary discipline. Is the Chancellor now the right person to carry out the shift in policy and direction required if we are to bring our economy back into balance? I admit to a sneaking admiration for the right hon. Gentleman. He is a clever man who is at home with economic issues. I also find his boundless self-confidence, especially when he is making up economic theory on the run, quite engaging. But I doubt whether his particular qualities are what is required now.
  The problem for the Prime Minister is that there are no obvious replacements for the Chancellor on the Government Front Bench. Judging by his performance as Secretary of State for Energy, I do not find the right hon. Member for Hertsmere (Mr. Parkinson) to be a credible candidate. In many ways, there are now more obvious candidates for the Chancellorship on the Government Back Benches. If, for lack of suitable successors, the right hon. Gentleman is made to soldier on, he will have to learn to change his tune. He will have to learn to become the Chancellor of the bad times, which we are now experiencing.
  6.46 pm
  Sir Peter Hordern: I agree with the hon. Member for Durham, North (Mr. Radice) in one respect: the Chancellor is in an extremely uncomfortable position. It appears that he is caught in a cleft stick, while sitting on a tightrope while the jury is out interminably. The jury has not been out at all. Whenever the Select Committee on the Treasury and Civil Service issues a report, it is free with its criticisms and that is its verdict. However, I have noticed, especially from the criticisms of the Opposition parties, that it tends to be wrong.
  The hon. Member for Durham, North puts his finger on it. He pointed out the balance of payments deficit and he said that it represented a potential threat to the economy and to the Government. But I draw his attention to this difference. In sharp distinction to what has happened in previous years, the Government are operating a substantial Budget surplus. Foreign holders of sterling take real account of the internal balance within an economy when deciding whether to support it. They would observe, as my right hon. Friend the Chancellor has observed in the past, that we are suffering at the moment from an excess of demand which is going rather higher than our productive capacity can meet. That is a serious matter in itself, but I do not agree with the hon. Gentleman that it represents a threat in the sense of a balance of payments run.
  Nor do I agree that we should devalue the pound, which has been the recipe followed by virtually every Labour Government. It would be just as unpalatable now as it has been in the past and would be the surest way to create inflation. I am dead against it.
  As my right hon. Friend the Chief Secretary said, the Bill is the largest on record. Like my hon. Friend the Member for Beaconsfield (Mr. Smith), I could have done without clauses 51 to 53, which I understand we shall be debating later. Private medical insurance does not seem to be the most obvious cause for tax concessions. One of my right hon. Friend's great achievements in successive Budgets has been to broaden the tax base and to reduce sharply the levels of direct taxation. That is exactly what we said we would do, and we have done it.
  However, the tax concessions that we have given have generally been acknowledged to be in the national interest, whether in helping to promote the property-owning democracy, share savings schemes of one sort or another, or, through the business expansion scheme, to assist in finding rented accommodation, and so on. Those schemes have benefited the country. I wait with interest to see how clauses 51 to 53 are explained, but this proposal seems to be of a rather different order. It is a tax relief not just for the elderly but for those who may be well off to encourage them to assist their parents. It may be that those who are well off need education and some incentive to help their elderly parents, but many of us are in that position and this is not the most obvious candidate for tax cuts. I regret that this measure has appeared.
  Apart from that, I warmly commend the Bill and my right hon. and hon. Friends' general approach to the economy. We have a substantial revenue surplus, yet there have been no tax cuts on this occasion and that is a responsible attitude to adopt. We are in as sound a fiscal position as we could be, but I am confused about what is happening to demand. I see what is happening in the south-east. House prices are falling. However, I also see
  854
  the evidence of a shortage of labour, and skilled labour in particular, not just in the south-east but in other parts of the country. Wage rates are increasing and one-day strikes are just beginning. The BBC is not the most obvious candidate, but we had the Underground strike. These people feel that they will obtain more money and pressures are still building up.
  The question is whether that pressure and the higher increases in borrowing will sustain domestic growth and keep imports too high. I agree with my right hon. Friend the Member for Worthing (Mr. Higgins) that it looks as if we are stuck with a high level of interest for some time to come because that is the only way of reducing demand to make room for more exports and to reduce inflation and to correct the balance of payments deficit.
  Some economic commentators say that economic growth will have to fall to 1 per cent. if we are to reduce the balance of payments deficit to 1 per cent. in terms of GDP—a deficit of £5 billion. We do not have to be too precise about those figures, but there is no sign of the economy slowing down to such a rate of growth. Yet we might have to raise interest rates still further in order to provide room in the economy to achieve more exports. If we were to do that, we might once more see all the harmful effects, such as the soaring rate of exchange, that the economy and manufacturing industry experienced in 1981–82, and that would be damaging.
  There was a strong reason for that in 1981–82, because inefficiencies were built into the system. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) made a charming speech, looking back on the 1970s when Ashton-under-Lyne was a great manufacturing centre. But the world has moved on since then. We are still a great manufacturing country, but fewer people are engaged in manufacture. There has been much greater efficiency in the past few years, but I doubt whether we can withstand another large rise in the exchange rate.
  We need a different attitude and policy, and that is the one that my right hon. Friend the Chancellor has suggested before—to align our currency with the deutschmark and, necessarily, to enter the European monetary system. That would not have any quick effect, but I ask the House to understand the difference that would make in dealings on the foreign exchange markets. While the pound is loose and unhitched, all companies with overseas interests have to protect their interests every week, look at their position and renegotiate or switch their loans from one currency to another. The demand for such foreign exchange operation would diminish substantially if we were to announce a formal link with the EMS, and the deutschmark in particular. I do not see why we should wait any longer. It would take time, but interest rates would not have to be as high as they are if we were firmly fixed within the EMS. In due course, interest rates would approximate to German rates.
  Having joined the EMS, that is where we should stop. Despite what Mr. Delors said, we do not need a common currency, still less a European central bank. The Bundesbank is effectively a European central bank and we should lend it every support. Together, the deutschmark and sterling would become the Euro-currency. There is a lot to be said for the ecu, but, in reality, traders, business men and companies would deal in the strongest currencies, and they would remain the deutschmark and sterling. Those are the currencies in which most business would be done.

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  We should not be wet about Europe. We need to be involved. Indeed, we need to be in the driving seat. Our interest has always been the balance of power. We should not be isolationist or integrationist. We must do our best to stop this Euro-Socialism and Euro-bureaucracy which is suggested by Mr. Delors. The way to stop it is not to build Euro-bureaux for bureaucrats to man. It is a necessary part of Socialism to create a tightly enclosed, inward-looking, small band of nations, but that is not in the interests of the United Kingdom, still less in the interests of world trade.
  The purpose of the EC should not simply be to be anti the United States, as it so often appears to be, but to reflect the increasing internationalism of finance and manufacture. A report which says that we are not manufacturing enough of the goods that we wish to buy has been mentioned, but one reason for that is the increasing internationalism of manufacture and distribution. That can be seen in the motor industry. We make parts here, but some of the biggest companies in Britain are buying and assembling agents rather than manufacturers, and that process will not stop. Britain is too small a base to manufacture everything and we are rapidly coming to the time when Europe may also be too small. Therefore, it is in our interests to open Europe to more investment and competition. We have seen that already in the amount of investment that the Japanese are bringing in.
  We should expand the borders of the EC to include the European free trade area countries and then look wider still, beyond the European free trade area, to countries such as Hungary. This is a most exciting time. We are talking not just of arms and disarmament but of trading blocs. In the words of General de Gaulle, we can imagine a Europe sans frontier, extending from the Atlantic to the Urals. None of that will come about without willing it, and without our close involvement. We must take a grip on our affairs and engage ourselves in a common cause in Europe and the world beyond.
  6.58 pm
  Mr. Denzil Davies: This Second Reading debate has shown that the House can discuss the tax details of the Bill and look at the changes in the economy and the effect upon the economy of the Chancellor's Budget in the time between that Budget and now. The Chief Secretary chose the former course. Wisely, he dealt with the tax changes and hardly touched upon the economy.
  I agreed with much that the hon. Member for Horsham (Sir P. Hordern) said, except for his opening remarks when he seemed fondly to believe that we do not have a run on sterling because of the great confidence of the international financial community in Her Majesty's Government. The reasons are baser. The interest differential is just about sufficient to enable them to keep their money in this country. If interest rates go up, the Chancellor will have to put them up again as well otherwise there will be a run on sterling.
  In the short time between the Budget and the Finance Bill it would be trite to say that the economy has deteriorated even further. Inflation has got worse, interest rates may have to increase, and bank lending and the consumer boom have not abated, according to the latest figures. The balance of payments deficit is horrendous. In
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  his Budget the Chancellor forecast a deficit of £14·5 billion for this year. The Select Committee bore out the view that we are heading for a far worse deficit, probably £20 billion.
  When the Chancellor and other members of the Cabinet were in opposition between 1974 and 1979 they never tired of lecturing the Labour Government about how the tax system and the Finance Bill should not be used for the purpose of what they called social engineering. They said that the tax system should be neutral and was there merely to raise revenue for the Government. The hon. Member for Beaconsfield (Mr. Smith) made the same point in his speech today. Once the Conservatives got in to power, the story changed. Over the last 10 years the Government have used the tax system for the purpose of social engineering to a greater extent perhaps than any Government since the war, or certainly since the early 1950s.
  We have some examples in the Bill. The tax system is to be used to give a subsidy to rich, elderly taxpayers for private health insurance; that is to satisfy the Prime Minister. Also, there are a number of measures to give tax relief for investment in unit trusts and other institutions. Because popular capitalism has failed to deliver savings, the Chancellor will bribe institutional capitalism to try to save money for him. Apart from some instances like that, there is very litle social engineering this year on the ma in elements of income tax in the economy. The reasons are clear. The Chancellor dare not touch it because the economy is in such a precarious state.
  When the Prime Minister came to power, one of the vogue phrases—perhaps even a vague phrase—which was used constantly, and is still used, was supply side economics. It is not a well thought out phrase but it conveys the impression of the need for British industry and the economy to produce more goods, better quality goods and goods that are competitive with those produced by our major industrial competitors. I think we can all agree that the phrase means that.
  When the Government came to power in 1979, Ministers had very little idea of how to achieve that goal except through a mystical conviction in the ability of the free market to deliver and the belief that a substantial reduction in income tax, especially in the top rates for richer people, would somehow galvanise management and production, thereby increasing supply and improving the competitiveness of home-produced goods. After 10 years the experiment has failed.
  Perhaps the only indicator in international society of the success or failure of supply-side economics in the production of goods, their quality and their competitiveness is the current account of the balance of trade. The figures for British exports, for imports of foreign goods and for the penetration of the British market by goods produced by competitors leads inexorably to one conclusion—there has been no economic miracle but rather an economic catastrophe.
  Over the last eight years our share of world trade has fallen by 15 per cent. The deficit on the current account of the balance of payments in 1988, the year that has just finished, was larger than the total of all the deficits for the previous 40 years. In 1978, during the period of the much-maligned Labour Government, we had a surplus on the current account of the balance of payments of £5 billion, and we had no oil. We imported oil; we could not export any. In 1988 we had a deficit of £14·5 billion on the current account when oil was still worth £7 billion.

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  Let us consider the figures for the imports of specific items, the goods that people buy in the shops. They tell an even more depressing story. In 1978 we imported only 18 per cent. of the colour television sets purchased in the United Kingdom; in 1988 the figure was 40 per cent. For commercial vehicles the figure was 22 per cent. in 1978 and 40 per cent. in 1988; for buses and coaches, 3 per cent. in 1978 and 38 per cent. in 1988. As to electric irons, which I would have thought were simple to make, in 1978 we imported 15 per cent. and in 1988, 65 per cent. That was another triumph for Thatcherite supply-side economics. Last year 56 per cent. of our cars were imported; for medical instruments the figure was 57 per cent. On and on the sorry tale goes.
  The command economies of the Soviet Union and eastern Europe—they used to be called command economies; perhaps they are not any more—generally were not allowed to import more goods than they could export. In other words, they had to balance not their budget but their trade. They tried to get round it by borrowing, as we are doing now. If we had had to balance our imports and our exports over the last four or five years, the queues for cars, videos, television sets and washing machines would have been almost as bad as those in the command economies of eastern Europe and the Soviet Union.
  The position will not get better; indeed, it will get worse despite high interest rates. Next year the balance of trade deficit on manufactured goods is forecast at £15 billion by the Red Book. The Chancellor hopes that the position will be better in the first half of next year, which will really be about October 1990. Even that hope is not shared by many economists and forecasters. This year the deficit is running at £20 billion. We shall see what the figures bring tomorrow.
  The Institute of International Economics in Washington believes that in 1992, when barriers to trade in the EEC come down, the deficit will be £45 billion. Of course, it will never come to that because long before that figure is reached the pound will have disappeared through the floor, and the Chancellor with it.
  The Chancellor and the Government have very little confidence in the galvanising value of income tax reductions as a way of boosting the supply of British goods. If he still believes that last year's tax cuts were not responsible for the surge in imports, why did he not do the same this year? It would have been a very good year to do it. With a massive surplus of £14 billion, with a need to produce more goods and with a need to boost the supply side of the economy, why did he not cut taxes? Perhaps I should not call them the loony Right, but some Right-wing economists, perhaps even Alan Walters himself, were arguing before the Budget that tax cuts were needed. It was argued that interest rates should be even higher so that we would have a monetary squeeze and taxes could be cut to help the supply side of the economy. That was logical in their terms, but the Chancellor did not dare do such a thing. If tax cuts boost the economy, why did the Chancellor not cut taxes this year?
  The Chancellor and other Conservative Members have tried to play down the importance of the deficit. Neither the City nor the public are fooled any longer. First, the Chancellor said that the balance of payments deficit was of
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  no consequence because it balanced. That was an affront to common sense. He then said that it did not matter anyway so long as we could finance it. Then we were given the story that the deficit was really one of the problems of success. I suppose, on that reasoning, the German surplus is a product of failure. The deficit has been caused, apparently, by too fast economic growth. Indeed, it is a consequence, we have heard today, of the Thatcher economic miracle. Finally, we have another spurious reason being trotted out to us. Much of the deficit, it seems, is caused by British industry retooling and re-equipping itself, gearing itself up for a march on the markets of the world—again, of course, a consequence of the great economic miracle.
  The only answer to all this is "baloney". A balance-of-payments deficit of this size is a serious matter. Even the Chancellor does not pretend otherwise. If it can be financed at all—and that cannot go on for ever—it can be done only by tripling rates of interest, which inevitably put up the costs of industry, very often causing new investment to be abandoned or postponed, thereby reducing the supply of the goods which we need to reduce the deficit.
  One reason given by the Chancellor for putting up interest rates was to damp down the boom in the private housing market. But the irony is that if one borrows to buy a house, especially if one is a first-time buyer, one pays 12·5 per cent.; while if one is a small business man trying to borrow to invest and export one has to pay 15 or 16 per cent. to the banks. High interest rates put up the value of the pound and of course make imports cheaper and exports more expensive.
  With regard to the retooling argument, I suspect that we are not a manufacturing nation any longer; we are an assembly nation. As has been said, we import to assemble; we have to import to assemble; and the idea that some of those imports are capital goods and are there to enable industry to retool does not accord with the facts.
  Obviously, this Bill will do nothing to solve the problem of the balance-of-payments deficit, because, in my opinion, it is far too entrenched. Some time the Government will have to swallow their pride; some time they will have to put up taxes; some time they will have to try to escape if they can through the European monetary system or its exchange rate mechanism, trying to engineer thereby what they will call a realignment of currencies but which will, in effect, be a devaluation.
  The tragedy of the last 10 years is that there have been so many opportunities in terms of oil and a favourable international climate and the Government have wasted them. The British public will pay for that for a very long time to come.
  Mr. Deputy Speaker (Sir Paul Dean): I remind the House that the 10-minute limit is now in operation and I appeal for the co-operation of hon. Members.
  7.12 pm
  Mr. James Couchman: I trust that the right hon. Member for Llanelli (Mr. Davies) will forgive me if I do not follow him down the road which he has been traversing, for I wish to speak quite briefly on that facet of this year's Budget and tonight's Finance Bill which appears to have proved most contentious—the proposal to offer tax relief on premiums for medical insurance for the over-60s.

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  I must declare an interest, for I have lately been asked to advise a company called Denplan and I shall during the course of my speech refer to the unique service and product of that company, which I believe may well prove to be the most important financing scheme for primary health care in the private sector. Neither I nor my immediate family pay any private medical insurance.
  I have long taken the view that those who pay directly or through individual or corporate provident insurance schemes for private medical care do so to the advantage, not the disadvantage, of the National Health Service. They have paid for NHS treatment through their income tax and national insurance contributions and then they pay again by way of an insurance premium so that they may unburden the Health Service of its duty to provide care in the event of illness. Without their additional payment to and treatment by the private sector they would have their malady treated eventually by the NHS. If they take away that burden from the state and in so doing receive treatment earlier than they might otherwise have done, we should rejoice in their earlier restoration to health rather than condemn them as queue jumpers, as the Opposition do.
  It is unfortunate, therefore, that, at the very point where people's use of health care services begins to increase and their income falls as they near or reach retirement, the premiums for private medical insurance escalate sharply. The proposals to offset this escalation through tax relief for the over-60s means that in future fewer people will feel that the burden of premiums has become insuperable. More people who have formerly been covered by corporate schemes, either contributory or non-contributory, will feel able to pay individual premiums for themselves. Health care resources will thus have been extended by taking less tax off people than would otherwise have been the case, and thus resources for others using the NHS will have become greater.
  Whatever the cost in tax relief—and my right hon. Friend the Chief Secretary gave several figures this afternoon, varying from £40 million to £70 million—that will be a direct subvention to health care generally and will make a direct contribution to reducing NHS waiting lists.
  I wish now to consider dentistry. The White Paper speaks of medical insurance premiums being eligible for tax relief from April 1990. The Finance Bill that we are discussing today speaks about private medical insurance premiums in clause 51 and is specific about insurers in clause 52(8). However, clause 53(3)(a) spells out the conditions for eligibility of a scheme as follows:
  "the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified".
  That is a good piece of drafting.
  Does my right hon. Friend intend schemes to provide private dentistry to be included? He must make that clear. Does my right hon. Friend intend only insurance schemes in the traditional sense to be covered? I would caution him about too prescriptive a definition on the face of the Bill in the primary legislation, for new, exciting and innovative schemes are at present developing. The traditional provident insurance has been ideally suited to discrete episodes of illness requiring perhaps periods of
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  hospitalisation and cold or non-urgent surgery. Insurance schemes have generally not been able to grasp the nettle of chronic illness or continuing care.
  Successful dental care is based on routine and regular visits to the dentist, who will provide continuing care and preventive advice and treatment so that substantial tranches of heavy treatment do not suddenly become necessary. One of the problems of the present method of NHS remuneration is that it encourages short-lasting piecework and discourages prevention. Piecework mitigates against quality. It is worth noting that the best insurance against oral cancer is regular routine visits to the dentist. Oral cancer has become particularly prevalent among the over-60s who, because many of them have full sets of dentures, are less than assiduous in visiting the dentist. A six-monthly check-up would lead to a much greater likelihood of early diagnosis of oral cancer for the over-60s.
  What is needed, therefore, is a scheme which offers continuing care by way of a contract between patient and dentist and which also insures against unforeseen dental misadventures, including those suffered abroad, in return for a regular modest premium paid monthly, so that preventive care by the dentist brings the reward of having less work to do later. The company which I have lately advised has developed such a scheme, which combines continuing care with insurance against traumatic episodes. Interestingly, treatment is free at the point of delivery and is given in return for a regular monthly contribution which averages £6 to £7. Individual contracts between patient and dentist are made irrespective of whether payments are made under individual or corporate schemes and the participating dentists monitor one another's quality by a unique system of peer review. This is a good scheme which has achieved accreditation from the British Dental Association.
  Rumour has it that dentistry is to be excluded from tax relief on medical insurance premiums for the over-60s and that only traditional insurance-based schemes are to be eligible. That would be a shame because I believe that continuing care schemes which have been pioneered in dentistry could be developed into a most important contribution to primary care provision. What is good for 3,200 dentists and 45,000 of their patients could well develop into general practice and other branches of medicine and paramedicine. The wide definition of what constitutes a scheme eligible for tax relief and the inclusion of dentistry would give continuing care schemes a fillip. The resulting reduction in the burden on the NHS would allow earlier treatments for those not able or willing to pay private medical insurance. Only the ideologues on the Opposition Benches would oppose such a benign measure as the tax relief proposed in the Budget.
  7.22 pm
  Dr. Lewis Moonie: When the hon. Member for Gillingham (Mr. Couchman) referred to a unique form of care, I thought that he was going to talk about dentists operating on their own teeth. That would certainly be a unique form of care review. Apart from that, I will leave my comments on the merits or otherwise of private medical insurance to another debate.
  The Bill and the Budget proposals from which it sterns must be considered in the context of the current economic situation and the prospects for the future. It is easy to be

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  wise with hindsight, so I propose to do just that and consider what the Chancellor should have done last year and would have done had he been aware then of what he is aware now. It is easy to be wise with hindsight because it is difficult to forecast what is going to happen. Our economic indicators are so unreliable that forecasting is a discipline which is fraught with uncertainty and something on which we would not want to place too firm a reliance.
  It is harder to say what the Chancellor should be doing now than what he should have done a year ago. When I read the Chairman's draft report of the Treasury and Civil Service Committee, I thought that it was remarkably anodyne. I was therefore surprised to read the press reports over the past few days stating how severely and stringently we had criticised the Chancellor and his team. Nevertheless, it is clear from the evidence which the Committee received that the present economic cycle has peaked. We must now ask how far we will slide down the other side, how deep will the trough be and how quickly will we fall into it.
  The cliche of the Chancellor walking a tightrope has been mentioned several times. One slip and off he goes. Perhaps in the Chancellor's case, one decent job offer and off he goes—and perhaps not in the too distant future.
  There is an awful inevitability about all this. Chancellor after Chancellor has tried to buck the trend, and to avoid falling into the trough which follows the peak, and failed. The Chancellor's problem is perhaps analogous to a surgeon who decides to conduct a delicate operation on the brain, reaches round to his instrument table and finds that he has only a saw and a sledgehammer. In addition, the quality of the team which he has with him is obvious.
  It does not help to have blunt instruments, and most of the tools available to the Chancellor are sadly blunt instruments. It might help if he used more than one at a time. The effects of his blunt instruments take an indeterminate time to be felt and the total level of their effect is hard to predict.
  The tightrope is not a very accurate description. Perhaps it would be better to describe the Chancellor as a man standing at the top of a very narrow peak with pitfalls on all sides. A tightrope would suggest only one or two sides—
  Mr. Chris Smith: More like the inaccessible pinnacle.
  Dr. Moonie: Exactly. My hon. Friend is trying to make me jealous. I have seen the inaccessible pinnacle and there is no way that I would try to climb it.
  The Chancellor is standing on top of such a pinnacle and he is surrounded by potential disasters. The end point is recession, but the pitfalls include a multitude of inter-related factors such as inflation, capacity constraints which our economy has clearly run up against over the past year, the balance of trade, the value of the pound, the level of domestic demand, the level of investment and the rising level of wages.
  The pre-election boom of 1986 and 1987 has come and is about to go and we are left with its after-effects. Excess demand has led to capacity constraints in the economy and to our worst ever balance of trade deficit in manufactured goods, and in construction materials to the extent of £2 billion last year. In order to make themselves more
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  competitive, factories in my constituency must go abroad to find the machinery with which to retool. That is a result of the Government's policies.
  Inflation has risen and will continue to rise. The abandonment of any coherent regional policy has meant that the south-east has attracted most of the investment and is now facing a critical and growing shortage of labour, while Scotland, the north of England and Wales still have unemployment levels of over or around 10 per cent., even using the Government's doctored figures.
  The problem is compounded by our continued failure to retrain unemployed workers and by the present demographic trend with which I accept the Chancellor has very little to do. The number of young people entering the job market is falling. There is also a critical shortage of housing in the boom area of the south-east which makes it impossible for an unemployed worker in my constituency in Scotland to move here in search of work and bring his family with him.
  It is therefore hardly surprising that wage increases are accelerating with the inevitable consequence of higher prices and increasing inflation. To cure the over-heating which has resulted from his policies, the Chancellor has selected his blunt instrument—interest rate policy—with the intention of choking domestic demand. He is predicting that the demand will switch to exports and that will reduce our current trade deficit. It is very difficult to find any economic analyst who agrees with the Chancellor about that.
  I want to quote from some of the advice that was given to the Treasury and Civil Service Select Committee and which is included in the report:
  "Finally the balance of payment deficit now faced by the United Kingdom is larger than at any previous cyclical peak. There seems little reason from the point of view of supply performance to believe that the deficit will be easier to eradicate than in the past. Furthermore, while the deficit is running at present levels, the risks of a really hard landing for the economy will remain. There has been no instance of a major economy successfully running a deficit on this scale for any length of time, at least not without substantial depreciation in the exchange rate."
  Interest rates at their present level have unfortunate side effects. They maintain the value of the pound and make us less competitive abroad. They increase industry's costs, making borrowing for investment more difficult. They increase the cost of mortgages, putting even greater pressure on wages, and that is compounded by the higher prices for water and electricity, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said earlier. The recent increases in petrol prices will not help. All those factors will drive inflation higher and place further pressure on wage levels.
  High interest rates also attract hot money from abroad; money which could equally well flow out if conditions change. We are heading for the worst possible situation where the Chancellor will find that his crude weapon smashes domestic demand, which will lead to recession, increasing unemployment and inflation. The beneficiaries will be West Germany, the United States of America and Japan.
  What about this Bill? The Government's policies have fuelled domestic demand and pushed up inflation, as a direct result of the Chancellor's folly. He has told us that he will not increase duty on tobacco and alcohol this year as that, too, would increase inflation. The result is a dangerous blow to people's health which, as he

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  barefacedly admits in his interview with the Treasury and Civil Service Committee, he holds less important than fighting inflation or presumably his own political future. Frankly, I would rather he had concentrated his energies on avoiding the price increases in electricity and water, brought about as a direct result of privatisation, and on increasing the price of alcohol and tobacco.
  The Chancellor has done nothing about the availability of credit. Conservative Members say that nothing can be done about it. I accept that, as we approach 1992 and the internationalisation of our finance market, it is becoming more and more difficult to do so. However, when I see advertisements such as those yesterday in the popular press offering people loans of up to £10,000, secured on their houses, with nothing to pay until April 1990, I refuse to believe that it is impossible for the Chancellor to do anything about that type of abuse of personal credit. There is no way on earth that such loans are justified and no way on earth that Conservative Members can say that nothing can be done about it. Something can be done to choke off the worst abuses of the credit system, even if general credit squeezes cannot, or will not, be applied by the Government.
  If the Chancellor were sensible, he would have given some recognition in the Budget to the need for a proper regional investment policy to reduce the imbalances between the south-east and the rest of the country, and, hopefully, to allow the economy to continue to expand as it could do if those imbalances were redressed. He could have redressed the imbalance between rich and poor and done much more for those at the lower end of the earnings scale. He could have signalled his intention to increase capital investment and encourage saving rather than consumption. He has done none of those things, and therefore we must sit and await the consequences of his folly.
  7.32 pm
  Mr. John Heddle: As I wish to address my brief remarks to two specific points—the cost of mortgages and house prices, and value added tax on buildings and land as contained in clause 17 of the Bill —it is appropriate for me to declare two interests.
  First, I am vice-president of the Building Societies Association. I agree with the hon. Member for Kirkcaldy (Dr. Moonie) that there is no doubt that great hardship has been caused, particularly to first-time buyers such as young married couples, who have been induced and persuaded to borrow more on mortgage than they can afford. Due to the lack of rented accommodation, they have hitherto perhaps had no alternative. Therefore, in some cases, they have borrowed more than was prudent or sensible.
  Like the hon. Member for Kirkcaldy, I deplore the sort of irresponsible advertisements to which he referred and which I too saw in yesterday's popular press. Day after day other loan companies continue to lend money on consumer credit and take charge of the unwary borrower's house.
  My hon. Friend the Member for Beaconsfield (Mr. Smith) kindly allowed me to intervene in his speech after he had answered a question put to him by the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) about the cost of borrowing on mortgage. Over the past three or four years, some banks, both national and
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  international, and some building societies have done the house buyer no service and no favour by encouraging him to borrow money to a greater extent than was prudently sensible.
  When I practised as a surveyor before becoming a Member of the House, most building societies, and most members of the Building Societies Association, encouraged members to borrow only two and a half times their incomes, or two and three quarter times their incomes if their wives were also working. Now advertisements encourage purchasers to borrow up to four times their annual income. This inevitably means that many borrow beyond their means which, because of the current level of interest rates, causes unnecessary hardship. Purchasers borrow beyond their means and, because more money goes into the housing market, it pushes house prices higher and higher. With the current level of interest rates, I sincerely hope, as I know does my right hon. Friend the Chancellor, that the leapfrogging has stopped.
  I shall repeat what I said in my earlier intervention. I am certain that any borrower in my constituency who puts before me his current housing difficulties, born out of the current level of interest rates, has only to go to the branch office of his building society and explain the facts simply and honestly to receive a sympathetic hearing. The building society will reschedule the mortgage, freeze the capital repayment, and perhaps spread the borrowing over a longer period.
  Secondly, I must declare my interest as a consultant partner to a firm of surveyors. I hope that the House will accept that I bring a modicum of practical sense to an apparently theoretical problem in the Finance Bill. That problem involves the imposition of value added tax on non-domestic construction work, which was brought about not at the behest of the Government but by a ruling of the European Court, published on 21 June last year.
  I pay tribute to my hon. Friend the Economic Secretary to the Treasury who, in conjunction with the Customs and Excise, published on the same day—21 June last year—a consultative document explaining the practical implications of the European Court's ruling and suggesting certain measures to bring transitional relief. Following the publication of the consultation document, there was a consultation period which, I believe, expired at the end of September last year.
  I pay tribute to the officials of the Customs and Excise who listened understandingly to the many representations. I pay particular tribute to my hon. Friend the Economic Secretary, whom I know from personal experience of taking constituents and others to see him to explain the practical effects of the ruling. He listened with sympathy and understanding. I also know that certain amendments were made to the transitional arrangements, because they were incorporated in the draft clauses published in February.
  I put it to my right hon. Friend the Financial Secretary to the Treasury that the Treasury has not gone far enough in accommodating a number of schemes which, and contractors who, do not fulfil the conditions contained in the transitional arrangements. I relate my remarks particularly to schemes of inner city renewal, which are such a vital plank of the Government's manifesto. Arty scheme which was legally committed by 21 June—the date of the European Court's judgment—will not be subject to VAT. A number of schemes, although not legally committed, were commercially committed. It is in the

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  nature of inner city redevelopment, and development generally, that the contractor will spend a considerable amount of money on infrastructure, planning, design and rerouting roads, under the broad umbrella of a head of agreement or a letter of intent that will fall short of a legal commitment. The imposition of value added tax, as contained in clause 17 and schedule 3 of the Bill, will cause considerable hardship and, no doubt, loss to a number of schemes committed to inner city regeneration.
  I ask my right hon. Friend the Financial Secretary to consider with officials in the European Commission whether transitional arrangements can be extended—as I am sure they can—to ensure that those inner city schemes, which may well show a loss for the contractor, are included in the transitional arrangements.
  7.38 pm
  Mr. Ieuan Wyn Jones (Ynys Môn): Earlier, the hon. Member for Wanstead and Woodford (Mr. Arbuthnot) eulogised about last year's Budget, which I thought was thoroughly irresponsible. This year, he complimented the Budget in part, which I did not think was much to write home about. I declare an interest because, like him, I am a solicitor involved in estate tax planning. I share his concern about the effect of clause 167 of the Finance Bill which has serious consequences for small businesses and many of the people whom we have heard mentioned in tonight's debate. When I refer to small businesses, I do not mean those run by the sort of people mentioned by the hon. Member for Beaconsfield (Mr. Smith) who wish to invest £1 million. In all my experience, I have never had a client who wished to invest £1 million. I am talking about small farmers and business men, shopkeepers, those involved in manufacturing, and all who make up the fabric of rural society and who are in danger from the clause.
  In recent years, many owners of businesses have sought advice on how best to ensure that their families succeed to those businesses on their deaths. Their concern is a result of the incidence of inheritance tax—formerly capital transfer tax—on death and also capital gains tax on lifetime transfers if a transfer was contemplated either on retirement or owing to ill health.
  Giving advice on such matters is not simply a case of considering the tax implications; many other factors must be considered, such as the ages of children, the assets that might be available to a surviving partner and the relationships within families. Nor is it a case of merely looking at tax advantages: it is a case of weighing up the available advantages and giving the best all-round advice, considering all the relevant factors.
  Most proprietors of small businesses whom I know have only one thought in mind—how they can make arrangements that are in the best interests of their families and businesses. That is the sole criterion. If they can settle their affairs in such a way as to ensure the smooth transfer of the business to the next generation without being subjected to substantial capital taxation on death, or on lifetime transfers, they will be content.
  I want the House to understand—I make this point time and again—that I am not talking about wealthy landlords or City whizzkids. I am talking about ordinary people in rural areas who have a small or medium-sized venture, the value of which has risen in recent years as a
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  result of roaring inflation in the property market. They cannot be blamed for that, and they do not seek to exploit it to realise their assets. They have few liquid assets on which they can lay their hands; all their investment is linked with the business, and all the capital is unrealisable.
  Those with access to expert tax advice normally arrange their affairs in the way that I have described, and in such cases no problems usually arise. Circumstances, however, can and do change, and as such changes cannot be predicted there must be a period during which alterations can be made to meet the new circumstances without families being penalised.
  Let us take the case of a farmer and his wife who have two sons and a daughter. At the time when the arrangements are made, one son farms at home and the other is at school, while the daughter is married and living away. It would perhaps be appropriate for the bulk of the estate to be left to the son who is at home, with separate arrangements being made for the other son and the daughter; but, as I have said, circumstances change.
  Let us say that both the father and the eldest son are killed in an accident. The family may want to make new arrangements in such tragic circumstances. They may want to rearrange the estate so that the other son—who, say, is now at agricultural college—will have the bulk of the estate. Unfortunately, owing to the changes in clause 167, that cannot happen because of the resulting tax implications: in other words, the changed circumstances will mean that the family will lose out. Possibly the asset will have to be sold on the open market and divided among the rest of the family. They will have cash, but a family asset will have been destroyed. That surely cannot be the Government's reason for introducing the clause, but that will nevertheless be its effect.
  We are not talking only about changing circumstances. We are also talking about people who have not the resources to gain access to expert tax planning advice, or who choose not to do anything about it. Those people themselves are not being penalised; they have left the scene. It is the families left afterwards who will have to face the crippling circumstances.
  In my experience over the years, the variation rules are used not for tax avoidance purposes—as is claimed by the Government—but as an opportunity to solve two kinds of problem. First, they are used to put families in a position no worse than would have resulted had proper arrangements been made; secondly, they are used to take into account changes that have occurred since arrangements were made which there has been no opportunity to amend.
  In my opinion, tax avoidance schemes are stitched up well in advance. They do not rely on discussions after a death, which can often be traumatic, hazardous and difficult to predict. All the variations that we are talking about require the consent of all the parties who are to benefit. Some will lose out: clearly, if there is a variation, there will be some gainers and some losers. It is very difficult to obtain consensus within a family after a death, and the Bill will make it impossible for any such arrangements to be made. The real tax avoider would not leave it to chance.
  The Treasury, in my view, is aiming at the wrong target. The provision must be reviewed; otherwise, for the sake of an insubstantial gain for the Treasury in duty, many small

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  businesses will be driven to dispose of their assets, and the fabric of some of our rural communities may be endangered. I believe that that is entirely unnecessary.
  7.46 pm
  Mr. William Hague: I wish to speak only briefly, but in so doing I shall give my reasons for supporting what I consider to be a very good Finance Bill, and to raise a few questions that Treasury Ministers may wish to consider.
  Many right hon. and hon. Members have discussed the overall economic position at length, and I do not intend to follow them. Let me say merely that if it is true, as I believe it is, that our key economic objective at present is to restore low inflation—low, that is, by international standards—we should understand that the Treasury's current policy is heavily focused on that objective. We have the tightest fiscal and monetary policy that we have had for many years—tighter than many people appreciate. The instruments of that policy—public sector debt repayment and high interest rates—have come in for considerable attack, and no doubt the policy has its risks, as the Treasury Select Committee has pointed out. I believe, however, that the emphasis has been rightly placed on dealing with inflation, and that that will be shown to be so. All the other arguments that we may advance about competitiveness, employment and output eventually depend on it.
  The Bill deals with the overall level and indeed the detailed structure of taxation. The reason I support it so strongly is that it takes us nearer to the point at which taxation is structured so as not to discourage people from earning more, working harder or achieving success, whatever their income levels. That, I believe, is the main principle on which taxation should be based; it should raise the required amount of revenue, with the minimum interference with the industry and efforts of the people.
  To many outside the House, that may seem a statement of the obvious, but it is a new development for the tax structure in Britain to be consistent with that principle. Not many years ago the reward for success was to be penalised by massive marginal income tax rates: it cannot be many years ago, for even I can recall it. Those tax rates were presumably designed to discourage the payment of high salaries. Certainly their objective was not to obtain the required revenue, as the total revenue from the highest earners went up considerably after the rates were reduced.
  It was only last year that people stopped losing more than half of any increase in their pay if they were paid more than a certain amount. Only following this year's Budget will some low wage earners cease to face their own excessive marginal tax rates, as represented by national insurance contributions. The changes that are to be made in national insurance contributions are welcome, as they concentrate what are in effect reduced tax rates on many of the lowest wage earners. Even so, it is hard to view national insurance contributions today without wondering about their long-term future.
  Mr. Battle: Is it not the case that when the analysis is done what has been gained in the national insurance changes by people on lower wages is in fact taken away if they claim the family credit allowance, so that they do not gain a penny as a result of the changes and people are not taken out of the poverty trap?
  Mr. Hague: It does deal with the excessive marginal impact of the national insurance contributions. However, we will always need to do more work in that area. Clearly further action can be taken to improve the situation.
  The integrating of income tax and national insurance contributions would be an immense administrative task, given the contributory principle behind the benefit system. In the long run, we must ask whether the contributory principle is worth the trouble of having two types of income tax whose combined effect is to cause the payment of tax to start at a lower level than might otherwise apply, to produce some very strange ups and downs in the marginal rates at higher levels of income and, indeed, to make the benefits system more complicated.
  I believe that the abolition of the pensioners' earnings rule also fits the same theme. Few of those penalised were earning a fortune. The change made in the age allowance is also very good. Previously some pensioners paid more than a 40 per cent. marginal tax rate, while the rest of the country had ceased to do so. Again, people will now have a greater incentive to earn a bit more. The changes in corporation tax for small companies are also part of this theme. People will have an incentive to do a bit better and earn a little more.
  Thus, this Bill can be seen as part of a continuing and, I believe, healthy process. Last year's Budget did much to move the tax system away from stamping on effort and success; this year's Budget takes a few more steps in that direction. It is a Budget that does not menace, frighten, threaten or act out any vendetta against any section of the population. Having regard to some of the tax legislation in previous decades, this Budget therefore represents a rather refreshing and considerable achievement. We have not yet obtained a perfect tax structure, as even my right hon. Friends on the Treasury Bench would concede. It would be good in future to see fewer people pay tax and to see many doing so at a lower rate. As my hon. Friend the Member for Beaconsfield (Mr. Smith) said, it would be good to get rid of some of the taxes currently paid.
  We cannot complain that this Bill lacks anything in volume. It is a daunting sight even to one who has never set eyes on such a Bill before. Clearly some changes which are buried within it and which have been spoken about by my hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot) and the hon. Member for Ynys Môn (Mr. Jones) have not yet received wide publicity but merit careful consideration. They referred to changes in clause 167, which refers to deeds of family arrangement. As I understand it, the effect of the Bill will be that people who would have had a chance to reorder the affairs of a deceased person by general agreement will no longer have that opportunity. The people most likely to be adversely affected are not the super rich who could have their wills rewritten every other day if they so wished, but the small farmer or business man who has never been rich but who has considerable assets in his business and who made his will many years before his death. The intention of the will may be frustrated in such cases by economic or legal changes in the meantime. There may be good arguments for the clause, but we need to hear them.
  Members on both sides of the House accept that taxation is used still as an instrument of social and environmental policy. The increased differential between leaded and unleaded petrol is an example, and is widely applauded in the country. Another example is the imposition of duty on tobacco. I hope that the possible

  869
  impact of the increase in duties on retail price inflation is the only reason why my right hon. Friend has not taken more action on that this year.
  The encouragement of charitable giving is another use of tax policy for social purposes. The doubling of the amount allowed under the payroll-giving scheme is an excellent proposal. However, I wonder whether the time will come before long to consider further tax incentives for charitable giving on a larger scale. I also wonder whether the Treasury has exhausted the limits of examining whether it is necessary for VAT to be imposed on village halls. Much is being said about the age of the active citizen, so it will be good if we could do a bit more sometimes to encourage the active citizen in his activities.
  In summary, then, I applaud the Bill which, with appropriate caution, takes us closer to a fair structure of taxation in this country and deserves the support of the House.
  7.57 pm
  Mr. Tony Worthington: My attention was directed yesterday to an article about the Secretary of State for Energy who was billed as the top table Tory who probably understands industry best. It was interesting to read the article, because it may well refer to the thoughts of the next Chancellor of the Exchequer, given that the present one is clearly on borrowed time. It was depressing to read the words of the Secretary of State for Energy because, if he became Chancellor, judging from those words there would not be any change in thought about the respective roles of manufacturing and service industries.
  I found it depressing to read that the Secretary of State for Energy saw manufacturing industry very much as a phase from the past. He was saying that if we looked at the trend worldwide we could see that we would never need the same number of people in manufacturing to produce an absorbable quantity of goods.
  It is important that he should say that, because it contradicts the experience in Japan where, over recent years, a growing number of people have been employed in manufacturing industry. The Secretary of State for Energy was told, in the article, that whole sectors of British industry, for example, machine tools, had never come back. He was asked whether he considered that that mattered. It is interesting that if one goes around the country visiting factories one cannot find a British machine tool industry, and there seems no willingness in this country to find the means by which it would return. In answer to the question asked by the interviewer, the Secretary of State for Energy said:
  "Comparative advantage has to be the basis on which you trade. If other people make things better than we do and we deny ourselves the opportunity of buying for some false nationalistic reasons, we just put ourselves at a disadvantage."
  Indeed, we certainly have put ourselves at a disadvantage in recent years. When one looks at the consumer goods in one's life, one can see how few come from this country. We must challenge the idea that there is a maximum number of goods that can be produced or absorbed. I cannot imagine that Japanese industry is saying that it must hold back because the world cannot absorb any more of its products. The idea that we can just leave manufacturing
  870
  and that services industries will take over is specious. The idea that fewer and fewer people should be involved in manufacturing as being a measure of the strength of the economy is specious. The idea that people will turn their surplus funds to the use of the services of people is also specious.
  I have already referred to the increase in the number of people in Japan who are involved in manufacturing. In the United States as well there has been a negligible decline. It seems that service industries depend on manufactured goods—that they are packed full of manufactured goods. I assume that we shall continue buying from abroad. All the services that I can think of will ultimately be replaced by goods. There is a tendency constantly to development technology which will allow the provision of a service to be by machine.
  We used to have laundries, but they have been replaced by machines that do the same work. Dry cleaning is a service industry that will disappear once a machine is developed for use in the home. Cinemas—although there is a degree of recovery—are being replaced by video production. Many manufactured goods are designed to provide a service, and people choose to buy such goods rather than have those services provided by people. One does not go into a bank, for example, but draws cash from a machine outside it. There is no longer the need for the cashier inside the bank that there used to be. The interval between car services grows longer.
  It is unlikely that there will be a growth in the number of people required in service industries in future. In the financial services industry, for example, people will be progressively replaced by machinery and by goods. It is essential that we change our attitude about manufacturing. The service industries cannot replace manufacturing industry, particularly in respect of exports. There has been a massive expansion in air travel, for example, whose export earnings are equivalent to what was earned in the past from the motorcycle industry. However, service industries cannot be exported in the way that manufactured goods can.
  We must follow the Japanese pattern of spotting the manufacturing future. I refer to the home entertainments industry as one example. We cannot leave it to be continually dominated by the Japanese. We know that in future we must look more seriously at the whole area of fibre optics, high definition and digital television, if we are to operate on a European scale and ensure that we claw back our share of that industry.
  The Government appear to take a hostile attitude to manufacturing. In particular, we are massively under-equipped in terms of work force skills. In 1985, the number engaged in manufacturing training was only one quarter that of 1968. In Scotland, Scottish Enterprise will rely on the private sector to provide better training, but the private sector has conspicuously failed to deal with that aspect in the past.
  I cannot but be fearful about the future, when the Americans eventually get around to dealing with their own budget deficit. There may be some idea around that they are tackling that aspect. Recently, I have been very impressed by the publication by William Cline dealing with the global impact of the American trade adjustment. As an outsider, he has no reason to be deceitful. He observes that when the Americans get around to sorting out their budget deficit, it will be extremely worrying for the British because the weakest external sector outlook is

  871
  that of the United Kingdom, which stands in a class of its own. When the recession hits, as it is almost certain to do, then because of the way in which the Americans will have to operate—by raising interest rates, or by protectionism, or by using other means—Britain, which already has a considerable budget deficit, will be hit even harder. It is possible to forecast a further decline in Britain's manufacturing industry.
  We find ourselves in the situation we do because of our historical neglect of manufacturing industry by Governments of both parties over a long term. We have not given our workers enough training, and neither have we invested enough in research and development. We have fallen behind. The only reason why investment per person in recent years has not plummeted is that we have one third the number of people employed in manufacturing industry that we had in the past. It is a simple fiction to think that in future we shall have low unemployment because service industries will take over. That is not true. We must tackle the problems of manufacturing industry with vigour and with a sense of interventionism that is conspicuously absent from the Government's proposals in the Bill.
  8.5 pm
  Mr. William Powell: I am sorry that my right hon. Friend the Paymaster General has just left his place because I intended to begin my remarks by commenting that I suspect that for him the most important and interesting pages in today's newspapers are the cricket pages. I must confess that for me they are the racing pages—not only for their intrinsic interest but because the racing pages in both the national newspapers and the specialist press subject their writers and tipsters to the relentless discipline of having their forecasts checked there and then, that day, by the actual result on the race course. I cannot help thinking that if only the economic tipsters were subjected to the same relentless discipline, we might see a great deal more caution, and much more humility, among those who forecast in the House and outside it.
  Let us take that notion one stage further, and reverse the situation so that the economic writers become the racing tipsters and the racing tipsters become the economic forecasters. I imagine that the quality of information that would then become available for national policy making would be a great deal better and more reliable than it is at the present time.
  We have listened to a great deal of speculation—and that is all it is—about what might be happening in our economic life. We know perfectly well that most of last year's speculation was wrong—often badly wrong. The Chancellor was criticised, but most of his critics were just as badly wrong as he has ever been. We should bear that in mind. Economic policy is not determined by short-term factors of the kind so often identified this afternoon and this evening, but by much longer-term factors. The British economy in the 1980s is very dependent upon what happened in the 1970s. What happened in the British economy in the 1970s was totally dependent on what happened in the 1960s. What happens in the 1990s will be the product of what happens in this decade.
  The House will bear in mind my interest in the racing pages when I forecast that there is a rich harvest to be gathered for this country in the 1990s as a consequence of the fundamantal structural changes made during the present decade. My hon. Friend the Member for Horsham
  872
  (Sir P. Hordern), in describing the speech of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), used the expression "charming". I extend that expression to cover the speech of the right hon. Member for Llanelli (Mr. Davies) because he and the right hon. Member for Ashton-under-Lyne had responsibility in the Treasury in the 1970s, and they may look back with nostalgia upon their success during those days.
  However, those successes were not viewed as such by the rest of this House, nor are they so viewed by the rest of the country at the present time. At that time they were not viewed as successes, and the position does not look good in retrospect either. So that those two right hon. Gentlemen are welcome to go down memory lane, but they should not imagine that they deceive anybody in the Opposition, anybody on the Government side of the House, or anybody outside.
  The right hon. Member for Ashton-under-Lyne talked about how one third of the manufacturing industry in his constituency had been wiped out—so he said—in 1980 and 1981 by this Government. My constituents remember March 1979, when the Labour Government announced that Corby steelworks, which employed three quarters of the population of the main town in my constituency, was to close. My constituents do not look back with nostalgia upon the so-called golden days of the 1970s—far from it. That kind of analysis deceives nobody.
  What my constituents do notice now are the enormous changes brought about by the investment that has taken place in the 1980s. At first, those changes were rather fragile, then they gathered steam, and now they amount to a raging boom. Every single week, when I return to my constituency, I see still more factories being constructed. Each week, changes are taking place—and this in an area that undoubtedly experienced some of the highest unemployment levels in this country earlier in the decade. That is why I am so confident that there is a rich harvest to be gathered in the next decade as a result of the structural changes that have been made in our economy during the course of this decade.
  I welcome this Finance Bill. I welcome most of its proposals with very considerable enthusiasm. However, I have to say to my hon. Friend the Economic Secretary to the Treasury that there are aspects of it that I find disappointing, and one or two aspects that are unwelcome. I will deal first with those that I find unwelcome. My hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot) and the hon. Member for Ynys MÔn (Mr. Jones) mentioned clause 167. We shall have to look again at that clause, and the criticisms by two people who are experienced practitioners in this field will have to be taken on board. In the course of the deliberations of the Standing Committee, I shall certainly do my bit to see that these matters are looked at again very carefully.
  I agree entirely with the criticisms of my hon. Friend the Member for Horsham in his very wise and perceptive speech, and of my hon. Friend the Member for Beaconsfield (Mr. Smith) about whether tax relief should be extended to people over 60 who have private health insurance. As the argument stands, I shall be unable to join the Government in the Lobby when these matters come to a vote in due course. I say so on the basis that it is entirely wrong to extend tax reliefs further and further unless there are the most profound reasons of national endeavour for doing so. At this stage I am not persuaded by the arguments that have been put forward for this extension.

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  I am disappointed by the inheritance tax provisions in the Bill. My hon. Friend the Member for Beaconsfield identified tax abolition as an entirely noble and proper course for Chancellors in their Budget speeches and in the ensuing Finance Bills. I have to say that it is time that the inheritance tax was abolished. It brings in only just over £1 billion a year. There are already enormous exemptions, and the fact is that, because of its arbitrary nature, it is capable of doing immense damage, particularly to the business fabric of this country. My hon. Friend knows of my interest in unquoted and family businesses. In the case of these businesses, inheritance tax can be paid only out of active assets. That leads to take-overs, sell-outs and centralisation of a most undesirable sort.
  If we are to have the sensible regional policy for which a number of hon. Members have called during this debate, we must face up to the implications for regional policy of inheritance tax and its predecessors. Over a generation, enormous damage has been done to our regions by nationalisation, by the huge and burgeoning growth of pension funds based in London and using London as the base for their investment decisions, and by the subsidy to public companies taking over private companies, usually in the form of roll-over relief—that itself being necessitated by capital transfer tax, inheritance tax, estate duty, or whatever it may have been called.
  I want to make two final points. First, I welcome the ESOP provisions that have been introduced in this Budget, but I hope that my right hon. Friend the Chancellor will not regard them as a panacea. They will be useful in encouraging employees, in giving incentives to certain types of companies, but many family businesses will find them irrelevant to their necessary task of ensuring that their employees too enjoy the kind of incentives that are increasingly widely available outside family businesses. I warn my hon. Friend the Economic Secretary that when we come to discuss in detail the Finance Bill's proposals for the abolition of the closed companies legislation I shall make it clear that I do not think that my right hon. Friend has selected the best means of doing this. There are potential nasties in the scheme that he has put forward, and we will need to look very closely at the proposals.
  Lastly, I welcome very strongly the added incentives to motorists to use unleaded petrol. I am one of a growing number of people who, since the Budget, have taken advantage of that incentive, and I hope that many thousands will follow. They will not only benefit from lower prices but do their own little bit to see that further damage to our environment is limited to the greatest extent.
  8.17 pm
  Mr. John Battle: Opening the Second Reading debate the Chief Secretary to the Treasury used again the oft-repeated tale about booming Britain. He talked about a dramatic improvement; he said that the country had never been in such a good position; he spoke of its outstanding record of success. I suggest that such descriptions have developed a very hollow echo for millions of people in Britain, who are not experiencing what the hon. Member for Corby (Mr. Powell) referred to as "a rich harvest".
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  During yesterday's debate on social security, hon. Members on the Government side, faced with evidence of social security reductions for those on the lowest incomes, had real difficulty in claiming that real living standards are rising. We are entitled to ask whether all the people in our society are participating in this much-vaunted boom in Britain. Are all getting their share of this increasing wealth? Recently, The Sunday Times published a comprehensive study of Britain's richest people. That may give us some idea who has been gaining as a result of this Government's finance policies. The next day one of the tabloids published an article under the banner headline
  "It's still the posh that's got the dosh".
  In view of the grammar, I hardly need say which tabloid it is. A sub-head says:
  "Try Eton or the Guards if you want to get rich"
  [Interruption.] Is the hon. Member suggesting that his name was in the list? I fear that it may not have been.
  Mr. David Shaw: As someone slightly experienced in business, may I offer the hon. Gentleman a suggestion? Today, if one is to succeed in business, it is a positive disadvantage to have gone to Eton and to have been in the Guards.
  Mr. Battle: I will deal precisely with that point later.
  In this article there was a portrait not of the hon. Gentleman but of Mr. Ian McGlinn, a Sussex garage owner who, at joint 158th place in the league of the 200 richest people,
  "proves that hard work and an eye for the main chance can catapult ANYONE into the jet set."
  Did he do it by building up his car business? Sadly, he did not. The article says that in 1976 he
  "dabbled in shares. He put £5,000 in Anita Roddick's fledgling Body Shop firm—now that it has been floated on the stock exchange he's worth £40 million."
  That view—that share and equity ownership is the key to personal wealth in Britain today—was emphasised today by the Chief Secretary to the Treasury.
  To return to the question put to me by the hon. Member for Dover (Mr. Shaw), The Sunday Times put an entirely different interpretation on the wealth story. It said:
  "The very limited success of the Thatcher revolution in transforming British society is graphically and grimly illustrated by the league table of wealth published in The Sunday Times Magazine today. Of the 200 richest people in the country we have identified, old Britain still looms large: more than half the list is made up of inherited money. Some 57 of the 200 are landowners, 55 went to one school … and 25 even served in the same regiment … No wonder Japan, America and West Germany continue to beat the pants off us in the league table of economic performance. In these countries people have grown rich through industry; in Britain the rich still come disproportionately from those who have managed to hold on to their ancestors' land and property … The bias towards old money is not just bad for the balance of payments. A country in which people can grow rich through industry is also a country which creates jobs. But there are precious few jobs in simply passing wealth on from one generation to another and the only industry involved is in avoiding the taxman."
  There is another flaw in the tabloid approach that is often adopted by Conservative Members. Those in poverty do not have the choice whether to be rich or poor. They do not have £5,000 to put down on a shares gamble. That is not an option for the 15 million people who are living in poverty. It is not true that anybody can make himself a millionaire. He cannot.

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  The trickle-down theory has run dry. Real incomes have increased on average by 6 per cent. in the last 10 years, but the poorest 20 per cent. have seen their share of household income fall from 6·1 per cent. to 5·6 per cent. How does that contrast with the richest 20 per cent.? Their share has risen from 40 per cent. to 43 per cent. The trickle-down theory is not working; nor is the myth of the average wage that is peddled by those who sit on the Conservative Benches. Their view is that if the average wage increases, everybody will get that increase. However, those on the lowest incomes do not find that their incomes increase if the average wage rises. The average wage may rise as a result of those at the top end getting even more.
  The Government are involved in all kinds of contortions in an attempt to present their economic efforts as a success. Yesterday they claimed that they were celebrating a rising average wage. However, all their noises about the need to keep down inflation mean that they have to insist on wages being kept under control. I make no apology for returning to the British Institute of Management and Remuneration Economics survey of wages that was published in the Financial Times on 23 April 1989. It said:
  "Britain's directors last year received their biggest increase in take-home pay for 16 years … The survey found that the reduction in the top rate of taxation in the 1988 budget had helped to increase directors' take-home pay by 26 per cent. Their gross earnings, before tax and national insurance contributions increased by 13·9 per cent."
  The Government's tax policies are manufacturing tax inflation. Emerging wage inflation is the product of last year's economic mismanagement when the rich were given back so much.
  If the Government's economic policies have led to an illusory sleight of hand in the management of taxes and wages, the same is true of the Government's previous claim that the National Health Service is safe in their hands. The introduction of tax relief for private health care represents a serious breach in the principles of the National Health Service. The Government are clearly going down the road of tax subsidies in the Finance Bill. Its provisions are the first steps down the road towards tax subsidies. They will lead to tax relief on direct payments for health care, to special tax-free savings for private health care and eventually to tax relief on all such schemes, regardless of age, need or type of operation.
  An article in The Independent on 15 April was headed
  "Clarke urged to extend tax relief to over-60s."
  The article spelt out how key advisers to the Government, when formulating their White Paper proposals—such as Dr. Michael Goldsmith, the medical director of Medisure, the medical insurance advisers, and David Willetts, the director of the Centre for Policy Studies—are urging the Government to go even further. According to the article, Mr. Willetts said:
  "I hope that tax relief will not cover just insurance, and that it will cover any direct payment mechanism."
  It is time that the Government made absolutely plain what their attitude is to private health care. It is no use the Secretary of State for Health and the Minister of State saying, in an aside, that they believe that the changes in the Finance Bill are minor, interesting details. They may undermine the principles of the National Health Service.
  If there is to be a tax break on private health care, it will lead to an erosion of the tax base, to a loss of income to the Exchequer and in turn to a reduction in the funds available to the National Health Service.
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  In July 1988 the Select Committee on Social Services reported:
  "In our judgment the creation of a new tax subsidy on all private health insurance cannot be demonstrated to extend the total availability of health care."
  The Finance Bill will undermine the National Health Service. It reinforces the Government's past policies and demonstrates that the Government are undermining their own stated intentions.
  8.27 pm
  Mr. Andrew Mitchell: In contrast to the hon. Member for Leeds, West (Mr. Battle), whom it is always a great pleasure to follow, I must make it clear that I believe that the 1989 Budget and Finance Bill will be seen in retrospect as fundamental to securing good economic performance and rising living standards in the 1990s, as well as to securing a soft landing later this year.
  I have read with great interest the report of the Treasury and Civil Service Select Committee. It refers to the loose monetary policy adopted in the wake of the October 1987 stock market crash and says that it is now clear that nearly all conventional wisdom underestimated the tremendous strength of the British and other economies. However, it certainly did not look like that at the time. Perhaps the Select Committee allowed itself just a touch of the Monday morning footballer syndrome.
  Earlier in the debate the Chairman of the Select Committee, my right hon. Friend the Member for Worthing (Mr. Higgins), seemed to concede as much. I hope that my right hon. Friend will not mind if I quote his words to the House on 5 November 1987 in the debate on the financial markets. In stressing the importance of effective action he said:
  "The response of the Chancellor in reducing interest rates following recent events was the right one."
  He then went on to say:
  "However, there is still further scope for us to reduce interest rates …"—[Official Report, 5 November 1987; Vol. 121, c. 1134.]
  I make that point to underline the fact that to have done otherwise at that time would in the short term have been extremely dangerous, would have flown in the face of conventional wisdom, and might well have precipitated a yet greater and more prolonged crisis of confidence in the market.
  Clearly we still live with the effects of that decision, but we also live with the specific difficulties of a dynamic economy whose supply side has been transformed and where progress has been so rapid and marked that change and growth pains are endemic and unavoidable. Unemployment has been markedly reducing, yet we now face serious skill shortages. The problem is turning on its head as a result of the growth in our economy.
  We should be very wary of knee jerk and over-simplistic reactions to the size of the deficit. Certainly it is extremely high and we want to see a change in trend. I have no doubt that change will come as a result of our very high current interest rates, but the present high level of demand and credit is a consequence of other aspects of our economic success. We should be very wary of further rises in interest rates before the present level has been allowed time to achieve the necessary result.
  Much has been said in this context about the performance of the Government's statistics office. I welcome the intention now to get to grips with these difficulties by placing at least part of the Central Statistical

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  Office under the wing of the Treasury. I am sure that this will lead to more accurate statistics being made available. However, the inability to explain the £15 billion hole in the accounts is rather disturbing. Perhaps much of it is unrecorded exports. There is a revaluation at the end of each year of the export figures; they are adjusted and normally turn out to be much more favourable. The various measures of gross domestic product simply do not add up. Tomorrow dealers in the City will be staring lugubriously at their screens awaiting the trade figures and subsequently making judgments about our economic performance based on unreliable figures. We should pay far less attention to those figures and accept that a deregulated, dynamic, free enterprise economy such as ours is extremely difficult for the CSO to monitor effectively.
  Following last year's Budget, which accomplished so many historic necessities at one go—the tax emancipation of women, the ending of confiscatory income tax rates, the translation of the PSBR into a PSDR—it was inevitable that this year's Budget would be lower key and more technical.
  This year's Finance Bill underlines that. It can hardly be described as a user-friendly document—perhaps it never is—but it is certainly a considerably more challenging document than last year's Finance Bill, which I had the good fortune to examine in Committee. I fear that its comprehension and interpretation will provide a very good living for many City lawyers and accountants for the next few years. Nevertheless, if its complexity was foreshadowed, many of the Budget's measures themselves were not.
  I believe that there will be radical effects on the savings market as a result of this Budget. The Chancellor has made a major contribution to the development of employee share ownership by allowing the contributions of a company towards an ESOP to qualify for corporation tax relief. It is encouraging to know that our representations to the Chancellor last year during the Committee stage, and particularly those of my hon. Friend the Member for Esher (Mr. Taylor), who is currently detained overseas on parliamentary business, have been noted and heeded.
  The measures which affect profit-related pay and employee share schemes will also be extremely helpful in promoting genuine employee participation in the enterprises for which they work. It is this Conservative approach to encouraging harmony and productivity in commerce and industry which is itself a landmark in industrial relations and which will have the most far-reaching and profound effects over the long term.
  The measures for promoting personal equity plans are equally significant. They too will not only encourage savings and share ownership but will have a significant effect on the mortgage market. The financial institutions may well be able to demonstrate that a PEP mortgage is at least as competitive as an endowment mortgage and thereby wake up a rather sleepy corner of the market to the great benefit of the consumer both in terms of choice and competition.
  As the reasonable man surveys this Bill and the Budget which forms its foundation, it will be hard to find much wrong with it. Certainly the abolition of the earnings rule and changes in national insurance contributions are
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  pivotal. I particularly salute the Economic Secretary in his work on the promotion of lead-free petrol. I am delighted to see Gedling, as so often in other matters, leading the way in this. In my constituency now practically all garages supply lead-free petrol; one petrol station has 16 out of 20 pumps supplying it.
  I do not wish to insult the ingenuity of the shadow Opposition Treasury team but, with the exception of the health proposals, there is very little they will be able to complain about in Committee. Yet those health proposals were announced in January and their announcement was therefore not part of the Budget. More important surely is the overall perspective on health. Our successful economic policies have provided for unprecedented increases in health spending, but throwing money at the Health Service is not a sufficient discharge of our public duty. We are now reforming its structure to ensure value for money and value for the taxpayer. That surely is our duty.
  It is because the 1980s have seen such a fundamental change in our economic performance—indeed, it is no exaggeration to say that the 1980s are the decade of the supply side revolution—that the future needs of the National Health Service, and indeed of the rest of the public sector, can continue safely to be met by this Government.
  I support the Bill and look forward to its rapid implementation.
  8.36 pm
  Mr. Pat Wall: According to the radio today, the CBI sees some signs that high interest rates are beginning to slow down the economy and hopes that will bring down the rate of inflation, which, even excluding mortgage payments, means we have the sixth highest of the seven major European countries. It is interesting to note that in real terms, excluding inflation, interest rates are the highest they have been in this country since the Napoleonic wars. Perhaps that gives a clue to how the Chancellor sees his present role, as the Napoleon of the British economy, the revolutionary tax reformer. Like Napoleon, the right hon. Gentleman normally stood with his hands in his jacket. However, Napoleon Bonaparte won real victories before his eventual defeat and exile. The Napoleon of Blaby's victories have been somewhat illusory, though he also, I suspect, will go into political exile.
  The CBI also sees prospects of a reversal in the rising rate of inflation and—with illusions—holds on to the belief that it can contain the increase in ex-factory prices to 5 per cent., the present rate. That is in conflict with the evidence of the retail sales figures and the money supply figures. However, even the CBI has no faith whatsoever in the Chancellor's ability to tackle the balance of payments problem. It makes the point that a decrease in the rate of inflation will lead to further losses of manufacturing jobs and in the wealth-creating section of the economy. Already the figures from the textile industry, which is often a barometer for the rest of the economy, show a growth in redundancies in the knitwear and other sectors.
  The Chief Secretary today boasted yet again of the Government's achievements in economic growth, productivity and production. I would like to look at each of those aspects of the British economy.
  The British economy has grown less than its major competitors since 1979, despite the bonus of North sea oil,

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  which was worth about £18 billion a year in the mid-1980s and is worth about £7 billion a year now. Since 1979 the average annual rate of growth has been 1·8 per cent.—a miserly figure, even compared with the 2½ per cent. rate of growth under the last Labour Government which has been much maligned by Treasury Ministers. Manufacturing output fell by 14 per cent. between 1979 and 1981 and did not return to its 1979 level until 1987. In the same period manufacturing output increased by 38 per cent. in Japan, 25 per cent. in America, 16 per cent. in Italy and 12 per cent. in West Germany. Although the 4 per cent. increase in output in the past two years is above that of our major competitors, the figures I have quoted illustrate that Britain has a long way to go to compete with our major competitors.
  The Chief Secretary boasted a productivity growth rate of more than 4 per cent. between 1979 and 1988—which is higher than that of our major competitors. But Britain is still 25 per cent. behind the EEC average in terms of productivity and still further behind Japan and America.
  In 1988 investment per worker stood at £3,000 per head —lower than all our major competitors and only half the investment per worker in Japan. Even if we had a slave society worse than the restrictions that the managerial counter-revolution have placed on the conditions under which people work in recent years, investment in new machinery and new methods would always win and that is lacking in the British economy at present. Between 1979 and 1987 investment in industry rose by only 9 per cent. —less than half the increase in consumer spending. Manufacturing investment is still slightly below the level it reached in 1979. The annual rate of growth in capital stock—that is machines and plant— between 1979 and 1986 was only 11/2 per cent. which is about half that of Britain's major competitors.
  The Government's investment in real terms in schools, hospitals, housing, roads and general economic infrastructure has fallen by 50 per cent., and is likely to fall by a further 6 per cent. in the next two years. Without taking into account the decline in oil and energy revenues between 1985 and 1988, manufacturing exports rose by 23 per cent. while imports increased by 48 per cent. That created the balance of trade deficit, which is continuing to run at an annual rate of more than £20 billion per year. The net outflow of private capital of £6·3 billion in the first nine months of 1988 plus a further outflow of £5·6 billion in portfolio investment abroad amounts to almost £12 billion in nine months. That, in addition to the balance of trade deficit, shows that if there were a run on the pound—which could happen given the general rise in world interest rates and the poor performance of the British economy—even the Chancellor's much-vaunted currency reserves of £30 billion would be under serious threat within a year.
  The Finance Bill and the Government's economic prospects cannot be considered in isolation from the rest of the world. The massive $155 billion America budget deficit, the further $130 billion American trade deficit and the massive surpluses in Japan and West Germany have created a total imbalance in the world economy. In America there is the added problem of corporate debt to finance huge takeovers. Many American loan banks have gone into default and in the next five or 10 years could cost the American Treasury anything between $50 billion and $150 billion. The world's major capitalist economies are in a far from rosy position. In addition, there is a continuing problem of Third world debt with a net outflow from poor
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  countries to rich countries of $46 billion last year. Therefore, the situation is very different from the picture that the Government have painted of the British economy and the major world economies.
  Although the world economies avoided a recession after the stock exchange crash more than a year ago, by cutting interest rates and priming the economy, that policy is now being reversed. Interest rates are rising and productivity and growth are falling. That brings us back to the situation which one would normally have expected to follow the stock exchange crash—the possibility of a growing trade war and a recession and all that means in terms of human misery.
  I conclude by drawing a comparison between the Government's claims and what really happened which was so well explained by my hon. Friend the Member for Leeds, West (Mr. Battle). The top 100 millionaires in Britain gained more from last year's Budget than the bottom 1 million people in Britain. Under this Conservative Government the top 1 per cent. of people in Britain received a 55 per cent. increase in income while the bottom 10 per cent. have lost 8 per cent. of their income. The Government represent a class-divided society. The world economy is split so that, even in so-called boom years, billions of people live in absolute poverty and a tiny handful live in riches. I believe that that is becoming increasingly apparent and that a democratic Socialist society which controls and shares its wealth evenly will become more and more desirable in this country and throughout the world.
  8.46 pm
  Mr. David Shaw: It is always interesting to listen to the hon. Member for Bradford, North (M r. Wall). I remember his previous speeches on the economy which covered many world issues. He reminds me of the man with a sandwich board who goes round proclaiming that the world will end tomorrow. Unfortunately, his speech that the world was due to end tomorrow which he delivered last year appears to be wrong. The world is still around, the United States economy is still growing, the British economy is still growing and the only notable failure in the world economy in recent years is the Marxist-Leninist and Socialist economy in the Soviet Union.
  The Finance Bill has been introduced against a background of a good economic position. The good news is that inflation is nowhere near as high as it was in 1979, earnings are much up on 1979 and economic growth is considerably higher than it was in 1979. Manufacturing productivity is a key statistic because of the very statistic that the Opposition always quote. The fact that we have lost 2 million jobs in manufacturing industry is good news because the 5 million people now employed in manufacturing are producing more goods than the 7 million people who were producing under Labour. Manufacturing productivity has increased by 50 per cent. since 1979—[Interruption.] The Opposition should listen and learn from those statistics so that if they ever get into government, which is extremely unlikely, they will know what to do.
  Capital investment in Britain is going up at record rates, but, leaving aside capital investment in buildings and dwellings, the investment in manufacturing plant and machinery has gone up by 25 per cent. in real terms since

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  1979. That has produced the balance of payments deficit because about 22 per cent. of the growth in imports is the result of manufacturing plant and machinery having to be imported.
  Machine tools are having to be imported as the British economy grows because the Labour Government in the 1970s destroyed the machine tools industry, just as they destroyed many industries. The motor car industry is a good example of that. In 1976, the balance of trade on motor cars was positive. The success of the Conservative Government in the early 1970s left Labour with a balance of payments surplus. By the time Labour left office in 1979, there was a deficit on motor cars. They had totally and utterly moved towards the destruction of that industry.
  The Conservative Government have begun to reverse that decline. We have encouraged the Japanese and others to set up here. We have encouraged Jaguar and other companies to be more efficient. The way in which we have reversed the declining situation caused by Labour has been good for jobs and growth. I welcome the Finance Bill because it is a continuation of the achievements of Conservative Administrations. The Bill is part of the process of getting Britain right. It was not right under Labour.
  I welcome the news for pensioners—the abolition of the earnings rule and the tax relief to be granted for contributions to private health insurance schemes. I welcome the benefits for low-paid employees through the changes in national insurance. I also welcome what is being done for share ownership. Everybody should have a stake in the community. All workers in Britain should have an opportunity to buy shares in the companies and businesses for which they work, and in other enterprises.
  It is also good news to see encouragement being given to profit-related pay. Employees should be paid according to the success of the firms for which they work. It would be nice to have a Civil Service profit-related pay scheme. Indeed, we would welcome the Government defining "profit" in that sector.
  I also welcome increased taxation on what I would call the car benefit. We should be taxing business perks. Indeed, there should be no need for such perks. People should be paid a fair and straight wage, not a wage with perks attached. Let us tighten up on all forms of business perks and tax them fully, with national insurance being charged on them as well. Pay should be related to the success of the firms for which people work.
  I must comment on two slight disappointments—I would call them omissions—in this year's Finance Bill which I hope will be addressed in future measures. If I am fortunate enough to be a member of the Standing Committee, it might be possible to discuss at that stage the two key areas to which I wish to refer.
  The higher rate of capital gains tax at 40 per cent. is too high. It has been recognised in the United States that it acts as a disincentive to investment in entrepreneurial-based companies. The 40 per cent. rate hits the gains of the very companies we want to help and in which we want people to invest. It hits the entrepreneurs who back those companies.
  The hon. Member for Leeds, West (Mr. Battle) referred to Body Shop. Had he checked his facts he would have appreciated that the success of that investment of £5,000
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  has created 4,000 jobs—according to figures I have—in terms of direct employment. The degree of indirect employment is much larger. Had he examined the contribution that is made by the founding members of that organisation, he would have discovered that they contribute towards CND—not a contribution that I would recommend all business men to make—although the hon. Gentleman might have some sympathy with the views of the founding members in that respect. As I say, he should have researched his facts better.
  Next, I am unhappy about the lack of help for business expansion scheme funds and the fact that the Government have not included in the Bill this year any measures for BES projects. It has been said that BES is too oriented to backing property and that we must return to a scheme which backs real companies and real investment, such as electronics and manufacturing.
  In Committee last year we discussed at length the £500,000 limit and whether it should be raised for investment in BES companies in the manufacturing sector. I extracted a half promise from the Financial Secretary last year that he would look into the success that BES funds were having in attracting finance for investment in manufacturing companies. As I pointed out, funds cannot achieve tax relief at the time when investment is made in the fund. Tax relief is available only when investment is made in the company.
  Some adjustment was made in the Budget last year, but I warned the Financial Secretary then that it might not be adequate. I hope that the Treasury is examining the statistics. If so, it will be found that investment in BES funds is not satisfactory now and that it is not high enough. I hope that the adjustment for which I appealed last year will be considered in terms of an amendment to the Finance Bill this year.
  It would be wrong for me to conclude my remarks without referring to one aspect of the speeches by Opposition Members. We have heard a great deal of criticism from them, but they have supplied no positive answers, no policy and no solutions. Conservative Members are entitled to wonder whether there was an important economic policy announcement last weekend from the hon. Member for Oldham, West (Mr. Meacher) when he said that secondary picketing would be allowed under a Labour Government.
  I hope that Opposition Front Bench spokesmen will now explain how secondary picketing would help the nation's economy; how secondary picketing would help to keep inflation at a low level and help British companies to be successful in exporting more. Let them tell us clearly whether Labour Members support secondary picketing and believe that it would improve the economy.
  Mr. Mans: Does my hon. Friend agree that we recently had another example of the way forward by the Labour party in terms of its policy to provide fibre optic cable to every household in Britain at a cost of £21 billion to the taxpayer?
  Mr. Deputy Speaker: Order. The hon. Member for Dover (Mr. Shaw) has half a minute left for his speech.
  Mr. Shaw: My hon. Friend the Member for Wyre (Mr. Mans) makes a telling point. All Labour Governments have spent money regardless of benefit to the taxpayer.
  We have had an important new economic indicator suggested from Opposition Members. I refer to the

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  number of people who, according to them, can afford to holiday in Spain. I remind them that under Labour we had a £50 sterling limit. Indeed, under Labour people could not afford to go abroad on holiday. The statistics of the number of people who take holidays abroad under Conservative rule have gone on increasing, just as many other aspects of the nation's activities continue to improve.
  I welcome this year's Finance Bill. It is an excellent measure that addresses many of the nation's problems. It is part of the Government's policy of solving Britain's real problems. The economy is improving under Conservative rule and I hope that the Government will go on introducing Finance Bills of this type in the future.
  8.57 pm
  Dr. Kim Howells: The hon. Member for Dover (Mr. Shaw) dealt with some important matters. I shall deal in particular with the reticence of the Finance Bill to address the question how our manufacturing industries are to be encouraged to devote greater resources to research and development and product innovation. We also have a desperate need to educate and train our work force in skills adequate to propel our manufacturing industries into the 21st century.
  So dismal have been the innovative and research and development performances of certain key sectors of our manufacturing industries in the last decade that—as my right hon. Friend the Member for Llanelli (Mr. Davies) ably pointed out—in the unlikely event of Britain adopting some of the trade barriers favoured by the Japanese, our manufacturers would not be able to fill the gaps left by the prohibited imports, be they cars or wrist watches.
  It is true that there has been in recent years, even in constituencies such as mine in the coalfields, a welcome influx of jobs in the electronics sector. It is also true that those jobs have the sheen of newness and modernity and that they are frequently a boon to communities that have suffered badly from industrial decline over the past decade. I hope that they are jobs that will stay, if only because, all too often, they have arrived because hard-pressed local authorities have risked precious funds to attract them in the first place. I also hope that they stay because they give constituencies such as mine a toehold on the hazardous slopes of the international electronics trade.
  I am afraid that all too often, when the sheen of newness and modernity is rubbed away, constituencies such as mine find themselves engaged in a sector of the electronics industry that is dependent for its competitiveness and health not on the productivity records of its work force or on the excellence of its industrial relations record—important though those elements are—but on the innovations and development strategies worked out and decided on the other side of the world.
  The Finance Bill seems to have been drawn up in the belief that there is nothing wrong in simply hoping that market forces will, somehow, resolve automatically our research and development problems. In fact, that is a belief that tends to encourage the views of an increasing number of transnational corporations that Britain is a fine place to set up assembly lines. We are often extremely generous with financial incentives for them to site here. In constituencies such as mine there is a prevailing low-wage economy and there are few pressures from the Government to source the key components of the electronics goods being assembled with United Kingdom
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  producers. Of course, that is mainly because we do not produce many of the key components. All too often, those in Government whose job should be to mould and shape this country's economic environment are content to sit back and allow transnational corporations based in the Pacific ring, north America or continental Europe to draw away from us in the manufacturing innovation stakes. I hope that the Financial Secretary will agree that it can not be in the best interests of the nation's economy to allow it to become subject to an increasing dependence on imported supplies of certain microchip technologies, the manufacture and supply of which are determined in boardrooms remote from the effective influence of our manufacturers.
  In the past four years alone, the trade deficit in electronic goods has risen by a staggering 40 per cent., and that is just the main story. The subtext carries an even more ominous message. It says that our ability to win for ourselves a leading place in the world manufacturing stakes over the next decade will continue to be seriously impaired unless we recognise that there are mechanisms available to us to win that place other than the manipulation of interest rates and the wholesale surrender to the notion that the free market—and only the free market—can determine the rate and nature of manufacturing innovation.
  I am not advocating a centralised Government think tank which would distribute funds to research and develop huge projects. We have seen the results of that in the disastrous Magnox and advanced gas-cooled reactor nuclear power station programmes, which swallowed up precious research and development funds at an unprecedented rate and produced little other than a troublesome, inefficient and unsaleable technology. I am advocating that the Government should reassess their priorities about where they see fit to bestow their financial blessings. In particular, they should concern themselves less with easing the tax burden of the best off and more with priming the pump of manufacturing investment and with strengthening and extending the opportunities for educating, training, and retraining those who will develop and manufacture the innovations to which I have alluded.
  There has been little success in reducing the lag in training in this country and there is widespread concern about the continuing decline in our comparative research and development position. Those features constitute serious impediments to the transformation of our economy to one capable of rapid growth in the long term, as distinct from rapid growth from a comparatively low base in the short term. I have no doubt that industry recognises that it could have much to gain from an increase in training, but that does not mean that industry is prepared to meet the costs associated with increased training, especially as employers perceive that there is a risk that trained personnel may choose to shift their skills, after training, to a rival. The Government will allow that situation to continue only at the peril of our manufacturing economy.
  The Finance Bill gives no suggestion that the Government are paying the attention and the respect warranted to those key problems. If that policy continues, it may result in more jobs on the assembly line of the foreign transnational corporations. But it will not result in an economy that is able freely to determine its own future.
  9.6 pm
  Mr. Quentin Davies: My right hon. Friend the Chief Secretary made it plain when he introduced the debate this afternoon that the Government are introducing the Finance Bill against the background of the incipient overheating of the economy. That is a danger which my right hon. Friend the Chancellor correctly diagnosed almost a year ago and which he has addressed by a series of stepped increases in interest rates. I am convinced that that was the right response and that after the normal time lag of six, 12 or 18 months the increases in interest rates will begin to have an impact on the real economy. However, we need to take account not merely of the immediate problem but of the causes behind the incipient overheating.
  There will be general agreement in the House that that overheating is due, more than anything else, to the precipitate decline in the net savings ratio of the household sector, which is in itself an astonishing reflection of the degree of confidence that has been generated by our prosperity in this country. If it is a problem, it is a problem of success, but, none the less, it is a problem that we must redress. In those circumstances, we should examine the Finance Bill against the three criteria that, in such circumstances, the Finance Bill must meet.
  The first requirement is that the Finance Bill should be conservative. It should be clear that the Government are determined that until and unless private sector saving, especially household saving, revives there is no question of the Government reducing their own savings—that is, reducing their own surplus. There is a natural trade-off between monetary policy and fiscal policy, between the Government's surplus and the level of interest rates. The higher Government savings are, the less the need to increase interest rates to induce households to save a greater proportion of their current incomes. It is utterly fatuous for Opposition Members to argue at the same time that interest rates should be lower and that the Government should spend more of their surplus.
  This Budget is conservative. My right hon. Friend is going for a surplus of around £14 billion again this year and one could hardly be more conservative than that. If the growth rate continues on its present course, the surplus is likely to be higher. Events over the past few weeks have thoroughly vindicated my right hon. Friend's essential budgetary decision. We have found that the financial markets have not collapsed, there has not been undue pressure for a further rise in interest rates and it has been possible to maintain business and investing confidence precisely because we had such a conservative Budget, which made it less likely rather than more likely that we would need a higher level of interest rates in future.
  The second great requirement is that it should do something to stimulate the supply side. That is difficult when, by definition, there is no scope for a massive reduction in taxation and no scope for an immediate reduction in interest rates. Considerable ingenuity is required, and my right hon. Friend the Chancellor has displayed that.
  First, my right hon. Friend has greatly increased the ceiling for the corporation tax rate for small companies —an important measure. Other most important measures in that area were incorporated in the Social Security Bill that the House discussed yesterday. There is no question but that the reduction in national insurance contributions
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  for the low paid will reduce the employment trap. Other measures in that Bill which will encourage people to make an even greater effort to go back to work will also tend in that direction.
  What is more, the reduction of the earnings rule previously applied to pensioners must also have not only desirable human consequences, but the desirable economic consequence of persuading many people to remain in employment longer, making their skills available to the economy and reducing the skill shortages from which we suffer and are likely increasingly to suffer during the 1990s when we move into a demographic trough.
  Thirdly, in the circumstances that I have described, we must address the root cause of the overheating and do what we can to increase household and personal savings. I congratulate my right hon. Friend on resisting the considerable pressure from the Inland Revenue to burden the life assurance industry with substantially greater taxation. The regime that he has now come out with, and which is expressed in the Bill, will give renewed confidence to those contemplating taking out contractual savings schemes or increasing their existing commitment to contractual savings.
  Most of all in that context I welcome my right hon. Friend's provision for expanding the personal equity plan scheme, doubling the maximum amount and permitting half of it, £2,400, to be invested in unit trusts. For the first time, the PEPs will be aggressively marketed. The financial pages of the Sunday papers over the past few weeks have given us considerable evidence that that is happening.
  Personal equity plans are an ideal mechanism for mobilising savings on the part of the small saver and investment in unit trusts—I have no interest to declare on behalf of the unit trust industry—is particularly desirable for the small saver because they enable him to achieve a degree of diversification in his portfolio which would otherwise not be possible.
  Within this apparently technical and complicated Finance Bill there is an extremely coherent nucleus of sharply focused economic policies which address very effectively the problems immediately before us. The Bill deserves the full-hearted support of the House.
  9.12 pm
  Mr. Chris Smith: We should be having this debate tomorrow because it is crucial to see the Finance Bill and the fiscal decisions that it enshrines against the broader economic background, and tomorrow's balance of payment figures will, I suspect, once again emphasise how stark that background is.
  My right hon. and hon. Friends have in large numbers drawn attention to precisely that problem. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) talked about the balance of payments problem and spoke of the mistakes that were made last year when it became obvious that credit was spiralling out of control. My hon. Friend the Member for Durham, North (Mr. Radice) spoke of the balance of payments deficit as the most immediate danger that we face. He rightly said that we run the risk of our economic policy being dictated by the holders of sterling. My right hon. Friend the Member for Llanelli (Mr. Davies) spoke about the deficit being likely to be far worse than predicted even at Budget time a month

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  ago. He spoke of a possible deficit of £20 billion this year and he perceptively pointed out that last year's deficit was larger than the combined deficits of the previous 40 years.
  My hon. Friend the Member for Kirkcaldy (Dr. Moonie) spoke of a deficit of £2 billion last year in construction materials alone. My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) said that we had lost whole sectors of British industry over the past 10 years. My hon. Friend the Member for Bradford, North (Mr. Wall) spoke about the specific problems facing the textile industry. My hon. Friend the Member for Pontypridd (Dr. Howells) spoke movingly of the damage done to the electronics industry in his constituency and the importance of innovation, training and research to its future. All identified the balance of payments problem as one of the key issues facing our economy which the Government should be facing up to. Sadly, the same concern has not been shown by Conservative Members at any stage during today's debate.
  Last year's balance of payments deficit was at a record level. All the indications are that this year's deficit is likely to be worse. The Government's predictions are hopelessly unachievable. Table 3.3 of the Red Book, which was also highlighted by the Select Committee's report which came out yesterday, gives the game away. That table predicts that export volume will grow by 7·5 per cent. in 1989 as opposed to a growth figure of 3 per cent. last year, and that import volume will grow by only 4·5 per cent. in 1989, as opposed to the staggering figure of 14·5 per cent. last year. Can such changes from domestic consumption to export orientation be achieved in such a short period, especially when interest rates are at a crippling level for small businesses wanting to invest, coupled with an overvalued pound that makes exporting more difficult? Of course not.
  It does not just need a shut down of major North sea production fields to throw the Government's predictions out of kilter. Those predictions are unachievable anyway. We must remember that even on the basis of those predictions the Chancellor is forecasting a balance of payments deficit of £14·5 billion in 1989. I warn the Government now that it will be worse and that will be a direct result of the Government's policies towards industry, investment, the exchange rate and interest rates.
  Britain's share of world trade has fallen faster during the past 10 years than that of any other major country. That is the real economic miracle of 10 years of Thatcherism. In terms of our balance of payments and balance of trade, 10 years of the Prime Minister have produced not an economic miracle but an economic disaster.
  What of the other key economic factors that we should be looking at as the background to the Bill? The Government constantly tell us that their central objective is the control of inflation. Let us look at their record on that. The hon. Member for Dover (Mr. Shaw), in an entertaining speech, took time off from his researches into the net book agreement to tell us that there was good news on inflation. When the Prime Minister came to power Britain's inflation rate was 10·3 per cent., lower than that of the United States, France and Italy, and just above the average of 9·7 per cent. of all the OECD countries. It is now 7·9 per cent. and rising. It is higher than in any major industrial country and twice the OECD average.
  Just to ensure that that miraculous transformation continues, the Governmment's direct decisions on water prices, electricity prices, transport fares, rents and rates,
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  together with the immediate impact of the Chancellor's own chosen anti-inflationary weapon of interest rates, have all ensured further twists to the current inflationary spiral. The attempts to mitigate the rise in inflation in the Finance Bill, by means of the alarming decision not to uprate the duty on tobacco and alcohol, pale into insignificance beside that overall picture. That picture shows clearly that a Government who set out to make the lowering of inflation their target, their principal goal, their judge and jury, have roundly failed in that task.
  What of the high interest rate policy that the Chnancellor has chosen in response to the problem? He has chosen it with three apparent objectives—to help finance the balance of payments deficit and coterminously to keep the exchange rate high, to try to dampen demand, and indirectly to influence the inflation rate. It is a blunt and inadequate instrument at the best of times. To rely so heavily, so exclusively and with such blinkered vision on that one policy instrument alone is sheer economic madness.
  That policy is leading the Government and the Chancellor into deeper and deeper trouble. With interest rates already rising in Germany, and likely to rise in Japan, with bank lending still rising sharply, and consumer spending obstinately high, with a continuing deterioration in the balance of payments and with a blind attachment to interest rates as his only weapon, there are likely to be even further interest rate rises ahead, bringing with them further mortgage misery for home owners, further investment difficulty for small businesses and the spectre of recession.
  Yesterday's Select Committee report has been rightly much quoted in the debate, except of course by the Chief Secretary. The report pointed out that the Chancellor was walking a tightrope between inflation and recession. It is a tightrope of his own making, determined directly by his own decisions and policies. He cannot remain on it for ever. His policies dictate that he cannot avoid either the prospect of inflation or that of recession without embracing the other. On all these fronts—on the balance of payments, on inflation and on interest rates—the Government's performance has been and continues to be lamentable.
  It is against that background that the fiscal decisions in the Finance Bill need to be viewed and judged. The balance between monetary and fiscal policy is clearly seen by the Select Committee. Last year's fiscal decisions directly fuelled demand. They were not only unfair but imprudent. We said so at the time. They staggeringly bettered the already better off. This year's Finance Bill does nothing to redress the balance, nor does it do anything to address the overall and pressing needs of the economy.
  Let us lay to rest one myth right from the start. On 15 March the Chief Secretary said:
  "We"—
  that is, the Conservatives—
  "are the party of low taxation".—[Official Report, 15 March 1989; Vol. 149, c. 429.]
  That claim is nonsense. The Tory party has perpetrated a great fraud on the nation. By adjusting the marginal rates of income tax downwards whilst at the same time raising other forms of taxation, it has hoodwinked many people into thinking that their taxes are lower. They are not. The people are beginning to rumble the Government.
  In 1978–;79, before the first Tory Budget, taxes took just over 34 per cent of GDP. Now they take 37·5 per cent., effectively a 10 per cent. increase in the tax burden over 10

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  years. The Finance Bill ensures that the percentage will remain the same. Indeed, Lloyds Bank Economic Bulletin estimates that the burden may even rise by a further 1/2 per cent. in the coming year. Interestingly, that bulletin also points to the adverse impact of the poll tax this year in Scotland and next year in England and Wales. It says:
  "The community charge will wipe out the lightening of the income tax burden over the last decade, effectively cancelling out a large part of the value of personal income tax allowances."
  That is on top of an already tightening tax burden.
  If, instead of considering the overall national income, we consider the fate of ordinary householders, and if we take not just income tax, which has gone down, but VAT, rates and national insurance, all of which have gone up directly at Government behest, we see that the average household has found its total tax burden rising from 35·1 per cent. of income in 1978–79 to 37·3 per cent. in 1988–89. That is from a purportedly low tax party.
  Mr. Mans: Does the hon. Gentleman agree that he is misleading the House in saying that the rate of taxation has gone up? Taxation and national insurance have gone down since 1981. The increase that the hon. Gentleman is talking about took place during the first two years of the period that he mentions. Since then the rate has gone down to 37 per cent.
  Mr. Smith: I am looking at the record of the Government. It may not have escaped the notice of the hon. Gentleman that the Government, as they claim widely in current circumstances, have been in office for 10 years. I am taking their 10-year record; I am taking not just income tax and national insurance but the other things that people pay, such as VAT and rates.
  Even worse, if we take the way tax changes operated throughout the income spectrum, we find staggering differences between those at the top and those at the bottom. My hon. Friend the Member for Leeds, West (Mr. Battle) charted the widening gap between the rich and the poor. Taking just direct deductions for income tax and national insurance, the tax contribution for a married couple with two children, on half average earnings, has gone up in the past 10 years nearly three times as a proportion of their income. For those on 10 times average earnings, in the same 10-year period their tax burden as a proportion of income has virtually halved. This is not a low tax Government. It is a Government who believe in low taxes for those at the top and high taxes for everyone else.
  Of course, the Government got a little worried about that feature of their policy and about the impression that they were giving, especially in last year's Finance Act. So they trumpeted this year's Budget in advance as a Budget for the low paid. It was not. They include one measure that will be of some help, but not very much: the reduction of initial national insurance contributions to 2 per cent. It is not in this Bill, of course, because it is an insurance change. This is welcome, but its inadequacies are none the less manifest. By refusing to alter the contributions regime for employers at the same time as that for employees the Government have kept in place the bunching effect that keeps hundreds of thousands of appallingly paid part-time workers, most of whom are women, at a point just below the figure of £43 a week in earnings. Even those who
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  benefit from the 2 per cent. change will in many cases face a corresponding reduction in family credit and housing benefit and end up hardly better off at all. This change, welcome though it is, does very little to solve the problem of the poverty trap.
  One other major Budget change is missing from the Finance Bill because it is subject to regulation rather than legislation. The extension of personal equity plan tax relief to the purchase of newly privatised shares is nothing short of a naked bribe to improve the prospects of the flotation of public assets. We ordinary taxpayers will, in effect, be subsidising those people who seek to purchase assets which we already own as citizens. The sellers will be subsidising the purchasers and we shall not be receiving any direct payment for the sale of what we own.
  Mr. Stuart Holland: Bring back Adam Smith.
  Mr. Smith: There is, however, plenty in this 180-clause, 17-schedule Bill quite apart from these two principal exclusions. It is a long Bill. I am tempted to agree with my right hon. Friend the Member for Ashton-under-Lyne that the size of the Finance Bill is in inverse proportion to the quality of the ideas that the Government have put in it. I am also tempted to agree with the hon. Member for Gedling (Mr. Mitchell), who described it as not exactly a user-friendly Bill.
  Some of the measures in the Bill are undoubtedly ones to which we give a welcome. Clause 1 brings forward a differential duty on unleaded petrol. We would have wished to see the Government go further, but even some degree of movement is welcome. Ringing declarations of environmental concern from No. 10 Downing street are all very well, but it is about time that we saw some other action on the environment.
  Clause 44 brings about the abolition of closed company borrowing relief in relation to business expansion scheme investment. This is a welcome end to abuse, and indeed we demanded it before the Budget. I am pleased to see that the Government have for once taken our advice. BES investors, now overwhelmingly those investing in private rented property—the hon. Member for Dover is right about the way in which that scheme has skewed the whole purpose of the business expansion scheme—were able not only to claim tax relief at the higher rate on their investment but, by using the closed company structure, to claim a further tranche of relief on any borrowing they undertook to finance the investment. In addition, they were set to make a tax-free capital gain after five years. It was money for old rope.
  We wish that the Government had acted retrospectively and had seen their way to abolish the whole wretched private property scheme altogether, but as far as it goes it is a welcome change.
  Mr. Arbuthnot: Does the hon. Gentleman approve of retrospective tax legislation and, if so, where does he see it ending?
  Mr. Smith: In this particular instance, yes, of course I approve of retrospective tax legislation and we shall be tabling an amendment to that effect when we come to consider that clause in detail. I point the hon. Gentleman in the direction of clause 167 of the Bill, about which a number of his hon. Friends have spoken and which enshrines retrospective legislation in terms of tax.

  891
  Clause 114 extols the regulatory powers for the control of the lump in the construction industry. It is a useful marginal change in tackling a continuing abuse of the tax system which also acts as a tool for the exploitation of workers.
  There are various detailed anti-avoidance measures, provision for employee share ownership plans and partial implementation of the recommendations of the Keith committee. All this is to be broadly welcomed, although we shall want to trawl very carefully and thoroughly through the detail in Committee.
  There are many other provisions in the Bill, however, which we shall want to oppose as strenuously and vigorously as we can. The first is the provision for tax relief for private health insurance for the over-60s. By definition, this will be available only to those who are rich enough to afford to take out private health insurance and well enough to be eligible to benefit. It is a precisely targeted benefit, targeted on those in the least financial need and the least medical need, and everyone else will have to pay for it.
  Interestingly, a number of hon. Gentlemen, especially the hon. Member for Horsham (Sir P. Hordern) and for Beaconsfield (Mr. Smith), have expressed their doubts, along with ours, about the wisdom of this scheme. The only major pleading in its favour from the Conservative Benches came from the hon. Member for Gillingham (Mr. Couchman) who seemed to argue for its expansion to include the services provided by the company which he runs. To be fair to the Chief Secretary to the Treasury and to the Chancellor, we know that they were very unhappy about the change, however much they now try to shrug it off as unimportant. It was forced on them by No. 10. Perhaps it was even given express authorisation by Mr. Charles Powell and Mr. Bernard Ingham. Perhaps it is also a foretaste of what will shortly happen when Sir Alan Walters returns to take up residence next door to the Chancellor and even closer to the Prime Minister's ear.
  The proposal for health insurance relief is only the most blatant of a number of atrocious measures in the Bill. Take, for instance, the decision to uprate the personal allowances by only 6·8 per cent.—the very barest minimum required by law which sets the increase by reference to the previous calendar year's inflation rate.
  As we now know, inflation is nearly 8 per cent., and rising. The real value of the tax threshold has been cut by the clause in the Bill relating to relief. That will have the direct effect of drawing more low-paid workers into tax. There will be about 150,000 more taxpayers as a result of the Bill and that clause. More people will be stuck in the poverty trap.
  We should also consider the changes to the schedule E regime contained in clauses 34 to 39. The change from an earnings base for calculation to a receipts base sounds neat and logical. However, it opens up enormous opportunities for tax avoidance over and above the projected substantial loss of £60 million in a full year to the Exchequer, as envisaged in the Red Book.
  Our principal criticism of the Bill, of the Budget and of all the associated economic decisions taken by the Government must be that the Bill represents a massively wasted opportunity. It does virtually nothing for the low paid. Last year's Budget was a gravy-train for the rich. The Chancellor should have redressed the balance this year, but he did not.
  892
  The Bill does nothing for the needs of women. It does not remove the iniquitous tax on workplace nursery provision which acts as a direct disincentive to discourage women from joining the work force. The Financial Secretary to the Treasury has told me in answers to questions that he has no idea of the benefit to the Exchequer of the tax. Nor has he any idea of the cost to the Exchequer of the minimal incentives which exist at present for employers to establish nurseries. The Bill should have scrapped that tax, but it did not. I give notice that we shall be seeking to change the Bill to ensure that it does.
  The Bill does nothing for the needs of those with children. The House will be aware that yesterday we debated the need to uprate child benefit properly in line with inflation.
  Dame Elaine Kellett-Bowman: Where were Opposition Members then?
  Mr. Smith: I noted from the Division lists that all the Treasury Ministers voted against the amendment tabled by their colleagues yesterday.
  The real value of child benefit has already fallen by 12 per cent. since the Government took office. It is now set to fall further. Child benefit still represents the most effective way, by far, of removing poverty. To take the decision alongside this Bill to use the Exchequer's surplus for the virtually useless depletion of the national debt instead of taking the proper action to uprate and improve child benefit shows how sadly perverse the Chancellor's priorities have become.
  Above all, the Bill and its associated economic decisions do nothing to tackle the deep-seated economic problems that we face. The catastrophic balance of payments deficit, the imbalance between demand and supply in the domestic economy, the imbalance between the regions and the depleted capacity of manufacturing industry all point to the overwhelming need to ensure that the wealth-creating resources of the economy are boosted. From a Government who have done such grievous harm to our economy over the past 10 years, the Bill will do little to repair and much to intensify that damage.
  9.40 pm
  The Financial Secretary to the Treasury (Mr. Norman Lamont): I am glad that the hon. Member for Islington, South and Finsbury (Mr. Smith) eventually mentioned the Finance Bill. I do not mind him taking up too much of my time because I have precious little to respond to as nobody has mentioned the Finance Bill in this debate. When hon. Members talked about the Budget, they tended to talk about last year's Budget, which has somewhat dominated today's debate. I make no complaint about that because last year's Budget was a watershed Budget, the supply side benefits of which will be with us for years to come.
  If the Opposition believe that, despite the fiscal surplus that it created, last year's Budget has affected inflation and the current account, it is certainly curious that, just before the Budget, the Opposition put forward a package for tax cuts, higher personal allowances and higher national insurance. It is also extraordinary that, if the Leader of the Opposition believes that this year's and last year's Budgets were irresponsible, he should then advocate, in his response to the Budget, that we should run down the

  893
  budget surplus. One cannot be simultaneously against tax cuts and also in favour of running down the budget surplus. That does not make sense.
  In the earlier part of his speech, the hon. Member for Islington, South and Finsbury, reflecting the confusion of the Opposition, said that it was a mistake to cut taxes. However, in the last few minutes of his speech he said that the burden of taxation was far too high. I wish that the hon. Gentleman could make up his mind which it was. He referred to the proportion of people's income that went in tax. However, as we have debated endlessly in the House, the only reason that a higher proportion of people's income goes in income tax is simply because under the Government incomes have risen so much. I agree that the burden of tax is too high. We want to reduce it. If the Opposition think that the burden of tax is too high, why did they vote against us on every single occasion that we reduced the basic rate of tax?
  This year's Budget was quite deliberately cautious because my right hon. Friend the Chancellor's priority is to keep down inflation. Inflationary pressures began to emerge last year. The current account was one sign; another was the evidence of faster than expected growth. There is already ample evidence that higher interest rates are having the desired effect. The targeted money aggregate, MO, has already slowed down and figures published last week show that the growth rate has fallen for the third month running and provide further confirmation of the sharp slowdown since last autumn.
  While reducing inflation is primarily a task for monetary policy, it is essential that fiscal policy should support it. That is what the Budget does and that is why we have budgeted for another massive public sector debt repayment this year, which is the same as last year's in total, and, excluding privatisation proceeds, £2 billion more.
  A number of Opposition Members suggested that the Government's interest rate strategy would damage industry's investment prospects, but there is no reason why it should because most companies are able to borrow long term. Long-term rates have risen very little, which is an indication of the market's confidence and its view of the long-term rate of inflation. That is why investment intentions in the latest survey by the Confederation of British Industry and in the DTI's investment intention survey remain strong by historical standards.
  We have enjoyed a considerable investment boom in British industry over the past decade. Investment has grown by nearly 7½ per cent. a year on average in the 1980s, compared to just over 2¼ per cent. a year in the 1970s. Business investment is now a higher proportion of GDP than ever before. In the 1980s it has been in stark contrast to the 1970s. At the same time, the quality of investment has improved because the net rate of return on capital employed by British industry has nearly doubled since 1981. Excluding North sea companies, it has nearly quadrupled, and, whether including or excluding North sea companies, it is now back to levels that have not been seen for 20 years.
  The hon. Member for Berwick-upon-Tweed (Mr. Beith) asks, "Where is the evidence of the miracle? Where is the evidence of the real sea change in the British
  894
  economy? Where is the evidence of the transformation?" It is there, in the return on capital and the profitability of British industry.
  My hon. Friend the Member for Beaconsfield (Mr. Smith), my right hon. Friend the Member for Worthing (Mr. Higgins) and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) have commented on the length of the Bill. I must say that, especially as it is about to go into Committee, I share some of their misgivings. Let me point out, however, that some 50 clauses deal with just three measures: the Keith committee recommendations, the abolition of close company apportionment—which I believe will be a major improvement and simplification—and the schedule E receipts, which again will become much easier for taxpayers to operate. Although the legislation to implement the changes is fairly lengthy, I believe that the end result will be much better and simpler.
  The hon. Member for Dunfermline, East (Mr. Brown), who as we all know is a noted author, has been writing recently in Accountancy Age, and has said that the Bill contains no new measures to deal with tax havens and tax avoidance. Perhaps at that stage he had not read the Bill, but he repeated the accusation today. I can only say that the Government's record on closing tax loopholes is a thousand times better than that of Labour Members when they were in government, for all their humbug and rhetoric. They gave us no credit last year for abolishing the forestry loophole. This year's Bill abolishes capital gains tax rollover relief on gifts. It also deals with the close company provisions, the schedule E receipts provisions, the provisions relating to switches between offshore funds, the business expansion link scheme and, indeed, the cap on tax relief for occupational pension schemes. I am all in favour of such schemes, but I feel that there is a case for limiting relief at the top end. It has been one of the biggest tax shelters for the wealthiest in the country.
  Did the Opposition acknowledge that? Not for a minute. Far from recognising what the Budget and the Bill do, the hon. Member for Dunfermline, East had the cheek to refer to "yet another Budget for the rich".
  Let me point out that in this year's Budget the full year cost of the income tax and national insurance changes of over £4 billion will definitely help those on low incomes, and that well over half the total amount will be given to tax units with incomes below £15,000 a year. The percentage increases on net incomes show that the low paid will benefit by twice as much as the high paid. The net incomes of people earning £5,000 and £10,000 a year will increase by twice the percentage of those of people earning £25,000. The measures that we have taken on national insurance are the most effective way of helping the lower paid.
  My hon. Friend the Member for Stamford and Spalding (Mr. Davies) referred to the measures designed to level out the playing field between different forms of savings. The changes in life assurance to which he referred are designed to achieve, among other things, a regime that is a little more on all fours with direct investment in shares. The changes in personal equity plans criticised by the hon. Member for Islington, South and Finsbury will, I believe, be profoundly attractive to investors, and, indeed, have been given a positive welcome by PEP managers and unit trusts. The hon. Gentleman seems to think it is wrong that we should extend the device of PEPs to privatisation, but why not? We want to encourage wider share ownership

  895
  and, by marrying PEPs and privatisation, we can do a tremendous amount to boost wider share ownership in this country.
  A number of comments have been made on tax relief for private health insurance. A number of my hon. Friends, including my hon. Friend the Member for Beaconsfield and my hon. Friend the Member for Horsham (Sir P. Hordern), have expressed reservations. Their objections are really in terms of tax policy. However, I must say that the proposed tax relief on health insurance seems to be the only measure in the Bill that gets Labour Members jumping up and down like dervishes. Their reaction has been extraordinarily overdone. They have not come here as guardians of fiscal neutrality, complaining that we are further than ever away from the platonic ideal of the level playing field in savings. As my right hon. Friend the Chancellor of the Exchequer has explained, that is not a readily obtainable ideal. It would be absurd if Labour Members put forward those arguments because they rarely speak in this House except to plead for tax relief or subsidy for something or other.
  The main problem for Labour Members is that they believe that private medical insurance is really the exclusive prerogative of the rich. In believing that, they are as out of touch with medical insurance and the health market as they are with housing. About 5½ million people—one in 10 of the population—are now covered through private medical insurance. About 600,000 people aged over 60 are covered by medical insurance. Those people can hardly be the super-rich.
  I point out that tax relief will be available to non-taxpayers as well. We expect that the majority of those who will take advantage of the system will either be non-taxpayers or basic rate taxpayers. It is perhaps because Labour Members have an exaggerated view of the wealth of people who take out health insurance that they have an exaggerated idea of what the cost of this relief is likely to be to the Exchequer. We believe that the cost of the relief will be less than £100 a person, and most people will be taking out budget policies. That sum of £100 a person compares with a cost of £850 for National Health hospital service for each person in the country aged over 65. When non-hospital services are added, the cost for each person in the country over 65 is £1,000 per head.
  If we can generate just a little additional demand for health insurance, that will relieve pressure on the National Health Service and the resources of the Government. That would be in the interests of the whole country, particularly the users of the National Health Service.
  My hon. Friend the Member for Beaconsfield said that the Opposition had not bothered to say much about their policies on taxation. Recently, we have had a few tantalising glimpses of such policies. We have had the odd appearance on the Jimmy Young show by the Leader of the Opposition, and he has made speeches in Preston and Nottingham. What seems to be emerging is that the Labour party objects to our very simple two-rate system of income tax-25 per cent. and 40 per cent. Most of us regard that structure as desirably simple in itself and think that it a good thing that we do not have a single rate of tax over 40 per cent. in the whole tax system.
  Labour Members want to introduce a new starting rate and a new reduced rate band that would take us back to the situation in 1978–79 when there were 11 different rates of income tax on earned income and 13 different rates of income tax on unearned income. That is the regime that we
  896
  had before and the regime to which the Labour party wants us to return. They want to finance such a scheme, first, by reversing the top rate tax cuts and then abolishing the ceiling on national insurance contributions. That would amount to about £3½ billion. That £3½ billion would buy such a narrow band of reduced rate tax that it would be of no benefit, or of benefit to precious few poor people. The drawback of a reduced rate band is that it goes to everyone, including the Duke of Westminster. It goes to all taxpayers. Only 10 per cent. of the cost goes to people whose total income is in the lower rate band.
  If one takes people at the very bottom of the scale, earning just enough to pay tax—not necessarily the poorest people, because many of them are part-time workers—they would gain from a reduced rate band, but they would gain far more from the same costs spent on an increase in allowances. That is why, as well as reducing the basic rate, we have since 1979 placed emphasis on increasing allowances. Since 1979, we have increased allowances by some 25 per cent. in real terms. That is in sharp contrast to what happened under the last Labour Government, when the single person's allowance fell by a scandalous 20 per cent. in real terms.
  The person at a slightly higher level of income—on three quarters of average earnings and above—will gain more, or as much, from a basic rate cut than from a reduced rate band. A reduced rate band, a new starting rate, is not effective for dealing with poverty because it is badly targeted, its benefits are an illusion, and it would be absurdly bureaucratic—requiring something like 1,300 staff to administer.
  I am being absurdly fair to the Opposition, because I am assuming that their £3½ billion would be spent on introducing a reduced rate band. However, as right hon. and hon. Members on both sides of the House know, the Opposition have spent that £3½ billion over and over again. Last year, they spent £3½ billion increasing pensions, child benefit and benefits generally. This year, they spent it on a reduced rate band. Every time that the hon. Member for Dunfermline, East makes a speech, he devotes time to his favourite subjects of training, infrastructure, regional aid and education. An Opposition spokesman for the environment in a single statement spent that £3½ billion four times over in just a few minutes, when she promised a £½ billion package to clean up water.
  We all know that it is not the Opposition's arithmetic that is at fault. They have only one answer—that it will all come out of the surplus. But we know, and the country knows, that under a Labour Government there would be no surplus. There never has been and there never will be.
  It is no wonder that the right hon. and learned Member for Monklands, East (Mr. Smith) admitted that Labour's tax plans would mean many basic rate taxpayers paying more. He can certainly say that again. The near abolition of the ceiling on national insurance contributions would mean that 2 million people—every one of them a basic rate taxpayer—would suffer a 9 per cent. increase in their marginal rate. They are the people in the middle income groups—the managers, scientists and young professionals —for whom the Labour party claim to speak. The man on one and one half times average earnings would see his national insurance bill increased by £7·60 per week.
  All the Opposition's plans are based on the assumption that raising taxes will generate more revenue—but it may not. All our experience shows that cutting taxes from absurdly high rates generates more revenue. After we cut

  897
  the top rates last year, we expected the top 5 per cent. of income taxpayers to contribute some 28 per cent. of revenue. This year, we expect them to contribute 29 per cent., and next year almost 30 per cent. That compares with 24 per cent. from the top 5 per cent. in 1979. The truth is that top-rate tax cuts have become a new and more effective way of clobbering the rich. [Laughter.] Experience shows that Labour Budgets soak the poor and that Conservative Budgets soak the rich. The difference is that, under the Conservatives, the rich can actually afford it.
  Unfortunately, the Labour party has ceased to think about taxation. Tax-cutting is an essential part of the process of reversing this country's decline. That is why we stand by the tax cuts that we made last year, which are confirmed in this Bill for the first full year of operation. We believe in an incentive-led economy that will benefit rich and poor alike. It has worked in the past, it will work again, and it is the philosophy embodied in this Bill, which I commend to the House.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 271, Noes 186.

  Division No. 175]

  [10 pm

  AYES

  Adley, Robert

  Butler, Chris

  Aitken, Jonathan

  Butterfill, John

  Alexander, Richard

  Carlisle, John, (Luton N)

  Alison, Rt Hon Michael

  Carlisle, Kenneth (Lincoln)

  Amess, David

  Carrington, Matthew

  Amos, Alan

  Carttiss, Michael

  Arbuthnot, James

  Cash, William

  Arnold, Jacques (Gravesham)

  Chalker, Rt Hon Mrs Lynda

  Arnold, Tom (Hazel Grove)

  Channon, Rt Hon Paul

  Ashby, David

  Chapman, Sydney

  Aspinwall, Jack

  Clark, Dr Michael (Rochford)

  Baker, Nicholas (Dorset N)

  Clark, Sir W. (Croydon S)

  Baldry, Tony

  Clarke, Rt Hon K. (Rushcliffe)

  Batiste, Spencer

  Colvin, Michael

  Beaumont-Dark, Anthony

  Conway, Derek

  Bellingham, Henry

  Coombs, Anthony (Wyre F'rest)

  Bendall, Vivian

  Coombs, Simon (Swindon)

  Bennett, Nicholas (Pembroke)

  Cope, Rt Hon John

  Benyon, W.

  Couchman, James

  Bevan, David Gilroy

  Cran, James

  Biffen, Rt Hon John

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

  Blackburn, Dr John G.

  Davis, David (Boothferry)

  Blaker, Rt Hon Sir Peter

  Day, Stephen

  Body, Sir Richard

  Devlin, Tim

  Bonsor, Sir Nicholas

  Dickens, Geoffrey

  Boscawen, Hon Robert

  Dicks, Terry

  Boswell, Tim

  Douglas-Hamilton, Lord James

  Bottomley, Peter

  Dover, Den

  Bottomley, Mrs Virginia

  Durant, Tony

  Bowden, Gerald (Dulwich)

  Dykes, Hugh

  Bowis, John

  Evennett, David

  Boyson, Rt Hon Dr Sir Rhodes

  Fairbairn, Sir Nicholas

  Braine, Rt Hon Sir Bernard

  Fallon, Michael

  Brandon-Bravo, Martin

  Favell, Tony

  Brazier, Julian

  Fenner, Dame Peggy

  Bright, Graham

  Finsberg, Sir Geoffrey

  Brooke, Rt Hon Peter

  Fishburn, John Dudley

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

  Fookes, Dame Janet

  Browne, John (Winchester)

  Forman, Nigel

  Bruce, Ian (Dorset South)

  Forsyth, Michael (Stirling)

  Buchanan-Smith, Rt Hon Alick

  Forth, Eric

  Buck, Sir Antony

  Fowler, Rt Hon Norman

  Budgen, Nicholas

  Fox, Sir Marcus

  Burns, Simon

  Franks, Cecil

  Burt, Alistair

  Freeman, Roger

  Butcher, John

  Fry, Peter

  898

  Garel-Jones, Tristan

  McLoughlin, Patrick

  Gill, Christopher

  McNair-Wilson, Sir Michael

  Gilmour, Rt Hon Sir Ian

  Major, Rt Hon John

  Glyn, Dr Alan

  Malins, Humfrey

  Goodlad, Alastair

  Mans, Keith

  Goodson-Wickes, Dr Charles

  Maples, John

  Gorman, Mrs Teresa

  Marland, Paul

  Gow, Ian

  Marlow, Tony

  Grant, Sir Anthony (CambsSW)

  Marshall, John (Hendon S)

  Greenway, Harry (Ealing N)

  Marshall, Michael (Arundel)

  Greenway, John (Ryedale)

  Martin, David (Portsmouth S)

  Gregory, Conal

  Maude, Hon Francis

  Griffiths, Peter (Portsmouth N)

  Mawhinney, Dr Brian

  Grist, Ian

  Maxwell-Hyslop, Robin

  Ground, Patrick

  Mayhew, Rt Hon Sir Patrick

  Grylls, Michael

  Mellor, David

  Gummer, Rt Hon John Selwyn

  Meyer, Sir Anthony

  Hague, William

  Mills, Iain

  Hamilton, Hon Archie (Epsom)

  Miscampbell, Norman

  Hamilton, Neil (Tatton)

  Mitchell, Andrew (Gedling)

  Hanley, Jeremy

  Mitchell, Sir David

  Hannam, John

  Monro, Sir Hector

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

  Morrison, Sir Charles

  Hargreaves, Ken (Hyndburn)

  Morrison, Rt Hon P (Chester)

  Harris, David

  Nicholson, David (Taunton)

  Hayes, Jerry

  Nicholson, Emma (Devon West)

  Hayward, Robert

  Norris, Steve

  Heathcoat-Amory, David

  Parkinson, Rt Hon Cecil

  Heddle, John

  Patnick, Irvine

  Hicks, Mrs Maureen (Wolv' NE)

  Pattie, Rt Hon Sir Geoffrey

  Hicks, Robert (Cornwall SE)

  Powell, William (Corby)

  Higgins, Rt Hon Terence L.

  Raffan, Keith

  Hill, James

  Riddick, Graham

  Hind, Kenneth

  Ridley, Rt Hon Nicholas

  Hogg, Hon Douglas (Gr'th'm)

  Ridsdale, Sir Julian

  Hordern, Sir Peter

  Rifkind, Rt Hon Malcolm

  Howard, Michael

  Roe, Mrs Marion

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

  Rossi, Sir Hugh

  Howarth, G. (Cannock & B'wd)

  Rost, Peter

  Howe, Rt Hon Sir Geoffrey

  Rowe, Andrew

  Howell, Ralph (North Norfolk)

  Rumbold, Mrs Angela

  Hughes, Robert G. (Harrow W)

  Ryder, Richard

  Hunt, David (Wirral W)

  Sackville, Hon Tom

  Hunt, John (Ravensbourne)

  Scott, Nicholas

  Hunter, Andrew

  Shaw, David (Dover)

  Hurd, Rt Hon Douglas

  Shaw, Sir Giles (Pudsey)

  Irvine, Michael

  Shaw, Sir Michael (Scarb')

  Irving, Charles

  Shelton, Sir William

  Jack, Michael

  Shephard, Mrs G. (Norfolk SW)

  Jackson, Robert

  Shepherd, Richard (Aldridge)

  Janman, Tim

  Shersby, Michael

  Johnson Smith, Sir Geoffrey

  Sims, Roger

  Jones, Robert B (Herts W)

  Skeet, Sir Trevor

  Kellett-Bowman, Dame Elaine

  Smith, Tim (Beaconsfield)

  Key, Robert

  Soames, Hon Nicholas

  Kilfedder, James

  Spicer, Sir Jim (Dorset W)

  King, Roger (B'ham N'thfield)

  Spicer, Michael (S Worcs)

  Kirkhope, Timothy

  Squire, Robin

  Knapman, Roger

  Stanbrook, Ivor

  Knight, Dame Jill (Edgbaston)

  Stanley, Rt Hon Sir John

  Knowles, Michael

  Steen, Anthony

  Knox, David

  Stern, Michael

  Lamont, Rt Hon Norman

  Stevens, Lewis

  Lang, Ian

  Stewart, Allan (Eastwood)

  Latham, Michael

  Stewart, Andy (Sherwood)

  Lawrence, Ivan

  Stradling Thomas, Sir John

  Lawson, Rt Hon Nigel

  Summerson, Hugo

  Lee, John (Pendle)

  Tapsell, Sir Peter

  Leigh, Edward (Gainsbor'gh)

  Taylor, John M (Solihull)

  Lennox-Boyd, Hon Mark

  Thompson, D. (Calder Valley)

  Lester, Jim (Broxtowe)

  Thompson, Patrick (Norwich N)

  Lilley, Peter

  Thornton, Malcolm

  Lloyd, Sir Ian (Havant)

  Thurnham, Peter

  Lloyd, Peter (Fareham)

  Townend, John (Bridlington)

  Lord, Michael

  Townsend, Cyril D. (B'heath)

  Lyell, Sir Nicholas

  Tracey, Richard

  McCrindle, Robert

  Tredinnick, David

  Macfarlane, Sir Neil

  Trippier, David

  MacKay, Andrew (E Berkshire)

  Twinn, Dr Ian

  Maclean, David

  Vaughan, Sir Gerard

  899

  Waddington, Rt Hon David

  Wiggin, Jerry

  Wakeham, Rt Hon John

  Wilshire, David

  Walden, George

  Winterton, Nicholas

  Walker, Bill (T'side North)

  Wolfson, Mark

  Waller, Gary

  Wood, Timothy

  Ward, John

  Woodcock, Mike

  Wardle, Charles (Bexhill)

  Yeo, Tim

  Warren, Kenneth

  Watts, John

  Tellers for the Ayes:

  Wheeler, John

  Mr. David Lightbown and

  Whitney, Ray

  Mr. Stephen Dorrell.

  Widdecombe, Ann

  NOES

  Abbott, Ms Diane

  Dobson, Frank

  Adams, Allen (Paisley N)

  Doran, Frank

  Alton, David

  Duffy, A. E. P.

  Anderson, Donald

  Dunwoody, Hon Mrs Gwyneth

  Archer, Rt Hon Peter

  Eadie, Alexander

  Armstrong, Hilary

  Eastham, Ken

  Ashdown, Rt Hon Paddy

  Evans, John (St Helens N)

  Ashley, Rt Hon Jack

  Ewing, Mrs Margaret (Moray)

  Ashton, Joe

  Fatchett, Derek

  Banks, Tony (Newham NW)

  Faulds, Andrew

  Barnes, Harry (Derbyshire NE)

  Fearn, Ronald

  Barnes, Mrs Rosie (Greenwich)

  Field, Frank (Birkenhead)

  Battle, John

  Flannery, Martin

  Beckett, Margaret

  Flynn, Paul

  Beith, A. J.

  Foot, Rt Hon Michael

  Bell, Stuart

  Foster, Derek

  Benn, Rt Hon Tony

  Foulkes, George

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

  Fraser, John

  Bermingham, Gerald

  Fyfe, Maria

  Bidwell, Sydney

  Galbraith, Sam

  Blair, Tony

  Galloway, George

  Blunkett, David

  Garrett, John (Norwich South)

  Boyes, Roland

  Garrett, Ted (Wallsend)

  Bradley, Keith

  George, Bruce

  Bray, Dr Jeremy

  Godman, Dr Norman A.

  Brown, Gordon (D'mline E)

  Golding, Mrs Llin

  Brown, Nicholas (Newcastle E)

  Gordon, Mildred

  Buchan, Norman

  Gould, Bryan

  Callaghan, Jim

  Graham, Thomas

  Campbell, Menzies (Fife NE)

  Griffiths, Nigel (Edinburgh S)

  Campbell, Ron (Blyth Valley)

  Hardy, Peter

  Carlile, Alex (Mont'g)

  Harman, Ms Harriet

  Clark, Dr David (S Shields)

  Hattersley, Rt Hon Roy

  Clarke, Tom (Monklands W)

  Healey, Rt Hon Denis

  Clay, Bob

  Henderson, Doug

  Cohen, Harry

  Hinchliffe, David

  Coleman, Donald

  Hogg, N. (C'nauld & Kilsyth)

  Cook, Robin (Livingston)

  Holland, Stuart

  Corbyn, Jeremy

  Home Robertson, John

  Cousins, Jim

  Hood, Jimmy

  Crowther, Stan

  Howell, Rt Hon D. (S'heath)

  Cryer, Bob

  Howells, Geraint

  Cummings, John

  Howells, Dr. Kim (Pontypridd)

  Cunningham, Dr John

  Hoyle, Doug

  Dalyell, Tam

  Hughes, John (Coventry NE)

  Davies, Rt Hon Denzil (Llanelli)

  Hughes, Robert (Aberdeen N)

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

  Hughes, Roy (Newport E)

  Dewar, Donald

  Hughes, Sean (Knowsley S)

  Dixon, Don

  Illsley, Eric

  900

  Ingram, Adam

  Randall, Stuart

  Janner, Greville

  Redmond, Martin

  Jones, Barry (Alyn & Deeside)

  Rees, Rt Hon Merlyn

  Jones, leuan (Ynys Môn)

  Reid, Dr John

  Jones, Martyn (Clwyd S W)

  Richardson, Jo

  Kaufman, Rt Hon Gerald

  Robertson, George

  Kinnock, Rt Hon Neil

  Robinson, Geoffrey

  Kirkwood, Archy

  Rogers, Allan

  Lamond, James

  Rooker, Jeff

  Leighton, Ron

  Ross, Ernie (Dundee W)

  Lestor, Joan (Eccles)

  Ruddock, Joan

  Lewis, Terry

  Salmond, Alex

  Livsey, Richard

  Sheerman, Barry

  Lofthouse, Geoffrey

  Sheldon, Rt Hon Robert

  Loyden, Eddie

  Short, Clare

  McAllion, John

  Skinner, Dennis

  McAvoy, Thomas

  Smith, Andrew (Oxford E)

  Macdonald, Calum A.

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

  McKelvey, William

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

  McLeish, Henry

  Snape, Peter

  Madden, Max

  Soley, Clive

  Mahon, Mrs Alice

  Spearing, Nigel

  Marek, Dr John

  Steinberg, Gerry

  Marshall, David (Shettleston)

  Stott, Roger

  Martin, Michael J. (Springburn)

  Strang, Gavin

  Maxton, John

  Straw, Jack

  Meacher, Michael

  Taylor, Mrs Ann (Dewsbury)

  Michie, Bill (Sheffield Heeley)

  Thompson, Jack (Wansbeck)

  Michie, Mrs Ray (Arg'l & Bute)

  Vaz, Keith

  Mitchell, Austin (G'r Grimsby)

  Wall, Pat

  Moonie, Dr Lewis

  Wallace, James

  Morris, Rt Hon A. (W'shawe)

  Walley, Joan

  Morris, Rt Hon J. (Aberavon)

  Wardell, Gareth (Gower)

  Mullin, Chris

  Welsh, Andrew (Angus E)

  Murphy, Paul

  Wigley, Dafydd

  Nellist, Dave

  Williams, Rt Hon Alan

  Oakes, Rt Hon Gordon

  Wilson, Brian

  O'Brien, William

  Winnick, David

  Orme, Rt Hon Stanley

  Wise, Mrs Audrey

  Owen, Rt Hon Dr David

  Worthington, Tony

  Parry, Robert

  Wray, Jimmy

  Patchett, Terry

  Young, David (Bolton SE)

  Pendry, Tom

  Pike, Peter L.

  Tellers for the Noes:

  Powell, Ray (Ogmore)

  Mr. Frank Haynes and

  Radice, Giles

  Mr. Allen McKay.

  Question accordingly agreed to.
  Bill read a Second time.

  FINANCE BILL (COMMITTAL)
  Ordered,
  That clauses Nos. 1, 32, 33, 44, 51 and 138 be committed to a Committee of the whole House;
  That the remainder of the Bill be committed to a Standing Committee;
  That, when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.—[Mr. Lawson.]
  Committee tomorrow.

  Mines (Safety)
  Mr. Bob Cryer: On a point of order, Mr. Speaker. The House is about to discuss the Mines (Safety of Exit) Regulations 1988. The Health and Safety Commission is due to introduce a code of practice which sets out the regulations we are about to discuss together with guidance notes. I have been to the Vote Office and it appears that the code of practice and the guidance notes are not available to the House. The code of practice should be available to the House so that it can be discussed in conjunction with the regulations.
  The Leader of the House will confirm that the Joint Committee on Statutory Instruments recently made representations to him, because no Committee or individual hon. Member, and now, apparently the House itself, can examine codes of practice which are issued in conjunction with regulations. That seems to be a serious omission and the code of practice should be made available to us.
  Mr. Speaker: Perhaps the Minister will respond to that as it is an out of time prayer.
  10.17 pm
  Mr. Gavin Strang: I beg to move,
  That the Mines (Safety of Exit) Regulations 1988 (S.I., 1988, No. 1729), dated 5th October 1988, a copy of which was laid before this House on 29th November 1988, be revoked.
  The House is well aware of the importance of mining safety regulations as compliance with them can sometimes mean the difference between life and death. They apply to one of our most dangerous industries, which is also one of the largest and most important industries in Britain.
  The Minister will recall that during a recent debate on mine safety in the Standing Committee considering the Employment Bill I reaffirmed the Opposition's belief that the coal mining industry has a great long-term future as a producer of energy and chemical feedstocks. No matter how many pits are closed by the Government for short-term accountancy reasons, thousands of people will be working in our collieries long after North sea oil has run dry.
  Against that background I have to tell the Government tonight that yesterday's announcement about Bilston Glen and Monktonhall collieries just outside Edinburgh is a piece of economic lunacy which we are determined to resist.
  The exit regulations before the House tonight are the first legislative package in a programme of new law which is intended effectively to replace all the existing mine safety legislation, including the Mines and Quarries Act 1954, the Mines Management Act 1971 and a host of national and local regulations made under those and earlier Acts on mine safety.
  Each package consists of a set of regulations and an approved code of practice. The regulations are made under the Health and Safety at Work etc. Act 1974. This constitutes a fundamental break with earlier mine safety laws in that there is not to be a modern piece of primary legislation specific to mine safety, such as the Mines and Quarries Act 1954 or the Coal Mines (Regulations) Act 1908.
  A second important break with the past is the use of codes of practice, which of course do not have the same force of law as a statutory instrument. The programme of
  902
  new law is intended to consist of 16 packages. Each package will consist of a set of new regulations and an approved code of practice. The exit regulations set out the facilities and conditions necessary for safe exit to the surface, the action to be taken when only one exit is available and the emergency apparatus to be provided when all apparatus normally used for exit to the surface becomes unavailable.
  The approved code of practice gives guidance on compliance with the regulations and sets out, for the first time in a code of practice, the best operating procedures when there is only one way out. As a senior executive of British Coal has been quoted as recently 8 March as saying that managers will not be required slavishly to follow the codes, I urge the Minister to make it clear that an approved code of practice must be fully implemented. What are the consequences of not doing so?
  Why have the Government not brought forward a major new piece of primary legislation to replace the 1954 Act? Many of the 16 packages relate to each other and it is difficult to consider them in isolation. It is to the credit of the mining unions that during the negotiations they obtained an assurance that if a later package created a need to revise an earlier one, that would be done. Will the Minister confirm that?
  It is hardly necessary for me to spell out to the House just how dangerous this industry is. The number of fatal accidents declined from 44 in 1982–83 to nine between 1988 and 1989. But last year the figure doubled to 18, and since 1 April 1989 there have already been two more fatalities.
  The accident rates for the various industries are well set out in the latest annual report of the Health and Safety Executive, and the Minister will recall that only recently we had a major debate, at the initiative of the Opposition, on health and safety in the construction industry. I can bring home to hon. Members how dangerous coal mining is when I point out that the accident rates in mining are three times those for the construction industry.
  In recent years we have seen a sharp fall in the number of mines and quarries inspectors. There has been a fall from 116 in 1979 to 72 in 1988. There can be no dispute as to the important role those inspectors play in health and safety in the mining industry.
  Mr. Patrick McLoughlin rose—
  Mr. Strang: I do not have time to give way, and in any case I will probably answer the question that the hon. Gentleman would have asked when I say that I accept that those figures must be set against the decline in manpower and the reduction in the number of pits. But most disturbing about the recent accident figures is the extent to which they are higher among private contractors working in British Coal collieries compared with direct employees of British Coal and, further, the extent to which accident rates among employees in the private licensed mines are higher still. For those reasons it is necessary to reverse the decline in the number of inspectors who watch over health and safety matters in the pits.
  That reduction in the number of mines and quarries inspectors must be coupled with the proposals in the Management and Administration of Health and Safety in Mines Regulations, currently under discussion. That legislative package would abolish the office and functions of the pit deputy, who performs a vital role in the pits. His responsibilities include the immediate charge of workers in

  903
  the district and their operations. Deputies may also carry out inspections and duties in relation to the presence of gas, into ventilation, the support of roof and sides and matters of general safety as required by the Mines and Quarries Act. Perhaps most importantly, deputies must give preference to the securing of the safety and health of the workmen employed in the mine over the securing of any other matters. Winston Churchill, speaking during the Second Reading debate on the 1911 Coal Mines Bill, said:
  "The deputies and firemen are the non-commissioned officers of the mining industry, and, just as the non-commissioned officers are said to be the backbone of the British Army, so the deputies and firemen are the essential foundations on which the safety and security of the mines mainly repose."—[Official Report, 17 March 1911; Vol. 22 c. 2649.]
  It is for that reason that I take the opportunity to tell the Minister that the administration package, as currently drafted, is utterly unacceptable to the Opposition. But we are, of course, debating the Mines (Safety of Exit) Regulations 1988 tonight. It has to be said that in recent years, Trades Union Congress representatives on the Health and Safety Commission and others involved with the commission have invested a substantial amount of effort in securing a legislative package which aims to maintain, if not improve, the existing law for the safe exit from mines. As a result of pressure from the mining unions, significant changes have been made to the draft regulations during the consultative process. The earlier drafts of the regulations contained, for example, no requirement that the minimum height of a roadway should be 5 ft 6 in or 1·7 m, as referred to in the regulations.
  Having achieved those changes, the regulations are supported not only by the Trades Union Congress, but by the three mining unions. We recognise the amount of work involved in the regulations and the improvements that have been made, but we are conscious that there are many more packages to come before the House. We earnestly urge the Government to ensure not only that they consult fully on those packages, but that the packages increase health and safety standards rather than diminish them and that they come before the House, as this package does, with the support of the mining unions. On that basis, we will not seek to divide the House tonight.
  10.27 pm
  The Minister of State, Department of Employment (Mr. John Cope): I apologise to the House that the code of practice was not in the Vote Office. It is in the Library, but I accept the criticism, although we are actually discussing the regulations. I want to set out briefly the background to the regulations and their contents, but I realise that many hon. Members want to speak, so I shall keep my remarks as brief as possible and then, if the House wishes, seek to catch your eye, Mr. Deputy Speaker, to respond to any points made in the course of the debate.
  As the hon. Member for Edinburgh, East (Mr. Strang) said, mining is an inherently dangerous industry. However, the modern British mining industry is the safest in the world and that reflects the attention paid to safety over many years by all concerned. The current law is based on a royal commission report of 1938, whose recommendations formed the basis of the Mines and Quarries Act 1954. Since then, there have been major technological and other changes. There have been two more Acts of Parliament, 50 sets of general regulations and
  904
  literally hundreds of local requirements and exemptions. It is time that all those were brought up to date and the regulations before us tonight start that process.
  I was asked by the hon. Member for Edinburgh, East why there was no new primary legislation in this area. The reason is that we believe that the primary legislation, the Health and Safety at Work etc. Act 1974, should form the basis of health and safety legislation for mines and quarries, as for the rest of British industry.
  Mr. Cryer: Part of the package involves the codes of practice. The Minister was here when I raised a point of order with Mr. Speaker about the lack of codes of practice in the Vote Office. I have been there again and the Minister has not arranged for any copies of the codes of practice to be placed in the Vote Office. That is a serious omission when we are debating the regulations, as a result of an Opposition initiative. The Government have not even troubled to lay a document before the House although, as I have emphasised, it will not be examined by any other body. Surely the document should be available.
  Mr. Cope: The hon. Gentleman may not have been present when I dealt with that point earlier and explained that copies are in the Library. However, I accept the criticism, as I did earlier.
  It is time that we modernised and revised the mass of existing legislation. The new basis for the Health arid Safety at Work etc. Act 1974 in industry of all kinds could hardly have a more cross-party basis on which to start, or, for that matter, a more mines-oriented parentage. It was based on the Robens committee and work on the agreement started under a Labour Government, proceeded under the Conservative Government of 1970–74 and was enacted by the incoming Labour Government later in 1974.
  The regulations are introduced on the basis of that Act. As the hon. Member for Edinburgh, East said, this is the first of a series of regulations, 16 of which are planned, which will in due course supersede the existing law on mines and quarry safety.
  Mr. Dennis Skinner: This is all about the privatisation of the pits. But is this the time, even for this Government, to be talking about relaxing safety laws when we have had so many accidents in industry, on the railways and at airports? Not satisfied with that, the Government want to relax the safety laws in the pits as well so that the privateers can make an easy killing. Is the Minister aware that the regulations are being introduced against a background of about a 130 per cent. increase in underground fires since the Government came into power? What kind of a Government would want to see more accidents in the pits?
  Mr. Cope: In the first place, the regulations do not relax the safety requirements—
  Mr. Skinner: I say they do.
  Mr. Cope: They do not, and if they did they could not have been brought in under the Health and Safety at Work etc. Act.
  In the second place, no one has been killed or injured in a fire in a British mine for more than 20 years.
  Mr. Skinner: There has been an increase in fires.
  Mr. Cope: Although more fires have been detected and extinguished, for which better equipment exists, Britain's safety record on fires is extremely good. Besides the Government are not advancing the regulations alone. They have wide support—
  Mr. David Ashby: Is it not right to say that last year the number of underground fires fell to the lowest level for 10 years?
  Mr. Cope: My hon. Friend probably is correct, but I am more concerned with safety and that is what was under criticism.
  Mr. Martin Redmond: Does the Minister accept that over the years regulations have been brought to the House to enforce safety factors in mines and they exist because of pit accidents? However one dresses the package up, it is taking away some of the measures which in the past have made safety paramount. These regulations are taking us a stage backwards.
  Mr. Cope: The regulations supersede some previous ones, but they seek to improve and build on them as I shall seek to show in a moment.
  It is not only the Government who have evolved the regulations. Work started on this package more than five years ago in 1983. The mines and quarries inspectorate and its colleagues in the Health and Safety Executive prepared the first draft which was published for informal consultation in November 1984.
  After six months' consultation with the unions, employers and others, the Health and Safety Executive worked out a revised draft which was put to the tripartite Health and Safety Commission. It approved it and released it for formal consultation in November 1985. There were further meetings with all concerned, as a result of which there was further consideration and amendment. But the commission was most anxious that the final proposals should be acceptable to all concerned. So the amended drafts were the subject of a third consultation, beginning in August 1986.
  By November 1986 it seemed that there was agreement all round. But in December of that year, the National Association of Colliery Overmen, Deputies and Shotfirers and the National Union of Mineworkers withdrew agreement and the whole programme was thrown into doubt. As a result, the commission asked Mr. Ray Buckton, a former commissioner of health and safety, to chair a series of meetings with the unions to try to find agreement. Finally, in June 1988 the unions accepted the regulations and the related code of practice and, apparently too, the Health and Safety at Work etc. Act formula of regulations supported by approved codes of practice. The way was then clear for the set of regulations before us to be approved by the commission, sent to the Secretary of State and laid before Parliament. They were laid before the House on 29 November last, to come into force on 1 April this year.
  I have spelt out the background in order to make clear that the regulations are not based on Ministers' ideas primarily. They have not sprung out of our heads, nor have they been imposed upon the unions by management.
  906
  For the benefit of the hon. Member for Bolsover (Mr. Skinner), may I point out that they far predate any talk of privatisation. They are based on legislation introduced by the right hon. Member for Blaenau Gwent (Mr. Foot), based on the recommendations of a committee chaired by a former Labour Member who was chairman of the National Coal Board. They have had five years of careful consultation with the unions and with others, and have been agreed and sent to Ministers by the tripartite Health and Safety Commission.
  I am sure that all that consultation was worthwhile and necessary. I am not in any way criticising it or the amount of time that it has taken. On the contrary, as has already been stressed, it is important that there should be wide agreement on such a package of measures.
  Above all, I stress again that the regulations improve safety standards. They are introduced under an Act which allows us to introduce them only if they maintain or improve standards of health and safety.
  Mr. Allen McKay: When have they been improved?
  Mr. Cope: I am coming to that. The main thing that the regulations do is to bring together and clarify the existing provisions. They rearrange them into regulations and an approved code of practice. They tighten some of the provisions. I shall give some examples. They extend the requirement for two separate exits from coal mines to all other mines—an important provision. They set a minimum height of 1·7 m for all roadways, irrespective of who uses them or when they were constructed. They reduce from 100 to 50 the number of people permitted where there is only one air intake. They clarify the requirement that normally only nine people may work in places where there is only one exit, restrict the scope for exemptions that are granted at the moment and provide extra safeguards where there are more than nine people. They also require action plans from management, emergency equipment and so on.
  I explained that some of the provisions are in regulations and some in approved codes of practice. I was asked about the approved codes of practice. The formula of having codes of practice and regulations derives from Robens and the Health and Safety at Work etc. Act. In the rest of industry it has worked well over the years since its introduction.
  An approved code of practice has legal backing in that if an employer does not follow the practice set out in the approved code of practice, and if legal proceedings result, he has to prove in court that the regulations were complied with in some other way. This allows for the different circumstances in different pits, and so on.
  Failure to follow approved codes of practice may be taken by a court in criminal proceedings as proof that a person has contravened the regulations or the section of the Health and Safety at Work etc. Act 1974 to which the provision relates. It is prima facie evidence in court and that is the extent of the legal backing that it has.
  There are, of course, many informal British Coal codes of practice in use in coal mines at the moment, as well as other managers' rules, and so on, which are also provided for in some of these regulations.

  907
  All in all, these regulations are an important step forward not only in what they do but even more because they are the first steps in a renewal of all our law and regulations on the safety of mines and quarries. They
  908
  have been, as I have spelt out at some length, painstakingly agreed by all concerned. I commend them to the House and believe that they should have the support of all parties.
  10.40 pm
  Mr. Alexander Eadie: The Minister is an experienced parliamentarian and he will gather that there is a measure of suspicion, if not hostility, on the Opposition Benches when we discuss the question of safety. I am hardly very well disposed to the Minister because yesterday two pits in my constituency closed after 800 years of mining because of over-production and because there is no sale for the product.
  This is a significant debate for us tonight. My hon. Friend the Member for Edinburgh, East (Mr. Strang) has said that the exit regulations now before us are a forerunner of what has been described as a package of new law which replaces all the existing mine safety legislation, including the Mines and Quarries Act 1954 and the Mines Management Act 1971, and a whole host of national and local regulations under earlier Acts on mine safety.
  The Minister must explain to us the proper definition of an approved code of practice. It might have been helpful if, as mentioned in the point of order raised by my hon. Friend the Member for Bradford, South (Mr. Cryer), we had had the necessary documentation before us. I ask the Minister if the men's representatives will have the opportunity to approve codes of practice before they are put before Parliament. He retailed to us a long discussion that had taken place with TUC representatives. Since he has told us that we are about to embark on a whole cycle of new regulations, we want to know what the position will be with regard to consultations with the representatives of the mining unions.
  It has been stated that the regulations are made under the Health and Safety at Work etc. Act 1974, but this action constitutes a fundamental break with earlier mine safety laws, and there is not to be a modern piece of primary legislation on mine safety like the Mines and Quarries Act 1954 and so on. It is all very well to modernise and we would never object to modernisation, but it has to be demonstrated to us that these codes of practice, these packages, will be beneficial to safety in the mines. So I put it to the Minister—and we will have to be persuaded otherwise—that this is an important break with the past in the use of codes of practice.
  It may be my fault, but I was not really persuaded about the force of law in relation to these regulations. We want to know about the force of law for parliamentary purposes in the case, say, of statutory instruments. The Minister must clarify that very important legal point tonight. What legal standing do the regulations have? The Minister must bear in mind the statement made by an official from British Coal. I recorded the official's exact words. He said:
  "British Coal do not intend to carry out slavishly codes of practice."
  It is important that that statement is clarified tonight. It is no good Parliament being involved in discussion, argument or debate if a senior executive at British Coal says that British Coal will not slavishly follow legislation, codes of practice or whatever else Parliament wants to define.
  I was involved in the discussions about merging the mines inspectorate with the proposed Health and Safety Commission. If you were more free, Mr. Deputy Speaker,
  910
  I am sure that you would want to put in your pennyworth, although we might not agree. You were involved in this matter as well.
  There were extreme doubts about the wisdom of the merger and I was one of the doubters. Would the authority, experience and independence of the mining inspectorate be undermined as a consequence of merging with the new commission? If it had been put to us that the method before us tonight was the way to deal with mine safety, would the industry and mining unions have agreed to sink their identity? I do not think that they would have.
  One compromise was reached. There is a minute to the effect that in matters of mining safety the sponsoring Department—the Department of Energy—would be involved in full consultations. My hon. Friends and I in the miners' parliamentary group want to know, as do my colleagues who represent constituencies with powerful mining interests, whether the Department of Energy was involved in full consultations. The minute states that it had to be involved. What input has the Department made to the proposals before us?
  The exit regulations are important because they set out the facilities and conditions necessary for safe exit to the surface and the action to be taken when only one exit is available. In my mining experience, which lasted more than 30 years, I had to lead men up an exit when the main shaft was blocked. I have led men up stair pits. I can assure the Minister that climbing a stair pit to the surface is not a pleasant task when the main shaft is blocked, particularly for men who have not done it before. I had plenty of experience because I was a workmen's inspector. It was part of my job to inspect those exits and also to climb them five or six times a year. Is there any change in the regulations concerning the authority, stature and influence of workmen's inspectors? Are there any new powers vested in them in the regulations? We hope that their powers have not been diminished. The Minister must say whether they have any additional powers and whether their existing powers are to be maintained.
  Some of us were concerned to find that there was to be no minimum height for roadways. It was only due to pressure from the mining unions that a maximum height for a normal roadway of not less than 5 ft. 6 in. became a requirement. The day should be past when miners have to walk like half-shut knives when making their way to an exit. The powers that be should be told by Parliament that we are disappointed that this had to drawn to their attention when it was an aspect that had long been under discussion.
  The history of the coal industry has a record of blood in the coal. Too often miners have had to weep, bury their dead and generally grasp whatever comfort they could from their Churches and relatives. Mining safety is important. There was an increase in mining fatalities last year. As my hon. Friend the Member for Edinburgh, East said, it is distressing that the statistics for accidents in private mines are much higher than those in British Coal mines.
  If there are plans for the privatisation of the coal industry, Parliament must be eternally vigilant when any mining safety regulations come before it. It will have to know whether the regulations are legally enforceable, and whether those administering, running and managing the mines can afford to ignore rather than follow slavishly codes of practice.

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  We shall not regard these regulations, or any other regulations on mine safety, with complacency. I believe that my view reflects that of my hon. Friends. We shall scrutinise with utmost care any such measures that the Government bring before the House.
  10.53 pm
  Mr. Andy Stewart: I have not had the privilege of working in the mining industry, unlike a number of Opposition Members, in particular the hon. Member for East Lothian—[Interruption.] I am sorry, the hon. Member for Midlothian (Mr. Eadie)—his constituency is next door, so why worry. However, I have lived all my life in coal field areas, the first 23 years in Scotland and the past 28 in Nottinghamshire, During that time, I have learnt that nothing surpasses safety in the coal industry.
  I can vividly recall the disaster in Ayrshire in the 1950s, when the community was bereaved like the families in Liverpool today. The recommendations from the report of that disaster and others from across the British coal fields have made working in the industry safer. During the past 10 years there has been a major reduction in accidents in Britain's coal industry. The rate for all accidents for every 100,000 manshifts worked has fallen by two thirds, from 94·6 in 1978–79 to 29·3 in 1988–89.
  Those figures belie the allegations made last year, and repeated recently by the Labour research department, that pit accidents were rising. The British coal industry has an unrivalled international reputation for its standards of safety and health. Accident prevention is the top priority of all miners and management throughout the industry—their lives depend on it. The Mines (Safety of Exit) Regulations strengthen the law, particularly by having to keep the nominated person informed. In the Nottinghamshire coal field that will usually be the Union of Democratic Mineworkers' branch secretary. The new regulations bring into line what is now practice under exemptions from the existing Mines and Quarries Act 1954 and regulations. In other respects there is no change.
  While the overall safety record has improved owing to a combination of determined efforts by those who work in the industry, it is to everyone's regret that fatalities increased to 18 during 1988–89, compared with 15 in 1986–87 and nine—the lowest number ever—in 1987–88. In an attempt to achieve what we must all see as our goal, a zero fatality figure, the coal industry's safety campaign activities this year involve everyone in the collieries concentrating on preventing fatal and major injuries.
  No better example could be produced than the safety-conscious miners of Clipstone colliery, in my constituency, who have won the national underground safety competition for the second time in three years. If their best were the national norm, and given the new regulations, mining would be a safer industry in which to work.
  10.55 pm
  Mr. Jack Thompson: I spent the major part of my working life in the mining industry, protected by and complying with the various Acts and regulations governing safety in the mines. I cite especially the Mines and Quarries Act 1954, but I was in the industry even before the advent of that Act. I remember when I was governed by the Coal Mines Act 1911.
  912
  I am particularly interested in the 16 new regulations. If there is one major flaw in our approach to them, it is our method of dealing with each regulation separately. They are not a package, and if we are to look at them at all that is how we should view them. They are all inter-related: safety of exit relates to electricity regulations, mechanical regulations, ventilatory regulations, and so forth. I hope that the Minister will give us an assurance that when all 16 have been examined we can examine them again, noting that the flaws in one may relate to another.
  My hon. Friend the Member for Don Valley (Mr. Redmond) rightly pointed out that many existing safety regulations had evolved from accidents and disasters, both large and small, some causing heavy loss of life. Let me give an example that relates specifically to safety of exit. More than 100 years ago, in my county of Northumberland, the New Hartley mine had only one shaft—circumstances that prevailed at the time. Ventilation was provided by a furnace at the shaft bottom, which pulled the air up and allowed cool air to come down. At the top of the shaft was a beam pump operated by steam: this was used to extract water from the mine. While the beam pump was operating, the beam snapped. It went down the single shaft and sealed it off, trapping all the men and boys—some only eight years old. Literally hundreds died. As a result of that accident, from then on mines were expected to have at least two shafts—a significant development.
  I am sure that those who draft and redraft mining legislation will have read the poignant stories of New Hartley and, for instance, Cresswell colliery, where a disaster involving the burning of conveyor belting led to new regulations being introduced. No doubt they have studied the reports produced at the time, and the horrendous stories relating to such accidents. Such events must be at the forefront of their minds when they draw up safety regulations such as these.
  It has become apparent that the foundation of the present legislation has prevented many more deaths and serious occurrences. Changes are acceptable only if they will improve safety standards. Any legislation that lowers standards would and should be opposed.
  The mining industry is claimed to be the safest in the world, as the Minister said himself. I do not dispute that claim. I hope that these regulations will uphold that reputation, but there is a financial price to pay. The British miners have shown that, despite the high cost of safety, they will always produce a relatively high standard.
  My role in the industry was in electrical engineering. While I had responsibilities for high standards of safety in electrical equipment upon which other miners depended, they, in their turn, were responsible for protecting my safety by ensuring that other equipment such as ventilation, roof supports, and roadways were secure and that the beams of the work place were safe.
  In electrical engineering, standards and quality of equipment have improved dramatically in recent years. I have seen changes that I would not have believed possible when I entered the industry. These improvements have continued since I left the industry. So in all aspects improvements have taken place; always in a nationalised industry safety came first.
  I am concerned that this set of regulations does not reduce the safety aspects of leaving a work place or mine in circumstances that are potentially dangerous. I shall give a personal example. Before I left my place of

  913
  employment in the mining industry—and I lived in Corrie —a new system of drawing men up the shaft was introduced. In fact, we did not have the normal procedure of a winch pulling a cage but a lift such as is in the Savoy hotel, believe it or not, although not quite up to that plush standard. However, it operated on the same principles. My responsibility as an engineer was, on occasion, to make sure the lift was working satisfactorily. When it did not work but broke down and stuck half way—this happens in the Savoy sometimes as well—with miners inside it was usually when they were coming out for a pint of beer on a Friday night. On such occasions I had to go to that lift and introduce a standby system which actually defeated some of the safety systems on the lift. I hope that the regulations prevent that sort of thing happening as standard practice. I hope that it will become part of the code of practice that that sort of equipment be protected.
  The only real improvement I can detect is a small change in the language to be used in the drafting of regulations. In Schedule 2 (b) which refers to regulation 20 relating to a deputy's duty to be acquainted with ways leading to exits the words
  "of egress therefrom or from any place therein"
  are replaced by
  "each leading to a different exit."
  Later there is a further simplification. The words
  "After 'from the district' for 'and from any such place"'
  are far more understandable expressed as
  "and from every place where a person works."
  I quote those two small examples to emphasise that miners are more used to using simple, clear and sometimes colourful language and not the pseudo-legal language often used in drafting Acts and regulations governing their lives and safety. That is all that I can really identify as an important change to the regulations.
  In general I can see these regulations having a more significant effect upon people operating small private mines whose resources and enthusiasm for safety standards are somewhat limited. Many of the proposals included are already standard practice in British Coal mines, including internal codes of practice.
  I am rather puzzled that in these regulations reference is made to the role of deputies. I would appreciate a comment from the Minister as to whether proposals will be laid before the House to alter both the title of the official and his important role. He is the principal officer responsible for on-site safety. If that is to happen, then this document before us should take that change into account. If the regulation is to change the role of the deputy, it should be the first to be considered. Any diminution of the role of the deputy will affect safety standards and the application of these regulations. In my long experience in the industry the deputy was the on-site safety officer for general safety standards. He was supported by skilled craftsmen with responsibility for the machinery's safety. If the deputy's responsibilities are reduced and shifted further up the management hierarchy, many of the regulations will be seriously affected in their application.
  I understand that the mining unions have been consulted, and that they made valuable suggestions for changes that have been incorporated in the regulations. I welcome the unions' participation because they know as much as anyone about mining safety. I shall be interested to learn their views on future proposals.
  914
  This package of 16 regulations can have a significant effect on the industry's future, for better or for worse. I hope that they will be for the better.
  11.5 pm
  Mr. Peter Hardy: I trust that brevity will not detract from the serious nature of the remarks that I shall make. As the House knows, I am sponsored by the National Association of Colliery Overmen, Deputies and Shotfirers, and reference has already been made by my hon. Friend the Member for Wansbeck (Mr. Thompson) and by others to NACODS' serious concern about the regulations. NACODS has an enormous interest in the regulations and in the others that will follow.
  My hon. Friend the Member for Edinburgh, East (Mr. Strang) referred to the association's concern. The House should be aware that the duties, experience, training and qualifications of the underground official reflect and provide for safety as well as for the pursuit of production. Will the Minister confirm that under the law as it was, or is, the priority of production was subordinate to that of safety? The anxiety felt about the regulations basically stems from concern as to whether production will command a greater priority than it has. It is in that regard—the additional risk to life and limb—that concern is most strongly felt.
  I suspect, as do many of my right hon. and hon. Friends, that there are people who, especially with the prospect of private profit, wish to weaken the structure of and priority given to safety. I hope that I am wrong. However, confusion seems to exist in the mind of British Coal. When the Select Committee considered the matter in 1985–86—as my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) will confirm—Sir Robert Haslam seemed to suggest that substantial changes to legislation were necessary. In the light of the Minister's comments about 1983, Sir Robert's remarks were consistent.
  It appears that when Sir Robert made that point senior British Coal officials present indicated dissent. Mr. Moses stated—he repeated this comment in response to questioning by my hon. Friend the Member for Pontefract and Castleford—that the only changes he wanted to see were changes in the Hours of Work Act 1908. He stressed that there was no need to amend regulations. According to the Minister, that was three years after the proceedings began. I believe that Sir Robert was honest with the Select Committee, but there seems to have been some inconsistency.
  The first package was reluctantly accepted by NACODS, for two reasons. Originally there was no minimum height proposal. Given the political situation and the mood in the industry at the time, I suppose it was felt to be a triumph to reach agreement on an exit height of 1·7 m. That is less than my height, but I suppose the unions felt relieved that miners would not always be required to crawl. No doubt there are those on the Government Benches and in Hobart house who would be happy if they were made to crawl.
  NACODS was assured—and I ask the Minister to comment on this—and it was promised that if it agreed, and if other parts of further packages were unacceptable, the association could return to the first package. Will the Minister confirm that such a promise was made? I feel some anxiety about whether that promise can be fulfilled.

  915
  The Minister acknowledges that there have been months of deliberation, months of argument, and months in which the unions, the inspectorate and others involved, including officials of the Department, gave serious thought and consideration to the regulations. At a meeting of the Mining Qualifications Board—this has been referred to already, so the Minister will have to comment on it—there was a discussion about whether the candidates for mining engineering qualifications should have access to works of reference during the examination. Mr. Moses said—and I am quoting again, but I shall complete the quotation because, so far, it has not been completed—
  "My managers will not slavishly follow the code of practice".
  He went on to say:
  "I will send out instructions that will supersede these codes."
  The Minister must understand that such a statement from such a principal person—the technical director of the British coal industry—justifies the concern of this House. Is privatisation such a god that proper regard for democratic and constitutional procedure can be set at naught? The Minister must answer that point. I do not know whether Mr. Moses has any explanation to offer, but, if not, the Minister has a duty to offer one.
  I suspect that the sort of attitude that is still to be found in the industry concerns the commitment to produce regardless of the consideration of safety. There is only one pit left in my constituency. It is a successful pit with good men and good management. But throughout my area there has been mining for generations. Indeed, people from three generations of my family were underground officials. The history of my area, as in the case of Northumberland and the other coalfields, is riddled with example after example of the priority and predominance of production. There have been series of accidents where the dominance of production has been the major factor in the loss of life. We are worried—very worried indeed—that the priorities are now about to shift.
  Reference has been made to accident rates. Last week, in this building, there was a press conference concerned with mine safety. Concern was expressed about the increased incidence of major accidents and major injuries. British Coal was far quicker off the mark in replying to that than it had been in advising people seeking to defend the coal industry during the proceedings on the Electricity Bill. It was far quicker off the mark than it had been in advising or helping us in seeking to defend the coal industry against the development of Humber ports to import South African coal.
  On the very day on which that press conference was held British Coal issued another statement suggesting that there were fewer accidents. The hon. Member for Sherwood (Mr. Stewart) may have forgotten that, as a result of the implementation of the bonus scheme, men are much more reluctant to report minor accidents. But major accidents cannot be disguised, and the number of major accidents and major incidents is increasing.
  Mr. Eric Illsley: Before leaving that point, would my hon. Friend comment on the fact that the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1985 made it more difficult to compare like with like on either side of the date of implementation?
  Mr. Hardy: My hon. Friend is quite right. The implication is that there will have to be further debates when other regulations are considered.
  There are those concerned with the coal industry who will be looking longingly at the coal industry in America. I have visited American pits, and I know that there are safe ones, but there are also dangerous ones, and my anxiety is that in the unfolding situation in the British coal industry we will see the dangerous ones rather than the better ones emulated. Those anxieties need to be allayed, otherwise the Minister will run the risk of being charged with putting a cover round those who are rather reckless in their attitude to the coal industry.
  11.13 pm
  Mr. Spencer Batiste: I shall be very brief, as I know that several other hon. Members wish to speak.
  Having read the regulations and listened to the speeches from the two Front Benches, I was satisfied that, in these regulations, we had achieved a reasonably fair balance, with a wide measure of acceptability across the political spectrum. Having listened to some of the comments that have been made since then, however, I think that it is important to probe the original speeches a little to see whether points of substance have been raised or whether what we have been hearing is unnecessary scaremongering for those listening to, or reading the report of, our debate.
  Anybody who has been down a pit recognises that those who spend their working lives underground are uniquely vulnerable. I have been down pits in many parts of the country. The experience of hon. Members on both sides of the House of the mining industry and the representations that were made when the regulations were being drafted have to be borne in mind.
  If the regulations are to be accepted, high standards of maintenance and enhanced safety must come first. I seek my hon. Friend's assurance that safety will be put first. Notwithstanding the carping criticism in the debate, I hope that that clear message will be given.
  Apart from maintaining and enhancing the high standards of safety, will my hon. Friend confirm that the regulations will have firm statutory force and that they will apply both to British Coal and to the private sector, whatever their future status in relation to each other may be? Will he also confirm that the codes of practice will be made more easily comprehensible so that specific problems can be tackled as they arise? Will my hon. Friend confirm that the regulations enjoy the support of bath management and all the unions in the industry? If the unions as well as the management support the regulations, the Opposition's criticisms have gone well beyond the views of the union's negotiators who participated in the preparation of the regulations.
  If, as a consequence of subsequent parts of the package, questions arise about the safety of exits, can my hon. Friend assure the House that the matter will be looked at again? I hope that my hon. Friend will give firm assurances about all these questions. If, as I believe, his answer to all of them is yes, the regulations should receive not just the approval of the House but a very warm welcome.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. I can see five hon. Members who are trying to catch my eye. I

  917
  understand that the debate must end by 11.47. I am sure that the House will want to leave time for the Minister to comment on some of the matters that have been raised.
  11.18 pm
  Mr. Geoffrey Lofthouse: The regulations will lead to a fundamental break with the safety legislation. Is that necessary? The safety regulations should be strengthened, if a case can be made out for doing so. My experience of the mining industry goes back over many years, both as a face worker and as a member of the management team. The regulations will not strengthen the safety laws. They will be diluted.
  The regulations will lead to a move away from a statutory obligation to a code of conduct.
  Mr. Cope indicated dissent.
  Mr. Lofthouse: The Minister shakes his head. No doubt he will put me right later, but that is how it appears to me. If that is the case, that is dilution of the present regulations.
  I make a further point as regards egress. There was reference earlier to egress from the winding shafts, but there are other forms of egress from headings with just one way in and one way out. As I understand the regulations here, the current situation is that where a manager requires more than nine men, plus any other workers such as deputies, to work in a heading of that nature, he must get Her Majesty's inspectors authorisation before he can increase that number. As I understand this regulation, that will not now be necessary and the manager will be able to decide for himself. If that is the case, that is diluting the present regulations.
  I hope the Minister will take full note that, after a long investigation into the future of the mining industry by the Energy Select Committee in 1986, it took evidence from those we expected to be experts. The evidence given to us at that time was that it would not be necessary for any alterations at all to the regulations apart from the working hours. Mr. Kenneth Moses, who has been referred to earlier this evening, who made a speech to the Mines Qualifications Board on 18 March, I understand, will not expect his managers slavishly to carry out the codes of conduct. During the investigation I personally put a question to Sir Robert Haslam. For the benefit of the House I will quote:
  "Are you aware that many of the elements of this new strategy assume the deregulation of the coal industry and coal mines legislation will have to be amended and diluted?"
  The strategy referred to was the mechanisation of the British industry as recommended by Mr. Albert Wheeler. Sir Robert replied:
  "We realise that to bring about the kind of changes Mr. Wheeler is outlining, there would have to be quite radical changes in legislation, yes."
  At that moment I noticed some of the witnesses with Sir Robert that morning shaking their heads, so I put a further question:
  "I notice a shaking of the heads there. In other words, some of the witnesses are not agreeing with what you are saying, Sir Robert. Can you indicate in your view or any of your officials' view, which specific regulations and which piece of legislation you think will be required as an amendment, so that the Wheeler plan can be implemented?"
  918
  The same Mr. Moses who was saying that he did not expect his managers slavishly to carry out the code gave this answer:
  "There is only one piece of legislation that would require any amendment to carry out Mr. Wheeler's plan, and that is the Hours of Work Act 1908 which limits the amount of time a man can spend underground in a normal shift. There will be no requirement to amend the Mines and Quarries Act; there will be no requirement to amend any safety legislation whatsover."
  Mr. Moses goes on to say in 10.19:
  "What I am saying is that if you take all the elements of Mr. Wheeler's suggestions which might be implemented to improve the performance of pits, there is no requirement to amend either the Mines and Quarries Act or any orders and regulations made under the Mines and Quarries Act, the Health and Safety Act or any orders made under the Health and Safety Act to enable any of these suggestions to be carried out. There is a requirement to amend the Hours of Work Act 1908."
  There was then a further question from me:
  "Will there be no pressure from the Coal Board to do so?"
  Mr. Moses: "No."
  Mr. Illsley: Far be it for me to defend Mr. Moses, but what he might have been saying was technically correct. There is no intention to amend the Mines and Quarries Act 1954. According to the written reply I have dated 27 May 1988 from the Department,
  "The intention is to replace the Mines and Quarries Act 1954"—[Official Report, 20 May 1988; Vol. 133, c. 613.]
  Not amend it, but simply to do away with it altogether.
  Mr. Lofthouse: I fully appreciate that point. Mr. Moses, in his senior position in British Coal, was deceiving the Energy Select Committee because the Minister has told us tonight that discussions and negotiations were taking place two years before Mr. Moses gave evidence to the Select Committee. Mr. Moses must have known that. If Mr. Moses, the technical director of British Coal and a mining expert, could tell the Select Committee that there was no reason whatsoever why the regulations would need to be changed, why are they being changed? We can only conclude that it is in preparation for privatisation. When the other 15 regulations are produced—it is a pity they are not before us tonight—I am sure that they will represent a continued dilution of the safety laws in the mining industry. People who worked in the mining industry prior to its nationalisation know what that means.
  I am not convinced that the true and honest motive behind the regulations is simply to strengthen the safety laws. I believe that they are in preparation for privatisation.
  I stress that the regulation that gives the manager the sole right to decide how many men go in a heading is extremely dangerous. The mining industry has already started operating the American system. Many of the headings have only one entrance and the roofs are supported only by roof bolts. That creates added danger. If hon. Members want confirmation of that, they should read the evidence of Her Majesty's chief inspector of mines to the Select Committee. He said that roof bolting alone was not satisfactory for United Kingdom mines. That practice is taking place in headings with only one entrance and one exit, putting men in danger. Yet the regulations will allow the manager to decide to increase the number of men from nine to 18 without the permission of Her Majesty's inspectorate. That is diluting the regulations.

  919
  I am sorry that we have decided not to vote against the regulations as I believe that they are a retrograde step for the safety of mines in Britain.
  11.27 pm
  Mr. Martin Redmond: I shall detain the House for only a few minutes. I have some sympathy with the Minister in dealing with the regulations. There is an old saying, "To know me, come and live with me". To know what makes the industry tick, and why it ticks, it is necessary to spend a considerable time in the industry. I listened to the Minister's opening speech with great care, but I was not convinced. Perhaps when he replies to the debate he will convince me that the regulation is a good thing.
  The Minister talked about consultation, but one does not consult with the management of British Coal. If one does not accept what they say they will not play ball—they simply take the bat and ball away. We met the British Coal board the other day, and I have yet to meet a more arrogant and conceited group of individuals.
  If we refer to the Mines and Quarries Act, we get back to the old theme that regulations need to be enforced. If miners object to discrepancies and complain that managers are failing to comply with mines and quarries regulations, they are classed as troublemakers and are forced out of the industry. For proof of that we need only talk to the men who have experienced these problems.
  It is all very well to talk about safety practices, but they go by the board when British Coal wants to see increased production coming up the shaft. There is a danger that British Coal is getting shot of men and threatening men who dare to question the integrity of the mines and quarries safety practices.
  The Minister assured us that the regulations would have legal backing. I urge him to speak to present and former mines and quarries inspectors about provisions having legal backing. He might then take a different view about such matters having the force of law.
  Is the Minister aware that a reduction in the roadway height must have an effect on ventilation? I am not a mining engineer, but I assure the Minister that the domino theory comes into effect because, once one section is interfered with, there is bound to be a knock-on effect. The Health and Safety Executive will have the right to disregard any of the regulations if it claims that in doing so it is meeting a British Coal request.
  I hope that the Minister will do more to convince me of the need for the regulations, because I cannot, from what he has said so far, consider them to be beneficial for the future of the coal industry.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. I appeal for very brief speeches, please.
  11.32 pm
  Mr. Allen McKay: I worked underground for 20 years as an electrical engineer and 13 years as an industrial relations officer. During the time I was underground I was president of the NUM at my colliery and I was a No. 1, 2 and 3 inspector at that colliery. Hon. Members will understand, therefore, that I take a great interest in the health and safety regulations applying to mining.
  920
  I was fined on two occasions for breaking the then existing regulations, once by the manager and once by the inspector, and on each occasion they shoved across the table to me the document containing the rules and regulations—the bible, as we called it—and said, "That is what you have broken. It is a statutory responsibility."
  I mention that experience to show that, while the Minister may talk about the regulations and the approved code of practice having legal status—that they could be used in court—he must realise that all of that will apply after the event. A code of practice is precisely that—a guide, a code than can be altered by the mine management, by British Coal—and I do not think it need return to this House to be altered. It must be done in consultation, but it need not return to Parliament. When a matter arrives in court, there will have been an accident. That will be the only time that a code of practice will be tested legally. Can the president of the NUM or a representative of any other trade union take a manager to court, not because there has been an accident but because the code of practice has been broken?
  In view of the remarks of my hon. Friend the Member for Wentworth (Mr. Hardy), may we have an assurance that, should problems occur with any of the other packages under this set of regulations, we will be able to return to the issue? The Minister said that there was little difference between what my hon. Friend sought and what was proposed. What precisely is the difference?
  My hon. Friend the Member for Wentworth spoke about fast headings. I worked under private enterprise in the mines, from non-mechanisation to mechanisation, and I saw the rules and regulations altered to suit the new conditions as bigger machinery was installed. I suggest that to have 18 men in a fast heading is too many in view of the size of the machinery that is now in use.
  A recent newspaper article said:
  "British Coal is lobbying the Government to hasten measures which could radically alter the way the industry is run. The corporation wants speedy changes in health and safety legislation in order to clear the way for new working practices to increase efficiency."
  It went on:
  "they are reluctant to see definite instructions on safety"—
  referring to the unions—
  "replaced with broader recommendations. As one union official said, they do want to see `shall' replaced with 'as far as is reasonably practicable."'
  Regulation 3(1)(b) states:
  "the shafts or outlets are so separated that as far as is practicable".
  Regulation 3(2) states:
  "The manager shall ensure that, so far as is practicable".
  Regulation 8(2) states:
  "The person for the time being in charge of that part of the mine shall ensure that any such barrier or enclosure is properly maintained and kept in position."
  However, the original regulation has been altered, because the word "deputy" has now been left out. This is the beginning of doing away with the safety representatives in the collieries—the deputies. We can see that in black and white. The word "deputy" has been taken out and that has left the manager able to put someone in charge other than the person who has been in charge of safety for every minute that the colliery has been open. Those are changes that are taking place.
  The changes have been accepted and we shall not vote on them, but we have made the points that should have been made. Some points cannot be answered, because the

  921
  real answers are here in black and white. We shall look carefully at the regulations as they come into effect. We want the assurance that we shall be able to come back to the original regulations if we find anything untoward in the new ones.
  11.36 pm
  Mr. Harry Barnes: I will confine my remarks to the important issue of the number of men allowed in a heading where there is no separate means of exit. As the Minister will know, the regulations refer not to "men", but to "persons" because it is proposed in the Employment Bill to allow women to work in the pits and to place them in circumstances in which they could be blocked in a heading.
  Before 1 April, when the present regulations came into force, the law on numbers in a non-exit heading was contained in section 24 of the Mines and Quarries Act 1954. It allowed only nine men in a heading where there was no separate exit, other than in exceptional circumstances under a notice issued by an inspector. Exemption certificates were issued carefully and only ever for small numbers of people. There is seldom a need to operate with more than nine men in a heading. Why is the law now being changed?
  The new regulations allow nine men, or persons, into those headings, plus three others engaged temporarily in inspection, investigation, measurement or sampling. But how long is "temporarily"? The code of practice from the Health and Safety Commission, which operates in association with the regulations, explains that for us. Section 31 states that it is:
  "to allow such persons as managers, mining and engineering supervisory staff, inspectors, workpeople's inspectors and surveyors to enter the heading."
  For how long? The code of practice states:
  "for as long as is necessary to do their work."
  In other words, "temporary" will be for as long as it takes.
  The manager can now decide to have 18 persons in such a heading provided he fulfils certain conditions and notifies the inspector of mines and quarries for the district. Sections 32 and 33 of the code of practice are headed:
  "Managers' rules where more than nine persons are employed in headings."
  But it should not be managers who rule. It should be the inspectors, as under past law, custom and practice, who make the decisions. Managers will be subject to increasing commercial pressures with the electricity privatisation and competing floods of coal imports coming through the Humber ports. They should not be expected to balance safety considerations against a push for increased productivity. The two functions should be undertaken by different people.
  The dangers of working in a heading are shown by the events at 91s main gate at 10.30 am on Friday 13 January at High Moor pit in my constituency. They occurred under the Mines and Quarries Act, but illustrate the need to change the current regulations and the code. I shall paraphrase the report of the inquiry by A. Ingham, the chief mining engineer, and I hope that I do not distort his work unfairly.
  High Moor is in the South Yorkshire area of British Coal. At approximately 10.30 am on Friday 13 January
  922
  this year, 30 m. of roof collapsed between 210 m. and 240 m. into what is in effect a tunnel 990 m. long. Ten men, one over the nine, were trapped inside.
  The inquiry pointed out that the accident was due not to any geological factors or to other seam operations, but to the fact that the girders were too far away from the roadway so that it was not correctly protected. When the fall took place the girders collapsed with a domino effect leaving people blocked inside.
  The report contained a set of recommendations and I hope that they will be included in any future revision of these measures in order to ensure proper safety within roadways.
  Mr. Cope rose—
  Mr. Deputy Speaker (Mr. Harold Walker): I take it that the Minister has the leave of the House to speak again.
  11.41 pm
  Mr. Cope: I shall do my best to respond to as many points as possible, but I thought it better to give one or two more hon. Members the opportunity to speak. I shall respond in writing to those whose points I do not touch on in the remaining few minutes.
  First, let me do my best to try to reassure hon. Members about the origins of the legislation and of codes of practice. The legal reason for the introduction of codes of practice goes back to the Health and Safety at Work etc. Act 1974, introduced by the right hon. Member for Blaenau Gwent (Mr. Foot) against the background that I described.
  Section 1 of that Act says:
  "shall in particular have effect with a view to enabling the enactment specified in the third column of Schedule 1 and the regulations, orders and other instruments in force under those enactments to be progressively replaced by a system of regulations and approved codes of practice operating in combination with other provisions of this Part".
  One of the Acts of Parliament mentioned in the schedule referred to is the Mines and Quarries Act 1954 and the other Acts that have been replaced by regulations under that. Therefore, the origin of all this is the Robens committee and the Health and Safety at Work etc. Act 1974 passed by a Labour Government. The Health and Safety Commission put that provision into effect.
  Several hon. Members have asked about the legal position of approved codes of practice. Failure to observe any provisions of an approved code of practice is prima facie evidence of a breach of statutory duty. The onus of proof is on the accused, British Coal or whoever, to prove that the law has been complied with. That is a strong measure which will be influential.
  I was asked by the hon. Member for Barnsley, West and Penistone (Mr. McKay) whether somebody could be taken to court for breach of the code of practice. Certainly. The regulations must be complied with. If somebody fails to follow the code of practice, he is, prima facie, likely to be in breach of the regulations. Breach of the code of practice is evidence of the breach of the regulations, unless those regulations are shown to have been met in some other way.
  Mr. Hardy: Will the Minister give way?
  Mr. Cope: I have many points to answer. I shall try to deal with all the questions that I have been asked.
  I was asked by the hon. Member for Midlothian (Mr. Eadie) whether the Department of Energy was involved in the consultations. It was. He also asked whether

  923
  workmen's inspections were affected by the regulations. They are not. They will remain as the hon. Gentleman has known them from his personal experience.
  The hon. Member for Wansbeck (Mr. Thompson) thought, like others, that all 16 regulations should be in a single package. The decision was made by the Health and Safety Commission; it was not decided by me or any other Minister. I think that it is a help that the consultations should proceed separately on different parts. The consultations will be interlinked and we may have to refer back to the regulations and to the code of practice later. The other parts of the package will have to be examined in the light of these regulations.
  A senior British Coal official made a statement recently about the code of practice. I want to make it absolutely clear that neither British Coal nor any other mine owner can choose whether to comply with the law or with the regulations. I have explained that prosecution can follow breaches of the regulations. Mine owners will have to satisfy the courts that their chosen methods meet the regulations. So British Coal is not and should not be above the law.
  Several hon. Members referred to the arrangements for nine men working in a heading. The position is that inspectors frequently granted exemptions from the provisions of the old law when more than nine men were to work in a single entry blind heading. Under the new regulations a mine manager must notify us—
  It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to order [21 April]:
  The House divided: Ayes 24, Noes 95.

  Division No. 176]

  [11.47 pm

  AYES

  Alton, David

  McKay, Allen (Barnsley West)

  Barnes, Harry (Derbyshire NE)

  Maxton, John

  Beith, A. J.

  Nellist, Dave

  Campbell, Menzies (Fife NE)

  Powell, Ray (Ogmore)

  Cryer, Bob

  Salmond, Alex

  Galbraith, Sam

  Taylor, Matthew (Truro)

  Gordon, Mildred

  Thompson, Jack (Wansbeck)

  Graham, Thomas

  Vaz, Keith

  Hardy, Peter

  Wallace, James

  Haynes, Frank

  Wilson, Brian

  Illsley, Eric

  Ingram, Adam

  Tellers for the Ayes:

  Livsey, Richard

  Mr. Dennis Skinner and

  Lofthouse, Geoffrey

  Mr. Martin Redmond.

  924

  NOES

  Alexander, Richard

  Irvine, Michael

  Amess, David

  Jack, Michael

  Amos, Alan

  Kirkhope, Timothy

  Arbuthnot, James

  Knapman, Roger

  Arnold, Jacques (Gravesham)

  Lang, Ian

  Batiste, Spencer

  Lawrence, Ivan

  Bellingham, Henry

  Leigh, Edward (Gainsbor'gh)

  Bennett, Nicholas (Pembroke)

  Lightbown, David

  Boswell, Tim

  Lord, Michael

  Bowis, John

  Lyell, Sir Nicholas

  Brazier, Julian

  Maclean, David

  Brooke, Rt Hon Peter

  Mans, Keith

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

  Martin, David (Portsmouth S)

  Burns, Simon

  Maude, Hon Francis

  Burt, Alistair

  Mills, Iain

  Butcher, John

  Mitchell, Andrew (Gedling)

  Carlisle, Kenneth (Lincoln)

  Nicholson, David (Taunton)

  Carrington, Matthew

  Nicholson, Emma (Devon West)

  Cash, William

  Norris, Steve

  Chapman, Sydney

  Raffan, Keith

  Clarke, Rt Hon K. (Rushcliffe)

  Ryder, Richard

  Coombs, Anthony (Wyre F'rest)

  Shaw, David (Dover)

  Coombs, Simon (Swindon)

  Shaw, Sir Giles (Pudsey)

  Cope, Rt Hon John

  Shaw, Sir Michael (Scarb')

  Couchman, James

  Shersby, Michael

  Cran, James

  Stern, Michael

  Day, Stephen

  Stevens, Lewis

  Dorrell, Stephen

  Stewart, Allan (Eastwood)

  Douglas-Hamilton, Lord James

  Stewart, Andy (Sherwood)

  Dover, Den

  Stradling Thomas, Sir John

  Durant, Tony

  Summerson, Hugo

  Fallon, Michael

  Taylor, John M (Solihull)

  Fishburn, John Dudley

  Tebbit, Rt Hon Norman

  Forman, Nigel

  Thurnham, Peter

  Forsyth, Michael (Stirling)

  Townsend, Cyril D. (B'heath)

  Fowler, Rt Hon Norman

  Twinn, Dr Ian

  Freeman, Roger

  Waddington, Rt Hon David

  Garel-Jones, Tristan

  Walker, Bill (T'side North)

  Greenway, John (Ryedale)

  Waller, Gary

  Griffiths, Peter (Portsmouth N)

  Watts, John

  Hague, William

  Wheeler, John

  Hamilton, Hon Archie (Epsom)

  Widdecombe, Ann

  Hargreaves, Ken (Hyndburn)

  Winterton, Nicholas

  Hayward, Robert

  Wood, Timothy

  Hind, Kenneth

  Yeo, Tim

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

  Howarth, G. (Cannock & B'wd)

  Tellers for the Noes:

  Hunt, David (Wirral W)

  Mr. David Heathcoat-Amory

  Hunt, John (Ravensbourne)

  and Mr. Tom Sackville.

  Hunter, Andrew

  Question accordingly negatived.

  Community Charge (Isle of Cumbrae)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. John M. Taylor.]
  11.58 pm
  Mr. Brian Wilson: The poll tax legislation has given rise to much injustice, many anomalies and some cruelties. I do not suggest that the aspect upon which I am concentrating tonight is by any means the most damaging consequence of the introduction of the poll tax. My deepest concern is, and will remain, for those low income families for whom a second home of any kind is but a distant dream and who have enough trouble keeping one roof over their heads in part because of the poll tax.
  I raise the question of the standard community charge and its specific impact on the Isle of Cumbrae because that is a constituency issue of considerable importance. A serious injustice is involved, and there are wider implications. There is an easy remedy which the Govermment should be able to accommodate without loss of ideological face. I hope that by raising this debate on the Adjournment tonight I shall finally encourage them to contemplate that remedy.
  The Abolition of Domestic Rates Etc. (Scotland) Act 1989 does not allow local authorities to vary the standard community charge on second homes within their own boundaries. The legislation allows each authority to set a multiplier of between one and two on the personal community charge in order to arrive at the standard community charge. In the case of Cunninghame district and Strathclyde taken in conjunction, the personal community charge is £278. Therefore, a multiplier of two means a standard community charge of £556 per property.
  If I may pre-empt what I confidently expect to be the Minister's reply, I suspect that he will inform the House that it would have been open to Strathclyde and Cunninghame to set their standard community charges at a multiplier of one, thereby halving the burden on the owners of second homes. However, if he does so, the Minister will know that he is being disingenuous. More important, everyone with a specific interest in the Isle of Cumbrae who learns of this debate will know, for at least two very good reasons, that he is being disingenuous.
  One of those who will know that the Minister is being disingenuous is the former Member of Parliament for Cunninghame, North, who raised this matter in similar terms in Committee when the Bill to abolish domestic rates was being debated in the previous Session.
  In the first instance, in making its own calculation of what the poll tax would be in each local government area, the Scottish Office worked on the assumption that a multiplier of two would be set. If Strathclyde had forgone revenue by setting it at less, I have no doubt that, under certain circumstances, the Minister would have attacked the authority for its fecklessness. There is no question but that local authorities were expected to set the multiplier at two, and that it would have been quite unreasonable to expect them to do otherwise.
  There is a second reason why the Minister cannot with any degree of credibility say that the multiplier should have been set at the minimum level of one. Local authorities were confronted with an unreasonable dilemma. If they spared Cumbrae and ignored the Scottish Office's assumptions by going for a multiplier of one, they
  926
  would have given even more substantial savings to the owners of large and very large second homes, which exist, often too plentifully, in areas where circumstances are entirely different from those in Cumbrae.
  The irony is that, while the owner of a tiny second home in Millport who was paying £100 in rates before the new system took effect is now asked to pay an additional £446, the owner of a large second home in one of the more scenic parts of Strathclyde, who was paying £1,000 in rates on that second home, is now offered a saving of £554, give or take a few pounds to take account of district variations. If the local authorities had opted for a multiplier of one, the owner of the tiny second home would still be £178 worse off, but the owner of the large second home would be £722 better off. Even greater inequity, as well as loss of revenue to the local authority, would therefore arise if the multiplier were set at one.
  It almost goes without saying that the owners of large second homes, who are to make substantial savings under the standard community charge, are also the people who are likely to make substantial savings under the personal community charge. They are doubly and quadruply rewarded, while the very different kind of people who, by and large, own tiny flats in Millport will, in many cases, be doubly penalised, on their first home and in their second tiny home, until they quite simply cannot maintain their link with Millport and the Isle of Cumbrae. The same problem arises in some other parts of Scotland, where the ownership of a second home is far from synonymous with personal wealth, but arises from an extremely wide range of circumstances.
  I am very grateful to Mr. Sandy Morton of Millport, who has kept me plied with statistics, a few of which I offer to the House. Of the 1,300 properties on Cumbrae, fully half are second homes. That is the nature of the place, and the economic basis on which it survives. By and large, they are used regularly at weekends throughout the year, and not just for a few weeks in summer; by and large, they are extremely modest properties which would not be suitable for use as first homes. That is the key fact that distinguishes my argument from a general defence of holiday homes, in which I would not engage.
  The modesty of those second-home properties, usually tiny and often with shared facilities, has been reflected in the rate bills. Until April they generally ran at a little more or a little less than £100, and were sometimes as low as £50. Last year the total amount of domestic rates collected on Cumbrae, covering both the resident population and those in second homes, was £146,554. This year the proposed take in poll tax and standard community charge is £390,312—an astonishing increase of £243,658, which cannot be sustained either by the island's economy or by many of the ordinary folk who will be asked to contribute.
  The effect can already be seen. At least 60 small flats have been put up for sale, while many others are being emptied of their effects in an attempt to circumvent the standard community charge for at least a limited period. Incidentally, I would be interested to hear the Minister's comments on the length of standard community charge "holiday" that local authorities are expected to grant before the charge takes effect.
  As might be expected, there is widespread concern on Cumbrae about the implications for the island's future. Is that future to involve an increasing number of empty, derelict properties? Certainly no one will buy a one-room flat with outside lavatory for the privilege of paying £556,

  927
  and more in subsequent years, in standard community charge. My concern, however, is not only for the economy of Cumbrae; it is also for the people involved. I have received many sad letters, some from elderly folk for whom a little seaside flat is the one luxury in life which is now being put beyond their financial reach. Often it has been in the family for many years.
  At the same time—here is the paradox—owners of large holiday homes are laughing all the way to the bank. I ask the Minister to recognise the inequity of the position, and to act. The remedy is simply to allow local authorities to vary the level of standard community charge within their own areas to take account of the level of amenity enjoyed. That involves some degree of recognition that the standard community charge is de facto a property tax. It bears no relation to the number of people using the property, the length of time for which they use it or the demands made on local government services. That admission should not be too much for the Minister to swallow.
  I know that Strathclyde regional council has asked the Secretary of State to introduce emergency legislation to allow authorities discretion to vary the second home multiplier to reflect the size of the properties involved, and I fully endorse that request. This is not a matter of ideology, but one of common sense.
  Throughout Scotland, many people will be waiting for a response to the debate. They will include the gentleman who telephoned me today to wish me well with it. Like many people who have a family connection with the highlands, he rescued the four walls of an old croft house from total dereliction. It is in a remote part of Sutherland with absolutely no services, and he paid rates of £43. Now he is asked—as a reward for 20 years of his own labours—for a standard community charge 10 times that amount. It is crazy.
  There are hundreds of anomalous circumstances throughout Scotland relating to the standard community charge. That has been recognised by everyone, irrespective of political persuasion, except the Minister and the Scottish Office. All of these anomalies could be resolved and a lot of worry and sadness relieved by the simple remedy that I have proposed tonight.
  12.10 am
  The Minister of State, Scottish Office (Mr. Ian Lang): I welcome the opportunity which the hon. Member for Cunninghame, North (Mr. Wilson) has given me through this debate on the standard community charge in Cumbrae to put on record the progress which has been made in implementing the community charge, and to correct certain misunderstandings which, regrettably, appear to have been given wide currency—in particular about the standard community charge. The hon. Gentleman may be surprised to hear that I agree with him at least on one point. There can be no doubt that the level of standard community charge set by Strathclyde region and Cunninghame district will cause hardship to the owners of second homes on Cumbrae. However, that hardship could have been avoided, as I will show later in my remarks. To put the blame on the Government for introducing the community charge is quite wrong.
  As we explained when we began our reforms of the way in which local government is paid for, one of the conditions we set was to introduce a tax which would promote local accountability by being paid by almost all of
  928
  those who benefit from local services. This was one of the major shortcomings of domestic rates. We acknowledged that domestic rates had certain technical advantages. They were highly perceptible to ratepayers—so perceptible indeed that there was a massive outcry from all over the country following the revalution in Scotland in 1985. The revaluation demonstrated very clearly two of the major weaknesses of domestic rates. Rates bills went up for reasons which had nothing whatever to do with the spending policies of local authorities, and indeed for reasons which the domestic ratepayer simply could not understand. And they were paid by little more than half of all adults. The community charge gives the vast majority of adults a direct financial interest in local spending decisions and, together with our other reforms of local government finance, establishes a clear link between changes in expenditure and changes in local tax bills.
  From now on, the increased local accountability we have under the community charge will encourage all local taxpayers to take a very much closer interest in the spending policies of their local councils. They will be keeping a very close eye on the value for money they get from the community charges they pay, in terms of the level and quality of the service they get in return. I am already getting a very clear impression that this is beginning to work in practice—particularly in rural areas. The abolition of domestic rates and the introduction of the community charge has been a major undertaking. It has gone remarkably well with about 99 per cent. of the full adult population now registered. There is, however, one aspect of the change where, in practice, performance has fallen far short of what we could reasonably have expected. That is the level of community charge which authorities have set. Of course, the level of standard community charge relates directly to the level of personal community charge. We provided the most generous level of grant settlement for many years and this should have enabled local authorities to set moderate community charges. However, with local authority current expenditure budgets 12 per cent. higher than last year—well above the increase required to maintain services—community charges in many areas are higher—in some areas, much higher—than necessary.
  Mr. John Home Robertson: The Minister is technically abusing the opportunity given him by my hon. Friend the Member for Cunninghame, North (Mr. Wilson) to deal with a very specific problem of a standard poll tax that affects people who have very small holdings on the island of Cumbrae. How on earth he thinks he can get away with suggesting that this general new tax he has brought forward is beneficial in rural Scotland will certainly escape most of our constituents in rural Scotland. Will he do my hon. Friend the courtesy of replying to the specific points relating to his constituents which have been put not only by my hon. Friend but also by Mr. John Corrie, the former hon. Member for Cunninghame, North, when he warned in Committee of this very effect of the standard poll tax on the poll tax legislation?
  Mr. Lang: It is important to set the scene in which the situation we now see in Cumbrae has arisen, and the levels of community charge are important in that context. If the hon. Member for East Lothian (Mr. Home Robertson) does not understand the relationship between the

  929
  community charge levels, both personal and standard, and the spending decisions of local authorities, he does not understand one of the fundamental principles of the community charge.
  It is not unreasonable to suggest that many authorities appear to have taken advantage of the turbulence caused by the introduction of the community charge to expand their activities and spend more. Perhaps they thought they could conceal this from their local charge payers. Certainly, in comparing this year's community charge level with last year's rates, payers should not forget that rates—had they remained in existence—would have risen substantially this year as a result of local authority spending decisions. Strathclyde region budgeted for increased expenditure this year of some 10 per cent., and Cunninghame district council budgeted for increased expenditure of some 17 per cent.
  Because the standard community charge is—for reasons I shall explain in a moment—linked to the level of the personal charge, standard charge payers as well as personal charge payers have been affected by those spending decisions.
  The standard community charge was developed in recognition of the fact that, following abolition of domestic rates, local authorities would lose income from rates on houses used as second homes but would not gain any compensating revenues from the personal community charge if there is no sole or main resident in the second home. To make up for that potential loss of revenue, and to reflect the fact that local authorities continue to provide services to houses used as second homes, the 1987 Act makes provision for a standard community charge—to be levied by local authorities in respect of dwelling houses that are not the sole or main residence of any person.
  Under that Act, the standard charge is set at between one and two times the personal community charge at the discretion of the local authority. Therefore, the standard charge applies, by and large, to houses used as second homes, and we are here concerned with the change in liabilities that their owners face following abolition of domestic rates and their replacement by the standard community charge.
  In some areas the use that can be made of second homes throughout the year is limited, while the stock of second homes in some localities can be quite large. Cumbrae—where, I understand, it is estimated that more than half the housing stock is used as second homes—is exceptional. But in any event, local authorities must pay regard to all homes in their areas in determining the provision of local authority services. Personal charge payers would reasonably regard it as inequitable if owners of second homes located in their local authority areas were exempt from any contribution at all to local authority costs.
  We concluded that a charge of from one to two times the personal charge would be a reasonable contribution to seek from second home owners. However, in keeping with our wish to leave local authorities with as much discretion as possible, we decided not to prescribe a particular level but to leave local authorities with discretion over a wide range to set the charge with regard to their own local circumstances. It was envisaged that one of the factors that local authorities will take into account is the extent and nature of use of houses as second homes in their areas.
  930
  No advice nor encouragement was given to local authorities in Scotland by the Scottish Office that could be taken by local authorities as implying that we expected them, let alone required them, to set the multiplier at two—the maximum level permitted.
  Mr. Wilson: I take issue with the Minister's last comment that local authorities were not given any guidelines, when the projections clearly set the expectation that a multiplier of two would be applied. The Minister also said that local authorities are expected to take account of the use to which second homes are put. The degree of use to which second homes in Cumbrae are put is fairly high. In many cases they are used at weekends throughout the year. Is the Minister saying that the Government believe that, because of that relatively high level of use, a high multiplier should be adopted by the local authority? Would not a much more satisfactory approach be to consider the nature of the property, rather than the number of weekends people stay at it?
  Mr. Lang: No, that is not my belief. Nor is it our purpose to imply to local authorities what level of multiplier they should set. However, it is right that local authorities themselves should assess the situation in their own areas and decide policy in the light of the prevailing circumstances.
  In determining the allocation of rate support grant, the revenue assumptions adopted by the Scottish Office include the assumption that income generated by the standard charge multiplier would be equivalent to that generated by a multiplier of two. That is in line with conventions used in determining the allocation of grant, which assume that local authorities maximise their revenue-raising possibilities where discretion exists. If we were to distribute grant under other assumptions, it might be argued that the distribution would be to the disadvantage of authorities having limited revenue-raising possibilities and to the advantage of those having greater scope for rating revenue because of local circumstances. But it does not imply that we expect or require local authorities to set charges at their maximum, any more than the introduction of a limit on the rate of increase in non-domestic rates implied that local authorities were being prevented from putting up non-domestic rates by a lower amount than that permitted by the maximum. Nor does it have significant financial implications in Strathclyde.
  In setting their standard charge multiplier, local authorities should have had regard both to the spending objectives and to the burden that would be placed on standard charge payers. The fact they have chosen, almost without exception, to set a multiplier of two suggests that they have no intention of tailoring their spending plans to take account of the burden on standard charge payers. Indeed, it appears that they concluded that standard charge payers should pay the maximum possible. The burden that this has placed on standard charge payers has been compounded by high levels of personal community charge set by many authorities.
  The hon. Gentleman suggested that there was an easy remedy by varying the multiplier within regions and districts. This would probably be administratively difficult, and certanly it implies judgments relating to the nature of different properties, and would bring us back very close to a property tax, from which we have been moving away.

  931
  However, the potential loss of income in this situation is very small indeed. Had Strathclyde chosen to go for a multiplier of one, the loss of income would have been £2,170,000, or 0·13 per cent. of its budgeted expenditure. In Cunninghame district the loss would have been £108,000, or 0·7 per cent. of budgeted expenditure.
  I acknowledge, of course, that local authorities could have maintained their spending plans, had a lower standard charge multiplier, but set even higher levels of personal community charge. I am not surprised that authorities were cautious about adding further to the levels of personal community charge that they have set. But if, for example, Strathclyde region and Cunninghame district had set a multiplier of one—half the level that they have chosen—the additional cost to their personal charge payers would have been only around £1, or one third of 1 per cent. of the community charge level. Rather than do that, the local councils have chosen to impose a burden on second home owners in Cumbrae, which, instead of increasing their costs by 36 per cent. this year, as a multiplier of one would have done, has actually increased them by no less than 172 per cent. How the councils can justify their action I do not know.
  I really wonder whether the region and district gave any serious thought to the effect of a multiplier of two on their standard charge payers. They must have appreciated that in many cases, of which Cumbrae is an example, there would he a substantial increase in the burden placed on individuals in meeting their local taxes. It must be concluded that they assumed that what they were doing was in the circumstances reasonable. I have no difficulty in acknowledging that for those who own second homes in Millport—and there are over 700 of them in Cumbrae—the consequences seem unreasonable.
  It has been argued that, as second home owners are not local electors, local councils will not be sensitive to the interest of second home owners in their areas. While they may not always be able to exercise this direct influence over local councillors, there are, of course, many other ways of registering views, and I certainly have had a considerable amount of correspondence, both from within my constituency and as a Minister at the Scottish Office, expressing concern about the level of the standard charge being set by local authorities. This correspondence has included strong representations from those with an interest in Cumbrae. I cannot believe that councils can remain impervious to expressions of concern of this kind, even when it comes from those not on the electoral roll. We shall, therefore, be looking to councils to consider very carefully next year, when it comes to determining the levels of the standard charge and what sort of properties in their area are likely to be affected, whether, taking account of the area as a whole, it is either necessary or reasonable to levy a standard charge based on a multiplier of two on second home owners.
  12.23 pm
  Mr. John Maxton: For a long time I have listened to ministerial replies to Adjournment debates and to debates about the poll tax, but that is the most disgraceful and utterly shameless response to an Adjournment debate that I have ever heard. The Minister failed to answer most of the basic points that had been
  932
  made by my hon. Friend the Member for Cunninghame North (Mr. Wilson). He failed to say what he might do to alleviate the situation of those who own holiday properties in my hon. Friend's constituency. As usual, he tried to pass the buck to the local authorities.
  The Minister fails to recognise that the community charge is a property tax with none of the fairness of the old rating system, which bore some relationship to the size of the property and the ability of people to pay. If the Duke of Argyll chooses to make Inveraray castle his second home, he will pay the same standard community charge as is paid by somebody living in a one-room flat with no toilet on the Isle of Cumbrae. That is a grossly unfair burden.
  The Minister says that it is all the fault of the local authority; its expenditure is too high. Strathclyde increased its expenditure by 10 per cent.—only 2 per cent. above the current rate of inflation. Cunninghame district council increased its expenditure by 17 per cent., which is double the present rate of inflation. Even if its expenditure had not been increased to take account of inflation, the community charge in Strathclyde would have been only £45 to £50 less than it is now. In Cunninghame it would have been only £2 or £3 less than it is now.
  One of my constituents has written to me about a holiday flat in Cumbrae. It has no bath and no toilet. There is cold water only in that one-room flat. Last year the rates were £56. The bill this year is £565 for that flat. Even if Strathclyde had not increased its expenditure, even by the rate of inflation, that person would still be paying £450 more this year than he paid last year. Even if Strathclyde had set a multiplier of one instead of two, that person would still be paying £200 more than he paid last year. There is no fairness in such a system.
  I have a friend on the island of Arran. He is the managing director of a distillers company. He has a second home on Arran. It has five bedrooms but he will pay exactly the same rates—£565—as my constituent will have to pay.
  Mr. Wilson: The Minister has made no attempt to solve the dilemma that local authorities face in having to give such large handouts to the owners of large holiday homes. That will be noted in Cumbrae. The blandness, emptiness and total unhelpfulness of the Minister's reply will be read with great anxiety on the Isle of Cumbrae.
  Mr. Maxton: It will be read in that way throughout Strathclyde.
  Mr. Wilson: Throughout Scotland.
  Mr. Maxton: Yes—wherever there are holiday homes. That was my point about this acquaintance of mine on Arran. He has a big house. His rates will be halved, or even more than halved. How can that be fair? It is within the Minister's power to do something about it. He could do exactly what is to be done in England and Wales. The multiplier there is to be zero to two. He does not give us even that. Strathclyde wants to be able to vary the multiplier according to the—
  The motion having been made after Ten o'clock on Tuesday evening, 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 twenty-eight minutes past Twelve o'clock.

EMPLOYMENT

  Young Employees
  Ms. Short
  To ask the Secretary of State for Employment what was the total cost to central Government funds of the community industry scheme in 1986–87, 1987–88 and 1988–89; what was the cost per young employee; and how much each young employee was being paid on average in each year.

  Mr. Nicholls
  The information requested is given in the following tables:

  Table 1

  Community Industry Scheme—total costs to central Government funds in 1986–87, 1987–88 and 1988–89

  Year

  Amount £

  1986–87

  25,011,000

  1987–88

  25,513,000

  1988–89

  25,203,000

  Table 2

  Community Industry Scheme—cost per young employee in 1986–87, 1987–88 and 1988–89

  Year

  Amount £

  1986–87

  3,682

  1987–88

  3,870

  1988–89

  4,000

  Table 3

  Community Industry Scheme—average pay per young employee in 1986–87, 1987–88 and 1988–89

  Year

  Amount £

  1986–87

  1,915·08

  1987–88

  1,819·65

  1988–89

  1,666·64

  Notes:

  1. In Tables 1–3 the figures for the year 1988–89 are estimated, as final year end information is not yet available.

  2. The decrease in average pay per young employee in 1987–88 and 1988–89 reflects the scheme's success in attracting a greater number of 16 and 17-year-olds whose rates of pay are lower than those per 18 and 19-year-olds.

  Community Options Programme
  Ms. Short
  To ask the Secretary of State for Employment whether employment training trainees who opt to take up voluntary work organised under the community options programme will be required(a) to sign on as unemployed and (b) to satisfy the availability for work condition; and whether they will continue to receive the £10 training premium.

  Mr. Nicholls
  People who choose to take up community opportunities after employment training, and who wish to claim unemployment benefit and/or income support, will be required to satisfy the appropriate legislation.
  460
  Participants on community opportunities are not trainees and so will not receive a training premium. Their travelling expenses will be met in full.

  Community Industry Scheme
  Ms. Short
  To ask the Secretary of State for Employment what plans he has to merge the community industry scheme with employment training; and if he will make a statement.

  Mr. Nicholls
  There are no plans to merge the community industry scheme with employment training.

  Redundancy Notices
  Ms. Short
  To ask the Secretary of State for Employment what information he has as to how many employees of(a) the National Association for the Care and Resettlement of Offenders, (b) the community task force and (c) the Apex trust, supported by funds from the community programme or job training scheme, have been issued with redundancy notices during the transition from CP/JTS to ET; and how many have been issued with redundancy notices during the operation of ET to date.

  Mr. Nicholls
  Information is not available in the precise form requested.

  The following figures are for employees declared redundant, within the meaning of the Employment Protection (Consolidation) Act 1978, during the transition from the community programme and the job training scheme to employment training and during the operation of employment training to date:

  Organisation

  Number of redundancies

  National Association for the Care and Resettlement of Offenders

  250

  Community Task Force

  150

  Apex Trust

  7

  Mines (Health and Safety)
  Mr. Hardy
  To ask the Secretary of State for Employment if the proposed amendments to the regulations on health and safety in the mines are intended to leave these matters within the discretion of management rather than subject to the authority of Her Majesty's inspectors.

  Mr. Nicholls
  No. Responsibility for health and safety continues to rest primarily with management. It is the duty of HSE's inspectors to ensure that the law is being observed and advise on working practices. Any new regulations proposed by the Health and Safety Commission will maintain or improve safety standards.

  Regional Policy
  Mr. John Evans
  To ask the Secretary of State for Employment if he will reconsider his Department's regional employment policies in the light of the unemployment figures released by his Department on 13 April.

  Mr. Lee
  The policies of my Department are kept under continuous review in the light of changing circumstances.
  461
  The March unemployment figures published on 13 April showed that in all regions of the United Kingdom unemployment was at a lower level than in March 1988. Total United Kingdom unemployment has fallen to its lowest level for over eight years, and there are well over 26 million people in employment—the highest number ever.

FOREIGN AND COMMONWEALTH AFFAIRS

  Siemens Printers
  Ms. Walley
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.

  Mr. Waldegrave
  There are no Siemens ND3 printers in either the ODA or Diplomatic Service wings of the FCO.

  E1 Salvador
  Mr. Andrew Smith
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made, or plans to make, to the E1 Salvadorean Government concerning the case of Eliseo Cordova Aguilar, vice-president of the Salvadorean Institute of Social Security Co-operative, abducted by E1 Salvadorean authorities on 12 July 1988.

  Mr. Waldegrave
  We understand that Sr. Cordova Aguilar was sized by armed men in civilian clothing on 12 July 1988. He has not been seen since.

  We have made no specific representations to the Government of E1 Salvador on this case. However, we have made plain the importance we attach to proper respect for human rights both to the present Government in E1 Salvador and to President-elect Cristiani, as well as in international fora, most recently at the UNCHR in February 1989.

  We remain in close touch with human rights organisations and other interested bodies in E1 Salvador, and we shall continue to monitor the situation closely.

  Immigration
  Mr. Madden
  To ask the Secretary of State for Foreign and Commonwealth Affairs when Mr. Aushad Iqbal is to be issued with a visa by the post in Islamabad to join his wife in the United Kingdom; when Mr. Iqbal's appeal, No.—TH/36030/87/6216 was upheld by the immigration appeal tribunal; and when the post was instructed to issue a visa to Mr. Iqbal.

  Mr. Waldegrave
  The information required is not immediately available and a further reply will be sent to the hon. Member as soon as possible.

  Foreign Affairs Council
  Mr. Greg Knight
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the outcome of the Foreign Affairs Council held on 24 April.

  Mrs. Chalker
  The Foreign Affairs Council met in Luxembourg on 24 April. I represented the United Kingdom.
  462
  The Council agreed on the continuing need for a coherent and carefully differentiated policy towards the countries of eastern Europe.

  With the regard to Romania, the Council agree on the suspension of negotiations for a trade and co-operation agreement. Their resumption would require clear evidence of a significant improvement in Romania's respect for human rights, and observance of its CSCE obligations. The United Kingdom strongly endorsed this unequivocal message of serious Community concern at the situation in Romania.

  The Council also noted encouraging developments in the situation in Poland, and agreed that the Community should adopt a more flexible position in current negotiations for a trade and co-operation agreement. The United Kingdom strongly supports a positive Community approach to Poland, reflecting progress in the implementation of Polish economic and political reforms.

  The Council also received reports on preliminary Commission discussions with the Soviet Union on a trade and co-operation agreement, and with the Gulf Co-operation Council on a second stage agreement.

  Noting the concerns of some member states on textiles, the Council generally welcomed the results of the mid-term review of the Uruguay round, completed in Geneva earlier this month, which laid the foundations for substantive negotiations for the remainder of the round. The Council also noted progress in negotiations with the United Kingdom on the dispute over the EC's directive banning meat from animals reared with hormones.

  An EC/Morocco Co-operation Council was held in the margins of the Council meeting.

ATTORNEY-GENERAL

  Judges (East Anglia)
  Sir Eldon Griffiths
  To ask the Attorney-General how many additional judges he has appointed in the East Anglian region; what additional court rooms and related resources and staff have been provided to support them; and at what cost.

  The Attorney-General
  In the period 1 January 1988 to 31 December 1988 the number of judges assigned to the Chelmsford courts administrator's group within the south eastern circuit increased by two. The salary of a circuit judge is £48,100. During the same period, a combined court centre was opened in Norwich, being a net addition of one courtroom at a cost of a little more than £7 million. There has been no change in the complement of staff.

TRADE AND INDUSTRY

  New Knitwear Machinery (Greece)
  Sir John Farr
  To ask the Chancellor of the Duchy of Lancaster what action he is taking to seek to bring to an end the current payments of 50 per cent. grant in Greece on the purchase of new knitwear machinery in that country.

  Mr. Alan Clark
  I understand that assistance of this type would be permissible for investments in the Attica and border regions of Greece. Regional assistance is a legitimate form of assistance under article 93(2) of the
  463
  Treaty of Rome. Under certain circumstances, United Kingdom knitwear companies investing in particular areas of the United Kingdom could be eligible for similar support.

  Siemens Printers
  Ms. Walley
  To ask the Chancellor of the Duchy of Lancaster how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.

  Mr. Forth
  There are no Siemens ND3 printers in use in my Department.

  GATT
  Mrs. Peacock
  To ask the Chancellor of the Duchy of Lancaster what progress his Department has made in the recent GATT negotiations in Geneva; and if he will make a statement.

  Mr. Alan Clark
  I refer my hon. Friend to the reply I gave to the hon. Member for Monklands, West (Mr. Clarke) on 10 April at column 396.

  House of Fraser
  Mr. Campbell-Savours
  To ask the Chancellor of the Duchy of Lancaster under what section and subsections of the Companies Act he initiated his Department's inquiry into the affairs of the House of Fraser Holdings.

  Mr. Maude
  The inspectors were appointed to investigate the affairs of House of Fraser Holdings plc under the provisions of section 432(2) of the Companies Act 1985.

  Mr. Campbell-Savours
  To ask the Chancellor of the Duchy of Lancaster whether the inspectors who considered the report dated 15 July 1988 submitted by buyers acting for the House of Fraser considered that report prior to its presentation to Ministers on 23 July 1988.

  Mr. Maude
  The inspectors considered fully and carefully all information and evidence received by them before submitting their report to my right hon. and noble Friend the Secretary of State.

  Airtours
  Sir John Farr
  To ask the Chancellor of the Duchy of Lancaster if he is satisfied that the interests of passengers are fully protected in travel schemes to the Caribbean offered by companies such as Airtours; and if he will make a statement.

  Mr. Peter Bottomley
  Yes. Airlines operating charter flights originating in the United Kingdom and carrying United Kingdom passengers are required to operate aircraft in accordance with the airworthiness standards of the state with whom the aircraft is registered. Such standards must be equal to or above the airworthiness standards specified by the International Civil Aviation Organisation. Operators are also required to maintain adequate insurance cover. Charter flights of this nature must also be organised through a travel organiser holding a valid Air Travel Organisers Licence issued by the United Kingdom Civil Aviation Authority.

WALES

  Bathing Water
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales how many E. coli per 100 ml. of water were found in the 1988 bathing water survey at Saundersfoot.

  Mr. Grist
  The information is shown in the following table:

  Sample

  Date

  Time

  E. coli per 100 ml

  18 May 1988

  1145

  20

  1 June 1988

  1215

  110

  8 June 1988

  1215

  800

  15 June 1988

  1200

  10

  22 June 1988

  1200

  170

  29 June 1988

  1230

  15,000

  6 July 1988

  1230

  <100

  13 July 1988

  1200

  200

  20 July 1988

  1200

  1,300

  27 July 1988

  1200

  600

  3 August 1988

  1045

  500

  10 August 1988

  1215

  500

  11 August 1988

  1210

  100

  17 August 1988

  1145

  600

  24 August 1988

  1150

  400

  31 August 1988

  1200

  600

  13 September 1988

  1215

  600

  14 September 1988

  1145

  100

  21 September 1988

  1200

  155

  26 September 1988

  1230

  300

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will publish in the Official Report the actual E. coli figures for the three samples in Swansea bay which failed the EEC coliform directive in the summer of 1988.

  Mr. Grist
  The information is shown in the following table:

  Sample

  Date

  Time

  E. coli per 100 ml

  28 June 1988

  0945

  2,100

  31 August 1988

  1200

  11,000

  27 September 1988

  1200

  5,200

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales (1) what was the highest level of E. coli per 100 ml found in the 1988 bathing water survey at(a) Cold Knapp, Barry, and (b) Oxwich bay;

  (2) what was the highest level of total coliforms per 100 ml found in the 1988 bathing water survey at (a) Oxwich bay, (b) Saundersfoot and (c) Whitesands.

  Mr. Grist
  The information requested is contained within the 1988 bathing water survey report, a copy of which, as the hon. Member will know, has already been placed in the Library of the House.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will publish in the Official Report the details of those samples in (a) Kinmel bay, (b) Rhyl and (c) Cold Knapp, Barry, sampled during the 1988 bathing water survey which failed to conform to the standards of the EEC coliform directive; and if he will make a statement.

  Mr. Grist
  The information is shown in the following table:
  465

  Date

  Time of sample

  Total Coliforms per 100 ml

  E Coli per 100 ml

  Kimnel Bay1

  4 July 1988

  1140

  24,500

  3,100

  29 August 1988

  1130

  11,000

  2,940

  1 September 1988

  1130

  >50,000

  4,400

  28 September 1988

  1120

  12,200

  4,700

  Rhyl1

  5 May 1988

  1150

  23,600

  —

  29 July 1988

  0850

  >30,000

  5,300

  29 August 1988

  1055

  17,400

  8,400

  I September 1988

  1240

  11,300

  2,600

  28 September 1988

  1045

  10,700

  2,090

  Cold Knapp2

  26 September 1988

  0935

  12,100

  4,700

  27 September 1988

  1350

  32,000

  20,000

  1 Total number of samples taken 21.

  2 Total number of samples taken 18.

  The samples which failed account for only a small proportion of those taken throughout the 1988 season. The medians were much lower. The Welsh water authority has in hand a programme of remedial works to ensure full compliance with the EC bathing water directive of all listed bathing waters in the Principality.

  M4 Motorway
  Mr. Nicholas Bennett
  To ask the Secretary of State for Wales what action his Department will be taking to minimise delays to traffic during the construction of the M4 between Baglan and Lonlas.

  Mr. Wyn Roberts
  Only that part of the A48 trunk road between Earlswood and Lonlas is likely to be significantly affected by construction of this final section of the M4. Detailed traffic management measures will be taken by the appointed contractor to ensure the continuing free flow of vehicles along it.

  Drinking Water
  Mr. Gareth Wardell
  To ask the Secretary of State for Wales what information his Department holds that enables him to assess the extent to which potable water in Wales complies with the European Community directive relating to the quality of water intended for human consumption (80/77/EEC).

  Mr. Grist
  Welsh water authority has the responsibility for ensuring that potable water within the Principality meets the standards of the directive.

  The Welsh Office holds information concerning time-limited derogations and delays, which have been granted under articles 9 and 20 of the directive, in respect of sources which do not fully meet the standards. The water authority's progress in achieving compliance where derogations and delays have been granted is regularly reviewed.

  The authority and the water companies in Wales have also submitted preliminary programmes of remedial work in relation to the proposed drinking water quality regulations.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will estimate the cost at current prices to the 466
  Welsh water authority of complying with the European Community directive relating to the quality of water for human consumption (80/77/EEC).

  Mr. Grist
  The full cost of the programme is still being evaluated.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if he will estimate the cost at current prices to the Welsh water authority to bring the 11 bathing beaches which failed to comply with bathing water directive (76/160/EEC) into conformity.

  Mr. Grist
  The authority is currently reviewing its programme of remedial works which aims to achieve compliance of all listed waters. The full cost of the programme has yet to be evaluated.

  Countryside Commission
  Mr. Ron Davies
  To ask the Secretary of State for Wales what was his Department's response to the Countryside Commission's consultation papers "Paths, Routes and Trails" and "Changing the Rights of Way Network."

  Mr. Wyn Roberts
  The Welsh Office received copies of both papers but did not comment on either since it was neither necessary nor appropriate to do so.

ENERGY

  Oil and Gas Resources
  Mr. Bright
  To ask the Secretary of State for Energy when he will publish his next report on the development of the oil and the gas resources of the United Kingdom (the Brown Book).

  Mr. Peter Morrison
  My right hon. Friend has today published the latest edition of the "Brown Book", and has arranged for copies to be placed in the Library of the House and the Vote Office. The report gives a detailed account of oil and gas development during 1988.

PRIME MINISTER

  Westland
  Mr. Dalyell
  To ask the Prime Minister whether Sir Leon Brittan cleared with No. 10 Downing street his statement on Channel 4 television, broadcast on 7 April, that Mr. Charles Powell and Mr. Bernard Ingham had expressly approved the decision to disclose a Law Officer's letter in the Westland affair.

  The Prime Minister
  I have nothing further to add to the many answers given in statements and in reply to questions on this subject.

  Penrhiwceiber
  Mrs. Clwyd
  To ask the Prime Minister when she next expects to visit Penrhiwceiber.

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

  International Sugar Organisation
  Mr. Shersby
  To ask the Prime Minister what information she has concerning an offer by the French
  467
  Government to provide free office accommodation and diplomatic immunity to the International Sugar Organisation if it moves from London to Paris; what benefits accrue to Britain from the location of the sugar, wheat, cocoa and coffee organisations in London; what is the policy of Her Majesty's Government towards this matter; and if she will make a statement.

  The Prime Minister
  I understand that the International Sugar Organisation is examining a number of locations, including proposals from France and other countries as well as alternative sites in London. Her Majesty's Government welcome the location of these organisations in London which reflects the merits of London as the leading international trading centre in these products. We already provide diplomatic immunity and rates concessions for these organisations as we do for all international organisations of similar standing.

  Engagements
  Mr. Pike
  To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.

  Mr. Barry Field
  To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.

  Mr. Harry Greenway
  To ask the Prime Minister if she will list her official engagements for Tuesday 25 April.

  The Prime Minister
  This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

CIVIL SERVICE

  NUCAPS
  Mr. Allen
  To ask the Minister for the Civil Service when he last met the general secretary of NUCAPS; and what topics were discussed.

  Mr. Luce
  I have meetings from time to time with representatives of Civil Service trade unions both centrally and during visits to Departments. Matters of mutual interest are discussed.

NATIONAL FINANCE

  Government Debt
  Mr. Allen
  To ask the Chancellor of the Exchequer which major issues of debt have come up for redemption in the financial years(a) 1987–88 and (b) 1988–89; and which are expected in 1989–90.

  Mr. Lilley
  The information is as follows:

  Per cent.

  £ million

  (a) The stocks of over £500 million redeemed in 1987–88 were:

  10½

  Exchequer

  Stock

  1987

  1,550

  6½

  Funding

  Loan

  1985–87

  559

  10

  Treasury

  Stock

  1987

  1,600

  3

  Treasury

  Stock

  1987

  950

  12

  Treasury

  Stock

  1987

  1,950

  7¾

  Treasury

  Loan

  1985–88

  500

  2

  Index-linked Treasury

  Stock

  1988

  1,352

  468

  Per cent.

  £ million

  (b) The stocks of over £500 million redeemed in 1988–89 were:

  10½

  Exchequer

  Stock

  1988

  1,450

  9¾

  Treasury Convertible

  Stock

  1988

  1,147

  3

  British Transport

  Stock

  1978–88

  1,302

  9½

  Treasury

  Stock

  1988

  2,050

  11½

  Treasury

  Stock

  1989

  2,250

  (c) The stocks of over £500 million redeemed in 1988–89 are:

  9½

  Treasury Convertible

  Stock

  1989

  854

  3

  Treasury

  Stock

  1989

  500

  10½

  Treasury

  Stock

  1989

  1,400

  10

  Exchequer

  Stock

  1989

  2,400

  11

  Exchequer

  Stock

  1989

  2,000

  5

  Treasury

  Stock

  1986–89

  601

  13

  Treasury

  Stock

  1990

  1,000

  2

  Index-linked Treasury

  Stock

  1990

  500

  11

  Exchequer

  Loan

  1990

  1,400

  12½

  Exchequer

  Stock

  1990

  1,250

  Mr. Allen
  To ask the Chancellor of the Exchequer if he will review the rules relating to the holding of Government debt by insurance companies and pension funds.

  Mr. Lilley
  I do not know which rules the hon. Member has in mind.

  Departmental Staff
  Mr. Sean Hughes
  To ask the Chancellor of the Exchequer with respect to the support grades in his Department(a) what is the number of staff employed, (b) how many vacancies there are in London and elsewhere and how many of these have existed for over one month and over three months, (c) how many temporary and casual appointments there are and (d) how much overtime was worked by them in London and elsewhere.

  Mr. Brooke
  The number of support grades employed in the Treasury is 241; the number of vacancies in London and elsewhere are five and none respectively, of which two have existed for over one month and three have existed for over three months; there are no temporary appointments and 1 casual appointment; in 1988–89 about 49,500 hours overtime were worked in London and 1,600 hours overtime elsewhere.

  Mr. Sean Hughes
  To ask the Chancellor of the Exchequer with respect to the support grades in his Department(a) what is the number of staff employed, (b) how many vacancies there are and how many of these have existed for over one month and over three months, (c) how many temporary and casual appointments there are and (d) how much overtime was worked by them in London and elsewhere.

  Mr. Brooke
  The number of support grades employed in the Treasury is 241; the number of vacancies is five, of which two have existed for over one month and three for over three months; there are no temporary appointments and one casual appointment; in 1988–89 about 49,500 hours of overtime were worked in London and about 1,600 hours overtime elsewhere.

  Computers
  Miss Emma Nicholson
  To ask the Chancellor of the Exchequer how many instances have been detected in his
  469
  Department of computer (a) hacking, (b) viruses, (c) logic bombs, (d) trojan horses or (e) other types of computer misuse, whether perpetrated by authorised or unauthorised users of computers; and how many unsuccessful attempts have been recorded.

  Mr. Brooke
  [holding answer 24 April 1989]: It is not the policy of the Treasury to make public details and circumstances of computer security incidents, their perpetrators and their success or failure, since such information might be of assistance to potential attackers.

  Capital Charges
  Mr. Ralph Howell
  To ask the Chancellor of the Exchequer at what level the interest elements of capital charges are set for public sector capital assets; how this figure is arrived at; and if he will make a statement.

  Mr. Major
  [holding answer 24 April 1989]: I assume my hon. Friend has in mind the returns the Government expect the public sector to earn on capital assets. I refer him to my statement on 5 April, at column 187.

  Fees and charges for non-trading public bodies will normally be set to recover a cost of capital of not less than 6 per cent. in real terms. This is based on the real pre-tax costs of capital to a private sector company raising funds for low-risk purposes.

  Trading bodies such as nationalised industries are required to earn a real rate of return of 8 per cent. on their new investment programmes as a whole. This is derived from the average pre-tax real rate of return achieved on assets in the private sector.

  Empty Property
  Mr. Soley
  To ask the Chancellor of the Exchequer what percentage of properties owned by Her Majesty's Customs and Excise and suitable for residential accommodation have been empty for (i) up to a year and (ii) over a year; and where these properties are located, by region of the United Kingdom or local authority area.

  Mr. Lilley
  [holding answer 20 April 1989]: Her Majesty's Customs and Excise does not own any property. Apart from a few properties which are provided by traders as a condition of the grant of privileges, the freehold or leasehold of all properties on the Department's estate is vested in the Secretary of State for the Environment.

  Only one building on the estate can be regarded as suitable for residential accommodation. This is situated in the Isles of Scilly and has been vacant for almost one year pending the appointment of an officer to the post for which the accommodation is provided.

EDUCATION AND SCIENCE

  Special Education Needs
  Mr. John Evans
  To ask the Secretary of State for Education and Science what has been the level of spending on special education needs, as a proportion of the education budget, in each of the last three years.

  Mr. Butcher
  Local authority current expenditure on special education was 4·23, 4·25 and 4·26 per cent. respectively of total local authority current expenditure on education in 1985–86, 1986–87 and 1987–88.

  Henry Mellish School, Nottingham
  Mr. Allen
  To ask the Secretary of State for Education and Science if he will visit the Henry Mellish school, Nottingham, to speak to parents and children about the Government's education policies.

  Mr. Butcher
  My right hon. Friend has no present plans to do so.

  Education Reform
  Mr. Redmond
  To ask the Secretary of State for Education and Science how many local education authorities in the course of compiling their strategic plans for further education under the requirements of the Education Reform Act and the guidance of his Department's circular 9/88, have sought and received advice from his Department.

  Mr. Jackson
  Representatives of 73 local education authorities have received advice on the preparation of their schemes for planning, funding and delegation under circular 9/88 at meetings with officers of the Department. A large number of authorities have also received advice over the telephone and in writing.

  Departmental Staff
  Mr. Sean Hughes
  To ask the Secretary of State for Education and Science with respect to the support grades in his Department(a) what is the number of staff employed, (b) how many vacancies there are and how many of these have existed for over one month and over three months, (c) how many temporary and casual appointments there are and (d) how much overtime was worked by them in London and elsewhere.

  Mrs. Rumbold
  The Department employs a total of 140 staff in the support grades in London and Darlington, including 12 casual appointments. There are seven vacancies, all of which have existed for over three months. On average these staff work a total of 93 hours of overtime a week.

  Language Teaching
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science if he plans to encourage more teaching of the Russian language; and if he will make a statement.

  Mrs. Rumbold
  The national curriculum will include a modern foreign language as a foundation subject at secondary level to be studied by all pupils between the ages of 11 and 16. Russian is among those modern foreign languages specified as eligible for inclusion in the national curriculum, within the framework of the proposals announced by my right hon. Friend in his reply to my hon. Friend the Member for Stroud (Mr. Knapman) on 3 March, at columns 338–39. Within this framework, my right hon. Friend is encouraging schools to offer a greater diversity of languages, including Russian, and we are providing education support grants for pilot projects in some local education authorities in England to promote the preparation and implementation of plans for language diversification.

  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science if he will list the numbers of foreign
  471
  language assistants, by subjects, in maintained schools for each year from 1978–79 to the last year for which figures are available.

  Mr. Jackson
  The numbers are as follows:

  Year

  French

  German

  Spanish

  Italian

  Russian

  Total

  1978–79

  1,710

  668

  162

  17

  4

  2,561

  1979–80

  1,783

  718

  187

  16

  4

  2,708

  1980–81

  1,558

  640

  150

  16

  2

  2,366

  1981–82

  1,314

  539

  145

  16

  4

  2,018

  1982–83

  1,279

  524

  127

  12

  3

  1,945

  1983–84

  1,301

  523

  138

  11

  1

  1,974

  1984–85

  1,241

  537

  132

  8

  2

  1,920

  1985–86

  1,211

  502

  126

  7

  2

  1,848

  1986–87

  1,260

  522

  149

  7

  2

  1,940

  1987–88

  1,503

  556

  186

  12

  2

  2,259

  1988–89

  1,371

  539

  163

  7

  2

  2,082

  Industry and Education (Links)
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science if he will take steps to ensure that representatives of the management and trade unions are treated equally in establishing links between industry and educational institutions; and if he will make a statement.

  Mr. Butcher
  The Department welcomes the involvement of all sections of industry in the establishment of links with schools. The management of such links is for local determination; however, the DES guides for employees and schools on "Education at Work" recognise the role of trade unions in the workplace and the TUC's strong support for workplace activities for school pupils. The TUC is also involved in education through, for example, its participation in the school curriculum industry project, which is developing teaching material for schools and teacher training, and its work with the National Curriculum Council "Educating for Economic Awareness" initiative.

  Home full-time students in higher education in Great Britain

  Thousands

  Academic year beginning in

  1979

  1980

  1981

  1982

  1983

  1984

  1985

  1986

  1987

  Total all students of which

  451·2

  465·0

  488·4

  504·6

  517·5

  525·1

  530·6

  540·0

  549·7

  Arts

  253·1

  256·8

  267·3

  273·0

  278·2

  278·8

  281·2

  286·8

  293·3

  Sciences

  198·1

  208·2

  221·1

  231·5

  239·3

  246·3

  249·4

  253·1

  256·5

  Figures may not sum due to rounding.

  Sciences are defined as medicine, engineering and technology, agriculture, science and professional and vocational studies while arts includes education, business and social studies, language, arts other than language and music, drama, art and design.

  Mr. Greg Knight
  To ask the Secretary of State for Education and Science whether he has any proposals to shift the balance of public funding of higher education towards the tuition fee.

  Mr. Straw
  To ask the Secretary of State for Education and Science what proposals he has for the future funding of higher education.

  Mr. Kenneth Baker
  Higher education funding councils and other interested bodies have today been sent a paper seeking views on proposals to increase the full-time undergraduate tuition fee met through mandatory awards from its 1989–90 level of £607 to £1,600 in 1990–91 and to

  City Technology Colleges
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science what progress he has made on his plans for city technology colleges; and if he will make a statement.

  Mr. Butcher
  The CTC programme is making excellent progress. Kingshurst opened last year. The Nottingham and Teesside CTCs will open in September, with those in Bradford, Gateshead and Dartford together with the London school for performing arts and technology due to open in 1990. Further announcements will be made soon.

  Disabled People
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science whether he plans to encourage more disabled people to become teachers; and if he will make a statement.

  Mr. Butcher
  The Department's action campaign on teacher recruitment aims to encourage more potentially good teachers to join the profession, including disabled people. Teacher training institutions and employers would of course need to satisfy themselves that all entrants to the profession possess the mental and physical capacity for the demanding job of teaching.

  Higher Education
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science if he will list the numbers of students in higher education in(a) arts and humanittes and (b) sciences in each year from 1978–79 to the last year for which figures are available.

  Mr. Jackson
  Readily available information is shown in the following table:
  introduce, from 1991–92, fees differentiated by the cost of groups of courses. Copies of the paper have been placed in the Libraries of both Houses.

  Music Education
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science what is the latest available figure for the number of pupils in secondary schools to whom music education is available only upon the payment of fees.

  Mrs. Rumbold
  This information is not available. The Education Reform Act prohibits charging for all tuition provided during school hours, with the sole exception of individual tuition in the playing of a musical instrument.

  Paper (Recycling)
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science what steps he is taking to encourage the recycling of paper; and what advice is given to schools and colleges on this.

  Mr. Butcher
  The statutory attainment targets for science in the national curriculum include a requirement for children to know that some waste materials can be recycled. The recycling of paper, and the use of recycled paper, by educational institutions is a matter for them and, as appropriate, their maintaining LEAs. I hope they will consider the matter sympathetically. The Department is currently considering the use of recycled paper for its own purposes.

  Expenditure (Derbyshire)
  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science whether he proposes to make additional funds available for the Derbyshire county council's capital expenditure on education as a consequence of the recent visit of a delegation to his Department; and if he will make a statement.

  Mr. Butcher
  As I said at the meeting on 6 April, the application of our normal criteria resulted in Derbyshire receiving 52 per cent. of its submitted plans for prescribed capital expenditure in 1989–90 compared with a national average for LEAs of 34 per cent. There are no extra resources over and above those notified for distribution to LEAs for the financial year 1989–90.

  Mr. Harry Barnes
  To ask the Secretary of State for Education and Science how much money was spent per pupil in Derbyshire in(a) special education, (b) primary schools, (c) secondary schools and (d) tertiary education from each of the years from 1978–79 to the last year for which figures are available.

  Mr. Butcher
  The available information is given in the table:

  Net institutional expenditure1 per pupil2

  Primary £

  Secondary £

  Special £

  1978–79

  340

  490

  n/a

  1979–80

  395

  565

  n/a

  1980–81

  500

  705

  2,445

  1981–82

  575

  795

  2,985

  1982–83

  635

  870

  3,305

  1983–84

  690

  950

  3,450

  1984–85

  730

  1,020

  3,855

  1985–86

  780

  1,125

  5,060

  1986–87

  875

  1,305

  5,495

  1987–88

  3990

  1,530

  6,220

  1 Net institutional expenditure includes the cost of salaries and wages, premises and certain supplies and services. It does not include the cost of school meals, central administration and inspection, debt charges or revenue contributions to capital outlay.

  2 The figures are based on LEA expenditure returns to DoE and pupil number returns to DES.

  3 The figure for 1987–88 includes nursery school pupils.

  Separate figures are not available for tertiary education which forms a part of further education.

  Ethnic Minorities
  Mr. Andrew Smith
  To ask the Secretary of State for Education and Science if he will report on progress on monitoring, by ethnicity, applications to universities and polytechnics.

  Mr. Jackson
  I understand that the Universities Central Council on Admissions and the Polytechnic Central Admissions System will include an ethnicity question on application forms for candidates applying for full-time degree course places in autumn 1990.

  Mr. Andrew Smith
  To ask the Secretary of State for Education and Science if he will make a statement on steps taken by his Department to secure improved access to higher education by people from ethnic minorities.

  Mr. Jackson
  The Department has made clear the priority it attaches to increasing participation in higher education, particularly from groups that are currently under-represented and it has taken a number of measures to that end. The Universities Central Council on Admissions and the Polytechnic Central Admissions System will include an ethnicity question on application forms for candidates applying for full-time degree course places in autumn 1990. In addition, my right hon. Friend announced on 12 April at column 528, the establishment of a national framework for the recognition of access courses for students who lack the traditional qualifications for entrance to higher education. Some access courses are specifically targeted at ethnic minorities and staff are funded under section 11 of the Local Government Act 1966.

  We are funding a number of projects which are investigating and developing ways of enhancing the provision of access courses. Initial teacher training institutions have also developed a range of courses specifically aimed at people from ethnic minorities which are designed to build on their previous experience.

  All these measures should help to improve access to higher education for people from ethnic minorities.

  Student Unions
  Mr. Andrew Smith
  To ask the Secretary of State for Education and Science how much has been spent on student unions in each of the last 10 years by(a) central Government and (b) local government expressed in (i) cost terms and (ii) real terms with 1979 = 100.

  Mr. Jackson
  This information is not available. I shall write to the hon. Member.

  Mr. Andrwew Smith
  To ask the Secretary of State for Education and Science how much his survey on student unions cost to compile

  Mr. Jackson
  As I indicated in my reply to my hon. Friend the Member for Basildon (Mr. Amess) on 1 December 1988, at column 356, work on the survey was undertaken by a team of officials which includes student affairs among its normal responsibilities. This was supplemented, from 9 December, by overtime payments and part-time assistance, the total cost of which was £1,720.

TRANSPORT

  Rotherhithe Tunnel
  Mr. Austin Mitchell
  To ask the Secretary of State for Transport for what reason a traffic census point was established at the north end of the Rotherhithe tunnel on the morning of 11 April.

  Mr. Peter Bottomley
  This is one of a number of sites being used for a traffic survey to collect data needed to develop proposals for improving the A 13 trunk road in the London boroughs of Tower Hamlets and Newham.

  Air Security
  Mr. Litherland
  To ask the Secretary of State for Transport (1) if he has received a request for a meeting with the chairman and members of the board of Manchester international airport to discuss the introduction of an airports departure tax; and if he will make a statement;

  (2) if he will consider revising the existing methods of funding security methods at airports; and if he will make a statement;

  (3) if he will support measures to introduce the funding of security costs at Manchester international airport through the imposition of an airports departure tax; and if he will make a statement.

  Mr. Peter Bottomley
  My right hon. Friend has received a letter from the chairman of Manchester Airport plc proposing the introduction of an airport departure tax and requesting a meeting to discuss the matter. He has replied as follows:"Thank you for your letter of 22 March proposing a meeting to discuss your proposal for an Airport Departure Tax to finance aviation security.

  This ground has been gone over many times in recent years. As you say, from 1978 to 1983 aviation security was financed through the aviation security fund, set up under the powers which are now contained in part IV of the Aviation Security Act 1982. This proved to be bureaucratic, complicated and costly to administer, with the Department collecting money from the industry with one hand and paying it out to it again with the other, and it provided little incentive to efficiency. Consequently, a review undertaken in 1982, at the request of the industry and in consultation with all sections of it, concluded that the financing of aviation security would be more straightforward, that unnecessary and complex procedures would be avoided, that incentives to carry out security measures effectively would be increased, and that cross-subsidisation would be eliminated, if the fund were abolished. The fund was wound up accordingly in 1983, and the airports and airlines became responsible for financing aviation security costs from their revenue, in exactly the same way as they meet other operating expenditure.

  This arrangement has much to commend it. It is simple and logical, and it is consistent with the arrangements in other areas, such as aviation safety. It ensures that costs fall where they are incurred, and thus produce an incentive to avoid waste and inefficiency

  The whole matter was reviewed again most thoroughly after the publication in 1986 of the House of Commons Transport Select Committee's report on airport security. It recommended that an aviation security fund should be
  476
  re-established, and that it should be financed by a levy on passengers which should be clearly itemised on the ticket price. In their response to this report the Government rejected these recommendations, pointing out that the arguments against financing aviation security through a Government-administered fund were still as strong as when the original fund was wound up.

  However, the response went on to say that, as some sections of the industry had recently proposed a variety of possible alternative arrangements, the Department would look at these suggestions further in consultation with the industry. This review was carried out through the National Aviation Security Committee, It examined in detail all the suggestions put forward, including some very similar to the arrangement you now seem to be proposing. It found that there was no widespread support for any of these schemes, and no grounds for believing that any of them would be more satisfactory overall than the present arrangements.

  In connection with the various proposals put forward for some kind of airport departure tax the review noted that security costs are not necessarily directly proportional to the number of passengers passing through a particular airport. Consequently either such a tax would have to be set at different levels for each airport—in which case considerable accounting resources would need to be devoted each year to working out the appropriate level at which it should be set for the coming year at each of the 50 airports in the national aviation security programme and in checking that the money was being properly used; or the tax would have to be the same as each airport—which would involve virtually the same arrangements as did the aviation security fund for the Government collecting the money and paying it out again against authorised expenditure.

  After considering the findings of the review, Ministers reaffirmed their belief that the current arrangements were the most satisfactory and effective ones possible and that they should not be changed. That remains our position, and I must tell the hon. Gentleman frankly that I can see no point in meeting him to discuss his proposal for a departure tax unless and until he can demonstrate that:

  (a) it has substantial support within the industry as a whole;

  (b) it would not suffer from the same disadvantages as did the aviation security fund or involve additional accounting resources; and

  (c) it would be more satisfactory overall than the present arrangements.

  Mr. Litherland
  To ask the Secretary of State for Transport if he will meet the chairman of the Civil Aviation Authority to discuss the imposition of a total ban on the carriage of personal radios on aircraft; and if he will make a statement.

  Mr. Peter Bottomley
  It is not just personal radios, but a whole range of portable electrical items, from pocket calculators, through electric shavers and hair driers, to lap top computers, which pose particular security problems.

  A complete ban on the carriage of such items on aircraft is not practicable.

  We have reinforced the advice to airports and airlines about the dangers, and instructed that such items should be examined particularly closely. Passengers will be prevented from retaining them in cases where the security staff are unable to satisfy themselves that they are harmless.
  477
  As the problem is an international one we have, as my right hon. Friend announced on 21 February, at columns 556–57, arranged for the International Civil Aviation Organisation to address the matter.

  Flight Paths
  Mr. Spearing
  To ask the Secretary of State for Transport what actions he has taken, consequent to the air disaster on the M1 motorway adjacent to the east midlands airport, to review the rules and practices concerning the siting of residential, commercial, or industrial buildings and public transport facilities beneath, or adjacent to, the flight paths to and from airport runways.

  Mr. Peter Bottomley
  Department of the Environment circular 39/81, a copy of which is in the Library, already requires planning authorities to refer to the Civil Aviation Authority or the Ministry of Defence for advice details of proposed developments close to busy airports. The 1989 review of accident statistics relative to public safety zones will pay particular regard to roads and railways running through such zones.

  Trunk Roads
  Ms. Walley
  To ask the Secretary of State for Transport which stretches of road are currently subject to negotiation 478
  with Staffordshire county council on trunk road status; and whether he will require standards currently adopted by Stoke on Trent city council for principal roads to apply on roads which change to trunk road status.

  Mr. Peter Bottomley
  We are discussing with the county council proposals to trunk part of A500 and to detrunk parts of A34, A5 and A449 in Staffordshire. The improvement and maintenance of trunk roads is carried out to the Department's standards.

  Hazardous Cargoes
  Mr. Atkinson
  To ask the Secretary of State for Transport if he has received any recent representations seeking amendment of existing international marine law regarding the carriage and protection of dangerous chemicals at sea, in the light of the recent sinking in the English Channel of a tanker carrying toxic material; and if he will make a statement.

  Mr. Portillo
  Following the recent incident in the English Channel I have received one representation seeking amendment to the international marine law. I have also received a number of suggestions on how the marine environment can be protected when such an incident occurs. Some of these have been foreshadowed by the International Maritime Organisation and will become part of the regulatory regime in the near future.

  A6 (M) Bypass
  Mr. Tom Arnold
  To ask the Secretary of State for Transport when he expects to publish the report of the inspector on the proposed route of the Stockport north-south A6 (M) bypass.

  Mr. Peter Bottomley
  The inspector's report is being considered. We hope to announce a decision soon.

  Siemens Printers
  Ms. Walley
  To ask the Secretary of State for Transport how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.

  Mr. Peter Bottomley
  None. Nowhere.

  Roads (Financing)
  Ms. Ruddock
  To ask the Secretary of State for Transport when he intends to publish a consultative paper on the private financing of roads.

  Mr. Portillo
  Shortly.

  Midland Mainline Electrification
  Mr. Allen
  To ask the Secretary of State for Transport what discussions he has had with British Rail about the midland mainline electrification.

  Mr. Portillo
  The midland main line already has a good service which is being improved. It is for British Rail to consider whether the very large cost of electrifying the line would be justified by operating improvements and revenue gains, and to put forward a case if it believes it to be worthwhile. The completion of the single European market in 1992 is unlikely to have a significant effect on this essentially business decision.

  Orange Badge Scheme
  Mr. Alfred Morris
  To ask the Secretary of State for Transport if he has completed his review of the operation of the orange badge scheme; and if he will make a statement.

  Mr. Peter Bottomley
  Yes. The review raised many complex issues. We are grateful to all those who commented, and in particular for the report from the Disabled Persons Transport Advisory Committee (DPTAC). A copy of its report has been placed in the Library.

  The rate at which badges are issued has increased rapidly since 1986. Between March 1986 and March 1988, the number of badges rose from about 800,000 to about 1 million. The scheme is losing the respect of the general public, who see apparently able-bodied people using cars bearing badges. Without changes the scheme will become unworkable.

  The parking concessions provided by the scheme are essential to those with the greatest mobility problems. We propose to accept the DPTAC's main recommendation —that eligibility for badges should be more closely related to eligibility for mobility allowance. This will concentrate badges on those severely disabled people who need them most.
  480
  We intend to hold further discussions with organisations representing people with disabilities, the British Medical Association and local authority associations to establish ways in which the new eligibility criteria can be introduced and to explore the implications for the financing of the scheme.

  Badges will continue to be issued automatically to people receiving mobility allowance, or using a vehicle supplied by a Government Department or getting a grant towards their own vehicle and to registered blind people.

  We propose to introduce a redesigned passport-type badge which will be more robust and will incorporate space for a photograph of the holder. The new badge will be designed to reduce abuse of the scheme and to make it clear that it is for the personal use of the badge holder. We shall be consulting on the design and wording of the new badge.

  The DPTAC proposed that the two-hour limit on parking on yellow lines should be removed completely or, at the very least, extended to four hours. Such an extension could lead to problems of traffic management and increase congestion, given the number of badges currently on issue. We propose to discuss with local authority associations and the police extending the limit to three hours and providing more designated spaces for parking by people with mobility handicaps.

  I have today written to the four central London authorities asking them to explore with the DPTAC the scope for introducing some elements of the scheme in those parts of central London where it does not at present apply. This could do much to give disabled people greater mobility in central London.

  We propose further measures to simplify the operation of the scheme. In particular, these would:

  (a) make recipients of war pensioners' mobility supplement automatically eligible for badges.

  (b) permit the issue of badges for the same period as mobility allowance and war pensioners' mobility supplement. for those in receipt of those allowances, up to a maximum of five years. Other badges would continue to be reviewed at three-yearly intervals.

  (c) allow local authorities to introduce four-hour time limits in on-street parking bays reserved for disabled people, where local authorities wish to encourage the use of such bays by shoppers rather than for all-day parking.

  (d) encourage local authorities to warn badgeholders who are misusing badges prior to considering withdrawing the badge, and to issue renewal reminders. Many authorities do this already.

  Further possible changes to the scheme were aired in the discussion paper, or suggested in response to it. We believe that other aspects of the scheme should continue as they are. In particular, we consider that registered blind people should continue to qualify automatically for badges and that otherwise eligibility should be restricted to those with the most severe mobility problems. We must protect the value of the orange badge if it is to be of real help to those who need it most.

  Validity of orange badges which are already issued will not be affected by the proposals. Badge holders will be assessed under new criteria only when their current badges have expired and following introduction of the new criteria. Badges are reviewed every three years.

  The Department has produced a leaflet in the traffic topics series explaining in more detail the proposals and the background to them. Copies have been placed in the Library.

  Vehicle Inspectorate Plan
  Mr. Holt
  To ask the Secretary of State for Transport when the vehicle inspectorate executive agency business plan for 1989–90 will be published.

  Mr. Peter Bottomley
  The business plan has been published today. Copies are available in the Library.

NORTHERN IRELAND

  Turbines (Rivers)
  Mr. McCusker
  To ask the Secretary of State for Northern Ireland how many privately operated electricity generating turbines are installed on rivers in Northern Ireland; and which Government Department has responsibility for permitting and overseeing their operation.

  Mr. Viggers
  No central register of privately operated electricity generating turbines is held by Northern Ireland Government Departments and thus the information sought is not available.

  No one Government Department has overall responsibility for privately operated electricity generating turbines on rivers. The Northern Ireland Departments of Agriculture, Environment and Economic Development have statutory responsibilities for installations affecting the flow in a particular watercourse for water abstraction and for health and safety at work considerations arising from the operation of such turbines.

  Equal Opportunities
  Mr. Janner
  To ask the Secretary of State for Northern Ireland (1) when his Department last conducted a survey of the ethnic origin of its employees; when it next plans to do so; and whether he will make a statement;

  (2) what steps he has taken to recruit members of ethnic minorities in top grades of employment at his Department.

  Mr. Ian Stewart
  Within Northern Ireland religious affiliation is a more significant consideration for equality of opportunity than ethnic origin. The Northern Ireland Civil Service therefore records details of religious affiliation together with sex (and disabilities if any) of applicants. It does not monitor the ethnic origin of staff nor has it any plans to do so.

  The home Civil Service conducted a programme of ethnic origin surveys over four years, covering all staff, and these surveys were completed in June 1988. The Northern Ireland Office in London took part in these surveys.

  The Northern Ireland Office continues to monitor staff as they join and to update its records. The home Civil Service and the Northern Ireland Civil Service are fully committed to ensuring equality of opportunity for all applicants including any from ethnic minorities.

  The Northern Ireland Office is an equal opportunity employer and this is emphasised in all our recruiting campaigns and advertising.
  482
  Promotion opportunities are open to all our staff and in all cases the promotion is gained on merit. No specific steps have been taken to recruit ethnic minorities to top grades.

  Agriculture Improvement Scheme
  Mr. Mallon
  To ask the Secretary of State for Northern Ireland what was the total amount, in grants, paid out by the Department of Agriculture, Northern Ireland, under the agriculture improvement scheme in each of the years since 1985 to applicants from each of the parliamentary constituencies in Northern Ireland.

  Mr. Viggers
  The information requested is not available by parliamentary constituency. It has been given by county.

  Agriculture Improvement Scheme

  Agriculture Improvement Regulations

  Agriculture Improvement Scheme (National)

  Counties

  Grant 1986–87

  Grant 1987–88

  Grant 1988–89

  Antrim

  2,706,655

  1,711,213

  545,763

  Armagh

  1,240,358

  1,016,101

  445,891

  Down

  361,852

  452,119

  265,245

  Fermanagh

  708,371

  730,625

  618,072

  Londonderry

  839,608

  582,122

  416,779

  Tyrone

  2,567,134

  2,320,384

  1,561,530

  TOTAL

  8,423,978

  6,785,564

  3,853,280

  Agriculture Improvement Regulations (European Community)

  Counties

  Grant 1986–87

  Grant 1987–88

  Grant 1988–89

  Antrim

  396,137

  972,419

  1,479,959

  Armagh

  357,520

  1,158,318

  1,849,241

  Down

  206,003

  682,963

  859,574

  Fermanagh

  191,618

  604,120

  1,139,423

  Londonderry

  282,782

  785,043

  826,249

  Tyrone

  439,408

  1,424,132

  2,142,174

  TOTAL

  1,873,468

  5,626,995

  8,296,620

  Job Creation
  Mr. McNamara
  To ask the Secretary of State for Northern Ireland (1) what is the number of jobs promoted by the Industrial Development Board and its predecessor, the Department of Commerce, for(a) indigenous firms and (b) overseas firms in Northern Ireland since 1978–79; how many of these jobs are the result of (i) new enterprise or (ii) expansion; what is the average cost per job; and how many of these jobs promoted were actually realised;

  (2) how many jobs have been promoted by the Industrial Development Board or its predecessor the Department of Commerce in the following industrial groups (a) engineering, (b) textiles, clothing and leather, (c) food, drink and tobacco and (d) all other industries; what was the average cost of each job promoted; and how many of these jobs were actually realised.

  Mr. Viggers
  [holding answer 21 April 1989] : Job promotion figures for the period April 1978 to December 1988 inclusive are as follows:

  483

  Job promotions

  Indigenous firms

  Overseas firms

  New

  Expansions

  New

  Expansions

  Total

  Department of Commerce

  1978–79

  357

  1,204

  4,165

  1,364

  7,090

  1979–80

  308

  1,793

  3,100

  2,333

  7,534

  1980–81

  430

  769

  178

  1,928

  3,305

  1981–82

  131

  381

  348

  815

  1,675

  1982–83 (from 1 April 1982 31 August 1982)

  41

  312

  —

  513

  866

  Industrial Development Board

  1982–83 (1 September 1982 31 March 1983)

  224

  751

  159

  1,791

  2,925

  1983–84

  715

  1,191

  539

  1,111

  3,556

  1984–85

  394

  1,478

  548

  2,847

  5,267

  1985–86

  204

  1,224

  224

  1,258

  2,910

  1986–87

  208

  1,124

  415

  2.440

  4,187

  1987–88

  183

  2,616

  867

  1.634

  5,300

  1988–89 (9 months to 31 December 1988)

  329

  1,071

  1,664

  1,428

  4,492

  Total

  3,524

  13,914

  12,207

  19,462

  49,107

  In this period offers of assistance have been made with the intention of safeguarding employment as well as promoting new jobs. In such cases the assistance offered is not disaggregated between various job categories and

  Jobs promoted by industrial group

  Engineering

  Textiles clothing and leather

  Food drink and tobacco

  All other industries

  Total

  Department of Commerce

  1978–79

  4,634

  1,282

  144

  1,030

  7,090

  1979–80

  4,802

  1,786

  325

  621

  7,534

  1980–81

  1,494

  1,092

  264

  455

  3,305

  1981–82

  667

  450

  89

  469

  1,675

  11982–83

  542

  204

  16

  104

  866

  Industrial Development Board

  21982–83

  1,773

  394

  551

  207

  2,925

  1983–84

  1,276

  1,425

  545

  310

  3,556

  1984–85

  1,615

  1,286

  1,309

  1,057

  5,267

  1985–86

  465

  1,194

  401

  850

  2,910

  1986–87

  1,678

  1,177

  507

  825

  4,187

  1987–88

  836

  1,839

  1,452

  1,173

  5,300

  31988–89

  2,038

  1,124

  547

  783

  4,492

  Total

  21,820

  13,253

  6,150

  7,884

  49,107

  1 From 1 April 1982 to 31 August 1982.

  2 From 1 September 1982 to 31 March 1983.

  3 9 months to 31 December 1988.

  Human Rights
  Mr. Vaz
  To ask the Secretary of State for Northern Ireland how many representations he has received about the denial of human rights or the use of torture in Northern Ireland; and which organisations made these representations.

  Mr. Ian Stewart
  I receive representations on a wide range of matters but no central record is kept of those which allege denial of human rights in Northern Ireland.

SCOTLAND

  Playgrounds
  Mr. Sillars
  To ask the Secretary of State for Scotland what correspondence he has received from Nithsdale road 484
  consequently it is not possible to identify separately the average cost per job promoted. The average cost for all jobs assisted during 1987–88 was £9,362. Job realisation figures could be obtained only at disproportionate cost.

  link-up group expressing concern about supervision of children in school playgrounds; what reply he has sent; and if he will make a statement.

  Mr. Michael Forsyth
  My right hon. and learned Friend has received representations from the Nithsdale road link-up group and many other expressions of concern from parents and parents' groups about the absence or inadequacy of playground supervision in education authority schools generally.

  Local arrangements for playground supervision are for education authorities, who have a duty of care at common law for pupils at their schools. The Government share the concern of parents that children should be properly cared for, and have made provision of £4 million within total education provision for 1989–90 to enable authorities to discharge their duty in this matter.

  A new clause—which would have the effect of putting a statutory duty on authorities to provide adequate levels

  485
  of supervision of pupils—has been tabled for discusion by my hon. Friend the Member for Eastwood (Mr. Stewart) in the Committee which is currently considering the Self-Governing Schools Etc. (Scotland) Bill. The hon. Gentleman may wish to attend the public gallery to listen to the debate.

  Competitive Tendering
  Mr. Galbraith
  To ask the Secretary of State for Scotland if, when evaluating contracts in competitive tendering of ancillary services, the cost of redundancy and early retirement is set against the private tender.

  Mr. Michael Forsyth
  Yes. Redundancy payments are real costs to the Health Service and boards are specifically instructed to have regard to them in the final assessment of all bids relating to competitive tendering. Similarly premature retirement costs, if any, are also required to be taken into account.

  Press Releases
  Mr. Galbraith
  To ask the Secretary of State for Scotland how many press releases have been issued by himself, his Minister of State and each of his Parliamentary Under-Secretaries since June 1987.

  Mr. Rifkind
  The total number of news releases issued by the Scottish Information Office in the period 1 June 1987 to 31 March 1989 covering the activities of myself and my ministerial colleagues was 2,078. The number issued on behalf of each Minister was as follows:

  Number

  Secretary of State for Scotland

  561

  Minister of State (Commons)

  426

  Minister of State (Lords)

  238

  Minister for Home Affairs and the Environment

  331

  Minister for Education and Health

  522

  Highland Health Board
  Mr. Galbraith
  To ask the Secretary of State for Scotland, pursuant to his answer of 14 April, why a separate meeting was held with the manager and chairman of Highland health board.

  Mr. Michael Forsyth
  To discuss matters of common interest.

  Departmental Staff
  Mr. Sean Hughes
  To ask the Secretary of State for Scotland with respect to the support grades in his Department(a) what is the number of staff employed, (b) how many vacancies there are and how many of these have existed for over one month and over three months, (c) how many temporary and casual appointments there are and (d) how much overtime was worked by them in London and elsewhere.

  Mr. Rifkind
  The Scottish Office (including Scottish Prison Service) position at 1 April 1989 is as follows:

  a. 318·5;

  b. 26, of which 20 had existed for over one month and 14 for over 3 months;

  c. 7·5 (all casual appointments);

  d. since May 1988 overtime hours worked amount to 1,097 (London) and 28,762 (elsewhere).

  Siemens Printers
  Ms. Walley
  To ask the Secretary of State for Scotland how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.

  Mr. Rifkind
  None.

  Forest Workers
  Mrs. Margaret Ewing
  To ask the Secretary of State for Scotland if he will publish the numbers of forest workers employed on forest management activities and harvesting activities by the Forestry Commission in each conservancy area since 1979.

  Lord James Douglas-Hamilton
  The information is given in the following tables:

  Conservancy

  Total1

  19792

  North East England

  391

  North West England

  387

  East England

  418

  South East England

  254

  South West England

  370

  North Wales

  474

  South Wales

  445

  North Scotland

  547

  East Scotland

  358

  West Scotland

  440

  South Scotland

  552

  Great Britain

  4,636

  Conservancy

  Forest management

  Harvesting

  Total1

  1984

  North East England

  170

  121

  291

  North West England

  125

  184

  309

  East England

  146

  180

  326

  South East England

  134

  69

  203

  South West England

  142

  168

  310

  North Wales

  183

  177

  360

  South Wales

  204

  106

  310

  North Scotland

  275

  135

  410

  East Scotland

  129

  132

  261

  West Scotland

  214

  101

  315

  South Scotland

  295

  211

  506

  Great Britain

  2,017

  1,584

  3,601

  Conservancy3

  Forest management

  Harvesting

  Total1

  1989

  North England

  222

  129

  351

  East England

  188

  159

  347

  West England

  166

  108

  274

  Wales

  276

  149

  425

  North Scotland

  298

  114

  412

  Mid Scotland

  215

  61

  276

  South Scotland

  234

  134

  368

  Great Britain

  1,599

  854

  2,453

  1 The figures do not include contractors.

  2 The 1979 figures arc not available by activity.

  3 The number of conservancies was reduced from 11 to 7 on 1 April 1985.

  Radioactive Waste
  Mrs. Margaret Ewing
  To ask the Secretary of State for Scotland what information his Department gave to Nirex
  487
  which enabled Dounreay to be placed on the short list as a possible site for the disposal of radioactive waste; and if he will make a statement.

  Lord James Douglas-Hamilton
  The decision by Nirex to include Dounreay on the short list of sites for investigation was taken as a result of their own site selection procedure. I am not aware of any information provided by the Scottish Development Department which was material to this decision.

  Mrs. Margaret Ewing
  To ask the Secretary of State for Scotland whether his Department has made any predictions of the economic effects upon the local economy of Caithness should Dounreay be chosen by Nirex for the disposal of solid low and intermediate-level radioactive waste; and if he will make a statement.

  Mr. Lang
  The economic effects would depend on the nature of any disposal facility which might be established. As a basic guide Nirex has suggested that, if construction were phased, some 350 jobs on construction and operation would be created during the 50-year operational life of the repository, without taking account of associated secondary employment.

  Public Rights of Way
  Mr. Ron Davies
  To ask the Secretary of State for Scotland what was his Department's response to the Countryside Commission's consultation papers "Paths, Routes and Trails" and "Changing the Rights of Way Network".

  Lord James Douglas-Hamilton
  No response has been made as the papers relate specifically to the situation in England and Wales.

  Renaval Fund
  Dr. Godman
  To ask the Secretary of State for Scotland if he will detail any recent applications, made by the Scottish Office, for financial assistance from the European Community by way of the Renaval fund which is designed to provide assistance to those communities which have suffered a decline in their shipbuilding and marine engineering industry; and if he will make a statement.

  Mr. Lang
  [holding answer 21 April 1989]: Applications under Renaval are currently under consideration and should go forward very shortly to the European Commission.

  Employment Training
  Mr. Allen Adams
  To ask the Secretary of State for Scotland if he will name the local authorities in Scotland which are training agents or training managers for employment training.

  Mr. Lang
  [holding answer 17 April 1989]: Scottish local authorities operating as training agents or training managers for employment training are as follows:

  Training Agents

  Borders Regional Council

  Caithness District Council

  Dumfries and Galloway Regional Council

  Fife Regional Council

  Grampian Regional Council

  Orkney Islands Council

  488

  Wigtown District Council

  Training Managers

  Angus District Council

  Argyll and Bute District Council

  Borders Regional Council

  Caithness District Council

  Clydesdale District Council

  Cumnock and Doon Valley District Council

  Dumfries and Galloway Regional Council

  Dunfermline District Council

  East Kilbride District Council

  Fife Regional Council

  Grampian Regional Council

  Hamilton District Council

  Highland Regional Council

  Kirkcaldy District Council

  Lochaber District Council

  Midlothian District Council

  Moray District Council

  North East Fife District Council

  Orkney Islands Council

  Ross and Cromarty District Council

  Wigtown District Council

DEFENCE

  Air Crash (Pembrokeshire)
  Mr. Nicholas Bennett
  To ask the Secretary of State for Defence when he expects to publish the findings of the inquiry into the air crash on 6 May 1988 near Solva St. Davids, Pembrokeshire, involving an RAF aircraft.

  Mr. Neubert
  I believe that my hon. Friend may be referring to the accident to a Royal Air Force Hawk aircraft which took place shortly after take off from. RAF Brawdy on 13 May 1988. The board of inquiry into this accident is now complete and a summary of its findings will be published shortly. I will send a copy to my hon. Friend.

  Gamma Shine
  Mr. Alton
  To ask the Secretary of State for Defence (1) if he will make a statement on the phenomenon of gamma shine and its implications for the safety of naval personnel;

  (2) what studies have been carried out into the possible hazardous effects of gamma shine; and if he will place such reports in the Library.

  Mr. Archie Hamilton
  In the context of submarine nuclear reactors, gamma shine is the term used to refer to the gamma radiation emitted by fission products contained within the vessel in the unlikely event of an accident. The hazardous effects of gamma radiation are well known and are documented in numerous published reports.

  Mr. Alton
  To ask the Secretary of State for Defence (1) why the Clyde area public safety scheme was revised in May 1985 and the gamma shine maximum hazard distance increased from 50 to 250m; and why the Scottish special safety scheme was similarly revised;

  (2) if he will list the date of the latest revision of the special safety schemes at all ports with Z berths; and if he will state in each case the recommendations for dealing with gamma shine.

  Mr. Archie Hamilton
  All public and special safety schemes lay down a distance within which automatic countermeasures would be taken against radiation
  489
  hazards, including gamma shine, in the event of an accident. Monitoring equipment is in place at every berth visited by nuclear powered submarines, either permanently or for the duration of the visit, in order to detect and quantify any radiation hazard. The countermeasures are designed to ensure that radiation dose rates to personnel do not exceed the limits set by the National Radiological Protection Board for nuclear accidents. Specific measures may vary depending on the circumstances of each particular berth; they include sheltering and/or evacuation.

  In addition, some safety schemes give an estimate of the extent of the hazard from gamma shine in the event of an accident. In all cases this is less than the distance within which automatic countermeasures would be taken. The estimates contained in the Clyde public safety scheme and the Scottish special safety scheme were revised in the light of NRPB recommendations in 1985, but no change to the planned countermeasures was required.

  The dates of the most recent revisions of public and special safety schemes for ports with Z berths are as follows.

  Dates

  Portsmouth Special Safety Scheme

  October 1988

  Southampton Special Safety Scheme

  February 1988

  Devon Public Safety Scheme

  September 1988

  Barrow Public Safety Scheme

  August 1988

  Barry and Cardiff Special Safety Scheme

  September 1988

  Liverpool Special Safety Scheme

  December 1988

  Torbay Special Safety Scheme

  August 1988

  Scotland Special Safety Scheme

  August 1988

  Clyde Public Safety Scheme

  July 1988

  Currently under revision

  Portland Special Safety Scheme

  August 1988

  Rosyth Public Safety Scheme

  March 1986

  Lance Missile
  Mr. Sean Hughes
  To ask the Secretary of State for Defence what information he has received from his United States counterpart concerning the length of time required to modernise the Lance missile; and what assessment he has made.

  Mr. Archie Hamilton
  [pursuant to his answer, 20 April 1989, c. 279]: The US Administration has kept allies fully informed about their development programme for a successor to the Lance missile. The selection by the US of a launcher at the end of last year was geared to having a new system available for deployment by the mid-1990s.

AGRICULTURE, FISHERIES AND FOOD

  Eggs
  Mr. Ralph Howell
  To ask the Minister of Agriculture, Fisheries and Food if he will press the European Commission to introduce equivalent standards for egg producers as those now pertaining in the United Kingdom; and if he will make a statement on measures being taken to ensure equality of competition between European egg producers.

  Mr. Donald Thompson
  I refer my hon. Friend to the replies given to the hon. Member for Caerphilly (Mr. Davies) on 4 April at column 51 and the hon. Member for Angus, East (Mr. Welsh) on 20 April at column 280.
  490
  My Department has supported the EC Commission's initiative in proposing measures to deal with a range of zoonoses, including salmonella, on a Communitywide basis, and is contributing constructively to ensure that progress is as rapid as possible.

  Siemens Printers
  Ms. Walley
  To ask the Minister of Agriculture, Fisheries and Food how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.

  Mr. Donald Thompson
  My Department does not use any of the printers specified.

  Potato Marketing Board
  Mr. Cox
  To ask the Minister of Agriculture, Fisheries and Food what plans he has to review the working of the Potato Marketing Board; and if he will make a statement.

  Mr. Kirkwood
  To ask the Minister of Agriculture. Fisheries and Food when he expects to make an announcement on the result of the Potato Marketing Board review.

  Mr. Ryder
  I refer the hon. Members to the reply given to my hon. Friend the Member for Ludlow (Mr. Gill) on 19 April at column 175.

  Pesticides
  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food if he will publish in the Official Report the pesticides for which there are international safety limits; and if he will indicate in each case whether the safety limit is accepted by his Department and what action is taken to see that the limit is invariably observed.

  Mr. Ryder
  International acceptable daily intakes for pesticide residues are published by the codex alimentarius commission of the United Nations Food and Agriculture Organisation and the World Health Organisation. The United Kingdom accepts these unless there are sound scientific reasons for not doing so. Our approval procedures take ADIs into account; we have a range of maximum residue levels which, while they are not themselves safety limits, must be toxicologically acceptable; and regular monitoring of pesticide residues in food provides a check that MRLs—and hence ADIs—are not being exceeded.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food what proportion of the pesticides used on food are used in order to(a) preserve the food or prolong the shelf life, (b) improve the appearance and (c) increase the yield of the crop.

  Mr. Ryder
  It is not possible to provide the information requested. All agricultural pesticides, including herbicides are used with the ultimate aim of producing good quality marketable produce with minimal crop losses.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food when his Department was informed by his United States counterpart of the concern in the United States of America, about the apple spray Alar; what action he took following the receipt of information; and when he did so.
  491
  Mr. Ryder
  Officials in my Department received information about the United States Environmental Protection Agency's action on daminozide (marketed as Alar) on 9 February 1989. On 10 February they requested all available data from the manufacturer and supplier, including the studies submitted to the EPA, in order to carry out an emergency review. The data have been supplied and have been considered by independent experts on the advisory committee on pesticides, whose conclusions will shortly be made public.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food what evidence of safety was considered by the advisory committee on pesticides when, in 1980, it approved the apple spray Alar.

  Mr. Ryder
  The advisory committee on pesticides considered an application for clearance of daminozide, the active ingredient of Alar products, in 1967. The application was supported by a full toxicological, residue and environmental data package according to the standards of the time.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food what has been the response of his Department to the European Economic Community directive which would compel retailers to inform customers of the pesticides used on the fruit and vegetables they sell.

  Mr. Ryder
  While I am in favour of informative labelling of food there are a number of technical problems that will arise if the European Commission's proposal is implemented. The United Kingdom delegation has therefore expressed some reservations in the discussions which have taken place to date.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food if he will take steps to prevent retailers from selling fruit and vegetables which have pesticide residues which are above international safety limits.

  Mr. Ryder
  I am not aware of any international safety limits for pesticide residues on fruit and vegetables. However the Government brought into force on 1 January this year a wide range of maximum residue levels for pesticides in foodstuffs. These take account of acceptable daily intakes for individual chemicals published by the codex alimentarius commission as described in my reply earlier today.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food how many pesticides are known to be used on food; and which of these are thought to be the most dangerous if excessive residues remain.

  Mr. Ryder
  Of the 400 or so active ingredients currently approved for use in the United Kingdom, some two thirds do not leave detectable residues. Ministers in six Government Departments must be satisfied that usage will not result in residue levels likely to pose a hazard to health before any pesticide is approved for use.

  Consumer Pressure Groups
  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food what information he has on the number of consumer pressure groups which have an interest in food and on how they are financed; and if the Government make a financial contribution to any of these groups.
  492
  Mr. Ryder
  Because of our statutory requirement to consult on proposals for regulations under the Food Act 1984, I am aware of up to 100 organisations which broadly represent consumer interests and have an interest in food matters. I have no detailed information on how they are financed.

  The Government wholly fund the National Consumer Council, the Welsh Consumer Council, the Scottish Consumer Council, the Consumers in the European Community Group and the headquarters organisations of the National Association of Citizens Advice Bureaux and Citizens Advice Scotland. It also makes a contribution to the funding of the National Federation of Consumer Groups. All this funding is for consumer interests in general and is not specifically related to food issues.

  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food if he will consider providing financial resources to recognised food consumer groups to permit them to carry out independent food testing similar to that carried out in the United States of America by the Natural Resources Defence Council.

  Mr. Ryder
  My Ministry already carries out an extensive programme of food surveillance and I am satisfied that this, together with local authority enforcement of legislative requirements, is entirely adequate to protect the interests of the consumer.

  Apple Juice
  Mr. Ashley
  To ask the Minister of Agriculture, Fisheries and Food if he will publish in the Official Report the names of the processed apple juices on sale in the United Kingdom that have been made from apples sprayed with Alar.

  Mr. Ryder
  This information is not held by my Department.

  Surplus Food
  Mr. Michael Brown
  To ask the Minister of Agriculture, Fisheries and Food when there is to be a further distribution of European Community surplus food; if applications will be invited from old people's welfare groups, charities and similar bodies to distribute the food; and if he will make a statement.

  Mr. Ryder
  When the EC surplus food scheme was introduced in 1988 certain charitable and non-profit making organisations were designated to operate the scheme both in 1988 and in 1989. My officials have recently consulted these organisations about the quantities of beef and butter they wish to distribute in 1989 and are currently considering each bid against the United Kingdom's budget of about £14·8 million to operate the scheme in 1989. We expect to be contacting designated organisations again shortly with details of their allocations. Once tendering, processing and packaging arrangements have then been made, produce will be made available for distribution.

  Salmonella
  Mr. Allen McKay
  To ask the Minister of Agriculture, Fisheries and Food if he will give, by each local authority area, the number of poultry keepers who have had hens culled because of salmonella and the number of hens culled in each case.
  493
  Mr. Donald Thompson
  It is not my Department's policy to divulge information which could be used to deduce the identity of individual flock owners who have had hens culled or whose flocks have been compulsorily slaughtered because of salmonella. This risk would be inherent if the information were supplied by each local authority area as requested.

  The following tables set out the information for the United Kingdom as a whole.

  Hen Culling Scheme (closing date for applications 5 January 1989)

  Number of applications1

  Number of hens culled

  44

  372,120

  1 Each from a separate establishment.

  Compulsory Slaughter of Flocks infected with Invasive Salmonella organisms (with effect from 1 March 1989 in Great Britain)

  Number of birds in each flock slaughtered

  4,263

  35,369

  489

  20,227

  65,249

  419

  53

  49,279

  16,537

  2,300

  6,580

  14,226

  51

  17,743

  80,000

  Total

  312,785

SOCIAL SECURITY

  Benefits
  Mr. McCrindle
  To ask the Secretary of State for Social Security if he will take steps to exclude from the calculation of entitlement to family credit and income support, the receipt of child benefit; and if he will make a statement.

  Mr. Peter Lloyd
  No. Provision is already made in income support for children's requirements. In family credit the support for children is the total of child benefit and the child credit rates. Thus in both schemes to ignore child benefit would mean double provision.

  Transitional Additions (Dumbarton)
  Mr. McFall
  To ask the Secretary of State for Social Security (1) how many claimants were awarded a transitional addition in the Dumbarton social security region in April 1988; and how many will as a result receive in April(a) reduced uprating and (b) no uprating;
  494
  (2) how many claimants in Dumbarton constituency were awarded a transitional addition in April 1988; and how many of these will as a result receive in April 1989 (a) reduced uprating and (b) no uprating;

  (3) what percentage of (a) pensioners, (b) persons in receipt of a disability premium, (c) single parents, (d) unemployed married, (e) unemployed single, (f) unemployed with children and (g) others in receipt of income support in Dumbarton constituency will receive no increase in their benefit payments as a result of the current year's uprating because of the effect of transitional additions.

  Mr. Peter Lloyd
  I refer the hon. Member to my reply to the hon. Member for Holborn and St. Pancras (Mr. Dobson) on 6 March, at column 445.

  Vaccine Damage Payments
  Mr. Ashley
  To ask the Secretary of State for Social Security how many vaccine damage payments were made in 1986; and if he will categorise these according to the age of the child, when vaccination took place, the year of the vaccination and the nature of the vaccination.

  Mr. Peter Lloyd
  Fifteen payments were awarded in 1986 under the provisions of the Vaccine Damage Payments Act 1979. Details are in the table.

  Vaccine damage payments scheme

  Awards made in 1986 by age of child at date of vaccination, year of vaccination and type of vaccination

  Age at date of vaccination (months)

  Year vaccination was given

  Type of vaccination cited on claim form

  1.

  3—6

  1973

  Triple/polio

  2.

  6—9

  1974

  Triple

  3.

  6—9

  1978

  Pertussis

  4.

  3—6

  1982

  Triple/polio

  5.

  3—6

  1962

  Triple

  6.

  0—3

  1984

  Triple

  7.

  3—6

  1967

  Pertussis

  8.

  9—12

  1981

  Triple/polio

  9.

  9—12

  1973

  Pertussis

  10.

  3—6

  1983

  Pertussis

  11.

  3—6

  1982

  Pertussis

  12.

  6—9

  1965

  Triple/polio

  13.

  0—3

  1983

  Pertussis

  14.

  6—9

  1974

  Pertussis

  15.

  15—18

  1949

  Diptheria

  Social Fund
  Mr. Madden
  To ask the Secretary of State for Social Security what percentage of(a) budgeting loans and (b) community care grants were awarded to each of the 15 client groups defined by his Department for (i) Great Britain as a whole, (ii) the north-east region and (iii) each of the four offices serving the Bradford metropolitan area, for the financial year 1988–89.

  Mr. Peter Lloyd
  [holding answer 20 April 1989]: The information available is shown in the table.
  495

  Table

  Budgeting Loans and Community Care Grants: Percentage Awards by Client Groups for Year 1988–89

  Budgeting Loans

  Client Group (See key)

  00

  01

  02

  03

  04

  05

  06

  07

  08

  09

  10

  11

  12

  13

  14

  15

  Great Britain

  0·3

  0·4

  0·6

  4·1

  0·5

  2·5

  3·5

  41·8

  0·9

  2·1

  16·0

  18·9

  0·9

  4·8

  0·0

  0·1

  North East Region

  0·2

  0·3

  0·7

  4·1

  0·4

  4·5

  2·9

  40·5

  0·9

  2·2

  19·8

  18·1

  0·9

  4·3

  0·0

  0·1

  Bradford East

  0·1

  0·3

  0·2

  3·6

  0·5

  4·4

  2·4

  42·9

  0·4

  2·0

  18·1

  18·8

  1·9

  4·3

  0·0

  0·1

  Bradford South

  0·1

  0·3

  0·6

  2·9

  0·3

  3·7

  2·2

  49·3

  1·0

  3·0

  13·8

  17·3

  0·9

  4·2

  0·0

  0·0

  Bradford West

  0·3

  0·5

  0·6

  2·9

  0·3

  3·7

  2·2

  35·9

  1·8

  5·3

  10·1

  25·0

  1·0

  6·7

  0·0

  0·3

  Keighley

  0 0

  0·3

  0·7

  5·7

  0·6

  6·5

  3·8

  40·0

  1·0

  2·8

  13·4

  18·3

  0·3

  6·2

  0·0

  0·2

  Community Care Grants

  Great Britain

  0·4

  4·5

  3·6

  14·2

  1·0

  4·3

  9·7

  24·3

  0·9

  1·7

  9·2

  16·5

  1·9

  7·0

  0·0

  1·0

  North East Region

  0·4

  3·6

  3·7

  14·3

  1·1

  4·2

  9·0

  25·2

  0·9

  1·5

  11·2

  16·3

  1·9

  5·9

  0·0

  0·8

  Bradford East

  0·0

  1·0

  1·2

  10·9

  0·8

  3·8

  5·9

  30·1

  0·4

  0·6

  8·3

  28·7

  0·6

  4·8

  0·0

  2·8

  Bradford South

  0·2

  0·2

  2·0

  7·6

  1·7

  2·7

  8·1

  31·8

  1·2

  1·0

  8·1

  23·9

  2·0

  7·6

  0·0

  1·7

  Bradford West

  0·9

  2·8

  1·8

  9·4

  1·4

  1·8

  7·1

  20·5

  0·5

  3·7

  4·6

  28·3

  3·0

  12·0

  0·0

  2·3

  Keighley

  0·0

  1·5

  1·1

  5·2

  0·0

  4·4

  4·4

  35·9

  0·4

  2·2

  8·5

  20·0

  2·2

  9·6

  0·0

  4·4

  Key

  Code Meaning

  00 Unallocated (by default).

  Applicant or partner aged 60 or over

  01 over 80—with income support higher pensioner premium.

  02 aged 60–79—disabled with higher pensioner premium.

  03 aged 60–79—with ordinary pensioner premium, or over 60 without pensioner premium.

  Applicant and partner aged under 60

  04 lone parent with income support disability premium.

  05 family with disability premium.

  06 other with disability premium.

  07 lone parent without disability premium.

  08 signs at UBO quarterly with income support family premium.

  09 signs at UBO quarterly without family premium.

  10 signing unemployed or with training allowance with family premium.

  11 signing unemployed or with training allowance without family premium.

  12 others with family premium.

  13 others without family premium.

  14 involved in trade dispute.

  15 applicant not in receipt of income support.

HEALTH

  NHS Reform
  Mr. Thurnham
  To ask the Secretary of State for Health what representations he has received from general practitioners in Bolton and other areas in the north-west about proposals for reform of the National Health Service; and if he will make a statement.

  Mr. Freeman
  We have received a number of representations from GPs from Bolton and the north-west, including some passed on to me by my hon. Friend.

  Mr. Simon Hughes
  To ask the Secretary of State for Health if he will consider withdrawing the proposals on self-governing trusts contained within "Working for Patients."

  Mr. Kenneth Clarke
  No.

  Sir David Price
  To ask the Secretary of State for Health how many hospitals within the National Health Service are currently in a position to provide a complete price list of all their treatments, operations and investigatory services; and how many will be required to do so by April 1991 in order to fulfil the terms of the Government's White Paper "Working for Patients."
  496
  Mr. Roger Freeman
  The current level of information about costs varies from hospital to hospital. A key element of our programme of reform is to provide all 260 major acute hopitals with the computerised systems they need to manage their resources more effectively. By April 1991 significant progress in implementing these new systems will have been made at a number of sites. However, the timetable for reform set out in the White Paper will not require any hospital to be in a position then to cost each of its services at the level of detail suggested by my hon. Friend's question.

  Mr. Stern
  To ask the Secretary of State for Health what representations he has received from overprescribing doctors in connection with the National Health Service review.

  Mr. Kenneth Clarke
  We have received many representations from many doctors. I regret to say that it is not possible to distinguish between those from doctors who overprescribe and those from doctors who do not. The review will ensure that all doctors will always be able to prescribe all necessary medicines to patients.

  Mr. Hardy
  To ask the Secretary of State for Health how many letters his Department has received since 1
  497
  January concerning the Government's approach to the National Health Service; and what proportion of these letters has been congratulatory.

  Mr. Kenneth Clarke
  We have received 3,500 representations about our proposals in "Working For Patients", expressing a wide range of questions and views which I shall take into account as part of the process of implementation. Many are broadly supportive, but it would not be possible, except at disproportionate cost, to establish the proportion which are congratulatory and those which are not. I am more interested in constructive comments than in congratulations or political opposition.

  Mr. Sumberg
  To ask the Secretary of State for Health how many representations he has received from general practitioners following the publication of his White Paper "Working for Patients;" and of these, how many contained requests for further details on the proposals contained therein.

  Mr. Mellor
  We have received some 1,200 representations from general practitioners, many asking questions. Information on the numbers requesting further details rather than expressing views is not available.

  Mr. Wallace
  To ask the Secretary of State for Health if he will consider introducing a pilot scheme for indicative drug budgets before going ahead with the proposals in "Working for Patients."

  Mr. Kenneth Clarke
  I refer the hon. Member to my reply to my hon. Friend the Member for Southend, East (Mr. Taylor) on 21 March, at column 562.

  Mr. Colvin
  To ask the Secretary of State for Health what further representations he has received from general practitioners about the proposals for practice management in the National Health Service review.

  Mr. Kenneth Clarke
  We continue to receive representations from general practitioners expressing a wide range of views. We shall take these carefully into account as the implementation process goes forward.

  Mr. Tim Smith
  To ask the Secretary of State for Health what contribution general practitioners are making in explaining to patients the National Health Service review proposals.

  Mr. Kenneth Clarke
  Some general practitioners are giving their patients a fair description of the benefits which will result from the White Paper proposals. I have also received representations from some GPs who are plainly misleading their patients particularly by use of BMA leaflets and causing unnecessary anxieties to old and sick people. I regret this and I am taking all possible steps to correct it. I have written to all general practitioners to set the record straight and to refute the inaccuracies contained in the BMA leaflet. I hope that all responsible general practitioners will respond by entering into constructive discussion of my proposals and by ceasing to cause unnecessary concern to their patients.

  Mr. Hind
  To ask the Secretary of State for Health if he has any plans to meet representatives of the British Medical Association to discuss the White Paper "Working for Patients"; and if he will make a statement.

  Mr. Kenneth Clarke
  I have had three meetings with the general medical services committee on the remuneration of 498
  general practitioners and I will have another meeting if it requests one. I will be meeting the joint consultants committee, which includes representatives of the BMA, tomorrow. I look forward to hearing that committee's views on the review proposals. The British Medical Association has not formally put any views on the review to me, although I have read its leaflets and pamphlets.

  Mr. Matthew Taylor
  To ask the Secretary of State for Health what representations he has received from the south-west concerning the proposed changes for general practitioners contained in the "Working for Patients" document.

  Mr. Mellor
  We have received a number of representations from the south-west, as from the rest of the country. Many are supportive of the proposals.

  Mr. Ron Brown
  To ask the Secretary of State for Health if he has received recent representations from the Medical Practitioners' Union about reform of the National Health Service.

  Mr. Kenneth Clarke
  I am not aware of any such representations.

  Mr. Tredinnick
  To ask the Secretary of State for Health what representations he has received recently from doctors and other medical professions concerning his White Paper on the Health Service; and if he will make a statement.

  Mr. Kenneth Clarke
  I have received a wide range of comments from doctors and other medical staff and shall take them carefully into account as the process of implementation goes forward.

  Mr. Dalyell
  To ask the Secretary of State for Health if he will make a statement on the recent representations he has received from family practitioners about his White Paper.

  Mr. Kenneth Clarke
  I have received a wide range of comments from family practitioners and shall take them carefully into account as the process of implementation goes forward.

  British Medical Association
  Mr. McLoughlin
  To ask the Secretary of State for Health when he last met representatives of the British Medical Association; and what matters were discussed.

  Mr. Kenneth Clarke
  I met members of the general medical services committee on 20 March to discuss the proposed new contract for general practitioners.

  Mr. John Greenway
  To ask the Secretary of State for Health when he last met the chairman of the British Medical Association; and what was discussed.

  Mr. Kenneth Clarke
  I last met him formally on 22 February, when I discussed with him the remuneration of hospital doctors in the light of the Government's decisions on the nineteenth report of the Doctors' and Dentists' Review Body.

  Mr. Gow
  To ask the Secretary of State for Health when he expects to meet the British Medical Association; and what he expects to discuss.
  499
  Mr. Mellor
  I refer my hon. Friend to my right hon. and learned Friend's reply earlier today to my hon. Friend the Member for Christchurch (Mr. Adley).

  Mr. Ian Bruce
  To ask the Secretary of State for Health what measures he has taken to answer the British Medical Association leaflet being distributed through doctors' surgeries.

  Mr. Kenneth Clarke
  I disapprove strongly of the BMA leaflet which grossly misrepresents the Government's proposals. It is inaccurate and misleading and I believe could cause unnecessary and unjustified alarm to more vulnerable patients. I have therefore written to all GPs to set the record straight on the BMA's five key untrue allegations.

  1. None of my proposed reforms will result in doctors running out of money, leaving them unable to prescribe for ill patients.

  2. The Government's intention to reward doctors who deliver high quality care to an average list of patients will not reduce the time given to patients when they need it. Doctors who choose to have more patients will need to be available for longer hours than their colleagues with small lists. However, the contract encourages new services and higher performance rather than bigger lists. Patients will not move to doctors who have little time to see them.

  3. No hospital is being encouraged to opt out of the NHS nor to reduce the range of services provided. All essential local services will be safeguarded by the DHA's legal powers and duty to require local delivery of them.

  4. The Government do not wish to save money by doctors taking the cheapest option. They wish to ensure that, within the resources available, more patients receive high quality care. Doctors who are given more choice and control over resources will make judgments over quality of care more than cost.

  5. The commitment of the Government to the NHS is absolute and will remain so. However, after 40 years, it is sensible to seek ways of improving the way in which its huge and growing resources are used.

  I will continue to take every opportunity to set out an accurate account of my proposals and to try to engage members of the medical profession in serious discussion of them.

  General Practitioners
  Mr. Madden
  To ask the Secretary of State for Health how many general practitioners have indicated their intention of resigning their contracts.

  Mr. Kenneth Clarke
  I am aware that some local medical committees have discussed the question of resignation, but very few indeed of the letters I have received refer to this possibility.

  Mr. Knox
  To ask the Secretary of State for Health what is the average number of people registered with each doctor under the National Health Service in each year since 1959.

  Mr. Mellor
  The average number of patients on general medical practitioners' lists in England for each year since 1959 is:

  Number

  1959

  2,300

  1960

  2,305

  1961

  2,308

  1962

  2,322

  1963

  2,343

  1964

  2,379

  500

  Number

  1965

  2,428

  1966

  2,470

  1967

  2,490

  1968

  2,494

  1969

  2,495

  1970

  2,478

  1971

  2,460

  1972

  2,421

  1973

  2,398

  1974

  2,384

  1975

  2,365

  1976

  2,351

  1977

  2,331

  1978

  2,312

  1979

  2,286

  1980

  2,247

  1981

  2,201

  1982

  2,155

  1983

  2,116

  1984

  2,089

  1985

  2,068

  1986

  2,042

  1987

  2,020

  Mr. Knox
  To ask the Secretary of State for Health how many general practitioners worked in the National Health Service in each year since 1959.

  Mr. Mellor
  The information requested is set out in the table.

  Date

  Number of unrestricted principals in England

  1 July 1959

  18,467

  1 July 1960

  18,643

  1 October 1961

  18,905

  1 October 1962

  19,031

  1 October 1963

  19,065

  1 October 1964

  18,978

  1 October 1965

  18,784

  1 October 1966

  18,612

  1 October 1967

  18,617

  1 October 1968

  18,732

  1 October 1969

  18,901

  1 October 1970

  19,099

  1 October 1971

  19,374

  1 October 1972

  19,775

  1 October 1973

  19,997

  1 October 1974

  20,219

  1 October 1975

  20,377

  1 October 1976

  20,551

  I October 1977

  20,796

  1 October 1978

  21,040

  1 October 1979

  21,357

  1 October 1980

  21,812

  1 October 1981

  22,304

  1 October 1982

  22,786

  1 October 1983

  23,254

  1 October 1984

  23,640

  1 October 1985

  24,035

  1 October 1986

  24,460

  1 October 1987

  24,922

  Mr. Battle
  To ask the Secretary of State for Health what prior consultations were held with the medical profession before the publication of the new contract proposals for doctors in general practice.

  Mr. Kenneth Clarke
  I remember the need for a more performance-related contract for GPs being a widespread subject of discussion with members of the medical profession about six or seven years ago. The need for a new
  501
  contract for general medical practitioners was first set out formally by the Government in the Green Paper "Primary Health Care: An Agenda for Discussion", published in April 1986. Eight months public consultation with the medical profession resulted in the proposals for a new contract set out in the White Paper "Promoting Better Health" published in November 1987.

  Detailed discussions of the proposed new contract with the general medical services committee, which negotiates for GPs, began in March 1988. Between March 1988 and the publication by the GMSC of its account of the negotiating position and my publication of "A New Contract", my officials held 17 meetings lasting 80 hours with the GMSC. I also held two meetings personally with the negotiators before publication and a third, protracted one afterwards. Subsequent meetings between my officials and the GMSC have taken the total time spent on detailed negotiations past 100 hours.

  The GMSC is now consulting its local medical committees and has summoned a conference for 27 April 1989. I wait to see whether it will wish to resume constructive discussions after the conference. In the meantime my officials are now preparing amendments to the regulations governing the GM services, including amendment to GPs' terms of service, and revised sections of the statement of fees and allowances (which sets out GPs' entitlement to those payments).

  The new contract will not reduce the average remuneration of GPs. It will however result in good GPs—those who provide all the services that patients need, attract patients to their practices and achieve high levels of performance—being paid more. This will be achieved by redistribution of existing levels of remuneration enhanced by increased investment in the family practitioner services as promised in the White Paper "Promoting Better Health".

  I believe that the GMSC agrees that the existing contract should be changed and that the changes should be introduced with effect from 1 April 1990. I hope, therefore, that the longest, most protracted, detailed and painstaking discussion of amendments to a contract in which I have ever been involved will soon come to an end. Both sides are agreed that our sole aim is to provide incentives to and fair reward for good quality primary health care and that publicly professed agreement should assist in any further discussions.

  Mr. Latham
  To ask the Secretary of State for Health whether he will make a statement on the response which he has received from general practitioners to his proposals for a new contract.

  Mr. Mans
  To ask the Secretary of State for Health how many representations he has received in the last 12 months on the subject of general practitioners' contracts.

  Mr. Hayes
  To ask the Secretary of State for Health what representations he has received on the British Medical Association's campaign against the proposed general practitioners' contract; and if he will make a statement.

  Mr. Mellor
  Since the publication of "General Practice in the NHS—A New Contract" on 23 February, I have received about 800 letters from individual GPs and their representative organisations. Prior to 23 February 502
  discussions on the GPs' contract with the GPs' representatives, the general medical service committee, were confidential.

  Sir David Price
  To ask the Secretary of State for Health what progress has been made in negotiations with the general medical services committee over a new contract for general practitioners since his publication of the Government's proposals on 23 February; and whether any of the outstanding issues have been settled.

  Mr. Malins
  To ask the Secretary of State for Health what progress has been made towards settling general practitioners' contracts.

  Mr. Mellor
  I refer my hon. Friends to my right hon. and learned Friend's reply to my hon. Friends the Members for Fylde (Mr. Jack), for Wyre Forest (Mr. Coombs) and for Basingstoke (Mr. Hunter) earlier today.

  Mr. Robert B. Jones
  To ask the Secretary of State for Health whether he has any plans to replace the General Medical Council with an independent body to investigate ethical complaints against general practitioners.

  Mr. Freeman
  The General Medical Council is an independent statutory body whose constitution and functions are regulated by the Medical Act 1983. Under this legislation the council has power to provide advice for members of the medical profession on standards of professional conduct and on medical ethics and to discipline doctors found guilty of serious professional misconduct. There are no plans to change existing arrangements.

  Mr. Baldry
  To ask the Secretary of State for Health whether he intends to make any amendments to the draft general practitioners' contract.

  Mr. Mellor
  The proposals set out in "A New Contract" are based on a year's intensive discussions with the general medical services committee negotiators. The principles are now settled but there will be plenty of opportunity to consider amendments to the detail as we proceed with the preparation of amendments to regulations and the statement of fees and allowances.

  Mr. Amos
  To ask the Secretary of State for Health if he will make a statement on the proposed level of capitation supplements in rural areas for rural general practitioner practices.

  Mr. Kenneth Clarke
  I propose that general practitioners should receive a rural capitation supplement to their basic practice allowance for each patient on their list who lives in a sparsely populated area. I envisaged three payments, the highest being for patients in the most sparsely populated areas. The amounts of these payments has not yet been decided.

  Community Care
  Mr. John Marshall
  To ask the Secretary of State for Health when he now expects to make a statement on his response to the Griffiths report.

  Rev. Martin Smyth
  To ask the Secretary of State for Health if he will make a further statement about the Government's response to Sir Roy Griffiths' report "Agenda for Action".
  503
  Mr. Mellor
  We remain committed to a policy of promoting the development of community services so that people can return to, or remain in, the community and live as independently as possible, wherever this is best for them. We are currently giving active consideration to the future organisation and management of community care following Sir Roy Griffiths' report and hope to be in a position to bring forward our own proposals in the near future.

  Mr. Wigley
  To ask the Secretary of State for Health how many representations he has received(a) generally in favour and (b) opposed to the main principles of the Griffiths report; and if he will now make a statement on the Government's intentions with regard to these recommendations.

  Mr. Mellor
  The representations we have received contain a wide and varied range of views on the Griffiths report. We shall take all reactions into account in framing our own proposals, which we hope to be in a position to bring forward in the near future.

  Mr. Fearn
  To ask the Secretary of State for Health when he expects to introduce changes in the reorganisation and delivery of community care.

  Mr. Mellor
  I refer the hon. Member to my reply to the hon. Member for Livingston (Mr. Cook) on 6 April, at column 291.

  Mr. Bowis
  To ask the Secretary of State for Health what steps he is taking to increase support services for carers.

  Mr. Mellor
  The Department has, for a number of years, grant-aided national voluntary organisations directly concerned with the needs of carers. In 1988–89 these grants totalled nearly £1/4 million. Total grant-aid to the voluntary sector by the Department now exceeds £36 million per annum, a substantial proportion of which is directed at organisations providing services for sick, elderly and disabled people and their carers. I have recently approved a grant of £150,000 for a carers training project and we have provided funding of £19,000 for an information pack about carers' services to accompany a forthcoming BBC local radio series. Under our helping the community to care programme we have made available £10·2 million for projects to support people looking after sick, disabled and elderly people in the community, including £ ½ million to the King's Fund informal caring support unit and £1·8 million to develop services for carers in three demonstration districts in Sandwell, Stockport and East Sussex. We are also funding a programme of research on carers at the university of York and have commissioned some further analysis of the carers data from the 1985 general household survey which, together with data emerging form the OPCS surveys of disability, will inform decisions about the future planning of community care policies.

  Mr. Tom Clarke
  To ask the Secretary of State for Health when he intends to meet the organisation MIND to discuss Sir Roy Griffiths' report on community care.

  Mr. Mellor
  We are currently giving active consideration to the future organisation and management of community care following Sir Roy Griffiths' report. We hope to be in a position to bring forward our proposals in the near future and will consider requests for meetings from the organisations involved at that stage.

  Ladywell Hospital, Eccles
  Miss Lestor
  To ask the Secretary of State for Health if he will pay a visit to Ladywell hospital in Eccles.

  Mr. Freeman
  I have no plans to make such a visit in the' near future.

  Patients (Mixing)
  Mr. Cran
  To ask the Secretary of State for Health what monitoring is undertaken by his Department of the numbers of mixing of elderly physically frail patients and elderly mentally ill patients.

  Mr. Freeman
  It is departmental policy that there should be separate services for elderly physically frail patients and elderly mentally ill patients. But where elderly people have multiple disabilities they are likely to be in the sort of facility best placed to meet their major need. The provision of services is the responsibility of the district health authority concerned. Overall levels of provision are monitored through the regional review process and through the Health Advisory Service programme of visits.

  Eyesight Testing
  Mr. Shersby
  To ask the Secretary of State for Health what consideration he is giving to the introduction of a low-cost private eye test.

  Mr. Mellor
  We are presently considering comments from professional and other interested bodies on a proposal that in the case of private sight tests a patient, under certain circumstances, will be able to choose to have a vision only test to determine whether spectacles are required. No decision on the proposal has yet been reached.

  Mr. Evennett
  To ask the Secretary of State far Health what representations he has received concerning his Department's proposals relating to sight testing.

  Mr. Mellor
  I refer my hon. Friend to my reply of 13 April to the hon. Member for Preston (Mrs. Wise), at column 699.

  Mr. Wareing
  To ask the Secretary of State for Health of he will make a statement on the levels of prices being charged for eyesight testing.

  Mr. Mellor
  Indications are that fees for private sight tests range between £7 and £15, though one chain of opticians is offering sight tests for old age pensioners at £2·50. Some opticians I understand who are charging about £10 are offering package deals which may give a discount on glasses if these are bought at the branch where the sight test takes place.

  NHS (Private Laboratories)
  Mr. Michael Brown
  To ask the Secretary of State for Health if he will make a statement on the consequences of the increasing use of private sector laboratory facilities within the National Health Service.

  Mr. Mellor
  I refer my hon. Friend to my reply to my hon. Friend the Member for Stafford (Mr. Cash) on 21 March 1989, at column 893.

  Nurses
  Sir Fergus Montgomery
  To ask the Secretary of State for Health how many nurses there are at present; and how many there were in 1979.

  Mr. Mellor
  I refer my hon. Friend to my reply to my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin) on 21 March, at column 567.

  Mr. Burt
  To ask the Secretary of State for Health what action his Department is taking to encourage the private health care sector to increase its contribution to nurse training.

  Mr. Mellor
  I am pleased to announce that representatives of the private sector, the English National Board and the Department have recently established a joint working group to identify the extent of the private sector's capacity to participate in pre-registration nurse training. The group will also identify the sector's demand for post-registration nurses and its capacity to provide an input consistent with its capacity to train, and its demand for, staff.

  GP Drug Lists
  Mr. Amess
  To ask the Secretary of State for Health if he will make a statement on the Government's policies for general practitioner drug lists.

  Mr. Brandon-Bravo
  To ask the Secretary of State for Health what is the Government's policy towards general practitioner drug lists.

  Mr. Mellor
  We are encouraging the continued development of voluntary local formularies (locally agreed lists of drugs which would normally be prescribed in the majority of cases) as a means of achieving more effective and economical prescribing by general medical practitioners. Formularies might cover a single practice, a group of practices or a family practitioner committee area. As we stated in working paper number 4, "Indicative Prescribing Budgets for General Medical Practitioners", it will be a responsibility of regional health authorities to encourage the development of joint formularies between FPCs and district health authorities.

  West Midlands RHA
  Mr. Gill
  To ask the Secretary of State for Health when he last met the chairman of the West Midlands regional health authority; and whether the question of hospital trusts was discussed.

  Mr. Mellor
  My right hon. and learned Friend the Secretary of State last met the chairman of the West Midlands regional health authority, together with the chairmen of all other regional health authorities, on 14 and 15 March. NHS hospital trusts were among the many questions that we discussed.

  Asset Registers
  Mr. Cousins
  To ask the Secretary of State for Health what practical and financial assistance he proposes to offer to health authorities in the compilation of asset registers.

  Mr. Freeman
  Health authorities have been given details of the pilot studies of asset recording as noted in 506
  paragraph 4.2 of working paper No. 5 "Capital Charges" together with details of asset register software which is available to them free of charge. The Department is forming a capital charges unit, headed by an experienced and professionally qualified financial manager seconded from the NHS, which will be available to advise authorities.

  Speech Therapists
  Mr. Kirkwood
  To ask the Secretary of State for Health what will be the extent of control over professional and budgetary matters available to speech therapists under the White Paper "Working for Patients" proposals.

  Mr. Kenneth Clarke
  The White Paper proposals apply to all branches of the professional services delivered by the National Health Service. The question is too vague to permit any precise answer at this stage.

  Health Authorities (Insurance)
  Sir Michael McNair-Wilson
  To ask the Secretary of State for Health what is his policy towards enabling health authorities to insure themselves against risk.

  Mr. Mellor
  Health authorities follow the practice of Government Departments, which normally do not insure unless it would be more economical for them to do so than to carry the risks themselves. This long-standing arrangement is something authorities take into account in deciding what provision for contingencies should be made in their financial plans.

  Waiting List Fund
  Mr. Patnick
  To ask the Secretary of State for Health what resources have been allocated for 1989–90 to the waiting list fund; and of this what proportion will be allocated direct to regional health authorities.

  Mr. Mellor
  The sum of £31 million will be made available through the waiting list fund in 1989–90. Of this, £25·3 million has already been allocated to regional and special health authorities to fund projects aimed at reducing the time patients have to wait for hospital treatment. The remaining £5·7 million will be targeted, through regions, at health districts with particular waiting problems.

  Acute Hospital Beds (West Midlands)
  Mr. Grocott
  To ask the Secretary of State for Health how many acute hospital beds there are in the West Midlands regional health authority and how many there were in 1979.

  Mr. Freeman
  The information requested is given in the table. The number of in-patient cases treated per available bed has increased from 28 in 1979 to 42 in the financial year 1987–88.

  Average daily available acute beds. West Midlands regional health authority, 1979 and 1987–88

  Available beds

  In-patient cases treated

  1979

  14,669

  414,865

  1987–88

  13,179

  550,698

  Source: SH3: 1979.

  KH03: 1987–88.

  Prepared Foods
  Mr. Duffy
  To ask the Secretary of State for Health if he will make a statement on the regulations governing the preparation and distribution of the products of the prepared food industry; and if, as a matter of urgency, he will discuss this with representatives of the industry.

  Mr. Freeman
  The provision of the Food Act 1984, together with the food hygiene regulations, made the Food Hygiene (General) Regulations 1970 and the Food Hygiene (Markets, Stalls and Delivery Vehicles) Regulations 1966, as amended, apply to the preparation and distribution of food products. The wider application of storage temperature controls in the food hygiene regulations, including those required for delivery vehicles, is currently being considered and revised draft regulations will be issued for consultation shortly. Food industry concerns will be included in this exercise.

  Prescriptions
  Mr. McAllion
  To ask the Secretary of State for Health what steps he has taken to modify the costs of prescriptions for those with incomes above income support level.

  Mr. Mellor
  The Government have maintained the wide-ranging exemptions from prescription charges under which more than 75 per cent. of all items dispensed in the NHS are free of charge as well as continuing to provide pre-payment certificates for persons who are not exempt but who need frequent medication.

  Hospital Pharmacists
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Health what progress is being made in recruiting more hospital pharmacists.

  Mr. Mellor
  Recruitment of hospital pharmacists is a matter for individual health authorities.

  NHS (Privatisation)
  Mr. Devlin
  To ask the Secretary of State for Health whether he has any plans for privatising the National Health Service.

  Mr. Conway
  To ask the Secretary of State for Health whether he has any plans to privatise the National Health Service.

  Mr. Kenneth Clarke
  No, and I never have had any such plans.

  Family Care
  Mrs. Maureen Hicks
  To ask the Secretary of State for Health how much on average is being spent in the current year on each family from the current health budget; and how much is planned for each of the three subsequent years.

  Mr. Freeman
  Average gross NHS spending (current and capital) per head in England will be £442 this year (1989–90) and is planned to be £461 in 1990–91 and £479 in 1991–92. If the average family is considered to consist of four persons the average spending per family will be £1,767 508
  this year and £1,845 and £1,917 in each of the following two years respectively. Planned expenditure figures for future years are subject to further consideration in future public expenditure surveys. The level of planned spending on the NHS for 1992–93 has not yet been decided.

  Nursing Homes
  Mr. Andrew Bowden
  To ask the Secretary of State for Health what mechanisms exist to safeguard the interests of elderly residents of residential and nursing homes.

  Mr. Mellor
  The Registered Homes Act 1984 and associated regulations place the responsibility on local authorities and district health authorities as registering authorities to register private and voluntary residential care homes and nursing homes respectively and inspect them at least twice a year; the inspections may be unannounced and "out of hours". In addition, general guidance on the running of these homes is available in "Home Life" a code of practice for residential care, and the National Association of Health Authorities' "Handbook on Registration and Inspection of Nursing Homes", and in departmental guidance. Local authorities are also responsible for ensuring adequate standards in their own homes. The Department's social services inspectorate monitors and advises local authorities on the discharge of their duties.

  Hospitals (Opting Out)
  Mr. Litherland
  To ask the Secretary of State for Health if he will make a statement on the number of district health authorities in the north-west expressing an interest in hospitals opting-out.

  Mr. Kenneth Clarke
  It is too early to do so. Mr. Duncan Nichol, the chief executive of the National Health Service, has asked for outline expressions of interest relating to proposals for self-governing hospitals within the NHS to come to my Department through RHAs, by 31 May.

  Mr. Skinner
  To ask the Secretary of State for Health if he will now withdraw his proposals for the opting-out of hospitals from the National Health Service; and if he will make a statement.

  Mr. Mellor
  I refer the hon. Member to my right hon. and learned Friend's reply to the hon. Member for Southwark and Bermondsey (Mr. Hughes) earlier today.

  Smoking
  Mr. Foulkes
  To ask the Secretary of State for Health what policy his Department has adopted in regard to smoking in departmental offices.

  Mr. Mellor
  The Department's policy has been under review and management and representatives of staff have discussed the introduction of a reviewed policy in line with the Health Education guidelines "Smoking Policies at Work" (ISBN 090365251X). On the basis of these discussions we will be moving towards a no smoking working environment by agreement in the Department's offices.

  Health Districts (Treatment Costs)
  Mr. David Shaw
  To ask the Secretary of State for Health if he will make a statement on the variations in cost of treatment between different health districts.

  Mr. Freeman
  I refer my hon. Friend to the reply given to my hon. Friend the Member for Basingstoke (Mr. Hunter) by my right hon. and learned Friend on 21 March 1989, at columns 562–63.

  Drug Costs
  Mr. Rooker
  To ask the Secretary of State for Health if he will take steps to take account in the analysis made of family doctors' drug costs of the savings in hospital treatment costs.

  Mr. Mellor
  Any analysis made of drug costs incurred by a general medical practice takes account of the reason for the prescribing pattern of that practice. This might include arrangements to treat patients with drug therapy in the community in preference to hospital treatment.

  Doctors
  Mr. Franks
  To ask the Secretary of State for Health how many doctors there are, and how many there were in 1979.

  Mr. Mellor
  In 1979 there were 60,764 doctors in the hospital and community health and family practitioner services in England. By 1987 the number was 68,777.

  NHS (Contracting-out)
  Mr. Andrew MacKay
  To ask the Secretary of State for Health if he can give an estimate of the savings made in the last available year from the contracting out of services within the National Health Service.

  Mr. Freeman
  I refer my hon. Friend to my reply on 21 March to my hon. Friend the Member for Birmingham, Northfield (Mr. King), at column 564.

  Clinical Efficiency
  Ms. Walley
  To ask the Secretary of State for Health if he has received copies of the COHSE document on clinical efficiency.

  Mr. Mellor
  Yes.

  Clinical Audit
  Mr. Campbell-Savours
  To ask the Secretary of State for Health what proposals he has received from trade unions on the development of clinical audit.

  Mr. Mellor
  Comments on the development of clinical audit have been received from the British Medical Association, the general medical services committee, the Royal College of Nursing and the Confederation of Health Service Employees.

  Hearing Aid Services
  Miss Emma Nicholson
  To ask the Secretary of State for Health what representations he has received concerning the case for improving hearing aid services.
  510
  Mr. Mellor
  We are continuing to receive a wide range of views on the provision of hearing aid services following the launch of the Royal National Institute for the Dears "Fair Hearing" campaign. The Department is giving careful consideration to all suggestions for change in examining the available options.

  Listeria
  Ms. Walley
  To ask the Secretary of State for Health if he will initiate additional scientific research into the epidemiology of listeriosis and the behaviour of its causative organism and as to whether the current statutory HTST milk pasteurisation temperature is fully effective in the destruction of listeria monocytogenes.

  Mr. Kenneth Clarke
  We will consider carefully any proposals to study the epidemiological risk factors (with particular reference to food) for the development of listeriosis. The behaviour of the causative organism has already been studied by the public health laboratory service and Camden Food Research Association, which were Government funded for this work. There is general international consensus that the HTST milk pasteurisation temperature and time requirements of 71·7°C for 15 seconds in the existing regulations is fully effective in the destruction of listeria monocytogenes.

  Ms. Walley
  To ask the Secretary of State for Health if he will establish a microbiological standard for listeria in foods.

  Mr. Kenneth Clarke
  The Government have established a committee chaired by Sir Mark Richmond to advise them on the microbiological safety of food. The work of the committee will include consideration of listeria. The Minister for Agriculture, Fisheries and Food and I will consider its recommendations on this and all related subjects as and when they are available.

  Cook-chill Food
  Ms. Walley
  To ask the Secretary of State for Health if he will introduce statutory control of cook-chill methods of food production, storage and display for sale.

  Mr. Kenneth Clarke
  The present food hygiene regulations cover all food business including those handling cook-chill foods. These are currently under review and we expect to be consulting on draft amending regulations in the near future.

  Legionnaire's Disease (Nottingham)
  Mr. Allen
  To ask the Secretary of State for Health if he will make a statement on the outbreak of legionnaire's disease at the Queen's medical centre, Nottingham.

  Mr. Freeman
  The Department is aware of the outbreak and is satisfied that effective measures are being taken urgently to trace the source of infection.

  Offerton House, Stockport
  Mr. Tom Arnold
  To ask the Secretary of State for Health when he expects to receive the report of the town planning consultant who is examining the alternative uses of Offerton house, Stockport.

  Mr. Mellor
  I understand that the Stockport health authority which commissioned the report, has no plans at present to send it to me.
  511
  Mr. Tom Arnold
  To ask the Secretary of State for Health how many former patients of Offerton house, Stockport, are taking part in the care in the community scheme; and how many have since returned to Offerton house.

  Mr. Mellor
  I understand that 30 patients have been discharged from Offerton house and none has returned.

  Food Poisoning
  Mr. Allen
  To ask the Secretary of State for Health what are the main reasons for food poisoning outbreaks according to his departmental research; and how many of these relate to temperature control.

  Mr. Kenneth Clarke
  We do not hold figures centrally on the reasons for reported outbreaks of food poisoning.

  Outbreaks of bacterial food poisoning and salmonella infection by location

  1979

  1980

  1981

  1982

  1983

  1984

  1985

  11986

  Private Homes

  325

  297

  410

  467

  439

  367

  259

  326

  Restaurants/receptions

  99

  89

  88

  70

  96

  94

  64

  71

  Hospitals

  37

  37

  24

  39

  37

  37

  36

  33

  Institutions

  20

  17

  11

  28

  25

  13

  19

  19

  Schools

  13

  10

  9

  9

  5

  7

  8

  8

  Shops

  12

  5

  17

  5

  15

  10

  5

  4

  Canteens

  11

  10

  12

  15

  13

  16

  10

  9

  Farms

  8

  8

  —

  16

  6

  9

  3

  2

  Infected abroad

  7

  5

  —

  4

  7

  14

  9

  12

  Other

  2

  9

  69

  23

  23

  20

  24

  18

  Unspecified

  31

  26

  27

  52

  26

  14

  TOTAL

  534

  518

  640

  702

  693

  639

  463

  516

  1 Provisional.

  Source:

  PHLS Communicable Disease Surveillance Centre.

  Note:

  The data relates to the place where the outbreaks occurred; no information is held on where the food was prepared.

  Mr. Allen
  To ask the Secretary of State for Health how many(a) salmonella, (b) campylobactor and (c) listeria outbreaks were reported in each year since 1979; and what estimate he has of the level of unreported outbreaks.

  Mr. Kenneth Clarke
  The information requested is available until 1987 and is as follows.

  Reports of outbreaks of salmonellosis, food and water borne campylobacter enteritis and listeriosis since 1979

  Number of outbreaks

  Year

  Salmonellosis

  Food and water borne Campylobacter enteritis

  Listeriosis

  1979

  2455

  3

  —

  1980

  2439

  3

  —

  1981

  568

  3

  1

  1982

  612

  3

  —

  1983

  594

  3

  —

  1984

  540

  24

  —

  1985

  372

  25

  —

  1986

  269

  15

  —

  1987

  294

  18

  —

  Notes:

  1 Reported to the Communicable Disease Surveillance Centre.

  2 Reports from PHLS and hospital laboratories only.

  3 Information not available.

  I am unable to estimate the level of unreported outbreaks.
  512
  Studies on a number of food poisoning outbreaks reported between 1970 and 1982 showed that inadequate temperature control was the main factor contributing to the growth of food poisoning organisms in food, but the problem can arise at any stage form production to consumption.

  Mr. Allen
  To ask the Secretary of State for Health what percentage of food poisoning outbreaks were attributed to(a) catering type establishments, (b) retail, (c) home and (d) others in the last 10 years.

  Mr. Kenneth Clarke
  the table shows the number of outbreaks of bacterial food poisoning and salmonella infection reported from 1979 to 1986 (the last year for which figures are currently available).

  Royal Devon and Exeter Hospital (Radiation)
  Mr. Speller
  To ask the Secretary of State for Health if he will make a statement on the delay in reaching agreement on a cash settlement for patients damaged by excessive radiation in 1988 at the Royal Devon and Exeter hospital.

  Mr. Freeman
  I refer my hon. Friend to my statement in the Adjournment debate on 6 April 1989, at columns 468–70.

  Siemens Printers
  Ms. Walley
  To ask the Secretary of State for Health how many Siemens ND3 printers are used by his Department, either in-house or through a private contract; and what is the location of each.

  Mr. Freeman
  None that I am aware of.

  Ambulance Personnel (Sunderland)
  Mr. Clay
  To ask the Secretary of State for Health if he will list in the Official Report (a) the number of ambulance personnel employed at the Sunderland ambulance station, (b) the number of ambulance personnel who have died from coronary attacks and related conditions while so employed and (c) the number of ambulance personnel who have retired from service due to heart conditions and related illnesses, showing each category year by year since 1985.
  513
  Mr. Freeman
  The information requested is not held centrally. The hon. Member may wish to contact the chairman of Northern regional health authority.

  Stomach Cancer
  Mr. Alton
  To ask the Secretary of State for Health, pursuant to his answer to the hon. Member for Liverpool, Mossley Hill, of 9 March,Official Report, columns 585–86, whether his Department will conduct statistical tests on the rates of stomach cancer per 100,000 population for the figures he gave; and what assessment has been made of the causes of the differences between the rates for Liverpool and Warrington district health authorities and the national mean.

  Mr. Freeman
  I believe the hon. Member is referring to figures given in my answer to him of 15 March, at columns 233–34. There is a statistically significant difference between the rates for Liverpool, but not for Warrington, and the national average. It is a matter for health authorities in the first instance to monitor and investigate information on the incidence of disease as part of their responsibility for the planning and delivery of services.

  Lung Disease (Miners)
  Mr. Hardy
  To ask the Secretary of State for Health what proportion of working miners were diagnosed as suffering from lung disease in each of the years(a) 1959, (b) 1961, (c) 1966, (d) 1971, (e) 1976, (f) 1981, (g) 1986 and (h) 1988; and what was the average incidence in the country as a whole.

  Mr. Freeman
  Information about numbers of working miners with lung disease or incidence of lung disease in the population as a whole is not collected centrally. The annual report of the Health and Safety Commission in its tables of cases of occupational diseases awarded benefit includes figures on occupational lung diseases. A copy of the report is in the Library.

  Midwives
  Mr. Battle
  To ask the Secretary of State for Health, in the Leeds western health authority(a) what was the average increase in midwives' pay following the recent regrading, (b) how many midwives received increases of £2,000 or more and (c) how many midwives are employed on the F grade, E grade and D grade.

  Mr. Mellor
  We hold no information centrally on average pay increases for groups of staff within an individual district health authority, or on the numbers of staff within a district who received increases of a given amount.

  The only information we hold here on the results of clinical regrading at district level relates to the assimilation at 1 April 1988 from old grades to new. This information has already been placed in the Library.

  Mr. Battle
  To ask the Secretary of State for Health whether he has any plans to introduce an appeal procedure for student midwives; and if he will make a statement.

  Mr. Mellor
  Midwifery students already have a right of appeal under a long-standing agreement between the management and trades union sides of the General Whitley council on procedures for settling differences over NHS employees' conditions of service.
  514
  Mr. Redmond
  To ask the Secretary of State for Health what percentage of home delivery training is given to trainee midwives in the Trent regional health authority ; and what is the percentage nationally.

  Mr. Mellor
  We do not hold this infomation centrally. I suggest the hon. Member writes to the chairman of the Trent regional health authority for the information he seeks.

HOME DEPARTMENT

  Grand National
  Mr Vaz
  To ask the Secretary of State for the Home Department what representations, and from whom, he has received about the deaths of horses at the current year's Grand National meeting at Aintree racecourse.

  Mr. Douglas Hogg
  My right hon. Friend has received one from an hon. Friend and 14 from members of the public.

  Police Rent Allowance
  Mr. Shersby
  To ask the Secretary of State for the Home Department if he will publish in the Official Report in tablular form details for the most recent 12-month period for which figures are available of the total pay bill, compensatory grant received and income tax paid by each police authority in England and Wales in respect of police officers' rent allowance.

  Mr. Douglas Hogg
  Expenditure incurred by police authorities in England and Wales on salaries for police officers in 1987–88 is shown in the table. The figures for allowances include compensatory grant payments but it is not possible to identify such payments separately.

  £ million

  Salaries1

  Allowances

  Total

  Avon and Somerset

  45,719

  7,801

  53,520

  Bedfordshire

  15,727

  2,523

  18,250

  Cambridgeshire

  17,691

  2,536

  20,227

  Cheshire

  28,239

  4,642

  32,881

  Cleveland

  22,567

  4,332

  26,899

  Cumbria

  17,797

  2,249

  20,046

  Derbyshire

  27,485

  4,592

  32,077

  Devon and Cornwall

  43,769

  7,733

  51,502

  Dorset

  18,790

  3,163

  21,953

  Durham

  20,422

  3,022

  23,444

  Dyfed-Powys

  13,924

  1,839

  15,763

  Essex

  43,246

  8,794

  52,040

  Gloucestershire

  17,265

  3,123

  20,388

  Greater Manchester

  106,342

  15,977

  122,319

  Gwent

  15,172

  2,411

  17,583

  Hampshire

  49,364

  8,633

  57,997

  Hertfordshire

  24,760

  3,724

  28,484

  Humberside

  30,630

  5,454

  36,084

  Kent

  48,454

  8,313

  56,767

  Lancashire

  49,173

  6,637

  55,810

  Leicestershire

  26,921

  4,981

  31,902

  Lincolnshire

  18,641

  3,014

  21,655

  Merseyside

  74,855

  13,066

  87,921

  Norfolk

  20,764

  3,584

  24,348

  Northamptonshire

  16,898

  2,513

  19,411

  Northumbria

  54,245

  8,201

  62,446

  North Wales

  19,825

  2,621

  22,446

  North Yorkshire

  20,550

  2,561

  23,111

  Nottinghamshire

  32,661

  5,844

  38,505

  South Wales

  46,005

  8,603

  54,608

  South Yorkshire

  44,876

  7,512

  52,388

  Staffordshire

  32,702

  4,872

  37,574

  515

  Salaries1

  Allowances

  Total

  Suffolk

  18,287

  2,987

  21,274

  Surrey

  25,961

  3,965

  29,926

  Sussex

  43,266

  6,651

  49,917

  Thames Valley

  56,679

  10,124

  66,803

  Warwickshire

  15,338

  2,675

  18,013

  West Mercia

  29,994

  4,614

  34,608

  West Midlands

  106,742

  15,659

  122,401

  West Yorkshire

  79,035

  13,603

  92,638

  Wiltshire

  17,160

  2,952

  20,112

  City of London

  14,390

  2,457

  16,847

  Metropolitan

  503,180

  84,328

  587,508

  TOTAL

  1,975,511

  324,885

  2,300,396

  1 Includes National Insurance.

  Prisoners (Rule 43)
  Mr. Cummings
  To ask the Secretary of State for the Home Department how many prisoners are serving sentences under the protection of rule 43; and what is the percentage in relation to the numbers of prisoners, by prison.

  Mr. Douglas Hogg
  Statistics of prisoners on rule 43 have hitherto been collected centrally only in relation to adult males and the latest figures available are as at 31 December 1988. The information available is set out in the table. The percentages relate to the total sentenced adult male population at each establishment.

  Sentenced adult males at 31 December 1988

  Establishment

  Number on Rule 43 (own protection)

  Percentage of total

  North Region

  Acklington

  0

  —

  Durham

  112

  15·7

  Frankland

  40

  10·1

  Full Sutton

  13

  5·1

  Garth

  0

  —

  Haverigg

  2

  0·7

  Hull

  53

  22·2

  Kirkham

  0

  —

  Lancaster

  0

  —

  Leeds

  144

  27·1

  Lindholme

  3

  0·4

  Liverpool

  165

  13·4

  Manchester

  93

  108

  Preston

  4

  1·2

  Risley

  0

  —

  Rudgate

  0

  —

  Thorp Arch

  0

  —

  Wakefield

  31

  4·2

  Wymott

  1

  0·3

  661

  South West Region

  Bristol

  36

  9·5

  Cardiff

  28

  5·1

  Channings Wood

  4

  0·8

  Dartmoor

  27

  4·3

  Dorchester

  5

  6·0

  Erlestoke House

  0

  —

  Exeter

  29

  14·2

  Gloucester

  14

  7·1

  Grendon

  55

  27·1

  Leyhill

  0

  —

  Long Lartin

  10

  2·5

  Oxford

  8

  6·4

  Pucklechurch

  0

  —

  Reading

  6

  4·8

  Shepton Mallet

  1

  0·4

  Swansea

  29

  9·9

  516

  Sentenced adult males at 31 December 1988

  Establishment

  Sentenced adult males at Number on Rule 43 (own protection)

  31 December 1988 Percentage of total

  The Verne

  0

  —

  Winchester

  60

  20·5

  312

  Midland Region

  Asgwell

  2

  0·5

  Bedford

  6

  5·5

  Birmingham

  34

  6·1

  Featherstone

  0

  —

  Gartree

  17

  5·5

  Leicester

  43

  21·2

  Lincoln

  88

  26·8

  Littlehey

  0

  —

  Morton Hall

  0

  —

  North Sea Camp

  0

  —

  Nottingham

  1

  0·3

  Ranby

  2

  0·6

  Shrewsbury

  23

  11·9

  Stafford

  45

  5·6

  Stocken

  2

  0·7

  Sudbury

  0

  —

  263

  South East Region

  Albany

  2

  0·5

  Aldington

  0

  —

  Blantyre House

  0

  —

  Blundeston

  4

  1·0

  Brixton

  44

  24·2

  Camp Hill

  23

  4·7

  Canterbury

  28

  28·9

  Chelmsford

  11

  11·4

  Coldingley

  0

  —

  Ford

  0

  —

  Highpoint

  0

  —

  Kingston

  0

  —

  Latchmere House

  0

  —

  Lewes

  15

  6·0

  Maidstone

  2

  0·4

  Northeye

  8

  3·4

  Norwich

  59

  15·3

  Parkhurst

  12

  5·1

  Pentonville

  45

  7·5

  Rochester

  0

  —

  Send

  0

  —

  Standford Hill

  0

  —

  Swaleside

  7

  1·8

  Wandsworth

  382

  26·2

  Wayland

  3

  0·6

  Wormwood Scrubs

  37

  9·4

  682

  Police (Escort Duties)
  Mr. Cox
  To ask the Secretary of State for the Home Department what estimate he has of the number of police who currently undertake escort duties of inmates from prison to courts; and what steps he is taking to encourage reallocation of this task.

  Mr. Douglas Hogg
  In a report produced in July 1988, the police requirements support unit of the Home Office estimated, on the basis of a survey in four police areas, that the handling and escorting of prisoners to magistrates' courts cost the police in England and Wales more than £31 million per year. On the basis of the same report it has been estimated that approximately 1,000 officers per day are involved in this work.
  517
  As my right hon. Friend announced to the House on 1 March at columns 277–78 further work is in hand towards contracting out the escorting, custody and control of prisoners with the aim of relieving both the police and prison service of this task.

  Crowd Control
  Mr. Spearing
  To ask the Secretary of State for the Home Department if he will place in the Library any manual, advice or other paper produced by his Department or the Police Staff College at Bramshill or any other official body relating to the control of crowds outside sports stadia.

  Mr. Douglas Hogg
  Chapter 14 of the "Guide to Safety at Sports Grounds", HMSO, 1986, offers guidance on crowd control. Paragraph 205 emphasises that effective arrangements to counter crowd disorder outside the ground must also be made. A copy of the guide is in the Library.

  The Association of Chief Police Officers issues to its members general guidance on the policing of football matches, part of which relates to policing outside stadia. Disclosure of such guidance is a matter for the association.

  Civil Defence
  Mr. Bill Michie
  To ask the Secretary of State for the Home Department (1) if he will give details of any emergency duty system for firefighters that he has considered for use in the event of hostilities or a war emergency;

  (2) what advice he has issued to chief fire officers concerning wartime or emergency duty systems for firefighters; and if he will make a statement.

  Mr. John Patten
  Guidance on wartime duty systems is contained in fire service circular 6/1984, paragraph 17. Detailed arrangements would be for the individual fire authorities to decide in the light of circumstances at the time. No such guidance has been given in relation to peacetime emergencies.

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department what are the criteria for determining the eligibility for civil defence grant aid of local authority emergency centre proposals.

  Mr. John Patten
  Relevant statutory provisions are contained in the Civil Defence (General Local Authority

  District/Borough Authorities in England and Wales which had received message switch equipment by 31 December 1988

  County

  District/Borough

  Bedfordshire

  Luton, Mid Bedfordshire, North Bedfordshire, South Bedfordshire

  Cambridgeshire

  Cambridge, East Cambridgeshire, Fenland, Huntingdon, South Cambridgeshire

  Cheshire

  Vale Royal

  Cleveland

  Middlesborough, Stockton on Tees

  Cornwall

  Caradon, North Cornwall, Penwith

  Cumbria

  Allerdale, Barrow in Furness, Carlisle, Copeland, Eden

  Derbyshire

  Chesterfield, High Peak, West Derbyshire

  Devon

  East Devon, Exeter, Mid Devon, Plymouth, Teignbridge, Torbay

  Dorset

  Bournemouth, Christchurch, East Dorset, Poole, Purbeck, West Dorset, Weymouth and Portland

  Durham

  Chester le Street, Derwentside, Durham, Easington, Teesdale

  Essex

  Basildon, Braintree, Brentwood, Castle Point, Chelmsford, Colchester, Epping Forest, Harlow, Maldon, Rochford, Southend-on-Sea, Tendring, Thurrock, Uttlesford

  Gloucestershire

  Cheltenham, Cotswold, Forest of Dean, Gloucester, Tewkesbury

  Hampshire

  New Forest, Winchester

  Hertfordshire

  East Hertfordshire, St. Albans

  Humberside

  Beverley, Cleethorpes, East Yorkshire, Glanford, Great Grimsby

  518
  Functions) Regulations 1983 (SI 1983/1634) and the Civil Defence (Grant) Regulations 1953 (SI 1953/1777) as amended. Proposals for such emergency centres should be in accordance with the guidance contained in the "Emergency Planning Guidance to Local Authorities", a copy of which is in the Library. In particular, information on the minimum standards for emergency centres is set out in annex D of section 4 of the EPGLA and on eligibility for grant aid in section 19.

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department if he will list those county and fire and civil defence authorities that had had message switch equipment installed in their emergency centres by 31 December 1988; and if he will list those county and fire and civil defence authorities that were expected to receive such equipment during the current year.

  Mr. John Patten
  The information requested is as follows:

  County and Fire and Civil Defence Authorities (FCDAs) in England and Wales which had received message switch equipment by 31 December 1988:
  Bedfordshire, Cambridgeshire, Cheshire, Cleveland, Cornwall, Cumbria, Derbyshire, Devon, Dorset, Durham, Essex, Gloucestershire, Gwent, Hampshire, Hertfordshire, Humberside, Lancashire, Leicestershire, Lincolnshire, Norfolk, Northamptonshire, North Yorkshire, Northumberland, Nottinghamshire, Somerset, Staffordshire, Suffolk, West Yorkshire FCDA, Wiltshire.

  County and Fire and Civil Defence Authorities (FCDAs) in England and Wales which have received or are expected to receive the equipment during the year to 31 December 1989:
  Berkshire, Buckinghamshire, Clwyd, Dyfed, East Sussex, Greater Manchester FCDA, Gwynedd, Hampshire (to complete), Hereford and Worcester, Isle of Wight, Kent, London FCDA, Oxfordshire, Powys, Shropshire, South Glamorgan, Staffordshire (to complete), Surrey, Tyne and Wear FCDA, Warwickshire, West Glamorgan, West Midlands FCDA, West Sussex.

  Some revisions and additions to the above list can be expected in the light of site availability, following discussion with the authorities concerned.

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department if he will list those district authorities that had had message switch equipment installed in their emergency centres by 31 December 1988: and if he will list those district authorities that were expected to receive such equipment during the current year.

  Mr. John Patten
  The information requested is as follows:
  519

  Country

  District/Borough

  Lancashire

  Blackburn, Blackpool, Chorley, Fylde, Hyndburn, Lancaster, Pendle, Preston, Ribble Valley, Rossendale, South Ribble, West Lancashire, Wyre

  Leicestershire

  Blaby, Harborough, Hinckley and Bosworth, Leicester, Melton, Rutland

  Lincolnshire

  Lincoln, North Kesteven, South Kesteven

  Norfolk

  Breckland, Great Yarmouth

  Northamptonshire

  Daventry, Northampton, Wellingborough

  North Yorkshire

  Craven, Hambleton, Harrogate, Richmondshire, Scarborough, Selby

  Northumberland

  Alnwick, Tynedale

  Nottinghamshire

  Bassetlaw, Broxtowe, Gedling, Mansfield, Newark, Nottingham

  Somerset

  Mendip, Sedgemoor, South Somerset, Taunton Deane

  Staffordshire

  East Staffordshire, South Staffordshire

  Suffolk

  Babergh, Ipswich, Mid Suffolk, St Edmundsbury

  West Yorkshire

  Bradford, Calderdale, Kirklees

  Wiltshire

  Kennet, North Wiltshire, Salisbury, West Wiltshire

  District/Borough Authorities in England and Wales which have received or are expected to receive the equipment during the year to 31 December 1989

  County

  District/Borough

  Berkshire

  Bracknell, Newbury, Reading, Windsor and Maidenhead

  Buckinghamshire

  Aylesbury Vale, Chiltern, Milton Keynes, South Buckinghamshire, Wycombe

  Clwyd

  Colwyn

  Dyfed

  Carmarthen, Llanelli

  East Sussex

  Brighton, Hove, Lewes, Rother, Wealden

  Greater Manchester

  Bolton, Bury, Oldham, Salford, Stockport, Trafford

  Gwynedd

  Aberconwy, Ynys Mon

  Hampshire

  Basingstoke and Dene, Eastleigh, Fareham, Hart, Havant, Portsmouth, Rushmoor, Southampton, Test Valley

  Hereford and Worcester

  Leominster, Redditch, Worcester, Wyre Forest

  Kent

  Dover, Gillingham, Sevenoaks, Shepway, Swale, Thanet, Tonbridge and Mailing, Tunbridge Wells

  London

  Barnet, Brent, Camden, City of London, Ealing, Enfield, Harringey, Harrow, Havering, Hammersmith and Fulham, Hillingdon, Hounslow, Islington, Kensington and Chelsea, Kingston upon Thames, Newham, Redbridge, Richmond upon Thames

  Oxfordshire

  Cherwell, Oxford, South Oxfordshire, Vale of White Horse, West Oxfordshire

  Powys

  Brecknock, Radnor

  Shropshire

  Shrewsbury and Atcham, South Shropshire

  South Glamorgan

  Cardiff

  Staffordshire

  Lichfield, Staffordshire Moorlands

  Surrey

  Mole Valley, Reigate and Banstead, Runnymede, Spelthorne, Surrey Heath, Waverley, Woking

  Tyne and Wear

  North Tyneside, Sunderland

  Warwickshire

  Rugby, Stratford on Avon

  West Midlands

  Birmingham. Coventry, Dudley, Sandwell, Solihull, Wolverhampton

  West Sussex

  Adur, Arun, Chichester, Crawley, Horsham, Mid Sussex

  In a few cases, equipment for the above districts has been accommodated elsewhere pending completion of site preparations. Also, some revisions and additions to the list can be expected in the light of site availability following discussions with the authorities concerned.

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department when the emergency planning communications handbook will be published; when the proposed circular on wartime communications will be published; when the guide to message writing being drafted by the ad hoc working party on emergency communications will be published; and if he will make a statement.

  Mr. John Patten
  The emergency planning guidance handbook on communications and the guide to message writing are due to be published later this year.

  Consideration is being given to the need for a circular to update existing references to emergency communications provision and associated arrangements for grant aid. Any such circular is unlikely to be issued before next year.

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department, pursuant to the written reply to the hon. Member for Don Valley (Mr. Redmond) of 7 December 1988,Official Report, columns 204–5, (1) how many of the 35 emergency planning officers and 10
  520
  administrative and support staff employed by district authorities are wholly funded by his Department's civil defence grant;

  (2) if he will list those district authorities which employ the 35 emergency planning officers and 10 administrative and support staff which are wholly or partly funded by Home Office civil defence grant.

  Mr. John Patten
  The aggregate figures quoted in the earlier reply derive from the employment of 22 full-time emergency planning officers, four full-time administrative and support staff and a number of part time staff in each category. The full-time posts are wholly funded by civil defence grant.

  The districts which employ these staff are as follows:

  Avon

  Wansdyke

  Buckinghamshire

  Aylesbury Vale

  Milton Keynes

  South Buckinghamshire

  Wycombe

  Chiltern

  Cambridgeshire

  East Cambridgeshire

  Cheshire

  Congleton

  Essex

  Braintree

  Southend

  521

  Brentwood

  Tendring

  Chelmsford

  Uttlesford

  Epping Forest

  Isle of Wight

  Medina

  South Wight

  Kent

  Canterbury

  Gravesham

  Dartford

  Sevenoaks

  Dover

  Norfolk

  Broadland

  South Norfolk

  Breckland

  West Norfolk

  North Norfolk

  Oxfordshire

  Cherwell

  West Oxford

  South Oxford

  Vale of White Horse

  Suffolk

  Babergh

  Suffolk Coastal

  St. Edmundsbury

  East Sussex

  Eastbourne

  Rother

  Hove

  Wealden

  Lewes

  West Sussex

  Adur

  Horsham

  Arun

  Mid Sussex

  Chichester

  Worthing

  Communications
  Mr. Bill Michie
  To ask the Secretary of State for the Home Department if there are any plans to hold further exercises of communications similar to the COMTEST 89 exercise held on 12 January; if he has had any representations about the lack of translation capability for non-European languages highlighted by the COMTEST exercise; and if he will make a statement.

  Mr. John Patten
  COMTEST 89 was arranged by the Association of Chief Police Officers and funded by the Home Office. I understand a report on the exercise is now being drawn up and while we shall consider it carefully, it will be for ACPO to consider the operational implications and to take any decisions on the need for further exercises. No representations have been received about language problems.

  Civil Defence College, Easingwold
  Mr. Bill Michie
  To ask the Secretary of State for the Home Department if he will give details of expenditure on building maintenance at the civil defence college, Easingwold for each year from 1979 to the present time.

  Mr. John Patten
  The information requested is as follows:

  Year1

  £

  1979–80

  34,049

  1980–81

  47,858

  1981–82

  83,032

  1982–83

  32,037

  1983–84

  34,094

  1984–85

  42,276

  1985–86

  59,763

  1986–87

  75,482

  1987–88

  200,190

  1988–89

  165,284

  1 (1 April—31 March).

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department if he will give details of capital 522
  expenditure on building improvements and extensions at the civil defence college, Easingwold for each year from 1979 to the present time.

  Mr. John Patten
  Details of capital expenditure in the years 1979–1984 are not available in the form requested and could only be obtained at disproportionate cost. The information for subsequent years is as follows:

  Year1

  Minor works £

  Major works £

  1984–85

  27,082

  —

  1985–86

  12,765

  —

  1986–87

  29,538

  —

  1987–88

  60,854

  —

  1988–89

  47,714

  —

  1 (1 April—31 March).

  Mr. Bill Michie
  To ask the Secretary of State for the Home Department if he will give current valuations for(a) the buildings, (b) the furniture, fixtures and fittings and (c) the land at the civil defence college, Easingwold.

  Mr. John Patten
  The information requested is not readily available and could be obtained only at disproportionate cost.

  Firearms Expert Consultative Committee
  Mr. Martin Jones
  To ask the Secretary of State for the Home Department when he will appoint a chairman to the firearms expert consultative committee set up under the provisions of the Firearms (Amendment) Act.

  Mr. Douglas Hogg
  I refer the hon. Member to the reply given to a question from my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on 13 April at column 718.

  Police (Ports)
  Mr. Nicholas Bennett
  To ask the Secretary of State for the Home Department if he will list for each port in England and Wales at which police including special branch officers, are stationed either on a full-time or part-time basis the following information:(a) the name of the relevant police force, (b) the number of full-time equivalent police officers stationed there or the number of police man hours, (c) the total direct costs associated with policing each port, (d) the total indirect costs associated with policing each port and (e) the amount of money provided to each police force in respect of policing each port.

  Mr. Hurd
  Special branch offices are stationed on a full-time basis at those seaports and airports in England and Wales which are designated under the Prevention of Terrorism (Temporary Provisions) Act 1989. In addition, uniformed police are stationed on a full-time basis at those airports in England and Wales which are designated under the Aviation Security Act 1982. The table shows which police force is responsible for the policing of each of the ports designated under these statutes. Police are also present on an ad hoc basis at a number of other ports in England and Wales.

  The cost falls to the appropriate police authority and comes within the normal police funding arrangements. Under these arrangements the Home Office meets 51 per cent. of whatever a police authority spends on policing and

  523
  an additional contribution is made from central Government funds by way of block grant. It would not be right in the interests of national security to publish information about numbers of officers, police man hours, or the costs associated with the policing of individual ports.

  Information is not held centrally for sea ports whose owners appoint their own constables under local and private legislation and where costs are met by the harbour authorities.

  Designated Ports under the Prevention of Terrorism (Temporary Provisions) Act 1989

  Force Area

  Seaports

  Fishguard

  Dyfed-Powys

  Fleetwood

  Lancashire

  Heysham

  Lancashire

  Holyhead

  North Wales

  Pembroke Dock

  Dyfed-Powys

  Plymouth

  Devon and Cornwall

  Port of Liverpool

  Merseyside

  Poole Harbour

  Dorset

  Portsmouth Continental ferry port

  Hampshire

  Southampton

  Hampshire

  Swansea

  South Wales

  Torquay

  Devon and Cornwall

  Weymouth

  Dorset

  Airports

  Biggin Hill

  Metropolitan

  Birmingham1

  West Midlands

  Blackpool

  Lancashire

  Bournemouth (Hurn)

  Dorset

  Bristol

  Avon and Somerset

  Cambridge

  Cambridgeshire

  Cardiff

  South Wales

  Carlisle

  Cumbria

  Coventry

  West Midlands

  East Midlands

  Leicestershire

  Exeter

  Devon and Cornwall

  Gloucester/Cheltenham (Staverton)

  Gloucestershire

  Humberside

  Humberside

  Leeds/Bradford

  West Yorkshire

  Liverpool

  Merseyside

  London—City

  Metropolitan

  London—Gatwick1

  Sussex

  London—Heathrow1

  Metropolitan

  Luton

  Bedfordshire

  Lydd

  Kent

  Manchester1

  Greater Manchester

  Manston

  Kent

  Newcastle

  Northumbria

  Norwich

  Norfolk

  Plymouth

  Devon and Cornwall

  Southampton

  Hampshire

  Southend

  Essex

  Stansted1

  Essex

  Teeside

  Durham

  1 Also designated under the Aviation Security Acct 1982.

  Courts
  Mr. Nicholas Bennett
  To ask the Secretary of State for the Home Department what estimates he has as to the annual number of court hours which are lost as a result of the non-delivery or lat delivery of prisoners to court; and if he will make a statement as to the estimated cost.

  Mr. John Pattern
  The information requested is not routinely collected. Where defendants do not appear it will 524
  often be possible to rearrange business so that court time is not lost. There is insufficient information on which to base an estimate of cost.

  Mr. Nicholas Bennett
  To ask the Secretary of State for the Home Department what recent examination he has made of the reasons for delays in courts trying cases down for hearing; and if he will make a statement.

  Mr. John Patten
  We are carrying out a survey of the reasons for adjournments in cases before magistrates courts. A range of courts will take part in the survey in the last week in April.

  Mr. Nicholas Bennett
  To ask the Secretary of State for the Home Department what estimates he has to the annual number of(a) magistrates court, (b) Crown court and central criminal court cases which are delayed or postponed as a result of the non-delivery of the defendant to the court by the police or prison service; and if he will make a statement.

  Mr. John Patten
  This information is not routinely collected. We expect to obtain information relating to cases postponed in a sample of magistrates courts from our forthcoming survey of reasons for adjournments.

  Police (Prisoners)
  Mr. Nicholas Bennett
  To ask the Secretary of State for the Home Department (1) if he will give for each police force area the average number of police officers involved each day in the transport of prisoners to and from court; and what percentage of the average daily manpower of each force this represents;

  (2) if he will give for each police force the daily and yearly cost of providing transport for prisoners to and from court.

  Mr. Douglas Hogg
  I refer my hon. Friend to the reply given today to a question from the hon. Member for Tooting (Mr. Cox) for the information which is available.

  Firearms (Police)
  Mr. Sims
  To ask the Secretary of State for the Home Department in how many operations firearms were issued to police officers in England and Wales in 1988; in how many of those operations shots were fired by police officers; how many police officers are currently qualified to carry firearms; and what were the equivalent figures for each of the previous five years.

  Mr. Hurd
  Information relating to the police use of firearms in operations against criminals or others known or believed to be armed in the years in question is given in the table.

  Year

  Number of operations

  Number of times shots fired

  Number of authorised firearms officers

  1983

  3,180

  3

  13,044

  1984

  2,667

  6

  11,873

  1985

  2,488

  7

  10,244

  1986

  2,453

  1

  8,395

  1987

  2,185

  7

  7,349

  1988

  2,227

  2

  7,194

  The figures show that over five years the police have been issuing and using firearms less often. The figures

  525
  show the continuing determination of the Government and of chief officers of police that the police use of firearms should remain a measure of the last resort, and that traditional methods of policing should continue.

ENVIRONMENT

  Property Services Agency
  Sir Eldon Griffiths
  To ask the Secretary of State for the Environment, pursuant to his reply of 8 March to the hon. Member for Bury St. Edmunds,Official Report, column 521, on what basis he determined in 1986 that the Property Services Agency site at Falmouth avenue, Newmarket, was too small to be redeveloped to accommodate civil servants located in Cambridge; and what was, and is, the average number of square feet he requires per civil servant doing the type of work in which the Property Services Agency is engaged in its Cambridge and Newmarket offices.

  Mr. Chope
  On the basis that the site of 1.21 acres could not be developed to provide the office space and parking facilities necessary for an establishment of some 400 staff.

  Rates
  Mr. John Marshall
  To ask the Secretary of State for the Environment, if he will make a statement about the level of rate increases in Greater London.

  Mrs. Virginia Bottomley
  The average rise in domestic rate poundages in 1989–90 for the London boroughs and the City is 9·9 per cent., slightly above the national average.

  The average masks a wide range of changes. In the six rate-capped authorities in London the average domestic rate poundage has decreased by 4·7 per cent. In Conservative boroughs the average rise is 7·6 per cent., compared wth 21·6 per cent. in those Labour boroughs which are not rate capped.

  Mr. David Nicholson
  To ask the Secretary of State for the Environment if he will publish in the Official Report the total rate in the pound payable by a resident in the London boroughs of (a) Lambeth, (b) Camden, (c) Islington, (d) Southwark, (e) Brent and (f) Haringey, including Greater London council, Inner London education authority and other precepts where appropriate, and the district of Taunton Deane, Somerset, in the years 1980–81, 1984–85, 1986–87 and 1989–90.

  Mrs. Virginia Bottomley
  The total rate in the pound, payable by a resident in the authorities listed for the years specified, is as follows:

  Domestic Rate Poundage (P)

  1980–81

  1984–85

  1986–87

  1989–90

  Lambeth

  145·4

  233·1

  217·2

  202·6

  Camden

  118·4

  202·7

  209·4

  210·7

  Islington

  117·9

  233·5

  184·3

  224·4

  Southwark

  118·0

  260·5

  212·2

  193·5

  Brent

  109·5

  223·5

  223·5

  344·5

  Haringey

  131·5

  259·3

  267·8

  363·4

  Taunton Deane

  104·4

  140·7

  186·8

  247·7

  Rateable Values
  Mr. David Shaw
  To ask the Secretary of State for the Environment what percentage of business premises taken 526
  from the recent Inland Revenue sample survey will have a rateable value between £1,000 and £7,500 in London and between £1,000 and £5,000 elsewhere in England; and what percentage of business premises will have a new rateable value between £7,500 and £22,500 in London and between £5,000 and £15,000 elsewhere in England.

  Mrs. Virginia Bottomley
  It is estimated that nearly half the properties covered by the Inland Revenue survey will have a new rateable value from 1 April 1990 of between £1,000 and £7,500 in London and between £1,000 and £5,000 elsewhere in England. Slightly more than a quarter of properties will have a new rateable value of between £7,500 and £22,500 in London, and slightly less than a quarter between £5,000 and £15,000 elsewhere in England.

  This information is based on a sample survey of the effects of the revaluation of non-domestic properties and the introduction of a uniform business rate. The new valuations supplied for the sample of properties were best estimates, not actual revaluations. The results must therefore be treated with caution.

  Crown Suppliers
  Mr. Sean Hughes
  To ask the Secretary of State for the Environment how many executive officers, higher executive officers, senior executive officers and grade 7 (administration) staff were in post in the Crown Suppliers on 1 April.

  Mr. Ridley
  The number of executive staff in post in the Crown Suppliers on 1 April 1989 was as follows:

  Number

  Executive Officers

  111

  Higher Executive Officers

  52

  Senior Executive Officers

  23

  Grade 7 (administrative)

  14

  Mr. Sean Hughes
  To ask the Secretary of State for the Environment what is the average length of tour in the Crown Suppliers of executive grades.

  Mr. Ridley
  My Department has no recognised average length of tour in the Crown Suppliers for any grade of staff.

  Mr. Sean Hughes
  To ask the Secretary of State for the Environment how many executive staff, namely, executive officers, HEOs, SEOs and grade 7 (administration) have since 1 April 1988(a) transferred from other parts of the Civil Service into those areas of the Crown Suppliers intended for sale and (b) been posted in following direct recruitment into the Civil Service.

  Mr. Ridley
  Since 1 April 1988, three executive staff have transferred from other parts of the Civil Service into those areas of the Crown Suppliers intended for sale; and two administrative officers already in the Crown Suppliers have gained executive appointments in those areas through an open competition for recruitment into the Civil Service.

  Mr. Dalyell
  To ask the Secretary of State for the Environment if he will set out the criteria he will apply in deciding to whom to sell the Crown Suppliers should appropriate legislation be obtained.

  Mr. Chope
  [holding answer 24 April 1989]: No decisions have yet been taken upon the detailed criteria which will apply.

  Defective Housing
  Ms. Walley
  To ask the Secretary of State for the Environment what additional housing investment programme allocation he has made in respect of(a) the Galleys Bank estate in Kidsgrove and (b) the Park Lane estate in Biddulph, in respect of problems concerning defective housing; what is the average allocation per affected dwelling in each estate; and if he will make a statement.

  Mr. Trippier
  Additional housing investment programme allocations of £389,000 and £690,000 were notified to Newcastle-under-Lyme and Staffordshire, Moorlands councils respectively to help them meet their housing defects obligations. These allocations are not made for specific estates or properties; it is for authorities to decide how to use them, together with their initial allocations and any other resources they have available.

  Mr. Summerson
  To ask the Secretary of State for the Environment whether he has reached a decision on proposals to amend the housing defects provisions following consultations with interested bodies.

  Mr. Trippier
  Yes. In the light of helpful comments from local authority associations, home owners groups and other interested bodies, we have decided to introduce certain amendments in the current Local Government and Housing Bill. This should help achieve a sound and practical streamlining of the housing defects scheme for the benefit of owners and local authorities alike. On the basis of consultations in Scotland, the Scottish Office proposes to introduce similar amendments to the parallel Scottish housing defects legislation.

  The main proposal is for the taking down and reconstruction of an individual property, in an equivalent position, to be treated as reinstatement under the scheme so that grant-aid can be made available. Although somewhat less radical than our consultation suggestion, it would he more in line with Housing Defects Act reinstatement and, in certain circumstances, could offer a sensible and cost-effective alternative to reinstatement, provided that it is in accordance with the Act's other conditions. We also intend to bring eligible "shared owners" within the scheme by requiring local authorities to submit schemes for the Secretary of State's approval; and to allow the Secretary of State to extend the present two-month period for deciding local designations, where he needs more information.

  Local Authority

  Scheme

  Number of units borought back into use

  Permanent/temporary accommodation

  Allocation 1987/88 £

  Allocation 1988/89 £

  Camden

  Various

  35

  permanent

  —

  632,000

  Hammersmith and Fulham

  White City

  56

  permanent

  349,000

  —

  Tower Hamlets

  Ocean

  20

  permanent

  126,000

  516,000

  Middlesbrough

  Broughton Avenue

  6

  temporary

  12,900

  122,640

  South Tyneside

  Tyne Dock

  16

  permanent

  55,000

  —

  Bradford

  Woodside

  14

  permanent

  37,000

  —

  Bradford

  Pennington Terrace

  22

  permanent

  —

  533,564

  Leeds

  Gipton

  10

  permanent

  200,000

  —

  Sheffield

  Various

  57

  permanent

  560,000

  —

  Wakefield

  Airedale

  16

  permanent

  90,000

  —

  York

  Various

  22

  permanent

  62,700

  —

  Nottingham

  Macedon Trust

  7

  permanent

  —

  150,000

  Rochdale

  Smallbridge

  13

  temporary

  —

  150,000

  Blackpool

  Mereside

  24

  permanent

  —

  269,500

  Guildford

  Guildford Park and Westborough

  17

  permanent

  57,500

  —

  528
  We also propose a minor clarifying amendment to make it explicit that local authorities should decade owners' applications as soon as reasonably practicable.

  We have decided at this time against the introduction of the proposed package of lifting Government-set limits on local authority reinstatement grants, with a revised degree of Exchequer contribution: consultees' responses generally favoured retaining existing controls, for the time being, to help ensure reinstatement is carried out cost effectively under the scheme.

  Homelessness
  Mr. Battle
  To ask the Secretary of State for the Environment how many units of accommodation his Department estimates were brought into letting for homeless households(a) in Greater London, (b) in the south-east outside London and (c) in England as a whole, through local authority schemes to give existing council tenants cash incentives to buy a property on the open market (i) in 1986–87, (ii) in 1987–88 and (iii) in 1988–89; and at what average cost.

  Mr. Trippier
  Regional and national estimates are not available. An exploratory research study of the majority of those Brent and Bromley tenants who received cash payments for home purchase in 1986 was published in May 1988 and a copy was placed in the Library. The department expects that the further studies of schemes in Tauntan Deane, Southend and Croydon will be received shortly from the survey organisation.

  Grants paid under section 129 of the Housing Act 1988 will be monitored for 1989–90 and subsequent years.

  Mr. Battle
  To ask the Secretary of State for the Environment if he will list each scheme selected for an additional allocation of housing investment programme funds, under the homeless initiative promoted by his Department's Estate Action team(a) during 1987–88 and (b) during 1988–89; how many units of accommodation each scheme brought into use for homeless households; and whether each scheme provided permanent or temporary accommodation for homeless households; and what was the date of completion of each scheme.

  Mr. Trippier
  Additional allocations under the Estate Action homelessness initiative have been made for the following schemes in 1987–88 and 1988–89. According to information supplied by local authorities all schemes were completed within the financial year in question.

  Archaeological Diggings
  Mr. Dalyell
  To ask the Secretary of State for the Environment what additional funds are being made available to English Heritage in respect of the archaeological diggings in Lower Thames street; what further action his Department is taking; and if he will make a statement.

  Mrs. Virginia Bottomley
  I refer the hon. Member to my replies to the hon. Member for Newham North-West (Mr. Banks) on 18 April, at columns 77–78. English Heritage has not asked for additional funds for this purpose.

  Community Charge
  Mr. Blunkett
  To ask the Secretary of State for the Environment what consideration he has given to the effects of the introduction of the community charge on the tenants of almshouses; and if he will make a statement.

  Mr. Gummer
  We considered the position of people in various types of accommodation when deciding on the definition of hostels, the residents of which will be exempt from the community charge. Our conclusion was that, in general, only establishments offering a high level of care should qualify. The tenants of almshouses will be able to apply for rebates of up to 80 per cent, if their incomes are low. Those in receipt of income support will have their income support increased to help them meet their 20 per cent. community charge payment.

  Mr. Allen
  To ask the Secretary of State for the Environment what representations he has received from hon. Members on the levying of a community charge on second homes.

  Mr. Gummer
  We have received a good many representations on this and other aspects of the community charge.

  Mr. Blunkett
  To ask the Secretary of State for the Environment (1) if he intends to publish guidelines for private landlords on the need to deduct rates from combined rent and rates charges with the introduction of the community charge in April 1990;

  (2) what protection will be offered to tenants in the private rented sector, who presently pay combined rent and rates charges, with the introduction of the community charge in April 1990.

  Mr. Gummer
  [holding answer 24 April 1989.1: I would refer the hon. Gentleman to the reply I gave to the hon. Member for Oxford, East (Mr. Smith) on 21 April.

  Mr. Buckley
  To ask the Secretary of State for the Environment if he will introduce a transitional period for households with substantial increases in payments following the introduction of the poll tax in April 1990.

  Mr. Gummer
  [holding answer 24 April 1989]: The Government have no plans to introduce a poll tax.

  The Government have proposed a safety net which will provide transitional protection for areas in which there would otherwise be substantial increases in average bills per household. The community charge rebate system will give further protection to chargepayers with low incomes.

  Mr. Blunkett
  To ask the Secretary of State for the Environment if he will publish for each local authority in 530
  England (a) the illustrative community charge for 1989–90 (i) within and (ii) without safety net, (b) the comparable figures for 1988–89, (c) the percentage changes between the two years, (d) the average rate bill per household for 1989–90 and (e) the average number of adults per household.

  Mr. Allen
  To ask the Secretary of State for the Environment in which month he expects to announce illustrative 1989–89 community charges for Nottingham based upon the forthcoming year's rate support grant settlement.

  Mr. Gummer
  As in previous years, I intend publishing illustrative community charges for all local authority areas in England when detailed budget returns have been received. The date of publication will depend on prompt submission of those budget returns. So far 343 out of the 426 returns have been submitted.

  Mrs. Margaret Ewing
  To ask the Secretary of State for the Environment if he will list the regulations which give poll tax registration officers access to local education authority lists containing the names and addresses of school pupils' parents; and if he will make a statement.

  Mr. Gummer
  The Government have no plans to introduce a poll tax. The regulations governing the administration of the community charge in England and Wales are the Community Charges (Administration and Enforcement) Regulations 1989 (S.I. 1989/438). Regulation 6 requires certain public bodies on request to provide the community charges registration officer (CCRO) with names, addresses and periods of residence where such information is within the possession or control of those bodies. The local education authority is among the bodies concerned, but the governors or proprietors of schools (who maintain registers containing the names and addresses of parents) are not. Whether such names and addresses can be given to the CCRO will therefore depend upon whether they have been passed into the possession or control of the authority. The authority may not inspect or take an extract from a school register other than for educational purposes.

  Nuclear Waste
  Mr. Allen
  To ask the Secretary of State for the Environment if Her Majesty's Government have identified a safe long-term method of disposing permanently of nuclear waste.

  Mrs. Virginia Bottomley
  The Government believe that safe disposal routes for radioactive wastes can be developed in the United Kingdom. The Government have accepted Nirex's recommendation that a repository for low and intermediate-level radioactive waste should be constructed in the form of a mine under the land and that further investigations should be undertaken to determine the suitability of Sellafield or Dounreay for construction of a repository. Heat-generating radioactive wastes will be stored for at least 50 years to allow them to cool before a final decision on disposal is taken.

  Caravan Parks
  Sir Eldon Griffiths
  To ask the Secretary of State for the Environment if he will publish his new model standards for caravan parks.
  531
  Mr. Trippier
  My right hon. Friend published the revised model standards on 19 April. Separate standards have been specified for permanent residential mobile home sites and for holiday caravan sites. As a result of research sponsored by my Department, the spacing standard for holiday caravans with aluminium or other similar fire-resistant exteriors has been reduced from 6 to 5m. This takes account of the changes which have occurred in the caravan industry over the past decade and, together with other changes in the new standards, should lead to more attractive holiday caravan site layouts.

  The standards have been circulated to all local authorities in England and Wales and to other interested bodies and copies have been placed in the House Libraries. I am sending my hon. Friend a copy.

  London Docklands Development Corporation
  Mr. Heddle
  To ask the Secretary of State for the Environment what the status of the London Docklands development corporation will be upon the expiry of its enterprise zone status.

  Mr. Trippier
  When the Isle of Dogs enterprise zone expires the corporation will cease to be the enterprise zone authority for the purposes of part XVIII of and schedule 32 to the Local Government, Planning and Land Act 1980, and will then gain the full range of planning powers in that area of docklands. Its status will otherwise be unchanged.

  Mr. Simon Hughes
  To ask the Secretary of State for the Environment if he will list all planning permissions given by the London Docklands development corporation along the river Thames in the borough of Southwark which secure a public riverside walkway.

  Mr. Trippier
  [holding answer 24 April 1989]: A list of 17 permissions given by the LDDC since 1981 has been placed in the Library. The corporation is committed to securing extensive riverside and dockside access throughout its area. Twelve miles of waterside are so far accessible, and a further 15 miles are proposed.

  Lindane (Lost Container)
  Mr. Allen
  To ask the Secretary of State for the Environment what information he has on the current whereabouts of the container of lindane lost on 13 March.

  Mr. Portillo
  I have been asked to reply.

  The container, lost while under tow by a French ship to Cherbourg, was thought to be about 25 km north-west of the Cap de la Hague. The French authorities, who are responsible for co-ordinating counter-pollution operations in that area of the Channel, have carried out an intensive but unsuccessful search for it using both surface vessels and a submersible. That special search has now been called off on the basis of a joint Anglo/French scientific assessment of the pollution threat which concluded that the physical nature of the lindane, the packaging, depth of water in which the container was lost, water currents and other factors, are such that the likelihood of contamination is much less than at first feared.

  In the process of normal training and exercises, the French Navy will continue to look for the missing container. The French authorities also continue to carry out an intensive programme of sampling and analysis of seawater and fish.

  Bathing Water
  Mr. Gareth Wardell
  To ask the Secretary of State for the Environment if he will estimate the cost at current prices to each water authority in England to bring the bathing beaches that fail to meet the standards laid down in the European Community bathing water directive (76/160/EEC) into conformity.

  Mr. Howard
  Water authorities are spending about £100 million a year on schemes to improve the quality of bathing waters and this rate of spending is likely to increase. However, detailed proposals for schemes to improve bathing waters are still being formulated and it is too soon to estimate the total spending required by each authority to meet EC bathing water quality standards.

  Public Rights of Way
  Mr. Ron Davies
  To ask the Secretary of State for the Environment what was his Department's response to the Countryside Commission's consultation papers, "Paths, Routes and Trails" and "Changing the Rights of Way Network".

  Mrs. Virginia Bottomley
  The Department has not commented on either paper.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for the Environment how his Department measures the reduction in the time taken to decide opposed rights of way orders in the absence of information on the receipt of, and replies to, letters by his Department's offices in Bristol; and if he will publish such information as is available to indicate how substantial the reduction is.

  Mrs. Virginia Bottomley
  The time between the submission of an order to the Department's Bristol office and the issue of a decision is recorded for every case. The median from submission to decision in 1987–88 was 53 weeks; in 1988–89 this time was reduced to 40 weeks.

  Housing Statistics
  Mr. Norman Hogg
  To ask the Secretary of State for the Environment what is the number and proportion of empty dwellings at the latest available date in(a) the private rented sector, (b) the housing association sector, (c) the central Government sector and (d) the local authority sector.

  Mr. Trippier
  [holding answer 24 April 1989]: Estimates derived from the housing investment programme returns of English local authorities for April 1988 are as follows:

  Vacant dwellings (number in '000s)

  Vacant dwellings as a percentage of stock

  Local authority1

  101·2

  2·4

  Housing Association

  12·7

  2·5

  Other public sector2

  16·1

  6·5

  Private3

  579·5

  4·1

  1 Includes dwellings which are closed or have been acquired for demolition but excludes dwellings on overspill estates.

  2 Includes housing owned by new towns, county councils, Government Departments, nationalised industries, other public bodies and council dwellings on overspill estates. Many of these are vacant because of operational requirements, notably those owned by the Ministry of Defence and others have been acquired for demolition for example, by the Department of Transport. The Government are encouraging the sale of housing which is surplus to requirements and many of those that are vacant are in the process of disposal.

  3 Includes owner-occupied as well as private rented dwellings.

  Local Authority Employees (Pensions)
  Mr. Favell
  To ask the Secretary of State for the Environment when he will introduce regulations to allow part-time local government employees to buy additional service for pension purposes.

  Mrs. Virginia Bottomley
  [holding answer 14 April 1989]: These proposed regulations were held up for a long time by a dispute between the local government employers and unions. Since this was settled we have needed to consult other Departments on the proposal that the regulations should apply not only to present employees but to those who have retired since April 1986. This has just been agreed. We will now give the preparation of the regulations as much priority as possible. In view of this agreement those employees who retire before the regulations are made will not be placed at a disadvantage.

  River Mersey (Pollution)
  Mr. Alton
  To ask the Secretary of State for the Environment what chemicals the Norsochem works is allowed to discharge into the Mersey; and in what quantities.

  Mr. Moynihan
  [holding answer 20 April 1989] : I understand that the company currently has deemed consent to discharge a range of organic chemicals into the Mersey. Details of the type and quantity of chemicals which the company is allowed to discharge are on the public register maintained by the North West water authority and available for inspection.

  I understand that the North West water authority is shortly to replace the deemed consent with a positively determined consent. Details of this consent including the conditions to which it is subject, will also be entered on the public register.

  Mr. Alton
  To ask the Secretary of State for the Environment how many prosecutions relating to pollution of the Mersey his Department has brought against companies for the time for which figures are available; and what were the verdicts and fines in each case.

  Mr. Moynihan
  [holding answer 20 April 1989]: Responsibility for enforcement of water pollution controls over industry rests with the regional water authorities and comprehensive information about prosecutions is not held centrally.

  However, I understand that in 1987, the North West water authority brought a total of 23 prosecutions for
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  offences committed under part II of the Control of Pollution Act 1974, in the Mersey catchment as a whole. All resulted in convictions, with an average fine imposed of £680. Of the prosecutions brought in 1988, 17 have so far been tried, all resulting in convictions with average fines of £670.

  Local Authority Services
  Dr. Cunningham
  To ask the Secretary of State for the Environment if he will list in the Official Report (a) those services which local authorities must presently provide free of charge; (b) those services for which local authorities are permitted to charge in accordance with regulations or primary legislation, where the charges are set in those regulations of primary legislation, where the charges are set in those regulations or primary legislation or otherwise by the Government and (3) those services for which local authorities are permitted to charge in accordance with regulations or primary legislation, where the charges are for local discretion.

  Mr. Ridley
  [holding answer 19 April 1989]:This information is not available in precisely the form requested by the hon. Member. I am placing in the Library such information as is available about local authorities' charging powers.

  Peak Park (Planning Applications)
  Mr. McLoughlin
  To ask the Secretary of State for the Environment how many planning applications for house building have been made to the Peak park planning board; how many have been successful; and how many have been for starter homes and how many for family residences.

  Mr. Trippier
  Since April 1984, the Peak park joint planning board has dealt with 1,110 planning applications for house building, of which 11 were for starter homes. A total of 626 applications (56·4 per cent.) were approved including six for starter homes. No records are kept of the number of family residences involved in the applications.

  Council Houses
  Mr. Allen
  To ask the Secretary of State for the Environment if he will make a statement further to his reply of 7 February,Official Report, column 600, about council houses.

  Mr. Trippier
  No.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.
Lord Monteagle of Brandon Lord Monteagle of Brandon—Took the Oath.

"Working for Patients"
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether they intend to amend their proposals contained in the White Paper Working for Patients in response to the views of professional organisations including the Royal Colleges, the Confederation of Health Service Employees, the Health Visitors Association, the British Medical Association, the British Dental Association, the Association of British Dispensing Opticians and the National Association for Mental Health.
Lord Henley: My Lords, we are firmly committed to our proposals set out in Working For Patients but welcome views on their implementation.
Lord Molloy: My Lords, I note that the entire British medical profession is opposed to the scheme. Is any body of opinion outside the Prime Minister's entourage in any way in favour of the scheme?
Lord Henley: My Lords, yes. Three organisations have been broadly supportive of the proposals the National Association of Health Authorities, the Institute of Health Service Management and the Society of Family Practitioner Committees. There has also been wide-ranging support from individual clinicians, mainly hospital consultants or heads of academic departments of medicine.
Lord Ennals: My Lords, does the noble Lord accept that the first two organisations that he mentioned supported some parts of the proposals but have been generally critical of them? Would it not be profoundly unwise for the Government to ride roughshod over the strongly held views of people who work daily in the National Health Service? Does he recognise that there is a massive amount of opinion against the proposals which are thought will cause grave damage? Would it not make sense to give a longer period of consultation so that views can be considered genuinely, rather than the question just being about the implementation of what the Government have decided? Is that the way to govern the country or the National Health Service?
Lord Henley: My Lords, as the noble Lord will be aware, I said that many doctors have also supported the Government. The fact that the BMA has not been broadly supportive is irrelevant. We have a great deal of support from individual doctors.
Lord Jenkin of Roding: My Lords, is my noble friend aware that there is considerable indignation about the misleading and tendentious propaganda put out by the BMA which doctors are now being asked to circulate in their consulting rooms and surgeries? Is he aware that many doctors regard the leaflet as an insult to their patients and will not display it?
Lord Henley: My Lords, I agree with my noble friend. Much of the information the doctors have been putting out on the instructions of the BMA has been wrong.
Lord Winstanley: My Lords, are the Government wise to try to ride roughshod over two great professions—the law and medicine—at one and the same time? Does the noble Lord accept that some doctors, who are implacably opposed to the White Paper, nevertheless accept that some of the proposals could prove beneficial to doctors and patients alike, provided that they are introduced with care and after proper consultation, and, in particular, after there have been preliminary pilot studies in selected areas to find out how the proposals will work before they are finalised?
Lord Henley: My Lords, I do not believe that we are riding roughshod over the two professions. With regard to the pilot schemes, thorough consideration was given to the proposals during the year in which the review was carried out. To postpone full implementation would lead to uncertainty and anxiety in the service without producing the benefits to patients and staff that will flow from early implementation.
Lord McCarthy: My Lords, it would be fair to say that the Government have found a GP in Hove who says that there is much to be said on both sides of the case.
Lord Henley: My Lords, I can assure the noble Lord that many GPs support the Government. If the noble Lord read an article by a London GP in the Standard last Friday he would have seen that he supported the Government's case.
Lord Rugby: My Lords, as I am outside the Prime Minister's entourage, may I say how pleased I am that I can now buy my reading spectacles without charging the taxpayer £10 and can choose them myself for £2.99?
Lord Henley: My Lords, that question goes rather wide of the subject on the Order Paper, but I thank the noble Lord for his remarks.
Lord Ennals: My Lords, will the criticisms that have been made of the BMA, which do not seem to promote good relations, apply also to the Royal colleges which have been strong in their condemnation of the Government's proposals?
Lord Henley: My Lords, I criticised the BMA for some of the documents it issued which were mentioned by my noble friend Lord Jenkin and which are not fair.
Lord Dean of Beswick: My Lords, in his reply to the first supplementary question, the noble Lord quoted the various organisations which had indicated support for a large part of the Government's proposals. He quoted the area health authorities and family practitioner committees. He must be aware that those organisations are manned overwhelmingly by government appointees whose political colour must be Conservative before they are appointed, so is there anything strange in the fact that they have come out in support of the proposals?
Lord Henley: My Lords, as the noble Lord is well aware from an answer given by my noble friend Lord Arran some time ago, people do not have to be Conservative to be members of such organisations. We always choose the best possible people. The three associations that I mentioned were not those mentioned by the noble Lord. I mentioned the National Association of Health Authorities and the Institute of Health Service Management. The noble Lord did mention the Society of Family Practitioner Committees.
Lord Molloy: My Lords, will the organisations that the noble Lord has mentioned be allowed to submit amendments? Will the vast amount of land held by hospitals be allowed to be flogged off to whoever can afford to buy it? Is it not a fact that careful examination of the noble Lord's evasions this afternoon reveals one thing, and one thing only—that the Government's Bill is designed solely to destroy the National Health Service?
Lord Henley: My Lords, that is absolute rubbish. As I said, we are firmly committed to the proposals but welcome views on their implementation. As the noble Lord knows perfectly well, and as Ministers in both Houses have repeated on many occasions, we have absolutely no plans to privatise the National Health Service.
Baroness Seear: My Lords, if the Government are firmly committed, what is the point of submitting our views? Following that, will the noble Lord not think again about the proposals from the noble Lord, Lord Winstanley? Surely when making a big change in any sphere there is a great deal to be said for a pilot study unless one is totally convinced that one has got it absolutely right in the first place. What evidence is there ever to suggest that one has got anything totally right in the first place?
Lord Henley: My Lords, I said that we welcomed views on implementation. With regard to pilot studies, quite a few of the proposals are voluntary, such as the doctors' practice budgets. In a sense one could argue that that is something approaching a pilot study. It is up to the doctor himself to decide whether to take it on.
Lord Annan: My Lords, is it not a fact that the great Minister of Health, Aneurin Bevan, also met united opposition from the profession? Is it not also a fact that Mr. Bevan was extremely subtle in his negotiations with the BMA and the other professional medical organisations?
Lord Henley: My Lords, I am sure that the noble Lord is correct. As one of my noble friends said the other day, that was slightly before my time.
Lord Winstanley: My Lords, will the noble Lord accept that no sensible general practitioner would accept the new contract unless he or she were satisfied as to how and by whom the community care would be provided?
Lord Henley: My Lords, the new contract is a totally different question, and I think it is wrong to start confusing it with the White Paper.

The Social Fund
2.44 p.m.
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
What steps are being taken to monitor the operation of the social fund, and whether they are satisfied that the objectives of flexibility and care in the community for vulnerable groups are being achieved.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Skelmersdale): My Lords, the introduction of the social fund is the first time that the social security system has specifically directed help to supporting the policy of care in the community for vulnerable groups. I am pleased to report that 152,000 people have been helped with community care grants in the social fund's first year. We have of course fulfilled our pledge to monitor the whole of the social security reforms, and the social fund is no exception.
Baroness Turner of Camden: My Lords, I thank the Minister for that reply. Is he aware of some of the studies that have been undertaken by voluntary organisations in the field, notably the Child Poverty Action Group? It would appear from them that the poorer people who are being offered loans frequently fail to qualify because they are not able to afford the repayments. They are therefore considerably worse off than they would have been under the single payment system. What steps are being taken to train SFOs in the work now required to ensure that people are offered community care grants rather than loans when that would be more appropriate?
Lord Skelmersdale: My Lords, yes, indeed, I am aware of the recent report of the CPAG on the subject. But of course that is not specifically in the terms set out in the Question; namely, regarding care in the community, which is a grant function, as it were, of the social fund.
The social fund officers are given guidance and were given it at the very beginning. I agree that the guidance has been overcautiously drafted. We have already advised social fund officers to be flexible in applying guidance to individual cases, and work is almost complete to revise existing guidance in order to make it clearer that it should be applied flexibly, sensitively and with imagination. That will be published, as the original guidance was.
Baroness Faithfull: My Lords, as regards the survey on the social fund, is my noble friend able to say, as he has done previously, who is helped? Is there also a survey as to the people who have not been helped under the social fund, and how is that being monitored? Many poor people, many homeless people and many single-parent families are unable to set up a home because they have not been able to obtain help from the social fund.
Lord Skelmersdale: My Lords, our objective has always been to target help on those most in need. The noble Lord may laugh, but that is not a new policy. It applied in much the same way under the old single payments scheme. However I accept that it is an unfortunate fact of life that, whenever a line is drawn, some will always fall on the wrong side of it.

Pesticides on Fruit and Vegetables
2.47 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
Whether they will consider legislation to compel retailers to tell customers which pesticides have been used on the fruit and vegetables on sale.
The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, we are currently considering a European Commission proposal which would require post-harvest pesticide treatments to be indicated in wholesale and retail trade.
Lord Hatch of Lusby: My Lords, I thank the noble Baroness for that encouraging Answer. As she says, the European Community has made these proposals and I believe that in France and Germany they are already implemented. Is she aware that the chemical alar, which is used on apples, is being banned in the United States? The United States Environmental Protection Agency has said that there is an,
"inescapable and direct correlation between its use and the development of life-threatening tumours".
In the light of that expert opinion, will the noble Baroness include in her consideration the banning of alar in this country?
Baroness Trumpington: My Lords, this matter has been referred to our independent committee of experts, the Advisory Committee on Pesticides, which is considering the results of current studies. I should remind the noble Lord that the United States Surgeon General said in a statement that it was perfectly safe to eat apples.
Baroness Sharples: My Lords, does my noble friend agree that one should always wash vegetables and hard fruits before eating them?
Baroness Trumpington: Yes, my Lords, and one's hands.
Lord Graham of Edmonton: My Lords, will the Minister confirm that research into pesticide
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residues on fruit and vegetables will be regarded as research for the public good and will therefore be publicly funded and not be considered as near market research, to be funded by industry? Will the Minister confirm that research work on pesticide residues on fruit and vegetables, which is presently carried out at experimental horticultural stations that are due for closure, will be transferred to other research stations and continued?
Baroness Trumpington: My Lords, if the work that is being carried out on pesticide residues comes under the heading of public good, we shall make every effort to transfer it to another site.
Lord Cornwallis: My Lords, can the Minister tell me what steps the Government are taking to protect consumers overall from high pesticide residues?
Baroness Trumpington: My Lords, before a pesticide is approved it is carefully examined. Approval would not be given unless any residue was considered to be safe. Pesticides may only be used in accordance with approved label instructions. Maximum residue limits have been set for a wide range of commodities and pesticides in the pesticides maximum residue limits regulations 1988. We have a monitoring programme which examines pesticide residues in a wide range of home produced and imported foods. The findings of that programme are published.
Lord Hatch of Lusby: My Lords, is it not the case that a large number of the chain retail stores have already collected information on the effects of various pesticides, and they refuse to give that information to the public? I also wish to ask the Minister about another pesticide, Tecnazene, which is used on potatoes. Will the Minister tell us why the Government have dropped their original proposals to set limits for Tecnazene, the use of which in this country has been shown to be well above international limits?
Baroness Trumpington: My Lords, the Advisory Committee on Pesticides is reviewing the residue data for Tecnazene as used on potatoes. I hope to have advice soon as regards maximum recommended limits appropriate to UK conditions.

Pilots' National Pension Fund
2.52 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
What is their policy towards the future activity of the pilots' national pension fund following the implementation of the Pilotage Act 1987.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, under the Pilotage Act 1987 (Pilots' National Pension Fund) Order 1987 the responsibility for the management of the fund was placed on the PNPF Trust Company Limited.
Lord Dean of Beswick: My Lords, does the Minister recall that during the passage of the Bill both in your Lordships' House and in another place Ministers in both Houses—I understand the Prime Minister also replied to this point—are on record as saying that the interests of the pilots involved in this exercise would receive the utmost consideration? It would appear as the situation has developed that that is not the case. Will the Minister therefore look into the situation to see whether assistance can be given towards resolving any disputes that may arise?
Lord Brabazon of Tara: My Lords, the PNPF Trust Company Limited was established jointly by the port authorities and the pilots. Its constitution provides for equal representation of both among the trustee directors of the company and for a negotiating forum composed of representatives of the port authorities and pilots to decide questions of policy. This seems to be a fair arrangement which was freely entered into by both ports and pilots.
Lord Underhill: My Lords, despite what the Minister has said, is it not the case that the pilots voluntarily agreed that some £15 million from their pension fund should be used for retiring pilots to ensure the smooth passage of the re-organisation under the terms of the Pilotage Act and that the negotiating forum to which the Minister referred did not come into effect until 1st October 1988? My second supplementary question arises from the fact that the ports are now suggesting that half the balance that was present at the end of December 1987—which was long before the new forum took effect—is to be used not to improve pensions and other benefits but to cut contributions. Does the Minister think that it is fit and proper that the ports should adopt this attitude, as they were in no way responsible for building up the balance of £26 million?
Lord Brabazon of Tara: My Lords, as I said, the arrangements are now for the port authorities and the pilots. This is clearly a matter to be resolved in the negotiating forum of port authorities and pilots which was set up under the terms of the constitution of the PNPF Trust Company Limited and by the trustee directors. I have no doubt that the pilots will be able to put their case in that forum, which is the correct place in which to put it.

Electricity Bill
The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper): My Lords, I beg to move that this Bill be now read a second time.
The Electricity Bill is a major feature of the Government's legislative programme this Session. It provides for the restructuring and privatisation of the electricity supply industry throughout Great Britain and continues the Government's policies of returning state businesses to the private sector and of encouraging wider share ownership.
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This is a large privatisation, and I wish to emphasise that the proposals have been given ample and careful consideration. The manifesto on which the Government were returned to office two years ago made it clear that we would bring forward proposals for privatising the electricity industry. These proposals were set out in the Government's White Papers which your Lordships will remember debating on 20th May last year; and unusually for a Bill of this size and scope, the Bill now before us completed its progress through the other place without the need for a guillotine, so every clause was considered.
The Bill before your Lordships is therefore a carefully considered piece of legislation. It has been prepared in the light of extensive consultation with the industry, with employee and consumer representatives, with independent generators and with other interested parties, including environmental bodies. But in saying this I fully realise that your Lordships will, quite rightly, still wish to examine it with your customary care and thoroughness.
Most of the Bill's clauses and 16 schedules are common to England, Wales and Scotland. Five clauses and two schedules are, however, specific to Scotland and some Scottish provisions are included as parts of other clauses and schedules. My noble friend Lord Sanderson of Bowden will speak on the specifically Scottish aspects of the Bill when he winds up.
Before I turn to the Bill itself, I should like to draw your Lordships' attention to three features which seem to me to lie at the heart of the Government's proposals. First and foremost, our proposals will promote effective competition. They will promote competition in generation and supply, ending the public sector monopoly which exists at present. This of course means a downward pressure on costs and prices.
The second feature is the new deal for customers which we offer, and the third is the security of electricity supply which we shall ensure, not least through the measures we are taking to ensure diversity in supply.
By competition I do not simply mean competition between Power Gen and National Power, the two companies which will inherit the generating capacity of the Central Electricity Generating Board, and the two new Scottish companies. I have in mind exciting new opportunities which privatisation will open up for independent private generators, who, we firmly believe, will be attracted by the opportunities presented by privatisation for the more thermally efficient and environmentally cleaner forms of generation such as CHP and combined cycle gas turbines. Our proposals will give all types of generators new rights to put them on a fair footing with the successors to the CEGB and the area and Scottish boards. We already know of some 20 proposed independent power generation projects which would amount to 7 gigawatts of electricity.
But this is just the start. We know that the area boards are keen, just as their successors will be, to encourage new entrants into electricity generation. Our proposals will enable public electricity

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suppliers—the successors to the area and Scottish boards—to contract for supplies from a wide range of competing generators. They will, for instance, be able to contract for supplies from Power Gen or National Power, or from new private generators, or from Scotland or France, and they will be able to generate a certain proportion of their capacity requirements themselves. They will have to contract efficiently. If they do not, they will be penalised by the licensing regime through the price control mechanism.
Our proposals will oblige public electricity suppliers and the holders of a transmission licence to allow others to use their transmission networks on transparent and non-discriminatory terms, with the director settling any disputes. This will provide a favourable environment for direct contracting between large consumers and generators.
For the domestic customer, who will receive his electricity from the public electricity supply companies, the licensing arrangements will ensure that the benefits of greater competition in generation and supply are passed on to the final customer. Heavy users in particular will find it useful to be able to contract directly with generators of their own choice. This is in addition to the competition that electricity will have to face from other energy sources.
I know that many of your Lordships take a keen interest in European matters and will want to see these radical proposals in a European context. The fact is that the increased competition which our proposals will promote are blazing a trail towards the completion of the European internal energy market. At the moment, we are the only member of the European Community with statutory provisions relating to the common carriage of electricity, which are set out in the 1983 Energy Act. We are determined to go even further. As I have explained, our proposals will oblige public electricity suppliers and holders of transmission licences to allow others to use their networks on fair terms. There will also be greater price transparency as a result of our proposals.
As regards the customer, our Bill is truly a customers' charter. For the first time all owners or occupiers will have the right, by virtue of Clause 16, to require the public electricity supplier for their area to offer them a supply of electricity. At present only those individuals within 50 yards of a main can require a board to provide a supply.
For the first time, customers will be guaranteed compensation if their local electricity supply company fails to provide a decent service. The director will be able to lay down guaranteed standards of service for domestic customers after consulting consumer representatives and the industry. He will be able to set compensation levels, determine any disputes and enforce his decisions.
And for the first time in the industry, consumers' committees will be fully integrated into the director's offices and will report directly to him. They will have a major role to play in the new industry; for example, in helping the supply companies formulate codes of practice on the payment of bills and on the
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special needs of the elderly and the disabled, and in protecting customers' interests generally.
These are major and substantial improvements on present arrangements. This is why our proposals have been warmly welcomed both by the electricity consultative councils and the Electricity Consumers' Council. Most importantly, electricity supplies will continue to beas secure as ever. The licences require public electricity suppliers and the holders of transmission licences to meet the current planning standards relating to security of supply. Our proposals reinforce this by ensuring diversity in sources of supply.
This necessary diversity is ensured by a statutory obligation to be placed on each public electricity supply company to purchase a minimum amount of non-fossil fuelled generating capacity; that is, nuclear and renewables. The fossil fuel levy will ensure that the costs of meeting this obligation are borne on an equitable basis by all electricity consumers. The cost of diversity is already present in electricity prices under the present system. The levy will enable customers—again for the first time—to identify the cost of the diversity they enjoy.
The Government believe that nuclear power has an important role to play in contributing to diversity of supply. We were elected on a manifesto which included the two commitments to maintain the nuclear power programme and to privatise the electricity industry. Those two commitments are wholly compatible. To that end we decided that the CEGB should be split into two parts with one— National Power—large enough to maintain the infrastructure for effective nuclear generation and to finance the construction of new nuclear power stations. By combining nuclear generation with a large portfolio of conventional generation we have created a company with a strength and diversity which I am sure will be attractive to investors.
The Bill is in several respects a better Bill than that which was introduced into the other place last December. Perhaps I may give some examples. On the important question of safety, Clause 3 of the Bill now places a specific duty on the Secretary of State and on the director in relation to the protection of the public from dangers arising from the generation, transmission or supply of electricity. As regards the regulatory arrangements, Clause 25 now enables the director to take enforcement action when he believes a licence holder is likely to contravene a condition of his licence, and not just after the event. As to consumers, we have amended Schedule 14 to the Bill so that they will be able to continue to pay their bills at post offices if they so wish.
We intend to bring forward an amendment to Clause 32 to create a special privileged place for renewable sources of energy within the non-fossil fuel obligation. We propose to do this by setting special extra tranches of capacity within the obligation which can be filled only by renewable forms of energy. In that context, your Lordships will be aware that recently the Director General of Gas Supply and British Gas have agreed a new procedure for dealing with customers who have difficulty in paying their bills. In future, such customers will be given the opportunity to agree a payment method

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linked to their ability to pay and, ultimately, to choose a prepayment meter as an alternative to disconnection. My right honourable friend the Secretary of State has already announced that the public electricity supply licence will make provision for a similar procedure. We shall be announcing the details soon.
I should now like to turn to the detail of the Bill, and in particular to Part I. Clause 1 and Schedule 1 provide for the appointment of a Director General of Electricity Supply and the appointment of staff to the Office of Electricity Regulation. Clause 2 and Schedule 2 require the director to establish consumers' committees.
Clause 3 is a major clause. It sets out the duties to which the Secretary of State and the director must have regard in carrying out their functions under Part I of the Bill. These include duties to secure that all reasonable demands for electricity are satisfied; that all licence holders are able to finance the carrying on of their licensed activities; and to promote competition in the generation and supply of electricity. There are also duties to protect consumers' interests, to promote the efficient use of electricity supplied by licensed suppliers, and safety duties.
This clause gives the Secretary of State and the director a duty to secure the establishment and maintenance of machinery for promoting the health and safety of persons employed in the generation, or transmission or supply of electricity; and as I have already mentioned, a new duty to protect the public.
The Secretary of State and the director will need to have regard to those duties in granting licences and exemptions under Clauses 5 to 7. Copies of the draft licences have been published but it may be helpful if I touch briefly on some of the main features. They will give customers and generators the right to use the transmission and local distribution networks. They will ensure, through the price control mechanism, that public electricity suppliers who contract with higher cost generators will be penalised and that those who contract at a lower cost will be rewarded. They will regulate prices to all but the largest customers and ensure that there will be separate controls on charges for distribution and transmission, where natural monopolies will remain, at least for the foreseeable future.
The Bill and public electricity supply licence also provide for the promotion of efficiency in electricity use. These are important provisions which will be of particular interest to your Lordships. They impose a specific duty on the director and the Secretary of State, and public electricity suppliers will be required to provide guidance to their customers on the efficient use of electricity.
The public electricity supply licences require each licensee to provide, within three months of his licence coming into force, information on the efficient use of electricity. Licensees will be required to revise this information as necesary; and also to send information on energy efficiency prepared by the director to every customer, if so asked.
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Public electricity suppliers and holders of transmission licences will also have a number of specific statutory duties, which are set out in Clause 9. They will have the duty respectively to develop and maintain efficient, co-ordinated and economical systems of elecricity transmission and supply. The holder of a transmission licence will also have a duty to facilitate competition in the generation and supply of electricity.
Clauses 11 to 15 enable the director to modify licence conditions. He can do that by agreement with a licence holder or following a modification reference to the Monopolies and Mergers Commission. The director also has powers, under Clauses 25 to 28, to take swift and effective action if a licence condition or a statutory requirement imposed on a licence holder under Clauses 9 or 16 to 23 of the Bill is contravened or is likely to be contravened.
Clauses 16 to 24 and 29 to 31 and Schedules 6 and 7 set out the framework for the supply of electricity by public electricity suppliers. Taken together, those clauses and schedules represent a long overdue and highly necessary modernisation and codification of the law on electricity supply. No fewer than 19 whole Acts—the earliest going back to 1882—will be repealed.
A key clause in that group is Clause 29, which gives the Secretary of State powers to make regulations relating to safety. The Government are determined that the privatised industry should continue the excellent safety record achieved by the industry in the past.
The electricity supply regulations introduced last year were the first major revision for 50 years. They followed a two-year period of consultation and discussion with the electricity industry and with industry generally, along with the Institution of Electrical Engineers, consumer groups and the major trade associations. Those regulations therefore carry respect within the industry.
The industry also has an excellent record in the field of research and development—which, in its nuclear aspects, we had the opportunity to debate a little over a week ago—and the Government are confident that that will continue. All successful companies have an eye to their long-term future, and research must be a key to long-term success. The Department of Energy, supported by the Advisory Council on Research and Development, will continue to review the need for electricity R&D on a national scale and will advise the Secretary of State on the need for government contributions to supplement research carried on by the industry.
Clause 37 and Schedule 9 will require the industry to have regard to the desirability of preserving natural beauty, of conserving flora and fauna and of protecting buildings and other objects of architectural or historic interest. For the first time, that amenity obligation will apply to all parts of the industry—that is, generation, transmission and supply of electricity—including existing private generators and those persons who generate electricity for their own use.
I know that many noble Lords take a keen and close interest in environmental protection. I share

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that view and I am delighted to be able to say that, as far as concerns the environment, we have a very positive story to tell. I have recently had meetings with representatives of the Nature Conservancy Council, the Countryside Commission, the Council for the Protection of Rural England and Friends of the Earth, and I understand their concerns. I shall of course listen closely to what the noble Lords have to say today.
I have also asked the successor companies for some positive indications of what they intend to do on the environment front and I can assure noble Lords that the standards of environmental protection that the industry has to meet now will be enforced every bit as vigorously after privatisation as they are now. In the first place, the industry will continue to be subject to a wide range of environmental and safety legislation which applies to industry as a whole.
Her Majesty's Inspectorate of Pollution will continue to be responsible for controlling power station emissions. As now, all new coal-fired power stations with a capacity of 50 megawatts or over will need to incorporate technology to abate acid emissions as required by Her Majesty's Inspectorate of Pollution. The Government remain committed to reducing emissions from power stations. In accordance with the European Community's large combustion plant directive, the United Kingdom will reduce the level of sulphur dioxide emissions by existing large combustion plants by 60 per cent. on 1980 levels by the year 2003. The UK will also reduce nitrogen oxide emissions by 30 per cent. on 1980 levels by 1998. The combined costs of those programmes are likely to entail overall expenditure of some £2 billion.
In that context, perhaps I may remind noble Lords that earlier this year we debated regulations to implement, for energy projects, the 1985 European Community directive on environmental assessments. The regulations relate to applications made to the Secretary of State under the various Elecricity Acts for the construction or extension of power stations and the placing of overhead lines.
On the greenhouse effect, we acknowledge that more research needs to be carried out in that area. It is clear that the proposed non-fossil fuel obligation will go some way to help contain harmful carbon dioxide emissions. Nuclear stations and renewable energy sources emit little, if any, carbon dioxide. In addition privatisation is likely to bring new power station technology to the fore, utilising new combined cycle gas turbines and advanced coal combustion techniques which will help further to reduce acid emissions.
Clauses 38 to 40 of the Bill provide the statutory framework for the guaranteed standards scheme and enable the director to collect and publish comparative information about all public electricity suppliers. For the first time, consumers will be able to compare the performance of their local suppliers directly with all the others in the country. Clauses 43 and 44 provide for the investigation of complaints by the director and by consumers' committees. Each consumers' committee will have a duty, under
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Clause 49, to keep under review matters in its area relating to the supply of electricity and affecting electricity consumers.
Part II of the Bill provides for the reorganisation of the industry and for the necessary powers for those companies to be transferred to the private sector. These are similar to the parallel provisions in the Gas Act 1986 and the Telecommunications Act 1984. Part III of the Bill deals with a number of necessary miscellaneous and supplemental provisions dealing with important aspects such as safeguarding existing employee rights.
I should like to take this opportunity to pay tribute to all those who have worked and who continue to work in the electricity industry. The industry has behind it a long tradition of public service and of dedicated endeavour, which I know we all value highly. I am sure that those traditions will continue to flourish once the industry is in the private sector and responds to the new challenges and opportunities of that environment.
We believe that our proposals offer the nation tremendous benefits—benefits that will make the industry more responsive to customer needs, and benefits that will give employees and everyone else the opportunity to invest in a major British industry.
I have spoken at some length. Even so, I feel sure that I have not anticipated in detail all the aspects of the Bill that will be covered in the debate, to which I shall listen with great interest. I commend the Bill to your Lordships.
Moved, That the Bill be now read a second time.—(Baroness Hooper.)
3.18 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Baroness for setting out some of the basic philosophy behind the Bill that we are to consider today, and for taking us through its main provisions. She did so with her usual courtesy and elegance, for which we are very grateful. I, in turn, shall try not to introduce too brutal a note too soon. Nevertheless, I must make it clear at the outset that we on these Benches believe not only that the philosophy behind the Bill is misconceived, but also, and perhaps more importantly, that its provisions in detail will turn out in the long term to be profoundly and perhaps even irrevocably damaging. The Government seem determined to persist in the conviction that generating and supplying electricity is exactly like making and selling Mars Bars. Given that absurd dogma, it is not surprising that they have produced a thoroughly bad Bill.
We shall of course point out, in what promises to be a fairly lengthy Committee stage, the particular fallacies that we see in the Bill, and try to fill the obvious gaps. This afternoon I shall confine myself to the basic principles that the noble Baroness has explained to us. To do any more in this rather complex Bill would weary your Lordships to the point of boredom, I fear. Similarly, to follow the noble Baroness, I shall not be talking about Scottish problems but shall leave that to my noble friend Lord Carmichael of Kelvingrove who will be winding up from these Benches. I shall only say that over

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the years we have become quite familiar with the Government's policy of turning publicly owned monopolies into privately owned monopolies and the pattern is followed yet again in the Scottish case. I am afraid it is depressing but it is fairly true to form.
In spite of what the noble Baroness said about the improvements made to the Bill in another place, it is my view that in discussion it became fairly clear that the Government's position on the Bill from the outset was one of almost total intransigence. There were no, or very few, concessions made—the noble Baroness scraped the bottom of the barrel to try to find some things which were inserted in another place. There was no flexibility shown.
I hope very much that the noble Baroness can be taken at her word when she says that she will listen very carefully to what is said in your Lordships' House. The Government should not always behave as though they have their backs to the wall—a kind of Custer's last stand. In the end, of course, Custer was overwhelmed by the opposition. While I am the last person to object to the Opposition overwhelming the Government, I believe that as a revising Chamber we need, if nothing else, rational discussion between the two sides, particularly in this House where, if I may say so—and I am not sure how to say this tactfully—the whipping is perhaps less strict than in another place and government supporters are perhaps less amenable to calls to blind party loyalty.
Nevertheless I must be realistic about the Government's position. I am afraid that in spite of what the noble Baroness said, I see no signs—other than on some fairly interesting issues which I shall come to in a minute—of the Government being receptive to reasoned argument. I shall therefore address myself to the generality of noble Lords opposite, above the head of the Government, as it were, in the expectation that with them at least we can have a reasoned and informed debate. I shall put to noble Lords opposite three questions about this Bill. They are questions which in my view, and I believe also in the view of the noble Baroness, go to the heart of the matter.
First, do they believe with us that the interests of the customer, be he or she domestic, commercial or industrial, are in this case of paramount concern? If so, can they seriously and conscientiously say that the Bill works to the benefit of the customer? Secondly, are they now convinced, again with us, that perhaps the major issue that is facing mankind is the future of the global environment? If so, can they in all honesty claim that the Bill as it stands will work to the benefit of that environment? Thirdly, would they be prepared to invest their own money—not somebody else's money but their own money—in any of the enterprises that will be spawned by this Bill? In other words, to use the rather crude expression current in City circles, when it comes to the point will they put their money where their mouth is?
Having put those questions I say to noble Lords quite openly that unless they can place their hands
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on their hearts and answer yes not just to one but to all three questions, they should not in all conscience and good faith support this Bill in its present form.
First of all let me take the case of the customer. I use the word "customer" advisedly since he or she may be a domestic householder or a major industry. So far as concerns the industrial customer, I think that the CBI has put the case on prices very well, expressing concern that the nuclear levy—the fossil fuel levy, to give it the correct terminology—will enable the costs of more expensive power to be passed straight through; and so it will. Even now electricity costs to British industry are moving up in the international league and they will move up further if privatisation goes ahead in its present form with nuclear power ring-fenced and subsidised by this special tax.
So far as concerns the security of supply, industry must be even more worried, since although the Bill attempts to lay the responsibility on what I call the area boards (and I hope that I shall be excused for that old expression) to maintain the supply, I think we all know that that will simply not work. At the end of the day the Government will have to take the responsibility into their own hands. It stands to reason, as the noble Lord, Lord Nelson of Stafford, said the other day on the Floor of this House. It is far too important to leave to 12 area boards. It will be the Secretary of State who will be in the dock. But by what process he arrives at the dock, as he undoubtedly will, is fraught with uncertainty; and uncertainty breeds unease.
So I am afraid that there is no joy for industrial and commercial customers in the Bill as it stands. Both on price and security of supply we believe that they will be worse off. What about the domestic consumer? I am afraid that the situation there is not much better. On all the evidence so far the domestic consumer in the short term can expect continued price rises designed to raise the return on assets prior to privatisation, and, if the precedents of British Telecom and British Gas are any guide at all, an aggressive policy of debt collection after privatisation. Your Lordships will remember that in the two years following the privatisation of British Gas the number of disconnections owing to unpaid bills rose by 25 per cent. With great respect to the civil servants in the Department of Energy, since the pricing formula in the licences is incomprehensible to anybody without a Master's degree in higher mathematics, I suspect that domestic prices, after privatisation, will rise inexorably too.
The Government's main claim—and the noble Baroness set this right up front—and indeed their justification for the whole Bill is that somehow or other (and I am not quite sure how) competition will have the effect of increasing efficiency and so exerting downward pressure on prices. Let us look at the competition argument. We are told that there will be competition in electricity generation between the two generating companies which will succeed the CEGB. There will also be competition at the low voltage distribution level with private generators being able to sell power to the public electricity suppliers—again I should like to call them the area boards, if the House will allow me—and area boards

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being able to commission their own generating capacity. On the other side there will be large customers being able to buy power direct from the main generating companies. In the middle stands the national grid which is responsible for high voltage transmission from the generating company to the area board.
The way in which all this is meant to work—and I ask noble Lords to bear with me during what may be a slightly tedious exposition—is apparently that the area boards will contract with individual generating sets in the two privatised generating companies for capacity and price—not the companies themselves, your Lordships will note, but the individual sets. The contracted power will be transmitted by the grid to the area boards which will distribute it. This process of pricing combined with the fact that the area boards will own the grid is meant to ensure sufficient capacity and least cost.
Clearly if that were the end of the story there might be some merit in it. But of course it is not the end of the story. In fact it is not even the beginning of it. What would happen if that system were allowed to operate freely? All area boards would rush to make contracts with the Drax station in Yorkshire which is able and will be able to produce cheaper power than any other station in England or Wales. But Drax is not able to supply all the requirements of England and Wales. What happens then? Is it the sharpest area board that will snap up the whole Drax production on day one, thus justifying the competitive principle that the race goes to the swiftest? No, that is not what will happen. What will happen is that the Government will decide how existing generating stations will be spread out among the 12 area boards, on contracts perhaps of five years' duration or more, we know not at the moment.
So much for the idea of competition resulting from direct contracts between area boards and generating stations. It comes down in the end to a government carve-up. Furthermore, if the nuclear industry is to be protected, it is a carve-up unrelated to least-cost generation. Even this might be all right over time, after the first, say, five years, if there were a mechanism whereby the grid could ensure that an area board received the power that it had contracted for at the price at which it was contracted from the station with which it had contracted. But there is no such mechanism. The grid is a system with a unitary nature. There is therefore no competition there. The grid will parcel it out in the best way it can. If there are severe outages in some of our major stations—as a result of we know not what—and if neither Scotland nor France can make up the shortfall, what happens then we do not know because the CEGB will no longer be in existence with its obligation to maintain supply. Those running the grids are well aware that they will be right in the middle of the firing line if anything goes wrong.
To conclude on this competitive environment, there is one further point that the noble Baroness brought up. The idea that small, privately owned generating stations—gas-fired turbines and suchlike, quite apart from the misuse of national resources involved—will make any difference to electricity prices seems to me plainly wrong. These small plants
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will price off the market leader and the market leader will be the grid. If they make a profit, if they are more efficient, they will collect their rewards with no benefit to the consumer.
Whatever the arguments about competition—and I understand that the noble Baroness has made them; I believe them to be bogus but they are nevertheless made—let us consider whether there will be any competition for the domestic consumer in the home. The answer is that there will not. As the noble Baroness said, it will be the old area board with which the domestic consumer will have to deal. In this case it will not be the old area board because it will be masquerading as a commercial enterprise without any restraint on its activity imposed by public ownership and community responsibility. There is no question, nor has there ever been, that the domestic consumer will be faced by other than a clear private monopoly.
So much, my Lords, for the whole competition argument. What we have seen is not a solution that brings in competition but a series of ra1her artificial arrangements more related to appearance than reality. Politicians may believe that this represents competition, but I know of nobody in the industry who believes in this mad construction.
If there is no benefit to the customer, can we say anything nice about the effects of the Bill on the environment? I am afraid that the answer is, no. In a week in which we are seeing a major and indeed welcome conference in Downing Street on the greenhouse effect, in which the head of the Government's own Energy Technology Support Unit is expected to tell the Prime Minister herself that half the cuts in carbon dioxide emissions will have to come from energy conservation programmes, we still have to record that the Government have resisted all efforts to introduce conservation clauses into the Bill.
The same attitude is shown on most environmental issues, ranging from global warming right through to protection of the countryside. We are told today —we read it in the evening newspaper—that there will be a "green" Bill in the next Session. The Government are quite plainly looking forward to external regulation. But why do we not have it in this Bill? Why should we not have pollution control as a policy of all companies which will be the result of this Bill? So far as concerns the Government, in this Bill—let us leave aside the "green" Bill—the world can blow up so long as they can sell off the electricity supply industry.
However, let us take the noble Baroness's third point: will the Government succeed in the sale? Will anybody in their right mind buy it at other than a knock-down price? Let us assume that millions of pounds have already been spent on valuing assets, reorganising accounting systems, estimating replacement values, drawing up contracts, writing prospectuses and so on. Knowing something of these matters, I can tell noble Lords that the final bill for accountants and lawyers will run into many millions of pounds.
But let us assume that all that is done. What do we have? First, we have the area boards. At first

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sight, they would seem to create no major problem. But there are two major problems about privatising area boards. The first is their investment in the national grid, which will be by far their biggest asset. Furthermore, the grid requires enormous sums of money over the next few years to replace equipment that is coming to the end of its technical life. How will the new shareholders enjoy that? Will they really believe that area board managers who have no experience in managing a grid at 400kV transmission can handle and manage this enormous investment? How will the area boards survive if, as the noble Baroness has explained, large customers opt out? What happens to South Wales Electricity if it loses all the major firms along the M4 corridor? I shall tell noble Lords what will happen. It will go broke. What happens then to the security of supply and investment in the national grid?
The situation is much worse when we look at the two generating companies. The prospectus for National Power should make really splendid reading—I look forward to reading it—with accounts drawn up on a replacement cost basis as well as historic cost basis, estimates of the cost of decommissioning the Magnox plants, together with the directors' assessment of what money will be available from the Government under Schedule 12 to help with those costs, a view from the directors as to whether or not the nuclear levy is contrary to Article 85 of the Treaty of Rome, and as of today an estimate, properly scrutinised by the auditors, of the cost of the measures apparently to be proposed in the new green Bill to cut down sulphur dioxide emissions.
In addition, prospective investors will want to know about material contracts, such as those with the area boards and the grid and, to cap it all, every single piece of information will have to be provided under Section 47 of the Financial Services Act 1986, which makes it a criminal offence to make a misleading statement, whether deliberately or not, the penalty for the offence being a maximum of seven years in prison. I am worried that our already overcrowded prisons may be receiving a new intake in the future.
At the beginning of my speech I asked three questions of noble Lords opposite about the Bill. Will it work in favour of the consumer? Will it benefit the environment? Will anybody invest in the industry at a fair price? I have no doubt, and I believe that there are many noble Lords opposite who agree with me, that the answer is a resounding "No". I invite them to join with us in amending the Bill to make it less of a disaster area. Let us do it together. However, amending the Bill can never make it a good Bill. No Bill based on the Mars bar syndrome can be a good Bill, and I would be failing in my duty if I did not point out again that we on these Benches are irrevocably and irreconcilably opposed to it on principle.
I invite the noble Baroness, with the best will in the world and in the friendliest possible spirit, to take away her Bill and to put it in the wastepaper basket, where it properly belongs.
3.40 p.m.
Lord Ezra: My Lords, before joining in the fray, I should like to declare an interest. I am involved in companies whose objective is the promotion of energy efficiency and they are also involved in schemes of combined heat and power. As the noble Baroness said in introducing the measure, this is the largest privatisation scheme we have had so far and it may be the largest we shall ever have. As she rightly anticipated, many questions will have to be asked in this House, even though the Bill has already been through the other place in some detail. The noble Lord, Lord Williams, has referred to some questions. I shall come back to some of those and add a few more.
I should like to start by reminding your Lordships of what is happening. Our electricity supply industry is being changed from being a totally integrated system—which, over the years, as the noble Baroness rightly said, has been operated with considerable efficiency and security—into a system where a number of separate parts will be created and their relationship will be on a changing contractual basis. Instead of the totally integrated system we had and still have, this will be entirely new territory. Because electricity is of such vital importance and ranks with water as being one of the essential ingredients of life as we know it now, with a change of this magnitude coming about I think it is essential that Parliament and this House of Parliament should look with extreme care at this measure which takes on historical proportions because of the size and importance of the industry it deals with.
I should like to start with prices, because prices are of great concern to all consumers of electricity; indeed all those who live in this country. It is a vital matter. The first thing that people want to know is what will happen to the price. The price of electricity in what appears to have been the run-up to this measure has not been very satisfactory. In 1988–89 we had a 9 per cent. increase and in 1989–90 we have a 6 per cent. increase. Who knows whether there will be others before the measure takes effect. What is particularly galling is that during that period, the element which creates the major cost in electricity distribution: namely, the primary energy input, has gone down in price, certainly on the fossil fuel side. That should normally have been reflected in a reduction in price, but instead there have been increases. As I understand it, the increases have been due to the fact that a larger rate of return is felt to be necessary.
Will this concept of a larger rate of return continue under the privatised system? Will that come into this very complex price formula, which the noble Lord, Lord Williams, referred to? It is a difficult formula to understand even for those who have been familiar with the energy industry. That is one factor that people are concerned about; the rate of return.
Another factor will be the extent of the new investment required because sooner or later that is bound to be reflected in prices. Before that matures and brings benefits, there will be the cost of raising the money. There seems to have been a slight degree of confusion concerning new investment. Various

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figures have been mentioned. The last figure that I can recall is the equivalent of £30 billion by the end of this century. Perhaps the noble Lord in winding up will be able to tell us what the position is. But whatever it is it will be a large sum, partly required for new generating capacity and partly to update the grid. We ought to know what that is and what price increases we can expect to pay for it.
On top of that there is another factor: the cost of privatisation and, perhaps more importantly, the cost of the reorganisation which privatisation will bring about. There have already been rumours in some of these leaked documents from one of the big companies being set up that these costs could be extensive.
All those factors add up to fairly severe pressures for upward movements in prices, some of which, it might be argued, would have come about anyway because there would have to be new investment, but some of which are peculiar to this measure.
On the other side of the coin, there is the pressure which will be exerted through the director general, the regulator, to increase efficiency. He will obviously be doing his best to do that. What we want to know is what the balance is to be over the next few years. Will the balance be that on the whole the factors making for the upward pressures in prices will pull them up? Or will the counter pressure of increasing efficiency counteract that to a large degree and even bring prices down? That is something which we should like to know about and I presume that it will certainly have to be mentioned in the prospectus.
Next there is security, because the one thing that is absolutely vital about an electricity supply industry is that it must be secure. It must be secure not only to meet normal needs, but to meet abnormal situations. On the whole, as I believe your Lordships will agree, the electricity industry of Britain has been extremely good at maintaining the security of the system, even in the most difficult situations. Indeed it has been recognised the world over for it. I remember when some years ago they were having "brown outs" as they are called in the United States—for a period the city of New York was blotted out—and we were all saying happily, lighted and warmed by our electricity system here, "It could not happen here". What we must ask is: could it happen here under the new arrangements?—because the responsibility for security will be shifted from a single integrated operator, which has developed high technology in dealing with such problems, to 12 separate companies and a grid company. Presumably among them they will share this responsibility. That is a much more difficult concept to visualise. On the face of it, there seem to be some risks inherent in this arrangement. We shall need a good deal of reassurance that the new arrangements will maintain the very high standards of security we have had in the past.
There is a related problem to worry us. It partly arises from competition and it partly raises the question of security and has been referred to by the noble Lord, Lord Williams. It is that the very large consumers of electricity will be free to shop around. Today they might be doing their business with
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company X, and tomorrow they might decide that they can do it better with company Y. They will therefore shift around a large amount of business in one go which will have considerable impact on the operations of the companies concerned. That could have all kinds of repercussions on the domestic market, on prices, but above all on security. What will be done with the contracts entered into for the supply of electricity which will then be substantially surplus to needs because these people have gone elsewhere? Will there be some mechanism for transferring a contract at a lower price that the second company has negotiated with this large user? These are matters of some concern because of the impact that they could have both on security and on the market.
We then come to the question of competition. I have already declared my interest. I am among those who are hoping to negotiate a private generating supply based on CHP and I should like to know where we stand. We have done a great deal of work. I am talking of two consortia; one in Leicester and one in Sheffield, in which the local authority and other bodies are involved. We have prepared schemes which we believe are attractive and both the electricity companies concerned have talked to us in positive terms. However, we must now wait until the long drawn-out, somewhat arduous and difficult negotiations have taken place between the 12 companies and the two main generating companies. Until they are in place nothing else can happen.
As we understand it, the contracts arc likely to last for approximately five years and maybe more. It could be that only at the end of that five-year period will the small private generators come on to the scene. It is important that we should know because some of us have geared ourselves up for getting in on the act from day one. We have been excited by the prospect. We have thought hard about issues such as the CHP schemes which could make use of the waste heat, and so forth. But we have been somewhat delayed and are now concerned about the future delays which may occur until the initial contractual network is in place.
Obviously that will affect the speed at which competition develops over a wide area. It could be that for the first five years the competition will be between the two main suppliers and that little else will come into the picture. If that is so we should like to be informed; if not we should like reassurance in the other direction.
That leads to the question of competition in primary energy. A number of issues are involved, including that relating to the nuclear component. I agree that we should have a nuclear component and I am in favour of that. However, it so happens that at the moment nuclear energy is far more costly than other forms. It might be argued, for example, that at this stage we should not add to that cost with new nuclear stations. Instead we should continue our research and development capability and bide our time until the nuclear position becomes more competitive.
Whatever the answer, we are faced with a difficult situation because of the increase in the cost of nuclear on the one hand and, the diminution in the

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cost of fossil fuels on the other. The Government have devised the proposal which was explained most clearly by the noble Baroness.
I am a little doubtful about including nuclear in one of the big generating companies. It will complicate its task and our view of its task. As the noble Lord, Lord Williams, graphically pointed out, it will make drawing up the prospectus difficult. At this early stage in the debate, and before we reach the Committee stage, I suggest that there is a great deal to be said for a proposition which was introduced in the other place. It is that the nuclear component should be separated off and another company formed. That is being done in Scotland where there will be a separate nuclear company with the other two companies as shareholders. Even that proposition would be better here than would mixing up the nuclear component with the fossil fuel generation of one of the two companies. It would then be easier for all to understand what is happening. I hope that we shall pursue that matter as we reach the Committee stage.
I was interested to hear what was said by the noble Baroness about the renewable content in the arrangement: that a special proportion of the arrangement will be reserved for renewables. However, I am worried about one issue. I understand that renewables will not be introduced into the special measure unless the projects are either completed or committed by the end of this year. That would make life very difficult because a number of the projects are at an early stage. There has in the past been doubt about the role that renewables can play in the energy content of this country. If it is correct that in order to qualify for the special arrangements renewable projects must be in place or at an advanced stage by the end of the year, the nature of the arrangement would be limited.
I should like to turn to coal, an industry with which I had a close association for many years. I hope that as a result of the negotiations which are now taking place a continuing substantial place will be found for indigenous coal. I do not say that for emotional reasons, although I feel a little emotion for it. The reasons are down to earth. Overdue dependence on imported coal could be a risky process because only about 3 per cent. of the world's coal moves in international trade. It is totally unlike oil where the bulk produced is traded and therefore there are compensating movements in that vast trade. However, in the case of coal that is marginal and it is totally dependent on what happens in the country in which it is produced. If there is a shortage of coal, for example in Australia, or there are strikes the marginal element which is exported will immediately suffer. If there is a sudden and massive change in the rate of exchange coal will be immediately affected, as it will if there is a substantial change in freight rates.
There are many uncertainties about imported coal, with which I was once familiar. I hope that on grounds of security and continuity, quite apart from the social implications, we shall be seriously concerned if there is not a substantial coal contract in the new arrangements. I have been informed that
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British Coal has bent over backwards to make a competitive contract related to the RPI. It will include an element to compete with coal from anywhere else. The corporation is trying very hard and I hope that there will be a positive response.
I should like to share the views expressed by the noble Lord, Lord Williams, about efficiency, conservation and environmental questions. I believe that the contents of the Bill should be sharpened up in those respects. There are plenty of good intentions but I believe that it needs to go further. For example, the question of energy efficiency in use is barely touched upon. There is an obligation to stimulate it and an intention on the part of the companies to provide guidance to consumers. However, that does not go nearly far enough. The fact is that we live in an age where it is of vital importance, not only on economic grounds but on wider ecological grounds, that we make the best use of energy in order to diminish effects on the atmosphere while retaining more in the pocket.
Those of us involved in energy conservation are concerned that even the work which is now being carried out by the Electricity Council will disappear because the council will disappear. Therefore, I believe that we should return to consider that area most seriously. We should make it part of the obligations of all concerned positively to promote the more efficient energy in use. I need hardly remind noble Lords, many of whom have studied the matter closely, that in many states of the USA the regulator does not agree to new investments in power generation until he has been assured that every effort has been made by the utility company to promote a corresponding amount of energy efficiency. That is written into the licensing rules and I believe that we should make similar provisions.
As regards the environment, there is a need for a code of practice setting out more clearly the obligations and not simply for repeating previous legislation.
In conclusion, this is a substantial and far-reaching measure. What is happening is that a major basic industry, upon which we all depend, is at one and the same time being restructured and privatised. It might perhaps have been more prudent to carry the restructuring first and tried it out for a while before privatising the industry. But these two steps are being taken together. That being so, I think that we should look at the issues extremely carefully, according to our old tradition in this House.
We must consider objectively, and with due deliberation, what are the changes which need to be made in order to make this measure more acceptable. It must be acceptable not only within the framework of a competitive society but also within the framework of a society which cares for those who are in financial difficulty and which avoids undue disconnections, to which the noble Lord, Lord Williams, referred. But, above all, it must pay full regard to the environmental issues which face our generation.
4.1 p.m.
Lord Carver: My Lords, I intervene to speak on the Second Reading of this Bill as a member of

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your Lordships' Select Committee on Science and Technology. The sub-committee, of which I was a member, last year studied research and development in nuclear power under the chairmanship of the noble Lord, Lord Nelson of Stafford. Our report was published just before Christmas of last year. The Government's response to that report was received just before it was debated in this House as recently as 14th April. Neither that response, nor the noble Baroness's reply to the debate removed some of the concerns of the committee about the effect on research and development into the country's longer-term energy needs of the privatisation of the electricity supply industry, which this Bill proposes to bring into effect.
Unfortunately, the noble Lord, Lord Nelson of Stafford, is at present abroad and unable personally to express today the concern to which he drew attention on 14th April. However, I know that what I have to say has his full support. I am also concerned because the same sub-committee, of which I am now chairman, is this year studying certain aspects of the greenhouse effect, to which this Bill has a direct relevance. Both of those studies are very much concerned with the long-term future of our energy supplies: their adequacy; their security—to which the noble Lord, Lord Ezra, has so forcefully drawn our attention—their safety; their availability at a reasonable price to industrial and domestic users; their competitiveness in a Europe without frontiers (which one assumes will be without energy frontiers) and their effect on the environment.
The first of the conclusions of our report on research and development in nuclear power said:
"The present abundance of energy is unlikely to last. There is no adequate alternative to fossil fuels other than nuclear energy. The United Kingdom must therefore retain the capability to develop and expand its nuclear power industry, in the most cost-effective way, taking full account of public concern over the impact of the nuclear programme on health and on the environment, where possible in collaboration with agencies in other countries".
We expressed ourselves generally satisfied that the research and development basis needed to support the continued use of existing nuclear power stations and the planned pressurised water reactor programme, was likely to be adequate, as was the R&D needed to support health and safety aspects. We also accepted that it was not yet clear that the fast breeder reactor would be an economically viable successor, although it is the only real alternative to an advanced PWR. The price and availability of uranium would be the critical factor on that issue.
The Government, however, plan to close down the prototype fast reactor at Dounreay in 1994, rejecting our advice that it should continue in action as long as it will be useful to the European fast reactor design. In their response to our report, the Government refuse to pick up any of the bill towards the latter, to which at present the National Nuclear Corporation and the CEGB contribute something between £6 million and £7 million a year. They intend to leave it to, in their words,
"potential customers in the electricity supply industry and to other interested parties (such as potential manufacturers of fast reactor components)".
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But, in that part of their response dealing with long-term R&D following privatisation, the Government said:
"The various components of the privatised ESI can be expected to scrutinise their R&D programmes carefully in the light of their corporate strategies. As with any other organisation, it will be up to the privatised companies to ensure that their R&D needs are met. The Government would expect them to focus on near market research, on operational research and on research that is particularly applicable to them as commercial companies. It would then be for the Government, as at present, to undertake any necessary research which may have longer term national implications. If the privatised ESI decides not to do work which the CEGB is currently doing for national interest rather than commercial reasons, then it will be for the Department (of Energy) to assess the long-term implications and decide whether or not to fund the work".
I listened most carefully to what the noble Baroness said on the subject, in her introduction to the Bill, when she referred to Clauses 36 and 37. I am afraid that I could not detect anything more encouraging other than a pious expression of hope that the private sector would undertake the necessary R&D. I suggest that that is a quite negative and unsatisfactory attitude. In the debate on 14th April, I described it as an Asquithian one; that is, one of wait and see. I suggest that that is no way in which to deal with such an important matter as the long-term future of our energy supplies.
That long-term future will have to take account of the greenhouse effect. Even if that effect did not exist, there would have been great uncertainty about future energy needs and how they should be met. There are great uncertainties about the greenhouse effect: about the current concentrations of the gases which cause it, and even more about how they may develop; about the climatic changes, global and regional, which they may cause and about the effect of those on sea and land and on all forms of life, human, animal and plant, in or on both.
However, there is enough international scientific agreement now to indicate that radical measures will have to be taken on a global basis to reduce the emission of these gases, notably carbon dioxide, to which the production of energy contributes so much. International and regional agreements will have to be concluded and enforced to give effect to them, and governments will have to be the agents. Those measures may involve such things as increasing the use of non-fossil-fuel-based forms of energy production; of reducing CO2 emissions by fossil-fuel-based systems—for instance, switching more to natural gas—and, perhaps most important of all, energy conservation.
A move in that direction will require a strong research and development effort, well directed on a long-term basis, if it is to be done effectively. It will almost certainly mean forcing the electricity supply industry to adopt systems which will increase the cost of supply, apart from the research and development cost involved: systems, which in the pursuit of free market economic competition, they would reject. Energy conservation is clearly not attractive to an industry trying to sell energy, however eloquently government appeals for it may be phrased, and however pious the expressions of hope may be that such a need will be met.

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The Central Electricity Generating Board had a statutory duty, which it has taken very seriously, to meet the country's needs for electricity, balancing the needs of consumers of different kinds, of the long against the short-term, of economy against effect on the environment, both present and future. In attempting to retain some of those central functions while splitting generation from distribution, and splitting both up into privatised firms, this long and complicated Bill seems to me to attempt to apply a much higher degree of Whitehall control than is now exercised by the Department of Energy over the CEGB. There is very little likelihood of it being effective in seeing that the necessary research and development is done to ensure either the security and efficiency of our future supply of electricity or that its effect on the environment is not harmful and meets the obligations which we are likely to have to assume in order to counter the greenhouse effect.
When someone with my background talks about national security he is assumed to be referring to the armed forces. I can think of no factor more important to national security than the future of our energy supplies and their effect on the environment. I fear that this Bill will do neither any good.
4.10 p.m.
Lord Diamond: My Lords, in thanking the noble Baroness for her introduction to this Bill I hope she will not regard that as the conventional start to a speech, as is regular in your Lordships' House; it is due to the fact that I have listened to the noble Baroness on many occasions and I have always been impressed by her courtesy and her clarity. I look forward for a long time to having the opportunity of saying so. I can only hope that what I am about to say does not do her too much harm.
I am delighted to follow the noble and gallant Lord, Lord Carver, with every word of whose speech I agreed for the reasons which I will give when I come to that part of my comments. The noble Baroness made it clear that the Government have given great and careful thought to the needs of the electricity supply industry and have, perhaps not surprisingly, come to the conclusion that the industry ought to be privatised in its entirety. I say not surprisingly, because that is wholly in line with the Government's ideology.
We on these Benches do not approach the matter in that way. We regard every issue of privatisation versus continuation in the public sector as being a matter worthy of separate examination. We shall therefore reach a conclusion based on the facts of each case. As regards electricity, we certainly do not regard it as a natural monopoly like water—certainly not. We think that there is no reason in principle against transfer to the private sector of those parts of the electricity supply industry where there is natural competition and where the national interest does not forbid it. Subject to those two qualifications we believe that it is open to the Government to endeavour to demonstrate that their particular brew is capable of reaching those parts which perhaps others do not.
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However, there is at least one area where the criteria to which I have referred are not satisfied. I refer to the nuclear generation of electricity in England and Wales. My noble friend Lord Taylor of Gryfe will be speaking from his vastly greater knowledge and close experience of nuclear generation in Scotland. For England and Wales, however, huge questions arise immediately one starts to consider the matter. Here I repeat my gratitude to the noble and gallant Lord, Lord Carver, for having spoken so strongly in this respect.
If one thinks of the different types of nuclear generation and the problems that are involved in selecting which type it should be; if one thinks of the safety issues involved in nuclear generation; if one thinks, as has been explained at some length, of the problems arising out of the necessary long-term nuclear research and development activities, the expenditure and who is to bear the cost; if one thinks of the huge costs involved in de-commissioning this somewhat quickly obsolescent plant; if one thinks of the many problems associated with, and very much in the public domain, the disposal of nuclear waste; if one thinks of the extent to which it is safe and secure for this country to rely on filling any gap in our nuclear generated electricity from France—if one thinks of all those problems and realises how very much national interests are involved, how deeply they are involved, and for what a long period ahead as far as one can see they are involved, we are certainly not satisfied that in regard to England and Wales the Government have reached the right answer.
The Government cannot claim to have done that, either, under the heading of competition. The Government do not offer any solution to the problem of competition in nuclear generation. They have merely transferred—allocated—the whole of nuclear generation in England and Wales to the already too big, big G. Therefore, on this issue, I am asking the Government again to have second thoughts. I say "again" because, of course, we reached a stage in water privatisation where the Government decided they ought to have second thoughts. They took back the Bill they had in mind and postponed presentation of it. They gave much further thought to the issues involved where national interest seemed to be the dominant factor.
The Government came up with a solution. They proposed the National Water Authority—a public body within the structure of a privatised industry. That is a parallel and a reinforcement of my argument that the Government should seriously consider removing from the Bill the privatisation proposals for nuclear generation and instead provide for control by a public body. One already has to hand the example of the AEA. If the Government are not prepared to do that, perhaps they will at least provide for joint control by a body which is both public and private; the mixture which has worked so well in many areas and to which the Government have given their approval on many occasions.
I am sure that that is a reasonable request. It helps the Bill. It certainly does not detract from the Bill's possibilities and it would remove anxieties which

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are generally felt throughout the nation about issues which should not be left to market forces to decide.
That is my main request to the Government. However, just as this combined private and public enterprise might fill the bill here—though I would much prefer a government-appointed controlling body—similarly, with the national grid where the Government have provided a solution of 12 area bodies (as I shall continue to call them because we all understand what we mean by that) the Government should think again.
It is all very well saying that we have here 12 different area bodies that will naturally compete. It is true that they will represent different areas, but their interests are not different; they are common. I share the anxiety that has been expressed in many quarters that it will not be long before we see a nice cosy arrangement being made to overcome the awkwardnesses of competition at their level. I am not speaking of a government majority shareholding, but there should be a government presence which need be only of the order of about 10 per cent. There should be a government presence within the councils and the decision-making bodies of the 12 area boards as regards the making of their decisions concerning the national grid so that there will not be collusion between them in order to avoid the Government's intentions under the structure that they have provided in this Bill.
There are only two other issues to which I wish to refer because so many excellent points have already been made. The first concerns the environment. With the Government in their present frame of mind—we were reminded only a short time ago about the conference that is to take place at No. 10 in the very near future—and with the Bill providing a broad separation of the responsibilities of the provider and the polluter, in theory at all events there should be a better chance of enforcing—not providing—the protection of the environment that we all seek. I am not sure that I expressed myself with sufficient clarity. I was referring to the separation of the functions of the protector on the one hand and the polluter on the other.
The second matter I wish to refer to is that of energy efficiency. There is much more to be done than has been provided for in the Bill in order to secure greater efficiency, energy saving and the examination of alternative sources of supply. It is very easy to talk about the possibility of using North Sea gas to provide electricity generation. But we all know that North Sea gas is not an endless source of supply. We must look much further ahead and examine much more carefully all practical possibilities of achieving these ends, not excluding the most recent experiments with test tubes in cool kitchens. I remind myself that the word "cool" not only describes the temperature in the kitchen, but it also describes fairly accurately our approach to this Bill.
4.23 p.m.
Lord Beaverbrook: My Lords, last week your Lordships debated at Second Reading, the government's proposals for water privatisation. A number of your Lordships took us back through the
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past three or four hundred years to try to show why water should remain in the public sector. At least as regards electricity, which we are debating today, it is almost impossible to return to the years before the turn of the century.
The electricity industry is exclusively a child of the 20th century. It has affected every single one of our citizens and it has changed the life of this country more than any other invention or industrialisation. When looking at our electricity industry today, it is difficult to see why we have taken so long to return it to the private sector. After all, it has never been in intensive financial care, unlike steel or the Rover Group. It has a record of low-key but competent management. On the whole it has efficiently provided what we want; namely, reliable power at reasonable cost, and it has done so even while being forced to subsidise the coal industry.
Of course, government involvement was needed during the evolution of the industry. The Electricity (Supply) Act 1926 set up the national grid and now that is a vital component of this country's infrastructure. It allowed a reduction in surplus generating capacity in the early 1930s from 80 per cent. to 15 per cent. That is a prime example of beneficial interference by government. Then we had the nationalising Electricity Act 1947. At that time reorganisation at regional level was needed, but sadly, political dogma dictated the way in which the government brought this about.
Nevertheless, as a country, we find ourselves today with an electricity industry organised on at least a rational basis. But it is an industry with shackles. It is a good, old-fashioned utility structure interfered with by Ministers, civil servants, quangos and by Treasury cash limits. Electricity simply cannot move forward to face the challenge of the next century unless we return it to the management to manage, and to succeed or fail by the results that they produce. That will take place in an atmosphere, for the first time, of competition, rather than of monopoly power. I cannot and have never been able to understand any politician, Minister or any administration past or present who say that they want governments to run business. Experience has shown that to be both commercially disastrous and politically suicidal.
So privatisation is the track that we must now take if we are to have an electricity industry going on to its next stage, and one that makes use of the new technologies that are surely coming along, such as automatic switching meters, line data transmission and all manner of innovations, some of which are not yet even contemplated. Could, for example, the telecommunications industry really have responded to the huge growth we now see unless it was able to react to consumer demands? That was only possible without a stifling bureaucracy and the financial contraints of state ownership.
I firmly believe that countries who do not free their utilities from the shackles of state ownership will be left with a sorry legacy of unresponsive, unmodernised, over bureaucrated and under-capitalised monuments to the sorry era of nationalisation that has so blighted the mid-20th century. This country has moved from being the sick man of world

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economies in the 1960s and 1970s. We now proudly take our place again in the top league. This Government's policy of returning business to its management and shareholders has fully contributed to that renaissance. The Bill we are discussing today will enable another step in that process, the result of which is now a huge benefit to all our citizens, irrespective of whether they consume electricity, work in electriciy or whether they are going to invest in electricity.
4.28 p.m.
Lord Shepherd: My Lords, as one who has been involved in the public sector, I entirely agree with the noble Lord, Lord Beaverbrook, when he said that Ministers are birds of passage and that civil servants brought up in the narrow confines of Whitehall are not the very best for the running of industry. Yet we have a Bill commended by the noble Lord and which comes from that exact province. It has all the weaknesses that I believe the noble Lord has in mind. I believe that the noble Baroness was quite right in her fulsome praise of the electricity industry, both of those who work in it at board level and of those who work in the supply and distribution of electricity.
The industry has had its difficulties and it has made mistakes. I believe that those mistakes are sufficiently well known without having to be examined this afternoon. But they are all mistakes in the planning procedures within the industry, and both the board and the departments had to take some responsibility where mistakes were made. To my mind, the Government make their greatest mistake in not maintaining and retaining the very strengths of the industry.
The present daily operation of the Central Electricity Generating Board ensures that at any time there is enough reliable generating plant capacity connected to the transmission system to meet the forecast load. The actual power output from all the generating stations is determined continuously by computers throughout each day using sophisticated, mathematical calculations so as to minimise the cost of electricity supplied to the area boards. Such methods of cost minimisation used by the board are based on the overall system optimisation rather than, as proposed in the Bill, on individual contracts. The problem has been the subject of much research throughout the world and similar techniques are used, without exception, by all electricity supply utilities. Any departure from this total system approach produces more expensive electricity. This can be scientifically verified.
Thus, given the plant that is available, the board in its present integrated form can produce the cheapest possible electricity. The system operators through the national and local computer control centres have always ensured that supply and demand are matched by observation of best market prices. In effect the natural economic centre, or spot price market place, for the buying and selling of electricial power exists in the present day operation of system dispatch. By removing this normal function from the proposed grid company, which will be financially neutral, the
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Government have abandoned the benefits which flow from the operation of free market forces.
The claim that merit order dispatch will still be observed to produce the lowest cost electricity to the consumer is not true. The present system of cost merit order will be replaced by a price merit order system, the operation of which is to be governed by a generator pool subject to the behaviour of a gaming mechanism. Arbitrary and complex rules are proposed in the electricity supply licences for the successors to the area boards to regulate charges for the supply and distribution of electricity. When tariffs are to be formulated and promulgated for a year ahead, the distribution companies must account for variables in these rules, the values of which can be estimated only approximately or will be imposed by the Government.
In this respect it is worth noting the comment made by a former chairman of an area board, Mr. R. Peddie. In the Electrical Review of 21st March this year he said:
"It is obvious that the working and regulation of the electricity supply industry will become more opaque and incomprehensible to all but a minority of large customers".
He went on to argue that, with the complexity of the industry plus the political pressures, even the most saintly polymath director general of regulation will be bound to make bad economic decisions from time to time. He concluded:
"Surely some form of appeals procedure to an independent body is needed".
But the Bill makes no provision for independent arbitration on general tariffs.
The assumption in the Bill that any customer can obtain power from any specific generating source at all times is not, and never has been, technically possible. Faults occur daily on the electricity supply system, some causing loss of income to manufacturers and loss of information to computer operators. Liability and recompense is presently the concern of the area boards. With several hundred fauls per day and 2 million customers, the liabilities of the constituent companies will have to be defined at the start if the privatised industry is not to become a scene of much litigation. This need is particularly true of the grid company where faults have the most impact and liabilities are consequently the greatest. In tems of liability, electricity supply is a grey rather than, as the Government appear to believe, a black and white industry.
It can also be argued that the creaming off of the most economic production sources by consumers having the most purchasing power would result in the inequitable treatment of less powerful consumers, including domestic consumers, for whom electricity prices would be influenced by the production costs of less economic sources. Another aspect of the system of contracts concerns the independence of the grid supply company. The grid company has to decide on the choice of generators in the pool around the margins of demand not covered by the contract. With the grid company owned by the distribution companies, which are themselves to become generators, the need for independence of operation needs special emphasis

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lest influences by the owners or buyers work to the disadvantage of the generating companies and consumers. It would have been a far better Bill if the grid company had been established as a separate company in its own right.
The contracts to supply electrical energy from non-fossil sources, which include nuclear and imported electricity, will have another consequence. At present most renewable forms of electricity generation are not available in amounts sufficient to displace the contracted capacity of any nuclear power station. Furthermore the form of a contract to cover the charging of the unpredictable and variable nature of some renewable supplies is unclear. The minimum quota which the distribution companies will have to purchase will tend to bind the companies to take the maximum nuclear capacity available. They will thus be shielded from competition. With cheap electricity being available from France, the net effect will be to freeze renewable energy sources out of the non-fossil quota.
Baroness Hooper: My Lords, I should perhaps have intervened earlier when the noble Lord, Lord Ezra, referred to the position of renewables in the non-fossil fuel obligation. I made the point that we propose to bring forward an amendment following the announcement by my right honourable friend the Secretary of State that there would be a safeguarded position for renewables within the non-fossil fuel obligation. That covers the noble Lord's point.
Lord Shepherd: My Lords, that is certainly a step forward. However, we shall need to see the proposals and how and to what extent they will provide motivation within this field.
Perhaps I may say a few words about research. The Bill makes no mention so far as I can see of the need to continue research despite a recent five-year audit by the CEGB showing the cost effectiveness in this area. I do not know whether the Minister when he comes to reply will be able to say anything about the Marchwood laboratories which we understand will be either run down or closed. This is the centre of the research.
At present there is a statutory requirement for the electricity industry to do research, but this will disappear with the privatisation Bill as it now stands. The electricity supply industry is a major, probably the biggest, contributor, as we all know, to environmental pollution in the form of carbon and sulphur dioxides which are connected with the greenhouse effect and acid rain. Apart from these areas, continued research is needed also into the problems of safety and reliability. What plans do the Government have to promote research work in general in this industry and into environmental but non-commercial problems of general concern in particular?
There is much, too, that needs to be said in regard to conservation and efficiency. Time is pressing, but I hope that by the time the House goes into Committee on this Bill the report of my committee, sub-committee B, will be available. In it we make criticisms not only of the commission but also of the Government, particularly about the energy
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efficiency office which they are introducing in their capital spend. We wish to see far greater steps taken in this area.
It is worth remembering that other countries, the United States and Sweden, are taking special steps to ensure that investments in energy saving measures receive the same assessment as investments in new plant capacity. Like the noble Lord, Lord Ezra, I do not hold in much regard the importation of cheap coal or what appears to be cheap coal. This would of course have short-term effects within our own coal industry and once pits are closed it is very difficult to reopen them. The size of the market is in fact very small. I think it is something of the order of 140 million tonnes per year, and if this country were to move into large-scale purchases of this present cheap coal from overseas, prices would rise dramatically.
This Bill needs to be examined with the utmost rigour and care, but it will need, too, a new approach by the Government. The noble Baroness took a very responsible attitude today and treated the House as it ought to be treated; very much different from her colleagues in another place. I hope that with her and her noble colleagues this House will be able to make some significant improvements in this Bill, because this industry requires it.
4.43 p.m.
The Earl of Lauderdale: My Lords, like other speakers this afternoon I must begin by congratulating my noble friend the Minister who opened the debate with such clarity and with all the grace we have come to expect from her. We look forward to collaboration with her in improving this Bill as it goes along, and we hope that what is said today will not, in the words of the noble Lord, Lord Williams, seem too brutal. But I think she knows that there are some relatively unpalatable things on the way.
With nearly 30 speakers on the list, I have no intention of dotting i's and crossing t's of things already said. But the speech of the day this afternoon has surely been that from the noble and gallant Lord, Lord Carver—he is not in his place at the moment—with his sincere and cogently argued plea about research and development. We have, of course, heard the reference of the noble Baroness to Government consultation with the Advisory Committee on R&D— —ACORD—and, if I may say so in the nicest possible way, that is a familiar genuflection of the sort we have had many times before. I implore the Government to take very seriously indeed the words of the noble and gallant Lord, Lord Carver, bearing in mind that the story is going around—I cannot vouch for it—that a decision to slash research on fusion, because it is 30 or 40 years away, has in fact been taken with very little top-level scientific consultation.
My noble friend Lord Beaverbrook just now said that surely it is not the Government's job to run business. Certainly not. But surely it is the Government's job to run defence and, as the noble and gallant Lord, Lord Carver, said so cogently, nothing is more important to our national security than the safety of our power supply.

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Electricity planning and pricing is at the heart of industrial costs and is therefore a critical factor in Britain's place in the world. The question that I have been asking myself as the White Paper came along—there has been much discussion on the subject—and as one had a chance to read the Bill, is this: Has the Department of Energy got it wrong again? I say "again" because it is only five years ago that it scoffed—and I repeat "scoffed"—at the forecast in this House that unless something radical was done soon there would be a shortfall of electricity generating capacity by the end of the century. What did we see when this Parliament opened 18 months ago but an immediate and almost panic—at any rate, urgent—declaration by the Secretary of State for Energy that we now needed 15 gigawatts of new capacity by the end of the century, a prospect which had hitherto been denied. Has the department now got it wrong again?
I was glad to hear the noble Baroness say that the companies that are, as it were, nibbling at the prospect of coming into this business, some 20 of them added together, reckon to produce about half the shortfall—7 gigawatts—while the plans of the Central Electricity Generating Board, as we now know it, are intended to provide the rest. I hope all that happens.
But how far will this Bill advance the matter? It splits generation from transmission; it dismembers a highly co-ordinated organic command system; it replaces the cost link between demand and supply with one based not only on price but on contract price—all this to the astonishment of the world, not least of those parts of the United States where the regional industrial economy is in some ways comparable with that of Great Britain. As the energy Select Committee in another place declared:
"The Government should explain why the vertical integration is preferred in Scotland but not in England and Wales".
The committee went on to say that they were,
"concerned how far economic logic played any part in this choice".
This is an enabling Bill. The nitty-gritty is hidden away in complex licensing provisions. But the real problem always is how to reconcile absolute security of supply on the one hand with cheapness of supply on the other. Officially we are told—this is the prevailing philosophy, with which in principle I agree, but I do not think it applies in this case—that market forces and competition provide the answer. In fact, as I read this Bill, the key questions are not solved at all; they are shelved. They are shelved onto the head of a regulator whose job of squaring the circle is about as promising as an invitation to invent perpetual motion.
Only a cumbersone bureaucracy can manage this fragmented system, and I take two headings in particular. First, there is the regulator. His staff are to regulate 12 public energy suppliers—what for convenience we have hitherto called the regional boards—plus the grid company. That is 13 enterprises to start with. They have also to monitor the supply contracts of two large and a score of small generators. In addition they have to hearken to 12 regional consumer committees. It is quite a task and
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would test the patience of Job. On the experience of Ofgas and Oftel—I think that their experience is instructive and in some respects commendable—the proposed staffing level of 115 looks wildly optimistic.
On the supply side, the noble Lord, Lord Williams of Elvel, mentioned that the formula RPI minus x plus y whereby prices are to be determined is incomprehensible, certainly to the layman. I have looked at it, and it is 12 lines of algebra. I am sure that clever people will understand it and I am sure that the clever people on the Front Bench will understand it. I do not, but never mind, I am not a mathematician and I am rather slow on the uptake.
Whatever is said about competition forcing price close to cost—we are told that competition will force down price as near to cost as is humanly possible—a merit order system on private investment and contracts must mean "take or pay" deals for not less than 70 per cent. of the output of private generating companies.
These will be under an obligation both to their shareholders and to the sources of their loan finance. I argue that the sums needed to make company investment attractive can only be greater than those needed in the public sector just to meet the unavoidable costs of keeping reserve capacity on call. Supply pools with a complicated settlement system are planned. The extra cost of these has been put at £250 million a year by none other than Mr. Frank Ledger, former member of the CEGB board and now Production Director-designate of National Power. He knows what he is talking about.
Some 20 consortia are said to be eager to come into generation. We are told that together they offer to provide about 7 GW, half the shortfall of capacity with which we are confronted. Will they not find five-or even seven-year supply contracts much less cosy to fund than an offtake backed by state guarantee?
So far as I am concerned, it all adds up to the sorry conclusion that, while privatisation—I want to see privatisation and I believe that it has brought great benefits elsewhere—is a desirable aim in itself, this is not the way to do it. Higher prices must result. I am sorry to conclude that the Department of Energy has got it wrong again.
4.53 p.m.
Lord Kirkhill: My Lords, I wish to discuss the Bill briefly as it applies and relates to Scotland. If I have an interest to declare, it is of a retrospective character, in that I was at one time chairman of the North of Scotland Hydroelectric Board.
I start from the proposition that, whatever the merit of a private power industry may be, it is in marked contrast to the public service nature of the product. Unlike the noble Lord, Lord Diamond, I think that the electricity supply industry is as much a natural monopoly as the water industry. In my view, that latter industry is about to be radically altered by the present Administration, which I regard to be of an extreme and doctrinaire character.
If I may speak in the context of the Scottish dimension, the usual free market principles so much

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admired by the present Administration are, the Administration judge, inadequate to meet the needs of the electricity generation transmission and distribution. Hence, I assume, the retention by the Secretary of State for Scotland of very wide powers to direct, for example, the operations of the power stations so far as concerns the use of fuel stocks and the levels at which these are to be sustained.
However, the most important person after the industry is privatised will be the Director General of Electricity Supply. We are told that in Scotland he will have a deputy. Let us consider what he is asked to do. He is to grant licences, enforce their conditions, fix maximum prices and prescribe individual standards of service. Perhaps the Minister will tell the House when he replies what he thinks the phrase "standards of service" should embrace. The director general is to determine standards of overall performance and more generally exercise his discretion,
"in a way best calculated to protect the interests of consumers in respect of prices, terms, continuity of supply and quality of supply services".
That is a heavy regulatory schedule.
He is additionally to establish and control two consumer committees, which I readily concede is likely to be an improvement on the present position. In my experience the existing boards certainly listen to their consultative councils. A council is attached to each board. However, I believe that they only rarely act on the advice offered to them by the councils. In fairness to the Government's position I believe that there is a firm-up in terms of consumers' interest at that point in the Bill. Nevertheless, as I have attempted to point out, the director general's regulatory responsibilities are heavily bureaucratic in nature. I acknowledge that the same could be said about the present role of the Secretary of State for Scotland. However, as I see it, the significant difference is in the public accountability which results from the elected nature of his office.
As I indicated in opening, I am opposed to the basic principle of the Bill. Given that such amendments as may subsequently be carried in your Lordships' House are unlikely to threaten the basic integrity of the legislation proposed, I welcome the fact that in the private sector in Scotland there will continue to be two separate all-purpose boards. The arrangements suggested for ownership of the nuclear company seem reasonable—that is, if one accepts the proposition that the nuclear interest should be retained within the private sector framework. There is a compelling argument the other way that the nuclear input should be removed and retained in the public sector. Nevertheless, in the framework of the Bill that we have to discuss, the arrangement of separation of nuclear from the two boards or their successor companies appears to be reasonable, as indeed is the proposed cancellation of the joint generating account.
It is obvious that suitable arrangements will be made by the successor companies to sell to England the undoubted excess capacity that they can expect to have available. It should be a profitable form of export for them and may help to prevent—this may be a pious hope—in the future the worst excesses
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of the immediate past; namely, the recent totally unjustified price hike of something over 8 per cent. to the domestic consumer in Scotland, fuelled, one fears, by the boards' need to look as though they might just be of interest to an intending investor. Incidentally, when the Minister replies I should be interested to know whether the two boards are to be offered into the private sector on a historic cost or a current cost accounting basis. That is a point worthy of more detailed consideration.
Undoubtedly it is worth keeping in mind that the basic structure of the Scottish industry remains virtually unchanged other than there is the separation of nuclear and the creation of a different nuclear company; and that the present arrangement of the two vertically integrated suppliers is being preserved, with a new contractual arrangement replacing the existing joint generating account. By contrast, there is, and there will be, a significant undercapacity continuing in England and Wales. The overcapacity in Scotland at the moment can be of the order of 100 per cent on occasion, so that there is a great excess of capacity in Scotland. There is at the moment, and there will continue to be post-privatisation, undercapacity in England and Wales. That of course poses certain problems. It clearly gives the Scottish boards an effective monopoly; but it would seem unlikely that any private generator would wish to engage in activity on the Scottish scene. If I have misinterpreted that position, perhaps the Minsiter will correct me when he replies.
The position would seem to be: overcapacity in Scotland; undercapacity in England; a complete monopoly in Scotland, because a private generator will not dare to enter the fray; and the Scottish boards selling merrily south to England at prices favourable to themselves. It then of course touches upon the position outlined by the noble Earl, Lord Lauderdale, who talked about price and whether the price is truly competitive. One has one's reservations.
It is important to note that it appears that the Secretary of State for Scotland—after an initial refusal—will hold a golden share. That is important because it will at least prevent the worst kind of financial and commercial predator activity in the early days of privatisation. We must of course keep in mind that the SSEB as it presently is, and as its successor company will be, is a large organisation and that in the future it will prowl around—one can be certain of that—the much smaller hydro-electric board. The hydro-electric board has had a unique experience of providing electricity to the more remote areas of our country. The area which it presently embraces, and which its successor company will embrace, takes up about a quarter of Britain's land mass, although only about 2 per cent. of Britain's population. One can see in the future, five or six years on when the golden share will have expired and the Secretary of State's consequent influence will have diminished, a predator stalking the SSEB, looking most dangerously at whatever future company the hydro board proves to be. I hope that is not too demonic a scenario to paint. It is at least a possibility. It is one to which your Lordships should give consideration during the Bill's passage.

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I have said all that I wish to say on Second Reading about the Scottish position. More detailed points may be raised by my noble friend Lord Carmichael of Kelvingrove. What is certain—I echo the words of my noble friend Lord Shepherd—is that the Bill will require to be examined carefully. It requires substantial amendment. Because of our conviction we must oppose from this side of the House the basic principle which underlies the Bill.
5.6 p.m.
Baroness Gardner of Parkes: My Lords, I thank my noble friend for introducing the Bill so clearly. I must begin by declaring an interest, because I am a member of the London Electricity Board. I have served for nearly five years in that capacity. However, my financial interest will not be a long continuing one, because I am sorry to have to say that when the board is privatised I shall no longer be part of it.
I listened with great interest to the noble Lord, Lord Williams of Elvel. I disagreed completely with his anxiety that we are going to see a rash of price increases and an aggressive debt collection policy. He implied that electricity was not safe with the area boards. I must comment on that point and tell your Lordships a little of how successfully area boards do their job now. I cannot see that there will be much change in that position, because 11 of the people involved in the 12 present area boards will run the new plc. They have already been nominated for those posts. The 12th member will not be nominated, because in the North-East area we have had a retirement on age grounds. I believe that a new chairman is already in position.
I consider that plc status will be a good thing. There are three areas upon which I should like to touch—the environment, consumer affairs (customer care as we know it at the other end of the business) and the research aspect. On the environment, the London board is unique in having most of its supply underground. That is unusual, but it is expensive. I know that many people in the country would like to have supply lines which are not visible. It is a matter of cost. I understand that the possibility of going underground is always considered in the country provided that part of the cost is borne by the consumer, and provided that British Telecom is prepared to go underground in the same area at the same time. There is no point in moving one service down.
Underground works mean that the surface can be restored to a good standard. Those of your Lordships who know Devonshire Square in the City will probably have seen what a successful job has been done there. A major new substation has been built without damage to the environment. In fact, there has been considerable enhancement of the area. My Australian accent makes saying "enhancement" difficult.
There is now another area in London where a new substation is needed and plans are already under way to build it totally underground and to restore the upper area at the end of the work. The electricity
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board will contribute £1 million to the improvement of the area by the local council. I think that that is a good environmental record. I remind noble Lords also about the 1987 storm, when major efforts were made by the boards, particularly in areas of outstanding natural beauty, to restore the trees and the countryside. Thousands, in fact some area boards say a quarter of a million new trees—no one is quite sure how many but they are checking—were planted at the time. That was fascinating.
The London Electricity Board does more than just care about the environment, it also cares about the community. It has an award system called "Brightening up London" whereby every year awards are given. There are five different categories, one for people helping the elderly. When I heard the words "Brightening up London", I imagined that it was because we were turning on the lights, but that is not so. The phrase is used in the sense of brightening up the lives of the people of London. The award winners this year included a woman who was running a scheme for disabled guides; another who had started a help group for relatives of sufferers from Alzheimer's disease. All the other winners were in equally impressive categories. My area board takes the attitude that it is a caring part of the community and intends to go on in that way.
The noble Lord, Lord Kirkhill, mentioned that although people consulted the local consultative council, they acted upon what happened. Again, while I do not know about the Scottish system, I think there has gradually been a change in London, even in the time that I have been here. As a result of discussions with our consultative council, we have now produced valuable documentation. The document I am holding is called London Electricity Collection Policy Guidelines, and another is the Customer Service Manual. The Collection Policy Guidelines would answer all the anxieties which the noble Lord, Lord Wiliams of Elvel, expressed. Nothing could be better than the way in which people are encouraged to approach their problems if they have difficulty in paying their electricity bills. The first point is that they must notify the electricity board that they have difficulty. Unless boards know that people are in difficulty they just think that the customer is trying to escape payment. Naturally, no one can afford to allow bad debts to accumulate without good reason. But where there is good reason, then a means of payment is added in, so that gradually people can pay off the existing debt and at the same time pay for their present supply.
That can be done in a number of ways. One way which is important and has proved extremely helpful in the London area is to use budget meters. These are meters which use a rechargeable key. The people who have to buy their electricity use the keys, instead of the old pre-payment meters which are being phased out. Where meters exist they are allowed to keep them; but no more of those types of meter are being installed. There have always been great problems, not only of outsiders breaking them open and stealing the money, but frequently of people themselves breaking the meters open because at some time, for some reason, they have had cause to look for money.

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Under the new scheme there is no money, there is no risk to the man who used to go around and collect money from the meters, there is no risk to the customers that they do not know how much is there. There is a little key which people recharge at the local electricity board and which will only operate on their meter. It is different from the cards which people can use as a saleable asset, and a person given money to help with his heating—particularly an elderly person—might find it misused. All that has been the outcome of research which will be continuing at Capenhurst, the main research centre which we use. It is a most impressive development and there are now 50,000 of these meters in use.
As regards the Customer Service Manual, everyone has heard before about how they will be paid by their electricity board if the board's workmen fail to arrive to carry out the work they promised to do. It is important that people should understand that these solutions exist. Noble Lords might ask, "If everything is so good now, why will this Bill make it any better?" I shall give just one reason. At present there is a large element of costs imposed—80 per cent. The London Electricity Board is an industry with a turnover of £1,000 million a year. The noble Lord, Lord Williams, said that he did not think that the present people were capable of running big business, but they are already doing so and they will continue to run the industry efficiently in that way.
I believe that 80 per cent. of the costs are non-controllable costs imposed on the local area boards. They can do nothing about them. Only 20 per cent. of the costs are within the boards' own control. Under the new system with the privatisation arrangements, the boards will have much greater control of their own destiny. Because of that, I believe that they will be able to negotiate more favourable contracts. To build new stations will probably take at least 18 months, so we might not see the full benefits of competitive policy for anything up to five years. We cannot expect to see these changes overnight, but I believe we shall see them eventually and will see competition producing reduced prices for the consumers. That must be in their interests. I noted that the noble Lord, Lord Kirkhill, mentioned an 8 per cent. price increase in Scotland this year, but we have had only a 6 per cent. increase in London.
With regard to research, as I said, we are retaining it and the research establishment at Capenhurst will be continued. It has made important contributions to the success of the industry in the distribution and energy utilisation areas. Individual boards have been prepared to invest. As I mentioned those keys, I should say that the rechargeable keys were a joint development between the research body and the London Electricity Board.
However, there are other matters involved, such as the mains-borne signalling. That can only be used in an underground system. Instead of the man having to come round to read the meter, he will be able to read it and send signals to one's late night storage heaters or any type of off-peak appliances over the mains. That will be a great saving and convenience. The boards are developing a meter reading system now whereby a van will be able to drive up a street
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with the engineer reading all the meters in that street without needing to find people at home or to knock on doors.
I should also speak up in favour of the combined heat and power scheme. I say this not in my LEB connection but under my former GLC connection, where we had exactly that at Edmonton. The waste was burned and we were able at that time to sell the electricity to the national grid, originally at an appalling price. I remember some years ago speaking on an amendment here to a Bill which gave boards the right to obtain a good price for their power. But in environmental and research terms space for burying rubbish is becoming harder to find and less desirable. It must be a good thing for us not only to be able to dispose of our waste but, at the same time, to have the benefit of the power. As my noble friend the Minister said, there will be protection for the environment in terms of the emissions that are allowed from these stations.
Noble Lords may be tempted by other speakers here, or by amendments as they come forward, to tighten the regulatory pressures because it is popular and fashionable to condemn electricity boards as mindless and uncaring. But to their credit their performance in all the areas I have mentioned has been caring and wise.
The body that replaces the present system must preserve the best of what we have. A careful balance needs to be drawn between the protection of the customer, the needs of the shareholder and the pressures on companies to improve performance. As the Bill enters this House, it meets that balance reasonably well. I urge your Lordships to ensure that the Bill emerges from this House with that balance maintained.
5.20 p.m.
Baroness Ewart-Biggs: My Lords, 1 wish to join with other speakers who have thanked the noble Baroness, Lady Hooper, for the very attractive way in which she presented the Bill. That makes me that much sorrier that the content of what she said received so very little support from previous speakers. I believe that only the noble Lord, Lord Beaverbrook, and the noble Baroness, Lady Gardner of Parkes, supported the Minister, although much of what the noble Baroness, Lady Gardner of Parkes, said was in support of what is happening now. That made me rather sorry. However, the noble Baroness, Lady Gardner of Parkes, herself admitted that many changes were necessary.
We have a long list of speakers, most of whom have very specialised knowledge. I wish only to make a few very brief remarks in order to highlight the way in which some of the proposals will affect the domestic consumer. But, first, it is interesting to note how the general public have reacted to the news of the privatisation of a service which is so very central to their everyday lives. It is interesting to see that the opinion polls have shown strong evidence of very little public support for this measure. The latest poll findings suggest that about 70 per cent. of those questioned oppose the privatisation. A recent Gallup poll showed that not only were people

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opposed to the plans for the privatisation, but that 70 per cent. of those questioned said that they would probably not buy shares in the privatisation of the electricity supply industry. That makes a mockery of the Government's objective of spreading share ownership.
One wonders why there is a lack of confidence in this privatisation. Perhaps an overall reason is that people are aware of a fact, which is generally accepted here and overseas, that our publicly-owned electricity industry is considered an outstanding success. Everyone has heard people say that it is the envy of many countries in Europe. Those countries wonder why we are making this change.
However, there are other aspects of the proposals which are of particular concern to the public. One anxiety concerns whether competition will exist. The public are worried about whether prices will rise or stay the same. They are also worried about how their interests will be represented in a privatised company. My noble friend Lord Williams of Elvel made it very clear that there can be no competition at the point of consumption. Indeed, the Bill allows for only a limited degree of competition at the generation level. So the consumer has rightly sensed that this Bill has nothing to do with competition.
The consumer also wonders about prices, and whether they will rise. It is a fact that over the five years to March 1988, electricity prices fell by 17 per cent. in real terms. Unfortunately, it is also a fact that since privatisation of the industry was first mooted, there have been price increases of 9 per cent. in April 1988 and up to 10 per cent. for large users in April 1989. We face the possibility of a further substantial increase in 1990 prior to privatisation. Furthermore, a fossil fuel levy—a nuclear tax—is to be paid by all consumers of electricity without any provision for measures to encourage improved performance in the nuclear sector, which would lead to lower costs and prices.
So, the consumer wonders what will happen to prices. He fears the worst. There have been estimates that a monthly electricity bill may well increase by up to 20 per cent. by 1990. Naturally, for all kinds of reasons the poorer families and pensioners will be hit hardest by higher electricity charges. Low income households spend a much larger proportion of their income on fuel than better off families, because low income families tend to live in poorly insulated houses. Low income families also generally have less choice of heating systems and fuel. They often use a non-economic type of heating system and do not have the resources to convert it into amore cost-effective system. Those who are not in full-time work spend more time at home and therefore use more heating there than people in full-time work who benefit from heating in offices.
Changes in the Department of Social Security's benefit system since April have meant that problems of fuel poverty have been exacerbated by cuts in housing benefit and the removal of single payments and draught proofing grants. This all leads me to my main point which concerns disconnections. The disconnection of an electricity supply can and does cause severe hardship to families who find
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themselves unable to pay their bills. It is impossible for those of us who have never experienced the loss of such a central commodity as electricity to imagine a situation where suddenly we do not have any heating, where we have no refrigeration for our food, and where candles, which are a danger to small children, must be used.
The penalty of disconnection is a very serious matter. I know that the National Consumer Council welcomes the Government's undertaking to provide similar protection for customers of electricity as the safeguard that was negotiated by the Director General of British Gas for the customers of British Gas, following privatisation. I think the noble Baroness, Lady Hooper, mentioned that fact in her speech. However, the consumer bodies feel that we should not only go as far as British Gas went post-privatisation, but we should go one step further. The consumer bodies feel we should improve the situation by using this Bill to place public electricity suppliers in the same position as other commercial undertakings who supply goods or services on credit. However, those bodies feel we should take into account the electricity suppliers' special status as monopoly suppliers.
A legal obligation to supply tariff customers, but not necessarily on credit terms, would achieve that objective and ensure that those who are truly unable to pay off a previous debt are guaranteed continuing access to an electricity supply. After all, if someone does not pay the milkman for delivering his milk, it does not mean that person cannot have any more milk. Such a person can go and buy milk from another source. However, the suppliers of fuel are in a completely different position because they can remove the supply and the people affected cannot obtain a supply elsewhere.
As matters stand at present, the National Right to Fuel Campaign, among others, is very worried that the number of disconnections will rise. The example of what happened to gas consumers after privatisation has already been mentioned. It is difficult to forget that in 1988 as many as 48,000 households were disconnected from a gas supply. That rate is still 22 per cent. higher than the rate of disconnections when gas was initially privatised. To prevent the same thing happening to electricity users, the National Right to Fuel Campaign and many other agencies, including the National Consumer Council, Age Concern, and the Child Poverty Action Group, believe that the new electricity suppliers should have a duty to provide a supply which is not interrupted when a customer gets into debt.
Those bodies fully accept that the electricity consumed must be paid for, but they believe that customers should have the right to choose the method of payment and the type of meter which would best prevent them getting into debt and risking disconnection. The noble Baroness, Lady Gardner of Parkes, talked about prepayment meters which are operated either with a key or tokens, but not with money. I understand that at present they are available only to people who are already in debt. We should like to see the meters available as a preventive measure. They would allow people on very small incomes to budget and decide how best to meet their bills.
Baroness Gardner of Parkes: My Lords, I am sorry to interrupt but I feel that I must take up this point. Those keys are not available only to people who are already in debt. They are available whenever there is cause to change the meter. Whenever anyone requests a pre-payment meter, it is a budget meter which is provided. I must read to the noble Baroness an extract from the Collection Policy Guidelines under the heading "Arrangments to Pay" because she has just said that somebody would not be refused milk if they tried to buy it somewhere else:
"If the payment arrangement needs resolving over a longer term, appropriate arrangements can be made covering both the debt and the on-going supply. We will take financial and other circumstances into account when making an arrangement. All arrangements made must be kept or we may not be able to offer another one".
Without doubt arrangements exist whereby people can have an on-going supply and be helped to meet a debt which they have accumulated.
Baroness Ewart-Biggs: My Lords, I am very grateful to the noble Baroness for explaining that point. However, it is not the position as it has been explained to me by the National Campaign for the Right to Fuel. It has said that people are not allowed a pre-payment meter on request but that such meters are provided only if the electricity supplier is willing to do so. We should like to see a provision in the Bill allowing people to have such meters and for any dispute between the supplier and the customer to be settled by the regulator.
The problem is that many people whose supply is disconnected have had no verbal contact with the supplier before disconnection. In many cases they are hard pressed, single mothers who never open the door but keep the hatches down. For that reason it would be very useful for them to have such meters, which would safeguard them from being disconnected.
There are other points to be raised about consumer representation. There is a concern, shared by many of the consumer bodies, that the Bill does not give the proposed customers' committees adequate powers of redress. I see that the noble Baroness, Lady Oppenheim-Barnes, is to speak in the debate. I have no doubt that she, from her position as Chairman of the NCC, will present that concern very strongly.
I should like to end with a few remarks regarding the quality of service to the customer. My noble friend Lord Kirkhill has already spoken on this point. I know that consumer bodies welcome the provision in the Bill to enable minimum quality standards to be set and for consumers to receive compensation if those standards are not met. To be adequate those standards must cover the quality of the electricity supply itself as well as incidental service quality such as punctuality of service calls and the time taken to answer letters. The consumer bodies believe that comprehensive quality standards should cover the following criteria: the continuity of supply; voltage stability; frequency stability; response time to requests for new supply; notice periods for planned interruptions of supply; and frequency and duration of planned interruptions. It is not clear whether or not any of the above will be included in the service quality guarantee scheme.
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From what I have said I do not believe that it is surprising that there are so many people among the general public who are concerned and who oppose the privatisation of electricity. As my noble friend Lord Williams has said, we on these Benches agree with those people and believe that there is no need for privatisation. The electricity supply industry is efficient. It serves a social and economic purpose. Competition will not be introduced as a result of the legislation, and the Bill is wrong in principle and will probably be wrong in practice. We on these Benches very much hope that there will be a vigorous debate at Committee stage and that many changes will be made to the Bill.
5.35 p.m.
Lord Ferrier: My Lords, while thanking my noble friend for her skilful and comprehensible speech in recommendation of the proposals in this massive piece of legislation, I shall not for many minutes deter your Lordships from supporting the Motion which I hope will be successful at the end of the day. After all, the Bill has had a good laundering in the other place.
I am reminded that 40 years ago, al the invitation of the Government of India, I was involved in the drafting of the new Government of India's Electricity Act. I should like to place on record an instance of the friendly co-operation that existed when that great change of command took place in 1948.
I only wish that on this occasion my noble friend had been able to declare that these proposals would reduce the cost of electricity to the ordinary consumer. It is rather cold comfort that it is only hoped to prevent the costs of energy from rising further although the proportion of nuclear generation increases. (I need hardly say that I am leaving out a lot of what I had written because it has already been said.)
As my noble friend said in her speech, one must recognise the contribution the Bill will make to environmental improvement, which is to be welcomed.
The unexpected changes of climate that we have experienced in the last few weeks, particularly in the last few days, with their extraordinary variations, make one realise the uncertainties which lie ahead.
As an electricity consumer there are two specific, peripheral points I wish to make. First, as an electricity consumer in southern Scotland I am one of those who has complained that southern Scotland has recently had to bear the brunt of the early costs of the Torness power station—which, however, as time has gone by, has been shown to be a resounding success. Nevertheless, I wonder whether the noble Lord who is to reply can say whether the Bill provides for any adjustment to compensate those who have carried the burden of the formative years of that great power station. It was not required to meet Scotland's electricity needs; it was built to remove the stranglehold on fuel production which was at that time held by the coal industry.
The high costs from massive interest charges were out of all proportion to the proceeds of the sale to the public of the power fed into the grid. Those

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proceeds are now being realised, but nevertheless it has been an expensive business. It has had two disadvantages: it has discouraged the use of electricity because of its high price, and it has annoyed those noisy people in Scotland who object to everything which is done by government and who make things difficult for Scotland. However, that is quite another matter.
Just as I should have liked to have seen an indication of lower charges for energy in the future, I am a little surprised that there is no reference to another factor in the future development of the business: namely, the conservation of energy. That has been mentioned in the debate. One appreciates that the responsibility for conservation and saving electricity, rather than increasing consumption, will lie with the retailers. They will be the individual controllers and will control distribution either through their tariff structure or equipment, or through other methods.
As noble Lords have said, there is a great deal of Committee work to be done on the Bill. We must face the fact that, if the Bill is to go forward as we hope, it will require a great deal of consideration.
That brings me to my second point which is to inquire about the extent to which the promoters envisage the employment of off-peak tariffs and modern methods of energy saving, such as night storage heating and other up-to-date devices which can ease the burden on the ordinary domestic consumer or, as he has been called, the customer. I am thinking of my old friend "granny up the glen" and "granny in the high-rise flats". In these cold winds, the night storage heater is a very advantageous, electricity-conserving device.
I want to know whether the Department of Energy takes account of the R&D experience of designers of off-peak operations. I admit that the points that I have made in respect of off-peak heating, the costs of Torness and the initial costs of nuclear energy construction reflect on the energy with which the director general and his minions on the distribution side will have to exercise their authority. The undertaking is vast. As the noble Lord, Lord Ezra, said, the matter is one of great complexity. Energy may be the name of the department, but it will also be the "name of the game". Some risk is inherent in the developments, as has been emphasised by the risks in the developments following the negotiations in India of which I spoke. Of course, there is a risk, but the undertaking is so vast that it is easy to shoot down practically anything. Some of it has been shot down and will be shot down. It is our business to make energy the name of the game.
The other day, the noble Earl, Lord Halsbury, said something that reminded me of an old military handbook called Cavalry Section-leading which contained the phrase:
"to do nothing is to do something definitely wrong".
I think that we must rely on the Department of Energy not to do nothing and to see to it that the distributors do not do nothing and make the Bill work. We intend to make the Bill work. The object of this and subsequent debates is to see that it is
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made to work. We are anxious that no time should be lost in getting on with the vast amount of work that is necessary in order to make it work. The noble Lord, Lord Diamond, pointed out how much energy was required. I hope that all noble Lords will support this side of the House in pushing the Bill forward to its designed end.
5.45 p.m.
Lord Taylor of Gryfe: My Lords, I too should like to join the chorus of congratulation to the Minister on her presentation of the Bill. I am just about to pay the noble Lady a compliment but I am not sure that I have her attention. I was about to say that I wished to join the chorus of congratulation to the Minister on her presentation to the House of this complex Bill. Her real problems will start when we examine the detail of the Bill in the Committee stage.
As my noble friend Lord Diamond said, our reaction on these Benches to the Bill is like the weather—somewhat cool. I was delighted that the Minister reassured some of her critics in the fields of consumer and environmental protection when she made her opening remarks. No doubt, when we examine the Bill in detail in due course, we shall be able to see how those professions of concern are translated into the legislation.
I have been much impressed this afternoon by the devastating criticisms that have been offered in connection with the Bill. I am a great admirer of the noble Lord, Lord Williams of Elvel, and the reasonable way in which he presents his case. I have rarely heard him in better form than this afternoon. Similarly, I admired greatly, with their knowledge of the subject, the contributions of the noble Earl, Lord Lauderdale, and of the noble Lord, Lord Ezra, both of whom have a lifetime of experience in this field. I thought that their contributions were significant and added to my doubts about the worthiness of this piece of legislation.
I have grave doubts on two points. First, there is an assumption of efficiency gains. It is purely an assumption. In any large organisation, efficiency is achieved by two means; namely, getting one's structure and management right. I have no doubt that the experts in the industry will continue to manage this new privatised industry and to give their expert guidance and advice.
However, I am not sure whether the structure of the industry and the powers of the director are such as to make for an efficient organisation. I think that any business consultant looking at the industry would condemn it in those terms. Indeed, I wondered who would buy it. I am sure that, if one reads in the Bill about the overweening powers of the director and one looks at the breakdown of the industry into its various sections, it will not appeal greatly to potential investors, unless—as has happened so often in the various privatisation exercises—the national assets are sold off at a throw-away value. That is my feeling. The Government's record in privatisation, albeit with their expert advisers, is not a happy one. I believe that it would be sad for us, the owners of this great industry, to see our assets transferred to private ownership at inadequate values.

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Another point that worries me about this legislation is that, although we talk a great deal about competition being introduced into the industry, it does nothing to improve choice at the point of consumption. The consumer is given no choice. Therefore the claim for its competitive nature is not fully realised.
I should like to say a few words about the Scottish situation, with which I am reasonably familiar. Today is a sad day in Scotland. There are only three deep-mined pits in Scotland and it was announced yesterday that two of them were to be closed, leaving only one deep mine. The only pit that survives is Longannet and that has only been possible because of the intervention of the Secretary of State for Scotland to ensure that the South of Scotland Electricity Board continued for a further three years its contract to take 2 million tonnes of coal. That was achieved by the intervention of the Secretary of State for Scotland while these two industries were arguing in the courts.
However, it is quite obvious to me that, if this Bill is passed and with privatisation comes the complete freedom of these organisations to buy where they like, there will be immense dangers for the coal industry in this country. I suspect that there will be very little left of the coal industry while people take a short-term view on cheap imports or take a gamble on the price of oil or gas. There is a very important public interest in this regard and it would be a very unwise country that allowed one of its great natural resources to die on the altar of privatisation of the electricity industry.
As has been mentioned by the noble Lord, Lord Kirkhill, who has more experience than I have in this field, there are two organisations in Scotland: the Hydro Board, which was originally set up in order to exploit the hydro capacity of the Highlands and which serves a very large area of Scotland though it has a small consumer base; and the South of Scotland Electricity Board, which is the supplier of the large industrial areas. Under the new arrangements, particularly in the nuclear section, they are to have an integrated operation.
I know that it is a heresy in Scotland but in regard to the future structure of the industry I think that a greater degree of integration of the Hydro Board and the SSEB is probably called for. I believe that we are paying too high a price for old loyalties. In the course of this Bill I think we should look very seriously at the possibility of a combined holding company for Scottish electricity.
It is interesting—and this is important in the Bill—that in England the costs of nuclear power will be much greater than the costs of the fossil fuels. In fact there will be a very substantial difference. For that reason the Government have built a protective fence around the nuclear industry. One will have to pay a levy to keep the expensive nuclear business expanding. So one builds a protective fence around a future nuclear industry but no protective fence around the coal industry, and the consumer will be required ultimately to pay for expensive nuclear production.
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In England it is assumed that the cost of nuclear power will be 5p per unit whereas the cost of fossil fuel production in England is 3.5p per unit. So we have coal production at 3.5p per unit and nuclear production at 5p per unit. Presumably the distributive organisations will pay the fossil fuel price and 1.5p per unit will be found from the levy which will be carried by the consumer.
It is interesting to see that in Scotland, with the AGR production of nuclear power, the cost per unit of nuclear fuel is 1.6p per unit. In England it is 5p per unit and in Scotland it is 1.6p per unit. In Scotland the nuclear capacity is around 60 per cent., so that Scotland has a large export surplus available. I should be glad to have reassurance from the Minister—in fact it has been acknowledged by the Secretary of State for Scotland—that the export of cheap nuclear power from Scotland will come within the non-fossil obligation percentage in England.
It would be very interesting to hear the Minister tell us a little about the pricing arrangements for the nuclear fuel exported from Scotland to assist the proposed 20 per cent. non-fossil fuel base in England. Will it perhaps be the case that the Scottish industry will have a negative levy? Obviously if the industry in England is to carry a levy (the difference between 3.5p and 5p) and Scotland is producing nuclear power at 1.6p per unit, it would be interesting to hear just how the pricing arrangement is to be set up. If favourable pricing arrangements were made in the Scottish case, it might enable some of the fossil fuel pits which are mined in Scotland to be carried, making them economic and maintaining employment. Perhaps the Minister would tell us a little about that matter.
As I have said, we shall examine the detailed arrangements with great interest. We are extremely critical of certain provisions of the Bill.
5.57 p.m.
The Earl of Swinton: My Lords, I am certainly not opposed to privatisation in principle nor in fact to this particular Bill. However, I think that this Bill will need a little ironing out in Committee and later on. There are three points that I should like to make very quickly but only in passing because I understand that my noble friend Lord Stanley of Alderley will mention them, although they have not yet been raised. These points are the rather strict powers of compulsory purchase, which I think are to be put in the Bill; the question of way leaves, which are not mentioned but which have stood the test of time well; and differential charging in rural areas.
This evening I should like to speak, albeit briefly, on one subject; namely, the environmental concern arising out of the Bill. My noble friend spoke on that subject in her excellent introductory speech and it was mentioned briefly by the noble Lords, Lord Williams of Elvel and Lord Ezra. I feel that this Bill represents a great opportunity wasted. It strikes me as very ironic that the privatisation of both the water supply industry and the electricity supply industry should be going through this House in tandem, as it were. Whereas one of the major provisions of the water privatisation Bill is designed to clean up the pollution in our rivers, this Bill does little or nothing,

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to clean up what I think I can safely say has been one of Britain's biggest polluters—the electricity supply industry. Whereas the Government are doing much to help protect the environment with the Water Bill—I know that many noble Lords would say that it is not enough, because I have read the speeches on Second Reading of that Bill and it is clear that many people think they can do better—in fact there is pitifully little on offer in this particular Bill.
The Countryside Commission—perhaps I should declare an interest as a member—the Nature Conservancy Council and English Heritage, three of the Government's own environmental advisers, are bitterly disappointed that their advice on this legislation has been largely disregarded. It would be no exaggeration to say that this view is supported by every conservation group in the country. The Countryside Commission and the NCC explained their environmental concern to the Department of Energy last year. I make this point. These are the Government's own advisers. They are not what my noble friend Lord Onslow might describe as a bunch of bearded eco-freaks, but they are the Government's official advisers on environmental matters. They made some modest proposals for incorporation in this legislation last year. When the Bill was published, virtually none of these proposals was adopted.
My noble friend Lady Hooper made a certain play about Schedule 9 to this Bill. In fact Schedule 9 could provide a golden opportunity to reflect public and political awareness of the environment. All it does at the moment is to repeat, virtually word for word, Section 37 of the Electricity Act 1957 which placed amenity obligations on a publicly owned industry. I submit that it has not been particularly successful. That was over 30 years ago. In that time it would be fair to say that public awareness of the countryside, its conservation and enhancement, has increased. I should like to see Schedule 9 tightened to impose duties on the industry, the director general and the Secretary of State, to further the conservation and enhancement of the landscape, including its natural beauty, its flora and fauna, and the protection of buildings of archaeological, architectural and historic interest.
There should also be a duty to promote energy conservation measures. There should be a statutory code of environmental conservation practice, drafted in consultation with the Government's environmental advisers, which would promote desirable practices in such matters as the protection and enhancement of the environment, the planning of new generating stations and transmission lines, the undergrounding of low voltage cables in sensitive areas, landscaping and screening generally, and avoidance of sites of ecological or archaeological interest.
In case I am accused of being too parochial in speaking for England, I am quite sure that the Historic Buildings Council for Wales would welcome these proposals. In view of the fact that my noble friend Lord Sanderson will wind up, I can assure him that the Countryside Commission for Scotland
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could come up with some very useful suggestions on how to redraft Schedule 9 for inclusion north of the Border.
I was encouraged that my noble friend Lady Hooper said that she was willing to consider further environmental matters. I hope she meant what she said; I am sure that she did. I implore both my noble friends to take these matters on board during the passage of the Bill. I submit that they are modest matters. They are not expensive and they should not deter potential investors. If the Government desire to improve the environment of this lovely country, here is a wonderful opportunity to show their sincerity.
6.4 p.m.
Lord Stoddart of Swindon: My Lords, like other noble Lords I should like to congratulate the noble Baroness, Lady Hooper, on the manner in which she presented the Bill. However, the attractive wrapping concealed a nasty doctrinaire Bill which will do nothing to deal with the desperate financial and economic problems that the Government face at the present time. In my view, the Bill is an insult to the people working in the industry, past and present, who have given of their skill and energy to build what is acknowledged worldwide as the most efficient and reliable electricity supply system in the world. Perhaps I ought to declare an interest in Clause 99 of the Bill since I am a member of the electricity supply industry superannuation fund.
The Government have little support for their Bill among the general public. In my view they have much less support among employees in the electricity supply industry who are fearful not only for their jobs but also for the future of their industry and for the consumers whom it serves. The conversion of the industry from the pre-war hotch-potch of private companies and municipal undertakings to the present first class integrated and much envied system, is a tribute to the staff. What is now proposed—although it will not work, as my noble friend Lord Williams pointed out—is a return to those conditions which, before the war, failed to supply the people of this country with a decent, integrated electricity supply system. Indeed, I cannot understand what the Government are talking about when they refer to competition. There can be no competition if the Government have decided, as they have, that there will be a single price throughout the country. That is what the grid system entails. Before the war there were differing prices up and down the country, ranging from sixpence per unit to one penny per unit. At least if the Government retain the centralised grid system, I hope that it will ensure that the people in the north of Scotland will pay the same price per unit as the people in the south of England. I hope that we shall have that assurance, because if we do not there will be big trouble in the remote areas of this country, and in particular north of the Border.
So far as I can see, there is no other reason for this Bill than sheer ideology. There is no other reason why the Government should break up this great industry. Indeed, the Government do not even need the money to bribe the electorate and finance a

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pre-election tax cutting bonanza. They already have sufficient money to do that. The reason for the Bill can be based only on sheer ideology. The dedicated, highly qualified staff of the electricity supply industry are used to being taken into management's confidence and consulted about a wide range of issues, not only health and safety—as proposed under this legislation—but also on welfare and efficiency. Do I understand from this Bill that the staff will no longer be involved in matters of efficiency? During my time in the industry, through the consultative procedure, the discussion of efficiency was a very important matter indeed and enabled the staff at local, regional and indeed national level to make their contribution to the wellbeing of the industry. I can see nothing in this Bill that will enable the staff, or give the staff the right, to do so in the future. At Committee stage we shall be examining this aspect. That aspect and the contribution of the staff through that machinery has helped to make the industry what it is: one of the greatest supply industries in the world.
However, the other question that we are entitled to ask at this stage is whether the privatisation of other energy industries has been highly successful. Is British Gas under privatisation any more efficient than it was under public ownership? Are prices cheaper than they were under public ownership? They are not; they have gone up. Do customers get a better deal? They do not; in my experience they get a worse deal. Is the industry more accountable to the people? It is a long time since we have seen the chairman of the board talking to Members of Parliament as he used to when the industry was under public ownership. He does not come along these days.
As far as we can see, the experience so far of an industry that has been de-nationalised, privatised, has not necessarily been good—except perhaps for the chairman and board members. It has not even been all that good for shareholders. We hear about the shareholding democracy and accountability to shareholders. But the fact is that it costs the normal shareholder in British Gas far more to travel to a meeting of shareholders than he receives in dividends, so there is not much accountability there either.
British Petroleum was completely sold off. How has that helped the motorist or anybody else for that matter? Is BP helping to keep down energy costs in this country? Of course it is not. Under private ownership it is forcing them up so that it can make more profit for the shareholders. The experience we have had so far in privatisation has not been very good for the consumer, has it?
This is the wrong Bill at the wrong time. We have heard a good deal this afternoon about the greenhouse effect. We have heard about the need to conserve energy so that we can deal with the greenhouse effect. The matter has become urgent. Yet here we are breaking up the industry so that we shall be unable as a country, as a community, to ensure that the industry burns fossil fuels more efficiently and gradually replaces them by renewable energy and conservation. Those are the two elements which are so important. Conservation could ensure
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that we did not need a new power station, whether it be nuclear or fossil fuel, for many years yet. That is something which I hope the Government will concentrate on: but de-nationalising, privatising, the electricity supply industry makes the job even more difficult. It is no good the Government, on the one hand, greening themselves and, on the other hand, blackening themselves by throwing away powers which they presently have to deal with the green policy.
There is another matter—the provision of renewable sources of energy. One of the most important sources of renewable energy would be through tidal barrages, like the Severn Barrage for example. The cost will be £7,000 million. Do the Government imagine that private enterprise, a privately owned industry, will be able to provide such a scheme as that without assistance from public funds? We shall be interested during the Committee stage to know exactly what the Government are doing about renewable sources of energy.
However, my time is running out. Before I sit down I want to ask my noble friend on the Front Bench what the Labour Party policy is in relation to re-nationalising the industry when a Labour Government takes office? I am not seeking to rock the boat, but I understand that the Labour Party—of which I have been a member for many years—is saying that when it comes to office it will take water and telecommunications back into public ownership, but there is no mention of electricity. I want to remind my noble friends that electricity is just as important a service as water or telecommunications. Indeed, make no mistake about it: without electricity one cannot pump the water or get rid of the sewage in a modern society.
It is no good saying that we shall tinker with the control mechanism. There is a very good case—I do not have time to deploy it fully—for a Labour Government to take the electricity supply industry back into public ownership, hook, line and sinker, although not necessarily organised in the same way as it is at present.
In conclusion, I must repeat that I believe this to be a bad Bill, introduced for the wrong reasons at the wrong time. My only hope is that during the Committee stage we shall be able to improve it beyond all recognition.
6.16 p.m.
Viscount Weir: My Lords, I start by declaring several interests—as the chairman of one company which manufactures equipment for power stations, as a director of another major electrical company and as president of BEAMA, the trade association which represents this country's manufacturers of electrical equipment. By the way, those manufacturers employ 400,000 people and they have a turnover of £25 billion.
It is almost a year now since your Lordships debated the White Paper on privatising electricity. Those who were present on that occasion will recall that almost every speech made on that day was generally critical. But among that criticism many sensible and helpful points were made. It is a matter

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of acute discouragement and disappointment therefore to find that now the Bill has come before your Lordships' House almost all of that constructive criticism has apparently been rejected and the basic proposals are still before us in their original and unsatisfactory form.
Of course your Lordships will have a chance of trying to improve the Bill by amendment, but that can be of only limited use if the basic fabric is not sound. It is like my tailor. When I bring in for repair some tattered garment that is long past its life expectancy, he admits he can do something here and there, but the expression on his face clearly indicates that the end result will still be a disgrace to the trade.
It is not just the basic proposals in the Bill which are misguided. The implications for those affected and the consequences of timing have not been properly thought out and planned. That is equally serious, and if your Lordships think that I am trying to make some wild and unsubstantiated criticism, let me try to spell out some of those effects. Let us first take the distribution companies, as the area boards will become. I had the pleasure of dining with most of their chairmen the other night. My host headed one of the boards which wants to take advantage of its right to build up to 15 per cent. of its generating capacity itself. He said he was sure that that policy would be economic, but unfortunately he could not say how economic. Therefore, how can he plan and choose between major capital investment on the one hand and purchasing power from generators on the other?
Let us now take the case of large private sector consumers which wish to make bulk purchase contracts. If I understood correctly, some months ago ICI was quoted as saying that the uncertainties were such that there was no basis on which it could make such contracts. On the other side of the coin are those companies in the private sector which could generate substantial amounts of power, in some cases easily and cheaply, by expanding existing facilities. I spoke to someone in that happy position a week or two ago. He heads a famous oil company. He could proceed very quickly. He mentioned being able to put in place some 500 megawatts. He cannot move either because he does not have the basis on which to make a proper assessment of capital investment or to negotiate a contract.
Let us now look at the poor CEGB which these days appears to be treated with scant sympathy. Early in 1988, on the occasion of the BEAMA dinner in Birmingham, my right honourable friend the Secretary of State for Energy specifically stated that privatisation would not affect the investment programme in generating plant, which included three major coal-fired stations. The CEGB placed design contracts on the main equipment makers. They in turn heavily committed their technical resources to those contracts. But my right honourable friend has subsequently told my trade association that, unfortunately, he cannot confirm his original commitment to the coal-fired programme because the decision to build those stations will now depend on the contracts which are negotiated between the generating companies which succeed the CEGB and the distribution companies.
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But the uncertainty which exists because of the way in which the issue has been handled by the Department of Energy makes it impossible to make such contracts. Therefore, no decisions can be taken on construction. I consider it inexcusable to create what can be only described as a vicious circle of uncertainty. Two of the root causes of that uncertainty were the failure to appoint the regulator at the outset and to set up a clear framework of rules at the earliest possible moment. Surely it was obvious that if that was not done the present confusion would result.
To say that, given time, it will sort itself out and that critics such as I are simply being impatient is not an adequate or acceptable reply to the criticism. Time is not on our side. There is a large body of serious opinion which believes that we shall face a supply gap in the 1990s. We are talking of very large serious investment projects which take a long time to design and construct and, incidentally, where planning permission does not come exactly overnight.
I now turn to the long-suffering equipment makers. As I remarked earlier, some of them have already wasted much scarce technical effort on coal-fired plants which now appear unlikely to be built. In addition, the public procurement directive from Brussels will apply to the power generation industry at just about the time of privatisation. Our home market, which will then be the only one active in Europe, will therefore be opened to European competitors at just that moment.
In issues of trade and competition we hear talk about level playing fields. However, I am afraid that our equipment industry will find itself playing uphill and against the wind. We see little if any chance of penetrating the French or Italian power industry with our exports. Their electricity supply will remain nationalised and they will look after their national manufacturing interests. The Germans will find ways of doing exactly the same, and that is the reality.
Our manufacturers are also unhappy about future arrangements for research and development. My trade association sought, but failed to find, any comfort in that matter from the Department of Energy. Clearly the CEGB—which will become a national power—feels that in the new competitive environment it cannot afford to finance long-term research and development projects. Commercially that may be correct but nationally I ask whether it is not another matter.
In case some noble Lords think that I am just another manufacturer whingeing about competition and complaining about losing public support, I remind them that the electrical equipment industry is a massive exporter. We export over £10 billion worth of products. In looking at our parlous balance of trade we see that the country needs every pound of those exports. Successful exporting needs a stable home market and at least the level of support for research which our competitors enjoy. If the electricity industry is reorganised so that manufacturers no longer have those benefits, the consequences will be obvious.
Finally, competition is the essential hallmark which is supposed to be stamped on every good

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privatisation scheme. Unfortunately, in this case the contortions needed to introduce it in an industry with a strong natural element of monopoly have been such as to produce the complicated and unnaturally constructed creature which we see before us in the Bill.
One or two aspects of competition are worth mentioning. First, we should remember that the degree of true and real competition in electricity generation must logically depend more on the amount of capacity which there is in excess of demand and on the pattern of ownership of capacity generally than on any other factor. We should also remember that in the end excess capacity is a national cost.
Secondly, I suggest that, curiously, perhaps one of the most important aspects of competition has had little mention in public debate and none directly in the Bill. It was touched upon earlier in the debate by the noble Lord, Lord Taylor of Gryfe. It is the price at which the generating companies will be sold to the public. In other countries quoted utility companies are usually in the category of investment which is considered safe and has a modest growth in turnover and an attractive dividend yield. They usually have a fairly high level of debt, as fixed interest bonds are the most sensible way of funding long-term capital investment.
When our generating companies are sold off therefore it is certain that they must be marketed at an attractive dividend yield; and to make the issue sure to succeed their price will need to be seen to be cheap. To do so means that the value of their existing capital assets must be heavily discounted. In the case of national power, further discount will in practice be needed to compensate for its nuclear involvement. That is not an issue which will appeal to private investors.
The question then is simply whether these newcomers into power generation have any real chance of competing on a large scale with entrenched generating companies, the assets of which have been heavily and artificially written down to meet the realities of the stock market. That is an important question and one which goes right to the root of competition and to the principles of privatisation. Having put that question, I shall sit down.
6.30 p.m.
Lord Hatch of Lusby: My Lords, like my noble friend Lord Stoddart of Swindon I oppose the Bill in principle. Electricity, like water, telecommunications, coal and railways is part of the commanding heights of our economy they should be owned and managed by the national community. So far as concerns the Bill itself, I listened carefully to the opening speech made by the noble Baroness, Lady Hooper. She made a particular point—indeed, I was glad that she did—on the environmental issue. It is on that issue alone that I wish to speak tonight. I shall complement what was said by the noble Earl, Lord Swinton, and by my noble friend Lord Stoddart of Swindon.
The noble Baroness made many attractive noises about her desire that the Bill should help to make
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the environment clean. Indeed, she seemed to count upon the use of nuclear power for that purpose, and later referred to the diversity contained in the Bill—a diversity which seems to me to be rather artificial, especially following the remarks made by the noble Lord, Lord Taylor of Gryfe—with a protective fence around the nuclear industry. I wonder whether she has studied the evidence as to whether nuclear energy is environmentally clean. Further, I wonder whether she has studied the evidence given to the energy committee of another place by Bill Keepin and Gregory Kats of the Rocky Mountain Institute published in Energy Policy No. 16 on 6thDecember 1988. In that evidence the whole argument that nuclear energy is environmentally clean is directly challenged.
The noble Baroness talked about a positive story concerning nuclear energy. She then went on to say that the Government were going to ask the companies to carry out certain actions and that they would continue the present policy. She gave figures for their hoped for reduction in sulphur dioxide by the year 2003 and nitrate dioxide by 1998. They were all hopes. However, if they were sincere hopes surely they should have been included in the Bill. But they should not have been included as hopes; they should have been included as specific targets which had to be met.
The noble Baroness spoke about the greenhouse effect and said that there should be more research. I believe that some kind of research will be carried out tomorrow at No. 10 Downing Street. I have not been invited to attend and I do not know whether any other noble Lords have been invited. But, more important than that, none of the specialist environmental organisations in this country has been invited. I understand that one environmentalist is coming from the United States; but none of our own organisations, which have been advised by top scientists, has been invited to the seminar.
It is not enough for the Government to hold seminars or international conferences; there is action here in Britain which the Government could have taken, can take and, indeed, will be able to take in the future. It is upon that action that this country will be judged as to its sincerity in the colossal issue which faces us between now and the end of the century, so far as concerns the world environment. No steps have been taken to reduce Britain's carbon dioxide emissions, which have a direct bearing on the greenhouse effect. Indeed, the Central Electricity Generating Board has told Members of Parliament that it expects an increase of 25 per cent. in those emissions over the next 15 years.
The electricity supply industry is mainly responsible for environmental pollution in this country. Indeed, 233 million tonnes of carbon dioxide are produced by the industry thus adding to the greenhouse effect. Moreover, 2.8 million tonnes of sulphur dioxide, which contributes to acid rain, are produced by the industry; 809,000 tonnes of nitrogen oxide, which contributes both to acid rain and to the greehouse effect, are produced by the industry. Further—and I hope the noble Baroness will take careful note of this fact—the electricity supply industry also produces about 27,500 cubic metres of

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radioactive waste every year, including the waste produced by reprocessing of spent fuel. But, on top of that, must be added the waste which will come from the decommissioning of plants after shut-down.
At the current level of carbon doxide and other greenhouse gas emissions, global temperatures are set to rise by 1.5 degrees centigrade to 4.5 degrees centigrade over the next 50 to 60 years. That is within the lifetime of present generations. We know that that may well cause—indeed, it is almost certain to cause—climatic changes and rises in sea levels. The electricity industry contributes 39 per cent. of British carbon dioxide emissions. It contributes 73 percent. of sulphur dioxide and 35 per cent. of nitrogen dioxide emissions in addition to that which is produced by the so-called "fuel cycle industries" which produce 90 per cent. of the radioactive waste of this country.
I ask: what are the Government doing in order to put their environmental rhetoric into practice? So far as concerns the Bill, they are doing virtually nothing; nor are they doing anything in their own governmental policies. They are in fact dismantling the energy conservation programme. I wonder whether noble Lords will remember—perhaps the noble Baroness will—that three years ago in 1986 this year was put forward as environmental conservation year. Indeed, a special unit was set up. However, I understand that the unit has now been halved, both as regards its budget and its personnel.
Let me turn to one particular issue in this field. What I would like to see in the Bill—if we must have such a Bill—are two main factors: the first is energy efficiency and energy conservation and the second is the introduction of specific targets for reduction in pollution. Those two central factors could be in the Bill if the Government so wish. However, the Government have shown that they are not sincere in their professions of concern for the environment.
Let us take the one issue of wave power. Wave power research at a serious level on the connection between wave power and electricity was started in 1976. In 1982 it was abandoned and £17 million in research written off. Norway continued and began to export its technology in wave power. I not only admit but welcome the fact that in March of this year the junior energy Minister pledged £250,000 for a turbine and generator in the Hebrides—a small half-step back from the retreat that the Government have made.
I also congratulate and thank the Minister for her Statement on 6th April that the Government will finance a study of shoreline wave energy sources. I fully admit that that is another step in the right direction—a very small step. However, why has that not been included in the Bill? Why is it not included in the energy efficiency and energy conservation that apparently has to compete with protected nuclear power? Why have the Government not said that such alternatives will be a part of our energy efforts within the Electricity Bill?
The European Commission estimates that all the Common Market countries could gain 85 per cent. of the electricity they use from wave power and that
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Britain could obtain from wave power all the average demand on the Central Electricity Generating Board. I have given only one example as there is no time to give the many others—insulation and so on—but that is the kind of energy conservation which is vital for the preservation of our globe and for the efficient provision of the electricity needs of this country. However, all these alternatives have to compete with the protected nuclear industry which, as I have briefly shown, itself contributes to the destruction of the environment.
It is only a day or so ago since the National Audit Office reported that British Nuclear Fuels is less accountable to Parliament than other government-owned bodies. It is also less accountable to local opinion. I come back to the point I made to the noble Baroness in a debate we had about 10 days ago on the disposal of nuclear waste and to the issue of Wylfa. Her answer did not totally satisfy me, though I fully accept that she replied at short notice. Now we learn that it is planned to build a second reactor at Wylfa; this time a PWR—a type not known for efficiency or safety.
In that debate I quoted the incident which occurred at Wylfa in July 1984 when there was an earthquake. The Secretary of State for Energy was not backward in congratulating the Soviet Union on closing down a nuclear power station after the earthquake in Armenia. As I said in the previous debate, in July 1984 there was an earthquake recorded at 5.4 on the Richter scale with its epicentre 30 miles south of Wylfa. I know that there is grave public concern in that area at the building of yet another nuclear power station. If that is the kind of consequence that the Government expect from this Bill there will be a great deal of local opposition in many parts of the country, but particularly where new nuclear power stations are being built.
My noble friends Lord Williams and Lord Stoddart have both said that this is a bad Bill. It is a bad Bill in principle and in practice but it will be our job during the Committee stage to set off on a policy of damage limitation and to take the opportunity which we will have of including environmental protection within the Bill. I am glad to hear that noble Lords on the Government side of the House have expressed agreement and I hope they will show their sincerity by voting with us in Committee.
If the Government are serious about saving the environment and constructing an energy policy, which so far has been lamentably absent, they will put into the Bill environmental imperatives, not rhetoric, sweet words or hopes. They will put into the Bill the demands that are now coming more and more from the people of this country who are looking ahead to the kind of environment in which we and our children will have to live.
6.47 p.m.
Viscount Hood: My Lords, I add my congratulations to the Minister for dealing so clearly with this most complicated Bill. I cannot say that I agree with all of the Bill but I start with some brief comments on the non-fossil fuel policy with which I fully agree. It seems to me that this is wholly

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justified on the argument of diversification. Looking back to the coal strike, the possibility of this country keeping the lights on without nuclear power would have been small.
However, added to that now are the arguments for the environment and the increasing concern about the greenhouse effect, where nuclear power has such a clear advantage. One must think of the next 30 to 35 years, which is the life of a power station. I do not think that the renewables will play any very significant part in that period. There must be research and development in looking ahead, of course, but the renewables have a long way to go.
Wind and tide are the most probable sources of energy. While wind is probably economic, or beginning to be, the concept of 250 square miles of windmills in the areas of this country which need a generating capacity—essentially the south—constitute an environmental problem of colossal magnitude. Tide is a vast proposition. The Severn barrage is, I am told, ideal but it is so large that it is difficult to contemplate it in the context of privatised power. I believe that that must be delayed indefinitely in the structure of the present Bill. Having said all that, we are left with nuclear power. I am delighted to see that the Government are going ahead as fast as planning permissions will permit to create this important addition of 10 to 15 gigawatts to our generating capacity.
I now turn briefly to what I think is the main action and problem in the Bill; namely, the break-up of the CEGB into three components. In the first place that involves the transfer of security of power to the hands of 12 area boards, none of which at the outset will have any generating capacity, or, in the foreseeable future, can have very little. They will have to enter into contracts to achieve their power. The question arises on which comment has already been made, notably by my noble friend Lord Weir, whether that capacity will be available. No doubt the private enterprises are studying the matter. They will need to have something that is bankable. It does not matter exactly what bank or what form of borrowing is attempted; but it has to be bankable.
It involves three factors; namely, a fair price, a long-term contract and the load. The load is a difficult prospect. The Government are rightly committed to the nuclear programme, and presumably it will have the base load of the generating system as it does today. The nuclear stations will operate day in and day out, year in and year out, as they do at the moment. That leaves the remainder of the generating capacity to meet the remainder of the load. There are many complications in the method by which power will be sold and bought under the Bill. One matter that is certain is that fundamentally the merit order will continue. The merit order depends on the human beings in this country, who are not going to be changed in their methods and ways of living by this Bill. They use a great deal more power in the evening than at other times of the day. They also use a good deal more power in winter than they do in summer.
I do not see how the private enterprises will get the assurance of load which is fundamental to their
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willingness to make the very large capital investments that are involved. If that is not so, there will be a lack of security of power, not today but in the 1990s or thereafter. Events so far are not particularly encouraging. My noble friend Lord Weir referred to the Fawley contract which was stopped, apparently, because assurances as regards load could not be given. There may also have been environmental objections. Nevertheless, that station is not being built. I shall be very interested if my noble friend the Minister can comment on this general area which gives me great concern.
My conclusion is that the argument for competition which is fundamental to the Bill does not justify the risks that are being taken in breaking up the CEGB. I believe that there are solutions to this problem. Even at this late stage I suggest that the CEGB should be kept together but put into the generating companies. They can be privatised, collectively owning the CEGB, which should remain an entity and able to carry out research and enter into the kind of long-term contracts that are so urgently necessary. That is a variation of some suggestions made by the noble Lord, Lord Ezra. It would be possible to have the security of power and the long-term research that we also want consistent with privatisation.
6.54 p.m.
Lord Stanley of Alderley: My Lords, my concerns about this Bill are almost identical to those concerning the Water Bill and relate to two main points. First, compensation for land taken by the public liability companies must be at a realistic value and not at the existing use value which, apart from being unjust, will encourage the electricity plcs to develop on green field sites. I believe that they will be encouraged and forced to do so by their shareholders.
Secondly, the charges for services must not discriminate against rural consumers. The answer given in another place by Mr. Michael Spicer on behalf of the Government was not satisfactory. This latter point is where I part company with the Government. Their policies are geared to market forces. That is all right for many things, but not for a service such as electricity. This philosophy inevitably means that the richer and more prosperous areas do well, while the improverished and usually rural areas struggle. We are in danger of losing that very quality that exists there, that our town cousins look and come for.
I want this Bill to ensure that essential services such as electricity and water are provided to the rural areas at no greater charge than to what I call the urban easy-to-service areas. The noble Lord, Lord Stoddart of Swindon, suggested that such a control on electricity charges was in the Bill. When he replies I ask my noble friend on the Front Bench to say that it is. I cannot find it.
6.56 p.m.
Lord Macaulay of Bragar: My Lords, at the outset of my contribution to this debate perhaps I may say that it is unfortunate that those of us with a Scottish interest in the privatisation of electricity will have

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to wait until the last speech to be given by the noble Lord, Lord Sanderson, for the ministerial viewpoint on Scotland to be presented to the House. It means that those of us with a particularly Scottish interest are to some extent speaking in a vacuum, not knowing what the current ministerial viewpoint is for Scotland because it may not necessarily be the same as it was at the time when the White Paper was produced.
Much of what I was going to say has already been said by my noble friend Lord Kirkhill and I do not intend to repeat it. Neither do I intend at this stage to go into the details and the minutiae of the Bill. I merely concur with all my noble friends on this side of the House who have condemned this Bill in the various ways in which that has been done. I believe that it was my noble friend Lord Williams of Elvel who suggested that it should be taken away and disposed of. That was a very practical suggestion. Perhaps the Government may take serious heed of that suggestion because this Bill can be seen to be a contradiction in terms when its stated objective is considered against its content.
It is said that the Bill is aiming to achieve privatisation and to take away the heavy hand of state interference from the industry. But does it give the new companies the freedom of the market place to make their own way and to stand or fall on their own efforts and decisions, including in particular the financial ones? It certainly does not. Basically, that is because there is no real market place within which the companies can operate in competition. In another way this Bill creates the stranglehold of an interventionist triumvirate; namely, the Secretaries of State for Energy and for Scotland, the director general and his proposed deputy in Scotland and the Treasury, each with their own powers and duties. The Government call this a regulatory régime. How can that be reconciled with the principle of freedom which is inherent in the concept of privatisation?
The truth of the matter is that by imposing that regulatory regime the Bill récognises the false nature of this so-called act of privatisation. The success of the companies proposed will each be like that of a dog allowed out for a walk, but only on a lead with its master and with no freedom to run about. The Bill is flawed in principle and its structure speaks for itself. This public utility cannot be left to the market forces so admired by Her Majesty's Government and must be supervised on behalf of the most important person; namely, the consumer. For that purpose it should be left in the hands of the state. Grandiose titles like "Director General of Electricity Supply" scarcely have the ring of freedom for the industry. When the actual position of the director general is examined, one sees that he is relegated more to the rank of a private than that of a general, because he will always have the commander in chief, the Secretary of State, supervising his activities. Indeed the Scottish deputy director general will have to answer to two Secretaries of State—the Secretary of State for Energy and the Secretary of State for Scotland.
In fairness to the Bill, it does achieve an objective. The objective which it achieves is the plundering of
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a public utility, and in particular the nuclear element of it. The Government propose to hand it over to the private sector, probably without any real financial risk to the successor companies. As one reads the Bill, if all goes wrong due to changing and unforeseen circumstances, the taxpayer will foot the Bill. There is no logical reason for the Bill. If it is said to be carrying out an election pledge, perhaps the House could be reminded that, while election pledges are important, they are not sacrosanct and should take into account changing circumstances. It may be said that the Bill is marginally necessary for England and Wales but it has little or no relevance to the Scottish position. Its application to Scotland is merely another reflection of the Government's obsession with what I might call back-to-back legislation. This philosophy lay behind the review of legal services, on which the House held a full debate not so long ago. Because vast changes are proposed for the English legal system, the Government say that the Scottish system must be reviewed, whether or not that is necessary. The philosophy appears to be that if it is good for one part of the country, it must be imposed on the rest of the country.
As regards Scotland, the Government are in the Bill prescribing to a healthy patient. At the end of the day that medicine itself may make the patient ill when basically there is nothing wrong with him. In the White Paper it is recognised by the Government that Scotland is in a unique position because of its geographical location, because of the distribution of population and because of its ready access to power, especially nuclear and water power, not to mention wind and air power. That gives Scotland a uniqueness which is readily recognised by the Government but is not reflected by the application of the Bill to Scotland.
It is said by the Government that there is a significant surplus of energy in Scotland and that no new power stations will be required before the end of the century. What on earth are we doing by covering and restructuring the Scottish electricity industry? When the noble Lord, Lord Sanderson, comes to reply, perhaps he will be good enough to tell the House where the competition will be in Scotland. Has research been done in Scotland to identify areas in which competition will occur as a result of the Bill? I have my suspicions that no such research has been done and that the noble Lord will struggle to name any place where there will be immediate competition for the generation of electricity. Will he also say whether extra customers are expected for this new service, and if so, from where will they come? Most important of all, can he name firms or give numbers of firms at this stage, waiting in the wings to join in the competition?
There is no demand or need for privatisation of the electricity industry in Scotland. Such alterations as may be required could be done by restructuring the present industry. It would also be instructive if the Government could give chapter and verse as to representations received by them prior to the publication of the White Paper, not after the publication of the White Paper when people are forced into consultation. What representations were received before the White Paper was published from

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producers, and consumers of energy in Scotland and from the workforce in the electricity industry?
Was there a demand for privatisation as the only answer to problems in the industry? No industry is without its problems from time to time. What consultations took place with the Scottish boards before the White Paper was produced? There is a world of a difference between consulting once a decision to privatise has been made and a general consultation to identify existing problems in the industry in order to try to rectify them. Now the boards can only make the best of a bad job in this respect.
It is accepted by the Government that in Scotland there is a high standard of service at reasonable cost. If that is so, why is privatisation so urgently necessary to achieve in Scotland higher standards, greater efficiency and greater job satisfaction? Is this a formula produced by the boards in consultation? Is it a demand from the workers, the unions or the customers? Are the present boards, the workers in the industry and the customers fretting and waiting for the Bill to become law so that they can see a revolutionised electricity industry in Scotland? The answer to that question, I suspect, is again in the negative.
I find intriguing the question of job satisfaction. Job satisfaction is an element founded upon by the Government as being a justification for privatisation. I regard the approach to job satisfaction in the electricity industry as an insult to the diligent workers and engineers who in all weathers and at all hours, especially in terrible winter conditions, turn out with a degree of dedication, courage and application which probably surpasses that of any other industry in the country. I have had the benefit of that service in the Hebrides. At three o'clock in the morning, with a blizzard blowing, an engineer has turned out to try to put the power back on. The noble Lord, Lord Sanderson, may have had a similar experience on his Hebridean journeys when he has ventured there during the winter months. How will the Bill give that type of worker greater job satisfaction? Will he be a better and more eager worker merely because his industry is privatised and because he holds a few shares in it? This is a nonsensical political platitude which demonstrates the obsession of the Government with privatisation of anything that might generate profit.
Perhaps when he comes to reply the noble Lord will tell the House on what research this whole project is based. No mention is made in the White Paper of the sources of research. It would be interesting to know what research was done. It would be helpful if before the Committee stage the Government could publish details of the research that was carried out before the White Paper was written. It would also be useful to know what factual basis there is for the view that there will be—I note the words used by the Government in anticipation; it is not that "there might be"—greater efficiency and downward pressure on prices. On what is that based, or is it an expression of hope and anticipation rather than being based on fact?
Privatisation is not necessary for the Scottish electricity industry. The Bill should not apply to
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Scotland. However, if the Government are determined to apply the Bill to Scotland we shall have to make the best of it in Committee and get on with the job of impoving it.
The final structure of the Bill will be one which gives a privatised industry a clean financial start and underwrites it against unexpected or unusual circumstances in the future. That does not reflect the ethos of the market place, in which risk allied to judgment and the input of private money with the aim of making profit prevail.
Private industry will reap the profit while it can, but in the end, because of the nature and importance of the industry, the Government have to keep a finger in the pie and control what the new companies are doing. They know that they have to do that. This Government in presenting this Bill are behaving like a heavily blinkered horse which is only allowed to see ahead in the race towards the winning post and is compelled to ignore the events round about it, particularly when it is bumped by other horses. I suspect that this Bill has indeed suffered a few bumps from some unexpected quarters in the course of this debate.
This Government should have the courage to take the blinkers off now, take this Bill away, reassess the whole issue of privatisation and let the nation keep and improve these valuable national assets.
Lord Ferrier: My Lords, before the noble Lord sits down, I think it fair to say that much of what he has said about Scotland is not altogether acceptable to all Scotsmen. We shall hear what the noble Lord, Lord Sanderson, has to say when the lime comes and again at the Committee stage when we come to Schedule 9.
7.10 p.m.
Baroness Oppenheim-Barnes: My Lords, I must first declare my interest as chairman of the National Consumer Council. Consumers of goods and services when dealing with monopoly suppliers are at a great disadvantage. When they are dealing with monopoply suppliers of essential utilities, suppliers of their basic needs, the disadvantage is even greater. But worst of all is the position of the captive consumer dealing with a monopoly supplier of his essential needs in the public sector.
I must say that listening to some of the expressions of affection for public sector monopolies by some noble Lords opposite one could be forgiven for thinking that they represented some kind of consumer paradise. I submit with respect that that is not the case. In my experience in consumer affairs over the past 15 years, the greatest area of consumer dissatisfaction has been with the services, standards and prices of the public sector monopoly utilities.
They represent a system which is rigid and inflexible; a sort of public ownership that has never delivered the benefits expected or wanted. Forty years have been spent defending nationalised industries that closed down railway lines to rural communities, charged prohibitive collection charges for essential services and cut off consumers who could not pay inflated bills. Those are not my words.

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They are a paraphrased quotation from Mr. John Edmonds, general secretary of the boilermakers' union at last year's Trades Union Congress, and he was right.
Consumers have been treated in the past often with contempt by such industries. I could relate to your Lordships' House a number of horror stories, but time will not permit on this occasion. Every time a price increase has been announced in the electricity industry—this was before privatisation was mooted—their spokesmen have been rushed regularly on to television and radio, where they have intoned over and over again that cost increases would have to be passed on to consumers in price increases. What nonsense! If any company subject to the rigours of full competition were to adopt attitudes like that, it would soon be out of business because competition simply would not allow it to pass on the full costs.
So public sector monopoly utilities, together with their sponsoring departments and Ministers, are in an intrinsically "corrupt" relationship. I intend no personal offence to noble Lords who are past chairmen of nationalised industries, nor to those who have been their Ministers; it is simply the nature of the beast. Together these industries, with their Ministers and their sponsoring departments under successive governments—I do not seek to score any political points—have taken account of everything before the consumer interest: regional considerations, employment considerations, the industries' own interests, the money considerations of the government of the day; yes and, of course, political considerations, too. All have come first.
That is why I welcome on behalf of consumers the privatisation of electricity, providing as it does a fresh start, a clean sheet on which we can rewrite the rules; however—and here a word of caution—taking account of the problems, the pitfalls and a multitude of requirements for these captive and sorely tried consumers.
Nobody should expect an overnight transformation, as they have done perhaps in the past in previous privatisations, I believe mistakenly. Years of inefficiency and abuse of monopoly power cannot be wiped out overnight. But correctly tackled privatisation should benefit consumers, provided—and it is an important proviso—the regulation is adequate, competition is encouraged where it is practical to do so and access for complaint and compensation is available and accessible.
In this Electricity Bill, my right honourable friend the Secretary of State for Energy has gone to immense trouble to take account of the consumer interest. The first and most important benefit to consumers among others is the installation of the Director General of Electricity Supply, the regulator, with a formula for determining a price structure that fully compensates for the missing competition factor by taking account of all cost elements in relation to efficiency and to the consumer interest as well as to the industry's investment requirements and return on capital. This will inevitably be a formula which is very complicated and variable and subject to
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ongoing negotiations, as it should be. Because the competition is theoretical, such a formula must be very carefully constructed.
But why look into the crystal when we can read the book? The precedents set in those industries already privatised so far as prices are concerned have been very good for consumers. The price increases in both British Gas and British Telecom have after privatisation been a mere fraction of what they were when those industries were in the public sector. Indeed after privatisation in the case of British Telecom there was a price freeze for over a year, and in British Gas a price reduction in one year of over 4 per cent. So much then for the scaremongering that we have had about price increases and profiteering.
However, just as important as price regulation is the basic structure of consumer protection. Here again this privatisation offers a fresh start, an opportunity to provide electricity consumers with the protection, redress and compensation that they have not had before; also, an opportunity to learn from the successes and the omissions of part privatisations.
Again, my right honourable friend the Secretary of State for Energy has been sensitive to consumer needs. He has responded to my council's representations by creating in this Bill the 12 consumer committees at regional level to represent consumers' interests with their regional electricity companies, with powers to compensate customers for inadequate standards, including, hopefully, interruption of supply. Hopefully, too, they will be able to resolve disputes with the local distribution companies or, if not in that way, through the regulator.
I particularly welcome the announcement of my noble friend the Minister this afternoon that there will be a new, more sensitive attitude towards disconnection policies similar to that in British Gas. But no doubt we shall want to improve it even further. So far so good. However, if we have a look at what followed the privatisation of British Gas and of BT, we can learn a great deal from their successes and failures. As I have already shown, the regulators, Mr. McKinnon and Sir Bryan Carsberg, have performed very well for consumers so far as prices are concerned. But the structure for general consumer protection and performance has been more successful in British Gas than in British Telecom, although neither is directly comparable either with each other or with electricity.
In the case of British Gas, in addition to the regulator and 12 small regional gas consumer council offices, there is a national Gas Consumers' Council administered not by the sponsoring industry's department but by the DTI; a council which, until her recent retirement, flourished under the brilliant leadership of Sheila Black, to whom I should like to pay tribute, and I am confident that it will continue to flourish under its excellent new chairman.
It has had provided for it by the DTI a superb information retrieval system at national level. This has permitted it to keep closely in touch with the regions, to analyse and to compare performance and thus formulate and influence national policy through the regulator, who has successfully negotiated a

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number of benefits for consumers and has had a successful reference to the Monopolies and Mergers Commission. Together they have been able to set new standards on the basis of analysis and research of customers' needs. When something goes wrong their system tells them what has happened, where it has happened, why it has happened, how often it has happened and the sort of customer to whom it has happened. This gives crucial opportunity for prompt and effective action through the regulator.
The British Telecom picture is not so rosy because there is a vacuum in the structure. The regulator has done a good job on prices and has negotiated better standards and compensation. However, as he recently admitted to me in a letter, he is not satisfied with the operation of the sub-structure for dealing with consumer complaints and redress and, I may add, neither am I. Oftel needs to be much more visible, accessible, responsive and effective in dealing with complaints at regional level. This is precisely the vacuum that my right honourable friend the Secretary of State for Energy has filled in the Bill with the regional consumer committees.
We have learnt valuable lessons from the privatisation of these two industries. Their customers are better off. However, at the National Consumer Council we are concerned that in the consumer protection structure proposed in the Bill there is, despite the welcome regional consumer committees, a need for a national body that would to some extent replicate the role of the national Gas Consumers Council. With the best will in the world, the regional committees will be dealing only with their own regional electricity companies, whose customers are in turn dealing with monopoly suppliers. They will not be able to compare standards of service between the 12 companies or between themselves and other committees. Even if the regional committees are given 12 separate information retrieval systems, which will be very expensive, this will not produce a national picture. The regulator certainly will not have the time, resources or facilities to monitor the results across the whole country. Above all, local committees will not be able to advise the regulator on national policy as the Gas Consumers Council does. There is even the possibility of cosy local relationships developing between the committees and their companies. At the appropriate stage therefore I hope to move an amendment in your Lordships' House to remedy this.
Another matter about which the National Consumer Council is concerned is the allocation of staff and resources to the regulator. Although by comparison with British Gas and British Telecom the proposals in the Bill appear to be adequate and even generous, the electricity industry regulator will, if he is to do his job properly, have more than 12 times as much work to do as the regulators of British Gas and British Telecom.
I understand that the Secrectary of State has not yet appointed the new Director General of Electricity Supply. I do not want to make the job of finding an appointee more difficult, but the fact remains that this regulator will have his work cut out. He will be negotiating prices with 12 different electricity
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companies, not one, as will British Gas and British Telecom. On top of that he will be dealing with the two generating companies and monitoring their competition activities.
The regional company chairmen will inevitably confer about their costs and the price increases that they will be seeking, and no doubt they will reach a number of agreements. It is essential therefore, if the regulator is to avoid an across-the-board institutionalised cost-plus formula, that he should consider each price application absolutely separately, applying different criteria to each of the 12 companies, where appropriate. Indeed, this is one of the excellent reasons for having 12 different companies, as the Secretary of State has recognised. However, with respect, he must also recognise the size and scope of the task that he is setting the regulator and must provide him with adequate staff, resources and backup.
I apologise for detaining your Lordships' House for so long but there is nothing so perfect that it is not capable of improvement. I warmly welcome the Bill, which, subject to a few modest amendments, ought to benefit consumers, improve efficiency, raise standards, maintain safety and provide abetter service at a fairer price.
7.25 p.m.
Lord Lovell-Davis: My Lords, I have never believed that out-and-out competition is the best basis for a national energy policy. During my time as a junior Minister in the Department of Energy, I advocated, as government spokesman on energy in your Lordships' House, an integrated energy policy. In those days, the mid-1970s, I seem to remember that there was a good deal of agreement on all sides of the House that an integrated policy, balancing one source of supply with another, was the sensible approach to our energy needs. The reasons were, and I think remain, clear. We were, and still are, dealing with finite resources. We conceived it a s the proper role of government to secure the appropriate, efficient, reasonably priced and safe production and distribution of energy while at the same time conserving and not wasting the vital supplies of coal, gas and oil on which our whole economy, society and very civilisation depend.
The Labour Government therefore exercised a regulatory role in the overall energy programme. When the North Sea provided its unexpected but timely benefits, we created the British National Oil Corporation in order to be at the sharp end of a new and little understood industry and to make sure that neither were we ripped off by the huge multi-national oil companies nor were our precious assets going to be ruthlessly expended in the pursuit of profit.
In the short time available to it the Government tried to set down the foundations of an integrated, forward-looking energy policy. We were and still are in an excellent position to get our energy equation right. The oil is still flowing, though how long it will continue to do so remains somewhat obscure to those outside the industry. Natural gas continues to fuel our industries and homes and, above all, we know that vast quantities of coal lie beneath the

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United Kingdom. The imperative of the nuclear option presses less heavily on us than on other less well endowed countries such as France.
The Labour Government recognised the paramount importance in today's world of the efficient use of energy and the need for conservation and the avoidance of waste. With that in mind as an essential arm of an energy programme which would serve the country well in the short and long term, an energy conservation programme was put in place. It proved instantly successful and popular with commerce and industry. It limited energy demand and, incidentally, saved the country hundreds of millions of pounds on our balance of payments.
Noble Lords might think that by and large it was a fair enough inheritance to hand on to a new government, something which, if not perfectly developed, was on the right lines for as secure a future as one could hope to achieve in terms of energy supply. The gas, oil and electricity elements of the programme were operating efficiently. The coal industry, facing immense challenges, needed particular care. Coal represents our greatest single energy resource. A rational and caring inheritor would not have chosen to inflict possibly irreversible damage on the coal industry or make it a battle-ground over which to fight out political dogma. However, someone such as myself who did not accept that energy policy was simply to be an expression of political intent but was to provide the best service to society, was to be disappointed, not to say appalled, by subsequent events.
The idea of an integrated energy policy was thrown out of the window. Market forces, the extraordinary shibboleth of the Government, were to be the driving force. I believe that we shall one day look back with a sense of disbelief that anyone could have seriously proclaimed that as the answer to the problems posed by such a complex society as this. Break up and privatisation were the order of the day. No matter that it has been performing efficiently and well, the Government are now about to take the electricity industry out of the public ownership which has served the country so well for generations and privatise it. No wonder that the chairman of the Select Committee on Energy of another place, Sir Ian Lloyd, said on Second Reading:
"My verdict is that there will be many unforeseen consequences and I should not like to predict their character or their influence on the outcome".—[Official Report, Commons, 12/12/88; col. 708.
In that chaotic situation, is it surprising that the question of the extent of, or need for, future nuclear generation, with all its attendant problems of safety, efficiency and the cost of decommissioning, is constantly in our minds? To quote the chairman of the Select Committee again, he likens the Bill to a
"slipway to launch the post-1990 electricity supply industry, but, I am not sure that we know much about the shape, speed or efficiency of the ship. I have several fundamental reservations about the Bill".—[Official Report, Commons, 12/12/88; col. 708]
I, like other noble Lords, ask where energy conservation will come into all this. Are me seriously to believe that private contractors will advise their customers to consume less of their particular source
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of energy when competition and profitability are the name of the game? The Secretary of State, defending his decision to cut the budget for energy conservation by almost half this year, and over half by next year, said this weekend that the Government were not in the business of bribing industry to save its own money. That remark is breathtaking in its lack of perception of the essential need, which is to preserve the nation's energy resources, but at least I suppose that it has the merit of alerting us to the attitude to conservation most likely to be adopted by energy suppliers.
I sometimes wonder whether the Government are right in the head when they come to consider energy matters. They no more seem to know what they are doing than does their Minister for Local Government, Mr. John Selwyn Gummer, whose thinking seems to be as woolly as the clothes that he advises people to wear. Apparently, he heats only the downstairs of his home which, unless he uses a great deal of fuel, must give him the worst of both worlds—upstairs and downstairs—as he seems to have overlooked the fact that hot air rises.
This is an unnecessary Bill. All one can say about it is that it fits naturally into an idealogical framework and, as such it is short-sighted, likely to prove wasteful of our natural resources, and unlikely to lead to great efficiency, the extension of consumer choice or stable fuel prices. It is also unlikely to have an easy passage through your Lordships' House, which has always taken a broader, more prudent and more far-sighted view of this vitally important subject, when it examines the Bill in greater detail in Committee.
7.34 p.m.
Lord Norrie: My Lords, like my noble friend Lord Swinton, I believe that the electricity supply industry is potentally Britain's biggest polluter. The Bill gives us an ideal opportunity to introduce safeguards which will reduce the adverse environmental impact of electricity supply and use. We are told that over a period of 12 months, the electricity supply industry generates 233 million tonnes of carbon dioxide, which adds to the greenhouse effect; 2.8 million tonnes of sulphur dioxide, which is the prime constituent of acid rain; and 809,000 tonnes of nitrogen oxides which create acid rain and contribute to the greenhouse effect.
I am afraid that that is not all. The industry also produces about 27,500 cubic metres of radioactive waste every year. Nonetheless, nuclear power for the provision of electricity has great environmental advantages, provided that the reactors are safe; that proper financial provisions are made for the eventual dismantlement; and that the radioactive waste generated is disposed of safely.
All three of those advantages are possible; but whether or not the industry is doing its best to clean itself up, it could be described as dirty, with a massive potential for harm, not only to every man, woman and child in Britain, to our buildings and our countryside, but also to our international reputation. That is why the Bill desperately needs safeguards written into it. By safeguards, I mean measures

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which will protect the consumer and which are designed significantly to reduce the environmental impact of electricity supply and use. Yet, as drafted, the Bill appears to do little to resolve the problem of the greenhouse effect, which will be exacerbated by future industrial pollution and nor does it make adequate provision for the protection of the environment.
I am sure that the Government will wish to remedy those defects. I hope therefore that my noble friend Lady Hooper will come forward with the amendments necessary or accept some amendments which I am sure will be tabled.
I shall now deal with the form in which the Bill should be amended; and I should like briefly to refer to two of the crucial ingredients of the improvement that I seek. First, there must be full consultation on developments which would be environmentally damaging. The CEGB is now well used to that. Through the setting up of its environmental development panel, chaired by Sir William Wilkinson of the Nature Conservancy Council, incorporating senior executives of the CEGB as well as distinguished outsiders representing interests such as the Countryside Commission, the CEGB has demonstrated that it is now fully sympathetic. However, we must not merely assume that that sympathy will be inherited by the successor bodies. Future decisions could fall into the hands of those who feel no such obligations and who decide only to swim with the tide of commercial pressures.
Secondly—this applies to the distribution companies and is something which my noble friend Lord Swinton mentioned—we must embark upon a programme for the undergrounding of low voltage lines in sensitive areas such as village conservation areas, national parks and other environmentally protected landscapes. I emphasise low voltage. We all know that with present technology the grid cannot be undergrounded.
At present, some of the area boards, such as Yorkshire and the South Western board, have a programme of undergrounding, and very effective it is, even though more could be done. Other boards do little or nothing. It is entirely reasonable for distributor companies to be required to set aside each year modest sums, perhaps as little as a quarter of 1 per cent. of their annual sales of electricity, to be spent on a programme of undergrounding.
Such an allocation would produce sufficient money to finance such a programme, but it would neither eat into profit in any noticeable way nor justify a measurable increase in the charges to consumers. The funds would ideally be spent county by county, in consultation with local authorities and conservation bodies, both statutory, such as the Countryside Commission, and voluntary, such as the CPRE.
In wishing electricity privatisation well, I should like to ensure that its opponents cannot, on doctrinal grounds, make use of the environmental argument as a means of taking the electricity supply industry back into public ownership. Privatisation of the electricity industry will result in the industry's biggest reform to date. To leave environmental
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protection to accident or whim would be to leave things to chance and to miss a golden opportunity to set the industry's house in order.
7.40 p.m.
Lord Dean of Beswick: My Lords, the Bill is very lengthy and detailed, and I shall not deal with its main thrust. The amount of opposition has been expressed more than adequately by previous speakers, not least from behind the Minister. It is a long time since I have known a Bill which was supposed to epitomise the Government's thinking receive such adverse comments from prominent Back-benchers on the Government side.
For part of my speech I was going to address myself to the adverse effects of the Bill on our manufacturing industries, bearing in mind the appalling balance of payments deficit. I worked in the electricity supply industry on the manufacturing side, making turbines at Eggborough and Thorpe Marsh, so I know a little about it. I am concerned at the adverse effects that the Bill might have on the manufacturing side of the electrical supply industry. But that subject was more than covered. by the noble Viscount, Lord Weir, in an interesting and obviously well briefed and knowledgeable speech. I do not think I could improve on that one iota.
However, nobody as yet has talked about the social consequences of the exercise. There will be social consequences and we, as a nation, ought to be more than a little ashamed of them. The noble Lord, Lord Taylor of Gryfe, referred briefly in his speech to what has happened in east Scotland. After tomorrow there will be only one pit in existence in Scotland. The Government have got it tragically wrong in assuming that the price of coal at the pithead is the real price in terms of the cost to the community. It is the market price all right, but I have figures here which I shall no doubt deploy during the Committee stage. They show that some of our pits which have closed down might have been saved if they had received the underpinning from our own Government that their competitors received from their governments. Coal is substantially subsidised when it comes into this country; those producers are not selling the coal at the price covering the mining cost. The Government's concern, and one of the biggest conflicts, is that the Colombian Government is going in for such activities.
A few weeks ago I put a Question to the Minister regarding the financial terms on which coal was being imported into this country. I put down a Question for Written Answer in order to get a reply concerning the last five years. I shall not read the Answer because the figures are pretty similar for the last five years. I am not picking the worst, but last year in cash terms—and these figures are from the Inland Revenue—we imported £427 million worth of coal. If only people were aware that part of our balance of payments deficit was because we were paying nearly half a billion pounds to import coal which we can dig here.
The noble Lord, Lord Taylor of Gryfe, referred to Scotland, but the Welsh coalfields have been savaged, communities discarded and almost sent to

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the wall. The noble Baroness said to me in her Answer that one of the reasons was that much of the coal being bought abroad was coking coal. I am not a mining expert but I understand that a number of pits in South Wales specialised in coking coal.
Was the price for the coal at the pithead the real price to the community of what has taken place? I suggest that since there is already a half billion pound deficit from the closures in our trading account, if the Bill goes through it will escalate dramatically and the present situation will pale into insignificance. The noble Viscount, Lord Weir, made the point about the manufacturing side, but I know of engineering companies which manufactured mining equipment such as electric motors, which have gone out of existence because the Government are determined that the market price at the pithead should be charged for the coal and the social consequences should be ignored. So much for the repeated statements of various Ministers that the Government have faith in British coal.
I have mentioned Scotland and Wales. In my own county, Lancashire, where I live, there is very little mining left. The North-East also has been made almost completely into a desert after the mining that used to take place in Durham. We should ask ourselves whether we as a nation have a right to destroy communities which have lived off coal and served the country well through history. We should just listen to the tape of the maiden speech of the late Lord Stockton—Mr. Harold Macmillan—to see what he said about the miners' contribution to the country.
Since 8th March 1985 noble Lords may be aware that under the Government's present system 76 colleries have closed. I come from a big city. There is one pit in Manchester, so the city lived off a variety of industry. But anybody who knows the mining areas in the hinterlands, where the pit communities are, knows that when the pit is closed, it is all right talking about Toyota and various companies coming in, but they do not replace the pit in terms of the value to the community.
I have some figures of the costs in a report used by the NUM. They show the effects on the coal industry of imports of 30 million tonnes in terms of displacement: lump sum redundancy payments for 47,000 miners, £1,160 million; annual cost of unemployment benefit etc. for 79,000 miners and workers in other industries related to mining, £559 million; written-off colliery investment, £2 billion; annual balance of payments cost of 30 million tonne imports, £1,050 million; investment cost of three superports, to bring in the coal, £300 million. Then we have an interesting figure in terms of everybody, not just the mining communities: increased electricity prices quoted at 15 per cent. over two years—and that is not unrealistic with what has been happening to electricity prices over the last two or three years—£1.7 billion. Nobody has yet referred to these costs. But where will they come from in the community?
The report gives costs over three years: unemployment costs, £2.8 billion; investment costs for ports,
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which I have mentioned before, £300 million; electricity price increases—and nobody denies that this will happen—£3.4 billion. The total is £6.5 billion.
Has this exercise been thought through? Where is the money to come from? South Wales shows some signs of recovery with a variety of industries, but it will never make up the loss in the number of jobs. I know that pits were closed under the Labour government, and some of those closures might have been a mistake. All I am saying is this. Is the cost of bringing the coal to the top the only measure by which we should determine whether or not a pit should close? There is terrible misery and social deprivation in those areas with no sign of recovery, even with the inception of Japanese investment. That investment does not make up for the loss.
Where I was born and bred in Manchester there was a large pit called the Bradford Pit which employed 3,500 men. Just after the war it was modernised at a cost of £3.75 million. The pit produced very good quality coal. It was closed at the same time as one of the big collieries in Lancashire which was situated on what we called the East Lancashire Road.
The two pits were very similar in their design. The coal from both was of a high quality, but it was not offered at the right price at the time as it had to compete with cheap oil. If the situation of today, with dear coal prices, had occurred then, those pits would have been viable. However, they are no longer available and 3,500 to 4,000 jobs were lost. Those jobs included school-leavers' posts. The area where the pits were situated is now an industrial desert.
I do not think that I can do anything about that situation as this side of your Lordships' House does not have the voting strength to do anything. However, I am not prepared to sit quietly by and watch the continued butchery of communities which have lived off coal historically and could still deliver the goods if competition were fair. I am not prepared to watch them go to the wall because of the Government's philosophy. I believe these points will be made much more forcibly during the later passage of the Bill.
I was interested to hear the noble Baroness, Lady Oppenheim-Barnes, talk about the setting up of a regulatory body as a safeguard for customers. I believe that is a good idea, but I must say—I do not intend this as any reflection upon the noble Baroness—that I would not trust the Government to appoint anyone to that body who would be critical of this legislation. All the mileage of this Government shows that anyone who is appointed to such a body will be someone who supports what the Government are doing. I vouch to suggest that if such a person is appointed from your Lordships' House, it will not be from this side of the House or from the Benches to my right, or perhaps not even from the Benches to my left. The person who is appointed will be a party hack of the Government's so he will carry out the Government's business. Justice must not only be done; it must be seen to be done.

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Many Cabinet Ministers who have retired have come to your Lordships' House and often positions have been found for them on bodies. That is a very nice situation if one is involved in it. But the Government never consider for appointment anyone who is opposed to their policies so that an impartial approach and a fair deal could be made on behalf of the consumer.
I have tried to make a plea on behalf of the coal industry. Having full regard to what happened four years ago, I think it is about time the Government literally buried the hatchet in their war against the mining communities, because to fair minded people that is what they appear to be involved in. It appears that the Government intend that Britain's mining industry shall be damaged to such an extent that it will never become a strong force again. If one considers the social consequences of that course, it is an appalling indictment of politics if we are supposed to be one nation.
7.54 p.m.
Lord Gray of Contin: My Lords, I am tempted to follow the noble Lord, Lord Dean of Beswick, as regards some of his remarks, but I shall save my comments until we debate the privatisation of the mining industry in this House on some future occasion. I, for one, look forward to that very much indeed. I agree with the noble Lord that miners are genuinely interested in their industry. I believe they would have a very much better future than they appear to have at the moment if the mining industry were privatised.
I shall start my remarks, somewhat unusually, by offering congratulations to our colleagues in another place. The amount of dedication which they showed in their scrutiny of the Bill deserves comment. All too often we hear in this House of Bills which are sent here having been guillotined and insufficiently examined. I understand that our colleagues at the other end of the corridor spent somewhere in the region of 160 hours scrutinising the Bill. That scrutiny has been carried out in an extremely sensible way. They picked out the parts which they considered to be most important and spent considerable time on them. That is an example of what can be done when an intelligent examination is made and there is co-operation among all sides of the House.
The industry has also shown great sense in the way it has prepared itself for privatisation of the electricity supply. What disappoints me slightly is the attitude of the electricity unions, which have a splendid record of dedication and responsible leadership. Unlike many of their colleagues in other industries who so often concentrate their arguments on production rather than productivity and on producers rather than consumers, the electricity unions have always appreciated that consumption is the end product of production. Having accepted such a realistic appraisal of the situation, it seems surprising that they have not so far been more enthusiastic about the enormous potential which these proposals offer and about the opportunity which each and every one of them will have for participation and investment in their own industry.
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The electricity supply industry employs some 146,000 persons in Britain and has a power station capacity of 62,000 megawatts. However, responsibility for generation of power has been dominated by the CEGB, which has enjoyed a virtual monopoly. When my right honourable friend announced that the industry was to be turned over to the private sector, he indicated six principles which the Government had in mind and on which their plans had been based. Those principles have been incorporated into the Bill. I do not propose to go over each one in detail tonight.
The CEGB is to be broken up. That is probably the most important decision of all. There were of course a number of options open to the Government, but it is very difficult to see how any real competition could have been created if the CEGB had continued to occupy the position of pre-eminence afforded to it in the past.
The creation of National Power, Power Gen and the national grid company, together with private sector company status for the 12 area boards and the selling off of the Scottish boards, along with the creation of a nuclear power company n Scotland, form a series of proposals which make more sense the more one studies them. They seem to me to have real relevance to the first principle that decisions about the supply of electricity should be determined by the needs of consumers. The new supply companies will be able to purchase electricity from a variety of generators. They can purchase it from two new generating companies, from Scotland, from France or from new private suppliers or they can generate it themselves. Thus the move from a producer orientated public sector monopoly to a series of customer orientated private sector companies will be achieved.
I am particularly pleased about the opportunity which this legislation now offers to private generators, because the 1983 Act was effectively frustrated by the size and power of the CEGB. The Act simply did not achieve what we had hoped it would. It is significant that there are already more than a dozen potential generators who have taken new heart from these proposals. More will follow, for they will have the option of generating for the grid or generating directly for a contract customer. The regulatory system will allow them to use the wires of the grid company and the area suppliers on a non-discriminatory basis, so customers, especially large ones, will have some choice over who generates their electricity.
I have heard some apprehension expressed about the new grid company and the merit order system. Indeed, my noble friend Lord Lauderdale has discussed this subject with me, and my noble friend Lord Hood raised the matter in his speech this evening. This is a technical and complicated subject, but it seems to me that the national grid company, as holder of the transmission licence, will effectively carry out the grid control operation as we understand it. But there will be some differences. It will be owned by the 12 new supply companies. It will be completely divorced from generation, and that I welcome. It will ensure that demand at any moment is met from those power stations which offer the most cheaply priced electricity.

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The electricity supplier will contract with a generator for capacity and energy and with the national grid company for conveyance of the electricity on wires. All the various contracts will then be pooled in a distributors' pool run by the national grid company. The grid company is then in a position to call on those contracts with the lowest rates to meet demand on a half-hour by half-hour basis. The pooling system thus optimises the use of plant that is on the system at any time. I emphasise that that is my understanding of how the grid system will work. If I have misunderstood the situation I have no doubt that my noble friend who is to wind up will correct me. I give way to the noble Earl.
The Earl of Lauderdale: My Lords, the point which I should like to raise is that the power will be pulled in on a half-hourly basis, but it will be pulled in on the basis of price rather than of cost. Surely the price has to take account of shareholders' remuneration and so on and is bound to be more than cost.
Lord Gray of Contin: My Lords, that is a matter on which we shall have to wait and see. But I believe that the principle is right. When the contract is made the cost is assessed by the generator and the supplier. The grid will then be able to call in the most attractive price. But my noble friend may wish to comment further. Certainly I shall give way.
Lord Williams of Elvel: My Lords, I hope that the noble Lord who is to wind up for the Government will correct the noble Lord on what he thinks is the job of the grid.
Lord Gray of Contin: My Lords, I can only give my understanding of the situation. If that is not correct I trust that my noble friend will correct me.
In operating the merit order system the grid company will need to be able to direct power stations, which will affect power flows on the transmission system. Even smaller stations could be significant depending on their location and proximity to other power stations. The Government's objective is to preserve the benefit of merit order dispatch while allowing the competition and incentive of the contract principle.
It may well be that in the future there will be more rather than fewer small power stations. That may not appeal to my noble friend Lord Weir. The potential of links with combined heat and power schemes may emerge. As the Magnox reactors come to the end of their useful lives they will have to be replaced, whether by stations of similar size or by larger or smaller stations remains to be seen. However, I hope that decisions will be taken on a more satisfactory basis than those which have resulted from the interaction of government and the CEGB. Indeed, the CEGB's part in such exercises has been savaged by Mr. Alex Henney, the economist, in his paper Privatising Power: How to Restructure the Electricity Supply Industry 1987. Nevertheless, I do not condemn the CEGB out of hand. It has achieved much and full credit should be given for its successes.
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However, the decision-making process on power station building has left much to be desired. As a result our nuclear industry has also suffered from all the chopping and changing of policy as government after government have leaned upon the CEGB, which must take its share of the blame as one of the principal participants in those discussions. I very much welcome the Government's commitment to the nuclear industry outlined in the Bill, for surely here we have far and away the cleanest form of power generation. We have an industry with a splendid safety record, together with standards acknowledged worldwide to be of the highest quality. The Greens and the conservationists should change their slogan. They should be saying, "Nuclear power—yes, please".
The Scottish boards face privatisation with great confidence. I was astounded to hear the comments of some noble Lords this afternoon. My researches show that the Scottish boards believe that they will be much sought after when flotation takes place. I am sure that they are right. There are some reservations about the Scottish scene which will no doubt be explored in Committee. However, basically the industry is well prepared to meet the challenge of joining Scotland's major companies in the private sector.
The Bill points the way forward for the electricity industry to lasting prosperity. The removal of Treasury control will allow investment decisions to be made on their merits and without political constraint. The introduction of competition will have a downward effect on prices in the longer term. The emphasis on consumer rights, so well described and spoken to by my noble friend Lady Oppenheim-Barnes, and value for money means a good deal for the domestic customer.
My noble friend mentioned the reduction in gas prices since privatisation of the gas industry, despite rumour-mongering. There is no reason why the same should not be the case in due course with electricity. There is plenty of opportunity for competition in generation, and also between various fuels. That will work through to the customer, whether domestic or industrial. Together with the incentive created by the new freedom already enjoyed by so many other liberated industries, that will allow electricity to take its place in providing a variety of very attractive companies which will attract investment from individuals and institutions alike.
There are no long faces at the National Freight Corporation any longer. Workers in British Gas, British Telcom, Britoil, British Aerospace, Enterprise Oil, Jaguar and Rolls-Royce and a host of other companies now removed from government control are not campaigning for renationalisation. Clause 4 is disowned even by the Labour Party, despite the fact that my old friend the noble Lord, Lord Stoddart, has asked his Front Bench to renationalise. I do not believe that he will have very much encouragement from them on that point.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord. Can he say who has advised him on the speech that he is at present making? Can he

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possibly tell us whether he really believes, as a former Minister in the Department of Energy, that what he has said about electricity supply still holds?
Lord Gray of Contin: My Lords, I think that that remark is hardly worthy of the noble Lord. Nobody has advised me on what I have said. I have spoken because I believe in this legislation. I shall do all I can to assist in putting it through. I do not know who is advising the noble Lord, but I think that he had better get another adviser
As I was saying, Clause 4 is disowned, even by the Labour Party, but perhaps we shall be told tonight that it is to be resurrected. Those new companies which will be created, along with all the others enjoying the freedom of the private sector, will realise that the way forward is powered by the vigour of enterprise. I hear not a murmur from those directly involved in the companies that have been returned or sent to the private sector for any return to the frustrations and dreariness of subsidised state subsidiaries. I wish the Bill well.
8.10 p.m.
Viscount Hanworth: My Lords, I must first apologise to the House that I was not here at the beginning of the debate. The reason was that I was on a Private Bills Committee.
I am afraid that there is almost nothing that the noble Lord, Lord Gray of Contin, said with which I agree, but, as I shall make what is for me a longish speech, I think that I had better leave it at that. Some of the points made by the noble Lord will no doubt be answered in my speech.
Many of us have been bitterly opposed to privatising the industry. It works well and will now be dismembered. Any conceivable improvement in efficiency will take years to achieve after a prolonged period of adjustment. Many people will agree with me on that point.
In their White Paper, the Government enunciated six principles. They are nothing more than pious hopes. The only public justification for privatisation seems to be that consumers will benefit and that their interests will be paramount. Quite frankly, that is rubbish. In my view, the Government are misguided, but they are not complete fools. I suggest therefore that the reasons for privatisation have nothing to do with the consumers' interests; the real reasons are quite otherwise.
First, the capital assets of the sale will be useful to the Government and can go to fund other important liabilities, but one must now ask what they propose to do with their present enormous budget surplus. There are many areas where financial help is needed and is not forthcoming. Is the surplus just to be used as a bonanza before the next election?
Secondly, power stations will no longer be forced to buy a high proportion of British coal, so leading to the partial demise of our coal industry. The Government are using privatisation to get them off that particular hook—a hook from which they could have disentangled themselves at any time.
Thirdly, if new power stations can be financed by the City, it greatly reduces the public sector borrow-
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ing requirement (PSBR). Is that so important if people could be persuaded to invest more in attractive government bonds rather than spend their money and increase inflation?
Fourthly, there is the hope that, by splitting the industry, it may reduce the potential power of the unions to bring the country to its knees. The Government may well be wrong in that philosophy because the electricity industry has unions with a history of responsible and effective representation of all their members' interests. The Government could worsen the situation by fragmenting the unions' commitment to the national interest and replacing it with a commitment to the companies' interests.
Fifthly, privatisation has become a dogma certainly as bad as the Labour Government's previous ideas on nationalisation. The Conservatives appear to believe that privatisation without normal competition is a good recipe. They seem to have forgotten about the unacceptable face of capitalism, or at least to think that it can be controlled well by a regulatory authority.
We talk about democracy which, to most people, means that the Government should pay some attention to people's wishes and not override them when it is not necessary to do so. Privatisation of water and electricity is very unpopular indeed. The noble and learned Lord, Lord Hailsham, seems to be right about the danger of elected dictatorships.
Why do we have to endure this destabilising swing of the pendulum from one extreme to the other, currently that of privatising anything that can trade? Perhaps it is that, if there is sufficient privatisation now, no Labour Government could ever reverse it to any great degree.
I am worried about the regulatory authority which must try to strike a balance between commercial interests and those of the consumer. It will often be a Solomon's judgment and, if the consumers' interests are paramount, as the Minister said, there will be little room for free enterprise. The industry will be very much like that which has developed in the United States, where private companies are severely restricted by federal and state intervention. The regulatory authority will need a high proportion of top level staff who can be trusted to make decisions on their own initiative, not the usual bureaucratic hierarchy.
I very much fear that the statutory powers given to the authority could lead to endless litigation with the delays that seem inherent in our present legal system. It could be a charter for barristers, but not for consumers.
Before I deal with the Bill itself, I must make some general remarks. I repeat that useful competition between generating stations can be only a minor factor because a large transfer of power between distant areas results in unacceptable losses and in destabilising the grid. Competition from small stations would have been possible for several years past, if only the terms for accepting their output had been more favourable. Why did not the Government step in and make them so?
I very much doubt whether it will be possible to balance the use of power stations on a merit basis,

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with the contractual obligations to large consumers and area boards, without expensive over-capacity, no doubt justified on grounds of competition. Most certainly, that straitjacket could lead to blackout as it did in New York. The noble Lord, Lord Nelson, so aptly remarked that, after privatisation, the long-term security of supply would be in the hands of everybody and nobody. I say that it is a recipe for government intervention and disaster.
I think that there will be privately financed small power stations of up to 300 megawatts. They are likely to use natural gas and some may employ a combined cycle giving efficiencies of up to 45 per cent. In the longer term, they might try to exploit combined heat and power for providing urban populations with hot water. All that is a good thing, but I do not believe that it can be a substitute for larger power stations in the 1,000-2,000 megawatt class. One or two of those might be built in strategic areas with private capital, but, unless long-term guarantees for treatment as base load stations are given, I believe that the City would find such an investment too expensive and risky.
All that means that it will be difficult to ensure that our generating capacity remains adequate. Time for the construction of new power stations is running out. Mr. John Baker, the chief executive designate of the National Power Company, has been quoted as saying that, as his company will no longer have any statutory obligation to supply electricity, his shareholders will require him to put profit before security of supply. To ensure that the lights stay on now that the obligation to supply has been transferred to the distribution companies, I am afraid that government intervention will have to continue probably as much or even more than it did before.
Competition as such between the new area boards or within them is impossible, and their charges to the public will be controlled by an enormously complicated formula and by the regulatory authority. I suppose that to a limited extent they may be able to sharpen up on the terms on which they draw bulk supplies from the generating companies, but the gain, I believe, will be very small indeed. I dislike the idea of the area boards diversifying into areas wholly unconnected with their primary function, and they seem to want to do just that. Already prices for electricity have been raised by 16 per cent. primarily to make the privatisation sale more attractive. It has been estimated that the cost of privatisation will be £1 billion overall, or at least a very substantial sum, with a further increase in electricity charges on average putting about £30 on consumers' bills.
We are to retain a proportion of nuclear generating capacity. I foresee that it will be difficult to privatise it under the National Power umbrella without the Government making many stipulations and giving guarantees. I do not think that in the present climate private finance will be forthcoming for new nuclear stations, except on the most disadvantageous terms. I also wonder what will happen about decommissioning and the necessary longer-term research for that and for fast reactors.
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For all those reasons I urge the Government to form another generating company covering the nuclear field with initially 100 per cent. ownership of shares by the Government. On 24th March 1988the Minister, Mr. Peter Morrison, said:
"I agree that the record of research and development in the industry must be maintained as we look to the future. I would go even further than that and say that it needs to be improved, if that is possible".—[Official Report, Commons, 24/3/88; col. 627.]
There are at present three major CEGB research laboratories employing over 2,000 people and with a turnover of more than £162 million. Once again the Minister's statement would seem just a pious hope unless the Government are prepared to intervene on their behalf. I foresee a rapid decline in the amount of research carried out within the industry as short-term commercial considerations dictate the terms on which short and long-term projects are determined as viable.
I am gravely concerned with the CEGB's decision to allocate the Marchwood Engineering Laboratories to Power Gen rather than National Power. The laboratories are just outside Southampton. Apart from having extensive test facilities, they employ over 400 people. Power Gen, the much smaller of the two organisations, needs comparatively few research staff and has said that it will close Marchwood completely in about three years' time. That was decided without consultation with the unions involved or consideration for the effect on the staff. It seems that the decision to give Marchwood to Power Gen was almost solely just to provide a balance of assets in the split-up of the CEGB. That decision ought to be reversed, and it is not too late to do so.
To summarise what I have said, there is absolutely no justification for the privatisation of this industry. The chances even in the future of reducing the cost of electricity are, in almost everybody's view except that of the Government's supporters, remote in the extreme and any other benefits seem even more remote. Today, we are faced with an ever-increasing amount of legislation unthought-out in detail at the behest of the elected dictatorship who are even more dogmatic than their predecessors. This is in a so-called democratic society. In the words of last Saturday's popular television programme "Yes, Minister": "If you must do this damned silly thing, don't do it in this damned silly way".
8.24 p.m.
Lord Carmichael of Kelvingrove: My Lords, we have had a very long debate and I hope that I can be relatively brief. These Benches, and I in particular, are waiting for Scottish answers. That means that I am at a disadvantage. My noble friend Lord Macaulay, who spoke earlier, also made that point. Like other noble Lords, I should pay tribute to the noble Baroness, Lady Hooper, for her speech. The tributes paid to her were very proper. This is a dreadful Bill to defend and she made the best of a bad case. She did what she could, as did her advisers and writers, but one cannot sell bad goods to intelligent people. During the debate I made a note of the tenor of the speeches from the other side. The noble Baroness should not take my figures too much to

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heart as it was not her fault. However, from the 11 noble Lords who spoke from the Back Benches, the score was five in favour, three against and three very very doubtful.
In opening the case against the Bill for this side, we saw how unenthusiastic were some noble Lords on the Government Benches. My noble friend Lord Williams said that the effect of the Bill in Scotland would be dealt with by me. I hope to deal with some of the points mainly in an inquisitorial manner because we need many answers—answers which were not even forthcoming from the other place. Had my noble friend Lord Williams been dealing with the Scottish as well as the English side he would have been able to make an even more devastating case than he did. I think he tore the Bill to pieces very successfully. The Bill will not receive the same treatment in this House as it received in the other place because there is a rather better balance maintained in our discussions and the speeches from the other side show perhaps more openmindedness on this subject than is shown in the other place.
There is a fundamental difference between Scotland and England and Wales. We believed that there should be a separate Scottish Bill. The reason that there was not a Scottish Bill was considered by many people in Scotland, and certainly by the media to be because the Government were afraid to put another separate Scottish Bill through the other place. The difficulty of trying to man a committee must be manifest to everyone when for Scotland there is a total of 10 Members, including Ministers, on the other side. So the Bill was tagged on to an English Bill as the result of parliamentary expediency.
But even within the Bill as it stands the Scottish element has been blurred. The regulator is a key figure in the efficient provision of electricity to all consumers. But there is no separate Scottish regulator. Scotland will be only a branch office of the United Kingdom and will have a deputy. My noble friend Lord Macaulay of Bragar made the point that the UK regulator will have two masters: he must answer to the Secretary of State for Scotland and the Secretary of State for Energy. This is not a small chauvinistic point, although I realise that sometimes the Scots are blamed in Parliament for being chauvinistic (and maybe we have good reasons to be so). Scotland has a large surplus of energy which will continue until at least the end of the century and perhaps for a good bit beyond. We are also fortunate in Scotland in having a very varied range of sources of energy and electrical power and a joint generating agreement between the North of Scotland Hydro-Electric Board and the SSEB.
I refer to paragraph 21 of the White Paper, which states that there is scope for,
"plant and fuel use in order to produce electricity at the cheapest prices available and to maintain security of supply".
I believe that the two boards of Scotland have been able to do this extremely well until now.
What assurances can we have that when the two boards are privatised some new owners will not try to find ways within the rules laid down by the regulator to make a quick profit? For instance, SSEB could buy out North of Scotland Hydro Board. The
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Minister shakes his head. I shall be glad to have the assurance on how tightly the rules will be applied. However, if the rules are applied as tightly as that, we have the difficulty of working out how the shareholders will make a profit from the deal.
I believe that the Scottish White Paper on which this Bill is based is a beautifully written document in which the writers do their best to satisfy a nonsense commission given to them by their Ministers. In trying to squeeze a competitive element. into the Bill, the writers came up with what I consider to be a gem of an expression. I believe that it has been quoted already. I quote from paragraph 31 of the White Paper:
"Of most importance will be the potential for yardstick competition, or competition by comparison, by which means the customer of one company will be able to compare the prices and service they receive with those received by the customers of the other company. Shareholders will also be able to compare the performance of the companies and draw appropriate conclusions".
Again, we are all mystified. What an individual consumer or even a small commercial consumer can do about his costs quite baffles me. Obviously the big giants can come along. The Minister may be able to say something later about the aluminium plant which may be able to do a very special deal. But there is no possibility of the ordinary consumer having any independent ability to dictate the costs at which he will buy his power. There is no choice. With regard to telephones, if one has paid an initial fee to Mercury one can switch from one company to the other. But there is no possibility of doing that here. It was suggested that there might be two sources into one's house, but I think that is quite ridiculous.
However, in paragraph 32 of the White Paper the previous paragraphs are qualified when it stresses that there is an,
"inherent element of natural monopoly in transmission and distribution"
of electricity. In the same paragraph, it states that the director general will be charged with ensuring,
"a satisfactory degree of transparency in the cost structure".
I should like to deal for a few minutes with the question of the degree of transparency in the cost structure. The Minister will be aware that there was an exchange in the other place between my honourable friend the Member for Garscadden and the Secretary of State for Scotland on the statements of Mr. Donald Miller, the SSEB chairman. There was also an exchange of letters that I am sure the Minister will have seen. I understand that Mr. Miller is likely to be the chairman designate of the new set up in the southern board.
In the annual report of 1987–88, the trading profit of the SSEB was £13 million but it then became a loss of £70 million because of the cost of transferring Chapelcross to Cumbria. The Minister will be familiar with this. The cost of the nuclear station totally took away any profit that was there. Mr. Donald Miller said that Clause 88 must be fully implemented and all the extra costs of nuclear stations and BNFL processing charges written off or the company will be unsaleable. Mr. Miller is quoted as saying that these assurances,
"will have to be signed and sealed before one writes a prospectus —otherwise it will not be worth writing".

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The Minister will know of that exchange and how unsatisfactory we found the replies of the Secretary of State. I hope that the Minister will be able to help us on this. His reply will be very carefully scrutinised because the words were quite unequivocal: if we do not have the agreement signed and sealed before the prospectus is written it will not be worth writing. I should like the Minister to answer the point.
There are one or two other questions. If there is to be privatisation we want the Scottish board to be able to sell direct to English area boards. The Bill suggests that all the Scottish output should go in bulk to the grid. I have heard on the grapevine that this point may now have been conceded. I shall be very pleased if that is so, and the Scottish surplus could be sold in competition with all the English generating boards.
We are concerned with a purely Scottish matter regarding conservation. It has been very widely discussed. We are concerned about the interconnector between Scotland and England and the question of who pays for it and when it will be built. Here I believe that there is a considerable element of conservation because a new line parallel to the existing line, in particular down the west coast, I am sure would meet a great deal of opposition. We should like to know whether the Minister has any confidence in the likelihood of this interconnector being, built, the estimated cost and the likely timescale of it. Will it be 275 kilovolts or 400 kilovolts?
I hope that the questions that I have asked the Minister will help to make the Committee stage more intelligible and more understandable. But from what we have heard in the debate today the Minister will be aware that it will be a fairly rough Committee. I hope that after the discussion on the Bill in another place and the debate today—and I refer especially to the speeches of noble Lords on the Back Benches —we shall be able to push at a slightly more open door than my colleagues were able to do in another place.
8.39 p.m.
The Minister of State, Scottish Office (Lord Sanderson of Bowden): My Lords, we have had a most interesting and very wide-ranging debate on this Electricity Bill. I should like to thank all those who have taken part in it. Like my noble friend Lord Gray of Contin, I am gratified that this Bill was not guillotined in another place. It has therefore received many hours of scrutiny there. I am sure that it will receive the same here.
Perhaps I should begin by saying that I was very impressed by what my noble friend Lord Beaverbrook said. His words were that this Government do not want to run businesses. That is not our philosophy. Businesses should run their own businesses. I cannot think of a better way to start this debate as we proceed to privatise the electricity industry.
In one way or another this Bill impinges upon the lives of every man, woman and child in Great Britain. This Bill will affect every person in the
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nation. I should like to start with some asn the Scottish situation as that is my responsibility, although later I shall try to address myself to some of the wider issues that have been raised in the debate.
There are three specific features peculiar to the electricity supply industry in Scotland. First, Scotland has a diversity of resources for electricity generation unrivalled in any other part of Great Britain—oil, coal, hydro and nuclear are in abundance. That is unique to those of us who live north of the Border. In passing, I say to the noble Lord, Lord Macaulay of Bragar, who I am glad will be taking part in the further proceedings on the Bill, that on this side of the House we try to keep the promises we make at elections. Therefore we have brought forward the Bill.
Secondly, we have a surplus capacity available for export through the development of the interconnector—as the noble Lord, Lord Carmichael, has said—to help meet the demands for electricity in other parts of Great Britain. Thirdly, Scotland has a substantial nuclear capacity. About 60 per cent. of Scotland's electricity requirements will be provided by the nuclear part of the industry when Torness power station comes fully on stream. Output from Torness is currently over 1,360 megawatts, almost up to its design maximum. That is a sincere tribute to the South of Scotland Electricity Board.
In view of that, we decided that vertical intergration of electricity transmission and distribution was what we would prefer to put forward in the Bill. We did not believe that it was appropriate to divide transmission and generation. We decided on two companies rather than one, with the creation of a nuclear company jointly owned 75 per cent. and 25 per cent. by the two proposed plcs. I was glad that, although he objected in principle to the fact that the industry was being privatised, the noble Lord, Lord Kirkhill, thought that this was the best way forward. Unlike the noble Lord, Lord Carmichael, he was pleased to see the cancellation of the joint generating agreement.
I know that the noble Lord, Lord Taylor of Gryfe, holds a different view concerning the number of companies that there should be north of the Border after privatisation. I am sure that he will return to this subject. But it was felt by those of us who are responsible at the Scottish Office that this was the best way forward for Scotland, and it received a welcome north of the Border, as I am sure he will realise.
It has been suggested that there should have been separate legislation. The noble Lord, Lord Carmichael, mentioned that. We do not accept it, as he will no doubt not be surprised to hear. There are many matters common to Great Britain as a whole, such as regulations, supply obligations and safety requirements. I do not need to remind him that in 1947, 561 electricity undertakers throughout Great Britain were nationalised in a single Bill by his party.
The noble Lord, Lord Macaulay of Bragar, asked about consultations. As my noble friend Lady Hooper has already said, the Bill was prepared in

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the light of extensive consultation with the industry, with employee and consumer representatives, with independent generators and with other interested parties, including environmental bodies.
The noble Lord, Lord Ezra, asked about the costs of privatisation. It is too early to make an estimate of the likely total cost of privatisation in the electricity supply industry. It will depend on market conditions at the time of flotation. The experience on previous privatisations has shown them to have an outstanding record of value for money. That is all I can say on that at this stage.
The noble Lord, Lord Taylor of Gryfe, asked about Scottish exports contributing to the non-fossil obligation in England. I shall return to that point when I deal with nuclear matters later, although it is very much a Scottish point. The structure of the industry in Scotland, as noble Lords will notice, is vertical integration. We feel that it has proven success in Scotland and it best suits the Scottish circumstances. Vertical integration has particular attractions in serving sparsely populated areas where additional costs can be accommodated within the cost structure of the whole industry.
Although the new companies will operate within a Great Britain regulatory regime, which I shall talk about in a minute, privatisation will transfer important elements of control from Whitehall to Scotland. I find it strange that some noble Lords opposite find that not to be in the best interests of Scotland. I thought that their party was particularly interested in returning some control to Scotland, and so I am glad that the Government are doing that in this case. It will bring about the creation of major new Scottish companies, provide a major boost to the Scottish private sector and create an important opportunity for the employees of Scottish institutions and the Scottish public to acquire a major stake of ownership in one of its most vital industries. Here I pay tribute to all those employees in the industry.
To answer the noble Lord, Lord Kirkhill, as he knows, special provisions in the Bill will allow for common tariffs to be maintained in the north of Scotland to cater for the unique geographic circumstances of that area and the availability of low cost hydro power. He also asked whether the boards would be floated on historic or current cost bases. The boards currently provide both types of information. The successor companies will decide the accounting basis for their main accounts, but they will in any case be required by their licences to produce current cost accounting information for the purposes of regulation. Both types of data will be provided in the flotation documentation.
The noble Lord also asked me about the golden share and its expiry. Scottish golden shares will be held without limit of time. There is no question of the hydro board being vulnerable therefore to takeover.
Lord Kirkhill: My Lords, I apologise for interrupting the Minister as he gets into his stride. I would normally restrain myself. But I want to ask him just one further point, as I do not quite follow his reply
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to me. Are the boards to be offered to the private sector upon the basis of current cost accounting or on an historic cost basis?
Lord Sanderson of Bowden: My Lords, I have given the factual situation. What I would rather do at this stage is to consider this matter and to write to the noble Lord so that he will know very soon how this is to be proceeded with. At this stage it is difficult to know what the answer is. I should like to confirm the point on the golden share that he mentioned, which I believe will give him much comfort.
Whether this will be a good thing for Scotland or not—the noble Lord, Lord Macaulay of Bragar, and other noble Lords seem to think that it would not be good for Scotland—I do not think I need to go into at this stage because it will crop up during the course of the Bill. However, as the noble Lord is a Highlander, I should like to point out to him that the news from British Alcan over the last week has been quite encouraging. This may turn out to be an excellent example of the way in which privatisation is creating the conditions in which there is a genuine potential for competition in electricity supply and in which companies, especially intensive energy users, will be able to consider a range of options for meeting their electricity needs.
The regulator will prevent abuse of any monopoly position. The Scottish electricity industry will be directly involved in the wider Great Britain market for generation. I could also be exposed to the wider yardstick of competitive pressures through the regulatory regime, which will seek to maximise incentives for cost efficiency through the industry and will encourage competition in generation among the existing companies within the wider British market. Fair and open access to the system will mean that competition from independent generators emerges spontaneously. There is a great deal of interest in knowing how this will operate, particularly north of the Border.
As has already been said, the regulatory regime will be supervised throughout Great Britain by the Director General of Electricity Supply, appointed jointly by the Secretaries of State for Energy and Scotland and will operate mainly through a system of licences. The director will have an office in Scotland and will be responsible to my right honourable friend the Secretary of State for Scotland in relation to the Scottish industry. The director general, supported by the deputy director for Scotland (who will be appointed by him) will be able to take account of the Scottish companies' place within the GB system and at the same time allow for the distinctive characteristics of the Scottish industry. The director will be able to draw comparisons on performance and efficiency across the whole UK industry and will also be able to ensure that trading across the inter-connector—which is an important part of the whole operation, as the noble Lord, Lord Carmichael, indicated—between England and Scotland is carried out fairly and that there is no cross subsidy of one activity by another.
My noble friends Lord Lauderdale and Lady Oppenheim-Barnes asked whether the staff would

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be sufficient to cope with the regulation. I believe that my noble friend Lord Lauderdale has misread the explanatory memorandum to the Bill. The figure of 115 is an estimate of the net increase in public sector posts which may arise from the setting up of the new organisation. It does not include, for example, the fact that over 80 people are currently working with the existing electricity consultative councils or that there are nearly 30 staff of the electricity meter examining service who will be part of the new organisation. That makes a total of approximately 220. Offer will have sufficient staff and resources for the important task it must carry out in England, Wales and Scotland.
Lord Williams of Elvel: My Lords, I am sorry to interrupt. Can the noble Lord say whether among the staff of the regulator will be people who understand the price formula in the licences? If not, can the noble Lord explain to the House what it means?
Lord Sanderson of Bowden: My Lords, it is fair to say to the noble Lord, Lord Williams, that the importance that we attach to the regulator and his staff is such that they will understand the formula in carrying out their duties. I should be surprised if the noble Lord, who is extremely intelligent, has not yet understood, but, if not, I am sure that he will do so by the time the Bill has passed through this House.
Our proposal will give the electricity consumer an important opportunity to invest in the new companies and consumers' interests will be catered for in other ways. I was pleased to hear my noble friend Lady Oppenheim-Barnes welcome the Bill on behalf of the Consumer Council. The regulatory regime is carefully designed to offer improved and comprehensive safeguards to consumers. They will benefit from increased competition and downward commercial pressures on costs. Those words have already been used by members of the Opposition Front Bench.
Our proposals mark a completely new beginning for the protection of the electricity consumer in Great Britain. The intention is to change the industry from a producer-centred monopoly into a service industry oriented towards the customer with additional new rights for the consumer. I was glad that the noble Lord, Lord Kirkhill, welcomed the fact that consumer committees would be improved. I take note of what was said by my noble friend Lady Oppenheim-Barnes about the subject. We shall look at the matter most carefully and no doubt return to it at a later stage. I was also pleased to hear my noble friend Lady Gardner of Parkes say that a careful balance had appeared in respect of consumers.
However, I was a little less happy about some of the remarks which emanated from the noble Baroness, Lady Ewart-Biggs. As regards the elderly and disabled, I should like to draw her attention to our proposals in Clause 3(4). They provide a new safeguard for the elderly and disabled by placing a specific duty on the director to consider in particular their needs in respect of the quality of electricity services provided by licensees. That is further
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reinforced by Condition 16 of the draft public electricity supply licence. It requires the licensee to produce a new code of practice aimed specifically at the elderly and disabled. The code of practice will cover special services available to those groups, including such matters as the use of special controls for electrical appliances and meters, the placement of meters for convenient access and advice on the use of electricity.
As regards the code of practice on payment of bills, there are further safeguards associated with the production of the code. The licensee must consult the appropriate consumer committee in the preparation of the code and he must submit it to the director for approval. The director will be able to call for a review of the code and its operation by the licensee.
I turn to deal with the point which the noble Baroness, Lady Ewart-Biggs, made about those who are having difficulty with the payment of bills. We take that matter most seriously in the passage of the Bill. Payment arrangements set out in the current code of practice on payment of bills provide a flexible way of helping those who have difficulty in paying bills. They include the installation of pre-payment meters where safe and practical. There are also special arrangements to avoid disconnection of the elderly during the winter months. The existence of the code is one reason why disconnections are declining so dramatically. The total number of disconnections during the 12 months ending February 1989 was 77,000. That is the lowest figure for any 12-month period since 1976. It is almost 15 per cent. lower than the previous 12-month period.
In order to ensure that that approach will continue after privatisation we are including in the draft electricity supply licence a requirement to produce such a code together with important new safeguards. I hope that in the light of that answer the noble Baroness will understand that we take her points most seriously.
I turn to the financial aspects which have been raised particularly in relation to prices. The subject was raised by many noble Lords during the course of the debate. Complaints have been made that prices to consumers will rise during the run-up to privatisation and afterwards. Examples were given by some noble Lords. The recently announced increases—and I refer to the Scottish boards—which are somewhat larger than last year have been used to justify that claim. In determining tariffs the industry must take account of a range of factors including cost structure and the need to make adequate returns on assets employed. The tariff increase in Scotland in 1988–89 was 7.75 per cent. from 1st April 1988. It was significantly lower than that in England and Wales, which ranged from 7 per cent. to 12 per cent. during the same year. The recently announced tariff increases in Scotland for this year were 8 per cent. from 1st April 1989. They are slightly higher than those in England and Wales, where they range from 6 per cent. to 7.5 per cent. However, they are still less than last year's average increase south of the Border.
The tariff increase in Scotland is greater this year than last principally because of the effects of higher

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rates of inflation on operating costs generally. But they also reflect higher than anticipated fuel costs for both nuclear and coal. Even with that latest increase in tariffs in Scotland, the rates are 9 per cent. lower in real terms than in 1982–83. I believe that to be most significant. I know that it is known by most noble Lords opposite—particularly by the noble Lord, Lord Stoddart of Swindon—but I should like to mention the fact that during the last Labour Government they rose 20 per cent. in real terms.
Primarily tariffs are a matter for the board to decide. In determining the level it must take into account a complex range of financial and operational factors, including financial targets agreed with the Government. The financial target for 1989–90 is 2.7 per cent. It is set jointly to reflect the board's shared responsibility for nuclear generation. It holds the target at broadly the same level as it has been for the past two years. The financial target for the electricity supply industry in England and Wales is 4.75 per cent. for 1989–90.
Questions were asked about price increases. There is no reason why tariffs should increase as a consequence of privatisation. The privatisation of the two companies will lead to increased efficiency through competition in the broadest sense. Private sector disciplines will produce downward pressure on the costs which go into consumer electricity bills, whatever noble Lords say. Where a monopoly will remain, prices to the consumer will be subject to strict and fair regulations.
The noble Lord, Lord Ezra, spoke a great deal about prices. I have indicated that prices will be controlled in the privatised industry. At this stage I shall not go deeply into the formula of how the regulator arrives at x, y, the yardstick cost or whatever. I believe that this is a matter which we can debate at greater length when we come to the Committee stage of the Bill. However, I must say to the noble Lord, Lord Williams of Elvel—who asked why we wanted to privatise the industry as if it were a matter of Mars bars—that I happen to think the company which produces Mars bars is a profitable company. Indeed, the product does give extra energy.
I should just like to make the point that the Bill marks a completely new beginning for consumer protection in the UK. At its heart is a set of measures which, as I have said before, are designed to turn the industry from a producer-centred monopoly. Moreover, I have no doubt that our proposals, which have been warmly welcomed by the area electricity consultative councils and the Electricity Consumers Council, will be noted. I also noted what my noble friend Lord Gray of Contin said on that issue.
I should like briefly to mention the non-fossil fuel obligation and the point made to me by the noble Lord, Lord Taylor of Gryfe. It is not intended that the non-fossil fuel obligation and the associated fossil fuel levy will apply in Scotland for the foreseeable future because of the high level of non-fossil fuelled generating capacity already available there from nuclear and hydro power. Exports from Scotland will however be capable of being counted towards the obligation on the supply companies in England and Wales. The fossil levy will apply to the Scottish
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companies in the narrow circumstances where they supply electricity generated from fossil fuel direct to large consumers in England and Wales.
I turn now to the nuclear situation in Scotland which is most important. It is one of great significance in the Scottish context, as I have already said, especially in relation to Torness. The financial provisions in the Bill provide the means to create the capital structure appropriate to the new companies. In answer to the question raised by my noble friend Lord Ferrier, I should say that we shall be replacing one type of debt with a combination of debt and equity geared to market requirements. It is much too early to give an indication of the detailed figures involved. But capital restructuring is a well-established business practice and we shall be aiming to ensure the maximum proceeds from the sale.
I refer to a point which I think was raised by the noble Viscount, Lord Hanworth. I believe that the matter has also been reported in the press recently. It concerns the opinion of Mr. Banham of the CBI. I am aware of the views of the CBI on the matter of disposal of nuclear assets. The confederation wants nuclear industry in the public sector and later for it to become a new competitive force in the private sector. However, we believe that our proposals will encourage the development of the next generation of nuclear stations from the outset by freeing the whole industry from the constraints of state control. In our view that is a sensible way forward and that to retain part of the industry in the public sector would not be a good idea. I am aware that the matter will be debated at greater length in the future and, if time permitted, I would give your Lordships a longer answer. However, I fear that time is pressing and we shall have to wait until the next stage of the proceedings on the Bill.
So far as concerns coal, I should like to point out the fact that it is my estimation—and I have good reason to believe this—that since 1979 we, as a government, have spent about £1 billion a year on the coal industry. That is quite a significant amount of money. To those who seem to say that the Government are walking away from their commitments to the coal industry, I suggest that they should check first the facts of the matter.
Noble Lords will know, in connection with the Scottish situation, that the chairman of the SSEB and British Coal have agreed to negotiate on the basis of a five-year deal under which the SSEB would purchase 2 millon tonnes of coal per annum subject to the conclusion, in respect of the fourth and fifth years, of a satisfactory contract with the electricity supply industry in England and Wales for exports of electricity over the inter-connector amounting to 600 megawatts.
Although the previous arrangements ended on 31st March, negotiations are continuing between the SSEB and British Coal, especially on the question of price. In the meantime, the SSEB has confirmed that it will continue to take supplies from British Coal at the rate of 2 million tonnes per annum; and British Coal has confirmed that it will continue to supply at that rate.

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I am well aware of the disappointing news about the closure of Bilston Glen, which I think was referred to by the noble Lord, Lord Dean of Beswick. Despite some improvement in the earlier part of this year, costs remain at more than twice target levels. The Government are naturally disappointed at that outcome but, of course, that decision is for British Coal. I understand that only a small proportion of the output from Bilston Glen has been destined for electricity generation, the bulk of it being for industrial and domestic users. Nevertheless, the Bilston Glen announcement makes it all the more important for British Coal to secure a satisfactory agreement with the SSEB which will ensure the future of Longannet. The viability of the Scottish coal industry remains dependent upon the future improvement in production costs. I know that the noble Lord, Lord Taylor of Gryfe, places a lot of weight on the future of open-cast mining. Indeed, I have heard him speak many times in this House on the subject.
I turn now to the issue of the environment. I understand the strength of feelings about the protection of the environment. Moreover, the Government share that concern. Perhaps I may say to my noble friend Lord Swinton that the amenity provision in Schedule 9 to the Bill does not stand on its own so far as concerns our commitment to the environment. I listened very carefully to what he said. The amenity duty is most important, and in future it will apply to all licensees and not just to the successor companies of the present electricity industry.
I am sure that the matter of the environment, and all that goes with it, will be debated at greater length during the passage of the Bill through this House. At this stage, all I should like to say—as my noble friend Lady Hooper has already spoken about the environment and the importance we attach to it—is that we shall come back to the matter in greater detail. However, I should like to give my noble friend the assurance that the Government are certainly listening most carefully to what he and other noble Lords have said in this respect.
Lord Hatch of Lusby: My Lords, perhaps I may intervene for just a moment. I realise that time is pressing, but surely the Minister is aware that questions on the environment have been raised by Members from both sides of the House. Indeed, they were very crucial questions regarding the global future. Can he therefore just encapsulate the Government's policy, their attitude and their philosophy towards that issue so as to help us in the later stages of the proceedings on the Bill?
Do the Government believe that the profit motive of private companies is more likely to promote progressive environmental policies than the safeguarding of the public interest which has to be promoted by a government?
The Earl of Swinton: My Lords, before my noble friend replies to that intervention, he was answering a question of mine. We all have to live in the same environment and certain Members of this House have to live in the same environment as other Members. Perhaps we prefer not to.
Lord Sanderson of Bowden: My Lords, I am grateful to both noble Lords for their interventions. For one I thank my noble friend and for the other I was just about to mention the noble Lord, Lord Hatch, in my reply.
However, the environment is an immense subject and I know that we shall take a great deal of time on it. In the course of the Bill it will become clearer and clearer that the Government take their environmental responsibilities extremely seriously. I hope that the noble Lord, Lord Hatch of Lusby, will not press me further at this stage, though I appreciate his concern just as much as everyone else's concern on this matter.
I should like to deal with one issue raised by the noble Lord, Lord Hatch, concerning reductions in SO2 emissions. It is not necessary to provide in the Bill for reductions in sulphur dioxide emissions. The Government have signed the EC large combustion plant directive and compliance will be overseen by Her Majesty's Inspectorate of Pollution under the powers of the Secretary of State for the Environment. That was mentioned by my noble friend Lady Hooper in her opening speech.
Many noble Lords spoke about what might loosely be termed global warming. In this respect I should like to bring your Lordships up to date on government thinking. The generation of electricity in this country is currently responsible for approximately one-third of our CO2 emissions. Overall, the UK itself emits some 3 per cent. of global CO2, which in turn contributes around 1.5 per cent. to the global greenhouse effect. It is clear from these figures that any unilateral action by the UK would have only a limited effect on the global problem and that properly co-ordinated international action will provide the best means of tackling it. CO2 abatement can be achieved by switching to fuels which contain less carbon—for example, from coal to natural gas—by using non-fossil fuel energy sources like nuclear, hydro-electric and other renewable energy technologies, and by increased energy efficiency. The Government are, of course, encouraging such sources.
I turn now to research and development, mentioned by many noble Lords including the noble Lord, Lord Shepherd, the noble and gallant Lord, Lord Carver, and my noble friend Lord Lauderdale. The Government's role in electricity research, post-privatisation, will be determined in the light of the industry's R&D programme and the Government's existing policy on R&D as set out in the Annual Review of Government Funded Research and Development. The Government acknowledge that the industry may decide not to undertake long-term research that is not of a near market nature. After privatisation, as now, it will be for the Government to decide whether the national interest in research is such as to justify the Government themselves funding it. ACORD will be considering the industry's intentions for R&D post privatisation in May of this year and will be advising the Secretary of State for Energy on the implications for the Government's role. The Government's intention will be to ensure that the long-term R&D they consider to be necessary in the national interest is indeed carried out.

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The noble Viscount, Lord Hanworth, and the noble Lord, Lord Shepherd, referred to the closure of Marchwood. The closure would have occurred regardless of which successor company it had been allocated to. Essential nuclear research will not be prejudiced. It will be completed or transferred elsewhere before the Marchwood site is closed.
The noble Lord, Lord Ezra, and the noble Viscount, Lord Weir, referred to capital investment and the difficulties of having those companies involved with privatisation. We are shifting the obligation to supply from the CEGB to the area boards. The latter will now decide from a position closer to the consumer what power supply contracts they need. It will inevitably take a little time to make that assessment and to negotiate the contracts that will underpin the reorganised industry's operations. Delays to power station ordering will be kept to a minimum by the demanding timetable to which the industry is working. Noble Lords should remember also that the new structure will create openings for supplies of new generating technologies which I am sure British companies will be well placed to meet. The noble Viscount, Lord Weir, is not present to hear that, but I have no doubt that he will return at later stages in the Bill when we shall benefit from his expert knowledge on matters of electricity plant.
Energy efficiency and least cost planning have been mentioned. Least cost planning would involve the electricity supplier or regulator deciding that a particular conservation measure was preferable to contracting for electricity. Such a planning process takes decisions away from customers and, as such, runs counter to our objectives. It is only relevant in cases of heavily regulated monopolies as seen in parts of the United States. The Government's view is that, in general, customers can and should decide which energy efficiency measures are appropriate, should pay for the measures and should receive the benefit of any savings. This makes decisions more relevant to the customers' needs and wishes as well as ensuring that the best efficiency measures are chosen.
I turn briefly to the matter raised in relation to the grid and merit order dispatch. At present the CEGB's merit order system determines on a daily basis which power stations will run. Throughout the day supply and demand are balanced minute by minute ensuring that demand is met at the lowest cost consistent with keeping the system secure. During the day some stations may be rescheduled, but this is to accommodate changes in technical circumstances or unexpected changes in demand. The power station cost data used to calculate the least cost option remains the same thoughout the day.
In future there will continue to be a merit order system balancing supply and demand on a minute-by-minute basis so as to meet demand at lowest cost consistent with the system security. Power stations will bid in prices rather than cost but in other ways the new and old systems will be very similar. One major difference will be the payment arrangements for power supplies. Each half hour the amount owed by suppliers to generators with whom they have
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contracted will be calculated. This is the so-called settlement procedure but it should not be confused with the merit order dispatch.
The noble Lord, Lord Williams of Elvel, wondered how the area boards would be able to cope with the grid because they do not know much about it. The grid will be run by the people who run it now. The grid will be transferred to the area boards with those CEGB employees who operate it, and the structure of the grid company will ensure that it will be run on an independent basis.
Lord Williams of Elvel: My Lords, can the noble Lord tell me how the board of directors of the national grid company will be composed?
Lord Sanderson of Bowden: My Lords, no, the noble Lord cannot tell you at this stage.
Lord Williams of Elvel: My Lords, perhaps I may tell the noble Lord. It will be composed of representatives of the area boards who are shareholders.
Lord Sanderson of Bowden: My Lords, that is as may be. As I understand it, the regulations that will be applicable to the grid company wall mean that it is a stand-alone company. Therefore by regulation it will be able to take an independent view of how its operations should proceed. The noble Lord, Lord Taylor of Gryfe, said that the degree of regulation may mean that the Government may sell the industry at too low a price. I believe that was a matter raised by my noble friend Lord Weir.
Obviously, the level of proceeds could be higher if the interests of the consumer were neglected. The system of regulation that we are introducing is aimed at protecting the consumers' interests while at the same time allowing the industry to make reasonable returns. Nevertheless, having established the regulatory framework, the Government will be aiming to achieve full value for all parts of the industry. We owe it to the taxpayer so to do.
The noble Lord, Lord Williams, asked some of my noble friends behind the Front Bench whether they would invest in the companies and whether it would be worth their while to do so. I remind the noble Lord that we as taxpayers at present own the industries concerned. The noble Lord, Lord. Stoddart of Swindon, spoke about the involvement of the staff. The staff shall be able to play a real part as shareholders in a way that they cannot do now. The management have made it clear that they regard the maintenance of good industrial relations as absolutely crucial to the success of the successor companies.
My noble friend Lord Norrie asked about the planning procedures. The Government take the view that, taken together with the arrray of legislation that has been mentioned, the main safeguards against electricity developments having an unacceptable effect on the environment are those in our detailed planning procedures. They ensure wide consultation with those affected or those who have an interest. These procedures are now buttressed by regulations which will be made to implement the European

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Council directive on the assessment of the effects of projects on the environment. He also asked about cables and whether they should be buried under ground. If required to make an environmental statement for an overhead line, one of the matters which the developer must address in his statement is the possible impact on the countryside.
Undergrounding cables is very costly and that is well understood. It also takes longer and so is correspondingly more expensive to locate and to rectify any subsequent faults along an underground cable. In some places, and especially agricultural areas, undergrounding is unsatisfactory but that is something we look at most closely. As I have said, the planning procedures are the control mechanism both before and after the Bill has been passed.
My noble friend Lord Stanley of Alderley asked about rural prices. We are not requiring public electricity suppliers to introduce differential tariffs, merely allowing the possibility of the development some time in the future. That is no different from the position which applies in England and Wales under the existing law. Our proposals merely clarify the position. I remind noble Lords that the area board chairmen in England and Wales and the chairman of the South of Scotland Electricity Board have given the assurance that they expect to maintain common tariffs for domestic consumers for five years after privatisation.
I have tried to deal as succinctly as possible with as many points as I could that were raised during the course of the debate. I conclude by saying that as a result of the privatisation programme so far, the performance of the privatised companies in terms of profits, efficiency and service to the public have been transformed. The sale of the electricity industry will be a major undertaking and there should be no doubt about that. Privatisation is not only transforming the economy and replacing inefficient loss-making state monoliths with competitive profitable companies; it is also transforming society by enabling, as I said in answer to the noble Lord, Lord Macaulay of Bragar, the British people and indeed the Scottish people to become a nation of shareholders. Perhaps that is not fully appreciated.
The noble Lord, Lord Williams of Elvel, said that this is a bad Bill. I have to disagree with him. I think it is an exceptionally good Bill. It was in our manifesto and we are carrying out our commitments and our promises. It will benefit employees of the electricity industry because it will give them freedom of opportunity which they have not enjoyed since nationalisation. It will benefit all of us as customers by giving us, I hope, the rewards of competition. I am an optimist in this regard. I look forward to listening to what noble Lords say at the various stages of the Bill. I am especially interested in the discussions that will take place on Scotland. I know that my noble friend Lady Hooper will deal most effectively with the matters relating to England and Wales. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Care of Animals used in Scientific Procedures
9.21 p.m.
Lord Houghton of Sowerby Lord Houghton of Sowerby rose to ask Her Majesty's Government what action is being taken on the Report of the Animal Procedures Committee for 1987, the Statistics of Scientific Procedures on Living Animals Great Britain 1987 and the Code of Practice for the Housing and Care of Animals Used in Scientific Procedures.
The noble Lord said: My Lords, it is quite some time since last I had the opportunity to raise these matters. We did not then have before us some of the documents that are available now. The noble Earl, Lord Arran, responded for the Home Office on that previous occasion and I am glad to see that he will do so again tonight. The first document mentioned in the Unstarred Question is the Report of the Animal Procedures Committee for 1987, which is new. It is the first one. The second is the Statistics of Scientific Procedures on Living Animals Great Britain 1987, published by the Home Office. It is not new but very old. However, it is very much better than it has ever been before. The third is the Code of Practice for the Housing and Care of Animals Used in Scientific Procedures, which is new.
I shall deal first with the Report of the Animal Procedures Committee for 1987. In so doing I shall mention the fact that all the documents before us tonight are the direct outcome of the Animals (Scientific Procedures) Act 1986, which, I continue to repeat, was an historic measure; historic not only for what it set out to do—it replaced the Cruelty to Animals Act 1876—but historic also for the way in which it was done. After years of frustration and futility in efforts to get changes by means of the Private Member's Bill procedure to the law on animal experiments, some of us had enough sense to come together to see whether we could find a consensus and secure the highest common denominator of agreement among animal welfare organisations and scientific and commercial interests which for along time had been at loggerheads. We succeeded. We were able to offer to the Government a set of proposals which if they adopted them or anything like them we could undertake to influence our constituents to ensure that the Bill went through Parliament with the least obstruction and delay. We could bring about reform in that way. And so it happened.
We then formed the strongest and most fruitful combination of animal organisations that I know, called the Welfare Alliance. It is composed of the British Veterinary Association, the Committee for the Reform of Animal Experiments, of which I have been chairman since the outset, and FRAME, the Fund for the Replacement of Animals in Medical Experiments, which has very strong support on all sides of the Houses of Parliament. That combination was the most influential in bringing about the Act of 1986 and has been most influential in the course of implementing the various recommendations of the Act.
I strongly recommend this lesson to all those concerned who think that they can get business done in Parliament on extremist solutions by using the

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Private Member's Bill procedure. It will not succeed. Parliament is not a body that will absorb extremist views or fundamentalist views into national legislation. One might as well get this common denominator before setting about it, rather than have to seek it when legislation has been wrecked, obstructed or scattered on the floor—something of which we have recently had experience.
The Animal Procedures Committee is a statutory committee. It is not an advisory committee in the superficial sense that advisory committees in the past have been, easily appointed, easily ignored and easily falling into disuse. It is a statutory committee which can run under its own steam and it does not have to wait for an indication from the Minister as to what it should do and what it should talk about. Again as a slight digression, I would say what a pity it is that the Farm Animal Welfare Council is not constituted with similar authority and similar independence.
There is one member of the Animal Procedures Committee who has the distinction of being also the only person who is a member of both the Animal Procedures Committee and the Farm Animal Welfare Council; he is Mr. Clive Hollands, who is probably one of the most able, distinguished and experienced representatives of animal welfare opinion that we have in this country today. His influence on all the committees on which he serves is very strong indeed.
The Animal Procedures Committee is a body of 19, with 18 specialists of various kinds and an academic chairman. It has made a very promising start and produced a report which has considerable self-confidence and is optimistic. The committee believes that it has made a good start and for a committee of that composition to feel that means that it really has made a good beginning.
There are one or two questions that arise on the report. The committee has taken special notice of one or two aspects of the use of animals in laboratories. They are matter of constant public concern. One is known as the Draize test, which covers the use of animals' eyes for the testing of irritant and corrosive substances, and for this purpose the most numerous sufferers of this test are New Zealand rabbits. The use of animals for eye irritancy and corrosion testing has increased considerably in the last 12 months. It has risen by about 100 per cent. and 59,000 rabbits are used for this purpose alone.
Many of the figures for 1987 have increased not because more animals have been used but because of the more rigorous and particular classification. In regard to sheep, for example, some procedures which were regarded in the past not as experiments but almost as normal veterinary practice are now brought within the scope of the definition of "procedures" and have to be recorded and classified. This is good because it means that henceforth the Home Office statistics will come nearer to the truth than they have in the past.
The committee refers to the Draize test and is concerned about its continued use on the present scale. It remarks on steps that it has taken in conjunction with those who use animals for this purpose to
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obtain more stringent observation and use of animals. We welcome that. There are difficulties. It is extraordinary that as yet there seems no alternative to using animals' eyes—the most sensitive parts of the bodies of all mammals—for this purpose. A great deal of suffering is caused when substances are put into the eyes of animals and left to corrode, or to establish whether they will corrode, the eye tissue.
Another matter of concern to the committee is cosmetics, to which it devoted a couple of pages. If there is one sector of the use of animals in laboratories that has created a greater upsurge of discontent than anything else it is surely cosmetics. I draw attention to the fact that an early day motion has been tabled in another place and signed by over 300 Members. It expresses very strong views about the continued use of animals for cosmetics testing and requests that draconian measures be taken to reduce the number so used. I recommend that anyone concerned with the use of animals in the testing of cosmetics should read what the committee says. It is in this sphere that the question of alternatives will have to be pursued rigorously so as to avoid consumer reaction. Many manufacturers of products in wide use in households and consumed in various ways will have to watch that consumer reaction does not compel them to take steps more successfully than they have so far done to minimise the use of animals.
We should not overlook the fact that the European Community, in parallel with ouselves, is pursuing exploration in this respect, which may result in directives from the EC of a kind that have not been forthcoming recently. The European dimension is becoming more and more important all the time because we shall suddenly find one day that we have a directive which will supersede our national legislation in particular respects, and we must be ready for that. In some ways, Europe will take a firmer line on the use of animals in laboratories than we have so far taken here.
That brings me to the other part of the report which it is important to note; that is, the fairly brief reference to the pursuit of alternatives. Of course, 1987, the year of the report, was only the beginning of the committee's work. It had not got into its stride in utilising the power which the Act gives it to pursue its own functions of research, to sponsor research and to turn itself into sub-committees on particular research projects. That is an important part of the committee's work. We want a much stronger resolve to pursue research into alternatives than we have had so far.
The Government have provided something like £70,000 in the current year—it may be a little higher than that now—towards the sponsorship of research projects. The committee advertised for applicants with good projects to send them in and it received well over 100. Those were examined by expert assessors and an appraisal was made of them. More received a favourable appraisal than could be accommodated within the government grant FRAME and others are searching for sponsorships from other sources to finance the work that is being undertaken and that which should be embarked upon without further delay. We want more sponsorships for the pursuit of alternatives.
A good deal of work is already being done by some firms and laboratories. In my opinion that is the salvation of a good deal of the problem: the finding of alternatives to the use of living animals. That is what we are after. It should be a prime purpose of the 1986 Act.
I hope that the Government will feel that what they are asked to do in that connection matters. It will probably give a better return than a good deal of restrictions and other restraints upon the use of animals in laboratories which under present circumstances are difficult to impose. I hope that we shall receive assurances from the Minister on the Government's policy on alternatives.
I want to say a word or two about numbers. I have already referred to the fact that the numbers for 1987 are up. We expected that in view of the reclassification and definition of the word "procedure" as against the old word "experiment". The figures are up 17 per cent. in 1987 as against 1986. Something like 3,600,000 animals are used in experiments; 63 per cent. of the total is used for commercial purposes—in the course of testing or developing commercial products; and 66 per cent. of the animals used are not subject to an anaesthetic. That does not mean that there is a good deal of deliberate cruelty going on; it means that many of the animals are being used for experiments other than medical. They are used for toxicity and other forms of safety precautions which can be very uncomfortable and sometimes very painful indeed. The pain cannot be alleviated by anaesthetising the animal concerned.
One of the uses of animals, in commercial production especially, falls within a well-known piece of jargon in the trade—the LD50 test. Lethal dose 50 means that one finds the point at which at least half the animals dosed with a particular substance die. That can be pretty horrible. I think it is probably in that field that there is more pain from substance testing than anywhere else because most of the testing is for toxicity.
The reason I mention this particularly is because Mr. David Mellor, the Home Office Minister at the time of the passing of the 1986 Act, was holding out the hope and indeed expectation that the numbers being used in the LD50 test would fall. I am afraid that they have not done so and about 130,000 animals are still being subjected to the full rigours of the LD50 test, the lethal dose procedure. That means enforced inhalation of gases or enforced absorption of substances that are pumped into them or put in by needle or whatever it is. The animal is fed with the substance until it cannot take any more and then people wait and see what happens. It is a very crude system.
I wish to ask the Minister whether the licensing system is being used effectively now to reduce and restrict performance of what is called the classical LD50 test in this country. To get the numbers down on the LD50 test is one of the first indications of the success of the 1986 Act. Can the Minister tell us why the numbers are still up, why the expectations of Mr. Mellor have not been realised and what the Government are doing to get the numbers down?
Finally, I come to the third document, the Code of Practice of the Housing and Care of Animals used in Scientific Procedures. The code represents the Secretary of State's paper under the statutory provisions of the 1986 Act. It ought to be well understood that the document is now the definitive and official code of practice for the care of animals in laboratories and it supersedes all the informal ones—good though they have been—in use in laboratories at the present time. I have it here and a very good document it is.
We have to be grateful to the Royal Society and the Universities Federation for Animal Welfare who combined in the production of the original basic document. But their proposals have been much improved upon in discussions between the welfare organisation and the procedures committee and the Home Secretary. Probably in more than 20 respects the final document is stronger on its conditions and requirements than the earlier voluntary document that was examined.
I think it has to be said that although this is not a body of regulations enforceable in law, nevertheless it is a code of practice and everybody has got used to the idea of it. It seems to me that it should now prevail as the standard provision for animal welfare, otherwise it will have to be reviewed again if we are to obtain satisfaction in this field.
I conclude with one further general observation. I think that the use of animals for laboratory purposes is a matter that probably lingers in the minds of more people than we realise. When we talk about the moral issues that confront the nation today, we must not leave out the treatment of animals. If a society has any morals at all, they must surely apply to animals too. It is an easy temptation when a scare arises concerning a phenomenon like AIDS or salmonella, or when a nation wants to discover something through embryo research which it has not been able to discover by any other method, for people to suggest that animals should be used as they do not like the idea of embryo research. But whether it is a matter of embryo research or research into the cause of AIDS, we must utter the caveat that animals are not just expendable to meet the requirements of the human species, just because it has worries and problems it wants to solve.
The tendency of the human race is to seek out cures rather than preventive measures. That is why there is such a drive for cures and so little enthusiasm for prevention. That has a very important bearing on the future use of animals in research. However, on the whole, I am glad to say that all my friends who are concerned directly with this matter are very pleased with the start that has been made in the implementation of the 1986 Act and with the start that has been made by the Animal Procedures Committee. We look forward very eagerly to future reports from that committee.
At the present time, there is a lull in animal welfare activity in this field. I am sure that the Home Office must feel the benefit of that. I imagine that the postbag received by that office on this subject is very much smaller today than it has been for many years past. That is an indication that people are waiting

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for the visible results of the reforms of 1986 which caused such high hopes to be raised. They still raise high hopes for those of us who want to see good results. We put our faith in that Act. We put our faith in a consensus. That view is freely accepted by the Government. We believe that view is represented in the public's attitude. That is the strength of the Act; we want to see it produce the goods. The goods are lower figures in all branches of animal use. When that trend is noticeable and continuous, we shall be on the way to making a testimonial to all who were concerned in work on the Act. That includes the Ministers and staff at the Home Office who worked diligently in the preparatory work that was needed to get the Act and all its ramifications on the road. I am sure that the Minister will have further assurances to give on the points and comments I have made.
9.49 p.m.
Lord Mackie of Benshie: My Lords, I have a confession to make to the House. When the task of replying to this Question was allocated to me at our party meeting, I thought we would be talking about farm animals. I know that the noble Lord, Lord Houghton of Sowerby, who has done so much work, and such effective work on this matter, has a fairly low opinion of farmers and their treatment of their animals. However, I can assure the noble Lord that I have read the three documents with a great feeling of satisfaction that something is now being done.
We all share the noble Lord's concern but we do not all express it or do something about it so effectively. We share his concern about the use of animals in experiments which may sometimes be for selfish purposes or for purposes which are not necessarily for the good of the human race. I know from personal experience that once one becomes deeply involved in technical matters—as I was long ago in the last war in the techniques of warfare—one becomes totally inhuman because one thinks only of the techniques one is trying to evolve and apply. I am sure that that is true of scientists in all fields. Without the concern and sympathy for animals which are properly expressed by the public and through government and legislation there would be a great deal of unthinking cruelty in the search for knowledge.
Turning to the three documents, I was very impressed by the report of the Animal Procedures Committee. The committee is composed of a number of very distinguished people. I thought that it had gone about its task in an extremely practical
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manner and its recommendations are practical. To take one small example, it recommends that the nominated veterinary surgeon should be impartial. These are practical recommendations which are bound to be effective.
I have no specific questions on the report, but I should like to know how well the inspectorate is staffed. There has been a certain amount of criticism by the RSPCA that there are insufficient staff to do much of the work that it is thought would be desirable for it to do. It appears that it has a great deal of work to do and it needs a good staff.
The statistics were fascinating and rather frightening. Apparently there are 20,434 licensees. That is a very large number of people who are licensed to carry out experiments. Perhaps the Minister can inform the House whether 3,631,000 animals were used or whether that was the total number of experiments with perhaps more than one experiment on one animal. It is a frightening figure. Out of all those experiments, apparently the inspectorate found nine infringements: one licence was revoked and eight licensees were admonished.
All that was the responsibility of an inspectorate which comprises one chief inspector, two superintending inspectors and 16 inspectors. That means that there is one inspector per rather more than 1,000 licences. There are 386 designated places, 25 per inspector.
I should like to know what training the inspectors have and what backing they have. They obviously have a great deal to do. Apart from the 386 designated places, there are a great number of additional establishments concerned with the breeding and supply of animals. They need to be looked after.
The code of practice, which also applies to farm animals, appeared to me to be quite excellent. Again, I wonder whether the inspectors have been able to assess the number of designated places and breeding establishments, which number rather more; I believe that the figure is about 2,000. How many of those have been inspected and are up to standard? If the Minister would be good enough to answer those practical questions, I should like to finish by saying that this is obviously a tremendous step forward. The matter is being taken seriously by the Government. The measure is much approved, certainly by all the people who are concerned with the welfare of animals and the proper use of animals by humans. However, while it is a step forward, perhaps we may have some detail on the management of those animals.
9.56 p.m.
Viscount Allenby of Megiddo: My Lords, I am most grateful to the noble Lord, Lord Houghton of Sowerby, for introducing this important topic for debate this evening. It is noticeable what tremendous support the 1986 Bill and code of practice have had in all spheres of influence in the veterinary and scientific world.
I shall confine my remarks to the 1988 code of practice and the current practices. Perhaps I may say that, following on from the Animals (Scientific Procedures) Act 1986, as it does, the code of practice has been generally welcomed by the veterinary profession and the scientists involved in the use of animals for experiments, as well as by those bodies which seek to protect the welfare of animals.
I should like to point out that the licensing procedure brought in under the 1986 Act became effective only in January of this year. Will the noble Earl be able to say whether any work carried out under the Cruelty to Animals Act 1876 has been stopped under the new licensing procedure of the 1986 Act?
Recently, there have been significant developments in biotechnology, both in the treatment and control of diseases and in increased agricultural production. Anything to ensure better health and welfare in animals, such as new drugs, diagnostic agents and vaccines, is obviously very welcome. However, it is clear that some of the new and potential developments in the field of agriculture and medicine have an adverse effect on animals.
Here I cite the example of the use of growth hormones in pigs, causing arthritis and considerable discomfort to those pigs that are treated in this way. I am glad to say that that practice has now largely been stopped, but I believe that there is a danger of additives which could promote growth in pigs being put into foods. Transgenic animals are being developed to improve agricultural production. Here again, I do not believe that the enhancement of BST in milk-producing cattle to increase milk production by an estimated 10 per cent. is wholly justified when one considers that milk quotas are full and that we already overproduce. However, one greatly welcomes the possible development of Factor IX, a blood clotting agent from the milk of sheep for the treatment of haemophiliacs and other people who suffer from blood deficiency. There are no side effects on sheep which produce that blood clotting agent.
There are therefore both good and bad developments facing us today, but I believe that there is a need for clarification regarding the point at which animals used for experiment should be put into agricultural production and so released from the control of the 1986 Act. There may be a problem in that long-term adverse effects may not show up until later in the animal's life, or only become apparent under changed conditions such as diet, climate, age or production stress.
Turning to the LD 50 test which has already been explained by the noble Lord, Lord Houghton, and to certain comments made about that test, in 1979
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the Home Office Advisory Committee on Animal Experiments, now known as the Animal Procedures Committee, reported that properly conducted LD 50 tests should continue. However, it urged that there should be closer liaison between the authorities which regulated the potency and safety of drugs and the Home Office in order that the welfare of animals should receive more careful consideration.
More recently it is the view of certain toxicologists that the classical or formal LD 50 test procedure should be regarded as unscientific and unnecessarily wasteful of animal lives. There have been suggestions that alternative procedures do approximate to the LD 50 test and that the limit test could be used instead. Will the Minister comment on that point and say whether the Government will consider bringing in a special justification for the use of the LD 50 test, or even a referral procedure to the Animal Procedures Committee, and so achieve an even bigger reduction in LD 50 testing in the future? I think that that would be beneficial.
My belief is that the 1986 Act and the 1988 code of practice are working well and that those involved in their everyday implementation, particularly the officials in the Home Office, should be congratulated on their sensible and practical approach to the licensing procedure. Advances are occurring on many fronts but I think that there is cause for concern in the development of transgenic animals, and there is a need to limit further the LD 50 tests. We must be increasingly mindful of the welfare of the animals that we use in scientific tests.
10.2 p.m.
Lord Northfield: My Lords, the 1986 Act was a triumph for my noble friend Lord Houghton. He used his great powers of persuasion, conciliation and advocacy to have the Act drafted and then to get all sides to accept it. His immense reputation for concern for animal welfare was the guarantee to all animal lovers that the Act would constitute a definite advance in care for animals used in science, while allowing the necessary use of animals to continue, albeit historically, as I am sure he would agree, on a steadily reducing scale. As a result we in this country now have a system of tight controls which is the best in the world. I know that it was a great satisfaction to my noble friend that the Council of Europe convention was very much patterned on the UK example. As he said, a cornerstone of the Act is the Animal Procedures Committee which advises the Home Secretary so widely. There is much to welcome in the report of its first eight months. I select some points at random.
It is heartening that in all but one of the issues with which it deals the committee has obviously been able to work and proceed unanimously. The report notes that at least two members disapprove completely of testing cosmetics on animals. I understand that, but after visits to establishments the committee reports that testing is for mildness rather than severity and that important hygienic products, as distinct from beauty products, must probably continue to be tested on animals where

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no in vitro testing is available. The committee has sensibly recommended that the area of cosmetics should be split into two, and that in future licences for testing should be issued only when applications identify whether the testing is intended to be on hygienic or on beauty preparations.
There has been so much confusion about this definition that I very much welcome the committee's recommendations. The committee will be able to study the matter further. Let us note from the statistics that cosmetic testing was only 0.5 per cent. of experiments last year, and only two research projects were approved for licensing in 1987. We must keep this matter in proportion. On the Draize eye irritancy test, which was tightened up in 1987, there was no mention of dissent in committee. Guidelines on such testing are apparently working well. They stress preliminary screening by in vitro methods and minimal use of animals. However, the committee concludes on this issue that has caused such emotional comment that they cannot see any way of avoiding altogether, for the present, the use of some animals. Once again, we must welcome the balance in the committee's findings.
It was important that the committee should establish good relations with the Home Office inspectors. It is good to know that this has happened, with attendance of the chief inspector and superintending inspectors at meetings and even a joint meeting of the inspectorate and the committee.
The committee has sensibly obtained for itself an important role in the preparation of guidelines on the care of laboratory animals. It will watch over the operation of the guidelines and has intervened to check in particular on control of pain and suffering. I am sure that my noble friend is pleased about that.
It is clear from the report that the committee has not only examined carefully the applications for licences referred to it in specific areas but has recommended substantial modifications to the proposed programme of work presumably in the interests of animals inevitably involved.
I offer a warm welcome to the section of the report dealing with non-human primates. The committee has endorsed the report sent to the Home Secretary by a group of institutions with wide-ranging proposals for care, choice of animal, use of the lowest possible order of primate, and for special restrictions on use for the experiments that can cause substantial severe effects on the animal. These paragraphs in the report lead to my first suggestion. It is of course the case that of the 3 million or so experiments on animals in the year, the number on primates is very small indeed. Eighty per cent. were on rats and mice and a tiny fraction of 1 per cent. were on primates. The figure is much less than 1 per cent. Nevertheless this is an area where public concern and inflammatory comment are high. The report does not specifically mention continuing work by the committee on the issue. I suggest—I hope that the Minister will pass it on—that the committee might consider preparing special paragraphs for a future report on the use, across the spectrum of research, of primates, showing why, for what important medical research
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reasons, and to what extent primates must occasionally be used. This would be of great public interest, and would calm many fears.
My noble friend Lord Houghton must be disappointed, as we all are, that the Act has not led to reduced violence by animal protesters. However, he should take heart. Despite the bombings at Debenhams, Dingles and Bristol University, and despite the many less publicised incidents which cause great personal suffering to scientists who are persecuted, very often with their families, I sense that the public supports violence less and less and feels that a fair balance has now been struck in the 1986 Act.
Our experience in AMRIC—the committee on research with animals—is that impressionable young people increasingly seek both sides of the case nowadays. That is a good augur for the future. Some of the more violent protesters are now seeking to persuade rather than to set off bombs. Membership of some of the extreme groups is said 1 o be declining. Scientists are fighting back by giving—sometimes at risk of danger to themselves—chapter and verse of the importance of the experiments that they feel bound to undertake to cure disease and increase human welfare.
In this connection I mention in particular Professor Colin Blakemore, who has been persecuted and vilified for his work on eyesight, using for part of his work some monkeys and kittens. His work has, by common consent in the medical profession, led to a completely different approa.ch in treating childhood blindness, amblyopia, as I think it is called, and to cures that were previously not possible without his research. The attack on Professor Blakemore in the Sunday Mirror was particularly unbalanced and despicable. We must all be glad that the Press Council condemned the newspaper in the strongest terms. I note that the Sun then published an article calling Professor Blakemore a "rat", a "butcher", "evil" and "mad". This should not go on.
The Home Secretary has announced an inquiry during the next 12 months into press excesses and the kind of sensationalism and erroneous reporting that led to the right of reply Bill in another place. My second suggestion to the Minister who is replying is that this promised inquiry should cover not only the invasion of privacy and similar excesses by the press but also this kind of sensational and hysterical attack on reputable scientists who are using animals to further human welfare.
Throughout the country such humane, devoted and caring scientists are being pursued, despite the careful and stringent controls that are exercised over their work. It is partly because of what I call the Houghton Act, the 1986 Act which will always bear the noble Lord's name, that the experimenters using animals are feeling more confident. It is clear under the Act that experiments are now being rigorously controlled. They feel able to fight back more strongly. I hope that that will continue, despite the personal risk that some of these scientists take in fighting back.

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Perhaps I should end by agreeing with an article in the Sunday Telegraph some months ago which ended:
"David Mellor, MP, once said that 'One of the tests of a civilised society is its treatment of animals'. Another is its treatment of scientists".
It is a point worth bearing in mind as we look forward to the further progress on the use of this admirable Act in the years to come.
10.12 p.m.
Baroness Ewart-Biggs: My Lords, as previous speakers have said, we are all very grateful to my noble friend Lord Houghton for introducing the debate this evening, because these three reports present the first major tests of the Animals (Scientific Procedures) Act 1986. I remember in the debate on the Third Reading of that Bill saying, with the support of other speakers, that the hope of the House was that one of its main effects would be a reduction in the number of experiments on animals. That is what my noble friend has repeated this evening.
How far do the statistics we are examining demonstrate this? The figures, once adjusted to take note of a different accounting method, show a welcome fall of 5 per cent. in the number of experiments over the first year since the Act's introduction. There is concern, as my noble friend has already said, over the number of largely discredited LD 50 and cosmetic tests that were performed over the same period. The statistics show that 14,500 animals are still used in cosmetic testing. This is something that many Members of the Commons, as well as members of the public, feel strongly about.
We are glad to see that the APC recommends licences for such testing only when details of procedures have been submitted. We hope to read details in next year's report of the number of cosmetic licences which have been refused recommendation by the committee. As my noble friend has said, there are still far too many acute LD 50 tests, a fact which has been repeated by other speakers.
While the statistics are to be welcomed for the fuller picture that they give of the type of tests being undertaken and the animals used, they provide us with no way of assessing the cost to the animals as balanced against the benefits of conducting a given experiment. The severity of individual tests is not acknowledged in the figures, and that is to be noted.
When questioned in the other place about whether the Government plan to publish severity data on individual procedures, the Minister's written reply was:
"There are currently no plans to incorporate in these annual statistics assessments of the severity of procedures … because of the inevitably subjective nature of such assessments".—[Official Report. Commons 13/3/89; col. 10.]
Does the Minister not agree that that reply calls into question the system of banding project licences according to severity as provided in the 1986 Act? Can he give an assurance that the confusion will be
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resolved and that the Government will consider including individual severity tests in the annual statistics?
The figures show that the number of institutions licensed under the Act dropped from 573 in 1978 to 386 in 1987. However, I am concerned that there is no indication in the statistics or the report about how many personal and project licences were refused. Does the Minister have that information? Are there plans to include such information in future annual statistics and reports?
The role of the committee in assessing the desirability of granting licences is one which we should like to see increased. The annual report gives details of the review of licences for cosmetic testing. But can the Minister assure us that the co-operation between the APC and the procedure inspectorate will lead to a more widespread referral of licence recommendations to the APC?
We believe that the critical strength of the APC and the inspectorate is very much weakened by their lack of administrative resources. I understand that the committee has the use of only two part-time employees, as pointed out by the noble Lord, Lord Mackie. The Home Office inspectorate has so few resources that it cannot provide computer search facilities for those requiring a more detailed breakdown of information of experiments. Can the Minister say whether the Government will commit more resources both to the APC and to the inspectorate to allow for the proper investigation of animal procedures and the granting of licences?
When considering animal testing, it is easy to overlook the fact that the welfare of an animal has more to do with the period it spends waiting in a laboratory than the time undergoing a test. A laboratory animal spends 99 per cent. of its time there just waiting. In that respect we are glad to see that the code of practice for the housing and care of animals used in scientific procedures recommends a strengthening in some instances of the guidelines drawn up by the Royal Society and the Universities Federation for Animal Welfare. It takes full account of the animals' environmental, social and handling needs, as well as simply cage size and diet.
However, we believe that there are gaps in the code which are the result not of negligence but of inadequate research in the area of laboratory animal welfare. For instance, relatively little is known of how to reduce stress caused to rabbits waiting for testing. Unfortunately the one institution which dealt specifically with such issues, the Animal Laboratory Centre, was closed down some years ago by the Medical Research Council. Therefore we should like to see the Government commit funding to research into that very important area of laboratory animal welfare.
I wonder whether the Minister could also clarify the precise status of the code. Can he say whether action is to be taken—with even prosecution to follow—against those who fail to observe the standards set by the code? Can he confirm that that is now the definitive document for the housing and care of animals used in scientific procedures?

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As I said at the beginning of my remarks, the ultimate test of the success of the 1986 Act is to be found in the reduction in the number of animals used in testing. But it is difficult to see how that will be achieved if the Government continue to grant such small sums of money in this respect; for example, in 1988–89 the sum was only £60,000. That was a cut of £40,000 from the sum which was originally promised for the development of alternative forms of testing and research. Therefore we should like to see more funds being allocated to the important work of bringing down the number of animals being used for such testing.
I am sure we all agree that the documents which we have been considering today represent a most encouraging start to the process of implementing the 1986 Act. As the committee said on page 2 of the annual report:
"The first years of implementation of the new Act are the most crucial".
Finally, I should like to join with what other speakers have said: we are extremely grateful, as indeed are all animal lovers, to my noble friend for once again focusing attention on this very important legislation.
10.22 p.m.
The Earl of Arran: My Lords, although the hour is quickening, I must nevertheless say that the noble Lord, Lord Houghton of Sowerby, has done the House a great service by raising the issue of animal experiments and scientific procedures this evening. As I am sure your Lordships appreciate, he brings to the subject many years of experience. I am also equally aware that many questions have been asked of the Government this evening and, although the hour is late, I shall do my best to cover as many of them as possible. However, as regards any questions which I fail to answer, noble Lords may rest assured that I shall write to them on the issues raised as soon as I can.
Scientific procedures involving living animals raise difficult and emotive issues, as we all know. The noble Lord is an example to all of us in the careful and rational way in which he presents his case and contributes towards this important debate. The subject is so often discussed against the background of the outrages of animal rights extremists that it is genuinely welcome to debate it this evening on its merits.
Tonight we have little time but a wide range of issues have been raised. We shall take note of all of them. We consider that we are making good progress in the implementation of the Animals (Scientific Procedures) Act 1986. The project licence is the key innovation in the Act. The applicant has to describe exactly what he plans to do and justify it to himself and to the Home Office inspector.
The conversion to project licensing from the provisions of the Cruelty to Animals Act 1876 to those of the 1986 Act—an Act in which the noble Lord played such a crucial part—is almost complete. At the turn of the year over 3,500 project licences had been issued. Only a handful of applications were outstanding. In each of those cases, where the work
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is continuing, this is only on the direct, written authority of the inspector.
By the middle of this year we expect that all the work will be covered by project licences, thereby bringing that aspect of the transitional arrangements under the Act to an end. We are planning soon to lay the orders which will bring into force the new provisions for the designation of establishments for the breeding and supplying of laboratory animals. On current plans, that will take effect from the beginning of next year, 1990. This is the last key element in bringing the Act fully into force.
Transforming the way in which scientific procedures involving living animals are regulated in this country has been a major task and we have accomplished it very much according to the timetable which we originally set. When these last stages are completed, we will be fully complying with—indeed, we will be going much further than—the European directive on animal experiments and we will be ready to ratify the Council of Europe's convention on animal experimentation.
I was pleased to hear the comments which the noble Lord, Lord Houghton of Sowerby, made about the Animal Procedures Committee and its annual report. This report was also warmly welcomed by the noble Lord, Lord Mackie of Benshie. As regards the point he made on staffing, we are aware that the view has been expressed that the committee might have a larger or even full-time secretariat. I believe that point was brought out by the noble Baroness, Lady Ewart-Biggs. We are not persuaded that this is necessary. The staff resources available to the committee were strengthened only last month, but I can say that we are keeping the matter fully under review.
The noble Lord, Lord Mackie of Benshie, also asked about the training and background of the inspectors. Under the requirements of the Act inspectors have to be either qualified medical officers or veterinary surgeons. The inspectors visit all designated places unannounced and all designated establishments are visited at least once a year. The noble Lord, Lord Mackie, also referred to the number of animals used, which is slightly smaller, in fact, than the number of experiments.
I can assure the House that the committee's report for 1988 will not be so long delayed, I understand that the report should be available in time for my right honourable friend to lay it before Parliament in July. That is a timetable which I believe the committee intends to observe for future years.
The noble Baroness, Lady Ewart-Biggs, referred to the assessment of severity for the project licences which had been issued. Perhaps I may take the opportunity to give the House slightly corrected figures. A total of 1,293 project licences were issued; 570 were assessed as mild; 629 were assessed as moderate; 23 were assessed as substantial and 71 were unclassified because they involved either terminally anaesthetised or decerebrate animals.
The assessment of the severity of a project licence is inevitably subjective. Moreover, it is made before any procedures have been carried out. But the detailed control which the project licensing system

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allows over the way in which scientific procedures are performed—in particular, the tight control over end-points—ensures that the great bulk of scientific procedures do not involve substantial suffering by the animals concerned.
The noble Viscount, Lord Allenby, asked whether any work carried out under the Cruelty to Animals Act 1876 had been stopped under the 1986 Act. The answer is undoubtedly yes. Under the new Act the programme of work which the scientist wishes to undertake is carefully examined by the inspector and the Home Secretary only authorises it if the applicant satisfies him that the work is justified.
The noble Lords, Lord Houghton and Lord Northfield, and the noble Baroness, Lady Ewat-Biggs, all raised the issue of the testing of cosmetics. We have so little time tonight that I hope the House will forgive me if I say that I have nothing to add to the detailed statement by my honourable friend in another place on 23rd March.
The noble Lord, Lord Houghton, reserved some of his stronger comment for the level of funding which the Government have made available for research into the reduction of animal experiments, the refinement of procedures and the replacement of animals in scientific procedures. I must leave your Lordships in no doubt that the Government attach great importance to this research. I believe the words "really does matter" were used by the noble Lord, Lord Mackie. This is work we would like to encourage in the scientific community.
The whole thrust of our licensing system is to ensure that the number of animals used is minimised; that the design of the procedure is the best available; and that the possibility of carrying out the work without using living animals has been closely examined. The sponsoring of research to achieve these ends is therefore an integral part of the implementation of the 1986 Act.
But we have never sought to represent ourselves as a major research funder. Instead we have started to build up a specialist, well-focused research programme which is manageable and for which we can ensure value for money. It is most important for the survival of the scheme that the projects we support are worth while and fully justify the expenditure. We spent approximately £70,000 in the first year of the scheme. We anticipate that we can commission almost the same level of additional work in the second year. And we have given an undertaking to stretch resources a little bit further if this can be justified to support particular work of high merit and outstanding value.
The noble Lord, Lord Northfield, mentioned the Draize eye test. It is worth mentioning that one of the research projects that the Home Office is funding on the advice of the Animal Procedures Committee is into what we hope will be an alternative to the Draize test. There has been talk of much higher levels of grant support for this kind of research. I think that that is fanciful. We are seeking to build up this scheme carefully, to maintain its credibility with the scientific community and to sponsor research which is genuinely of high quality. I am sure that that is what your Lordships would expect,
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and to a certain extent we must be patient as the scheme develops.
As regards infringements, I can assure your Lordships that we will not hesitate to refer to the Director of Public Prosecutions any case where unnecessary pain or distress has been caused to animals or there has been a flagrant, deliberate or serious breach of the Act. That has always been our position and always will be. So far, and fortunately, there have not been any infringements that in our view would merit prosecution.
I cannot leave the question of the APC's annual report without paying tribute to that committee. It has a distinguished membership and it meets frequently. Because it contains such a range of interests, including those of the animal welfare movement, it will not necessarily find it easy to agree on every issue which is put before it. But the committee is where the important and real debate is carried out about how animal procedures should be controlled and regulated. The committee is led in this by an eminent academic lawyer, Professor David Williams, who so skilfully handles the difficult task of producing a unity out of these different elements. I know that my right honourable friend the Home Secretary is immensely grateful for the care and attention which the committee devotes to its work.
I will deal briefly, if I may, with the points which the noble Lords made about statistics. The statistics which we published for 1987 were the first under the new legislation. They represent a transition. The statistics will not begin to reflect the full impact of the new project licensing system, and therefore the Act as a whole, until after the end of this year. But in this country we do publish very detailed statistics of scientific procedures involving living animals. This year we went to some length to provide some additional information which we thought would be of interest and of value. I am sure that those who are responsible for preparing the statistics will note with interest the points which noble Lords have made this evening.
The noble Lord, Lord Houghton, the noble Viscount, Lord Allenby and the noble Baroness, Lady Ewart-Biggs, raised the important question of the LD50 test. That is a difficult issue, complicated by international regulatory requirements and responsibilities which stretch across a number of departments. I can assure your Lordships that the Government remain fully committed to their policy of endeavouring to ensure that LD50 tests are used only when they are fully justified. The figures we have indicate that the use of the LD50 test is falling. But we have gone further. As the result of a British initiative led by the Department of Health and sponsored by the Home Office, an international study is now under way to develop an internationally acceptable alternative to the formal LD50 test. This study involves more than 30 laboratories all over the world. The scientific results will begin to emerge in a month or so. They will be collated over the summer. The European Community is supporting a seminar in the early autumn to assess them.
The support which we are giving this study is a tangible demonstration of the importance which we

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attach to the reduced use of the LD50 test. We know that the key to reducing the use of the LD50 test is international recognition of an alternative method of safety and toxicity testing. That is the hope which is held out by this study.
I am grateful to the noble Lord, Lord Houghton, for his kind comments about the code of practice for the housing and care of animals used in scientific procedures. At the time when this code was issued, my right honourable friend paid tribute to the work of the Royal Society and the Universities Federation for Animal Welfare, on which the code was based. I know that other groups were involved in the work of refining the original guidelines and I pay tribute to the work of the Animal Procedures Committee for the contribution it made when the guidelines were being converted into a code of practice.
This code of practice is an important step. It outlines in some detail how we expect animals which are used in scientific procedures to be housed and cared for. That is no less important than the care we take over the regulation of the scientific procedures themselves. Under Section 21 of the Act, the failure of any person to comply with any provision of the code, while not of itself rendering that person liable to criminal or civil proceedings, is admissible in evidence in any proceedings about an infringement. The code has, therefore, a special status and I know that licensees will be conscious of that. But it is, nevertheless, a code of practice. It is not a rigorous prescription which must be followed blindly in all circumstances. The recommendations of the code must be implemented sensibly. If there are passages which either now, or in the future, appear ambiguous in certain circumstances then licensees can always consult their inspector about what to do.
The noble Lord, Lord Northfield, also suggested that the Animal Procedures Committee should undertake a general survey of the use of primates. That is an interesting suggestion. I shall certainly bring his point to the attention of my right honourable friend the Home Secretary to pass it on to the committee. The noble Lord also referred to the position of Professor Blakemore. He told the House
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how Professor Blakemore had been the victim of some mischievous allegations and an unpleasant press campaign. I am pleased to be able to take this opportunity to extend the sympathy of the House to Professor Blakemore for the disgraceful way in which some people have sought to insult and threaten him and his family.
This has been a short but important debate. It has been ably led by the noble Lord, Lord Houghton of Sowerby. Most of us would like to obtain the benefits of surgery without having to go through an operation. Equally, we all benefit from the results of animal experimentation and so we must be sensitive to what this may involve for the animals concerned. We have the advantage of having a scientific community with a strong commitment to the ethical approach to its work and we have animal house staff who justifiably enjoy a worldwide reputation for their caring approach.
I would pay tribute to the enthusiastic co-operation of all, or at least, almost all, members of the scientific community in bringing the new legislation into effect so as to raise our already high standards still higher.
We are fortunate to have, in this country, up to date legislation to control all scientific procedures on living animals. It is not an idle claim that we lead the world with our legislation. I think we also lead the world in the way in which we implement this legislation. I have told the House about our conversion to project licensing. We have a full time inspectorate, which I know commands respect. We have a distinguished Animal Procedures Committee. We have already published our code of practice. Moreover, we publish very full statistics of the animal procedures which are carried out.
I am grateful for the opportunity this evening which the noble Lord has provided to tell the House of the action we are taking and the progress we have made in implementing the Animals (Scientific Procedures) Act 1986.
House adjourned at twenty minutes before eleven o'clock.

  FIREARMS: USE BY POLICE
  FIREARMS: USE BY POLICE
  TIBET: HUMAN RIGHTS VIOLATIONS
  TIBET: HUMAN RIGHTS VIOLATIONS