Sitting of 20 March 1989

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
Oral Answers to Questions
  WALES

    Roads Strategy
    Mr. Wigley: To ask the Secretary of State for Wales what discussions he has had with local authorities in Wales on the implementation of his roads strategy, "Roads for Wales: The 1990s and beyond"; and if he will make a statement.
    The Minister of State, Welsh Office (Mr. Wyn Roberts): There were 160 written responses to the "Roads for Wales: The 1990s and beyond" consultation document, including responses from county, district, town and community councils. Those have been considered in drawing up the new edition of "Roads in Wales" which will be published shortly after Easter.
    Mr. Wigley: Does the Minister recall that shortly before Christmas a deputation from Gwynedd visited him to talk about the need for the construction of a bypass on the A487 for the villages of Llanllyfni and Penygroes? Does he recall that at that time he said that he hoped to have further information early this year and that the bypass might then be included in any strategy for roads in the 1990s? Will he confirm that he has had further representations from Gwynedd county council on the matter and that further priority will be given to the construction of the bypass?
    Mr. Roberts: I well recall the meeting to which the hon. Gentleman refers. There is no doubt that the A487 in Gwynedd is an important route for north-south traffic. As the hon. Gentleman knows, improvements for the section between Caernarfon and Bangor are programmed. The case for improving the route at Porthmadog and northwards through Penygroes and Llanllyfni to Caernarfon is under consideration.
    Sir Anthony Meyer: Is my hon. Friend satisfied that highway authorities, especially Clwyd county council, are taking full advantage of the magnificent achievements of the Welsh Office in building trunk roads by providing proper connections from those trunk roads to coastal areas such as Rhyl?
    Mr. Roberts: My hon. Friend is right that that is a matter for Clwyd county council. There is no doubt that the investment of some £500 million in the A55 will be of great benefit to towns along the north Wales coast, but the matter of linking those towns with the A55 will be
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    examined in the context of the initiative that my right hon. Friend has asked me to consider in connection with the development of the A55.
    Mr. Murphy: Has the Minister of State any plans to improve the heads of the valleys road? Does he not agree that an upgrading of that road would be a great shot in the arm for our valley communities and a major factor in attracting jobs to the part of Wales where they are most needed?
    Mr. Roberts: The heads of the valleys road is indeed a fine road, although I am aware that a number of accidents along that road recently have caused concern to right hon. and hon. Members. We are looking at all the roads in Wales which are the responsibility of the Welsh Office, and also at county roads. Where improvement is justified, we shall, of course, seek to progress that improvement.

    Training Grant Scheme
    Mr. Coleman: To ask the Secretary of State for Wales what representations he has received concerning the local education authority training grant scheme in Wales; and if he will make a statement.
    Mr. Wyn Roberts: I have recently received a number of representations on behalf of voluntary youth organisations expressing concern that unpaid voluntary sector youth workers do not come within the scope of the local education authority training grant scheme. Similar representations have been made in the past in respect of careers officers, nursery nurses, and other groups whose training costs are not supported under the scheme. Representations have also been received from school governors about the disruption caused by teachers' absences from the classroom to attend training courses.
    Mr. Coleman: Will the hon. Gentleman clarify the Welsh Office's position in respect of whether LEA training grants can be applied to voluntary organisations, such as the Boys Brigade, the Scout Association and the Girl Guides Association for the valuable training of their voluntary workers? If the answer is no, will he undertake to revise the Welsh Office circular on that matter so as to permit the necessary financing to be made available to those important organisations?
    Mr. Roberts: Those training grants are paid under the Education (Training Grants) Regulations 1987, which define eligible youth and community workers as:
    "Youth and community workers employed by a Local Education Authority or a voluntary organisation."
    Both we and the Department of Education and Science have always interpreted that as meaning that only paid workers are eligible and that volunteers are not. We have, however, encouraged LEAs to make their own provision from their own resources.
    Mr. Morgan: Does the Minister agree that that is part of the pattern of general retreat from the provision of training in Wales and goes along with the decision of the engineering industry training board to close its Cardiff office? We need to be assured that the Minister was consulted about that, as well as about the privatisation of the skill centres. Does he agree that with the prospect of Bosch and Toyota coming to south Wales serious damage will be caused if the Government do not adopt the attitude that real training for real skills can lead to real jobs?
    Mr. Roberts: I was astonished to see the hon. Gentleman's remarks in the Western Mail this morning and I am even more appalled to hear him repeat them in the Chamber. There is no such thing as a retreat from training under this Government. At this very moment, we are seeking to expand training facilities for people in Wales.
    Mr. Morgan: Tell that to the Germans.
    Mr. Roberts: We do indeed tell it to the Germans, as well as to all other inward investors in Wales.
    The hon. Gentleman does not seem to realise that the change in the training board means no more than the removal of administrative jobs from Cardiff to Bristol and that all the training field workers will remain in place as they now are.
    Mr. Ian Bruce: Will my hon. Friend clarify the situation regarding grant because many Scout associations in Wales and the rest of Britain are concerned about the apparent change in the grants system for the training of adult leaders? For a number of years an excellent scheme has operated which has been virtually the only support that voluntary organisations have had in obtaining grants to train leaders. Those leaders give up their time voluntarily, but they have expenses to meet as a result of the courses. Can my hon. Friend clarify whether in the past the Government have given the money or whether it has come from local resources?
    Mr. Roberts: I can indeed clarify the position. Either we can increase the resources earmarked for the grants, which local authorities would not like us to do or we can reduce, the support for those already within the scope of the scheme, which hon. Members would not like. I repeat that local authorities are free to fund training courses from their own resources for those outside the scheme.

    Housing
    Mr. Anderson: To ask the Secretary of State for Wales what is his policy regarding the provision of housing by Welsh local authorities.
    The Secretary of State for Wales (Mr. Peter Walker): Local authorities assess housing needs and forecast that they will spend £236 million on housing this year. I hope that they will also assess the many advantages to Wales of the new housing provisions, including 100 per cent. mandatory grants for home improvements which will be available to those on low incomes.
    Mr. Anderson: The Secretary of State will be aware that his right hon. Friend the Secretary of State for the Environment has referred to a time when local authorities, or what he calls "facilitators", will cease to build homes. Will the Minister given an undertaking that Welsh local authorities will still be able to build for general need? Given the enhanced and welcome role of housing associations, does the right hon. Gentleman see a need for the Welsh Office to provide a framework for continuing consultation between Welsh local authorities and the housing associations operating in the Principality?
    Mr. Walker: First, I believe that a great deal of consultation will take place. I can only reflect on the figures for the total public sector housing programme, including the housing associations and the new towns,
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    which shows that the forecast spend for this year is £286 million compared with £131 million for the last year of the Labour Government.
    Mr. Gwilym Jones: Is my right hon. Friend aware of the groups of council tenants in Cardiff who are considering breaking away from their landlord, the city council? Will he assure me that every facility will be provided to tenants' organisations and Welsh housing associations to ensure that, if they so wish, they can take full advantage of the new freedoms under the Housing Act 1988?
    Mr. Walker: Obviously any such move would have to be considered carefully by all those involved. The provisions of the Housing Act 1988 are clear and available to all concerned.
    Mr. Ieuan Wyn Jones: I am sure that the Secretary of State will recall being reported in the Western Mail recently as saying that he would be announcing more help for people to become owner-occupiers, presumably through incentives for people buying council houses. He will be aware that many long-standing tenants are not proceeding with their purchases and are awaiting details of his announcement. Will the Secretary of State tell the people of Wales what is the status of his announcement and when he will make a statement?
    Mr. Walker: I have made it clear that anyone wishing to proceed under the present scheme will not be disadvantaged. When the present scheme was introduced, it was bitterly opposed by the Labour party, and possibly by Plaid Cymru as well, but I am glad to say that many people in Wales in local authorities under the control of different political parties have been able to enjoy owner-occupation as they could not have done if the Opposition's views had prevailed.

    Second Homes
    Mr. Alan W. Williams: To ask the Secretary of State for Wales what representations he has received seeking the launch of a campaign regarding arson against second homes and English-owned property in Wales.
    Mr. Peter Walker: Over the past year I have received eight letters from the public and outside organisations.
    Mr. Williams: Did the Secretary of State notice that during January and February there were no arson attacks even though those are normally the peak months for the arson campaign? There were no attacks until after the Pontypridd by-election, but the arson campaign was resumed within hours of the declaration of the result. Does the right hon. Gentleman recognise that Meibion Glyndwr has an acute sensitivity to the political diary of the Welsh nationalist party? I remind him that at the outset of the winter, in September 1988, 40 estate agents' properties were daubed with slogans and the hon. Member for Caernarfon (Mr. Wigley) backed those incidents. Will the Secretary of State therefore treat any requests from the nationalist party for talks about the arsonists' campaign with extreme scepticism in view of the nationalists' duplicitous behaviour?
    Mr. Ieuan Wyn Jones: On a point of order, Mr. Speaker. An allegation has been made against a colleague

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    of mine. Those were totally scurrilous comments. Will you ask the hon. Member for Carmarthen (Mr. Williams) to withdraw them?
    Mr. Speaker: No. Every hon. Member must take responsibility for what he says in this Chamber.
    Mr. Walker: In so far as such arson campaigns exist, I would not want to accuse any person or organisation of being involved unless I had evidence of that. I welcome the proclamation from all party leaders in Wales condemning such acts of violence.
    I hope that we shall all place what is happening in perspective. The incidents over the weekend received a great deal of publicity in certain newspapers. Six devices were involved, none of which caused any serious damage, but they resulted in serious publicity. A person or persons telephoned the media to say that devices would be placed in certain estate agents. Such calls focus media attention on the acts and the people involved have gained considerable media coverage. All of that is against the wishes of the people of Wales. It is a great disadvantage being an English Secretary of State for Wales when it was rumoured in a newspaper today that the person who called the media had an English voice. Only someone hostile to Wales would do such a thing.
    Mr. Nicholas Bennett: Will my right hon. Friend join me in paying tribute to the bomb squad officers who successfully defused a bomb in my constituency on Saturday, which had been placed in the main high street where it could have killed and maimed people? Does my right hon. Friend agree that the vicious and nasty terrorist campaign is damaging the image of Wales in the United Kingdom and throughout the world? Does he also agree that we must do all that we can to catch the perpetrators as soon as possible'?
    Mr. Walker: Yes, but the incidents must be put into perspective. The devices used at the weekend basically comprised a quartz battery operating ignition by a flash bulb connected to a bottle of petrol. The main motive of the person or persons responsible is publicity. I hope that those responsible will be quickly apprehended by the police.
    Mr. Wigley: Will the House accept that, as a Member representing a constituency in which a napalm bomb was placed only a couple of weeks ago, in the village of Llanberis, I repudiate the small-minded remarks of the hon. Member for Carmarthen (Mr. Williams) and his poisoned chalice? I re-emphasise that all parties in Wales condemn without reservation the arson campaign which took place before, during and after the Pontypridd by-election, and which is worsening now. Will the Secretary of State confirm his support for all-party unity on an issue which should not be used for party political purposes? Will he also clarify his remarks in Llandudno on 7 March, when he suggested that only two people might be active in the campaign and that they might not even live in Wales?
    Mr. Walker: Obviously, as the persons concerned have not been apprehended, I do not know the number involved or their identity. However, I know that the devices are similar, as are the voices of those concerned, and that the main motive is always publicity. The hon. Member speaks of napalm bombs and a worsening situation, but I do not
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    agree that the planting of five devices of the kind that I have described in order to secure a great deal of publicity should be interpreted as a great national campaign. That is the reality of the scene.

    Immunopathology Consultants
    Dr. Marek: To ask the Secretary of State for Wales if he will give (a) the number and (b) the locations of consultants in immunopathology in Wales.
    Mr. Wyn Roberts: There are no consultants in Wales whose main specialty is immunopathology. There are a number of consultant pathologists who have an interest in immunopathology but information on them is not held centrally.
    Dr. Marek: Does the Minister acknowledge that there are people in Wales suffering from immuno-deficiencies but that they are not well served? What plans does he have to improve the service?
    Mr. Roberts: Perhaps I should confirm to the hon. Gentleman that while there is no consultant in Wales whose main specialty is immunopathology, none has been asked for by any of the authorities. I believe that the hon. Gentleman is referring to the AIDS problem, and I can tell him that about £2·5 million has been spent on AIDS-related programmes in Wales since 1985–86. We plan to spend about £1·7 million supporting such activities in the coming year.

    Secondary Pupils (Costs)
    Mr. Knox: To ask the Secretary of State for Wales how much was spent per pupil in secondary schools in Wales in the most recent year for which figures are available; and what was the comparable figure for 1978–79, at constant prices.
    Mr. Wyn Roberts: In 1986–87, expenditure per pupil in secondary schools in Wales was £1,320. The equivalent constant price figure for 1978–79 was £1,053.
    Mr. Knox: Will my hon. Friend confirm that the 1986–87 figure represents an increase of 25 per cent. in real terms? Does he agree that even more could be spent in real terms if surplus school places could be eliminated?
    Mr. Roberts: My hon. Friend is right to say that the figure represents an increase of, to be precise, 25·3 per cent in real terms. That is a substantial increase by any standard. There has been a fall in pupil numbers of 14·3 per cent., and that fall is due to continue until 1991. Currently there are about 63,000 surplus places in secondary schools in Wales. If they could be removed, the money could be spent on improving education still further.
    Mr. Alan Williams: Does the Minister realise that the figures that he has given the House for increased expenditure per pupil are fraudulently deceptive because of the very reduction in pupil numbers of which he spoke? The capital cost of the whole education system is spread over a smaller number of pupils, which accounts for most of the increase. On the basis of the figures that the Minister has just given, the increase over 10 years is 11 per cent. or just over 1 per cent. per year. Does he regard that as something to be proud of?
    Mr. Roberts: I do not accept the hon. Gentleman's analysis. There has been a substantial increase in spending on education. In the middle of his supplementary, the hon. Gentleman suddenly switched to capital expenditure. In the coming year we shall be providing some £53 million in capital spending on education. That is 11 per cent. above this year's level, and comes on top of a 10 per cent. increase the previous year and an increase of 19 per cent. the year before.

    Severn Crossing
    Mr. Stern: To ask the Secretary of State for Wales what assessment he has made of the potential benefits to the Welsh economy of the southern link to the second Severn crossing; and if he will make a statement.
    Mr. Wyn Roberts: Enhanced road communications across the Severn estuary will reinforce the current improvement in economic performance in south Wales, which is resulting in reduced unemployment, a rising trend in investment, record levels of factory letting by the Welsh Development Agency and accelerating industrial and commercial development.
    Mr. Stern: I thank my hon. Friend for that reply, which will be welcomed throughout the country. Does he agree that the same benefits are liklely to accrue to the southern end of the southern link, which will be in my constituency? Does he also agree that the increased development that will take place at both ends of the southern link removes the last shred of potential justification for any major road across a possible Severn barrage?
    Mr. Roberts: I tend to agree with my hon. Friend that any barrage proposal would be for the far distant future, and I understand that the costs have in any event increased substantially. As for economic benefits deriving from the second crossing, I am sure that the shortened road communications will bring those benefits to both sides of the Severn.
    Mr. Roy Hughes: Does the Minister appreciate that proposals are well firmed up to knock off no less than £200 million of debt from the Humber bridge? In the case of the Erskine bridge in Scotland, the debt has simply been forgotten. Why do the Government propose to double the tolls on our Severn bridge? [HON. MEMBERS: "Because England lost yesterday."] Is that not a case of racial discrimination? When will Welsh Office Ministers stand up for Wales?
    Mr. Roberts: We are implementing the Severn Bridge Tolls Act 1965. I believe that Labour was in power at that time, so it was a Labour Government who imposed tolls on the Severn bridge for a 40-year period. The hon. Gentleman will be aware that we have been criticised by the Comptroller and Auditor-General, and that my right hon. Friend the Secretary of State for Transport has therefore proposed to increase the tolls. An inquiry is currently taking place.

    Labour Statistics
    Mr. Roy Hughes: To ask the Secretary of State for Wales what are the latest unadjusted figures for
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    unemployment in (a) Newport, (b) Gwent and (c) Wales; and if he will give the equivalent figures for 1979 on the most nearly comparable basis.
    Mr. Peter Walker: On 9 February 1989 the numbers of unemployed claimants in Newport district, in Gwent, and in Wales, were 5,953, 18,099 and 112,044 respectively. Unadjusted figures for 1979 are not available on a basis which enables a valid comparison to be made.
    Mr. Hughes: Does the Secretary of State appreciate that Newport, with all its advantages, has 12 per cent. male unemployment? The figure in the county of Gwent is 13·8 per cent. Are not those figures horrific? There is much hidden unemployment besides. Does the Secretary of State accept that such great problems cannot be concealed by figures relating to part-time, low-paid jobs for women?
    Mr. Walker: First, I am grateful to the hon. Gentleman for putting that question down for every Welsh Question Time. I hope that he will continue to do so for the rest of this Parliament.
    Unemployment in Wales has fallen by well over 50,000 in the past two years. Regional assistance offers in 1988, most of which are still to be put into operation, will provide 32,000 new jobs. Inward investment in 1988 reached all-time records of more than £1 billion, with 13,700 jobs. The Welsh Development Agency's factory-building programme also reached an all-time record level. I am delighted at the Government's record in bringing down unemployment.
    Mr. Raffan: Will my right hon. Friend join me in welcoming the fact that unemployment in Delyn has been halved during the last two years and that, with the most recent job announcements, it is set to be halved again, thanks in large part to the Government's designation of the Delyn enterprise zone, which the Opposition opposed?
    Mr. Walker: Yes. The position is exactly the same in north Wales, mid-Wales and south Wales. I am glad to say that in recent months the decline in unemployment in the valleys has been faster than anywhere else.
    Mrs. Clywd: Can the Minister explain why the profit-making utility services department of the Welsh Development Agency at Hirwaun is to be shut and why its functions are expensively to be transferred to statutory authorities, making 70 people redundant in one of the worst unemployment black spots in Britain?
    Mr. Walker: Yes—because, in the interests of the hon. Lady's constituents, it is right that all the substantial resources of the WDA, which is spending £130 million this year, should be efficiently and well administered. I much prefer money to go into new factories and new factory building rather than that an inefficient administrative set-up should be allowed to continue.
    Sir Anthony Meyer: What is the position on unfilled vacancies?
    Mr. Walker: Surveys have shown that the number of unfilled vacancies is three times the number registered at jobcentres. At the moment there are 38,000 unfilled vacancies in Wales. I hope that urgent action will be taken to fill those vacancies.
    Mr. Rowlands: Despite what the Secretary of State has said, are there not some worrying signs? For example,

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    Rover has laid off people and Hotpoint employees are on a shorter working week. Both are attributed to the rise in interest rates. Does it not mean that for the Chancellor's policy to work, workers in Wales will have to be put out of work again?
    Mr. Walker: During the last month there has been a drop of 2,600 in the unemployment figures, despite problems of the type described by the hon. Gentleman. If those problems had not existed, the fall in unemployment would have been very much greater. The fall is substantial. The hon. Gentleman's remarks about training were designed to put off the Japanese and the Germans. Four administrative jobs were to go to Bristol. I am glad to say, however, that inward investment will continue to come to Wales on a considerable scale.
    Mr. Barry Jones: On the issue of interest rates, the right hon. Gentleman again is wriggling. I commend to him the excellent report by the 15 boroughs and district councils of the valleys in south Wales on unemployment and economic development. It is a superb document. I urge the right hon. Gentleman to meet the valley councils. He will find that his initiative will be subjected to informed and reasonable criticism. I challenge him to meet the valley councils. Does he recollect that, according to his valleys initiative document, during the three years that it may be in operation 25,000 to 30,000 jobs will be created in the valley communities? Will he give me the basis for that large figure?
    Mr. Walker: I shall send the hon. Gentleman the details of that analysis. It is a minor factor when compared with the whole range of valley initiatives. As for meeting the valley councils, they have seen more of me as Secretary of State for Wales on a whole range of individual negotiations than they saw of most other Secretaries of State for Wales when there was a Labour Government. I have arranged for the Welsh Office and each valley local authority to have discussions at regular intervals on the valleys initiative.

    Housing for Wales
    Mr. Murphy: To ask the Secretary of State for Wales when he next intends to meet the chairman of Housing for Wales; and what he expects to discuss.
    Mr. Peter Walker: I expect to meet the chairman at the official launch of Housing for Wales on 3 April. I expect to discuss the undoubted success that will attend this new body.
    Mr. Murphy: Why is the chairman of Housing for Wales also the vice-chairman of the Land Authority for Wales, and why is the chairman of the Land Authority for Wales also the chairman of the Cardiff Bay development corporation? Can we expect to see even more failed Conservative parliamentary candidates running our public affairs in Wales and introducing unpopular Thatcherism into our country by the back door?
    Mr. Walker; I know of no political views of any description which are held by the chairman of the housing development corporation. I am surprised at the hon. Gentleman's remark. The chief executive is a former Welsh Office civil servant. The chairman of the Cardiff Bay development corporation was appointed before I was
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    appointed to my present job. The one thing that I cannot be accused of is making party-political appointments as Secretary of State for Wales.
    Mr. Coleman: Does the Secretary of State recall the answer that his ministerial colleague gave during the previous Welsh Question Time about homelessness in Wales? Will he discuss homelessness with the chairman? Will he discuss the possibility of using council house sales receipts to deal with the growing problem of homelessness?
    Mr. Walker: Quite a few council house sales receipts have been used to that end. Under a Labour Government, there were hardly any such receipts.
    Mr. Livsey: When the Secretary of State meets the chairman of Housing for Wales, will he tell him of the housing crisis in rural Wales? What will he do about forming a housing strategy for rural Wales involving affordable houses for rent and affordable starter homes?
    Mr. Walker: I am glad to say that, before I have met the chairman, the Housing Corporation has decided to spend quite a lot of important resources on that problem.

    Deeside Waterfront Project
    Mr. Raffan: To ask the Secretary of State for Wales if he will make a statement on the involvement of the Welsh Development Agency in the proposed Deeside waterfront project.
    Mr. Peter Walker: The Welsh Development Agency is assisting the local authorities concerned in the area to evaluate the impact of the project.
    Mr. Raffan: Is my right hon. Friend aware of the serious concern in north Wales that Tarmac and Clwyd county council have persistently misrepresented the Welsh Development Agency as being in support of the Deeside waterfront project when the agency's stance is one of neutrality? As the area can support only one large out-of-town retail centre and, currently, three such schemes are being proposed locally, will my right hon. Friend ensure that there is a public inquiry on the Deeside project, especially now that the Secretary of State for the Environment is insisting on a public inquiry on the Chester scheme?
    Mr. Walker: My hon. Friend will understand that I have to wait to see what decisions are made and then decide what actions to take. It would be wrong of me to comment on any potential planning applications. I can confirm that, as with all local authorities, the Welsh Development Agency's role is to assist in the evaluation of a project. That is the task that it is carrying out.
    Mr. Barry Jones: May I emphasise that Alyn and Deeside district council, Clwyd county council and Cheshire county council support the scheme? They are supported wholeheartedly by Connah's Quay, Shotton, Queensferry, Sealand, Saltney, Buckley and Hawarden town councils, and others, myself included. Does the right hon. Gentleman remember that, in 1980, 8,000 steel jobs were lost at Shotton? The travel-to-work area still has 9,000 or more people out of work. The project is earmarked to be developed on derelict land which is the

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    site of our old blast furnaces at Shotton steelworks. I urge the right hon. Gentleman to hear every side of this important matter.
    Mr. Walker: The hon. Gentleman is quite correct—I must hear every side on this important matter. The hon. Gentleman realises that I cannot comment on this potential application, but I promise that I shall consider all points of view very carefully.

    Tinplate Plants
    Mr. Gareth Wardell: To ask the Secretary of State for Wales what initiatives he is taking to replace the manufacturing jobs to be lost in the tinplate plants at Velindre, Trostre and Ebbw Vale.
    Mr. Peter Walker: At two of the sites mentiond in the question there will be a number of off-setting jobs provided by British Steel. The total number of net job losses is expected to be 700, concentrated at Velindre.
    The company has assured me that it is making every effort to see that workers are redeployed and it is confident that it will be able to redeploy many workers to other plants and is hopeful that, subject to the closure agreement, early retirement and favourable terms can be offered to a substantial number of those affected by this rationalisation.
    Tomorrow announcements will be made by the Swansea Bay partnership whose co-ordination of efforts will be of considerable importance. A meeting took place with the local district council and the Welsh Development Agency last Friday. British Steel has made it clear to me that it will assist in seeing that the site is used for new purposes; that it will be involved in job counselling schemes; and that it will be making every effort to assist in encouraging job opportunities in the locality.
    Mr. Wardell: Does the Secretary of State agree that it is sad that the only centre of the tinplate industry in the United Kingdom is being decimated in that way? Is it not a sign of Britain's continuing long-term decline in manufacturing employment? Does he accept that at Velindre, where the most job losses will take place, the missing link of the M4, which is an important factor in attracting investment to that site, will not be completed until the end of 1994, according to his plans? Will he look again at the matter and make sure that the link is completed earlier?
    Mr. Walker: On the latter question, we shall be publishing the programme for roads with the appropriate priorities after Easter. However, the hon. Gentleman knows that it is not a matter of getting rid of the tinplate industry, it is a matter of rationalisation which will direct a considerable amount of additional investment to other locations in Wales and ensure their effectiveness. The steel industry in Wales is currently in a very strong and powerful position.

  THE ARTS

    London International Opera Festival
    Mr. Harry Greenway: To ask the Minister for the Arts if he has any plans to attend the London international opera festival.
    The Minister for the Arts (Mr. Richard Luce): I welcome the aims of the London international opera festival. I will be giving a reception for Pavilion Opera at Lancaster house on Thursday 18 May, which is to be followed by a performance.
    Mr. Greenway: Does my right hon. Friend agree that the London international opera festival does an excellent job in encouraging young composers, singers and audiences to participate in opera? Could not that example be emulated in other parts of the country? Will my right hon. Friend give his Oscar to that body which would be a much worthier recipient than some other recipients of Oscars yesterday?
    Mr. Luce: I agree with my hon. Friend that the opera festival which takes place in May and June places particular emphasis on young people, young composers, singers and audiences. It is very valuable because it is a good investment for the future.
    Mr. Tony Banks: I am glad to hear the Minister welcoming the opera festival. Precisely what funding is being provided for the festival by the Office of Arts and Libraries? May I have an invitation to the reception?
    Mr. Luce: I take careful note of the hon. Gentleman's last request. In regard to money, the hon. Gentleman knows that direct funding for the performing arts is not provided by the Office of Arts and Libraries, but by the Arts Council. A number of opera companies such as the English National Opera, Kent Opera and Opera North receive direct funding from the Arts Council which decides what support it gives to such organisations.

    EC (Artistic Dimension)
    Sir David Price: To ask the Minister for the Arts what steps he is taking to seek to ensure that the European Community has an artistic dimension in the formulation of its policies.
    Mr. Luce: I regularly attend the meetings of European Community Ministers responsible for cultural affairs. I will be in Santiago de Compostela for an informal meeting of Ministers under the Spanish presidency at the end of this month, when we expect to discuss audiovisual, library and book matters.
    Sir David Price: My question went a little wider. Given that an important element of the common European heritage is artistic and cultural, and given that the Community now accepts a social dimension in its formulation of policy, does it not make sense to air a cultural and artistic dimension, and is it not time that my right hon. Friend took an initiative in that direction?
    Mr. Luce: I accept what my hon. Friend says, except that cultural co-operation goes beyond the boundaries of the Community. I do not think that it makes sense to draw a line at the Community, although I am in favour of a measure of co-operation within the Community. Of course, this does not come within the area of competence of the treaty of Rome or the Single European Act, but that has not stopped Ministers of the European Community indulging in multilateral co-operation, and I agree with that.
    Mr. Buchan: Does the Minister agree that it might be helpful in carrying out his communitaire responsibilities in relation to the city of culture—Glasgow—if he will tell us how much Government money he intends to offer? So far, it has been very little.
    Mr. Luce: I admire very much the fact that since the decision was taken to give the status of cultural city of Europe to Glasgow in 1990, it has taken full advantage of it. It is attracting a large number of tourists and others to enjoy the arts in Glasgow. I believe that next year the cultural city will be a great success. With that in mind, although I made it plain at the beginning that there would be no central Government support for it, I am glad that I have been able to provide £500,000 to help in that process.

    Books and Titles
    Mr. Jessel: To ask the Minister for the Arts how many (a) books and (b) titles were held in libraries in England and Wales (i) now and (ii) in 1979.
    Mr. Luce: In 1986–87—the latest year for which full statistics are available—English library authorities held 115·6 million books compared with 110 million in 1979–80. That is an increase in books per head of population from 2·37 to 2·45.
    Details of titles held by libraries are not kept centrally. Welsh library authorities are the responsibility of my right hon. Friend the Secretary of State for Wales.
    Mr. Jessel: In view of the significant increase in the number of books, will my right hon. Friend comment on the whingeing, whining and falsehoods put about by the Library Campaign, the leaflets of which pretend that there has been a 4 per cent. drop in the stock of books, that issues have dropped by 7 per cent. and that libraries intend to force people to pay?
    Mr. Luce: My hon. Friend is right. The Library Campaign has dented its credibility by such extraordinary distortions in the launch of its campaign. There was a 9 per cent. increase in real terms in expenditure on libraries between 1979 and 1986–87. Book stocks increased from 110 million to over 115 million in the same period and service points have increased from 14,000 to just under 18,000. Also, there has not been a staff cut as the Library Campaign suggests but a marginal staff increase.
    Mr. Fisher: Does the Minister accept that there has been a net loss of over 200 libraries under this Government and that book fund spending is down considerably? If there is a distortion of figures, as the Minister accused the Library Campaign, he also is distorting and giving extremely partial figures.
    On the subject of libraries, will the Minister join me in congratulating Mr. Holmes a Court in coming to the aid of the British Theatre Association library? We welcome his generosity but we deplore the Minister's failure to act. How much longer can he go on ducking his responsibilities and hoping that the private sector will bail him out of his refusal to act on important national issues such as this?
    Mr. Luce: It is astonishing that the hon. Gentleman and Opposition Members find it impossible to welcome support for the arts when it comes from the private sector. In their judgment it always has to come from the taxpayer. To suggest that the funding should have come from
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    another source is rather silly. The hon. Gentleman should welcome wholeheartedly and without hesitation the remarkable support that Mr. Holmes a Court has now announced. I am glad that the executive committee of the British Theatre Association library has accepted his offer to provide premises for the association in central London. The premises will enable the library to continue its operations with a firm financial base, underwritten by Mr. Holmes a Court. I should like to pay tribute to his generosity. I am contributing £25,000 to the transitional costs of the association.

    Southern Arts Association
    Mr. Andrew Smith: To ask the Minister for the Arts when he next intends to meet the chairman of the Southern Arts Association to discuss the funding and structure of the arts in his region.
    Mr. Luce: I have no plans to do so.
    Mr. Smith: Will the Minister join me in congratulating the Southern Arts Association and the other regional associations on their role in fostering community arts? In the light of that, will he assure the House that the Wilding inquiry will not be permitted to undermine the autonomy of the associations or to weaken their links with local authorities in a further act of centralisation for which, sadly the Government have become known?
    Mr. Luce: I welcome the role played by the regional arts associations. There has been a substantial shift of resources to them in the past few years, to such an extent that today they handle about £30 million of taxpayers' money. It is for them to decide precisely how they disburse that money. The important point about the Wilding inquiry is to examine the relationship between the regional arts associations, the Arts Council and central Government, to seek greater accountability, to examine the coherence of funding policy and to see whether the structure and procedures can be improved. The inquiry will also study administration and that is needed in view of all the changes that have taken place. There is a principle of arm's-length policy in the allocation of funds. Decisions about artistic freedom and merit are for the Arts Council and the regional arts associations.
    Sir David Price: Does my right hon. Friend accept that local authorities of all political persuasions in the Southern Arts Association area are strongly behind that association's work, but that there is a strong feeling that the Arts Council is not giving the Southern Arts Association a fair share of the money allocated to regional arts associations? It is important to resolve the issue reasonably soon, otherwise the initiative about which he has spoken may go a bit sour in the south of England.
    Mr. Luce: I take my hon. Friend's point. The Arts Council has devised a new formula for disbursing money between the regional arts associations. The Southern Arts Association has received an 11·4 per cent. increase in resources to recognise the fact that it has been relatively underfunded over the years.

    Welsh Arts Council
    Mrs. Clwyd: To ask the Minister for the Arts when he next intends to meet the chairman of the Welsh Arts Council to discuss the funding and structure of the arts in his region.
    Dr. Marek: To ask the Minister for the Arts when he next intends to meet the chairman of the Welsh Arts Council to discuss the funding and structure of the arts in his region.
    Mr. Luce: I have no plans to do so.
    Mrs. Clwyd: Can the Minister give us an assurance that whatever the results of the Wilding inquiry, both the Welsh Arts Council and the Scottish Arts Council will remain autonomous?
    Mr. Luce: There are no proposals to change the position of the Welsh Arts Council which, incidentally, under the formula for disbursing funds, receives relatively more per capita than the English regions.
    Dr. Marek: Has the Minister consulted the Welsh Arts Council about a picture gallery in north Wales? Will he take a grip of the spending at Bodelwyddan by Clwyd county council? There are many of us who want to see a proper arts gallery there, but money must be spent wisely and properly.
    Mr. Luce: That is largely a matter for the county council, but if the hon. Gentleman is referring to the national portrait gallery at Bodelwyddan, I hope that the House will welcome the extension of a national body to north Wales.

  CIVIL SERVICE

    Agencies
    Mr. Butler: To ask the Minister for the Civil Service whether any further Civil Service agencies have been announced.
    Mr. Thurnham: To ask the Minister for the Civil Service if he will make a statement on progress towards the establishment of the new agencies.
    The Minister of State, Privy Council Office (Mr. Richard Luce): Since I last reported to the House on 1 February, my right hon. Friend the Chancellor of the Exchequer has announced that he has concluded that the Central Office of Information should become an agency. In addition last week my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement announced the decision to set up the four main non-nuclear research establishments, covering 12,500 staff, as a single organisation with the intention that they should become a next steps agency by April 1991. I strongly welcome both those announcements which illustrate the importance that the Government attach to the next steps initiative.
    Mr. Butler: Will the agencies benefit from an infusion of new talent? Will they be able to advertise for their chief executives from outside the Civil Service?
    Mr. Luce: As my hon. Friend's question is about next steps, I hope that he will allow me to congratulate him on his own next step—his marriage later this week.
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    In many cases, the best way to fill top posts will be by competition, open to both external and internal candidates. My hon. Friend may be interested to know that the chief executive designate for the defence research agency will be recruited by open competition.
    Mr. Thurnham: In the search for new talent, will my right hon. Friend confirm that he is doing all in his power to encourage the agencies to move to areas of high unemployment out of London whenever possible? How many more agencies does he expect to be able to announce this year?
    Mr. Luce: Yes, I confirm that it is the Government's policy to seek ways in which we can encourage Departments to move to other parts of the country. Indeed, only today I announced that the occupational health service, which is part of the Cabinet Office, is planning to move its headquarters to Edinburgh in the autumn, bringing cost and operational advantages, and involving co-location with the Scottish regional office of the occupational health service. As my right hon. Friend the Paymaster General has already disclosed to the House, no fewer than 34,000 jobs are being reviewed for possible relocation elsewhere, outside the south-east.
    Mr. Skinner: Can the Minister tell us whether a new agancy has been set up, such as a Ministry for looking after the Christmas mail? Is it true that the Secretary of State for Transport resigned, sending his resignation three months ago, but that it got mixed up in the Christmas mail? [Interruption.]
    Mr. Morgan: Will the Minister explain whether the creation of an agency alters the status of the members of staff of the agency, and especially that of the most senior member of staff? Does that person become the accounting officer instead of that role being fulfilled by the permanent secretary of the Department, and if so, does that mean that Opposition Members can have access to the chief accounting officer of the agency, which they would not have to a civil servant? At the moment, hon. Members have access to, for example, the heads of the Welsh Arts Council, the Welsh Development Agency and the Wales tourist board, but not to the head of the National Health Service or to the permanent secretary of the Welsh Office. What will be the status of the head of an agency?
    Mr. Luce: I am glad to answer a serious question—[Interruption.] I am prepared to answer a serious question. On the question of the positions of the chief executives of the agencies, the system of the accountability of Ministers remains the same, but there will have been—there is under this system—delegation of responsibility to chief executives. It is perfectly possible—not only because they are accounting officers—for the Select Committees to summon them to give evidence. The hon. Gentleman was right to ask his question about hon. Members. Access will be open to Members of Parliament. The operational duties of the chief executives will be their responsibility, not that of the Secretary of State. Hon. Members will be free to write direct and to take up issues direct with the chief executives.

    Bridge Scheme
    Mr. Jack: To ask the Minister for the Civil Service what has been the uptake of the bridge scheme; and if he will make a statement.
    Mr. Luce: I launched the bridge scheme with my right hon. and noble Friend the Secretary of State for Trade and Industry on 1 March. The scheme aims to encourage secondment and exchanges between Government and business, and I hope businesses as well as Government Departments and other areas of the public sector will take full advantage of the opportunities available.
    Mr. Jack: May I congratulate my right hon. Friend on the excellence of the advertising of the bridge scheme? Will he confirm that its success will be ensured if the right example comes from the top? How many people are currently on secondment at the Cabinet Office?
    Mr. Luce: I am grateful to my hon. Friend. If the scheme is to succeed in encouraging secondment both ways, it is important that people at the top of industry, as well as in the Civil Service, should encourage the process. Between 1977 and 1987, secondment quadrupled, which is a considerable improvement. I confirm that 24 people are on secondment at the Cabinet Office—10 out and 14 in. There are 1,600 staff in post in the Cabinet Office, and at grade 7 and above 64 per cent. are on loan from other Government Departments.
    Mr. Tony Banks: is that what the Americans call the "revolving door" with which John Tower had so many difficulties? What safeguards are in place to ensure that cosy relationships do not develop between senior civil servants, Ministers and defence and other suppliers to the Government through contracts?
    Mr. Luce: I am surprised that the hon. Gentleman does not welcome the idea of more exchanges between civil servants and the private sector. Surely it is healthy for both the Civil Service and the private sector to learn how the Government work and for the Civil Service to learn how commerce and industry work. I think that the Civil Service will welcome a breath of fresh air from the outside.

    Morale
    Mr. Soames: To ask the Minister for the Civil Service if he will make a statement on morale in the Civil Service.
    Mr. Luce: Like other employers, the Government attach great importance to ensuring that the levels of morale are maintained and improved.
    Mr. Soames: Is my right hon. Friend aware that morale in Civil Service offices in my constituency is extremely high, particularly in the DSS, because the civil servants do an exceptionally good job? Does my right hon. Friend agree that we are now moving towards a time when regional pay would make an enormous difference to the performance of civil servants and Government agencies? Will my right hon. Friend see what he can do to achieve that laudable aim as quickly as he can?
    Mr. Luce: I am grateful to my hon. Friend for paying a tribute to the work of the DSS in Crawley. I include also the excellent work done by the 900 or so staff in the office of my right hon. Friend the Paymaster General. It is now
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    very much the consistent policy of the Government, in terms of flexible pay, pay additions, performance bonuses and so on, to take into account the requirements of a particular area or a particular skill that may be in short supply. I agree with my hon. Friend that that policy should do a lot to help recruitment and retention in the Civil Service.
    Dr. Marek: Is the Minister aware that one of the ways in which morale could be improved is to put into operation the recommendations in the consultation paper "Service to the Public"? That paper clearly implies extra staffing in social security offices, especially in London. What representations will he make to the relevant Secretary of State?
    Mr. Luce: I am glad that the hon. Gentleman referred to the paper about the quality of services. It was placed in the Library of the House of Commons. Everything has been done under our training schemes to encourage civil servants to provide the best quality service, given the resources that they have. I am certainly glad that, in that paper, there are signs of the kind of job that is being done by a number of Ministries to improve the quality of their services. Staff numbers are for my right hon. Friends the Secretaries of State.
    Mr. Holt: Does my right hon. Friend agree that performance often goes with morale? In that case, the morale of DSS officers in Blackpool must be at an all-time low. Performance in relation to the general public is abysmal. Is it not time that a management audit was carried out to ensure that attendance and mobility allowance departments are given a thorough shaking, up from top to bottom?
    Mr. Luce: I am concerned to hear what my hon. Friend says. I will certainly draw that point to the attention of my right hon. Friend the Secretary of State for Social Security so that he can give my hon. Friend a full reply.

    Civil Service College
    Mr. Dalyell: To ask the Minister for the Civil Service if the Civil Service college has any plans to include rain forest issues in its general training programmes on environmental awareness.
    Mr. Luce: As part of its general programme of raising awareness of issues of public interest, the college is holding a briefing session for senior civil servants on the greenhouse effect on 22 March, in collaboration with the Committee for the Public Understanding of Science.
    Mr. Dalyell: Added to a session on the greenhouse effect, which one welcomes, could there be a similar seminar at the college on issues—climatological and otherwise—arising from the botanical and biological holocaust that is taking place in the rain forests of the world? Given world weather patterns, it could affect us in a most severe way.
    Mr. Luce: I admire the hon. Gentleman for the persistence with which he pursues this important matter. I should point out that training at the Civil Service college is principally geared to training for better management. Clearly, if there are opportunities such as the one that I have demonstrated to bring in wider environmental issues, the college will take them.

Lockerbie Air Crash
3.33 pm
Mr. D. N. Campbell-Savours: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20 for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the handling of the Lockerbie incident by the Secretary of State for Transport."
The matter is important, as the country and Parliament want to know the truth about what has happened. On 18 November last year, a warning was issued by the United States Federal Aviation Administration, alerting the authorities to the activities of terrorists who were likely to use a new type of bomb which could be concealed in a radio cassette player. That information was also raised at the Wiesbaden conference, following upon which the British Airports Authority was also alerted.
On 19 December, two days before the Lockerbie disaster, the Department of Transport received additional vital information concerning details of the radio cassette player, which included colour photographs, information about the wiring of the bomb, X-ray identification characteristics, and details of the arrangements for packing Semtex explosives within the cassette player. That information was not relayed to the airlines until after the disaster took place.
The Secretary of State, in a desperate attempt to hide his blunder, now says that the information was unimportant. He indicated his lack of concern at the time by posting this vital new information to the appropriate authorities by second-class mail, far too late, while adding the utterly irresponsible suggestion that suspicious packages should be placed in the holds of aircraft. My hon. Friend the shadow Secretary of State for Transport has said that the Secretary of State for Transport could have given a full explanation on 10 January, yet he has singularly failed to do so. Indeed, he deliberately tried to block further questions in Parliament by telling an hon. Friend on 10 January:
"I am not prepared to go further than my earlier remarks about warnings being subject to the assessment process."—[Official Report, 10 January 1989, Vol. 144, c. 708.]
This was a blatant attempt to hide the truth from Parliament by refusing to be drawn on the vital issue of his Department's failure to communicate. [HON. MEMBERS: "Order."] The public want to know why he refused in January to comment on details of the radio cassette bomb, when the German authorities were perfectly prepared to comment on details of the same device in Wiesbaden at the beginning of November. Hiding behind the police inquiry is no answer.
This matter is urgent because the Secretary of State insists on refusing to comment on it in the Chamber, while at the same time he makes statements to Lobby correspondents, who, last Wednesday, were told by him that the police were allegedly doing a brilliant job and that the whereabouts of the terrorists who had planted the Lockerbie bomb were known. His denial of this allegation, which he leaked with his ambiguous and misleading statement, "The only person I saw on the relevant dates were three journalists on the record," is quite outrageous.
Mr. Speaker: Order. The hon. Member has had his time.
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The hon. Member for Workington (Mr. Campbell-Savours) asks leave to move the Adjournment of the House under Standing Order 20 for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"The handling of the Lockerbie incident by the Secretary of State for Transport."
As the House knows, under Standing Order 20, I have to take into account the requirements of the order and to announce my decision without giving reasons to the House. I have listened with care to what the hon. Member has said, but, as he knows, my sole duty in considering his application is to decide whether it should be given priority over the business already set down for this evening or for tomorrow. I regret that the matter that he has raised does not meet the requirements of the Standing Order, and I therefore cannot submit his application to the House.
Mr. John Prescott: On a point of order, Mr. Speaker. Can you say whether the Government have indicated whether they are prepared to make a statement, before the Easter recess, on the early bomb warnings prior to the Lockerbie tragedy, in view of the statement, made today by the Daily Record editor, that "Mr. Channon", despite his denial, was the source of information that claimed that the arrest of the terrorists responsible was imminent? Will you make it clear, Mr. Speaker, that this House will not tolerate the denial of a debate on the importance of airport security before the Easter recess, as such denial will only feed the view that a cover-up is now being conducted by the Government?
Several Hon. Members: On a point of order, Mr. Speaker.
Mr. Speaker: Are they all on the same matter?
Hon. Members: Yes.
Mr. Speaker: Very well.
Mr. Richard Holt: On a point of order, Mr. Speaker. During the course of the diatribe by the hon. Member for Workington (Mr. Campbell-Savours), he accused my right hon. Friend of telling a lie to the House of Commons. He may have wrapped it up in parliamentary language of a sort, but that is what he said, and it should be withdrawn. You heard him, Mr. Speaker.
Mr. Speaker: I did not hear it, and if hon. Members wrap comment up in a certain way, I cannot interpret it. [Interruption.] Well, we are all honourable Members in this House.
Dame Elaine Kellett-Bowman: On a point of order, Mr. Speaker. Unlike most Opposition Members or those on this side of the House, my husband and I were actually present at Heathrow that evening, and we know very well that security was extremely tight. I very much hope that if there is a statement I shall have an opportunity——
Mr. Speaker: Order. Whether the Government come forward with a statement or volunteer a debate, or whether the Opposition gives time for a debate, is not a matter for me.
Mr. Alan Williams: On a point of order, Mr. Speaker. There is here a matter that is directly for you, Mr. Speaker, because the country is beginning to

733
wonder what on earth is happening when the House of Commons cannot get statements or answers on matters of clear and immediate public interest. I know that it is not customary procedure to refer to the fact that private notice questions have been asked or have not been asked, but if the Government are refusing to do that which they constitutionally should and that which the public is entitled to expect—to come to the House and explain themselves—we as a House look to you and the private notice question procedure to ensure that they do.
Mr. Speaker: Yes, but the right hon. Gentleman knows perfectly well that, in considering these difficult decisions, I must take into account the requirements of the Standing Order. It is not for the Chair to get involved in party political controversy. There are other methods of debating this matter.
Mr. Tony Favell: Further to that point of order, Mr. Speaker. What is most important is that the perpetrators of this appalling crime are brought to justice. This sort of interference from Opposition Members, who are nakedly trying to advance their ambition and chances of becoming deputy leader of the Labour party, does no good whatever.
Mr. Speaker: I do not think that we can take the matter any further.
Mr. Matthew Taylor: Further to that point of order, Mr. Speaker. Surely it is unacceptable for the House to learn through the drip, drip, drip of media leaks and briefings what happened in this serious incident. Is there no way that you can bring the Secretary of State to the House to answer to the public, as is his duty?
Mr. Speaker: I am well aware of the concern about this matter, but there are other ways of achieving a debate or statement, which do not go through the Chair.
Mr. Alan Williams: Further to that point of order, Mr. Speaker. You made a perfectly legitimate point when you said that you must stand aside from the party wrangling within the House. No one would challenge that. However, if you look at the quotations over the weekend in relation to Lockerbie and what has happened in the past few days, you will see that Tory Members as well as Labour Members have been asking for the statement that we have been denied, or for a private notice question on the subject. It is not a matter of party wrangling, but of general national concern on both sides.
Mr. Speaker: The right hon. Gentleman knows that we do not discuss the criteria for private notice questions in the Chamber.
Mr. Alan Williams: Well, accept a private notice question.
Mr. Speaker: Order. The right hon. Gentleman knows perfectly well, because he has indications of this, that there are other ways of raising this matter, and he should take them.
Mr. Tony Marlow: Further to that point of order, Mr. Speaker. It would appear that
734
there is a certain amount of arguing with the referee, which is not a very attractive situation. Can some of us on this side of the House express our gratitude to you in preserving the dignity of the House from the charm school of the hon. Member for Kingston upon Hull, East (Mr. Prescott) and his carrion ratbag as they seek to gorge themselves yet further on the blood of Lockerbie? This was an American aircraft exchanging cargo with another American aircraft. It was an American responsibility which tragically fell out of the skies in Britain. We want to seek the people who committed this atrocity and bring them to justice. I am sure that that is the overwhelming desire of my right hon. Friend. We are disgusted at the disgraceful behaviour of the Opposition in seeking to dredge into the entrails——
Mr. Speaker: Order. These points of order are also getting out of hand.
Mr. Frank Dobson: Further to that point of order, Mr. Speaker——
Mr. Speaker: I cannot say any more.
Mr. Dobson: Mr. Speaker, on several occasions you have rightly said that you prefer important statements by Ministers to be made in this House rather than in other places, whether the Parliamentary Press Gallery or at unattributable briefings. Throughout the whole history of the sad business of Lockerbie, my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has asked the Secretary of State time and again to come to the House to make a statement. We have been told in various ways, "No that would be inappropriate," "There is nothing to say," "It would be a threat to the security arrangements," "It would upset our relations with the West German intelligence service," and so on. Then, later the same day, the Secretary of State, who will not come to the House, rushes to the newspapers and tells them everything that we have been asking him to come to speak about in the House.
Under the rules of procedure, if a Minister will not make a statement, a way of bringing him to the House is to get him to answer a private notice question, provided that you will authorise it, Mr. Speaker. I shall not discuss what private notice questions have been sought or refused, but it would make Labour Members happier if, when they were refused, my hon. Friend was the first to know. On two recent occasions the press have rung to tell him, from whatever source I know not, that his private notice question application has been refused.
Several Hon. Members rose——
Mr. Speaker: Order. I am not having any more of this. We cannot have a debate on the matter now, and certainly not on private notice questions. I say to the House that I have an extremely difficult decision to make every day as to whether to grant private notice questions. In doing so, I must take many factors into account. As I have already said to the House, I must give no reasons for my decision but must simply stick to the criteria set down in the Standing Order. I invite the House to study those criteria; then it can make its judgment. Whether there is to be a statement or a debate is not a matter for the Chair.

Water Bill (Money Resolution)
3.45 pm
Mr. Dafydd Wigley: On a different point of order, Mr. Speaker. When the business of the House was announced on Thursday last week no reference was made to the fact that we would be asked to debate later tonight the Water Bill money resolution. I understand that money resolutions are normally appended to other substantive matters that come before the House. No statement was made on Friday and no notification has been given to the parties at any stage since last Thursday that this matter would be forthcoming.
I ask for your guidance, Mr. Speaker, as to what defence we have when the first that we hear of substantive matters of significance to the Water Bill is when we pick up our Order Papers. Is that in order?
Mr. Speaker: I understand that the money resolution arises from amendments to be made to the Bill. That is a question to be asked during the debate later this evening.
Mr. Wigley: I am sorry, Mr. Speaker, but I have a further point of order. No doubt the money resolution is a matter that arises from amendments to the Bill, but the Bill is being debated tomorrow and on Wednesday and there will be time then to debate the substance of the money resolution. When we went away last week we were not under the impression—nor were we given any indication or guidance—that the Water Bill would be considered tonight, whether on this amendment or on anything else. We are in an impossible situation, because all our papers are lined up to be here tomorrow and not today.
Mr. Speaker: That is in order, and it has frequently been done. I believe that those are matters that the hon. Gentleman must argue tonight; if he objects, he must vote against the money resolution.

Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [14 March].

  AMENDMENT OF THE LAW
  Motion made, and the Question proposed,
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting any supply;

  (b) for refunding any amount of tax, otherwise than in a case where the amount has been paid by reason of a mistake;

  (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (d) for relief other than relief applying to goods of whatever description or services of whatever description—[Mr. Lawson.]

  Question again proposed.

  Budget Resolutions and Economic Situation
  [Relevant documents: European Community document No. 8887/88, Annual Economic Report 1988–89 and the unnumbered document, "Annual Economic Report 1988–89" (final version as adopted by the Council).]
  3.47 pm
  The Secretary of State for Employment (Mr. Norman Fowler): One of the central achievements of the Budget has been to tackle some of the outstanding barriers to employment that still remain in this country. Employment is already at an all-time record with more people in employment now—more than 26 million—than at any stage in our history. Unemployment has fallen at a record rate since the 1987 election and has fallen by more than 1 million since then. However, my right hon. Friend's Budget recognises the potential for further improvement. It sets out ways that new employment can be created and, above all, it sets out those proposals at a time when the labour market is changing rapidly.
  Perhaps the Budget measure that gives some of us on this side of the House most cause for satisfaction is the abolition of the pensioners' earnings rule, because that removes a major disincentive to people who want—it is their choice—to work beyond the statutory retirement age. It means that men between 65 and 69 and women between 60 and 64 will no longer be faced with the loss of pension income if they remain in employment. We previously raised the earnings limit, but that still meant that anyone earning more than £75 a week had the disincentive of a reduced pension if they remained in employment.
  The abolition of the earnings rule means that there is substantially more choice for men and women in their sixties. If they choose to work on—whether full-time or part-time—it will not affect their pension entitlement; while, of course, if the man or woman does not draw his or her pension at all, he or she builds up an increased pension. In other words, the Budget achieves an increase in flexibility and choice for the older worker. That recognises the changing nature of the British labour market.

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  I am probably the first Employment Secretary in 20 years to come to a Budget debate to say that, now, our priority is to increase the supply of labour to meet the rising demand that we will face in the years ahead. In the next seven to eight years we will face, for the first time, a relative shortage of new school leavers coming to the labour market—there will be a drop of a quarter by the mid-1990s. That is in stark contrast to the position in the 1970s and most of the 1980s, when our central concern was to find jobs for young people. That position is now changing radically, and for the better.
  In the past two years, unemployment among young people has fallen substantially. The United Kingdom now has a lower unemployment rate for the under-25s than any other major European Community country, with the exception of Germany. Today, the prospects for well-qualified young people have never been better, but we must recognise that the supply of new school leavers will not be sufficient to keep up with demand in the manufacturing and service industries or in the public services, such as the Health Service.
  One of the aims of policy, therefore, must be to look at new sources of recruitment. One course is to attract back married women, and a range of employers are currently pursuing that policy. A less obvious but vital course is the recruitment and retainment of older workers.
  Mr. Paddy Ashdown: I am sure that the right hon. Gentleman is aware of the woefully low level of over-16s who go on to further education in Britain. I am sure that the right hon. Gentleman agrees that there is a need to raise that percentage towards the levels enjoyed in Germany and Japan—60 per cent. and 90 per cent. respectively. Will he give an undertaking to the House that no deficiency in the labour market will stop the Government seeking to raise the numbers who go on to further education and to better qualifications?
  Mr. Fowler: Yes, Sir. I will give such a commitment, as it is entirely correct. We want people aged between 16 and 18 to be as well educated and as well trained as possible. The fact that there will be fewer young people coming on to the labour market underlines the importance of that, but it is a question not just of education, but of training. The whole aim and purpose of policy must be to improve the professional standards of all people not only young people.
  The abolition of the earnings rule takes a giant step towards more choice for older workers. As a nation, we have not sufficiently valued the contribution that older workers can make. At a time when people are living longer, we have become preoccupied with earlier and earlier retirement. I believe that debate should be about maximum flexibility and about maximum choice for people.
  Mr. Ron Leighton: The Secretary of State mentioned the need to attract married women back into the labour market. Can he tell us why the Budget did not abolish the tax on women using workplace nurseries? Was that not a mistake?
  Mr. Fowler: I do not think so. We are witnessing the unprecedented development of the exact measures to attract women back to the labour market. A whole range of employers are undertaking developments that are not
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  only right—of course, they get tax relief on them—but in their own interests. I can hardly think of a time when there has been more development in such measures.
  Mr. Christopher Hawkins: On the last available figures, GDP per head has been rising at about 2·6 per cent. per annum. The Treasury is forecasting that the economy will grow in the coming year by only about 2·5 per cent. The labour force is rising. If output rises by 2·5 per cent. and productivity goes up by more than 2·5 per cent., it is impossible for unemployment to go on falling, even without increasing the labour force as the Government are suggesting. Would my right hon. Friend please comment on that?
  Mr. Fowler: I will comment on that at some length at the relevant stage in my speech.
  The second major change in the Budget concerns national insurance. That proposal will bring gains to nearly 19 million workers at an annual cost of about £2·8 billion. Every employee with a weekly income of £115 or more will gain £3 a week. Everyone with a weekly income of more than £75 will gain between £1·50 and £3 a week. The change will particularly benefit those on half average earnings, where the national insurance charge is of crucial importance.
  Just as important is the fundamental change which my right hon. Friend the Chancellor of the Exchequer has introduced to the system of national insurance. In 1985, the Government introduced lower rate contributions for the lower-paid. That was a welcome step, but a major problem remained. When an individual crossed the lower earnings limit of national insurance, he had to pay 5 per cent. on all his earnings. If he earned £1 more than the lower earnings limit of £43, he lost £2·15 through national insurance. Not surprisingly, many people were deterred by that cliff-edge effect from crossing the lower earnings limit. Among other things, they were excluded from a range of national insurance benefits.
  The changes introduced by my right hon. Friend the Chancellor means that those earning below £43 a week will continue to pay nothing. Those with earnings above the lower earnings limit will pay 2 per cent. on the first £43 —that is, 86p—and 9 per cent. on the rest, up to the upper earnings limit of £325. The 86p earns entitlement— I must stress this—to contributory benefits including the basic retirement pension.
  In summary, those changes will remove a disincentive for employees to increase the hours that they work. They will also generally increase incentives for people on low incomes. They should contribute to employment where growth has already been so remarkable.
  The 1988 labour force survey, published last week, shows that there has been a real and dramatic improvement in employment in this country. It shows that there are now 1 million more people in employment than in 1979. It shows that, in the year to September 1988, total employment increased by more than 730,000 and that 85 per cent. of those new jobs were full-time posts. It also shows that self-employment has increased by 1·1 million since 1979 and by 125,000 in the year to September 1988. It shows that, over the past two years, we have had the fastest employment growth since 1945.
  Mr. Win Griffiths: Despite those impressive figures, will the Secretary of State accept that in the standard planning regions in the United Kingdom of

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  Wales, the west midlands, the north-west, the north, Yorkshire and Humberside, Scotland and Northern Ireland, there are still 800,000 fewer jobs than in 1979 despite this economic miracle? Virtually all the jobs have been created south of a line between the Severn and the Wash, and most of them are part-time.
  Mr. Fowler: That is not true of the growth in employment or of the fall in the rate of unemployment. The rate of unemployment has come down fastest in many of the areas to which the hon. Gentleman referred including the west midlands, Wales, the north and north-west.
  Mr. Michael Meacher: Will the Secretary of State give way?
  Mr. Tony Marlow: Will my right hon. Friend give way?
  Mr. Fowler: I want to continue for a moment.
  The labour force survey shows that there is absolutely no truth in the suggestion that unemployment has not been falling at the rate shown by the monthly unemployment count. On the contrary, it shows that, in the 12 months to June 1988, unemployment fell by 500,000 on the international definition of unemployment used in the labour force survey and on the figures recorded by the unemployment count.
  Furthermore, the survey confirms that unemployment fell because of the record number of new jobs created. In the 12 months to June 1988, employment increased by 870,000, more than matching the fall of 540,000 in the number unemployed. In other words, more than enough jobs were created to bring about a fall in unemployment and to provide employment for a 300,000 increase in the labour force. Those are the facts about Britain's employment position.
  Only the hon. Member for Oldham, West (Mr. Meacher) seeks to contradict that improvement. He is on record as saying that the labour force survey would show unemployment at 2·6 million in the spring of 1988. He is on record as saying that both in the House and outside it as well. The hon. Gentleman is wrong to the tune of 200,000. Last Thursday, the hon. Gentleman made another prediction:
  "Unemployment has fallen as far as it can go with current Government policies."
  With the hon. Gentleman's record, that prediction must be the best news that the unemployed have had for a very long time.
  Mr. Marlow: Would it be true to say that one of the reasons that unemployment has dropped so dramatically over the last couple of years or so is the large amount of inward investment we have had into this country— particularly from Japan and countries like that? Would my right hon. Friend confirm that one thing that would put off the Japanese and other people wishing to invest in our productive and successful economy would be the institution by him or somebody else of some airy-fairy concept like a Ministry of Innovation or, alternatively, a system of picking winners, whereby my right hon. Friend would take more tax from some companies so that he could expend his largesse on various political operations that he thought might be beneficial?
  Mr. Fowler: I am sure that my hon. Friend is entirely right. We do not even need to consider the hypothetical situation. We can see what happened in respect of inward investment at Dundee, where the threat of industrial action, and the rest, deterred valuable inward investment. Worst of all, the hon. Member for Oldham, West, who leads for the Opposition on employment, did not at any stage have the courage to condemn the action that was taken at Dundee. That is the condemnation of the Labour party.
  Mr. Meacher: Is the Secretary of State really bragging about the fact that unemployment is still over 2 million and still twice as high as it was in 1979? Is he aware that the latest labour force survey figure shows also that, in the period following the end of March 1988, which is the half-year for which figures are available, jobs increased at only half the rate of the year before, showing that the jobs boom is clearly over and that unemployment is clearly bottoming out? Is the right hon. Gentleman aware also that vacancies have fallen by 39,000 net over the past year, which is a trend normally associated with rising unemployment? Is he satisfied that adult male unemployment is still twice as high as the European average?
  Mr. Fowler: I am not bragging about the employment or unemployment situation. I am saying that the hon. Gentleman not only got his predictions wrong but self-evidently wrong, and that if he had any courage at all, he would get up and apologise to the House and to the country for his inaccurate statements about the fall of unemployment. The fact remains that unemployment has come down, but that the hon. Gentleman has sought month after month to fiddle the unemployment figures upwards. His claims have now been shown to be entirely bogus, which comes as no surprise to those of us who have known the hon. Gentleman over the years.
  Dame Elaine Kellett-Bowman: Will my right hon. Friend commiserate with the 1,000 workers in Liverpool who have lost their jobs because of the Luddite tactics of the antiquated unions there?
  Mr. Fowler: My hon. Friend is right. The part of the Transport and General Workers Union in that dispute needs to be examined, and people need to learn what is going on.
  Let me take up what the hon. Member for Oldham, West has just said about vacancies. The significant point about unfilled vacancies is how the number has kept up. On Thursday, the hon. Gentleman issued a press release in which he talked about the alarming fall in vacancies. He said that vacancies had fallen by 1,000 in jobcentres over the past month, and if he wants to deny that we have it on record. There are now nearly 230,000 vacancies in jobcentres alone, which means that in the economy generally there are probably between 600,000 and 700,000.
  Mr. Richard Holt rose——
  Mr. Fowler: I would like to make progress.
  In such circumstances, it is entirely right for the Chancellor to remove barriers that stand in the way of those jobs being taken up, and to take away obstacles that prevent new jobs from being created.
  Mr. Holt rose——
  Mr. Fowler: I would like to make progress, if my hon. Friend will forgive me.
  My right hon. Friend has done that by ending the pensioners' earnings rule for men and women in their sixties. He has done it by reforming the national insurance system, which I should have thought would be welcomed by hon. Members on both sides of the House. He has also done it by increasing corporation——
  Mr. Holt: I am sorry that my right hon. Friend does not wish to hear the good news from Teesside that I would like to give him. The latest newsletter from the Teesside chamber of commerce shows that 28 per cent. of firms anticipate taking on new labour in the next few months, and that the vacancies advertised in the newspapers in that location are running into pages and pages. Last Friday, there were five pages of vacancies.
  One reason why the number of vacancies registered with the jobcentres is not as high as it was may be that jobcentres are no longer a source of labour. Jobs are being advertised in newspapers, as has been the case historically, and in Teesside they are booming.
  Mr. Fowler: I am grateful to my hon. Friend, and I apologise for not having given way to him earlier. It was unforgivable of me not to allow him to give news of that kind. I should like, however, to make a few minutes' progress with my speech before giving way to any more hon. Members on either side of the House.
  By increasing the corporation tax threshold for small companies, my right hon. Friend has reduced the corporation tax burden for 20,000 small companies. He has simplified the tax regime for small business men and raised the compulsory threshold for VAT. By any standards those are significant measures, but of course other barriers to employment exist.
  At the same time as making those reforms, it is right for us to consider other measures to improve employment levels. As my right hon. Friend said in his Budget speech:
  "The task of business and industry is to control their pay and other costs. The more successfully they do so, the less costly in terms of output and employment the necessary adjustment will be."—[Official Report, 14 March 1989; Vol. 149, c. 245.]
  As the House knows, we have been reviewing the closed shop, particularly the pre-entry closed shop. The effect of the closed shop is to limit employment opportunities and to reduce the supply of labour. At the same time, it limits the employer's freedom to decide whom to employ and whom not to employ, and the employee's freedom to decide whether or not to join a trade union in the first place.
  As part of the review, I commissioned a special survey of the extent of the closed shop, which shows that the number of jobs covered by the closed shop has fallen from a peak of 5 million in 1978 to just over 2·5 million today. Nevertheless, the survey found that one worker in 10 said that the most important reason for union membership was that
  "it was a condition of having the job."
  The survey also shows that 1·3 million jobs are the subject of a pre-entry closed shop. To get the job, one needs a union card. That is substantially more than previous estimates and, in effect means that there are still 1·3 million jobs which are closed to anyone who is not already a member of a trade union. We have already taken action against the post-entry closed shop whereby the employer may take on a non-unionist, so long as such a
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  recruit joins the union shortly after starting the job. In such a case, the victim of the post-entry closed shop can go to an industrial tribunal with a claim for unfair dismissal.
  As I said in my December statement, I believe that the time has now come to act against the pre-entry closed shop. I am publishing today for consultation a Green Paper which for the first time gives a similar remedy to anyone who is excluded from a job because of the pre-entry closed shop.
  At the same time, we need to recognise that bad industrial relations can also provide a major obstacle to employment growth. Strikes export jobs to our competititors. In the 1970s, this country lost on average 13 million working days a year because of strikes. At this time 10 years ago, we were in the immediate aftermath of the winter of discontent which did so much damage to the reputation of this country.
  Working days lost through strikes are now down to about 3·75 million a year. The number of working days lost in January of this year was the lowest in any month since August 1940, but although the position has improved, there are still areas where I believe that action should be taken.
  We are particularly concerned with secondary industrial action. Although the 1980 Act took important action in this area, the position remains that as the law stands at present immunity can apply to organising certain forms of secondary action. The Government's view is that there is no good reason why employers who are not party to a dispute should be at risk of having industrial action organised against them.
  For example, secondary action can deter employers from starting up for the first time in this country—in a situation where secondary action is threatened among workers in the new firm's customers or suppliers with the aim of forcing the new enterprise to accept certain terms and conditions. Indeed, exactly that sort of threat was made at Dundee, when the American Ford company planned to establish a new factory. Dundee, above all, shows the link between industrial relations and jobs.
  Mr. John Townend: I welcome the news about the closed shop, but will my right hon. Friend deal as soon as possible with that relic of the corporate state, the national dock labour scheme, as a result of which the container terminal in Hull remains shut, jobs are being lost and trade is going to other ports?
  Mr. Fowler: My hon. Friend will not be surprised to learn—if he is, I apologise for it—that my right hon. Friend the Prime Minister gave an exact reply to his question on 19 January. I have nothing to add to what my right hon. Friend said then. My announcement today will enable the reform of industrial relations to go forward. There will be a step-by-step reform of industrial relations law. I am glad that my hon. Friend welcomes the proposals.
  A range of measures is being taken to tackle barriers and obstacles to employment, but the Budget goes beyond that. It also gives opportunities for employment itself to be more attractive. It gives employees further opportunities to participate in the success of their firm. It recognises the impact that successful employee participation schemes can have on staff commitment and the business performance of the company. The experience of many leading British companies bears this out. So the Budget includes

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  important new proposals on employee share ownership, profit-related pay, and pensions, including personal pensions.
  In all these areas, the Budget builds on the substantial progress that has already been made. More than 1·75 million employees have already benefited from approved employee share scheme. They have received shares or options for shares worth some £4 billion. The tax relief on profit-related pay, which came into effect only 18 months ago, already covers more than 120,000 employees and profit-related pay worth more than £100 million. In this Budget, my right hon. Friend the Chancellor has proposed significant improvements which will give further encouragement to those important developmemnts.
  First, increased benefits will be available under employee share schemes. The limits will be raised so that firms will be able to give staff more shares free of tax. Secondly, the Budget proposes a new tax relief which is specially designed to help companies that set up employee share ownership plans. My right hon. Friend also proposes to increase the maximum of profit-related pay which can attract tax relief.
  For the individual worker, the new personal pensions and money purchase pension schemes are making it substantially easier for employees to move from firm to firm and take their pension entitlement with them. That is a substantial advance in the rights of working people.
  Personal pensions have been a major success story. One million people have already taken advantage of the new opportunities that have been available since last July. Money purchase schemes can be used to contract out of the state earnings-related pension scheme. Already, more than 8,000 schemes have been established, including some industrywide schemes, such as those in engineering, construction and the footwear industry.
  The Budget changes will allow greater flexibility in pension provision. They will improve the arrangements for personal pensions and make very significant increases in the contribution limits for people over 35 who, as a result, will be able to make better provision for their retirement. They will make it easier and more attractive for employees to pay additional voluntary contributions to secure better benefits, simplify the rules for occupational pension schemes, and reduce the administrative burden on employers.
  All in all, the Budget proposals offer employers a range of important opportunities to increase employee participation in the prosperity of their firms. They will give a further impetus to developments which have already proved successful, effective and popular with employers and employees alike.
  There are other issues that affect workers' and staff commitment. At the beginning of this debate on Wednesday, the shadow Chancellor, the right hon. and learned Member for Monklands, East (Mr. Smith), referred to the importance of investment in training. I agree about its importance. That is why the Government are investing £3 billion in training for young people and the long-term unemployed—£3 billion made possible by the Chancellor's policies. It is also why we are setting up training and enterprise councils around the country—to achieve more training by employers and more training generally, geared to the needs of the local labour markets.
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  It is because of the crucial importance that we attach to training that I published two White Papers last year proposing important changes in our arrangements.
  On training, we are entitled to say to the Opposition, "We hear the words, but we remember the action." We remember that, when the employment training programme for the long-term unemployed was launched, it was bitterly opposed by the Labour party conference. We remember that, although—to his credit—the Leader of the Opposition backed the programme, the Trades Union Congress rejected his advice. We remember that the shadow spokesman on employment, to his great discredit, took the easy way and campaigned against a training programme for the long-term unemployed.
  Mr. Meacher: If the right hon. Gentleman is so pleased with his employment training scheme, will he explain why, after six months, only 50 per cent. of the target number of places have been filled and why a large number of companies, including McAlpine, which has close associations with the Tory party, refuse to have anything to do with it?
  Mr. Fowler: I thought for a moment that the hon. Gentleman might have been getting to the Dispatch Box to deny that he has been campaigning against employment training. His intervention establishes and underlines what I was saying. I shall answer the hon. Gentleman directly. At the moment, we are getting about 40,000 entries to the programme each month. There are now about 170,000 people on employment training. Therefore, given that employment training has been going for only six months, the programme is off to an extremely good start by any standard. The new job training scheme, which the hon. Member for Oldham, West also tried to sabotage, attracted only 30,000 people after 12 months. After six months, 170,000 people are on employment training.
  What I find so distasteful about the hon. Gentleman's attitude is that it entirely confirms what I said. Although the Leader of the Opposition had the guts to get up and back employment training, I cannot say the same for the Labour party spokesman on employment.
  A whole range of companies is involved in employment training, including IBM, Sainsbury, Laing and many other major companies. McAlpine occupied a special position in Yorkshire. The hon. Gentleman's only contribution to training in the past 12 months has been to try to prevent training in Britain. We shall not take lectures about training from the shadow Chancellor at least until he gets rid of the Opposition spokesman on employment, and that can only be a matter of time. I notice that we shall not have the pleasure of hearing the Opposition spokesman on employment reply to the debate. Obviously, he is on the substitutes' bench in these matters.
  The Budget builds on the policies which have made possible the record growth in jobs and the record fall in unemployment in Britain. Since the last general election, unemployment has fallen by more than 1 million. Over the last year, the rate of unemployment has fallen faster in this country than in any other major industrialised country. Unemployment in Britain is now well below the European Community average, and below the figures for France, Belgium, the Netherlands, Spain, Italy and Ireland.
  Contrary to what the hon. Member for Oldham, West suggested, the 1988 labour force survey published last week has confirmed the record of rapidly falling

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  unemployment which the monthly unemployment count has shown for the last 31 months. It also confirmed that unemployment has fallen, because record numbers of new jobs have been created.
  At the last general election, the Labour party promised to reduce unemployment by 1 million within two years. Part of its plan for achieving that was to extend early retirement to 160,000 people in Britain, and a whole range of similar measures. However, since the election this Government have reduced unemployment by more than 1 million in less than two years, and our policies have reduced unemployment by creating real jobs—more than 1·75 million new jobs between March 1987 and September 1988 and a total of more than 2·5 million since 1983.
  The truth is that the Opposition have nothing to offer except a return to a high taxation, low incentive and a low-growth economy. My right hon. Friend's Budget is a budget for investment, for continued employment growth and for a strong economy. I commend it to the House.
  4.24 pm
  Mr. John Garrett: I regret that about half an hour before the debate we, or rather I, learnt of the indisposition of my hon. Friend the Member for Dagenham (Mr. Gould). I am sure that we all wish him a speedy recovery.
  Our view is that once again the Budget has failed to provide for a fair society and a strong economy. It does nothing to strengthen our economy. The 1988 Budget gave tax breaks to the rich when any economic scribbler knew that resources should have been spent on the supply side—education, research and development and training. The overheating caused by boosting demand and neglecting supply has led to savage increases in mortgage interest rates and we all know from our advice surgeries how much suffering that has caused to our constituents. This version of the Barber-boom is over and we have to ask two basic questions: first, when will interest rates come down and, secondly, when will the balance of payments improve?
  The Budget insults the low paid. After last year's giveaway to the rich, the decent thing would have been to have given something to the poor this year. However, analysis shows that for those earning under £100 a week the gain is only £1 and for the ordinary working family it is just £3. That should be compared with last year when a person on £100,000 a year was given an extra £260 a week —more than the average family will receive in a year from the 1989 Budget.
  Many tax dodges still exist to be exploited by those who can afford accountants. The Government's latest contribution to the condition of the, low paid has been to attack the wages councils, so the poorly paid will lose the only defence that they have had in past years.
  The Government tell us that Budgets are to increase incentives. Is it efficient to discourage women from going to work by failing to end the tax on workplace nurseries? Is it efficient to increase loopholes for the rich by tax relief on private health schemes or to throw money around to encourage share ownership simply to ensure that privatisation works? The Budget shows that the economy and the Chancellor have grave problems. Despite having accumulated a Budget surplus of £14 billion over the past year when the Chancellor forecast £3 billion originally, he has been unable to reduce the burden of taxation or to begin investing in the supply-side measures that Britain
  746
  needs. He should have begun the supply-side revival by targeting expenditure on training, research and development and our deteriorating infrastructure. Not to do so is folly, not prudence.
  Mr. Andrew MacKay: Will the hon. Gentleman give way?
  Mr. Garrett: Not for a minute.
  Those long-term problems are the outcome of 10 years of Government economic mismanagement. Our problems are coming home to roost in the appalling balance of payments deficit—a deficit that the Chancellor admits is here to stay as far ahead as we can see because balance of payments deficits of over £10 billion a year are forecast in the Red Book over the planning period. The deficit is the product of 10 years of under-investment in the productive strength of the British economy. In those 10 years manufacturing investment has never returned to the 1979 level. It has been 10 years of a growing trade deficit in almost every sector of British industry.
  Mr. Andrew MacKay rose——
  Mr. Garrett: I will give way to the hon. Gentleman in my own time, not his.
  Let us look at some of the most noticeable loopholes in the Budget. Let us look at those affecting corporate management, such as personal equity plans. That pet scheme of the Government flopped last year. Now, in their passion to make it work, they have created an even bigger tax loophole. Before now, only new money could be used to invest in PEPs to gain from the tax breaks that were offered. Now, privatisation shares taken up outside PEP schemes can be transferred into them, tax free. Tax-free privatisation is now the Government's policy.
  Mr. Andrew MacKay: The hon. Gentleman has just criticised my right hon. Friend the Chancellor for not further reducing the tax burden. This seems a suitable opportunity for him to tell us what the basic level of taxation would be under a future Labour Government. Would it be above or below 25 per cent? That is not clear at the moment.
  Mr. Garrett: I do not need to take instruction from any hon. Member on that. I am here to discuss the Budget and that is what I intend to do. My duty is to examine the Budget in terms of its effect on industry and the economy.
  Another corporate issue is company cars. Understandably, the Chancellor has reduced the tax benefits accruing from having a company car. That seems fair enough, but he has failed to distinguish between those for whom cars are essential for work and those for whom a company car is a tax perk. The health visitor. for example, has been hit as hard as the company director.
  We now have a simpler system for the assessment of the earnings of directors. Directors will now pay tax on the amount that they receive in the tax year, rather than the amount they earn or accrue in the tax year. Clearly, that can be exploited, giving company directors the ability to minimise tax bills by choosing when they receive income.
  I want to consider the effect of the Budget on industry and the economy generally. Instead of strengthening the trading industries of Britain—the industries that must capture new markets abroad and defend markets at home —the Government's high interest rate strategy hits investment, building up yet further problems for the

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  future. It is no wonder that we find the Chancellor's trade forcasts incredible. In his Autumn Statement, five months ago, he forecast that in 1989 exports would grow by 7 per cent. and imports by 5 per cent. The export forecast has now been reduced to 5·5 per cent. and the import forecast has been revised up to 5·5 per cent. as well. Even so, the Chancellor is assuming that the growth of exports will have to accelerate from 0·5 per cent., which it is today, to 5·5 per cent. and that imports will have to fall from a rate of growth of 13 per cent. to 5·5 per cent., while he keeps interest rates up and the pound high.
  The Government's failure over the past decade has led to a massive increase in the percentage of products in the domestic market that are imported. I shall give a few examples. In 1978, 18 per cent. of colour televisions were imported. From January to September 1988, the figure was 40 per cent. For telephone receivers, the figure has increased from 2 per cent. to 41 per cent. and for buses and coaches, from 3 per cent. to 38 per cent. In my own constituency, 4,000 to 5,000 people are still employed in the footwear industry. There is great concern that imports of footwear have risen from 30 per cent. to 47 per cent. The Government boast that investment is booming, but as investment in manufacturing is down on 1979, the main growth areas have been investment in distribution and the financial sector—aiding the financing and distribution of imports.
  Growth in the past year has been fuelled by a massive consumer boom, irresponsibly stoked up by the Government. The boom has been paid for by growing personal debt. The ratio of debt to income in Britain is now the highest in the western world, threatening the future of individual families and the future stability of the economy. In the past year, the amount of mortgage lending would have bought all new housing stock twice over.
  The Chancellor has admitted that inflation will rise to over 8 per cent. before falling back towards the end of the year. That fall will be caused not by any slackening in the rate of price increases, but because year-on-year comparisons will be with the high inflation months in the second half of 1988.
  Mr. Tim Yeo: Will the hon. Gentleman give way?
  Mr. Garrett: No, although I know that this is a debate.
  Mr. Frank Dobson: My hon. Friend should ignore the hon. Member for Suffolk, South (Mr. Yeo). He is a ratbag. He is a person who interrupts.
  Mr. Garrett: I do not care whether the hon. Gentleman is a ratbag or not. That is my hon. Friend's opinion. The hon. Gentleman may be a good husband and father, for all I know.
  There are substantial and mysterious anomalies in the Red Book. I was trying to draft some questions for the Chancellor on those when I was hauled in here, protesting, half an hour ago. These questions really are my questions and I am trying to get at the truth of the matter. The Red Book tells us that underlying inflation is continuing to fall. Yet if I look at table 3·9 on page 34 of the Red Book, which deals with the increase in output prices over the previous year, I see that in 1987 the increase was 4¼ per cent. In 1988 it
  748
  was forecast at 4¾ per cent. and for 1989 the forecast is 5½ per cent. However, the Chancellor forecast a fall in inflation, as measured by the retail price index in 1989. The only way that that can be achieved is if he is right in his assumption that interest rates will stop rising, that is, unless he tries to fiddle the RPI by taking mortgage interest out of it.
  Mr. Yeo: I know how difficult it must be for the hon. Gentleman to know his party's policy on income tax, so I shall not ask him any questions about that, but he may like to recall a historical fact. Can he tell the House the lowest rate of inflation achieved by the previous Labour Government?
  Mr. Garrett: As I recall, when the Labour Government left office inflation was 7 per cent.—and it was falling. But what is the point of discussing that when we are talking about the Chancellor's forecast? I am simply saying that the Chancellor's forecasts of inflation do not gel or make sense. If output prices have risen by 5 per cent. on the year before, how does he expect the cost of living to fall as he forecasts?
  Mr. Ashdown: Perhaps I can assist the hon. Gentleman on this point.
  Mr. Garrett: I thank the hon. Gentleman but I do not need any assistance with my speech and if he catches your eye, Madam Deputy Speaker, the hon. Gentleman can make his own speech later.
  When reading the newspapers over the weekend, I noted that the Americans are planning to push up interest rates, which will inevitably lead to a round of interest rate increases throughout the world in which we shall have to take the lead, as at the moment. With the forecast balance of payments deficit running at well over £10 billion into the future, the pound will not be sustainable at its present level without further interest rate increases. Think of the personal misery that interest rate increases cause. Think of the mortgage foreclosures and of the people I have mentioned who come to my surgery in tears because they cannot continue to maintain their mortgage interest repayments.
  In recent years we have had a novel development in economic policy—the repayment of the national debt. According to the Government, that is a new triumph, and I am willing to believe them up to a point. However, the Government also say that it represents the repayment of the debt that Labour incurred in its years of government. When one considers it, it is, in fact, the Tory debt that has been run up in the past eight years. It is the bill for unemployment.
  The biggest mystery is why, when the Government forecast a repayment of £3 billion for 1988–89, they repaid £14 billion. We can piece together some of the answers. There was, for example, a £2 billion overrun on privatisation receipts and a £1·5 billion shortfall on fixed investment by the Government. There was also excess revenue from income tax, national insurance contributions and VAT because the Government could not control inflation. Receipts were increased by the Government's own inflation. I am sorry to have to say that those figures also include a £0·3 billion saving on transport spending —which is a matter of some resonance given recent news.
  The Chancellor's Budget shows no recognition of the hard landing forecast in his predictions for British industry. The Budget and the public expenditure

  749
  programme that preceded it do not help the reconstruction of industry and do not provide the training, the education or the infrastructure that our economy must have in order to be efficient and competitive. Worse still, the Budget does nothing for our new underclass, such as the homeless young people whom one can see sleeping in cardboard boxes across the river at Waterloo on any night of the week; the confused who have been discharged from mental institutions; single parents or for the great grey army of the unemployed. The Budget combines incompetence with inhumanity.
  Several Hon. Members rose——
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. Before I call other hon. Members, I must tell the House that Mr. Speaker has determined that, because of the number of hon. Members who wish to speak, there should be a 10-minute limit on speeches between the hours of 7 pm and 9 pm.
  4.38 pm
  Mr. Edward Heath: I was somewhat taken aback by the abrupt end of the hilarity promoted by the hon. Member for Norwich, South (Mr. Garrett).
  I shall concentrate on two main points. Before I do so, I agree with the praise by my right hon. Friend the Secretary of State for Employment for the measures which the Chancellor of the Exchequer has taken in respect of the benefit system and, in particular, of the abolition of the earnings rule. I utter just one word of caution. I am not convinced that, although desirable, the abolition of the earnings rule will lead to a great increase in production or employment. Those who were affected by the earnings rule usually found ways and means of achieving their ends without necessarily having the rule abolished or falling into trouble. But its abolition is a sound measure, and one which we have wanted for a long time. I hope that it leads to a solution of the problem.
  My one reservation about my right hon. Friend's speech concerns his comments about training. I shall say much more about that point later on. He mentioned that we had the utmost difficulty in finding jobs for young people in the 1970s. I ask him to take further advice from his Department on that point. As we had 580,000 unemployed when we left office in 1974, there was no problem about finding jobs for young people—they were all in jobs. It was only in limited areas where we had any serious degree of unemployment.
  I now refer to the two points on which I wish to concentrate, although fairly briefly. First, this Government have now been in power for a decade. The debate is an opportunity to look at matters over the decade, in the light of the Chancellor of the Exchequer's Budget. On this occasion, the Chancellor of the Exchequer has proved himself to be a wise man. He is not a far-seeing man, that we must know—[Interruption.] He will agree that, in his previous Budget, he did not foresee that his surplus would be four or five times that which he calculated. He is not a well-informed Chancellor. The reason for that is that the Prime Minister's campaign against the worthless bureaucracy has so affected the statistical department of the Treasury that it often does not know what is going on.
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  But the Chancellor is wise. The reason I say that is that he has got himself and the country into a position in which he does not know what to do. He has therefore very wisely decided to do nothing. It may be for that that we should be grateful.
  As the Chancellor knows, he is my favourite one-club golfer. On the last occasion, he made a splendid drive from the tee. Enormous reductions in taxation were widely hailed. He now finds himself in a bunker, and he is discovering how difficult it is to get out of a bunker with the wooden club with which he drove off. All I ask is that he should now reconsider his bag of clubs and perhaps embrace a few more.
  Why did I say that I want to examine matters over the past decade? It is because we have been through a decade which has not been altogether different from the decades since the second world war. The sooner we recognise that, the better. It is true that, at the beginning of this decade, the depression was lengthened because of the measures taken by the Government at the time, in particular by imposing a drastic increase in indirect taxation and allowing the pound to rise to heights which put our businesses out of practice. Our exports were seriously damaged, and they have never been able to recover. Since then, we have had the upward graph and now, undoubtedly on the Chancellor's calculations, we are at the top of that graph and are on the downward slope again. Nobody challenges that.
  I accept that we have gone through that process yet again. It is the fourth time that that has happened in my time in the House of Commons. Quite honestly, I am getting rather bored with it. Every time, it has happened to a greater and worse degree.
  We have heard the employment figures. Increases in the number of people employed are welcome, but there are still more than 2 million unemployed. On the basis of the statistical adjustment that is made at the end of the month, according to the season, the figure is just under 2 million, but the number of people who do not actually have jobs is over 2 million. [Interruption.] Well, that is the figure, which is seasonally adjusted. I have not forgotten completely my days as Minister of Labour. The problem is that, for the first time when we have been at the top of the cycle, we still have more than 2 million people without jobs—a large number of them young people. That is the first factor.
  Secondly, borrowers now have to face interest rates higher than at any time in the past 45 years when we have been at the top of the cycle. Indeed, interest rates are higher than they have ever been. Thirdly, the adverse balance of trade is of a scale that we have never had at this point of the cycle. All these things constitute an appalling aspect of the development of the cycle in this decade, compared with the previous four and a half decades. [Interruption.] Was there a sedentary interruption?
  Dame Elaine Kellett-Bowman: I was just pointing out that my right hon. Friend seems to look on the gloomy side. Never in his day, or in any other day, did we have such a massive improvement in the Budget surplus.
  Mr. Heath: I am coming to that. The Chancellor's problem is that he did not expect this surplus, and he does not know what to do with it. He and the Prime Minister regard the rate of inflation as abominably high, so he has said that he is going to use the surplus to repay the national

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  debt. One has to ask oneself what will happen when the national debt has been repaid. What guarantee does the Chancellor have that the funds will not be used for consumption? One cannot automatically assume that they will be used by corporations for further investment.
  The Chancellor may very well find that, with the pressures of high interest rates, those people who now find themselves with cash instead of investments will start spending the cash. That would defeat his purpose, and preventing it must be one of his problems. Indeed, can he prevent it at all? I do not think so. That is another aspect of his having got himself deep into the bunker.
  This is the situation in which we find ourselves after a decade. Parliament and the country ought to be asking how we can get out of this situation, which has occurred four times in the last 40 years, and achieve a stabilised system in which we are not forced to expand the economy and then to wreck that economy automatically.
  I am not ignoring the personal harm, anxiety and agony caused by the measures that are taken in these circumstances. I am, thinking, for instance, of high interest rates. I sometimes feel that those, both in the City and in Whitehall, who have to deal with policy of this kind are dealing with something which, to them, has no relationship at all to human beings; that the level at which interest rates have to be pitched is a pure intellectual exercise to get a certain answer as to money circulation, and that that is only a guide as to which particular monetary definition may be adopted at a given time—they can change it as they go along.
  People come to our advice bureaux. Indeed, a lady from outside my constituency wrote to me the other day saying:
  "It was such a happy time when we got our mortgage as first buyers. We did what the Government told us to do. Now it is agony. I can see no future except suicide. The only thing that stops me is my two children."
  It is appalling that people should get to that stage, which is brought about by those who regard as a purely intellectual exercise the level at which interest rates should be set. It behoves us all to look at that.
  Several factors have kept us in this state. First, at the beginning of this decade, the market dogma adopted wiped out any question of regional aid. The market was going to put everything right. If the market preferred the south, it would move to the south and everything would be put right. We know that that was nonsense. Even if we wanted the market to move to the south, we did not make it possible for it to do so. We did not provide housing, roads, railways or anything. [Interruption.] Look at the state of the railway lines. Do I need to comment on that? I shall be accused of interfering with justice if I comment on railway lines. We did not make it possible for those in regional development to move to the south. We continued with long unemployment, and we have suffered the results politically in Scotland, the north-east and over a large part of the country. The Government should bear that in mind.
  We were scorned when we said that ways could be found of choosing the infrastructure in which investment could be placed without increasing inflation. Ministers are constantly pulling out figures, saying that we are spending whatever percentage it is more than last time or more than under the Labour Government in 1979, The latter is of no interest to me or the great majority of British people. The former is not relevant to the problem. The question is: is
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  what we are doing satisfactory to deal with the problem which faces the country today? The plain answer is no, even in the south.
  My colleagues from the south know that many motorways are unfinished, even in the south. There is the M2 in my constituency, the M20, the M25 and the M27, and in the west country there are none. Our motorways are inadequate, as are all our transport facilities. Our airports are overcrowded. Look at the mess at Heathrow. The Labour Government are largely to blame for that, because they cancelled the plans to build a great new airport on the east coast.
  What happens to business men who want to travel to improve their business? I travel a reasonable amount and what am I told? It all depends on whether there is a "slot". That is the latest jargon. The other day at Dusseldorf and Cologne I was told, "You can't get back. We are an hour and a half late. There is not a slot at Heathrow." Life now depends on slots. This is not the higher quality of life of which the Prime Minister spoke at Scarborough on Saturday afternoon.
  Housing demands are not being met, again because it was said that the market would do all that was necessary. One sees the conditions in which many of our fellow citizens have to live. The young cannot find anywhere to live; they have families, and they still cannot find anywhere to live. Housing is another major problem that has not been dealt with.
  We have not dealt with education. We have bashed it on every possible occasion. We have bashed the teachers just to bash a handful of loony Labour councils in London which do silly things. That has not produced results.
  Mr. Brian Sedgemore: Steady on, old man.
  Mr. Heath: I am using modest language.
  The other night I heard my right hon. Friend the Prime Minister on television say that we must find a new means of dealing with education and that there used to be guilds. They are out of date, yet she compared the new arrangements with the guilds. I find that difficult. I know that we have been looking back the whole time. We looked back to Marshall and the 19th century to give us our economics. He was not entirely satisfactory, so we looked back to Adam Smith and the 18th century for more economics. He has not proved foolproof, so now we are looking back to the guilds for our training arrangements. [Laughter.] I am prepared to acknowledge my vested interests. I am a member of Goldsmiths Company and the Honourable Artillery Company. I do not regard those companies as having responsibility for training. Moreover, the guilds were the most protectionist organisations which Europe has ever seen. My right hon. Friend runs all the risks of abolishing the closed shop in every conceivable circumstance, yet creates guilds which will be extremely protectionist and will not produce the education that we want.
  We shall never deal with the problems until we have a training system for industry which is embodied in the whole education system—and we must face that. There has always been a Department of Employment which has fought the Department of Education and Science about that. It argues that what happens after pupils leave school has nothing to do with education but is entirely to do with labour. I may even have said that myself. I certainly do not

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  say that now, because I have seen the experiments and they have all failed. In 1970–74. we made a further attempt with training agencies. Three or four were successful, but the rest were not. I have come firmly to the conclusion that we shall never have a successful industry until training is embodied as part of our complete education system.
  That applies equally to management. It is natural for some of my hon. Friends always to shout when a trade union is mentioned—to bash the unions. Unions are not entirely to blame. Today we should encourage enterprising unions which recognise the modern world. They may be expelled from the Trades Union Congress, but they are certainly getting on with the job of training and they are facing the modern world. They should be encouraged, not damned.
  I regret to say that many of our management are not interested in management as such. They are interested in finance and the quickest way of getting their money. That is not the same as management. That is horrifying in the context of 1992, especially when one goes around the country asking people what preparations they have made. An employer wrote to me recently, "God help us when we get to 1992." I replied, "Would it not be more appropriate and effective if we helped ourselves?" Alas, that is not helping. Management training is just as important as employee training.
  Such training will affect the Chancellor of the Exchequer. If we are to have some overall technical education system for industry and management as part of our education system, the Treasury will have additional burdens put on it. I believe that we have reached that point and that it is necessary.
  If we compare ourselves with the two successful countries in the post-war world, the Federal Republic of Germany and Japan, we see enormous contrasts. We have only to ask ourselves the simple question: why are we not doing as they are doing?
  Mr. Nicholas Budgen: Because we are not like that.
  Mr. Heath: I think that my hon. Friend would be more accurate if he said that we were not like them. That is the real point. They were both defeated in war. Japan was bombed with atom bombs and Germany was almost entirely destroyed, yet here are we unable to compete with them or to emulate what they have done.
  Mr. Marlow: My right hon. Friend, sadly, is in one of his Cassandra-like moods. He is telling us about everything that he finds wrong. I wonder whether he could do us and perhaps himself a favour by telling us some of the things that the Government have done which have been successful and of which he approves.
  Mr. Heath: I approve of the abolition of the earnings rule. I said that earlier. I fully approve of that.
  Mr. Budgen: Will my right hon. Friend give way?
  Mr. Heath: I do not think so.
  Mr. Budgen rose——
  Mr. Heath: Very well, then.
  Mr. Budgen: My right hon. Friend appears to believe that our society should be the same as one sees in both Japan and in West Germany. He goes on to say that the main purpose of education should be materialistic and
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  devoted to earning more money in later life. Was that the sort of view that was behind his devotion to music when he was at Oxford? Does he believe that our society would wish to be the same as that in Japan or West Germany?
  Mr. Heath: I wish that we had as many opera houses and top-class operas as the Germans. I wish, too. that we were devoting as much to education as the Japanese. I cannot criticise them on those grounds.
  I shall quote one or two figures. We have heard about the fixed capital formation, and all I would say is, whatever good we may have done, do not let us think of it as being the answer to everything or that it compares with what other countries have done. We must look at it from the point of view that we are the lowest in the Community league. The latest figures for the whole of 1987 show that we are down to 17·3 per cent. of GDP.
  The Chancellor of the Exchequer (Mr. Nigel Lawson)indicated dissent.
  Mr. Heath: The Chancellor shakes his head, but that information comes from my best statistical advisers—[Interruption.] We were down to 17·3 and everyone was higher than we were.
  Mr. John Garrett: That is right.
  Mr. Heath: That has been confirmed by the spokesman for the Opposition, who has his own source of information.
  We then come to the question of the prime lending rate, which affects the whole of our industry and our citizens. Last week, we were 14 per cent., West Germany 7 per cent. and Japan 3·38 per cent. Why can we not have an economy run with similar figures? [Interruption.] There is no answer to that.
  Then there is the rate of consumer price inflation.
  Mr. Ian Gow: Will my right hon. Friend give way?
  Mr. Heath: No, I shall not at the moment.
  The latest figures, in 1988, showed that the United Kingdom had a rate of inflation of 6·8 per cent. and my right hon. Friend the Chancellor has said that that will go up to 8 per cent. West Germany is 1·6 per cent. and Japan is 0·9 per cent., with very low interest rates. On the question of trade, if we take the current balances as a percentage of GDP, we have a deficit of 3·26 per cent., West Germany has a plus of 3·09 per cent. and Japan has a plus of 2·76 per cent.—[Interruption.]
  Hon. Members: Give way.
  Mr. Heath: I shall gladly give way to the Chancellor.
  Mr. Gow rose——
  Mr. Heath: I have thought a great many things about my hon. Friend, but I never thought that he was Chancellor.
  Mr. Gow: My right hon. Friend accused my right hon. Friend the Chancellor of a lack of compassion in having put up the interest rates. Does my right hon. Friend believe that he showed more compassion by failing to abate inflation or that my right hon. Friend the Chancellor is showing true compassion by trying to abate inflation?
  Mr. Heath: I did not accuse the Chancellor of a lack of compassion. I said that those who so constantly deal in interest rates as a solution to economic problems do it from a purely intellectual approach, without realising the human consequences, and I stick absolutely by that view.
  We did not have to deal with interest rates of that kind, and I believe that we were—[Interruption.] The Chancellor was one of the advisers. We were dealing with the problems of infrastructure and of housing on an infinitely bigger scale than the Government have been doing in the past 10 years. However, it will all be in the memoirs.
  The question is why, after 45 years, we cannot do the same as those industrial countries. We must address ourselves to that. It means that, instead of going on a purely monetary dogma, a balance must be struck between those matters which emphasise inflation, those which require a reduction of interest rates, a lower pound to get a better balance on trade——
  Mr. Lawson indicated dissent.
  Mr. Heath: The Chancellor always shakes his head about this. He knows that it is right, but he is not allowed to do it. He knows that the pound is too high for our exporters. He knows that it is far too high for our exports to Europe.
  Sir William Clark: Who is stopping him?
  Mr. Heath: I never mention names in public.
  If we are to give our exporters a chance, the pound must be dealt with. It is always a question of keeping the balance.
  Mr. Neil Hamilton: My right hon. Friend made great play of exchange rates stopping us exporting, but is he aware that in the past two years the yen has appreciated against the dollar by virtually 100 per cent., yet the Japanese trade surplus is increasing? Does that not show that there is not necessarily a connection between the two?
  Mr. Heath: I am not saying that there is a necessary connection, but our business men recognise that they lose many exports because of the rate of the pound. If we consider Germany from Erhard's time onwards, it is true that he was able step by step to improve the value of the deutschmark and at the same time encourage the exporters to increase their exports. That is right, but that has not happened here.
  I am asking the Chancellor and the Government to strike a balance between the different factors involved and gradually to adjust them—with such a crisis, they have not much time—so that exports can be increased and the adverse balance of trade reduced. They could, therefore, do more for the infrastructure and for housing and, above all, they could start thinking about an overall education system for technology and management that is not improvised from Government to Government but becomes part of our internal education system in exactly the same way as it did in Germany in the 19th century and as it is in Japan at the end of the 20th century. That can be the only answer. We must face the facts and not just engage in inter-party squabbles about whose figures were right and whose went up the most. We must look at the real basis of the situation and then start dealing with it.
  5.7 pm
  Mr. Paddy Ashdown: It is a pleasure to follow the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who said so much with which I would agree, little with which I would disagree and some of which I shall mention later. I hope, nevertheless, that he will understand if I say that the pleasure of his speeches comes not just from listening to them but from their visual impact. We have a unique advantage that is denied to those who read the right hon. Gentleman's speeches afterwards—that of watching the miserable, downcast, scowling looks on the faces of all those on the Treasury Bench as the right hon. Gentleman's speech proceeds. At no stage did I see anything other than a deep scowl from the Chancellor. I look forward to the coming of television to the House so that the rest of the British public can enjoy the spectacle.
  I am sure that I speak for many other hon. Members in wishing the hon. Member for Dagenham (Mr. Gould) an early recovery. That is no reflection on the speech made by the hon. Member for Norwich, South (Mr. Garrett), but we always look forward to the speeches of the hon. Member for Dagenham and we always listen attentively. We shall miss him in this debate.
  This Budget has been described as "the boring Budget" and no doubt that is an apt description, but the apparent torpor of the Budget should not be allowed to hide the basic realities of the situation in which the British economy finds itself. The realities which should be addressed by the Budget include a structural trade deficit, declining competitiveness, an unacceptable rate of unemployment and rising underlying inflation. Nor should this boring Budget be allowed to hide the injustices contained in the Government's strategy, which have been touched upon by the right hon. Member for Old Bexley and Sidcup.
  This was certainly not a Budget for the low paid as more of them will now pay tax. It was not a Budget for those on benefit, nor was it a Budget for families. Those who have seen child benefit effectively cut again will recognise that only too powerfully.
  The changes to the pensioners' earnings rule and to national insurance contributions are welcome—the Secretary of State for Employment touched upon them —but they do not go far enough. It was depressing to read recent newspaper reports of the Chancellor saying that he had finished reforming and cutting national insurance contributions. Much more could be done in that regard to relieve the poverty trap and make a substantial contribution towards the proper integration of the tax and benefit system.
  Despite a boring Budget, we still have a gambling Chancellor who is prepared to gamble our long-term prospects to leave himself enough room for tax cuts in the run-up to the next general election. It is perfectly clear that that is the purpose of the Budget. As the right hon. Member for Old Bexley and Sidcup said, the Chancellor is prepared to gamble with the quality of our life, preferring to satisfy a narrow materalism today rather than to prepare Britain for tomorrow.
  I believe that it was the Chief Secretary who said last week that living standards were the final arbiter of economic performance, and no doubt they rightly have a part to play. The rapid rises in domestic consumption are clearly a key ingredient in the Government's electoral calculations, but the Government will soon have to change their tune because the notion that there is more to life than

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  personal material acquisition is not an attractive one to a growing number of people. Many of those who have done best out of Treasury policies now realise that they have to look for something more from Ministers and they are looking for policies which will bring our people together rather than sadly and tragically divide them. They are looking for policies which will correct the dog-eared, down-at-heel nature of public Britain and provide a base for the public goods and services which are essential to the enjoyment of our future prosperity. They are looking for policies which invest in the future because they know that today's tax cuts and consumption become tomorrow's debt burden and trade deficit.
  Mr. John Townend: How can the right hon. Gentleman talk about tomorrow's debt burden when we have a Budget surplus of some £14 billion?
  Mr. Ashdown: The hon. Gentleman fails to recognise what has happened since last year. The tax cuts and the increase in consumption, which was deliberately encouraged by the Government, have plunged many families into debt. The reason is perfectly clear. The hon. Gentleman will have had a stream of leaflets coming through his door from one bank after another, all saying exactly the same thing—"For goodness sake, don't worry —extend yourself; we will offer you as much credit as you like." That is the reality facing people today.
  Mr. Tim Janman rose——
  Mr. Ashdown: No, I shall not give way as I need to make some progress. The hon. Member for High Peak (Mr. Hawkins) has failed to recognise the way in which the 1988 Budget inflated the burden of debt and the burden of public consumption in Britain.
  The Government are now hemmed in on the one hand by last year's folly and on the other by their own inflexible ideology. After the rhetoric is stripped away we find an economy that is peculiarly vulnerable and weak. It gives me no pleasure to remind the House of our fundamental economic condition, just as my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) did after the 1988 Budget. The Government's refusal to face up to our trade deficit demands that we press the matter vigorously.
  The right hon. Member for Old Bexley and Sidcup was right to say that we should look at the whole picture. It is clear that since 1979 the growth of manufacturing output has been the slowest for any similar period since the war. Import penetration has soared and our share of world trade has continued to decline, at times dramatically. Net investment in manufacturing has also fallen. The record under the present Government compares unfavourably with any similar period under their predecessors in the 1960s and the 1970s, never mind with the level of achievement for which we need to aim if we are to compete effectively in the world markets of the 1990s.
  The astonishing fact is that the economic problems now facing the Government look remarkably familiar to anyone who remembers the 1950s and 1960s. We are faced with wage rises that are too high, a quality of goods that is too low, under-investment in people and underachievement in world markets. All those old familiar symptoms of the British disease remain unconquered. The major, age-old weaknesses of the British economy are revealed as having remained uncorrected by the so-called "Thatcher miracle". In some cases they have got far worse.
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  Those deficiencies are now covered in the gloss of spurious economic theory and dismissed as irrelevant or as a blip. They are rationalised away by this most intellectually agile of Chancellors and by the flexible use of forecasting, but hon. Members should study the Red Book. The fulfilment of the Chancellor's strategy and cosy predictions requires a trust in his forecasting skill which, in view of his record, amounts to little less than a mystical act of faith. This is a complacency that home-owners and businesses are paying for every day in higher interest rates and rising prices.
  To fulfil the Red Book predictions, we are required to believe in a dramatic fall in the growth rate of non-oil imports from 14·5 per cent. to 4·5 per cent. At the same time, we are required to believe that the growth of non-oil exports will rise from 3 per cent. to 7·5 per cent. at a time when demand is falling. Even this ambitious target, incidentally, would still leave the United Kingdom with a declining share of world trade.
  I wonder whether the Treasury is, even yet, ready to acknowledge the seriousness of the balance of payments problem. For a time, we were told that it did not matter, and the propaganda fed to us was that such things correct themselves in the modern world. Now all the evidence points to a massive, long-term structural problem which is being reflected in the record deficits.
  I wish Ministers had listened more to the 1985 report from the Select Committee in the other place under Lord Aldington, which looked at these long-term problems of overseas trade. I recall that the Chancellor used some fairly unpleasant and sometimes hysterical comments to damage and dismiss that report. It is a matter of record, however, that their Lordships' forecasts have fared a good deal better than those of the Chancellor.
  Mr. Marlow: The right hon. Gentleman is saying that he is much gloomier than my right hon. Friend the Chancellor. He implies that demand is still too high and that he wants to spend more on services. Therefore, he must want to increase Government expenditure. What does the right hon. Gentleman think of the Budget judgment? Does he feel that my right hon. Friend has been too generous in cutting national insurance or does he feel that taxes should be higher? Would he like Government expenditure to be higher? What would he have done? Will he let the House know because he is inconsistent at the moment?
  Mr. Ashdown: Clearly the hon. Gentleman has not listened to the submissions which my party has made. We have made a perfectly clear statement about this. The Government are doing much to increase inflation by raising utility prices. We believe that that money could be used much more effectively in different ways. To give the hon. Member for Northampton, North (Mr. Marlow) a straight answer, there is a case for selective and careful investment, as the right hon. Member for Old Bexley and Sidcup said, which would require expenditure but whose inflationary impact would be minimal in comparison with the utility price rises which have stimulated inflation.
  The question now is how long will the exchange dealers be persuaded by short-term, hot, high interest rates to ignore the long-term underlying weaknesses in the economy? As the trade deficit mounts inexorably, month after month, how long will short-term high interest rates maintain confidence on the foreign exchanges? As

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  numerous commentators have pointed out, there must be a real danger of a sterling crisis at some point in the not too distant future with all the attendant inflationary problems and a crisis of confidence.
  In the Red Book we are told that interest rates rise only because of the behaviour of narrow money. Everyone knows that that is nonsense. Interest rates rise when the markets are alerted to our real economic state by the trade figures and also when the Government and the Chancellor feel under pressure.
  In the 1950s and 1960s, we had stop-go Tory Chancellors. In the 1970s, Tony Barber was the cut-and-run Chancellor. We now have the handout-and-hike Chancellor who hands out tax cuts one year and hikes up interest rates the next.
  Our balance of payments deficit will more than likely grow even larger than the Government have suggested. In a recent editorial the Financial Times stated:
  "It is easy to envisage a current account deficit not far short of £20 billion, in both this year and next."
  However, the Government lack the policy instruments or the political will to tackle those problems.
  Mr. Janman: Will the right hon. Gentleman give way?
  Mr. Ashdown: I hope that the hon. Gentleman will forgive me. I have given way many times and I would like to get on. I will not give way.
  The Chancellor wants to fiddle the figures by removing mortgage interest rates from the retail price index. He will be remembered as the Chancellor of dearer mortgages and cheaper cigarettes. The manipulation of the RPI through the Chancellor's new policy on excise duties, amounting to a 0·4 per cent. reduction in the RPI brought about by what amounts to a tax cut of more than £1 billion in those duties, will cut little ice, but it will undermine the Health Service.
  Inflation is predicted to be 8 per cent. That is already higher than in any of our major competitor countries in the European monetary system, or in the United States or Japan. Despite all the apparent emphasis on defeating inflation, there are abundant signs of yet more complacency. Last November the Government announced a new policy of "bearing down on inflation". Since then, they have been responsible for its inexorable rise.
  The Red Book states:
  "It is the Government's policy not to accommodate inflationary impulses."
  Instead, the are busy adding to them by deliberately raising utility prices to fatten the calves for privatisation. That is policy-making gone crazy. The value of our money has halved since the Conservative party came to office. Under the Tories, prices have risen by 100 per cent. Over the same period, prices have risen by 68 per cent. in the United States, by 30 per cent. in West Germany and by 25 per cent. in Japan. We have an extra zero on inflation, but it is a zero at the wrong end of the number. It is 100 per cent.
  The Chancellor has claimed that inflation is the judge and jury of economic policy. If that is so, he stands in the dock, with the verdict passed, awaiting sentence.
  Mr. Janman: Will the right hon. Gentleman give way?
  Madam Deputy Speaker: Order. The right hon. Gentleman has made it clear that he wants to make progress and is not giving way.
  Mr. Ashdown: The Chancellor has refused to take advantage of closer European economic and monetary integration. That should be a central question facing our economic policy. The Chancellor has indicated his support of our membership of the EMS. He should have the courage of his convictions and battle it out with the Prime Minister. Membership of the EMS would be a far more effective discipline against inflation than any of the monetary routes down which he now seeks to take us.
  The British economic problem can be summed up partly in terms of inflation and of the crippling use of high interest rates to keep the currency buoyant. However, we must also consider the impact of the Government's long-term and systematic starvation of the supply side of our economy. The Conservatives now preside over what is becoming a second-class industrial nation which is in danger of drifting down even further to third class status. If we are not careful and are not prepared to act quickly, the opportunities of oil and of world growth may disappear for the foreseeable future.
  The forecast figures in the Budget are an admission of the defeat of the supply side miracle of the Prime Minister's years even as we approach 1992 and the single market. The Department of Trade and Industry's slogan was "Europe Open for Business". It might have been better as "Britain Open for Imports".
  This year we needed a Budget for industry. If we are to have the right products and services of the highest quality marketed effectively across the world, the Government must work with industry and commerce, not against it. It takes something to provoke the Confederation of British Industry into talking about the "locust years". That something was the disastrous state of our supply-side policies. That is why my hon. Friends and I recommended a package of careful and prudent investment in Britain's future.
  It is about time that the Government realised that a supply-side agenda that consists only of cutting taxes and bashing the unions has run its course. The new supply-side agenda for Britain must concentrate on training, regional policy, research and development, involvement and shared communication in British companies, improving stan-dards of quality and safety and developing the new technologies. Taken together, those require a new approach from the Government, which the Conservatives seem incapable of realising.
  We are lagging way behind our competitor nations in training. To match France and Japan, we should be training an extra 50,000 skilled engineers a year. To match Germany, we should be training 80,000. Far too many companies in Britain are currently looking to move their operations elsewhere in Europe because the skills that they need are not available in sufficient numbers in this country. Human talent is our value-added asset and by this standard Britain is still going backwards in comparison with the rest of the world. A supply-side strategy is required to fill that vacuum.
  There must be a change which will make the care of our environment a Government priority. We all understand that the Prime Minister's new enthusiasm for the planet should be given time to show itself in action. However, the Budget was the fairest test of that. Do the Government

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  mean what they say about the green agenda? Do they understand what they are saying? Are they prepared to put their money where their mouths are?
  The Budget contained only one gesture towards environmental issues, that with regard to unleaded petrol. True to form, it was quickly swallowed by the oil companies. Apart from that, there was nothing. There were no incentives for improvements in waste and pollution controls. No investment in environmental protection, but there were cuts in the energy efficiency office and in insulation grants. There was no investment in relevant research and there was opposition to Community initiatives which would apply energy audits to domestic property.
  The Government are brilliant at telling other people what to do, but hopeless at accepting their responsibilities for the environment. An environmental Government would have produced an environmental Budget.
  However much Conservative Members might delude themselves, and no matter whether some people have benefited from previous tax cuts, the Thatcher years will not be remembered with affection by the British people in years to come. Those years represent years of under-investment in public transport and years of running down the staff in the public services. They represent years of hostility towards research which led to a brain drain from Britain which the New York Times described last year as the greatest movement of intellectual capital into the United States since the Jewish intellectuals left Germany in the 1930s.
  That is what is happening as a result of research cuts in Britain today. At best, it may be said that a certain shabbiness in public goods might be endured for the benefit of some. More likely, people will look back in wonder at our collective failure in the 1980s to take advantage of the unique, oil-led opportunities that we had to build a more sustainable industrial base. They will wonder why it was that obvious, massive public support for investment in health, education and the basic infrastructure was ignored at great cost to industry, to the public and to the future. They will dismiss a Budget that fiddled at the edges of the issues and failed to tackle those that really mattered.
  We on these Benches believe in the virtues of competition and in the power of the market. However, we fear that, by refusing to play their part on the supply side, this hands-off Tory Government are turning what should be an economy of invention, excellence and quality into a low-wage and low-skill economy that has a tin-tray industrial base.
  Sustainable growth in the future depends on investment in the future now. Excellence in the economy depends upon the excellence of our people. The Budget reveals that the Chancellor has not learnt that lesson after six years. They have been correctly described as the "locust years" —the years in which we failed to invest in the future, to heal the divisions in our country, and to take the steps necessary to protect our environment.
  5.31 pm
  Mr. William Hague: I wish to speak briefly on the Budget, as my first and modest contribution to the proceedings of the House. Before I do so, I pay tribute to my predecessor as Member for
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  Richmond, Sir Leon Brittan, and will say a few words about the constituency that he represented so well. I am fortunate to be able to do both with uninhibited pleasure.
  Most new Members elected at by-elections speak of a predecessor who was distinguished but is sadly deceased, but I am delighted that my predecessor, who made such a major contribution to the House and who was so highly regarded by his constituents, is very much alive and well and is by all accounts doing an extremely good job as a European Commissioner. There is no doubt that he will be sorely missed in Richmond—a constituency that he served with extreme thoroughness and attention to detail. Even when he was Home Secretary, he never missed a weekend surgery and never failed to involve himself in as many aspects as possible of life in north Yorkshire. He set the highest standards of service to his constituency, and I will be doing well if I can live up to them.
  All I can say is that, over the coming months, I shall try to be inspired by Sir Leon's example, rather than being intimidated by it. It would be all too easy for the new Member of Parliament for Richmond to be intimidated by the past. I number among my constituents not only Sir Leon Brittan but his predecessor Sir Timothy Kitson and my noble Friend Lord Tranmire, the former S r Robin Turton, who sat in this House for 45 years for Thirsk and Malton, part of which is now included in my constituency.
  Those former Members will be very valuable sources of advice. Some might observe that they will also he rather varied sources of advice. However, the fact that they remain deeply rooted in the area says something about the strong attachment of Members of Parliament to Richmond and its surrounding area, because of both the natural appeal of its countryside and the independent character of its people.
  It is almost unnecessary for me to tell the House about my constituency, because many right hon. and hon. Members are already surprisingly familiar with it. I am one of the few Members of Parliament, along with those representing constituencies in the east end of London, who has a regular television series about his constituency. Also, many right hon. and hon. Members have spent more time in my constituency in the past few months than I have spent in the House. Right hon. and hon. Members could be forgiven for believing that the right hon. Members for Plymouth, Devonport (Dr. Owen) and for Yeovil (Mr. Ashdown) had taken up permanent residence in my constituency. They certainly provided a valuable off-season boost to the local tourist trade. They will always be welcomed back, though perhaps they are the only two tourists in the whole nation who I hope will spend less money on their next visits than they did on their last.
  I hope that all those who visited Richmond during the by-election had an opportunity to enjoy the diverse nature of the region. Although always associated with the magnificent hillside town of Richmond itself and with the splendid dales to the west of it, my constituency embraces a rich breadth of physical geography and human activity —from the hill farmers in the dales and on the edges of the moors, to the lowland arable farmers around Northallerton and Thirsk; from the 20 industrial estates that have brought a growing sense of enterprise and availability of employment to the area, to the commuters in the north-east who work on Teesside and to the large number of people who come to the area to retire. Richmond's variety defies simple description.

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  In addition, my constituency has a huge military presence. The area is proud to host one of the country's largest Army garrisons at Catterick, and now we also have a major air defence base at RAF Leeming. That variety, and the popularity of north Yorkshire as a place to live, means that behind the idyllic image are mounting stresses and strains, both economic and social. Much has been said about the plight of the inner cities in the 1980s, but I fear that much will have to be said in the 1990s about the strains of rural life.
  Although my constituency, like the rest of the country, has grown more prosperous in the past 10 years, and although unemployment has fallen by 40 per cent. over the past three years, one must not overlook the depressed incomes of the farming community, the shortage of housing for local people—ironically coinciding with housing development on a scale that threatens traditional village life—the tendency for younger people to move elsewhere, and the appalling and increasing pollution of some of the nation's most beautiful rivers. Those are not the subjects of today's debate. Nevertheless, I hope to help ensure that they will not go unnoticed or unaddressed in the House.
  My constituents are interested in all those matters, but they are interested also in the Budget—despite all the efforts of the media to convince us that it was boring. Like me, my constituents approve of the Budget because of its most obvious characteristic—that my right hon. Friend the Chancellor of the Exchequer used what room for manoeuvre he had to help those people whose efforts were most unfairly penalised by the existing tax structure. I strongly welcome the changes my right hon. Friend made to national insurance contributions and his abolition of the hated pensioners' earnings rule. I believe that right hon. and hon. Members in all parts of the House believe that the Chancellor did the right thing in the circumstances, and they should have the good grace to say so.
  Much of the debate about the economic situation has been taken up with discussing the direction of and the explanations for inflation, interest rates and the public sector surplus. However, that debate has been concerned mainly with the short term—with this year and next year. When I look at the economic background to the Budget, what I find interesting are some of the other economic indicators whose improvement has been strong and marked over a sufficiently long period to become an established trend.
  Today, companies' real rate of return is at its highest since the 1960s. Investment has risen twice as fast as consumption for the past seven years. Labour productivity has risen faster in the 1980s even than in the 1960s. That should bring home to us the fact that, whatever the arguments about last year's or this year's forecast, the fundamental indicators of the economy's future performance and output are better than they have been within the political lifetime of most right hon. and hon. Members, and within the entire lifetime of some of them.
  Maintaining that progress requires lower levels of inflation and of short-term interest rates—otherwise, the increased confidence that is at the centre of all those improvements will disappear. However, no one has argued convincingly that there is a better policy for bringing
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  inflation down than that which the Chancellor is pursuing. Most criticism has been of the "We wouldn't have started from here" variety, but it is incumbent on those who would do the Chancellor's job for him to say what they would do if they had to start from here.
  Nevertheless, it must be recognised that we face over the next year inflation at a higher level than we would have wished. Some people are less able than others to cope with that inflation, and some are particularly worried about it. Foremost among them are elderly people who are wholly or largely dependent on their basic state pension. The Government have done a great deal to help many pensioners in several ways. The abolition of the earnings rule will help many who are still able to earn, and lower inflation over the lifetime of the Government has helped those with savings.
  Last autumn's announcement of an additional increase this year for the oldest pensioners will help those in that category. Huge numbers, however, still depend heavily on the basic state pension. In the coming year, they face a pension increase indexed to, but lagging behind, RPI inflation—which may in any case understate the inflation that they experience, as their own expenditure is disproportionately weighted towards some large items such as household rates and basic utilities, the cost of which for most people is rising faster than the retail price index.
  I hope that in the coming year the Government will have the pensioner in the forefront of their collective mind and, as far as the economy permits, will feel able by some means to help still more pensioners by doing somewhat more than simply indexing their basic pensions to the RPI. If they can do that, they will avoid much dissatisfaction and some genuine hardship.
  That is the point that I wanted to make—within the context of strong and whole-hearted support for the economic and budgetary policies of Her Maesty's Government. I thank the House for its indulgence, and hope that there will be many more occasions, Madam Deputy Speaker, on which I may try to catch your eye.
  5.40 pm
  Mr. Robert Sheldon: The hon. Member for Richmond, Yorks (Mr. Hague) spoke about his predecessor, Sir Leon Brittan, who is continuing to play a prominent role in public life. He spoke well of Sir Leon; he spoke also of other distinguished former Members of the House whom some of us had forgotten were still his constituents. I urge the hon. Gentleman to remember that when he comes to seek their advice he will be dealing with a two-edged sword, and that he accepts only advice that, after consideration, he considers worth pursuing. He spoke with clarity, and his interesting speech was well received by the House.
  Of late there has been a tradition of rather more controversial maiden speeches than we used to hear—a tradition that has extended to the toleration of such speeches. The hon. Member for Richmond, Yorks returned to an earlier and, I think, more acceptable tradition, and perhaps because of that he won greater acceptance today. I am sure that he will come to enjoy the rough and tumble of the House, and I hope that his first contribution will provide an easy entry into it.
  The most depressing part of the Red Book is the forecast for the balance of payments deficit. The whole

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  year is expected to produce yet another devastating £14 billion. That is more serious than any previous balance of payments crisis. We do not now have the large number of manufacturing industries that provided us in the past with the capacity to turn from home trade to export. The main example was the motor car industry, but there have been many others. In my constituency there were many small to medium-sized companies, paying well above the national average, with unemployment below the national average. We lost one third of those skilled firms between 1979 and 1981. They had the capacity to produce for export if they found that the home market was not able to take their goods, but that has now changed considerably.
  I have been asked—as, perhaps, have other hon. Members—what is the relationship between the £14 billion public sector debt repayment and the £14 billion balance of payments deficit. The unknowledgeable assumed that there was a strong connection; others, with a little more understanding, realised that the two had no relationship. Some, with even greater understanding, recognised that there was after all a close relationship between the two: it is the £14 billion deficit that makes it impossible to spend the £14 billion debt repayment sum. The Chancellor of the Exchequer, with money to spend, is unable to spend it because of the external problems that he faces.
  The Chancellor can justifiably be criticised for his failure to deal with the economy's long-term prospects. He can fairly be censured for failing to deal not only with the balance of payments but with the problems of manufacturing industry, and the lost advantages of North sea oil, which we are unlikely to regain because we are once more on a level field, with our advantages lost.
  The Chancellor can also be censured for his failure to control the short term. It is more than six months since fears of a credit explosion—frequently expressed—were finally confirmed. Two years ago, on 10 February 1987, the Financial Times was able to say that more was required of the Chancellor than high interest rates, that monetary policy had flitted from one rationale to another in the past few years like a bee in search of honey, and the task was not helped by continuing to trivialise a major deviation from the Chancellor's own target for the economy. It also said:
  "The Department of Trade and Industry said that outstanding consumer credit from finance houses, retailers and credit card companies, totalled £23·7 billion in December 1986."
  That was over two years ago; there is nothing new in it. What is new is the failure to react to it. This was not a blip, and the action that the Chancellor took was inadequate and slow in its effects.
  The right hon. Member for Yeovil (Mr. Ashdown) talked about stop-go. At least in the days of stop-go we could he sure of the results. They would be dramatic and immediate: purchase tax or VAT increases, a raising of the tobacco duties, increases in taxes on alcohol, petrol prices raised, spending on roads cut. We can see from the state of the roads today that cuts have been made in good times as well as bad, although North sea oil has been abundant.
  All those announcements about tobacco, alcohol and petrol took effect at 6 pm on the day of the Chancellor's statement. The result was a highly visible and dramatic appreciation of the change in our economic fortunes. After a few weeks, patterns of spending changed and the economy promptly slowed down. On this occasion, we
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  talked about measures in the autumn. The months went past—we had Christmas and the new year, and now we are in March—and still we have not seen any such effect.
  I was once a frequent critic of sudden changes, mainly because of the damage done to our manufacturing industry, which took the brunt of such measures. The present position is different. With the decline of our manufacturing base, the burden of immediate measures would be carried rather more by importers and retailers. There was therefore a strong case for action in the autumn. The Chancellor, however, ruled it out, to the disadvantage of industry and house buyers and ensuring that our economic problems would outlast the year. Failing to administer the short sharp shock was, I believe, a tactical error of the worst kind—waiting for something to turn up —and we shall have to live with the consequences.
  Of even greater importance than the tactical failure, however, has been the Chancellor's failure to plan for the long term. He had the opportunity to use the breathing space with which North sea oil provided our balance of payments to help industry and promote training, and to equip the nation to deal with the major problems lying ahead. With the startling growth of world populations, we are destined to be just one of a number of smaller countries. Many more have populations in excess of 100 million, and industrialisation is on the increase elsewhere.
  In 1979, with the prospect of the cornucopia of North sea oil, our position appeared enviable and compared favourably, if not with that of Germany and Japan, certainly with that of France and Italy. We were the only country in that group with self-sufficiency in oil. We even had an exportable surplus. Our position could hardly have seemed more attractive, but oil in itself is not enough: only if it can be used sensibly is it a real and lasting benefit. Iran and Iraq have used their advantage disgracefully, Mexico has wasted it, and Britain has squandered it. Meanwhile, Japan and Germany strode on without it.
  On the other hand, France and Italy almost seem to have benefited from not possessing this valuable mineral. Those two countries have manufacturing sectors that are highly successful, whereas we have turned, traditionally, to our financial sector that produced rewards that were directly contrary, in a number of cases, to the interests of our productive industries.
  The high pound that the City smiles benevolently upon and that the Bank of England believes is crucial to our economic well-being is the deadly affliction of those companies that manufacture. The truth is that, in the long term, manufacturing growth is so much more important than North sea oil. This oil produces so many billion pounds a year which, for a given output, even if its price remained high, would not increase with time. If, however, manufacturing industry is nurtured and encouraged, it grows at a compound rate that leads to an accelerating level of prosperity. That cannot be found in any other kind of industry. Furthermore, that prosperity is enjoyed by all employees and in all the different regions of the country.
  Manufacturing industry, however, has been hit very badly. The fact is that 13 per cent. interest rates and an over-valued exchange rate is the recipe that brought about the disasters of 1979 to 1981. The position is not quite so bad now; there was a 17 per cent. interest rate then. That ruined the domestic market, and a $2·40 pound ruined the export market. We hear nonsense about there being no problems with an over-valued exchange rate. If we are

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  interested in the commercial future of our country but rule out price—the dominant factor in selling our goods—we are being absurd. Price is crucial.
  Mr. Janman: Throughout the lifetime of the last Labour Government output per person in manufacturing industry increased by 5·8 per cent. Between 1987 and the fourth quarter of 1988, it increased by 10·8 per cent.—nearly double what happened throughout the period when the last Labour Government were in office.
  Mr. Sheldon: Interventions of that kind are pretty useless. The hon. Gentleman should not make such an intervention in a serious debate. He should understand that we are considering imports and exports. Manufacturing exports have declined; manufacturing imports have increased. That has led to our country's prospects being put in serious jeopardy. If our prices are higher than they ought to be, we shall sell fewer of our goods.
  That has happened in my constituency. One third of the medium-sized firms in my constituency have disappeared. Companies in Germany, Japan and all over the world closed their doors to our exports. We could not live with 17 per cent. interest rates and a $2·40 pound. I fear that a number of them will not be very comfortable with a 13 per cent. interest rate and a $1·70 pound. It is a ruinous combination. The Chancellor of the Exchequer ought to be ashamed of presiding over it.
  As for European monetary union, just by chance I happened to speak with three directors of the German Bundesbank. They had the same message. They want European monetary union so that bankers will be able to control the monetary aggregates. That is similar to what the Chancellor of the Exchequer wanted in 1977. He wanted a law to be enacted that would give power to the Bank of England to decide the levels of monetary stability. The Minister of State, Treasury at that time, my right hon. Friend the Member for Llanelli (Mr. Davies), replied to the debate. The Chancellor of the Exchequer wanted legislation that would enable the bankers to do even more than the Bundesbank allows.
  We nationalised the Bank of England in 1945. We were determined that bankers ought to be subordinated to democratic direction, which means Government direction. Of all the privatisation measures announced by the Government, no mention has been made of denationalis-ing the Bank of England, and for a very good reason. The Treasury sometimes takes a different view of economic policy from the Bank of England. The relations between the two are sensitive, as they should be. However, when the Chancellor of the Exchequer decides on the policy, it is the Governor of the Bank of England who has to implement much of it, and it is the Treasury that decides. At one time, the Treasury had an inadequate knowledge of the markets and of the operations of the Bank of England. Its knowledge has improved greatly in recent years. The eyes and ears of the Bank of England are always important, but they do no play quite the same role as they did a decade or more ago.
  Those who see dangers in European monetary union are not anti-Europe; nor are they pro or anti any other kind of grouping. However, we feel strongly about the dangers of domination by bankers. In a more integrated
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  Europe there is a threat that, in the absence of political agreement, the power of the central bank might become dominant. Irrespective of whether there ever was a bankers' ramp in the pre-war years, the control of our economic policy cannot be left in the hands of those who are unaccountable and who, moreover, have been known to display certain prejudices that are not identical to those that might be expressed on either side of the Chamber. More than all that is the question of economic power. Bankers cannot be given that kind of authority.
  Those who say that it works well in Germany should not assume that a transplant is always successful. The institutions of different countries owe so much to coventions, history and social relationships that they cannot readily be transferred from one country to another —still less from one country to a supranational authority. Those who say that we should have our own representative on the board of the central bank—a supra-European Bundesbank—must accept the reality that that person would be a banker, too, and, like those he joined, would rapidly come to the view that all the important economic decisions are best taken by bankers.
  It is for that reason that, however fast one may wish to move towards greater integration in Europe, the transfer of economic power cannot precede common political agreement and common political power. There are no short cuts. Those who seek an easy way into economic and political integration within the Community are wrong on a number of matters, but on this matter I believe that they are dangerously wrong. There has been so little reference in the Budget debates to that important question that I thought it right to include something about it.
  The right hon. Member for Old Bexley and Sidcup (Mr. Heath) said that the Chancellor of the Exchequer is a wise man; he does not know what to do, so the best thing is to do nothing. I am a little less charitable. Another back-handed compliment is that I believe that the Chancellor is a clever man. He has succeeded in pleasing his party for six years, but I believe that he has failed in his long-term economic policy.
  5.57 pm
  Mr. Julian Amery: I, too, congratulate my hon. Friend the Member for Richmond, Yorks (Mr. Hague) on his good maiden speech. It is traditional for a maiden speaker to refer to his constituency. My hon. Friend brought his constituency into the Chamber. I could see the hills, the dales and the valleys. For a few minutes in this otherwise rather dry debate, I enjoyed the pleasures of Richmond. I was also touched by his advocacy of the importance of looking after senior citizens, one of whom I now am. I hope that we shall hear more from him in the years to come.
  As the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) recognised, the Chancellor of the Exchequer's room for manoeuvre is limited. The fight has to be against inflation. Like all literate and numerate commentators, he recognised that fact. There may come a day when a Budget could reflect what my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) advocated. It sounded to me rather like the Yellow Books that Keynes wrote for Lloyd George when prices were falling, but the time is not yet. Had we had a Budget that reflected those views, I suspect that there would have been a run on the pound of a pretty sensational dimension.

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  We have to recognise, like it or not and whatever the causes, that the fight against inflation must take priority. That is intellectually understood, but we in this country do not have a gut feeling about inflation in the way that the Germans and others have. That is natural, and the markets know it. Our rhetoric on this subject is therefore suspect. The markets want to know where the beef is. Determination to keep up interest rates until inflation has been tamed is the most important proof, and the key. My right hon. Friend the Chancellor has said it loud and clear, and his commitment and that of my right hon. Friend the Prime Minister is the best gauge that it will be the answer.
  There is, perhaps, a longer haul ahead of us than some observers think. I think that we might find the situation at the end of the year more uncomfortable than we expect. Monetarist high priests such as Friedman have always made it clear that the consequences of their policy would take quite a long time to come through. We may find that that is the case. The question is whether we can do more to meet the problem of inflation.
  I should like to ask a question which rather follows on what the right hon. Member for Ashton-under-Lyne has just said. Since the general election, my right hon. and hon. Friends have taken credit for past privatisations, brought forward the privatisation of water and electricity, and talked about the railways and coal as possible targets. As the right hon. Gentleman said, there is an important omission. It is curious that nobody has talked about restoring to the Bank of England the independence which it had before 1948. It did not have complete independence. Like the Archbishop of Canterbury and the Lord Chief Justice, the Governor of the Bank of England was appointed by the Government of the day but, once appointed, he was very much his own man. The same is true of the Federal Reserve Bank in the United States and the Bundesbank in Germany. Would not a return to that arrangement be a strong guarantee that no British Government would return to an inflationary path?
  My right hon. Friend the Chancellor of the Exchequer has broad shoulders as well as breadth in other respects, and on him rests a heavy responsibility for both fiscal and monetary policy. It is a great burden, even for him. Is there a case for separating the two? Fiscal policy—taxation and the rest—is political in character. But it could be argued that monetary policy is professional. If we commit ourselves to what my right hon. Friend the Prime Minister calls honest money, there cannot be much difference of opinion about what it is. Should we go back to it? Should we try to institutionalise our counter-inflationary policies by giving the Bank of England greater independence?
  I ask those questions in the context of our fight against inflation, as they are the only things that I can think of which might add to the clear commitment of my right hon. Friends the Chancellor and the Prime Minister. Long as I hope to see them reign, they cannot be eternal—much as we might like that. I do not use the word "we" in any facetious sense. Ought we not to be thinking about the longer term?
  Is it possible that greater independence allowed to the Bank of England might help us in the international sphere? It is inevitable, and right, that we will have a lot of discussion about a possible European currency, a possible European reserve bank or a possible European central bank. The Delors committee reports in June. I do not think that decisions will be taken at once. The matter is bound to be controversial, but I wonder whether it is
  770
  possible that the depoliticising, if I my use that horrible word, of our monetary policy, by moving responsibility for it from the Treasury to the Bank of England, would help co-ordinate monetary policy in Europe.
  There is a school of thought, which I rather favour although I am not sure that I am right, that we ought to make the European currency unit, the ECU, legal tender in parallel with our own currency. Such a move would involve considerable professional problems. If it were adopted in all Community countries, it would call for consideration at a very professional level.
  Would such a change help to depoliticise the Bank of England in a wider context? We have meetings of the Group of Five or Seven—would it help in deliberations with the other banks concerned? It would certainly align us with the two giants—the Federal Reserve Bank and the Bundesbank.
  In the old days, the Bank of England had a great reputation. It was enhanced, if anything, in 1931 when we went off the gold standard. The general view of pundits in the City was that the heavens would fall in. But not at all —they did not even dip. The Bank of England went on to create the sterling area; and sterling became a reserve currency which, within two or three years, was accepted by all countries in the world. I shall not go into the details of what the Bank did, but what it did was little short of a miracle by the standards of those days. No other bank in Europe has that experience. Even the Federal Reserve Bank, which inherited a currency, has never created a new one. It was quite extraordinary.
  Mr. Robert Sheldon: It was Winston Churchill who brought Britain back on to the gold standard as a result of the Bank's involvement. The right hon. Gentleman is saying that the Bank just corrected its previous mistake, which was a grave error that led to some of the country's many problems during the early 1930s.
  Mr. Amery: I would be happy to discuss with the right hon. Gentleman whether Churchill was right to make the pound look the dollar in the face. I am talking about 1931 when we were forced, rightly, to go off the gold standard and the Bank of England picked up the consequences which many people thought would lead to world collapse. That did not happen. The skill of the Bank of England made a currency, which was backed not by gold but by the reserves of the other members of the sterling area, a world currency which was accepted and, until the 1960s, remained a world currency. No other bank in Europe, and not even the Federal Reserve Bank, has the same experience. Do we still have the expertise to do that? Maybe some of the expertise has been hived off to the Treasury. My right hon. Friend the Chief Secretary to the Treasury will have that in mind.
  Could any Government happily delegate control of monetary policy? I can see that it would be awkward to surrender such control—it would be awkward for my right hon. Friend the Chief Secretary and for my right hon. Friends the Chancellor and the Prime Minister. I am asking questions, not making proposals. The return of inflation, which we thought we had got under control, suggests that the time has come to ask these questions. If I am right, the time has also come to ask the Government to consider them seriously.
  6.9 pm
  Mr. Brian Sedgemore: I was fascinated by the suggestions of the right hon. Member for Brighton, Pavilion (Mr. Amery) that monetary policy could be cured by some administrative changes and that one of those changes should be that the Bank of England should be given an independence which it has not had since it was nationalised. As he began his argument, I thought that he would suggest that we should return to the gold standard at the same time. After all, it was only 10 years ago that Sir William Rees-Mogg, the smutty man in charge of the Broadcasting Standards Council, wrote a pamphlet saying that all our economic ills could be cured by a return to God and the gold standard. I am not sure that doing things by hunch, by guess and by God is the right way to deal with economic problems and I shall not follow the right hon. Member for Pavilion down the line of historical fantasy.
  There is broad agreement in the country, if not in the House, that the 1989 Budget is the price that we have to pay for the 1988 Budget. That price includes listening to the Chancellor's words about lower economic growth, wage restraints, a balance of payments crisis, high inflation and more unemployment. Although the responsibility for the current mess, muddle and moronity in economic affairs lies entirely with the Chancellor of the Exchequer, I felt sorry for him as he delivered his Budget. As the blood drained from his face and his eyebrows drooped, I thought about the excrutiating pain he must be suffering—that haughty, ebullient, cocky, arrogant Chancellor, forced at the Dispatch Box to disport himself in such a diffident fashion, and produce such a demeaning, piddling little Budget which has made him the object of political scorn and economic contempt. As he sat down, I was reminded of the words of President Lyndon Baines Johnson, when he listened to a speech by Richard Nixon. He turned to the press corps and said:
  "Boys, I may not know much, but I know chicken shit from chicken salad."
  The Chancellor began his speech by talking about the enterprise culture and telling us about the Thatcher economic revolution of the past 10 years. Recently I have spent a great deal of time examining the Thatcher economic revolution of the past 10 years and comparing our economic performance with the country's economic performance during the 10 years preceding 1979. The results are quite interesting. Those who salivate at the thought of the Thatcher revolution claim that it has brought about a sea-change in our economic performance, but my analysis shows that the Thatcher revolution is an illusion, a mirage, and a will-o'-the-wisp that belongs to the media world of make believe.
  The theory of the Thatcher revolution was to have been monetarist. In practice, it has been a mish mash of monetarism and crypto-Keynesianism. At first the neo-monetarism theorists of the revolution told us that they would control inflation by controlling M3. When the evidence confounded the theorists, they turned to M1, and when that did not work they turned progressively to a variety of monetary indicators—M0, M2, M4, M5, PSL1, PSL2 and DCE. In the 1989 Budget the Chancellor has gone back to M0. Needless to say, none of those monetary indicators did what was claimed of them and Mo will not
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  do what was claimed for it. In theoretical terms, the revolution has turned out to be Grecian tragedy and only the Chancellor's pride prevents him from admitting that.
  According to conventional media wisdom, high levels of economic growth in the 10 Thatcher years have brought about the enterprise culture, better management and more hard work. According to conventional media wisdom, low economic growth is a thing of the past. Alan Budd, a Thatcher apologist and professor of economics, and director of the centre for economic forecasting at the London Business school, argued in volume 2, No. 2 of the "Contemporary Record":
  "The Conservatives could look back to 10 years prior to 1979 when GDP had grown at an average rate of 2·2 per cent … Since the second quarter of 1981; GDP growth has averaged 3·4 per cent. a year."
  Even the most stupid member of the stupid party can see the trick. Thatcher did not come to power during the second quarter of 1981; the Conservative Government were elected in 1979. The average rate of growth in GDP since 1979 is 1·8 per cent. rather than 3·4 per cent. and is less than in the 10 years preceding 1979. Professor Budd also ignored entirely the contribution of oil and gas production on the United Kingdom continental shelf to economic growth since 1981. The figures show that without oil and gas production virtually all the economic growth would have been wiped out.
  In 1983, oil and gas production accounted for 6 per cent. of gross national product—twice the rate of economic growth for that year. On average, in the years 1982–87—the only reason I stop at 1987 is that I cannot obtain any figures for 1988—oil and gas production more than accounted for all the economic growth in Britain. We should remember that prior to 1979 there was virtually no oil and gas production in the United Kingdom.
  So what kind of revolution is it? After 10 years there has been no growth other than that from a God-given source, and not even Thatcher can claim that she is God. Even sanctification will probably have to await her death. After 10 years we have just surpassed the level of manufacturing output that existed at the beginning of 1979. As North sea oil and gas revenues and production diminish, and a balance of payments crisis of super proportions hits us, the Thatcher revolution will be seen by the public and by history as little more than a chimera.
  I read incessantly that one of the major characteristics of the enterprise culture and the Thatcher revolution is low taxation. It is said that Thatcher lets the people spend more of their own money, that the Tories are the party of low inflation and that Labour is the party of high taxation. I hate to say it, but it is a whopping great lie. The truth is the reverse. Thatcher takes more money from people and lets them spend less than Labour did. The statistics show that the Tories are the party of high taxation. [Interruption.] I hear the laughter of the hon. Member for Bridlington (Mr. Townend) who accompanied me to Tokyo. Apologists of the Thatcher revolution, of whom he is one, talk only about income tax and avoid all mention of VAT, national insurance, royalties and rates because the figures show that, after a difficult start, the Labour Government brought down taxation as a proportion of GDP. Whereas Labour took only 33·9 per cent. of gross domestic product in taxation in 1978–79, in the current tax year the Conservative Government are taking some 37·4 per cent. of GDP in taxes. In every year that the Conservatives have been in power, they have taken a

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  higher proportion of GDP in taxes than Labour took in 1978–79. In 1984–85 the Conservative Government took as much as 39·1 per cent. in taxes. I remind the hon. Member for Bridlington that that is our money.
  Mr. John Townend: Will the hon. Gentleman be good enough to explain why he and his colleagues systematically vote against every tax reduction that the Government propose? In view of the fact that this year there is a Budget surplus of almost £14 billion, if he were in power, would the hon. Gentleman reduce taxes—a measure that I would support—and which taxes would he reduce?
  Mr. Sedgemore: I will set out my taxation policy at the end of my speech if I have time. It is incorrect to say that we have opposed every tax reduction that the Government have made. It does not help an argument in the House for somebody to stand up and make a cheap debating point on the wrong premise. When I studied logic at university I learnt that if one moves from false premises to using false logic, one invariably reaches false conclusions. I invite the hon. Gentleman to study Aristotelian syllogisms and he might be able to make a reasonable intervention.
  I was talking about the high proportion of taxation that the Conservative Government have taken in respect of GDP. The figures show that in every year in which the Government have been in office they have taken away a higher percentage of the gross earnings of a married couple with two children when the husband is on average earnings and where child benefit is treated as negative income tax. In 1978–79 only 35·1 per cent. of the average family's earnings was taken in tax, but in the current year, 1988–89, the Government are taking away 37–3 per cent. I am not sure how the hon. Member for Bridlington will justify that.
  Moreover, it is much worse than that. John Hills of the London School of Economics has just shown in a pamphlet produced by the Child Poverty Action Group called "Changing Tax" that the Government's cuts in direct taxes have been paid for entirely by cuts in the generosity of benefits. That is another way of saying that the poor are subsidising the rich. According to Hills—I do not think that anybody has challenged his figures—the bottom half of the population has lost £6–5 billion through the failure to uprate benefits since 1978–79 and £5·6 billion of that has gone to the top 10 per cent. of income earners. In other words, the Government have used the benefits and tax systems to target relief on the rich. What sort of miracle is that of which any Government can be proud?
  I shall deal now with the national debt and Government borrowing. Inherent in the idea of the enterprise culture —I read it again and again—is the notion that the Government have achieved a miracle by more than balancing the budget and by replacing the public sector borrowing requirement with the public sector debt repayment. That miracle may appeal to the daughter of a Grantham grocer, but if one examines the historical data one can see that it is a miracle that is rather commonplace. If one examines the definition of a miracle, one will see that it cannot be a miracle if it is commonplace.
  In 1969–70 Labour had a budget surplus or a PSDR of £1 billion when Roy Jenkins, now Lord Jenkins, was Chancellor of the Exchequer. Budget surpluses or a PSDR also existed in 1947–48 and 1948–49 when times were hard. When the Chancellor said in a speech last year
  "For the first time for at least half a century we have a Government in this country that are engaged in repaying the national debt"
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  he was not telling the truth.
  In that respect, he reminds me of Bernard Shaw's "Major Barbara" of whom it was said:
  "He knows nothing and he thinks he knows everything. That points clearly to a political career."
  I sometimes wonder who carries out the Chancellor's high level statistical research. It could be that one of the major problems of the British economy is that miss Pamella Bordes has a Treasury pass too. Somebody who does not understand the way in which this place works is producing the Chancellor's statistics.
  The miracle of the PSDR palls even more when we realise that Socialist Governments in Sweden, Denmark, Finland, Norway and Australia have budget surpluses. When the country desperately needs investment in infrastructure, education, science and industry if it is to remain competitive, why do we want to repay the national debt, particularly as it is now at historically low levels in relation to GDP? As my right hon. Friend the Member for Islwyn (Mr. Kinnock) said, it is our surplus and it should be used to meet our needs.
  I shall now deal with savings and investment in the Thatcher revolution. In the enterprise culture and as part of the Thatcher revolution, we are encouraged to save, or at least so we are told. Again, the facts show that the reverse is true. The enterprise culture and the Thatcher revolution have encouraged people to spend, spend, spend and borrow, borrow, borrow. The statistics show that they have well and truly created a loads of money consumerist mentality in which nobody saves at all.
  If we define borrowing as negative saving, which is what the Government do, the figures show that when Labour was in power between 1975 and 1979 the personal sector savings ratio averaged 11 per cent. The latest figures show that it is down to just over 1 per cent. The decline in savings—savings are essential to investment unless it is assumed that all our investment is to be done by foreigners —seems to be terminal.
  The Thatcher revolution in investment seems to have been still-born in one crucial area of the economy. Surely it is a very small miracle that has left manufacturing investment in 1988 still below the 1979 levels. In 1979 at 1985 prices, £10,136 million was invested in manufacturing. By 1982 that figure had plummeted to £6,360 million. In 1988, at £10,013 million it was still lower than in 1979.
  Let us turn to the one big area that always brings a smile to the faces of Conservative Members, the ability of the Government to control inflation relative to everybody else. It is axiomatic to everybody who believes in the theory of the Thatcher revolution that Britain has low inflation. Again, as my right hon. Friend the Member for Islwyn said, the figures suggest that the Chancellor is Mr. Inflation himself. The man who promised us zero inflation now has a rate of inflation of 7·5 per cent., which is the highest of all the major industrial countries. It is higher than in America, Canada, Japan, Germany, France and Italy and 50 per cent. higher than the EEC average.
  Before any hon. Member stands up and asks, "What happened under the Labour Government?" I can provide them with all the figures for the past 20 years. Every hon. Member knows that 7·5 per cent. inflation is historically high bearing in mind that it is Government-induced and owes nothing to oil price increases or a rise in commodity prices. It is fair to say—I want to be fair—that inflation blipped in 1986 at 3·4 per cent. However, as the figures show, it has never looked like reaching zero. In 1980 under

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  this Government it was as high as 18 per cent. In fact, that was the average for 1980 but in 1980 on a year-on-year basis it touched 22 per cent. I am puzzled, as are all my hon. Friends, as to how the Chancellor is to reach zero inflation when he is pushing inflation up. He is pushing up mortgage interest relief and the cost of borrowing. He is supporting the privatisation of the water and electricity industries, the former of which is already pushing prices up by 43 per cent. and the latter of which will push up prices by 10 per cent. per annum.
  On that subject, I believe that the Chancellor, like President Nixon, is such a conformer in duplicity that he now lends himself to what Lawrence Peter called the Nixon political principle: if two wrongs do not make a right, try three.
  The Chancellor denies that this will be his last Budget. We do not know. I doubt it because the Chancellor, as we all know, wants to go to the City of London. The feelers have been put out by the Treasury and the advertisements have been placed. The entire Government progaganda machine has gone into action. I can inform the House privately that he has not had a single offer from the City of London. In practice, the City, like the country, cannot afford a clapped-out second-rate Chancellor whose luck has run out. To paraphrase a comment made by Adlai Stevenson about Nixon—and I apologise for the constant comparisons between the Chancellor and Nixon—the Budget shows that the Chancellor is the kind of politician who would cut down a redwood tree and then mount the stump for a speech on conservation. It is a bad Budget by a bad Chancellor, so I hope that all hon. Members will oppose it.
  6.30 pm
  Sir William Clark: The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), with his usual panache, has made a speech, as always, that is offensive to the Minister about whom he is speaking. That is a pity because some of his points could be debated. He accused my hon. Friend the Member for Bridlington (Mr. Townend) of making a cheap debating point. That was priceless coming from the hon. Gentleman—definitely a case of the pot calling the kettle black.
  Like other hon. Members, I enjoyed the speech of my hon. Friend the Member for Richmond, Yorks (Mr. Hague). I could not help reflecting how different it was from the speech of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). My right hon. Friend's speech was well received by the Opposition, but he should sometimes make himself say something kind and good about the Government and our economic performance. His gratuitous insult to my right hon. Friend the Chancellor was inexcusable. When he was talking about exchange rates and interest rates, he said that my right hon. Friend the Chancellor wanted to bring them down, but was stopped. That reflects on the integrity of my right hon. Friend the Chancellor. Exchange rates and interest rates are an extremely important matter of principle for my right hon. Friend. Knowing him as I do, I am convinced that if he had been stopped from bringing them down, he would not be Chancellor today. He would never put forward policies with which he did not agree, so
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  I am sure that my right hon. Friend the Member for Old Bexley and Sidcup will, on reflection, regret having made that remark.
  In 1979, the Conservative party made the following two pledges, among others—first, to reduce the standard rate of tax to 25 pence in the pound and, secondly, to abolish the earnings rule for pensioners. I am sure that my hon. Friends will join me in congratulating my right hon. Friend on being the Chancellor who has fulfilled both those pledges. Others of my hon. Friends have already said that the Budget will help the lower paid through the readjustment of national insurance contributions, but none of my hon. Friends has mentioned the help that my right hon. Friend the Chancellor has given to charity. It is a great step forward and should be commended. I am delighted that my right hon. Friend has not touched life assurance funds—the only long-term savings that we have in this country—as I believe that it would have been a mistake to make any changes in that respect.
  The Opposition always sell Britain short, as did the hon. Member for Hackney, South and Shoreditch. Every speech from the Opposition denigrates the economy. The Opposition make three points—first, the overseas deficit, secondly, high interest rates and, thirdly, inflation. On the overseas deficit, I wonder how many of our imports are capital goods, how many are commodities and how many are consumer durables. I do not know how the Central Statistical Office works out such figures. One reads in various financial papers and journals that the CSO's margin of error is considerable. Consequently, when we talk of a deficit of, say, £14 billion, that figure may not be accurate and the deficit may be only £10 billion. The journals that I have read maintain that the estimated deficit has been exaggerated. The Treasury should, perhaps, spend some time dealing with that. Even if we take the figure of £14 billion, however, we should not continue to say that there is gloom and doom around the corner. One difference between this deficit and that of the Labour Government is that we have gold and dollar reserves of £29 billion to cover the deficit, so we can easily sustain it even if we do not want it to continue.
  I know that Labour Members do not like us to mention the financial position of the last Labour Administration. The Labour party asks for more public expenditure, but it conveniently forgets that when Labour was in office, especially after the meeting with the International Monetary Fund, the Labour Government cut expenditure across the board, including education, roads and the National Health Service. We all want to debate the economy, but hon. Members should not run down the economy and imply that there is a catastrophe around the corner.
  With hindsight—I emphasise that word—all hon. Members would agree that in 1988 the reduction in interest rates was too lax, although one must remember that it was preceded by the stock market crash and all the economic pundits were saying that there might be a recession around the corner. My right hon. Friend the Chancellor thought that he should boost consumption and he did so by reducing interest rates. Having seen that a world recession did not occur, some have criticised his taking remedial action. In my view, however, he should not be criticised but congratulated. This Chancellor is not afraid to take unpopular measures, rather than trying to buy votes. If economic policy deviates, action must be taken. It is all

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  very well for the Opposition to criticise my right hon. Friend. The only time the last Labour Government took action was when the IMF told them to do so.
  Mr. Hawkins: I would go further and say that not only did a recession not occur, but that it did not occur because of the measures taken by Britain and the rest of the Group of 7. It is easy for people to say that my right hon. Friend the Chancellor over-reacted and that there was not a world recession, but there could have been one, as there had been after every other stock market crash in history. It was the actions of Britain and the rest of the Group of 7 that stopped the recession from coming this time.
  Sir William Clark: I am grateful to my hon. Friend for making the point rather better than I could.
  As my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) said in his excellent speech, it is obvious that the first priority is the control of inflation. That has meant that interest rates have risen, but that is a temporary and not a permanent measure and in the months to come the 13 per cent. base rate will come down.
  My right hon. Friend the Chancellor has cut consumer demand. When one considers house prices and trade and retail sales, one sees that his policy is having an effect. In effect, my right hon. Friend has told people, "If you want to spend, borrowing will be expensive." Consequently, expenditure has been cut. However, that does not affect the person who does not want to borrow for his spending. I therefore welcome the Budget measures on personal equity plans, workers' share option schemes and pensions.
  As my right hon. Friend the Chancellor will enjoy an even greater surplus in the coming year, I should like him to repay some of the national debt in his next Budget. However, I have slight reservations about repaying too much of the national debt because some day there may be a profligate Government and it would be far too easy for them just to spend, spend, spend. I therefore offer that caveat to my right hon. Friend.
  The rate of savings causes me some concern as it has reduced from about 14 per cent. of disposable income to about 4 or 5 per cent. although we do not know the exact figures. Again, I do not know whether the Central Statistical Office has got its sums right, but the trend is clear. In the next Budget we should give a definite boost to savings. My right hon. Friend has done so much this month for which we thank him, but next year I should like contractual savings to be allowed as a charge against one's taxable income. That would give a great boost to savings.
  In 1979 there were 2·75 million shareholders in this country. Today, through the Government's economic policy and privatisation, we have more than 9 million shareholders—9 million capitalists. We should build on that, so that more and more of our fellow countrymen have something to conserve. Between now and his next Budget, next March, I should like my right hon. Friend the Chancellor to concentrate on seeing how we can increase the savings of this country and create more and more capitalists.
  6.42 pm
  Mr. Denzil Davies: As has been said, it is now more than 10 years since the Prime Minister's first Government introduced their first Budget, and, almost 10 years later, all that the Chancellor of the Exchequer had to
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  show last Tuesday for the Government's policies and efforts was a truly dismal and, in some senses, truly horrendous set of economic statistics and forecasts.
  The Government, who have made the elimination of inflation the cornerstone of their policies, have had to admit that inflation will now rise to over 8 per cent. As has been pointed out, that is by far the highest rate among all the major western industrial countries. Indeed, over the past 10 years, inflation in Britain—under this Government —has been higher than that of most of our industrial competitors in the western world. Does the Chancellor, the Chief Secretary or the Prime Minister ever ask why all those other countries can apparently do so much better than Britain is doing under their Administration''
  The deficit on the current account of the balance of payments is appalling. It is £14·5 billion this year and is forecast to be £14·5 billion next year, according to the Red Book. Again, that is by far the worst deficit of all the western industrial nations. Again, does the Chancellor or the Prime Minister ever ask why all those other countries, except possibly the United States—why all our competitors and trading partners in the EEC—can do so much better than Britain is doing under their Administration?
  On the balance of payments, is it not surprising and worrying that, according to the Red Book, despite high interest rates and despite there now being an apparent reduction and a fall in growth next year to 2·5 per cent., next year the balance of payments will stay the same as it is this year—that is £14·5 billion—and that the deficit on manufactured goods will increase to £15·5 billion?
  There may be many reasons for that—it may be our old friends the leads and the lags—but I suspect that one reason is that Britain's manufacturing capacity has so shrunk over the past 10 years that we are not producing the capital and consumer goods that industry and individuals have little option but to purchase, because they cannot do without them, whatever the cost. If that is the case—and I suspect that it may be—the future for this country, for our balance of payments deficit and for our industrial base is truly bleak and appalling.
  Our interest rates are the highest in the western world and I believe that the Government—this will be shown in the next few years—have failed to arrest or reverse Britain's relative industrial decline when compared with the other trading nations of the EEC.
  All that is despite the fact that, over at least eight of the past 10 years—the first two years were more difficult—the Government have had the benefit of the most favourable economic climate of any British Government since the war. During the 1980s, most Governments in the western industrial world recognised the dangers of inflation and, because they all did so, the measures to combat it were politically easier to carry out than they had been in the 1960s and 1970s. As the Red Book clearly shows, over the past 10 years, from 1980 to now, commodity prices, especially of oil, food and industrial materials, have fallen substantially and steadily in real terms. However, they are now beginning to rise again.
  As has been said, on top of those international advantages, the Government have had the enormous domestic benefit of a boost to their revenues and to the balance of payments through the oil surplus and the oil revenues from the North sea. Yet after 10 years of the most

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  favourable industrial and economic climate, we were presented with dismal and appalling figures in last Tuesday's Budget.
  When the Government came to power in 1979, they knew what they wanted to do and they knew what had caused Britain's economic ills. The radical Right, like the Ayatollah, had no doubts. Their targets were clear and simple. Some of us remember the rhetoric. The targets were the trade unions, the over-sized public sector, high public expenditure, the dreadful public sector borrowing requirement, high income tax and the appalling lack of monetary discipline and control.
  The trade unions were the first to fall. Their power was broken; especially, their power over collective bargaining in manufacturing industry has diminished. However, despite that, in the past 10 years rises in wages and earnings have consistently exceeded the rate of inflation. I accept that some of the difference and excess obviously comes from increased productivity, but not all of it. Despite the fact that the power of collective bargaining has been broken, much of that excess does not come from productivity.
  Next came the over-sized public sector, which was diminished by privatisation. High public expenditure was cut, perhaps not by as much as some Conservative Members would have liked, but it was cut. The dreaded PSBR was eliminated, destroyed, slain and turned into a surplus, albeit a surplus that cannot be used. Despite all that, inflation is apparently going up to 8 per cent., the balance of payments is horrendous, and interest rates are crippling. All the bogeys have been shot down.
  There were also high rates of income tax. Reduce them, so the rhetoric went, and British management would be galvanised and the supply side of the economy would supply. Income tax is now down to 25 per cent. and 40 per cent., but it has done nothing for Britain's supply side. It has worked wonders for the supply side of our competitors. The supply of BMWs and European imports has gone up considerably, but tax cuts have done nothing to the supply side of British manufacturing industry.
  Since 1985, manufacturing imports have risen by 200 per cent. in value, and exports have risen by only 30 per cent. Next year, the deficit on manufactured goods will be £15·5 billion. Our share of world trade in manufactures has fallen consistently over the past 10 years. That deficit in manufactured goods is not a deficit with the sweatshops of Asia. Most of it is a deficit with other EEC countries —countries that pay higher wages and have a better provision of public expenditure. Many of them have a higher rate of income tax than we have. So much for the supply side.
  Let us examine monetarism—the ark of the covenant, the reincarnation of everything that the Prime Minister learned in that little corner shop in Grantham. Rhetoric was high early in 1980, but, since then, there has been little monetary control—certainly not under this Chancellor. This Chancellor set up one monetary target, missed it, changed it, and then set up another. So it went on and on. Hon. Members heard tonight how it is called money GDP. It is about the worst target that could be chosen. One target after another has been missed. The Chancellor has
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  zig-zagged between monetary flags like a giant slalomist. The only difference is that the game is to hit them and not to miss them, but he has missed them almost every time.
  There is now no strategy left. The medium-term financial strategy is a joke and nobody believes it. There was an attempt to use an exchange rate strategy but, for whatever reason, it did not last long. All we have left are high exchange rates and the hope that, somehow, high interest rates will be able to free the Chancellor from the restraints on domestic inflation and foreign exchange markets. When the miracle has been achieved, a year before the election, the unearned surplus—it has not been earned, it has not been produced, and that is why it cannot be spent—will somehow or another be redistributed to a grateful electorate. I do not think that that will work.
  The tragedy of the past 10 years is that much could have been achieved, but much damage has been done. It is a tragedy for which the British public will pay for a long time.
  6.53 pm
  Mr. Terence L. Higgins: Since the Chancellor made his Budget statement, hon. Members have heard several remarkable speeches. I am sorry that I was unable to be in the Chamber for the opening speeches this afternoon, as I was attending the funeral of a greatly respected constituent who was tragically killed in the Purley rail crash.
  The Chancellor's Budget has been described as prudent and cautious. That is what it is, and it is appropriate in the present circumstances. Within the restraints of the present economy, he has got his priorities right. It is a Budget for pensioners. I was delighted that the Chancellor took the step of abolishing the earnings rule. Its abolition is long overdue. Against the background of changes in the demography of our country, in which the work force will clearly diminish in size as a proportion of the total population, that step is entirely appropriate. Taxes or other restrictions which are abolished rarely stage a comeback. However, if we merely change limits or increase allowances, all too often in a subsequent year we find that the improved position deteriorates. Therefore, the abolition of the earnings rule is welcome. On top of that, the Chancellor has made other changes to help pensioners. For example, he has reduced the limit at which extra help becomes available, from 80 to 75.
  I shall refer to two other points in relation to specific taxation measures. The first is unleaded petrol. I certainly welcome that change, which is already having a perceivable effect. In his Budget speech, the Chancellor made an important point. He said that people have the impression that, if they switch to unleaded petrol, they cannot switch back to leaded petrol. We in this country are not in the same situation as that which obtains in the United States, where cars which are converted or designed to take unleaded petrol cannot be used with leaded petrol. There is no reason why people should worry about using unleaded petrol when their cars are converted simply because they fear that they may not be able to get unleaded petrol at a given time. It is important that some newpapers, particularly the Daily Mail, which has been campaigning on the issue, should get that point across. The change which the Chancellor has made will greatly increase the incentive to improve the environment.

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  The other point is the exclusion of any increase in the price of drink and tobacco. Hon. Members understand what the impact on the RPI would have been if the Chancellor had increased those duties. However, there is a case for taking tobacco out of the retail prices index. It is a cost of living index, not a cost of dying index. It is quite absurd for the Chancellor to be inhibited from taking that action simply because of the effect that it would have on the RPI and the likely consequences of wage settlements.
  It has been suggested that the Budget is cautious and prudent because last year's Budget was a misjudgment. I simply do not believe that to have been the case. In the light of the stock exchange crash, along with many other Finance Ministers, the Chancellor took measures to stimulate the economy by monetary means. Of course, that had the desired effect. As was pointed out, a world recession was avoided. The timing of these matters is difficult, but. on the fiscal side, it is quite extraordinary for Opposition Members to say that the overall tax reductions last year were too big, when the outcome of the year was a massive surplus of unprecedented proportions. I am not clear whether they thought that we should have had fewer tax reductions last year and an even greater surplus this year.
  My constituents are somewhat puzzled by the surplus, if only because they have never seen anything of its size before and are a little worried about why it has not been distributed. Some points need to be made about that. If greater taxation reductions or further increases in expenditure had been made, it would have inevitably put more purchasing power in consumers' pockets, when, quite clearly, the Chancellor's intention is to exert downward pressure on inflation rather than stimulate the economy. It is important to stress that the surplus has arisen not because of increases in tax rates or cuts in public expenditure but despite reductions in tax rates and increases in public expenditure. Therefore, it is not a case of the surplus being accumulated in some adverse way. It has occurred despite improvements in tax and spending.
  As I understand it, Madam Deputy Speaker, I am subject to the 10-minute limit, so I shall make a passing reference——
  Madam Deputy Speaker: Order. The right hon. Gentleman may speak until 10 minutes past seven.
  Mr. Higgins: I shall try not to take that long, Madam Deputy Speaker. Having thrown away my notes for the part of the speech that I thought I should be unable to deliver, I shall make no effort to recover them.
  The surplus is, in part, the product of the proceeds of asset sales. The Treasury and Civil Service Select Committee has been inclined to argue that those proceeds should be treated as a means of funding the public sector borrowing requirement, rather than as a means of reducing public expenditure, or as revenue. Now that we do not have a public sector borrowing requirement, we need to rethink the position, because the proceeds of asset sales increase the overall surplus. To some extent, the cash raised by the issue of shares in privatised companies is being used to pay off Government borrowing in another form.
  Even if I am allowed to speak rather longer than I expected, I think these matters are rather technical to be dealt with on the Floor of the House. However, I hope
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  very much that the Treasury and Civil Service Select Committee will be able, having taken evidence, to elucidate these matters in a subsequent report.
  The Chancellor's fiscal stance is a tighter one than we have had previously, reinforcing his overall stance on interest rate policy. It is very difficult to think of ways of using the surplus, in terms of extra Government expenditure or tax cuts, that would not increase the inflationary pressure. If there are any such means, we shall no doubt hear suggestions about them, but they are difficult to find. That is the reason for the policy of repaying the national debt. In many ways, the consequences are favourable—for example, the shape of the yield curve, longer-term interest rates having been driven down, with benefit to manufacturing industry and commerce.
  The Chancellor says that he proposes to return eventually to a balanced budget. It looks as though we shall by that time have paid about £30 billion of the national debt, resulting in a saving of about £3 billion in interest payments. The question is whether this can be used in a non-inflationary way. It is important to stress that, had that commitment remained, there would have been a transfer from one group of people to another—mostly domestic, but perhaps some overseas. Those resources may now be put to use, allowing for some variation, depending on whether the people receiving the new resources have a propensity for saving greater than that of those who were getting the interest payments. The result will be increased, genuine choice—and that is welcome.
  The unexpected, extremely large surplus raises matters that can be dealt with in economic theory, but we in this country have not had any practical experience of a surplus on this scale. One aspect of the matter that creates very serious problems is the Government's statistics. I hope that the Chancellor will soon announce the improvements that he proposes to make in that regard.
  In addition, the evidence that the Treasury Committee received from the head of the Government's statistical service was extraordinary, in that it seemed seriously to underestimate the impact of inadequate statistics on markets. However, I shall leave that on one side.
  I hope that we shall see some improvement in forecasting models. My right hon. Friend the Chancellor has always been very sceptical about forecasting models. Normally, a balance of payments surplus would be forecast if there were a fiscal surplus. However, with a fiscal surplus on a massive scale, we had the reality of a massive balance of payments deficit. That raises some very serious questions about the model and about the way in which such forecasting should be revised and reformed. Perhaps we shall have to take into account the impact of the overall borrowing—Government, private and cor-porate—rather than simply Government borrowing.
  Finally, when he made his Autumn Statement the Chancellor was on something of a tightrope. He was using interest rates to try to get the economy back on course, following a period, as he rightly pointed out, of a very rapid inflation rate, overall, of some 4·5 per cent. per year —a rate which, clearly, could not be sustained indefinitely. The danger for a Chancellor on a tightrope is that, on one side, he can fall off into a recession, whereas, on the other side, he can fall off into a situation in which confidence is shaken internationally, the exchange rate collapses, and we get inflation. I believe that the Chancellor is still on that tightrope and that he will remain there until the situation

  783
  eases. Having said that, however, I must say that the combination of interest rates and fiscal measures reinforces the overall anti-inflationary stance, and for that reason, as well as for the reason that I gave earlier—the benefit of the specific tax change for pensioners—I welcome the Budget very much indeed.
  Several Hon. Members rose——
  Mr. Deputy Speaker (Sir Paul Dean): I remind the House that the 10-minute limit on speeches is in operation.
  7.6 pm
  Mr. Alex Salmond: The hon. Member for Staffordshire, Moorlands (Mr. Knox) began this debate by thanking the Leader of the Opposition—I am sure that he was speaking for all Conservative Members—for saving the timing of the Chancellor's Budget speech. It was indeed a generous and highly unusual gesture by the Leader of the Opposition. Most Leaders of the Opposition on acquiring that role have as their ambition to serve as Prime Minister; the present Leader of the Opposition seems to content himself with serving the Prime Minister. Most Leaders of the Opposition see it as their role to create procedural difficulties for the Government; this Leader of the Opposition sees it as his role to solve the procedural problems of the Government. At any rate, he has committed a political blunder that will haunt him for many years to come in Scotland.
  My hon. Friend the Member for Glasgow, Govan (Mr. Sillars) had the best of last Tuesday. He was lucky enough to miss the Budget speech, which was well worth missing. If last year's Budget speech contained the sins of commission, this year's was about the sins of omission. Never has a Chancellor with so much available given so little to so few, and kept the unhealthy concentration on those who have been so favoured by his past largesse.
  I wonder if the right hon. Gentleman appreciates the nausea that is felt by many Opposition Members when they see that, with so much to do, no fewer than nine paragraphs of the Budget speech are devoted to the attempted resuscitation of his pet scheme for personal equity plans. The real task is to rebalance the economy, to unfasten the straitjacket in which the Chancellor's past mistakes have put him.
  First, there is the task of rebalancing the economy between rich and poor. Like many other Scottish Members, I faced my constituents this weekend—people who have received their poll tax demands. The reality is of people on tiny incomes qualifying for tiny rebates of poll tax, and, in some cases, no rebate. Young people earning £60 a week will face the full blast of the poll tax on 1 April. On Saturday I spoke to a constituent in Turriff, who faced a doubling of the rates bill. He did not qualify for any rebate whatsoever, although he had been sent a very helpful note to the effect that he could always apply for family credit. To a family in receipt of only £6,000 or £7,000 a year, what comfort is it to tell them that the limit for personal equity plans has been increased to £2,400? Such people get nothing but the crumbs from the table of this Chancellor's largesse.
  I say to Labour Members that it is a very dangerous tendency—the hon. Member for Hackney, South and
  784
  Shoreditch (Mr. Sedgemore) illustrated it tonight—to try to outflank the Conservatives as a tax-cutting party. Let me mention something from today's Evening Standard. I am not claiming that the Evening Standard has the best interests of the Labour party at heart, but it was very interesting that even that newspaper was attempting today to remind the Labour party that it should be the party which represents the poor and the under-privileged. Our position on this side of the House should be that fair taxes are a just return for fair public expenditure.
  The second rebalancing of the economy should be between north and south, between Scotland and England. The Chancellor of the Exchequer has been engaged in Treasury sabotage of regional policy. If we are to believe his public statements, not content with sabotaging regional policy within the United Kingdom, his ambition is to sabotage regional policy throughout the European Community. The Treasury has been conducting a fight with the European Commission over the past few years —one which it has unfortunately won—to spend less in the regions of the United Kingdom by not obeying the rules of additionality.
  The Chancellor and the Treasury ignore the massive "regional policies" which are implicit within the United Kingdom economy, for example, in mortgage interest tax relief. Thirty per cent. of the United Kingdom population are in the south of England but obtain 50 per cent. of the mortgage interest tax relief—tax relief which is spiralling, with the Chancellor's high interest rates policy, to a level this year of some £6 billion. That is additional regional spending in the south of England of £1,000 million a year —approximately equal to the entire regional development grant budget for the rest of the United Kingdom.
  Then we have regional policy in the defence procurement budget. A parliamentary answer to me on 22 February revealed that, of the defence procurement budget of £10,000 million, no less than 62 per cent. was spent in the south-east and south-west of England. That is a "regional policy" which dwarfs the official regional policy of the United Kingdom.
  We have a regional policy in transport spending. British Rail's announcement that it will contemplate an additional £500 million, perhaps even £1,000 million, of spending in taking the Chunnel underground towards the coast is a massive regional preference for that area. It matters not whether that is funded by the public or the private sector. If it is funded by the public sector, it will come from the burden of taxation on all of us. If it is funded by the private sector, it will come from the charges levied on that transport and paid by the whole country for its communications with Europe.
  The Budget should have entailed a massive expenditure and investment programme on the infrastructure of the north of England, Wales and Scotland. That spending would not have been inflationary. It would have had a low import component and would have prepared those areas for the challenges of the European market and 1992.
  Today in Scotland we debated Scottish enterprise in the Scottish Grand Committee. It was an arid and sterile debate because, even in Scottish Committees which are not packed by English Tory Members, there is no decision-making power at the end of a debate. The debate was also misdirected because we were debating the supply side of the Scottish economy. Obviously, that is important

  785
  and improvements could be made, but the debate was out of focus. The basic economic problems of Scotland lie in a deficiency of demand.
  The real level of unemployment in Scotland is some 400,000, or 15 per cent. of the total work force. There is little capacity constraint within the Scottish economy and no real inflationary pressure. We know that total revenue over total expenditure is running at some £2,000 million, yet, in the face of deficient demand, we have interest rates, as a by-product of policies which are being pursued in the interest of overheating elsewhere in the economy, at 13 per cent. Moreover, there is no increase in public spending which is necessary to meet the problems of the Scottish economy.
  Not only do we have an inappropriate monetary policy as a by-product of inflationary pressure in the south-east, but that policy hits the Scottish economy harder than many other areas. The Scottish economy relies heavily on investment expenditure, capital goods, exports and construction expenditure, so high interest rates are particularly damaging to Scottish industry.
  The Government often claim consistency in their economic policies. It is true that interest rates have been consistently high, although the underlying reason for that has been changing substantially over the past 10 years. At the outset of their term of office, we had high interest rates because the then Chancellor of the Exchequer was in hot pursuit of sterling M3. Eventually that was given up as being immeasurable. Some years ago, the present Chancellor hyped interest rates to stabilise the currency and latterly we have had high interest rates to stop the so-called "overheating" in the economy. That phrase has a bitter irony for the regions of England and Scotland and Wales, whose economies are still just coming out of the deep freeze.
  The Chancellor's Budget, and his management of the economy, are biased towards the south of England where he has concentrated power, income and wealth, and which just happens to hold the friends, supporters and voters of the Conservative party.
  7.15 pm
  Mr. David Davis (Boothferry): I do not intend to follow the hon. Member for Banff and Buchan (Mr. Salmond) down his antiquated route, as expenditure per head in Scotland is second only to public expenditure in Northern Ireland, with all the troubles that the Province has. His analysis falls on that alone.
  Mr. Salmond: Will the hon. Gentleman give way?
  Mr. Davis: No, with all due respect, I cannot give way as I have only 10 minutes.
  This is a Budget for the future, not the past. In cutting the national debt the Chancellor of the Exchequer is cutting tomorrow's taxes and enhancing tomorrow's prospects. It is a Budget for the poor. In reforming national insurance, amending the age allowance and abolishing the earnings rule, the Chancellor is allowing some of the least well-off the chance of significantly improving their lot.
  In the past 10 years we have built and developed a successful enterprise strategy. From listening to my right hon. Friend the Secretary of State for Employment, I have some hope that the Budget is the first stage of a new strategy for enhancing the enterprise culture's impact on
  786
  the poorest. Our first duty to the poorest is to maintain the impetus for prosperity that we have developed in the past 10 years. Prosperity increases job opportunities-—500,000 in the past 18 months—enhances earnings, which are up 25 per cent. in the past 10 years, and allows the nation to pay for the welfare benefits of the least well-off among us. Therefore, there is an overwhelming need to maintain policies that promote prosperity. The first of those policies is to reduce the tax burden on the nation. I am a little disappointed that we did not see a further reduction in income tax, but things cannot he perfect all the time.
  Having assured that prosperity, we can turn our minds to ensuring that the combination of taxes and welfare benefits creates the sort of nation that we seek. We want to see a nation of self-reliant people, free from the heavy hand of government. We have achieved that for the vast majority of the population but, I fear, not yet for the very poor. Some of them face high rates of tax combined with benefit withdrawal. The worst case that I can find involves a 97 per cent. marginal rate of taxation and benefit withdrawal. That is higher than the highest rate of taxation on any earnings under any Government of any persuasion.
  While 97 per cent. is a rare occurrence, half a million of our people face a tax and withdrawal rate of 70 per cent. or more, which is worse than the old, top-rate taxes. Such a situation creates not just a dependency culture, but a despondency culture. Why on earth, then, do a Conservative Government, of all Governments, tolerate what is both economic idiocy and economic injustice?
  The reason unfortunately is a Gordian knot of logic that at first sight allows no answer. The paradox is that in reducing the marginal rate of withdrawal, we drag more and more people into the welfare net. In doing so, costs are dramatically increased, which in turn pushes up taxes, which depresses incentives, and thereby destroys the very enterprise culture that we are trying to create. Targeting, tax cuts and prosperity go hand in hand. Targeting and welfare incentives are logical opposites.
  The effect of reduced withdrawal rates is best demonstrated by example. My right hon. Friend the Chief Secretary will not need this particular example, but I shall give it anyway. To understand we must imagine a family —say two parents and two young children—on about £100 a week, who receive £40 a week in benefit. With a withdrawal rate of 80 per cent.—which is about the present rate—80p is lost for every pound of extra earnings. Their benefits drop to nothing when their earnings climb to £150. That is close to reality for many families. With a withdrawal rate of 40 per cent., their benefits drop to nothing at £200 and of 25 per cent. at £260. My right hon. Friend the Chief Secretary will realise immediately that I am leaving out the taxation component. If I added that to my last calculation, the level would be £400.
  If we consider the effects of the withdrawal rate on the number of people who receive benefits, the current withdrawal rate leads to all families with incomes of £150 or less being on benefit. If the rate was 40 per cent., all families on incomes under £200 would be on benefit, which is between 3 million and 5 million more households. That is a significant cost increase of more than £5 billion. A 25 per cent. withdrawal rate would take us up to having the majority of the households on benefit, and, if we took tax into account, the vast majority.
  That is the paradox. Targeting creates a poverty trap, but not targeting incurs massive costs and sucks a massive

  787
  number of people into dependence on the state. The question is whether the problem can be unpicked. The key that will unlock the problem is time and earnings growth. Already the Government operate welfare benefits and their qualifying income level in line with inflation. Since average earnings have grown by about 2 per cent. per annum above inflation during the past 10 years because of the Government's policies, qualifying levels for support should become a smaller and smaller fraction of average earnings. Thus the gap between the welfare benefit level and average earnings increases.
  To illustrate this, I shall return to our example. Dropping the withdrawal rate to 40 per cent. would mean that benefit would be paid up to earnings of £200 a week —that is £50 more than today. However, in 10 years time the average wage will be significantly more than £50 higher. As a result, a 40 per cent. withdrawal rate then would bring slightly more people into the net than 80 per cent. does now. Therefore, over 10 years it should be possible gradually to reduce the withdrawal rates from 80 per cent. to 40 per cent. as real incomes grow.
  The income improvement arising from our incentive policies creates the leeway to improve the withdrawal rate, to combine incentives and targeting. The strategy must be seen as a whole to be understood. I would say to my right hon. Friend the Chief Secretary that most of it is already Government policy. It requires four parts—first, to continue the downward pressure on basic rates to maintain the initiative and drive that underpins growth in earnings, which is the key to the economy; secondly, to maintain basic levels of benefit at constant levels in real terms, which is Government policy; thirdly, gradually to increase tax thresholds with the aim of ensuring that people and families who receive welfare benefits do not incur tax at all, which is why I used the non-taxed numbers; and, fourthly, to increase the earnings level at which zero benefit is paid by the same percentage as wages each year; which is to say that the taper should be lifted by the same percentage as wages each year—say about 2 per cent. above inflation.
  Over a period of 10 years or so that would force down the marginal rates significantly without increasing the proportion of GDP that goes into welfare payments—in fact, it would probably reduce it. What would happen is that the balance of targeting and incentives would reach a rational basis that has not been seen in this country for 25 years.
  Churchill once described the ideal modern state as one having
  "a net beneath which no man may fall and a ladder up which any man might climb."
  We have spent the past 10 years repairing the net and rebuilding the ladder. In the next 10 years, it would be an honourable objective to lower the rung at which that ladder starts.
  7.24 pm
  Mrs. Alice Mahon: I am grateful for a chance to speak briefly and to follow, though not immediately, the excellent speech of my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore). I believe that he paid a great service to the House and to the people of this country when he exposed the gigantic con
  788
  trick of the so-called Thatcher miracle. It is a sham, and my hon. Friend eloquently exposed the Chancellor as wearing no clothes, which was not a pretty sight.
  The truth is that by every major economic indicator the Government's policies have failed. Unemployment is still at more than twice the 1979 level. As my constituency reels under the hundreds of redundancies since Christmas, I can understand why the Secretary of State would not allow me to intervene. When I give the figures, the House will also understand. The trade deficit is still more than £14 billion and rising, and we have the highest interest rates and inflation of any of the major industrialised nations.
  British industry did not invest enough in the early oil-rich 1980s and we are paying the price. My constituency is a good example of an area where imports have been sucked in to the detriment of the local economy. There was not one proposal in last week's Budget which would help manufacturing. In a constituency such as mine, one can see the situation becoming worse. Because no attempt has been made to bring down interest rates, there is a high pound, high water and energy charges and the Government have deliberately forced up rates by starving councils of rate support grant. This has led to a lower demand for goods, which has been graphically demonstrated in my constituency.
  Mr. Janman: Will the hon. Lady give way?
  Mrs. Mahon: No, the hon. Gentleman can make his own speech.
  Since Christmas, in Halifax and in the Calder Valley which covers the Calderdale council area, 850 jobs have been lost in manufacturing—in textiles, engineering, the food industry and bed manufacturing. This morning I heard of a further 34 redundancies in textiles at an excellent hosiery and knitwear firm with a good record —the Wolsey socks division of Courtauld. The textile industry is not noted for its militancy and certainly not for its high pay. The reward to the textile industry and to engineering has been a kick in the teeth from the Government.
  The hon. Member for Boothferry (Mr. Davis) spoke about increased prosperity and then shed crocodile tears for those caught in the poverty trap. That really made me sick. How can he pretend to care when he walks through the Lobby with a Government who have persistently cut benefits, held down wages and bashed the unions to the extent that they have over the years?
  West Yorkshire is the lower-paid capital of this country. On too many occasions in the House I have highlighted what is happening to the local economy in my constituency. Our once highly skilled manufacturing jobs have been replaced by the sweat-shop type of economy towards which the Government have been urging us. I have been heavily involved with the problems of home working, which is on the increase. The average pay for a home worker is 50p to 60p per hour, and average pay in many of the factories in my constituency—this is borne out by the Government's own figures—is less than £2 an hour.
  I still have many thousands of constituents employed in the textile industry, which is an area of grave concern to me. Had I not been limited to 10 minutes I should have liked to quote what captains of the textile industry are saying about the Government's policy. I could have quoted letters from mill owners in my constituency who are deeply concerned about water privatisation because

  789
  the textile maufacturing process uses a great deal of water. They have already seen unfair increases in energy costs, compared with their competitors, and they have seen the results in terms of imports. The Government have let them down badly.
  The right hon. Member for Old Bexley and Sidcup (Mr. Heath) highlighted the need for the Government to invest in real training. Whatever the Secretary of State for Employment may say about employment training, it has been an utter failure. A fortnight ago a young graduate, Michael Pickles, came to my surgery. He has been unemployed since last June. He has an extremely good degree and in desperation he went on employment training for three months, but in that time he has had just two weeks placement with a firm. For the rest of the time he has been kicking his heels. He told me that if I got the chance I should tell the Government that they are just wasting the taxpayers' money on a rubbish scheme that was no good for him and no good to anyone else.
  In 1988 a survey of the local economy of Halifax showed that we are moving towards a two-tier labour market with a widening gap between the professional and skilled occupations and those workers concentrated in low-status, low-skill and unskilled jobs. The latter groups are often part of the flexible work force. Such people need training. In Halifax we fought back and tried desperately to help. We were involved with the business in the community initiative, which used the combined resources of the local council and the local trade unions, with the help of excellent officers who guided us through it. The chamber of commerce sulked, however, and would not join the regeneration committee. We used the small amount of European money available to us to try to train people for the future, but what have the Government done for us in return? They have done absolutely nothing—we are the hole in the middle of the doughnut. The Government have kicked us in the teeth. In the early 1980s the Government took assisted-area status away from Halifax, followed by urban programme area status. Recently Calderdale has been told that no derelict land grant will be given for the only piece of flat land available for industrial development.
  We have been betrayed by the Government. They are not putting our area forward for objective 2 status for the EC structural fund. The Government have ignored our pleas and representations, although we have pointed out that thousands more jobs are about to be lost. Last week, with two officers of the council, I made representations to the Department of Trade and Industry to get objective 2 money from Europe. We were given the impression that the Department was doing all that it could to press our case, and the Minister told us that our case was being flagged up in Brussels. Unfortunately for the Minister, however, the new Commissioner—Bruce Millan—told us the truth. The Government have not represented Calderdale and they have not highlighted the new unemployment levels in the area. The Commissioner told us that the Government were doing absolutely nothing for us. I have written to the Chancellor of the Duchy of Lancaster to say that if his Department wants to help Calderdale, Halifax and the Calder valley to get that money, we should have assisted area status.
  I see nothing in the Budget to help manufacturing. When the oil runs out—the income from that oil is already sliding—I wonder how we shall pay our way. What is happening in my town is a sign of things to come. I know
  790
  why the Secretary of State for Employment would not allow me to intervene—since Christmas nearly 1,000 jobs have been lost in my constituency and it would be difficult to explain that away in the so-called boom economy.
  7.32 pm
  Mr. John Townend: The hon. Member for Halifax (Mrs. Mahon) comes from the west riding, but the story is different in east Yorkshire. I represent a constituency in the hinterland of Hull; anyone visiting Humberside today will see nothing but expansion and the development of the manufacturing industry, which is taking on more labour.
  The Budget tax changes, modest though they were, have been universally approved. I particularly support the radical reform of employers' national insurance contributions, which will remove some of the stupid anomalies that created the poverty trap in the previous system.
  I represent a constituency with an above average number of old people, so I particularly welcome the removal of the earnings rule. That is a particularly useful supply-side measure when one considers that in the next few years there will be a fall in the number of school leavers coming on to the market. In common with my right hon. Friend the Member for Worthing (Mr. Higgins) I also approve of the reduction in the age limit for the higher rate of age allowances.
  I am chairman of the Back-Bench small businesses committee and I naturally welcome the 50 per cent. increase in the band for small company corporation tax to £150,000. Mainly that will help medium-sized firms, not small firms. I am disappointed that my right hon. Friend the Chancellor was unable to accept the recommendations of our committee, which would have been of enormous help to small businesses that have just started. We suggested that the first £5,000 of taxable profit retained in a business should be tax-free. That would be particularly helpful to small businesses desperate for capital in the early years.
  Another suggestion that we made and which I commend to the Chancellor for next year's Budget is roll-over relief for inheritance tax on private businesses or shares in private businesses until the disposal of the business or the shares. There would be no loss of revenue in the long term and in the short term it would stop smaller businesses being bled of much-needed capital to pay the Revenue's inheritance tax.
  In formulating this year's Budget, the Chancellor faced a completely different situation from any faced by a Chancellor this century. He not only balanced the Budget, but had a surplus of almost £14 billion. That is a clear sign of the success of the Government's handling of public finances. In the coming year, based on no changes other than indexation, my right hon. Friend has a surplus of £15·5 billion. At one bound, he could have achived his stated ambition of reducing the standard rate to 20p—at a cost of some £7 billion—still leaving him a further £8·5 billion for further tax cuts.
  In this century we have not had a Chancellor as successful as my right hon. Friend the Member for Blaby (Mr. Lawson) at introducing tax reductions and tax reforms to help the supply side of the economy. Therefore, it must have been terribly frustrating for him to be unable

  791
  to use the enormous surplus to continue that policy. My right hon. Friend was unable to use that surplus because of the current economic situation.
  In the event, my right hon. Friend is repaying another £14 billion of the national debt. That means that in about three years he will have repaid one sixth of the debt which has accumulated in the past 200 years. I do not believe that we should overlook what is, without doubt, an enormous achievement. For many years, the Government and their predecessors have increased the burden that will be bestowed on our children and grandchildren. The one exception to that practice which was brought to the attention of the House was not a budgeted surplus but one achieved by accident at the end of the year. It is truly wonderful that, at last, we are reducing the burden on future generations.
  Let us consider our economic difficulties. As my hon. Friends have said, it is always easy to be wise after the event. It could be argued that pumping more money into the economy and reducing interest rates prevented a world economic collapse. It could also be argued that the growth in the world economy was so strong that those measures were unnecessary. There is no doubt, however, that our current problems stem from pumping too much money into the system and reducing interest rates. This monetarist Government were not monetarist enough, and they paid the price. Our monetarist stance was too lax even before the October crisis. Therefore, for two years the economy had been growing at an unsustainable rate. It is nonsense to blame the Budget of 1988. That Budget produced a £14 billion surplus, which was fiscally tight.
  The main culprit is monetary policy. To be fair to my right hon. Friend, he has only done what his critics on the Opposition Front Bench have demanded for years— reflated the economy and reduced unemployment. To combat inflation, the Chancellor had to suppress his natural desire to cut taxes in this Budget, and he had to introduce a prudent and cautious Budget. He had to convince everyone, not least the markets, that when he said that the Government's No. 1 priority was to reduce inflation he really meant it. That is the only justification for sacrificing more than £1 billion in revenue by not valorising excise duties.
  We required a Budget for the markets this year and I believe that my right hon. Friend the Chancellor has succeeded so far. The Budget was far more cautious than many people expected. I am sure that the Chancellor hopes, if he gets the right response from the markets, that he will not have to increase interest rates any further. We will have to see whether that happens. However, I am heartened by the fact that my right hon. Friend has made it clear that, if necessary, he will raise interest rates further.
  My right hon. Friend the Chancellor is faced with two significant problems—inflation and the balance of payments deficit. The Budget will undoubtedly help, but it will not solve those problems. The only way to reduce inflation is through further monetary policies. It is a tragedy that, when the Government managed to reduce inflation to 3·5 per cent., they did not continue their policy to get it down to zero. They traded off reflation to bring down unemployment. I hope that the Government have learnt a lesson and will not be diverted from their main aim in future.
  792
  I am worried whether targeting MO is sufficient. I am not certain whether we need to return to targeting broad money, despite all the problems that that would cause.
  A vital factor in reducing inflation relates to wage increases. All private employers should heed the Chancellor's warning that he will not let the exchange rate fall to accommodate real wage increases which are not covered by increases in productivity. The Government also have an important part to play because they are a major employer. Regardless of the political clout of this year's special interest groups, whether they be doctors, nurses or teachers, the Government should not allow themselves to be pressured into allowing wage increases much in excess of 6 per cent.
  I believe that the balance of payments deficit will right itself in due course because this deficit, unlike previous deficits, is mirrored by a private sector deficit and not a public sector one. As hon. Members have said, a considerable proportion of the deficit is made up of imports of capital goods. When they enter production, they should reduce imports and increase exports.
  In the short term, the Government should take a much tougher line with countries which have free access to our markets, but which make it difficult for us to export to them. For example, for 25 years Japan has discriminated against Scotch whisky and that discrimination will be removed only after 1 April. We have a significant deficit with South Korea, but it is virtually illegal to sell Scotch whisky there, other than in tourist hotels. That is not good enough, and retaliatory action must be taken. We believe in free trade in both directions. If we open access to our markets, we demand equal access for our exporters.
  Also, while we have this worrying balance of payments deficit, we should not increase overseas aid, however much the bleeding hearts brigade might plead. Indeed, we might do well to restrict it.
  We must all hope that "Lawson's luck" holds and that the British economy has a soft landing. The Budget has hopefully created the right environment. Backed by firm monetary control, inflation should fall and there should be a reduction in the balance of payments deficit. When that happens, I hope that the patience of the British people will be rewarded and that the Government will once more embark on their avowed policy of reducing taxation. We should have enough of a surplus then to bring the standard rate down to 20p in the pound and to make significant reductions in other areas. On that basis, I strongly support the Budget.
  7.43 pm
  Mr. Tony Worthington: We have heard much from Conservative Members about the importance of incentives and I support much of what has been said. It is particularly important that the less well-off should have incentives. They should have a sense of achievement and a sense of being able to surmount their own economic problems. However, the incentives issue becomes less important when we consider the more wealthy. There appears to be an area of diminishing returns. For many reasons many people who become wealthy cannot benefit or gain any more enjoyment from increased wealth. The wealthy often have the opportunity to set their own wages and incentives and use their own power. In many cases they cannot work much harder. It is ironic that the Prime Minister who claims that it is crucial

  793
  that the well-off should have large tax cuts does not take her own wages. It is clear that the Prime Minister, although she works extremely hard, realises that she cannot work any harder.
  The well-off often gain tremendous benefits from firms. They receive income which is more than a simple salary. In this Budget debate, we should be debating the Government's attitude towards different forms of taxation although I have not heard such a debate so far. Is it true, as we often hear, that the Government favour indirect taxation instead of direct taxation? If so, why? Is it true, as we often hear, that the Government favour regressive taxation rather progressive taxation? If so, why? It seems that there is a move towards more indirect and regressive taxation. That should be justified in this House.
  In 1978, income tax raised one third of all revenue. In 1988–89 it will raise only 24 per cent. In 1985, the poorest one fifth of the community paid 5·9 per cent. of their disposable income in VAT. The best-off one fifth paid only marginally more—7·3 per cent.—of their income. The bottom one fifth paid 29 per cent. of their disposable income in indirect taxation, but the top one fifth paid 21 per cent. There is a built-in unfairness there.
  We have heard today, as we have heard ad nauseam in the past, that we have a tax-cutting Government. If we consider the almost mythical married couple with two children on average income, we discover that in 1978–79 that family paid 35 per cent. of its income in taxation while in 1988–89 it paid 37 per cent. as a result of the shift towards indirect taxation.
  The position for the less well-off is worse than that because the role of benefits is neglected. In 1988–89 a wage earner with four children earning £75 a week, with cash benefits actually received about £123 a week. To increase his income from £123 to £140—an increase of £17—he would have to earn an extra £90 because of the loss of cash benefits. That represents a taxation loss of 80 per cent.
  We all welcome the minor changes in national insurance contributions, but that affects only a tiny part of the poverty trap. At the top end of the scale people are treated even more favourably than would appear from the way in which the Chancellor cut the tax rates to 40 per cent.
  People at the top end are looked after by their employers. It was pleasing to see the reduction in allowances relating to company cars, but that is a small part of what is happening at the moment. Recent surveys show that 84 per cent. of senior managers receive free medical insurance. Many receive life assurance policies, have their telephone bills paid for them or receive money to pay for their newspapers. According to the data, 30 per cent. have their golf club fees paid. Such benefits are not taken into account in the Budget.
  The Paymaster General (Mr. Peter Brooke)rose——
  Mr. Worthington: I cannot give way in a 10-minute speech.
  All of that is a form of middle class, welfare state subsidy that is not taken into account. Others receive share option schemes, and they do not pay the market price. They receive free meals from their companies, whereas a working person will receive only luncheon vouchers to the value of 75p per week before that benefit is taxed.
  What is to be done about that extremely unfair system? We all need incentives, and the greatest benefits should go
  794
  to those who are least well off. I believe in the importance of incentives to working people. I am much attracted to the scheme proposed, admittedly in embryo form, by my hon. Friend the Member for Birkenhead (Mr. Field), which seeks to re-examine the present system of tax allowances. In tonight's debate, we have heard from hon. Members who are hostile to any benefit being given to working-class people but who have urged the value of incentives for savings schemes, for example. If there is no such thing as a free lunch, there is no such thing as a free tax allowance. A free tax allowance is being paid for by someone else, who is often receiving a lower income than the person enjoying the tax allowance.
  At present, about 100 tax allowances are in existence. Major allowances include mortgage relief, while others include car allowances, tax-free pension schemes, business expansion schemes, and subsidies to invest in privatisation. They are all largely biased towards the better off. The value of that tax welfare rises with one's income. There has been a great growth in tax welfare, and one of the things that that has done is to drag poorer people into the tax net.
  The only way to end the drastic poverty trap, with people effectively paying 80 per cent. income tax, is to get rid of that panoply of tax allowances. If that is done, it will be possible to have a standard rate of income tax of around 12p to 15p in the pound. One could then have a progressive tax system based on fairness and linked with that rate of 12p to 15p in the pound. It would also be necessary to increase considerably child benefits, and to do more for pensioners.
  The unfair divide that currently exists between those at the top who are assumed to need incentives and those at the bottom who are clobbered massively for every increase in income that they receive is totally unsatisfactory. One of the ways of ending that, as was suggested by my hon. Friend the Member for Birkenhead, is by re-examining the current system of tax allowances, which probably costs the rest of us about £50 billion. We must then return to what is surely the only fair system of taxation—a system of progressive, not regressive, taxation, under which one pays according to one's ability to pay.
  7.53 pm
  Mr. Neil Hamilton: This has been an interesting debate because we have heard from both the old and the new. It included a contribution from the newest Member of this House, my hon. Friend the Member for Richmond, Yorks (Mr. Hague), whom I congratulate on the excellence of his maiden speech. He was preceded by the oldest Conservative Member of the House—with the exception of the Father of the House —my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).
  My hon. Friend the Member for Croydon, South (Sir W. Clark) commented that he wished that my right hon. Friend the Member for Old Bexley and Sidcup sometimes said something good about the Government and that he approved of what they are doing. However, that would amount to an act of apostasy on the part of my right hon. Friend the Member for Old Bexley and Sidcup, so it is not likely that he would do such a thing. To be more even-handed might also give his opinions a spurious credibility. I am delighted that when he speaks to the House he does so only to attack, because that can only diminish the strength of his message.

  795
  If we learned anything in the past year, the two lessons that have come home to us are that monetarism is still alive and well and that the inflation experienced in recent months is a reflection of a laxity in monetary policy, and how potentially dangerous it is to rig exchange rates by intervention in the foreign exchange markets—and how even more dangerous it would be to tie us up in a permanent, formalised system such as the European monetary system.
  I am delighted that in his opening remarks on the Budget my right hon. Friend the Chancellor of the Exchequer agreed, at least partially, with my view, when he said:
  "Inflation is a disease of money; and monetary policy is the cure."—[Official Report, 14 March 1989; Vol. 149, c. 293.]
  I am glad that my right hon. Friend gave that ringing endorsement of what I believe to be the underlying cause of the difficulties we have recently experienced. I endorse his comments that interest rates should stay as high as necessary for as long as necessary. I do not believe that we shall cure inflation unless we adhere to that policy.
  That is not a policy that commends itself to my right hon. Friend the Member for Old Bexley and Sidcup. He comes to the House only when he perceives that the Government are in some difficulty, and feasts upon perceived Government misfortune like a vampire given free run of a blood bank. However, where inflation is concerned, I dare say that we should to some extent listen to him, because he is one of the greatest experts on the causes of inflation—having himself presided over some of the worst bouts of it in living memory.
  On occasions, my right hon. Friend attacked the Chancellor for his excessive reliance, as my right hon. Friend the Member for Old Bexley and Sidcup sees it, on interest rates. He says that the Chancellor has only one golf club. In the period 1972–74, my right hon. Friend used every golf club apart from the right one, played most of the time in the rough, and ended up well and truly bunkered. It ill becomes him to pose now as the club professional. It is my right hon. Friend the Chancellor of the Exchequer who deserves that description.
  My right hon. Friend the Member for Old Bexley and Sidcup has the support of various bodies such as the CBI, which seems to spend all its time whining about matters that are beyond its control and ignoring those within its control, such as wage increases—which have a far greater influence upon the costs of manufacturing industry than interest rates. My right hon. Friend the Member for Old Bexley and Sidcup is supported also by Opposition Members, though the same applies to them as to him. When the Labour party comes to the House to accuse the Government over their record on inflation, that is the nearest thing that one can imagine to Satan rebuking sin.
  Several times during the debate Opposition Members have called for non-inflationary increases in Government spending. I should like to know what is a non-inflationary increase in Government spending, because unless one can achieve a 100 per cent. rate of return, any investment is likely to lead to an increase in total demand—and as excessive demand is the cause of inflation, such investment is likely to stoke the fires of inflation rather than dampen them.
  Another mistake that has been made in Opposition Members' speeches this evening is to say that last year's
  796
  Budget produced the upturn in inflation that we now have, and that the tax cuts it introduced must be held responsible. I do not understand the logic of that argument. Last year's tax cuts totalled £4 billion and there has been an increase in personal sector credit of £40 billion. It sems unlikely, to say the least, that £40 billion extra spending should result from a £4 billion increase in disposable income as a consequence of tax cuts. In an economy now approaching £450 billion, it is impossible to believe that last year's modest tax cuts were in any way responsible for the current inflation upturn.
  The problem is that credit has been allowed to expand too rapidly for too long. I agree with my hon. Friend the Member for Bridlington (Mr. Townend): we were satisfied, when we should not have been, with inflation continuing at 3, 4 or 5 per cent. We lost the momentum of our campaign to squeeze inflation out of the system. Bank credit has trebled in the five years between 1984 and 1989, and broad money has expanded at a rate of about 20 per cent. a year.
  I appreciate the problems relating to M3. World changes in the past eight years—freedom of capital movements and so forth—have made it a less reliable indicator than it was. I certainly do not think, however, that it is right to concentrate our attention on a narrow measure of money—M0—which has nothing to do with credit, when credit is the basis of our current problems. We need a new monetary measure which balances the different kinds of money that are held.
  Although inflation is unacceptably high, we should not overstate the recent increases. I am a zero-inflation man myself, and I should not like it to be thought that I am being soft on inflation, but we should recognise that earnings have risen by 9 per cent. in the past year and productivity by 4 or 5 per cent. The real level of inflation in the economy is still only about 4 to 5 per cent., although it is rising, which is worrying.
  We need a tight monetary policy, but I am sorry that we have such a tight fiscal policy. I believe that the supply side implications of our tax reductions have been the basis of the huge increase in prosperity at all income levels in the past 10 years, and we need to go further in that direction. I want Britain to become a tax haven, and taxation to cease to be a consideration in people's decisions about how hard to work or what jobs they do.
  For all the talk by Opposition Members about cuts in spending in the past 10 years, figures in the Red Book show that expenditure has not been cut as a proportion of GDP. It has started to decline only recently, and I look forward to further falls in the coming years. Table 2·5 shows that the proportion of our national income taken by taxation also has not declined much. When we came into office in 1979 it stood at 35 per cent. of GDP, while the figure for 1988–89 is 37·5 per cent. Of course Government spending is more honestly financed today as a result of the abolition of the public sector borrowing requirement, but I believe that 37·5 per cent. is far too much for the Government to take in taxation, and that significant reductions are needed.
  I recognise that market sentiment was probably against the Chancellor this year but I think that, although the markets had discounted it, there was room for a 1p cut in the basic rate of income tax, and I wish that the Chancellor had felt able to take such action. The problems that we have faced in the past year have been familiar to economic theorists and others for a long time. It is many years since

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  Professor Milton Friedman pointed out the dangers of a discretionary monetary policy. Along with my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), I hope that we may think again of establishing an entirely independent control of the money supply by privatising the Bank of England.
  In this as in many walks of life, it is politicians who cause the difficulties with which we must grapple. If their hands are kept off the levers, more often than not the market will ensure that the right solution emerges. That will remove the uncertainties and unpredictabilities inherent in the fickle nature of politicians' decisions.
  Limited though its effects may be, I welcome this year's Budget. I regret the necessity to tread water, and I look forward to further progress on tax reductions, particularly income tax reductions, in future years. In the long run, however, the country's prosperity will be assured only if the Government keep firm control of the money supply, inflation and their own expenditure, and reduce significantly the proportion of the national income that they take out of people's pockets.
  8.4 pm
  Mr. Pat Wall: This year, as last year, the Chancellor may have left excise duty on alcoholic beverages alone, but in economic terms the bacchanalian binge for the rich from last year's tax cuts have been succeeded by a Budget of relative sobriety. Even last year's celebrations were enjoyed by a very small section of the population—in the board rooms of banks and finance houses, in the large monopoly companies, by the stock exchange and property speculators and by other assorted rich spivs, by the 1 per cent. of the population who received more in tax cuts than the bottom 70 per cent. of taxpayers—some £1,880 million compared with £1,730 million. Those on more or less average incomes—in terms of prosperity, the medium band—found that their modest glass of wine soon turned sour during the year as inflation, interest rates, rents and mortgages rose for most families.
  As for the 6·6 million earning what by any civilised standards must be regarded as low wages, the most that they have received have been crumbs from the rich man's table, despite the cuts in national insurance payments in this year's Budget which, incidentally, has brought 150,000 people into the payment band for the first time. Any gains can be offset against the plight of those who have to survive on the workfare schemes, which the Government suggest are some kind of training programme, and those who lose the protection of wages councils. Millions of others—the unemployed, the sick, the disabled and many pensioners—have been excluded from any benefits conferred by last year's or this year's Budget.
  It is, indeed, surprising that at the height of what the Chancellor calls the first ever post-war boom this "reforming" Chancellor should find it necessary to eschew reforms. It is even more remarkable that a Chancellor who claims to be tax-cutting should increase the overall tax burden to 37·5 per cent., compared with 34 per cent. in 1978–79.
  The spectre that haunts the Conservative Benches above all else, however, is the balance of trade deficit, which the OECD estimates will rise from its present level of £14·4 billion to £15 billion in 1989 and £16·5 billion in 1990. On the basis of last month's figures projected for a year it could reach around £20 billion.
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  The Government claim particular credit for their period in office. Between 1980 and 1988 exports increased by one third, roughly in line with the performance with the rest of the manufacturing world. At the same time, however, imports increased by two thirds—twice the rate in the leading economies in the Group of 7 and the OECD countries.
  In the so-called first ever boom years since 1985, exports have increased by 12 per cent. and imports by 39 per cent. As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) pointed out in a recent speech, in the past 12 months exports increased by only 0·5 per cent. while imports increased by 14 per cent.
  That presents a picture of grave deterioration. Between 1985 and 1988—excluding oil and energy products, which are declining in any event—manufacturing exports rose by 23 per cent., while imports rose by 48 per cent., but that is not the only deficit problem that the Government face. In the first nine months of 1988, the net outflow of direct investment amounted to £6·3 billion. To that has to be added £5·6 billion of portfolio investments abroad. If that is rounded up on a yearly basis, the deficit amounts to about £15 billion.
  Taken together, that deficit on trade and capital outflow abroad—about £30 billion—is 6 per cent. of gross domestic product. Sir Donald MacDougall said recently that a £10 billion surplus on the trade account is required to finance the current level of capital outflow. The Chancellor of the Exchequer dismisses that argument. He says that our fiscal reserves stand at £30 billion. That is a dangerous confidence trick to play on Britain's economic wellbeing. It rests on the fact that we attract foreign investment because of our current high interest rates. That has led to an over-valued pound. The result is that exports continue to lag behind imports.
  The Chancellor's confidence trick rests entirely on our ability to attract foreign investment. A lack of confidence in the pound could wipe out our entire capital reserves within a year. There would be a run on the pound, which would have a disastrous effect on Britain's economy, but not just a return to stop-go and stagnation. The IMF would have to intervene. There would be a reversal of the downturn in unemployment and working people's wages would have to be cut. The signs are already there, in the fall in the value of the pound both against the dollar and against the basket of world currencies.
  The Government boast about unit labour costs. In 1986, they rose by 4·8 per cent., compared with 3·1 per cent. in OECD countries. In 1987, the Government achieved a reduction in unit labour costs of 3·1 per cent. against an increase of 3·1 per cent. in OECD countries. In 1988, however, the increase in unit labour costs was 5·7 per cent. and it is still rising, compared with a rate of 3·3 per cent. in OECD countries. During that period, labour costs remained static in America but fell by 4 per cent. in Japan and by 2 per cent. in France. The British economy is not, therefore, competitive. It is not succeeding in world markets or against its major competitors, so any loss of confidence when the pound stands at an artificially high level will lead to a serious deterioration in Britain's economic outlook.
  The British economy is part of the world economy, which is dominated by the problems faced by the United States. The US budget deficit stands at $155 billion, its trade deficit has been reduced but is still about $130 billion, and there are enormous corporate debt problems.

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  Merger mania in America is not properly financed and these are problems facing US savings and loans banks, which are similar to those which face building societies in this country.
  Third-world debt creates great problems and it has been suggested that overseas aid should be cut. During 1988, the net outflow from the poorest countries in the world to the wealthiest industrial countries amounted to £46 billion. That has had political repercussions, with a swing to the Left in the Mexican general election and riots in Venezuela. The Government boast that capitalist policies are being followed in China, Russia and eastern Europe and are the way out of the problem, but the reality of the market economy is that millions of people are starving, the world is divided between north and south and in countries such as Britain there are millions of poor people, with a handful of very rich people growing ever richer at the expense of the poor.
  I am pleased that there have been demonstrations this week in support of a candidate in the Russian parliamentary elections. I refer to Boris Yeltsin in Moscow. Tens of thousands of people demonstrated in the streets, though not in favour of capitalism. Boris Yeltsin says that Russia needs a society where there are no perks for the bureaucrats and no privileges at the expense of ordinary people. He says that land is needed for the peasants and that factories should be controlled and owned by the workers. I believe that the British people, too, will see through their Government's flawed policy and will see the need for change in society. That change will be brought about only by a change of Government. Only in that way will a democratic society be created in which wealth is shared equally and fairly among all.
  8.14 pm
  Mr. Tim Janman: There have been some interesting speeches in the debate. My hon. Friend the Member for Richmond, Yorks (Mr. Hague) made an excellent maiden speech. He has much more common sense than my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) who has been a Member of this House for far longer than my hon. Friend the Member for Richmond, Yorks.
  The Budget is contained within a rather dull crown, albeit of necessity, but there are some shining jewels hidden within it. The changes to national insurance contributions, corporation tax, charitable donations direct from the payroll and petrol tax—which will act as a stimulant to motorists to change to lead-free petrol—are examples of those jewels. The most important, in the long term, and the most pleasing aspect of the Budget, is the fact that my right hon. Friend the Chancellor of the Exchequer is coming back on course to monetary policy.
  I was pleased to hear that there are to be targets for MO, and that they will be kept to, and that the annualised rate of growth of MO over the last six months was only 3 per cent. I echo what was said by my hon. Friend the Member for Tatton (Mr. Hamilton), that MO and its close monitoring and targeting are not enough. I hope that when he replies to the debate my right hon. Friend the Chancellor of the Exchequer will provide more detail about how much weight is to be placed on broader supplies of money. That is important. I accept, however, that in a
  800
  free economy—we now have the freest economy in Europe, with the exception of Switzerland—that is more of a challenge than it used to be.
  The changes to national insurance contributions are particularly to be welcomed. They will be good for people on low, below-average and average incomes. I am disappointed, however, that the tax-cutting momentum has not been continued in the Budget. If the Chancellor had taken another penny off the standard rate of income tax, I do not believe that a warning note would have been sounded by the money markets. Tax cuts are not inflationary. It cannot be inflationary to let people keep the money that they earn. Inflation has been caused by the irresponsibly low interest rates of a year or so ago and by too much meddling and interference with the exchange rate, particularly with reference to the deutschmark.
  I echo the comments of my hon. Friends the Members for Tatton and Bridlington (Mr. Townend). Not to reduce tax by 1p in the Budget only gives credence to the economic illiteracy of the Opposition. The 1988 Budget was excellent. It was certainly not inflationary. The figures that were given earlier by my hon. Friend the Member for Tatton prove that point excellently. The standard rate of tax should have been reduced by 1p to show our detractors that we do not intend to be blown off course and that we intend to move away from the "they will" society to which the Opposition wish to return.
  There are many small and medium-size companies in Thurrock and the corporation tax changes will enhance their profitability. That will enhance employment and job security in the area. It is a pity, perhaps, that local government taxes cannot also be related to profitability. Many small businesses, especially those in the retail sector, continue to face huge rate bills. The Government's reform of commercial rates will, I am afraid, fail in many cases to resolve this outstanding issue.
  The Budget is, to some extent, borne out of a climate of inflationary fear. That is good. We must never take our eye off the ball of inflation. The Opposition are hypocritical and confused on the subject and about the right level of taxation. In at least two speeches today, Opposition Members have called for tax cuts that would benefit people on lower incomes, but last year they trooped into the Lobby to vote against 2p off the standard rate of income tax. Any party which, when in government for five years, presided over an inflation rate of 15·5 per cent. is in no position to lecture the present Government about their record on inflation. Nevertheless, like many of my colleagues, I believe that 7·5 per cent. or 8 per cent. inflation is far too high. Our target should be not 5 per cent. or 4 per cent. but nil per cent.
  The economy is fundamentally sound. The statistics prove that. We need only take the example of output per person in manufacturing, or productivity. Anybody can make something. What is important is whether it is made cost effectively. Productivity is the key measure. The increase in productivity in manufacturing during the entire term of the previous Labour Government was 5·8 per cent. Just from 1987 to the fourth quarter of 1988, there has been an increase of 10·3 per cent.—nearly double what was witnessed under Labour.
  We have also built up huge overseas assets, second only to Japan, and a huge fiscal surplus, and public expenditure is going down in real terms. The state is taking a smaller proportion of gross national product. That is something which we have always been elected to achieve.

  801
  Nevertheless, public expenditure is increasing in real terms. There have been no cuts. Public expenditure continues to rise in crucial areas such as health and the fight against crime.
  My right hon. Friend the Chancellor is to be congratulated on a well balanced Budget. It is important that we do not lose the momentum to return to individuals more of the money that they earn so that they can be less dependent on the state. The Leader of the Opposition spoke of our record and said that the Government had created a "me, now" society. His alternative is a "they will" society in which individuals lose their sense of responsibility for themselves and turn to the great they, whether it he local government, central Government, social services or the Department of Social Security to take on their individual responsibilities in life.
  The Government have a duty to ensure that there is a safety net and that citizens do not fall below it, but they also have a duty to maximise the amount of money that people can keep and spend as they wish. Although the Budget is excellent in many other ways, we have lost an opportunity to keep our tax-cutting momentum going.
  8.23 pm
  Mr. Win Griffiths: We are debating a Budget that has been created in the shadow of storm clouds caused by all the miscalculations on which the Chancellor's last Budget was based.
  The Chancellor's forecasting record is such that, if he was an economic analyst or financial executive of a privatised Great Britain Ltd, he would have been sacked a good while ago. His inflation figures proved to be 100 per cent. out, his forecast for the balance of payments deficit was a quarter of what it has turned out to be, and the same is true of the Budget surplus. It is therefore extremely difficult to enter a debate with the Chancellor on the basis of his forecast this year for what is likely to happen in the coming financial year. We have to take his forecasts with a pinch of salt and hope that he has learnt something from all the mistakes of the last year.
  Will the Budget strengthen the economy and create jobs? We have to answer that question with a resounding no. The continuing underlying trend of weakening in the manufacturing sector will continue. During the past decade, Britain's share of world trade has decreased by more than 10 per cent. We have managed to convert a £3·7 billion surplus when Labour was last in power to a £16·4 billion deficit today—some economic miracle. Even allowing for invisibles, which we are often told we have to bear in mind when considering the whole economy, the deficit has doubled.
  Those figures show an appalling performance. The economy has been saved only by the Chancellor being absolutely resolute about pushing up interest rates time and again to bring hot money into the country. We must remember that it can just as easily leave. In the meantime, home owners and businesses, especially small and medium-size businesses, face the difficulty—and sometimes the misery—of coping with the extra costs that high interest rates involve. Those interest rates are the creation of the Chancellor alone as he tries to make up for some of the mistakes of last year's Budget. The Chancellor told us in his Budget statement that he will maintain high interest rates for as long as is necessary. No doubt he will increase them if he considers that necessary.
  802
  At the beginning of today's debate, the Secretary of State for Employment made great play of the Government's job creation record. His view was blinkered and short-sighted in terms of recent history. I intervened in his speech, but he was unwilling to accept the figures that I produced, which are based on answers given by his Department to questions about how the economy has developed.
  I shall remind the House of those rather stark figures. During the past decade, jobs have been created, but they have been created in the south-east, East Anglia, the south-west and the east midlands. In those areas, 580,000 jobs have been created for men and 433,000 jobs have been created for women. They are all full-time jobs. Just over 1 million jobs have been created in the area below a line drawn from the Severn to the Wash. However, in the west midlands, the north, the north-west, Yorkshire and Humberside, Wales and Scotland there are 650,000 fewer jobs for men and 149,000 fewer full-time jobs for women.
  Therefore, as a result of the economic miracle of the past decade, there are almost 800,000 fewer jobs north of the line from the Severn to the Wash. The only bright spot is the west midlands, where there are 8,000 extra full-time jobs for women. Therefore, the Government should not be proud of their record on jobs. By the Chancellor's own admission, the situation is unlikely to improve in the coming year. The squeeze which is meant to affect the southern part of the country is more than likely to affect the north and will mean that while the south gets a cold the north and the west will get influenza.
  We have to take the Chancellor's predictions with a pinch of salt because he was so wrong last year. He predicts that the growth in GDP will slow done from 4·5 per cent. in 1988 to 2·5 per cent. in 1989, and that domestic demand will slow down from 6·5 per cent. in 1988 to 2·5 per cent. in 1989. Yet at the same time he predicts no fall in the current account deficit or import penetration when the economy is supposedly slowing down. He predicts that the more sophisticated GDP deflator will be 5·5 per cent. in 1989–90. That must mean a decline in the rate of growth of earnings and profits which are moving well ahead of inflation at present. It would be interesting to know from the Minister exactly how the Government plan to achieve that target. It is very difficult to perceive that the economy, which is running away on the credit boom, will slow down without an extremely hard landing.
  Much has been said about the extension of PEP; and ESOPs. While ESOPs are to be welcomed, PEPs appear to be an attempt to bribe people to buy shares in water and electricity—a way in which the Government hope to get out of the hole which they have dug for themselves in attempting to privatise water and electricity, neither of which has been accepted by the public as a suitable industry for privatisation.
  After last year's Budget, the Chancellor was hailed as Wonderman, but within six months he has been described as Blunderman—a blunderman who, in his Budget speech last week, appeared to have no confidence in the ability of British business to increase its share of the domestic market or overseas market. If he had, he would be predicting a drop in import penetration into Britain. The Chancellor is so scared stiff of the credit-based consumer boom that he unleashed in his last Budget that for yet another year he has refused to index duties on alcohol and cigarettes, showing the scandalous disregard for the health of individuals that he showed for the health of the nation

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  in his Budgets in the past couple of years. If the Chancellor cared for the nation's health, he would never have ended up with a £14 billion Budget surplus this year or be planning a similar or bigger surplus next year.
  There are ways of spending the Budget surplus without stoking up inflation. For example, having got rid of the earnings rule for pensioners, the Chancellor might have struck an even bigger blow for the standing and the prosperity of pensioners by giving them back the £4 billion that was taken from them in the past decade. Such an investment in the state pension would not have unleashed the inflationary credit boom that we have experienced in the past year. A great deal could have been spent on infrastructure, the Health Service and education, and that would not have been inflationary. By its nature, such spending is used for products made in the home market, and that would have benefited British industry.
  8.37 pm
  Miss Ann Widdecombe: I have listened with increasing disbelief to the catalogue of whining, whingeing, moaning and groaning which has eminated from the Opposition, as I did last year. They really are very bad losers. They recognise the Government's achievements but try to find fault with them. One has to admire their ingenuity in managing to find fault where practically none exists.
  The hon. Member for Banff and Buchan (Mr. Salmond) said that people would regard with nausea the way in which the Government have continued to help the same friends they have helped in the past. That is true. We have consistently helped pensioners and we have done so again this year. The abolition of the earnings rule and the raising of the age allowance presumably are greeted with nausea by the electorate of Banff and Buchan, if we are to believe the hon. Gentleman. We have consistently aided charities and this year we have doubled the limit for charitable giving, yet we have been led to believe that that will be regarded with nausea. We have made the most significant contribution of any Government in the past decade to the financial independence of women, and this year we have helped them through assistance with savings schemes as women are often the savers in the family. Yet that is supposedly greeted with nausea.
  Once again we have helped the lower paid by raising the tax thresholds, and particularly by the reforms of national insurance contributions. We have also helped small businesses through corporation tax changes, so we have helped our friends as we have in the past. I cannot believe that pensioners, charities, women, the lower paid and small businesses regard the Budget in quite the same light as the hon. Member for Banff and Buchan does.
  The hon. Member went on to say that Government policies militate against those living in the north, particularly in Scotland, and favour those in the south. But his examples were rather peculiar. First, he quoted mortgage tax relief. I nearly did a double take because the level of relief is the same whether one lives in the north or south, but property prices are very much lower in the north. I should have thought that the system of mortgage tax relief would encourage the purchase of property in the
  804
  north and migration to the north. That is not a regional policy to be deplored if the hon. Member for Banff and Buchan wants to encourage investment in the north.
  To my utter amazement, having been involved in it recently, the hon. Gentleman then mentioned the Channel tunnel and its attendant rail link. He said that somehow that was of vast benefit to the south. He should try telling that to my constituents who fought hard not to have it. We are witnessing the devastation of the southern environment to bring prosperity to the north.
  We need a regional policy, but it must be a policy connected with regional pay which would finally enable those in the south to recruit as they deserve. It is a poor show for the hon. Member for Banff and Buchan to talk about regional discrimination when we discriminate heavily in favour of Scotland in terms of public expenditure. I am sorry that the hon. Member for Banff and Buchan is no longer in the Chamber to hear what I am saying.
  Another hon. Member who is no longer in the Chamber talked about inflation and what he called the balance of payments crisis and the iniquitous level of interest rates. He appeared to think that such things were indicative of general failure. It is a tribute to the achievements of the Government and of my right hon. Friend the Chancellor that we now get hysterical at the thought of an inflation rate of 8 per cent. Over the past five years the average rate of inflation has been 5 per cent. When the Opposition were in power it was 15 per cent. and they tolerated 20 per cent. or more. They did not appear to regard it with anything like the hysteria they are trying to work up over a mere 8 per cent.
  We are facing the problem of success. The Opposition do not understand that because they never have success and do not understand the problems associated with it. Yes, we have a balance of payments problem but it has not been brought about because exports have fallen. In fact, exports rose by 5 per cent. and are predicted to rise by another 7·5 per cent. We are facing the problems of a prosperous country whose inhabitants can afford to buy overseas. We are facing the problems of prosperity, not poverty. The Opposition know well how to address the problems of poverty and failure because they have had to cope with them for so long. They do not understand the problems of success and they cannot masquerade our outstanding achievements as Government failures.
  The Opposition fail to acknowledge that interest rates have been low for several years. Therefore, when they have to rise, it looks painful. Over the past 15 years, interest rates have been higher than they are now and they have seldom been as low as they have been in the past couple of years. Once again, we are suffering from the reputation we have built ourselves of being able to have low inflation, low interest rates and an extremely successful economy. The slightest blip is greeted by the Opposition as proof that somehow our policies are not working. Our economy has never been more buoyant and we have never had a greater boom.
  The only slight degree of sympathy I felt with anything said by Opposition Members was when the hon. Member for Bridgend (Mr. Griffiths) said that he wished the excise duty had been increased on drink and cigarettes. I sympathise and want to control the consumption of both those commodities. I am particularly alarmed at the increased incidence of uncontrolled drinking among the young and the increase in smoking among young girls.

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  However, we have to be practical. A few extra pence on the price of a packet of cigarettes or a bottle of whisky will not make any real difference to consumption. Somehow, if such commodities are a regular part of someone's life, people seem able to afford them regardless of what happens to taxation. We need a campaign of public information and health education, particularly among the young. We already have some such campaigns but I should like to see more. However, that is a matter for another debate.
  In summary, the Opposition cannot recognise the difference between success and failure. They do not recognise that we have looked after, yet again, those least able to look after themselves. They fail completely to recognise what we have done for the financial and social status of women and for our pensioners. That failure of recognition reflects only their total lack of morale. They know that they could not achieve what we will have achieved and that the electorate will never give them an opportunity to try.
  Mrs. Teresa Gorman rose——
  Mr. Deputy Speaker (Sir Paul Dean): Order. The wind-up speeches are expected at 9 o'clock so the hon. Member for Billericay (Mrs. Gorman) can have a little more than 10 minutes if she wishes.
  8.45 pm
  Mrs. Gorman: I, too, wish to congratulate my right hon. Friend the Chancellor and his predecessor on the amazing changes that they have brought about in our economy in the past 10 years. Those changes have restored people's incentive to go to work and to invest their money in creating new jobs. That is why I am doubly disappointed that the Budget did not do more to help women, who now form a most important part of the labour force. Almost half the people who go to work are women, and many of them have to carry out domestic duties as well. They need help with those duties if they are to fulfil both roles satisfactorily.
  The Budget did not give any tax advantages to women who employ domestic help. In fact, it threatens to make life more difficult for those who employ people at relatively low rates of pay in domestic and other jobs. In a nasty little piece on page 46 of the financial statement, we are told that the Government intend to give the Inland Revenue increased powers to chase up people paying fairly modest sums of money directly to others. It is well known that if one employs domestic help, or a part-time gardener or someone who occasionally cleans out the gutters or the drains and generally helps to support the structure of the family unit, one usually pays in cash and it is usually relatively small amounts of money. It seems, however, that the Inland Revenue intends to beef up its attack on such arrangements. One can imagine the spectacle of a tax inspector with his ear to the letter box listening for the noise of children and perhaps of a babyminder scolding them. He will knock on the door and burst in, waving his little plastic card and asking the babyminder how much she is earning. If it is more than £50 per week, he will demand to know whether the harassed mother is operating PAYE and national insurance deductions. If I were the mother, I would empty the baby's chamberpot over the inspector's head.
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  I wonder whether the new strictures will apply to gentlemen who keep mistresses, which is a favourite topic just now. Will gentlemen who support a woman full-time, wholly and singularly, be visited by the same tax inspectors and be asked whether they are paying national insurance and operating PAYE on the money that they spend in support of their mistresses? That is the kind of legislation that we can well do without. It is a nasty aspect of the growing authoritarianism that we are seeing in taxation legislation.
  The Inland Revenue seems to have the idea that those jobs will exist whether or not it spends its time chasing up employers, but I do not believe that they will. If we make it more difficult to employ a live-in cook, housekeeper, or whatever, fewer people will be employed in those roles. The hassle of operating the bureaucracy involved with those relatively modestly paid jobs puts people off If hon. Members do not believe me, they should go to their local supermarket. One has to pack one's own shopping because the supermarket does not think the hassle of tax and national insurance worth while for relatively modestly paid packers. If one goes to the cinema, one stumbles down the aisle because the cinema owner does not consider it worth paying relatively modest sums and then taking income tax and national insurance to have somebody with a torch to show people to their seats.
  Such jobs will not exist, and nor will people want to do them. When the Inland Revenue goes on the rampage after such groups of people, the people and the jobs usually disappear. A good example of that was when the Inland Revenue had a purge on people doing casual work in horticulture in Norfolk and Suffolk. The casual workers came now and again to carry out carrot topping, leek washing or strawberry picking. The Inland Revenue came with all its battalions to chase those people to find out whether they were paying tax and national insurance on their relatively modest incomes—which, over the year, did not amount to taxable pay, but which in the odd weeks when they were working went over the limit at which tax and national insurance began—and the result was that the crops rotted in the fields that year. The new imposition set out in the financial statement is likely to create a similar situation.
  Miss Widdecombe: Will my hon. Friend give way?
  Mrs. Gorman: No; I have only a short time.
  Such jobs will not exist and that will be a great pity for young people, many of whom come to cities and obtain jobs with accommodation attached by doing domestic work such as helping with children and the household. Such jobs will not exist for many older people who have part-time jobs helping with gardening, cutting grass, washing cars and cleaning out gutters and drains. Such odd jobs will no longer be a useful help to the family, but will disappear as a result of an authoritarian tradition making life more difficult.
  The penalty for being found to be paying somebody more than £50 a week without operating one of the schemes is to be increased from £250 to £3,000. That is enough to scare some people into thinking that they would rather do without the extra pair of hands.
  One of the proposals that I sent to the Chancellor, and which he ignored, along with most other people's, was that it was time we treated the family as a taxable unit—Mr. and Mrs. Average Taxpayer plc—and that jobs necessary

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  to help the family function, including domestic work, should be tax deductible. At present, if one has people to do jobs for one, one has to pay them out of taxed income. I pay £80 for domestic help, spread over two people in the course of a week. I have to pay that out of my taxed income. If I have to start keeping PAYE records and national insurance records, I shall not only have that extra work, but I shall have to earn the money to pay those wages. If I do not have help, my life will be made much more difficult. My right hon. Friend the Chancellor should either say that all those domestic jobs are tax deductible, which they are not at the moment, or he should concentrate on raising the base level at which tax starts to be paid.
  Before the last war, the starting point for income tax was the equivalent of around £30,000 in today's money. We have gradually drawn lower-paid people into the tax net, which has not helped them or those who need assistance. Women are needed in the labour market. We say increasingly that we want their skills and time, yet we are not willing to do much to help them by allowing them to offset the costs of the domestic help that they need. I do not advocate creches, and I do not believe that the taxpayer should be expected to pay, but if a mother goes out to work and puts her baby into a creche or pays for a babyminder or home help, she should be able to deduct that from the money that she earns in the same way as her husband does if he pays for a secretary. If a mother pays for a secretary, she is allowed to deduct that from her earnings as well.
  I hope that my right hon Friend the Chancellor will pay a great deal more attention in the next Budget to the special needs of women. They are wanted back in the labour force as well as being expected to continue their domestic role of supporting their husbands and families and creating comfortable and reasonably organised homes.
  8.55 pm
  Mr. Anthony Coombs: I welcome this cautious, sensible and responsible Budget, the effect of which will be to reduce inflation, improve currency stability and reassure the financial markets. My right hon. Friend is correct to emphasise further improvements in the supply side of the economy by ensuring that the lower rate bands for corporation tax for small businesses move from £100,000 to £150,000. He is also correct to reform the national insurance system and to improve the operation of the earnings rule, so that pensioners are not penalised for working to supplement their pensions.
  However, the Budget will be judged primarily by its success in reducing inflation to the targeted 4·5 per cent. in the second half of next year, thereby reducing retail expenditure, which takes 75 per cent. of our imports. The balance to be achieved is to reduce aggregate demand without damaging investment, which will fuel the 2·5 per cent. growth rate expected in the economy next year.
  The measures taken by my right hon. Friend will work more quickly and effectively than anticipated, for three reasons. First, we hear much about the savings ratio being only 1–3 per cent. of disposable income in the consumer sector, but historical trends show that, when there is higher price inflation, the savings ratio in the consumer sector has
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  been offset by a higher savings ratio in the public sector, which is now 3·3 per cent. of GDP against 1·5 per cent. in 1980, and in the industrial sector, where savings as a proportion of output are 12·1 per cent. against only 8·9 per cent. in 1980. The overall effect is that national savings, as a percentage of nominal GDP, are 23·1 per cent. Despite what we hear about the savings ratio in the consumer sector, it is the highest it has been since 1981.
  Consumer spending will come down for the simple reason that, as the FSBR shows, it has been boosted by high asset values as people have had confidence that house values are rising and so have maintained their consumer spending. Now that the property market is flat, and is declining in some areas, such as London, it will have a significant effect on consumption. It is important to ensure that that fall in aggregate demand does not have an adverse effect on industrial profits. That is why the Confederation of British Industry urged a reduction of corporation tax to 25 per cent.
  It should be remembered that, although there have been huge increases in productivity—ours has grown faster than that of any other industrialised country since 1980— although there was a large increase in output and exports last year and although manufacturing productivity is rising fast, a higher proportion of GDP—3·9 per cent.—goes in corporation tax, which is 2 per cent. in France, Germany and the United States. To that extent, I can see some justification for the CBI arguing for cuts in corporation tax, but I believe that until we can see how fast aggregate demand falls as a result of the increase in the savings ratios, such a policy would be premature and I believe that my right hon. Friend the Chancellor was right to resist it.
  I should like to make one plea in terms of improving the savings ratio over the longer term and to urge my right hon. Friend the Chancellor to consider better treatment for friendly societies which increase self-reliance, enterprise and charitable works among lower income groups. Although I am pleased that share ownership, personal pensions and employee share schemes have been boosted by tax exemptions rising to £4,800 per year for personal equity plans and £2,000 per year for employee share schemes, I should like to know why the tax exemptions for saving plans with friendly societies still remain at a £100-per-year annual premium level.
  I should like to know why the Revenue did not like the innovation of baby bonds that the friendly societies wanted to introduce recently, and I should also like to know why friendly societies, which represent 7 million people, were not allowed to widen their commercial activities as they wanted in the past few years. I understand that they made representations to the Chancellor and to the Economic Secretary in July and November last year, and I believe that they are worthy of consideration.
  9.1 pm
  Mr. Gordon Brown: Today's Budget debate has been distinguished by many excellent speeches, from a former Prime Minister and from three former Treasury Ministers, two from the Opposition and one who is the Chairman of the Select Committee on the Treasury and Civil Service.
  Perhaps most of all, the debate has been graced by a distinguished, memorable and much applauded maiden speech from the hon. Member for Richmond, Yorks (Mr.

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  Hague), the youngest Conservative Member. In making one theme of his speech the interests of the elderly and in putting the case of pensioners so eloquently when he closed his speech he, least of all, could be accused of self-interest, and he found an echo for his sentiments among hon. Members of all parties. I must tell him that when I arrived here as a young Member of Parliament I was described in The Times as being 58 years old and a Labour party veteran. The hon. Gentleman has come here with a great reputation, having given advice to the Prime Minister at the age of 16, and no doubt he has a great future ahead of him. I noticed from his curriculum vitae that he has been a former speech writer for the Foreign Secretary. I can only say that his speech shows that his humour and content have improved immeasurably over the years. We look forward to many distinguished speeches from him as he speaks up, as he did today, so eloquently on behalf of the needs of his constituents.
  This is a Budget at the end of which, by common consent, hon. Members of all parties have said that the biggest beneficiaries are not home owners struggling with high mortgage payments, not mothers facing price rises having witnessed the freezing of child benefit, not pensioners on basic pensions—despite the welcome changes in the earnings rules and the age additions—and not working mothers who have lost out because the Chancellor has refused to remove the tax on workplace nurseries. Despite the welcome changes in national insurance, most of all the beneficiaries are not the low paid because as a result of the combination of the tax and national insurance changes, sombody on £70 per week will receive only about 21p per week extra. As the Chancellor well knows, the biggest beneficiaries are those couples in BUPA, who have private medical insurance and who are over 60, who can receive tax benefits of up to £800 or £900 per year if they use the system properly when one small part of the Finance Bill is passed after we debate it later. The benefit will be £18 or £19 per week for a couple in BUPA, £3 per week for those paying national insurance through those reductions and, as the Chancellor well knows, only £1·50 per week for those earning less than £100 per week, and there will be nothing for many part-time workers. When the choice is between helping the low paid of this country and the rest, it is perfectly clear, as this Budget shows, that the Tories will not help the low paid; they will help those most well off most of the time.
  However, our complaint about the Budget goes deeper than that. The Budget is wrong because it reflects and exposes an economic strategy that is wrong. It is a Budget that does nothing to meet the problems of the present, such as the high interest rates and high mortgage rates that many families and many industries face. It is a Budget that has done nothing to meet the challenges that we must face in the future, such as the skills shortages, the technology bottlenecks, the regional imbalances and the problems that we face as we move towards 1992. Most of all, it is a Budget that will do nothing for the problems of the present and nothing to meet the challenges of the future because it is the Budget of a Chancellor who is imprisoned and haunted by the mistakes of his past.
  Before the Budget we had the highest inflation, the highest interest rates and the highest trade deficit of all our major competitors in Europe. After the Budget, with the Chancellor's new forecasts, we still have the highest inflation, the highest interest rates and the worst trade deficit of our major competitors in Europe. I shall tell
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  Conservative Members what the position in Europe really is. Inflation is at 3·3 per cent. in France; 2·6 per cent. in West Germany; and, outside Europe, it is 1–4 per cent. in Japan and 4·7 in America, but inflation will move to 8 per cent. in the next few weeks in Britain. Interest rates are 10·75 per cent. in America, less than 7 per cent. in West Germany and less than 5 per cent. in Japan, but they are 13 per cent. here—twice the level of the interest rates in both Japan and West Germany.
  We also have a trade deficit that is unparalleled in our history, yet this is the Chancellor who came to the House last March and told us at the end of the Budget debate that he was presiding over an economic miracle. He told us that our prospects had never been better and that we were experiencing an economic transformation, an industrial resurgence, a British renaissance and a miracle that he compared to that of Japan. Even in the past 10 years, the economic performance of Britain has been so unlike that of Japan that Japan has grown at twice the rate of Britain. Japan's rate of investment growth has been twice as high as ours; its growth in industrial production has been four times as high and its growth in manufacturing output has been five times as high. The great achievement of the past 10 years is not that we have managed to rival Japan or West Germany, but that having fallen below France, we have now fallen below Italy on almost every indicator.
  The Britain that the Chancellor tells us will enter the 1990s—[Interruption.] If the Chancellor does not think that that is true, I shall give way to him now— [Interruption.] Yes, the Chancellor will speak later and I hope that he will answer the point because the Common Market's own forecasts not only show that Italy has surpassed us in national income, in growth rate and in the growth of exports, but that over the next year and into 1991 the growth rate of our economy will be slower than that of almost every other economy in the European Community.
  Mr. Ian Taylor: Does the hon. Gentleman recognise that, in terms of investment, Britain's rate of growth is faster than that of any other member of the European Community and that this country in the 1980s compares extremely well with the position when the Labour party was in power in the 1970s?
  Mr. Brown: I shall have to give the hon. Gentleman my statistics because he fails to appreciate what hon. Members of other parties seem to know—that the real value of manufacturing investment is still below that of 1979 when this Government came to power. That is what the latest figures confirm. As for the share of investment in our national income, it is well known that it is lower in Britain than in almost any other European country, with the exception of countries such as Belgium, and I advise the hon. Gentleman that Japan has been investing 30 per cent. of its national income while we have reached the figure of 18 or 19 per cent.
  Not only have we the highest interest rates, the highest inflation and the worst trade deficit of our competitors now, but on the Common Market's predictions our growth rate over the next two years will be lower than that of France and Italy, lower than that of Belgium, the Netherlands and Eire and even lower than in Greece, Spain and Portugal. Those are the facts produced by the European Commission.

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  The hon. Member for Esher (Mr. Taylor) might also be interested in the facts on investment. For 1990 and in the run-up to 1992, it is expected that investment in Spain, Portugal and Greece will grow at roughly three times the rate of investment in the United Kingdom, at 10 per cent. in Portugal, 9 per cent. in Spain, but at about a third of that in Britain, according to the figures that the Chancellor has produced for Britain in his Budget statement.
  Our case against the Chancellor is not only that he engineered a consumer boom based on credit and tax cuts which, without a proper, sustained and adequate increase in investment, was bound to lead to the problems that have been created and was bound to be unsustainable, but that he has failed to learn from his mistakes. Having failed to learn from his mistakes, he now intends to repeat them, and nowhere is that more obvious than in his attitude to what is to happen to the Budget surplus.
  It is a surplus that he did not forecast. It is a surplus that he acquired by selling our national assets and by breaking the link between pensions and earnings. It is a surplus that he admits he cannot use now but which he is to use this year only to pay off the national debt. The worst thing about the surplus—the Chancellor made it absolutely clear in his Budget speech, and perhaps the Prime Minister made it even clearer when she spoke to the Conservative council on Saturday—is that, even when we know that we have 1 million schoolchildren in classrooms that were built before 1914—[Interruption] Many classrooms have been declared by the Audit Commission to be unsafe and should be closed down.
  Dame Elaine Kellett-Bowman: Two schools in my constituency are over 300 years old. One could not find more delightful schools than those.
  Mr. Brown: If the hon. Lady is satisfied with the condition of the schools in her constituency, that is one thing, but the implications in the report by the Audit Commission about the safety risk of old schools being kept open without investment in them are very clear. They worry many Opposition Members.
  It is not only schools that are affected. Two thirds of hospital wards were built in the days of voluntary and charity hospitals. Many of our roads have a life of less than 10 years without proper new investment. We know what must be spent to deal with the problems of pollution and the environment. Most of all, we know that if we do not invest in training and in the supply side of the economy in this decade, the money that we refuse to invest will have to be spent on unemployment and redundancies in the next decade.
  The worrying thing about the Chancellor's surplus is not only that most of the surplus will not be used for public investment now, but that he has absolutely no intention of later using it for proper investment in the economy. As we now know and as was made clear on page 7 of the Red Book, public spending fell in real terms last year. It was £300 million less on the railways alone, when people are concerned about safety. But the answer that the Chancellor gave in his Budget statement is clear. His first priority is not the reduction of the national debt, the reduction of pollution, congestion or the risk to safety on the roads or on the railways, or the reduction of the waiting lists for health services or housing; it is the
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  reduction of taxes for those people who are already wealthy. To discharge the Tory party's historic mission to the very rich of our country, the Chancellor is less interested in paying off the national debt. In future years he will be more interested in paying off his political debts to those who support the Conservative party.
  The 1989 Budget is an interlude between act I of the Chancellor's top rate tax cuts and act II. He is not a Chancellor who has learnt from his mistakes—he is merely giving himself a pause between them. Any other Government would make investment in this country the priority both now and in the future.
  Mr. John Redwood: How does the Labour party propose to contain the inflationary consequences of a major increase in capital investment demand for an over-pressed building industry on top of the large increases already proposed by the Government?
  Mr. Brown: I am grateful to the hon. Gentleman for that intervention. The House will remember his famous statement about this time last year, suggesting that £5 billion to £6 billion in additional public money might be spent. I will not take the hon. Gentleman's lectures on whether public spending is inflationary. The CBI has made it clear that the neglect of investment in this country, skill shortages, congestion and the overheating in the south-east are responsible for much of the inflation. That inflation was not created directly by the Chancellor. I refer to electricity and water price rises and everything else. The neglect of investment in our country is not the only issue in this debate. The issue is the Government's unfair and unjust policies.
  Even after the national insurance changes, 2·4 million of the lowest paid workers will get no benefit at all. Four million will receive anything between nothing and £1·51. For many of them, their national insurance gain will be taken away by losses in family credit and housing benefit. The "tax-cutting" Chancellor ends a Budget by actually putting another 160,000 of our low paid into income tax when, for the low-income people in this country, the share of the bottom 10 per cent. from the Budget gains is only 3 per cent., while for the top 20 per cent. it is about 30 per cent. this year alone. Last year, the Chancellor could give £3 billion to the rich, and give it in March. This year, he can give less than £1 billion to the poor, and give it only in October. With his colleague, he is to remove wage protection for millions of our workers under wages councils in the next few months. This Budget does not correct the errors of last year—it compounds them.
  Is it not typical of the Conservative party that, even when a Budget is advertised as a Budget for the low paid, the higher paid in the country do best out of it at the end of the day? It completes a decade when the gap between rich and poor has been growing at a faster rate than at any time since the war—the rich getting richer while many of our citizens are seeing their living standards fall in real terms. Slowly but surely, the two nations that the Government have created are drifting apart as a result of the Chancellor's policies.
  Just as the Budget does little for low-income Britain, it will do little for any part of Britain. The Chancellor still promises us zero inflation. In the next few weeks, we shall see rates rise by 8 per cent. and electricity charges rise by 6 per cent., making 15 per cent. over a year and a bit. We shall see water costs rise by anything from 10 per cent. to

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  30 per cent. We shall see gas prices rise, television licence fees rise, prescription costs rise, and new health charges introduced.
  By one measure in this Budget alone, we shall see bus fares increase again. What does the Chancellor say to that? I remind him of what he said in his Budget statement last March. When he spoke to the House on that Tuesday, with his usual modesty, he said:
  "it is a testimony to the soundness of our policies that the present strong and sustained upswing, unlike almost all of its predecessors, has not led to any resurgence of inflation."— [Official Report, 15 March 1988, Vol. 129, c. 994.]
  Yet our inflation is above the European average for the fourth year running, twice what it was at this time last year, and higher than when the right hon. Gentleman first proclaimed to the House that he would eliminate it. As he tells us in his Budget forecast, while France's inflation will be 3 per cent., Germany's less than 3 per cent., and Japan's 2 per cent., his great success will be to have brought inflation to 5·5 per cent.
  Every forecast that the Chancellor has made has gone wrong. His forecast about prices, the deficit, the money supply, savings—all were wrong. Even his prediction that this would be the first Budget to be televised was wrong, and how fortunate he is in that respect. Perhaps his worst forecast of all is that by staying on for a year as Chancellor after the Budget last March, when he finally goes to the City his market value will somehow be enhanced. One test of a successful Tory Budget was laid down by no less an authority than the Prime Minister herself a few years ago. She said:
  "The markets have already given their verdict. Already there has been a welcome fall in interest rates and mortgage rates."
  On top of price rises, home owners in this country are facing mortgage payments that have risen on average by £40 per month, by £50 for young home owners, and for home owners in the south-east they have risen by £70 since the Chancellor's last Budget. The Governor of the Bank of England, who wrote that celebrated letter to the Chancellor a few weeks ago, in a public speech only a few days ago said that the mortgage and credit card debts that we face in the 1980s remind him of the problems with Third-world debt in the 1970s.
  When the Governor talks about the further squeeze on household finances, no wonder the Prime Minister is no longer talking about a Chancellor who is brilliant and marvellous and wonderful; no wonder she now appears hardly able to bear to mention his name. A quarter of a million people are estimated to be in arrears, and 500,000 are having to turn to the citizens advice bureaux for advice about their mortgages. There have been 20,000 repossessions—a figure that the Governor of the Bank of England, in his speech, said would undoubtedly rise. Perhaps the one repossession with anything to offer the nation—the eviction of the Chancellor from 11 Downing street—cannot be expected immediately, not because he has been doing well but because his potential successors, the Secretary of State for the Environment and the Secretary of State for Energy, have been doing so badly.
  Let me tell the Chancellor something about the current thinking of his friend Sir Alan Walters. I understand that at a meeting at the Mansion house—about 300 people were charged £100 a time—Sir Alan gave his verdict on the Budget. I understand that he praised what he called the architect of Britain's economic revival—the Prime Minister. The Chancellor will be pleased to know that Sir
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  Alan welcomed the Budget too. But let me tell the Chancellor that Sir Alan praised the Budget not because interest rates would come down but because they would stay up, because he believed that recessions should not be avoided; they can be good for the economy. No doubt the Chancellor cannot wait to have the benefit of Sir Alan's full-time advice.
  What of the trade deficit? Predicted to be £4 billion last year, it was £11 billion by the time of the .Autumn Statement, and is now £15 billion. I suppose the good news is that it has stabilised; the bad news is that it has stabilised at £15 billion. The Chancellor still calls this a problem of success—freak figures caused by an investment boom. It is a second-grade problem, self-correcting, he tells us, but it is a problem big enough now for him to seek to doctor the statistics. All that is needed to convince us that a real problem exists is a multi-million-pound advertising campaign, led by Lord Young, telling us that it has been solved, or an announcement from 10 Downing Street that the Prime Minister is about to take personal charge.
  If the Chancellor does not think that the trade deficit is a problem, what of other Ministers? I have here a press release from the tourism Minister. Entitled "Your Country Needs You", it says:
  "Hopefully the British public will increasingly appreciate that holiday taking in the United Kingdom is not only a stimulating and enjoyable experience but will help our balance of payments as well.
  With the cumulative tourism deficit of nearly 1·8 billion, compared with £1 billion for the same period last year, perhaps the time has come to say to the British holidaymaker
  "Your country needs you."
  A problem not serious enough to delay the Chancellor is sufficiently worrying to the tourism Minister to prompt him to tell millions of holidaymakers that their country needs them—not in Majorca but in Margate, not in Benidorm but in Blackpool—with all the impact that that would have on his £15 billion deficit.
  Perhaps the Chancellor remembers what the Foreign Secretary, who was then Chancellor, said in the first Budget of this Government 10 years ago. No one supported the then Chancellor more strongly than the current Chancellor. No one was as great an advocate of his policies as the right hon. Member for Blaby (Mr. Lawson).What did the now Foreign Secretary tell us in that Budget speech? He said:
  "Progress internationally … will not cure the deep-seated weaknesses of own domestic economy. Nor will North Sea oil.
  He went on to say that North Sea oil
  "must not be allowed to conceal the grim truth about what has been happening to the balance of our own trade, particularly in manufactured goods." [Official Report, 12 June 1979; Vol. 968, c. 238.]
  A problem that the current Chancellor says is unimportant was one of the themes of the Budget of 1979. Should we now conceal what the present Foreign Secretary called the grim truth when we have a trade deficit of £15 billion—a £15 billion deficit in manufactured goods? The truth is that the Chancellor has no policy to sort out the problems of the trade deficit. The truth is that the trade deficit will be with us for many years to come if his policies continue. No industry is better off as a result of the high interest rates and the high exchange rate that the Chancellor is pursuing. No community is better protected. No family feels at the moment that it is doing better.
  But is it not the saddest of all commentary on this Government that Ministers could complete a National

  815
  Health Service review—could look at the needs of the service; could look at the 130,000 people on the waiting lists for hip joint and other orthopaedic operations; could look at the 70,000, mainly pensioners, on the waiting lists for cataract and other eye operations; could look at the shortage of nurses and doctors and at the huge repair bills we face—and decide that the first priority for this Budget, the consideration above all others, should be the needs of those who are already wealthy enough to afford private medical insurance in the first place?
  The death grant for pensioners has been abolished to save 18 million, housing benefit has been cut, eyesight test charges introduced, dental charges for pensioners introduced, the link with earnings not restored, but somehow £40 million is available to give private medical insurance tax relief to those who are already rich enough to afford such insurance. No wonder BUPA ran an advertising campaign last week. I understand that the Chancellor is well within his rights to complain to the Advertising Standards Authority, not because the photograph gives a false impression of him, but because the advertisement gives a false impression of who was the author of the Budget proposal. It is a proposal which the Chancellor did not originate, which he does not support, which he could barely mention when he made his Budget speech last Tuesday, and which he knows will cost a lot in 1990, and a lot more in the years to come. It is the policy not of the Second Lord of the Treasury but of the First Lord of the Treasury.
  Last year the Chancellor was overruled by the Prime Minister on the question of the exchange rate. Later he was overruled on interest rates. This year he has been overruled on the most controversial item—the £40 million for private medical insurance. Perhaps next year, on the morning of Budget day—in the interests of accountability, if for no other reason—the press should be invited to a photo opportunity in which the Prime Minister will take her Chancellor for a short walk in St. James's park. This proposal is the ultimate in redistribution. It is not the rich supporting the poor, but now the poor compelled to support the rich. The more one buys the more subsidy one receives: "The richer you are, the more you can get. If you are rich, you will be treated, while others have to wait." In fact, this tax relief is a unique and indefensible device whereby the queue is compelled to subsidise the queue jumper.
  We now know what the Prime Minister meant when she talked at the general election about private medical care. She wanted the doctor of her choice, the hospital of her choice, the time of her choice and the tax relief of her choice—not for our health care to be safe in her hands, but for her private health care to be save in ours. In a civilised society, the £40 milion going to those who do not need it should go to those who do. That is what the Labour party stands for and that is what the whole country supports.
  The only role that the Government are now enthusiastic about for public spending is that it should be used not to extend the rights of the many but to shower privileges on the few—business expansion subsidies from public funds to create top-rate tax shelters for owners of private rented property, PEP subsidies from public funds to create tax
  816
  shelters for those who already have considerable shares and BUPA-style subsidies from public funds to create tax shelters for owners of private medical policies.
  Does the Prime Minister not realise that no matter how many private schools, private hospitals and private roads she creates, there will still be a need in the public sector for decent schools, proper hospitals and adequately-funded community services for the vast majority of the people?
  After 10 years during which our growth rate has been half that of Japan, we have been manufacturing and producing less than Italy, our economy has invested less of our national income in ourselves than even Spain and Portugal, we are investing less of our national income in innovation than Taiwan and we are investing a smaller share of our national income in education and training than Korea. After 10 years, there is more and worse poverty throughout the country. Even in the past 12 months, housing benefit has been cut, child benefit frozen, new charges introduced, the poll tax imposed in Scotland and thousands of teenagers have been denied any help.
  In 10 years, to make a few individuals richer, the Prime Minister and her Ministers have been prepared to make all our communities poor. It is not just our Health Service, our roads and our railways that are unsafe in their hands; it is not just our environment, our water and even our food that is unsafe in their hands; it is not just our children's education that is unsafe in their hands; the whole government of this country is unsafe in their hands. A Budget that should have been preparing us for the challenges of the 1990s leaves us paying the price for the problems that the Chancellor created in the 1980s. We need a Budget for Britain—a Budget for fairness, efficiency and investment. For that, the people of this country will have to look to Labour.
  9.31 pm
  The Chancellor of the Exchequer (Mr. Nigel Lawson): I should like to begin by congratulating my hon. Friend the Member for Richmond, Yorks (Mr. Hague) on an outstanding maiden speech. It was no surprise to those of us who were present when, at the age of 16, he made that remarkable and precocious speech in the economic debate at the Conservative party conference of 1977. As he generously pointed out, he follows a distinguished predecessor at Richmond. I am sure that his future career will be equally distinguished and we greatly look forward to hearing him again.
  We do not greatly look forward to hearing again the sort of exhibition that we heard from the hon. Member for Dunfermline, East (Mr. Brown), who displayed a degree of economic illiteracy which even he has not plumbed before. He went on about the need for increased public expenditure from a surplus which, if his policies had been in operation, would never have existed in the first place. When asked, in the only intervention on his speech, by my hon. Friend the Member for Wokingham (Mr. Redwood) the clear and simple question of how much extra public expenditure he was advocating, he was wholly unable to answer. He confirmed by his speech that the Opposition have a complete policy vacuum. It was clear from the latter part of his remarks, as his side recognises, that he is living in a fantasy world entirely of his own.
  We also had a speech from the leader of the Social and Liberal Democrats. I am glad that he is in his place. He told us—I took this down—that "People want to be

  817
  brought together." It was, alas, a wasted plea, because the right hon. Member for Plymouth, Devonport (Dr. Owen) was not in the Chamber to hear it.
  We also had a thoughtful contribution from my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery). My hon. Friend the Member for Croydon, South (Sir W. Clark), in a powerful speech, mentioned the further help that this Budget provides for charities and charitable giving. It is a striking fact that, over the past 10 years, giving to charity has more than doubled in real terms. That is not the hallmark of a selfish society.
  My hon. Friend the Member for Croydon, South also asked about the relative growth of imports of capital and consumer goods. I can tell him that, in each of the past two years, imports of capital goods have risen considerably faster than imports of consumer goods. This is, of course, closely related to the huge investment boom that we have been enjoying, to which I will turn later.
  My right hon. Friend the Member for Worthing (Mr. Higgins) also welcomed the Budget, as did many other of my hon. Friends, and he followed this up with a number of more or less technical questions about life the other side of the looking glass as it were, with a substantial public sector debt repayment in place of a substantial public sector borrowing requirement. I look forward to discussing these matters with the Select Committee which he chairs with such distinction.
  It is a remarkable fact that, after four days of debate on a Budget containing so many measures that the Finance Bill is likely to be the longest ever, all that the Opposition have found to criticise is the provision of tax relief for medical insurance premiums for the elderly. That was all that they were able to go on and on and on about—and that was, of course, something that had already been announced by my right hon. Friend the Secretary of State for Health, a couple of months ago, in the context of the Government's plans for the National Health Service. It accounts in 1990–91 for some £40 million out of total remissions of £3,500 million in that year.
  I shall not tonight detain the House with a list of all the many other measures in the 1989 Budget, but I do propose to draw attention to some of them.
  Foremost among them is the major reform and reduction of employees' national insurance contributions. This was supported by such unlikely bedfellows as the Institute of Directors and the TUC, and it will achieve two important objectives. First, it will either remove altogether or greatly reduce the present serious work disincentive of ultra-high marginal rates at particular points at the very lowest end of the earnings scale. Secondly, it will mean that, from October, some 15 million employees earning over £115 a week—which is well below half average earnings—will be £3 a week better off. This is a substantial measure by any standards, as its cost shows—some £2¾ billion in a full year.
  Then there is the abolition of the earnings rule for pensioners. This has been widely welcomed on all sides. It, too, is a reform which will remove not merely an injustice, but also a major work disincentive, at a time when, for demographic reasons, the demand for older workers to stay on beyond retirement age is likely to become steadily greater.
  Then there is the major reshaping of the tax relief for pensions, designed in particular to place for the first time a limit, albeit a generous one, on the amount of tax relief any pension can attract, and at the same time to encourage
  818
  still further the provision of personal pensions, which my right hon. Friend the Secretary of State for Employment spoke about in his speech at the opening of the debate today. The new pensions package will not only be more equitable, but it will also encourage both greater flexibility and greater personal responsibility in private provision for retirement.
  All this has to be seen in the context of the important further package of measures to encourage wider share ownership. It is clear from the response already that the new and improved rules for personal equity plans, in particular, will ensure their future success and the steadily growing importance of PEPs as a home for the savings of the people.
  Wider share ownership will, in time, reverse the steady drift to ever greater institutional ownership of British industry; it enables the people of the country to secure a direct stake in the success of British business; it provides the best form of worker participation; and it sounds the death knell of Socialism.
  But I would add just this. It is important that the growing public desire to own shares, and the further assistance provided in this Budget, are supported by the stock exchange as it moves to a paperless trading system. I call upon the stock exchange tonight to ensure that the needs of the small investor are fully met in the new system.
  Meanwhile, these Budget changes—and there are many others too: reforming the taxation of life assurance, simplifying the taxation of close companies, and reducing the burden of corporation taxes for smaller firms—add up to our eighth successive tax-cutting Budget.
  What a contrast with Labour, when Budget day was approached with dread and apprehension. The question that everyone was asking then was what tax was going to go up, would it be income tax or something else, and what new taxes would be introduced. Would it be capital transfer tax, the national insurance surcharge or what else? That was the question then.
  Moreover, we have achieved our eighth successive tax-cutting Budget while securing a massive improvement in the public finances, with a surplus, or debt repayment, this year of no less than £14 billion and a further £14 billion repayment in prospect for the year ahead. As a share of GDP, debt interest in the coming year is set to be at its lowest since 1915.
  So, unable to attack this year's Budget, the party opposite—we heard more about it tonight—has spent much of its time attacking last year's Budget. Well, I know the Opposition did not like it—they made that abundantly clear at the time—but they will have to grit their teeth and live with it because that Budget has happened and every one of the reforms and reductions it introduced remain on the statute book and will continue on the statute book. Nothing in it has been rescinded or reversed, nor will it be. As a result, the benefits of that Budget will continue to flow in the years that lie ahead.
  Mr. Thomas Graham: The Chancellor will know that, this week, one of the Scottish newspapers spoke about how many people were getting into serious debt because of the Chancellor's policies and were going to bankruptcy court to be declared bankrupt. They are probably taking the advice of the Prime Minister: when the letter comes through the door

  819
  they "bag it and bin it" as that is the only way they will win it. The Chancellor has introduced mad policies that have not helped the Scottish people.
  Mr. Lawson: I clearly should not have given way.
  I know there are some who seek to attribute to last year's Budget responsibility for the increase in inflation that subsequently emerged. That wholly misunderstands both the role of fiscal policy and the time lag between cause and effect in economic affairs. Let us just look at what the OECD, an international organisation frequently quoted by the Opposition, and which does assign a rather greater short-term importance to fiscal changes than I would do, has to say. After studying fiscal policy in all the major industrial nations comprising the G7, and making what it considers the proper cyclical adjustments, the OECD has concluded that the United Kingdom, in 1988, tightened its fiscal policy more than any other country, and has the tightest fiscal stance in the entire G7.
  The Opposition really cannot have it both ways. They cannot say at one and the same time that last year's Budget, which produced a surplus of £14 billion, was reckless, and that this year's Budget, which is set to achieve an identical surplus, is too cautious. No. The plain fact is that the temporary re-emergence of rising inflation has nothing whatever to do with last year's Budget. It has a great deal more to do with the worldwide loosening of monetary policy in the wake of the stock market crash of October 1987. That perhaps is why the rise in inflation is a worldwide phenomenon, and it is worth noting in this context that commodity prices too have been rising, with metal prices twice what they were two years ago.
  Meanwhile, the remedy, a sharp rise in interest rates to tighten monetary policy, has duly been applied. Yet despite the fact that the Opposition Front Bench dimly recognise the monetary nature of the inflationary threat —at least, that, I take it, accounts for the constant references of the right hon. and learned Member for Monklands, East (Mr. Smith) to the credit boom—despite that dim recognition, all they have to offer on this front is a call for lower interest rates and indeed a lower exchange rate. How they imagine lower interest rates would deter borrowing beggars belief. The truth is that what they put forward is an inflationists' charter, for the simple reason that the Labour party is the party of inflation, just as it is the party of high taxation—it always has been and always will be. [Interruption.] They do not like this. Let them just look once again at their record when they were last in power. Theirs was an inflation rate which averaged more than 15 per cent. for the whole of their term of office, so I am certainly not going to take any lessons from them about inflation.
  Ten years ago next week, this House debated a motion of no confidence in the then Labour Government, whose passage brought about the then Government's downfall. In that debate, in a desperate attempt to save himself, the then Prime Minister, the noble Lord Callaghan, pledged himself to do better in future in these terms:
  "There is a bold and ambitious target, to which we have set our hands, of working to get inflation below 5 per cent. in the next three years. That is the objective."—[Official Report, 28 March 1979; Vol. 965, c. 477]
  During the whole of the time that I have been Chancellor, a period slightly longer than the full term of the last Labour Government, inflation has indeed
  820
  averaged below 5 per cent.—Labour's "bold and ambitious target" which they never got within a million miles of achieving, nor would they have done, as the people of Britain well understood. Even now, when inflation has temporarily risen above that mark, its underlying level is well below the underlying level of inflation in the best month that Labour ever achieved.
  Nor has our success been secured at the price of slower economic growth. Nothing could be further from the truth. During the whole of my period as Chancellor so far, economic growth in Britain has been well over half as much again as what it was under Labour, which, as I have already pointed out, was a roughly comparable period of years.
  Indeed, it is worth looking, for an overall picture, at the amount by which the rate of inflation exceeded the rate of growth over the two periods. Under Labour, the rate of inflation exceeded the rate of growth by 13½ per cent. During my time as Chancellor, the difference has come down to 1½ per cent. That is a measure of the difference. Admittedly, economic growth is now set to slow down for a year or two, but the lower growth now projected over the next couple of years—1989 and 1990—is still higher than the average rate of growth under Labour. Labour certainly had many crises to grapple with. In fact, there was hardly a moment when they did not have a crisis. But I have to admit that one problem it never had to worry about was rapid economic growth. Indeed, during the 1970s Britain was the slowest growing economy of all the main European nations. During the 1980s we have had the fastest growing economy of all the main European nations.
  This transformation has seen unemployment fall by a million in less than two years since the last general election, and the number of people in work the highest in our history. There was a time when the Opposition professed to care about unemployment. It is quite clear from their lack of enthusiasm when unemployment comes down that they could not care a fig.
  Of course the dramatic improvement in the performance of the British economy has been based on an equally dramatic improvement in productivity. In 1980, the Brookings Institute in Washington produced a gloomy report on the British economy, which concluded with these words:
  "The studies in this volume indicate that Britain's malaise stems largely from its productivity problem, whose origins lie deep in the social system."
  It was not the social system which was at fault, but the Socialist system. With the jettisoning of the culture of Socialism in favour of the enterprise culture, we have seen Britain leap from the bottom of the manufacturing productivity growth league in the 1970s to the top in the 1980s.
  There has been a similar transformation in investment, about which Opposition Members prate so much. Nothing provides clearer evidence of the way in which the Labour party is completely out of touch with what is really happening in Britain today than its failure to comprehend the truth about investment. That was shown, once again, by the response made by the Leader of the Opposition to the Budget itself last Tuesday, when he said:
  "After 10 years … the proportion of total investment in GDP is lower than during any year under the last Labour Government."—[Official Report, 14 March 1989; Vol. 149, c. 313.]
  That is what he said. [HON. MEMBERS: "Hear, hear."] Opposition Members cheer. In fact, at almost 21¾ per

  821
  cent., the truth is that the proportion of total investment in GDP is higher than during any year under the last Labour Government. Those are the facts.
  Nor is that all. Business investment—public and private sector combined—is now at its highest proportion of GDP ever—the highest ever. Whereas under Labour total investment grew scarcely at all, and well below the growth of consumption, over the past seven years investment in this country has grown more than twice as fast as consumption—something that only Japan among the major nations even so much as approaches. And not only is investment in Britain at an all-time record high and growing fast. Its quality has improved immeasurably, as evidenced by the dramatic improvement in the return on capital.
  What about public sector investment, about which the hon. Member for Dunfermline, East waxed so lyrical, and with such hypocrisy? Take investment in the railways. Under Labour, a rise of only 8 per cent. in real terms. Under this Government, four times as much—up 32 per cent. Or major roads: under Labour, a cut of 41 per cent. —that is the truth; under this Government, up by 30 per cent. Or water: under Labour, a cut of 25 per cent.; under this Government, up by 50 per cent. Or hospitals: under Labour, a cut of 30 per cent.—a cut; under this Government, up 31 per cent. in real terms. And of course private sector investment is at its highest level ever—not merely in absolute terms, but as a share of GDP. So much for Labour's humbug, hypocrisy and sheer ignorance about investment.
  Mr. John Smith: I am grateful to the Chancellor for giving way at the point where he talks about humbug and hypocrisy. Why is it that poor old-age pensioners have to be put through invidious means tests as to income and capital for income support and housing benefit, while well-off people will be subjected to no test whatsoever and will be subsidised by the poor for private medical insurance? Why does the right hon. Gentleman defend that?
  Mr. Lawson: Here we are again—this complete obsession with tax relief for private medical insurance, and no answer at all about investment, which is at the heart of our economic success.
  I urge Opposition Members, if they really wish to understand what is happening in Britain today, to listen to the informed voice of the CBI. I refer to their chief economic adviser Professor McWilliams, who recently gave a lecture under the auspices of the CBI entitled "The Renaissance of British Management". Needless to say, it was barely reported, but I warmly commend it to the House—not least to the party opposite, whose need for economic education is palpable. Let me quote a few extracts.
  "United Kingdom growth in the 1980s can now be seen to have been faster"—
  [Interruption.] Oh no, they do not like anything about the success of the British economy. The cannot stand the success of the British economy. I will start again:
  "United Kingdom growth in the 1980s can now be seen to have been faster than in any other recent decade and the comparison with other countries now shows a fairly substantial outperformance by the United Kingdom in the latest decade, with the United Kingdom growing over a fifth faster than the average of the other economies."
  He went on:
  822
  "In the first half of the 1980s, the proportion of United Kingdom investment in plant and machinery devoted to computers rose from 10 per cent. to 20 per cent.—a rise on a much faster scale than anywhere else in the world."
  He continued, after this thorough study:
  "The United Kingdom has been an economic success.… and I believe that the success will continue."
  Mr. John Smith: The Chancellor, as he well knows, is responsible for everything in his Budget, whether he likes it or not. Will he please tell us the public policy justification for the absence of a means test for private medical insurance for the rich, and tell us why the rest of us should pay the Prime Minister's bills?
  Mr. Lawson: Is the—[HON. MEMBERS: "Answer."] Is the right hon. and learned Gentleman suggesting that tax relief should be subjected to a means test? Is he going to suggest that mortgage interest relief should be subjected to a means test? Is he? Is he? Answer that. Perhaps he can answer that.
  Mr. Smith: I asked a perfectly simple question. We have been lectured about the targeting of benefit. Why is this benefit not targeted? All the poor are targeted. Why are the Conservative party's clients not targeted?
  Mr. Lawson: Not only was the right hon. and learned Gentleman totally unable to answer my question, but he was also totally unable to distinguish between the remission of taxation and an increase in public expenditure. He was quite unable to understand the difference between them.
  Let me return to the Budget. It has above all been a prudent and cautious Budget. [Interruption.] Perhaps, Mr. Speaker—[Interruption.]
  Mr. Speaker: Order. Mr. Chancellor of the Exchequer.
  Mr. Lawson: They cannot take it, Mr. Speaker. That is the trouble—they cannot take it.
  It has above all been a prudent and cautious Budget —perhaps even more prudent and cautious than was strictly necessary, but economics is an inexact science at the best of times and that was clearly the right direction in which to err.
  It certainly appears to have struck terror into the Opposition. This could not have been made clearer than in the intervention by the Leader of the Opposition right at the end of the speech by my right hon. Friend the Chief Secretary last Wednesday. The Leader of the Opposition, with desperation manifest in his voice, said this:
  "The right hon. Gentleman has referred several times to the great virtue of using the Budget surplus to repay the national debt. Can he confirm that that will continue to be an objective of the Government, should they have surpluses, and that it will continue until the next general election and not be impeded by any desire that the Government may have to make a tax cut before the next general election?"—[Official Report, 15 March 1989; Vol. 149, c. 435.]
  Well, I have given the right hon. Gentleman's question the most careful consideration. It would not, of course, have occurred to me to think in terms of the next general election, but since the right hon. Gentleman has raised the matter, I have to inform him that I regret I cannot rule out the future use of the current surplus to reduce the burden of taxation. Indeed, it is the Government's policy to do just that.
  In short, this Budget is a Budget which, in the firm support it gives to the defeat of inflation by monetary policy, provides a solid base for further economic success,

  823
  including progress to a basic rate of income tax of 20p in the pound, in the years that lie ahead. Once again, I commend it to the House.
  Question put:—
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting any supply;

  (b) for refunding any amount of tax, otherwise than in a case where the amount has been paid by reason of a mistake;

  (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (d) for relief other than relief applying to goods of whatever description or services of whatever description.

  The House divided: Ayes 341, Noes 222.

  Division No. 122]

  [10 pm

  AYES

  Adley, Robert

  Carlisle, Kenneth (Lincoln)

  Aitken, Jonathan

  Carrington, Matthew

  Alexander, Richard

  Carttiss, Michael

  Alison, Rt Hon Michael

  Cash, William

  Allason, Rupert

  Channon, Rt Hon Paul

  Amery, Rt Hon Julian

  Chapman, Sydney

  Amess, David

  Chope, Christopher

  Amos, Alan

  Churchill, Mr

  Arbuthnot, James

  Clark, Dr Michael (Rochford)

  Arnold, Jacques (Gravesham)

  Clark, Sir W. (Croydon S)

  Arnold, Tom (Hazel Grove)

  Clarke, Rt Hon K. (Rushcliffe)

  Ashby, David

  Colvin, Michael

  Aspinwall, Jack

  Conway, Derek

  Atkins, Robert

  Coombs, Anthony (Wyre F'rest)

  Atkinson, David

  Coombs, Simon (Swindon)

  Baker, Rt Hon K. (Mole Valley)

  Cope, Rt Hon John

  Baker, Nicholas (Dorset N)

  Cormack, Patrick

  Baldry, Tony

  Couchman, James

  Banks, Robert (Harrogate)

  Cran, James

  Batiste, Spencer

  Critchley, Julian

  Beaumont-Dark, Anthony

  Currie, Mrs Edwina

  Bellingham, Henry

  Curry, David

  Bendall, Vivian

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

  Bennett, Nicholas (Pembroke)

  Davis, David (Boothferry)

  Benyon, W.

  Day, Stephen

  Bevan, David Gilroy

  Devlin, Tim

  Biffen, Rt Hon John

  Dicks, Terry

  Blackburn, Dr John G.

  Dorrell, Stephen

  Blaker, Rt Hon Sir Peter

  Douglas-Hamilton, Lord James

  Body, Sir Richard

  Dover, Den

  Bonsor, Sir Nicholas

  Dunn, Bob

  Boscawen, Hon Robert

  Dykes, Hugh

  Boswell, Tim

  Eggar, Tim

  Bottomley, Peter

  Evans, David (Welwyn Hatf'd)

  Bottomley, Mrs Virginia

  Fallon, Michael

  Bowden, A (Brighton K'pto'n)

  Favell, Tony

  Bowden, Gerald (Dulwich)

  Fenner, Dame Peggy

  Bowis, John

  Field, Barry (Isle of Wight)

  Boyson, Rt Hon Dr Sir Rhodes

  Fishburn, John Dudley

  Brandon-Bravo, Martin

  Fookes, Dame Janet

  Brazier, Julian

  Forman, Nigel

  Bright, Graham

  Forsyth, Michael (Stirling)

  Brooke, Rt Hon Peter

  Fowler, Rt Hon Norman

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

  Fox, Sir Marcus

  Browne, John (Winchester)

  Franks, Cecil

  Bruce, Ian (Dorset South)

  Freeman, Roger

  Buchanan-Smith, Rt Hon Alick

  French, Douglas

  Budgen, Nicholas

  Fry, Peter

  Burns, Simon

  Gale, Roger

  Burt, Alistair

  Gardiner, George

  Butcher, John

  Gill, Christopher

  Butler, Chris

  Gilmour, Rt Hon Sir Ian

  Butterfill, John

  Glyn, Dr Alan

  Carlisle, John, (Luton N)

  Goodhart, Sir Philip

  824

  Goodson-Wickes, Dr Charles

  Luce, Rt Hon Richard

  Gorman, Mrs Teresa

  Lyell, Sir Nicholas

  Gorst, John

  McCrindle, Robert

  Gow, Ian

  MacKay, Andrew (E Berkshire)

  Grant, Sir Anthony (CambsSW)

  Maclean, David

  Greenway, Harry (Ealing N)

  McLoughlin, Patrick

  Greenway, John (Ryedale)

  McNair-Wilson, Sir Michael

  Gregory, Conal

  McNair-Wilson, P. (New Forest)

  Griffiths, Peter (Portsmouth N)

  Madel, David

  Ground, Patrick

  Major, Rt Hon John

  Grylls, Michael

  Malins, Humfrey

  Gummer, Rt Hon John Selwyn

  Mans, Keith

  Hague, William

  Maples, John

  Hamilton, Hon Archie (Epsom)

  Marland, Paul

  Hamilton, Neil (Tatton)

  Marlow, Tony

  Hampson, Dr Keith

  Marshall, John (Hendon S)

  Hanley, Jeremy

  Marshall, Michael (Arundel)

  Hannam, John

  Martin, David (Portsmouth S)

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

  Mates, Michael

  Hargreaves, Ken (Hyndburn)

  Maude, Hon Francis

  Harris, David

  Mawhinney, Dr Brian

  Haselhurst, Alan

  Maxwell-Hyslop, Robin

  Hawkins, Christopher

  Mellor, David

  Hayes, Jerry

  Meyer, Sir Anthony

  Hayhoe, Rt Hon Sir Barney

  Miller, Sir Hal

  Hayward, Robert

  Mills, Iain

  Heath, Rt Hon Edward

  Miscampbell, Norman

  Heathcoat-Amory, David

  Mitchell, Andrew (Gedling)

  Heddle, John

  Mitchell, Sir David

  Heseltine, Rt Hon Michael

  Moate, Roger

  Hicks, Mrs Maureen (Wolv' NE)

  Molyneaux, Rt Hon James

  Higgins, Rt Hon Terence L.

  Monro, Sir Hector

  Hind, Kenneth

  Montgomery, Sir Fergus

  Hogg, Hon Douglas (Gr'th'm)

  Moore, Rt Hon John

  Holt, Richard

  Morris, M (N'hampton S)

  Hordern, Sir Peter

  Morrison, Sir Charles

  Howard, Michael

  Morrison, Rt Hon P (Chester)

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

  Moss, Malcolm

  Howarth, G. (Cannock & B'wd)

  Moynihan, Hon Colin

  Howe, Rt Hon Sir Geoffrey

  Mudd, David

  Howell, Rt Hon David (G'dford)

  Neale, Gerrard

  Howell, Ralph (North Norfolk)

  Needham, Richard

  Hughes, Robert G. (Harrow W)

  Nelson, Anthony

  Hunt, David (Wirral W)

  Neubert, Michael

  Hunt, John (Ravensbourne)

  Nicholls, Patrick

  Hunter, Andrew

  Nicholson, David (Taunton)

  Hurd, Rt Hon Douglas

  Nicholson, Emma (Devon West)

  Irvine, Michael

  Norris, Steve

  Irving, Charles

  Onslow, Rt Hon Cranley

  Jack, Michael

  Oppenheim, Phillip

  Jackson, Robert

  Page, Richard

  Janman, Tim

  Paice, James

  Jessel, Toby

  Parkinson, Rt Hon Cecil

  Jones, Gwilym (Cardiff N)

  Patnick, Irvine

  Jones, Robert B (Herts W)

  Patten, Chris (Bath)

  Jopling, Rt Hon Michael

  Patten, John (Oxford W)

  Kellett-Bowman, Dame Elaine

  Pattie, Rt Hon Sir Geoffrey

  Key, Robert

  Pawsey, James

  Kilfedder, James

  Porter, Barry (Wirral S)

  King, Roger (B'ham N'thfield)

  Porter, David (Waveney)

  Kirkhope, Timothy

  Portillo, Michael

  Knapman, Roger

  Powell, William (Corby)

  Knight, Greg (Derby North)

  Price, Sir David

  Knight, Dame Jill (Edgbaston)

  Raffan, Keith

  Knowles, Michael

  Raison, Rt Hon Timothy

  Knox, David

  Rathbone, Tim

  Lamont, Rt Hon Norman

  Redwood, John

  Lang, Ian

  Renton, Tim

  Latham, Michael

  Rhodes James, Robert

  Lawrence, Ivan

  Riddick, Graham

  Lawson, Rt Hon Nigel

  Ridley, Rt Hon Nicholas

  Lee, John (Pendle)

  Ridsdale, Sir Julian

  Leigh, Edward (Gainsbor'gh)

  Rifkind, Rt Hon Malcolm

  Lennox-Boyd, Hon Mark

  Roberts, Wyn (Conwy)

  Lester, Jim (Broxtowe)

  Roe, Mrs Marion

  Lightbown, David

  Rossi, Sir Hugh

  Lilley, Peter

  Rost, Peter

  Lloyd, Sir Ian (Havant)

  Rowe, Andrew

  Lloyd, Peter (Fareham)

  Rumbold, Mrs Angela

  Lord, Michael

  Sackville, Hon Tom

  825

  Sainsbury, Hon Tim

  Thurnham, Peter

  Sayeed, Jonathan

  Townend, John (Bridlington)

  Scott, Nicholas

  Townsend, Cyril D. (B'heath)

  Shaw, David (Dover)

  Tracey, Richard

  Shaw, Sir Giles (Pudsey)

  Tredinnick, David

  Shaw, Sir Michael (Scarb')

  Trippier, David

  Shephard, Mrs G. (Norfolk SW)

  Trotter, Neville

  Shepherd, Colin (Hereford)

  Twinn, Dr Ian

  Shepherd, Richard (Aldridge)

  Vaughan, Sir Gerard

  Shersby, Michael

  Viggers, Peter

  Sims, Roger

  Waddington, Rt Hon David

  Skeet, Sir Trevor

  Wakeham, Rt Hon John

  Smith, Tim (Beaconsfield)

  Waldegrave, Hon William

  Soames, Hon Nicholas

  Walden, George

  Speller, Tony

  Walker, Rt Hon P. (W'cester)

  Spicer, Sir Jim (Dorset W)

  Waller, Gary

  Spicer, Michael (S Worcs)

  Walters, Sir Dennis

  Squire, Robin

  Ward, John

  Stanbrook, Ivor

  Wardle, Charles (Bexhill)

  Stanley, Rt Hon Sir John

  Warren, Kenneth

  Steen, Anthony

  Watts, John

  Stern, Michael

  Wells, Bowen

  Stevens, Lewis

  Wheeler, John

  Stewart, Allan (Eastwood)

  Whitney, Ray

  Stewart, Andy (Sherwood)

  Widdecombe, Ann

  Stokes, Sir John

  Wiggin, Jerry

  Stradling Thomas, Sir John

  Wilshire, David

  Sumberg, David

  Winterton, Mrs Ann

  Tapsell, Sir Peter

  Winterton, Nicholas

  Taylor, Ian (Esher)

  Wolfson, Mark

  Taylor, John M (Solihull)

  Wood, Timothy

  Taylor, Teddy (S'end E)

  Woodcock, Mike

  Tebbit, Rt Hon Norman

  Yeo, Tim

  Temple-Morris, Peter

  Young, Sir George (Acton)

  Thatcher, Rt Hon Margaret

  Thompson, D. (Calder Valley)

  Tellers for the Ayes:

  Thompson, Patrick (Norwich N)

  Mr. Tristan Garel-Jones and

  Thorne, Neil

  Mr. Tony Durant.

  Thornton, Malcolm

  NOES

  Abbott, Ms Diane

  Clwyd, Mrs Ann

  Adams, Allen (Paisley N)

  Coleman, Donald

  Alton, David

  Cook, Robin (Livingston)

  Anderson, Donald

  Corbett, Robin

  Archer, Rt Hon Peter

  Corbyn, Jeremy

  Armstrong, Hilary

  Cousins, Jim

  Ashdown, Rt Hon Paddy

  Crowther, Stan

  Banks, Tony (Newham NW)

  Cryer, Bob

  Barnes, Harry (Derbyshire NE)

  Cummings, John

  Barnes, Mrs Rosie (Greenwich)

  Cunlitfe, Lawrence

  Battle, John

  Dalyell, Tam

  Beckett, Margaret

  Darling, Alistair

  Beith, A. J.

  Davies, Rt Hon Denzil (Llanelli)

  Benn, Rt Hon Tony

  Davies, Ron (Caerphilly)

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

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

  Bermingham, Gerald

  Dewar, Donald

  Bidwell, Sydney

  Dixon, Don

  Blair, Tony

  Dobson, Frank

  Blunkett, David

  Doran, Frank

  Boyes, Roland

  Douglas, Dick

  Bradley, Keith

  Dunnachie, Jimmy

  Bray, Dr Jeremy

  Dunwoody, Hon Mrs Gwyneth

  Brown, Gordon (D'mline E)

  Evans, John (St Helens N)

  Brown, Nicholas (Newcastle E)

  Ewing, Mrs Margaret (Moray)

  Brown, Ron (Edinburgh Leith)

  Fatchett, Derek

  Bruce, Malcolm (Gordon)

  Faulds, Andrew

  Buchan, Norman

  Fearn, Ronald

  Buckley, George J.

  Field, Frank (Birkenhead)

  Caborn, Richard

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

  Callaghan, Jim

  Fisher, Mark

  Campbell, Menzies (Fife NE)

  Flannery, Martin

  Campbell, Ron (Blyth Valley)

  Flynn, Paul

  Campbell-Savours, D. N.

  Foot, Rt Hon Michael

  Carlile, Alex (Mont'g)

  Foster, Derek

  Cartwright, John

  Foulkes, George

  Clark, Dr David (S Shields)

  Fraser, John

  Clarke, Tom (Monklands W)

  Fyfe, Maria

  Clay, Bob

  Galbraith, Sam

  Clelland, David

  Galloway, George

  826

  Garrett, John (Norwich South)

  Mitchell, Austin (G't Grimsby)

  George, Bruce

  Moonie, Dr Lewis

  Gilbert, Rt Hon Dr John

  Morgan, Rhodri

  Godman, Dr Norman A.

  Morley, Elliott

  Golding, Mrs Llin

  Morris, Rt Hon A. (W'shawe)

  Gordon, Mildred

  Morris, Rt Hon J. (Aberavon)

  Graham, Thomas

  Mowlam, Marjorie

  Grant, Bernie (Tottenham)

  Mullin, Chris

  Griffiths, Nigel (Edinburgh S)

  Murphy, Paul

  Griffiths, Win (Bridgend)

  Nellist, Dave

  Grocott, Bruce

  Oakes, Rt Hon Gordon

  Hardy, Peter

  O'Brien, William

  Harman, Ms Harriet

  O'Neill, Martin

  Hattersley, Rt Hon Roy

  Orme, Rt Hon Stanley

  Haynes, Frank

  Owen, Rt Hon Dr David

  Healey, Rt Hon Denis

  Patchett, Terry

  Heffer, Eric S.

  Pendry, Tom

  Henderson, Doug

  Pike, Peter L.

  Hinchliffe, David

  Powell, Ray (Ogmore)

  Hogg, N. (C'nauld & Kilsyth)

  Prescott, John

  Holland, Stuart

  Primarolo, Dawn

  Home Robertson, John

  Quin, Ms Joyce

  Hood, Jimmy

  Radice, Giles

  Howarth, George (Knowsley N)

  Randall, Stuart

  Howell, Rt Hon D. (S'heath)

  Redmond, Martin

  Howells, Geraint

  Rees, Rt Hon Merlyn

  Howells, Dr. Kim (Pontypridd)

  Reid, Dr John

  Hoyle, Doug

  Richardson, Jo

  Hughes, John (Coventry NE)

  Roberts, Allan (Bootle)

  Hughes, Robert (Aberdeen N)

  Robertson, George

  Hughes, Roy (Newport E)

  Robinson, Geoffrey

  Hughes, Sean (Knowsley S)

  Rogers, Allan

  Hughes, Simon (Southwark)

  Ross, Ernie (Dundee W)

  Illsley, Eric

  Rowlands, Ted

  Ingram, Adam

  Ruddock, Joan

  Johnston, Sir Russell

  Salmond, Alex

  Jones, Barry (Alyn & Deeside)

  Sedgemore, Brian

  Jones, Ieuan (Ynys Môn)

  Sheerman, Barry

  Jones, Martyn (Clwyd S W)

  Sheldon, Rt Hon Robert

  Kennedy, Charles

  Shore, Rt Hon Peter

  Kirkwood, Archy

  Short, Clare

  Lamond, James

  Skinner, Dennis

  Leadbitter, Ted

  Smith, Andrew (Oxford E)

  Leighton, Ron

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

  Lestor, Joan (Eccles)

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

  Lewis, Terry

  Snape, Peter

  Litherland, Robert

  Soley, Clive

  Lloyd, Tony (Stretford)

  Spearing, Nigel

  Lofthouse, Geoffrey

  Steel, Rt Hon David

  Loyden, Eddie

  Steinberg, Gerry

  McAllion, John

  Stott, Roger

  McAvoy, Thomas

  Strang, Gavin

  McCartney, Ian

  Straw, Jack

  McFall, John

  Taylor, Mrs Ann (Dewsbury)

  McKay, Allen (Barnsley West)

  Thomas, Dr Dafydd Elis

  McKelvey, William

  Turner, Dennis

  McLeish, Henry

  Wall, Pat

  Maclennan, Robert

  Wallace, James

  McNamara, Kevin

  Warden, Gareth (Gower)

  McTaggart, Bob

  Wareing, Robert N.

  McWilliam, John

  Welsh, Andrew (Angus E)

  Madden, Max

  Welsh, Michael (Doncaster N)

  Mahon, Mrs Alice

  Wigley, Dafydd

  Marek, Dr John

  Williams, Rt Hon Alan

  Marshall, David (Shettleston)

  Williams, Alan W. (Carm'then)

  Marshall, Jim (Leicester S)

  Wilson, Brian

  Martin, Michael J. (Springburn)

  Winnick, David

  Martlew, Eric

  Worthington, Tony

  Maxton, John

  Wray, Jimmy

  Meacher, Michael

  Young, David (Bolton SE)

  Meale, Alan

  Michael, Alun

  Tellers for the Noes:

  Michie, Bill (Sheffield Heeley)

  Mr. Ken Eastham and

  Michie, Mrs Ray (Arg'l & Bute)

  Mr. Fred Cook.

  Question accordingly agreed to.
  Mr.Speaker: I am now required, under Standing Order No.50(3), to put successively without further debate the

  827
  Question on each of the ways and means motions. With the leave of the House, I will put together motions Nos. 2 to 50.

  2. HYDROCARBON OIL
  Resolved,
  That, as from 6 o'clock in the evening of 14th March 1989, the Hydrocarbon Oil Duties Act 1979 shall have effect with the amendments set out below.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  (1) In section 6——

  (a) in subsection (1), after "(2)" there shall be inserted ", (2A)", and

  (b) the following subsection shall be inserted after subsection (2)—

  "(2A) The rate of duty for petrol which—

  (a) has an anti-knock value below that specified as the minimum for 4 star petrol in the British Standard Specification BS 4040: 1988, and

  (b) is neither unleaded petrol (within the meaning of section 13A below) nor aviation gasoline,

  shall be £0·2122 a litre."
  (2) In section 13A, for "0–0202" there shall be substituted "0·0272".
  (3) In Part I of Schedule 3, in paragraph 10A, after the word "Amending" there shall be inserted the words "the description of petrol falling within subsection (2A) of section 6 of this Act or" and for the words "section 6 of this Act" there shall be substituted the words "that section".—[Mr. Lawson.]

  3. BEER (ORIGINAL GRAVITY)
  Resolved,
  That provision may be made amending section 3(5) of the Alcoholic Liquor Duties Act 1979.—[Mr. Lawson.]

  TABLE A

  RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WHGHT GENERAL RATES

  Plated gross weight of vehicle

  Rate of duty

  (1)Exceeding

  (2)Not exceeding

  (3)Two axle vehicle

  (4)Three axle vehicle

  (5)Four or more axle vehicle

  tonnes

  tonnes

  £

  £

  £

  12

  13

  450

  340

  340

  13

  14

  630

  340

  340

  14

  15

  810

  340

  340

  15

  17

  1,230

  340

  340

  17

  19

  —

  600

  340

  19

  21

  —

  800

  340

  21

  23

  —

  1,100

  490

  23

  25

  —

  1,980

  760

  25

  27

  —

  —

  1,220

  27

  29

  —

  —

  1,790

  29

  30·49

  —

  —

  2,780

  4. PRODUCTION OF MADE-WINE
  Resolved,
  That section 55 of the Alcoholic Liquor Duties Act 1979 may be amended by provisions relating to the blending or other mixing of made-wines or of made-wines and wines.—[Mr. Lawson.]

  5. VEHICLES EXCISE DUTY (RATES)
  Resolved,
  That the Vehicles (Excise) Act 1971 ("the 1971 Act") and the Vehicles (Excise) Act (Northern Ireland) 1972 ("the 1972 Act") shall have effect, in relation to licences taken out after 14th March 1989, with the amendments set out below.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  (1) For the words—

  (a) "in the second column of" in paragraph 1 of Schedule 2 to the 1971 Act (rates of duty on hackney carriages), and

  (b) "in column 2 of' in paragraph 1 of Schedule 2 to the 1972 Act,

  there shall be substituted the words "in relation to its seating capacity in the Table in"; and for the Table in Part II of each of those Schedules there shall be substituted the Table set out below.

  RATES OF DUTY ON HACKNEY CARRIAGES

  Seating capacity

  Rate of duty

  £

  Under 9

  100

  9 to 16

  130

  17 to 35

  200

  36 to 60

  300

  Over 60

  450

  (2) In Part 11 of Schedule 4 to the 1971 Act for Tables A, A(l) and A(2) (rates for rigid goods vehicles having plated gross weight exceeding 12 tonnes) there shall be substituted the Tables set out below.

  829

  TABLE A(l)

  RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT

  RATES FOR FARMERS' GOODS VEHICLES

  Plated gross weight of vehicle

  Rate of duty

  (1) Exceeding

  (2) Not exceeding

  (3) Two axle vehicle

  (4) Three axle vehicle

  (5) Four or more axle vehicle

  tonnes

  tonnes

  £

  £

  £

  12

  13

  270

  205

  205

  13

  14

  380

  205

  205

  14

  15

  490

  205

  205

  15

  17

  740

  205

  205

  17

  19

  —

  360

  205

  19

  21

  —

  480

  205

  21

  23

  —

  660

  295

  23

  25

  —

  1,190

  460

  25

  27

  —

  —

  735

  27

  29

  —

  —

  1,075

  29

  30–49

  —

  —

  1,670

  TABLE A(2)

  RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT

  RATES FOR SHOWMEN'S GOODS VEHICLES

  Plated gross weight of vehicle

  Rate of duty

  (1) Exceeding

  (2) Not exceeding

  (3) Two axle vehicle

  (4) Three axle vehicle

  (5) Four or more axle vehicle

  tonnes

  tonnes

  £

  £

  £

  12

  13

  115

  90

  90

  13

  14

  160

  90

  90

  14

  15

  205

  90

  90

  15

  17

  310

  90

  90

  17

  19

  —

  150

  90

  19

  21

  —

  200

  90

  21

  23

  —

  275

  125

  23

  25

  —

  495

  190

  25

  27

  —

  —

  305

  27

  29

  —

  —

  450

  29

  30·49

  —

  —

  695

  (3) The Tables set out above shall also be substituted for Tables A, A(1) and A(2) in Part II of the Schedule 4 to the 1972 Act, but modified for that purpose by the substitution to." any reference to a plated gross weight of a reference to a relevant maximum weight.

  (4) In paragraph 2 of Schedule 4A to the 1971 Act and the 1972 Act (rates of duty for vehicles carrying or drawing exceptional loads) for "£1,600" there shall be substituted "£3,100".
  (5) In—

  (a) subsection (5) of section 16 of the 1971 Act (rates of duty for trade licences), including that subsection as set out in paragraph 12 of Part I of Schedule 7 to that Act, and

  (b) subsection (6) of section 16 of the 1972 Act, including that subsection as set out in paragraph 12 of Part I of Schedule 9 to that Act,

  for "£85" and "£17" there shall be substituted "£100" and "£20" respectively.—[Mr. Lawson.]

  6. VEHICLES EXCISE DUTY (ASSIGNMENT OF REGISTRATION MARKS)
  Resolved,
  That provision may be made—

  (a) for the payment of sums, payable into the Consolidated Fund, in respect of the acquisition of rights relating to the assignment of registration marks under the Vehicles (Excise) Act 1971 or the Vehicles (Excise) Act (Northern Ireland) 1972; and

  (b) for the payment of charges under section 12(11 of the Finance Act 1976 in connection with the assignment of registration marks in pursuance of rights so relating.—[Mr. Lawson.]

  7. SPECIAL MACHINES (VEHICLES EXCISE DUTY AND HYDROCARBON OIL)
  Resolved,
  That the Vehicles (Excise) Act 1971 ("the 1971 Act") and the Vehicles (Excise) Act (Northern Ireland) 1972 ("the 1972 Act") shall have effect, in relation to licences taken out after 14th March 1989, with the amendments set out in paragraphs (1) to (3) below; and the Hydrocarbon Oil Duties Act 1979 ("the 1979 Act") shall have effect, as from 15th March 1989, with the amendment set out in paragraph (4) below.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  (1) In Part I of Schedule 3 to the 1971 Act and the 1972 Act (annual rates of duty on tractors etc.)—
  (a) after paragraph 1 there shall be inserted—
  "1A. In this Schedule "special machine" means—

  (a) a tractor;

  (b) an agricultural engine;

  (c) a digging machine;

  (d) a mobile crane;

  (e) a works truck; or

  (f) a mowing machine.";

  (b) for paragraph 2 there shall be substituted—
  "2. In this Schedule "tractor" means a vehicle which is either—

  (a) an agricultural tractor, or

  (b) a tractor (other than an agricultural tractor) that is—

  (i) designed and constructed primarily for use otherwise than on roads, and

  (ii) incapable by reason of its construction of exceeding a speed of twenty-five miles per hour on the level under its own power.";

  (c) in paragraph 3(b), for the words "neither carries nor hauls any load than" there shall be substituted the words "does not carry any load except";

  (d) in paragraph 4(b), for the words "neither carries nor hauls any load than" there shall be substituted the words "does not carry any load except";

  (e) paragraph 5A shall be omitted; and

  (f) in paragraph 6, for the words from "(other than" to "8 below)" there shall be substituted the words "(other than a special machine, a recovery vehicle or a vehicle to which Schedule 4A to this Act applies)".

  (2) In Part II of Schedule 3 to the 1971 Act and the 1972 Act, in column 1, for paragraph 1 there shall be substituted—
  "1. Special machines."
  (3) In Part I of Schedule 4 to the 1971 Act and the 1972 Act (annual rates of duty on goods vehicles)—

  (a) in paragraph 11, for paragraphs (b) and (c) there shall be substituted—

  (b) a special machine within the meaning of Schedule 3 to this Act;

  (c) a recovery vehicle within the meaning of that Schedule; or";

  (b) paragraphs 12 and 13 shall be omitted; and

  (c) in paragraph 15(1), the definitions of "agricultural machine", "fisherman's tractor", "mobile crane", "recovery vehicle" and "works truck" shall be omitted.

  (4) In paragraph 2 of Schedule 1 to the 1979 Act (vehicles which are not road vehicles within the meaning of that Act), for sub-paragraph (b) there shall be substituted—
  "(b) a special machine within the meaning of Schedule 3 to that Act;".—[Mr. Lawson.]

  8. VALUE ADDED TAX (BUILDINGS AND LAND: ZERO-RATING AND EXEMPTION ETC.)
  Resolved,
  That—
  (1) For Group 8 of Schedule 5 to the Value Added Tax Act 1983 there shall be substituted—

  GROUP 8—CONSTRUCTION OF DWELLINGS, ETC.
  Item No.
  1. The grant by a person constructing a building—

  (a) designed as a dwelling or number of dwellings; or

  (b) intended for use solely for a relevant residential purpose or a relevant charitable purpose,

  of a major interest in, or in any part of, the building or its site.
  2. The supply in the course of the construction of—

  (a) a building designed as a dwelling or number of dwellings or intended for use solely for a relevant residential purpose or a relevant charitable purpose; or

  (b) any civil engineering work necessary for the development of a permanent park for residential caravans,

  of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity.
  3. The supply to a person of—

  (a) materials; or

  (b) builder's hardware, sanitary ware or other articles of a kind ordinarily installed by builders as fixtures,

  by a supplier who also makes to the same person supplies within item 2 of this Group or Group 8A below of services which include the use of the materials or the installation of the articles.
  Notes:
  (1) "Grant" includes assignment.
  (2) "Dwelling" includes a garage constructed at the same time as a dwelling for occupation together with it.
  (3) Use for a relevant residential purpose means use as—

  (a) a home or other institution providing residential accommodation for children;

  (b) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder;

  (c) a hospice;

  (d) residential accommodation for students or school pupils;

  (e) residential accommodation for members of any of the armed forces;

  (f) a monastery, nunnery or similar establishment; or

  (g) an institution which is the sole or main residence of at least 90 per cent. of its residents,

  except use as a hospital, a prison or similar institution or an hotel, inn or similar establishment.
  (4) Use for a relevant charitable purpose means use by a charity otherwise than in the course or furtherance of a business.
  (5) Where part of a building is designed as a dwelling or number of dwellings or intended for use solely for a relevant residential purpose or a relevant charitable purpose (and part is not)—

  (a) a grant or other supply relating only to the part so designed or intended for such use (or its site) shall be treated as relating to a building so designed or intended for such use;

  (b) a grant or other supply relating only to the part neither so designed nor intended for such use (or its site) shall not be so treated; and

  (c) in the case of any other grant or other supply relating to, or to any part of, the building (or its site), an apportionment shall be made to determine the extent to which it is to be so treated.

  (6) Where all or part of a building is intended for use solely for a relevant residential purpose or a relevant charitable purpose—

  (a) a supply relating to the building (or any part of it) shall not be taken for the purposes of item 2

  833
  or 3 as relating to a building intended for such use unless it is made to a person who intends to use the building (or part) for such a purpose; and
  (b) a grant or other supply relating to the building (or any part of it) shall not be taken as relating to a building intended for such use unless before it is made the person to whom it is made has given to the person making it a certificate in such form as may be specified in a notice published by the Commissioners stating that the grant or other supply (or a specified part of it) so relates.
  (7) The grant of an interest in, or in part of, a building designed as a dwelling or number of dwellings is not within item I if—

  (a) the interest granted is such that the grantee will not be entitled to reside in the building, or part, throughout the year; or

  (b) residence there throughout the year will be prevented by the terms of a covenant, statutory planning consent or similar permission.

  (8) Where the major interest referred to in item I is a tenancy or lease—

  (a) if a premium is payable, the grant falls within that item only to the extent that it is made for consideration in the form of the premium; and

  (b) if a premium is not payable, the grant falls within that item only to the extent that it is made for consideration in the form of the first payment of rent due under the tenancy or lease.

  (9) Where the benefit of the consideration for the grant of a major interest as described in item 1 accrues to the person constructing the building but that person is not the person making the grant, he shall for the purposes of that item be treated as the person making the grant.
  (10) The reference in item 2 to the construction of a building or work does not include a reference to—

  (a) the conversion, reconstuction, alteration or enlargement of an existing building or work; or

  (b) any extension or annexation to an existing building which provides for internal access to the existing building or of which the separate use, letting or disposal is prevented by the terms of any convenant, statutory planning consent or similar permission;

  and the reference in item 1 to a person constructing a building shall be construed accordingly.
  (11) A caravan is not a residential caravan if residence in it throughout the year is prevented by the terms of a covenant, statutory planning consent or similar permission.
  (12) Item 2 does not include the supply of services described in paragraph 1(1) or 5(3) of Schedule 2 to this Act.
  (13) The goods referred to in item 3 do not include—

  (a) finished of prefabricated furniture, other than furniture designed to be fitted in kitchens;

  (b) materials for the construction of fitted furniture, other than kitchen furniture;

  (c) domestic electrical or gas appliances, other than those designed to provide space heating or water heating or both; or

  (d) carpets or carpeting material.

  (14) Section 16(3) of this Act does not apply to goods forming part of a description of supply in this Group."
  (2) In item 1 of Group 8A of that Schedule, for the word "granting" there shall be substituted the word "grant".
  (3) In Note (1) to that Group, for the words "a building which" there shall be substituted the words "a building which is designed to remain as or become a dwelling or number of dwellings or is intended for use solely for a relevant residential purpose or a relevant charitable purpose after the reconstruction or alteration and which, in either case,".
  (4) After that Note there shall be inserted—
  "(1A) Notes (1) to (8) above apply in relation to this Group as they apply in relation to that Group."
  (5) After Note (6) to that Group there shall be inserted—
  "(6A) For the purposes of item 2 the construction of a building separate from, but in the curtilage of, a protected building does not constitute an alteration of the protected building."
  (6) The following Note shall be substituted for Note (7) to that Group—
  "(7) Item 2 does not include the supply of services described in paragraph 1(1) or 5(3) of Schedule 2 to this Act."
  (7) In Group 11 of that Schedule, for paragraph (6) of the Note there shall be substituted—
  "(b) the supply of accommodation in a caravan or houseboat."
  (8) For Group 1 of Schedule 6 to the Value Added Tax Act 1983 there shall be substituted—

  GROUP 1—LAND
  Item No.
  1. The grant of any interest in or right over land or of any licence to occupy land, other than—

  (a) the grant of the fee simple in—

  (i) a building which has not been completed and which is neither designed as a dwelling or number of dwellings nor intended for use solely for a relevant residential purpose or a relevant charitable purpose;

  (ii) a new building which is neither designed as a dwelling or number of dwellings nor intended for use solely for a relevant residential purpose or a relevant charitable purpose after the grant;

  (iii) a civil engineering work which has not been completed;

  (iv) a new civil engineering work;

  (b) the grant of any interest, right or licence consisting of a right to take game or fish;

  (c) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering;

  (d) the provision of holiday accommodation in a house, flat, caravan, houseboat or tent;

  (e) the provision of seasonal pitches for caravans, and the grant of facilities at caravan parks to persons for whom such pitches are provided;

  (f) the provision of pitches for tents or of camping facilities;

  (g) the grant of facilities for parking a vehicle;

  (h) the grant of any right to fell and remove standing timber;

  (i) the grant of facilities for housing, or storage of, an aircraft or for mooring, or storage of, a ship, boat or other vessel;

  (j) the grant of any right to occupy a box, seat or other accommodation at a sports ground, theatre, concert hall or other place of entertainment; and

  (k) the grant of facilities for playing any sport or participating in any physical recreation.

  Notes:
  (1) "Grant" includes an assignment, other than an assignment of an interest made to the person to whom a surrender of the interest could be made.
  (2) A building shall be taken to be completed when an architect issues a certificate of practical completion in relation to it or it is first fully occupied, whichever happens first; and a civil engineering work shall be taken to be completed when an engineer issues a certificate of completion in relation to it or it is first fully used, whichever happens first.
  (3) Notes (2) to (6) to Group 8 of Schedule 5 to this Act apply in relation to this Group as they apply in relation to that Group.
  (4) A building or civil engineering work is new if it was completed less than three years before the grant.
  (5) Subject to Note (6), the grant of the fee simple in a building or work completed before 1st April 1989 is not excluded from this Group by paragraph (a)(ii) or (iv).
  (6) Note (5) does not apply where the grant is the first grant of the fee simple made on or after 1st April 1989 and the building was not fully occupied, or the work not fully used, before that date.
  (7) Where a grant of an interest in, right over or licence to occupy land includes a valuable right to take game or fish, an apportionment shall be made to determine the supply falling outside this Group by virtue of paragraph (b).
  (8) "Similar establishment" includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by or held out as being suitable for use by visitors or travellers.
  (9) "Houseboat" includes a houseboat within the meaning of Group 11 of Schedule 5 to this Act.
  (10) "Holiday accommodation" includes any accommodation advertised or held out as such.
  (11) A seasonal pitch is a pitch—

  (a) which is provided for a period less than a year; or

  (b) which is provided for a year or a period longer than a year but which the person to whom it is provided is prevented by the terms of any covenant, statutory planning consent or similar permission from occupying by living in a caravan at all times throughout the period for which the pitch is provided.

  (12) "Mooring" includes anchoring or berthing.
  (13) Paragraph (k) shall not apply where the grant of the facilities is for—

  (a) a continuous period of use exceeding twenty-four hours; or

  (b) a series of ten or more periods, whether or not exceeding twenty-four hours in total, where the following conditions are satisfied—

  (i) each period is in respect of the same activity carried on at the same place;

  (ii) the interval between each period is not less than one day and not more than fourteen days;

  (iii) consideration is payable by reference to the whole series and is evidenced by written agreement;

  (iv) the grantee has exclusive use of the facilities; and

  (v) the grantee is a school, a club, an association or an organisation representing affiliated clubs or constituent associations."

  (9) In consequence of the amendment made by paragraph (8) of this Resolution, in paragraph 9(1) of Schedule 4 to the Value Added Tax Act 1983 for "(a)" there shall be substituted "(c)"
  (10) The following section shall be inserted in the Value Added Tax Act 1983 after section 35—
  "Buildings and land.
  35A. Schedule 6A to this Act shall have effect with respect to buildings and land."
  (11) The following Schedule shall be inserted in the Value Added Tax Act 1983 after Schedule 6—

SCHEDULE 6A

  BUILDINGS AND LAND
  1.—(1) In this paragraph "relevant zero-rated supply" means a grant or other supply taking place on or after 1st April 1989 which—

  (a) relates to a building intended for use solely for a relevant residential purpose or a relevant charitable purpose or part of such a building; and

  (b) is zero-rated, in whole or in part, by virtue of Group 8 of Schedule 5 to this Act.

  (2) Sub-paragraph (3) below applies where—

  (a) one or more relevant zero-rated supplies relating to a building (or part of a building) have been made to any person;

  (b) within the period of ten years beginning with the day on which the building is completed, the person grants an interest in, right over or licence to occupy the building or any part of it (or the
  836
  building or any part of it including, consisting of or forming part of the part to which the relevant zero-rated supply or supplies related); and

  (c) after the grant the whole or any part of the building, or of the part to which the grant relates, (or the whole of the building or of the part to which the grant relates, or any part of it including, consisting of or forming part of the part to which the relevant zero-rated supply or supplies related) is not intended for use solely for a relevant residential purpose or a relevant charitable purpose.

  (3) Where this sub-paragraph applies, to the extent that the grant relates to so much of the building as—

  (a) by reason of its intended use gave rise to the relevant zero-rated supply or supplies; and

  (b) is not intended for use solely for a relevant residential purpose or a relevant charitable purpose after the grant,

  it shall be taken to be a taxable supply in the course or furtherance of a business which is not zero-rated by virtue of Group 8 of Schedule 5 to this Act (if it would not otherwise be such a supply).
  (4) Sub-paragraph (5) below applies where—

  (a) one or more relevant zero-rated supplies relating to a building (or part of a building) have been made to any person; and

  (b) within the period of ten years beginning with the day on which the building is completed, the person uses the building or any part of it (or the building or any part of it including, consisting of or forming part of the part to which the relevant zero-rated supply or supplies related) for a purpose which is neither a relevant residential purpose nor a relevant charitable purpose.

  (5) Where this sub-paragraph applies, his interest in, right over or licence to occupy so much of the building as—

  (a) by reason of its intended use gave rise to the relevant zero-rated supply or supplies; and

  (b) is used otherwise than for a relevant residential purpose or a relevant charitable purpose,

  shall be treated for the purposes of this Act as supplied to him for the purpose of a business carried on by him and supplied by him in the course or furtherance of the business when he first uses it for a purpose which is neither a relevant residential purpose nor a relevant charitable purpose.
  (6) Where sub-paragraph (5) above applies—

  (a) the supply shall be taken to be a taxable supply which is not zero-rated by virtue of Group 8 of schedule 5 to this Act (if it would not otherwise be such a supply); and

  (b) the value of the supply shall be such that the amount of tax chargeable on it is equal to the amount of the tax which would have been chargeable on the relevant zero-rated supply (or, where there was more than one such supply, the aggregate amount which would have been chargeable on them) had so much of the building as is mentioned in sub-paragraph (5) above not been intended for use solely for a relevant residential purpose or a relevant charitable purpose.

  2. The Notes to Group 8 of Schedule 5 to this Act apply in relation to this Schedule as they apply in relation to that Group but subject to any appropriate modifications."
  (12) In section 48 of the Value Added Tax Act 1983, after the definition of "Commissioners" there shall be inserted—
  " "fee simple", in relation to Scotland, means—

  (a) the estate or interest of the proprietor of the dominium utile, or

  (b) in the case of land not held on feudal tenure, the estate or interest of the owner;".

  (13) In Schedule 1 to the Value Added Tax Act 1983—
  (a) in paragraph 1 there shall be added at the end—
  "(6) Where, apart from this sub-paragraph, an interest in, right over or licence to occupy any land would under sub-paragraph (5) above be disregarded

  837
  for the purposes of sub-paragraph (1) above, it shall not be if it is supplied on a taxable supply which is not zero-rated." and
  (b) in paragraph 2 there shall be added at the end—
  "(4) Where, apart from this sub-paragraph, an interest in, right over or licence to occupy any land would under sub-paragraph (3) above be disregarded for the purposes of sub-paragraph (I) above, it shall not be if it is supplied on a taxable supply which is not zero-rated."
  (14) Subject to paragraphs (16) to (19) of this Resolution, the amendments made by paragraphs (1) to (9) of this Resolution shall have effect in relation to grants, assignments and other supplies made on or after 1st April 1989.
  (15) The remainder of this Resolution shall come into force on 1st April 1989.
  (16) Subject to paragraph (18) of this Resolution, the amendments made by paragraphs (1) to (6) of this Resolution shall not have effect in relation to a grant, assignment or other supply where—

  (a) it is made in pursuance of a legally binding obligation to make it which was incurred before 21st June 1988, and

  (b) if the Commissioners so require (whether before or after it is made), it is proved to their satisfaction by the production of documents made before that date that it is so made.

  (17) Subject to paragraph (18) of this Resolution, the amendments made by paragraphs (1) to (6) of this Resolution shall not have effect in relation to a grant or assignment of an interest in, or in any part of, a building or its site where—

  (a) the person making the grant or assignment was under a legally binding obligation incurred before 21st June 1988 to construct (or reconstruct) the building or to construct any development of which it forms part (other than an obligation to receive services or goods in the course of the construction or reconstruction),

  (b) if the Commissioners so require (whether before or after the grant or assignment is made), it is proved to their satisfaction by the production of documents made before that date that he was under that obligation, and

  (c) planning permission for the construction (or reconstruction) of the building was granted before 21st June 1988.

  (18) Where the grant or assignment is of a tenancy or lease—

  (a) if a premium is payable, paragraph (16) or (17) of this Resolution shall apply only to the extent that it is made for consideration in the form of the premium; and

  (b) if a premium is not payable, paragraph (16) or (17) of this Resolution shall apply only to the extent that it is made for consideration in the form of the first payment of rent due under the tenancy or lease.

  (19) The amendments made by paragraphs (1) to (6) of this Resolution shall not not have effect in relation to a supply relating to a building or civil engineering work where—

  (a) the supply is made to the person constructing the building or work (or reconstructing the building),

  (b) that person was under a legally binding obligation incurred before 21st June 1988 to construct the building or work (or to reconstruct the building) or to construct any development of which it forms part (other than an obligation to receive services or goods in the course of the construction or reconstruction),

  (c) if the Commissioners so require (whether before or after the supply is made), it is proved to their satisfaction by the production of documents made before that date that he was under that obligation,

  (d) planning permission for the construction of the building or work (or the reconstruction of the building) was granted before 21st June 1988, and

  (e) before the supply takes place the person construct-ing the building or work (or reconstructing the building) has given to the person making the supply a certificate in such form as may be specified in a notice published by the Commissioners stating that
  838
  the supply is zero-rated (in whole or to the extent specified in the certificate) by virtue of this paragraph.

  (20) Where a grant, assignment or other supply is zero-rated by virtue of paragraph (16), (17) or (19) of this Resolution, it is not a relevant zero-rated supply for the purposes of paragraph 1 of Schedule 6A to the Value Added Tax Act 1983.
  (21) This Resolution shall be construed as one with the Value Added Tax Act 1983.
  This Resolution shall not authorise the making of amendments that would make value added tax chargeable at a rate other than either nil or the rate specified in section 9 of the Value Added Tax Act 1983.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  9. VALUE ADDED TAX (ZERO-RATING: SEWERAGE SERVICES, WATER, FUEL AND POWER)
  Resolved,
  That provision may be made restricting Groups 2 and 7 of Schedule 5 to the Value Added Tax Act 1983.
  This Resolution shall not authorise the making of amendments that would make value added tax chargeable at a rate other than either nil or the rate specified in section 9 of the Value Added Tax Act 1983.—[Mr. Lawson.]

  10. VALUE ADDED TAX (ZERO-RATING: NEWS SERVICES)
  Resolved,
  That, in relation to supplies made on or after 1st April 1989, Schedule 5 to the Value Added Tax Act 1983 shall have effect with the omission of Group 6.
  This Resolution shall not authorise the making of amendments that would make value added tax chargeable at a rate other than either nil or the rate specified in section 9 of the Value Added Tax Act 1983.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  11. VALUE ADDED TAX (ZERO-RATING: PROTECTIVE BOOTS AND HELMETS)
  Resolved,
  That—
  (1) In relation to supplies made on or after 1st April 1989, Group 17 of Schedule 5 to the Value Added Tax Act 1983 shall have effect with the amendments mentioned in paragraphs (2) and (3) of this Resolution.
  (2) In item 2 there shall be inserted at the beginning the words "The supply to a person for use otherwise than by employees of his of".
  (3) In Note (5) there shall be inserted at the end the words ", but, in the case of goods comprised in item 2, only if the goods are for use otherwise than by employees of the person to whom the services are supplied."
  This Resolution shall not authorise the making of amendments that would make value added tax chargeable at a rate other than either nil or the rate specified in section 9 of the Value Added Tax Act 1983.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.[Mr. Lawson.]

  12. VALUE ADDED TAX (BUILDINGS AND LAND: GENERAL)
  Resolved,

  839
  That the enactments relating to value added tax may be amended by provisions about buildings and land.
  This Resolution shall not authorise the making of amendments that would make value added tax chargeable at a rate other than either nil or the rate specified in section 9 of the Value Added Tax Act 1983.—[Mr. Lawson.]

  13. VALUE ADDED TAX (SELF-SUPPLIES)
  Resolved,
  That provision may be made amending the Value Added Tax Act 1983 in relation to input tax on supplies which, under or by virtue of that Act, a person is treated as making to himself.—[Mr. Lawson.]

  14. CAR TAX (RELIEF FOR VEHICLES LEASED TO HANDICAPPED)
  Resolved,
  After section 5 of the Car Tax Act 1983 there shall be inserted, as from 1st April 1989, the following section—
  "Relief where vehicle leased to the handicapped.
  5A.—(1) This section applies where—

  (a) a person registered under this Act sends out from any premises of his in the United Kingdom a chargeable vehicle made or imported by him, and,

  (b) at the time when he sends it out he holds a certificate of the person to whom it is sent ("the lessor") that the lessor intends to supply the vehicle to another in such circumstances that the supply will be a zero-rated supply by virtue of item 12 of Group 14 (letting on hire of motor vehicles to the handicapped) of Schedule 5 to the Value Added Tax Act 1983.

  (2) Tax on the vehicle—

  (a) shall not be payable by the registered person, but

  (b) if, within the period of three years beginning with that time, the lessor supplies the vehicle in any circumstances other than those mentioned in subsection (1)(b) above, shall be payable by the lessor and shall become due and payable at the time of the supply.

  (3) In this section—
  "certificate" means a certificate in a form for the time being approved by the Commissioners, and "supply" has the same meaning as in the Value Added Tax Act 1983."
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  15. CUSTOMS AND EXCISE DUTIES, VALUE ADDED TAX AND CAR TAX (DIPLOMATS, MEMBERS OF VISITING FORCES, INTERNATIONAL ORGANISATIONS ETC.)
  Resolved,
  That provision may be made, in connection with duties of customs and excise, value added tax and car tax, about—

  (a) any person who, for the purposes of any provision of the Visiting Forces Act 1952 or the International Headquarters and Defence Organisations Act 1964 is—

  (i) a member of a visiting force or of a civilian component of such a force or a dependant of such a member, or

  (ii) a headquarters, a member of a headquarters or a dependant of such a member,

  (b) any person enjoying any privileges or immunities under or by virtue of—

  (i) the Diplomatic Privileges Act 1964,

  (ii) the Commonwealth Secretariat Act 1966,

  (iii) the Consular Relations Act 1968,

  (iv) the International Organisations Act 1968, or

  840

  (v) the Overseas Development and Co-operation Act 1980,

  (c) any person enjoying any privileges or immunities similar to those enjoyed under or by virtue of those enactments.—[Mr. Lawson.]

  16. INCOME TAX (CHARGE AND RATES FOR 1989–90)
  Resolved,
  That income tax shall be charged for the year 1989–90, and—

  (a) the basic rate of tax shall be 25 per cent. and

  (b) the higher rate at which tax is charged in respect of so much of an individual's total income as exceeds the basic rate limit (£20,700) shall be 40 per cent.

  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  17. INCOME TAX (AGE ALLOWANCE)
  Resolved,
  That—
  (1) For the year 1989–90, section 257 of the Income and Corporation Taxes Act 1988 shall have effect with the following amendments—

  (a) in subsection (3) (increased allowance for those aged 80 and over) for "80", wherever occurring, there shall be substituted "75", and

  (b) in subsection (5) (age allowance withdrawn by two-thirds of amount by which income exceeds a specified limit) for "two-thirds" there shall be substituted "one half"

  (2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn) before 18th May 1989.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  18. INCOME TAX (OPERATIVE DATE OF INDEXATION FOR PAYE)
  Resolved,
  That, for the year 1989–90, sections 1(5) and 257(10) of the Income and Corporation Taxes Act 1988 (which specify the date from which indexed changes in the basic rate limit and in allowances are to be brought into account for the purposes of PAYE) shall have effect as if for the reference to 5th May there were substituted a reference to 18th May.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  19. RELIEF FOR INTEREST (LIMIT FOR 1989–90)
  Resolved,
  That, for the year 1989–90, the qualifying maximum defined in section 367(5) of the Income and Corporation Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  20. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1989)
  Resolved,
  That corporation tax shall be charged for the financial year 1989 at the rate of 35 per cent.—[Mr. Lawson.]

  21. CORPORATION TAX (SMALL COMPANIES)
  Resolved,
  That for the financial year 1989—

  (a) the small companies rate shall be 25 per cent.

  (b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988 shall be one-fortieth—[Mr. Lawson.]

  PART I

  TABLES OF FLAT RATE CASH EQUIVALENTS

  TABLE A

  Cars with an original market value up to £19,250 and having a cylinder capacity

  Cylinder capacity of car in cubic centimetres

  Age of car at end of relevant year of assessment

  Under 4 years

  4 years or more

  1400 or less … … … … … … … … …

  £1,400

  £950

  More than 1400 but not more than 2000 … … …

  £1,850

  £1,250

  More than 2000 … … … … … … … …

  £2,950

  £1,950

  24. CALCULATION OF PROFITS OR GAINS
  Resolved,
  That provision may be made as to the calculation of profits or gains—

  (a) for the purposes of Schedule D;

  (b) for the purposes of corporation tax.—[Mr. Lawson.]

  22. SCHEDULE E
  Resolved,
  That charges to income tax may be imposed by provisions relating to Schedule E.—[Mr. Lawson.]

  23. BENEFITS IN KIND (CARS)
  Resolved,
  That—
  (1) For the year 1989–90 and subsequent years of assessment, Schedule 6 to the Income and Corporation Taxes Act 1988 (taxation of directors and others in respect of cars) shall have effect with the substitution for Part I (tables of flat rate cash equivalents) of the following—

  25 CHARITIES
  Resolved,
  That, for the year 1989–90 and subsequent years of assessment, section 202(7) of the Income and Corporation Taxes Act 1988 (which limits to £240 the payroll deductions attracting relief) shall have effect with the substitution of "£480" for "£240".

  843
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  26. PROFIT-RELATED PAY
  Resolved,
  That further provision may be made about profit-related pay.—[Mr. Lawson.]

  27. PROFIT SHARING SCHEMES (INCREASE OF MAXIMUM SHARE APPROPRIATION)
  Resolved.
  That section 187(2) of the Income and Corporation Taxes Act 1988 shall have effect for the year of assessment 1989–90 as if in the definition of "relevant amount" for the words "not less than £1,250 and not more than £5,000" there were substituted the words "not less than £2,000 and not more than £6,000".
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

  28. RETIREMENT BENEFITS SCHEMES
  Resolved,
  That provision may be made about retirement benefits schemes.—[Mr. Lawson.]

  29. PERSONAL PENSION SCHEMES
  Resolved,
  That provision may be made about personal pension schemes.—[Mr. Lawson.]

  30. COLLECTIVE INVESTMENT SCHEMES
  Resolved,
  That charges to income tax, corporation tax and capital gains tax may be imposed by provisions relating to collective investment schemes (including unit trusts) and investors in them.—[Mr. Lawson.]

  31. OFFSHORE FUNDS
  Resolved,
  That charges to income tax and corporation tax may be imposed by provisions relating to investors in offshore funds. —[Mr. Lawson.]

  32. INSURANCE COMPANIES AND FRIENDLY SOCIETIES
  Resolved,
  That provision may be made about the taxation of insurance companies and friendly societies, and about policies of life insurance, contracts for life annuities and capital redemption policies.—[Mr. Lawson.]

  33. PREMIUMS TRUST FUNDS
  Resolved,
  That provision may be made about stock lending by the trustees of premiums trust funds.—[Mr. Lawson.]

  34. REGULATIONS ABOUT UNDERWRITERS ETC.
  Resolved,
  That provision may be made amending section 451 of the Income and Corporation Taxes Act 1988 and section 142A of the Capital Gains Tax Act 1979.—[Mr. Lawson.]

  35. SECURITIES
  Resolved,
  That charges to income tax, capital gains tax and corporation tax may be imposed by provisions about securities.—[Mr. Lawson.]

  36. GROUPS OF COMPANIES AND CHANGES IN THE OWNERSHIP OF COMPANIES
  Resolved,
  That provision may be made—

  (a) in relation to advance corporation tax in connection with groups of companies and changes in the ownership of companies; and

  (b) amending sections 247 and 769 of the Income and Corporation Taxes Act 1988.—[Mr. Lawson.]

  37. CLOSE COMPANIES
  Resolved,
  That provision may be made in relation to close companies.—[Mr. Lawson.]

  38. SETTLEMENTS
  Resolved,
  That provision may be made about income arising under settlements—[Mr. Lawson.]

  39. DOUBLE TAXATION (TAX CREDITS)
  Resolved,
  That provision (including provision having retrospective effect) may be made as to the amount of tax credits paid to persons resident outside the United Kingdom.—[Mr. Lawson.]

  40. CAPITAL ALLOWANCE
  Resolved,
  That provision may be made about capital allowances. —[Mr. Lawson.]

  41. CAPITAL GAINS (ANNUAL EXEMPT AMOUNT)
  Resolved,
  That provision may be made as to the operation of section 5 of the Capital Gains Tax Act 1979 for the year 1989–90. —[Mr. Lawson.]

  42. CAPITAL GAINS (GIFTS ETC.)
  Resolved,
  That provision may be made about capital gains tax on gifts and other disposals not made under a bargain at arm's length.[Mr. Lawson.]

  43. NON-RESIDENTS
  Resolved,
  That charges to capital gains tax and corporation tax may be imposed by provisions relating to persons not resident and not ordinarily resident in the United Kingdom but carrying on or ceasing to carry on an activity in the United Kingdom through a branch or agency.—[Mr. Lawson.]

  44. DUAL RESIDENT COMPANIES
  Resolved,
  That charges to corporation tax may be imposed by provisions relating to companies resident in the United Kingdom and falling to be regarded for the purposes of double taxation relief arrangements as resident in a territory outside the United Kingdom..—[Mr. Lawson.]

  45. NON-RESIDENT COMPANIES (NON-PAYMENT OF TAX)
  Resolved,
  That, in relation to corporation tax payable by a non-resident company on chargeable gains, provision may be made with respect to the payment by other persons of tax not paid by the company.—[Mr. Lawson.]

  46. EXPLORATION AND EXPLOITATION ASSETS
  Resolved,
  That charges to capital gains tax and corporation tax may be imposed by provisions relating to exploration or exploitation assets.—[Mr. Lawson.]

  47. CAPITAL GAINS (RE-BASING TO 1982 ETC.)
  Resolved,
  That further provision (including provision having retrospective effect) may be made about capital gains and losses accruing on, or attributable to, disposals of assets acquired before 1st April 1982.—[Mr. Lawson.]

  48. INHERITANCE TAX
  Resolved,
  That charges to inheritance tax may be imposed—

  (a) by provisions relating to the variation of dispositions taking effect on death; and

  (b) by provisions relating to the settlement by recipients of exempt gifts of claims against the estates of deceased persons.—[Mr. Lawson.]

  49. BROADCASTING: ADDITIONAL PAYMENTS BY PROGRAMME CONTRACTORS
  Resolved,
  That provision he made with respect to additional payments payable under section 32 of the Broadcasting Act 1981.—[Mr. Lawson.]

  50. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)
  Resolved,
  That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from taxation.—[Mr. Lawson.]

PROCEDURE RESOLUTIONS

  PROCEDURE (SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY)
  Resolved,
  That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, and Finance Bill of the present Session may make provision for the application, in discharging liability for social security contributions, of sums required to be deducted from payments of any description made by way of remuneration for labour used or to be used in construction operations.—[Mr. Lawson.]

  PROCEDURE (FUTURE TAXATION)
  Question put.
  That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—
  846

  (a) provisions about value added tax restricting the zero-rating of supplies of sewerage services, water, fuel and power;

  (b) provisions about contracts of private medical insurance;

  (c) provisions about persons who are or have been married;

  (d) provisions about the management of tax.

  The House divided: Ayes 337, Noes 221.

  Division No. 123]

  [10.15 pm

  AYES

  Adley, Robert

  Coombs, Simon (Swindon)

  Aitken, Jonathan

  Cope, Rt Hon John

  Alexander, Richard

  Cormack, Patrick

  Alison, Rt Hon Michael

  Couchman, James

  Allason, Rupert

  Cran, James

  Amery, Rt Hon Julian

  Critchley, Julian

  Amess, David

  Currie, Mrs Edwina

  Amos, Alan

  Curry, David

  Arbuthnot, James

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

  Arnold, Jacques (Gravesham)

  Davis, David (Boothferry)

  Arnold, Tom (Hazel Grove)

  Day, Stephen

  Ashby, David

  Devlin, Tim

  Aspinwall, Jack

  Dicks, Terry

  Atkins, Robert

  Dorrell, Stephen

  Atkinson, David

  Douglas-Hamilton, Lord James

  Baker, Rt Hon K. (Mole Valley)

  Dover, Den

  Baker, Nicholas (Dorset N)

  Dunn, Bob

  Baldry, Tony

  Dykes, Hugh

  Banks, Robert (Harrogate)

  Eggar, Tim

  Batiste, Spencer

  Evans, David (Welwyn Hatf'd)

  Beaumont-Dark, Anthony

  Fallon, Michael

  Bellingham, Henry

  Favell, Tony

  Bendall, Vivian

  Fenner, Dame Peggy

  Bennett, Nicholas (Pembroke)

  Field, Barry (Isle of Wight)

  Benyon, W.

  Fishburn, John Dudley

  Bevan, David Gilroy

  Fookes, Dame Janet

  Biffen, Rt Hon John

  Forman, Nigel

  Blackburn, Dr John G.

  Forsyth, Michael (Stirling)

  Blaker, Rt Hon Sir Peter

  Fowler, Rt Hon Norman

  Body, Sir Richard

  Fox, Sir Marcus

  Bonsor, Sir Nicholas

  Franks, Cecil

  Boscawen, Hon Robert

  Freeman, Roger

  Boswell, Tim

  French, Douglas

  Bottomley, Peter

  Fry, Peter

  Bottomley, Mrs Virginia

  Gale, Roger

  Bowden, A (Brighton K'pto'n)

  Gardiner, George

  Bowden, Gerald (Dulwich)

  Gill, Christopher

  Bowis, John

  Gilmour, Rt Hon Sir Ian

  Boyson, Rt Hon Dr Sir Rhodes

  Glyn, Dr Alan

  Brandon-Bravo, Martin

  Goodhart, Sir Philip

  Brazier, Julian

  Goodson-Wickes, Dr Charles

  Bright, Graham

  Gorman, Mrs Teresa

  Brooke, Rt Hon Peter

  Gorst, John

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

  Gow, Ian

  Browne, John (Winchester)

  Grant, Sir Anthony (CambsSW)

  Bruce, Ian (Dorset South)

  Greenway, Harry (Ealing N)

  Buchanan-Smith, Rt Hon Alick

  Greenway, John (Ryedale)

  Budgen, Nicholas

  Gregory, Conal

  Burns, Simon

  Griffiths, Peter (Portsmouth N)

  Burt, Alistair

  Ground, Patrick

  Butcher, John

  Grylls, Michael

  Butler, Chris

  Gummer, Rt Hon John Selwyn

  Butterfill, John

  Hague, William

  Carlisle, John, (Luton N)

  Hamilton, Hon Archie (Epsom)

  Carlisle, Kenneth (Lincoln)

  Hamilton, Neil (Tatton)

  Carrington, Matthew

  Hampson, Dr Keith

  Carttiss, Michael

  Hanley, Jeremy

  Cash, William

  Hannam, John

  Channon, Rt Hon Paul

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

  Chapman, Sydney

  Harg reaves, Ken (Hyndburn)

  Chope, Christopher

  Harris, David

  Churchill, Mr

  Haselhurst, Alan

  Clark, Dr Michael (Rochford)

  Hawkins, Christopher

  Clark, Sir W. (Croydon S)

  Hayes, Jerry

  Clarke, Rt Hon K. (Rushcliffe)

  Hayhoe, Rt Hon Sir Barney

  Colvin, Michael

  Hayward, Robert

  Conway, Derek

  Heathcoat-Amory, David

  Coombs, Anthony (Wyre F'rest)

  Heddle, John

  847

  Heseltine, Rt Hon Michael

  Moate, Roger

  Hicks, Mrs Maureen (Wolv' NE)

  Molyneaux, Rt Hon James

  Higgins, Rt Hon Terence L.

  Monro, Sir Hector

  Hind, Kenneth

  Montgomery, Sir Fergus

  Hogg, Hon Douglas (Gr'th'm)

  Moore, Rt Hon John

  Holt, Richard

  Morris, M (N'hampton S)

  Hordern, Sir Peter

  Morrison, Sir Charles

  Howard, Michael

  Morrison, Rt Hon P (Chester)

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

  Moss, Malcolm

  Howarth, G. (Cannock & B'wd)

  Moynihan, Hon Colin

  Howe, Rt Hon Sir Geoffrey

  Neale, Gerrard

  Howell, Rt Hon David (G'dford)

  Needham, Richard

  Howell, Ralph (North Norfolk)

  Nelson, Anthony

  Hughes, Robert G. (Harrow W)

  Neubert, Michael

  Hunt, David (Wirral W)

  Nicholls, Patrick

  Hunt, John (Ravensbourne)

  Nicholson, David (Taunton)

  Hunter, Andrew

  Nicholson, Emma (Devon West)

  Hurd, Rt Hon Douglas

  Norris, Steve

  Irvine, Michael

  Onslow, Rt Hon Cranley

  Irving, Charles

  Oppenheim, Phillip

  Jack, Michael

  Page, Richard

  Jackson, Robert

  Paice, James

  Janman, Tim

  Patnick, Irvine

  Jessel, Toby

  Patten, Chris (Bath)

  Jones, Gwilym (Cardiff N)

  Patten, John (Oxford W)

  Jones, Robert B (Herts W)

  Pattie, Rt Hon Sir Geoffrey

  Jopling, Rt Hon Michael

  Pawsey, James

  Kellett-Bowman, Dame Elaine

  Porter, Barry (Wirral S)

  Key, Robert

  Porter, David (Waveney)

  Kilfedder, James

  Portillo, Michael

  King, Roger (B'ham N'thfield)

  Powell, William (Corby)

  Kirkhope, Timothy

  Price, Sir David

  Knapman, Roger

  Rattan, Keith

  Knight, Greg (Derby North)

  Raison, Rt Hon Timothy

  Knight, Dame Jill (Edgbaston)

  Rathbone, Tim

  Knowles, Michael

  Redwood, John

  Knox, David

  Renton, Tim

  Lamont, Rt Hon Norman

  Rhodes James, Robert

  Lang, Ian

  Riddick, Graham

  Latham, Michael

  Ridley, Rt Hon Nicholas

  Lawrence, Ivan

  Ridsdale, Sir Julian

  Lawson, Rt Hon Nigel

  Rifkind, Rt Hon Malcolm

  Lee, John (Pendle)

  Roberts, Wyn (Conwy)

  Leigh, Edward (Gainsbor'gh)

  Roe, Mrs Marion

  Lennox-Boyd, Hon Mark

  Rossi, Sir Hugh

  Lester, Jim (Broxtowe)

  Rost, Peter

  Lightbown, David

  Rowe, Andrew

  Lilley, Peter

  Rumbold, Mrs Angela

  Lloyd, Sir Ian (Havant)

  Sackville, Hon Tom

  Lloyd, Peter (Fareham)

  Sainsbury, Hon Tim

  Lord, Michael

  Sayeed, Jonathan

  Luce, Rt Hon Richard

  Scott, Nicholas

  Lyell, Sir Nicholas

  Shaw, David (Dover)

  McCrindle, Robert

  Shaw, Sir Giles (Pudsey)

  MacKay, Andrew (E Berkshire)

  Shaw, Sir Michael (Scarb')

  Maclean, David

  Shephard, Mrs G. (Norfolk SW)

  McLoughlin, Patrick

  Shepherd, Colin (Hereford)

  McNair-Wilson, Sir Michael

  Shepherd, Richard (Aldridge)

  McNair-Wilson, P. (New Forest)

  Shersby, Michael

  Madel, David

  Sims, Roger

  Major, Rt Hon John

  Skeet, Sir Trevor

  Malins, Humfrey

  Smith, Tim (Beaconsfield)

  Mans, Keith

  Soames, Hon Nicholas

  Maples, John

  Speller, Tony

  Marland, Paul

  Spicer, Sir Jim (Dorset W)

  Marlow, Tony

  Spicer, Michael (S Worcs)

  Marshall, John (Hendon S)

  Squire, Robin

  Marshall, Michael (Arundel)

  Stanbrook, Ivor

  Martin, David (Portsmouth S)

  Stanley, Rt Hon Sir John

  Mates, Michael

  Steen, Anthony

  Maude, Hon Francis

  Stern, Michael

  Mawhinney, Dr Brian

  Stevens, Lewis

  Maxwell-Hyslop, Robin

  Stewart, Allan (Eastwood)

  Mellor, David

  Stewart, Andy (Sherwood)

  Meyer, Sir Anthony

  Stokes, Sir John

  Miller, Sir Hal

  Stradling Thomas, Sir John

  Mills, Iain

  Sumberg, David

  Miscampbell, Norman

  Tapsell, Sir Peter

  Mitchell, Andrew (Gedling)

  Taylor, Ian (Esher)

  Mitchell, Sir David

  Taylor, John M (Solihull)

  848

  Taylor, Teddy (S'end E)

  Walters, Sir Dennis

  Tebbit, Rt Hon Norman

  Ward, John

  Temple-Morris, Peter

  Wardle, Charles (Bexhill)

  Thatcher, Rt Hon Margaret

  Warren, Kenneth

  Thompson, D. (Calder Valley)

  Watts, John

  Thompson, Patrick (Norwich N)

  Wells, Bowen

  Thorne, Neil

  Wheeler, John

  Thornton, Malcolm

  Whitney, Ray

  Thurnham, Peter

  Widdecombe, Ann

  Townend, John (Bridlington)

  Wiggin, Jerry

  Townsend, Cyril D. (B'heath)

  Wilshire, David

  Tracey, Richard

  Winterton, Mrs Ann

  Tredinnick, David

  Winterton, Nicholas

  Trippier, David

  Wolfson, Mark

  Trotter, Neville

  Wood, Timothy

  Twinn, Dr Ian

  Woodcock, Mike

  Vaughan, Sir Gerard

  Yeo, Tim

  Viggers, Peter

  Young, Sir George (Acton)

  Waddington, Rt Hon David

  Wakeham, Rt Hon John

  Tellers for the Ayes:

  Waldegrave, Hon William

  Mr. Tristan Garel-Jones and

  Walden, George

  Mr. Tony Durant.

  Waller, Gary

  NOES

  Abbott, Ms Diane

  Dixon, Don

  Adams, Allen (Paisley N)

  Dobson, Frank

  Alton, David

  Doran, Frank

  Anderson, Donald

  Douglas, Dick

  Archer, Rt Hon Peter

  Dunnachie, Jimmy

  Armstrong, Hilary

  Dunwoody, Hon Mrs Gwyneth

  Ashdown, Rt Hon Paddy

  Evans, John (St Helens N)

  Banks, Tony (Newham NW)

  Ewing, Mrs Margaret (Moray)

  Barnes, Harry (Derbyshire NE)

  Fatchett, Derek

  Barnes, Mrs Rosie (Greenwich)

  Faulds, Andrew

  Battle, John

  Fearn, Ronald

  Beckett, Margaret

  Field, Frank (Birkenhead)

  Beith, A. J.

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

  Benn, Rt Hon Tony

  Fisher, Mark

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

  Flannery, Martin

  Bermingham, Gerald

  Flynn, Paul

  Bidwell, Sydney

  Foot, Rt Hon Michael

  Blair, Tony

  Foster, Derek

  Blunkett, David

  Foulkes, George

  Boyes, Roland

  Fraser, John

  Bradley, Keith

  Fyfe, Maria

  Bray, Dr Jeremy

  Galbraith, Sam

  Brown, Gordon (D'mline E)

  Galloway, George

  Brown, Nicholas (Newcastle E)

  Garrett, John (Norwich South)

  Brown, Ron (Edinburgh Leith)

  George, Bruce

  Bruce, Malcolm (Gordon)

  Gilbert, Rt Hon Dr John

  Buchan, Norman

  Godman, Dr Norman A.

  Buckley, George J.

  Golding, Mrs Llin

  Caborn, Richard

  Gordon, Mildred

  Callaghan, Jim

  Graham, Thomas

  Campbell, Menzies (Fife NE)

  Grant, Bernie (Tottenham)

  Campbell, Ron (Blyth Valley)

  Griffiths, Nigel (Edinburgh S)

  Campbell-Savours, D. N.

  Griffiths, Win (Bridgend)

  Carlile, Alex (Mont'g)

  Grocott, Bruce

  Cartwright, John

  Hardy, Peter

  Clark, Dr David (S Shields)

  Harman, Ms Harriet

  Clarke, Tom (Monklands W)

  Hattersley, Rt Hon Roy

  Clay, Bob

  Haynes, Frank

  Clelland, David

  Healey, Rt Hon Denis

  Clwyd, Mrs Ann

  Heffer, Eric S.

  Coleman, Donald

  Henderson, Doug

  Cook, Robin (Livingston)

  Hinchliffe, David

  Corbett, Robin

  Hogg, N. (C'nauld & Kilsyth)

  Corbyn, Jeremy

  Holland, Stuart

  Cousins, Jim

  Home Robertson, John

  Crowther, Stan

  Hood, Jimmy

  Cryer, Bob

  Howarth, George (Knowsley N)

  Cummings, John

  Howell, Rt Hon D. (S'heath)

  Cunliffe, Lawrence

  Howells, Geraint

  Dalyell, Tam

  Howells, Dr. Kim (Pontypridd)

  Darling, Alistair

  Hoyle, Doug

  Davies, Rt Hon Denzil (Llanelli)

  Hughes, John (Coventry NE)

  Davies, Ron (Caerphilly)

  Hughes, Robert (Aberdeen N)

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

  Hughes, Roy (Newport E)

  Dewar, Donald

  Hughes, Sean (Knowsley S)

  849

  Hughes, Simon (Southwark)

  Mullin, Chris

  Illsley, Eric

  Murphy, Paul

  Ingram, Adam

  Nellist, Dave

  Johnston, Sir Russell

  Oakes, Rt Hon Gordon

  Jones, Barry (Alyn & Deeside)

  O'Brien, William

  Jones, Ieuan (Ynys M⃴n)

  O'Neill, Martin

  Jones, Martyn (Clwyd S W)

  Orme, Rt Hon Stanley

  Kennedy, Charles

  Owen, Rt Hon Dr David

  Kirkwood, Archy

  Patchett, Terry

  Lamond, James

  Pendry, Tom

  Leadbitter, Ted

  Pike, Peter L.

  Leighton, Ron

  Powell, Ray (Ogmore)

  Lestor, Joan (Eccles)

  Prescott, John

  Lewis, Terry

  Primarolo, Dawn

  Litherland, Robert

  Quin, Ms Joyce

  Lloyd, Tony (Stratford)

  Radice, Giles

  Lofthouse, Geoffrey

  Randall, Stuart

  Loyden, Eddie

  Redmond, Martin

  McAllion, John

  Rees, Rt Hon Merlyn

  McAvoy, Thomas

  Reid, Dr John

  McCartney, Ian

  Richardson, Jo

  McFall, John

  Roberts, Allan (Bootle)

  McKay, Allen (Barnsley West)

  Robertson, George

  McKelvey, William

  Robinson, Geoffrey

  McLeish, Henry

  Rogers, Allan

  Maclennan, Robert

  Ross, Ernie (Dundee W)

  McNamara, Kevin

  Rowlands, Ted

  McTaggart, Bob

  Ruddock, Joan

  McWilliam, John

  Salmond, Alex

  Madden, Max

  Sedgemore, Brian

  Mahon, Mrs Alice

  Sheerman, Barry

  Marek, Dr John

  Sheldon, Rt Hon Robert

  Marshall, David (Shettleston)

  Shore, Rt Hon Peter

  Marshall, Jim (Leicester S)

  Short, Clare

  Martin, Michael J. (Springburn)

  Skinner, Dennis

  Martlew, Eric

  Smith, Andrew (Oxford E)

  Maxton, John

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

  Meacher, Michael

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

  Meale, Alan

  Snape, Peter

  Michael, Alun

  Soley, Clive

  Michie, Bill (Sheffield Heeley)

  Spearing, Nigel

  Michie, Mrs Ray (Arg'l & Bute)

  Steel, Rt Hon David

  Mitchell, Austin (G't Grimsby)

  Steinberg, Gerry

  Moonie, Dr Lewis

  Stott, Roger

  Morgan, Rhodri

  Strang, Gavin

  Morley, Elliott

  Straw, Jack

  Morris, Rt Hon A. (W'shawe)

  Taylor, Mrs Ann (Dewsbury)

  Morris, Rt Hon J. (Aberavon)

  Thomas, Dr Dafydd Elis

  Mowlam, Marjorie

  Turner, Dennis

  850

  Wallace, James

  Winnick, David

  Warden, Gareth (Gower)

  Worthington, Tony

  Wareing, Robert N.

  Wray, Jimmy

  Welsh, Andrew (Angus E)

  Young, David (Bolton SE)

  Welsh, Michael (Doncaster N)

  Wigley, Dafydd

  Tellers for the Noes:

  Williams, Rt Hon Alan

  Mr. Ken Eastham and

  Williams, Alan W. (Carm'then)

  Mr. Frank Cook.

  Wilson, Brian

  Question accordingly agreed to.

  FINANCE BILL [Money]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act resulting from the Finance Bill, it is expedient to authorize—

  (a) the payment out of the National Loans Fund of any expenses incurred by the Treasury in connection with the redemption before maturity of securities held in the Issue Department of the Bank of England;

  (b) the payment into the Consolidated Fund of the surplus standing to the credit of the Redemption Annuities Account immediately before that account is wound up.—[Mr. Lawson.]

  Ordered,
  That a Bill be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Fowler, Mr. Secretary Ridley, Mr. Secretary Channon, Mr. Secretary Moore, Mr. Secretary Parkinson, Mr. John Major, Mr. Tony Newton, Mr. Norman Lamont, Mr. Peter Brooke, and Mr. Peter Lilley do prepare and bring it in

  FINANCE BILL
  Mr. Norman Lamont accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 102]

  Water Bill [Money] (No. 2)
  Queen's recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the Water Bill, it is expedient to authorise the payment out of money provided by Parliament of—

  (a) any travelling or other allowances payable under the Act to members of the committee established and maintained for advising the Secretary of State with respect to matters affecting or otherwise connected with the carrying out in Wales of the functions of the National Rivers Authority; and

  (b) sums required by a Minister of the Crown for making loans to the National Rivers Authority for capital purposes in connection with the carrying out of its flood defence functions, so long as the aggregate amount outstanding in respect of the principal of sums borrowed by the Authority shall not exceed £160 million.—[Mr. Norman Lamont.]

  10.29 pm
  Mr. Bob Cryer: I shall raise several questions on this money resolution. I spoke on the Water Bill [Money] (No. 1) resolution. I am concerned, because the first money resolution—[Interruption.]
  Mr. Speaker: Order. Would hon. Members who are not staying for this important debate please leave quietly?
  Mr. Cryer: I am grateful to you, Mr. Speaker. After all, the hon. Members who are moving out of the Chamber in such a noisy fashion belong to the party that continually complains about looking after the taxpayer's money. We are discussing a money resolution that authorises the spending of at least £160 million, and Conservative Members are leaving the Chamber in a noisy and indifferent fashion.
  The first section of the resolution deals with
  "any travelling or other allowances payable under the Act to members of the committee established and maintained for advising the Secretary of State with respect to matters affecting or otherwise connected with the carrying out in Wales of the functions of the National Rivers Authority".
  The National Rivers Authority is part of the hierarchy which is established by this wretched bit of legislation—it is hardly a bit of legislation; it is one of the biggest Bills ever brought before the House—yet hon. Members were not informed that extra money would be required for a committee established by the Secretary of State to advise him about the NRA. We were told that the NRA would be a free-standing body able to operate on its own, and that grant aid would be provided for it. The Minister responded to me in that way on 8 December when we discussed the first resolution. He said:
  "The hon. Member for Bradford, South rightly referred to the National Rivers Authority and the grants to it by the Secretary of State. Paragraph 17 to schedule 1 enables the Secretary of State, with the approval of the Treasury, to make grants to the NRA of such amounts, and on such terms, as he considers appropriate. He must, of course, provide the Comptroller and Auditor General with an account for each financial year of any grant paid and the Comptroller and Auditor General must then certify and report on that account. As the hon. Gentleman knows, copies of the Comptroller and Auditor General's report must be laid before both Houses of Parliament."
  I should like the Minister to confirm that that safeguard will apply to the expenditure sought—they may be minor amounts—for the committee which is being established to advise the Secretary of State on matters concerning the functions of the NRA in Wales.
  Mr. Dennis Skinner: Do not ask him too many questions, Bob, he has been busy.
  Mr. Cryer: My hon. Friend the Member for Bolsover (Mr. Skinner) is referring to the extra-curricular activities of the Minister. I want him to be bright and alert and not feeling too weak and worn out, for whatever reason, to answer the debate.
  The second part of the money resolution refers to
  "sums required by a Minister of the Crown for making loans to the National Rivers Authority for capital purposes in connection with … flood defence functions".
  On 8 December, I raised the issue of the grant-making power. The Minister said:
  "The grant-making power will enable grant-in-aid to meet the deficit on the NRA's operations. Although the NRA will be encouraged to maximise its income from direct charges, a deficit will arise largely because the environmental service charge will not be levied after 1989–90. Grant-in-aid is considered a more appropriate method of paying for services which are of benefit to the whole community."—[Official Report. 8 December 1989; Vol. 143, c. 539.]
  Clearly, flood defence arrangements are of benefit to the whole community. Why did the Minister tell me on 8 December that the benefits that would be enjoyed by the entire community would be paid for by grant in aid, to meet any deficits, when now, a few weeks later, the Government find it necessary to make loans? Is the wretched Bill so complex and so difficult to follow that Ministers could not produce a money resolution to cater for every contingency for which the Bill provides, as the contingencies were discovered in Committee? If so, that is not a good process of legislation. The Bill is complicated, but surely Ministers should have made provision at the beginning of the legislative programme, not when we are halfway through it.
  Indeed, tomorrow the House will be debating the Water Bill on Report. It is a bit late in the day for the Government to produce a second money resolution. It is clear that they have discovered oversights in the past few weeks. It is clear that there has been a lack of planning and understanding in the construction and progress of the Bill. There has been a serious miscalculation, bearing in mind that the original money resolution was, to all intents and purposes, massively comprehensive. The first section contained 12 parts, the first of which provided for grants by the Secretary of State to the National Rivers Authority. It seems that grants are not enough. Loans are required for a specific purpose. Why were grants authorised in the previous resolution for the generality of community purposes with loans being authorised only for flood defence purposes? Why was there that differentiation? I hope that the Minister who is to reply will provide an adequate response.
  As I have said, the first resolution was comprehensive. Are the Government considering the introduction of further money resolutions? We know from our experience that the Government's calculations are often so incompetent that sometimes three resolutions have been required. It seems that they have no idea of making adequate provision. For example, they introduced two further money resolutions following the Second Reading of the Firearms (Amendment) Bill, as it then was, and the original resolution.
  I hope that the Minister will be able to provide the assurances that I seek. I am surprised that an explanation was not provided in the first instance. It is outrageous that the House should be asked for £160 million, with a few

  853
  extra million pounds, I suppose, for the expenses of the committee that is advising the Secretary of State for the Environment on the NRA. I suppose that the extras are too trivial to bother about. Approval is sought for the expenditure of £160 million, yet no explanation is vouchsafed to the House. In other words, a Minister has had to be forced to his feet. We are talking of a Government who are supposed to be concerned about the taxpayers' interests. It seems that if they think that they can get away with pushing expenditure of £160 million through the House on the nod, they will try to do so. That is a disgraceful attitude for any Government to take.
  10.38 pm
  Mr. Dafydd Wigley: I was surprised to find at 2.30 pm that the resolution was on the Order Paper. There was no announcement last week that any such measure would appear before us. I understand, however, that that is the normal way in which such business is handled. I suggest that in future there should be reference to a resolution such as that which is now before us when the business of the House is discussed on a Thursday. If not, the allegation of the hon. Member for Bradford, South (Mr. Cryer) that something is being slipped through will have additional credence. Nothing was said last week to the effect that a second money resolution would be on the agenda this week, whether on the nod or otherwise.
  I was a member of the Committee which considered the Water Bill and I do not oppose the provisions contained in the resolution. In some respects, they meet some of the arguments that I and other Opposition Members raised in Committee over several weeks. First, the resolution will facilitate the acknowledgement in legislation that the advisory committee on rivers in Wales will have money made available to it to enable it to do its work. We had a long argument in Committee about whether the advisory committee in Wales would be a statutory one. For a long period the Government appeared not to be too keen on making it a statutory body. I am glad that we have won the argument and that the Government have conceded that. I hope that the statutory committee will feel that it has an important function to carry out and that the Secretary of State will take account of the weight of its opinion.
  I hope that the sums made available to the Committee will enable it to undertake a professional job and that it will not be a committee of people who have retired or have independent incomes and are thus able to undertake do-gooding work for the Secretary of State. It must consist of people who do ordinary everyday jobs, and the scale of the allowances and costs must be adequate to recompense those who do not have private means or a retirement income. It is important to strike the right balance. I welcome paragraph (a) as a concession to the points that I made in Committee, as did the hon. Members for Cardiff, South and Penarth (Mr. Michael) and for Brecon and Radnor (Mr. Livsey).
  I should be grateful for clarification of how the second paragraph will work. Although I welcome any source of additional publicly originated finance available to undertake important works that should be undertaken in the public sector, such as flood defence mechanisms, it is important to know how the charging for that will be affected by the money resolution. Will there be additional charges to service the loans? They are loans, not grants. If there are additional charges, will they go through to
  854
  communities which suffer from floods and need defence mechanisms? I should be grateful if the Minister, in responding to this brief debate, would give some indication of the additional implications that this part of the resolution may have for those who are to benefit from the work undertaken.
  My other slight misgiving is whether £160 million is enough and about the mechanism for increasing the figure, if more is needed. Presumably it will not be necessary to go back to primary legislation and the money may be provided by an order on an annual basis or by some similar arrangement.
  In introducing this money resolution the Government are providing a prelude to the debate on the Bill that we shall have in the next two days and on the first day after the recess, when they will have to introduce many amendments and proposals to meet the points of weakness that we pointed out to them in Committee. The Bill has been fully opposed in Committee because Tory Back Benchers, Opposition Members and people outside do not believe that it is coherent legislation. It will need considerably more than this money resolution to overcome the basic fallacies in the Bill, not least the financial ones.
  10.43 pm
  Mr. Alun Michael: It is a little surprising to see the scrappy way in which the Government are beginning to backtrack on this curious Bill. In view of the criticism that the Secretary of State and the Prime Minister made of the Ministers' handling of the Water Bill, it should be said in fairness that they have done their job throughout the Committee stage and given way on nothing. Now we see a little room for manoeuvre creeping in. Besides this money resolution are we to see more money resolutions about the writing off of debt or the suggestions made by the right hon. Member for Henley (Mr. Heseltine) to give grants to the privatised water companies?
  I should like to make it clear that we will not oppose these proposals because they mark concessions wrung from reluctant Ministers who have taken a pounding. One has rarely seen Ministers in such disarray as we saw in Committee.
  Paragraph (b) reflects a response to one element of the muddle through which Ministers have tried to find their way. That is certainly welcome as an important step by the Government in recognising the need for a loan facility, which Ministers, of course, failed to recognise throughout the Committee stage. The Secretary of State is obviously not aware of the difficulties that his junior Ministers have been suffering over recent weeks and months. Our response to paragraph (b) is that at last perhaps the Secretary of State has recognised—[Interruption.]
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. Mr. Michael.
  Mr. Michael: I am grateful, Madam Deputy Speaker. It is obvious that the Secretary of State is somewhat needled on this matter.
  Paragraph (a) will give the financial requirements for a committee that will at last be written into the Bill. Of course, the Minister of State at the Welsh Office continually refused our request to write this into the Bill

  855
  during the Committee stage. I am glad to see that it will be in the Bill and that the money resolution is before the House.
  Tomorrow's debate will be about the committee's composition and what it will do. Our welcome, therefore, for paragraph (a) depends on the debate tomorrow. The Government are, in effect, accepting the amendment that we pressed on them in Committee that the advisory committee should be written into the Bill. Our amendments will give teeth to the committee, but they will require the same provisions as are given tonight. However, the purpose of our amendments—which also require the money resolution—are to protect the Welsh people from the worst effects of the Water Bill. Our plea is for a watchdog with real teeth. Our amendments will give real teeth without which the body would be completely meaningless.
  The amendments will go further than simply to say that there will need to be a committee to advise the Secretary of State for Wales. They will seek to give proper weight to that committee by appointing to it representatives of local authorities in Wales, the chairman of the fisheries drainage and recreation committees and representatives of consumer, environmental and recreational organisations to be named by the Secretary of State. That will provide a meaningful committee and will give some purpose to the payments to be made under the resolution.
  There will also be the possibility of the Secretary of State giving that committee some real work, by enabling it to carry out any function exercisible by him by virtue of the Bill. I refer to Wales because, of course, the first part of the resolution refers to Wales. It appears that the Secretary of State for the Environment does not require those functions for England.
  It is important that there is an environmental oversight by a proper body. We believe that that should be carried out by a Welsh rivers authority and we have tabled an amendment to that effect. However, failing such an authority, there is a need for a Secretary of State's committee that is not just a nominal cipher, but has some power and responsibilities and can be seen to exercise functions within Wales.
  During the Committee stage we won from a reluctant Minister of State the concession of a special committee for Wales, which has led to the money resolution. After fresh controversy, the Minister has tabled an amendment to write the committee into the Bill. However, unless the committee is given proper authority by our amendments, it will be a toothless corgi.
  We propose further changes to make the body effective and representative of Welsh interests. As the paragraph now stands, the Secretary of State could use the money resolution simply to pay for three or four members of the Conservative party to meet in a hotel somewhere near the Welsh border, or even in London, for half an hour once a year and to offer him private advice that he could then ignore. That would be completely meaningless, but I suspect that that is what the concession means as it stands. If the amendments debated tomorrow are accepted, however, the money resolution will enable proper payment to a proper committee that will consist of proper
  856
  representation from environmental groups, fishermen as well as local authorities and the chairman of the committees to which I referred earlier.
  If the sell off of our water goes ahead information will be vital, but it will not be available to the public in Wales unless we have the powers that are allowed for in our amendments to the Government's new clause. Our amendments will empower the committee to require information from the water companies and from the rivers authority. In that event, the payment called for in the money resolution will be money well spent. Without such expenditure it is difficult to see how the public in Wales will be properly protected.
  The Secretary of State for Wales will be able to delegate any of his powers under the Bill to the committee and give it a real job to do. That will also give some purpose to the financial provisions that we are debating.
  We believe that the privatisation of water will do nothing positive for the environment or for the consumer in Wales. The minimum that we shall seek tomorrow is the establishment of a Welsh rivers authority and a consumers' charter of measures to be included in the Bill. Failing that, the Secretary of State for Wales should recognise that the amendments that we shall debate tomorrow and the financial provisions before us tonight are modest, constructive and positive proposals which would be welcomed in Wales and which the Secretary of State should accept if he has the slightest desire to protect Welsh interests.
  We hope that the money resolution will pave the way for the Secretary of State for Wales to accept our amendments to the new clause tomorrow so that there will be something in the Bill that means something to the Welsh people.
  To a great extent, tonight's debate is meaningless until we have tomorrow's debate. The way in which the Government have sought to rush through such an amendment by putting it on the Order Paper in such an extraordinary fashion leads to us having to refer to tomorrow's business while we debate that of tonight. That is a nonsensical way in which to deal with business but that is the way in which the Government operate. They have got themselves in a complete mess, but, because of that, we welcome what we think today's money resolution may mean and look forward to the substantive debate tomorrow.
  10.52 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Cohn Moynihan): By the tenor of the laboriously scribed responses of the hon. Member for Cardiff, South and Penarth (Mr. Michael) in Committee, I often thought that his mind was not even on the same Committee. Tonight is no exception. We have won the argument, we have won the debate and tonight the hon. Gentleman has stood at the Dispatch Box to agree with us on the money resolution.
  The first part of the money resolution relates to the establishment of the advisory committee for Wales, which the Secretary of State for Wales will be able to appoint if new clause 8 is approved by the House. The advisory committee's role is to ensure that the Secretary of State for Wales is kept fully informed, and obtains a Welsh view, of

  857
  National Rivers Authority policies which affect Wales and of the needs of the NRA if Welsh requirements are to be met.
  The clause provides for the Secretary of State to pay —with the consent of the Treasury, out of money provided by Parliament—to the members of the committee sums reimbursing them for loss of remuneration, for travelling expenses and for other out-of-pocket expenses. The costs are not likely to be "a few million pounds", to quote the hon. Member for Bradford, South (Mr. Cryer). We expect them to be about £25,000 per year.
  Paragraph (b) of the resolution provides for the payment of loans to the NRA in connection with its flood defence function, and sets a limit to the amount that the NRA could borrow for this purpose. The resolution is necessary because we have tabled amendments to the Water Bill to provide for such arrangements. Paragraph 18 of schedule I already allows the NRA, with the consent of the Secretary of State or the Minister of Agriculture, Fisheries and Food, and the approval of the Treasury, to undertake temporary borrowing. That power is intended to enable the NRA to overcome any problems that may arise with short-term cash flow.
  The hon. Member for Bradford, South wanted to know why we should have to discuss these details now when we have already debated a money resolution. He would be the first to accept that we should listen very carefully to points raised in Committee by his hon. Friends and also by our own hon. Friends, and that is what we did. Concern was expressed that a power for the NRA to borrow temporarily was not sufficient on its own and that the NRA should also be able to undertake long-term borrowing to fund its flood defence work.
  Mr. Peter L. Pike: We debated the issue of temporary borrowing in Committee. I argued then that temporary borrowing was unnecessary because all borrowing is temporary if the intention is to repay it. Why has the Minister produced a proposal after all this time when he refused to accept in Committee that there was any need for additional provision in the Bill? If money is borrowed, the intention must be to pay it back.
  Mr. Moynihan: In Committee, the hon. Gentleman and his hon. Friends put the case for long-term borrowing powers, to which we are responding positively now. We have taken account of the hon. Gentleman's views and of the admirable views expressed by my hon. Friends on this point in the debate in Committee.
  Mr. Alistair Burt: I wonder whether my hon. Friend the Minister noted the point made by the hon. Member for Burnley (Mr. Pike) that money which is
  858
  borrowed is intended to be paid back. I do not know where the hon. Member for Burnley was while the Labour party was in government, but the Labour Government did not pay back a penny piece. The Conservative Government are paying money back, whereas the Labour Government just kept on borrowing, leaving the burden to the next generation.
  Mr. Moynihan: If we ever wanted living proof of the fact that we won the argument in Committee, it exists in the form of my hon. Friend the Member for Bury, North (Mr. Burt).
  We do not believe that it is necessary to provide the NRA with long-term borrowing powers for situations other than emergencies. It should be possible for the NRA to plan a balanced budget for the normal run of its flood defence work without recourse to borrowing. Indeed, water authorities have generally managed without significant and new borrowings in recent years.
  I confirm that the report that Ministers are required to make to both Houses of Parliament under paragraph 21(3) of schedule 1 will include a reference to money expended on the Welsh committee. This money resolution is necessary because of the amendment to provide borrowing powers following the strong views expressed in Committee which I reflected in my earlier comments.
  In response to the points raised by the hon. Member for Caernarfon (Mr. Wigley), the money resolution provides for loans to the NRA to finance emergency flood defence work. The cost of servicing the loans will come from the land drainage precepts. The effect of that is to spread the costs of major emergency works over a number of years. I hope that in a spirit of harmony and agreement between hon. Members on both sides of the House about the great benefits and wisdom of this money resolution the House will accept the motion without a Division.
  Question put and agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the Water Bill, it is expedient to authorise the payment out of money provided by Parliament of—

  (a) any travelling or other allowances payable under the Act to members of the committee established and maintained for advising the Secretary of State with respect to matters affecting or otherwise connected with the carrying out in Wales of the functions of the National Rivers Authority; and

  (b) sums required by a Minister of the Crown for making loans to the National Rivers Authority for capital purposes in connection with the carrying out of its flood defence functions, so long as the aggregate amount outstanding in respect of the principal of sums borrowed by the Authority shall not exceed £160 million.

  Grant-Maintained Schools
  10.58 pm
  Mr. Jack Straw: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Education (Grants) (Grant-Maintained Schools Limited) Regulations 1989 (S.I., 1989, No. 165), dated 8th February 1989, a copy of which was laid before this House on 10th February, be annulled.
  This debate is about an abuse of powers, and the Government's double standards. It is about the arrogance of power of a Government, who in the words of one of their leading members, Lord Hailsham, have now become an elective dictatorship and effectively accountable to no one but themselves.
  This debate is also about a simple question of morality: whether taxpayers should fund a body which is palpably a party political front organisation, but which has sought to hide its true nature by falsely claiming that it was a charitable trust, when at no stage in its existence has it ever had that status.
  The regulations empower the Secretary of State to grant-aid Grant-Maintained Schools Limited for a variety of activities. Speaking on the radio this morning, the Secretary of State said that those activities would comprise mainly training for grant-maintained schools already established. However, paragraph 2(1) of the regulations goes very much wider than that, allowing
  "expenditure incurred or to be incurred by it for the purposes of, or in connection with, the provision (or proposed provision) of educational services in grant-maintained schools (or proposed grant-maintained schools), which expenditure is for the time being approved by the Secretary of State."
  Despite questioning by me, the Secretary of State says that he cannot put a figure on the sum that he is likely to grant. However, the Grant-Maintained Schools Trust has applied for the purposes specified by the regulations for £25,000 for the 11 remaining days of the current financial year and for £150,000 for the next financial year.
  A Department of Education and Science grant of £150,000 is very large indeed, by comparison with the moneys made available to other organisations. The Pre-School Playgroups Association, which has a worthier function than the Grant-Maintained Schools Trust and provides services for hundreds of thousands of children, receives the princely sum of £153,000. If the trust's application is granted in full, it will receive more in total grant than the Church of England Board of Education, the National Association of Governors and Managers, the National Children's Bureau, the Family Welfare Association and the Girls Brigade combined.
  Mr. John Maples: The hon. Gentleman says that £150,000 is a lot of money. If a Labour-controlled local education authority were to run up £75,000 in legal fees on its own account, and another £75,000 on the account of the governors, over an attempt to frustrate the governors' wishes to turn their school into a grant-maintained school, would not the hon. Gentleman agree that that was a misuse of public money? That is exactly what happened in at least one case.
  Mr. Straw: As usual, the hon. Gentleman does not mention which authority. [HON. MEMBERS: "ILEA."] If the school in question is Haberdashers' Aske's, that case concerns an application to become not a grant-maintained school but a city technology college. The hon. Gentleman knows full well that ILEA won in court in the first
  860
  instance, and that it now has leave to appeal to the House of Lords. Citizens and local authorities have a right to go to court and have their rights established, not have them crushed by Conservative Members. [Interruption.] It is understandable that Conservative Members do not want to debate the matter of the Grant-Maintained Schools Trust being a Conservative front organisation, the abuse of power that there has been in funding it, and why the trust has so falsely misrepresented its position.
  The trust is a Conservative front organisation. When the Prime Minister gave an interview to The Independent in September 1987, speaking of opting out, she said—and she used the first person plural—
  "We are very much aware that we have got to form some kind of organisation to help people to do it"—
  that is, opt out.
  "And we have got to get the people who already run schools and say to them 'Now look! This is the way to go about it'."
  The trust was established at the Prime Minister's behest. All the main trustees are Conservative party activists. The chairman is the hon. Member for Epping Forest (Mr. Norris), and its director is Mr. Andrew Turner, formerly of Conservative Central Office research department and a Conservative city councillor for Oxford. One of the trustees is Judith Chaplin, a former Conservative councillor and head of the Institute of Directors policy unit. Another trustee is Mr. Ronald Baird, group director of Saatchi and Saatchi and a former Conservative party public relations manager. So the trust is a Conservative front.
  Secondly, it has acted as such. The organisation's first act—even before the Education Reform Act was passed —was to write not to all councillors, but to all Conservative councillors, asking them whether they could identify schools that might opt out and concluding:
  "Needless to say the Trust would treat any such information in the strictest confidence".
  That, I suggest, is not the behaviour of an above-board, respectable charitable organisation.
  Dame Elaine Kellett-Bowman: Is the hon. Gentleman aware that one Labour organisation wrote to all Labour councillors in Birmingham before one election —which the hon. Gentleman may well remember—telling them to oppose grammar schools because they taught the children of working-class families to vote Conservative?
  Mr. Straw: I was not aware of that. As ever, I am deeply grateful to the Lady, but that is not the subject that we are discussing.
  The third point is that, even if training were needed —as the Secretary of State says it is—it would be quite wrong for it to be provided by this organisation. There are resources and skills enough within the Department of Education and Science, and within respectable, established educational charities, to provide training—if it is training, and not indoctrination of those running grant-maintained schools, that is needed.
  What of the resources of the DES? We do not have a unit for grant-maintained schools, or even a branch; a whole division of the Department is devoted to nothing but grant-maintained schools, costing £150,000 a year in salaries alone. Are those people not capable of providing the training? Can the inspectorate—whose costs are added to that £150,000—not provide it?
  The fourth and last point is this: we should not pay the organisation because it has wilfully misled parents and the

  861
  public about its true nature. The first major pamphlet sent out by the trust—I understand that it was sent to all eligible schools—was called "A New Choice of Schools". I have a photocopy here. It is very cleverly put together, with pictures of children on beaches and in school libraries, and it talks in tendentious terms about the problems that schools have faced in the past. Turning to page 10, we read as follows—[HON MEMBERS: "We?"] Yes, I assumed that Conservative Members could also read—
  "The Grant-Maintained Schools Trust has been set up to promote and assist in the development of Grant-Maintained Schools. As a registered charity it is independent of, but fully briefed by, the Department of Education and Science".
  That statement—that the trust was and is a registered charity—is a simple, straightforward, bare-faced lie. The Charity Commissioners wrote to me as recently as 28 February this year, saying:
  "As you know, the current activities of the Trust are carried on through a non-charitable company and that a charity has yet to be constituted."
  Yet the statement that it was a charity was made nine months before that letter was written.
  Whoever wrote that, and whoever allowed it to go out, must have known that it was not true. I suspect that someone will stand up tonight and say that it was all a mistake, but to suggest that that was a mistake is to ask us to suspend our judgment and our experience of the wholly unscrupulous operation of the present Government over the past 10 years. I will accuse the trustees—including the hon. Member for Epping Forest—of many things, but incompetence is not one of them. Nor is that an accusation that I bring against Field Fisher and Martineau, one of the country's leading firms of solicitors and the solicitors to the trust.
  There was no mistake when that claim was made; just arrogance—an arrogance that led the trust to believe that it was above the law and could get away with making a claim that it probably knew to be untrue. What is more, it was not a mistake. Mr. Andrew Turner, Conservative city councillor and director of the trust, has damned himself out of his own mouth. He was the man who, last summer, issued the document that used the words "As a registered charity". In The Observer yesterday, he said:
  "We never thought that all our activities were charitable."
  That is interesting. The Secretary of State and Mr. Turner must know that one cannot have a charitable trust if parts of its activities are not charitable. That makes the operation of such a trust wholly impossible and bogus. It means that Mr. Turner was party to wilfully misleading the public and parents about the nature of the trust and that it was done for a purpose: that the trust could be presented as independent—to use its word—of the Department of Education and Science and the Conservative party when it was not.
  Further evidence of the wilful intent to mislead is that, once a fuss was made about it, initially in the education press, no apology was sent by the Department of Education and Science to the thousands of schools that had received the document. It did not say, "We have been referring to this as a trust. By the way, it is not a charitable trust; it is a political front organisation." All the Department did was to change the word "charity" for "non-profit". There is still the insinuation, with the use of the word "trust", which is customarily associated in people's minds with charity, that this body is a charity.
  I asked the Secretary of State twice on the radio this morning, and twice he refused to answer, this question;
  862
  perhaps he will do so now: does he approve of a body of this kind wilfully misleading the public and parents about its nature? I asked him whether he was aware that those who make false representations that a body is a charity and who collect funds from the public might find themselves in the criminal courts. Is the Secretary of State seriously suggesting that a body such as this, which has fraudulently misrepresented its position, is a proper recipient of public funds?
  Opting out has flopped. Only a handful of schools have balloted to become nationalised, state-controlled institutions. Most of them are threatened with closure and reorganisation. Most of them are not in Labour-controlled areas. Four weeks ago the Secretary of State tried to revive opting out by some cheap and grubby accusations against Labour authorities and against some of my hon. Friends. He has failed, despite repeated requests, to justify them. Tonight he seeks to breathe life into a flagging campaign by involuntarily invoking the taxpayers' assistance.
  This is the Secretary of State who is only too ready to lecture others about morality. We remember his lecture to the General Synod of the Church of England on 1 February about the need for the Church to maintain moral values. Before he next examines the mote in the eye of his brother, or in the eye of local authorities, hon. Members, or the Church, let him examine the beam in his own eye. Let him practise what he preaches, for once. The regulations are an abuse of power. We shall oppose them in the Lobby.
  11.13 pm
  The Secretary of State for Education and Science (Mr. Kenneth Baker): He got a bit worked up, didn't he? I welcome this opportunity to explain to the House the merits of the Education (Grants) (Grant-Maintained Schools Limited) Regulations 1989. I find it richly comic to be lectured by the Opposition about the proper and prudent use of public money. The hon. Member for Blackburn (Mr. Straw) certainly overreached himself this time.
  The hon. Gentleman said at the end of his speech that the grant-maintained schools movement had flopped, but the debate is not just about the Grant-Maintained Schools Trust—it is also about the position of grant-maintained schools. The regulations cannot be discussed without grant-maintained schools also being discussed. Behind the hon. Gentleman's self-righteous pose is the unmistakable sound of wailing and gnashing of teeth. The debate is about the Opposition's rage and frustration that yet another of the Government's policies has proved both popular and successful. That success leads directly to these regulations and to the Opposition's mingled pain and grief.
  The speech of the hon. Member for Blackburn has only illustrated his penchant for what I might describe as the Billy Bunter school of oratory. Hon. Members will recall Bunter's words:
  "I didn't eat your … jam, you rotter; and anyway, it tasted awful".
  The hon. Gentleman's version is that grant-maintained schools will ruin the state education system, but that no school will want to be grant maintained. He is wrong on both counts. The hon. Gentleman said that the whole system has flopped, but I have already approved four schools for grant-maintained status from September this year. Eighteen more have published formal applications to

  863
  me, which I shall consider and determine as soon as possible. Parents at 12 more schools have voted yes in secret postal ballots, and will publish proposals in due course. Eleven more schools are committed to holding ballots shortly, and another three have just embarked on the statutory procedures. I should add that a further 12 have held ballots and voted no to pursuing grant-maintained status. I have no trouble with that at all. If parents are given choice, they can choose not to change.
  Mr. Patrick McLoughlin: Is my right hon. Friend aware that one of the schools to which he has just referred is in Chesterfield? We can imagine how embarrassing it would be for the Labour party if a school in Chesterfield opted out. Is my right hon. Friend aware that there is a lot of jiggery-pokery going on and that the county council allocated money to teachers to campaign against opting out? Is my right hon. Friend aware of any other local authorities which have used public money to obstruct parents' democratic choice?
  Mr. Baker: My hon. Friend raises a case about which we have documentary evidence. [HON. MEMBERS: "Publish it."] It has already been published by Derbyshire county council, which voted £500 to be given to teachers to campaign against opting out. That is not fair because it is money for one side only.
  Mr. Straw: Will the right hon. Gentleman give way?
  Mr. Baker: In a moment. The money that has been used for that campaigning is public money. [HON. MEMBERS: "So is this."] The money that we are debating in the regulations will not be used for campaigning. Not a penny of public money has been spent by the Government on campaigning for grant-maintained schools.
  Mr. Straw: That may be so, but £22,700 has been spent on 100,000 pamphlets, copies of which have been sent to every school governor asking them to opt out. Was that not campaigning?
  Mr. Baker: It did not ask them to opt out. The leaflets that we sent out were an explanation of the law relating to grant-maintained schools. I am always being asked to explain the law. That is perfectly legitimate. Derbyshire county council produced the leaflet that I am holding up now at ratepayers' expense. I believe that 50,000 copies were produced.
  The hon. Member for Blackburn alleges that grant-maintained schools have flopped. More than 60 schools——
  Mr. Nicholas Bennett: On a point of order, Madam Deputy Speaker. The hon. Member for Rhondda (Mr. Rogers) has just walked into the Chamber and is now accusing my right hon. Friend the Secretary of State of being the biggest hypocrite in politics. Will you ask the hon. Gentleman to withdraw that comment?
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. I am listening to the Secretary of State.
  Mr. Baker: I was trying to remind the House that the Labour party cannot stomach the order because, so far, 60
  864
  schools have opted out. That is a confirmation of the importance of parental choice, which the Labour party does not like and will not have.
  Mr. Bob Dunn: Does my right hon. Friend agree that the Opposition's approach tonight has been motivated by their fear of the success of the Government's policy? Does he further agree that within a few months the Opposition will probably reincarnate the policy and claim it as their own? They may even go so far as to claim that they invented it in the first place.
  Mr. Baker: I hope that there will be such a conversion, but I am not optimistic. My hon. Friend is absolutely right that our policy has proved popular. Last year, during the long proceedings on the Education Reform Bill in Committee and in the Chamber, I was told that there would be a low turnout in the ballots, that parents would take no interest and that small handfuls of parents would take schools away from local education authorities. What actually happened? In the 46 ballots so far, the average turn out has been 71 per cent. of those eligible to vote, some schools have had turnouts of more than 80 per cent., and the average vote in favour has been 68 per cent.
  Mr. Derek Fatchett: The Secretary of State seems to be having some difficulty with his statistics. He told us that 60 schools had opted out, then he said that four had been approved, and now he is saying that 46 schools have held ballots. Which is the correct figure?
  Mr. Baker: I said that four schools had completed the process. So far, 46 of the 60 schools have reached the ballot. I remind the hon. Gentleman, who likes these figures, that in the 46 ballots so far, 71 per cent. of those eligible have voted, so the measure is proving very popular with parents.
  Mr. Fatchett: Whether by mistake or deliberately, the Secretary of State has misled the House. His original claim was that 60 schools had opted out. The right hon. Gentleman must come clean. Although 60 schools may have approval by resolution of their governors to hold a ballot, they have not opted out. Will the Secretary of State now correct the record?
  Mr. Baker: I have no wish to mislead the House, but 61 schools are in the process of opting out—[Interruption.] The number has increased since I have been in the Chamber——
  Madam Deputy Speaker: Order. I remind the Secretary of State that the scope of the debate is very narrow. It relates to the desirability of paying grant to the company for the specified purpose. I hope that we shall contain the debate within its scope.
  Mr. Baker: May I clear up the point that I was asked to clarify? [Interruption.]
  Madam Deputy Speaker: Order. I require the Secretary of State to adhere to his responsibilities and to talk within the scope of the debate.
  Mr. Baker: I am delighted to do that.
  With regard to the purpose of the regulations, the governors and senior staff of a school approved for grant-maintained status will obviously need to prepare for their new and important responsibilities. Particularly in the early days, grant-maintained schools may well wish to

  865
  have access to sources of expertise and advice in a number of areas—for example, on financial matters, such as proper budgeting and accounting practices, on effective use of computer hardware and software to collect, store, retrieve and use management information on the purchase of goods and services, on the making of contracts with staff and suppliers and on legal, architectural, health and safety and other matters.
  The Grant-Maintained Schools Trust has submitted a proposal to my Department to make advice on each of these areas available to schools approved for grant-maintained status. It also intends to provide training for governors and staff. In the longer term, it will seek to build up a group ethos in this new sector of maintained schools and to ensure that they share good practice.
  These are all worthwhile objectives, the pursuit of which it is entirely right and proper for my Department to finance. The regulations empower me to do so. The trust has made a good case. It has thought hard about what its potential customers' needs will be and how it can best help to meet them. I have therefore concluded that my Department should make a pump-priming grant of £25,000 to the trust for the remainder of the 1988–89 financial year and a further sum of the order of £150,000 in 1989–90.
  Mr. Simon Hughes: Will the right hon. Gentleman give way?
  Mr. Baker: I must finish this point as it is germane to the issues that have been raised.
  Let me make it absolutely clear. I shall make grants to the trust, in the words of regulation 2(1),
  "in respect of expenditure incurred or to be incurred by it for the purposes of, or in connection with, the provision (or proposed provision) of educational services in grant-maintained schools (or proposed grant-maintained schools)".
  The hon. Member for Blackburn raised this point.
  Mr. Straw: The Secretary of State has talked about the need for good practice. What about the issue that I raised in relation to sharp practice on the part of the trust? It has said that it is a registered charity when it is not. When will the Secretary of State say whether he regards that as acceptable conduct by a public body?
  Mr. Baker: I shall come to that.
  I shall continue with the point that I was making because the hon. Member for Blackburn asked me about the important phrase, "proposed provision". He suggested that money will be made available by the trust in the future for schools contemplating opting out as opposed to those whose applications have been approved. It is important to realise that only four schools have gone through the process of being approved. The hon. Gentleman found it hard to grasp the fact—he made the same mistake on radio this morning—that my intention is to provide grant only to support the trust's educational services to schools which have gone all the way through the procedures and been approved for grant-maintained status. That is a clear statement. The phrase "proposed provision" applies only to schools which have gone right through the process. I wish to make it clear to the House that no money will be provided by the trust for schools which are applying for grant-maintained status.
  Mr. Simon Hughes: The Secretary of State might consider altering the wording of the regulations to prevent that happening. If the Secretary of State is claiming that
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  the justification for the trust is to provide expertise, why is it that it neither employs nor has as trustees people with recognised educational expertise but instead has Tory party nominees and known Tory party activists?
  Mr. Baker: I shall deal with the political nature of the trust shortly. I must finish the important point that I was making. As I have said, I wish to make it clear that the money will be provided only for the educational services of schools that have opted out.
  The trust will be subject to the same sort of financial controls as other bodies grant-aided by my Department. In particular, it will be required to set up a bank account solely for the handling of grant from my Department, to ensure that grant is used solely for the purposes for which it is payable, and to publish annual, audited accounts and make such other returns as I request demonstrating that all grant has been spent for the purposes for which it was intended. My Department's accounting officer, the permanent secretary, is satisfied that those conditions of grant can be met by the trust and checked by the Department. I shall be accountable to Parliament in the usual way for the public funds expended, which means that the National Audit Office or the Public Accounts Committee will be able to examine the spending of every penny of the money for which I am asking the House.
  On charitable status, I have seen the document to which the hon. Member for Blackburn referred and I have also seen the amended document. I understand that the trust believed that it would receive charitable status for its activities and advertised itself on that basis. I agree that that was regrettable. However, within one month of the facts being drawn to the trust's attention, the revised document was printed with the amendment. The trust took steps to correct the impression made by its literature. The trust tells me that it is now discussing with the Charity Commission charitable status for the educational services that I have described, which are the only activities for which I shall pay it grant.
  Mr. Straw: It is more than regrettable—it is reprehensible. How could the trust have believed that it would receive charitable status when, according to the Charity Commissioners, a charity has yet to be constituted, even at this date, and no charity or charitable trust was in existence at the time when the trust wrote those words?
  Mr. Baker: I said that I considered it to be most regrettable. However, the trust corrected the mistake within a month.
  The question is whether money for educational services should be passed to a body which does not have charitable status. I have checked carefully the various bodies for which I provide grants for educational services. The majority are charities, but a large minority are not charitable bodies. Money is provided to them for the educational services that they provide, which we consider worth purchasing.
  Mr. Straw: The Secretary of State says that the mistake —not to say complete inaccuracy—was corrected. Did the Grant-Maintained Schools Trust send to all recipients of the original document a correction pointing out that the trust was not a charity?
  Mr. Baker: I am not aware that a correction was sent out to every recipient. The trust showed the corrected

  867
  document to schools that approached it. That is the important point. I should make it clear that it is legitimate for my Department to provide money for educational services to bodies which are not charities. I looked carefully through the list and I found that one of the largest grants for educational services given to a body that is not a charity is to the Trades Union Congress, which has received more than £750,000 in the current year. There are many other bodies in that position.
  The accusation has been made that the trust will receive public money for campaigning. I emphasise that the trust will not receive money for campaigning in favour of grant-maintained schools. So far, not a penny has been provided to the trust out of public money for any purpose. In future, the trust will not receive money for public campaigning, but only for the substantial provision of educational services.
  Mr. Tony Marlow: As I am sure my right hon. Friend is aware, the regulations say that he may pay grants for
  "the provision (or proposed provision) of educational services in grant-maintained schools".
  The regulations say, "in grant-maintained schools". When schools are going through the process, they are not grant-maintained schools, so my right hon. Friend cannot pay the money until a school is a grant-maintained school. What the hon. Member for Blackburn (Mr. Straw) has said is either a red herring or he cannot understand plain English.
  Mr. Baker: I am delighted to have the support of my hon. Friend. He has confirmed the advice that I received from the Clerks of the House this morning. The fact that the hon. Member for Blackburn cannot understand plain English is no surprise to me.
  We shall not provide money for campaigning purposes —it will be for educational services. On that basis, I am perfectly entitled to be concerned at the heavy expenditure which some local authorities have apparently used in campaigning, or in enabling others to campaign, against grant-maintained status. That was the point raised by my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin). We know that substantial sums have been made available by certain local authorities. An article in The Guardian—the hon. Member for Blackburn must agree that it is true if it has appeared in The Guardian—states:
  "Rochdale Council spent £5,414 on its campaign to persuade parents at Queen Elizabeth High School to vote against opting out."
  The article also refers to Rochdale spending
  "£6,165 on a similar campaign at Siddal Moore high school".
  Whether or not that money has been properly spent is not a matter for me, but reference has already been made to the money that Derbyshire county council has approved for campaigning. That is a direct use of public money for campaigning. Tonight the hon. Member for Blackburn has again accused the Government of using such money for party political purposes. Does he not realise that grant-maintained schools are nothing to do with party politics? If he does not agree with that, perhaps he will recognise that 24 schools in Labour areas have asked to
  868
  opt out, compared with only 21 schools in Conservative areas. That shows clearly that a great many Labour parents and councillors are in favour of opting out.
  The hon. Member for Blackburn has referred to political pressure, so I shall remind him of what happened to a Labour councillor in Bolton——
  Madam Deputy Speaker: Order. I regret that the Secretary of State is going wide of the debate. I remind the House that this is a short debate and will finish at 12.28 am. Short speeches will be welcome and speeches that go beyond the scope of the debate are out of order.
  Mr. Baker: The Government have been accused of using public money for party political purposes, so surely I am allowed to answer that point——
  Mr. Elliot Morley rose——
  Mr. David Young rose——
  Madam Deputy Speaker: Order.
  Mr. Baker: None of the money that will be provided under these regulations will be used for campaigning purposes, although other money has been used for such purposes by LEAs. Indeed, pressure has been put on Labour councillors. The hon. Member for Blackburn knows of a Labour councillor in Bolton who has had to resign the whip because he is in favour of grant-maintained schools.
  In conclusion—I know that other hon. Members wish to speak—we know that the hon. Member for Blackburn is implacably opposed to grant-maintained schools. [HON. MEMBERS: "This week."] If that is so, perhaps the hon. Member for Blackburn will come to the Dispatch Box and tell us what he intends to say in the next Labour manifesto about grant-maintained schools. Will he keep them or abolish them?
  Madam Deputy Speaker: Order. This debate is not about grant-maintained schools. I ask the Secretary of State to keep to the scope of the debate.
  Mr. Baker: I shall, of course, observe your ruling, Madam Deputy Speaker. I shall not press the hon. Member for Blackburn to answer that question tonight.
  Madam Deputy Speaker: Order. I am not concerned about that. I am concerned that the Secretary of State should keep within the scope of the debate.
  Mr. Baker: I conclude by repeating the point that I have already made. The money that we are asking the House to approve today is not for campaigning or for party political purposes—it is to provide educational services to grant-maintained schools, which have proved popular. I am sure that the Opposition are opposing this regulation not because of its terms but because they are fundamentally opposed to the concept of grant-maintained schools. I ask the House to approve the regulations.
  11.38 pm
  Mr. Denis Howell: We have heard a sordid speech that matches the sordid proposals before the House. It is a disgrace——
  Mr. Dunn: On a point of order, Madam Deputy Speaker. Will you please direct the right hon. Gentleman to confine himself to the regulations before the House?
  Madam Deputy Speaker: The debate must remain in order. I am sure that the right hon. Gentleman will refer to the scope of the debate. If he does not do so, I shall call him to order.
  Mr. Howell: In all my years of refereeing football matches—[Interruption.]
  Mr. John Marshall: On a point of order, Madam Deputy Speaker. I clearly heard a Labour Member make a disgraceful comment and I suggest that the hon. Member for Rhondda (Mr. Rogers) be brought to book.
  Madam Deputy Speaker: Order. I call Mr. Howell.
  Mr. Howell: I shall of course do my best to comply with your injunction, Madam Deputy Speaker, but I am bound to say that in all my years of refereeing football, this is the first time that I have been told to observe the laws before I have even taken to the field of play.
  This is a sordid business. In accordance with your line of thought, Madam Deputy Speaker, I wish to illustrate the activities of a trust in Small Heath school in my constituency. It is a disgraceful state of affairs. From day one, the trust, whether or not it has yet received money from the Government, has been involved in a collusion between the head teacher, certain governors and Conservative councillors. Two judicial reviews have now been granted by the courts. It would be wrong for the House to discuss them. All those activities——
  Mr. Harry Greenway: On a point of order Madam Deputy Speaker. What is sauce for the goose is sauce for the gander. The right hon. Gentleman's speech is not within the terms of the order. [Interruption.]
  Madam Deputy Speaker: Order. I have no intention of naming any hon. Member. I can deal with the matter without naming the right hon. Member. Does the right hon. Member understand that the scope of the debate relates to the desirability of paying grants to the company for specified purposes? I am sure that the right hon. Gentleman, who is a considerable parliamentarian, will confine himself to the guidelines that I have laid down.
  Mr. Howell: I assure you, Madam Deputy Speaker, that every word of my speech will deal with the activities of grant-maintained schools and the company. [Interruption.] I am sure that Madam Deputy Speaker will tell me if I am out of order. She does not need any assistance from the rabble on the Conservative Benches.
  I wish to deal with the activities of the trust in that school in my constituency. An unfortunate situation arose. Of the governors who were elected as a result of the Secretary of State's activities in a Labour constituency, only one Conservative governor attended once in 10 years. That is what happened. Suddenly, and in spite of their record——
  Mr. Harry Greenway rose——
  Mr. Howell: The hon. Gentleman should keep quiet and not get upset. There is no need to get excessively agitated.
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  I make it clear that, suddenly, and under the influence of that trust in an area in which, in 10 years, not one Tory governor had ever attended a meeting, because of the Secretary of State's activities, the governors were transformed and a multiplicity of Tories appeared. It would be out of order——
  Mr. Spencer Batiste: On a point of order, Madam Deputy Speaker. I seek your guidance. If the Secretary of State has said that the money under this Bill will be provided to an organisation only for the purpose of helping schools which have already opted out, how can it be in order to deal with schools which are contemplating opting out?
  Madam Deputy Speaker: Order. The hon. Member for Elmet (Mr. Batiste) should read the order before he raises with me points of order of that nature.
  Mr. Howell: I am dealing with proposed grant-maintained schools, which are mentioned in the order. That should be in order. In all my time in this place, any self-respecting Minister who said that he wished not to deal with proposed school trusts but only with those that are already formed, out of courtesy to the House, would have withdrawn his order. That is not what this Secretary of State has done. He is going on hell-fire with his order, which has no relevance to his speech. However, hon. Members must put up with such discourtesies.
  As a result of the company—the grant trust—the people on the board of parent governors——
  Mr. Steve Norris: I am grateful to the right hon. Gentleman for allowing me to intervene because I intend to make my own contribution to the debate. On the assumption that he is making a spurious attempt to raise matters that are not within the scope of the regulations, will he agree that no member of the grant maintained schools trust had any discussion on the composition of any governing body, whether in Birmingham or in any other education authority? To imply otherwise is to lie to the House.
  Mr. Howell: Perhaps the hon. Gentleman will tell us why the secretary of the trust attended the meeting of governors at which co-option was discussed.
  Mr. Norris: I am grateful to the right hon. Gentleman for allowing me to clarify the position. In Birmingham, the trust has discussed with interested parents and governors the concept of grant maintenance. That is what it should do, and that is what it has done. It is the elected Labour councillors of Birmingham who have so far spent over £20,000 of ratepayers' money on spurious legal actions to try to frustrate the wishes of parents and governors in Birmingham.
  Mr. Howell: If the trust is behaving as a trust, why has it not had one minute's consultation with the chairman of the governors, who happens to be a distinguished former lord mayor and Labour councillor? Why are representatives of the trust seen going into the Conservative room at the Birmingham city council with Conservative governors? If it is a trust, it has an obligation in law to be evenhanded in all the advice that it gives. It has an obligation in law to speak to the governors as a whole, which it has not yet done. It is conniving in a

  871
  hole-in-the-corner method by meeting certain governors only. For that reason, the Secretary of State should not give it a penny. It is not behaving properly.
  Mr. Norris: As long as the right hon. Gentleman makes statements that are wildly inaccurate and accuses me of involvement, he must expect me to interrupt him. He has said that the trust has an obligation in law to consult every governor. For my edification, will he draw the attention of the House to that specific law? Where does he find it? Where does the obligation arise? I know of no such law.
  Mr. Howell: If that obligation does not exist and the trust—[Interruption.] I assert that as the trust is a charity the obligation does exist because a charity cannot be partial in its activities. It cannot be party political. If the obligation does not exist, the Secretary of State is showing a monumental abuse of his powers by allowing the trust to behave as it is. May I add——
  Mr. Anthony Coombs: Will the right hon. Gentleman give way?
  Mr. Howell: If no one else wishes to speak, I shall continue to give way.
  Mr. Coombs: Does the right hon. Gentleman agree that it is a monumental abuse of power for the Birmingham city council to make available confidential names and addresses of parents so that they can be lobbied and canvassed in their own homes by supporters of the council against the opting-out proposal?
  Mr. Howell: I am delighted to deal with that intervention because it echoes an argument that has been advanced by the Secretary of State, as reported in Education. The right hon. Gentleman asserted that it was wrong for members of the city council and others, such as my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and myself, to have access to the names and addresses of parents for the purpose of writing to them. The headmaster of the school in question has used the register to write five, six or seven letters——
  Madam Deputy Speaker: Order. The right hon. Gentleman is straying into territory beyond the scope of the debate.
  Mr. Howell: With the greatest respect—[HON. MEMBERS: "Oh."]
  Madam Deputy Speaker: Order. I am sure that the right hon. Gentleman will adhere to my guidelines and stay within the scope of the debate.
  Mr. Howell: It is typical of the Tory rabble that I have only to address you, Madam Deputy Speaker, with the greatest respect, which is the phrase that I used, to bring them off their seats. With the greatest respect, I made the error of replying to the question put to me and I should not have done so.
  Madam Deputy Speaker: Order. The right hon. Gentleman and hon. Members should not respond to interventions. They should stay within the scope of the debate; it is a narrow one and I intend to keep the House to it.
  Mr. Howell: You are right, Madam Deputy Speaker, but nobody interrupted the hon. Member for Wyre Forest (Mr. Coombs), so I thought that it would be in order to reply to him.
  To return to the trust, it is advising on the gerrymandering of boards of governors.[Interruption.]
  Madam Deputy Speaker: Order. Gerrymandering and boards of governors do not come within the scope of the regulations.
  Mr. Howell: With the greatest respect—[Laughter.] I am dealing with the activities of the trust. It is behaving in a disgraceful way. I am perfectly entitled to express that to the House. What has happened in Small Heath is wholly——
  Mr. Roger King: How did the parents vote?
  Mr. Howell: I will tell the hon. Gentleman how they voted. They voted in a way which has been challenged, rightly, in the courts, therefore—[Interruption.] I will tell the House what happened. The trust was advising the headmaster who called a special school assembly of pupils of 11 to 15, distributed leaflets and told them to go home and vote no. That matter is before the courts.
  Mr. Dunn: The right hon. Gentleman is making an interesting case and I understand his difficulties. Can he please tell the House what his opinion is of his constituents who as parents exercised their democratic right and voted to opt out?
  Mr. Howell rose——
  Madam Deputy Speaker: Order. I am sure that the right hon. Gentleman will not stray down that familiar route. The debate has nothing to do with opting out.
  Mr. Howell: Done again. I am sorry that we are put in this position and I shall not follow that route.
  The body has been advising the headmaster and governors who now face two judicial reviews, neither of which was acknowledged by the Secretary of State at Question Time, nor in his disgraceful speech to the Young Conservatives when he was dealing with the trust and the legislation. Instead he attacked those who were ensuring that the legality of what was going on was properly reviewed in the courts.
  We shall have other opportunities to talk about the sort of literature that has gone out and certainly to defend the charges made against us. It does not equate with the concept of any democratic process that I have ever been brought up in to understand that, on the one hand, parents could be written to six or eight times and, on the other, people are pilloried by the Secretary of State for writing one single letter to parents advising them of the case against opting out.
  The regulations are a disgrace to the British democratic process. It is an absolute disgrace to the Secretary of State for Education and Science, who, if he had an ounce of decency left in him, would take them away and rectify them.
  11.54 pm
  Mr. Steve Norris: I had no idea until tonight just how successful the principle of opting out obviously is with education authorities. I do not believe

  873
  that I have ever heard such an appalling display of self-righteous humbug in all my years in the House. During my recent sabbatical, when I had the pleasure of reading these debates as one removed, I was just as excited by the concept of grant maintenance—the idea of allowing schools to operate as independent schools free from the sort of political chicanery that we have heard about in the examples that my hon. Friends and even Opposition Members have given. It was a marvellous concept, which we had to follow through as vigorously as possible.
  I shall first of all dispel what I see as possibly the only valid point that the hon. Member for Blackburn (Mr. Straw) made. He is right that on page 10 of one of the early documents published by the trust the words "As a registered charity" appeared. Those words were written in the context of what we expected at that time would be a successful application for charitable status, bearing in mind the trust's three objectives, which I shall later outline.
  As it happens, by the time that that publication was issued, charitable status had not been obtained. Any decision——
  Mr. Win Griffiths: Will the hon. Gentleman give way?
  Mr. Norris: When I have finished my sentence, I will give way.
  As it happened, at the time that that document was published, charitable status had not been obtained. At that time, it was still being sought for the trust as a whole. We have been advised that, because of the nature of the political debate surrounding grant maintenance—whereas the objectives of the trust were perfectly clear and not concerned with the debate in the House on the Education Reform Bill—charitable status would not follow automatically. It was therefore brought to our attention that the document was in error. Immediately that that document was shown to us to be in error, the—[Interruption.]
  Mr. Win Griffiths rose——
  Mr. Norris: I must say that, in a fairly lengthy document of 15 pages, the only correction that was required was to four words.
  Mr. Martin Flannery rose——
  Mr. Win Griffiths rose——
  Mr. Norris: I shall finish my sentence, then the hon. Member for Bridgend (Mr. Griffiths) or any one of his army of hon. Friends may intervene.
  A correction to four words was made in a quite complex document, copies of which I am more than happy to allow my hon. Friends and, indeed, Opposition Members to see. We ensured that the education press, especially The Times Educational Supplement, The Guardian and other interested journals, had full details of the change that we had made. We were very keen that, if there was any suggestion that any of the work of the trust was not charitable—in the sense that it involved the discussion of any principle that might be defined as political—the trust should not seek grant-maintained status in that regard.
  An important consideration was the belief of all those associated with the trust that it was reprehensible to use public money to make a political point. The irony is that in that regard the trust accepted——
  Mr. Win Griffiths rose——
  Mr. Straw rose——
  Mr. Norris: We have a short time and others want to speak. When I have finished, I shall give way to the hon. Member for Bridgend.
  In that regard, the trust was clear that it had three main functions. They were first——
  Mr. Win Griffiths rose——
  Mr. Norris: The hon. Gentleman must contain himself —[Interruption.]
  Madam Deputy Speaker: Order. It is clear that, for the moment, the hon. Gentleman is not giving way. In that case, I must ask hon. Members not to persist in seeking to intervene.
  Mr. Norris: If hon. Members will contain themselves, we shall get through much more quickly.
  The trust has three objectives. The first is to advise schools that inquire of the trust about what grant-maintained status means. Earlier, figures were tossed around about the popularity of the concept of grant-maintaned status. There are 6,300 schools eligible for grant-maintained status, and the House will be interested to know that of those more than 10 per cent. have now inquired of the trust as to how they might seek grant-maintained status. Therefore, more than 600 schools have expressed interest in the principle.
  The second purpose for which the trust was established was to assist those schools that have balloted their parents and have decided that they will make an application for grant-maintained status. Those schools would need two kinds of technical information about the issues to be decided upon while the balloting takes place and about the process for preparing an application to my right hon. Friend the Secretary of State were the ballot successful. My right hon. Friend acts in a quasi-judicial capacity in determining any application to him for grant-maintained status, but he could not, of course, offer advice on the preparation of an individual application.
  I shall now give way to the hon. Member for Bridgend. The hon. Gentleman has not risen and, having given him every opportunity, I see no reason to detain further—[Interruption.]
  Madam Deputy Speaker: Order. The hon. Member for Epping Forest (Mr. Norris) has the Floor.
  Mr. Allan Rogers: On a point of order, Madam Deputy Speaker. The hon. Gentleman is well known for his chicanery—[Interruption.] He gave way to my hon. Friend the Member for Bridgend (Mr. Griffiths) and you should now rule that my hon. Friend has the Floor because the hon. Gentleman gave way.
  Madam Deputy Speaker: Order. Mr. Norris has the Floor.
  Mr. Norris: The third function——
  Mrs. Maureen Hicks: Will my right hon. Friend give way?
  Mr. Norris: As my hon. Friend is kind enough to elevate me to the Privy Council, the least I can do is give way.
  Mrs. Hicks: Does my hon. Friend agree that grant-maintained schools are about parental choice? Does it come as any surprise to my colleague that the Opposition, who are totally opposed to choice——
  Madam Deputy Speaker: Order. The hon. Lady probably was not present earlier when I insisted that we keep to the scope of the regulations.
  Mr. Norris: Perhaps it would assist my hon. Friend and the general debate to make one point clear in answer to a serious allegation by the right hon. Member for Birmingham, Small Heath (Mr. Howell). At no time has the trust had any discussions with any member of my right hon. Friend's ministerial team or with any local authority about the composition of governing bodies. That is entirely a matter for the appropriate authorities and it is absolutely nothing to do with the trust. I assure the House that the trust has plenty of work on its hands without engaging in matters that are entirely outside its purview.
  Mr. Norris rose——
  Mr. Denis Howell: My accusation was crystal clear. It was not that the trust was negotiating with officers or with the city council as a whole, but that at every stage it was advising a Conservative group on Birmingham council's education committee. The trust members attended meetings in Conservative members' rooms and acted in a quasi-party political way.
  Mr. Norris: The right hon. Gentleman raises a very interesting point. The trust had embarked on its work in a spirit of explaining the concept of grant maintenance to interested parents and governors. Perhaps the trust was naive to believe that it could do that without encountering the sheer distortion which the Opposition seem to regard as their everyday stock in trade.
  I have a copy of a document which was issued at public expense by Rochdale council during its "Think Twice" campaign. The document is headed:
  "If you are thinking about grant maintained schools, Think Twice: it's your child's future."
  That document describes in fairly lurid terms a version of grant-maintained status which a reader would find incomprehensible. In those circumstances, the trust was obliged——
  Mr. Flannery: Give way. Go on, give way now.
  Mr. Norris: It was obliged to explain in the clearest possible terms the true principle of grant-maintained status so that all parents would understand what grant-maintained status actually means when they take that important decision about a school's future. If parents were left to the tender mercies of the Labour party, they would never be able to avail themselves of that information.
  Mr. Maples: If a school governing body was deciding whether to opt out, would it be possible for my hon. Friend's organisation to use any of the money that my right hon. Friend the Secretary of State could award under the regulations to finance a lawsuit to attempt to remove two of the governors who were against the school's opting out and therefore run up a legal bill of £75,000 and force the other side to run up a similar bill? That is exactly what the Inner London education authority has done with a school in my constituency.
  Mr. Norris: My hon. Friend has made his point extremely well. It would be entirely improper for the trust or any other body charged with a proper discharge of educational responsibility to act in the way that he has described. It saddens me and it must sadden my hon. Friend and all Conservative Members that so often Labour councillors use public funds and ratepayers' money to gerrymander and engineer without any regard for the political consequences. It is becoming clearer through this bad-tempered debate that the Opposition are scared stiff of giving parents the right to control their own schools.
  Having in the 1960s and 1970s destroyed so many of our great schools which actually delivered the best education without replacing them, the Opposition now want to get their greasy hands on the rest of the education system. They want to deny parents the right to make their own decisions.
  With regard to the matter before the House this evening, Madam Deputy Speaker, you were entirely correct to draw the attention of the House to the limited scope of the measure, although I am sure that you do not need my reassurances about that. This measure enables my right hon. Friend the Secretary of State to make grants, under the most stringent conditions, to the trust in the discharge of one of its stated purposes—to research and provide facilities for grant-maintained schools, which the Opposition are the first to point out are not provided by a local education authority once the school becomes grant-maintained. Once it becomes grant-maintained, in addition to its per capita funding it receives an amount in recognition of the LEA's share of the administrative costs of the school. The school must then find its bursar, accounting system, advice on property maintenance, grants maintenance and in-service training for teaching and non-teaching staff.
  Many schools may decide that, rather than appoint another racial awareness adviser or send half the staff on sexual orientation courses during teaching time, it might be better to use some of the money available to enhance teaching levels and salaries in the school. That decision is one that many of my right hon. and hon. Friends would applaud. In so far as any of the schools need services that the ILEA previously provided, it is clearly necessary that they should continue to be available, and that schools may know where those services can be found.
  The purpose of the trust in that regard is specific—to determine where those services can be provided and on what basis, to cost them, to endeavour to determine which of them is appropriate for a particular type of school, and to offer free advice to schools accordingly. In that, the trust will do a job that previously has been done by the Department of Education and Science and by local education authorities, and therefore it is entirely appropriate that my right hon. Friend's Department should fund that work. That work will be accounted for separately and appear in separate bank accounts in the trust's accounts.
  Mr. Flannery: The hon. Gentleman departs from the fundamental point made earlier, that the organisation of which he is chairman—he ought to declare that interest —sent out a pamphlet containing a direct lie in claiming that the trust was a charity. Why does not the hon.

  877
  Gentleman put that right in a proper manner by sending out a pamphlet correcting that earlier statement? The trust is not a charity, yet the pamphlet claimed that it was.
  Mr. Norris: I am sorry that the House was detained by that intervention, because the hon. Gentleman could not have listened to a word I said earlier, when I fully answered that point. As the hon. Gentleman may or may not have observed, I am, I think, the only speaker in this debate —with the exception of my right hon. Friend, I hurriedly add—who has stayed in order. I do so because the motion's purpose is very clear. I reiterate that the trust is in no doubt as to the limitations placed on its powers, or about the heavy responsibility borne by any non-profit-making body such as the trust—a company limited by guarantee—in the discharge of public funds.
  I give this unequivocal undertaking to the House. As to the trust, there is no question whatsoever but that any funds received by the trust on behalf of my right hon. Friend the Secretary of State for Education and Science will he used exclusively and totally to provide those services that were previously provided by local education authorities, under the specific terms of the regulations.
  I was privileged to attend a great grammar school in Liverpool, the Liverpool Institute high school. I used to say that I went to school with the Beatles, but these days I say that I went to school with my hon. Friend the Member for Derbyshire, South (Mrs. Currie) because more people know who one means. That school provided the best possible education for children, regardless of their families' incomes. If a child had the ability, he was able to utilise it fully, go to university and make a career—which he could not possibly have done in any other way in a system that did not provide that excellent start.
  The tragedy of education in the 1980s is that, thanks to Labour intervention over 20 years, those schools——
  Madam Deputy Speaker: Mr. Simon Hughes.
  12.8 am
  Mr. Simon Hughes: Methinks the Conservatives do protest too much. The questions so far asked about the Grant-Maintained Schools Trust have not been answered. The reality of this debate is that there are regulations before the House—[Interruption.] Yes, this is my speech. Conservative Members have had plenty of time.
  Mr. Norris rose——
  Madam Deputy Speaker: Order. The hon. Member for Epping Forest (Mr. Norris) had completed his speech as far as the Chair was concerned. He was moving widely away from the scope of the debate. Mr. Simon Hughes.
  Mr. Norris: On a point of order, Madam Deputy Speaker. If I strayed I apologise, but I submit that to infer from that straying that I had completed my speech was perhaps less than charitable of you. You might at least permit me to conclude my peroration.
  Madam Deputy Speaker: The hon. Gentleman had a superb peroration, but it went on for a very long time. Mr. Simon Hughes.
  Mr. Hughes: The hon. Member for Epping Forest (Mr. Norris) has done his cause no service by taking a long time to say very little about the trust and its origins. The
  878
  Secretary of State was equally evasive, as he was on the radio this morning and as his colleagues up and down the land know him and his hon. Friends to be.
  This matter was debated by the Association of County Councils last Thursday. Not only had the association in February condemned the Secretary of State's action in laying regulations giving him powers to pay Grant-Maintained Schools Ltd., but—so embarrassed were its Conservative members—not a word did they utter about the issue in last week's ACC debate. The questions about why the trust had been described as a charity were not answered for some time; moreover, at no time has the question been answered whether an application had even then been made—and it is believed, on firm evidence, that it had not.
  At no time have the Secretary of State and his colleagues described how leaflets came to be circulated which give the game away very clearly. One of them— printed on blue paper—reads as follows:
  "Schools making this choice need independent advice. Not every school will qualify; there will be strict checks and safeguards to ensure that only well-run schools obtain GM status. The Trust can offer advice on whether GM status is right for your school. It will also be able to offer specialist advice on and assistance with the completion and submission of applications."
  That is not advice to schools that have already become grant-maintained, have voted to become grant-maintained or even have started the procedure to become grant-maintained.
  I have here the company's memorandum of association, lodged I believe with Companies house on 18 July last year. They clearly include in the company's objects:
  "To assist governors and headmasters in acquiring GM status".
  There was never any prospect of the organisation's being a charity. The Secretary of State and his colleagues know that, and they have been dishonest to the House—as they have been dishonest throughout the debate. The reality is that a Tory front organisation has been set up. It has been campaigning for grant-maintained status, although so far without Government money. Where has the money come from so far? We have not been told, but the organisation has been active, and people have been evasive about explaining its activities. I phoned one of the trust company's directors today. He refused to answer any questions about the trust's activities. The trust's telephone number, indeed, was unobtainable today, so willing is it to give advice.
  The Secretary of State's tawdry defence of this Tory front organisation might be that he appointed the hon. Member for Epping Forest when he was not a Member of Parliament. He should now make it clear that the hon. Gentleman should no longer be in that position, because it is prejudicial to the independence of the organisation, as it is for Tory activists, known former Tory party employees and Tory councillors to be its backbone and only political appointees.
  Mr. Jerry Hayes: Give us the reason why.
  Mr. Hughes: Because the Government assert that this is an independent, non-campaigning organisation, whereas the reality is that it is urging people, directly and indirectly, to seek grant-maintained status. I hold no brief for Rochdale or for any other authority that spends public money——
  Mr. John Marshall: Will the hon. Gentleman give way?
  Mr. Hughes: I shall not give way. Hon. Members have had plenty of time to argue the case, and Conservative Members have not argued it successfully.
  I hold no brief for local authorities that spend public money in this sort of campaigning. However, it is equally unacceptable for the Government to set up an organisation improperly and prematurely and to ignore advice, or fail to take proper advice. There has been no explanation of the Secretary of State's mistakes, or those of his officials.
  The Government ask the House to approve regulations that allow the funding not only of grant-maintained schools but also of proposed grant-maintained schools, which is not provided for in the Act. The criteria here relate to schools with a good reputation, able staff and the support of the community and that is not provided for in the Act either. They will therefore be unable in future to come to the House and say that other public bodies should not spend public money on campaigns. The Secretary of State has done his career, credibility and integrity a great disservice. I ask him to reconsider his position; and if the hon. Member for Epping Forest has any honour, he ought to resign his post before the end of the debate tonight.
  12.20 am
  Mr. Derek Fatchett: It is clear that the debate is not about the grant-maintained schools principle, the desirability of grant-maintained schools, or the holding of ballots. It is about one important principle: that the Secretary of State and the Government want to use taxpayers' money to fund a Conservative party front organisation.
  No evidence has been produced in the debate to counter that accusation. The chairman of the organisa-tion earned his meal ticket back into the House of Commons by running that organisation. The director of the organisation is a former employee of Conservative central office. He is a Conservative member of Oxford city council. So keen is that individual to look after public funds that recently he was thrown out of the members' room of Oxfordshire county council for using the telephone on grant-maintained schools trust business.
  Mr. James Pawsey: That is petty.
  Mr. Fatchett: The hon. Gentleman says that that is petty. Mr. Turner is the gentleman to whom we are to entrust taxpayers' money. When he behaves in that way, he is not worthy of that trust. Every other member of the trust is a paid-up, card-carrying member of the Conservative party. The House is being asked for a blank cheque to support the Conservative party. Taxpayers, without their knowledge, are being asked to fund a blank cheque because the Conservative party does not have the courage to campaign throughout the country on behalf of opting out and grant-maintained schools. That blank cheque should have been underwritten by the Conservative party. It should have been paid for by Conservative party funds.
  When the Secretary of State says that the money will be used in a particular way, what greater nonsense could he offer? We know that when that money is used in a particular way, other money will be released for straightforward party political purposes. The trust has deliberately misled the public and parents. The hon.
  880
  Member for Epping Forest (Mr. Norris) said that there had been a mistake. It took the organisation a month to find out that there had been a mistake. During that time that information was sent to headteachers, parents and teachers.
  Mr. Norris rose——
  Mr. Fatchett: I shall not give way to the hon. Gentleman.
  Mr. Norris: The hon. Gentleman is making unjustified allegations about me and he ought to give way.
  Mr. Fatchett: I shall not give way. The hon. Gentleman spoke for more than 25 minutes. His speech was a disgrace and an embarrassment.
  Mr. Hayes: On a point of order, Madam Deputy Speaker. The hon. Member has made serious allegations against the honour of my hon. Friend the Member for Epping Forest (Mr. Norris)—
  Madam Deputy Speaker: Order. That is not a point of order for the Chair.
  Mr. Fatchett: I am perfectly prepared to talk on for the next four minutes. We saw that the hon. Member for Epping Forest had no supporters on his side of the House. He had to speak for more than 20 minutes to fill in the time. If the Conservative party wants to behave in that way, two of us can play at that game.
  I want to ask the Minister a question—maybe we can have a response. We know that the trust has misled parents and that because of that——
  Mr. Peter Thurnham: Will the hon. Gentleman give way?
  Mr. Fatchett: No. The hon. Gentleman is wasting the Minister's time.
  We know that parents have been misled by the trust. Where ballots have taken place, I would advise parents to examine their legal rights closely to see whether they can challenge in court the conduct of ballots because of the misrepresentation that has taken place.
  It took the trust one month to change the word "charity". We need to know when the Department of Education and Science found out and what advice it gave the charity and what advice it gave the trust. I think that the answer is that they were in collusion and that the Department knew exactly what was going on.
  I will leave the Minister time to wind up. This measure is one of arrogance. It tries to use taxpayers' money for party-political purposes. If local government behaved in this way, the Government would use legislation to stop it. The Secretary of State says that that is right. This Secretary of State has no principles. He will move the goal posts whenever it is convenient to him to move them. That is why the regulations are flawed.
  We believe in consistency and in principle. We shall vote against the regulations because we believe in good law and because we do not believe in using taxpayers' money for party-political purposes.
  12.27 am
  The Minister of State, Department of Education and Science (Mrs. Angela Rumbold): Such a lot of huffing and puffing, such a lot of pompous, holier-than-thou sentiments and sanctimonious rubbish have been spoken tonight.
  No money from the public purse has been spent by the Grant-Maintained Schools Trust, but money to campaign against parents exercising their rights under the law has been spent by public authorities, and that is totally unacceptable.
  I think that my hon. Friend the Member for Epping Forest (Mr. Norris) has honourably acknowledged the mistake that was made by his trust, and I hope that the House will have the grace to accept what he said. I believe that he was right in every respect, especially that the purpose of the trust is to advise governors——
  It being one and half hours after commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Order [17th March].
  The House divided: Ayes 193, Noes 255.

  Division No. 124]

  [12.28 pm

  AYES

  Abbott, Ms Diane

  Dixon, Don

  Adams, Allen (Paisley N)

  Dobson, Frank

  Alton, David

  Doran, Frank

  Anderson, Donald

  Dunnachie, Jimmy

  Archer, Rt Hon Peter

  Dunwoody, Hon Mrs Gwyneth

  Armstrong, Hilary

  Eastham, Ken

  Ashdown, Rt Hon Paddy

  Evans, John (St Helens N)

  Banks, Tony (Newham NW)

  Fatchett, Derek

  Barnes, Harry (Derbyshire NE)

  Faulds, Andrew

  Battle, John

  Field, Frank (Birkenhead)

  Beckett, Margaret

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

  Beith, A. J.

  Fisher, Mark

  Benn, Rt Hon Tony

  Flannery, Martin

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

  Flynn, Paul

  Bermingham, Gerald

  Foot, Rt Hon Michael

  Bidwell, Sydney

  Fraser, John

  Blair, Tony

  Fyfe, Maria

  Blunkett, David

  Galbraith, Sam

  Boyes, Roland

  Garrett, John (Norwich South)

  Bradley, Keith

  George, Bruce

  Bray, Dr Jeremy

  Gilbert, Rt Hon Dr John

  Brown, Gordon (D'mline E)

  Godman, Dr Norman A.

  Brown, Nicholas (Newcastle E)

  Gordon, Mildred

  Brown, Ron (Edinburgh Leith)

  Graham, Thomas

  Buckley, George J.

  Grant, Bernie (Tottenham)

  Caborn, Richard

  Griffiths, Win (Bridgend)

  Callaghan, Jim

  Grocott, Bruce

  Campbell, Ron (Blyth Valley)

  Hardy, Peter

  Campbell-Savours, D. N.

  Harman, Ms Harriet

  Clark, Dr David (S Shields)

  Haynes, Frank

  Clarke, Tom (Monklands W)

  Healey, Rt Hon Denis

  Clay, Bob

  Henderson, Doug

  Clelland, David

  Hinchliffe, David

  Clwyd, Mrs Ann

  Hogg, N. (C'nauld & Kilsyth)

  Coleman, Donald

  Holland, Stuart

  Cook, Frank (Stockton N)

  Home Robertson, John

  Cook, Robin (Livingston)

  Hood, Jimmy

  Cope, Rt Hon John

  Howarth, George (Knowsley N)

  Corbett, Robin

  Howell, Rt Hon D. (S'heath)

  Cousins, Jim

  Howells, Dr. Kim (Pontypridd)

  Crowther, Stan

  Hoyle, Doug

  Cryer, Bob

  Hughes, John (Coventry NE)

  Cummings, John

  Hughes, Robert (Aberdeen N)

  Cunliffe, Lawrence

  Hughes, Roy (Newport E)

  Dalyell, Tam

  Hughes, Sean (Knowsley S)

  Darling, Alistair

  Hughes, Simon (Southwark)

  Davies, Rt Hon Denzil (Llanelli)

  Illsley, Eric

  Davies, Ron (Caerphilly)

  Ingram, Adam

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

  Jones, Barry (Alyn & Deeside)

  Dewar, Donald

  Jones, Martyn (Clwyd S W)

  882

  Kirkwood, Archy

  Quin, Ms Joyce

  Lamond, James

  Radice, Giles

  Leadbitter, Ted

  Randall, Stuart

  Leighton, Ron

  Redmond, Martin

  Lestor, Joan (Eccles)

  Rees, Rt Hon Merlyn

  Lewis, Terry

  Reid, Dr John

  Litherland, Robert

  Richardson, Jo

  Lloyd, Tony (Stretford)

  Robertson, George

  Lofthouse, Geoffrey

  Robinson, Geoffrey

  Loyden, Eddie

  Rogers, Allan

  McAllion, John

  Rooker, Jeff

  McAvoy, Thomas

  Ross, Ernie (Dundee W)

  McCartney, Ian

  Rowlands, Ted

  McFall, John

  Ruddock, Joan

  McKay, Allen (Barnsley West)

  Sheerman, Barry

  McKelvey, William

  Sheldon, Rt Hon Robert

  McLeish, Henry

  Shore, Rt Hon Peter

  McWilliam, John

  Skinner, Dennis

  Madden, Max

  Smith, Andrew (Oxford E)

  Mahon, Mrs Alice

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

  Marek, Dr John

  Snape, Peter

  Marshall, David (Shettleston)

  Soley, Clive

  Marshall, Jim (Leicester S)

  Spearing, Nigel

  Martin, Michael J. (Springburn)

  Steinberg, Gerry

  Martlew, Eric

  Stott, Roger

  Maxton, John

  Straw, Jack

  Meacher, Michael

  Taylor, Mrs Ann (Dewsbury)

  Meale, Alan

  Turner, Dennis

  Michael, Alun

  Vaz, Keith

  Michie, Bill (Sheffield Heeley)

  Wall, Pat

  Mitchell, Austin (G't Grimsby)

  Wallace, James

  Moonie, Dr Lewis

  Wardell, Gareth (Gower)

  Morgan, Rhodri

  Wareing, Robert N.

  Morley, Elliott

  Welsh, Michael (Doncaster N)

  Morris, Rt Hon A. (W'shawe)

  Wigley, Dafydd

  Mowlam, Marjorie

  Williams, Rt Hon Alan

  Mullin, Chris

  Williams, Alan W. (Carm'then)

  Murphy, Paul

  Wilson, Brian

  Nellist, Dave

  Winnick, David

  Oakes, Rt Hon Gordon

  Wise, Mrs Audrey

  O'Brien, William

  Worthington, Tony

  O'Neill, Martin

  Wray, Jimmy

  Orme, Rt Hon Stanley

  Young, David (Bolton SE)

  Patchett, Terry

  Pendry, Tom

  Tellers for the Ayes:

  Pike, Peter L.

  Mr. Llin Golding and

  Powell, Ray (Ogmore)

  Mr. Nigel Griffiths.

  Primarolo, Dawn

  NOES

  Adley, Robert

  Bowis, John

  Alexander, Richard

  Brandon-Bravo, Martin

  Alison, Rt Hon Michael

  Brazier, Julian

  Allason, Rupert

  Bright, Graham

  Amess, David

  Brooke, Rt Hon Peter

  Amos, Alan

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

  Arbuthnot, James

  Browne, John (Winchester)

  Arnold, Jacques (Gravesham)

  Budgen, Nicholas

  Arnold, Tom (Hazel Grove)

  Burns, Simon

  Ashby, David

  Burt, Alistair

  Aspinwall, Jack

  Butcher, John

  Atkins, Robert

  Butler, Chris

  Atkinson, David

  Butterfill, John

  Baker, Rt Hon K. (Mole Valley)

  Carlisle, John, (Luton N)

  Baker, Nicholas (Dorset N)

  Carlisle, Kenneth (Lincoln)

  Baldry, Tony

  Carrington, Matthew

  Batiste, Spencer

  Carttiss, Michael

  Bellingham, Henry

  Cash, William

  Bendall, Vivian

  Channon, Rt Hon Paul

  Bennett, Nicholas (Pembroke)

  Chapman, Sydney

  Bevan, David Gilroy

  Chope, Christopher

  Blackburn, Dr John G.

  Churchill, Mr

  Blaker, Rt Hon Sir Peter

  Clark, Dr Michael (Rochford)

  Body, Sir Richard

  Clark, Sir W. (Croydon S)

  Bonsor, Sir Nicholas

  Clarke, Rt Hon K. (Rushcliffe)

  Boswell, Tim

  Colvin, Michael

  Bottomley, Peter

  Conway, Derek

  Bottomley, Mrs Virginia

  Coombs, Anthony (Wyre F'rest)

  Bowden, A (Brighton K'pto'n)

  Coombs, Simon (Swindon)

  Bowden, Gerald (Dulwich)

  Cope, Rt Hon John

  883

  Couchman, James

  Janman, Tim

  Cran, James

  Jessel, Toby

  Currie, Mrs Edwina

  Jones, Gwilym (Cardiff N)

  Curry, David

  Jones, Robert B (Herts W)

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

  Kellett-Bowman, Dame Elaine

  Davis, David (Boothterry)

  Key, Robert

  Day, Stephen

  King, Roger (B'ham N'thfield)

  Devlin, Tim

  Kirkhope, Timothy

  Dicks, Terry

  Knapman, Roger

  Dorrell, Stephen

  Knight, Greg (Derby North)

  Douglas-Hamilton, Lord James

  Knight, Dame Jill (Edgbaston)

  Dover, Den

  Knowles, Michael

  Dunn, Bob

  Knox, David

  Durant, Tony

  Lang, Ian

  Dykes, Hugh

  Latham, Michael

  Eggar, Tim

  Lawrence, Ivan

  Evans, David (Welwyn Hatf'd)

  Lennox-Boyd, Hon Mark

  Fallon, Michael

  Lester, Jim (Broxtowe)

  Favell, Tony

  Lightbown, David

  Fenner, Dame Peggy

  Lilley, Peter

  Field, Barry (Isle of Wight)

  Lloyd, Peter (Fareham)

  Fishburn, John Dudley

  Lord, Michael

  Forman, Nigel

  Luce, Rt Hon Richard

  Forsyth, Michael (Stirling)

  Lyell, Sir Nicholas

  Fox, Sir Marcus

  MacKay, Andrew (E Berkshire)

  Franks, Cecil

  Maclean, David

  Freeman, Roger

  McLoughlin, Patrick

  French, Douglas

  McNair-Wilson, Sir Michael

  Fry, Peter

  McNair-Wilson, P. (New Forest)

  Gale, Roger

  Madel, David

  Gardiner, George

  Major, Rt Hon John

  Garel-Jones, Tristan

  Matins, Humfrey

  Gill, Christopher

  Mans, Keith

  Glyn, Dr Alan

  Maples, John

  Goodhart, Sir Philip

  Marland, Paul

  Goodlad, Alastair

  Marlow, Tony

  Goodson-Wickes, Dr Charles

  Marshall, John (Hendon S)

  Gorman, Mrs Teresa

  Marshall, Michael (Arundel)

  Gorst, John

  Martin, David (Portsmouth S)

  Gow, Ian

  Mates, Michael

  Grant, Sir Anthony (CambsSW)

  Maude, Hon Francis

  Greenway, Harry (Ealing N)

  Mawhinney, Dr Brian

  Greenway, John (Ryedale)

  Maxwell-Hyslop, Robin

  Gregory, Conal

  Meyer, Sir Anthony

  Griffiths, Peter (Portsmouth N)

  Miller, Sir Hal

  Grylls, Michael

  Mills, Iain

  Gummer, Rt Hon John Selwyn

  Miscampbell, Norman

  Hague, William

  Mitchell, Andrew (Gedling)

  Hamilton, Hon Archie (Epsom)

  Mitchell, Sir David

  Hamilton, Neil (Tatton)

  Moate, Roger

  Hampson, Dr Keith

  Monro, Sir Hector

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

  Montgomery, Sir Fergus

  Hargreaves, Ken (Hyndburn)

  Morris, M (N'hampton S)

  Harris, David

  Morrison, Sir Charles

  Haselhurst, Alan

  Morrison, Rt Hon P (Chester)

  Hayes, Jerry

  Moss, Malcolm

  Hayhoe, Rt Hon Sir Barney

  Moynihan, Hon Colin

  Hayward, Robert

  Neale, Gerrard

  Heddle, John

  Nelson, Anthony

  Hicks, Mrs Maureen (Wolv' NE)

  Nicholls, Patrick

  Higgins, Rt Hon Terence L.

  Nicholson, David (Taunton)

  Hind, Kenneth

  Nicholson, Emma (Devon West)

  Hogg, Hon Douglas (Gr'th'm)

  Norris, Steve

  Howard, Michael

  Onslow, Rt Hon Cranley

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

  Page, Richard

  Howarth, G. (Cannock & B'wd)

  Paice, James

  Howell, Rt Hon David (G'dford)

  Patnick, Irvine

  Howell, Ralph (North Norfolk)

  Patten, Chris (Bath)

  Hughes, Robert G. (Harrow W)

  Patten, John (Oxford W)

  Hunt, David (Wirral W)

  Pattie, Rt Hon Sir Geoffrey

  Hunt, John (Ravensbourne)

  Pawsey, James

  Hunter, Andrew

  Porter, Barry (Wirral S)

  Irvine, Michael

  Porter, David (Waveney)

  Jack, Michael

  Portillo, Michael

  Jackson, Robert

  Powell, William (Corby)

  884

  Price, Sir David

  Twinn, Dr Ian

  Raffan, Keith

  Vaughan, Sir Gerard

  Raison, Rt Hon Timothy

  Waddington, Rt Hon David

  Rathbone, Tim

  Walden, George

  Redwood, John

  Waller, Gary

  Renton, Tim

  Ward, John

  Rhodes James, Robert

  Wardle, Charles (Bexhill)

  Roe, Mrs Marion

  Warren, Kenneth

  Rumbold, Mrs Angela

  Watts, John

  Sackville, Hon Tom

  Wells, Bowen

  Shepherd, Colin (Hereford)

  Wheeler, John

  Shepherd, Richard (Aldridge)

  Whitney, Ray

  Skeet, Sir Trevor

  Widdecombe, Ann

  Stradling Thomas, Sir John

  Wiggin, Jerry

  Taylor, Ian (Esher)

  Winterton, Mrs Ann

  Taylor, Teddy (S'end E)

  Winterton, Nicholas

  Temple-Morris, Peter

  Wood, Timothy

  Thompson, D. (Calder Valley)

  Woodcock, Mike

  Thompson, Patrick (Norwich N)

  Yeo, Tim

  Thornton, Malcolm

  Young, Sir George (Acton)

  Thurnham, Peter

  Townend, John (Bridlington)

  Tellers for the Noes:

  Tracey, Richard

  Mr. John M. Taylor and

  Tredinnick, David

  Mr. David Heathcoat-

  Trippier, David

  Amory.

  Question accordingly negatived.

  SOCIAL SERVICES
  Ordered,
  That Dr. Lewis Moonie be discharged from the Social Services Committee and Mr. Andrew F. Bennett be added to the Committee.—[Mr. Ray Powell, on behalf of the Committee of Selection.]

  TREASURY AND CIVIL SERVICE
  Ordered,
  That Ms. Joyce Quin be discharged from the Treasury and Civil Service Committee and Dr. Lewis Moonie be added to the Committee.—[Mr. Ray Powell, on behalf of the Committee of Selection.]

  WELSH AFFAIRS
  Ordered,
  That Mr. Paul Murphy be discharged from the Welsh Affairs Committee and Dr. Kim Howells be added to the Committee.—[Mr. Ray Powell, on behalf of the Committee of Selection.]

PETITION

  Ripon Hospital (Maternity Unit)
  12.40 am
  Mr. David Curry: I beg leave to present a petition, containing 7,000 signatures collected in the ancient city of Ripon, seeking the intervention of my right hon. and learned Friend the Secretary of State for Health to prevent the closure of the maternity unit at the hospital in Ripon. The Friends of Ripon Hospital are seeking that intervention on the following grounds.
  There will be severe hardship to families in a very rural constituency if a local facility is closed. There will be special hardship to the 500 service families already in Ripon and to a further 500 who will be there when Dishforth base is fully developed. The unit has an essential role for lying in, even when births have taken place in Harrogate. Finally, although a new hospital is promised to Ripon and figures in the plans, it has no funding whatsover attached to it.
  To lie upon the Table.

  Cot Deaths
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
  12.43 am
  Miss Joan Lestor: Each year in Britain more than 2,000 babies between the ages of one week and two years die suddenly and unexpectedly. Ninety per cent. of those deaths occur before those babies reach the age of eight months. In about 1,500 of those cases, no adequate cause of death is ever found. As the House is aware, such cases are described as the sudden infant death syndrome. There are between four and five such deaths a day.
  When it was publicised that my Adjournment debate tonight would deal especially with cot deaths, I received a great amount of literature from many organisations working in the area, and some heart-breaking letters from parents who have been thus bereaved. The plea from all of them is for more research into the subject. As I am sure we are all aware, there can be nothing worse than losing a child except, perhaps, losing a child and never knowing why that child died. Few parents do not fear this appalling tragedy and it is the responsibility of us all to ensure that no reasonably researched pilot scheme goes unfunded or is dismissed because it appears far-fetched. As long as we do not know the reason for such deaths, we must explore every possibility.
  I have never been a scaremonger or prone to react favourably to every claim in medicine—or any other area —that a cure has been found for some particular ill. But having been interested and concerned for years about the infant mortality rate and cot deaths in particular, I was startled when I read of the research into the possible connection between those sad, unexplained deaths of babies and the possibility that they are caused—or partly caused—by the growth in our environment of electromag-netic fields.
  The Minister will no doubt be aware of the recent publicity given to the work of Roger Coghill of Coghill Research Associates and I assume that it was that research to which he was referring on 20 February when, in a written answer to the hon. Member for Rutland and Melton (Mr. Latham) about whether his Department had investigated the studies into the electromagnetic wave theory and the possible relationship to cot deaths, he replied that neither his Department nor the National Radiological Protection Board, which has a responsibility to advise on hazards from electromagnetic fields, was aware of any authoritative, peer-reviewed studies that had demonstrated an association between sudden infant deaths and exposure to those fields at any frequency. In the list of areas under study given in the written answer, that area was not included. Of course, much depends on what is meant by "authoritative study", which was the phrase used in the written answer.
  I have come across other work on the same subject and, as I understand it, research has been going on since as far back as 1976. In that year a German doctor, Dr. Eckert, published research into cot deaths and the proximity of electromagnetic waves from tube trains, electric railways and similar things. It was widely discussed by the medical profession at the time and as recently as 1988 a Swedish researcher, Mr. Hansson, carried out experiments with small mammals exposed to such rays, using a method of high-powered cables of high voltage. The results seemed to
  886
  demonstrate at least the necessity to research further, as the reaction of the mammals was similar to those of babies dying unexplained deaths for which there appeared to be no medical cause. The work was edited by Connor and Lovely and published by Alan R. Liss.
  If the Department is not aware of those works, that should be rectified at once, as they add a little weight to the research that I mentioned earlier. If it is aware of them, perhaps the Minister will tell me why, apparently, that circumstantial evidence and research appears to have been dismissed. We all know that, although the research into cot deaths has produced various explanations, which could be termed individual explanations, it is far from conclusive and we are already looking at a variety of substances, areas and causes.
  I am sure that the Minister is aware of the research that has been carried out by Roger Coghill in a pilot study in this area. I am asking that those results should be researched further by the Department when it researches this whole subject. There is not enough evidence, in my view—I am no doctor—to be dogmatic, but on the other hand there is enough evidence to warrant further investigation and not simply dismiss that other research.
  The main argument is based on the massive rise in the use of artificially created electromagnetic energy. At the beginning of the century, few houses were centrally heated or lit by electricity. There were no commercial radio stations until 1920, no radar surveillance until 1939 and no widespread television until 1951, but all our homes are now electrified to an enormous degree. In the past 30 years the use of electricity in Britain has trebled. There has been a massive rise in the use of electrical appliances, from electric blankets to satellite dishes and car telephones.
  As the research points out, so filled is the air with radiated electromagnetic transmissions that only with the greatest difficulty can space be found for new radio stations. As the research states:
  "We have, in the space of one lifetime, bathed ourselves in an ocean of electromagnetic energy waves."
  As we are all aware, it took more than a quarter of a century before the regulations curtailing the use of X-rays were introduced, despite research of many years standing showing how organic tissue could be damaged by too much exposure. How many people died as a result of that ignorance of X-rays and how many were damaged we shall never know, but I have always been impressed by the fact that that knowledge was around for many years and was discussed long before the regulations were introduced. Many people, eminent in many areas, dismissed the evidence and argued that that connection was not possible and that much of the damage to tissue was caused by other things.
  One could enlarge that view into other areas, considering X-rays alone and the safeguards that we now have, the nervousness with which we approach them, and the fact that, the moment that a young woman enters a hospital to be X-rayed, the first question asked is. "Are you pregnant?" We must remember that those rays are dangerous, and then question some of the research, which has not been confined to one individual but has already been highlighted in other parts of the world and has not been investigated enough.
  In November last year, the Select Committee on Social Services published its report on infant mortality. The report is awaiting a response. I do not in any way criticise the Department for that. These things take time, and it is

  887
  important that, when we get a response, it is the correct one. Since that report was published, the electromagnetic theory has achieved some prominence in this country. I hope that, when they respond to the report, the Government will take on board the recommendation about cot deaths and the stated concern in the report that little progress has been made, particularly since a report in 1980 asked that there should be a general introduction of confidential inquiries into all health districts. I understand that special attention is being placed on one or two areas —Wolverhampton is one—because of certain incidents.
  Bearing in mind the criticisms of the report, that not enough work has been done on cot deaths and that more research generally needs to be done and notice taken of a report that was published nine years ago, the electromagnetic waves theory should be given more serious consideration in any future research and work than it is at present.
  I cannot refer to all the experiments that have led me to stand here tonight and make this plea. It would take too long, and none of us is expert in the matter and able to give a proper analysis. But I make this plea on behalf of all parents who have seen their children inexplicably die. On behalf of the people, many of whom work on the subject in various ways, it is in our interests that no research is left unlooked at and that proper credence is given to people who may have come up with at least something that bears a causal relationship to cot deaths, if it is not entirely the cause.
  12.52 pm
  The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman): I congratulate the hon. Member for Eccles (Miss Lestor) on being successful in the ballot for the Adjournment debate. This is a very important issue and one about which the Government are deeply concerned. In addition to the number of deaths attributed to sudden infant death syndrome, we are concerned about the devastating effect that such tragic losses have on the families involved. My hon. Friend the Member for Rutland and Melton (Mr. Latham) also is interested in the subject.
  It might be helpful if I commence by explaining that the terms "cot death" and "sudden infant death syndrome" are not synonymous. The term "cot death" was first introduced by Dr. A. M. Barrett in 1954 to describe the unexpected death during sleep of an apparently healthy infant. The term "sudden death syndrome" has been defined as "the sudden and unexpected death of any infant or young child which is unexpected by history and in which a thorough postmortem examination fails to demonstrate an adequate cause of death". Thus, whereas the term "cot death" might include an unexpected death for which an explanation is subsequently discovered—for example, an unsuspected congenital anomaly or a respiratory or gastro-intestinal infection—the term "sudden infant death syndrome" should be used only after a thorough postmortem has been unable to identify a cause. It is a diagnosis of exclusion.
  Both terms, and other similar phrases, are used in practice to record unexpected infant deaths on death certificates. The Office of Population Censuses and Surveys has indentified separately since 1971 deaths
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  registered where such terms have been mentioned on death certificates. Of the 4,108 post-neonatal deaths—that is deaths after 28 days but within one year of birth—in England and Wales in the past three years of available statistics, 1985–87, with mention of cot death or a similar term on the death certificate, sudden infant death syndrome was given as the underlying cause in 91 per cent. of cases, a respiratory condition in 5 per cent. and a non-respiratory condition in 4 per cent.
  In the 10 years to 1987, the latest year for which figures are available, there has been a significant increase in the number of deaths attributed to sudden infant death syndrome and a similar decrease in deaths attributed to respiratory conditions. The provisional figures for the first nine months of 1988 continue to bear this out. An expert group which prepared a report in 1988 on infant mortality in England for the chief medical officer drew attention to the belief that there is a trend in the pattern of certification towards certifying as sudden infant death syndrome deaths which, hitherto, would probably have been assigned to respiratory disease. The combined post-neonatal mortality rate has remained essentially unchanged over the same period at 2·3–2·4 deaths per 1,000 live births. I should add that the infant mortality rate as a whole in England has fallen from 12·8 per 1,000 live births in 1979 to 9·1 in 1987, the latest year for which figures are available. There have been significant decreases in the perinatal—the first week of life—and neonatal—the first month of life—mortality rates. That is encouraging. The worry is with the post-neonatal period.
  Few cases of sudden infant death syndrome occur after one year of age. The peak is between one and four months. I now turn to possible causes. The syndrome is much more common among boys than girls. About 60 per cent. of sudden infant deaths are among boys. There is a clear seasonal pattern to the syndrome. Most deaths occur in winter months. We must not jump to conclusions, however. There is evidence that unintentional overheating may be a factor in some babies, and accidental chilling is likely to be a factor in some others. Similar seasonal patterns occur with deaths due to recognisable respiratory disease.
  It would be unwise to believe that we are looking for one common factor among these unexplained deaths. It seems more likely that there is a variety of contributory clinical factors. Numerous theories have been mooted, and they can be classified into four kinds: first, that a previously normal infant succumbs to overwhelming stress —for example, chilling or infection—secondly, that there is a defect in function or anatomy that has been present from birth; thirdly, that infants are especially vulnerable to such events as minor infections, changes in temperature and even domestic upheaval during critical phases of development; fourthly, that there is some failure in the processes of maturation of one or more organ systems.
  The hon. Lady has mentioned in particular the theory linking sudden infant death to electromagnetic fields. The advice which I have received from the experts in this subject, the National Radiological Protection Board, is that it is not aware at present—I stress "at present"—of any authoritative study which has demonstrated an association between sudden infant death syndrome and exposure to these fields at any frequency. I shall respond to the hon. Lady's suggestion that research should take place.

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  The main Government agency for supporting biomedical and clinical research is the Medical Research Council. In the year 1987–88, about £400,000 was spent on projects directly or indirectly related to sudden infant death syndrome and respiratory distress in the new born. We recognise, however, that there is a need to continue such efforts, and in April the Department will be discussing with the Medical Research Council what further avenues of research, including, if necessary, the influence of electromagnetic fields, might next most fruitfully be explored. I can give the hon. Lady an undertaking that I shall draw specifically to the attention of the Medical Research Council this debate and the research that has been cited. Following the discussions, I shall write to the hon. Lady and my hon. Friend the Member for Rutland and Melton. I am sure that the hon. Lady will agree that this is essentially a matter for clinical judgment and research judgment. I shall discharge my duty to the House by drawing the attention of the council specifically to the debate.
  Sudden infant deaths have been shown to be associated with a number of social, biological and demographic factors, including social class, parents' marital status, mother's age, past pregnancies and low birth weight. Smoking during pregnancy and passive smoking have also been linked with sudden infant death syndrome. There are also regional variations but no common themes. I answered a recent question from my hon. Friend the hon. Member for Rutland and Melton on the regional pattern and he will have noted from my reply today, if he has had a chance to study it, that no clear themes seem to emerge from the statistics that I have provided.
  While none of those factors has been unequivocally identified as the cause of sudden infant death syndrome, it is important to increase public awareness of the factors that may be influenced by individual actions. We need to continue to encourage good professional practice and sound parenting to ensure that those families whose circumstances are associated with risk to their infant, or whose babies are unwell, have ready access to the advice, support and care that they may need. For example, all new mothers already receive, on their first visit to antenatal clinics, a free copy of the "Health Education Authority's Pregnancy Book" which gives advice on giving up smoking. That is backed up by advice at antenatal clinics and from general practitioners. A new teenage antismoking campaign costing £2·2 million a year starts in April and will take special account of the worrying trends in smoking among girls approaching child-bearing age.
  The hon. Lady may have seen the reports of the article in last week's British Medical Journal which discussed the relationship between the sleeping position of the infant and sudden infant death. However, I do not believe that clinicians can yet give parents unequivocal advice about the best sleeping position for their baby. I am sure that clinicians and paediatricians will be considering that.
  In the voluntary sector the Foundation for the Study of Infant Deaths plays a significant role in funding and promoting research. At present it is spending about half a
  890
  million pounds a year. The foundation also provides an extremely valuable support and counselling service for bereaved families. I pay tribute to its work.
  Both the Department and the Foundation for the Study of Infant Deaths are concerned that parents who have already lost a child—the risk for subsequent children is statistically only very slightly higher—or whose child is considered to be at risk of sudden infant death should not be misled by recent media coverage about the use of apnoea monitors. Unfortunately, there is no guarantee that these alarms, which are attached to the chest of an infant, will prevent sudden infant deaths occurring. We support the advice recently issued by the foundation that such monitors should be used only with the knowledge, advice and support of the paediatrician, the general practitioner and health visitor.
  As I have said, the Government are concerned about the incidence of sudden infant death syndrome—a concern shared by the Select Committee on Social Services, which, as the hon. Lady is well aware, published its report on perinatal, neonatal and infant mortality in December. The Government welcomed the Select Committee's interest in this area. However, as I am sure the hon. Lady will understand, and as she has already acknowledged, I cannot comment in any detail on our response to the Committee's report, which is currently being prepared and will, I hope, be published shortly after Easter. In our response to the Committee we plan to demonstrate by our proposals the importance which we attach not only to identifying the factors associated with sudden infant death syndrome, but to reducing further the infant mortality rate as a whole.
  We believe that the way forward could be to build on the approach of one of the most commonly referred to research studies on sudden infant death syndrome—the multi-centre study of post-neonatal mortality coordinated by Professor Knowelden and funded by the Department. This study investigated 988 infant deaths over a three-year period, 1976 to 1979, in eight parts of England and Wales. The aim in each case was to perform a full postmortem, carried out by a paediatric pathologist, to determine how far the death could be explained and, separately, to hold a confidential case conference to determine whether or not signs of the infant's terminal condition had been exhibited before death and whether appropriate action had been taken. The study showed that a number of deaths were partly or wholly explicable. The line of approach pursued by the professor in this study possibly shows the way forward, concentrating as it does on proper pathology and the importance of confidential case conferences to establish exactly the circumstances and factors surrounding each particular tragedy. As I have said, we shall be publishing our conclusions and our response to the Select Committee's report shortly, and I hope that that response will be constructive and will be studied by the whole House.
  Question put and agreed to.
  Adjourned accordingly at four minutes past One o'clock.

TRANSPORT

  Britannia Bridge
  Ms. Gordon
  To ask the Secretary of State for Transport if he has made any assessment of(a) the cost or (b) the effects on safety of a reversible lane on the Britannia bridge on the Commercial road (A13) at Limehouse.

  Mr. Peter Bottomley
  The provision of a reversible lane, while the repair works are being carried out, was ruled out for safety reasons.

  Engineering Materials
  Mr. Cohen
  To ask the Secretary of State for Transport if he will make a statement about the progress of the inquiries by British Transport police into contracts for engineering materials; when they are likely to be completed; and if he will make a statement on the involvement of any managerial staff.

  Mr. Portillo
  I understand that inquiries by the British Transport police are continuing and are likely to take some time to complete. These are matters for the British Transport police, the Attorney-General and the Lord Advocate.

  Catalytic Converters
  Mr. Allen
  To ask the Secretary of State for Transport what is his Department's policy towards encouraging the use of catalytic converters; and if he will make a statement.

  Mr. Peter Bottomley
  I refer the hon. Member to the reply he received from my hon. Friend the Under-Secretary of State for the Environment on 16 March at column 319.

  Hazardous Substances (Road Transport)
  Mrs. Dunwoody
  To ask the Secretary of State for Transport if he will introduce legislation to increase the fines payable by haulage firms failing to comply with regulations on the safe transportation of dangerous substances by road; and if he will make a statement on the EEC report on long-distance drivers and safety.

  Mr. Peter Bottomley
  We have no plans to do so.

  Most relevant offences under the Health and Safety at Work etc. Act 1974 are dealt with summarily in magistrates' courts, where the maximum penalty for each single offence is £2,000. Magistrates can refer serious cases on indictment to the Crown court, where the maximum fine is unlimited.

  The study of hours worked by drivers engaged in international road transport was carried out in Holland in 1984–85. It recommended that drivers should work fewer hours, and that there should be increased enforcement.
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  The 1986 EC drivers hours regulations include provisions for increased weekly rest and a recent EC directive setting minimum levels of enforcement came into effect on 1 January 1989.

  Fissile Materials
  Mr. Flynn
  To ask the Secretary of State for Transport if he will set out the regulations to be met by consignors of plutonium and other fissile materials exported by sea.

  Mr. Portillo
  The regulations and conditions for the transport of all radioactive materials (including plutonium) are based on the internationally accepted standards of the International Atomic Energy Agency safety series No. 6. A copy is held in the Library.

  For United Kingdom sea consignments these are given effect by:

  The Merchant Shipping (Dangerous Goods) Regulations 1981 (SI 1981 No. 1747).

  The Merchant Shipping (Dangerous Goods) (Amendment) Regulations 1986 (SI 1986 No. 1069).

  In addition, the Ionising Radiations Regulations 1985 (SI 1985 No. 1333) apply to all modes of transport.

  City of Westminster (Coach Parking)
  Mr. Macfarlane
  To ask the Secretary of State for Transport what discussions his Department has had with the City of Westminster council regarding parking arrangements for coaches in London SW1; and if he will make a statement.

  Mr. Portillo
  I met the chairman of Westminster City council's planning and development committee in December last year as part of my continuing effort to support the council with its coach parking responsibilities. Our discussions concentrated on how illegal on-street parking by tourist coaches might be discouraged and how legal parking arrangements might be improved.

  These discussions have been taken forward by my officials. Westminster have met the Metropolitan police, who have written to the Bus and Coach Council explaining that in a bid to minimise illegal coach parking, especially in streets surrounding Buckingham palace, the Houses of Parliament and Westminster Abbey, they will be carrying out an advice and enforcement campaign starting this month and continuing throughout the summer.

  My officials also attend Westminster's coach working party, which discusses a range of coach parking issues across London; and the Department has commissioned a major comprehensive study of tourist coach traffic in London, which is due to report later this year.

  Bus Lanes
  Mr. Macfarlane
  To ask the Secretary of State for Transport if he has any plans to introduce legislation to abolish bus lanes; and if he will make a statement.

  Mr. Peter Bottomley
  We have no plans to abolish the power of local highway authorities to install bus lanes. M y hon. Friend will know from my answer to his question on 10 February that we believe that bus lanes can be justified when the benefit to bus users exceeds the cost to other road users. I am writing to him enclosing a copy of our current technical advice on the subject.

  City of Westminster (Traffic Flow)
  Mr. Macfarlane
  To ask the Secretary of State for Transport if he will meet officials of the City of Westminster council to assess the bus lanes and the traffic flow between Vauxhall bridge road and Drummond gate, London SW1; and if he will make a statement.

  Mr. Peter Bottomley
  We are not aware of any particular reasons for an assessment of bus lanes and traffic conditions between Vauxhall bridge road and Drummond gate.

  Freight (Continental Europe)
  Mr. Favell
  To ask the Secretary of State for Transport what is his estimate of the proportion of freight to continental Europe by(a) weight and (b) value which will be carried (i) through the Channel tunnel, (ii) by air and (iii) by sea, broken down where possible by individual port, on completion of the tunnel.

  Mr. Portillo
  The Department of Transport does not produce forecasts of cross-channel freight traffic in total or by mode. Instead, on certain occasions, when the pattern of future cross-channel freight traffic has implications for the public sector, it forms its own view on the available forecasts.

  Air Services (Malta)
  Mr. Steen
  To ask the Secretary of State for Transport if he will now designate British Island Airways as a British carrier for the Gatwick-Malta and Manchester-Malta routes commencing on 10 April.

  Mr. Peter Bottomley
  British Island Airways was designated for these routes on 10 March 1989.

  Mr. Steen
  To ask the Secretary of State for Transport when he expects to receive in his Department the written decision from the Civil Aviation Authority regarding the recent route licence applications by Air Europe, Air UK, Monarch and British Island Airways to Malta starting on 1 April.

  Mr. Peter Bottomley
  The Department has received a copy of the decision, which was dated 10 March 1989.

  Air Transport Licences
  Mr. Steen
  To ask the Secretary of State for Transport (1) how many air transport licences have been revoked in each of the last 10 years other than for non-use;

  (2) how many air transport licences have been revoked in each of the last 10 years for subsequent non-compliance with statements of intent given at Civil Aviation Authority route licence hearings.

  Mr. Peter Bottomley
  These are matters for the Civil Aviation Authority. I will ask the chairman of the authority to write to my hon. Friend.

  Coastguard (Breeches Buoy Equipment)
  Mr. Fearn
  To ask the Secretary of State for Transport by whom the line-throwing breeches buoy equipment withdrawn from Her Majesty's coastguard on 31 March 1988 has been purchased; if he will give details of the 402
  number of sets of this equipment sold and the moneys received in payment; and how the funds realised from the sale of this equipment will be invested.

  Mr. Portillo
  All line-throwing rockets and launching devices, which formed an integral part of breeches buoy equipment, were over age or obsolete and destroyed. Some ancillary equipment plus a variety of miscellaneous items, were purchased by the Department of Marine of the Republic of Ireland at a total cost of £6,940. The remainder will be disposed of as Government surplus. All receipts count towards departmental appropriations-in-aid, and are not available for direct use by Her Majesty's coastguard.

  Sub-Post Offices (Vehicle Excise Duty)
  Miss Widdecombe
  To ask the Secretary of State for Transport if there are any plans to add to the network of sub-post offices which issue vehicle excise licences.

  Mr. Peter Bottomley
  Sub-post offices provide an efficient and convenient vehicle excise relicensing service, particularly in rural areas. There are currently 3,550 offices providing this service. Some 2,000 are sub post offices. Following negotiations with Post Office Counters Ltd. we are pleased to be able to announce that a further 60 sub-post offices will be added to the relicensing network over the next few months. The choice of offices will be made by the Post Office, but I shall be writing to right hon. and hon. Members in whose constituencies individual offices are situated.

  Fishing Vessels and Submarines (Incidents)
  Mr. Foulkes
  To ask the Secretary of State for Transport what information he has on incidents which took place on 27 February and 3 March, involving fishing vessels and submarines; what investigations he is undertaking into the incidents; and what action he is proposing to take to avoid similar incidents recurring.

  Mr. Portillo
  On 27 February 1989 a near miss incident was reported involving three fishing vessels and a submarine near Little Cumbrae Island, Firth of Clyde. On 3 March 1989 the fishing vessel Seagull reported a near miss involving an unidentified unlit vessel near the Cock of Arran. The Department's marine surveyors are investigating both incidents. When their inquiries are completed appropriate action will be considered.

  Vale of Rheidol Narrow Gauge Railway
  Mr. Geraint Howells
  To ask the Secretary of State for Transport what information he has on the purchaser of the Vale of Rheidol narrow gauge railway; when he expects the sale to be completed; and if he will make a statement.

  Mr. Portillo
  British Rail is proposing to sell this railway to the Brecon mountain railway company, subject to my right hon. Friend's consent. We are considering the evidence on the case and we shall make an announcement as soon as possible.

  Road Noise
  Mr. Tony Lloyd
  To ask the Secretary of State for Transport (1) if he will make a statement on the Government's policy regarding provision of double glazing, secondary glazing and other measures in connection with noise from road traffic;
  403
  (2) what steps he takes to monitor noise levels on urban and suburban roads;

  (3) if he will introduce a minimum noise level which would automatically attract grant assistance for noise insulation.

  Mr. Bottomley
  Government policy is to seek to reduce the effect upon residential properties of noise from new roads by careful design, including where appropriate the use of earth bunds and noise barriers. Under part I of the Land Compensation Act 1973, owner-occupiers can claim compensation from the Government in respect of depreciation in the value of their property arising from the use of a new road. Claims may be made as from 12 months after the road comes into use.

  In addition, under the Insulation Regulations (1975 to 1988) the Government offer secondary glazing for eligible rooms of dwellings where it is estimated that maximum noise levels, during the 15 years after road opening, will be at least 68 dBA on the L10 18 hour scale, with a contribution of at least 1 dBA from traffic using the new road. Where insulation has been offered or installed, its benefit is taken into account when setting the level of part I compensation. These provisions apply to roads constructed on behalf of the Secretary of State. Local authorities follow similar procedures. The regulations also allow insulation to be provided on a discretionary basis in respect of noise insulation arising from road alterations.

  For older, unaltered roads, there is no entitlement to compensation or noise insulation. In respect of trunk roads, the Department does occasionally exercise a discretion to provide noise barriers where the noise levels are high and where the benefits of barriers would be substantial.

  We have no proposals to alter the qualifying noise levels under the noise insulation regulations or to seek to introduce qualifying noise levels for houses beside older roads. There is no general monitoring by the Department of noise levels on urban or suburban roads.

  HM Coastguard
  Mr. Fearn
  To ask the Secretary of State for Transport what assessment he has made of the implications of the amount of overtime being undertaken by Her Majesty's coastguard and the hours worked, for safety in handling emergency rescues.

  Mr. Portillo
  Overtime working by individuals is voluntary but is strictly controlled to ensure that performance is not impaired. The average among watchkeepers is 4·7 hours/week and among sector officers is 1·4 hours/week. There is no indication that hours worked have had any adverse effect on the safe handling of emergency rescues.

  A36 (West Wellow)
  Mr. Colvin
  To ask the Secretary of State for Transport if the contract for the study of the A36 through West Wellow was put out to competitive tender.

  Mr. Peter Bottomley
  A study was commissioned in September 1986 without competition. The appointment of consultants for design announced on 14 March 1989 followed competitive tender.

  Dr. Tony Ridley
  Mr. Wheeler
  To ask the Secretary of State for Transport if he can now announce the terms on which Dr. Tony Ridley resigned from London Regional Transport.

  Mr. Portillo
  London Regional Transport will pay to Dr. Ridley a sum equivalent to six months' pay in lieu of the notice provided for under the terms of his appointment, that is £30,000. LRT will pay sums to make up the difference between the immediate reduced pension which Dr. Ridley had already earned on 10 November 1988, and the actuarially reduced pension which would have been payable to him on retirement at the end of his appointment on 31 August 1991.

EDUCATION AND SCIENCE

  Irish Teachers
  Mr. Bernie Grant
  To ask the Secretary of State for Education and Science (1) whether Irish teachers who qualified in the Republic of Ireland will become licensed teachers from September when employed by British local education authorities;

  (2) whether Irish teachers who qualified in the Republic of Ireland will, from September, be fully and automatically recognised by his Department on application by the employing local education authority; and whether applications for recognition will be processed within a two-week period;

  (3) whether route 2(b) application procedure for his Department's recognition by Irish teachers seeking qualified teachers' status will still be available from September as the self-advocacy route to his Department's recognition;

  (4) whether route 2(e) application procedure for his Department's recognition by Irish teachers seeking qualified teachers' status will be abolished in September.

  Mrs. Rumbold
  We propose, subject to further consultation, to lay regulations before the House introducing the licensed teacher route to qualified teacher status from September 1989. This will replace all existing routes to qualified teacher status other than the successful completion of a course of initial teacher training in England or Wales. Local education authorities will then be free to employ teachers trained in Ireland as licensed teachers who will progress to qualified teacher status after up to 2 years' satisfactory performance as licensees.

  Teachers (Shortages)
  Mr. Key
  To ask the Secretary of State for Education and Science (1) what is his policy towards providing financial support for teacher recruitment and retraining initiatives by local education authorities in relation to the problems of teacher shortages identified by his Department;

  (2) what information is available to his Department on any teacher recruitment and retraining initiatives being undertaken by local education authorities in relation to the problems of teacher shortages identified by his Department; what steps are being taken by his Department to promote good practice; and if he will make a statement.

  Mr. Butcher
  The recruitment, employment and deployment of teachers is the responsibility of local
  405
  education authorities and schools. It is for them to determine the level of recruitment and retraining necessary in the light of their own needs. The costs of retraining are eligible for support through the LEA training grants scheme. The Department is aware of good practice and special measures in a number of local authorities. The teaching as a career unit whose remit has just been extended for three years, promotes good practice in recruitment on the basis of guidelines agreed by my Department.

  Mr. Key
  To ask the Secretary of State for Education and Science what is his policy towards future numbers of re-entrant qualified teachers, with appropriate retraining, in relation to the problems of teacher shortages identified by his Department; what actions he has taken in pursuit of this policy in recent years, and at what cost; and if he will make a statement.

  Mr. Butcher
  My right hon. Friend recognises the great importance of encouraging former teachers to re-enter the profession. My Department's memorandum to the Education Science and Arts Committee—a copy of which is in the library—indicates the importance of re-entrants as a source of supply and highlights good recruitment practice to attract returners. In recent years the proportion of teaching posts filled by former serving teachers has risen steadily to about 50 per cent. This proportion has been achieved without the widespread use of special measures by local authorities who, as employers, have responsibility for the employment and re-training of re-entrants. With proper publicity for employment opportunities, good employment practices and support and training measures the proportion of posts filled by re-entrants can remain substantial. The costs of re-training are eligible for support through the LEA training grants scheme.

  City Technology Colleges
  Mr. Fatchett
  To ask the Secretary of State for Education and Science whether there is any religious group from which he would automatically reject a proposal to sponsor a city technology college; and if he will make a statement.

  Mr. Butcher
  All proposals put to us for the establishment of city technology colleges are considered strictly on their merits. My right hon. Friend would not, however, find any proposal acceptable which sought to provide exclusively for applicants from particular religious groups.

  Mr. Fatchett
  To ask the Secretary of State for Education and Science if he will set out the criteria to be used in evaluating a proposal from a sponsor to support a city technology college based on the principles of any religion.

  Mr. Butcher
  In considering any proposal from prospective sponsors my right hon. Friend will first look at whether it meets the objectives and requirements of the CTC programme. A number of such sponsors have indicated that they would wish to place an emphasis on Christian values in their CTCs. This is entirely complementary to the fundamental CTC objective of preparing young people more effectively for their adult responsibilities and opportunities. But no CTC will admit 406
  pupils on the basis of their religious beliefs; and we shall ensure that all CTCs are fully representative in all respects of the communities they serve.

  Mr. Fatchett
  To ask the Secretary of State for Education and Science whether he has received any proposals or representations from companies or trusts to establish city technology colleges based upon religious principles other than Christianity; and if he will make a statement.

  Mr. Butcher
  No such proposals or representations have been received.

  Universities (Public Funding)
  Mr. Wray
  To ask the Secretary of State for Education and Science if he will list all the administrative forms which universities have to fill in to comply with procedures for the control of public money they receive.

  Mr. Jackson
  The control of public money is not meaningfully separable from the range of dealings between the University Grants Committee and individual institutions. However, the committee's main source of information on financial matters is the annual return form 3 (finance).

  Mr. Wray
  To ask the Secretary of State for Education and Science what is, for each year, since 1974 the amount of public funds given to universities in(a) Austria, (b) Denmark, (c) France, (d) Germany, (e) Holland, (f) Italy, (g) Spain, (h) Sweden, (i) Canada, (j) the United States of America and (h) the United Kingdom.

  Mr. Jackson
  The readily available information covering higher education is shown in the table and is on a per capita population basis to enable comparisons to be made.

  Public recurrent expenditure1 on higher education in 1983 and 1984 (calendar years)

  Current expenditure per capita (£)

  Country

  1983

  1984

  France

  41

  42

  Germany

  37

  258

  Italy

  25

  26

  Netherlands

  98

  95

  United Kingdom3

  57

  58

  United States of America4

  168

  165

  1 At purchasing power parity; data prior to 1983 and 1984 have been adjusted via consumer price indices.

  2 Revised coverage of source statistics.

  3 Excluding expenditure on nursing and paramedical courses at Department of Health establishments. Also excludes in-service teacher training secondment costs.

  4 Provisional.

  "School Governors: A New Role"
  Miss Lestor
  To ask the Secretary of State for Education and Science how many copies of the booklet "School Governors: A New Role", have been supplied to the Conservative party; and what payment was made for them.

  Mrs. Rumbold
  Sample copies of "School Governors: A New Role" were distributed to a wide range of organisations, including representatives of political parties. Further copies are supplied free of charge to any
  407
  individual or organisation asking for them. So far over 750,000 copies have been distributed: the Department does not keep a record of the number supplied in response to each individual request.

  Voluntary-aided Schools
  Mr. Fatchett
  To ask the Secretary of State for Education and Science whether he will give an indication as to the projected time scales for reaching a decision on proposals to establish voluntary-aided schools.

  Mr. Butcher
  My right hon. Friend's objective is to reach a decision within five months of the publication of such proposals.

  Teachers (Salaries)
  Mrs. Ann Winterton
  To ask the Secretary of State for Education and Science what steps he is taking to ensure that funding by local education authorities for schools through the local management scheme takes into account the actual salaries paid to teachers, rather than the average level of salary within that local authority area.

  Mrs. Rumbold
  The central determinant of schools' funding under schemes of local management should be the numbers and ages of pupils. Pupils of the same age should therefore attract the same resources, including the same element for teaching costs, irrespective of which school they attend within the local authority area. It will be for governing bodies to manage their costs, including salaries, from within their budgets as derived on this basis. In practice, variations from average salary costs will be limited. My right hon. Friend has made clear that schools with fewer than 10 teachers, excluding the head teacher and deputy, may receive enhanced funding where they have above average salary costs.

HOME DEPARTMENT

  Prison Medical Service
  Mr. Cohen
  To ask the Secretary of State for the Home Department if he will provide in the Library an updated report stating the extent to which Her Majesty's Government have implemented the recommendations relating to mentally disturbed inmates in the third report from the Social Services Committee, Session 1985–86 into the prison medical service and the Government's response thereto, Cm. 115; and if he will make a statement.

  Mr. Douglas Hogg
  I am arranging for this to be done.

  Mentally Disturbed Prisoners
  Mr. Cohen
  To ask the Secretary of State for the Home Department if he will indicate the number of psychiatric reports prepared outside prison department establishments on persons remanded to all prisons and cells in England and Wales for each year from 1980; and if he will make a statement.

  Mr. Douglas Hogg
  The information requested is not available.

  Mr. Cohen
  To ask the Secretary of State for the Home Department what recent and current studies he has 408
  commissioned into mentally abnormal and disordered offenders in prisons; whether they include those held on remand; whether any recommendations have been made; and if he will make a statement.

  Mr. Douglas Hogg
  Two studies are under way and the Department expects to decide on a third shortly.

  In October 1987 a contract was entered into with the institute of psychiatry, university of London, to produce over a three-year period a definitive statement of the dimensions of the problem of sentenced mentally disordered offenders in the prison system. This will provide a basis for the consideration of the development of policy in the medium and long term. In November 1988 the institute of criminology, university of Cambridge, was contracted to research into sentencing by the courts in relation to the use of sections 37 and 41 of the Mental Health Act 1983 in making hospital and restriction orders. The intention is to obtain reliable information on whether, and if so to what extent, the courts are unable to make hospital and restriction orders in all cases that they wish, and to examine the factors affecting their decisions.

  The third study is currently under consideration. This would also be carried out by the Institute of Psychiatry. It would focus on the working of the procedures for courts to remand defendants to obtain medical reports.

  Mr. Cohen
  To ask the Secretary of State for the Home Department how many secure units are available to his Department for accommodating mentally disturbed offenders(a) specifically for such offenders and (b) along with convicted prisoners not so categorised; and where they are situated.

  Mr. Douglas Hogg
  Prisoners who meet the criteria under the Mental Health Act 1983 may be transferred to special hospitals or regional secure units. Within the prison service there is a variety of provision for mentally disturbed prisoners. This includes the CRC special unit at Parkhurst C wing, which is intended exclusively for convicted prisoners with a history of psychiatric illness arid who also pose persistent control problems.

  Mr. Cohen
  To ask the Secretary of State for the Home Department when was the last full-scale review in his Department of out-of-prison alternatives for mentally disturbed prisoners who are(a) sectioned and (b) in other categories; and what plans he has for the provision of such alternatives.

  Mr. Douglas Hogg
  An interdepartmental working group of Home Office and DHSS officials on mentally disturbed offenders in the prison system in England and Wales which reported in May 1987 carried out a review of all alternatives to imprisonment for mentally disturbed prisoners. The provision of facilities for the treatment of the mentally disordered outside prison is a matter for the Department of Health. The consultation paper issued last month by the Home Office on bail accommodation and secure bail hostels included discussion of the use of bail hostel accommodation for mentally disturbed defendants.

  Mr. Cohen
  To ask the Secretary of State for the Home Department how he categorises(a) prisoners requiring psychiatric attention and (b) mentally disturbed offenders; how many are in each category; and what is the proportion of the prison population as a whole for each category and in total.
  409
  Mr. Douglas Hogg
  Prison medical officers, in examining inmates on reception, identify as a priority those who by reason of their mental state may require particular attention whether of a medical or general management nature. In such cases referral to a psychiatrist would be an early course of further action. Where an inmate is considered to be suffering from mental disorder of a nature or degree which would satisfy the criteria of the Mental Health Act 1983 for detention in hospital for medical treatment, the prison medical officer would use the procedures of that Act to seek the inmates removal to an appropriate hospital. Two hundred and ninety inmates of prison service establishments in England and Wales were on 30 September 1988, the latest date for which figures were available, considered by prison medical officers to meet those criteria. That figure represents 0·58 per cent. of the prison population of 49,922 on that date.

  Information as to the total number of inmates in the much wider range of those considered to be mentally disturbed but not such as to satisfy the criteria of the Mental Health Act 1983 is not held centrally. Two censuses were undertaken by prison medical officers of inmates serving sentences of six months and more considered to require specialised therapeutic facilities by reason of mental disorder or abnormality. The censuses showed that on 4 December 1985 1,583 inmates and on 1 October 1986 1,340 inmates were in that category. Those figures represent respectively 3·38 per cent. of the prison population of 46,752 on 6 December 1985 and 2·85 per cent. of the prison population of 46,912 on October 1986.

  The study being undertaken by the Institute of Psychiatry, referred to in the answer to another question by the hon. Member, is designed to produce a comprehensive psychiatric profile of the sentenced prison population.

  Mr. Cohen
  To ask the Secretary of State for the Home Department what percentage of the prison population the number of inmates referred to National Health Service consultant psychiatrists and other National Health Service psychiatrists represented in the last year for which figures are available, and to what extent inmates may be referred to more than one psychiatrist.

  Mr. Douglas Hogg
  During the period 1 April 1987 to 31 March 1988 12,285 inmates were referred by prison medical officers to NHS psychiatrists appointed to visit establishments on a sessional basis or to NHS consultants for domiciliary consultations. In addition, psychiatric consultations were arranged for 4,151 inmates at the instigation of inmates' legal advisers.

  On the imformation available it is not possible to calculate that the sum of those numbers represents a given proportion of the prison population since that population is not static. While the average prison population in 1987–88 was 49,300 (including an average of 750 prisoners in police cells) the number of first receptions to prison service establishments in the course of that year was in the order of 136,000.

  Prison medical officers have unfettered clinical discretion to call other medical practitioners into consultation and are not restricted as to the number consulted in any individual case.

  Mr. Cohen
  To ask the Secretary of State for the Home Department if he will indicate the current extent, and regularity, of police training including that involving 410
  professional psychiatric expertise, in dealing with mentally disturbed individuals who create a disturbance; whether there are any plans to improve this training; and if he will make a statement.

  Mr. Douglas Hogg
  Training for all ranks in the police service aims to develop oficers' interpersonal skills, knowledge and attitudes to enable them to deal effectively with all sections of the community, and to foster an understanding of the social context of policing and the role of other agencies. As part of this integrated approach, officers will study such areas as responding to illness—including mental disturbance—in the street, dealing with distressed persons and the social causes of crime.

  Chief officers and commandants may invite members of the psychiatric profession to contribute to training in forces and at district training centres. The police staff college involves members of the psychiatric profession in a number of its courses. Police training is kept under regular review by the police training council, which seeks to ensure that all training meets the needs of the police service and the community at large.

  Mr. Cohen
  To ask the Secretary of State for the Home Department whether disturbances at Bedford prison during 1988 involved mentally disturbed prisoners; and if he will make a statement.

  Mr. Douglas Hogg
  No prisoners diagnosed as mentally ill (who would be held in the prison hospital) were involved in any incident of violent concerted indiscipline at Bedford during 1988.

  Body Belts
  Mr. Cohen
  To ask the Secretary of State for the Home Department if he will indicate each prison establishment in which body belts were used during 1987, the number of inmates upon whom they were used for each establish-ment, the number of inmates fitted with body belts twice or more, and the extent of injuries or deaths arising as a result.

  Mr. Douglas Hogg
  The following information for 1987 relates to prison establishments in England and Wales. It is additional to the particular case of which the hon. Member has knowledge and which involved the use of a body belt in transit between establishments. The table shows, by establishment, the number of occasions on which a violent or refractory inmate was kept in an establishment under restraint by means of the application of a body belt, and the number of inmates:

  Establishment

  Number of applications

  Number of inmates

  Prisons and remand centers

  Albany

  1

  1

  Bedford

  1

  1

  Blundeston

  1

  1

  Canterbury

  2

  2

  Chelmsford

  2

  2

  Frankland

  6

  15

  Hull

  7

  7

  Leeds

  1

  1

  Leicester

  6

  6

  Lindholme

  1

  1

  Long Lartin

  4

  13

  Oxford

  1

  1

  Parkhurst

  5

  5

  Pentonville

  2

  2

  411

  Establishment

  Number of applications

  Number of inmates

  Reading

  1

  1

  Stafford

  3

  3

  Wakefield

  2

  2

  Wandsworth

  6

  15

  Wormwood Scrubs

  3

  3

  Youth custody centers

  Dover

  7

  7

  Glen Parva

  1

  1

  Guys Marsh

  1

  1

  Hoilesley Bay Colony

  1

  1

  Northallerton

  1

  1

  Onley

  1

  1

  Rochester

  7

  7

  1 Includes one prisoner to whom a body belt was applied twice.

  I am not aware of any case in which a causal connection between death and the application of a body belt has been proven. Such information as is available centrally about injuries to inmates does not enable injuries sustained in circumstances where a body belt was in use to be separately identified.

  Michael Bettaney
  Mr. Cohen
  To ask the Secretary of State for the Home Department how long Michael Bettaney has spent in solitary confinement; and what are the reasons for it.

  Mr. Douglas Hogg
  Mr. Bettaney is not held in solitary confinement.

  Street Lighting
  Mr. Cohen
  To ask the Secretary of State for the Home Department, further to his answer of 25 January,Official Report, column 588, what early action Her Majesty's Government propose to take substantially to improve lighting in public areas and streets to combat crime; and if he will make a statement.

  Mr. John Patten
  I announced today that the Home Office has undertaken to fund a major research study at Southampton university. The research will assess the impact of street lighting on crime and the fear of crime, and the study will be carried out in the London borough of Wandsworth.

  Children's Television Programmes
  Mr. Redmond
  To ask the Secretary of State for the Home Department if he will make a statement on his proposals for children's programmes.

  Mr. Renton
  Our broadcasting White Paper envisaged that the BBC would continue to be expected to provide high quality programming across the full range of public tastes and interests, and that Channel 4 would be required to cater for any interests under-represented by other parts of the independent television sector. It also envisaged a broadcasting environment in which there would be more outlets and opportunities for many different types of programming such as children's programming. We are now carefully considering the comments we have received on the White Paper.

  Heavy Goods Vehicles
  Mrs. Dunwoody
  To ask the Secretary of State for the Home Department what assessment has been made of 412
  whether the level of policing on motorways is adequate to ensure compliance by heavy goods vehicles with road traffic regulations.

  Mr. Douglas Hogg
  It is a matter for individual chief officers of police to determine how to deploy their resources. I have no reason to believe that the level of policing on motorways is unsatisfactory.

  Correspondence
  Mr. Cummings
  To ask the Secretary of State for the Home Department when he intends to reply to the hon. Member for Easington's letter dated 6 February concerning prisoner Ian Armstrong.

  Mr. Douglas Hogg
  I replied to the hon. Member on 14 March.

  Mr. Hafiz Ali Akbar
  Mr. Madden
  To ask the Secretary of State for the Home Department when he expects to take a decision in the case of Mr. Hafiz Ali Akbar who has applied to enter the United Kingdom; when Mr. Akbar's case was referred to him by the Foreign and Commonwealth Office; when Mr. Akbar, ref. A380937/2 and GV 100/2878, applied to enter the United Kingdom and when he last was interviewed in Pakistan; what inquiries he has made in the United Kingdom; and when Mr. Akbar can expect to be told whether his application has been granted.

  Mr. Renton
  [holding answer 17 March 1989]: Mr. Akbar applied for entry clearance on 6 July 1987 and was interviewed in Islamabad on 5 October 1987. His application was referred to the immigration department on 6 March 1988. Further information and supporting evidence was sought from the secretary of the Burnett place mosque on 15 March 1989. I much regret the long delay in dealing with this case. Once our inquiries are complete the application will be determined as quickly as possible and Mr. Akbar will be notified of the decision by the entry clearance office. I shall write to the hon. Member in due course to let him know the outcome of the case.

  Miss Michelle Renshaw (Imprisonment)
  Mr. Cryer
  To ask the Secretary of State for the Home Department if he will call for a report on the facilities provided during the imprisonment of Michelle Renshaw for contempt; and if he will make a statement.

  Mr. Douglas Hogg
  No. I am satisfied that the normal facilities were afforded to Miss Renshaw during her imprisonment.

  Immigration
  Mr. Madden
  To ask the Secretary of State for the Home Department when he expects to make a recommendation on the application of Mr. Zulfiqar Khan ref. GV 100/5117, to enter the United Kingdom; and when Mr. Khan's application was referred to him.

  Mr. Renton
  Mr. Khan's application was referred to my Department on 6 April 1988 for an interview of the sponsor, Mrs. Yasmeen Akhtar. The immigration service at Hull interviewed Mrs. Akhtar on 19 February 1989 and its report dated 9 March was sent to Islamabad on 13 March. A decision on Mr. Khan's application will be made by the entry clearance officer in Islamabad.
  413
  Mr. Madden
  To ask the Secretary of State for the Home Department when papers concerning the applica-tion to enter the United Kingdom by Mrs. Musarat Bibi, ref. GV100/5248, were passed to the Immigration Office at Leeds/Bradford airport; and when any report is to be sent to the European Community officer at the British embassy in Pakistan.

  Mr. Renton
  The papers were passed to the immigration office at Hull on 19 January 1988 so that the sponsor could be interviewed. Further investigations proved necessary and these were carried out first at Hull and then at Leeds/Bradford airport. A full report was sent to the immigration department on 22 February 1989.

  The entry clearance officer in Islamabad was authorised on 16 March to issue entry clearance to Musarat Bibi.

  Citizenship
  Mr. Madden
  To ask the Secretary of State for the Home Department why, in the light of letters to him dated 7 December and 16 February from the hon. Member for Bradford, West, concerning an application for British citizenship by Mrs. Sarwar Begum, ref. IMP R 161633/3(S), the hon. Member was not informed until 13 March that a certificate of registration had been sent to Mrs. Sarwar Begum via the British embassy in Islamabad on 16 January.

  Mr. Renton
  The letter of 7 December was not referred to the nationality division for advice until the hon. Member responded on 16 February to my Private Office's request for additional details to identify the case. I then replied to the hon. Member as soon as possible. These events did not however delay the nationality division's action on the application, which was granted in January.

  Mr. Teddy Taylor
  To ask the Secretary of State for the Home Department if he will make inquiries into the position of Mr. Govinden Vythelinghad who submitted a nationality application to Lunar House (ref: V6/80/43) in October 1987; and when Mr. Vythelinghad can expect a decision.

  Mr. Renton
  I am writing to my hon. Friend.

  Prisoners (Escape Attempts)
  Mr. Bermingham
  To ask the Secretary of State for the Home Department how many prisoners attempted to escape from prisons in England and Wales in each of the years since 1979.

  Mr. Douglas Hogg
  Details of offences punished of attempting to escape or abscond are given in chapter 9 of the published prison statistics, of which copies are available in the Library.

  Magistrates' Courts
  Mr. Lawrence
  To ask the Secretary of State for the Home Department if he will institute a review of procedure in magistrates' courts; and if he will make a statement.

  Mr. Hurd
  It has been apparent for some time that some aspects of criminal and domestic procedure in magistrates' courts are unwieldy or outmoded. I have, therefore, decided to initiate a thorough review. This will be carried out by a working party of officials and experienced practitioners under Home Office chairmanship. Its terms of reference will be:414
  "to review the criminal and domestic procedure of magistrates' courts; to consider what changes could be expected to make that procedure more effective, efficient and economical, consistently with satisfactory provision for due process; and to make recommendations".

EMPLOYMENT

  Chlorofluorocarbons
  Dr. Thomas
  To ask the Secretary of State for Employment if he will assess the employment creation potential of chlorofluorocarbons-free refrigerator production.

  Mr. Nicholls
  It is not possible to assess the employment creation potential of producing refrigerators free of chlorofluorocarbons. However, the eventual production in the United Kingdom of CFC-free refrigerators should benefit both our manufacturing industry and the world environment.

  Parliamentary Constituencies
  Mr. Grocott
  To ask the Secretary of State for the Home Department if he will list the parliamentary constituencies of England, Scotland, Wales and Northern Ireland in order of size, showing in each case the extent to which they are above or below the electoral quota.

  Mr. Freeman
  The information requested is contained in "Electoral Statistics 1988" (HMSO) a copy of which is in the Library.

  Statistics relating to the 1989 electoral registers are still being assembled centrally. They will be published in "Electoral Statistics 1989" (Series EL No. 16) at the end of May, and a copy will be placed in the Library.

ENERGY

  Offshore Safety
  Mr. McAllion
  To ask the Secretary of State for Energy what steps he proposes to take to improve safety in the offshore oil and gas industry.

  Mr. Parkinson
  [pursuant to the reply, 27 February 1989, c. 81]: A consultative document containing our proposals for a set of regulations for pipeline safety valves on offshore installations has been issued today. Copies of this document are available in the Library of the House.

  As a consequence of the technical investigation carried out by my Department into the Piper Alpha accident last July, my director of safety contacted all pipeline operators on 24 August 1988 to reassess the location and operation of their pipeline isolation systems.

  Following a review by my Department of the operators' responses I have decided that it is necessary to introduce regulations requiring emergency shut-down valves on pipeline risers serving offshore installations together with the periodic inspection and testing of these valves and their control systems. In addition, it is proposed that an Order in Council will be made whereby these valves will become part of the certification process of the installation.

  These proposed regulations represent an important further step in securing improvements in the safety of offshore pipeline systems. I shall in due course be laying further regulations to deal with subsea isolation systems,

  415
  however these present very difficult technical problems which require further study before I can make firm proposals.

  Employment Training
  Mr. Loyden
  To ask the Secretary of State for Employment if he will give a breakdown of the target figures for employment training for(a) September 1988, (b) December 1988 and (c) March 1989 on (i) a national and (ii) an area office basis.

  Mr. Nicholls
  Targets both nationally and for Training Agency area offices for the number of filled employment training places are for internal management purposes only.

  Wages
  Mr. Goodlad
  To ask the Secretary of State for Employment by how much the average weekly wage in the north-west of England has increased since 1979.

  Mr. Lee
  The average gross weekly earnings of full-time adult employees in the north-west of England increased by 138 per cent. between April 1979 and April 1988.

  Labour Force Survey
  Mr. Meacher
  To ask the Secretary of State for Employment to which month the published results of the labour force survey apply in each of the last 10 years.

  Mr. Lee
  Published estimates from labour force surveys are based on interviews conducted in the spring of each labour force survey year. In 1979, 1981 and 1983, the interviews took place between April and June. From 1984 onwards the labour force survey has been carried out annually and the interview period has been between March and May.

  Male civilian work force in employment

  Thousand

  June 1979

  September 1988

  All

  of which self employed

  All

  of which self employed

  South East

  4,839

  544

  5,039

  815

  Greater London (included in South East)

  n.a.

  n.a.

  1,996

  312

  East Anglia

  481

  64

  609

  100

  South West

  1,032

  111

  1,135

  221

  West Midlands

  1,462

  124

  1,416

  180

  East Midlands

  1,013

  99

  1,062

  154

  Yorkshire and Humberside

  1,302

  107

  1,223

  176

  North West

  1,700

  161

  1,460

  215

  North

  802

  61

  732

  84

  Wales

  716

  98

  616

  109

  Scotland

  1,333

  128

  1,218

  170

  Northern Ireland

  359

  56

  320

  53

  Figures for Her Majesty's forces are not available below national level. Comparisons of data for June 1979 and September 1988 are affected by seasonal variations. The civilian work force in employment is the sum of employees in employment, the self-employed, and participants in work-related Government training programmes.

  Time Off
  Mrs. Fyfe
  To ask the Secretary of State for Employment whether he intends to issue any guidance on the interpretation of reasonable amounts of time off for(a) trade union representatives and (b) safety represen-tatives representing the same number of members.

  Mr. Nicholls
  In relation to(a), guidance is already provided by ACAS in accordance with section 27(2) of the Employment Protection (Consolidation) Act 1978; in relation to (b), no.

  Health and Safety Inspectors
  Mr. Strang
  To ask the Secretary of State for Employment what is the projected number of(a) factory and (b) agricultural inspectors that will be employed by the Health and Safety Executive on 31 March.

  Mr. Nicholls
  At 1 March 1989, 608–5 factory and 165 agricultural inspectors were in post. The Health and Safety Executive's objective is to increase the numbers employed to 638 and 175 respectively as soon as possible.

  Following the latest in a series of recruitment competitions, 12 successful candidates have been offered employment, (nine to the factory and three to the agricultural inspectorate). Offers are expected to be made shortly to some 20 further candidates subject to completion of medical and other checks.

  Labour Statistics
  Mr. Win Griffiths
  To ask the Secretary of State for Employment how many men were in employment in each standard planning region of the United Kingdom in June 1979 and September 1988; and how many of these were self-employed.

  Mr. Lee
  The available information is as follows:

  Child Care Facilities
  Ms. Richardson
  To ask the Secretary of State for Employment whether he will ensure that the local education authorities' development programmes for further education provision outlined in the White Paper "Employment for the 1990s", provide child care facilities which allow(a) parents, and (b) mothers, to attend colleges, further education institutes, polytechnics and universities.
  417
  Mr. Cope
  The content of local education authorities' development programmes for further education provision is for authorities themselves to determine. The Training Agency encourages the further education service to provide easy access to vocational education throughout working life for all members of the work force, including those needing child care facilities.

  Quality of Life
  Mr. Goodlad
  To ask the Secretary of State for Employment what information he has on the relationship between the quality of life in the north-west of England, Greater London and the United Kingdom as a whole.

  Mr. Lee
  Any assessment of the quality of life is inevitably subjective and depends on the importance placed by individuals on a large range of factors such as income, local amenities and nearness to the countryside. I do not have the information required to make a comparison of the overall quality of life in different regions. However the Central Statistical Office annual publication "Regional Trends" has statistics on matters that might be thought to contribute towards the quality of life.

  As far as the information available to me is concerned, I can report that all regions are benefiting from the success of the Government's economic policy; over the year to September 1988, the civilian work force in employment is estimated to have grown by 38,000 in the north-west, 61,000 in London and 736,000 across Great Britain as a whole. Furthermore, unemployment rates have decreased sharply, with falls over the past year of 2 per cent. in the north-west, 1·8 per cent. in London and 1·9 per cent. in Great Britain.

PRIME MINISTER

  Nuclear Non-proliferation Treaty
  Mr. Flynn
  To ask the Prime Minister if, during her discussions with the Federal German Chancellor in Frankfurt in February, she discussed the planned modernisation of the short-range nuclear forces in the context of articles I and VI of the nuclear non-prolifera-tion treaty.

  The Prime Minister
  No.

  Mr. Flynn
  To ask the Prime Minister if, during her recent meeting with Chancellor Kohl in Frankfurt, she discussed issues to be discussed at the fourth review conference of the nuclear non-proliferation treaty to be held in 1990.

  The Prime Minister
  No.

  Commercial Forestry
  Mr. Ron Davies
  To ask the Prime Minister whether Her Majesty's Government have set an ultimate target for the area covered by commercial forestry in the United Kingdom, over and above the annual targets currently set for commercial forestry and the farm woodland scheme.

  The Prime Minister
  No. The amount of land that is devoted to forestry will depend on a number of factors, including the amount of land that comes out of agricultural use.

  Lockerbie Air Crash
  Mr. Prescott
  To ask the Prime Minister if she will report to the House on the circumstances in which senior Government officials and others gave private briefings to journalists in which they stated that they knew both the identity and the whereabouts of those responsible for planting a bomb on Pan Am Flight 103 which exploded over Lockerbie.

  The Prime Minister
  My right hon. and learned Friend the Lord Advocate issued a statement to the press on Friday about progress in the investigation. He said:"The type of item of baggage in which the tape recorder was contained is now known and that will allow the police to take a further step forward in the enquiries they are making, both on a national and international basis.
  I can confirm that it appears that all the explosives were packed in the tape recorder and were not located elsewhere in the item of baggage.
  If we can move forward from knowing not just the type of the item of baggage, as I have to put it, but to an identification of the owner of that bag, clearly, I think it can be appreciated that we would then have taken a further significant step forward.
  Although the progress of the enquiry has been remarkable, the evidence which has been secured so far has not yet led to the identification of the person or persons responsible for placing the bomb in baggage on Pan Am Flight 103. Enquiries are continuing with that end in view.
  Of course there are suspicions and of course a number of lines of enquiry are being pursued, but what I would not like people to believe at the moment is that I am holding something back, or that the British Authorities are holding something back, for some obscure or ulterior purpose.
  My primary concern, because I am responsible not only for the investigation but also for the prosecution, is to ensure that there is no prejudice either to that investigation or ultimately to a prosecution. I appreciate that the public both nationally and internationally are very anxious to know what is going on but I think they should also appreciate, indeed I hope they do, that the ultimate success that we wish to achieve in this is the bringing to justice of those people who were responsible for this mass murder.
  In association with the FBI, the West German BKA and the Metropolitan Police investigators are continuing to pursue and investigate all matters which have a possible bearing on this case. These include the finding of a bomb and a radio cassette player in Frankfurt in October 1988 As I indicated in my answer in the House of Lords yesterday the possible connection between that bomb and the Lockerbie disaster is being scrutinised with the greatest care. I should emphasise that the two persons held in custody in Germany have not been arrested in connection with Lockerbie.
  I have to say, as I have said several times before, that the success of these enquiries is not likely to be assisted by the kind of wild, irresponsible speculation in some newspaper reports this morning. Although some of those reports purport to be based on 'Whitehall sources' they are not accurate. The only authoritative information about the progress of this investigation is that issued by me, or on my authority, by the senior investigating officer in charge of the enquiries.
  I will authorise disclosure of relevant information about the progress of the investigation wherever possible and as soon as possible, as we all recognise the general interest of the public and the particular interest of the relatives of the victims to be informed about the matter".

  That remains the position.

  Special Advisers
  Mr. O'Brien
  To ask the Prime Minister if she will show in the Official Report the previous employment of the special advisers listed in her answer to the hon. Member for Copeland (Dr. Cunningham), 29 July 1988, Official Report, column 628.
  419
  The Prime Minister
  The information is not readily available in the form requested. The previous employment of serving special advisers is as follows:

  Previous employment

  Number employed

  Bank of Montreal Capital Markets

  1

  British Petrolem Company plc

  1

  Cazenove and Co.

  1

  City University Business School

  1

  Guff Investments and Trading

  1

  Conservative Central Office

  4

  Conservative Research Department

  2

  Consolidated Goldfields plc

  1

  Council of European Communities

  1

  Daiwa Europe Ltd.

  1

  Department of Health and Social Security

  1

  Foreign and Commonwealth Office

  1

  Former Special Adviser

  3

  Fund-raising for charity

  1

  Good Relations Group plc

  1

  Hill Samuel and Company Ltd.

  1

  Institute of Directors

  1

  McKinsey and Co.

  1

  Milk Marketing Board

  1

  P and O

  1

  Phillips and Drew

  1

  Political Office, Number 10

  1

  RTZ Ltd

  1

  Secretary to MPs

  1

  Self employed

  1

  Student

  1

  This list covers special advisers who are on secondment from or are still employed, full or part-time, by other employers.

  Mr. O'Brien
  To ask the Prime Minister if she will state the total cost to public funds of(a) the special advisers on secondment and (b) the most senior special advisers not paid on the common pay spine.

  The Prime Minister
  The total annual reimbursement cost to public funds of special advisers on secondment is currently £147,333. The current annual cost to public funds of salary and employer's national insurance contributions for the most senior special advisers is £133,500.

  Mr. O'Brien
  To ask the Prime Minister what restrictions there are on the activities of ministerial political and special advisers in relation to their giving directions to career civil servants.

  The Prime Minister
  Apart from secretarial assistance, permanent civil servants do not work directly for special advisers except with my express permission.

  Mr. O'Brien
  To ask the Prime Minister what restrictions on political activities apply to Ministerial political advisers previously employed as career civil servants.

  The Prime Minister
  There are two areas of political activity where special advisers may be allowed more freedom than other civil servants. With the approval of the Minister they may attend party functions and maintain contact with party members; and they may take part in policy reviews organised by the party.

  In addition, and subject to the approval of the Minister, special advisers are permitted to undertake all forms of local political activity provided they observe the rule of discretion applicable to civil servants. This does not include local activities in support of national politics.
  420
  There are no additional restrictions on special advisers who may previously have been career civil servants.

  Immigration
  Mr. Madden
  To ask the Prime Minister if she will establish an inquiry into co-ordination on immigration matters between the Foreign and Commonwealth Office and the Home Office, in the light of a letter from the (ion. Member for Bradford, West, dated 1 March from the Secretary of State for the Home Department that the application by Mr. Bahad Singh for entry clearance to the United Kingdom, ref. S656383/4, was being considered after being passed to him by the Foreign and Commonwealth Office and a letter to the hon. Member for Bradford, West from the Foreign and Commonwealth Office, dated 17 February, ref. GV100/5098, saying that the British deputy high commissioner in Bombay was unable to trace any such applications and if she will indicate when she expects that a decision will be reached on Mr. Singh's application.

  The Prime Minister
  Mr. Singh lodged his application with the British High Commission in New Delhi, not Bombay as the hon. Member believes. It was this initial error which contributed to the seemingly contradictory letters received from the two Departments. The letter sent to the hon. Member on 1 March, from the Home Office should have clarified the position and the Home Office will review its procedures, in consultation with the Foreign and Commonwealth Office, with a view to preventing such misunderstandings in the future.

  Mr. Singh's application was refused in July 1988. He has appealed against the decision and his case will be heard by the appellate authorities in due course. The relevant Minister at the Home Office will shortly be writing to the hon. Member about this case.

NORTHERN IRELAND

  Disability
  Rev. Martin Smyth
  To ask the Secretary of State for Northern Ireland whether he will make a statement about the surveys on disability being carried out by his Department; what detailed arrangements are being made to make use of experience gained in the Office of Population Censuses and Surveys survey in Great Britain; and what consultations have taken place with organisa-tions concerned with disability in Northern Ireland.

  Mr. Ian Stewart
  The study of disability, which the Government announced on 15 December 1988 would be carried out in Northern Ireland, will cover all types of disabilities, mental as well as physical, all age groups and include people living in various forms of communal establishments as well as in private households. The research in Northern Ireland will replicate and develop work conducted by the Office of Population Censuses and Surveys in Great Britain and will be conducted by the policy planning and research unit of the Department of Finance and Personnel on behalf of a number of Northern Ireland Departments. Regular contact has been main-tained with OPCS during the planning stages and continued use is being made of their experience. An initial meeting has been held with the director of the Northern Ireland Council on Disability to inform him of the study
  421
  and further consultations will take place with various organisations concerned with disability in Northern Ireland.

  Public Expenditure Commentary
  Mr. William Powell
  To ask the Secretary of State for Northern Ireland when he intends to publish the Northern Ireland public expenditure commentary; and if he will make a statement.

  Mr. Ian Stewart
  The Northern Ireland commentary on public expenditure plans 1989–90 to 1991–92 was published today and copies are available in the Vote Office. This is the second Northern Ireland commentary and it aims to improve the information available to Parliament and the public by amplifying the material in the Northern Ireland chapter of the 1989 Public Expenditure White Paper.

  Students
  Mr. Hume
  To ask the Secretary of State for Northern Ireland if he will make a statement indicating the nature of the consultations which the Department of Education, Northern Ireland, will have regarding the White Paper "Top-Up Loans for Students" and listing the organisa-tions from which the Department are seeking views.

  Dr. Mawhinney
  The White Paper made provision for all comments to be submitted to the Department of Education and Science to arrive by 1 February 1989.

  Mr. Hume
  To ask the Secretary of State for Northern Ireland what information is available to indicate the numbers of disabled students by sex in Northern Ireland in further education and in higher education.

  Dr. Mawhinney
  Information in the form requested is not held centrally.

  Mr. Hume
  To ask the Secretary of State for Northern Ireland what information is available to indicate how many students in Northern Ireland are studying four-year degree courses and three-year degree courses, respectively.

  Dr. Mawhinney
  Provisional information for the 1988–89 academic year is as follows:

  Full-time undergraduate students

  Number

  Enrolled on:

  Three-year Degree Courses

  7,948

  Four-year Degree Courses

  5,220

  Degree Courses longer than 4 years

  994

ENVIRONMENT

  Globe Theatre Site
  Mr. Simon Hughes
  To ask the Secretary of State for the Environment if, in view of the discovery of the site of the Rose theatre in Southwark, he will ask English Heritage to reconsider its decision not to recommend the Globe theatre site for scheduling.

  Mrs. Virginia Bottomley
  The importance of the Globe theatre site is unquestioned. It has not been scheduled so far because there is no evidence to show exactly where the theatre stood. This means that an unjustifiably large area would have to be scheduled.422
  English Heritage has, however, written to the London borough of Southwark suggesting that, before any application for the site's redevelopment is determined, an archaeological evaluation should be undertaken to determine the exact location of any remains. In the light of the results of such an evaluation English Heritage will reconsider where there is a case for scheduling the Globe theatre site. We shall, of course, consider any such recommendation very carefully.

  Sea Pollution
  Dr. Cunningham
  To ask the Secretary of State for the Environment if he will list by water authority area the number of sewage outfalls to the sea; and, of those, how many include primary treatment works.

  Mr. Ridley
  [holding answer 14 March 1989]: This information is not held centrally.

  Applications for new or varied consent conditions for all sewage outfalls to sea are considered by Her Majesty's inspectorate of pollution.

  Quantitative conditions are set in all cases and these have regard to the impact of the discharge in the receiving waters. Her Majesty's inspectorate of pollution also requires all new outfalls to include provision for the removal and disposal of screenings and non-biodegradable materials such as plastics. My hon. and learned Friend the Minister for Water and Planning has placed copies of the inspectorate's guidelines for the construction of new sea outfalls in the Library.

  We do not set specific treatment standards for discharges to the sea; but authorities, in preparing proposals to improve sewage disposal arrangements in coastal areas will want to consider alternative options including inland treatment and sometimes disinfection. However, as the Royal Commission on environmental pollution made clear in its 10th report, the use of long sea outfalls, which rely upon the action of sea and sunlight to break down bacteria, is often the most environmentally satisfactory system of disposal.

  Beaches
  Mr. John Evans
  To ask the Secretary of State for the Environment what will be the cost of bringing beaches in north-west England up to EEC standards; and from what date he expects the standards to be met.

  Mr. Moynihan
  The Department has asked the North West water authority to draw up a capital expenditure programme with the aim of bringing those bathing waters identified under the EEC bathing water directive up to the directive's standards by 1995.

  Yorkshire (Water Reserves)
  Mr. Redmond
  To ask the Secretary of State for the Environment what are the present levels of water reserves in the Yorkshire water authority area; if the authority has applied for any drought orders; what risks there are of drought conditions arising during the coming months of the current year; if he will list by location the areas within the Yorkshire water authority area that are most susceptible to suffering from drought conditions; and if he will make a statement.

  Mr. Moynihan
  Storage reservoirs in the Yorkshire water authority area are almost full and, although
  423
  groundwater levels in the aquifer serving North Humberside are low, adequate supplies are being transferred from elsewhere. The authority has not applied for any drought orders and foresees no difficulty in meeting demand this year unless an exceptionally dry summer occurs.

  Vehicle Exhaust Emissions
  Mr. Allen
  To ask the Secretary of State for the Environment what assessment he has made of the impact on the environment of those vehicle exhaust emissions which are capable of being reduced or eliminated by catalytic converters.

  Mrs. Virginia Bottomley
  Assessing the contribution made by petrol driven vehicles to national levels of carbon monoxide, hydrocarbons, ozone and nitrogen oxides and their consequent environmental impact has been and continues to be a major part of the Department's air quality research programme.

  Water Pollution
  Mr. John Garrett
  To ask the Secretary of State for the Environment if he will list in the Official Report the number and location of breaches in 1988 in the EEC guide and mandatory levels for (a) faecal coliforms, (b) total coliforms, (c) cadmium, (d) arsenic, (e) pesticides, (f) nitrogen and (g) ammonia in bathing waters which were the responsibility of the Anglian water authority.

  Mr. Moynihan
  [holding answer 16 March 1989]: My hon. and learned Friend the Minister for Water and Planning announced on 21 February at column 572, the results of the 1988 survey of bathing waters for England, Northern Ireland and Wales. A summary of the results has already been placed in the Library. The report contains detailed results for individual waters in each water authority area, including numbers of samples taken for particular parameters and the number of these which failed to meet the directive's mandatory standards.

  Mr. John Garrett
  To ask the Secretary of State for the Environment if he will list in the Official Report the number and location of breaches in 1988 in the EEC guide levels and maximum concentrations for (a) chlorides, (b) sulphates, (c) magnesium, (d) sodium, (e) potassium, (f) nitrates, (g) aluminium, (h) nitrates and (i) phenols in water intended for human consumption supplied by the Anglian water authority;

  (2) if he will list in the Official Report the number and location of breaches in 1988 in the EEC guide levels and maximum concentrations for (a) iron, (b) manganese, (c) copper, (d) zinc, (e) phosphorus, (f) barium, (g) cadmium, (h) chromium, (i) mercury, (j) nickel and (k) lead in water intended for human consumption supplied by the Anglian water authority;

  (3) if he will list in the Official Report the number and location of breaches in 1988 in the EEC guide levels and maximum concentrations for (a) herbicides, (b) fungicides, (c) PCBs, (d) insecticides, (e) total bacteria counts, (f) faecal coliforms and (g) faecal streptococci in water intended for human consumption supplied by the Anglian water authority.

  Mr. Moynihan
  [holding answer 16 March 1989]: In view of the current widespread interest in drinking water
  424
  quality, Anglian water authority will be publishing a report on the subject setting out the extent of compliance in 1988 with all the standards set in the EC drinking water directive. Work is in hand to prepare this report and I am asking the authority to send the hon. Member a copy when it is published.

  Mr. Bermingham
  To ask the Secretary of State for the Environment what proposals exist to further relax effluent limits on the amount and type of effluent discharged by the plants of the North West water authority; and if he will make a statement.

  Mr. Moynihan
  [holding answer 16 March 1989]: My hon. and learned Friend, the Minister for Water and Planning announced on 7 December 1988 at column 199, that applications for temporary variations in discharge consent conditions will be considered for those sewage works where capital improvements are programmed to be completed by March 1992.

  Applications made by the North West water authority under the Control of Pollution Act 1974, including those for time-limited variations, will be considered on an individual basis by Her Majesty's inspectorate of pollution. Details of all applications made are held on the register maintained by the water authority which may be inspected, free of charge, by anyone at all reasonable hours.

  Mr. Barry Field
  To ask the Secretary of State for the Environment how many beaches have now reached the higher EEC standards.

  Mr. Moynihan
  My hon. and learned Friend the Minister for Water and Planning announced on 21 February at column 572, the results of the 1988 survey of bathing water quality. These showed that 254 out of the 380 bathing waters in England, Northern Ireland and Wales (67 per cent.) met the mandatory coliform standards in the 1988 bathing season, compared with only 51 per cent., measured on a comparable basis, in 1986.

  Although since 1987 we have tightened the way we monitor and assess compliance with the directive, the EEC standards themselves remain unchanged.

  Water Authority Chairmen
  Mrs. Mahon
  To ask the Secretary of State for the Environment what the chairmen of water authorities are currently paid.

  Mr. Moynihan
  [holding answer 16 March 1989]: I refer the hon. Member to the answer I gave to the hon. Member for Sheffield, Brightside (Mr. Blunkett) on 27 January 1989 at column 792–3.

  Mrs. Mahon
  To ask the Secretary of State for the Environment what the chairmen of water authorities will be paid once the industry is privatised.

  Mr. Moynihan
  [holding answer 16 March 1989]: Once the water authorities are in private ownership, the remuneration of chairmen will be a matter for the successor companies.

  Mrs. Mahon
  To ask the Secretary of State for the Environment what will be the limit on the number of shares a chairman of a privatised water company will be able to hold(a) in his own authority and (b) in other private water companies.
  425
  Mr. Moynihan
  [holding answer 16 March 1989]: The same as for any other shareholders.

  Football Membership Scheme
  Dr. Goodson-Wickes
  To ask the Secretary of State for the Environment what assessment he has made of the implications for the workability of the Football Spectators Bill[Lords] of the extent to which the case for its provision has been made in the absence of separate figures for the number of arrests made inside football grounds.

  Mr. Moynihan
  [holding answer 16 March 1989]: Separate figures are not available distinguishing total arrests at football league matches in England and Wales made inside grounds and those directly connected with such matches made in the vicinity of and/en route to and from grounds. However, both are undoubtedly much reduced by the high level of police resources deployed at matches and by the strict segregation of supporters, the use of closed circuit television and video, and other measures. The Football Spectators Bill, in disqualifying trouble-makers from attending designated matches, will be effective in reducing misbehaviour inside grounds and, since those disqualified will be deterred from travelling to matches, outside and on journeys to and from matches as well.

  Renovation Grants
  Mr. Soley
  To ask the Secretary of State for the Environment if he will make available figures comparable to those in respect of a married couple with two children contained in his Department's paper "Renovation Grants: Proposed Test of Resources", illustrating both the lower and upper thresholds for entitlement to grant towards eligible repairs in respect of(a) a single-parent family with one child under 11, (b) a single pensioner, (c) a pensioner couple, (d) a single person aged between 18 and 25 years, (e) a single person aged between 25 and 60 years and (f) a couple aged between 18 and 60 years on the assumption that all except the pensioner households are entitled to an earnings disregard.

  Mr. Trippier
  Comparative figures based on work costing £10,000 are:

  Lower Threshold £

  Upper Threshold £

  (a) Single parent family with one child under 11

  4,883

  13,918

  (b) Single pensioner (under 80)

  3,331

  12,366

  (c) Pensioner couple (under 80)

  4,560

  13,595

  (d) Single person aged between 18 and 25 years

  2,265

  11,690

  (e) Single person aged between 25 and 60

  3,037

  12,270

  (f) Couple aged between 18 and 60 years

  4,235

  13,270

  Mr. Soley
  To ask the Secretary of State for the Environment how many households living as owner occupiers in dwellings eligible for renovation grants on grounds of their condition with incomes(a) below £20,000 a year, (b) below 15,000 a year, (c) below 12,000 a year and (d) below £9,000 a year will not qualify for any grant aid towards improvement and repair costs on the basis of
  426
  the proposals embodied in part VIII of the Local Government and Housing Bill and amplified in his Department's paper "Renovation Grants: Proposed Test of Resources".

  Mr. Trippier
  On the basis of the assumptions contained in the consultation paper "Renovation Grants: Proposed Test of Resources" the estimated numbers of those with net incomes below the levels specified who do not qualify for grant are:

  (a) 1·9 million

  (b) 1·7 million

  (c) 1·2 million

  (d) 0·4 million

  Chlorofluorocarbons
  Mr. Allan Roberts
  To ask the Secretary of State for the Environment if he will make it his policy to ban chlorofluorocarbons in all but medically essential aerosols.

  Mrs. Virginia Bottomley
  Members of the British Aerosol Manufacturers Association have already agreed to end all non-essential use of chlorofluorocarbons in their products by the end of this year. They are well on course to achieve this.

  Mr. Allan Roberts
  To ask the Secretary of State for the Environment to how many countries Britain exports chlorofluorocarbons which are not signatories to the Montreal protocol.

  Mrs. Virginia Bottomley
  Export data for past trade are not sufficiently detailed to provide this information. A recent revision of data headings means that such data should become available in due course for 1989 and subsequent years. The Montreal protocol does not prohibit the export of CFCs to countries outside the protocol as this might persuade them to start their own new production of CFCs. However, from 1 January 1993, any export of the controlled CFCs or halons to such countries must be compensated for by an equivalent additional reduction in domestic consumption.

  Mr. Allan Roberts
  To ask the Secretary of State for the Environment when he now expects a ban on the use of chlorofluorocarbons in refrigeration units to be implemented.

  Mrs. Virginia Bottomley
  It is hoped that new ozone-benign refrigerants will be available early in the 1990s, although their introduction will be subject to the satisfactory conclusion of toxicological testing. At present, the voluntary approach to reductions in chlorofluorocar-bon use is working well. Should new rules become necessary to require the use of the more beneficial refrigerants as they become commercially available, then we would introduce them.

  Ozone Layer Conference
  Mr. Allan Roberts
  To ask the Secretary of State for the Environment if he will make a statement on the outcome of the London saving the ozone layer conference.

  Mrs. Virginia Bottomley
  The outcome of the highly successful saving the ozone layer London conference was summarised in the chairman's message prepared by my right hon. Friend. Copies of the message, together with a more detailed account by the conference rapporteur, have been placed in the Library.

  Local Government (Access to Information) Act
  Mr. Fatchett
  To ask the Secretary of State for the Environment if he has any plans to extend the provisions of the Local Government (Access to Information) Act to cover urban development corporations and new town corporations.

  Mr. Trippier
  This Act is currently under review but there are no plans to extend its provisions to urban development corporations or new town corporations.

  River Quality
  Mr. Wray
  To ask the Secretary of State for the Environment which are the specific objective criteria used when assessing the quality of rivers as (i) good and (ii) fair.

  Mr. Howard
  The national freshwater quality classification scheme ranks water in four main categories, the highest two being good (class 1) and fair (class 2) quality.

  The specific criteria used in determining river quality class in England and Wales are given in appendix 1 to the report of the 1985 river quality survey of England and Wales.

  In Scotland, slightly different criteria are used. Details are given in appendix A to the report of the 1985 water quality survey of Scotland.

  Copies of both reports are available in the Library of the House.

  Sewage Treatment Works
  Mr. Ron Davies
  To ask the Secretary of State for the Environment if he will list those sewage treatment works in each English water authority which discharged effluent below the required standard during 1988.

  Mr. Moynihan
  Information for 1988 is not yet available but the indications are that water authority returns will show a further improvement in the number of sewage treatment works complying with discharge consents.

  River Pollution
  Mr. Ron Davies
  To ask the Secretary of State for the Environment if he will publish in the Official Report the number of recorded incidents of river pollution, the number of related prosecutions and the number of convictions in England in each of the last 10 years.

  Mr. Moynihan
  The number of reported water pollution incidents recorded by English water authorities in each year between 1980 and 1987, has been published in the Digest of Environmental Protection and Water Statistics (No. 11, 1988), a copy of which is available in the Library of the House.

  The number of prosecutions brought by the English water authorities under section 31 of the Control of Pollution Act 1974, are as follows:

  Year

  Total prosecutions

  1980–81

  91

  1981–82

  129

  1982–83

  124

  1983–84

  173

  1984–85

  206

  428

  Year

  Total prosecutions

  1985–86

  201

  1986–87

  254

  Figures for years prior to 1980–81 are not held by the Department and figures for 1987–88 are not yet available.

  Information about convictions following prosecutions is collected by my right hon. Friend, the Secretary of State for the Home Department, but it is not in a directly comparable form. I understand, however, that on average, around 90 per cent. of these cases result in convictions.

  Enterprise Centre (Bradford)
  Mr. Madden
  To ask the Secretary of State for the Environment if he has approved any grants or other financial assistance towards capital or revenue costs of the enterprise centre in Bradford; and if he will make a statement.

  Mr. Trippier
  A grant of £96,267, towards the capital works needed for the refurbishment of Britannia house, in which the enterprise centre is housed, was given under the urban programme for 1988–89.

  Voluntary Organisations (Bradford)
  Mr. Madden
  To ask the Secretary of State for the Environment whether the financial assistance he announ-ced on 15 March enabling five voluntary organisations in Bradford threatened with closure to continue has come from within existing allocations; and if he will make a statement.

  Mr. Trippier
  The resources, which will enable eight voluntary organisations to continue, will come out of the £4·5 million urban programme allocation for 1989–90, also announced on 15 March.

  Mr. Madden
  To ask the Secretary of State for the Environment if he will make further financial assistance available to enable the 21 voluntary organisations in Bradford, which are faced with closure or severe cuts in their funding, to receive funding, in line with inflation for 1989–90.

  Mr.Trippier
  No. The urban programme is intended to provide initial finance for a project, which if continued can then be financed longer term from other sources such as the council's main programme, or the private sector. Against this background it is for Bradford to decide which projects it wishes to put forward for funding through the urban programme. The Government have already agreed, as an exceptional measure, to the continued funding next financial year of eight projects that have time expired. This utilises in full the resources available next year within the urban programme allocation for Bradford.

  Rating Reform
  Mr. Greg Knight
  To ask the Secretary of State for the Environment what a ward sister would pay(a) in community charge and (b) in a system of capital value rates plus local income tax paid in the proportions of 80–20, respectively, if she lived in a typical one bedroom flat in Paddington.

  Mr. Gummer
  A ward sister earning £15,000 living in a flat in Paddington worth £70,000 would pay a community
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  charge of £373 (disregarding the transitional safety net) and £1,165 under a system of capital value rates plus local income tax.

  Set-aside Scheme
  Sir Charles Morrison
  To ask the Secretary of State for the Environment whether he intends to introduce top-up payments for farmers who have entered land into the set-aside scheme and undertaken to bring about environmental improvements on that land.

  Mrs. Virginia Bottomley
  My right hon. Friends the Secretary of State and the Minister of Agriculture, Fisheries and Food have been considering, with the Countryside Commission and the Nature Conservancy Council, the possibility of making additional payments to farmers who undertake to manage their set-aside land in a way that produces specified benefits for the environment.

  The set-aside scheme already carries with it conditions to ensure that fallow land is kept in good condition and that hedges are maintained. In addition, guidance has been issued suggesting to farmers how they can best manage fallow land in the interests of the landscape and wildlife. However, in order to assist farmers in cases where particular forms of management impose significant extra costs going beyond the basic conditions of the scheme, we have decided to introduce a system of additional incentives.

  Under the scheme farmers will be invited to adopt one or more specified management practices which will, for example, increase the nature conservation or landscape value of the land or provide access or other recreational opportunities. Adoption of these practices will attract payment in addition to the rates offered under the set-aside scheme. The incentives will vary according to the nature of the management involved.

  The top-up scheme will, at any rate initially, be targeted to certain parts of England where scope for environmental improvement seems greatest. It will be run by the Countryside Commission, with the assistance of the Nature Conservancy Council and in consultation with the Ministry of Agriculture. Payments will be made at the discretion of the commission.

  Further details of the scheme, including its geographi-cal coverage are now being worked out and will be announced in due course.

  Eastbourne Waterworks Company
  Mr. Gow
  To ask the Secretary of State for the Environment whether he will make a statement following his meeting with the chairman of the Eastbourne Waterworks company to discuss changes for the year ending 31 March 1990.

  Mr. Howard
  I shall write to my hon. Friend.

  Migratory Species
  Mrs. Rosie Barnes
  To ask the Secretary of State for the Environment whether it is possible to keep, breed and sell any species listed in appendix 2 of the Berne convention on migratory species.

  Mrs. Virginia Bottomley
  Yes. I will write to the hon. Member with details.

  Electoral Registers (Doncaster)
  Mr. Redmond
  To ask the Secretary of State for the Environment if he will list in the Official Report, the total number of people in each of the three parliamentary constituencies in the Doncaster area listed on (a) the electoral registers for 1988–89, (b) the electoral registers for 1989–90 and (c) the electoral registers for five years and 10 years ago, respectively.

  Mr. Freeman
  I have been asked to reply. The information requested for 1983–84 and 1988–89 is as follows:

  Parliamentary constituency

  Parliamentary electors

  1983–84

  1988–89

  Doncaster Central

  71,888

  70,680

  Doncaster North

  73,204

  74,457

  Don Valley

  74,136

  75,852

  Notes:

  The current reorganisation of parliamentary constituencies took place in 1983. Electorate statistics for 1983–84 have been reassembled on the basis of current constituency boundaries. Figures for earlier years are not available.

  Numbers on the 1989–90 Register are still being assembled centrally. They will be published in Electoral Statistics 1989 (Series EL No. 16) at the end of May, and a copy will be placed in the Library.

TRADE AND INDUSTRY

  British Telecom (Pricing Policy)
  Mr. French
  To ask the Chancellor of the Duchy of Lancaster (1) if he has had any discussions with the Director-General of Fair Trading regarding the pricing policy of British Telecom; and if he will make a statement;

  (2) if he will discuss with the chairman of OFTEL the pricing policies of British Telecom; and if he will make a statement;

  (3) if he has any plans to review the legislation which defines the services provided by British Telecom governed by the RPI-X pricing formula; and if he will make a statement.

  Mr. Atkins
  These are matters for the Director General of Telecommunications to consider in the light of his independent statutory functions. I understand that at the end of last year he published a notice of his proposals for revising the price control formula in BT's licence with effect from 1 August 1989.

  Manufacturing Industry (North-West)
  Mr. Goodlad
  To ask the Chancellor of the Duchy of Lancaster what percentage of the economy of the north-west consists of manufacturing industry; and what is the national average.

  Mr. Atkins
  Provisional figures for 1987 indicate that manufacturing industry contributed 30·6 per cent. to the north-west standard region's gross domestic product (at factor cost and current prices). This compares with an average figure for the United Kingdom of 24·8 per cent.

  GDP (North-West)
  Mr. Goodlad
  To ask the Chancellor of the Duchy of Lancaster, by how much gross domestic product per head has increased in the north-west of England since 1979.
  431
  Mr. Atkins
  Gross domestic product per head (at factor cost and current prices) in the north-west standard region has increased from £2,838 in 1979 to, provisionally, £5,622 in 1987.

  Export-Import Trade
  Miss Lestor
  To ask the Chancellor of the Duchy of Lancaster what is the value of United Kingdom exports to

  United Kingdom trade with Latin America, Japan, Asia4, South Africa, Sub-Saharan Africa' and the Middle East for 1984 to 1988

  1984

  1985

  1986

  1987

  19881

  Imports2

  Exports3

  Imports2

  Exports3

  Imports2

  Exports3

  Imports2

  Exports3

  Imports2

  Exports3

  Latin America

  1,525·9

  924·9

  1,582·4

  1,067·3

  1,231·2

  1,091·2

  1,436·8

  1,191·9

  1,515·6

  1,101·8

  Japan

  3,771·9

  926·6

  4,115·5

  1,012·3

  4,936·9

  1,193·7

  5,464·0

  1,495·1

  6,509·1

  1,742·7

  Asia4

  4,770·4

  4,194·4

  4,642·0

  4,501·5

  5,357·1

  4,682·5

  6,226·3

  5,312·7

  7,457·0

  5,557·9

  South Africa

  725·6

  1,204·1

  989·8

  1,009·2

  829·6

  849·5

  658·2

  948·6

  807·7

  1,074·8

  Sub-Saharan Africa5

  1,849·2

  1,726·6

  2,053·4

  2,066·9

  1,443·8

  1,564·4

  1,086·3

  1,564·4

  1,006·2

  1,479·9

  Middle East6

  2,026·8

  5,224·5

  1,755·4

  5,304·0

  1,669·4

  5,033·7

  1,536·4

  4,955·7

  1,879·1

  4,749·8

  1Provisional.

  2 Imports cif

  3 Exports fob

  4 Asia: Afghanistan, Pakistan, India, Nepal, Bhutan, Sri Lanka, Bangladesh, Burma, Thailand, Malaysia, Singapore, Laos, Kampuchea, Vietnam, Mongolia, China, Taiwan, Macao, Hong Kong, North Korea, South Korea, Philippines, Maldives, Brunei and Indonesia.
  Excluding Japan.

  5 Excluding South Africa.

  6 Middle East: Egypt, Syria, Lebanon, Israel, Jordan, Saudi Arabia, Kuwait, Bahrain, Qatar, Abu Dhabi, Dubai, Sharjah etc, Oman, Yemen, North, Yemen South, Iraq and Iran.

  Source: Overseas Trade Statistics.

  Price Indication (Code of Practice)
  Ms. Quin
  To ask the Chancellor of the Duchy of Lancaster (1) when he intends to review the effectiveness of the code of practice for traders on price indications;

  (2) what progress he has made in setting up a committee to monitor the effectiveness of the code of practice for traders on price indications.

  Mr. Forth
  The code of practice on price indications provides practical guidance for traders who need to comply with the obligation imposed by section 20 of the Consumer Protection Act 1987 not to give a misleading price indication.

  The Government will be monitoring the operation of the legislation and the working of the code of practice and has suggested that a committee should be set up for this purpose. It is hoped that representatives of all interested parties will be prepared to take part in the work of the committee. A review of the working of the legislation and the associated code of practice will be undertaken when sufficient experience of its operation is available to enable an informed assessment to be made.

  Ms. Quin
  To ask the Chancellor of the Duchy of Lancaster what representations he has received on the effectiveness of the code of practice for traders on price indications(a) since they came into practice on 1 March and (b) before that date.

  Mr. Forth
  Extensive consultations were held both prior to and during the preparation of the code of practice 432
  and imports from (a) Latin America, (b) Japan, (c) Asia (excluding Japan), (d) South Africa, (e) Sub-Saharan Africa (excluding South Africa) and (f) the middle east; for each of the last five years in (i) constant prices and (ii) current prices.

  Mr. Alan Clark
  Information in constant prices is not available. Information at current prices is given in the table:

  with representatives of the main interested parties and with the public. Since its coming into operation on 1 March there have been a number of representations and inquiries on specific aspects of the code.

  Public Limited Companies
  Mr. Janman
  To ask the Chancellor of the Duchy of Lancaster how many new public limited companies have been registered in the United Kingdom in the last 12 months.

  Mr. Maude
  The chief executive of Companies House tells me that 2,843 public limited companies were incorporated in Great Britain in the 12 months to February 1989. In addition, a further 841 private companies were re-registered as plcs in the same period.

  Regional Assistance
  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster if he will provide figures on regional development grants for each of his Department's regions for(a) the number of applications outstanding on 31 March 1988, (b) the number of applications processed, (c) the number of those applications that are still outstanding and (d) the total amount of money paid out since 31 March 1988 to those applicants.

  Mr. Atkins
  The information requested in respect of he revised regional development grant scheme by region is as follows:
  433

  North East

  North West

  Yorkshire and Humberside

  East Midlands

  South West

  Number of applications outstanding at 31 March 1988

  3,260

  2,740

  830

  240

  540

  Number of these processed at end-February 1989

  3,064

  2,711

  819

  234

  538

  Number still outstanding end-February 1989

  196

  29

  11

  6

  2

  Grant paid (£ million) to date on applications outstanding at 31 March 1988

  14·2

  12·9

  3·1

  1·5

  1·8

  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster if he will give the total expenditure on regional selective assistance in each of his Department's regions for

  £ million

  North East

  North West

  Yorkshire and Humberside

  East Midlands

  South West

  West Midlands

  England Total1

  1983–84

  13·8

  15·2

  8·8

  8·7

  2·0

  —

  62·2

  1984–85

  14·6

  14·4

  9·7

  6·4

  2·1

  —

  72·9

  1985–86

  15·6

  13·3

  8·3

  3·9

  2·5

  5·5

  74·8

  1986–87

  17·6

  18·9

  10·1

  2·2

  5·2

  9·8

  100·6

  1987–88

  23·4

  20·9

  14·1

  2·3

  4·3

  18·3

  122·9

  1 At the regional level the figures include only industrial and training grants: the England total also includes some unallocated project grants, and expenditure under the business improvement services and exchange risk guarantee scheme which it is not possible to provide on a regional basis.

  Note:

  All figures are gross of domestic receipts and receipts from the European regional development fund.

  The latest gross forecast outturn for 1988–89 is £135 million. This is a best estimate and is dependent on the level of claims received and processed before the end of March.

  The planned provision for 1989–90 as contained in the Supply Estimates, is £145 million. The planned provision for 1990–91 and 1991–92 is £150 million and £160 million, respectively. All planned provision figures are net of domestic receipts.

  All the above figures include expenditure on industrial and training grants, and the business improvement services and exchange risk guarantee schemes.

  Year

  North East

  North West

  Yorkshire and Humberside

  East Midlands

  South West

  1983–84

  68·8

  115·5

  23·5

  8·2

  7·8

  1984–85

  61·6

  107·4

  26·8

  3·8

  9·5

  1985–86

  46·4

  83·0

  24·2

  4·4

  8·6

  1986–87

  89·8

  113·7

  27·1

  8·4

  15·3

  1987–88

  57·6

  49·8

  17·8

  7·1

  7·0

  Note:

  All figures in the table are gross domestic receipts and receipts from the European regional development fund.

  The latest gross forecast outturn for DTI as a whole in 1988–89 is £155 million. This is a best estimate and is dependent on the level of claims received and processed before the end of March. The planned provision for 1989–90, as contained in the Supply Estimates, is £125 million. Planned provision in respect of 1990–91 and 1991–92 is £110 million and £55 million respectively. All planned provision figures are net of domestic receipts.

  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster (1) if he will give for each of his Department's regions(a) the total number of applications received for investment grants from 1 April 1988 to the most recent
  434
  each year from 1983–84 to 1987–88 inclusive and the estimated expenditure for 1988–89, 1989–90, 1990–91 and 1991–92.

  Mr. Atkins
  Total expenditure on regional selective assistance (RSA) by region in the years in question was:

  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster if he will give the total expenditure on regional development grant in each of his Department's regions for each year from 1983–84 to 1987–88 inclusive, and the estimated expenditure for 1988–89, 1989–90, 1990–91 and 1991–92.

  Mr. Atkins
  Total expenditure on the original and revised regional development grant schemes by region in the years in question was:

  date for which figures are available, (b) the total number of applications approved, (c) the total amount of expenditure involved and (d) the total estimated expenditure planned for that period and the estimated expenditure for 1989–90, 1990–91 and 1991–92;

  (2) if he will give for each of his Department's regions (a) the total number of applications received for innovation grants from 1 April 1988 to the most recent date for which figures are available, (b) the total number of applications approved, (c) the total amount of expenditure involved and (d) the total estimated expenditure planned for that period and the estimated expenditure for 1989–90, 1990–91 and 1991–92.
  435
  Mr. Atkins
  Regional enterprise grants (REGs) became available on 1 April 1988 in the development areas, and on 1 September 1988 in south Yorkshire. The information

  Number of applications

  Number of offers

  Value of offers (£000)

  Investment

  North East

  363

  219

  1,203

  North West

  390

  219

  1,373

  Yorkshire and Humberside

  161

  95

  771

  East Midlands

  36

  30

  269

  South West

  126

  86

  385

  Total England

  1,076

  649

  4,001

  Payments of £557,900 have been under investment up to end February.

  Innovation

  North East

  117

  48

  896

  North West

  129

  36

  759

  Yorkshire and Humberside

  61

  22

  490

  East Midlands

  8

  3

  75

  South West

  28

  11

  199

  Total England

  343

  150

  2,419

  Payments of £164,000 have been made under innovation up to end February.

  The amount of expenditure paid out in any particular region depends on demand for the scheme and the appraisal of individual applications. The value of grants actually paid so far reflects the nature and timescale of the projects on which applicants have sought grants since scheme commencement in April.

  The provision for 1989–90 as published in the supply estimates are £22–2 million for investment grants and £5·9 million for innovation grants.

  Planned provision for regional enterprise grants in 1990–91 and 1991–92 is £45·2 million and £46·3 million respectively. The actual expenditure in future years will of course depend on demand.

  North East

  North West

  Yorkshire and Humberside

  East Midlands

  South West

  West Midlands

  (a) Number of applications received between 1 April 1988 and 28 February 1989

  255

  399

  216

  21

  94

  520

  (b) Number of applications processed between 1 April 1988 and 28 February 1989

  239

  382

  208

  31

  84

  502

  (c) Total grant paid (£ million) between 1 April 1988 and 28 February 1989

  22·9

  17·4

  6·9

  0·9

  3·6

  21·2

  Business Development Consultancy Initiative
  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster if he will give the total number of applications(a) received, (b) approved for business development consultancy initiative from 1 April 1988 to the most recent date for which figures are available and (c) the total amount of expenditure involved for each of the regions of his Department, Scotland and Wales.

  Mr. Atkins
  In the period from 1 April 1988 to 24 February 1989 a total of 16,761 applications were received
  436
  requested, for the English regions for which DTI is responsible, for the eleven months to 28 February 1989, is as follows:

  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster if he will provide figures on regional selective assistance for each of his Department's regions giving(a) the total number of applications received since April 1988, (b) the number of applications that have been processed and (c) the total amount o f money paid out since 1 April 1988.

  Mr. Atkins
  The information requested in respect. of regional selective assistance (RSA) industrial and training grants by region is as follows:

  for the business development consultancy initiatives. In the same period 12,533 applications were approved for assisted consultancy. The Department's contribution to the cost of completed consultancies totalled £9·3 million. It is estimated that those consultancies not completed by 24 February 1989 will cost the Department £22·5 million. A breakdown of numbers and cost of consultancy projects for each DTI region and for Scotland and Wales is as follows:
  437

  Department of Trade and Industry region/county

  (a) Number of applications received

  (b) Number of applications approved for consultancy

  (c) Department of Trade and Industry expenditure on completed consultancies (£'000)

  (d) Estimated expenditure on outstanding consultancies (£'000)

  North East

  852

  649

  465

  1,124

  North West

  2,607

  2,106

  1,775

  4,295

  Yorkshire and Humberside

  1,636

  1,203

  1,078

  2,609

  West Midlands

  1,789

  1,268

  1,069

  2,586

  East Midlands

  989

  793

  660

  1,597

  South West

  1,667

  1,008

  576

  1,394

  South East:

  Cambridge

  1,155

  832

  372

  900

  London

  1,783

  1,349

  892

  2,159

  Reading

  969

  769

  390

  944

  Reigate

  910

  707

  446

  1,079

  Scotland

  1,366

  1,093

  1,078

  2,609

  Wales

  1,038

  756

  493

  1,192

  TOTAL

  16,761

  12,533

  9,294

  22,488

  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster if he will estimate the total amount of expenditure on the business development consultancy initiative to be paid out in Scotland, Wales and his Department's regions for each of the years 1988–89, 1989–90, 1990–91 and 1991–92.

  Mr. Atkins
  We estimate the total amount of expenditure on the business development consultancy initiatives in 1988–89 will be £43·3 million. This cannot be broken down on a regional basis. The public expenditure survey provision for the years 1989–90 and 1990–91 is £91 million and £109 million respectively. Provision for 1991–92 has not yet been set.

WALES

  Nurses (Regrading)
  Mr. Livsey
  To ask the Secretary of State for Wales if he will make a statement on the nurses' clinical regrading review.

  Mr. Wyn Roberts
  Health authorities in Wales completed their work on the nurses clinical grading review by the end of October 1988. They received additional funds to meet the estimated final cost of the regrading.

  Sheepmeat Regime
  Mr. Alex Carlile
  To ask the Secretary of State for Wales what are the latest developments regarding the sheepmeat regime proposals as they affect Wales; and if he will make a statement.

  Mr. Peter Walker
  Little progress has been made on the Commission's proposal for the review of the sheepmeat regime. Meanwhile, producers in Wales continue to benefit from the existing support arrangements.

  Wales Tourist Board
  Sir Anthony Meyer
  To ask the Secretary of State for Wales when he last met the chairman of the Wales tourist board; and what was discussed.

  Mr. Wyn Roberts
  My right hon. Friend frequently meets with the chairman of the Wales tourist board to 438
  discuss many matters of mutual interest, including the WTB's central reservations system which is showing bookings up by 50 per cent. on this time last year—with self-catering holidays up 100

  Experimental Farms
  Mr. Geraint Howells
  To ask the Secretary of State for Wales if he has any plans to expand research and development at Trawsgoed an Pwllpeiran experimental farms; and if he will make a statement.

  Mr. Peter Walker
  The funding of research and development at experimental husbandry farms is a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food. Future research programmes will depend on the results of consultations which are still under way.

  Collieries (Merthyr)
  Mr. Rowlands
  To ask the Secretary of State for Wales when he intends next to meet the chairman of British Coal to discuss the future of the collieries in the Merthyr area.

  Mr. Peter Walker
  I am in regular contact with the chairman and deputy chairman to discuss issues of mutual interest, including the future of pits in the south Wales coalfield.

  Gwynedd Health Authority
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Wales when he next intends to meet the chairman of Gwynedd health authority to discuss health services.

  Mr. Peter Walker
  I plan to meet members of the Welsh health authorities chairmen's Committee, including Mrs. Edwards, in the near future to discuss the White Paper "Working for Patients". My officials will be meeting officers of Gwynedd health authority to discuss its revised financial plans in the light of my recent decisions on its hospital rationalisation proposals.

  West Wales (Inward Investment)
  Mr. Nicholas Bennett
  To ask the Secretary of State for Wales what action he is taking to encourage inward investment to west Wales; and if he will make a statement.
  439
  Mr. Peter Walker
  Efforts to attract inward investment to Wales have been very successful with 1988 being a record year. The advantages of all parts of Wales are emphasised when projects are discussed with potential inward investors and Winvest has recently appointed a regional executive to work closely with local authorities in west Wales to secure inward investment projects for the area. I am tomorrow launching a marketing campaign developed by Winvest and a consortium of local authorities in west Glamorgan and east Dyfed. Winvest is currently discussing with local authorities in Dyfed the possibility of a similar initiative for west Wales.

  East Glamorgan General Hospital
  Dr. Kim Howells
  To ask the Secretary of State for Wales if he will make a statement explaining the delay in the announcement of a replacement for the east Glamorgan general hospital.

  Mr. Wyn Roberts
  Mid Glamorgan health authority's proposals for the replacement of east Glamorgan general hospital are contained in its consultation document on the reorganisation of hospital services in Taff Ely and Rhondda. My right hon. Friend wishes to see health services in that area improved and he will give a decision on the proposal when further information that he has been asked for is obtained.

  Farming Unions
  Mr. Martin Jones
  To ask the Secretary of State for Wales what representations he has had recently from the Welsh farming unions.

  Mr. Peter Walker
  I regularly receive representations from the Welsh farming unions on a wide range of issues affecting agriculture in Wales.

  Rating Reform
  Mr. Gwilym Jones
  To ask the Secretary of State for Wales what is his latest estimate of the community charge for 1990–91 for(a) Cardiff and (b) the average in Wales; and if he will make a statement.

  Mr. Peter Walker
  I have made no such estimates.

  Disabled People
  Mr. Wigley
  To ask the Secretary of State for Wales what was the outcome of the meeting between Welsh office Ministers and representatives of disablement organisations in Wales, held on 7 February; and whether he proposed to take any new action as a result of that meeting.

  Mr. Gareth Wardell
  To ask the Secretary of State for Wales if following the meeting between his officials and the Spastics Society with the Wales Council for the disabled on 7 February in Cardiff, he now considers there to be the need for an all Wales physical handicap strategy and for additional resources to be made available for services for people with physical disabilities in Wales.

  Mr. Peter Walker
  Representatives of the Wales Council for the Disabled and the Spastics Society in Wales were told that Welsh Office social work services would be undertaking surveys of services for disabled people 440
  provided by local authorities and voluntary organisations in Wales. The needs of people with physical and sensory disability would also be examined in the next round of health authority strategic planning. The results of those exercises will not be available until next year, but in the meantime further consultations will be held with a number of bodies representing people with disabilities and preliminary guidance for planning purposes will be issued.

  Mr. Wigley
  To ask the Secretary of State for Wales if he will publish a table showing, in current money equivalent terms, the spending by Social Services departments in Wales on services for registered physically handicapped people during 1987–88 and for each of the previous 10 years, together with the number of such people who were beneficiaries of these services in each year and the corresponding average spending per assisted case.

  Mr. Peter Walker
  The information available on spending is given in the table:

  Local authority expenditure on physically handicapped1 at 1985–87 prices

  £ million

  1976–77

  4·5

  1977–78

  3·3

  1978–79

  4·3

  1979–80

  4·0

  1980–81

  3·8

  1981–82

  3·6

  1982–83

  3·5

  1983–84

  4·2

  1984–85

  2

  1985–86

  3·5

  1986–87

  3·6

  1 Estimated from outturn information shown in the local authority social services planning statements for Wales. May include some expenditure on the elderly. Excludes day care.

  2Not available.

  Information relating to the receipt of services provided by Social Services Departments is as follows:

  Number of residents under the age of 65 supported by local authorities1 2

  Cases of assistance provided by social services departments3 4

  1977

  761

  22,110

  1978

  718

  24,997

  1979

  720

  28,707

  1980

  689

  28,418

  1981

  634

  25,293

  1982

  630

  26,720

  1983

  583

  31,290

  1984

  599

  41,659

  1985

  548

  39,312

  1986

  417

  42,423

  1987

  416

  44,310

  1988

  404

  45,285

  1In local authority, private and voluntary homes. Some of these residents may not be physically handicapped.

  2As at 31 March.

  3Telephone rentals, personal equipment, adaptations to property, holidays etc. Information given relates to cases as opposed to beneficiaries (an individual beneficiary may receive more than one case of assistance). Figures quoted include all age groups and relate to assistance provided to both physically handicapped people and other client groups.

  4Year ending 31 March.

  It is not statistically meaningful to calculate an average spending per assisted case because of the differing natures of the various services provided. These services vary from

  441
  smaller forms of assistance (such as the provision of personal aids) through to long-term support in residential care.

  Dialysis Patients
  Mr. McLoughlin
  To ask the Secretary of State for Wales how many new patients per million population in Wales received (i) haemodialysis and (ii) continuous ambulatory peritoneal dialysis in 1988 or the most recent year for which figures are available.

  Mr. Peter Walker
  The number of new patients receiving renal dialysis in Wales in 1988 was 71·2 per million population. The proportional contribution of each dialysis mode was as follows:

  Home haemodialysis

  18·3 per cent.

  Hospital haemodialysis

  31·0 per cent.

  Continuous ambulatory peritoneal dialysis

  50·7 per cent.

  New Patients
  Mr. McLoughlin
  To ask the Secretary of State for Wales what proportion of new patients were attended to in the private sector and in public sector units.

  Mr. Peter Walker
  This information is not available centrally.

  Regional Assistance
  Mr. McLeish
  To ask the Secretary of State for Wales if he will provide figures on regional selective assistance for(a) the total number of applications received since 1 April 1988, (b) the number of the above applications that have been processed and (c) the total amount of money paid out since 1 April 1988.

  Mr. Peter Walker
  A total of 231 applications for regional selective assistance grants were received by my Department and 181 of these processed in the period from 1 April 1988 to 28 February 1989. The total amount of grant paid out over the same period was £27·4 million (RSA project and training grants).

  Mr. McLeish
  To ask the Secretary of State for Wales if he will provide figures on regional development grants for(a) the number of applications outstanding on 31 March 1988, (b) the number of those outstanding applications that have subsequently been processed, (c) the number of those applications that are still outstanding and (d) the total amount of money paid out since 31 March 1988 in regional development grants to those applicants.

  Mr. Peter Walker
  A total of 1,935 applications for revised regional development grant (RDG II) were outstanding on 31 March 1988. All these have since been actioned, and decisions had been made on 1,821 as at 28 February 1989, leaving a balance of 114. Actual payments on applications outstanding at 31 March 1988 totalled £13·3 million as at 28 February. Total expenditure on RDG II between 31 March 1988 and 28 February 1989 was £34·85 million.

  Mr. McLeish
  To ask the Secretary of State for Wales if he will give the total expenditure on regional development grant for each of the years 1983–84 to 1987–88 inclusive, and the estimated expenditure for 1988–89, 1989–90, 1990–91 and 1991–92.
  442
  Mr. Peter Walker
  Expenditure on regional development grants in Wales for the years 1983–84 to 1987–88 inclusive was as follows:

  £ million1

  1983–84

  72·1

  1984–85

  92·7

  1985–86

  84·4

  1986–87

  88·8

  1987–88

  53·4

  Notes:

  Estimated outturn for 1988–89 is £57·5 million1 and the provision for 1989–90 is shown in the Supply Estimates published on 14 March. Planned provision by my Department for 1990–91 and 1991–92 is, respectively £43·6 million2 and £34·3 million2.

  1Gross expenditure on original (RDG I) and revised (RDG II) schemes.

  2Expenditure net of domestic receipts and recoveries, gross of EC receipts.

  Mr. McLeish
  To ask the Secretary of State for Wales if he will give the total expenditure on regional selective assistance for each of the years 1983–84 to 1987–88 inclusive, and the estimated expenditure for 1988–89, 1989–90, 1990–91 and 1991–92.

  Mr. Peter Walker
  Expenditure on regional selective assistance' in Wales for the years 1983–84 to 1987–88 inclusive is as follows:

  £ million1

  1983–84

  18·2

  1984–85

  25·1

  1985–86

  28·0

  1986–87

  35·6

  1987–88

  36·7

  Notes:

  Estimated outturn for 1988–89 is £43·0 million1 and the provision for 1989–90 is shown in the Supply Estimates published on 14 March. Planned provision by my Department for 1990–91 and 1991–92 is, respectively £61·2 million2 and £62·7 million.2

  1 Gross expenditure on industrial and training grants, exchange risk losses on European loans, payments under the business improve-ments services scheme.

  2 Expenditure net of domestic receipts, gross of EC receipts.

  Mr. McLeish
  To ask the Secretary of State for Wales if he will give(a) the total number of applications received for innovation grants from 1 April 1988 to the most recent date for which figures are available, (b) the total number of applications approved, (c) the total amount of expenditure involved and (d) the total estimated expenditure planned for that period and the estimated expenditure for 1989–90, 1990–91 and 1991–92.

  Mr. Peter Walker
  Under the regional enterprise grant scheme 106 applications for innovation projects were received by my Department and 28 offers of grant to the value of £538,000 were made in the period 1 April 1988 to 28 February 1989. Most of these offers will not fall due for payment until 1989–90 and subsequent years. The revised total provision for payments in the 1988–89 financial year is £0·1 million. Vote provision for 1989–90 is shown in the Supply Estimates published on 14 March and planned provision in 1990–91 and 1991–92 is £1·8 million in each year.

  Investment Grants
  Mr. McLeish
  To ask the Secretary of State for Wales if he will give(a) the total number of applications received

  443
  for investment grants from 1 April 1988 to the most recent date for which figures are available, (b) the total number of applications approved, (c) the total amount of expenditure involved and (d) the total estimated expenditure planned for that period and the estimated expenditure for 1989–90, 1990–91 and 1991–92.

  Mr. Peter Walker
  Under the regional enterprise grant scheme 277 applications for investment projects were received by my Department and 111 offers of grant to the value of £688,350 were made in the period 1 April 1988 to 28 February 1989. Most of these offers will not fall due for payment until 1989–90 and subsequent years. The revised total provision for payments in the 1988–89 financial year is £0·2 million. Vote provision for 1989–90 is shown in the Supply Estimates published on 14 March and planned provision in 1990–91 and 1991–92 is £5·6 million and £5·7 million respectively.

  Nursing and Midwifery Staff NHS Scotland (WTE)

  1975

  1980

  1985

  1986

  1987

  11988

  Total

  52,540

  58,602·5

  62,562·1

  62,868·2

  63,388·3

  63,909·0

  Qualified

  24,246

  28,028·4

  33,803·3

  34,426·1

  35,109·8

  35,663·4

  In training

  11,096

  12,414·3

  11,366·7

  11,190·7

  10,830·4

  10,828·4

  Unqualified

  17,198

  18,159·8

  17,392·1

  17,251·4

  17,448·1

  17,417·2

  1Provisional.

  Note: Data at 30 September.

  Teachers (Vacancies)
  Mr. Dunnachie
  To ask the Secretary of State for Scotland how many vacancies exist currently in(a) primary, (b) junior and (c) secondary schools for teachers in (i) English, (ii) mathematics, (iii) languages, (iv) science, (v) craft and (vi) art subjects in Scotland.

  Mr. Michael Forsyth
  The numbers of vacancies for full-time teaching posts in Scotland which education authorities had advertised but not filled, at 31 January 1989, are as follows:

  Type of school or subject

  Vacancies

  (a) Primary

  70

  (b) Junior

  1—

  (c) Secondary

  58

  (i) English

  9

  (ii) Mathematics

  3

  (iii) Languages

  2

  (iv) Science

  8

  (v) Craft (Technology)

  4

  (vi) Art

  4

  (vii) Other subjects

  28

  1 Not applicable in Scotland.

  Remand
  Dr. Godman
  To ask the Secretary of State for Scotland what steps he has taken to ensure that minor offenders are not given remand; and if he will make a statement.

  Lord James Douglas-Hamilton
  The decision to grant bail or, to remand an offender in custody is entirely one for the courts, which have before them the facts of each case and can consider all the circumstances.

SCOTLAND

  Waste Disposal
  Mrs. Ray Michie
  To ask the Secretary of State for Scotland if he will list the number of convictions, by district, for illegal waste-dumping in Scotland in each of the last five years.

  Lord James Douglas-Hamilton
  [holding answer 16 March 1989]: The information requested is not available.

  Nurses
  Mr. Galbraith
  To ask the Secretary of State for Scotland if he will give for each year the number of nurses employed by the National Health Service in the following categories(a) qualified, (b) untrained and (c) in training in terms of whole-time equivalents.

  Mr. Michael Forsyth
  The information requested is set out for selected years:

  Incinerators (Pollution)
  Dr. Godman
  To ask the Secretary of State for Scotland if he has any proposals for new guidance on practices at incinerators to reduce dioxin discharges; and if he will make a statement.

  Lord James Douglas-Hamilton
  I refer the hon. Member to the reply given on 16 March by my hon. Friend the Parliamentary Under-Secretary of State for the Environment to the hon. Member for St. Helens, South (Mr. Bermingham). In Scotland, large incinerators will be under the control of HM industrial pollution inspectorate.

  Dr. Godman
  To ask the Secretary of State for Scotland if he has any proposals for new limitations on pollution from incinerators of municipal rubbish; and if he will make a statement.

  Lord James Douglas-Hamilton
  I refer the hon. Member to the reply given on 16 March by my hon. Friend the Parliamentary Under-Secretary of State for the Environment to the hon. Member for St. Helens, South (Mr. Bermingham).

  Salmon Farming
  Dr. Godman
  To ask the Secretary of State for Scotland what research has been conducted into the metabolism and depuration rate of dichlorvos in farmed salmon; and what regulations are in place to ensure that farmed salmon is not marketed within an appropriate period following treatment.

  Mr. Michael Forsyth
  No research has been carried out by the Department of Agriculture and Fisheries for Scotland into the metabolism and depuration rate of dichlorvos in farmed salmon. The veterinary products
  445
  committee would require any company applying for a licence for a dichlorvos-based product to provide data of this kind for evalution. However, information in support of an application for a medicinal product licence is a matter of commercial confidentiality and its publication would be a matter for the company concerned. It is the responsibility of the user and his veterinary adviser to comply with the conditions of use stipulated for any veterinary medicinal product.

  Dr. Godman
  To ask the Secretary of State for Scotland when and where the Department of Agriculture and Fisheries for Scotland's marine laboratory will publish its research result on(a) the toxicity of dichlorvos to marine organisms, including phytoplankton species, copepod species and larval stages of various marine organisms and (b) the persistence of dichlorvos in the marine environment and the form in which it is dispersed; and if he will make a statement.

  Mr. Michael Forsyth
  Toxicity experiments on phytoplankton and copepod species were carried out by scientists of the Department of Agriculture and Fisheries for Scotland's marine laboratory as preliminary "rangefinder" tests on a number of species to determine the most sensitive and therefore appropriate species for more detailed work. Subsequent detailed studies of the toxicity of dichlorvos to lobster and herring larvae have been carried out and it is hoped that reports will be published in the scientific press later this year.

  No measurements of the persistence of dichlorvos in the marine environment have been carried out by scientists of the Department of Agriculture and Fisheries for Scotland. Published work on the degradation rate of dichlorvos indicates a half-life in sea water of 6–7 days at 10–1°5c.

  The marine laboratory is currently developing numerical models of the dispersion of dichlorvos away from release points in a fish farm, and field studies are planned for later this year to measure the horizontal and vertical diffusion coefficients and other hydrographic parameters required for these models. It is too early to say when this work will be sufficiently progressed to consider publication.

  Dr. Godman
  To ask the Secretary of State for Scotland if he will issue a template for future environmental assessment statements in connection with proposed salmon farming developments to include a full marine impact statement.

  Lord James Douglas-Hamilton
  No. Schedule 1 of the Environmental Assessment (Salmon Farming in Marine Waters) Regulations 1988 already provides a framework for preparing environmental statements including the assessment of the effect of the proposed development on the marine environment.

  Dr. Godman
  To ask the Secretary of State for Scotland what steps he has taken to ensure that the environmental assessment statement submitted to the Crown Estate Commissioners by Marine Harvest Ltd. for a proposed salmon farm development in Lamlash bay, Isle of Arran (ref. XX100/660a) meets the requirements of(a) the Environmental Assessment (Salmon Farming in Marine Waters) Regulations 1988 and (b) the European Community directive 85/337 as implemented by Statutory Instrument 1218.
  446
  Lord James Douglas-Hamilton
  Whether the require-ments of European Community Directive 85/337, as implemented by the Environmental Assessment (Salmon Farming in Marine Waters) Regulations 1988, are met is the responsibility of the Crown Estate Commissioners who are the competent authority under the regulations.

  Schools (Self-Government)
  Mr. McLeish
  To ask the Secretary of State for Scotland if he will list the organisations he has met with to discuss the consultative document on self-governing schools.

  Mr. Michael Forsyth
  Over recent months I have met a number of education organisations and discussed a range of topics, including our explanatory paper on self-govern-ing schools.

  Mr. McLeish
  To ask the Secretary of State for Scotland if he will list the schools which have expressed an interest in changing to self-governing status.

  Mr. Michael Forsyth
  Pending the establishment of school boards there is no formal means by which a school corporately can register interest in changing to self-governing status.

  Deprivation
  Mr. Wray
  To ask the Secretary of State for Scotland what information his Department has gathered, and what research it has sponsored or carried out regarding the effect of deprivation on the physical and mental health of the Scottish people.

  Mr. Michael Forsyth
  The Scottish Home and Health Department is funding a research project into "Community Health Promotion in a Deprived Area" and has funded studies into aspects of health care in the community. The Department is aware of work undertaken by the Medical Research Council sociology unit in Glasgow, which may be relevant.

  Grant Maintained Trust
  Mr. McLeish
  To ask the Secretary of State for Scotland if he or his Ministers have met representatives of the Grant Maintained Trust.

  Mr. Michael Forsyth
  Yes.

  Mr. McLeish
  To ask the Secretary of State for Scotland if he has received any requests from the Grant Maintained Trust for forward support.

  Mr. Michael Forsyth
  No.

  City Technology College Trust
  Mr. McLeish
  To ask the Secretary of State for Scotland if he has received any request from the City Technology College Trust for financial support.

  Mr. Michael Forsyth
  No.

  Mr. McLeish
  To ask the Secretary of State for Scotland if he or his Ministers have met representatives of the City Technology College Trust.

  Mr. Michael Forsyth
  Yes.

  Regional Assistance
  Mr. McLeish
  To ask the Secretary of State for Scotland if he will provide figures on regional development grants for(a) the number of applications outstanding on 31 March 1988, (b) the number of those outstanding applications that have subsequently been processed, (c) the number of applications that are still outstanding and (d) the total amount of money paid out since 31 March 1988.

  Mr. Lang
  The figures requested for applications in Scotland under the revised regional development grant scheme are as follows:Number of applications outstanding at 31 March 1988: 5,117
  Number of these fully processed by 15 March 1989: 4,414
  Number under consideration but awaiting response from the applicants: 703
  Number of applications awaiting attention: nil
  Total payments made between 31 March 1988 and 10 March 1989: £47·7 million

  Mr. McLeish
  To ask the Secretary of State for Scotland if he will provide figures on regional selective assistance for(a) the total number of applications received since 1 April 1988, (b) the number of applications that have been processed and (c) the total amount of money paid out since 1 April 1988.

  Mr. Lang
  In the period 1 April 1988 to 15 March 1989, 242 applications for regional selective assistance (RSA) were received in Scotland. Of these, 199 have been fully processed. The remaining 43 are being processed. Total payments of RSA in Scotland in the same period have amounted to £33·0 million.

  Cancer Screening
  Mr. Maclennan
  To ask the Secretary of State for Scotland what consideration he has given to the allocation of a mobile cancer screening unit to the Highland health board for use wholly in that board's area; and if he will make a statement.

  Mr. Michael Forsyth
  I have agreed that Highland health board will receive a mobile breast cancer screening unit for use wholly within their area as part of the programme to implement a comprehensive breast cancer screening service in Scotland by March 1991.

  Water Pollution
  Mr. Ron Davies
  To ask the Secretary of State for Scotland (1) if he will list those sewage treatment works in Scotland that discharged effluent below the required standard during 1988;

  (2) if he will publish in the Official Report the number of recorded incidents of river pollution, the number of related prosecutions and the number of convictions in Scotland in each of the last 10 years.

  Lord James Douglas-Hamilton
  The information is not held centrally in the form requested. In Scotland river purification authorities are responsible for water pollution control. The information sought on compliance, pollution incidents and prosecutions is generally available in the annual reports of river purification boards which are lodged in the Library.

FOREIGN AND COMMONWEALTH AFFAIRS

  Rights of the Child (United Nations Convention)
  Mr. David Nicholson
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Government's policy in respect of negotiations on the United Nations convention on the rights of the child; whether it is intended that Her Majesty's Government should be a signatory to that convention; and what reservations Her Majesty's Government have expressed on the convention.

  Mr. Eggar
  The United Kingdom has played a leading role in the drafting of the United Nations convention on the rights of the child and intends to sign and ratify soon after its adoption. We indicated at the working group in December last that we may need to enter reservations on various articles of the convention but the scope of these reservations has yet to be determined.

  South Africa
  Mr. Steel
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will take steps to express Her Majesty's Government's concern at the recent visit to Chile by General Magnus Malan, the South African defence minister, and the resultant agreements between Chile and South Africa for military collaboration, in contravention of the United Nations arms embargo on South Africa.

  Mrs. Chalker
  We faithfully implement the United Nations arms embargo. It is for the United Nations Security Council arms embargo committee to investigate alleged breaches by other countries. We would deplore any breach shown to have occurred.

  Vietnam
  Mr. Frank Field
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether it is his policy to support the policy of the European Community Commission to establish a special office of trade and co-operation in Hanoi to further commercial relations between the European Community and Vietnam.

  Mrs. Chalker
  We understand the Commission has no plans to open an office in Hanoi.

  E1 Salvador
  Mr. Wood
  To ask the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government will be sending observers to the forthcoming presidential elections in E1 Salvador.

  Mr. Eggar
  We have accepted an invitation from the Salvadorean Government to observe the presidential election in El Salvador on 19 March. Dr. David Browning, fellow of St. Cross college, Oxford has been appointed as official Government observer. He will report his findings to my right hon. and learned Friend the Foreign Secretary in due course.

ATTORNEY-GENERAL

  Special Constables
  Mr. Shersby
  To ask the Attorney-General what guidance the Lord Chancellor gives to justices of the peace
  449
  regarding their powers under section 79 of the Harbours, Docks and Piers Clauses Act 1847 to swear in as special constables persons nominated for the purpose by harbours, docks or piers undertakers and as to the nature of the inquiries to be made before such swearing in; and when such guidance was last amended.

  The Solicitor-General
  The Lord Chancellor does not give guidance to justices of the peace on the exercise of their powers. They receive advice as to the law and procedure on such matters from their justices' clerk.

  Duty Solicitors
  Mr. Fraser
  To ask the Attorney-General what representations have been received by the Lord Chancellor's Department on the draft Legal Advice and Assistance (Scope) Regulations 1989 concerning duty solicitor schemes in the county court; and if he will publish the responses to any such representations.

  The Solicitor-General
  The Lord Chancellor's Department has received five representations on the draft Legal Advice and Assistance (Scope) Regulations 1989 which concern the provision of assistance by way of representation in county courts. Representations were also received on this subject during the preparation of the regulations from a further nine bodies or individuals to whom individual replies have been sent. These replies are on similar lines and I will place a copy of the letter of 15 November 1988 from the Lord Chancellor's Department to the Law Society in the Libraries of both Houses.

  Legal Aid
  Mr. Fraser
  To ask the Attorney-General what steps have been taken in the last year to obtain accurate estimates of the percentage of the adult population eligible for legal aid.

  The Attorney-General
  Studies have been carried out on the basis of family expenditure survey data in relation to households of different compositions.

  Mr. Fraser
  To ask the Attorney-General what estimate he has made of the number of persons who will(a) cease to be eligible and (b) pay increased contributions in respect of legal advice and assistance, civil legal and criminal legal aid consequent upon proposals for assessment of cohabitees' resources when assessing legal aid eligibility.

  The Solicitor-General
  The proposals in respect of the assessment of cohabitants' resources for legal advice and assistance, civil legal aid and criminal legal aid reflect the rules applicable to social security benefit applicants and implement a recommendation made by the legal aid advisory committee in its 34th annual report (1983–84). The Government announced their acceptance of this recommendation in 1986. It has not been possible to estimate the numbers who might benefit and the numbers who might lose as a result of this change.

  Single Parents (Custody)
  Mr. Cryer
  To ask the Attorney-General if he will make a statement on the requirements for judges to inquire into the circumstances of single parents and the provision for any children before any custodial sentence is passed.
  450
  The Solicitor-General
  When passing sentence judges are required to take into account all the relevant circumstances.

  Crown Court Judges
  Mr. Cryer
  To ask the Attorney-General how many Crown court judges are in post; what is their current training; what social services, psychological, or commun-ity service training is undertaken before or during appointment; and if he will make a statement.

  The Solicitor-General
  There are 405 circuit judges of whom the majority regularly sit in the Crown court. Circuit judges are appointed from recorders and assistant recorders who will have sat regularly on a part-time basis.

  Before assistant recorders are permitted to sit they must have completed a study programme which comprises:

  (a) visits to the prison and probation services;

  (b) attendance at a residential 3½ day induction course;

  (c) sitting in with an experienced judge for a minimum of five days.

  Every year each circuit holds one or more conferences which all circuit judges and part-time members of the judiciary are expected to attend. Speakers from the prison and probation service regularly attend these conferences. After 3½ years' sitting assistant recorders attend a three-day residential refresher seminar. Thereafter, together with all circuit judges and other part-time members of the judiciary they attend further refresher seminars every five years. In addition, the judicial studies board has initiated a series of induction and refresher courses in the civil and family field which have, inter alia, dealt with housing benefit.

  Mr. Cryer
  To ask the Attorney-General if he will list the occasions when people have been imprisoned for contempt by Crown court judges or their equivalent for each year from 1970; and if he will make a statement.

  The Solicitor-General
  It is not possible to distinguish between contemnors committed to prison by reference to the type of tribunal ordering the committal. However, the table provided shows the numbers of men and women committed to prison for contempt for the period 1970 to 1987 and the average length of imprisonment for all contemnors for each year during the period 1975 to 1987.

  Receptions

  Males

  Females

  Total

  1970

  289

  10

  299

  1971

  318

  42

  360

  1972

  534

  23

  557

  1973

  500

  18

  518

  1974

  547

  15

  562

  1975

  751

  15

  766

  1976

  810

  24

  834

  1977

  900

  33

  933

  1978

  923

  34

  957

  1979

  923

  31

  954

  1980

  804

  24

  828

  1981

  877

  36

  913

  1982

  933

  40

  973

  1983

  934

  37

  971

  1984

  1,020

  38

  1,058

  1985

  936

  46

  982

  1986

  976

  40

  1,016

  1987

  924

  41

  965

  451

  Estimated Average time spent in custody by persons committed in Contempt of Court (in days)

  Days

  1975

  14

  1976

  14

  1977

  17

  1978

  18

  1979

  18

  1980

  19

  1981

  15

  1982

  13

  1983

  14

  1984

  14

  1985

  17

  1986

  18

  1987

  18

  Justices of the Peace
  Mr. Cohen
  To ask the Attorney-General if he will provide details of how the north-east London area advisory committee on the appointment of justices of the peace is undergoing the process of reconstitution; for what purpose; and what progress has been made.

  The Solicitor-General
  The reconstitution of the north-east London area advisory committee is a routine matter. All the Lord Chancellor's advisory committees on the appointment of justices are subject to a similar process every three years. Appointments are made by the Lord Chancellor on the recommendation of the chairman. The purpose is to obtain a balance of new and experienced members who broadly reflect the composition of the area served.

  Advisory Committees
  Mr. Cohen
  To ask the Attorney-General why he does not regard it as appropriate to disclose information about members on(a) the north-east London area advisory committee and (b) the north-east London advisory committee Waltham Forest division sub-committee; what steps he is taking to ensure that the local community are confident that these individuals are fit for their positions; and if he will make a statement.

  The Solicitor-General
  The purpose of these committees is to advise the Lord Chancellor on the appointment of justices. The final decision is his. The Lord Chancellor believes that it is appropriate for the names of the members to be disclosed but sees no purpose in the publication of personal information about them.

NATIONAL FINANCE

  Private Medical Insurance
  Mr. Gordon Brown
  To ask the Chancellor of the Exchequer what proportion of the £40 million tax relief estimated for 1989–90 for private medical insurance he estimates will go to those who already have private medical insurance.

  Mr. Norman Lamont
  [holding answer 17 March 1989]: The introduction of tax relief for private medical insurance paid by or on behalf of the elderly has no cost in 1989–90. As I explained in the Budget debate it is estimated that about 90 per cent. of the cost in 1990–91 will be attributable to those who already have private medical
  452
  insurance. Over later years this proportion is expected to decline, though the figure will depend upon take-up and marketing by insurers.

  Mr. Gordon Brown
  To ask the Chancellor of the Exchequer what proportion of the £40 million tax relief he has set aside for private medical insurance he estimates will go to(a) BUPA and (b) Private Patients Plan.

  Mr. Norman Lamont
  [holding answer 17 March 1989]: The benefit of tax relief on qualifying private medical insurance premiums will go to the person paying the premium and not to the providers of private medical insurance.

  Mr. Gordon Brown
  To ask the Chancellor of the Exchequer (1) what is his estimate of the cost of private medical insurance tax relief for 1991–92 and 1992–93;

  (2) what is his best estimate of the proportion of pensioners who will take up private medical insurance tax relief in each of the five years from 1989.

  Mr. Norman Lamont
  [holding answer 17 March 1989]: Tax relief on private medical insurance premiums paid by the elderly will not be available until 1990–91. It is estimated that about 5 per cent. of the 12 million people aged 60 and above will be covered by private medical insurance in 1990–91. The number of people covered and the cost of the relief in future years will depend. among other things, on the extent to which medical insurance for the over-60s is promoted and taken up.

  Mr. Gordon Brown
  To ask the Chancellor of the Exchequer if a firm will be eligible for tax relief if they pay the private medical insurance tax relief of ex-employees who are aged over 60 years.

  Mr. Norman Lamont
  [holding answer 17 March 1989]: A firm will normally be entitled to a deduction for these costs under existing law in computing the taxable profits of its trade. But relief would not also be due under the new relief-at-source scheme to be introduced in April 1990.

  Seafarers (Taxation)
  Mr. Woodcock
  To ask the Chancellor of the Exchequer if he will publish details of any special arrangements for the taxation of earnings of seafarers which apply or are in active contemplation in each of the member states of the European Economic Community.

  Mr. Norman Lamont
  Last year for United Kingdom resident seafarers we eased the conditions for entitlement to the 100 per cent. foreign earnings deduction available to those United Kingdom residents who work wholly or partly abroad for a qualifying period of 365 days. Seafarers may now visit the United Kingdom for up to 90 consecutive days and up to one quarter of the total number of days abroad and in the United Kingdom without losing the deduction.

  I understand that in Greece, for many years, the earnings of ratings have been exempt from tax and a special low rate of tax (5·5 per cent.) is applied to officers' earnings. A number of other EC countries (Belgium, Denmark, Germany and Netherlands) have either introduced or are reported to be considering arrange-ments, the effect of which is to use the seafarers' tax liability as the basis for calculating a subsidy in favour of the employing shipping company.

  Shipping
  Mr. Woodcock
  To ask the Chancellor of the Exchequer if he will publish a summary of the arrangements for special depreciation on shipping investment in European Economic Community countries.

  Country

  Rate/Method of depreciation

  Notes

  Belgium

  Based on life of eight years; 20 per cent, a year straightline reducing to 10 per cent.

  Investment allowance of 13 per cent. for new ships.

  Denmark

  Stage payments in advance of delivery (up to a maximum of 30 per cent, of total cost) attract allowances of 15 per cent, a year for up to two years. Post-delivery rate on unrelieved expenditure is 30 per cent, (reducing balance).

  France

  According to life of ship:

  Life (years)

  Rate (reducing balance) (per cent.)

  8

  31·25

  10

  25

  15

  16·66

  20

  12·5

  Federal Republic of Germany

  Normal rates based on expected useful life: large passenger ship: 18·75 per cent.; others: 25 per cent. (reducing balance).Corresponding straightline rates are 6·25 per cent, and 8·33 per cent. Additional 40 per cent, of net cost of new ship can be taken over first five years (straightline basis only).

  80 per cent, of book profit from sale of ship can be taken to a tax-free reserve, provided ship owned for at least six years. Replacement must take place within two years.

  Greece

  Special tax rules according to age and tonnage of ship. (No details available.)

  Ireland

  Initial allowance of up to 75 per cent, for capital expenditure on new or secondhand ships (reducing to 50 per cent, for 1989–90) which may be taken as and when required.

  Italy

  Accelerated allowance of 15 per cent. for each of first three years. Normal rates thereafter. Passenger, tanker or refrigerated ships: 10 per cent. (straightline). Others (including dry cargo ships): 9 per cent.

  Netherlands

  Usual rates 12–16 per cent. (reducing balance) over 12–20 years according to expected life of ship.

  Special investment premium of 4 per cent. per year over five years reduces depreciation base. Book profit from sale of ship can be taken to tax-free reserve. Replacement must take place within four years.

  Spain

  Tankers, refrigerated ships: 15 per cent. Passenger/cargo: 12·5 per cent. (reducing balance). Corresponding straightline rates are 6 per cent. and 5 per cent.

  10 per cent, tax credit for investment in new fixed assets. Book profit from sale of ship tax free if reinvested in replacement ship within two years.

  United Kingdom

  25 per cent. of reducing balance.

  Allowances can be rolled forward and taken as required. Cost of newly-acquired ship can be used to offset a balancing charge on the disposal of another vessel, where disposal and acquisition occur in the same chargeable period.

  Tax Threshold
  Mr. Grylls
  To ask the Chancellor of the Exchequer what would be the full cost to the Exchequer of raising the threshold when tax-payers have to pay 40 per cent. income tax(a) from £20,000 to £21,000, (b) from £21,000 to £22,000, (c) from £22,000 to £23,000, (d) from £23,000 to £24,000 and (e) from £24,000 to £25,000.
  454
  Mr. Norman Lamont
  The information available about the tax treatment of depreciation on shipping investment is as follows:

  Mr. Norman Lamont
  [holding answer 10 March 1989]: The direct revenue cost in a full year at 1989–90 income levels of raising the basic rate limit by £1,000 from the 1988–89 level of £19,300 is estimated to be about £200 million. Each further increase of £1,000 would cost about £10 million less, so that the cost of raising the limit from £24,000 to £25,000 would be about £150 million.
  455
  Estimates are based on a projection of the 1986–87 survey of personal incomes and are provisional.

  National Debt
  Mr. Tim Smith
  To ask the Chancellor of the Exchequer if he will publish in the Official Report an analysis of the total national debt of £197 billion as at 31 March 1988, showing how much was incurred in the following periods: (a) 1979–80 to 1987–88, (b) 1974–75 to 1977–78, (c) 1970–71 to 1973–74, (d) 1964–65 to 1969–70 and (e) 1959–60 to 1963–64.

  Mr. Lilley
  [holding answer 13 March 1989]: Taken literally, the question appears to ask what fraction of the particular stocks currently outstanding (31 March 1988) was issued, net of redemptions, during each period. Figures for Treasury Bills and the various National Savings products are unavailable. Of those gilt-edged stocks currently outstanding (nominal value = £140·9 billion) the (net) amounts incurred were as follows:

  £ billion

  (a) 1979–80 to 1987–88

  109·5

  (b) 1974–75 to 1979–80

  21·5

  (c) 1970–71 to 1973–74

  3·9

  (d) 1964–65 to 1969–70

  2·4

  (e) 1959–60 to 1963–64

  1·9

  However, such a series is not very informative. The average life of gilt-edged stocks is somewhere near eight years, and debt has to be issued continually to replace any that is redeemed; we would almost always expect to see a declining series, as above, whatever the relative strengths of public sector finances in each period.

  However, the national debt is not the most useful or comprehensive measure of public sector indebtedness. It includes debt held by official bodies within central Government, it does not cover the whole of central Government and it excludes entirely the debt of other parts of the public sector. In addition, it takes no account of the public sector's short-term assets, including foreign exchange reserves.

  A better measure is the public sector net debt, which is analagous to the PSBR-PSDR.

  In 1987–88 prices, the total PSBR over each period was as follows:1

  Revisions to 1988–89 voted cash limits

  Class

  Vote

  Accounting department

  Description of expenditure

  Current cash limit £000

  Decrease £000

  Revised cash limit £000

  I

  12

  Ministry of Defence

  Defence Procurement

  8,822,266

  531,169

  8,291,097

  XVI

  2

  Department of Agriculture and Fisheries for Scotland

  Agricultural services and fisheries

  76,542

  445

  76,097

  XIX

  13

  Her Majesty's Treasury

  Central Computer and Telecommunications Agency

  18,490

  406

  18,084

  XX

  13

  Office of Fair Trading

  Office of Fair Trading

  10,227

  75

  10,152

  Total

  532,095

  1 The five cash limited Defence votes are each separate cash limits but, by agreement with the Treasury, are managed as a cash block. Underspend on expenditure eligible for the scheme in these cash limits was carried forward to Class 1, Vote 2.

  Mortgage Interest Relief
  Mr. Bowis
  To ask the Chancellor of the Exchequer whether Crown servants posted overseas continue to receive mortgage interest relief on their homes in the United Kingdom.456

  (a) 1979–80 to 1987–88—£88·4 billion equivalent to £9·8 billion a year.

  (b) 1974–75 to 1978–79—£111·9 billion equivalent to £22·4 billion a year.

  (c) 1970–71 to 1973–74—£39·8 billion equivalent to £9·9 billion a year.

  (d) 1964–65 to 1969–70—£33·4 billion equivalent to £5·6 billion a year.

  (e) 1959 to 1963—£27·4 billion equivalent to £5·5 billion a year.

  1 Note: before 1963–64 PSBR data are only available in calendar year form.

  Income Tax (Scotland)
  Mr. Robert Hughes
  To ask the Chancellor of the Exchequer what is the income tax yield from taxpayers resident in Scotland for the latest available tax year.

  Mr. Norman Lamont
  Income tax liabilities of taxpayers resident in Scotland amounted to about £3·3 billion in 1986–87, the latest available year.

  Cash Limits
  Mr. Bowis
  To ask the Chancellor of the Exchequer if he will give revised cash limits for 1988–89 which take account of the decision by some Departments not to seek supplementary provision to cover the carry forward allowed under the end year flexibility scheme.

  Mr. Major
  Under the end year flexibility scheme, announced in 1983, some 34 1988–89 cash limits were increased to allow for the carryforward of capital underspend in 1987–88—Official Report, 21 July 1988, columns 725–28. Under the terms of the additional flexibility arrangements for the Ministry of Defence announced in 1986, there was a further increase to allow for carryforward and to compensate the defence budget for a writing off part of a debt in respect of loan service and training charges incurred by the Nigerian Government —Official Report, 21 July 1988, columns 725–36. In the case of four voted cash limits, the relevant departments have not sought parliamentary approval for the extra provision in a Supplementary estimate. To keep the control figures in line with provision, the cash limits are accordingly being reduced; a list is shown in the following table.

  Mr. Norman Lamont
  Crown servants, including members of the armed forces and diplomats, serving abroad who are required to live in job-related accommodation qualify for mortgage interest relief on their homes in the United Kingdom. Most other Crown servants are covered by the existing extra statutory
  457
  concession under which relief continues during absences, due to employment, for periods up to four years. In a few cases Crown servants, whose salaries remain subject to United Kingdom tax, are posted overseas for periods exceeding four years. We are extending the extra statutory concession to ensure that relief will continue in these cases for the full period of the overseas posting.

HOUSE OF COMMONS

  Research Assistants (Passes)
  Mr. Allen
  To ask the Lord President of the Council how are holders of research assistants' passes with access to the Library reviewed in order to ensure that those who would make fullest use of them are able to do so.

  Mr. Wakeham
  The passes issued to right hon. and hon. Members for use by their research assistants which give limited access to the Members' Library, are issued for a period of one year in the first instance, and are then renewable on application for three further years. Research assistants holding such passes are required to sign a register each time they use the Library in order to ensure that not more than 15 of them are in the Library at the same time. There is no systematic monitoring of frequency of usage: nor would it appear desirable or practicable to do so.

  Mr. Allen
  To ask the Lord President of the Council how many hon. Members are on the waiting list for research assistants' passes with access to the Library.

  Mr. Wakeham
  Twenty-nine.

  Standing Orders
  Mr. Salmond
  To ask the Lord President of the Council if he will list every change in the Standing Orders of the House since 1979; and if he will indicate the name and ministerial status of the person moving the appropriate motion to change the Standing Orders.

  Mr. Wakeham
  A table showing the dates at which the Standing Orders of 1988, relating to Public Business, were passed and amended is given in "Standing Orders of the House of Commons: Public Business 1988" (pages ix to xvi; HC 1; Session 1988–89). The House also frequently approves motions which either modify Standing Orders for the duration of a Session or a Parliament or suspend Standing Orders for a specific purpose or a specific period. A list showing every change and the name and ministerial status of the person moving the appropriate motion could be provided only at disproportionate cost.

  Miss Pamella Bordes
  Mr. Campbell-Savours
  To ask the Lord President of the Council on what date approval for the fitting of a division bell to premises occupied by Miss Pamella Bordes was given by the Serjeant at Arms; and who made the application.

  Mr. Wakeham
  No application has been made for a Division bell to be fitted to premises known to be occupied by Ms. Bordes.

  Photo-passes
  Mr. Dobson
  To ask the Lord President of the Council if he will give the number of photo-passes to the House held by staff of each Government Department.

  Mr. Wakeham
  [holding answer Thursday 9 March 1989]: Photo-passes giving restricted access to the Palace of Westminster are issued to departmental staff permanently employed within the precincts, to depart-mental messengers, to ministeral drivers and to officials who are required to attend often at short notice. The following is the information requested:

  Number

  Government Actuary Department

  1

  Ministry of Agriculture, Fisheries and Food

  32

  Cabinet Office

  57

  Central Office of Information

  2

  Customs and Excise

  19

  Crown Suppliers

  135

  Ministry of Defence

  97

  Department of Education and Science

  50

  Department of Employment

  102

  Department of Energy

  76

  Department of the Environment

  228

  Foreign and Commonwealth Office

  103

  Department of Health

  176

  Department of Social Security

  Home Office

  160

  Inland Revenue

  95

  Law Officers' Departments

  10

  Lord Advocate's Department

  4

  Lord Chancellor's Department

  163

  Northern Ireland Office

  35

  Office of Arts and Libraries

  2

  Office of Fair Trading

  1

  Office of Parliamentary Counsel

  29

  Overseas Development Administration

  19

  Prime Minister's Office

  42

  Privy Council Office

  13

  Property Services Agency

  287

  Scottish Office

  81

  Department of Trade and Industry

  192

  Department of Transport

  60

  Her Majesty's Treasury

  162

  Welsh Office

  43

  Government and Opposition Whips' Office

  18

SOCIAL SECURITY

  Appeals
  Mr. Sillars
  To ask the Secretary of State for Social Security what are the reasons for the delays in dealing with the appeal before the social security appeals tribunal in the case of Mr. George McLeod, 689 Mosspark drive, Glasgow.

  Mr. Peter Lloyd
  Mr. McLeod appealed on 3 May and 20 June 1988 against two separate decisions issued by the adjudication officer. The delay in submitting the papers to the social security appeal tribunal was caused partly by the local office having to process a larger than normal volume of appeals resulting from benefit take-up campaigns in the area and partly by the need to resolve issues raised by Mr. McLeod in subsequent correspondence. The appeals were heard on 16 February 1989 and notification of the tribunal's decision was sent to him on 6 March 1989.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security if he will publish a table showing the number of
  459
  cases relating to the 26-week period of unemployment benefit qualifications which have gone to an appeal tribunal and the number for which appeals were successful, broken down for Great Britain, England, Wales, Scotland and by Department of Social Security Region.

  Mr. Peter Lloyd
  The number of appeals against disqualification for unemployment benefit, for reasons generally known as voluntary unemployment, heard and decided during the three months ended 30 June 1988 (the latest period for which information is available) and the outcome of those appeals are in the following table:

  Number of appeals

  Area

  Heard and decided

  Decided in claimant's favour

  Great Britain

  2,329

  1,040

  England

  1,829

  774

  Wales

  154

  84

  Scotland

  346

  182

  English regions:

  North Eastern

  416

  155

  North Western

  410

  179

  London North

  271

  116

  London South

  234

  113

  Midlands

  274

  111

  South Western

  224

  100

  Information is not available as to the number of these appeals which were against disqualifications for the maximum period of 26 weeks.

  Pension Age
  Sir David Price
  To ask the Secretary of State for Social Security when he expects the Government's consideration of proposals for the equalisation of pension age to be resolved.

  Mr. Peter Lloyd
  The Government are committed to the principle of equalising state pension age. These are complex issues and it would be wrong to reach a decision without taking all the factors into account. We cannot yet say when we will be able to announce changes.

  Family Credit
  Mr. Simon Hughes
  To ask the Secretary of State for Social Security if he will provide a breakdown of the numbers claiming family credit into(a) one-parent and two-parent families, (b) self-employed and employed and (c) regions, showing in each case the average payment per week.

  Mr. Peter Lloyd
  I refer the hon. Member to my reply to the hon. Member for Birkenhead (Mr. Field) on 20 January at column 360. No further information is available.

  Mr. Simon Hughes
  To ask the Secretary of State for Social Security how many people claimed family credit and housing benefit in 1988–89; and how many will do so in 1989–90.

  Mr. Peter Lloyd
  I regret that the information requested is not available.

  Income Support
  Mr. Kirkwood
  To ask the Secretary of State for Social Security (1) if he will explain how the April 1989 income support rule is derived;

  (2) what element is included in the income support rules for April 1989 for the average rate payment by an income support claimant.

  Mr. Peter Lloyd
  I refer the hon. Member to my right hon. Friend's statement to the House on 27 October 1988 at columns 445–58.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security what element is included in the income support rules for April 1989 for replacement clothing and food.

  Mr. Peter Lloyd
  The income support rates are intended to provide for normal day-to-day living expenses. There is no specific amount included for replacement clothing and food.

  Mr. Kirkwood
  To ask the Secretary of State for Social Security what element is included in the income support rules for April 1989 for the average water rate payment by an income support claimant.

  Mr. Peter Lloyd
  Water charges are not a separately identifiable element in the income support rates. Compensation for water charges was included as a once-and-for-all adjustment from April 1988.

  Widows (Pensions)
  Mr. Corbyn
  To ask the Secretary of State for Social Security how much it is estimated would have been paid out in 1989–90 in widows' benefits had the age limit for widows' pension not been raised from 40 to 45 years and the threshold for abatement not been raised from 50 to 55 years.

  Mr. Peter Lloyd
  [holding answer 22 February 1989]: I regret that information is not available in the form requested. The latest estimate of the amount of benefit that would have been paid out in widows' benefits in 1989–90 had the age bands for widow's pension not been changed is £965 million. This includes the extra expenditure arising from the changes announced on 28 February at columns 161–62 that women widowed. before 11 April 1988 will have their entitlement to widows' benefits determined on the pre-reforms legislation.

  Seafarers
  Mr. Woodcock
  To ask Secretary of State for Social Security if he will provide a summary of any special arrangements for social security contributions by or on behalf of seafarers which apply or are in active contemplation in each of the member states of the European Economic Community.

  Mr. Peter Lloyd
  [holding answer 23 February 1989]: The following special arrangements exist in the United Kingdom for social security contributions paid by and on behalf of seafarers:
  1. National insurance contributions paid by the employers of foreign-going mariners are subject to a special rebate, of 0·5 per cent. This reflects the fact that employers of foreign going mariners provide health care facilities for mariners whilst they are on board ship, and because the mariners cannot claim sickness benefit while abroad.
  461
  2. Share fishermen are self-employed but pay a special higher rate of national insurance contribution to reflect their entitlement to Unemployment and Industrial Injuries Benefits. The information available in respect of other EEC countries is as follows:

  Belgium

  Employers can receive special subsidies against their social security contributions if a crew is abroad for over seven months.

  Denmark

  Employers pay an extra amount per employee to cover sickness insurance.

  West Germany

  Foreign crew members not resident in Germany do not pay contributions for retirement pension purposes where there is no reciprocal agreement between West Germany and the country of origin.

  France

  Seafarers can retire on full pension at 55, or at 50 or 521 on reduced pension (normal pension age 65).

  Greece

  Special contribution rates and pension arrangements for employers and employees.

  Ireland

  No special arrangements.

  Italy

  No special arrangements.

  Netherlands

  No special arrangements.

  Portugal

  No special arrangements.

  Spain

  Special contribution rates for employers and employees and State subsidy.

CIVIL SERVICE

  Next Steps Initiative
  Sir Hal Miller
  To ask the Minister for the Civil Service what progress he can report on the next steps initiative.

  Mr. Luce
  Since I last reported to the House on 1 February my right hon. Friend the Chancellor of the Exchequer has announced that he has concluded that the Central Office of Information should become an agency. In addition, last week my hon. Friend the Parliamentary Under-Secretary of State for Defence Procurement announced the decision to set up the four main non-nuclear research establishments, covering 12,500 staff as a single organisation with the intention that they should become a next steps agency by April 1991. I strongly welcome both these announcements, which illustrate the importance which the Government attach to the next steps initiative.

THE ARTS

  Yorkshire Arts Association
  Mr. Battle
  To ask the Minister for the Arts when he next intends to meet the chairman of the Yorkshire Arts Association to discuss the funding and structure of the arts in his region.

  Mr. Luce
  I have no plans to do so.

  Northern Arts Association
  Mr. Boyes
  To ask the Minister for the Arts when he next intends to meet the chairman of the Northern Arts Association to discuss the funding and structure of the arts in his region.
  462
  Mr. Luce
  I have no plans to do so.

  British Theatre Association Library
  Mr. Baldry
  To ask the Minister for the Arts what progress has been made to secure the future of the British Theatre Association Library.

  Mr. Luce
  I was recently able to discuss the future of the BTA with Mr. Robert Holmes a'Court. I am now very pleased to say that the executive committee of the BTA has accepted Mr. Holmes a'Court's offer to provide premises for the association in central London. These premises will enable the BTA to continue its operations with a firm financial base underwritten by Mr. Holmes a'Court and I would like to pay tribute to his remarkable generosity, which has enabled satisfactory future arrangements for the association to be agreed. I am contributing £25,000 to the BTA towards its transitional costs.

  British Library
  Mr. Maclennan
  To ask the Minister for the Arts whether, in the light of concern about the ability of the new building at St. Pancras to house all the London collections of the British library, consideration has been given to the retention of the accommodation in the British Museum building with a view to continuing to make use of the round reading room and King's library, and to maintaining the link between the historic collections of the library and museums.

  Mr. Luce
  The British Library board is satisfied that the library's key requirements—including appropriate accom-modation for the King's library—will be met by the completed building at St. Pancras. There are no plans for the British library to retain any reader or storage accommodation in the British Museum building when the new library is complete in 1996.

  Library Attendances
  Mr. Soames
  To ask the Minister for the Arts what has been the pattern of attendance at libraries over the last 10 years; and if he will make a statement.

  Mr. Luce
  This information is not kept centrally.

  North-West Arts Association
  Mr. Bradley
  To ask the Minister for the Arts when he next intends to meet the chairman of the North West Arts Association to discuss the funding and structure of the arts in his region.

  Mr. Luce
  I have no plans to do so.

  Greater London Arts Association
  Mr. Tony Banks
  To ask the Minister for the Arts when he next intends to meet the chairman of the Greater London Arts Association to discuss the funding and structure of the arts in his region.

  Mr. Sedgemore
  To ask the Minister for the Arts when he next intends to meet the chairman of the Greater London Arts Association to discuss the funding and structure of the arts in his region.

  Mr. Chris Smith
  To ask the Minister for the Arts when he next intends to meet the chairman of the Greater London Arts Association to discuss the funding and structure of the arts in his region.
  463
  Mr. Luce
  I have no plans to do so.

  Business Sponsorship Incentive Scheme
  Mr. Andrew Mitchell
  To ask the Minister for the Arts what plans he has for the future of the business sponsorship incentive scheme.

  Mr. Luce
  I am delighted with the progress of the scheme which, since its inception in 1984, has already brought £23 million of new money into the arts and has attracted over 900 new sponsors. As I announced to the House on 6 February at column 643, to encourage even more businesses to support the arts, I propose to allow individual arts organisations to be eligible for up to two awards next year instead of one as at present, up to the maximum of £25,000.

  East Midlands Arts Association
  Mr. Haynes
  To ask the Minister for the Arts when he next intends to meet the chairman of the East Midlands Arts Association to discuss the funding and structure of the arts in his region.

  Mr. Luce
  I have no plans to do so.

  West Midlands Arts Association
  Mrs. Golding
  To ask the Minister for the Arts when he next intends to meet the chairman of the West Midlands Arts Association to discuss the funding and structure of the arts in his region.

  Mr. Luce
  I have no plans to do so.

  The Puppet Centre, Battersea
  Mr. Bowis
  To ask the Minister for the Arts when he next intends to visit the Puppet Centre, Battersea, to discuss support for puppetry.

  Mr. Luce
  I have no plans to visit the Puppet Centre.

  Northern Ballet Theatre
  Mr. Devlin
  To ask the Minister for the Arts what recent representations he has received seeking his intervention to protect the future of the Northern Ballet Theatre; and if he will make a statement.

  Mr. Luce
  I have received a number of representations. I refer my hon. Friend to the Adjournment debate on Wednesday 8 March 1989 at columns 1007–1014.

  Museums
  Mr. Maples
  To ask the Minister for the Arts how many museums are currently established in Great Britain; and how many there were in (i) 1984, (ii) 1979, (iii) 1974 and (iv) 1969.

  Mr. Luce
  The number of museums and galleries in the United Kingdom is estimated to have risen from approximately 900 in 1963 to just under 2,200 in 1984 and over 2,400 in 1988.

  The fastest area of growth has been in the independent museum sector where the Association of Independent Museums has indicated that its current membership of 750 represents a doubling of the membership in 1980.

  British Craft
  Mr. Butler
  To ask the Minister for the Arts what assistance is given by the Government towards the development and export of British craft.

  Mr. Luce
  The Crafts Council, which is funded by my Department, seeks actively to promote the sales of works by artists/craftsmen at home and abroad. During the past year, its activities have generated sales of crafts exceeding £2¼ million, of which more than £450,000 (20 per cent.) has been for export.

  Performing Arts (Young People)
  Mr. Kirkhope
  To ask the Minister for the Arts what plans he has to encourage young people to be trained in the performing arts.

  Mr. Luce
  I welcome the establishment of the city technological college at Selhurst, in 1990, which will train young people in the full range of abilities, from performance to technical skills, that the performing arts will require in the future. I hope that there will be similar, schools.

  Mappa Mundi
  Mr. Colin Shepherd
  To ask the Minister for the Arts what progress has been made in ensuring that the Mappa Mundi remains in the United Kingdom.

  Mr. Luce
  The dean and chapter of Hereford cathedral, having withdrawn the map from public auction at the end of February, announced at the weekend their decision on the proposals before them. They hope to raise the substantial sum required for the cost of cathedral repairs, running costs and pastoral work by offering shares at £1,000 each in a company, the shareholders to receive a replica of the map and the dean and chapter to hold 50 per cent. of the stock.

  The national heritage memorial fund today issued a press notice detailing its proposals, put to the cathedral on 17 February, but not in the event taken up. These were that a charitable trust should be set up, to which would pass ownership not only of the Mappa Mundi, but also the chained library, both of which would be housed in a new building. The trustees had secured from Mr. J. Paul Getty an offer of £1 million, and NHMF had also offered £2 million on the understanding that a public appeal should be launched to raise a similar sum. These proposals were open to negotiation.

  I am grateful to the trustees of the fund for their efforts which, along with those of other interested parties, including Hereford city council, have led to the withdrawal from sale of Mappa Mundi. I wish the cathedral authorities every success in their task.

  New Buiildings
  Mr. Fraser
  To ask the Minister for the Arts if he will consider regular giving of Government funds for sponsorship of new buildings to house the performing and other arts.

  Mr. Luce
  Sponsorship of new or refurbished buildings by businesses is eligible for matching under the Government's business sponsorship incentive scheme in the same way as other arts activities. In 1988–89 such projects attracted over £100,000 in awards.

AGRICULTURE, FISHERIES AND FOOD

  Veterinary Officers
  Mr. Redmond
  To ask the Minister of Agriculture, Fisheries and Food if he will list for each of the three counties of Yorkshire, the number and grade of veterinary officers employed by his Department at the end of 1988 and give comparable figures for 1983 and 1978; what recruitment of staff he is undertaking within these three counties at the present time; and if he will make a statement.

  Mr. Donald Thompson
  Because my Department's regional organisation has undergone changes in the period covered by the question and because the geographical areas of responsibility of veterinary staff are not contiguous with the boundaries of the three shire counties of Yorkshire, the precise figures requested by the hon. Member are not available. However, the number and grade of my Department's permanent veterinary staff with responsibilities covering all or part of Yorkshire for the end of years 1988, 1983 and 1978 were:

  1988

  1983

  1978

  Regional Veterinary Officer

  1

  1

  1

  Deputy Regional Veterinary Officer

  1

  1

  1

  Superintending Veterinary Investigation Officer

  1

  1

  1

  Divisional Veterinary Officer

  4

  4

  4

  Senior Veterinary Investigation Officer

  11

  2

  2

  Veterinary Investigation Officer(VIO)

  13

  6

  6

  Veterinary Officer (VO)

  11

  14

  16

  Total

  22

  29

  31

  1 Leeds Veterinary Investigation Centre closed in 1986.

  A national recruitment exercise for VOs and VIOs is planned for early May, which will take account of one veterinary officer vacancy at Leeds and additional posts granted for salmonella controls.

  Vote Office (Publications)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food (1) on what basis he decides which of his publications should be available to hon. Members in the Vote Office on the day of publication;

  (2) how many reports he has published in the last 12 months; and how many of these were made available in the Vote Office on the day of publication.

  Mr. Donald Thompson
  Reports and other material, compiled by my Department and published by HMSO should be available to hon. Members under arrangements agreed between HMSO and the House authorities. I make other important material available if, for example, the document is of direct interest to a parliamentary debate, or referred to in a parliamentary answer. In the last 12 months HMSO published 14 reports on behalf of my Department. Other than HMSO publications the Department made 98 documents available to hon. Members by placing copies in the House Libraries and copies of 490 documents were lodged in the Vote Office. The total number of documents which my Department made available to the public is not held centrally.

  Slaughterhouses (Diseased Animals)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food what inspections he carries out in slaughterhouses to ensure that cattle with bovine spongiform encephalopathy and sheep with scrapie do not enter the food chain; and if he will make a statement.

  Mr. Donald Thompson
  On the advice of the Southwood working party, the carcases of cattle suspected of having bovine spongiform encephalopathy are destroyed as a precautionary measure. The Slaughterhouses (Hygiene) Regulations 1977, as amended, prohibit the entry of animals which are diseased, or suspected of having a disease into a slaughterhouse unless they are accompanied by a certificate issued by a veterinary surgeon which states that the animals are not suffering from any disease or condition which would render the carcase unfit for human consumption.

  Scrapie has been present in this country for at least 200 years without any evidence of a risk to humans. Neither has research identified such a risk. Therefore action to prevent sheep with scrapie being slaughtered for human consumption would not be appropriate.

  Abattoirs (Hygiene Standards)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food if he will list the regulations which control hygiene and animal welfare standards in abattoirs for meat prepared for domestic consumption.

  Mr. Donald Thompson
  For the requirements applying to red meat slaughterhouses I would refer the hon. Member to the reply given on Wednesday 1 February at columns 240–41 to the hon. Member for Newcastle upon Tyne Central (Mr. Cousins).

  In respect of poultry slaughterhouses the following apply:
  The Poultry Meat (Hygiene) Regulations 1976, as amended.
  The Slaughter of Poultry Act 1967 (as amended).
  The Slaughter of Poultry (Humane Conditions) Regulations 1984.

  Sheep Dipping
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food what regulations control the use of chemicals for dipping sheep; and if he will make a statement.

  Mr. Donald Thompson
  Sheep dips are veterinary medicines and are subject to controls set down in the Medicines Act 1968. Proper use and storage on farms is a matter for the HSE.

  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food what advice he gives to farmers about the safe use of chemicals used for dipping sheep; and if he will make a statement.

  Mr. Donald Thompson
  It is a condition of licences for all veterinary medicinal products that suitable advice on use is included on the label including, where appropriate, operator safety warnings and contingency medical advice.

  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food what action he is taking to ensure the safe disposal of chemicals used for dipping sheep; and if he will make a statement.
  467
  Mr. Donald Thompson
  Sheep dip labels carry advice on safe disposal. Fuller guidance is available free in ADAS booklet 2198, "Guidelines for the disposal of unwanted pesticides and containers on farms and holdings".

  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food what action he is taking to ensure that chemicals used in sheep dips do not enter rivers and streams; and if he will make a statement.

  Mr. Donald Thompson
  Sheep dip labels point out that it is unlawful to permit any poisonous, noxious or polluting substance to enter any river, stream or watercourse etc. The law is enforced by local water authorities from whom further guidance is available.

  Transmissible Spongiform Encephalopathies
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food what monitoring is carried out by his Department into transmissible spongiform encephalopathies in mammals in the United Kingdom.

  Mr. Donald Thompson
  Bovine spongiform en-cephalopathy is a notifiable disease in Great Britain and all suspected cases must be reported to the Ministry. Members of the Ministry's sheep and goat health scheme may participate in an optional scrapie monitoring programme. The veterinary investigation service of the state veterinary service continues to monitor for novel diseases which have not been recorded in this country.

  Farm Woodland Scheme
  Mr. Boswell
  To ask the Minister of Agriculture, Fisheries and Food what information he has of delays in obtaining permission to proceed with plantings with the farm woodland scheme during the present tree-planting season.

  Mr. Ryder
  As I said in reply to my hon. Friend the Member for Suffolk, Central (Mr. Lord) on 16 February at column 357, most applications for the farm woodland scheme submitted by then should receive approval in time for planting to go ahead this season. That remains our intention. In England, 311 applications had been approved by the end of February. This represents some 66 per cent. of the applications received in England by the end of January. Applications received later than mid-February may not be approved in time for planting this season, although I have given clear instructions that everything must be done to quicken up the process.

  Veterinary Products Committee
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food whether he intends to widen the criteria by which the veterinary products committee assesses products submitted for approval for a product licence.

  Mr. Donald Thompson
  No. The terms of references of the veterinary products committee are established under the Medicines Act 1968.

  BSE-infected Cattle
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food (1) how many carcasses of BSE-infected cattle have been buried in the United Kingdom; and what are the burial sites;
  468
  (2) what proportion of carcasses of cattle confirmed to be suffering from bovine spongiform encephalopathy are (a) buried, (b) incinerated and (c) disposed of by other means.

  Mr. Donald Thompson
  Some 1,300, or about one third of the carcasses of cattle compulsorily slaughtered, have been buried on licensed waste tips or on farm, with the approval of water and local authorities. The others have been incinerated.

  Transmissible Mink Encephalopathy
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food whether he has any information on outbreaks of transmissible mink encephalopathy in the United Kingdom.

  Mr. Donald Thompson
  Transmissible mink ence-phalopathy has not been reported in this country.

  Veterinary Products
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food whether he has any plans to make it a statutory requirement to consider evidence of need before the granting of a product licence to a veterinary product.

  Mr. Donald Thompson
  No. The principles of the Medicines Act have stood the test of time.

  Cetaceans
  Dr. Godman
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to his answer to the hon. Member for Greenock and Port Glasgow on 1 December 1988,Official Report, column 860, if he will publish details of the monitoring of the incidental capture of cetaceans; and if he will make a statement.

  Mr. Donald Thompson
  My Department is working on the detailed arrangements for a proposed monitoring scheme and, once this has been established, it is intended that the information obtained will be made available. It is envisaged that fishermen will be asked to provide details of the species taken, its size, the type of fishing practice involved, the location of the capture and whether the animal was released unharmed. It is hoped that this range of information will help us to develop a much clearer understanding of the incidental capture of marine mammals.

  Meat Statistics
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food how much meat was produced in total from abattoirs in the United Kingdom in 1988.

  Mr. Donald Thompson
  In total, 2.3 million tonnes of carcase meat (beef, veal, sheep and pigmeat) was produced from abattoirs in the United Kingdom in 1988.

  Sheep (Scrapie)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food what advice he gives to farmers on the regulations he makes about disposing of scrapie-infected sheep carcases; and if he will make a statement.

  Mr. Donald Thompson
  There are no regulations specifically relating to the disposal of scrapie-infected sheep carcases. There is no evidence to suggest that scrapie is a risk to human health.

  Goats' Milk
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food (1) whether any testing is carried out to ensure hygiene standards of goats' milk; and if he will make a statement;

  (2) whether he has plans to improve the standard of hygiene of goats' milk; and if he will make a statement;

  (3) if he will list the regulations that cover the hygiene standards of goats' milk.

  Mr. Donald Thompson
  The wording of the Food Act means that the detailed regulations which apply to cows' milk cannot be extended to cover goats' milk. Consultations on a new Food Bill have suggested that this should be remedied. Meanwhile, goats' milk is subject to the general provisions of the Food Act whereby all food (including drink) must be of the nature, substance and quality demanded by the purchaser, must be fit for human consumption, and must not be labelled in a false or misleading way. Local authorities are responsible for the enforcement of these provisions and for any testing required. In addition, the Ministry has issued a code of practice on the hygienic production of goats' milk.

  Fruit (Cyanide)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food (1) what discussions he is having with Agriculture Ministers in other countries about the possibility of cyanide contaminated fruit being imported into the United Kingdom; and if he will make a statement;

  Calendar year

  1982

  1983

  1984

  1985

  1986

  1987

  11988

  Apples

  399·4

  405·6

  401·0

  428·4

  442·2

  443·4

  498·3

  Pears

  63·8

  78·5

  66·0

  69·3

  64·3

  77·2

  92·5

  Plums

  21·0

  27·4

  20·5

  21·9

  20·9

  24·0

  23·5

  Cherries

  7·5

  7·8

  9·5

  9·2

  6·9

  9·3

  7·3

  Strawberries

  7·5

  9·0

  10·2

  12·5

  13·7

  15·4

  17·6

  Oranges

  315·1

  305·2

  317·3

  283·8

  344·4

  333·

  400·3

  Mandarins

  110·4

  122·8

  134·8

  121·9

  131·1

  151·1

  134·6

  Lemons

  50·1

  48·0

  49·5

  47·2

  51·3

  51·5

  54·4

  Other Citrus

  98·2

  85·1

  79·3

  71·4

  82·2

  83·2

  92·2

  Bananas

  328·0

  307·3

  309·4

  323·7

  343·1

  359·6

  388·2

  Melons

  71·0

  90·5

  98·4

  99·1

  106·0

  107·7

  93·7

  Peaches

  67·3

  83·8

  82·4

  85·0

  79·3

  95·0

  83·8

  Grapes

  64·5

  85·7

  86·2

  106·4

  101·1

  107·8

  121·7

  Avocados

  9·3

  10·7

  11·9

  13·9

  14·9

  18·7

  13·0

  Pineapples

  15·8

  15·9

  15·2

  18·3

  19·2

  21·3

  22·3

  All other fresh fruit

  13·1

  13·3

  14·5

  15·9

  18·5

  18·1

  20·7

  TOTAL QUANTITY

  1,642·0

  1,696·6

  1,706·1

  1,727·9

  1,839·1

  1,916·1

  2,064·9

  1 Provisional.

  BSE-infected Cattle
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food (1) what criteria are applied when consideration is given to the method of disposal of carcases of cattle confirmed to be infected with bovine spongiform encephalopathy;

  (2) why burial was chosen as an appropriate means of disposal of the carcases of cattle infected with bovine spongiform encephalopathy.

  Mr. Donald Thompson
  The criteria applied are as for other notifiable diseases; the carcase must be disposed of in a way that does not pose a risk to animal or human health. Both incineration and burial are safe methods of
  470
  (2) what action he is taking to ensure that cyanide contaminated fruit from Chile is not being sold in the United Kingdom.

  (3) whether he is considering banning the import of Chilean fruit.

  Mr. Ryder
  The Government have obtained full information from the Governments of the United States and of Chile about the anonymous threats made to the United States embassy in Santiago relating to action against fruit for export, and the subsequent discovery by the United States authorities of non-lethal doses of cyanide in two grapes in a consignment exported from Chile.

  There is no indication that fruit other than grapes is involved, and the threat appears to be restricted to supplies consigned to the United States. My Department and the Department of Health have alerted the port authorities and the trade in the United Kingdom so that produce arriving from Chile can be thoroughly examined. In view of the transport time supplies shipped from the period of the threat cannot yet have arrived in this country.

  The Departments will be maintaining a close watch on the situation. In the light of the existing position, no further action is justified at present.

  Fruit Imports
  Dr. David Clark
  To ask the Ministry of Agriculture, Fisheries and Food if he will list the type of fruit and quantities of each that have been imported into the United Kingdom in each of the last six years.

  Mr. Ryder
  The following is the information:

  disposing of carcases of cattle slaughtered because of suspected BSE. The method used depends on the facilities available in various parts of the country.

  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food what information he has concerning the inactivation of the agent causing bovine spongiform encephalopathy by burial of the carcase of the host.

  Mr. Donald Thompson
  The only part of a cattle carcase known to carry the BSE agent is the brain, which is removed for laboratory examination prior to the disposal of the carcase and subsequently incinerated. Research is under way to establish whether any other parts of the
  471
  carcase carry the agent. The carcases are buried in such a way that no other species would be exposed to the agent should it be present.

  Belgian Trawlers (Rule Infringements)
  Mr. David Porter
  To ask the Minister of Agriculture, Fisheries and Food what action his Department has taken on reports by United Kingdom fishing vessel operators of breaches of Community fisheries policy and European Community rules by Belgian trawlers.

  Mr. Donald Thompson
  The United Kingdom fishermen concerned have not produced any solid evidence to support their allegations against Belgian trawlers, nor are they substantiated by information available to the fisheries protection service. The United Kingdom co-operates closely with the Belgian authorities on fisheries control matters and information is regularly supplied to them. Such information has in the past been used by the Belgian authorities to institute proceedings against certain of their fishermen.

  Mr. David Porter
  To ask the Minister of Agriculture, Fisheries and Food if he will make it his policy in future that any reports by United Kingdom fishing vessel operators of breaches of Community fisheries policy and European Community rules by Belgian trawlers are taken up promptly with the Community; and if he will make a statement.

  Mr. Donald Thompson
  It has always been my Department's practice to pass all properly substantiated information on offences of this kind to the vessel's member state and, if appropriate, to the Commission.

  Belgian Fishing Fleet
  Mr. David Porter
  To ask the Minister of Agriculture, Fisheries and Food what recent representations he has had from fishermen and fishing organisations on the relationship between the viability and the quota of the Belgian fishing fleet; and what action he intends to take with the Commission.

  Mr. Donald Thompson
  The National Federation of Fishermen's Organisations, the South West Fish Producers' Organisation and the Cornish Fish Producers' Organisation have made allegations that the level of activity by the Belgian fleet is higher than would be justified by its quotas. The organisations concerned have not, however, provided any concrete or substantiated evidence in support of their allegations. Nor are they supported by evidence available to the Department from the fisheries protection service.

  Dutch and Belgian Fishing Vessels
  Mr. David Porter
  To ask the Minister of Agriculture, Fisheries and Food what action he intends to take at the Council of Ministers to prevent the Dutch Government from permitting vessels over 4,000 brake horsepower to derate their engines to below the 1800 brake horsepower cut-off which allows these vessels south of 55° north.

  Mr. Donald Thompson
  The derating of the engines of Dutch fishing vessels to enable them to fish in the North sea south of 55° north between 1 April and 30 June is a matter for the Dutch authorities and the Commission. We shall be following closely any developments.
  472
  Mr. David Porter
  To ask the Minister of Agriculture, Fisheries and Food what monitoring his Department has done in the past six months as to how successfully the Dutch and Belgian Governments are enforcing agreed European Community rules on fishing vessels.

  Mr. Donald Thompsan
  It is primarily the reponsibility of the Commission to monitor member states' compliance with Community rules and the Community inspectorate makes frequent visits to member states to examine their control and inspection arrangements. The United Kingdom continues to inspect Belgian and Dutch vessels, along with other nationalities, operating in British fishery limits. We also continue to press for improved enforcement and control of the common fisheries policy throughout the Community.

  Bovine Somatotropin
  Mr. Win Griffiths
  To ask the Minister of Agriculture, Fisheries and Food (1) if he will make it his policy not to grant a product licence for BST in the light of the trials at Winchester and Edinburgh showing that cows treated with bovine somatotropin fail to gain weight compared to control cows and that treated heifers lose weight;

  (2) if he will make it his policy not to grant a product licence for BST in the light of the trials at Shinfield, Hurley and Newcastle showing that cows treated with bovine somatotropin lose body condition score;

  (3) if he will make it his policy not to grant a product licence for BST in the light of the trials at Edinburgh, Shinfield and Hurley showing reproduction problems in treated cows;

  (4) if he will make it his policy not to grant a product licence for BST in the light of evidence that treating cows with bovine somatotropin through regular non-therapeutic injections can leave tender swellings;

  (5) if he will make it his policy not to grant a product licence for BST in the light of the fact that it is against the advice of the British Veterinary Association to inject cows daily for non-therapeutic purposes.

  Mr. Donald Thompson
  The policy for deciding applications for product licences is established by the Medicines Act 1968. In the case of BST products both data being generated in field trials and all other pertinent data will be rigorously assessed against the statutory criteria of safety, quality and efficacy.

  Mr. Win Griffiths
  To ask the Minister of Agriculture, Fisheries and Food what research is being done to determine whether BST can survive in the flesh of slaughtered cows which have been treated with BST.

  Mr. Donald Thompson
  Applicants for product licences for BST are, in accordance with the Medicines Act, obtaining or generating all data necessary for a thorough assessment, including data on possible residues.

  Mr. Win Griffiths
  To ask the Minister of Agriculture, Fisheries and Food what information he has about the imposition in the Netherlands of a 28-day withdrawal period on BST treated cows before they are slaughtered; and to what extent a similar practice is followed in the United Kingdom.

  Mr. Donald Thompson
  None. In the United Kingdom the withdrawal periods which may be applicable for a
  473
  product such as BST are determined following a thorough assessment of the licence application and its supporting data.

  Medicines (Monitoring)
  Dr. Godman
  To ask the Minister of Agriculture, Fisheries and Food what provisions there are to monitor the environmental effects and regulate the use of products used under the Medicines Act 1968, which are not licensed, including products prescribed by veterinary practitioners; and if he will make a statement.

  Mr. Donald Thompson
  Products not licensed under the Medicines Act may be prescribed by veterinary practitioners for particular animals under their care, and in accordance with their professional judgment. The wide range of products involved is not a specific category for environmental monitoring purposes.

  North-East Drift Net Fishery
  Dr. Cunningham
  To ask the Minister of Agriculture, Fisheries and Food if he will provide details of the review of the north-east drift net fishery as laid down in section 39 of the Salmon Act 1986; and if he will make a statement.

  Mr. Donald Thompson
  Section 39 of the Salmon Act 1986 requires my right hon. Friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Scotland to prepare and submit to Parliament a report reviewing salmon netting off the coasts of north-east England and eastern Scotland. That report is to be submitted as soon as practicable after 7 November 1989, three years after the enactment of the 1986 Act. Work on the review is currently in hand and it would not be appropriate to pre-empt it.

  Slaughterhouses
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food on how many occasions a year his veterinary officers visit each slaughterhouse in the United Kingdom.

  Mr. Donald Thompson
  My veterinary officers visit non-export approved slaughterhouses once a year to monitor standards and give advice to enforcement authorities. They aim to make monthly visits to export approved plants and quarterly visits to licensed poultry slaughterhouses.

  Environmentally Sensitive Areas
  Mr. Ron Davies
  To ask the Minister of Agriculture, Fisheries and Food if he has any plans to introduce legislation to ensure that landlords have no legal claim on payments made under the ESA scheme applied for by a tenant.

  Mr. Ryder
  No. ESA payments are made to the applicant who will usually be an owner-occupier or tenant of the land. Any questions relating to tenants' participation must be a matter for the parties concerned since they will depend on individual circumstances. I would advise tenants to seek professional advice if they are in any doubt about their position under a tenancy agreement.

  "Nuclear Accidents and the Farmer"
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food how he intends to distribute the leaflet entitled "Nuclear Accidents and the Farmer"; and to whom.

  Mr. Ryder
  The leaflets entitled "Nuclear Accidents and the Farmer" are being distributed by post to farmers in the vicinity of major nuclear installations. Copies are also being sent to local liaison committees at these sites and to representatives of national organisations such as the Milk Marketing Board, the National Farmers Union and the Country Landowners Association and copies have been placed in the Library of the House. Further copies are available on request from my Department's regional offices.

  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food how many leaflets entitled "Nuclear Accidents and the Farmer" he has had printed.

  Mr. Ryder
  Five thousand copies of the advisory leaflets entitled "Nuclear Accidents and the Farmer" have been printed.

  Egg Producers
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food if he will list each egg producer who received assistance under his scheme to aid the egg industry; and how much was paid out in each case.

  Mr. Donald Thompson
  Payments under the egg industry scheme were made to egg packers. The slaughter of hens scheme did involve payments to egg producers but it would not be appropriate to list their names and the amounts which they received.

  Sheep (Radioactivity)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food how many sheep and in which months since April 1986, have been monitored for radioactivity in slaughterhouses in England.

  Mr. Ryder
  As promised in the Government's response to the Agriculture Committee's report, "Chernobyl: the Government's Reaction", we have been examining the feasibility of monitoring for radioactivity in English slaughterhouses. An initial pilot study was carried out in December 1988 involving the monitoring of 40 sheep carcases at one slaughterhouse. A more extensive trial is now under-way at six slaughterhouses, as part of which 314 sheep carcases were monitored in February and a further 442 had been monitored by 15 March.

  Training
  Mr. Boswell
  To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the appropriateness of the present arrangements for agricul-tural and related training in the light of the period of considerable change in the industry.

  Mr. MacGregor
  Over the past 22 years the agricultural training board has made a most valuable contribution in developing training provision in the agricultural industry. I believe, however, that it is timely to consider on what lines the future role of the board might most appropriately develop, taking into account the changing patterns of employment and associated training needs in agriculture and related industries; the diversification of the range of training offered by the agricultural colleges; and the Government's plans for the reform of training set out in the White Papers Cms. 534 and 540. In the circumstances I have, with my right hon. Friends the Secretaries of State for Scotland and Wales, and with the agreement of my right hon. Friends the Secretaries of State for Employment and for Education and Science, decided to institute a review with the following terms of reference:"To consider the future role of the Agricultural Training board (ATB) in meeting the agricultural and related training needs for the 1990s bearing in mind the Secretary of State for Employment's proposals on training in 'Employment for the 1990s', and the proposals of the Secretary of State for Scotland contained in 'Scottish Enterprise', and the resources and facilities available at agricultural colleges; and, from the basis of the existing Agricultural Training Board legislation, to make specific recommendations to Agriculture Ministers on the national and local organisation and structure most appropriate to meet those needs; and to report by Autumn 1989."

  This review will be conducted by Mr. John Smith, a partner in Arthur Young who today becomes chairman elect of the agricultural training board. He will be assisted in his task by the following assessors:

  Mr. J. S. Barber, Cavick House Farm, Wymondham, Norfolk

  Mr. D. H. Wilkinson, Southdown Farm, Ringstead, Dorset

  Mr. D. Rose, Principal, Barony College, Dumfries

  Mr. T. Jones, Plas Gwyn, Llangyniew, Welshpool, Powys Mr. A. G. Harris, Principal, Harper Adams College, Newport, Shropshire

  Mr. P. Brown HMI, Staff Inspector for Agricultural Education (England).

DEFENCE

  South Korea
  Mrs. Wise
  To ask the Secretary of State for Defence how many British troops there are in South Korea. and in what capacity.

  Mr. Archie Hamilton
  Forty-three members of Her Majesty's armed forces are currently located in the republic of Korea. A platoon of 34 men from the Hong Kong garrison contribute towards the United Nations honour guard and we have nine personnel in the headquarters of the Commonwealth liaison mission to the United Nations command.

  Oman
  Mr. Cohen
  To ask the Secretary of State for Defence (1) under what agreement British troops are based in Oman; when it was initiated; and what is its duration;

  (2) whether any memorandum of understanding exists between Her Majesty's Government and the Sultanate of Oman.

  Mr. Archie Hamilton
  No British troops are based in Oman. A number of members of the United Kingdom armed forces are posted to Oman, as to other countries, as loan service personnel. The details of the arrangements under which this takes place are confidential between the two countries.

  Low Flying
  Mr. Home Robertson
  To ask the Secretary of State for Defence (1) if he will make a statement on the speed, height and purpose of the low-level flight by a jet aircraft over East Linton, East Lothian at 11.45 am on Monday 27 February; and if he will identify the type of aircraft involved and the base from which it was operating;

  (2) if he will make a statement on the purpose, height, speed, home base, and type of aircraft which were involved in flights over Pencaifland at 11.30 am; 3.01 pm; and 3.26 pm on Wednesday 8 March.

  Mr. Neubert
  United Kingdom and other military aircraft are authorised as a matter of routine to carry out low level flying training in the area mentioned at heights no lower than 250 feet and at speeds normally not exceeding 450 knots. Aircraft may originate from a number of flying stations both in the United Kingdom and the Federal Republic of Germany.

  Exercise Red Lanyard
  Mr. Redmond
  To ask the Secretary of State for Defence, pursuant to his answer of 2 March,Official Report, column 253, how many complaints in respect of low flying aircraft during Exercise Red Lanyard have been received to date; and at what locations.

  Mr. Neubert
  Nine complaints have been identified which are likely to have arisen from military aircraft activity connected with exercise Red Lanyard. They were received from members of the public in Watton, Wilby, Middleton, Monks Soham, West Winch, Stanground, Normans Cross, Lundy Green and Brockhampton.

  Royal Military Police (Accountants)
  Mr. Key
  To ask the Secretary of State for Defence (1) what are the numbers and qualifications of Royal Military Police officers currently serving as specialist accountants;

  (2) in how many cases each year since 1979 investigations by the Royal Military Police have required the services of a specialist accountant who is a serving officer with the Royal Military Police;

  (3) how many Royal Military Police officers who are trained as specialist accountants are currently in post; and how many have been in post in each year since 1979.

  Mr. Neubert
  Cases of suspected fraud are investigated by Royal Military Police (RMP) teams. The teams are composed of members of the special investigation branch of the Royal Military Police and, for technical assistance in their investigations, of advisers seconded from the Royal Army Pay Corps. Two RAPC warrant officers are currently employed full time as specialist financial advisers to provide technical assistance. The first full-time specialist financial adviser was seconded to the RMP in 1983. A second specialist was seconded in 1986.

  Before 1983 all RAPC warrant officers could be called upon to assist with a SIB RMP investigation. In order to make best use of the experience and technical expertise gained in this type of investigation it was decided to second a warrant officer to the RMP as a full-time member of their SIB teams.

  Since 1983, the financial advisers have handled 121 cases of false accounting, with five cases under investigation.

  Mr. Key
  To ask the Secretary of State for Defence in how many cases each year since 1979 investigations by the Royal Military Police have required the assistance of specialist accountants who are(a) civilians, (b) civil servants, (c) officers serving with the ministry of defence police, (d) officers of the metropolitan police and (e) officers of other forces.

  Mr. Neubert
  None. We do, however, make use of the expertise of the Royal Army Pay Corps.

  Warrant Officer Newbery
  Mr. Key
  To ask the Secretary of State for Defence if he will make public the Royal Military Police report on Warrant Officer Newbery which led to him being charged with false accounting in 1986 and being subsequently acquitted.

  Mr. Neubert
  No. It is not the practice to make public confidential reports of this nature.

  Nuclear Weapons
  Mr. Simon Hughes
  To ask the Secretary of State for Defence if he will list all the dates since 1 January 1988 on which nuclear weapons tests have been carried out on behalf of the United Kingdom; and, in each case, whether these tests were carried out independently, or with the assistance of another country.

  Mr. Sainsbury
  None.

  Mr. Flynn
  To ask the Secretary of State for Defence what policy considerations underline his decision not to 478
  make available to Parliament details of North Atlantic Treaty Organisation deliberations on the plans for modernisation for short-range nuclear weapons; and to what extent he takes into account their publication in other North Atlantic Treaty Organisation member states.

  Mr. Archie Hamilton
  A communiqué is issued, following all NATO meetings, which is made available to the public. Copies are placed in the Library of the House. However, the details of the ministerial discussions and documentation for these meetings is, and should remain, confidential.

  Nuclear Submarines
  Mr. John Evans
  To ask the Secretary of State for Defence (1) if nuclear submarines personnel have access to a record of their dose rates on leaving service with the nuclear submarine fleet or the armed services;

  (2) what levels of radiation are (a) received by nuclear submarine personnel and (b) reported by the Central Electricity Generating Board amongst classified persons working in nuclear power stations.

  Mr. Archie Hamilton
  [holding answer 16 March 1989]: The ionising radiation doses accrued by Royal Navy nuclear submarine personnel during the operation of the submarines are in general very small, being for the most part lower than those received by members of the public, who are exposed to natural cosmic and terrestrial radiation from which submariners are shielded. The majority of nuclear submarine personnel are thus not categorised as radiation workers.

  Personnel who require regular access to designated radiation areas are categorised as radiation workers and subject to dosimetric assessment. Since 1986 such personnel have been isssued, on leaving the Royal Navy, with a termination record of the total dose which they have received. Before 1986, dose records were available to the individual on request. The average whole body dose received by Royal Navy submarine personnel categorised as radiation workers during 1988 was 1·5 milliseiverts.

  I understand that the average radiation dose received by classified persons working in the Central Electricity Generating Board's nuclear power stations in 1987 was 0·7 milliseiverts (the 1988 figure is not yet available).

  The radiation exposure limit for classified persons, set by the Ionising Radiations Regulations 1985, is 50 milliseiverts per annum.

  Mr. John Evans
  To ask the Secretary of State for Defence if he will publish in the Official Report the upper quartile range of maximum radiation dose rates sustained by nuclear submarine personnel in the last five years.

  Mr. Archie Hamilton
  [holding answer 16 March 1989]: Figures for the radiation doses sustained by nuclear submarine personnel are not easily broken down into quartiles. The following table gives the cumulative total dose, the average individual dose and a breakdown of numbers of personnel by dose received for each of the last five years.
  479

  Number of personnel in dose ranges

  Year

  Cumulative dose (man Seiverts)

  0–15 mSv

  15–20 mSv

  20–30 mSv

  30–40 mSv

  40–50 mSv

  Over 50 mSv

  Average individual dose (mSv)

  1988

  2·1

  1,398

  4

  0

  0

  0

  0

  1·50

  1987

  2·6

  1,307

  19

  12

  4

  0

  0

  1·90

  1986

  3·1

  945

  19

  18

  16

  1

  0

  3·07

  1985

  2·9

  905

  18

  16

  10

  3

  0

  3·05

  1984

  2·8

  777

  24

  13

  6

  0

  0

  3·46

  Note: mSv =milliseivert.

  Mr. John Evans
  To ask the Secretary of State for Defence what level of radioactivity his Department judges as significant in regard to the discharge of radioactive materials from nuclear submarines into the sea; and what type of materials are involved.

  Mr. Archie Hamilton
  Royal Navy submarines do not discharge radioactivity at sea under normal circumstances. The significance of such discharges depends upon their potential effect. In determining what levels are acceptable, therefore, the Royal Navy takes into account the recommendations of the International Commission on radiological protection regarding dose. The radioactive isotope of most significance in discharges from Royal Navy submarines would be cobalt 60.

  Mr. John Evans
  To ask the Secretary of State for Defence how his Department knows either in which foreign ports Britain's nuclear submarines may berth, or into whose territorial waters those submarines may enter.

  Mr. Archie Hamilton
  Whenever a Royal Navy nuclear-powered submarine wishes to visit a foreign port, a request is made to the authorities of the country concerned.

  Mr. John Evans
  To ask the Secretary of State for Defence what assessment his Department has made of the consequences of an accident involving the nuclear armed warheads of the Polaris class of submarine boats in berth, and when at sea nearby the coastline, with regard to the guidelines recently published by the Health and Safety Executive entitled "Tolerability of Risk".

  Mr. Archie Hamilton
  The consequences of a Polaris nuclear weapon accident have been thoroughly examined. The hazard from such an accident would be from contamination by nuclear material which might be dispersed by a fire or ignition of conventional explosives. The risks of such an accident occurring are extremely small, and are assessed as consistent with the HSE guidelines on the tolerability of risk, although these were drawn up with nuclear power stations rather than weapons in mind. Plans do, however, exist to deal with such an accident.

  Mr. John Evans
  To ask the Secretary of State for Defence if his Department regards nuclear submarine personnel as equivalent to classified persons, as specified by the Ionising Radiations Regulations; and what measures are implemented to monitor and safeguard the health of such submariners, and to maintain the radiation dose exposure records of such personnel.

  Mr. Archie Hamilton
  Most nuclear-powered submarine personnel are not categorised as radiation workers. Of those who are, a proportion are designated as classified persons using criteria laid down in the Ionising Radiations 480
  Regulations 1985. Radiation protection advisers are appointed, and dedicated staff qualified in radiation protection are provided in each nuclear-powered submarine and in their operating bases. Where required, dosimetric assessments are made by the defence radiological protection service.

  Mr. John Evans
  To ask the Secretary of State for Defence if dose rate records for submariners working aboard nuclear submarines are maintained on a national register; and if those records are transferred to, or available to, future employer; of such personnel.

  Mr. Archie Hamilton
  A national register of radiation workers is currently being produced within the United Kingdom. The doses accrued by nuclear submarine personnel will be included within the register unless the individual concerned chooses not to have his name entered. The requirements for termination records laid down in the Ionising Radiations Regulations are complied with, and for any radiation worker a summary of the dose received can be provided.

  Mr. John Evans
  To ask the Secretary of State for Defence if his Department has knowledge of any medical disorders associated with radiation dose uptake amongst past and present submarine service personnel or their offspring.

  Mr. Archie Hamilton
  The Ministry of Defence has no knowledge of any medical disorders arising from the exposure of RN nuclear submarine personnel to radiation.

  Mr. John Evans
  To ask the Secretary of State for Defence what is the average whole body radiation dose equivalent receipt or uptake of submariners aboard a nuclear submarine during an average tour of duty.

  Mr. Archie Hamilton
  The average radiation dose per annum for those submarine personnel designated as radiation workers is included within the breakdown of dose statistics which I gave earlier today. The average tour of duty with an individual submarine is about two years. The majority of submarine personnel, on the basis of their type of employment and access to radiation areas, are not designated as radiation workers and are not, therefore, subject to dosimetric assessment.

  Mr. John Evans
  To ask the Secretary of State for Defence (1) if his Department has identified and evaluated the worst credible nuclear accident in the operation of its nuclear powered submarine fleet, its predicted frequency, and the severity of its consequences both in terms of an individual positioned at each operational dockyard station perimeter and, separately, for nearby populations beyond that perimeter;

  (2) what assessment his Department has made of the consequences of an accident involving the nuclear powered

  481
  reactor of a nuclear submarine in berth, at either a refit dockyard, at Z-berth, or any other port of call, with regard to the guidelines recently published by the Health and Safety Executive entitled "Tolerability of Risk."

  Mr. Archie Hamilton
  Accident probabilities and consequences for nuclear-powered submarine reactor accidents have long been identified and evaluated. These predictions have subsequently been compared with the Health and Safety Executive guidelines on the tolerability of risk, and are consistent with these. The predictions are used in the formulation of accident response plans for the berths in question, in consultation with local civil authorities.

HEALTH

  Dolls' Houses (Synthetic Foods)
  Mr. Teddy Taylor
  To ask the Secretary of State for Health how many children have been injured or killed by consuming synthetic foodstuffs for use in dolls' houses in each of the past five years; and if he was consulted over the EEC directive on the issue.

  Mr. Forth
  [holding answer 16 March 1989]: I have been asked to reply.

  None. This fact, coupled with the fact that they are usually so small as to be unlikely to mislead a young child into thinking that they are food, has enabled me to exempt them from the proposed regulations, which I announced in a written answer on 14 March to my hon. and learned Friend the Member for Burton (Mr. Lawrence) at column 128.

  Governments of all member states were, of course, consulted during the preparation of the EC Dangerous Imitations Directive which the Council of Ministers adopted on 25 June 1987. It rightly outlaws products which imitate food or drink and thereby pose a hazard to the public. Products which do not pose a hazard are not banned by the directive.

  Kidney Patients
  Mr. McLoughlin
  To ask the Secretary of State for Health (1) how many new patients per million population in England have received(a) haemodialysis, (b) continuous ambulatory peritoneal dialysis each year since 1980, and how many that is in absolute numbers;

  (2) if he will show for 1988 dialysis in new patients per million population for the English regional health authorities.

  Mr. Freeman
  Information about new patients accepted for the treatment of end stage renal failure in England is not available in the precise form requested.

  I understand that the number of new patients in England accepted for treatment since 1980 is as follows:

  Year

  Number of new patients

  Per million population

  1980

  1,072

  23

  1981

  1,177

  25

  1982

  1,376

  29

  1983

  1,534

  33

  1984

  1,672

  36

  1985

  1,993

  42

  1986

  2,181

  46

  1987

  2,330

  49

  482
  Information for 1988 is not yet available.

  Psychiatric Care
  Mr. Cohen
  To ask the Secretary of State for Health if he will provide a table showing the amount of capital and special revenue funds allocated to each regional health authority for (i) 1988–89 and (ii) proposed for 1989–90 for the development and operation of regional secure psychiatric and interim secure facilities and the total amounts allocated for each year since 1979.

  Mr. Freeman
  Revenue and capital allocations in 1988–89 and initial revenue allocations for 1989–90, for regional secure units (RSU) are shown in table 1. We plan to allocate an additional £0·355 million revenue and £1·037 million capital for further RSU developments during the course of the year.

  Total capital allocations for RSUs from 1978–79 to 1987–88 are shown in table 2. The total initial revenue allocation in 1978–79 was £6·5 million. It has increased in real terms as regions have opened more RSU beds and in 1987–88 at the initial allocation stage stood at £15·5 millions.

  Table 1

  Regional secure units

  Region

  Total revenue allocation 1988–89 (£'000s cash)

  Initial revenue allocation 1989–90 (£'000s cash)

  Capital allocation 1988–89 (£'000s cash)

  Northern

  957

  1,005

  133

  Yorkshire

  1,098

  1,153

  —

  Trent

  1,648

  1,636

  —

  East Anglian

  834

  876

  24

  North West Thames

  1,079

  1,133

  47

  North East Thames

  1,161

  1,219

  205

  South East Thames

  1,377

  1,446

  388

  South West Thames

  892

  937

  —

  Wessex

  815

  856

  —

  Oxford

  763

  974

  399

  South Western

  1,180

  1,458

  561

  West Midlands

  1,608

  1,688

  —

  Mersey

  1,168

  1,226

  19

  North Western

  1,698

  1,783

  —

  Bethlem and Maudsley (SHA)

  874

  918

  —

  Totals

  17,152

  18,308

  1,776

  Regional secure units

  Table 2

  Total capital allocations for regional secure units

  Year

  £000s (cash)

  1978–79

  292

  1979–80

  1,086

  1980–81

  2,239

  1981–82

  5,656

  1982–83

  7,247

  1983–84

  7,759

  1984–85

  4,804

  1985–86

  5,228

  1986–87

  4,289

  1987–88

  3,080

  Surgery Costs
  Mr. Dobson
  To ask the Secretary of State for Health if he will give the average National Health Service costs of(a) an appendectomy, (b) a hernia operation, (c) a hysterectomy, (d) duodenal ulcer treatment, (e) a

  483
  cataract removal, (f) a tonsillectomy, (g) a slipped disc repair, (h) gall bladder removal, (i) a varicose veins operation, (j) a bunion removal, (k) a knee cartilage operation, (l) breast lump removal, (m) a hip replacement, (n) a prostate removal, (o) a nasal polyp removal, (p) a prolapse repair and (q) a bowel resection.

  Mr. Freeman
  Cost estimates are not available for all of these procedures. Broad estimates of the costs of the following procedures have been made (1988–89 prices):

  £

  Hernia operation

  730

  Hysterectomy

  1,350

  Cataract removal

  790

  Tonsillectomy (tonsils and adenoids)

  370

  Hip replacement

  2,500

  Approved secure accommodation—31 December 1988

  Region and location

  Local authorities

  O & A or CHE1

  Number of places2

  Northern

  New Aycliffe (Royston House)

  Durham

  O & A

  14M

  Clavering House

  Newcastle

  O & A

  3M

  Aycliffe Special Unit

  Durham

  CHE

  36M

  Netherton Park

  North Humberland

  O & A

  5M

  Yorkshire and Humberside

  Kepples View

  Rotherham

  O & A

  4M

  East Moor

  Leeds

  O & A

  9B

  East Moor

  Leeds

  CHE

  18B

  North Western

  Red Sands

  Cheshire

  CHE

  6M

  Derwent House

  Liverpool

  O & A

  4G

  Red Bank (Vardy House)

  Lancashire

  O & A

  8B

  Red Bank Special Unit

  Lancashire

  CHE

  26B

  Blackbrook House (Labore House)

  Liverpool

  CHE

  5G

  Briars Hey (Orchard House)

  Lancashire

  CHE

  8G

  Dyson Hall

  Liverpool

  O & A

  8B

  West Midlands

  Danescourt

  Wolverhampton

  O & A

  4M

  Stoke House

  Coventry

  O & A

  6M

  St. Johns

  Birmingham

  O & A

  4M

  East Midlands

  Moorfield

  Derbyshire

  O & A

  2M

  Kesteven

  Lincolnshire

  O & A

  4M

  Amberdale

  Nottinghamshire

  O & A

  8M

  Greenacres

  Derbyshire

  O & A

  5M

  Thames/Anglia

  Salters

  Cambridgeshire

  O & A

  4G

  Oxenden House

  Bedfordshire

  O & A

  6M

  Woodside Young People's Centre

  Hertfordshire

  O & A

  2M

  Thornbury House

  Oxfordshire

  O & A

  3B

  Brookside

  Berkshire

  O & A

  4M

  London

  Middlesex Lodge

  Hilingdon

  O & A

  9G

  Little Heath Lodge

  Newham

  O & A

  6B

  Orchard Lodge

  Southwark

  O & A

  8B

  Frant Court

  Sussex

  CHE

  3G

  Melanie Klein House

  Greenwich

  CHE

  6G

  Southern

  Landsdown

  East Sussex

  O & A

  5M

  Beechfield

  West Sussex

  O & A

  6M

  The Oaks

  Surrey

  O & A

  2M

  Fairfield

  Hampshire

  O & A

  3G

  Glen House

  Hampshire

  O & A

  8B

  Secure Accommodation
  Mr. Paice
  To ask the Secretary of State for Health if he will list for each year 1979 to 1989 the local authorities which maintain secure units for the purpose of restricting the liberty of children in care and within each authority give(a) the type of unit provided, (b) the number of places available, (c) the number of places filled by children from outside the authority and (d) the number of places filled by children from within the authority.

  Mr. Mellor
  [holding answer 17 March 1989]: We do not have information in the form requested for the full period. The table gives details of approved secure units as at 31 December 1988. Details of the use made of each unit by local authorities are given in "Children Accommodated In Secure Units During the Year Ending 31 March" for the years 1984 to 1987. Copies are available in the Library. Information on children in secure accommodation was not collected centrally prior to 1984.
  485

  Region and location

  Local authorities

  O & A or Number of CHE1

  places2

  South Western

  Atkinson Unit

  Devon

  O & A

  12M

  Kingswood

  Avon

  CHE

  20B

  1 Observation and Assessment Centres (O & A); Community Homes with Education (CHE).

  1 Girls (G); Boys (B); Mixed sex (M).

  Mr. Paice
  To ask the Secretary of State for Health if he will provide the total number of children in care in each local authority for each year 1979 to 1989 and list the proportion of those in care who were placed in approved secure accommodation maintained(a) by the authority and (b) elsewhere.

  Mr. Mellor
  [holding answer 17 March 1989]: The number of children in care in each authority at 31 March is published annually in "Children in Care of Local Authorities During the Year Ending 31 March, England" for 1979–87.

  The information requested for secure accommodation is not readily available in the form requested and could only be provided at disproportionate cost. However, the latest available information on the total number of children in approved secure accommodation at 31 March (including some who are not in care) is published annually in "Children Accommodated in Secure Units During the Year Ending 31 March, England" for 1984–87.

  Copies of these publications are availible in the Library.

  No information on children in secure accommodation was collected prior to 1984; the current format of collection and publication was introduced in 1985.

  Mr. Paice
  To ask the Secretary of State for Health what proportion of approved secure places were filled by(a) juvenile offenders, (b) young persons who have been detained under section 53 of the Children and Young Persons Act 1933 and (c) children in care who have not committed any offence for each year from 1979 to 1989; and if he will make a statement on the availability of such places.

  Mr. Mellor
  [holding answer 17 March 1989]: We do not collect information centrally in the form requested. However, the details available of the legal status of children in approved secure units are given in "Children Accommodated in Secure Units During the Year Ending 31 March 1987, England" for 1984–87. Copies are available in the Library. Information on children in secure accommodation was not collected centrally prior to 1984.

  The provision of secure accommodation is the statutory responsibility of local authorities. There were 294 places available in 38 secure units on 31 December 1988; in addition, five secure units, providing 46 places, were temporarily closed on that date because of building work.

  Because secure accommodation is a specialised resource there is, at times, considerable pressure on available places. The Department is always ready to consider applications from local authorities for grant aid towards the costs of providing new secure units and renovating and extending existing units.

  Mr. Paice
  To ask the Secretary of State for Health what has been the total cost to local authorities and directly to the Department of Health for the provision of secure accommodation in each year from 1979 to 1988; and what is the estimated cost for the years 1989 to 1991.
  486
  Mr. Mellor
  [holding answer 17 March 1989]: We do not hold centrally information about the revenue cost to local authorities of providing secure accommodation.

  Grant-aid may be made available by the Department to local authorities to meet the capital costs of providing secure accommodation and to improve security aspects of existing units. The table provides the available information:

  Table: Grants to local authorities (S.81 Child Care Act 1980).

  £000s

  1978–79

  1,024

  1979–80

  1,120

  1980–81

  2,000

  1981–82

  1,748

  1982–83

  525

  1983–84

  316

  1984–85

  572

  1985–86

  506

  1986–87

  503

  1987–88

  1,205

  1988–89

  1994

  1989–90

  22,500

  1 Estimate.

  2 Current budget limit.

  Cot Deaths
  Mr. Latham
  To ask the Secretary of State for Health how many babies have died in each of the last five years through cot death syndrome; and whether the totals reveal any statistically significant features relating to regions, proximity to strong electro-magnetic fields or any other specifically identifiable feature common to such tragedies.

  Mr. Freeman
  [holding answer 20 February 1989]: The following figures for the years 1983–87 (the latest available) show for each regional health authority and for Wales the number of deaths and the death rate for (a) deaths where sudden infant death or a similar term was given as the underlying cause; (b) deaths where sudden infant death or a similar term was mentioned on the death certificate although not as the underlying cause; and (c) for comparison, all infant deaths.

  The figures illustrate what has long been known—that regional variations exist. We are aware of no statistically significant evidence that links deaths from sudden infant death syndrome (SIDS), or accounts for its geographical variations, with any specific factor. A 1988 report on infant mortality in England prepared for the chief medical officer—a copy of which was placed in the Library—noted that there has been a shift in diagnostic classification towards certifying as SIDS deaths which would previously have been assigned to diseases of the respiratory system. The recent Social Services Select Committee report on perinatal, neonatal and infant mortality recommends further research into the causes of infant deaths, particularly those attributed to SIDS. The Government will be responding shortly.
  487

  Deaths registered in England and Wales where Sudden Infant Death is given as the underlying cause

  Numbers

  Rates per 1,000 live births

  1983

  1984

  1985

  1986

  1987

  1983

  1984

  1985

  1986

  1987

  England and Wales

  1,099

  1,080

  1,165

  1,292

  1,337

  1·75

  1·70

  1·77

  1·95

  1·96

  Northern

  56

  60

  51

  69

  84

  1·43

  1·53

  1·25

  1·71

  2·08

  Yorkshire

  105

  111

  102

  113

  101

  2·26

  2·38

  2·12

  2·34

  2·05

  Trent

  67

  63

  81

  80

  85

  1·17

  1·09

  1·38

  1·35

  1·39

  East Anglia

  53

  42

  53

  47

  56

  2·30

  1·77

  2·16

  1·91

  2·17

  North West Thames

  81

  64

  86

  68

  76

  1·78

  1·39

  1·81

  1·41

  1·53

  North East Thames

  74

  85

  70

  94

  121

  1·48

  1·66

  1·35

  1·77

  2·19

  South East. Thames

  77

  81

  101

  102

  92

  1·75

  1·81

  2·15

  2·14

  1·84

  South West Thames

  56

  55

  67

  95

  81

  1·61

  1·58

  1·84

  2·59

  2·12

  Wessex

  75

  72

  74

  91

  99

  2·27

  2·13

  2·12

  2·54

  2·66

  Oxford

  65

  52

  52

  44

  52

  2·10

  1·63

  1·57

  1·33

  1·50

  South Western

  93

  81

  77

  104

  105

  2·62

  2·24

  2·05

  2·73

  2·64

  West Midlands

  89

  110

  110

  127

  115

  1·30

  1·60

  1·56

  1·80

  1·59

  Mersey

  55

  49

  58

  75

  60

  1·73

  1·55

  1·76

  2·29

  1·83

  North Western

  101

  109

  116

  115

  118

  1·88

  2·01

  2·09

  2·07

  2·08

  Wales

  49

  42

  64

  66

  88

  1·38

  1·17

  1·74

  1·78

  2·33

  Deaths registered in England and Wales with a mention of Sudden Infant Death

  Numbers

  Rates per 1,000 live births

  1983

  1984

  1985

  1986

  1987

  1983

  1984

  1985

  1986

  1987

  England and Wales

  1,315

  1,242

  1,301

  1,504

  1,528

  2·09

  1·95

  1·98

  2·28

  2·24

  Northern

  65

  65

  57

  78

  95

  1·66

  1·66

  1·39

  1·94

  2·35

  Yorkshire

  114

  118

  115

  125

  117

  2·45

  2·53

  2·39

  2·59

  2·37

  Trent

  128

  118

  118

  131

  128

  2·24

  2·05

  2·01

  2·21

  2·10

  East Anglia

  52

  46

  55

  48

  57

  2·25

  1·94

  2·25

  1·95

  2·21

  North West Thames

  92

  70

  87

  92

  82

  2·02

  1·51

  1·83

  1·91

  1·65

  North East Thames

  83

  95

  84

  97

  135

  1·66

  1·85

  1·62

  1·83

  2·44

  South East Thames

  93

  92

  105

  115

  105

  2·11

  2·06

  2·24

  2·42

  2·10

  South West Thames

  69

  70

  71

  92

  93

  1·99

  2·01

  1·95

  2·50

  2·43

  Wessex

  92

  79

  79

  102

  107

  2·78

  2·34

  2·26

  2·85

  2·88

  Oxford

  75

  62

  64

  55

  66

  2·42

  1·95

  1·94

  1·66

  1·90

  South Western

  100

  85

  82

  122

  111

  2·82

  2·35

  2·18

  3·20

  2·79

  West Midlands

  110

  123

  127

  145

  131

  1·61

  1·79

  1·81

  2·06

  1·81

  Mersey

  66

  57

  62

  91

  73

  2·07

  1·80

  1·89

  2·78

  2·23

  North Western

  110

  111

  120

  137

  126

  2·05

  2·05

  2·16

  2·47

  2·22

  Wales

  63

  47

  72

  72

  96

  1·77

  1·31

  1·96

  1·94

  2·54

  All deaths of infants aged under one year registered in England and Wales

  Numbers

  Rates per 1,000 live births

  1983

  1984

  1985

  1986

  1987

  1983

  1984

  1985

  1986

  1987

  England and Wales

  6,381

  6,037

  6,141

  6,313

  6,272

  10·1

  9·5

  9·4

  9·6

  9·2

  Northern

  398

  370

  343

  394

  353

  10·2

  9·4

  8·4

  9·8

  8·7

  Yorkshire

  524

  499

  513

  513

  498

  11·3

  10·7

  10·7

  10·6

  10·1

  Trent

  591

  524

  505

  585

  553

  10·3

  9·1

  8·6

  9·9

  9·1

  East Anglia

  208

  195

  231

  198

  201

  9·0

  8·2

  9·4

  8·1

  7·8

  North West Thames

  400

  397

  429

  412

  411

  8·8

  8·6

  9·0

  8·6

  8·3

  North East Thames

  481

  474

  441

  491

  549

  9·6

  9·3

  8·5

  9·3

  9·9

  South East Thames

  413

  442

  445

  408

  463

  9·4

  9·9

  9·5

  8·6

  9·3

  South West Thames

  301

  298

  332

  323

  323

  8·7

  8·5

  9·1

  8·8

  8·4

  Wessex

  335

  329

  316

  326

  352

  10·1

  9·7

  9·0

  9·1

  9·5

  Oxford

  288

  270

  271

  299

  299

  9·3

  8·5

  8·2

  9·0

  8·6

  South Western

  349

  309

  320

  361

  342

  9·8

  8·5

  8·5

  9·5

  8·6

  West Midlands

  740

  771

  741

  706

  687

  10·8

  11·2

  10·5

  10·0

  9·5

  Mersey

  296

  252

  293

  307

  279

  9·3

  8·0

  8·9

  9·4

  8·5

  North Western

  607

  542

  536

  594

  535

  11·3

  10·0

  9·6

  10·7

  9·4

  Wales

  379

  314

  362

  352

  359

  10·7

  8·8

  9·8

  9·5

  9·5

  General Practitioners (Contracts)
  Mr. Michael Morris
  To ask the Secretary of State for Health what was the latest date on which general practitioner principals received his letter on the proposed new contract; by what date they are required to respond; what previous notice had been given of the proposals under consideration; what agreement there was on the 488
  confidentiality of negotiations between himself and the General Medical Services Committee; and whether this agreement was breached.

  Mr. Kenneth Clarke
  Despatch to all GPs of my proposals for changing the GP's term of service and remuneration system, set out in the booklet "A New Contract", commenced on 23 February 1989. I have no reason to believe that the postal authorities were unable to deliver within a few days of that date. The purpose of the
  489
  document was to inform GPs of the Goverment's plans. No specific response was called for because the contents were and continue to be the subject of consultation with the GP's representatives, the General Medical Services Committee (GMSC), although I am pleased to say that many GPs are using the "helpline" service we set up.

  Notice of the proposals was given in the White Paper "Promoting Better Health" (Cm 249) published in November 1987, which announced the Government's plans for improving the primary health care services. "A New Contract" is the culmination of a year's detailed consultation with the GMSC.

  It was agreed with the GMSC that consultation should proceed on a confidential basis on the understanding that either party could terminate the arrangement by giving the other due notice. The GMSC chose to bring the confidentiality arrangement to an end on 16 February and I was informed of this intention on 9 February by the chairman of the GMSC.

  Organ Transplants
  Mr. McLoughlin
  To ask the Secretary of State for Health how many kidneys, hearts, livers and other organs have been transplanted each year since 1980; and what proportion of each group of transplant patients survive for longer than one year.

  Mr. Freeman
  Information on the number of organs transplanted in the years 1980 to 1987 was provided in my reply to the hon. Member for East Lothian (Mr. Home Robertson) on 22 December 1988 at columns 397–98. I announced provisional figures for 1988 during the Adjournment debate on transplant surgery on 21 February at column 976.

  My hon. and learned Friend the Minister for Health provided information on survival rates following transplant in a reply to my hon. Friend the Member for Newbury (Sir M. McNair-Wilson) on 19 December at columns 130–31.

  Ethnic Minority Health
  Mr. Boateng
  To ask the Secretary of State for Health what progress he has made towards developing a central information resource unit for ethnic minority health following the management seminar organised by his Department on 4 November 1987.

  Mr. Mellor
  The report "Action not Words" by a National Association of Health Authorities working party, published in November 1988, proposed the creation of a central resource unit on ethnic minority health issues.

  As I said in my reply on 9 February to the hon. Members for Brent, South (Mr. Boateng) and for Birmingham, Ladywood (Ms. Short) at column 800, we needed to consider whether establishing a separate unit was the best way forward. Officials in the Department are exploring, with a number of organisations, ways of setting up an effective system for exchange of information on ethnic minority health issues.

  Prescription Costs
  Mr. Butterfill
  To ask the Secretary of State for Health what variations his Department is aware of in the level of costs of prescriptions between doctors' surgeries.
  490
  Mr. Mellor
  We are aware of substantial variations in the prescribing costs of practices. For example, about 10 per cent. of practices prescribe at a level of 25 per cent. or more above the average for a practice in their FPC area. We have published information on the variation between FPCs in cost per head of prescriptions and I refer my hon. Friend to my reply to my hon. Friend the Member for Beaconsfield (Mr. Smith) on 16 March.

  Hazardous Waste
  Mr. Shersby
  To ask the Secretary of State for Health what representations he has received from the London borough of Hillingdon concerning the importation of hazardous waste through London Heathrow airport and the environmental health implications of the carriage of dangerous substances by air; if he will review the Public Health (Aircraft) Regulations 1979; and if he will make a statement.

  Mr. Freeman
  A letter from the chief executive of the London borough of Hillingdon has been received. Copies were sent also to my right hon. Friends the Secretary of State for the Environment, the Secretary of State for Transport and the Minister of Agriculture, Fisheries and Food, to a number of hon. Friends and hon. Members and to a number of local authorities and other organisations. A reply will be sent to the chief executive as soon as is practicable and I shall write to my hon. Friend at the same time.

  Child Protection Services
  Mr. Anthony Coombs
  To ask the Secretary of State for Health when he intends to publish the report by the social services inspectorate on child protection services in the London borough of Southwark; and if he will mike a statement.

  Mr. Mellor
  In response to concern about the handling of child protection cases in Southwark, the Department's social services inspectorate has examined the child protection services and reported its findings to me. Copies of the report are now available in the Library.

  The inspection revealed a number of features which require attention. The number of children registered is distorted by the present cumbersome registration system, but even if efficient registration systems were operated there would still be a large number of children on the register.

  It is always unacceptable for child protection cases to be without social work intervention when they have been assessed as needing it, and the number of such cases in Southwark is disturbingly high.

  However, on the brighter side, action taken in one area of the borough has been effective in reducing the number of unallocated cases, and this action must be repeated elsewhere if this authority is to deserve public confidence in a crucial area of its operations.

  Overall, there was considerable activity on child protection cases but the quality of the social work done needs to be improved to enable sound judgments to be made on cases.

  It is clear that determined management action is needed on a number of fronts to ensure that the position improves. In view of this I am asking SSI to agree a plan of action with Southwark Council and to monitor progress closely.
  491
  Southwark council has asked Lambeth, Southwark and Lewisham area review committee to establish an independent inquiry into the handling of the case of Doreen Mason. That inquiry is being chaired by an independent lawyer. I understand that the inquiry should be completed by the early summer and that the outcome will be made public. I will then determine whether further action is needed on my part.

  Expenditure
  Mr. Fearn
  To ask the Secretary of State for Health if he will give the definitions for the purposes of statistics collection of the national United Kingdom expenditure on health care provision(a) for total public expenditure on health services, (b) for private sector health care provision and (c) for voluntary sector health care provision.

  Mr. Freeman
  The United Kingdom national accounts, prepared by the Central Statistical Office, define the components of net public expenditure on health care as follows:

  (a) Total final consumption on the NHS.

  (b) Public sector gross domestic fixed capital formation on health.

  (c) Current grants to the personal sector.

  (d) Current grants abroad.

  (e) Capital grants to the private sector.

  Private expenditure on health is defined as the sum of:

  (f) Payments to the NHS, ie "charges".

  (g) Consumers' expenditure on medicines.

  (h) Consumers' expenditure on private medical insurance.

  (i) Consumers' expenditure on spectacles.

  (j) Consumers' expenditure on medication.

  (k) Private sector gross domestic fixed capital formation.

  The voluntary sector is not separately identified in the United Kingdom national accounts.

  Mr. Fearn
  To ask the Secretary of State for Health if he will give the national United Kingdom expenditure on voluntary sector health care provision in money terms, for the latest 10 financial years for which figures are available.

  Mr. Freeman
  Expenditure by the voluntary sector on health care provision is not separately identified in the United Kingdom national accounts prepared by the Central Statistical Office.
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  Mr. Fearn
  To ask the Secretary of State for Health if he will give the total national United Kingdom expenditure on private sector health care provision from National Health Service funds in money terms, for the latest 10 financial years for which figures are available; and whether this includes the voluntary sector.

  Mr. Freeman
  None. NHS funded health care is, by definition, NHS health care.

  Mr. Fearn
  To ask the Secretary of State for Health if he will give figures for, or an estimate of, the amount of double counting of expenditure on health care provision when amounts are aggregated for national United Kingdom statistics on total national expenditure on health.

  Mr. Freeman
  We are not aware of any double counting either in the health expenditure figures for England which this Department prepares or in the summary figures for the United Kingdom which are prepared by the Central Statistical Office for the United Kingdom national accounts.

  Mr. Fearn
  To ask the Secretary of State for Health if he will give the national United Kingdom expenditure on voluntary sector health care provision from National Health Service funds in money terms, for the latest 10 financial years for which figures are available.

  Mr. Freeman
  The United Kingdom national accounts prepared by the Central Statistical Office do not separately identify voluntary health care provision from National Health Service funds.

  Registered Homes Tribunal
  Ms. Harman
  To ask the Secretary of State for Health if he will list(a) the chairs of the registered homes tribunal and (b) the wing members and their occupations.

  Mr. Mellor
  A list giving the Lord Chancellor's panel of chairmen has been placed in the Library.

  A separate list giving the Lord President's panel of members has also been placed in the Library.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of St. Albans.

Trident: Costs
Lord Gainford Lord Gainford asked Her Majesty's Government:
Whether the estimated cost of the Trident programme has increased or decreased over the last year.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, over the last year the forecast real costs of the Trident programme have decreased by £ 104 million.
Lord Gainford: My Lords, the Minister has given the House some valuable and encouraging information. Can he indicate whether this year's costs will show a similar or greater decrease?
Lord Trefgarne: My Lords, it is too early to say precisely. However, I hope that the revised estimate, which will be made towards the end of the year, will represent another modest saving on the earlier estimated cost. The pattern thus far has shown that, as the programme progresses, earlier estimates become firmed up.
Lord Irving of Dartford: My Lords, will the Minister agree that, according to the schedule, the increase must take place between now and 1992? Why, at a time when the super powers are engaged in discussions about eliminating 50 per cent. of nuclear weapons and when Mr. Gorbachev is talking about eliminating all nuclear weapons by 1992, are the Government proposing an eight-fold increase in our nuclear force? Would it not be much better to put this into some kind of negotiating round?
Lord Trefgarne: My Lords, the noble Lord's supplementary question contains at least three errors, if he will forgive me saying so. Perhaps the most important is his suggestion that the programme represents an eight-fold increase in our present forces. It represents no such thing.
Lord Mayhew: My Lords, will the Minister not agree that, in spite of the extraordinary and welcome changes now taking place in the Soviet Union and Eastern Europe, there is still a fair case for Britain maintaining her present nuclear capability? However, what possible reason can there be at this time for multiplying our nuclear capability several times — if not eight, then certainly four or five times? What are the reasons for that?
Lord Trefgarne: My Lords, the fact of the matter is that Polaris is coming to the end of its useful life. If we do not replace it, then far from increasing our nuclear capability we shall have none.
Lord Cledwyn of Penrhos: My Lords, will the Minister deal with the latter part of my noble friend's question? May we assume that the Government are prepared to put Trident into any arms talks?
Lord Trefgarne: My Lords, we have never said that we should never agree to including Trident in such talks. However, we are still a long way from that situation. When it comes into service, even if the 50 per cent. reduction referred to by the noble Lord has come to pass — and that is far from certain — Trident will still represent a tiny percentage of the strategic nuclear capability of the super powers. It represents what we regard as an irreducible minimum, if we are to maintain an independent nuclear deterrent. One cannot have less than the irreducible minimum.
Lord Hylton: My Lords, would it not be appropriate for Her Majesty's Government to follow the example of the great powers and turn their defence effort more and more towards non-threatening forms of defence?
Lord Trefgarne: My Lords, if the noble Lord is suggesting that we should cancel our Trident programme, the answer is: no.
Lord Mellish: My Lords, is the Minister aware that some of us believe it to be most sensible that Trident should constantly be put in a state of improvement and modernisation, and that that applies to all our deterrents? There is no point in having a deterrent if it is incapable of deterring.
Lord Trefgarne: My Lords, I am grateful for the noble Lord's intervention. The Labour Party is reassessing its defence policy. I hope that it reaches the same conclusion as the noble Lord.
Lord Mason of Barnsley: My Lords, will the Minister tell the House what the Ministry of Defence intends to do with the underspend?
Lord Trefgarne: My Lords, I am not sure to what underspend the noble Lord refers. The defence budget is set to increase steadily in the future by approximately 1 per cent. in real terms. The precise growth in real terms depends upon future inflation. As regards underspend, it is the case that we are spending less on defence procurement programmes than we had originally planned. That is not because we are reducing the size of the programmes but because we are now securing much better value for money. That is releasing funds for other much-needed purposes.
Lord Irving of Dartford: My Lords, as usual the Minister says a questioner is wrong without explaining why. Will he accept that whereas Polaris had three warheads, Trident may have eight and possibly 14 and that therefore the point made by the noble Lord, Lord Mayhew, is right? So is the statement I made. Will the Minister reaffirm the fact that it is important to put the missiles into some kind of negotiating machinery so that we can get rid of them?
Lord Trefgarne: My Lords, the noble Lord appears to know exactly how many warheads will be fitted to Trident and exactly how many missiles will be in service when the time comes. None of that information has yet been announced and, in most cases, it is highly sensitive and classified. I venture to suggest that the noble Lord is not yet in possession of it.
Lord Thorneycroft: My Lords, would it not be a very odd form of negotiation if a party were to put Trident on the table as a negotiating factor with all the world knowing that it was desperately anxious to get rid of it?
Lord Trefgarne: My Lords, as my noble friend rightly points out, that would be an act of the greatest folly.
Lord Paget of Northampton: My Lords, is the Minister aware that the truth of the matter is that Trident was always a non-starter and is now definitely a non-runner?
Lord Trefgarne: My Lords, I am often interested in the views of the noble Lord, if he will allow me to say so. I am afraid that his last remark bears the hallmarks of inaccuracy which has been a feature of some other suggestions he has made.
Lord Mayhew: My Lords, in his reply to me the noble Lord said that if we do not have Trident then we shall have no nuclear capability. I specifically said that there was a good case for maintaining our nuclear capability at its current level. However, I asked the noble Lord what reasons the Government have at this moment for multiplying by several times our nuclear capabilty.
Lord Trefgarne: My Lords, Polaris is coming to the end of its life and therefore has to be replaced by something. Beyond the mid-1990s, Polaris will not be a credible deterrent and therefore has to be replaced. It was decided that it should be replaced by the best of the submarine-based systems we could acquire, which is the Trident D5 system.

Scottish Air Traffic Distribution
2.44 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
When they intend to withdraw the directive under which civil aricraft proceeding from Glasgow Airport to the western hemisphere are compelled to land at Prestwick Airport almost immediately after take-off.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, we are at present considering, in consultation with my right honourable friend the Secretary of State for Scotland, a request from BAA plc for a review of Scottish lowland air traffic distribution policy.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that somewhat ambiguous reply. Is it not quite ridiculous to compel an aircraft which has just taken off on a transatlantic flight to land within a few miles of the point of take-off? Is he aware that that compulsion, according to the airlines, adds some £ 5,000, two additional take-offs and landings with all the safety considerations involved and adds three hours to the time of the round trip? What is the point of a Government, which believes in free enterprise, imposing a nonsense of that sort?
Lord Brabazon of Tara: My Lords, the traffic distribution rules for Prestwick date back many years, originally, in fact, to 1946. They were looked at again in 1978 and 1979, again in 1982, and in the 1985 White Paper we said that they would be reviewed this year if the airport did not show a steady improvement in its financial results. BAA has asked for such a review and therefore, as I said in my original Answer, we are considering whether it should take place.
Lord Carmichael of Kelvingrove: My Lords, is the Minister aware that the feeling in Scotland about Prestwick extends right across the party divide and that in another place the feelings of Members of all parties are extremely strong? Is he also aware that the defence of Prestwick is considered almost as a national symbol and that some of the figures produced suggest that Prestwick is not always treated with the fairness that one expects? Can the Minister tell the House whether it is true that, for example, Highland Express is charged £1,460 and £14.35 per passenger to land at Prestwick, whereas the same plane belonging to the same company is charged only £160 and £1.35 per passenger to land at Stansted? That is one of the reasons for such strong feelings regarding Stansted.
Lord Brabazon of Tara: My Lords, I am certainly aware of the feeling both ways in Scotland. Since BAA asked for the review, we have had representations from a great many people, some arguing for the retention of the traffic distribution rule and some asking for it to be swept away. Obviously, we shall have to take those matters into consideration in consultation with the Scottish Office, when we make our decision. Regarding landing charges, they are obviously more expensive at Prestwick because it is not well used and the airport has to cover its costs. Of course, it is limited by various international rules so that it cannot overcharge.
The Earl of Selkirk: My Lords, may I ask my noble friend whether he is aware that Prestwick has the finest weather record for aviation of any airport in the country and is used by not only Glasgow airport but by airports all over the country when fog is about? Therefore, it is a fundamental safety factor in aviation at present, and I ask the Minister to bear that in mind with BAA, which is anxious to lower its costs, possibly by selling off Prestwick. It should be deterred from doing so.
Lord Brabazon of Tara: My Lords, I am well aware that Prestwick has an excellent weather record and

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is used quite frequently as a diversionary airport. The traffic distribution rule to which I referred has nothing to do with whether or not BAA will close the airport but is concerned with whether transcontinental flights should be allowed to use airports other than Prestwick in Scotland. That is what we are arguing about.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that it is not a question of whether airlines use airports other than Prestwick in Scotland? Air 2000 is already using Glasgow. This is a question of whether he does Prestwick any service by making it compulsory to call there ridiculously close to the point of origin.
Lord Brabazon of Tara: My Lords, I appreciate my noble friend's point. That is why BAA has asked for a review. At the moment the rules say that all transcontinental traffic must pass through Prestwick and not go directly to Glasgow or Edinburgh. That is why BAA has asked for a review, and that is why we are currently considering whether or not to have a review.
Lord Bruce-Gardyne: My Lords, can my noble friend advise us as to how long he thinks it may take for our fellow Scots to recognise the benefit which will accrue to the Scottish economy as a whole when it is accepted that Prestwick has no future?
Lord Brabazon of Tara: My Lords, as I said earlier, feelings in Scotland run high on this issue —the noble Lord, Lord Carmichael, said they were "extremely strong". Therefore, in deciding whether to have a review we are consulting the Scottish Office and will make our decision fairly shortly.

Peterhead Coastguard Centre: Closure
2.50 p.m.
Baroness Elliot of Harwood Baroness Elliot of Harwood asked Her Majesty's Government:
Why the proposed closure of the Peterhead Coastguard Centre has not been postponed pending the outcome of the inquiry into the Piper Alpha disaster.
Lord Brabazon of Tara: My Lords, Peterhead Maritime Rescue Subcentre took no part in the Piper Alpha incident, except to assist with message distribution, a task which could have been done by any other station. Aberdeen Maritime Rescue Co-ordination Centre co-ordinates all major and oil related incidents off the east coast of Scotland. The closure of Peterhead will allow some strengthening at Aberdeen, which will be the best manned station in the United Kingdom apart from Dover. If the Piper Alpha Inquiry should make any recommendations about the co-ordination of search and rescue, they will be given the most urgent consideration.
Baroness Elliot of Harwood: My Lords, the noble Lord's Answer is not exactly what I had hoped for. Will not the closure of the station, and any others,
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adversely affect the safety of those using the sea? Indeed, without the help of Peterhead station during the Piper Alpha disaster a terrible situation could have been even worse.
Lord Brabazon of Tara: My Lords, 1 am afraid I have to disagree with my noble friend. As I said in my original Answer, all that Peterhead did during the Piper Alpha incident wasto relay a number of messages, which could have been done by any other Coastguard station. Therefore, we remain convinced that Aberdeen will in fact, with a greater number of people there, be in an even better position to deal with major incidents such as that which occurred on Piper Alpha.
Lord Grimond: My Lords, is it then the case that the allegations at any rate are untrue that Peterhead, if not directly involved with the disaster, took a considerable amount of pressure off Aberdeen at a vital moment when Aberdeen was deeply involved? Secondly, what damage would there be if this closure was postponed until after the inquiry? It seems anomalous to have an inquiry and to make major decisions in the area just before it is due to report.
Lord Brabazon of Tara: My Lords, first, we do not accept that it is a major decision so far as the Piper Alpha inquiry is concerned. As I said in my original Answer, all that Peterhead did was to assist with message distribution, which is a task that could have been done by other Coastguard stations. Peterhead and Aberdeen are only 24 miles apart, which is much closer than most Coastguard stations. The flank stations will in future be Forth and Pentland, which can assist in a similar way. Therefore, I simply do not accept that it would be right to change our decision. All the arrangements for the closure have been made. Six extra staff are going to Aberdeen, of whom four will be transferring from Peterhead. Peterhead will remain as a sector office. A person will be in the existing building so there will still be facilities for co-ordination with the local people.
Lord Underhill: My Lords, how can the Minister say prior to the outcome of the Piper Alpha inquiry that the closure of Peterhead will not present a problem? Surely he is making a judgment in advance of what the inquiry may report. The inquiry may report a serious need for increased attention to the North Sea.
There is one point in the previous supplementary question which the Minister did not answer. What would be the cost if the closure was postponed, as I believe most sensible people consider it ought to be?
Lord Brabazon of Tara: My Lords, I perhaps disagree that most sensible people think that should be the case. We have obviously looked into this matter extremely carefully and have made our decision. If the inquiry recommends any changes in the Coastguard structure in North-East Scotland, we will of course give them full consideration. However, that does not necessarily mean that Peterhead Coastguard station has to be kept open.

Road Traffic Law Review
2.54 p.m.
Lord Brougham and Vaux Lord Brougham and Vaux asked Her Majesty's Government:
When they propose to bring forward legislation to implement the recommendations in the North Report on the road traffic law review.
Lord Brabazon of Tara: My Lords, the Government announced their proposals to reform road traffic law in the White Paper The Road User and the Law on 7th February. Legislation will be brought forward as soon as parliamentary time can be found.
Lord Brougham and Vaux: My Lords, I should like to thank my noble friend but I find it difficult to do so. Is he aware that RoSPA gave evidence, along with many other organisations, to Dr. North and 95 per cent. of its recommendations were accepted? Is he further aware that if this White Paper is not implemented in the next Session, road safety will be severely affected and that his right honourable friend's plans for a reduction in all accidents by one-third by the year 2000 will be extremely hard to accomplish?
Lord Brabazon of Tara: My Lords, I cannot go very much further in saying what legislation will or will not be announced in the normal way in the Queen's Speech for the next Session. However, I re-affirm that the Government are determined to improve road safety and that we are committed to cutting road casualties, especially those involving death or serious injury, by one-third by the year 2000.
Lord Underhill: My Lords, I appreciate that the Minister cannot determine what legislation may be brought forward in the next Session, but have we not heard before the phrase that legislation will be introduced as soon as parliamentary time allows? We are still waiting—I believe the noble Lord sympathises with us on this — after three and a half years for the implementation of the Horne Report on street works. Does not the preface to The Road User and the Law say that, following legislation, it is proposed to issue a clear and simple guide to road law in association with the planned revision of the Highway Code? If that is to be done, surely the Government should be getting on with the job of preparing legislation now so that it can be introduced in the new Session.
Lord Brabazon of Tara: My Lords, I am sorry to disappoint the noble Lord but I cannot go further than I have already. The Government's plans for legislation will be announced in the normal way in the Queen's Speech. I appreciate that the noble Lord would like us to get on and legislate on this matter, as he would on the Horne Report, as he has so often told me. I hope that that legislation will come forward speedily too, but there is competition for legislative space and we must wait to see what happens.
Lord Nugent of Guildford: My Lords, is my noble friend aware that the North Report was particularly
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penetrating in revealing the anomalies in some of the sentencing for road offences? Is he further aware that it is most desirable that sentencing should be in line with modern developments, with some sentences being more severe and some less? Therefore, in the interests of general confidence in the fairness of the courts when dealing with road offences, will he endeavour to obtain a better priority for this legislation than it now seems to be getting?
Lord Brabazon of Tara: My Lords, I can only draw my noble friend's remarks to the attention of my right honourable friend the Secretary of State.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that we on this side of the House would warmly support any legislation which embodies the recommendations in this excellent report? We would do so with enthusiasm if the noble Lord's right honourable friends would be prepared to drop some of the irrelevant and unpopular legislation currently going through Parliament.
Lord Brabazon of Tara: My Lords, we on this side of the House probably take a different view as to what is unpopular and irrelevant, so I regret that I cannot give the undertaking that the noble Lord seeks.
Lord Stoddart of Swindon: My Lords, I support most of the recommendations in the North Report and join other noble Lords in the hope that we shall have early legislation, but is it not important that when legislation is enacted it is properly enforced? Is the noble Lord aware that much legislation, particularly relating to speed limits on heavy lorries and express coaches, is not properly enforced? Is there anything that the Government can do to ensure that speed limits, especially on heavy lorries and express coaches, are enforced?
Lord Brabazon of Tara: My Lords, that is a slightly different question to whether or not we intend to introduce legislation. Enforcement is a matter for the police. Obviously we in the Department of Transport very much hope that the rules we make are enforced and obeyed. The noble Lord may not be aware that my noble friend Lord Brougham and Vaux has succeeded in the ballot for a debate on this subject to be held on Wednesday, 5th April. I am delighted about that and I am sure it will be an interesting debate.
Lord Brougham and Vaux: My Lords, I hope that my noble friend will take the strong feelings about this report in the House to his right honourable friend and also the fact of the wide support that it receives outside. Legislation to implement this report is very urgently needed. As regards the anxieties of the noble Lord, Lord Cledwyn, I would much rather see the North Report than the football Bill before your Lordships. Perhaps my noble friend will also have a word with the Leader of the House who is also a Member of the Cabinet, in order that he can press that we have this legislation in the next Session. It is vitally urgent. It will save a lot of hospital beds.
Lord Brabazon of Tara: My Lords, I am sure that my noble friend the Leader of the House has noted my noble friend's views.

Business
3 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Report stage of the Companies Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Civil Legal Aid (Matrimonial Proceedings) Regulations 1989, the Legal Aid (Functions) Order 1989 and the Legal Advice and Assistance (Scope) Regulations 1989, will be taken.

Companies Bill [H.L.]
Report received.
Clause 2 [Accounting records]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 1:
Page 2, line 39, at end insert—
("() A parent company which has a subsidiary undertaking in relation to which the above requirements do not apply shall take reasonable steps to secure that the undertaking keeps such accounting records as to enable the directors of the parent company to ensure that any balance sheet and profit and loss account prepared under this Part complies with the requirements of this Act.").
The noble Lord said: This amendment repeats a point that we raised at the Committee stage of the Bill. It provides what we regard to be an important technical improvement of the original wording. In our view it is important that holding companies ensure that group accounts meet the requirements of this Act. We believe that this amendment achieves that. It will also achieve something a little extra. It will effectively require parent companies to ensure that unincorporated subsidiaries which, I remind your Lordships, are not subject to the Companies Act, maintain sufficient records to enable proper group accounts to be prepared. We believe that this amendment makes a minor improvement to the Bill. It is in that spirit that I beg to move.
Lord Lloyd of Kilgerran: My Lords, I have considerable sympathy with the amendment that the noble Lord has presented so well to your Lordships. But I wonder whether the control that he is seeking regarding business undertakings goes far enough. I understand that the Government have some sympathy towards this amendment. I wonder whether they have considered that the amendment should start off in this way:
"A parent company which has an undertaking"
and not "a subsidiary undertaking". To leave out the word "subsidiary" at that stage will mean that the control exercised by this amendment will go deeper than it would by leaving in the word "subsidiary". That is an important matter as regards the control of companies, as the noble Lord, Lord Williams, has indicated.
As I see it, the trouble arises because the Bill is spattered with definitions. Therefore I hope that your
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Lordships will not mind if I go through the definitions of what constitutes a parent company, a subsidiary undertaking and an undertaking, in order to establish that it would be preferable to have an amendment without the word "subsidiary" being included in the way that I have indicated; namely,
"A parent company which has a subsidiary undertaking"
should be,
"A parent company which has an undertaking''.
I hope that your Lordships will allow me to take you through this rather convoluted argument. The definitions are to be found on page 39 of the Bill at the end of Clause 20. There your Lordships will see halfway down that page that a "subsidiary undertaking" is defined by reference to Sections 257 and 258 of the Companies Act 1985. A little lower on the same page the definition of "undertaking" and similar expressions are to be found at Section 259(1) to (3) in the Companies Act 1985.
A little higher up there is a definition of what a,
"parent undertaking (and parent company)"
comprises. For the moment I need not bother your Lordships with that. If your Lordships would care to look at the definition of "subsidiary undertaking" in Sections 257 and 258 of the Companies Act 1985, that is to be found earlier in the Act. At page 33 of the Bill, Clause 19 is headed "Parent and subsidiary undertakings". The whole of Section 257 of the Companies Act 1985 is included here which is itself helpful. The first subsection of that says:
"(1) The expressions 'parent undertaking' and 'subsidiary undertaking' in this Act shall be construed as follows: and a 'parent company' means a parent undertaking which is a company".
The definition continues:
"(2) An undertaking is a parent undertaking in relation to another undertaking, a subsidiary undertaking".
Therefore it rather implies that we are there dealing with subsidiary undertakings that are companies.
One would have hoped that the situation might have been clarified by subsection (3). Here we have somewhat of a gobbledegook definition that,
"(3) An undertaking is also a parent undertaking"—
which by definition in the Act is a company—
"in relation to another undertaking, a subsidiary undertaking".
That brings us back again to the position of a subsidiary undertaking—
"if it has a participating interest in the undertaking".
There is then given a further definition.
Certain confusion arises again as regards subsection (4) which states:
"A parent undertaking shall be treated as the parent undertaking of undertakings".
The parent undertaking is a company and I suppose that the undertaking must be a company. As one goes through that section one gains the impression that there is some confusion as to what is meant by "an undertaking". One then turns to Clause 20. That helpfully repeats Section 259 of the Companies Act 1985. It says:
"In this Part 'undertaking' means"—
presumably that means Part I of the Companies Act 1985—
"(a) A body corporate or partnership, or—

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(b) an unincorporated association carrying on a trade or business, with or without a view to profit".
I have failed to find what is meant by "association" in this Bill. I have perhaps missed the definition. If I have, no doubt it will be pointed out to me with some enthusiasm.
Subsection (2) of this part makes reference to shares and then goes on to describe the position of undertakings with and without a share capital. One hoped that in subsection (3) on page 36 some light would be thrown on the position. Subsection (3) confuses the matter a little further. It says:
"Other expressions appropriate to companies shall be construed, in relation to an undertaking which is not a company, as references to the corresponding persons, officers, documents or organs".
It goes on to say:
"This is subject to provision in any specific context providing for the translation of such expressions".
I assume that a little glimmer of light is being introduced and that the Treaty of Rome may be of some significance. In order to get the definition right one has to look at translations, because subsection (3) is,
"subject to provision in any specific context providing for the translation of such expressions".
I apologise for my legalistic approach, but this is a matter of some importance to persons in industry who must try to construe convoluted passages in the Bill regarding the scope of "susidiary company", "subsidiary undertaking" and "parent undertaking". On that analysis it seems to me that the internal control, which the Government apparently seek through the amendment, is incomplete. It may not include partnerships associated with the parent company. It covers unincorporated associations, whatever that may mean, but it may not include research associations associated with the parent company, unless of course the Government say that "associations" apply only to research associations. However, that is not the way to construe the question. Some loss of control appears to arise from accepting the amendment in its present form.
In conclusion, I should like to thank the noble Lord, Lord Strathclyde, for the letters he has sent to me which clear up a number of points raised during discussion on various parts of the Bill. However, one letter which I received this morning says that in Part IV of the Bill—not necessarily in this part—the Government still have in mind what to do with unregistered companies. I suppose that that means unregistered undertakings. It seems that this letter adds to the difficulty of construing precisely what is the scope of the amendment. I support strongly the amendment as put forward by the noble Lord, Lord Williams, but I do not think his presentation of it goes far enough.
Lord Strathclyde: My Lords, I should like to thank both noble Lords for taking part in the debate. Notwithstanding the legalistic views of the noble Lord, Lord Lloyd of Kilgerran—I think he described them as such—I must point out that the provision is useful only for consolidated accounts and that therefore it is not sensible or meaningful to leave
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out the word "subsidiary". Furthermore, there is no confusion over what is meant by "undertaking" or "subsidiary undertaking". They are not restricted to Companies Act companies. As the noble Lord said, they could, for example, be partnerships as well as a number of other things.
Subsection (2) and (3) of new Section 259 are intended to adapt references to other forms of body in the Act which are appropriate only for companies. In our view they have that effect and are not in the least confusing. No one else has suggested that there may be a difficulty here.
In Committee we debated a somewhat similar amendment tabled by the noble Lord, Lord Williams, in response to which I said that the Government had some sympathy with the proposal and would consider it further. The previous amendment was unclear in several respects and could not be accepted. However, the version now before us is more direct in that the accounting records referred to are clearly those necessary to enable the proper preparation by the parent company of the consolidated accounts. That is a proper concern of the directors of the parent company. The Government are happy to accept the amendment as a modest but important impovement to company law. As I said in Committee, it will serve to remind directors of parent companies of their responsibility to make sure that they have adequate information about subsidiary undertakings which fall outside the Companies Act—for example, United Kingdom partnerships and companies incorporated outside Great Britain.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lords, Lord Strathclyde and Lord Lloyd of Kilgerran. The noble Lord, Lord Lloyd, has a serious point in regard to the difficulty of defining what is a "subsidiary" and what is an "undertaking". This runs through the whole Bill and we had many discussions in Committee on this point. Indeed, the fact that there are two different versions of what is a "subsidiary" causes confusion in the lay mind and even in the minds of legal experts such as the noble Lord, Lord Lloyd. I am glad, however, that the drafting of my amendment is more acceptable to the Government than that of the one we moved in Committee. I hope that, having noted what the noble Lord, Lord Lloyd, said about the difficulty of defining "subsidiary", the Government will accept my thanks for adopting Amendment No. 1.
On Question, amendment agreed to.
3.15 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 2:
Page 2, line 39, at end insert
("() If the auditor of a public limited company has reported to the directors any criticisms of the accounting records or internal controls maintained by the company or its subsidiaries during the financial year which in the opinion of the auditor are significant, the directors shall state that fact in the notes to the accounts, and indicate what steps they propose to take.").
The noble Lord said: My Lords, Amendment No. 2 follows on from a discussion in Committee on accounting records and internal controls maintained by the company. This amendment is rather different from the one I moved in Committee. I have accepted

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the government argument that to introduce on a statutory basis a responsibility for internal controls in the same way as it is found in the Banking Act and the Building Societies Act for banks and building societies would not be appropriate for the generality of Companies Act companies. I accept that banks and building societies have different kinds of activities and that the provision for enforcement of internal controls contained in the two Acts governing those types of company is not appropriate for industrial companies. Nevertheless, in Committee the Government recognised the importance of proper internal control, and all noble Lords will agree that that is right and proper. The amendment is designed to ensure that where there are criticisms by auditors of internal procedures these are brought to the attention of the directors and, through notes in the accounts, to the attention of the shareholders. Furthermore, the notes in the accounts should indicate what steps the directors propose to take to remedy the defects brought to their attention by their auditors.
The opinion of the auditor is significant. It should be left to the professional judgment of the auditor. After all, he is appointed by the shareholders to protect their interests and is professionally equipped to make judgments of that kind. He should be entitled to make judgments and should not have to put them, as is present practice, in an audit letter to the boards of companies. He should be entitled to know that his opinion will be revealed to shareholders. It is also our view that shareholders should be entitled to know what boards of directors who receive these comments from auditors propose to do about them. Moreover when shareholders come to elect the directors of their company they will no doubt wish to bear in mind the measures which directors are prepared to take in order to meet the criticisms that have been levelled at them and their internal controls by their auditors.
Further, I believe that an amendment along the lines of the one which I am suggesting here would be a useful step—not a critical step, but a useful one—in the fight against fraud. I say that because slack systems encourage fraud, and absence of proper reporting duty may encourage directors who are slack or idle. Directors who have been criticised in the audit letter should, in order to protect their shareholders against any possible fraud within the company, have a duty to reveal such criticisms to the shareholders whom they represent.
In many senses this is a milder amendment than the one which I moved in Committee. Nevertheless it marks a most important point; that is, that internal controls are of vital importance in the running of our companies. I do not believe that there is any difference between the Opposition and the Government on the matter. We seek to ensure that shareholders are aware of criticisms which may be made by auditors and that they should be able to judge their board of directors on the responses which they make to such criticisms. I beg to move.
Lord Lloyd of Kilgerran: My Lords, the noble Lord will be very pleased to know that I shall only intervene briefly on this occasion in order to declare
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my support for the amendment, subject of course to what I said before. I should like to thank the noble Lord, Lord Williams, for the courtesy with which he received my long speech on these legal matters.
It seems to me that what is suggested here would be a useful step in the fight against fraud, in that where an auditor has made some kind of criticism or other, the directors should state the fact in the notes to the accounts instead of, as is now the practice, only having a letter from the auditor in the matter. I also think it is right that the directors should indicate what steps they propose to take.
Lord Benson: My Lords, in my view this amendment should not be passed for three reasons. First, the statutory duty of the auditors is to report to the shareholders and not to the directors. It is extremely important that that statutory responsibility should be absolutely clear and not confused by any other reporting obligation such as that indicated in the amendment. Secondly, if any point of significance arises on:
"the accounting records or internal controls"—
the words contained in the amendment—which is of sufficient importance to bring it to the attention of shareholders, the auditor has the statutory obligation, not the right, to refer to it in his report to the shareholders. He would do so under one of three aspects, all of which are contained in the Companies Act: either the true and fair view, the state of the books, or information and explanations —which is a widely embracing provision. All those factors automatically cause any such matter to be drawn to the attention of the shareholders in the auditor's report.
I agree with the noble Lord, Lord Williams of Elvel, that internal controls are of vital importance; but if they are so weak as to require comment by the auditor—I am not referring to small matters which can be corrected by the directors—then such comment must be included in the audit report.
The third reason why I think that what is proposed in the amendment would be unsatisfactory is that I believe it would defeat its own purpose. At the end of the audit it is the invariable practice of the auditor to have discussions with the directors on a wide-ranging agenda; that is, maters of general interest, matters of comment, and so on. If at some later date the general advice or discussion are going to be interpreted as having been a criticism, what will happen is that the auditors will not tender such advice at the end of the audit or in fact enter into those extremely valuable discussions. For all those reasons, it would be unwise to accept the amendment in its present form.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, I thank the noble Lord, Lord Williams of Elvel, for introducing the amendment which was supported by the noble Lord, Lord Lloyd of Kilgerran. At first sight this proposal looks quite attractive. It takes a different approach to the issue of a company's internal controls from that of the amendment moved by the noble Lord in Committee, on which, I think it is fair to say, there was a difference of philosophical approach between

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the Government and the noble Lord. Nevertheless I believe that this amendment, were it to be accepted, would do more harm than good and I shall shortly explain why.
The proposal would turn a private and extremely important and useful part of the relationship between a public company and its auditors into a more public and rather less useful exercise. The noble Lord's approach seems to be based on the blind assumption that the auditors would continue to comment on, and criticise, the accounting records and internal controls of the company as at present in the report to management which is sent to the company after an audit. Under the noble Lord's proposals the auditors would draw attention to points of significant criticism which the directors would then be required to disclose in the accounts. The directors would also be required to set out proposals for corrective action.
What I fear the noble Lord ignores is that the change itself would almost certainly have a profound and adverse effect on the way the auditor prepares the report to management. He would almost certainly be much more cautious. The auditor would think very hard before requiring the company to make the disclosure to which this amendment refers, which could have far-reaching repercussions. He would be under no statutory obligation to make such a report. The auditor would moreover be placed in the unenviable position of having to decide whether a criticism was significant. He may also come under pressure—or feel that he is under pressure—either not to report on such matters or to conclude that matters on which he has reported are not significant.
On the other hand the auditor may be concerned that he could be legally liable if he does not make comments. Either way, the effect of the amendment would be to put the relationship between the company's directors and their auditors on to a different and less satisfactory basis. A company genuinely wanting to improve its internal control systems, but not wanting to parade this in public, might look to someone other than the auditor. There is no sense in pushing companies in that direction.
What I have said so far is based largely on practical considerations: the amendment will not deliver what the noble Lord has promised. That argument must be overlaid with a more general difference of approach between the Government and the noble Lord about the role of auditors and the internal management of a company's affairs.
The Government's view is that the essential role of auditors under company law is to provide an independent verification of the information which the company is required to disclose to its shareholders in its accounts. In doing so, the auditors are required by law to check the quality of the company's accounting records. There will also be cases where the auditor concludes that a company's system of internal controls is so poor that it cannot make a proper audit judgment. In those cases, weakness of the internal control system will be reflected in a qualified auditor's report. I believe that that is the second point made by the noble
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Lord, Lord Benson. To that extent this amendment overlaps existing safeguards.
Further, under the law, the auditors are essentially concerned with the output of the company's accounting systems, not with the quality of the systems themselves. Of course the auditors may well report to the management of the company on the quality of the control systems. That is common practice and I am sure that it is entirely beneficial. I believe that that is the third point which the noble Lord, Lord Benson, made a short time ago.
I believe therefore that it would be wrong to confuse the auditors' public function, carried out on behalf of the shareholders, and the tasks that they carry out on behalf of management. The amendment introduces a confusion in that way, which is why we oppose it. Indeed, that was the first point made by the noble Lord, Lord Benson, for opposing the amendment. The Government believe that responsibility for the internal management of companies should rest with the boards of these companies. In carrying out its responsibilities for the management of the company, the board is accountable to the shareholders, not to the auditors.
I believe that in the end the amendment would do considerably more harm than good and would unduly interfere with the internal affairs of the company. Therefore, for the reasons I have outlined, I ask the noble Lord, Lord Williams, whether he would care to withdraw it.
3.30 p.m.
Lord Williams of Elvel: My Lords, perhaps I may reply first to the Secretary of State on the question of the role of auditors. I do not believe that the role of auditors is a matter of great political philosophy. We, from the Opposition, have not moved and passed the Financial Services Act, which lays the role of policeman on auditors. We, from the Opposition, have not moved and passed the Banking Act, which lays the role of policeman on auditors. We, from the Opposition, have not moved and passed the Building Societies Act, which also leaves the role of policeman fairly and squarely with auditors. The Government have laid burdens on auditors in successive pieces of legislation.
Lord Young of Graffham: My Lords, perhaps the noble Lord will forgive me for intervening. On those three pieces of legislation, we were of course concerned to protect members of the general public. In this instance we are looking at how the auditors report to the shareholders of a company in respect of their own interests. I suspect that the test is different.
Lord Wiliams of Elvel: My Lords, it may well be, but the auditors are appointed by the shareholders and not the general public. If the auditors are to be policemen, as the Government have decided in those three Acts which I mentioned, I do not see why they should not be reporting openly and fairly to shareholders as well as to the Government on behalf of the general public. I do not see that there is a great difference of opinion. The accounting profession complains bitterly that accountants are being made

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more and more policemen of the system rather than auditors in the old fashioned sense, as the Secretary of State tried to indicate. Nevertheless, I will leave that issue and come to the practical points.
We are here trying to define the difference between an audit letter and an auditor's report. That essentially is the object of the exercise. The audit letter, and discussions which follow it, are produced by auditors to boards of directors and indicates those areas where an auditor, having performed his audit, feels that there are problems in the accounting systems of the company which need rectifying.
All that is fair and proper. There may be many areas which are not, in the words of the amendment, "significent". Small matters which come to the attention of auditors and need correction will be reported in the audit letter, which will be discussed, as is right and proper, with the management of the company. At the other end of the scale, as the noble Lord, Lord Benson, points out, there is the qualification of the audit report. To have a qualification of an audit report is a serious matter for any company, especially a public company.
We are seeking to establish an intermediate situation where there is no qualification of the audit report, with all that that implies, but where nevertheless the shareholders are aware of any "significant" deficiencies in a company's internal control; in other words, parts of the audit letter, which of course will be discussed by the auditors with the board of directors, are literally made public.
I am afraid that I do not see that that would disturb the position of auditors. They would still be in a position to criticise. Indeed, they would be able to criticise with a little more authority than they do at the moment. They would say to management, "We have this criticism," the underlying persuasive threat being that if the directors do nothing about it they will be forced in the following year to declare that it is significant and should be published in the report.
I do not believe that there is a difference in philosophy on the role of auditors or that the practical difficulties mentioned by the noble Lord, Lord Benson, and the Secretary of State are of tremendous significance. Nevertheless, this has been a useful debate. The debate may well be carried on as we progress to Third Reading and when the Bill goes to another place. It is an important area. All your Lordships are concerned that there should be a proper system of internal controls in our industrial companies. Having debated the matter and having heard what the noble Lord, Lord Benson, to whose words I always pay attention, and the Secretary of State, to whose words I do not always pay attention, have said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [A company's financial year and accounting reference periods]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 3:
Page 4, line 15, leave out from ("is") to end of line 16 and insert ("required to be made up (by its constitution or by the law under which it is established), whether that period is a year or not.").
The noble Lord said: My Lords, the amendment clarifies new Section 223(4). That subsection is intended to explain what is meant by a financial year in relation to unincorporated undertakings and bodies corporate which are not companies within the meaning of the Companies Act. The Bill states at present that a financial year shall be any period in respect of which a profit and loss account is made up. It has been pointed out to us that an undertaking may make up any number of profit and loss accounts during a year for different purposes, quite possibly covering different periods. We agree t hat that would make it difficult to determine the body's financial year. The amendment makes that more precise by referring to any period in respect of which the body is required to make up a profit and loss account, whether by its constitution or by the applicable law. I beg to move.
Lord Williams of Elvel: My Lords, we believe that this is a useful amendment. It clears up a difficulty which was previously mentioned. We have no problem with it.
On Question, amendment agreed to.
Clause 4 [Individual company accounts]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 4:
Page 6, line 22, leave out second ("the").
The noble Lord said: My Lords, with the agreement of the House, I shall also speak to Amendment No. 10. The noble Lord, Lord Bruce of Donington, pointed out on the first day of consideration of the Bill in Committee that the accountancy profession was accustomed to refer to "the state of affairs" of a company rather "the state of the affairs", as the present text of the Bill does in two places. The noble Lord moved an amendment which would have removed the word "the" in new Section 226(2) but not in new Section 227(3). The two amendments simply remove the word "the" from the two places where it is redundant. This is simply tidying up. There is no change of substance. I beg to move.
On Question, amendment agreed to.
Viscount Caldecote Viscount Caldecote moved Amendment No. 5:
Page 6, line 25, at end insert—
("(2A) The profit and loss account of a public limited company shall also show the expenditure of research and development which has been charged against profits.").
The noble Viscount said: My Lords, with the leave of the House I shall speak also to Amendment No. 7. We had a considerable debate in Committee on a similar amendment. In line with comments then made, the amendment has been slightly altered to apply to plcs only. It is an entirely sensible change and makes the amendment more logical, as I shall explain.
As I said in Committee, the amendment has two purposes; first, to ensure that the accounts give a true and fair view, and, secondly, to remove or at least weaken disincentive to investment in research and development. Any view of the accounts, other than a short-term view, requires that that

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information should be given, if a true picture of the company in the longer term is to appear in the accounts.
As I also said in Committee, there is a major disincentive to investment in research and development because of the reduction in profit that occurs when that research and development expenditure is deducted in the profit and loss account. If no clear reason is given, the share price almost inevitably falls if a major increase in research and development expenditure occurs in one year. The company becomes more attractive to predators mounting a takeover bid, and as that applies only to plcs it is entirely logical that the amendment should apply to plcs only.
In the United States such disclosure is mandatory; all companies make it. As a result, when large expenditure is made on research and development, the profits fall for a year or two, but the share price increases because analysts see that the company is investing for the long term. Without adequate investment in the development of new products, the company has no long-term future, whereas well directed, market-led development expenditure ensures long-term prosperity of the company even though the profits may decline in the short term.
Nationally, greater investment in new competitive products is urgently needed if the massive deficit on our overseas trade in manufactured goods is to be corrected. In Committee, all speakers except my noble friend Lord Strathclyde on the Front Bench supported the amendment. He accepted that disclosure is desirable, but opposed the amendment because the Government prefer to achieve the same results through SSAP 13 which of course is not mandatory because it applies to non-public companies. That objection has now been removed.
My noble friend further stated that Her Majesty's Government were not keen to add another regulation to the Bill. However, he recognised the strength of feeling and said:
"perhaps I could take it away and come back at Report stage; then we could discuss it further". — [Official Report, 30.1.89; col. 904.]
So far as I can see, my noble friend has not come back with any amendment on the point.
He also pointed out that the Secretary of State has powers under Clause 18 to amend the disclosure requirements. I have considered that point very carefully, but if in this case such delegated power may be necessary, what is the objection to making this simple amendment to the Bill now in order to remove any doubt on the issue, which the Government agree is important?
The only outstanding reason given by the Government for opposing the amendment is that it adds unnecessarily to the Bill. The two amendments add about six lines to a long Bill on an important substantive matter affecting the prospects and prosperity of companies and the national economy. Compare that with page after page of regulations relating to auditors' powers to obtain information, registration of company charges and the like. All are no doubt important matters in their way, but with
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little relevance to the creation of wealth and the increased sales of British companies which become increasingly important as the days go by. I submit that the case for the amendment is overwhelming and that the reasons put forward by my noble friend for opposing it are unconvincing. I beg to move.
Lord Ezra: My Lords, I wish to support the amendment moved by the noble Viscount, Lord Caldecote. As he rightly recalls, on 30th January at Committee stage we went into the proposal very thoroughly. He amended what was then proposed in order to leave out companies which were not plcs. He has pointed out the vital importance for the growth of the economy of this country and the success of public companies that there should be an increasing amount of wealth devoted to research and development. That view has been many times reinforced by debates in your Lordships' House. Every time we have debated it and the Secretary of State has been present he has fully supported it.
Therefore it is difficult to see why such an obvious requirement should not exist for companies in the future, in this rapidly moving technological age in which we live, to reveal what companies spend on research and development. As someone who has been involved in a number of companies, I entirely agree that we do not wish to burden them with having to reveal more than is absolutely necessary in their annual reports. However, times change, priorities change. Research and development have now become such an important issue, with the creation of the single European market and the global economy in which we now live, that I should have thought that the Government would be the first to recognise that greater importance should be given to it. Therefore I very much hope that your Lordships will support the amendment and that the Government will also see fit to do so. The Minister pointed out in the previous debate that he would wait to see what amendment was proposed. A very reasonable amendment has now been put forward, and I very much hope therefore that the Secretary of State and his colleagues will support it.
3.45 p.m.
Baroness White: My Lords, I wish to speak very briefly in support of the amendment moved by the noble Viscount, Lord Caldecote, and supported by the noble Lord, Lord Ezra. I do so as a member of reasonably long standing of the Select Committee on Science and technology of your Lordships' House.
The noble Lord, Lord Gregson, is unfortunately not able to be in his place today but all of us who have been members of that committee have discussed the matter at considerable length. It has been referred to in reports from the Select Committee under the chairmanship of the noble Lord, Lord Sherfield, and particularly in reports on civil research and development. I hope that the Government will appreciate that there is the strongest possible feeling about the amendment among Members of the House who have been concerned with civil research and development. We are all of the opinion that the objective of the amendment is desirable. I very much hope that there will not

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be any unnecessary obstruction on the part of the Government when a thoroughly desirable amendment has been placed on the Marshalled List.
Lord Auckland: My Lords, I too hope that the Government will give serious thought to the amendment moved by my noble friend Lord Caldecote and supported by the noble Lord, Lord Ezra. Medical research is becoming more and more important in the country. Although the pharmaceutical industry, with which I have no financial connection, is often slated by governments because of the enormous profits it makes, much of the research which the industry carries out is responsible for the decrease in death from childhood cancers and other illnesses. I believe that the amendment will encourage more medical research. It is right that the Government should give it very serious thought in view of the amount of valuable research carried out these days.
Lord Bruce-Gardyne: My Lords, perhaps I might intervene briefly. First, I wish to apologise to your Lordships that I was not involved in discussions at the Committee stage. I had hoped to be able to do so but, unfortunately, at the moment, I am not entirely master in my own house.
I listened carefully to the most persuasive arguments in favour of the amendment from my noble friend Lord Caldecote and the noble Lord, Lord Ezra. I confess, however, that I still have some doubts. My doubts centre on this simple point. I should have thought that the accounts of a public company were first and foremost overwhelmingly for the shareholders. It is a worry to me that, particularly nowadays when we have some public companies with enormous numbers of small shareholders—of course I declare an interest as a director of the TSB, which is an obvious example in this context—we have a battle to make sure that accounts of the company are comprehensible to shareholders with limited experience.
Your Lordships will know that under the terms of the Bill it may well be that we shall authorise simplified accounts for large shareholders but we have not reached that point yet. While it does not exist, I must say that I cannot believe that it is altogether wise to add a stipulation like this to complicate further the information to which shareholders are entitled, and which for many of them is quite difficult to comprehend as it is. I personally have some doubts about the wisdom of accepting the amendment.
Lord Mottistone: My Lords, I wish to support the amendment of my noble friend Lord Caldecote. I think that his argument was very convincing indeed, particularly on the points he made about the practice in the United States. The CBI is neutral; its members say that they detect a possibility that the proposal would need a great deal of work. I do not suppose that matters because people have to work, but it is about the only adverse factor that I have heard.
What my noble friend Lord Bruce-Gardyne had to say is a warning, but as life moves on shareholders become more and more aware of the details of
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accounts. Many of the better companies present their affairs in such a way as to make it easy for both employees and shareholders to understand what the accounts seek to portray. So, on balance, I should have thought that the amendment needed support and I hope that the Government will be able to give it.
Lord Diamond: My Lords, when I see an amendment down in the names of the noble Viscount, Lord Caldecote, and the noble Lords, Lord Ezra and Lord Gregson, I find it is scarcely necessary to read or listen to what they have to say as it will obviously be a wise proposal. But I am bound to say that I do not find myself wholly satisfied that this is a necessary and wise proposal. Therefore I want to ask the Government to clear up some points because unfortunately I was not present in Committee when all this was thoroughly discussed. I apologise profusely beforehand if my questions were fully answered at that stage.
I am not wholly in support of this provision because, first, I am not persuaded by the principle that any step that a company should take should be encouraged by making reference to it in its profit and loss account. I do not think that is necessarily wise. Companies have to undertake all kinds of things. If every time a company does something that is useful and wholly constructive reference must be made to that step in the company's accounts to show that it has been done, the accounts will be too detailed and will not be straightforward enough to be understood by shareholders. So I am not wholly persuaded on that. I quite understand the argument that we need to invest in research and development. But again I am not wholly satisfied that everyone would draw the right conclusion from seeing a set of accounts in which research and development expenditure was included. I am not convinced people would then say, "Hoorah! What a jolly good company for doing that". If another set of accounts did not include research and development expenditure, I am not convinced that people would say, "Oh, why has that not been included? This company must be very badly run. It has nothing charged to its profit and loss account by way of research and development". There may be all kinds of other reasons why research and development has not been charged to the profit and loss account.
As regards giving full information to shareholders, of course they should get full information. But full information is not only related to what is in the profit and loss account. There are all kinds of other ways including the directors' report, in which companies can make their position very clear to shareholders. They can do that without the added responsibility of separating out a particular item.
But those are all preliminary matters. The main question is, what purpose does this provision serve? As everyone knows, companies have different methods of writing off their research expenditure. If they incur heavy research expenditure in one year and they take the view that it refers to benefits which will accumulate to the company over a period of years, they are naturally entitled to write that expenditure off over a period of years; or they may

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take the view that, as they are going to incur expenditure on development every year, it would be wise to set up a fund and write off the same amount each year. It is perfectly proper for them to set up such a fund so that what appears in the profit and loss account is either something written off over a very long period of years—that does not tell one what the company is doing in the year in question about research—or a regular amount written off every year. That again is perfectly proper but again it does not tell one what the company is doing about research in the year in question.
Having regard to the different ways in which different companies quite properly treat this semi-profit and loss, semi-balance sheet item of research expenditure, part of which can properly be capitalised and part of which has to be written off, if this provision is implemented as it stands there will be an additional responsibility placed on boards and auditors with regard to a specific item. That will not reveal anything helpful to the shareholders. I believe that that will be the case in the majority of companies. If the Government are going to support this amendment, I must ask them how they propose to treat this matter and whether they propose to introduce legislation to treat the different methods under which different companies write off this kind of expenditure.
Baroness White: My Lords, has the noble Lord read the report on this matter of the Science and Technology Select Committee?
Lord Diamond: My Lords, I apologise to the House in advance for the fact that I did not even attend the Committee stage of the Bill. I apologise again if all this ground has already been covered.
Baroness White: I am not speaking of the Committee stage. I am speaking of the report of the Select Committee of this House which has very strongly recommended the course of action proposed by the noble Viscount, Lord Caldecote.
Lord Boardman: My Lords, I support the intention of the amendment, but I share many of the reservations that have been put forward both by my noble friend Lord Bruce-Gardyne and by the noble Lord, Lord Diamond. I have two points on which I wish to comment briefly: first, the method of valuation or assessment of research and development. Such a valuation must be meaningful. The noble Lord, Lord Diamond, remarked on how it should be treated in the accounts. But the accounts are a fairly mixed bag which can list expenditure which is used just for maintaining the business and also expenditure on long-term research. It is difficult to be sure how one can accurately define that.
Secondly, a company which has added to its value and its long-term future by substantial expenditure on research and development will make a point of stating that somewhere in its report and accounts. As the noble Lord, Lord Diamond, said, there are ample opportunities to do that. That should be encouraged and I am sure shareholders will look for
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that. While I support the intention of the amendment, I believe it to be unnecessary at this time.
Lord Williams of Elvel: My Lords, we on these Benches support the noble Viscount in his amendment. I do not wish to spend a great deal of time answering some of the points that have been made. I would say to the noble Lord, Lord Bruce-Gardyne, that the report and accounts of a company are not simply for shareholders. In my view they are for potential shareholders, for creditors and for all kinds of people who are interested in the affairs of the company in question.
Lord Bruce-Gardyne: My Lords, I apologise for interrupting the noble Lord, but I certainly did not suggest that they were solely for shareholders. I said that they were primarily for shareholders. I stick by that view.
Lord Williams of Elvel: My Lords, I am sorry if I misinterpreted the noble Lord. I had the impression that he said that the report and accounts were solely for shareholders. They are of course for the world in general, but primarily for shareholders. Nevertheless they are also for creditors and for potential shareholders. In the United States it is becoming very clear that potential investors in a company pay much more attention than they used to to the research and development programme of a company. Analysts are now used to commenting on this. They assess companies by their R&D performance. So it is very important that the analyst or the person who recommends an investment should have proper information.
SSAP 13 is not mandatory and, to be honest, it is a little vague in its wording. We would like to see something a bit sharper. Nevertheless, we believe that SSAP 13 answers one of the points that the noble Lord, Lord Diamond, made as regards how one treats research and development and whether it should be expensed straight through the profit and loss or whether it should be capitalised and amortised over years through the profit and loss. That is a matter for guidance from the accounting standards committee
I believe that it is not an argument to say that to introduce a measure of this nature into the Bill would be overregulation. After all the whole of Part I regulates what will go in company accounts. I regard this provision as a minor addition, and to have this minor addition to company accounts does not seem to me to be a very serious matter in terms of an extra burden on companies. If they are attending to SSAP 13, they will probably produce this addition anyway.
I think I have said enough. I hope the Secretary of State recognises that there is a body of feeling in your Lordships' House which not only recognises the principle of the amendment, in the way that the noble Lord, Lord Boardman, does, but also supports the detail of this amendment. I hope he will pay attention to that.
Lord Milne: My Lords, I have one reservation in relation to Amendment No. 5. I should have thought that it is in the wrong place in the Bill. The section concerns compliance and general principles and states that the schedule should be amended accordingly. Amendment No. 7, which we shall come to in due course, is the amendment which amends the schedule. I shall not enter into the discussion as to whether this is a good argument, but subsection (2) is the wrong place for this provision.
As the law presently stands research and development cannot be capitalised, it has to be written off in the profit and loss account. I can see no difficulty with quantifying the figure for research and development in the profit and loss account. However, it must be remembered that as the law stands at present one would be bringing in the amortised part of development. That must be made clear.
4 p.m.
Lord Young of Graffham: My Lords, I did not entirely agree with the noble Lord, Lord Diamond, when he said that any amendment introduced by my noble friend Lord Caldecote and the noble Lord, Lord Ezra, need scarcely even be read, although I did agree with the point which he put to me subsequently. I could disagree even less when the noble Lord, Lord Williams, joined in the debate.
I should like to make one point at the outset. It is clear that noble Lords on all sides of the House attach importance to the disclosure of expenditure on research and development in company accounts. We fully share that view. One area in which I disagree with the preliminary remarks of the noble Lord, Lord Diamond, is that we think it important that companies should disclose the amount of research and development, and that shareholders and those who value companies should take into account the amount of money allocated to research and development. That is an area where the United Kingdom has perhaps not been very strong in recent years, although there is now considerable evidence that the amount spent on research and development is rising even more than in line with company profits. I think that that is something that we shall see and value in the future.
There is therefore no difference between us on the desirability of such disclosure and the stimulus it can provide to a greater understanding of the importance of research and development for a company's future prospects. However, I ask all in your Lordships' House to consider what I believe is a different method of achieving the same end and in many ways a more appropriate means of achieving the objective which we all share, and to which your Lordships' Select Committee paid tribute.
As my noble friend Lord Strathclyde explained when this subject was discussed during Committee, the Government firmly believe that the non-statutory approach is the best way of tackling this issue. I do not wish to weary the House by repeating at length the arguments advanced at that time by my noble friend, but I should like to outline one or two key points.
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The Government's position was, and remains, that if the accountancy profession could provide for disclosure through a revision to Statement of Standard Accounting Practice 13, which deals with accounting for research and development, there would be no need for legislation. The profession's own accounting standards committee has recently reached agreement on such a revision and a new version of the standard, which has been endorsed by all the leading professional bodies, was published on 26th January this year.
There are two aspects of the revised standard which will be of particular interest to noble Lords. The first concerns the nature of the companies which will be covered by the disclosure requirement. The new standard will require all public companies, and very large private companies, to disclose their expenditure on research and development in their accounts. This fully meets the Government's objectives and goes further than noble Lords have proposed in their amendment to Clause 4 since that amendment is limited to public limited companies and would not apply to very large private companies, some of which may be leaders in their field.
The second particularly interesting aspect is that the new standard requires disclosure of the total amount of research and development expenditure charged in the profit and loss account, analysed between the current year's expenditure and amounts amortised from deferred expenditure. That again goes further than the amendments, which are confined simply to the disclosure of expenditure on research and development which has been charged against profits. That is a point which was made by my noble friend Lord Boardman and the noble Lord, Lord Diamond.
The requirement for the expenditure on research and development charged to the profit and loss account to be analysed between the current year's expenditure and amounts amortised from deferred expenditure will ensure that it is clear how much of the amount charged to the profit and loss account is new expenditure incurred during the current year and how much is being amortised from expenditure incurred in past years.
The Companies Act 1985 allows development expenditure to be included as an intangible asset to a company's balance sheet only in special circumstances. The standard lays down conditions for including development expenditure as an asset, and the ultimate commercial viability of a project must have been assessed with reasonable certainty. If a project meets the conditions of the standard then development expenditure may be included as an intangible asset and amortised so that the expenditure is matched against future revenue from the project. There is the simple question of the quality of the research and development expenditure that has been incurred. It hardly matters that one incurs a large amount in the accounts or writes off from past expenditure something which has., subsequently proved to be worthless.
We then come to the question of how good is SSAP 13. The way it has been devised, and the improvement it offers over the amendment, demonstrates the thoroughness and firmness with

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which the accountancy profession has dealt with this important issue. I see no reason to doubt that the new standard will be complied with and that companies will accordingly disclose all the information that, and indeed far more than, noble Lords wish to have available.
It may be asked, what happens if they do not? In those circumstances, I believe that it would be the duty of the accountants to qualify the accounts. If the accounts did not comply with SSAP 13 they would not reflect a fair view of the company. I believe that that would be a much better position than having a statutory obligation. As the years go by, it may well be that there will be differences of view concerning the way in which research and development is dealt with. I believe that a method based on SSAP 13 provides a more flexible approach for the future. In those circumstances, we see no need to add to the weight of primary legislation by making this disclosure a statutory one.
The noble Lord, Lord Milne, raised the question of the amendment to Schedule 1. I hope that noble Lords will recognise that the amendment goes much further than the amendment to Clause 4 since it would require disclosure by all companies of expenditure on research and development, rather than limiting such disclosure to public limited companies. I believe that the system we are suggesting, adherence to SSAP 13, would be the most effective way to proceed. However, I wish to reiterate that if that should not be so and experience shows that the new accounting standard has not proved effective, the Government will not hesitate for one moment to consider using their powers under secondary legislation to make disclosure by all public and very large private companies a statutory requirement.
With that reassurance and the knowledge that the Government fully share the view that expenditure on research and development should be disclosed, I hope the noble Lords will feel able to withdraw their amendment.
Viscount Caldecote: My Lords, I am almost more worried now than I was at the start of this discussion. I wonder whether certain noble Lords have even read SSAP 13. There is no intention that the inclusion of this amendment in the Bill should supersede SSAP 13, it would merely give it strength. SSAP 13 would still be available and auditors would have to take note of it. If all the details were not adhered to, as my noble friend the Secretary of State said, the auditors would qualify the accounts. But this amendment would give added statutory power to ensure that that very important information is included in the accounts.
Some noble Lords made the point that that would complicate the accounts unnecessarily. The feature that complicates accounts is the vast length of the notes to company accounts nowadays, not the simple statements in the profit and loss account. They are very easy for anyone to understand, but the pages and pages of notes to the accounts of public limited companies are hopelessly difficult for the lay person to understand. I do not therefore think that the reply
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of my noble friend the Secretary of State has added anything at all to what his noble friend Lord Strathclyde said in Committee. In effect, he is saying that SSAP 13 is adequate without legislation. If it is adequate without legislation— —
Lord Young of Graffham: My Lords, perhaps I might ask my noble friend whether he knows, from his own experience, of any board of a large public company, or of any form of plc for that matter, that would voluntarily risk having qualified accounts. If not, then surely the statutory requirement would give no added protection at all.
Viscount Caldecote: My Lords, that is perfectly true, but my noble friend the Secretary of State would also agree that some large companies have considerable influence over their auditors. That is in no way to say that auditors do not do their job, but it is a matter of judgment as to what makes a true and fair view of the accounts, and in certain cases——
Lord Williams of Elvel: My Lords, I am sorry to interrupt the noble Viscount. Did not a number of public companies disregard the SSAP on current cost-accounting?
Viscount Caldecote: My Lords, that is probably true. I am not an expert on the subject, although I spent some time on the Inflation Accounting Committee. We were disappointed about the lack of reaction to our report. That is perhaps another matter, but it indicates that some companies, particularly large companies, sometimes say to their auditors, in exactly the way I was suggesting, "We don't agree with you. We think we've made a perfectly good statement and presented our accounts in a true and fair way". Discussion continues and both the auditors and the company give a little. However, if the requirement were made statutory—as it has been in the United States of America where it has been entirely satisfactory and has had a highly beneficial result in that, when research and development expenditure is increased, the tendency is for the share price to go up, even though the profits do down——
Lord Harmar-Nicholls: My Lords, does my noble friend agree that his last statement—unless he can modify it to some extent—entirely undermines confidence in the audit system? An audit is either impartial and the auditors carry out their duties impartially, or it is not impartial. To suggest that there is a halfway house—the noble Viscount gave me that impresssion—would undermine confidence in the audit system on which so much depends.
Viscount Caldecote: My Lords, the noble Lord, Lord Williams of Elvel, gave an example from the inflation accounting SSAP to show that that was not carried through by a considerable number of companies. That is pefectly true. If that can happen in that case, why should it not happen in this case? If it is bad here, why is it not bad in the United States where it has been very satisfactory?
Lord Young of Graffham: My Lords, I think that the noble Lord, Lord Williams of Elvel, offered a very good red herring and I must congratulate him on this. However, while there was an SSAP about current cost accounting, there were still statutory requirements on companies at that period to produce their accounts in the normal way. There was an additional set of accounts. I suspect that it would not be seen as non-regard to SSAP 13; it would be seen as a method of qualifying accounts and, I am sure, would have been seen by everyone as a more serious breach.
Furthermore, I believe that if we introduce this provision by statute, we weaken rather than strengthen the case for showing the amount of R & D. As I have said, the Government wholly support the desire to see this point brought out and accented. However, if we have a statutory requirement at the same time as we have an SSAP which goes further than the requirement, it will become a matter of doubt as to whether the board will say that, under the legislation, it is entitled to put merely this year's figure for R & D, even though it refers to amortisation, past expenditure and a number of other matters.
Viscount Caldecote: My Lords, is the noble Lord suggesting that, if the amendment were passed, SSAP would in some way be weakened? I do not believe that that is the case. SSAP has been agreed as a standard accounting procedure and it would go ahead just as it does now, whether or not the amendment is accepted. However, if the amendment is passed, it gives it much greater strength and statutory support.
Lord Boardman: My Lords, I am most grateful to my noble friend for giving way. With great respect to him, does he not believe that the giving of one global figure for research and development, as the amendment suggests, might be misleading? Is it perhaps better to rely on a breakdown to give an evaluation of the various component parts and the value attached to them, as appears in SSAP 15?
Viscount Caldecote: My Lords, SSAP 13 mentions all the points to which the noble Lord, Lord Boardman, refers. I do not know whether he has read SSAP 13, but it is clear how the disclosure will be made in the accounts. The amendment would simply give SSAP 13 statutory backing.
My noble friend the Secretary of State emphasised the fact that the provision would complicate or add an enormous number of words to the Bill, but that is going a bit far. It is a matter of only six lines. As the noble Lord, Lord Milne, said, the amendment is perhaps not in the right place, but I believe that it is the normal convention of the House that, if an amendment is accepted in principle, it is the Government's job to put it in the right place and tidy up the Bill at Third Reading. Is my noble friend saying that that process would be so onerous and complicated that it would not be satisfactory from that point of view? That appears to be his main argument. I am disinclined to divide the House, but this is an important issue. We believe that expendi-
482
ture on research and development for the future prosperity of companies and of the national economy is so important that a message should go out from this House to the effect that we endorse the amendment for the that reason.
4.16 p.m.
On Question, Whether the said 5 amendment (No. 5) shall be agreed to?
Their Lordships divided Contents, 70;Not-Contents, 118.

DIVISION 1

CONTENTS

Addington, L.

Jenkins of Hillhead, L.

Ardwick, L.

Kearton, L.

Auckland, L.

Kilbrack en, L.

Birk, B.

Kinloss, Ly.

Blease, L.

Leatherland, L.

Briginshaw, L.

Lloyd of Kilgerran, L.

Broadbridge, L.

Lockwood, B.

Bruce of Donington, L.

Lovell-Davis, L.

Caldecote, V. [Teller.]

Lucas of Chilworth, L.

Carmichael of Kelvingrove, L.

McNair, L.

Mason of Barnsley, L.

Cledwyn of Penrhos, L.

Mishcon, L.

David, B.

Molloy, L.

Davies of Penrhys, L.

Monson, L.

Dean of Beswick, L.

Mottistone, L.

Dormand of Easington, L.

Mulley, L.

Ellenborough, L.

Nicol, B.

Elwyn-Jones, L.

Peston, L.

Ennals, L.

Phillips, B.

Ezra, L.

Ponsonby of Shulbrede, L.

Falkland, V.

Prys-Davies, L.

Fisher of Rednal, B.

Ritchie of Dundee, L.

Gallacher, L.

Rochester, L.

Galpern, L.

Seear, B.

Graham of Edmonton, L. [Teller.]

Scrota, B.

Shepherd, L.

Grantchester, L.

Stoddart of Swindon, L.

Gregson, L.

Strabolgi, L.

Grey, E.

Taylor of Blackburn, L.

Hacking, L.

Taylor of Mansfield, L.

Hampton, L.

Tordoff, L.

Hanworth, V.

Underhil., L.

Hayter, L.

Wallace of Coslany, L.

Houghton of Sowerby, L.

White, B.

Irving of Dartford, L.

Wigoder, L.

Jeger, B

Williams of Elvel, L.

NOT-CONTENTS

Alexander of Weedon, L.

Carnegy of Lour, B.

Allerton, L.

Carnock, L.

Arran, E.

Cawley, L.

Aylestone, L.

Coleraine, L.

Balfour, E.

Constantine of Stanmore, L.

Bauer, L.

Cottesloe, L.

Beaverbrook, L.

Davidson, V. [Teller.]

Belhaven and Stenton, L.

Denham, L. [Teller.]

Beloff, L.

Diamond, L.

Belstead, L.

Dundee, E.

Benson, L.

Eccles, V.

Bessborough, E.

Effingham, E.

Birdwood, L.

Elliot of Harwood, B.

Blatch, B.

Elliott of Morpeth, L.

Boardman, L.

Erroll, E.

Borthwick, L.

Erroll of Hale, L.

Boyd-Carpenter, L.

Faithfull, B.

Brabazon of Tara, L.

Ferrers, E.

Brougham and Vaux, L.

Forbes, L.

Butterworth, L.

Fraser of Kilmorack, L.

Campbell of Alloway, L.

Gainford, L.

Campbell of Croy, L.

Glenarthur, L.

483

Grey of Contin, L.

Orkney, E.

Gridley, L.

Oxfuird, V.

Grimthorpe, L.

Oppenheim-Barnes, B.

Hailsham of Saint

Pennock, L.

Marylebone, L.

Platt of Writtle, B.

Harmar-Nicholls, L.

Rankeillour, L.

Havers, L.

Reay, L.

Henley, L.

Reigate, L.

Hesketh, L.

Renton, L.

Hirshfield, L.

Sainsbury, L.

Hives, L.

St. Davids, V.

Holderness, L.

Saint Oswald, L.

Hooper, B.

Sanderson of Bowden, L.

Ironside, L.

Selkirk, E.

Johnston of Rockport, L.

Sempill, Ly.

Kaberry of Adel, L.

Shannon, E.

Kennet, L.

Skelmersdale, L.

Kilmarnock, L.

Strange, B.

Lauderdale, E.

Strathclyde, L.

Lawrence, L.

Strathcona and Mount Royal, L.

Layton, L.

Liverpool, E.

Strathspey, L.

Long, V.

Suffield, L.

Luke, L.

Swansea, L.

McAlpine of Moffat, L.

Teviot, L.

McAlpine of West Green, L.

Thomas of Gwydir, L.

Mackay of Clashfern, L.

Thorneycroft, L.

Macleod of Borve, B.

Trafford, L.

Manton, L.

Tranmire, L.

Margadale, L.

Trefgarne, L.

Marley, L.

Trumpington, B.

Merrivale, L.

Vaux of Harrowden, L.

Milne, L.

Wigram, L.

Milverton, L.

Windlesham, L.

Munster, E.

Wise, L.

Nelson, E.

Wolfson, L.

Nugent of Guildford, L.

Wynford, L.

Onslow, E.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.24 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 6:
Page 6, line 44, at end insert —
("In preparing individual accounts which comply with these requirements directors shall have regard to all relevant Statements of Standard Accounting Practice.").
The noble Lord said: My Lords, our last debate culminating in your Lordships' decision not to make it a statutory requirement to obey an SSAP gives a certain relevance to the amendment that I am now moving. In reply to his noble friend the Secretary of State laid great emphasis on companies obeying SSAPs. I mentioned that in one rather spectacular case a number of companies had failed to do so. It is certainly true that in the case of a failure there may be a qualification in the audit report. However, that does not necessarily help shareholders very much.
The amendment determines the relationship between statute and the SSAP. That relationship is becoming increasingly important as we move through the Bill. Our discussions touch first on one —the statute —and then the other —the SSAP. It is in our view somewhat unsatisfactory that at some points the Government rely on an SSAP and at others decide to write things into the statute.
Noble Lords will be aware of a review committee on the making of accounting standards which, for brevity, I shall call the Dearing Report. There has been consultation on the report. I should like to draw attention to the view made clear by the consultative
484
committee of accountancy bodies and put before the Department of Trade and Industry. It states that most members of the committee accept that accounting standards will inevitably become more prescriptive and that strong measures are needed to ensure that they are uniformly applied. The committee supports therefore a legal requirement, applying at least to all listed companies, that a statement of compliance with accounting standards should be signed by the directors. At least one member of that committee asked that that legal requirement should be extended not only to listed companies but to all companies.
The amendment that I move is in essence rather modest. It requires boards of directors in preparing individual accounts to "have regard"; it does not say "to follow". They can if they wish take the view that they can break the SSAP. But they must "have regard", a fairly well known expression in law. It means that they must "pay serious attention to". It is almost tantamount to saying that they have to follow the relevant SSAP in compiling their accounts. If we are to rely on SSAPs in research and development expenditure, it seems right that there should be a legal obligation on boards of directors to have regard to those SSAPs.
As we go forward, we shall be pursuing this relationship between the two because it is important to get it right. I hope that the Government will pay attention to what the CCAB has said to them and will let us know what view they take of the Dearing Report. I beg to move.
4.30 p.m.
Lord Young of Graffham: My Lords, this amendment is similar to a number of amendments that were discussed in Committee and relates to an issue which is the subject of one of the recommendations of the Dearing Committee. The amendment would lay a duty on the directors of a company to have regard to all relevant accounting standards in preparing the company's individual accounts. As noble Lords will be aware, the Dearing recommendation goes further in one important respect. It proposes that in the case of all large companies the directors should be required to state in the notes to the annual accounts whether these are drawn up in accordance with applicable accounting standards and to draw attention to any material departures.
As I explained in Committee, the Government are sympathetic to this proposal, but we think that it is important to have the views of professional organisations, companies, shareholders and other users of accounts before we reach a final view. We therefore issued a consultative document at the end of January to approximately 800 interested organisations and individuals, inviting comments on the recommendations in the Dearing Report which would require legislative changes. As we were anxious to make progress quickly, bearing in mind the opportunity offered by the Bill to make such changes, we imposed an unusually tight deadline of only six weeks. This deadline expired last week and the majority of responses have therefore only just been received, with more arriving day by day. At this stage it is simply too early to assess the results of the consul-

485
tation process, but I can assure noble Lords that we shall be carrying this work forward with all due speed.
As I explained in Committee, our aim is to analyse the comments received, decide what action to take on the Dearing recommendations in the light of that analysis, and to bring forward any necessary amendments as soon as possible. I am sure that all noble Lords will agree that it is important to conduct this analysis thoroughly and to ensure that we have fully considered all the points raised and that our decisions are soundly based. It would therefore be wrong to give an assurance that any amendments will be available before this Bill goes to another place, because that simply may not be possible. However, if in the event we are not able to bring forward amendments before Third Reading, noble Lords will have an opportunity to debate any amendments made in another place when the Bill returns to this House.
With the assurance that the Government welcome the Dearing Report, that we are sympathetic to the recommendation in the report which relates to the subject of this amendment, and that we will bring forward as soon as possible any necessary amendments in the light of the responses to our consultative document, I hope that the noble Lord, Lord Williams of Elvel, will agree to withdraw his amendment.
Lord Williams of Elvel: My Lords, I am most grateful to the noble Lord. The intention behind my amendment was to draw the attention of the Government to the Opposition's views on the Dearing Report and to encourage the Government to bring forward appropriate amendments as early as possible so that your Lordships may have an opportunity to discuss them. I understand the thrust of what the noble Lord is saying in reply. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 [Form and content of company accounts]:
[Amendment No. 7 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 8:
Page 139, line 21, at end insert —
("Reserves and provisions
6A. In paragraph 46 (reserves and provisions) insert the following sub-paragraph after sub-paragraph (2)—
"(2) The directors shall disclose the maximum amount of reserves which could be distributed under Part VIII of this Act. If this amount is significantly different from the balance on the profit and loss account the directors shall explain the reasons for the difference." ").
The noble Lord said: My Lords, I apologise to noble Lords for the very technical nature of the amendment. At present, accounts are drawn up in accordance with Part VII of the Companies Act 1985 and the related schedules. Profits are calculated according to those rules. For distribution purposes —for example, the payment of dividends—different rules apply in accordance with Part VIII of the Companies Act 1985. It is rather like the difference between calculating profit for accounts purposes and
486
calculating profit for tax purposes, where different rules apply with regard to tax computations.
In some cases there may be substantial provisions or losses recorded for accounting purposes which can, for the purposes of distribution, be disregarded. For example, the write-down of a fixed asset or a realised loss can be treated as an unrealised loss, and in some cases dividend may be paid in spite of that fact. In other cases required depreciation may be added back to profits for the purposes of distribution. In an extreme position a company could pay a dividend even though the profit and loss account, on the face of the accounts, does not apparently warrant it. There is no statutory requirement at the moment for amounts which are available for distribution to be transferred to the profit and loss account; hence shareholders and others are still in the dark about what is allowed to be brought into the profit and loss account for the purposes of distributions.
Both SSAP 1 and SSAP 14 deal with the opposite situation where there are significant restrictions on a company's ability to distribute profits. However, the only remedy, in the absence of a specific requirement of this type, is to rely upon the true and fair rule, which requires additional information to be given in the appropriate circumstances.
This amendment seeks to clarify the position by imposing a specific disclosure requirement in appropriate circumstances. Therefore, it is in the other direction to SSAP 1 and SSAP 14. However, in our view it makes a minor but sensible addition to the Bill. I beg to move.
Lord Strathclyde: My Lords, the Government have some sympathy with the purpose of the amendment. It is not always apparent from a company's individual accounts how much of its reserves are potentially distributable to shareholders. Until the Companies Act 1967 companies were required to disclose separately the amounts of their capital and revenue reserves. Generally, the amount of the revenue reserves disclosed would have been the amount of the distributable reserves. although this was a matter of some debate at the time.
Since 1967 there has been no such requirement either in the Companies Act or under generally accepted accounting principles or practice. We should like to think carefully and consult quite widely before introducing such a requirement. Having said that, a requirement to state the maximum amount of reserves available for distribution may provide shareholders and other users of accounts with relevant information, although the figure would need to be interpreted with care. It should not be assumed, for example, that it is the amount that can safely be distributed to shareholders: a company's dividend policy will include consideration of its overall financial position, its future prospects and its future plans.
I should, however, make clear that we do not favour the second part of the amendment, which would require an explanation of any significant difference between the total amount disclosed and the balance shown on the profit and loss account.

487
There are any number of reasons why differences might arise. For example, there may be distributable profits included in other reserves such as the "revaluation reserve" or "general reserves". We believe that such disclosure would not prove to be useful in practice and may simply confuse and bewilder.
To return to the main issue, we are willing to consider with an open mind requiring disclosure of the total amount of distributable reserves, but not the suggestion that explanations should be required where that total amount differs from the balance on the profit and loss account. In view of what I have said, I hope that the noble Lord feels able to withdraw his amendment. On our part we shall endeavour to come to a view by Third Reading, though I cannot promise that this will be possible.
Lord Williams of Elvel: My Lords, I am most grateful to the noble Lord. I accept what he says about explanations. It is always rather difficult for directors to engage in explanations about why things were different to what was shown in their original accounts. Nevertheless, if that is the view of the Government, I am happy to have half a loaf. I hope very much that the Government will be able to come forward at Third Reading with their considered views on the amendment that I have put forward. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Group Accounts]:
The Deputy Speaker (Lord Nugent of Guildford): If the noble Lord, Lord Mottistone, moves Amendment No. 9 and it is agreed, I shall not be able to call Amendment No. 10.
Lord Mottistone Lord Mottistone moved Amendment No. 9:
Page 7, line 14, leave out subsection (3) and insert —
("(3) Consolidated accounts shall give a true and fair view of the financial position including the assets, liabilities and profit and loss of the undertakings included therein taken as a whole.").
The noble Lord said: My Lords, I moved a similar amendment in Committee asking the Government why they were not more closely following Article 16.3 of the seventh directive, from which it was derived. My noble friend Lord Strathclyde said that there was no obligation under the Treaty of Rome to repeat the directive word for word. However, he did not explain why it was that he did not want to follow it word for word. I did not explain why I believed that he should follow it word for word so perhaps I may do so now. It is not necessary that the Bill must precisely repeat a directive. However, the phrase "state of affairs" which appears in the present text is too vague and general. I suggest that for legal certainty the expression of what is to be included in the consolidated accounts —which is the basis of my amendment —is preferable.
I believe that the amendment clarifies the situation, gives legal certainty and reflects the requirements of the directive. It is of only secondary
488
interest that it more closely follows its wording. I hope that now it has been more fully explained, my noble friend will give the amendment a more sympathetic hearing than he was able to at an earlier stage. I beg to move.
Lord Bruce of Donington: My Lords, I hope that the Minister will give favourable consideration to the amendment. The clause to be replaced appears to be more adequately reflected in the smaller version that has been given. If the Minister objects to the amendment I shall be interested to hear his explanation. If he does not, I shall support any acceptance that he may put forward.
Lord Lloyd of Kilgerran: My Lords, I should like to support the noble Lord in his amendment, which is an improvement to this part of the Bill. I also believe that the phrase "state of affairs" is most unsatisfactory. Government Amendment No. 11 would leave in the Bill a clause containing the vague term "state of affairs".
Lord Milne: My Lords, is there not a technical deficiency in the amendment? A consolidated bound sheet shows the situation taken as a whole so far as concerns members of the company. Should the amendment not have inserted at the end the words:
"so far as concerns members of the company"?
Lord Young of Graffham: My Lords, my noble friend has developed his argument somewhat further than he did at the Committee stage. I hope we agree that the Bill does not need to repeat the seventh directive word for word in order to give proper effect to it. If we were to do so we must take into account the differing legal and administrative frameworks and cultures of each member state. Were each member to follow precisely and slavishly the wording of the directive, it is highly unlikely that the objective of a common framework could be reached given the differing legal environments.
I do not believe that there is a great difference of substance between the wording of the Bill and the wording which the noble Lord's amendment would introduce. His version sticks fairly rigidly to the directive. Ours closely follows the corresponding provision in Section 230 of the existing Act which is well understood by the profession and all those dealing with accounts. Were the Government to agree to the change, I am sure that we should very quickly face at least as strong pressure from the accounting profession to move back to the wording in the Bill. I suspect it would use some of the same arguments as my noble friend: that we were introducing uncertainty by changing the existing wording and that everyone would have to rush to seek counsel's opinion to find out what it meant.
My noble friend refers in particular to the phrase "state of affairs", suggesting that it is too vague. I find that a little surprising. The words have been used in this context in company law at least since 1947. Indeed the phrase is so beloved by the accounting profession that, when the Bill was published with a reference to "state of the affairs", one of the accounting bodies argued strongly that the offending

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word "the" had to be removed. Your Lordships have already considered an amendment making precisely this change in a corresponding new section of the Bill.
The principal difference between the wording of this amendment and the provisions in the Bill is that the Bill, as it exists under United Kingdom law, includes the words:
"so far as concerns the members of the company".
Their significance is that they set the perspective for which consolidated accounts are prepared—that is, for the members, as the noble Lord, Lord Milne. reminded your Lordships. The words do not appear in the directive, but that reflects its perspective.
I hope that I have said enough to persuade my noble friend that the wording of the Bill should not be of concern at this point. I hope that he is able to withdraw his amendment.
Lord Mottistone: My Lords, I thank my noble friend for explaining more fully why he wishes to adhere to the wording of the Bill. It appears to be an argument between experts advising him and experts advising me. Experts always confuse each other. The House has heard excellent advice from the noble Lord, Lord Milne, and I hope that it will be gazed at by members of the CBI when they read Hansard.
Thank heavens, the Bill has yet to go through all its stages in another place because one can be a little more relaxed: we are not in the usual position of being the last House to consider it. However, I do not believe that the argument can suitably be taken to Third Reading and I am sure that, having read what has been said, everyone concerned will decide whether to enter the lists again.
I am not entirely convinced by what the Minister has said. His argument goes so far but perhaps something in between the two would be a better solution. Members of another place may have an opportunity to include that, and at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Lord Strathclyde Lord Strathclyde moved Amendment No. 10:
Page 7, line 15, leave out first ("the").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 11:
Page 7, line 33, at end insert ("to the extent necessary to give a true and fair view").
The noble Lord said: My Lords, the Government made clear at the Committee stage that they were happy to accept two matching amendments tabled by the noble Lords, Lord Williams of Elvel and Lord Peston, which make it absolutely clear that, where the directors are required to depart from the other provisions of the Act to ensure that the accounts show a true and fair view, they may do so only to the extent necessary to give that true and fair view. One of those amendments—that to new Section 227(6)—was, however, not moved by the noble Lord. This amendment simply repeats that
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amendment. It brings new Section 227(6) into line with the corresponding new Section 226(5). I beg to move.
On Question, amendment agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 12:
Page 8, line 11, at end insert —
(For the purposes of this section such notice shall be deemed to be valid if served within six weeks of the date of receipt by the registrar of a notice in accordance with section 225 ("Alteration of accounting reference date")
The noble Lord said: My Lords, the Bill gives shareholders an important right to require the production of group accounts. A reasonable period of notice appears to be required in order to enable directors to obtain the necessary information. That condition could, inadvertently or deliberately, be used to deprive shareholders of their original rights.
It is comparatively easy to change a company's financial year if notice is given to the Registrar of Companies in the prescribed form and if the statutory conditions are observed. As a result of group reconstruction, tax planning or whatever, it frequently happens that a change is required. A change to shorten a year immediately reduces the time in which the six months' period of notice is required to be given.
The notice is effective on change of year end as soon as it is received by the Registrar of Companies. Indeed, the date of receipt is marked on the notice. However, in practice and depending on the backlog at the registry of companies, it may take up to six weeks from the notice of receipt by the registrar before a new accounting reference date—that is, the new financial year end—appears on the public record. Therefore, any shareholder who consults the public record through a company's search may have inaccurate information about what is the year end of the company. Shareholders may have no reason to know that directors are changing the year end. It could be a decision entirely by the board until it becomes clear when the accounts are published.
This amendment is designed to provide a safeguard for shareholders based on known delays—because we have consulted the Registrar of Companies in Cardiff —in the backlog of registering and issuing receipts and publishing year end changes. It is a fairly small arrangement but one which would give a safeguard to shareholders. I beg to move.
Lord Strathclyde: My Lords, the Government accept that a small change to the Bill is needed here to ensure that a company cannot avoid the effect of a notice served under new Section 228 by shortening its financial year. We do not think that the actual amendment proposed by the noble Lord offers a satisfactory way of achieving that end, but, if he is willing to withdraw his amendment, I undertake to bring forward a government amendment on Third Reading which has the same objective.
Lord Williams of Elvel: My Lords, I am most grateful to the noble Lord. We are making progress with this Bill. A number of Opposition amendments have been accepted in principle. I look forward to

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Third Reading when the Government bring forward their amendment along those lines. I am glad that they have accepted our case. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 13:
Page 10, leave out from beginning of line 1 to ("or") in line 3 and insert —
("(b) it would involve expense or delay out of proportion to the value to members,").
The noble Lord said: My Lords, we have raised this matter previously and this amendment is designed to probe the Government's intentions.
The present wording in the Bill seems to me to be rather ambiguous and in our view the test should be made by reference to the interests of shareholders—that is, members of the company—and what is material for them to know. In our view, the present wording allows directors to subordinate the legitimate interests of shareholders to directors' convenience or, indeed, administrative concerns; that is, the cost of obtaining information or processing it into the statutory accounts. In any event, there is a problem with the word "disproportionate". I should be grateful if the noble Lord, Lord Strathclyde, would give attention to the points I have raised. They are not vitally important but they clarify the Bill. I beg to move.
Lord Mottistone: My Lords, without wishing to appear pedantic, I am concerned about the wording of this amendment because it does not seem to me to be right to start paragraph (b) with the word "it". What is "it"? It seems to me that if one reads back, "it" is the subsidiary undertaking at the beginning of subsection (3). That makes a nonsense of the amendment. I am sorry, but that just stuck in my gullet.
Lord Strathclyde: My Lords, as the noble Lord has explained, he moved an identical amendment at the Committee stage. I said then that we were willing to consider the point carefully and report back. I am grateful therefore to the noble Lord for tabling this amendment and giving me the opportunity to explain why, on reflection, we have concluded that we cannot accept a change on this point. There are two questions here: first, whether to follow this particular amendment; and secondly, whether some other change should be made instead.
On the first point, the noble Lord's amendment picks up on the existing wording of the 1985 Act, which gives as a ground for exclusion from consolidation that inclusion would involve expense or delay out of proportion to the value to members. The Bill as drafted reflects a deliberate decision not to re-enact this. The seventh directive, Article 13.3(b), to which new Section 229(3) gives effect, uses the word "disproportionate" without restricting it in this way. To accept the amendment would mean that we had not given proper effect to the directive. As important, to follow this amendment would make it too easy for a parent company to leave a subsidiary
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undertaking out of account on grounds of expense. This is possible because the company need only take into account the value of the accounts to members.
This leads on to the second point. Can we use a word such as "disproportionate" without saying in relation to what the expense is disproportionate? Disproportionate" is an ordinary English word. It is not used here as part of a mathematical equation. In context it means, and can only mean, disproportionate having regard to the purposes for which the accounts are prepared. That is what we want. We have thought hard, in response to the pressure for a change on this, whether it might nevertheless give comfort were we to define completely what those purposes are. We can find no satisfactory formulation. An incomplete definition would be worse than useless, and therefore we believe the Bill should not be changed.
I hope that, in the light of what I have said, the noble Lord will withdraw his amendment. As he said, we are responding positively to many of the suggestions put forward in Committee. This is one where we have thought carefully and have concluded that the pressure for a change is misconceived.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, Lord Strathclyde, and to the noble Lord, Lord Mottistone, whose sharp eye, as always, has picked out the mistake in the drafting. He is right, and is also right to draw our attention to it. This amendment was tabled with a certain amount of haste so that the Government would have plenty of time to consider their reply. In doing so, we missed out on the drafting.
I understand the reply with which the Government have come forward. The object of the amendment was to take up the discussion we had in Committee. I shall not press the matter further. I am glad that the Government have considered it carefully, and I accept their answer. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Strathclyde Lord Strathclyde moved Amendment No. 14:
Page 10, leave out lines 30 to 46 and insert—
("230.— (1) The following provisions apply with respect to the individual profit and loss account of a parent company where—

(a) the company is required to prepare and does prepare group accounts in accordance with this Act, and

(b) the notes to the company's individual balance sheet show the company's profit or loss for the financial year determined in accordance with this Act.

(2) The profit and loss account need not contain the information specified in paragraphs 52 to 57 of Schedule 4 (information supplementing the profit and loss account).
(3) The profit and loss account must be approved in accordance with section 233(1) (approval by board of directors) but may be omitted from the company's annual accounts for the purposes of the other provisions below in this Chapter.
(4) The exemption conferred by this section is conditional upon its being disclosed in the company's annual accounts that the exemption applies.").
The noble Lord said: My Lords, this amendment replaces new Section 230 in its entirety but in fact makes only two small changes to the version in the existing Bill.
New Section 230 disapplies most of the requirements of the Companies Act in respect of the individual profit and loss account of a parent company where that company prepares group accounts. Such accounts are not subject to audit, and need not be circulated to members, laid before the company in general meeting or delivered to the Registrar of Companies. However, the account must be prepared in accordance with the Act and must be approved by the directors.
The amendment fine tunes this provision in two ways. First, on the existing text, it is unclear whether such an account is a statutory or a non-statutory account for the purposes of new Section 240. New Section 240 sets out rules in connection with the publication of accounts which differ according to whether the account in question is statutory or non-statutory. A profit or loss account prepared under new Section 230 should be treated as non-statutory for this purpose. The amendment has this effect by removing the express exclusion of new Section 240 in new Section 230(1).
Secondly, while such an account should have to be prepared in accordance with the basic rules laid down in Schedule 4, on reflection we think it is unnecessary to require compliance with the detailed disclosure set out in paragraphs 52 to 57 of Schedule 4. Subsection (2) of the revised new section therefore expressly excludes these requirements. I beg to move.
5 P.m.
Lord Lloyd of Kilgerran: My Lords, in general this amendment is an improvement on the whole of Section 230 of the Companies Act 1985. In particular, it removes the very large subsection (1) of that Act and divides it into paragraphs.
The noble Lord said that there were certain minor differences in his amendment and the original section of the Companies Act 1985, but he did not mention the removal of line 35 on page 10 of the Bill. There is a requirement that the accounts must be approved in accordance with Section 233(1). However, the proposed Section 230 to the Companies Act also goes on to say, in line 35:
"Subject to none of the other requirements of sections 234 to 245".
This is a minor point and perhaps a matter of semantics but the government amendment, instead of mentioning the relevant Sections 234 to 245, states:
"For the purposes of other provisions below in this Chapter".
Therefore, the words "below in this Chapter" will mean that the person reading the Bill will have to look at the chapter and endeavour to get the meaning right, whereas specific mention of the relevant clauses might clarify the Bill just that little bit further.
Lord Strathclyde: My Lords, perhaps I can give some further background. I think it is fair to say that the corresponding provision in the 1985 Act is flawed. Section 228(7) states that a company need not comply with Schedule 4 and need not show a true and fair view, but it does not say that the account need not be audited and delivered to the
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registrar. Having said that, in dealing with what the noble Lord, Lord Lloyd of Kilgerran, said I think he is perhaps confusing two issues. What we are proposing achieves exactly the same effect but in a slightly different way.
On Question, amendment agreed to.
Schedule 2 [Form and content of group accounts.]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 15:
Page 142, line 13, leave out ("time") and insert ("date").
The noble Lord said: My Lords, this is a minor improvement to the wording of paragraph 9 of Schedule 2. The paragraph sets out the acquisition method of accounting for a business combination. At two places reference is made to "date" of the acquisition but in a third to "time" of the acquisition. The amendment simply replaces the word "time" with "date" to avoid any argument that, since "date" is used elsewhere, the actual time of day must somehow be relevant. I beg to move.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 16:
Page 142, line 25, leave out paragraph 10 and insert—
("10.— (1) The conditions for accounting for an acquisition as a merger are—

(a) that at least 90 per cent. of the nominal value of the relevant shares in the undertaking acquired is held by or on behalf of the parent company and its subsidiary undertakings,

(b) that the proportion referred to in paragraph (a) was attained pursuant to an arrangement providing for the issue of equity shares by the parent company or one or more of its subsidiary undertakings,

(c) that the fair value of any consideration other than the issue of equity shares given pursuant :o the arrangement by the parent company and its subsidiary undertakings did not exceed 10 per cent. of the nominal value of the equity shares issued, and

(d) that adoption of the merger method of accounting accords with generally accepted accounting principles or practice.

(2) The reference in sub-paragraph (1)(a) to the "relevant shares" in an undertaking acquired is to those carrying unrestricted rights to participate both in distributions and in the assets of the undertaking upon liquidation.").
The noble Lord said: My Lords, this amendment is very similar to one which was moved in Committee and withdrawn. Paragraph 10 of Schedule 2 to the Bill sets out the minimum conditions which have to be met before a company can account for an acquisition using the merger method of accounting. As I explained to the Committee, the Government have reconsidered these conditions in the light of outside comment. This amendment has two principal effects: it follows more closely the minimum conditions for merger accounting set out in Article 20 of the directive and it provides a further test that the merger method of accounting is only available where it accords with generally accepted accounting principles or practice. This makes it possible, for example, for a revised accounting standard to set a tougher test but without giving that standard the force of law. The relevant standard is at present under review.
The noble Lord, Lord Williams, raised a number of detailed points on this subject in Committee.

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Your Lordships may find it helpful, therefore, if I spend a little time in spelling out the new conditions for merger accounting set out in this amendment.
The first condition reflects Article 20, paragraph 1(a) of the seventh directive. It requires that the parent company acquires at least 90 per cent. by nominal value of what the Bill terms "relevant" shares in the undertaking acquired. The noble Lord, Lord Williams, referred to "relevant shares" in the previous discussion and perhaps I should expand on this. The Bill defines "relevant shares" as those shares,
"carrying unrestricted rights to participate both in distributions and in the assets of the undertaking upon liquidation".
I emphasise "unrestricted". In simple terms the term includes most ordinary shares and excludes other classes of shares, though it is necessary to consider the precise rights attached to any particular class of shares to determine whether such shares are "relevant" for this purpose.
The second condition requires that that 90 per cent. must be attained following an arrangement providing for the issue of shares by the acquiring company. This follows paragraph 1(b) of Article 20 of the directive. It is based on the premise that merger accounting is an appropriate method of accounting only where there is substantially a share for-share exchange. I should perhaps make clear that this condition does not require the whole of that 90 per cent. of the relevant shares to be acquired as a result of that arrangement. It is permissible to have a prior holding. However, while the Bill itself does not restrict the size of that prior holding, there is a restriction—at present 20 per cent.—in accounting standards and that can continue.
The third condition is a slight adaptation of paragraph 1(c) of Article 20 of the directive, adapted to make the provision effective. This is designed to ensure that, where merger accounting is to be used, the issue of equity shares is the predominant element in the consideration offered by the acquiring company for the relevant shares in the target company. The fair value of the consideration given, which is in the form other than equity shares, is restricted to 10 per cent. of the nominal value of the equity shares issued.
The noble Lord, Lord Williams, expressed surprise in Committee at the use of "nominal value" in this context. "Nominal value" is the term used in this context in the seventh directive and we cannot therefore substitute for it a term which would have the effect of making the conditions for merger accounting less onerous. Some other test—such as 10 per cent. of the market value of the shares issued—could have been included in the directive but it was not. Moreover, although I accept that it is possible to take differing views on the merits of basing such a test on nominal values, we believe that it is appropriate.
The effect, where a company wishes to use merger accounting, is to restrict the non-equity element in an offer more tightly than would a reference to the market value of the shares issued. Since merger accounting is considered to be an appropriate
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accounting treatment only where a business combination arises out of a purchase of equity by equity it seems right in principle that the non-equity element is restricted quite tightly.
The fourth condition is also important. It makes clear that merger accounting is not available, as of right, to companies where the other three conditions are met but only where its use also accords with generally accepted accounting principles or practice. This allows for the development of thinking on the circumstances in which merger accounting can be used. It also enables accounting standards, as appropriate, to set tighter conditions for the use of merger accounting as a part of generally accepted accounting principles or practice. The amendment to my amendment would change the reference to generally accepted accounting practice to a specific reference to the relevant accounting standards. But I should like to hear the case for the amendment before commenting further.
The noble Lord, Lord Williams, agreed at the Committee stage that the amendment was clearer than that in the Bill at present and that it followed the directive more closely. In the light of the explanation I have given, I hope that he and other noble Lords can now go further and agree to this amendment. I beg to move.
Lord Williams of Elvel Lord Williams of Elvel moved, as an amendment to Amendment No. 16, Amendment No. 17:
Line 16, leave out ("generally accepted accounting principles or practice") and insert ("the relevant Statements of Standard Accounting Practice.").
The noble Lord said: My Lords, in moving this amendment it may be convenient if I speak also to the principal amendment, Amendment No. 16 moved by the noble Lord, Lord Young of Graffham. This is the third government attempt at defining merger accounting. We had one definition originally in the Bill and an amendment was produced in Committee and withdrawn. Therefore, we must look at this amendment very carefully because we hope that this time the Government have got it right.
I accept that the Government are bound by Article 20 of the directive. I accept that paragraph 10(1)(c) in the government amendment is exactly along the lines of Article 20(1)(c) in the directive, however odd that may be; and it is extremely odd. As I said at the Committee stage, I believe that there are countries such as Belgium which have no par value shares and where the accounting value can be used instead of the nominal value. That means that the value of the 10 per cent. that may be offered in cash may well be higher. Therefore merger accounting in Belgium or any other country that adopts no par value shares could be more favourable, if that is the right word, than in the United Kingdom as a result of the amendment the Government are proposing.
Having said that, I wonder whether the noble Lord can explain what is the position of a company domiciled in Belgium where there are no par value shares which makes an acquisition in the United Kingdom where there are nominal values of shares and where it is issuing its equity shares as specified in paragraph 10(1)(c). Those equity shares are valued by their accounting value in the country of origin —

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that is, Belgium—rather than in the nominal value because there is no nominal value in Belgium. There may be no nominal value because no par value shares are allowed. I personally would argue that in the United Kingdom we might look closely at adopting the principle of no par value shares. But leaving that argument aside for one moment, I shall be grateful to the noble Lord the Secretary of State when he comes to reply if he can clarify our minds on that point.
The other point that troubles me as regards this amendment is paragraph 10(1)(a). It is in the normal procedures in the accounting standards for merger accounting and I could understand if we were to say that at least 90 per cent. of the relevant shares in the undertaking were to be acquired. That would make sense. Ninety per cent. of the shares are acquired as a result of an equity issue of some kind that may be underwritten, or maybe not. The expression,
"90 per cent. of the nominal value of the relevant shares",
tracks the word in the directive. I understand that the Government have to track the word, but I cannot see why in United Kingdom law we cannot get round it so that we do not have this rather obscure expression.
Clearly, if we are to take partly-paid shares which have a nominal value they may not be relevant shares but they have unrestricted rights. If we take different kinds of shares they may have unrestricted rights to participate in distribution of the assets but do not have votes. There may be a different voting structure. There may be all kinds of things. When we talk about the nominal value we are fixing ourselves to a slightly arbitrary arithemetical value that to my mind slightly confuses the issue.
The point I have tried to amend is contained in paragraph 10(1)(d) where the expression,
"generally accepted accounting principles or practice",
is used. That is a new expression that has come into this amendment but was not in the previous government efforts to define merger accounting. That expression would appear to permit any recognised method of merger accounting. In the United Kingdom it does not carry the same connotation that it carries in the United States, where such principles are the body of principles laid down by the various authorities there.
There is an obiter dictum in the 1975 case of Associated Portland Cement v. The Price Commission. I hasten to assure the Secretary of State, in case he gets the wrong idea, that this was before I became chairman of the Price Commission. His noble friend Lord Cockfield was Chairman at the time. The commission was taken to the courts by Associated Portland Cement. The expression "generally accepted accounting principles" was held to mean those principles that are approved as permissible or legitimate by the accountancy profession. The noble and learned Lord, Lord Denning, later added in the same judgment:
"by the accounting profession of the United Kingdom".
I believe that he slightly rescued the situation from that judgment.
Nevertheless, it is clear that the expression "generally accepted accounting principles" is current in the United States and not in the United Kingdom. It is important to make sure that we are talking about accounting standards that are approved by the various bodies in the United Kingdom. That is the point of the amendment.
I do not wish to go on and on about merger accounting, though it is a favourite topic of mine. I understand that the Government have had problems in translating the directive into suitable language for the Bill. I believe that the directive is very curious in its language, but that is not the fault of the Government at the moment. One can argue that the matter should have been better negotiated when the directive was put in place. Nevertheless, given the directive that we have to obey, I believe that the Government have had a fair shot at it though it raises all kinds of problems. If my amendment is accepted I would prefer that it is firmly fixed in United Kingdom accounting standards rather than something that is much more vague. I beg to move.
5.15 p.m.
Lord Mottistone: My Lords, perhaps I may just make a few remarks as regards both these amendments. The CBI, which advises me, is particularly keen that I should enter the lists for putting forward its viewpoint on this matter. It definitely took the government side the last time this amendment came before us at the Committee stage. Having read over the subject again, I congratulate the noble Lord, Lord Williams, for getting the Government to withdraw their own rather lengthy amendment. They rarely do so. One can sometimes get them to say that they will think about it or even do something, but to get them to withdraw it was quite an achievement. However, I see that they have reintroduced an amendment which is identical in all but a couple of words.
It is worth making the point that the CBI felt most strongly that the Government were right and that the noble Lord, Lord Williams, was wrong in the previous exchange at the Committee stage. I will not go over the ground because some of it has already been covered, but some of it has not. However, there is no point in fighting that which has not been fought this time. I believe it is important that your Lordships should know that, taking industry's view, the CBI did not believe that the noble Lord, Lord Williams, was right. He himself has admitted that the problem is that the wording of the directive has to be followed fairly closely.
That is a little ironical when one considers that my Amendment No. 9 was rejected on the ground that the wording of the directive did not have to be followed precisely. So there is a great deal of varied thinking on this matter. I shall be grateful if my noble friend on the Front Bench takes note that the arguments in favour of their amendment now, as regards the wording, are contrary to those that they were advancing against my Amendment No. 9. When the Government come to think about my amendment later on—not now—they will have to make their own arguments consistent throughout this Bill. I feel that is rather important.

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As regards the noble Lord, Lord Williams, and his amendment, it is worth making the point that this advice was given to me before his amendment was tabled. It was quite clear that the CBI was entirely happy with the Government's amendment at paragraph 10(d). The CBI says it believes that the Government have correctly taken the opportunity of sub-paragraph (d) to allow the use of statements of standard accountancy practice. This will allow flexibility to be used examining any restrictions which have to to be made in the operation of merger accounting. That means the CBI believes that the present wording covers the ground that the noble Lord, Lord Williams, is seeking to cover with his own amendment. I suggest that perhaps his amendment is not necessary.
Lord Young of Graffham: My Lords, I am grateful to my noble friend Lord Mottistone for recognising the Government's attempt to get this right. The noble Lord, Lord Williams, said that it was the third attempt. In fact, the second and the third attempts were almost identical. I hope the noble Lord will accept that we have taken this back, have thought about it again and have returned with it almost as it was. If I understood the noble Lord, Lord Williams, to be referring to Belgium, perhaps I may point out that merger accounting is a member state option. To my knowledge Belgium is not implementing this provision. Therefore in that case it does not apply. When it comes to be put into effect here companies and auditors will have to look upon what are generally accepted accounting principles.
Lord Williams of Elvel: My Lords, I understand what the noble Lord says about Belgium not implementing the provision. However, let us suppose that a United States company resident in Belgium has no par value shares, as is allowed in the United States, and the Belgium company has no par value shares.
Lord Young of Graffham: My Lords, no par value shares means that they have no value. In that instance one would interpret it as the stronger of the tests and would have to say "equity for equity". The noble Lord is going to extremes in this case. He is looking for obscure circumstances. In any event we would have to accept the tests of the seventh directive and follow its wording. We would have to see the generally accepted accounting principles. The noble Lord referred to the case of Associated Portland Cement. I would not wish to imply by my demeanour that that case occurred during his time as chairman of the Price Commission. I do not distinguish between different chairmanships of the Price Commission.
It is inconceivable that a United Kingdom court could pay regard to what would be generally accepted accounting principles in the United States. I am sure that the contribution of the noble and learned Lord, Lord Denning, to that case would be accepted today, but the court would look only at what would be generally accepted accounting principles here. I say that with one proviso. I suspect that in the future a
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European dimension may be added to that interpretation, a matter which we shall have to take increasingly into account.
We are agreed on what we are trying to achieve. The difference between us lies in how best to achieve this result. This has happened on not a few occasions this afternoon. It raises wider issues than conditions for merger accounting. There are three reasons why the amendment of the noble Lord, Lord Williams, should not be accepted. First, because the expression "accounting principles or practice", which I generally accepted, is already used in the Companies Act in relation to the definition of realised profits in paragraph 91 of Schedule 4. Secondly, our amendment has the effect we both want of allowing accounting standards to set tougher conditions without placing the standard in a straitjacket by making it an extension of the Companies Act. It is capable of dealing with market conditions or other conditions as they change in the future. Were the question of conditions to come before the court, it is likely on the wording of the Government amendment that the relevant accounting standards would be regarded as persuasive but not conclusive evidence of generally accepted accounting principles and practice. That is how we want the standard to have effect. Were part of it not to be generally accepted, then that part would not be persuasive before the court.
Thirdly, to incorporate into the Bill at this point a direct reference to accounting standards would in some measure be viewed as prejudging what is decided in response to the Dearing Report which was mentioned earlier this afternoon. We are waiting to evaluate a large number of responses. I hope that tomorrow my noble friend Lord Mottistone will read clearly what I said in regard to Amendment No. 9. I hope he will realise that in this instance at least the Government are being wholly consistent. For these reasons I ask the noble Lord not to press the amendment.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord. I shall not press the amendment but I should like to point out that in the Bill we are in danger of winding ourselves up in different definitions. We have had two definitions of "subsidiary" in different parts of the Bill. We have "generally accepted accounting principles", which I agree occurs in the Companies Act 1985, and we have "Statements of Standard Accounting Practice". We also have the statute. We are in danger of complicating life by having too many provisions trying to cover the same subject.
I accept what the noble Lord said about following the directive. I also accept what he said about waiting for the consultations on the Dearing Report before we see how this relationship between the statute and Statements of Standard Accounting Practice actually work out. For the moment I am prepared to live with the Government's interpretation of the directive, although if I wanted to I could continue the argument for quite a long time as to the interpretation of accounting values and nominal values in the words

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of the directive. I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
On Question, Amendment No. 16 agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 18:
Page 143, line 21, leave out ("and fair values") and insert ("immediately prior to the acquisition, and the fair values at the date of acquisition,").
The noble Lord said: My Lords, sub-paragraph (5) of paragraph 12 to Schedule 2 is a new disclosure requirement in respect of significant acquisitions. It is part of a package designed to help the user of accounts to unravel the sometimes confusing accounting treatment used for mergers and acquisitions. Better statutory disclosure in this area was the principal point commanding widespread support to emerge from a careful consultation exercise carried out by the department last year.
This amendment clarifies the disclosure set out in sub-paragraph (5). This requires for major acquisitions a table showing the book values and the fair values of each class of assets and liabilities of the company which has been acquired. The present text, however, does not make clear the dates as at which those amounts must be calculated. This is important since the purpose of the disclosure is to provide a comparison between the values of the assets and liabilities in the books of the target company immediately prior to the acquisition and the fair values of those assets and liabilities as at the date of the acquisition. Requiring book values to be given immediately prior to the acquisition limits the scope for an acquiring company to rework the figures disclosed by making doubtful provisions in the books of the company it is acquiring. This amendment cures this defect. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 19:
Page 144, line 9, after ("amount") insert ("of capital and reserves").
The noble Lord said: My Lords, with the agreement of the House I shall speak also to Amendment No. 20. The Government tabled identical amendments in Committee but did not move them. The amendments make minor changes to the rules in Schedule 2 which govern the way in which "minority interests" are shown in a company's consolidated balance sheet and profit and loss account.
Amendment No. 19 merely improves the wording in line 9 on page 144 by making clear that it is the amount of capital and reserves attributable to shares which has to be shown. The noble Lord, Lord Bruce of Donington, in speaking to this amendment in Committee accepted that change but suggested a further one—that the reference should be to "equity" rather than "shares". I was not able at the time to satisfy him as to why his suggestion would create difficulties. I shall try to do so now. If "equity" rather than "shares" were to be used in line 9 then the minority interests in the subsidiary undertaking
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disclosed in the balance sheet would be restricted to outside shareholders' holdings of equity shares. This might not take account of all of the outside shareholders'interests—for example, there may be preference shares. Consequently, in order to ensure that all outside interests are covered, it. is necessary to refer to "shares". I hope that this explanation is adequate for the noble Lord, Lord Bruce of Donington.
Amendment No. 20 looks complicated though its effect is quite simple. It makes it clear that "minority interests" have to be shown in the face of the balance sheet, as the seventh directive requires, and may not be relegated to the notes to the accounts. The amendment provides that the item is treated as one to which a letter is assigned. Under paragraph 3(4) of Schedule 4 to the Companies Act 1985, only those items that have an Arabic number in the standard balance sheet formats can, in certain cases, be relegated to the notes to the accounts. It also makes clear that "minority interests" in the profit and loss account can in certain cases be relegated to the notes to the accounts. These presentations accord with current practice. I beg to move.
Lord Williams of Elvel: My Lords, we are quite happy with the amendments that the Government have now put forward and, indeed, with the explanation which the noble Lord, Lord Strathclyde, has given as to why my noble friend's arguments could not prevail. We are embarking here upon a discussion of the treatment of minority interests and potential consolidation. I should prefer to have that discussion when we reach Amendment No. 21. For the moment, therefore I do not oppose the amendments.
On Question, amendment agreed to.
5.30 p.m
Lord Strathclyde Lord Strathclyde moved Amendment No. 20:
Page 144, line 34, leave out sub-paragraph (5) and insert—
("(5) For the purposes of paragraph 3(3) and (4) of Schedule 4 (power to adapt or combine items)—

(a) the additional item required by sub-paragraph (2) above shall be treated as one to which a letter is assigned, and

(b) the additional items required by sub-paragraphs (3) and (4) above shall be treated as ones to which an Arabic number is assigned.").

The noble Lord said: My Lords, I beg to move.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, before calling Amendment No. 21, I should explain that if the amendment is agreed to I shall not be able to call Amendment No. 22.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 21:
Page 144, line 46, leave out from first ("undertaking") to end of line 2 on page 145 and insert "jointly with one or more undertakings not included in the consolidation, that other undertaking ("the joint venture") may, if it is not—

(a) a body corporate, or

(b) a subsidiary undertaking of the parent company,").

The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to

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Amendments Nos. 22, 23 and 27. These amendments concern the use of the method of accounting for joint ventures known as proportional consolidation. In responding to the noble Lord, Lord Williams of Elvel, and to my noble friend Lord Mottistone at the Committee stage, we acknowledged that there were problems with the existing definition of a joint venture in paragraph 18 of Schedule 2 to the Bill. We undertook to return to the subject. I should like to explain why, following further consultation, we wish to make particular changes covered by this series of amendments. I believe that they go very much in the direction sought by those noble Lords.
It has been put to us that setting out a detailed and restricted definition of a joint venture in the Bill may prevent the use of proportional consolidation for the kind of joint venture quite commonly found in the oil industry, and some other industries, which takes the form of an unincorporated association—and for which proportional consolidation is an entirely appropriate accounting treatment.
We agree that proportional consolidation is an appropriate accounting treatment in such cases. The amendments are intended to allow this, without allowing proportional consolidation as a method of accounting for a much wider range of bodies for which we believe such treatment would be inappropriate. That is achieved by relaxing the definition of a joint venture in one way and tightening it in another. It is relaxed in that the amendments simply define a joint venture in terms of joint management. It is tightened in that the amendments restrict the use of proportional consolidation to unincorporated bodies.
I should explain why it is appropriate to draw a distinction between incorporated and unincorporated bodies in this respect. Proportional consolidation involves bringing into the consolidated balance sheet, line by line, a proportionate share in the assets and liabilities. That is particularly appropriate accounting for a stake in an unincorporated joint venture. The company's interest in that joint venture can be seen as akin to a direct interest in the assets and liabilities rather than an indirect holding through shares. The second reason is that the Companies Act in our view arguably already prohibits the use of proportional consolidation for incorporated joint ventures, although it does not say so in as many words. We are therefore simply maintaining the present position.
Thirdly, the amendments are in line with the existing accounting standard. Paragraph 18 of Statement of Standard Accounting Practice No. 1 says that the equity method of accounting—which would otherwise apply—and I now quote:
"need not be applied to interests in partnerships or non-corporate joint ventures where such arrangements have features which justify accounting for a proportionate share of individual assets and liabilities as well as profits or losses".
Put another way, equity accounting is prescribed as the appropriate treatment for the incorporated joint venture. Fourthly, we are not aware that there is pressure from companies actually wanting to use
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proportional consolidation for incorporated joint ventures and to that extent the question is at the present time largely academic.
Finally, to permit proportional consolidation for the incorporated joint venture would give companies too much latitude in the way they account for certain associates. On this point it is only fair to add that some accounting bodies suggest that the Bill should not restrict proportional consolidation to unincorporated joint ventures but should leave this to be settled by accounting standards. We have considered that idea carefully. While we see accounting standards having an important role to play, for example, in giving guidance on what is meant by "managed jointly", once the law clearly envisages that possibility of proportional consolidation for an incorporated joint venture, we doubt that an accounting standard could be introduced which would limit the use of proportional consolidation to unincorporated joint ventures.
Moreover, agreeing to this amendment does not involve setting the position in stone until the next Companies Bill. We are willing to consider further reasoned argument as to why a further adjustment should be made to the law. That could be done while the Bill is still before Parliament, or subsequently. The Bill includes a power to amend the detailed accounting rules by statutory instrument to deal with precisely that kind of point. It allows for development in accounting thought and practice.
I apologise for speaking at some length on these amendments, but I believe that it is important to set out our thinking. The issue is of particular interest to certain companies and has aroused considerable interest recently within the accounting profession. The amendment to Schedule 3—Amendment No. 27—changes the disclosure provisions for joint ventures and is consequential on the amendments to Schedule 2.
I should also comment briefly on the amendment tabled by my noble friend Lord Mottistone. It would have the effect of removing the restrictions on what is to be considered a joint venture for this purpose, much as the government amendment, but would not restrict proportional consolidation to unincorporated joint ventures. I hope that my noble friend can accept that restriction for the reasons I have explained at some length, and that he also accepts that the amendment he has put forward is subsumed in the government amendments. I beg to move Amendment No. 21.
Lord Mottistone: My Lords, I am grateful to my noble friend for what he has said. I am also grateful to him for taking note of what I did not in fact say in Committee. That situation arose because my advice arrived too late. If one were to look in Hansard one would see that the advice arrived on the morning of the debate. At that time my noble friend Lord Strathclyde said that he was quite happy to receive such advice in written form. That was the course of action I took and therefore your Lordships will not know exactly what was said. However, I can tell the House that the amendments put forward by the Government more than cover what I, and the CBI, were seeking to achieve. Of course what is

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proposed encompassses Amendment No. 22 in my name. Indeed, it goes further in certain directions. I am advised that it is perfectly acceptable.
The main point was that the Bill as drafted did not appear to allow for more than three participants in a joint venture. Many industries, including the oil industry, the international construction industry and the engineering contractors, would have been adversely affected. Therefore it is a pleasure to see that that particular point has been taken care of. I shall not burden your Lordships with other examples to illustrate how the proposals are satisfactory. Suffice to say, I am pleased that Amendments Nos. 21 and 23 cover what we were seeking to achieve.
Lord Williams of Elvel: My Lords, we too welcome the amendments. In general, they follow the line we are taking in Committee. However, I should like to make one or two points. I hope that the Secretary of State will be able to clarify them when he comes to respond. So far as I can see, the expression "proportional consolidation" is new to the statute book and is not defined in the Bill. It could mean two things. It could mean that a company will show its proportionate share of assets and liabilities adjacent to, but separate from, its own balance sheet; in other words, one has two columns: one is the balance sheet of wholly owned or wholly consolidated assets and liabilities, and the other is the proportionately consolidated assets and liabilities, or it could be that there will be a combined total of assets and liabilities in the balance sheet, and the distinction between what is fully owned or fully consolidated and proportionately consolidated is not made, but merely translated down to the bottom as minority or joint venture interest.
Method number one—showing parallel to the main balance sheet the proportion of assets and liabilities which are owned—seems to be considered by members of the profession as more appropriate than method number two. I say "seems to be" because this is a new exercise through which people are going. Method number two, the full consolidation (the merging of the two columns) is appropriate where there is an element of control, and it is appropriate where there is control of a joint venture operation operating in the same industry or the same branch of industry as the parent—I will use the expression "parent" for the purpose of the argument—and it is probably also right when the venture is primarily a financing vehicle. It may not be right when there is a company operating in a different industry or a different branch of the industry, and therefore needs to be shown as — —
Lord Young of Graffham: My Lords, perhaps the noble Lord will allow me to intervene. As I understand the position, we are saying that one can have proportional consolidation for unincorporated bodies but not for incorporated bodies. Unincorporated bodies are essentially partnerships between companies in whatever proportion that partnership is owned by the company which is seeking to consolidate the assets. To that extent, is the test of minority share or the test of control the same as if it were an incorporated body? In other words, there may be a direct liability under the partnership.
Lord Williams of Elvel: My Lords, I suspect that it is. I suspect that the partnership can be controlled and an unincorporated association can be controlled in the same way as a subsidiary. I do not see that that point is relevant; nevertheless, 1 am prepared to listen to what the Secretary of State says in reply.
I accept that the Government are eliminating the possibility of a proportional consolidation of corporate industries and that the equity method of accounting (the one-line consolidation) is the one that they are going for. I have no particular problem with that where the venture is an unrelated business. But this is where I come to the amendment tabled by the noble Lord, Lord Mottistone. I wonder whether that is not going a little too far. I put the question, not because I have any persuaded view on it but merely because I wish to discuss the matter, whether there is not a case for something more than simple one-line consolidation of companies over which there is an element of control, even if it is only on a joint venture basis. The Government may have good reasons for excluding that possibility, but I should like to hear from the Minister what those reasons are.
I am trying to make two points. There are significant differences in presentation between what I regard as method number one, where there is a separate column, even on an unincorporated association which is joint ventured with the parent, and where the two balance sheets are rolled into one. Secondly, I wonder, and speculate, whether it is right to exclude altogether a proportional consolidation of corporate bodies.
5.45 p.m.
Lord Young of Graffham: My Lords, I shall deal with the second point made by the noble Lord, Lord Williams of Elvel. I suspect that it is right to exclude altogether proportional consolidation of unincorporated bodies, because they are separate legal entities. The corporate veil still applies and there is no legal liability unless it has been specifically entered into for the debts of the subsidiary of a parent company. If it were to be entered into and guarantees were to be given, that is surely a matter which, if it were of significance, would be noted on the accounts in some way.
Proportional consolidation as a statement is not defined as such within the statute. It is a well understood accounting term, and part of the generally accepted accounting principles and practice of which we have heard this afternoon. It means combining the totals. If we look at the proportional consolidation for unincorporated bodies, that esssentially means a share of the assets and liabilities which are directly attributable to that partner in the unincorporated body.
It may or may not involve joint and several liability. If it is several liability, then proportional consolidation should be suitable. I suspect that if it involves joint liability it is a matter which prudent accountants would note on the accounts. In terms of assets and liabilities, it would be proportional consolidation which would seem to be the most suitable, and therefore I hope that the noble Lord will accept it.
Lord Williams of Elvel: My Lords, presumably if it is joint and several responsibility, then it is joint and several responsibility for all liabilities and they become the liabilities of the organisation, and so there is still consolidation at that point.
Lord Young of Graffham: My Lords, whether it is full or partial consolidation, it would be joint responsibility for the liabilities but not necessarily the assets. Although I am not an accounting expert, and it is a long time since I dealt with such matters, I suspect that what would happen is that there would be proportional consolidation, and I suspect a note on the balance sheet or some note of the liabilities which would be covered by the joint liability. Those are matters upon which the accountants would determine a full and fair view of the accounts and would reflect that. We can see a good case to allow proportional consolidation for unincorporated bodies but not for incorporated bodies. I hope that the noble Lord will go along with that.
On Question, amendment agreed to.
[Amendment No. 22 not moved.]
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 23:
Page 145, line 4, leave out sub-pararaphs (2) and (3).
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 24:
Page 145, line 33, at end insert (", that is, shall not be regarded as held by any person or as forming part of the voting rights in the undertaking").
The noble Lord said: My Lords, I moved an identical amendment to paragraph 19 of Schedule 2 in Committee. Those noble Lords who spoke said that they found it difficult to understand. This is a modest amendment which the Government brought forward, and are bringing forward again, in response to a point put to us that the existing wording of sub-paragraph (3) of paragraph 19 is ambiguous. In view of the difficulty that caused last time I shall speak slightly more fully than I would otherwise do.
Paragraph 19 of Schedule 2 defines an associated undertaking. There is a presumption in sub-paragraph (2) that one company is an associate of another when that other holds 20 per cent. or more of the voting rights. This follows the requirement of the seventh directive. Sub-paragraph (3), with which the amendment is concerned, is one of a number of provisions which help to interpret the term "voting rights" for this purpose. Sub-paragraph (3)(b) is concerned with a special case: at present it says that voting rights which the undertaking in question is entitled to require should not be exercised shall be left out of account. It has been put to us that that is not entirely clear. Does "left out of account", for example, mean that such voting rights are not to be treated as held by the undertaking in question? Or does it mean that the voting rights in question are to be treated as though they do not exist? The amendment makes clear that such voting rights are both to be regarded as not held by anyone and also to be disregarded in determining the total voting rights in the undertaking. With that full explanation, I beg to move.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, Lord Strathclyde, for giving what he describes as "a full explanation" of the government amendment. It needs a full explanation because this is an exceedingly complicated part of the schedule. I am not sure even now whether I fully understand what the noble Lord said or the purport of the government amendment. Nevertheless, it is an issue which we shall examine carefully. If we have any major problems, we shall come back to the matter on Third Reading.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 25:
Page 146, line 6, leave out ("a subsidiary undertaking") and insert ("any of its subsidiary undertakings or a person acting on behalf of the undertaking or any of its subsidiary undertakings")
The noble Lord said: My Lords, with the agreement of the House I shall also speak to Amendment No 58. In Committee the Government accepted in principle that two amendments tabled by the noble Lord, Lord Williams, with the same purpose as these amendments corrected a defect in the Bill. I agreed to consider the detailed drafting and to bring forward equivalent amendments for Report. The purpose is to ensure that proper effect is given to Article 2.3 of the seventh directive. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 26:
Page 146, line 29, at end insert ("(after making any consolidation adjustments)").
The noble Lord said: My Lords, this corrects an ambiguity on a point of detail relating to the accounting treatment of associated undertakings. Paragraph 21(2) of Schedule 2 is concerned with the case where an associated undertaking is itself a parent undertaking. It prescribes in such a case that the net assets and profits or losses which provide the basis for the calculation on the equity basis of valuation are those of the associated undertaking itself and its subsidiary undertaking taken together. However, as presently drafted the provision gives no guidance as to whether the figures are to be calculated before or after the usual consolidation adjustments —for example, the elimination of transactions within the group. The figures should be those after making those adjustments and the amendment simply makes this clear. I beg to move.
Lord Williams of Elvel: My Lords, I am very surprised that this amendment is necessary. I should have thought that the expression, "the net assets and profits or losses to be taken into account" by itself eliminates all consolidation adjustments. I am baffled as to why the Government seek to introduce more wording into the Bill.
Lord Strathclyde: My Lords, with leave, the noble Lord suggests that the amendment is otiose. However, our advisers say that we need it, and therefore we put it forward.
On Question, amendment agreed to.
Schedule 3 [Disclosure of information: related undertakings]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 27:
Page 153, leave out lines 29 to 46 and insert ("—

(a) the name of the undertaking;

(b) the address of the principal place of business of the undertaking;

(c) the factors on which joint management of the undertaking is based; and

(d) the proportion of the capital of the undertaking held by undertakings included in the consolidation.").

The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 28:
Page 155, line 11, leave out sub-paragraph (2).
The noble Lord said: My Lords, this is a minor amendment which tidies up Schedule 3 to the Bill relating to disclosure of information in company accounts of related undertakings. I beg to move.
On Question, amendment agreed to.
Schedule 4 [Disclosure of information: emoluments and other benefits of directors and others]:
Lord Young of Graffham Lord Young of Graffham moved Amendments Nos. 29 to 37:
Page 158, line 36, leave out from beginning to ("the") in line 37 and insert—
("(3) There shall also be shown, separately, the aggregate amount within sub-paragraph (2)(a) and (b)(i) and").
Page 158, line 47, at end insert —
("and emoluments in respect of a person's accepting office as director shall be treated as emoluments in respect of his services as director.
(5) Emoluments shall be treated for the purposes of this paragraph as paid to or receivable by a person if they are paid to or receivable by a person connected with him or a body corporate controlled by him.").
Page 159, line 3, after "1" insert ("(1)").
Page 159, line 44, after "1" insert ("(1)").
Page 160, leave out lines 29 to 31 and insert—
("(3) References to compensation include benefits otherwise than in cash; and in relation to such compensation references to its amount are to the estimated money value of the benefit.").
Page 160, line 35, at end insert—
("Sums paid to third parties in respect of directors' services
8A. — (1) There shall be shown the aggregate amount of any consideration paid to or receivable by third parties for making available the services of any person—

(a) as a director of the company, or

(b) while director of the company—

(i) as director of any of its subsidiary undertakings, or

(ii) otherwise in connection with the affairs of the company or any of its subsidiary undertakings.

(2) The reference to consideration includes benefits otherwise than in cash; and in relation to such consideration the reference to its amount is to the estimated money value of the benefit.
The nature of any such consideration shall be disclosed.
(3) The reference to third parties is to persons other than—

(a) the director himself or a person connected with him or body corporate controlled by him, and

(b) the company or any of its subsidiary undertakings.").

Page 160, line 38, leave out ("and 8") and insert (", 8 and 8A").
Page 161, line 6, leave out ("and 8") and insert (", 8 and 8 A").
Page 162, line 3, at end insert—
("(4) References in this Part of this Schedule to a person being "connected" with a director, and to a director "controlling" a body corporate, shall be construed in accordance with section 346.").
The noble Lord said: My Lords, this series of amendments improves the information which the law already requires be given to shareholders about payments made in connection with the appointment and services of directors. The purpose: is to stop up loopholes in the existing disclosure requirements which limit the usefulness of the information. This follows the helpful discussion on this subject at the Committee stage. I believe that these changes to existing requirements will find favour with noble Lords who spoke at that earlier stage.
There are three principal changes from the existing requirements. The first concerns so-called "golden hellos" —a phenomenon that has arrived in the cloistered calm of government since I left the private sector. I hope the practice continues when the time comes for me to return. They are payments made in money or money's worth to a person to secure his services as a director. The first part of Amendment No. 30 addresses this point by extending the definition of emoluments. It is identical to a government amendment tabled for Committee. As I explained to the Committee, where a payment is made before a director joins the company and without any obligation to take up appointment, it is arguable that the payment falls outside the existing definition of emoluments and therefore does not need to be disclosed. We believe this is a weakness in the present disclosure arrangements.
The second change made by the second part of Amendment No. 30 also extends the meaning of emoluments. It arises out of discussion on amendments tabled at the Committee stage by the noble Lord, Lord Williams. It brings within a director's emoluments payments made to persons connected with him or to a body corporate controlled by him. "Connected" and "controlled" in this context are defined by reference to Section 346 of the 1985 Act. In essence they catch payments which, though made to someone other than the director, are in all likelihood for his benefit.
The third change would require separate disclosure of payments to third parties other than to those closely connected with the director. This is the purpose of Amendment No. 34. It is aimed at the case where, for example, a company loans one of its employees to another company as a director and receives payments in return, perhaps as compensation for loss of that person's services. There is nothing wrong with this practice but it is information which should be made available to shareholders. The amendment goes slightly further than the change proposed by the noble Lord, Lord Williams, in Committee which would have covered payments to third parties in connection with the appointment of a director but not payments in respect of his services as director.
The other amendments are either consequential or make minor improvements to the existing wording. I believe that this is a sensible package of improvements to the existing requirements. I beg to move Amendments Nos. 29 to 37 together.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for setting out these amendments and to the Government for bringing them forward because they respond to the concerns that we showed in Committee. We therefore welcome them. As the noble Lord has said, they go slightly further than even we had asked for, and I think that is absolutely right.
I am sorry that the noble Lord was not in a position to benefit from golden hellos when he was in the private sector. I am sure that on his return—and I hope that the noble Lord will not misunderstand me if I suggest that his return will take place sooner rather than later—the golden hellos will be in order when the time comes. We are very grateful to the Government for doing what we requested in Committee. We do not oppose the amendments.
On Question, amendments agreed to.
Clause 7 [Approval and signing of accounts):
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 38 and 39:
Page 12, line 40, leave out ("or the secretary").
Page 13, line 3, leave out ("or the secretary").
The noble Lord said: My Lords, we bring forward these amendments in response to the discussion in Committee. The changes on the signing of accounts were included in the Bill as a minor and sensible piece of deregulation. I recognise that allowing the company secretary to sign the accounts has given rise to fears that the directors will take it as a signal that they can disown responsibility for the accounts. The noble Lords, Lord Benson and Lord Williams, represented those fears at the Committee stage with considerable eloquence and verve. We do not share those fears. Indeed we believe that in practice they would prove to be unfounded.
The signature is purely recognition that the accounts have been properly approved by the directors. That said, we recognise that perceptions are important on a subject such as this. There is no point of principle involved for the Government. We have no wish to see a change to the law interpreted—albeit, in our view, mistakenly—as a signal that the directors need not take seriously their responsibility for preparing proper accounts. I am happy therefore to bring forward these amendments which simply remove the references to the company secretary in Section 233. I beg to move Amendments Nos. 38 and 39 together.
Lord Mottistone: My Lords, I merely wish to mention that the CBI is aware of this matter. It made this point through one of its members and it is delighted to see it in the Bill. I endorse the thoughts of the CBI on this matter.
On Question, amendments agreed to.
6 p.m.
Clause 8 [Directors' report]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 40:
Page 14, line 16, at end insert ("save for any section relating to contributions for political purposes, which shall be left unsigned and shall be expressed in the form of a proposal for ordinary resolution to be approved by the company in general meeting").
The noble Lord said: My Lords, this amendment is identical to one I failed to move in Committee. Nevertheless, I spoke to it at that stage. I beg to move.
Lord Stevens of Ludgate: My Lords, I do not find myself in sympathy with the amendment proposed, although I appreciate that a related part of it has already been approved by your Lordships' House. Companies of which I am a director make political contributions. Dare I say that in the past contributions have been made to more than one political party? If we are not careful we may put ourselves in the position where numerous items have to be separately approved by shareholders before the accounts can be signed. The directors are elected by shareholders to manage the company, and the correct recourse surely is for shareholders to remove directors when they disapprove of the way the company is managed and not to approve numerous details in the company's accounts.
Lord Young of Graffham: My Lords, as the noble Lord, Lord Williams, has reminded us, this amendment was discussed in Committee on a paving amendment, and despite the Government's advice the Chamber showed that it supported the principle underlying it. Although the noble Lord omitted to move the amendment itself when it was reached, I do not feel that it would be in accordance with the tradition of the House to seek to take advantage from that. We also have a convention that we do not seek to reverse on Report amendments on which the Chamber has voted in Committee. This is a valuable convention, which greatly facilitates our business. I shall not therefore be inviting the House to oppose this amendment today.
I should make the Government's position quite clear to the House. For the reasons which my noble friends, Lord Strathclyde and Lord Boyd-Carpenter explained in Committee, we regard this amendment as being wholly wrong in principle, unnecessary, and significantly defective in practice. It is wrong in principle because there is no good reason for treating political donations differently from other payments by a company. It is unnecessary because there are already effective ways in which shareholders can secure discussion about political donations if they are concerned about them. And it is defective because it leaves unclear what the result would be if the shareholders refused to approve donations already made. Would they have to be repaid, and what would happen if they were not? This would be a most unsatisfactory position. I feel sure that these are all points which will have to be addressed when the Bill reaches another place.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for his clear statement of the Government's position. He and his right honourable friends in another place will certainly have to argue this out. I hope they can advance rather stronger arguments than the noble Lord has advanced today. If they cannot, they will be in some trouble. No doubt the Government will consider the position in another place. If in another place a decision is taken to reverse what your Lordships have put in the Bill, no doubt your Lordships will have another opportunity to consider this matter. I am grateful to the noble Lord for not taking advantage of a technical slip on my part, for which I apologise.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 41 and 42:
Page 14, line 35, after ("report") insert("—(a)").
Page 14, line 36, at end insert ("and
(b) in paragraph 6 (general information), for "subsidiaries" in each place where it occurs, substitute "subsidiary undertakings".").
The noble Lord said: My Lords, I beg to move Amendments Nos. 41 and 42 en bloc. The effect of these amendments is to make a very small change to Schedule 7 of the 1985 Act, which sets out what must be covered in the directors' report. There will be very little change in practice, but the change is right in principle and is necessary to give proper effect to Article 36.2 of the seventh directive.
On Question, amendments agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 43:
Page 14, line 36, at end insert—
("(3) In paragraph 1(2) of Schedule 7 to that Act leave out the words from "balance sheet" to "the report".").
The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to Amendment No. 44. These amendments try to amend the present disclosure requirement in the directors' report. Substantial differences between book and market values of land should be reported to shareholders if the directors consider them sufficiently significant to warrant being drawn to their attention. In many cases such differences exist but are not reported, so there is a problem.
This lack of disclosure has been confirmed in several surveys of large company procedure. The usual argument against disclosure is that directors have no intention of selling and therefore the change in value is not relevant. But that avoids the question of whether the alternative investment of the assets concerned would be in the shareholders' interest. By denying shareholders that information on which they can form a judgment, it could be argued that they are being denied an opportunity to question the effective management of the assets they own.
This is not a matter on which auditors are required to comment. Up-to-date information on value, particularly of property, is in our view of considerable importance. It is not at the moment very clear exactly what is being done. As I say , there has been a survey of large company practice. But we want to see something rather more definite put in the Bill.
Amendment No. 44 proposes that the Bill should include the words:
"if there are no such differences that fact shall be stated".
These are somewhat minor amendments, but they address a point which needs to be addressed. Therefore, I look forward to hearing what the Secretary of State has to say. I beg to move.
Lord Young of Graffham: My Lords, I too shall speak to Amendments Nos. 43 and 44. I fear I am less attracted by the first of these amendments than the second. We have had only a relatively short time to study the implications, but I am willing to accept that they merit more careful consideration. I can give the noble Lord an assurance that we shall consider them more carefully between now and Third Reading but without commitment.
Amendment No. 43, by deleting part of the existing wording of paragraph 1 of Schedule 7, would simply require the disclosure in the directors' report whenever there was a significant difference between the market value of any land and the amount at which it is included in the company's books. There may be some merit in that idea where land is itself a substantial element in a company's overall assets. One difficulty with the noble Lord's amendment is that it would also require disclosure where land is not a substantial element in a company's assets, but where it is shown in the books at an amount significantly different from its fair value.
Amendment No. 44, on the other hand, would ensure that the directors make either a negative or a positive statement. My understanding is that the directors' report often includes such a disclosure even though there is no statutory requirement. I am happy to consider further whether that is acceptable.
I can give no undertaking that the Government will come back with their own amendments on this subject at a later stage. But, as I have said, we shall look at this carefully in the light of the noble Lord's explanation of the purpose of his amendments. I hope that on this basis he is willing to withdraw this amendment.
Lord Williams of Elvel: My Lords, I am most grateful to the Secretary of State for his comments. I understand that these amendments were tabled at a fairly late stage and the Government may not have had a chance to look at them in as much depth as they would like. I tabled the amendments in order to raise a point. I think the noble Lord has taken the point. As he has given us an undertaking that he will study the amendments without any commitment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
(Amendment No. 44 not moved.)
Clause 9 [Auditors' report]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 45:
Page 14, line 47, at end insert("—

(a) in the case of an individual balance sheet, of the state of affairs of the company as at the end of the financial year,

(b) in the case of an individual profit and loss account, of the profit or loss of the company for the financial year,

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(c) in the case of group accounts, of the state of affairs as at the end of the financial year, and the profit or loss for the financial year, of the undertakings included in the consolidation as a whole, so far as concerns members of the company.").

The noble Lord said: My Lords, this amendment does not, in our view, make a change of substance to the Bill. Rather, we bring it forward in response to the genuine concern felt by a number of people in the accountancy profession—concern which was eloquently reflected by the noble Lord, Lord Williams, and the noble Lord, Lord Benson, in Committee. That concern is that by re-enacting the substance of existing Section 236(2) in a different form we have affected the audit report fundamentally by seeming to weaken the references to the true and fair view. We believe that that is a question of perception. However, I recognise that the profession feels more at ease with something more familiar and more detailed than that included in the Bill. This amendment is intended to meet that concern. I accept that in practice the auditors' report tends to follow the wording of the Act and there is therefore some merit in spelling out the true and fair requirement—in effect, prescribing the form of the audit report. There is no point of principle involved for the Government. I beg to move.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord, Lord Strathclyde, for bringing forward this amendment. As I am sure noble Lords will agree, it is extremely important to be absolutely clear regarding the scope and content of the auditors' report. We emphasised that point when the Bill was before your Lordships in Committee.
The only problem I have with the amendment concerns paragraph (c). Let us consider the position of a subsidiary which is required to be excluded from consolidation under Section 229(4). That subsidiary will be incorporated in the consolidated accounts under the equity method, exactly as though it were an associate company, rather than consolidated in full like other subsidiaries. However, if it is not a UK company its accounts will also be attached to the group accounts, under Section 243(2). Does the auditors' report cover those additional accounts? The subsidiary has been included in the sense that it is incorporated in the accounts; but it is not included in the consolidation, unless that means some form of consolidation such as the equity method.
I hope very much that the noble Lord will be able to help me on that point. We want clarity and I think that a further explanation of precisely what the Government have in mind would be most welcome for those of us who wish to see an important clarification of the words of the Bill.
Lord Strathclyde: My Lords, after the fairly substantial debate in Committee and what I have just said I am sorry that I have not been able entirely to satisfy the noble Lord, Lord Williams, on this matter. Perhaps I should point out that the word "included" means included in the consolidation
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within the accounts. Therefore I believe that the problem raised by the noble Lord does not arise.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for that explanation. I am not sure that I fully understood it. Perhaps he will be kind enough to write to me and let me know the full position.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 46:
Page 15, line 25, leave out from ("are") to end of line 27 and insert (", where the office of auditor is held by a body corporate or partnership, to signature in the name of the body corporate or partnership by a person authorised to sign on its behalf.").
The noble Lord said: My Lords, this amendment makes a small change to new Section 235A which concerns the signature of the auditor's report. Subsection (5), in its present form, requires, where the auditors are a partnership or a body corporate, that the report is signed in the name of an individual authorised to sign on behalf of that body or partnership. The provision was introduced as an aid to enforcement in cases of suspected fraud or malpractice. We are now persuaded, however, that there is no need for this—checks made with the regulatory bodies established under Part II of the Bill are likely to prove more effective. The amendment requires instead, where the auditor is a partnership or a body corporate, that the report is signed in the name of the body or partnership. This accords with usual practice and we believe that the amendment will be warmly welcomed by the profession. I beg to move.
On Question, amendment agreed to.
6.15 p.m.
Lord Williams of Elvel Lord Williams of Elvel: moved Amendment No. 47:
Page 16, line 10, leave out ("information and explanations") and insert ("records, information and explanation whether oral or in legible form").
The noble Lord said: My Lords, in moving Amendment No. 47 I should also like to speak to Amendment No. 48. These two amendments are designed to probe the Government's intentions. We raised the points previously in Committee. In our view it is important to ensure that the auditor should have access to original records and that it should be stated precisely what that means. In our view the present wording allows directors to provide second hand information which could in certain cases be filtered by the directors . I hope very much that since the Committee stage of the Bill the Government have been able to reflect on the matter and respond. I beg to move.
Lord Strathclyde: My Lords, we have considered these amendments in the light of what the noble Lord said at the Committee stage and I have listened to him now. We have also taken preliminary soundings with one or two auditing practitioners. Our conclusion is that the words contained in the Bill as it stands are adequate, and that the changes in the wording proposed by the noble Lord would be unnecessary and very possibly confusing. We are not aware of any pressure from the auditing

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profession for changes of the law at this particular point, either on the lines proposed by the noble Lord or otherwise. In the light of that situation, I hope that the noble Lord will feel free to withdraw his amendment.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord. I am glad that the Government have consulted on this matter. I accept their word that no representations were made by any of the various bodies concerned with the profession. I confess to being slightly surprised by that, but if that is so then I believe that the matter should be left there. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 48 not moved.]
Clause 10 [Publication of accounts and reports]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 49:
Page 17, line 27, at end insert ("guilty of an offence and").
The noble Lord said: My Lords, Amendments Nos. 49 and 50 simply insert the words "guilty of an offence" in two places—in new Section 238(5) and in new Section 240(6)—where they are missing. That defect has been carried across from the corresponding provisions in the 1985 Act. We simply wish to take this opportunity to correct it. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 50:
Page 18, line 46, after second ("is") insert ("guilty of an offence and").
On Question, amendment agreed to.
Clause 14 [Public listed companies: provision of summary financial statement]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 51
Page 28, leave out lines 21 to 24 and insert—
("(5) No regulations under this section shall be made unless a draft of the instrument containing the regulations has been laid before and approved by a resolution of each House of Parliament.").
The noble Lord said: My Lords, we are dealing here with the contents of the proposed summary financial statement. Under Clause 14 of the Bill as at present drafted the regulations which spell out what is to be contained in the summary financial statement are subject to the negative procedure and your Lordships' House, unless noble Lords decide to pray against any such order, will not have an opportunity to discuss it.
This is a particularly important part of the Bill because it is an innovation. Having prompted the Government on an earlier occasion in Committee to accept a negative procedure rather than the affirmative procedure that was originally in the Bill, I very much hope that this time the Government will help me by accepting the affirmative procedure rather than the negative procedure that is present in the Bill. I beg to move.
Lord Young of Graffham: My Lords, one of the besetting sins of any of us who have the privilege of exercising power is a reluctance to delegate. It is so tempting to want to keep one's hands on every aspect of a project, but, as we all know, unless one delegates the less important matters it soon becomes impossible to find time to deal with those matters that are more important. I want to suggest to noble Lords who moved this amendment that it is perhaps disproportionate to require Parliament to set aside time on the Floor of the House to consider and approve in advance the detailed arrangements for summary financial statements.
The regulations to be made under new Section 252 will do three things. First, they wall specify the cases in which a listed plc may, if it wishes, avail itself of this new facility. We do not at present have any expectation of restricting the availability of the option, but no doubt the public consultation exercise to which we are committed will reveal whether there are any circumstances in which the option ought to be withheld. Secondly, the regulations will set out the procedure that companies must follow to ascertain whether a shareholder wishes to receive the full version of the annual report and accounts. Thirdly, the regulations will specify the form and contents of the summary financial statement.
Each of those three matters is simply the detailed application of the general principles set out in the Bill, and is therefore a field which Parliament has traditionally felt comfortable about delegating to the appropriate Secretary of State—subject of course to the ultimate power to annul the Secretary of State's regulations. Moreover, the provisions simply offer options and do not deprive anyone—certainly not shareholders—of any existing entitlement.
I ask the House to consider whether, given the nature of the matters that we are discussing and the long tradition of wide consultation on detailed company law matters, it is necessary to require the House to approve the detailed regulations in advance, and of course any subsequent changes that may be necessary, for example, to match minor changes in the form and content of company accounts. I therefore invite noble Lords to reconsider whether those matters are of such key importance as to require specific parliamentary approval each and every time. In our view, these are matters that Parliament can properly leave to administrative implementation. I hope that the noble Lord, Lord Williams of Elvel, will not press this amendment.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for giving us some inkling of what the Secretary of State will produce in the regulations. I find it odd that we have spent a great deal of time discussing what should be in the directors' report and accounts —indeed, what is in the directors' report and accounts is on the face of the Bill —yet we shall not even have the possibility of looking in draft at the summary financial statement. There seems to me to be a disproportion in those two facts. Nevertheless, we shall consider the matter. I do not intend to press the amendment at this time of the evening and at this stage of the Bill. We shall certainly look at the matter again, but I cannot

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guarantee not to come back to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 [Private companies: election to dispense with laying of accounts and reports before general meeting]:
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 52 and 53:
Page 29, line 28, leave out ("payable") and insert ("due or to become due").
Page 29, line 29, at end insert—
("() The directors shall be deemed not to have duly convened a meeting if they convene a meeting for a date more than 28 days after the date of the notice convening it.").
The noble Lord said: My Lords, these amendments make minor improvements to new Section 253(6). The first amendment replaces the word "payable" to make clear that, in the particular circumstances of the section, the company can retain its expenses out of fees payable now or in the future. The second amendment is consequential on a change to the Bill made in Committee to Section 368 of the 1985 Act. This provision is at paragraph 5 of Schedule 1 to the Bill. I beg to move.
On Question, amendments agreed to.
Clause 17 [Banking and insurance companies and groups: special provisions]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 54:
Page 30, line 34, leave out from ("group") to ("where") in line 35.
The noble Lord said: My Lords, this amendment simply removes redundant words. I beg to move.
Lord Williams of Elvel: My Lords, are there more redundant words in the Bill that could be removed?
Lord Strathclyde: My Lords, there may well be. Such words have often been pointed out by the noble Lord, to whom we are grateful.
On Question, amendment agreed to.
Clause 19 [Parent and subsidiary undertakings]:
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 55 and 56:
Page 33, line 25, after ("undertaking") insert ("— (a)").
Page 33, line 27, at end insert (", or
(b) if any shares in that other undertaking are held by a person acting on behalf of the undertaking or any of its subsidiary undertakings.").
The noble Lord said: My Lords, with agreement, I shall move these amendments together. The amendments make a small change to close a possible loophole in new Section 257 which has been drawn to our attention. I beg to move.
On Question, amendments agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 57:
Page 34, leave out lines 30 to 39 and insert—
("(5) For the purposes of section 257(2)(c)—
(a) an undertaking shall not be regarded as having the right to direct the operating and financial policies of another undertaking unless the directors of the other undertaking are obliged to comply with directions given whether or not they are for the benefit of that other undertaking; and").
The noble Lord said: My Lords, in our discussions with outside bodies we have identified a difficulty with the present wording of new Section 258 which this amendment is designed to remove.
New Section 257, subsection (2)(c), covers a special case of a parent-subsidiary relationship where one undertaking has the right, as a result either of a specific provision in the company's articles or by virtue of what the Bill terms a control contract, to direct the financial and operating policies of another undertaking. New Section 258, subsection (5)(a), sets out how this phrase is to be interpreted. At present it is in terms of,
"the right to give directions with respect to the operation and finances of the dependent undertaking which its directors are obliged to comply with".
Following discussion with the Law Society, we agreed that this definition goes wider than the natural meaning of
"the right to direct the operating and financial policies",
in that it would cover a right which can only be exercised in limited circumstances or on isolated occasions. It is wider than we want in that it might unwittingly bring within the definition of "subsidiary undertaking" bodies which should be outside.
The amendment follows a much simpler approach which avoids that problem. It makes clear that in this context the condition is met only where the directors of the dependent undertaking are obliged to comply with the directions, whether or not they are for the benefit of that undertaking. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 58:
Page 35, line 27, leave out ("a subsidiary undertaking of its") and insert ("any of its subsidiary undertakings or a person acting on behalf of the undertaking or any of its subsidiary undertakings").
On Question, amendment agreed to.
Clause 20 [Other interpretation provisions].
Lord Strathclyde Lord Strathclyde moved Amendment No. 59:
Page 39, line 17, column 2, leave out ("paragraph 88") and insert ("paragraphs 88 and 89").
The noble Lord said: My Lords, with permission, I shall speak also to Amendment No. 60. Both amendments correct wrong references. The first is a minor correction to the index of terms in Clause 20. The second corrects a wrong reference in the 1985 Act which has been pointed out to us recently and which has been unwittingly carried across into the Bill. I beg to move.
On Question, amendment agreed to.
Schedule 7 [Amendments consequential on Part I]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 60:
Page 171, line 43, leave out ("265") and insert ("264").
On Question, amendment agreed to.
Clause 23 [Eligibility for appointment]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 61:
Page 40, line 7, leave out subsection (3).
The noble Lord said: My Lords, the purpose of these amendments is to improve the Bill's provisions on the effect of the appointment as auditor of a partnership that has been constituted under a jurisdiction in which a partnership is not a legal person. That includes England and Wales, but not Scotland.
One problem with such partnerships is that there is no perpetual succession, so that when there is a change in the composition of the partnership, and the consequent formation of a new partnership, the new partnership would not hold the offices of auditor to which the earlier partnership had been appointed. To prevent the disruption that might otherwise be the consequence, Clause 23(3) of the Bill provides that the appointment of a partnership which does not have separate legal personality is to be treated as the appointment of that partnership, any partnership which succeeds to the practice of that partnership and is eligible for the appointment and any other eligible person who succeeds to that practice having previously carried it on in partnership.
The Law Society has represented to us—and we accept its arguments—that, as the Bill is presently drafted, there can only be a successor to the practice of a partnership if the person in question succeeds to the whole of the practice. So the effect of the Bill as it stands is that when a partner leaves taking some business with him, or another joins adding other business, the partnership will no longer be the successor to the earlier partnership and consequently will no longer be the auditor of the companies to which the former partnership had been appointed. That is not a desirable result. Subsection (4) of the new clause solves the problem by providing that a partnership is to be regarded as succeeding to the practice of another partnership if the members of the successor partnership are substantially the same as those of the former partnership, and they have succeeded to the whole, or substantially the whole, of the business of the former partnership.
We have also thought it necessary to deal with the case of the break-up of a partnership and the division of its practice, which is not addressed at all by the present Clause 23(3). Here we think that the company ought to have some say in the matter. Subsection (5) of the new clause provides that an appointment may, with the consent of the company, be treated as extending to a partnership or other person eligible for the appointment who succeeds to the business of the former partnership, or to such part of it as is agreed shall be treated as comprising the appointment.
More generally, we have some concern that the present position under which the appointment of an
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English, Scottish or Irish partnership is treated as the appointment of all of its qualified members is not a very happy one. Subsection (2) of the new clause therefore provides that the appointment is, unless a contrary intention appears, an appointment of the partnership as such and not of t he partners.
In speaking to this amendment I wish also to speak, with permission, to Amendments Nos. 62 and 63. I beg to move.
6.30 p.m.
Lord Williams of Elvel: My Lords, these seem perfectly sensible amendments. Could the noble Lord clarify one point for me? Presumably if a partnership is a legal person, as is the case, for instance, in Scotland, the same conditions can apply. Partners can walk out and take the practice with them and set up their own partnership as a separate legal person. Presumably under those circumstances the original partnership would not be considered to have a continuing role as auditor of the company?
Lord Strathclyde: My Lords, on that point, perhaps I may clarify exactly the position of Scottish partnerships. These have a legal personality separate from that of their members and therefore the problem does not arise. Section 389(8) of the Companies Act specifically provides that a Scottish firm is eligible for appointment if all its partners are qualified.
Lord Williams of Elvel: My Lords, before the noble Lord sits down, perhaps he can answer the point on what happens in a Scottish partnership if, say, three-quarters of the partnership walk out of the partnership and form their own partnership, taking their own clients with them.
Lord Strathclyde: My Lords, in that case, it would obviously be a separate entity. But the old partnership and the new partnership would both be regarded as new partnerships.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 62:
After Clause 23, insert the following new clause:
("Effect of appointment of partnership.
.— (1) The following provisions apply to the appointment as company auditor of a partnership constituted under the law of England and Wales or Northern Ireland, or under the law of any other country or territory in which a partnership is not a legal person.
(2) The appointment is (unless a contrary intention appears) an appointment of the partnership as such and not of the partners.
(3) Where the partnership ceases, the appointment shall be treated as extending to—

(a) any partnership which succeeds to the practice of that partnership and is eligible for the appointment, and

(b) any person who succeeds to that practice having previously carried it on in partnership and is eligible for the appointment.

(4) For this purpose a partnership shall be regarded as succeeding to the practice of another partnership only if the members of the successor partnership are substantially the same as those of the former partnership; and partnership or other person shall be regarded as succeeding 10 the practice of a partnership only if it or he succeeds to the whole or substantially the whole of the business of the former partnership.

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(5) Where the partnership ceases and no person succeeds to the appointment under subsection (3), the appointment may with the consent of the company be treated as extending to a partnership or other person eligible for the appointment who succeeds to the business of the former partnership or to such part of it as is agreed by the company shall be treated as comprising the appointment.").
On Question, amendment agreed to.
Clause 24 [Ineligibility on ground of lack of independence]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 63:
Page 40, line 20, leave out from ("if') to ("this") in line 25 and insert ("he is—

(a) an officer or employee of the company, or

(b) a partner or employee of such a person, or a partnership of which such a person is a partner,

or if he is ineligible by virtue of paragraph (a) or (b) for appointment as company auditor of any associated undertaking of the company.
For").
On Question, amendment agreed to.
Clause 26 [Power of Secretary of State to require second audit]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 64:
Page 41, line 21, leave out from ("concerned") to first ("to") in line 24 and insert ("to retain a person eligible for appointment as auditor of the company—

(a) to audit the relevant accounts again, or

(b)").

The noble Lord said: My Lords, this amendment clarifies the effect of Clause 26. As it stands, the clause appears to have the effect that when a company is required by the Secretary of State to have audited again accounts which have been audited by an ineligible person, the acounts must be re-audited within 28 days. That was not our intention. What we want, and what the amendment achieves, is to require the Company to retain a person within that period who will conduct the audit but will not have to complete it within 28 days. I beg to move.
On Question, amendment agreed to.
Schedule 8 [Recognition of supervisory body.]:
Lord Benson Lord Benson moved Amendment No. 65:
Page 180, line 4, leave out ("such as to secure") and insert ("which provide").p
The noble Lord said: My Lords, with the permission of the House, in addition to moving Amendment No.65, I shall speak to Amendments Nos. 69 to 72, and 77. They all raise the same point.
In speaking to any of the amendments in my name, I speak not only on behalf of myself but on behalf of the Institute of Chartered Accountants in England and Wales.
The point of this amendment is merely on the interpretation of the English language. In the Bill as drawn, the words "secure" and "ensure" are used when it is suggested that the correct English word to use is "provide". I am sorry to have to labour this point but it is a matter on which the profession feels strongly. We have been advised by our legal advisors
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that we should press for a change to be made. Discussions have taken place at official level to try to reach agreement but they have not reached any distance. The arguments against the amendment are that the word "secure" already appears in the Financial Services Act. Whether or not it does is irrelevant. If it is wrongly used in the Financial Services Act, there is no need to multiply the error by two. If that principle were to be observed it means that every time a wrong Act appears it must be copied year after year.
The second point that has been raised in discussion is that if there is a doubt as to the meaning of the word, the judges will be able to define it if it comes to the point. This is a not a satisfactory argument. It should not be left to the public to have to find out, or to go to the courts to obtain a definition from the judge. A Bill ought to be drawn so that it is perfectly clear as written.
We have had such an example very recently. In the Act which deals with insider trading the word "obtained" was used. Because it was not quite clear, the judge made a certain ruling. Everybody who knew anything about insider dealing felt that the judge had made a mistake; and so did the Government. Because the wording was sloppily inserted in the first place, elaborate machinery has to be installed either to take the matter to the Law Lords to have a clear definition or to bring in amending legislation. I therefore suggest that there is a strong case for making the language clear in the first place.
I am reluctant to continue to talk on this subject but I must do so because I must make the position clear. The words "secure" can normally mean one of two things. It can mean to obtain possession of, as, for example, in, "I secured possession of a manuscript". That clearly is not applicable here. The other meaning of secure is to make safe or certain. No written rule can make safe or certain. All that the rule can do is to provide what should or should not be done.
Perhaps I may give four simple examples. I believe that they will illustrate the point. A local authority may provide in a by-law that vehicles shall not exceed 30 m.p.h. in a built-up area. The making of that rule will not secure it. It can be secured only by the police and the yellow caps. The Civil Aviation Authority can make a rule providing that aircraft are not to be overloaded but it cannot secure that aircraft are not overloaded. That can be dealt with only by the appropriate machinery of inspection. A headmaster of a boys' school can make a rule providing that lights should be turned out at 9 p.m. But if the small boys do not want to do so, the rule will not secure it. The rule can only provide what should be done and, if it is not done, disciplinary proceedings must be taken against them. In this case the responsible body makes a rule that an auditor shall be a fit and proper person. The making of the rule cannot secure that; it can only provide that he shall be so. If he turns out not to be, it is necessary to take disciplinary action to expel him from membership—which is what we do in short order.
I should like to request the Government to be kind enough to take this clause away, and the other clauses

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to which I am speaking, in order to get the correct English language, which is "provide" in place of the words, where they are used, "secure" and "ensure". I beg to move.
Lord Roskill: I should like to support the amendment simply as a matter of drafting and the use of the English language. The noble Lord has pointed out the trouble that has been caused recently over careless drafting, to use a neutral expression, in relation to insider dealing. Without forecasting what the courts might do with this phraseology, I can see that the use of the word "secure" here could give rise to trouble. As the noble Lord has said, surely the right word to use is "provide", simply as a matter of the ordinary use of the English language.
The body cannot secure. It may endeavour to secure something, but that is not what the legislation says. It is to have rules and practices such as to provide. That is what should be done. I respectfully suggest to your Lordships that this amendment is well founded.
As to the argument that the same language has been used in the Financial Services Act, that, with respect, is a counsel of despair. If it has been used wrongly in one statute, there is no reason to perpetuate the error. I may be wrong in saying this, but I do not think that it is legitimate to construe this Bill, long as it is, by reference to another Act which is even longer.
Lord Mottistone: My Lords, I should also like to support the amendment that the noble Lord, Lord Benson, has moved. It seems to me that this is a straight matter of English. I hope that my noble friends on the Front Bench are not over-persuaded by the original drafter because it seems to me that the English requires it to be as the noble Lord would have it.
Lord Young of Graffham: My Lords, I find myself under a peculiar difficulty. I would be quite content to contest a matter of legal interpretation with the noble Lord, Lord Benson, but I would find myself somewhat inhibited in taking the same position with the noble and learned Lord, Lord Roskill. However, I am a member of the legal profession, albeit I have not practised for over a third of a century and I shall endeavour to try.
With permission, I shall speak also to Amendments Nos. 69, 70, 71, 72 and 77. I hope that I can allay the fears that have been expressed in your Lordships' House. The provisions in Schedule 8 do not place any obligations directly on recognised supervisory bodies and they certainly do not require recognised supervisory bodies to be perfect. We fully accept that no body can establish a system which prevents a person from breaking the rules. Indeed, that is evident if one looks at the schedule as a whole. Otherwise there would be no point to the requirements on monitoring and enforcement in paragraph 10, on disciplining members in paragraph 11 and on the investigation of complaints in paragraph 12.
The provisions to which the noble Lord's amendments are addressed must be assessed in the
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context of the role they play in the schedule as a whole. Under the schedule, the Secretary of State (I and my successor in title) have to look at an applicant's rules and practices and judge whether in all the circumstances it appears to him that they will secure the desired results. He is entitled to assume that there may be people who will be prepared to break the rules, but he will want to be satisfied that there are deterrents against people doing so and that on the whole the requirements will be achieved. In other words, the purpose of these provisions is to inform the Secretary of State as to the matters which are relevant to the question of whether a body should be or should continue to be recognised. They have no life of their own but are relevant only to the judgment to be made by the Secretary of State under paragraph 2(2) or 3(1). Analogous statutory provisions to those in this schedule adopt similar wording, and they are understood to have the meaning which I have given.
The noble Lord, Lord Benson, has said that we should use the word "provide" rather than "secure". In my view that does not go far enough. Let us take the example of paragraph 6. That provides that the rules and practices of a recognised supervisory body must be such as to secure that the persons eligible under its rules for appointment as a company auditor are fit and proper to be so appointed. If the rules and practices had simply to provide for fitness and properness, it might be taken as sufficient that the body had a rule referring to fitness and properness. Our intention is that the bodies play an active part in carrying out the requirement of the directive and that approval shall only be granted to persons of good repute. I believe that the word "secure" puts that positive requirement on the body and that the word "provide" does not go far enough.
Noble Lords have referred to the fitness of certain words that have been used in relation to insider dealing. As the noble and learned Lord, Lord Roskill, will be aware, that is a matter which m due course another part of your Lordships' House will decide.
6.45 p.m.
Lord Benson: My Lords, I am also in an embarrassing position because I have received very staunch support on my left and support from the noble Lord, Lord Mottistone. I am sure that the word "secure" is incorrectly used in the Bill because in paragraph 6 we see that in the first instance somebody who is admitted to the membership of the institute is fit and proper. However, there cannot be continuance surveillance to ensure that he is fit and proper every succeeding day in his life. If he subsequently proves to be not fit and proper, all that we can do is to get rid of him. We cannot ensure that he shall be, all his days, fit and proper. This is the point that troubles me. Having listened to the noble Lord I now find that there is an intention to impose requirements upon the governing bodies which they simply cannot meet because they cannot secure something of this kind.
Lord Young of Graffham: My Lords, of course they cannot secure that a person is fit and proper; but surely the noble Lord would agree that the body

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would have a duty to ensure that if it finds that he is not fit and proper, or if it does not check that he is fit and proper, it takes the appropriate steps. It cannot only have a rule referring to fitness and properness and no other test.
Lord Benson: My Lords, I have pointed out that if we discover that somebody is not a fit and proper person, we must take action. However, that requires a separate provision in the Bill. If he does not prove to be fit and proper, this can easily be covered by other wording if necessary. It is quite unsatisfactory to put in the blanket word "secure" in the hope that that is what it is intended to mean.
I am extremely reluctant to put this to a Division. I would not wish to waste the time of the House in doing so merely on a question of interpretation of the English language. However, I hope that the noble Lord will look at this more carefully. I think that the use of the word "provide" would be entirely suitable. I hope that it might be dealt with in another place.
Lord Young of Graffham: My Lords, I have listened with great care to what the noble Lord has said and to what the noble and learned Lord, Lord Roskill, said. If the noble and learned Lord advances that opinion, I will think again. If the noble Lord will withdraw the amendment, I will undertake to look at it.
Lord Benson: I am most grateful. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Benson Lord Benson moved Amendment No. 66:
Page 180, line 7, after ("conditions") insert ("at least").
The noble Lord said: My Lords, with this I should like also to speak to Amendment No. 68, because both amendments deal with the same point of principle. Paragraph 4 of Schedule 8 is designed to meet the requirements of the eighth directive, which specifies minimum requirements. However, it is equally clear in its wording that more restrictive requirements may have to be imposed. For that reason, Article 2 of the directive contains the words "at least" and makes it clear that it may be necessary to have more restrictions than those set out in the directive. For that reason, we have used in the amendment the words "at least"; they highlight the point immediately.
It may be necessary to make more restrictive arrangements, especially in relation to Amendment No. 68, because if, for example, a firm of auditors is owned as to 49 per cent. by a bank, it would be unsutiable for that firm to audit the bank's accounts. That is an illustration of the way in which restrictive arrangements must be made in order to avoid the auditor being put in a position where his independence and integrity may easily be questioned.
As regards the need to introduce more restrictive practices, there is no dispute between the Government and the profession. The Government want us to be able to do so and hope that we shall do so in appropriate cases. The point of contention is that the lawyers on behalf of the Government take one
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view and our lawyers take another. From the discussions which have taken place at official level, we understand that the Government believe that the wording of the Bill enables more restrictive practices to be imposed and our lawyers say that it does not. It does not matter which set of lawyers is right because if there is a reasonable doubt about what they mean, it is better to make the wording clear. If one includes the words "at least", or similar wording, the point is covered specifically.
Amendment No. 68 merely elaborates that in a particular way. The wording may not be especially suitable but it brings out the point that there must be the right to do so and there must be no doubt as to whether it can be done.
This is not a light technical point. At this moment my profession is going to elaborate pains in order to discover, by consultation with is members and outside bodies, what additional restrictions should be imposed to preserve the auditors' independence and integrity. In a short time we shall wish to make more restrictive practices than the minimum laid down in the eighth directive. It would be extremely embarrassing if we found that we wished to do so but there was then a dispute as to whether the wording of the Bill allowed it.
I ask for this modest change, intended to remove doubt and to make the Bill read in the way required by both the Government and the profession. I beg to move.
Lord Young of Graffham: My Lords, the fears of the noble Lord, Lord Benson, about the effect of laying down minimum requirements in this paragraph are unfounded. If a recognised supervisory body were to impose more strict requirements on the ownership of firms, and that was acceptable to me, then a member firm would not be able to ignore those stricter requirements and claim that it must, nevertheless, be eligible for appointment as a company auditor as it fulfilled the statutory conditions.
Schedule 8 is not, in its nature, concerned with giving rights to firms of auditors. It is a list of requirements which the Secretary of State must satisfy himself are met before he can recognise a supervisory body. Each provision of Part II of the schedule must be read in that context. Paragraph 2(2) of the schedule says that a body cannot be recognised unless it appears to me that the body satisfies the requirements of Part II. In this context, the relevant requirement is that stated in paragraph 4(1)(b)—that is to say, that the body has rules and practices which are such as to secure that the firms which are eligible for appointment are firms with respect to which the conditions specified in paragraph 4(2) are satisfied. If a body has a rule which provides that only firms in which, say, 75 per cent. of the partners are approved persons are eligible for appointment, it will have a rule which secures that a majority of the partners are approved. Paragraph 4(1)(b) does not, therefore, stand on its own and does not confer any rights on firms of auditors.
The directive is addressed to member states and requires them to ensure that at least certain

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minimum requirements are met. The words in the directive make it clear that a member state may impose more stringent requirement if it wishes. We shall comply with the directive by laying down in law the minimum requirements.
It is apparent from the paragraph that a recognised supervisory body can meet that requirement by going beyond it. Paragraph 4 provides that:
"the body must have rules and practices such as to secure that the persons eligible under its rules for appointment as a company auditor are … (b) firms with respect to which the following conditions are satisfied".
It is obvious that, for example, rules and practices which secure that, say, 75 per cent. of shares in a company auditor are held by qualified persons satisfy a requirement that 51 per cent. of the shares are held by such persons. What might prevent a recognised supervisory body from going that far is the competition regime in the Bill, but that remains to be seen and tested.
Why should we not include the words "at least"? If we did there might then be a suggestion that the rules should go beyond the minimum. Our intention is that we must be satisfied that any rules beyond the minimum are either not significantly anti-competitive or are no more so than is reasonably justifiable for the purpose of the part.
I hope that in those circumstances the noble Lord will withdraw his amendment.
Lord Benson: My Lords, there is no possibility of the risk of the enlarged provision being abused. If there was any such risk, the Secretary of State could step in under the provisions of Amendment No. 91, which is tabled in his name and which he will propose later this evening.
As regards the simple issue of interpretation, our legal advice is that if a supervisory body sought to impose additional qualifications under paragraph 4(1) and (2), a firm which met the requirements of paragraph 4(2) could argue that the statutory conditions were fulfilled and therefore that the rules must make it eligible.
It is unnecessary to weary the House with argumentation to and fro in respect of the meaning of the legal interpretations. The lawyers are in disagreement. I beg that they should be brought together and should reach agreement, or that the wording of the Bill should be amended so as to remove any doubt about the meaning of the words. We ought not to have on the statute book Acts of which the meaning is unclear. The issue should be raised openly beforehand so that one can know exactly what is likely to happen. It is so easy to put it right by the simplest possible use of wording—not necessarily the amendments which I have put forward—and the ambiguity can be removed beyond doubt.
For the reason which I gave earlier, I shall not press the matter to a Division. However, I believe that if it is a simple matter to remove any ambiguity which the lawyers have exposed, that should be done. I beg the Minister to be kind enough to look at the issue.
Lord Young of Graffham: My Lords, before the noble Lord sits down I should like to ask whether he moved Amendment No. 68. If so, I have a contribution to make.
Lord Williams of Elvel: My Lords, the noble Lord spoke to that amendment.
Lord Young of Graffham: My Lords, I should like to say a few words on Amendment No. 68.
Lord Benson: My Lords in the light of what I said, I withdraw Amendment No. 66, bat if the noble Lord wishes to speak to Amendment No. 68, then I shall let that amendment remain.
Amendment, by leave, withdrawn.
Lord Strathclyde: My Lords, I beg to move that further consideration on Report be adjourned until 8 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Civil Legal Aid (Matrimonial Proceedings) Regulations 1989
7 p.m.
The Lord Chancellor (Lord Mackay of Clashfern)The Lord Chancellor (Lord Mackay of Clashfern) rose to move, That the draft regulations laid before the House on 6th March be approved. [12th Report from the Joint Committee].
The noble and learned Lord said: My Lords, I beg to move the first Motion standing in my name on the Order Paper. I believe that it may be convenient to speak to all three together and then to move them formally.
Lord Mishcon: My Lords, perhaps I may say to the noble and learned Lord that it will be of the greatest assistance if he speaks to all three but I trust that each will be put separately.
The Lord Chancellor: My Lords, that is my intention. There are three Motions standing in my name on the Order Paper and, with the permission of the House, I shall deal with them together but put them separately. The draft regulations for which I am seeking approval today are part of a package designed to implement the Legal Aid Act 1988 from 1st April. They relate to the scope of legal aid and advice and assistance, and to functions to be given to the Legal Aid Board, areas over which your Lordships expressed concern during the passage of the Legal Aid Bill. Noble Lords may be aware of further sets of regulations relating to legal aid which do not require affirmative resolutions but which have been laid before the House. Together, all these regulations will, within the framework of the new Act, form the basis of the operation of legal aid for the coming years. Subject to a few specific exceptions, for the most part they recreate the existing arrangements. However, we have also taken the opportunity to carry out a measure of consolidation and revision and to give effect to some of the

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recommendations accepted by the Government in their White Paper on legal aid which foreshadowed the Legal Aid Act.
The biggest change which underlies all the regulations is that the responsibility for the administration of legal aid will pass from the Law Society to the new Legal Aid Board. I should like to take this opportunity to express the Government's appreciation of the service the Law Society has provided to the public in administering legal aid for nearly 40 years. I expressed that appreciation during the passage of the Legal Aid Bill, but I believe that it is appropriate, as the time is coming very near, to do so again. It might also be appropriate at the same time to wish the Legal Aid Board well in taking up the functions which the Law Society is now relinquishing.
The Legal Advice and Assistance (Scope) Regulations prescribe the scope of ABWOR (assistance by way of representation) as well as of green form assistance. The House will recall that in the White Paper on legal aid in 1987 the Government announced their decision that assistance in the making of wills and conveyancing, should not normally be paid for out of public funds, and that they would take steps to restrict the green form scheme in these areas. This decision was discussed fully during the passage of the Legal Aid Bill through your Lordships' House. In any publicly funded scheme such as legal aid the money available cannot be infinite. It must therefore be directed to those areas where it is most needed and away from areas where there is a lesser need.
The Government have concluded that the use of green form advice and assistance to carry out a conveyance or to make a will are just such areas of lesser need. It cannot be right that the taxpayer should be asked to subsidise those who wish simply to arrange their own affairs. However, although it is not right for the public generally to continue to bear the cost of providing advice on such matters, I have recognised, in the light of consultation, that in particular cases there may be special needs and I am anxious to ensure that hardship is not caused to vulnerable people as a result of the proposed change. Accordingly, the draft regulations contain a series of exceptions from the general exclusion of conveyancing and will-making from green form.
My department has conducted a wide consultation with interested parties both on the form of the draft regulations and on the range of exceptions. As a result of the comments received, the original range of proposed exceptions has been extended. Conveyancing services will continue to be available under green form in all cases where they are necessary in order to give effect to any court order. They will also be available to give effect to the terms of a settlement in a divorce. Green form advice and assistance will continue to be available in relation to rental purchase agreements or conditional sales. These are methods of house purchase where, unlike a purchase under a mortgage where the property is transferred immediately but acts as security for a loan, the ownership of the property does not change hands until the final instalment of the purchase money has been paid.
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Participants in such transactions, who tend to be at the lower end of the housing market, can often find themselves in difficulties. That is why the provision is continued in that case. Nevertheless, although the provision of conveyancing services is generally to be excluded from green form I should stress that other forms of advice and assistance in relation to housing or land law are not. Thus, for example, a leaseholder concerned over his or her position under the lease may receive advice under the green form. If, however, the advice is that some form of conveyance is required, then the leaseholder will usually have to pay for that conveyance.
In the area of will-making, advice and assistance will continue to be available for wills to be made by those aged 70 or over, by single parents wishing to appoint a testamentary guardian, by the physically or mentally disabled and the mentally ill, and by a parent or guardian who wishes to provide for such a disabled person, whether he or she is an adult or a child.
The remainder of the scope regulations set out the extent to which ABWOR will be available. Unlike green form which is generally available unless excluded by regulations, ABWOR is only available to the extent that regulations provide. Accordingly, subject to certain modifications which I shall go on to in a moment, these regulations extent ABWOR to those areas where it is currently available. There are, however, three areas of difference. First, the House may recall that during the passage of the Legal Aid Bill I agreed that all child care proceedings should be treated in the same way for legal aid purposes. As a result, all child care proceedings attract legal aid under Part VI of the Act granted by the court and not by the Legal Aid Board. Some of the proceedings relating to child care which now appear in Part VI previously attracted ABWOR. Since legal aid can now be granted by the magistrates' court in question ABWOR is no longer required and these regulations do not extend ABWOR to any of the proceedings for which legal aid is available under Part VI.
The second difference concerns the duty solicitor schemes at magistrates' courts provided under the Legal Aid Act 1982. Technically, these duty solicitor services constituted a distinct form of legal aid, that is "advice and representation". Under the new Legal Aid Act this "advice and representation" has now become part of ABWOR and these regulations therefore extend to ABWOR to cover all representation within the scope of the existing duty solicitor scheme.
The third qualification relates to the granting of ABWOR by a magistrates' court or county court. At present a magistrates' court or county court may approve the provision of assistance by way of representation by a solicitor who is at that time in the precincts of the court and whose client is not already in receipt of legal aid. These arrangements therefore by-pass the normal mechanisms for the granting of ABWOR through the Law Society and are intended to provide for representation where it is required as a matter of urgency. These regulations will ensure that such arrangements will continue. However, the wording of the regulations has been

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revised to make it clear that ABWOR is to be made available by this means only in cases where there is a genuine urgent need and not as a form of routine provision of representation (as has been happening in some places) or as a means of avoiding the usual application procedures.
I am also seeking approval today for the Civil Legal Aid (Matrimonial Proceedings) Regulations. These reproduce the effect of the existing Legal Aid (Matrimonial Proceedings) Regulations 1977 which exclude civil legal aid from undefended divorce proceedings, subject to certain exceptions where full representation is required. The new regulations simply recreate the existing position.
I am seeking approval too for the Legal Aid (Functions) Order 1989. The Legal Aid Board's functions in relation to legal aid in criminal or child care proceedings are extremely limited. At present, however, criminal legal aid committees of the Law Society may hear applications for review of a refusal by magistrates' courts to grant criminal legal aid. They may also hear other applications in relation to the amendment or withdrawal of legal aid in criminal or child care proceedings and applications for prior authority to incur expenditure.
This order gives the Legal Aid Board the necessary power to enable its area committees to carry out the same functions. It will therefore allow the existing arrangements to continue in effect unchanged. The order will also allow the Legal Aid Board to take over responsibility for the promotion and publicity of criminal legal aid. This function has hitherto been carried out by my department. The board already has responsibility for publicity in relation to civil legal aid and advice and assistance.
Although it does not arise from the regulations under discussion today, I should mention that an anomaly has inadvertently been created by the Legal Advice and Assistance Regulations which are subject to negative resolution, whereby a duty solicitor who provides assistance by way of representation in relation to a warrant of further detention will be paid less than he is now. However, I intend to make further regulations, also to take effect from 1st April, to rectify the anomaly.
Finally, at this time of the year Lord Chancellors often come to the House with proposals for increasing the legal aid financial eligibility limits. Although not arising from these instruments, I should like to inform the House that this year I am proposing increases in the financial limits from 1st April. These increases are generally of the order of 4.7 per cent. which reflects the rise in the level of social security benefits. However, I am also proposing to raise the capital limit above which civil legal aid is not normally available by 20 per cent. to £6,000 and I am increasing the capital allowances made for dependants in assessing eligibility for advice and assistance by nearly 68 per cent. to £335 for the first dependant, £200 for the second and £100 for other dependants. However, this year, for the first time, the regulations giving effect to the increased limits will not require affirmative resolution procedure and I am not therefore seeking your Lordships' approval of those proposals today.
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I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the draft regulations laid before the House on 6th March be approved [12th Report from the Joint Committee].—(The Lord Chancellor.)
7.15 p.m.
Lord Mishcon: My Lords, perhaps I may make it clear that while the noble and learned Lord has been good enough to address his remarks to all three Motions my noble and learned friend Lord Elwyn-Jones has, I know, some points he wishes to raise on the first regulations and the order before the House. I intend to limit my remarks to the Legal Advice and Assistance (Scope) Regulations 1989.
As the noble and learned Lord said, the regulations cover wills and conveyancing and matters in the county court. I want at once to pay my tribute to the noble and learned Lord for at least extending the group of persons who will be able to benefit under the green form scheme in regard to the drawing up of wills. Having said that—I have said it to the noble and learned Lord previously in the House—I wish that he had realised that even the extension of that scope admits exceptions that should be there and are not there and also admits that the scheme, by way of excluding wills from those who might otherwise benefit, is an administrative absurdity. I shall endeavour to explain what I mean.
First, in considering those who are exempted under these regulations one is immediately met by the difficulty that members of the public who might qualify, especially bearing in mind the type of people who could be involved, will fail to understand whether or not they are eligible for drawing up wills under the scheme. The qualifying categories are complex: people who are mentally ill and who have a mental handicap; parents making provision for disabled children; and people who are physically disabled or who suffer from a permanent serious illness. I pause only to deal with that last category.
I suppose that one of the most common examples of those who might want to make a will and who are not at all well off are people who have suffered some permanent, or perhaps not permanent, injury in an accident. Where the prognosis is doubtful they may wish to try to make provision for their family, possibly out of the small, or perhaps large, amount of damages obtained. If the amount of damages, is large there may not be the difficulty of approaching a solicitor and paying the proper fee. However, what is meant here? Who is to define someone who suffers from a permanent serious illness? Is there to be an accompanying medical certificate? Is the solicitor to determine whether he regards an illness as being serious? Is he to regard it as being permanent? How is the poor person to know whether he or she falls within that category?
There are still some groups who are likely to suffer hardship because they cannot afford to pay the solicitor's fee. Married couples are provided for, but what provision is there for unmarried couples who are separating and who own property jointly? No provision has been made for them. Where there is a dispute and misunderstanding in regard to who owns

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what as a result of not getting proper advice there will be an application for a legal aid certificate to cover the cost of reaching a property settlement and the consequent conveyance. One then moves into the world of conveyancing which is also covered by these regulations.
There will be only minimal savings achieved by the exclusion of will-making and conveyancing from the green form scheme. However, as I have said, many people may suffer as a result. This noble and learned Lord has already conceded that exemptions from this principle are required for a number of groups with special needs. Rather then sticking to this ill-considered proposal the Government should surely accept that it is unfair, unworkable and should be abandoned.
I spoke about an administrative absurdity. I ask your Lordships to consider what a solicitor is supposed to do when someone from the categories I have mentioned goes to him and says—having understood all this—that he thinks he is entitled to draw up a will on the green form scheme. Presumably the solicitor has to go into evidence of receipt of social benefits, and so on, in order to see whether the person is so entitled. Can one imagine the amount of adminstrative time of a solicitor that will be wasted as a result?
I say to the noble and learned Lord and to the House that it is a difficult matter to deal with orders or regulations and endeavour to upset them. We do not normally do that and my noble friends and I are not going to do that tonight. In view of the comments that I have made on this aspect I wonder whether the noble and learned Lord would think it proper to reconsider the regulation to which I am speaking.
The only other category I wish to mention is that concerning possession cases, which often go before the county court. There was a duty scheme in the county court that was working extremely well in various areas. One can well imagine the time of the court and the expense saved by someone being available, whether for plaintiff or defendant, in order to advise on the duty scheme basis. It may be advice as regards instalments to be agreed that would save the time of the court or concerning rental arrears and explaining to a tenant that he has not got a defence to a possession claim or that he has. It should be put in a very concise form and that is how it should be dealt with.
All these matters ease the working of the courts and the work of the profession. It is also of great benefit to the kind of people who badly need such help when the roof over their heads may be the matter which is coming before the court and which is to be advised on. To abandon this scheme as this regulation does is more than unfortunate. I end with the plea that I uttered only a few moments ago. In view of the feeling that there is in my profession as well as for the good of the public—which is the reason for the feeling in my profession—I hope very much that the noble and learned Lord will find it possible to reconsider this specific regulation.
Lord Elwyn-Jones: My Lords, the noble Lord, Lord Meston, has indicated that it will be more
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convenient if I speak at this point on the other matters. But I shall be very glad to give way to him if he takes a different view. I wish to begin with a preliminary observation concerning the complaints about the long delays that are taking place in processing applications for legal aid. The delays can extend for many months in some cases. That is clearly embarrassing for the litigant and it may be damaging to the conduct of the proceedings in the court. The delays may jam things up and complicate them. Perhaps the noble and learned Lord the Lord Chancellor can make some encouraging noises as regards what it is hoped to do. It may be that the new Legal Aid Board will be able to improve matters. There is certainly room for improvement, because the present arrangements are causing a good deal of dissatisfaction and anxiety.
I turn to the Civil Legal Aid (Matrimonial Proceedings) Regulations 1989. In paragraph 2 there is set out a list of exceptions to the exclusion from legal aid of
"Proceedings for a decree of divorce or judicial separation unless the cause is defended".
Among the exceptions in paragraph (d) it deals with,
"an order declaring that the court is satisfied as to arrangements for the welfare of the children of the family, excluding representation for the purpose only of making such an application where there is no reason to believe that the application will be opposed".
I wish to know, how far does that cover go? In wardship or custody in care cases there have been many hours of discussion on the prime importance of protecting the interests of the child in those proceedings. May we assume that in any problem as regards a child or when an appearance by or on behalf of a child takes place, legal aid will become available in those proceedings?
The next matter to which I wish to draw the attention of the noble and learned Lord arises from the Legal Aid (Functions) Order 1989. Paragraph 2(b) provides that among the functions of the Legal Aid Board is the requirement,
"to promote or assist in the promotion of publicity relating to the functions",
of subparagraph (a) relating, as a generality, to legal aid proceedings. The need for a special effort to publicise the facts and the existence of the legal aid scheme is important. I have before me the valuable report by the National Consumer Council, Ordinary Justice. It calls attention to this matter. At page 80 it states:
"One problem with the legal aid scheme is that very few people know about it. The Oxford Centre of Socio-legal Studies' survey of accident victims found that of those who had consulted a solicitor, fewer than half had heard of the legal aid scheme and only a quarter knew of the legal advice scheme".
A report emanating, I believe, from the Lord Chancellor's office states:
"Baldwin and Hill interviewed 124 clients who had been given advice under the green form scheme. They found that two-thirds of people had no idea about legal aid and did not know that financial assistance was available when they approached a solicitor".
I believe that an effort of and at publicity is clearly called for. I readily concede that there has been an improvement in the provision of publicity though in 1986 to 1987 it appears that the legal aid administration spent somewhat less on publicity publicising

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the legal aid scheme than in the previous year. It is something that must be looked at. Posters and leaflets are being used. The report continues,
"Unfortunately, leaflets are not generally available in post offices, job centres or doctors' surgeries, and are not usually sent out by courts with summonses".
I am not expecting the noble and learned Lord to give immediate answers about these matters but I hope that they can be looked at. I think that the requirement for increasing and promoting publicity is an important one that should not be overlooked.
Lord Meston: My Lords, I wish to join in thanking the noble and learned Lord for his introduction of these orders and regulations. It is important that we continue to have an opportunity to consider such orders. Those of us who were present during the debates on the Legal Aid Bill, as it then was, will well remember the concern as regards what regulations and orders should or should not be the subject of the affirmative resolution procedures.
The Civil Legal Aid (Matrimonial Proceedings) Regulations, to which reference has been made, are perhaps the most anodyne of the regulations before your Lordships' House this evening. They repeat almost verbatim the 1977 regulations. I am not aware that those regulations caused any hardship except perhaps to the lawyers, who had to say a nostalgic farewell to the undefended divorce.
I echo the point made by the noble and learned Lord, Lord Elwyn-Jones, in relation to paragraph 5(a)(d). I take it to refer to representation at hearings under Section 41 of the Matrimonial Causes Act 1973. In the modern divorce process the court's consideration of whether it is satisfied about the arrangements for the welfare of the children is its most important function in relation to the parties themselves. Lay parties get into considerable difficulties when appearing before a judge on a Section 41 hearing even when the hearing is not opposed. It is unlikely to be opposed by the other party. Nevertheless, one hears stories of parties who fail to get over to the judge the important information which needs to be conveyed to him. The result is confusion and distress.
The Legal Aid (Functions) Order gives rise to only one comment regarding the importance of speed in processing legal aid, including applications for prior authority to incur expenditure. As the noble and learned Lord, Lord Elwyn-Jones, said, delay, particularly in recent years, has been little short of scandalous, and has been rightly commented on, including judicially. I join him in hoping that the Legal Aid Board, which will come fully into operation on 1st April, will consider this matter urgently. The Legal Aid Board could hardly do worse than the present system.
With the Legal Advice and Assistance (Scope) Regulations we are in a sense travelling ground which was well covered by the noble Lord, Lord Mishcon, during the passage of the Legal Aid Bill. I shall not seek to comment on what he said in relation to wills, save only to join in asking what arrangements will be made to make both lawyers and lay people aware of eligibility for legal advice and assistance in relation to wills.
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I wish to ask about the provision that legal advice and assistance are available in relation to the formulating of terms of an agreement where there has been a divorce but apparently are not available if the terms of an agreement are to be produced following an application, or threatened application, under the Inheritance (Provisions of Family and Dependants) Act, under the Married Women's Property Act, under the Matrimonial Homes Act or under Section 30 of the Law of Property Act, where, for example, one is dealing with an unmarried couple. The Government's attitude to legal aid in regard to the problems of unmarried couples is called into question by one other feature of the new regime for legal aid. There has been an improvement through the introduction of regulations to allow the legal aid charge to be deferred in cases where the parties are in receipt of money to provide a new home for themselves and their children, but that does not appear to have been extended to proceedings under Section 30 of the Law of Property Act. It appears to be a deliberate omission from the new regulations relating to the deferment of the legal aid charge. I wonder whether the noble and learned Lord will explain that omission.
7.30 p.m.
Lord Butterfield: My Lords, I wonder whether I may make a modest and I hope helpful suggestion regarding one point raised this evening by the noble Lord, Lord Mishcon. I refer to legal aid to help persons suffering from permanent illnesses to make their wills. The noble Lord asked what is meant by the phrase "permanent illness". It occurred to me from my medical background that it might be helpful to link the legal definition with the list of permanent illnesses under which NHS patients are allowed to have their medicines free of charge. Such a device could get around the problem.
Before those unfortunate people with permanent illnesses were given their NHS medicines free of charge, serious consideration must have been given to the question of relief. I am suggesting that the fruits of those thoughts might help to clarify the definition about which we have been worrying tonight.
The Lord Chancellor: My Lords, I am grateful for the response of the House to the regulations and to the order and for the helpful comment on definition. Perhaps I may take that last point first. As the House will know, I came to these matters with a general statement that legal aid was not to be available under the green form scheme for conveyancing and wills. As a result of the consultation, I have endeavoured to focus on those categories which appeared to me to be the most deserving for exclusion from that exclusion. It is necessary to define these categories to some extent. The green form scheme is fairly simple. It is true that the list of permanent illnesses would be worth referring to in difficult cases, but generally speaking it is a matter for solicitors to decide in the light of the circumstances. I do not think many people would have difficulty in deciding whether an illness would properly come under that category. The application of a certain amount of

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common sense, which is not at all restricted in its availability in this area, is reasonable. Self-certification by the client and common sense seem perfectly reasonable for this purpose.
Lord Mishcon: My Lords, as the noble and learned Lord knows very well, permanent disability is also referred to. Is he conscious of the fact—and I say this with the deepest respect—that a solicitor who wrongly claims under the green form scheme is guilty of an offence, a professional offence, and perhaps another offence as well? To put upon him the burden of deciding whether someone has a permanent illness or a permanent disability is surely something which the noble and learned Lord would not want the profession to bear. I regarded the noble Lord's intervention as helpful. Perhaps a definition can be inserted into the regulations subsequently if the noble and learned Lord adheres to the policy of the regulations.
The Lord Chancellor: My Lords, I said that I thought that the solicitor could readily advise. The idea is that the applicant should certify whether or not he is suffering from a permanent serious illness. Where there is certification of that kind, it is not likely that there would be much controversy. In a simple scheme of this kind that seems reasonable. It is a deserving category and I would rather include it than leave it out. Moreover, I do not anticipate any difficulty in the matter. We are merely asking the client to name the doctor just in case there should be any need to check up on the application. But apart from that, I should have thought that this is a simple matter and one which should therefore be allowed to stand.
So far as concerns endeavouring to define such cases more closely, I think that it is difficult to do so. As I said, I should prefer to have the provision than not allow people who suffer from permanent serious illness to receive the benefit of the green form scheme in that situation.
I turn now to the point raised by the noble Lord, Lord Mishcon, on the so-called duty solicitor schemes in relation to possession cases in the county court. There have never been any provisions for county court duty solicitor schemes, but what was happening in some places was that the regulations in the previous form were thought to have countenanced that possibility. The provision had not been anything like general, and in drawing up the regulations we have made it clear what the original position was intended to be; namely, that assistance by way of representation on the spot should be available only where it is required urgently. Further, it will remain available in matters of genuine urgency, but otherwise ordinary green form and civil legal aid will remain available under the normal conditions.
I shall pass now to the remarks made by the noble and learned Lord, Lord Elwyn-Jones. I agree with him that there is a good deal of scope for improvement—indeed, the noble Lord, Lord Mishcon, also made this point—in relation to processing applications for legal aid. The Legal Aid
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Board has been looking at the matter and of course it takes over responsibility formally on 1st April. It looks as though there is scope for improvement in the way that some of these matters are handled. I certainly hope that there will be improvement, and I shall be looking to the board to improve the speed with which such matters are handled. I am told that there seems to be considerable scope for cutting delays by changing the practices in area offices. I sincerely hope that that will be so, and your Lordships may take it that I shall be looking particularly for improvement in that area.
As regards the position on the satisfaction hearings, the exception contained in new paragraph 5A(d) is intended to apply unless the application is unlikely to be opposed. In other words, if it is to be a purely formal application, the provision will not extend to it; but if, for example, there is a genuine question arising in relation to a child, then legal aid will be available. As I understand it, that is simply a reflection of the present regulation and therefore no change is proposed in that respect.
The third point raised by the noble and learned Lord was in relation to publicity. Indeed, I mentioned that the Legal Aid Board will now have responsibility for publicity across the field. I shall certainly draw to the board's attention the points which have been raised in the National Consumer Council publicity and also those made clear this evening by the noble and learned Lord.
I think that I have dealt with most matters raised by the noble Lord, Lord Meston, except possibly the one about the postponement of the statutory charge. It does not seem reasonable to allow the postponement of the statutory charge for those people such as former business partners or cohabitants who may be affected by a variety of legislation. The dissolution of marriage is covered by specific statutes; in extending or giving the possibility of postponing the charge, it is really to that issue that I had regard. It is particularly in those areas that problems have been experienced. As the noble Lord knows, there was a feeling on the part of the legal aid authorities at one time that they had a power to do so. Indeed, it was tested, and ultimately the matter was resolved by giving a statutory power to do so in the particular situations that arise. However, I do not think it would be right to make that a general power. It appears to me that the power to postpone the statutory charge is a most specific allowance which should be carefully controlled.
On Question, Motion agreed to.

Legal Aid (Functions) Order 1989
The Lord Chancellor: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the draft order laid before the House on 6th March be approved [12th Report from the Joint Committed]. —(The Lord Chancellor.)
On Question, Motion agreed to.

Legal Advice and Assistance (Scope) Regulations 1989
The Lord Chancellor: My Lords, I beg to move the third Motion standing in my name on the Order Paper.
Moved, That the draft regulations laid before the House on 6th March be approved [12th Report from the Joint Committee]. —(The Lord Chancellor.)
On Question, Motion agreed to.
The Earl of Arran: My Lords, I beg to move that the House do now adjourn during pleasure until 8 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.46 to 8 p.m.]

Companies Bill [H.L.]
Consideration of amendments on Report resumed on Schedule 8.
The Deputy Speaker (Lord Hayter): My Lords, I should point out that if Amendment No. 67 is agreed to I cannot call Amendment No. 68.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 67:
Page 180, line 14, leave out from beginning to end of line 10 on page 181 and insert—
("(b) that the firm is controlled by individuals who hold an appropriate qualification or firms which would themselves be eligible for appointment as a company auditor ("qualified persons").
(3) a firm shall be treated as controlled by qualified persons if, and only if—

(a) a majority of the members of the firm are qualified persons, and

(b) Where a firm's affairs are managed by a board of directors, committee or other management body, a majority of the members of that body are qualified persons.

5.— (1) This paragraph explains the references in paragraph 4(3)(a) and (b) to a majority of the members of the firm or its management body.
(2) Where under the firms' constitution matters are decided upon by the exercise of voting rights at a general meeting of the firm, a majority of members of the firm means members having a majority of such voting rights.
(3) In any other case, a majority of the members of the firm means members having such rights under the constitution of the firm as enable them to direct its overall policy or to alter its constitution.
(4) Where matters are decided upon at meetings of the management body of a firm by the exercise of voting rights, a majority of the members of the body means members having a majority of such voting rights.
(5) In any other case, a majority of the members of the body means members having such rights under the constitution of the firm as enable them to direct the policy of the body or to alter the body's constitution.
6. — (1) The following provisions supplement paragraph 5 as regards the references to voting rights and other rights.
(2) References to voting rights are to rights to vote on all or substantially all matters at general meetings or, as the case may be, at meetings of the management body.
(3) Voting rights which a person is entitled to require should not be exercised shall not be regarded as held by anyone; and voting rights which a person is entitled to require to be exercised in any particular manner shall be regarded as held by him and not by anyone else.
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(4) Rights which are exercisable only in certain circumstances shall be taken into account only when the circumstances have arisen, and for so long as they continue to obtain, or when the circumstances are within the control of the person having the rights.
(5) Rights shall be treated as held by a person if they are held on his behalf and shall not be treated as held by a person if—

(a) they are held on behalf of another person, or

(b) they are held by way of security and are exercised only in accordance with the instructions of another person, or

(c) they are held in connection with the granting of loans as part of normal business activities and are exercised only in the interests of the person providing the security.

(6) Rights held by or on behalf of a subsidiary undertaking shall be attributed to the parent undertaking.").
The noble Lord said: My Lords, the Government said in Committee, in response to an amendment from the noble Lord, Lord Benson, that we would bring forward an amendment to implement the requirement in the directive that a majority of the voting rights in an auditing firm are held by qualified persons. This amendment has that effect, but, as your Lordships will see, the opportunity has been taken to align the treatment of partnerships with the treatment of bodies corporate.
The only other significant changes brought about by the amendment are these. In a case in which management of the affairs of a corporate auditor has been delegated to a committee of directors, it is no longer necessary for a majority of all the directors of an auditing firm to be qualified persons. In addition, if a partnership is so structured that a majority of qualified persons will have control over the conduct of the partnership's affairs, it will no longer be necessary for a majority of the partners to be qualified persons. I beg to move.
Lord Williams of Elvel: My Lords, I am grateful to the Secretary of State for moving Amendment No. 67. I hope that the noble Lord who said before the adjournment that he had something to say about Amendment No. 68 will do so.
We have no difficulty with Amendment No. 67. There has been a slightly arcane difference of opinion between the department and the various institutes, which we imagine will be recognised bodies.
Lord Young of Graffham: My Lords, with permission, I shall say a word or two about Amendment No. 68. It may be helpful if I repeat the Government's policy on the question of the control and ownership of auditing firms by qualified persons. Our policy is that the legislation should reproduce the minimum requirements in the directive—and this is accomplished by paragraph 4 of this schedule—but that professional bodies should in principle be able to go beyond those minimum requirements provided they satisfy the competition test in the Bill.
Put simply, that test requires me as Secretary of State to satisfy myself before recognising a supervisory body that its rules and practices are either not significantly anti-competitive or are no more so than is reasonably justifiable for the purposes of Part II of the Bill.
Doubt has been expressed as to whether the provisions of the Bill are apt to enable a reasonable

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and balanced view to be arrived at on this question. In particular, it is not certain that the provisions of the Bill would enable any justification for such rules to found if they were judged to be anti-competitive.
We are considering whether there is anything in this point. If we decide that there is, we will consider how the Bill might be amended. We have in fact raised this question with the Institute of Chartered Accountants but it has not put any suggestions to us on it, although I understand that the noble Lord's amendment was inspired by it. We do not think that it is a very happy amendment, but we shall certainly discuss the question with the institutes and bring forward an appropriate amendment if it is agreed that there is a problem. On that understanding, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Williams of Elvel: My Lords, before the noble Lord sits down, could he give us some sort of timing on when the amendment will be brought forward?
Lord Benson: My Lords, I am more than grateful to the Secretary of State for what he has said.
Lord Young of Graffham: My Lords, I cannot give a timing. I hope that it may be possible to bring forward the amendment before the Bill goes to another place, but if not I shall ensure that we will have an opportunity to discuss the matter at a later stage.
Lord Cockfield: My Lords, there is a point made by my noble friend that should be questioned. He said that the objective was to include the minimum amount of control that was required by the directive. We are looking at a safeguard. The position is that on a safeguard it is always open to a member state to provide for more than the minimum amount of safeguard. That was the point which was debated by the noble and learned Lord, Lord Roskill, and myself on 6th March.
It is relevant when one comes to look at the amendments standing in the name of the noble Lord, Lord Benson, because he is endeavouring to include a safeguard over and above the minimum level of safeguard that the directive requires. We should be cautious before we accept that it is a principle of policy that we provide only the minimum level of safeguard.
Lord Young of Graffham: My Lords, our policy has been, as I have explained in regard to one or two similar matters, that we provide the minimum. It is open to the appropriate body to provide more safeguards than would be satisfactory provided that the Secretary of State for the time being is satisfied that those are not anti-competitive. It is that test which is the appropriate test. We see the directive applying the minimum standard, but it is open to others to go beyond that minimum standard.
Lord Williams of Elvel: My Lords, before the noble Lord sits down, perhaps I may ask him whether it is always Her Majesty's Government's policy to provide minimum safeguards only under directives.
Lord Young of Graffham: My Lords, no, of course not. The noble Lord, Lord Williams of Elvel, is well aware of that. When looking at the control and ownership of auditing firms by qualified persons and similar matters, we must ensure that the provisions included are for the protection and safeguard of the client, the investor and the creditors of firms. We must ensure that those safeguards do not, by their operation, become anti-competitive. Minimum standards are set within the Community. Those standards must pass the anti-competitive test.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, I cannot call Amendment No. 68.
[Amendments Nos. 69 to 72 not moved.]
The Deputy Speaker: My Lords, if Amendment No. 73 is accepted, I cannot call Amendments Nos. 74 and 75.
Lord Benson Lord Benson moved Amendment No. 73:
Page 182, leave out lines 15 and 16 and insert—
("10.—(1) The body must have rules and practices which enable it to monitor and enforce compliance with its rules.").
The noble Lord said: My Lords, the amendment is on a different subject—monitoring. Monitoring is a new word which has crept into the control and organisation of the professions and which arises out of the Bill. In Committee, I explained the great problems that arise about the word "monitoring". I do not propose to repeat all those matters.
It was noticeable in Committee that many Members also spoke with anxiety about monitoring. They suggested that clarification and an explanation were needed as to what was involved. That anxiety still remains, particularly with members of my profession. That is why the amendment has been put down. It is important on this occasion because, under the Green Papers dealing with the legal profession, the same words—"arrangements … for… monitoring"—are used.
What will be difficult for my profession will be even more difficult for the legal profession because the monitoring involved there is monitoring of advocacy. How one monitors advocacy has not been explained in the Green Papers. Discussions have been taking place at official level to determine what "monitoring" means. I have studied the record of those discussions. It is plain that neither the Government nor my profession are clear about what is meant. It is unsatisfactory that anything should be put on the statute book when neither the Government making the laws nor the public which has to comply with them are clear what "monitoring" means.
It is in the hope that we can get the term clarified that the amendment is put down. I did not press the matter to a Division in Committee because discussions were taking place. They are continuing. If "monitoring' means taking precautions to see that the rules of the governing body are complied with—which is what I think it means—then that is not a new subject. It has been established for over a 100 years.
There are five factors which long experience has dictated apply in such circumstances. The first is that no auditing firm, indeed no business in the world, can operate successfuly if it is subject to continual surveillance and interruption by an outside body. It is wildly impracticable and hopelessly expensive. Secondly, the governing body must have the right but not the obligation to satisfy itself that the procedures of the auditing firm—the routine procedures by which its staff and partners operate—are so designed as to cause it to comply with the rules of the governing body.
The third factor is that the governing body must have the right but not the obligation to satisfy itself when the occasion arises that those routine procedures which ought to be adopted have been adopted. The fourth point is that if the situation arises either by suspicion or by obvious fact that there has been default by an auditing firm, then either or both of those rights must be exercised and the appropriate disciplinary action must be taken. The fifth factor which is important in this context is that a great deal of accountants' business is making judgments. No amount of monitoring today will undo an error of judgment made yesterday; nor will it prevent an error of judgment being made tomorrow.
Those five factors have governed my profession for the past 109 years: they have operated satisfactorily to a greater or lesser degree. I ask in the amendment for some assurances from the Government that the dialogue taking place between the profession and the Government should be continued so that both may eventually discover and decide exactly what is meant by "monitoring" and how it will operate. When they have reached that agreement, all I request is that the wording of the Bill should be tailored so that it properly reflects the agreement reached. I beg to move the amendment.
8.15 p.m.
Lord Williams of Elvel: My Lords, I wish to speak to Amendment No. 73 moved by the noble Lord, Lord Benson, and also, for the convenience of the House, to my Amendments Nos. 74, 75 and 76. This group of amendments tries to achieve the same objective. Schedule 8 to the Bill seems to impose on the recognised body a duty to have adequate arrangements and resources for the effective monitoring both of technical standards and of competence among its members. I am reluctant to accept that it should be written into statute that any organisation, be it the institutes of England, Wales or Scotland, or any other organisation, should have tasks imposed on them which it is impossible for them to fulfil. It seems to me that what paragraph 10 of Schedule 8 to the Bill imposes is impossible for the institute to fulfil.
Given that there are over 10,000 firms or individuals qualified as auditors, the only way in which one can monitor technical standards is by some sort of spot check arrangement. With so many different entities, that is almost impossible to achieve. Competence must be maintained. It cannot be maintained unless the body in question is in a passive
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situation and can reply to complaints. It is very difficult to say to 10,000 people every week, "Are you competent?" People change, as we know.
I hope very much that the Government will recognise that paragraph 10 of the schedule as at present drafted simply imposes impossible tasks. I am afraid it is no good officials saying, "It does not matter what the statute says, you jus do whatever you can". As a House we are required to "monitor" —if I may use that expression—this statute. I have no brief from the accounting profession. As a Member of this House, I support what the noble Lord, Lord Benson, said. I believe that the Government ought to examine the proposal again. I hope very much that the Secretary of State will respond to that invitation.
Lord Young of Graffham: My Lords, in common with the noble Lord, Lord Williams of Elvel, I shall speak to Amendments Nos. 73, 74, 75 and 76. As has been mentioned, this matter was debated in Committee. Since then my officials nave, as was promised at that time, discussed "monitoring" further with the profession. Before describing the profession's proposals, I think it might be helpful for me to say a few words about the intentions behind the monitoring and enforcement provisions in paragraph 10 of Schedule 8.
As your Lordships will be aware, the eighth directive requires us to ensure that only persons fulfilling certain conditions are entitled in law to carry out company audits. We are also obliged to ensure that there are adequate guarantees in place to ensure that company audits are carried out independently and with integrity. The principal means by which we have attempted to give the necessary legal guarantee that the provisions of the directive will be enforced in the United Kingdom is by requiring the professional bodies which apply for recognition as supervisory bodies in Great Britain to have rules and practices on the matters covered by the directive.
However there seems to us to be little point in securing that there are appropriate rules and practices in place and then making no provision to secure that the rules and practices are actually enforced. Further, we do not think that we should properly be implementing the directive—which, being an instrument of Community law, would be interpreted in terms of the purposes which it was directed at securing—if we did not make adequate provision in this respect. A proper supervisory system in this field ought to involve more than just a body laying down a set of rules and making no effort to secure that those rules are observed, other than taking up whatever complaints it receives. In the auditing field, relying on taking up complaints would be unsatisfactory, partly because the layman may not have the expertise to spot that the auditor is falling down on his job and partly because the people with whom the auditor is dealing, the company's management not the shareholders—this is a very important point—may be entirely happy that the auditor is not, for example, acting independently and with integrity.

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So we think there ought to be some sort of pro-active system of monitoring. However, we are determined that that system will not be a bureaucratic or onerous one. I yield to no one in your Lordships' House in my determination to avoid unnecessary regulatory burdens on business, and the professional bodies can be assured that, when the time comes to assess their applications for recognition, I shall not be expecting them to have an army of inspectors in the field. That would not anyway be required by the provisions of paragraph 10. We think that it should be perfectly possible to satisfy the purposes of the directive and ensure the integrity of the supervisory system, but at the same time avoid the dangers of over-regulation.
Your Lordships may wish to know about the meetings which officials have had with the institutes of chartered accountants to discuss monitoring and enforcement. The discussion was an initial, exploratory one, and did not go into a great deal of detail. We certainly intend to have further discussions with the professional bodies and hope to work with them to ensure that a sensible system of monitoring emerges. But as your Lordships will appreciate, it is for the professional bodies to come forward with proposals which seem to them to fit the requirements and suit their circumstances. It is not for the Government to set a blueprint. It is for the bodies to consider what is appropriate to enable them to fulfil their responsibilities for securing that standards are maintained in practice. We shall then consider the adequacy of the professional bodies' proposals in judging their applications for recognition.
The institutes' initial thoughts are that they would propose to build as far as possible on firms' own procedures. As many of your Lordships may well know, many accountancy firms already have internal systems of quality control, which involve in particular the checking of compliance with technical and ethical requirements. The institutes are considering whether firms should be required to file periodic returns which would include answers to questions designed to establish what a firm's procedures are for checking compliance with the rules of the recognised supervisory body. Further questions would then be asked and, if appropriate, monitoring visits paid to see whether the returns indicated a need for further investigation or whether there was any other reason to believe that matters might not be satisfactory.
This approach seems to me to be an entirely sensible one. It builds upon the existing procedure within firms; and it provides some focus for investigations. But your Lordships will appreciate that the proposals need to be fleshed out. For example, the form of the questions has yet to be determined. It would clearly not be enough to ask a firm if it had appropriate procedures in place, and then inevitably receive back the message that every firm indeed had such procedures so the matter need not be taken further. There is also the question of what arrangements and resources a body has to deal with the monitoring returns. The returns should not be left piling up in an empty room to be scrutinised in due
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course by one part-time assistant. We should also consider whether the returns should enable a firm in any circumstances to avoid a monitoring visit in perpetuity. But, as I have said, the approach seems an acceptable one in principle. It is the practice which needs to be worked out. It is certainly not ruled out by the present provisions of paragraph 10, but obviously the details of the scheme will be crucial in this respect. Having listened to my remarks, I hope the noble Lord will feel able to withdraw the amendment.
Lord Williams of Elvel: My Lords, does not the noble Lord recognise from what he has said, even before it is fleshed out, to use his own words, that he is starting to institute an enormous bureaucracy which involves forms being filled out and spot checks being made? This will impose an enormous burden on firms, and indeed on the institutes in their capacity to recognise bodies.
Lord Young of Graffham: My Lords, if it is a bureaucracy it is a bureaucracy of the profession and not of government. It will be something that the profession itself will look at. If we are to place such regard—I believe it is high regard—on the work that the institutes' members do, there should be some method of ensuring that the members themselves follow an adequate system of checking to ensure that their results are accurate and that the auditor is acting independently and with integrity. We are not saying that every auditor should be checked on every single matter but that the institute, if that is the recognised body, sets up a procedure whereby it can point out to some of its members that a system of checking is there.
I am a solicitor and at one time I was in practice. At that time the Law Society had a system for ensuring that clients' money and office money were kept separate. The society had a system for checking on that money. But the system was no more than that. This provision involves no more than the Law Society's system of checking. This system should not, and will not, be bureaucratic. That is the purpose of our discussions.
Lord Benson: My Lords, I have been anxious on this subject, as I have already explained to the House, both in Committee and at this stage. I am pleased to note from what the noble Lord, Lord Young of Graffham, has said that the discussions will continue. I do not think there is any point in my pursuing this matter until those discussions have been taken a stage further. I hope that the Bill may then be tailored, if necessary, to meet the outcome of those discussions. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 74 to 77 not moved.]
Lord Strathclyde Lord Strathclyde moved Amendment No. 78:
Page 183, line 4, at end insert—
("(2) The body must have rules and practices designed to secure that where an auditors' report is signed under section 235A(1) of the Companies Act 1985 by or on behalf of a person whose name appears in the register of auditors, and in relation to whom that body is stated to be the relevant supervisory body, the title "Registered Auditor" is added after the signature.").
The noble Lord said: My Lords, the Government accepted in Committee the criticism that it was excessive for failure to use the title "registered auditor" to be a criminal offence, and we said that we would bring forward amendments to remove the offence and replace it with a requirement that a recognised supervisory body has rules and practices to secure that its auditing members use the title in the appropriate circumstances. Breach of those rules would then be a matter for the body's internal disciplinary procedures. These amendments give effect to that commitment. I beg to move.
Lord Williams of Elvel: My Lords, we are glad that the Government have produced these amendments. We support them.
On Question, amendment agreed to.
Schedule 9 [Recognition of professional qualification]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 79:
Page 185, line 16, leave out from beginning to ("not") and insert—
("Course of theoretical instruction
4A. The qualification must be restricted to persons who have completed a course of theoretical instruction in the subjects prescribed for the purposes of paragraph 5 or have a sufficient period of professional experience.
Sufficient period of professional experience
4B.—(1) The references in paragraphs 4 and 4A to a sufficient period of professional experience are to").
The noble Lord said: My Lords, these amendments take advantage of concessions in the directive in favour of people with sufficient professional experience which the Bill has not fully implemented hitherto. The directive allows us to admit people with sufficient professional experience on to the training course even though they have not attained university entrance level, and the Bill at present reflects this. The directive also allows these people to obtain a qualification without having to undergo the course of theoretical instruction. The directive allows periods of theoretical instruction which a person has undergone before entry on the course to count towards the period of professional experience provided that the conditions described in paragraph 4(4) of the schedule are met.
As someone who in a much earlier age qualified as a solicitor without going to university as a prequalification—I attended university later while I was qualifying—I can only thoroughly commend these amendments. I beg to move.
On Question, amendment agreed to.
8.30 p.m.
Lord Strathclyde Lord Strathclyde moved Amendment No. 80:
Page 185, line 28, leave out from ("required") to end of line 30 and insert ("in the case of persons satisfying the requirement in paragraph 4A by virtue of having a sufficient period of professional experience must not be shorter than the course of theoretical instruction referred to in that paragraph and the practical training required in the case of persons satisfying the requirement of that paragraph by virtue of having completed such a course.").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No 81:
Page 185, line 32, leave out ("completed a course of theoretical instruction and").
On Question, amendment agreed to.
[Amendment No. 82 not moved.]
Clause 32 [The register of auditors]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 83:
Page 45, line 3, leave out ("jointly").
The noble Lord said: My Lords, we discussed the joint register in Committee. The Government undertook to look at the problem bearing in mind the procedural and logistic difficulties for the various recognised bodies—as they will become—in maintaining a joint register. The Government (I think that it was the noble Lord, Lord Stratchlyde) indicated that to leave out the word "jointly" and to have separate registers for the individual recognised bodies might be in contravention of the directive. I should be grateful if the noble Lord could enlighten us on that point because it seems almost impossible to have a joint register for the various recognised bodies in the United Kingdom.
Lord Strathclyde: My Lords, an identical amendment was discussed in Committee. We recognise that the professional bodies are not very happy with the idea that the responsibility to maintain the register should be a joint one. My noble friend Lord Brabazon of Tara said in Committee that the Government would consider whether a way could be found of meeting the bodies' concerns while still implementing the directive.
One possibility which has occurred to us is that the recognised supervisory bodies might be placed under a duty individually to maintain a register of all auditors. They would then also have to be placed under a duty to supply the relevant information to each other so that they could discharge their responsibilities as to the register. I understand that that approach would be acceptable to the Institute of Chartered Accountants, but I should like there to be further discussion on this matter before we decide on any change. First, I believe that the certified accountants ought to be consulted on any proposals. Secondly, I should like the possibility of the information covered by Clause 33 being incorporated into the register to be explored with the professional bodies. Thirdly, I want further thought to be given to whether there are other ways of meeting the directive's requirements while avoiding some of the bureaucracy in the approach I have outlined.
I hope that your Lordships will agree that further consideration ought to be given to this issue.
Lord Williams of Elvel: My Lords. I am most grateful to the noble Lord. I am sure that he understands the point that I tried to make in Committee and am trying to make now. We hope very much that the Government will complete the consultations they have embarked on as quickly as possible so that we have an opportunity to discuss

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what they finally propose. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 [Matters to be notified to the Secretary of State]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 84:
Page 46, line 9, leave out subsections (5) and (6).
The noble Lord said: My Lords, in moving Amendment No. 84 I should like to speak also to Amendments Nos. 88, 89, 91 and 92. These amendments concern the operation of the competition regime when many of the Secretary of State's powers have been transferred to a statutory body set up under Clause 44. The Bill already reserves to the Secretary of State certain of the competition functions in those circumstances, for it is he who must have the final say as to whether a supervisory or qualifying body's rules have a significantly anti-competitive effect, and if so, whether that effect is reasonably justifiable for the purposes of the part. However, there are certain problems arising from the fact that some of the functions would be exercisable by the statutory body and others simultaneously by the Secretary of State.
For example, Clause 44(2)(a) reserves to the Secretary of State the function of deciding whether a recognition order should be revoked on grounds relating to competition, but the function of revoking the order on those grounds would be transferred by the delegation order to the statutory body and there is no mechanism enabling the Secretary of State to direct the body to take the appropriate action. Rather than make the rather complex and difficult amendments to the Bill which we think would be required to resolve all those problems, we have decided to take a power to make regulations to deal with them at the appropriate time. That seems sensible in the circumstances. I beg to move.
On Question, amendment agreed to.
Clause 38 [Duty to use the title "registered auditor"]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 85:
Leave out Clause 38.
On Question, amendment agreed to.
Clause 40 [Offences by bodies corporate, partnerships and unincorporated associations]:
Lord Benson Lord Benson moved Amendment No. 86:
Page 48, line 22, leave out subsection (3) and insert—
("(3) Where an offence under this Part committed by a partnership is proved to have been committed with the consent or connivance of a partner, he as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.").
The noble Lord said: My Lords, this amendment deals with the question of offences by either a company or a partnership. Under Clause 40(1) if a company commits an offence any officer of the company who consents to or connives at the
552
committing of that offence is also guilty. There can be no objection to that and no objection is raised to it in this amendment.
However, when it comes to a partnership a different situation arises. Under Clause 40(3) if an offence is committed by a partnership all the partners are automatically guilty unless a partner can prove his innocence. That arrangement appears to be objectionable on three grounds, each of which appears to be conclusive. Together they seem unanswerable. The first is that the clause itself is contradictory. Clause 40(1) puts the matter one way but when it comes to a partnership the matter is put another way. It is wrong to have inconsistencies of that character in the same clause.
The second point is that Clause 40(3) appears to conflict with the basic rule of British justice that a man is deemed to be innocent unless he is proved guilty. This says exactly the opposite: he is deemed to be guilty unless he proves he is innocent. It seems quite wrong that a Bill of this kind should override a fundamental right of British justice.
The third reason is that I think that it is totally impracticable. Most of the large firms have up to 200 partners. Should they be caught under this clause there could be two partners who committed the offence but 198 partners will stand in the dock and have to prove their innocence. Each one will be represented by barristers and solicitors and the jury will have to make an individual decision as to whether each one has satisfied the court of his innocence. Such a procedure is not capable of contemplation. There is no courtroom in the country which will hold 200 partners, all proving their innocence.
I suggest that there is no reason why subsections (1) and (3) should not be made the same. This is not a pernickety point of wording. I have the most specific legal advice that this is an issue which ought to be taken up, and I believe that that advice has been furnished to the Government. I hope therefore that the Government will be able to satisfy this point. I beg to move.
Lord Strathclyde: My Lords, I am not sure that I would agree with the noble Lord that this is a matter of reverting to the usual burden of proof. First, this is a standard provision that can be found in several statutes which provide for the prosecution of offences that have been committed by partnerships and unincorporated associations. Secondly, there is authority for the proposition that, particularly in the case of offences which do not involve an element of mens rea, partners who are ignorant of their co-partners wrongdoing may nevertheless be guilty of the offence. If that is the case so far as partnerships are concerned, it seems likely that similar principles apply in the case of unincorporated associations. That being so, it might reasonably be said that the Bill as it stands places partners in a better position than they might otherwise be since it provides them with a specific defence.
However, we have received representations on this matter and are considering them. As noble Lords will realise from what I said about these being standard

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provisions, we need to consult others on their appropriateness, but we shall certainly get in touch with the Institute of Chartered Accountants when we have considered the matter further. I hope that the noble Lord is able to accept that assurance and withdraw his amendment.
Lord Benson: My Lords, on the basis of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 87 not moved.]
Clause 44 [Delegation of functions of Secretary of State]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 88:
Page 50, line 12, leave out from ("(a)") to end of line 16 and insert ("such functions under Part I of Schedule 11 (prevention of restrictive practices) as are excepted by regulations under section 45,").
On Question, amendment agreed to.
Clause 45 [Restrictive practices]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 89:
Page 50, line 42, at end insert—
("(2) The Secretary of State may make provision by regulations as to the discharge of the functions under paragraphs 1 to 6 of that Schedule when a delegation order is in force.
(3) The regulations may—

(a) except any function from the effect of the delegation order,

(b) modify any of the provisions mentioned in subsection (2), and

(c) impose such duties on the body established by the delegation order, the Secretary of State and Director General of Fair Trading as appear to the Secretary of State to be appropriate.

(4) The regulations shall contain such provision as appears to the Secretary of State to be necessary or expedient for reserving to him the decision—

(a) to refuse recognition on the ground mentioned in paragraph 1(3) of that Schedule, or

(b) to exercise the powers conferred by paragraph 5 of that Schedule.

(5) For that purpose the regulations may—

(a) prohibit the body from granting a recognition order without the leave of the Secretary of State, and

(b) empower the Secretary of State to direct the body to exercise its powers in such manner as may be specified in the direction.

(6) Regulations under theis section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
On Question, amendment agreed to.
Lord Young of Graffham Lord Young of Graffham moved Amendment No. 90:
After Clause 45, insert the following new clause:
("Exemption from liability for damages
. — (1) Neither a recognised supervisory body, nor any of its officers or employees or members of its governing body, shall be liable in damages for anything done or omitted in the discharge or purported discharge of functions to which this subsection applies, unless the act or omission is shown to have been in bad faith.
(2) Subsection (1) applies to the functions of the body so far as relating to, or to matters arising out of—

(a) such rules, practices, powers and arrangements of the body to which the requirements of Part 11 of Schedule 8 apply, or

554

(b) the obligations with which paragraph 15 of that Schedule requires the body to comply,

(c) any guidance issued by the body, or

(d) the obligations to which the body is subject by virtue of this part.

(3) Neither a body established by a delegation order, nor any of its members, officers or employees, shall be. in damages for anything done or omitted in the discharge or purported discharge of the functions exercisable by virtue of the order, unless the act or omission is shown to have been in bad faith.").
The noble Lord said: My Lords, noble Lords will recall that we said in Committee that we would consider carefully the case put fo7ward by the Institute of Chartered Accountants that the Bill should confer immunity from liability in damages on recognised supervisory bodies. A number of noble Lords supported the institute's case and we have taken account of the arguments put forward. As will be apparent from the clause, we concluded that it would be appropriate to grant the special protection to recognised supervisory bodies. We consider that the same arguments apply to the case of any statutory body that might be set up under Clause 44 and we therefore propose that it should have similar protection. In those circumstances, I beg to move.
Lord Williams of Elvel: My Lords, after our discussions in Committee, I think that the Government recognised that this was the right solution. I am glad that they have brought forward this amendment, which we support.
Lord Benson: My Lords, I should like to thank the noble Lord, Lord Young of Graffham, for taking the trouble to bring forward this amendment. It has considerably relieved the anxiety in our minds and we are grateful for the way it has been handled.
On Question, amendment agreed to.
Schedule 11 [Supervisory and qualifying bodies: restrictive practices]:
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 91 and 92:
Page 189, line 50, at end insert—
("Notification of changes to rules or guidance
1A. — (1) Where a recognised supervisory or qualifying body amends, revokes or adds to its rules or guidance in a manner which may reasonably be regarded as likely—

(a) to restrict, distort or prevent competition to any significant extent, or

(b) otherwise to affect the question whether the recognition order granted to the body should continue in force,

it shall within seven days give the Secretary of State written notice of the amendment, revocation or addition.
(2) Notice need not be given under sub-paragraph (I) of the revocation of guidance not intended to have continuing effect or issued otherwise than in writing or other legible form, or of any amendment or addition to guidance which does not result in or consist of guidance which is intended to have continuing effect and is issued in writing or other legible form.").
Page 190, line 9, leave out from ("under") to ("together") in line 10 and insert ("paragraph 1A").
On Question, amendments agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 93:
Page 193, line 2, leave out ("term") and insert ("terms").
The noble Lord said: My Lords, this is just a drafting amendment. I beg to move.
On Question, amendment agreed to.
Clause 52 [Production of documents and evidence to inspectors]:
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 94 to 97:
Page 53, line 31, at end insert—
("() In subsection (1) (duty of officers to assist inspectors), for "books and documents" substitute "documents".").
Page 53, line 38, leave out ("books and").
Page 54, line 2, leave out ("books and").
Page 54, line 4, leave out from ("form") to ("a") in line 5 and insert ("the power to require its production includes power to require the production of').
The noble Lord said: My Lords, in moving these amendments I should like to speak also to Amendments Nos. 100, 101, 103, 105, 106, 107, 109, 110, 111, 121, 122, 124, 125, 126, 127, 132, 134, 151 and 153. Parts of Amendments Nos. 116 and 128 deal with similar changes, but I propose to speak to them separately. During the Committee stage debate on Part III of the Bill on 14th February, I undertook to consider further the points raised by the noble Lord, Lord Mishcon, on Clause 59—now Clause 60 of the Bill, as amended—relating to the various uses of the words "books and papers", "books and documents", and "documents" alone in the Companies Act, as to be amended by the Bill.
As I said at the time, we do not consider that the differences in the references are of consequence. However, we accept that the drafting would be improved if the various references were to be harmonised, not only in the Companies Act but also on related provisions in the Insurance Companies Act, the Financial Services Act, and in Clauses 73 and 78 of the Bill. Amendments Nos. 94, 95, 96, 97, 101, 103, 105, 107, 134 and 151 deal directly with that harmonisation, substituting the word "documents" for the various references to books, papers and documents as currently employed.
Amendments Nos. 110 and 111 are consequential and are simply intended to remove the reference to "books and papers" in Schedule 24 to the Companies Act 1985, which concerns the punishment of offences, in the entry related to what is now Section 448(5) of that Act. I hope noble Lords will agree that this measure clarifies and simplifies the provisions. I beg to move.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for this group of amendments, which certainly clears up a curious drafting anomaly in the Bill.
On Question, amendments agreed to.
8.45 p.m.
Clause 55 [Expenses of investigating a company's affairs]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 98:
Page 55, line 2, leave out from ("report") to end of line 3 and insert—
("(4) For subsection (5) substitute—
"(5) Where inspectors were appointed—

(a) under section 431, or

(b) on an application under section 442(3),

the applicant or applicants for the investigation is or are liable to such extent (if any) as the Secretary of State may direct.".").
The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 98, 99, 119 and 150. In Committee, the noble Lord, Lord Mishcon, tabled an amendment to Clause 58—then Clause 57—which was designed to preserve Section 442(3) to enable the Secretary of State to recover costs from the applicants. My noble friend the Secretary of State said then that he thought there might be merit in amending the provisions of that section on lines similar to Section 431. After further consideration, I have concluded that there is merit in such a proposal and I am bringing forward these amendments accordingly. I hope that this meets with the approval of noble Lords. I beg to move.
On Question, amendment agreed to.
Clause 58 [Investigation of company ownership]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 99:
Page 55, line 39 leave out from ("ownership),") to end of line 40 and insert ("for subsection (3) (investigation on application by members of company) substitute—
"(3) If an application for investigation under this section with respect to particular shares or debentures of a company is made to the Secretary of State by members of the company, and the number of applicants or the amount of shares held by them is not less than that required for an application for the appointment of inspectors under section 431(2)(a) or (b), then, subject to the following provisions, the Secretary of State shall appoint inspectors to conduct the investigation applied for.
(3A) The Secretary of State shall not appoint inspectors if he is satisfied that the application is vexatious; and where inspectors are appointed their terms of appointment shall exclude any matter in so far as the Secretary of State is satisfied that it is unreasonable for it to be investigated.
(3B) The Secretary of State may, before appointing inspectors require the applicant or applicants to give security, to an amount not exceeding £5,000, or such other sum as he may by order specify, for payment of the costs of the investigation.
An order under this subsection shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(3C) If on an application under subsection (3) it appears to the Secretary of State that the powers conferred by section 444 are sufficient for the purposes of investigating the matters which inspectors would be appointed to investigate, he may instead conduct the investigation under that section.".").
On Question, amendment agreed to.
Clause 59 [Secretary of State's power to require production of documents]:
Lord Strathclyde Lord Strathclyde moved Amendments 100 and 101:
Page 55, line 42, at end insert—
("() For "books or papers", wherever occurring, substitute "documents".").
Page 55, line 44, leave out ("books and papers") and insert ("documents").
On Question, amendments agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 102:
Page 55, line 45, leave out from first ("person") to end of line and insert (", after "the officer" in the first place where it occurs insert "or other person" and for "the officer" in the second place where it occurs substitute "he (the officer or other person)".").
The noble Lord said: My Lords, this is a minor technical amendment. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 103:
Page 56, line 1, leave out ("books and papers") and insert ("documents").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 104:
Page 56, line 3, at end insert—
("() In subsection (6), for the second sentence substitute—
"Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to this offence.".").
The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 108, 113, 116, 117 and 152. These are minor and technical amendments. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 105 to 107:
Page 56, line 5, leave out ("books or papers") and insert ("documents").
Page 56, line 7, leave out from ("form") to ("a") in line 8 and insert ("the power to require its production includes power to require the production of").
Page 56, line 8, at end insert—
("() In Schedule 24 to the Companies Act 1985 (punishment of offences), in the entry relating to section 447(6), for "books and papers" substitute "documents".").
On Question, amendments agreed to.
Clause 60 [Entry and search of premises]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 108:
Page 57, line 30, leave out from ("732") to ("apply") in line 31 and insert ("(restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies)").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 109 to 111:
Page 57, line 45, leave out from ("form") to end of line 48.
Page 58, line 2, after ("448(5)") insert ("—(a)").
Page 58, line 3, at end insert (", and
(b) for the entry in the second column substitute—
"Obstructing the exercise of any rights conferred by a warrant or failing to comply with a requirement imposed under subsection (3)(d).".").
On Question, amendments agreed to.
Clause 61 [Provision for security of information obtained]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 112:
Page 58, line 18, leave out ("section 74") and insert ("Part III").
The noble Lord said: My Lords, with this I shall speak also to Amendments Nos. 123 and 136. These amendments are minor and technical. They amend the Companies Act, the Financial Services Act and Clause 78 of the Bill, relating to information obtained under the powers to assist overseas regulators, so as to provide gateways for the disclosure of restricted information for the purpose of enabling or assisting the Secretary of State's exercise of functions under Part III of the Bill. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 113:
Page 58, line 41, at end insert—
("() In subsection (2), for the second sentence substitute—
"Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) arid 734 (criminal proceedings against unincorporated bodies) apply to this offence.".").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendments. Nos. 114 and 115:
Page 59, line 2, at end insert—
("(bb) any person authorised to exercise powers under section 44 of the Insurance Companies Act 1982, section 447 of this Act, section 106 of the Financial Services Act 1986 or section 75 of the Companies 1989,").
Page 59, line 23, leave out from ("authority") to end of line 28.
The noble Lord said: My Lords, I beg to move Amendments Nos. 114 and 115. They are technical amendments. Their effect is that inspectors appointed under the Companies Act may disclose information not only to other investigators but also to officers and servants of such investigators.
On Question, amendments agreed to.
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 116 and 117:
After Clause 61, insert the following new clause:
("Punishment for destroying, mutilating, &c. company documents.
.—(1) Section 450 of the Companies Act 1985 (punishment for destroying, mutilating, &c. company documents) is amended as follows.
(2) For subsection (4) substitute—
"(4) Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to an offence under this section.".
(2) After that subsection insert—
"(5) In this section "document" includes information recorded in any form.".").
After Clause 61, insert the following new clause:
("Punishment for furnishing false information.
In section 451 of the Companies Act 1985 (punishment for furnishing false information), for the second sentence substitute—
"Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to this offence.".").
On Question, amendments agreed to.
Clause 62 [Disclosure of information by Secretary of State or inspector]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 118:
Page 60, line 8, at end insert—
("() Any information which may by virtue of subsection (3) be disclosed to any person may be disclosed to any officer or servant of that person.").
The noble Lord said: My Lords, this is a technical amendment. Its effect is that inspectors appointed under the Companies Act may disclose information not only to other investigators but also to officers and servants of such investigators. I beg to move.
Lord Williams of Elvel: My Lords, can the noble Lord help us by defining in these circumstances who an officer or servant is?
Lord Strathclyde: My Lords, as I said, this is a technical amendment bringing in those who are officers or servants. In this definition, officers or servants are those instructed by the investigators to carry out whatever duties there may be.
Lord Williams of Elvel: My Lords, before the noble Lord sits down, I am sure that he will recognise that there is a problem here. It may be technical, but an inspector can divulge or disclose information to anybody, provided that he or she can claim that he or she is an officer or servant. Before allowing this to go through on the nod, as it were, I should like to be assured that there is some provision that an officer or servant is defined quite clearly in law so that not everyone can walk in from the street and claim to be an officer or servant of an inspector and obtain information which the inspector has available.
Lord Strathclyde: My Lords, I agree with the noble Lord. I would never wish matters to be pushed through the House on the nod. He has asked a pertinent question. The concept of an officer or servant is well understood in law. It is a phrase used elsewhere. It does not have a meaning here different from that in any other statute. I therefore hope that the noble Lord will be put at ease.
Lord Tordoff: My Lords, will the noble Lord explain what meaning it has in other statutes?
Lord Strathclyde: My Lords, without intending to be in the least facetious, it has exactly the same meaning in other statutes as it has here.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 119:
Page 60, line 8, at end insert—
("() The Secretary of State may, if he thinks fit, disclose any information obtained under section 444 to—

(a) the company whose ownership was the subject of the investigation,

(b(any member of the company,

(c) any person whose conduct was investigated in the course of the investigation,

(d) the auditors of the company, or

(e) any person whose financial interests appear to the Secretary of State to be affected by matters covered by the investigation.").

On Question, amendment agreed to.
Clause 64 [Investigation of oversea companies]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 120:
Page 60, line 40, leave out from ("(c)") to ("power") in line 41 and insert ("sections 442 to 445 (investigation of company ownership and").
The noble Lord said: My Lords, this is a minor technical amendment. I beg to move.
On Question, amendment agreed to.
Clause 66 [Investigations into affairs of persons carrying on investment business]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 121:
Page 61, line 44, at end insert—
("() In subsection (9) (interpretation), in the definition of "documents", for "references to its production include references to producing" substitute "the power to require its production includes power to require the production of'.").
On Question, amendment agreed to
Clause 67 [Investigations into insider dealing]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 122:
Page 63, line 4, at end insert—
("() In subsection (10) (definition of "documents") for "references to its production include references to producing" substitute "the power to require its production includes power to require the production of'.").
On Question, amendment agreed to.
Clause 68 [Restrictions on disclosure of information]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 123:
Page 63, line 24, at end insert—
("(a) in paragraph (c), after "insolvency" insert "or by Part III of the Companies Act 1989".").
On Question, amendment agreed to.
Clause 69 [Entry and search of premises]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 124:
Page 64, line 43, at end insert—
("() In subsection (9) (definition of "documents"), omit the words from "and, in relation" to the end.").
On Question, amendment agreed to.
Clause 70 [Amendments of the Insurance Companies Act 1982]:
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 125 to 127:
Page 65, line 7, leave out ("and section 44A").
Page 65, line 9, leave out from ("form") to ("a") in line 10 and insert ("the power to require its production includes power to require the production of").
Page 66, line 30, at end insert—
("() In this section "document" includes information recorded in any form.").
On Question, amendments agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 128:
Page 66, line 33, leave out subsection (5) and insert—
("(5) In section 71 (offences and penalties), after subsection (2) insert—
"(2A) A person who intentionally obstructs the exercise of any rights conferred by a warrant issued under section 44A above or fails without reasonable excuse to comply with any requirement imposed in accordance with subsection (3)(d) of that section is guilty of an offence and liable—

(a) on conviction on indictment, to a fine, and

(b) on summary conviction, to a fine not exceeding the statutory maximum.".

(6) In section 71(6) (defence to failure to comply with requirement to produce books or papers) for "books our papers" substitute "documents".").
The noble Lord said: My Lords, the purpose of Amendment No. 128 is to bring the penalty for the offence of failing to comply with the exercise of powers authorised by a warrant issued under Section 44A of the Insurance Companies Act 1982, as inserted by Clause 70(3) of the Bill, into line with the penalties for analogous offences in relation to search and entry powers in the Companies Act and the Financial Services Act. It provides for a person found guilty of such an offence to be liable on conviction on indictment to a fine, and on summary conviction to a fine not exceeding the statutory maximum.
This amendment also has the effect of substituting the word "document" for books and papers in Section 71(6) of the Insurance Companies Act. It is a minor drafting amendment on the lines that we agreed on Amendment No. 94. I beg to move.
On Question, amendment agreed to.
Clause 73 [Request for assistance by overseas regulatory authority]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 129:
Page 67, line 10, leave out subsections (2) and (3) and insert—
("(2) An "overseas regulatory authority" means an authority which in a country or territory outside the United Kingdom exercises—

(a) any function corresponding to—

(i) a function under the Financial Services Act 1986 of a designated agency, transferee body of competent authority (within the meaning of that Act),

(ii) a function of the Secretary of State under the Insurance Companies Act 1982, the Companies Act 1985 or the Financial Services Act 1986, or

(iii) a function of the Bank of England under the Banking Act 1987, or

(b) any function in connection with the investigation of, or the enforcement of rules (whether or not having the force of law) relating to, conduct of the kind prohibited by the Company Securities (Insider Dealing) Act 1985, or

(c) any function prescribed for the purposes of this subsection by order of the Secretary of State, being a function which in the opinion of the Secretary of State relates to companies or financial services.

An order under paragraph (c) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(3) The Secretary of State shall not exercise the powers conferred by section 74 unless he is satisfied that the assistance requested by the overseas regulatory authority is for the purposes of its regulatory functions.
An authority's "regulatory functions" means any functions falling within subsection (2) and any other functions relating to companies or financial services.").
The noble Lord said: My Lords, in moving this amendment I should also like to speak to Amendment No. 131. The amended subsections provide that the Secretary of State can by order add to the list of functions in Clause 73(2) which, if exercised by an authority in the country or territory outside the United Kingdom, mean that the authority is an overseas regulatory authority which is eligible to make requests to the Secretary of State to exercise his powers under Clause 74. Any function added to the list, however, must in the opinion of the Secretary of State relate to companies or financial services. Any order under this new provision must be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
This new order-making power is, in the Government's view, necessary to ensure that we are able to assist overseas authorities who exercise functions which do not correspond to the functions in Clause 73(2)(a) and (b) but which—and this is an important limitation to the power—nonetheless relate to companies or financial services. Without this power we believe that we could find ourselves with insufficient flexibility to assist overseas authorities exercising regulatory functions in certain cases, even though it was in the public interest to do so.
The order-making power, however, provides a parliamentary safeguard which would not apply if the clause simply defined an overseas regulatory authority as any overseas authority exercising one or more regulatory functions as defined in subsection (3).
The definition of "regulatory functions" in Clause 73(3) is amended to make clear that they include any of the functions falling within new subsection (2) of Section 73. New subsection (7) of Clause 73 makes clear that references in the clause to financial services include, in particular, investment business, insurance and banking. This new subsection replaces the similar provision in the existing Clause 73(3) but covers the additional reference to financial services in new subsection (2)(c). The new subsections also contain some consequential drafting amendments which have no substantive effect. I beg to move.
9 p.m.
Lord Williams of Elvel: My Lords, overseas regulatory authorities have been the object of some debate in Committee and also of correspondence between Government Ministers and myself. I accept that the amendment that the noble Lord is moving goes some way to meet our problems; but it raises the problem of banking, which is a rather specialised activity—information on banking should not be divulged to anybody except under the proper circumstances. I question whether, in the context of this Bill, banking can properly be defined as a financial service in the same way as investment business can be, because they have different aspects of confidentiality. I hope that the noble Lord will be able to satisfy me on that point.
Lord Strathclyde: My Lords, subsection (2) specifies functions in detail. This is to ensure that the question of whether or not an overseas authority qualifies for the purposes of these provisions can be determined with reasonable certainty. However, it would be undesirable for the Secretary of State to be limited in his ability to provide assistance solely for the purpose of a function in subsection (2). It would reduce the scope for providing assistance and focus consideration of whether the powers can and should be exercised on the relatively sterile question of whether the information was being sought for a function which corresponded to a particular function exercised in the United Kingdom. It is important that the authority should not be seeking the information in question for some purpose other than for the purpose of its regulatory functions in the companies and financial services sphere. Otherwise, the object of exercising these powers could be wholly at large. But the main consideration as to whether to exercise the powers should focus on matters of the kind instanced in subsection (4).
The noble Lord, Lord Williams, made a specific point concerning banking. I am not entirely clear why the amendment raises this problem. Banking information, for example, is already given special protection in Clause 75(4). Generally, that information is protected by Clause 77. Therefore, I hope that the noble Lord, Lord Williams, will see that the problem that he indicates does not arise.
Lord Williams of Elvel: I understand that banking information is protected under other parts of the Bill. However, we are dealing here in this amendment with what are known as financial services. Amendment No. 131, to which the noble Lord was speaking, includes investment business, insurance and banking. Perhaps the noble Lord can give an assurance that the banking part of Amendment No. 131 is covered by the protection in the rest of the Bill, and that banking secrecy will not thereby be violated in respect of overseas regulatory authority inquiries.
Lord Strathclyde: My Lords, generally speaking, I agree with what the noble Lord, Lord Williams, has said. However, as the noble Lord knows, there are different forms of banking. Therefore some aspects of banking will come under the new subsection and other aspects of banking will quite clearly fall under the secrecy applications in other parts of the Bill.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 130:
Page 68, line 7, at end insert—
("(6) The Secretary of State may decline to exercise those powers unless the overseas regulatory authority undertakes to make such contribution towards the costs of their exercise as the Secretary of State considers appropriate.").
The noble Lord said: My Lords, this amendment makes it clear that the Secretary of State can request an overseas regulatory authority which asks him to exercise the powers in Clause 74 to contribute towards the costs. I beg to move.
Lord Williams of Elvel: My Lords, if I may say so, this is an extraordinary amendment; that the Secretary of State may decline to help an overseas regulatory authority by the use of his powers unless the overseas regulatory authority coughs up some money. Suppose that the Securities and Exchange Commission, to give an example, comes along and says that it would like to do this, that and the other, and asks for help. Are we seriously proposing that the Secretary of State should say to the Securities and Exchange Commission, "You must pay me £3.53 and then I will give you the information you require"? Is that really what the Government intend?
Lord Strathclyde: My Lords, I think that the noble Lord, Lord Williams, is generally right, but he confuses the matter in this respect, that it is not that the Secretary of State would or should, but that he may. The intention here is that the costs or expense of exercising the new powers will generally be borne out of the department's budget. However, if the Secretary of State sees fit, he might request a contribution towards the costs from the requesting authority. It is envisaged that the basis for any such contribution would be set before the United Kingdom investigation began.
With regard to the noble Lord's point about the United States, there is already provision for costs for some investigations of that type.
Lord Williams of Elvel: My Lords, leaving aside the position of the United States, if this amendment is accepted by your Lordships, is the Secretary of
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State entitled to refuse to exercise his powers in favour of an overseas regulatory authority, if that regulatory authority refuses to pay the Bill?
Lord Strathclyde: My Lords, it would be extremely unlikely but, in the event, that would be the case.
Lord Williams of Elvel: My Lords, before the Minister sits down can he say whether it is consistent with our obligations in the European Community?
Lord Strathclyde: My Lords, yes, it almost certainly is. There are a variety of options for members and this would fall under those.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 131:
Page 68, line7, at end insert—
("(7) References in this section to financial services include, in particular, investment business, insurance and banking.").
On Question, amendment agreed to.
Clause 74 [Power to require information, documents or other assistance]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 132:
Page 68, line 37, leave out from ("form") to ("a") and insert ("the power to require its production includes power to require the production of").
On Question, amendment agreed to.
Clause 75 [Exercise of powers by officer, &c.]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 133:
Page 68, line 42, leave out from ("for") to end of line 2 on page 69 and insert ("the purpose of investigating—

(a) the affairs, or any aspects of the affairs, of a person specified in the authority, or

(b) a subject-matter so specified,

being a person who, or subject-matter which, is the subject of the inquiries being carried out by or on behalf of the overseas regulatory authority.").
The noble Lord said: My Lords, Clause 75(1) provides that the Secretary of State may authorise an officer of his or any other competent person to exercise the powers in Clause 74 on his behalf. Clause 75(2) requires that any such authority must be for specific purposes defined by reference either to the persons who are the subject of the inquiries being carried out by, or on behalf of, the requesting overseas authority or to the subject matter of those inquiries.
The amendment is intended to make it clear that the authority has to state only the affairs or subject matter being investigated by the overseas authority and that no further details are required. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 134:
Page 69, line 14, at end insert—
("In this subsection "documents" has the same meaning as in section 74.").
On Question, amendment agreed to.
Clause 78 [Exceptions from restrictions on disclosure]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 135:
Page 71, leave out lines 3 to 5.
The noble Lord said: My Lords, I should also like to speak to Amendment No. 139. At present, Clause 78(1)(d) permits disclosure of information to which Clause 77 applies for the purpose of enabling or assisting an overseas regulatory authority to exercise its regulatory functions but the disclosure must be to such an authority.
The amendments involve the deletion of Clause 78(1)(d) and the addition, in Clause 78(4), of a wider gateway which permits disclosure to any person for the above purpose. This is analogous both to the existing parallel gateways in Section 449(1)(m) of the Companies Act 1985 and Section 180(6) of the Financial Services Act 1986, and to the proposed amendments to those gateways in Clauses 61(2)(g) and 68(3)(c) of this Bill. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 136:
Page 71, line 32, column 2, at end insert ("or this Part of this Act").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 137:
Page 71, line 33, column 1, leave out ("by the Secretary of State") and insert ("under Part XIV of the Companies Act 1985 or section 94 or 177 of the Financial Services Act 1986").
The noble Lord said: My Lords, I should also like to speak to Amendment No. 138. At present the second entry in the table in Clause 78(4) allows for disclosure of information to which Clause 77 applies only for the purpose of enabling or assisting inspectors appointed under the specified provisions by the Secretary of State. By virtue of Section 114 of the Financial Services Act, the function of appointing inspectors under Section 94 of that Act is transfer-
566
able to a designated agency and is among those functions which have been transferred to the Securities and Investments Board on the basis that it is exercisable by the Secretary of State concurrently. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 138:
Page 71, line 33, column 2, leave out from ("under") to end of line 36 and insert ("that Part or that section").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No 139:
Page 71, line 43, at end insert—

("An overseas regulatory authority.

Its regulatory functions (within the meaning of section 73 of this Act).").

On Question, amendment agreed to.
Lord Henley: My Lords, I beg to move that consideration on Report be now adjourned.
Moved accordingly and, on Question, Motion agreed to.

Hayle Harbour Bill [H.L.]
Committed to an Unopposed Bill Committee.

Buckinghamshire County Council Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
House adjourned at thirteen minutes past nine o'clock.

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