Sitting of 9 May 1989

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

    Aircraft Orders
    Mr. David Nicholson: To ask the Secretary of State for Defence what aircraft have been ordered by his Department for the Royal Air Force since 1979.
    The Minister of State for the Armed Forces (Mr. Archie Hamilton): With permission, Mr. Speaker, it would be appropriate before we answer questions, to ask the House to join us in expressing sadness at the deaths of two naval airmen in an aircraft accident yesterday at Portland and in extending to their families our deepest sympathy.
    I refer my hon. Friend to table 5 of the "Statement on the Defence Estimates 1989", published last week, copies of which are available in the Library. He will note from that table that firm orders for a total of 550 RAF aircraft of eight different types have been placed since 1979.
    Mr. Nicholson: As the first hon. Member to ask a question, may I strongly support my hon. Friend's first sentences. Obviously, flying the new aircraft, the orders for which we welcome, requires very rigorous training. Will my hon. Friend ensure that those pilots whose training involves low flights, which are particularly pronounced in my constituency, notably in Exmoor and west Somerset, are fully aware of the rules and regulations regarding low flying? Will my hon. Friend and his colleagues immediately look into any suggestion that the rules and regulations have been departed from?
    Mr. Hamilton: Yes. I can assure my hon. Friend that any incidents of low flying which are brought to our attention in which people did not abide by the rules are rigorously investigated and everything is done to ensure that low flying is properly regulated.
    Mr. Bill Walker: Does my hon. Friend agree that the Royal Air Force now has the best modern equipment of any time to meet the envisaged problems and that the aircraft which the Government have ordered do just that? Does he further agree that our aircrew are the most professional and highly trained in the western world? But there is no point in those two achievements if the aircraft —particularly strike aircraft—do not have modern stand-off capabilities otherwise they become very risky against sophisticated modern Soviet defences. Therefore it is essential that we have modern stand-off capabilities and we must upgrade those weapons systems.
    Mr. Hamilton: My hon. Friend is absolutely right. That is why it is so important that our plans to replace the WE177 free-fall bomb with a tactical air-to-surface missile are so vital.
    Mr. Rogers: On behalf of my right hon. and hon. Friends, I associate the Opposition with the sentiments expressed by the Minister to the families of those killed in yesterday's tragic accident. In view of his answer, which could be quite misleading, will the Minister say how many of the new aircraft have been put into storage because of inadequate radar, how many have been brought in simply as replacements after flying accidents, and how many have been put into full operational service with the RAF?
    Mr. Hamilton: There are a number of aircraft which have been put into storage at the moment. That is because of the most economical form of production run. There were some aircraft in which the radars were not up to scratch, but now the radars are improving rather faster than the aircraft so many of the aircraft are being brought into service. There was a small problem but it has been overcome.

    MOD Police
    Mr. Skinner: To ask the Secretary of State for Defence what is his policy toward the deployment of members of the Ministry of Defence police on land outside his Department's responsibility.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Tim Sainsbury): The deployment of members of the Ministry of Defence police is an operational matter for the chief constable, in accordance with the provisions of the Ministry of Defence Police Act 1987.
    Mr. Skinner: Does the Minister recall that his hon. Friend the Minister of State for the Armed Forces said in Standing Committee on 12 February 1987 that Ministry of Defence police would be used only where defence interests were involved? If that is so, why were they used at Stonehenge? Will the Minister guarantee that the Ministry of Defence police will not be used against workers on strike, or is he in favour of secondary policing?
    Mr. Sainsbury: Neither the hon. Gentleman nor myself were members of the Committee, although the record of its proceedings is in Hansard. If the hon. Gentleman had been a member of the Committee, he might have been more familiar with section 2 of the Ministry of Defence Police Act 1987. 1 draw his attention especially to subsection 2(2)(d), which makes clear the power of the Ministry of Defence police to operate outside Ministry of Defence land, including in support of a Home Office constabulary.
    Mr. Key: My hon. Friend will be aware of my scepticism at the passage of that Act, in that it created for the first time a national police force under the direct control of a Minister of the Crown. However, the hon. Member for Bolsover (Mr. Skinner) is wrong in what he says. Will my hon. Friend accept that it is invaluable that the Ministry of Defence police help the civil police in disturbances that may arise, and in the protection of Stonehenge in my constituency? The delicate balance between the maintenance of the Queen's peace and the

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    upholding of the law is enhanced considerably by the devotion, dedication and professionalism of the Ministry of Defence police.
    Mr. Sainsbury: I am sure that the whole House will be grateful to my hon. Friend for what he has said about the loyal and dedicated service given by the Ministry of Defence police. The chief constable of Wiltshire was grateful for the assistance rendered a year ago by the Ministry of Defence police in helping his force to maintain law and order and in protecting an important monument, in addition to the wellbeing of my hon. Friend's constituents.

    Foulness and Maplin
    Dr. Michael Clark: To ask the Secretary of State for Defence what plans or proposals he has for returning Foulness island and Maplin sands to civilian use.
    The Parliamentary Under-Secretary of State for the Armed Forces (Mr. Michael Neubert): None, Sir. The use of Foulness island and Maplin sands is essential to the operation of the proof and experimental establishment at Shoeburyness. It makes a vital, impartial and cost-effective contribution to ensuring the safety and effectiveness of our weapons systems.
    Dr. Clark: Is my hon. Friend aware that there are rumours in my constituency that a consortium is seeking to build a major international airport on Maplin sands? Will he confirm that he is not negotiating with that consortium, or any other, and that he has no intention or plans to do so at present?
    Mr. Neubert: I am aware of the rumours circulating in my hon. Friend's constituency. Matters of airport policy are for our right hon. Friend the Secretary of State for Transport.

    Nuclear Submarines (Accidents)
    Mr. John Evans: To ask the Secretary of State for Defence what is the worst possible accident of a nuclear submarine in or near a British port for which his Department has emergency plans; and if he will make a statement.
    Mr. Archie Hamilton: The nuclear accident plans of the Ministry of Defence are prepared in line with the recommendations of the International Commission on Radiological Protection. The reference accident, on which the plans are based, envisages the release of some radioactive fission products into the atmosphere. In accordance with the ICRP recommendations, the plans are designed to be flexible enough to apply in worse accidents. In addition to that, the Royal Navy regularly exercises some of these extremely improbable accidents. The plans also consider the possibility that the submarine could sink.
    Mr. Evans: Yes, but will the Minister confirm that the worst possible accident that could occur to a nuclear submarine in port would be a primary containment failure, which would put many civilian lives at risk? Will he also confirm that local authority emergency planning officers have never been briefed about that probability and would have, therefore, no idea how to react if such an accident occurred?
    Mr. Hamilton: It is probable in those circumstances that the submarine would burn and then sink. The radioactivity would be contained if the submarine sank, as water is the best substance for containing it.
    Mr. Greg Knight: Is not the worst possible scenario an attack when we had a Government who were not prepared to press the firing button?
    Mr. Hamilton: Yes, that is right. There is no point in having a nuclear deterrent unless one is prepared to use it. I am sure that the Soviet Union will have taken into account the fact that the Opposition are saying that they are not prepared to use it.
    Dr. Reid: Is the Minister aware that on Sunday 7 May 1989 a vehicle allegedly transporting radioactive materials was involved in an accident at Cleland in my constituency? Can he confirm that there was radioactive material on board that vehicle? If so, will he confirm whether the vehicle bore the appropriate markings? Will he give a categorical assurance that the lives and personal safety of my constituents were not endangered? Will he now accept the unsuitability of that particular road between the two motorways for vehicles carrying hazardous substances and order a full investigation into why it was there in the first place?
    Mr. Hamilton: I am grateful to the hon. Gentleman for having given me notice of his supplementary question. understand that, on a journey from Derby to the naval dockyard at Rosyth on Sunday, a contractors' lorry carrying a portable cabin belonging to Rolls-Royce and associates was involved in a minor accident on the road to Cleland, Lanarkshire. The cabin was one used in the non-destructive examination of plant and equipment. Police took precautions on learning that, although there were no radioactive sources within the cabin, it carried an aluminium container and a roll of plythene properly marked with warning tapes, which both held items which were mildly contaminated with radioactivity through having been used in test procedures. Anyone would have been able to pick up and handle the items without coming to any harm. Once the lorry's load had been re-adjusted the lorry continued on its journey to Rosyth.

    Nuclear Weapons
    Mr. Pike: To ask the Secretary of State for Defence what are the most recent proposals for new nuclear artillery shells.
    The Secretary of State for Defence (Mr. George Younger): SACEUR's latest nuclear weapons requirement study addresses the full spectrum of NATO's nuclear requirements, including the need to continue with the modernisation of NATO's nuclear artillery shells.
    Mr. Pike: The Secretary of State will know that Chancellor Kohl has called for equal ceilings for nuclear artillery shells at drastically reduced levels. Does not that conflict with the policy of the United States Government to modernise and to develop new nuclear shells that are capable of being turned into neutron bombs? Will the Secretary of State argue that the new shells should not be deployed in Europe?
    Mr. Younger: I do not know whether the hon. Gentleman is familiar with SACEUR's nuclear weapons

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    requirement study. The proposals in it include a very large net reduction in the number of nuclear warheads. That compares with the fact that NATO has reduced its nuclear warheads by no less than 2,400 in recent years, whereas the Soviet Union has made practically no reduction. It is well open to the Soviet Union to make reductions if it so wishes.
    Mr. Janman: Can my right hon. Friend predict what the effect would be on his Department's ability to defend the country, on the morale of the armed forces and on the nation's security, if the Labour party's policies on defence were implemented?
    Mr. Younger: That is extremely difficult to predict, but it is certainly true that any policy that tried to throw over the policy of nuclear deterrence, which is supported by all countries in NATO, would be quite disastrous for the safety and security of this country.
    Mr. James Lamond: In answer to my hon. Friend the Member for Burnley (Mr. Pike) the Secretary of State mentioned 2.400 warheads. Is the right hon. Gentleman aware that when I mentioned the subject to the Prime Minister at Question Time, she dismissed it as nothing at all—just a small reduction by NATO? Will the right hon. Gentleman have a word with the Prime Minister and tell her which story they should go forward with?
    Mr. Younger: I am not sure what point the hon. Gentleman is trying to make. The Prime Minister has often referred to those figures, as have I. The hon. Gentleman must face the fact that the policy of nuclear deterrence is supported by all members of NATO without exception —including all those with Socialist Governments. The Labour party is in danger of getting out of step with all of them.
    Mr. Sayeed: Will my right hon. Friend remind the House of the balance of nuclear-capable artillery between Soviet and NATO forces?
    Mr. Younger: I shall be glad to remind the House of the modernisation that has been taking place. For instance, the Soviet Union has modernised 95 per cent.—almost all —its short-range nuclear missile systems in the past five years. It has replaced Frog missiles with the more capable SS21s and it is deploying the AS16 missile, which is a tactical air-to-surface missile. Labour Members who are supposed to be considering these matters should be a bit realistic about what is going on in the world.

    Nuclear Tests (Compensation)
    Mr. Hinchliffe: To ask the Secretary of State for Defence if he will review his policy on compensation for veterans of British nuclear tests.
    Mr. Sainsbury: The policy of my Department is to pay appropriate compensation wherever the Crown's legal liability is established. Since there is no firm evidence to show that the health of British test veterans was affected by exposure to radiation during the United Kingdom's nuclear test programme, the Government remain of the view that the Crown cannot be held legally liable for any ill-health suffered by those who participated. We do, of course, have the greatest sympathy with those who suffer illness and who believe, quite sincerely, that this is due to
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    their participation in the nuclear test programme. However, in the circumstances, we see no reason to change our policy on the question of compensation.
    Mr. Hinchliffe: As the Australian Government are paying compensation to certain veterans as a result of their involvement in a nuclear test, and the United States Government are paying compensation for 13 forms of cancer contracted by personnel involved in nuclear tests, is it not especially mean and insensitive for the British Government not to consider compensation for British service personnel who have been involved in the same tests? Will the Government consider the appointment of an ombudsman independently to analyse those compensation claims?
    Mr. Sainsbury: I am sure that the hon. Gentleman will have studied the National Radiological Protection Board, report, which was independent and authoritative. I am sure that he will have due regard to its findings.
    I understand that the terms of the judgment of the Australian court were published in Australia only last Thursday, although judgment was given rather earlier. A copy of the terms of that judgment was received by my Department only yesterday, so we have not had time to study its contents. I cannot yet say whether it will have any relevance or give us any cause for reassessing our position.
    Mr. Sumberg: Does my hon. Friend agree that, however generous the compensation, none would be sufficient to compensate for the loss of life and freedom that would be engendered by this country adopting the foolish and ill-considered policies of the Opposition? [Interruption.]
    Mr. Speaker: Order. I remind the House that the same rules apply here as in Prime Minister's questions. Questions must relate to Government responsibility.
    Mr. Sainsbury: My hon. Friend draws attention to the fact that over the years members of our armed forces have been prepared to give very loyal service and to suffer injury and death to protect their country. We have drawn attention—[Interruption.]
    Mr. Speaker: Order.
    Mr. Sainsbury: I am seeking to reply to the point raised by my hon. Friend. I re-emphasise that it has always been the policy of my Department to give compensation where liability has been established. We also have a system of pensions for those who have been injured or for the dependants of those who have lost their lives in service to their country.
    Mr. Boyes: That was a most disappointing and insensitive series of replies. It is unacceptable that the Minister is not offering compensation to nuclear test veterans. Will he, however, assure the House that he will consider giving compensation to those other nuclear veterans, the submariners, who have been discovered to have contracted cancer because of their service in nuclear submarines? Today the Minister's replies are nothing less than complacent, dilatory and lacking in care. It is about time that the Minister gave the House a guarantee that the Government will do something for those people who have suffered because of nuclear tests or their service in nuclear submarines.
    Mr. Sainsbury: I hope that the hon. Gentleman, speaking as he does from the Front Bench, will have regard to the importance of being fair to all people involved and not just to those who are suffering from cancer, which they believe may have been caused by their participation in nuclear tests. As cause or connection was not established by the NRPB study, we have a responsibility to be fair to everybody—those who are suffering from cancers, who were not involved in nuclear tests, and those who were.
    As is not unusual, the hon. Gentleman has gone off rather ahead of any factual information. The study to which he referred has been in progress for some time, and it is a study to check the general health of submariners. The hon. Gentleman should be aware of the fact that, if one is beneath the sea, one is protected from the nuclear radiation that all the rest of us are exposed to as we go about our normal business.

    Nuclear Weapons
    Mr. Eastham: To ask the Secretary of State for Defence what representations he has received from his Belgian counterpart about Her Majesty's Government's policy towards the modernisation of short-range nuclear weapons.
    Mr. Younger: In recent weeks my Belgian colleague and I have discussed the question of modernising NATO's short-range nuclear weapons both bilaterally and at a meeting of NATO's nuclear planning group. The NPG communiqué, to which we both subscribed, reflects a large measure of agreement on essentials.
    Mr. Eastham: Is it not a fact that the Belgian Prime Minister, Mr. Wilfried Martens, has been pressing the Government and other NATO countries for earnest East-West discussions about reductions in nuclear short-range forces? Why are the Government continuing the arms race philosophy, being so hard-line and causing such disagreement nowadays in NATO, such that the British Government seem to be the only Government who want to perpetuate the arms race?
    Mr. Younger: The hon. Gentleman is not fair to the Belgian Government because all along the Belgian Government have supported the main NATO strategy of nuclear deterrence and have strongly said that they do not favour a third zero of the shorter-range nuclear forces. They agree that weapons systems must be kept up to date. We must be fair to the Belgian Government.
    I wish to make it quite clear that the British Government consider the policy of nuclear deterrence, in which the shorter-range nuclear weapons play an important part, as a key factor in preventing war. It is to prevent all war that all our policy is directed and it has been successful over the past 40 years.
    Mr. Devlin: Will my right hon. Friend take time during his next discussions with the Belgian Defence Minister to assure him that this Government will stand firmly behind the NATO strategy of nuclear deterrence, will ensure that proper conventional forces are supplied into the future for NATO's deployment and will ensure that we shall never let our allies down by backing out of NATO or even discussing such a possibility?
    Mr. Younger: Yes, I agree with my hon. Friend and I re-affirm definitely that we in this Government entirely support the prevention of war by nuclear deterrence. In that we are supported absolutely unanimously by all our NATO allies of all political persuasions. All hon. Members, especially those in the Labour party, should reflect on that carefully at this time.
    Mr. Alex Carlile: Does the right hon. Gentleman support President Bush in his new policy of re-integration towards the Soviet Union? Does he accept that that signifies that United States is moving towards the Kohl-Genscher view on the modernisation of nuclear weapons? Will he take steps to advise the Prime Minister to moderate her views before President Bush moderates them for her?
    Mr. Younger: I fully support what the United States has been saying on these subjects in recent weeks under its new Administration. Its words are absolutely in line with those of myself and my right hon. Friend the Prime Minister.
    Mr. Leigh: Would my right hon. Friend retain any credibility with his Belgian counterpart if he supported the modernisation of short-range nuclear weapons on the basis that he doubted whether they were any use at all, that he would never use them anyway, and that he would phase them out by the year 2000? Would not even the Belgians think that my right hon. Friend was guilty of fudge and mudge?
    Mr. Younger: I am grateful to my hon. Friend. I cannot think of anyone in any of the other member states of NATO who would agree that the possession of a deterrent that one says that one would never use is of any use whatever.
    Mr. O'Neill: Will the Secretary of State say which members of NATO support the Government's position on modernisation because not even the United States is prepared to go along with that and is itself seeking a compromise with the Federal Republic of Germany?
    Mr. Younger: In answering that, I cannot do better than to quote from the NATO communique, to which all members of the Alliance subscribe—
    Mr. O'Neill: Not completely.
    Mr. Younger: Including my Belgian colleague. The words that he subscribed to are:
    "For the foreseeable future our strategy of deterrence will continue to require both conventional and nuclear forces. At this meeting we again expressed our determination to ensure that NATO possesses diversified, survivable and operationally flexible nuclear forces across the entire spectrum. These forces must be kept up-to-date where necessary."
    That is a complete answer to the hon. Gentleman and to his party while it is trying to work out its future policy.

    Soviet Air Force
    Mr. Mans: To ask the Secretary of State for Defence what information he has as to whether the Soviet Air Force has reduced its offensive capability.
    Mr. Archie Hamilton: We have no evidece to indicate that the Soviet air force has reduced its offensive capability; indeed there are signs that this capability has continued to grow. My hon. Friend will find this aspect covered more fully in the 1989 defence White Paper.
    Mr. Mans: I thank my hon. Friend for that answer. Does he agree that it shows the need constantly to update our own Air Force equipment and to be prepared, if necessary, to use that equipment, which the Labour party's policy does not recognise? That is the only way to ensure that we can negotiate arms reductions from a position of strength rather than weakness.
    Mr. Hamilton: That is absolutely true. The Soviet Union is producing 600 new fighters every year and 40 to 45 heavy and medium bombers. Those are becoming increasingly better equipped and, as my right hon. Friend the Secretary of State said, the Soviets have a good tactical air-to-surface missile which, I am quite convinced, is more sophisticated than our free-fall nuclear bomb.
    Mr. Watts: Does my hon. Friend agree that his assessment of the offensive capability of the Soviet air force would be affected if President Gorbachev had given an undertaking never to make use of that offensive capability?
    Mr. Hamilton: That is right. We are still awaiting such a pronouncement from President Gorbachev that he is not prepared to use armaments. His existence as president of the Soviet Union would be short-lived if he made such an announcement.

    Burden Sharing
    Mr. Clay: To ask the Secretary of State for Defence how the latest United States plans for burden sharing will affect United Kingdom defence costs and commitments.
    Mr. Hamilton: The defence planning committee report published in December 1988, on the sharing of roles, risks and responsibilities within the Alliance acknowledges the United Kingdom's substantial and comprehensive commitment to the Alliance. However, it calls on us to continue efforts to achieve greater efficiency and value for money from the existing resources we commit to defence and to improve the real value of our defence budget. We fully accept this NATO challenge.
    Mr. Clay: Will the Minister give an undertaking that one form of burden sharing that the Government will not go in for will be to accept in this country the American short-range modernised nuclear weapons which the west Germans had the good sense to refuse in their country?
    Mr. Hamilton: The question of the follow-on to Lance being based in this country does not arise. We will, of course, review whether tactical air-to-surface missiles and dual-capable aircraft are based in this country.
    Mr. Thorne: While I accept the need to ensure that everyone carries a fair burden in NATO, will my hon. Friend remind our American allies that it is also important that burden sharing in the far east is encouraged? The Japanese, by their actions, have been forced severely to reduce their contribution in the years since the war. That has been a major contribution to the fact that the Japanese are able to take us on in the industrial world. Would it not be better to ensure that the Japanese also make a fair contribution?
    Mr. Hamilton: I know that our friends in the United States are concerned about the contribution made by the Japanese to the defence effort in the far east, and that is certainly something which we are discussing with them.
    Mr. Cryer: Would it not be fairer if we reduced the level of our defence expenditure as a percentage of GDP to the average of our NATO allies? That would release some facilities that we could put into manufacturing industry, and so move towards the level of GDP percentage spending achieved by the Japanese Government, which is less than 1 per cent. We might then be able to emulate the success in manufacturing industry achieved worldwide by the Japanese.
    Mr. Hamilton: I believe that the Japanese contribution to defence spending is in excess of 1 per cent. and, because its economy is so large, it is one of the biggest defence budgets in the world. We have a defence budget that meets our commitments and we should not reduce it below that level. We have made an enormous contribution to British industry and our defence exports are one of the finest parts of our overall export performance.

    NATO
    Mr. Ian Taylor: To ask the Secretary of State for Defence what plans he has to meet the Secretary of Defence of the United States of America to discuss the case for improving upon existing levels of defence efforts among west European NATO partners.
    Mr. Younger: I expect to meet the United States Secretary for Defence, along with other Alliance Defence Ministers, at the NATO defence planning committee in Brussels next month. We shall discuss a wide range of issues, including the sharing of roles, risks and responsibilities within the Alliance.
    Mr. Taylor: At that meeting, will my right hon. Friend draw attention to the fact that six members of NATO commit less than 3 per cent. of their GDP to defence spending, which puts increased pressure, particularly on Great Britain and America, to ensure that NATO's defences are steadfast and sufficient? Will my right hon. Friend also confirm that no Government in NATO have refused to pledge themselves to a proper policy of deterrence and the use of such a policy when circumstances require it? Therefore, the present British Government must continue in power to prevent any party from replacing that policy.
    Mr. Younger: I agree with my hon. Friend's first point. It is very important that in an Alliance of equal, free, democratic nations all should pull their weight in the common defence. We certainly want to make sure that we play our full part and that we encourage all our allies to do the same.
    Not only has the policy of deterrence been inordinately successful over many years now, but it is pointless to have a deterrent that one says in advance one is not prepared to use. The Government's policy is clear: the best way of preventing all war is nuclear deterrence.
    Sir Antony Buck: When my right hon. Friend meets the United States Secretary of Defence, will he express to him the gratitude felt by most people in this country for the fact that the United States maintains such a substantial

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    commitment for the defence of Europe and that 100,000 of "their boys" are in Europe largely in our defence, as well as theirs?
    Mr. Younger: I agree. The American contribution to NATO's common defence efforts is notable and welcome. It is worth adding that it was put in train by the American Government precisely because they understand that the defence of the United States of America starts in Europe. That is why they put their weight into it.

    Armoured Vehicles
    Mr. Andrew Mitchell: To ask the Secretary of State for Defence what armoured vehicles have been ordered by his Department for the Army since 1979.
    Mr. Sainsbury: Since 1979, the Ministry of Defence has ordered seven regiments of Challenger 1 main battle tanks; 13 battalions of Warrior; 10 battalions of Saxon and a range of other type of armoured artillery, air defence and support vehicles.
    Further details of these and other orders are contained in table 5 and paragraphs 327 and 328 of the "Statement on the Defence Estimates 1989".
    Mr. Mitchell: Does not the excellent record that my hon. Friend has just outlined demonstrate both the quantity and the quality of the equipment with which we provide the armoured corps within the Army? Does it not also underline the strength and commitment of the Government to the deterrent effect of our conventional forces?
    Mr. Sainsbury: I agree entirely. Of course, it also highlights the importance of keeping weapons systems up to date, whether conventional or nuclear.
    Mr. Haynes: Not many moments ago a Minister agreed at the Dispatch Box with the use of Ministry of Defence police to support the civil police with problems. Bearing in mind the Secretary of State's majority at the last election, would he press the button to use the vehicles mentioned in the question against British people if he thought that was necessary?
    Mr. Sainsbury: I must confess that I am not readily able to determine my ministerial responsibility for my right hon. Friend's majority, but I shall do all I can to increase it next time.
    The Ministry of Defence police, whose operational tasks are under the control of their chief constable, would come to the aid of a Home Office force only at the request of its chief constable.
    Mr. Speaker: The main question is about armoured vehicles.
    Mr. Conway: Does my hon. Friend agree that as 50 per cent. of 1 BR corps is supplied by the Territorial Army there is a strong case for ensuring that the Territorial Army battalions designated to NATO have armoured personnel carriers at their disposal? Will he acknowledge that as these vehicles are manufactured so ably in Shropshire—and the engines even more so in Shrewsbury —I have no great personal interest to declare?
    Mr. Sainsbury: As my hon. Friend is well aware from his knowledge and experience, these new armoured personnel carriers are a great deal more capable and
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    provide a great deal more protection than the vehicles that they replace. As he also knows, the battalions of Saxon are largely going to equip units that did not have armoured protection before, so, again, we are considerably increasing our capability.

    NATO
    Mr. Wray: To ask the Secretary of State for Defence if he will make a statement on the outcome of the recent NATO nuclear planning group meeting.
    Mr. Younger: At the nuclear planning group meeting on 19 and 20 April, Ministers reaffirmed their determination to ensure that NATO has effective and up-to-date nuclear forces across the full spectrum of ranges, and expressed their continued support for national efforts to meet modernisation requirements stemming from Montebello. Ministers also noted SACEUR's conclusions about the link between modernisation and stockpile reductions and about the contribution to deterrence of new longer-range, ground-launched and air-delivered weapons. A copy of the communiqué issued at the end of the meeting, and agreed by all Ministers, has been placed in the Library of the House.
    Mr. Wray: Is it not a fact that a question mark hangs over the decision taken by the nuclear planning group? Is it not also a fact that the Prime Minister, by delaying the modernisation of short-range missiles, is reluctant to accept that decision? Does the right hon. Gentleman's statement mean that there is to be an increase in the number of FE111 s and FE15s?
    Mr. Younger: The hon. Gentleman is misinformed about the outcome of the meeting. The outcome, with the unanimous agreement of every nation present, was to reaffirm the nuclear defensive strategy of NATO, to reaffirm the need to keep weapons up to date and to reaffirm the unanimous view of all that a third zero would not be in the interests of the west. It cannot be said too often that we have had secure peace and freedom from war for so many years because of the existence of nuclear deterrence, which we would abandon at our peril.
    Sir Anthony Grant: What does my right hon. Friend think would have been the reaction of his colleagues at that NATO meeting had he told them that it was the policy of Her Majesty's Government not to use the nuclear deterrent, even if necessary?
    Mr. Younger: I am afraid that if I had made such a statement, nobody present from any Administration of any party would have agreed with me. Britain would have been in a minority of one, and I hope never to see Britain in a minority of one at NATO.
    Mr. Sean Hughes: Will the right hon. Gentleman now answer the question that I put to him on 7 March, which the Minister of State also refused to answer on 11 April and about which I wrote to the Department a month ago and to which I have not received a reply? Do the Government take seriously the threat of a tactical nuclear attack on NATO's fixed assets in West Germany?
    Mr. Younger: I am not sure what lies behind the question—[Hons. MEMBERS: "Answer."] The Government certainly do take seriously the large superiority in weapons lined up against us in western Europe—weapons of all

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    kinds; nuclear, conventional and chemical—and it is to make all those unusable that the policy of nuclear deterrence has worked so effectively for so long.
    Mr. Marlow: How would my right hon. Friend set about planning into such a meeting a nuclear deterrent which he had committed himself not to use? Would it not be something of a white elephant? Or, to put it another way, would it not be like hiring an expensive guard dog which had lost its bark, which he was having put down and which he intended to stuff?
    Mr. Younger: I cannot better my hon. Friend's simile. To arm oneself with a deterrent which one then said one would in no circumstances use would be about as effective as a feather duster.

    West Germany
    Mr. Roy Hughes: To ask the Secretary of State for Defence if he will make a statement upon his recent discussions with his West German counterpart.
    Mrs. Clwyd: To ask the Secretary of State for Defence if he will make a statement upon his recent discussions with his West German counterpart.
    Mr. Younger: I had discussions with Dr. Scholz on matters of mutual interest at the Western European Union and the nuclear planning group meetings last month. I have not yet had an opportunity to meet Dr. Stoltenberg who replaced Dr. Scholz as Federal Minister of Defence on 21 April.
    Mr. Hughes: Will the Secretary of State try to realise that Germans will be killed in their thousands if weapons at present based on their soil are ever used, so that when they take part in East-West relations they welcome the opportunity to negotiate with the Soviet Union cuts in conventional and short-term nuclear forces to achieve levels below present NATO levels?
    Mr. Younger: I well understand the sensitivities of people living in Germany to such matters, but it is a sad fact of geography that if any war were to break out it would he the British, Americans and Germans in the central front area who would be in danger. Nuclear deterrence exists to prevent war. It has been successful and only an irresponsible Government would abandon it.
    Mrs. Clwyd: The Secretary of State has persistently reminded the Opposition this afternoon that they should live in the real world. Is not the real world the fact that the West Germans are responding to public opinion in West Germany which is opposed to the modernisation of nuclear weapons? Is it not a fact that 71 per cent. of people in Britain are also opposed to the modernisation of nuclear weapons, and 61 per cent. of those are Tory voters? Why do not this internationally isolated Government live in the real world and follow what real people are feeling in the real world?
    Mr. Younger: I had hoped that I would be able to welcome the hon. Lady to the real world, but unfortunately I cannot, because the views that she has expressed are out of step with every Government of NATO, without exception, including the German Government.

  PRIME MINISTER

    Engagements
    Mr. Terry Lewis: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. I was also present at Victoria station to mark the arrival of President Babangida. In addition to my duties in the House, I shall be having further meetings later today. This evening I shall attend a state banquet in honour of President Babangida.
    Mr. Lewis: Will the right hon. Lady consider establishing a statutory committee to oversee the standards of premium telephone services in recognition of the fact that the voluntary committee, set up and funded by British Telecom, has fallen into disrepute?
    The Prime Minister: No, Mr. Speaker. I do not believe that the voluntary committee has fallen into disrepute. The Director General of Telecommunications, who has invited comments by the end of April on the proposed code of practice and amendments to the licences, is going precisely the right way.
    Sir Peter Blaker: Will my right hon. Friend consider making available the health inspectors from the Ministry of Agriculture, Fisheries and Food to examine a product which is to be put on the market this afternoon—a gigantic nuclear fudge?
    The Prime Minister: My right hon. Friend makes his own point in his own way. I expect that it will turn out to be unilateralism in a different wrapping.
    Mr. Kinnock: How could the Secretary of State for Health say last Saturday that the Health Service is at the limit of its capacity to absorb money when the health authorities report today that hospitals are underfunded by £490 million this year?
    The Prime Minister: If the right hon. Gentleman or anyone else suggests that hospitals are underfunded at their present rate, they must have been in dire circumstances when they had only one third of that amount from Labour.
    Mr. Kinnock: Will the Prime Minister simply tell us whom she thinks is telling the truth? Is it the Secretary of State, who says that the Health Service cannot take any more money because it cannot absorb it, or the health authorities, who say that the hospitals are £490 million short? May we have a straight answer to a straight question?
    The Prime Minister: will give the right hon. Gentleman a straight answer. Under him, the health authorities had only one third of what they are getting now, and that is what he cannot take. They are now getting three times as much as they had under Labour and they are doing far better than ever.
    Mr. Brandon-Bravo: Has my right hon. Friend seen, or will she see, a splendid half-hour programme, independently produced for the BBC last week, called "Thatcher's Children"? Apart from the fact that it was made almost entirely in my constituency of Nottingham, South, which

    719
    is part of what she has rightly called the queen of the midlands, does she agree that the young people interviewed showed enterprise and willingness to meet an enterprise culture, which bodes well for the future? Does she also agree that it is quite wrong to equate enterprise with greed and selfishness?
    The Prime Minister: The number of young people who are becoming self-employed, starting up their own businesses an taking advantage of all the opportunities is extremely encouraging. They are not only responsible for their own future but are looking after jobs for others and should be encouraged in every way.
    Ms. Walley: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer the hon. Lady to the reply that I gave some moments ago.
    Ms. Walley: Will the Prime Minister confirm that at the seminar at Downing Street energy conservation was recommended by the scientists as being the single thing which could deal with the problems relating to the greenhouse effect? Therefore, will she instruct her Minister of State, Department of Energy, on attending the European meeting on energy conservation this Thursday, to block the advice of civil servants which will effectively prevent a Community action programme for electricity conservation being adopted in this country—a programme already agreed by all other European countries?
    The Prime Minister: There was not one particular proposal put forward at the seminar, as I think I explained in answer to a question last time I replied from this Box. One of the proposals was for more nuclear energy, because it does not put up carbon dioxide, and one of the most damaging elements in the greenhouse effect is the burning of fossil fuels. Another was that every effort should be made to retain tropical rain forests and to include that effort in one's overseas aid programme. The third thing was energy efficiency, and we pointed out that this country is using less energy now, at a far higher rate of production than we had in 1973. I hope that the hon. Lady will have read the speech made yesterday by our ambassador in New York asking for a kind of umbrella convention on greenhouse effect gases of the same kind as we have on ozone layer gases.
    Mr. Wells: Will my right hon. Friend agree that to grant passports to 3·25 million Hong Kong Chinese would be a breach of the Sino-British agreement which she signed?
    The Prime Minister: We could do not do that unless the British Nationality Act 1981 were revised and that would have to go through the House. There are many different opinions about the practical effect with regard to the granting of such passports, but it is not possible under the present law.
    Mr. Grocott: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer hon. Gentleman to the reply that I gave some moments ago.
    Mr. Grocott: Can the Prime Minister confirm that now that she is spending another £1·75 million of our money to mislead people on the poll tax it means that her
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    Government are spending six times as much on publicity and propaganda as any previous Government? Is it not perfectly clear that anything that is so expensive to sell must be a pretty shabby product?
    The Prime Minister: If the hon. Member takes that view he must be pretty ashamed of some of the poll tax documents put out by his local authority. In regard to Government policy, the Government have a clear duty to ensure that everyone knows what his or her main rights and duties are. We are reaching 21 million households at a cost of under £1 million, which is very good value for money. Very soon, on 22 May, most councils will start registering people for the community charge and it is vital, therefore, that people have accurate information for the registration process.—[HON. MEMBERS: "Hear, hear."] If Opposition Members are saying "Hear, hear", they must agree that that accurate information should go to every household.
    Mr. Ward: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Ward: Does my right hon. Friend agree that the fines imposed by courts for river and harbour pollution are ridiculously low? Will she encourage the Magistrates Association to remind its members that they should use the full penalties available to them to discourage that form of environmental pollution?
    The Prime Minister: I greatly sympathise with my hon. Friend's remarks. The average fine imposed by magistrates courts in 1987 was £450, compared with the maximum penalty available of a £2,000 fine and up to three months' imprisonment. That issue has been drawn to the attention of the Magistrates Association several times, most recently by my right hon. Friend the Minister of Agriculture, Fisheries and Food, and we all hope for a positive response.
    Mr. Speaker: Mr. Ashdown.
    Mr. Ashdown rose—[Interruption.]
    Mr. Speaker: Order. This takes a lot of time.
    Mr. Ashdown: In view of the Prime Minister's recent comments, will she say what in her view is the role of the European Parliament?
    The Prime Minister: The role of the European Parliament is laid down in the treaty as amended by the Single European Act, and I assume that the right hon. Gentleman will be able to read it.
    Mr. Butterfill: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Butterfill: Does my right hon. Friend agree that one of the most essential attributes of a political leader is the courage to stand fast to his or her convictions, even when that may temporarily be electorally unpopular? Does she further agree that any political leader prepared to compromise their most cherished political principles for

    721
    the sake of short-term electoral popularity is unfit to lead their party and even more unfit to be Prime Minister of this country?
    The Prime Minister: Yes. As my hon. Friend knows, we are conviction politicians, and we never put power before principles.
    Mr. Ashley: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer the right hon. Gentleman to the reply that I gave some moments ago.
    Mr. Ashley: The Prime Minister is known to have a very high regard for our ex-service men, so how does she account for her Government's absolutely disgraceful conduct towards British nuclear test veterans compared with that of the United States Government, who grant compensation for 13 forms of cancer as compared with compensation for only two forms of cancer recognised by Britain? The Americans do not demand absolute proof, but the Ministry of Defence is bitterly fighting our ex-service men every inch of the way through the courts and is refusing to pay them compensation. That is a disgraceful state of affairs under a Government whose Prime Minister professes to love and admire our ex-service men.
    The Prime Minister: As the right hon. Gentleman knows, cases were carefully looked at by a special inquiry of medical people, who did not find cause and effect. I say to the right hon. Gentleman with the greatest of respect that the cause and effect that he says has been proved has not been proved, and therefore compensation is not appropriate.
    Mr. Favell: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Favell: Has my right hon. Friend had time today to consider what would be the effects on the environment if nuclear power were to be phased out over the next 10 years, as the Labour party proposes?
    The Prime Minister: Yes. I think that that would be very damaging. As my hon. Friend is aware, during that time a number of Magnox nuclear power stations will need replacing. We hope that, subject to planning permission, there will be four new nuclear power stations by the end of this century, replacing the coal-fired or oil-fired power stations that would otherwise be needed, and which would
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    add grievously to the greenhouse effect—which is something that the Leader of the Opposition does not want to happen.
    Mr. O'BrienTo ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. O'Brien: Is the Prime Minister aware of the report in the Yorkshire Post today in which the CBI and the Association of British Chambers of Commerce criticised the Government for high interest rates, which have had a significant effect on small industries and businesses? When will the Prime Minister do something to lift the strain from small business people and people paying high mortgage rates? When will she take action to reduce interest rates?
    The Prime Minister: We do not like to keep interest rates high any longer than we have to. [HON. MEMBERS: "We?"] My right hon. Friend the Chancellor of the Exchequer does not like to keep interest rates higher than need be, but the most damaging thing would he for inflation to go up to the kind of heights it reached under Labour. That is why interest rates must remain high for the time being.
    Mr. Brazier: To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Brazier: Will my right hon. Friend agree that the privatisation of British Telecom has resulted in much shorter waiting lists for telephones, lower charges for calls and a much wider ownership of telephones among pensioners because of the reduction in standing charges? Will she not further agree that for any political party to talk about renationalisation is thoroughly irresponsible?
    The Prime Minister: Yes, the privatisation of British Telecom has, indeed, led to a better service, a substantially increased number of telephones among pensioners and a very considerable reduction of the waiting lists. I agree with my hon. Friend that it is thoroughly arrogant of politicians with little experience of industry to say that they can run industry better than it can run itself.

NEW MEMBER
The following Member took and subscribed the Oath:
John William Patrick Smith Esq., for Vale of Glamorgan.

Burglar Alarms (Control)
3.33 pm
Mr. Hugo Summerson: I beg to move,
That leave be given to bring in a Bill to regulate the manufacture of burglar alarms to ensure that they do not ring for more than thirty minutes after being set off.
Burglaries, assaults and break-ins are far too common. Many citizens today take steps to protect their security, and they take them in many different ways. They may acquire a large dog; they may even acquire the amplified voice of a large dog, which I gather is rather cheaper. They may join the local neighbourhood watch scheme. They may also obtain a burglar alarm.
When you come to think of it, Mr. Speaker, the burglar alarm is a rather selfish way of protecting one's property. By definition, when people decide to defend their property they are frequently away. They do not think it wise to leave their property unprotected; accordingly, they set the alarm and off they go. They may go to the Pas de Calais or to the Bois de Boulogne; they may go further still, to the uttermost ends of the world. They may go down to Antarctica. In any event, if someone breaks into their property and the burglar alarm rings, they will not be there to hear it.
All the local people, however, will be there to hear it. I am talking about entire neighbourhoods. I encountered two instances in my constituency the other day. One was in the Higham Hill area, where a factory owner set his burglar alarm and went away for the weekend. Off went the alarm on Friday night, and it rang for the whole weekend, disturbing—by my calculation—at least 1,000 people.
It can be even worse than that. Relatives up from the country may be staying, and they will not be used to such sounds. Their repose may be disturbed for the entire weekend. Again, there may be a sick infant in the house, or an elderly friend or grandparent. Perhaps they will be light sleepers; certainly they will not be used to the sound of alarm bells ringing throughout the weekend.
It does not stop there, however. I am talking not only about immobile property, but about mobile property. Just the other day I walked past a car and the alarm went off. I give the House my word that I had neither touched nor even looked at it: it was a particularly nasty modern Japanese model, and nothing would have induced me to go anywhere near it. Perhaps it took grave exception to me. Anyway, the alarm went off.
I went and had a good dinner. When I came back, three hours later, the alarm was still ringing. What is more, I noticed that several more windows were alight in the neighbouring block of flats than when I had walked past earlier. All those people had been roused and disturbed.
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I am sure that we have all heard of people being driven mad by such alarms and taking the law into their own hands. I have heard of someone taking a 12-bore shotgun and shooting the alarm off the wall—although that is not to be recommended, being rather a dangerous practice. Others have been forced to acquire expertise in dealing with the alarms. They have mounted stepladders armed with spades or shovels—I gather that the old-fashioned coke shovel is best—to scoop the alarms off the walls. That is what people have had to resort to in their desperation.
I have discussed the matter with the Metropolitan police, and the House will be as horrified as I was to learn that according to their reckoning about 98·4 per cent. of times when they are called to deal with burglar alarms it is a false alarm. The alarms have not been set off by criminal activity. They may, for example, have been set off by a sudden gust of wind. It has been known, in country areas, for a herd of cows to wander past and set off an alarm.
Today I heard of the case of some people who bought a pet, a hamster in a cage. Playing on the little wheel in its cage, the hamster set off the burglar alarm. On that occasion not only were the police called but the RSPCA as well.
I have also discussed the matter with the National Supervisory Council for Intruder Alarms which has been most co-operative and has drawn my attention to the BS4737 with which all the best burglar alarms comply. The standard provides for automatic cut-off after 20 minutes and also that the burglar alarm should be regularly serviced and maintained.
The main thrust of my Bill would be to ensure that people installed high-quality burglar alarms and ensured that they were properly maintained and serviced in the full knowledge that if they were not, and the Bill becomes law, they would find themselves hauled before the beak and dealt with summarily. The amount of disturbance caused by alarms has got competely out of hand and should be stopped. If the Bill becomes law, the police will know in future that if a burglar alarm goes off there is a cat burglar, and there should be fewer cries of "wolf".
Question put and agreed to.
Bill ordered to be brought in by Mr. Hugo Summerson, Sir Geoffrey Finsberg, Mr. Keith Speed, Mr. Norman Hogg, Mr. Keith Vaz, Mr. Menzies Campbell, Mr. Chris Mullin, Mr. Tony Banks, Mr. David Martin, Mr. Max Madden, Mr. James Cran and Miss Ann Widdecombe.

Burglar Alarms (Control)
  BURGLAR ALARMS (CONTROL)
  Mr. Hugo Summerson accordingly presented a Bill to regulate the manufacture of burglar alarms to ensure that they do not ring for more than thirty minutes after being set off: and the same was read the First time; and ordered to be read a Second time upon Friday 7 July and to be printed. [Bill 136].
Orders of the Day

  Finance Bill
  (Clauses Nos. 1, 32, 33, 44, 51 and 138)
  Considered in Committee
  Mr. Harold Walker in the Chair.
  Ordered,
  That the order in which proceedings in Committee of the whole House on the Finance Bill are to be taken shall be Clause 51, Clause 33, Clause 32, Clause 44, Clause 138, Clause 1.—[Mr. Major.]

  Finance Bill
    Clause 51

      RELIEF
      3.42 pm
      Mr. A. J. Beith: I beg to move, amendment No. 18, in page 39, line 7 leave out 'on or after 6th April 1990'.
      The Chairman of Ways and Means (Mr. Harold Walker): With this, it will be convenient to discuss the following amendments:
      No. 19; in page 39, line 9 leave out '(whenever issued)' and insert
      'issued on or after 6th April 1990'.
      No. 20, in page 39, line 9, at end insert—
      '(aa) the individual making the payment has not entered into any other contract of private medical insurance prior to 6th April 1990.'.
      Mr. Beith: The amendments address themselves to the issue of tax relief for private health insurance, one of the most widely trailed features of the Bill, which the Government expected to be greeted with widespread enthusiasm. I see no sign of that enthusiasm but I see it adding even more to the depression among many people working in the National Health Service about the Government's attitude to the entire service. I see it as a further demonstration that the National Health Service is far from being safe in the hands of the Prime Minister.
      The amendments are designed to test the purpose of the new tax relief and to discover whether it is intended to open the door to an ever widening opt-out system in which more and more people are encouraged to believe that the only way to get reliable health provision is to buy their way out of the Health Service. In their reply to the amendments, perhaps Ministers will clarify the position.
      At a time of such anxiety about the financing of the National Health Service, who but this Government would have chosen to devote at least £40 million immediately this year to tax relief for private health insurance? When the National Health Service is in such crisis, who but this Government would have diverted funds immediately to the private sector?
      The crisis in the Health Service is partly but not entirely of the Government's making. Some of it relates to demographic change; to the increasing number of elderly people with which the Health Service must cope and the widening range of treatments now available for the illnesses and conditions from which those elderly people suffer. That crisis demands greater public funding, as successive reports of House of Commons Select
      726
      Committees, including the Social Services Select Committee and the Treasury Select Committee, emphasised. Even the Government's most ardent supporters in the Health Service—it is quite hard nowadays to find Government supporters anywhere in the Health Service—remain as anxious as ever, despite the new funds to which the Chief Secretary to the Treasury will no doubt refer, because those funds have not kept pace with the growing need that the Health Service faces and the higher rate of inflation from which it suffers through the commodities that it has to buy.
      3.45 pm
      Where did the proposal for such substantial expenditure on private health insurance originate? It did not come from within the National Health Service, where it is hard to find anyone who welcomes or is enthusiastic about the idea. Nor did it come from the House of Commons Social Services Select Committee which said in its fifth report:
      "In our judgment, the creation of new tax subsidy on all private health insurance cannot be demonstrated to extend total availability of health care. It would reduce the total public expenditure from which Health Service resources are drawn while at the same time narrowing the tax base still further."
      That is a clear recċognition of the force of the arguments against such a proposal.
      The proposal did not come from the National Health Service and it did not come from those Members of Parliament who take the closest and most careful interest in the National Health Service. It did not come from the Treasury Ministers who have to defend these clauses today. All the smoke signals from the Treasury were that Treasury Ministers were strongly opposed to the use of tax relief to encourage private health insurance and would regard it as a departure from their stated policy of broadening the tax base and reducing the rate of tax. The Government's declared policy on income tax is surely that the base for that should be as wide as possible and that the rate of tax should be as low as possible. Yet in this measure they are specifically narrowing the tax base and departing from their crusade against all tax breaks and tax incentives. It would be interesting to hear today whether they intend to abandon their crusade and return to an era of widespread tax relief and a narrower tax base or whether they have had to swallow one single inconsistent policy because the Prime Minister insisted on it.
      The basis of the proposal is the Dulwich factor, the Prime Minister's view of retirement and old age, which is that the best way to health care is to opt out and therefore that should be subsidised and encouraged.
      That leads one to question the purpose of the provisions in the minds of the Treasury Ministers. The amendments test the proposals by arguing that tax relief should not be granted to existing holders of private health insurance. It is necessary that we establish whether the measure is intended to be a growing provision for a widening number of people encouraged to opt out of the National Health Service, or whether it is what Treasury Ministers have recently said it is. I listened with some fascination to the Chief Secretary when he answered questions last Thursday. When he was pressed to give his view of the proposals he replied:
      "In a ringfence way it will help many elderly people who wish to continue medical insurance cover on retirement but who are unable to do so because they have lost the benefit of the employer scheme. At the moment of retirement their

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      income tends to fall and their premium tends to rise. We are seeking to retain the capacity for these people to sustain and retain the medical insurance they have previously had. That is entirely fair and reasonable, and I support it thoroughly." —[Official Report, 4 May 1989; Vol. 152, c. 351.]
      I have heard of proposals being damned with faint praise, but that takes the prize for the faintest praise I have heard in a long time. The Chief Secretary was saying that the Government's proposal was nothing that the Prime Minister had in mind and that it was not an attempt to encourage large numbers of people to take up private health insurance, but was for those who had already found themselves in employer-based, employer-funded schemes and who, when they retired, had to decide whether to stay in the scheme. Such schemes become expensive, because at retirement age, people have to pay their own premiums and they are in the age bracket at which premiums are higher. For such people alone, the Chief Secretary seemed to imply, the Government were making special provisions. That is not what clause 51 says and it appears to be intended to be much wider. The Chief Secretary's view seemed to be attempting to find something in the Government's proposals that he could support with a modicum of enthusiasm. He will have to go much further tonight, unless his promotion chances are to be restricted, because he will have to say that he welcomes the proposal in its entirety and not only that small part he singled out when answering questions.
      The proposal goes wider. It is part of the route to a two-tier Health Service, in which the better-off do not depend on the public provision. It will undermine the essential principles of the National Health Service, which one of my predecessors as Member of Parliament for Berwick-upon-Tweed, William Beveridge, laid down and which were implemented by the Labour Government in the years immediately after the war. There was the principle of a universal service, available free to all at the point of delivery and which should not require people to take out private insurance to provide for their essential health needs. There is no reason why people should not make provision for whatever they wish, whether health, leisure or a more comfortable retirement, out of their own taxed income. However, there is no reason why the generality of taxpayers, many of whom are struggling hard to make ends meet, should subsidise those who make the choice to have health provision outside the National Health Service. Those who have been called on to subsidise such provision are often those in the greatest need. That is an argument that Ministers are fond of using themselves against many aspects of public expenditure, but they seem unwilling to use it when it comes to the hard-pressed taxpayers at low levels of income subsidising those who are well-off enough to engage in private health insurance.
      The provision will bring into the Health Service a further degree of inequity and it will benefit the richer pensioners because it will apply not only to the standard rate of tax, but to those on higher rates, who can claim relief at a higher level at the expense of the ordinary taxpayer. The cost of the provision is open-ended, but is likely to become expensive. I do not know how the Government made an estimate, but they have estimated that in the first year, the cost will be £40 million. That is the basic cost of giving relief to those already insured, who without any incentive have seen fit to take out private
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      health insurance. They have made a free choice to do so as they are entitled to do. The Government propose to reward those people with a subsidy of £40 million, although the money could better have been used in the Health Service itself.
      Amendment No. 18 seeks to take away that element of cost by not providing tax relief for those who are already insured. As the number of pensioners with private medical insurance plans increases, both because of the increasing number of elderly people and because of the increasing proportion of those retiring who have been in company schemes, the cost could escalate considerably, which I presume is the Government's intention. What incentive will there be for private medical insurance firms to control costs when tax relief will make the premiums cheaper? As relief becomes more expensive and more widely enjoyed, Treasury Ministers know that it will become progressively more difficult to restrict and even more difficult to remove.
      The Government's argument is that the provision will relieve pressure on the National Health Service. That argument is not even supported by those most closely involved in the health insurance industry. The Investors Chronicle analysed the benefits to be obtained from taking advantage of the tax relief and concluded:
      "private medical insurance should not be regarded as a substitute for the NHS, since it does not provide an emergency ambulance service or cover long-term hospital care."
      The article goes on to say:
      "BUPA, the leading medical insurer with about 60 per cent. of the market, defines treatment as 'surgical or medical procedures the sole purpose of which is the cure or relief of … illness or injury'. This excludes chronic illnesses such as cancer and on-going treatment such as renal dialysis. Most insurers do not cover alcoholism or psychiatric problems".
      The publication then lists a number of other problems not covered by private health insurance.
      Private health cover is likely to take up those parts of the National Health Service that can be made profitable rather than those which cannot, by their very nature, be made profitable, such as after-care, community care, preventive medicine and the long-term treatment of conditions such as senile dementia, which is now a great problem for many elderly people. For all those things, most people will continue to depend on the National Health Service and the Health Service will pick up many of the after-care costs associated with treatments covered by private health insurance.
      Even though the private sector may succeed in adding to the total of treatment carried out—one can only welcome any additional treatment that it secures—all health experience suggests that it will still give rise to more dependence on the National Health Service. There is no escaping the fact that any diversion of money into the private sector will not help the NHS with its problems but instead will make them infinitely worse. I simply do not understand how Treasury and Health Ministers can blind themselves to that fact—unless it is simply that the Prime Minister has power to override all reasoned argument in her Government.
      There are 12 million people over 60, and the number is growing. Of those, 600,000 have so far chosen to invest in private health cover. It is costing £40 million to subsidise that 5 per cent. and it will cost perhaps £200 million to subsidise 25 per cent. of eligible pensioners. That constitutes a large and growing diversion of funds from the NHS, which it is in no position to afford. All over the

      729
      country, hospitals are crying out for staff—the continuity of resources that will enable them to staff facilities that already exist. As Ministers go round opening glossy new hospitals, they should be aware that such hospitals do not add up to much if they cannot be staffed and cannot provide the services that they are designed to provide. The funds that are to be diverted in this way could have helped to keep existing facilities going and to improve them.
      The amendment would remove that first year burden. I have tabled it as someone who is wholly opposed to the principle of a public subsidy going to private health insurers. In seeking the support of the Committee for the amendment, I also seek its support in opposing the principle of money that is desperately needed in the Health Service being channelled into private health insurance, when those who wish to choose that insurance can already do so freely and need no public subsidy to encourage them.
      The Chief Secretary to the Treasury (Mr. John Major): The hon. Member for Berwick-upon-Tweed (Mr. Beith) has started what I suspect will be a long march through the Committee stage of the Bill—both in Committee of the whole House and in Standing Committee. Although the hon. Gentleman argued against the principle of tax relief, amendments Nos. 18, 19 and 20 admit that principle and simply seek to limit the deadweight cost at the time of its introduction. If the hon. Gentleman will permit me to say so, I think that there is an inconsistency in his approach.
      Amendments Nos. 18 and 19 are essentially paving amendments for amendment No. 20, which deals with the substance of the hon. Gentleman's concern, although I think that many of his remarks of principle trespass somewhat on the next group of amendments, which I expect to be widely debated. I know that many hon. Members, including the hon. Member for Berwick-upon-Tweed will wish to debate further the principle of tax relief when we reach that group.
      The effect of the amendments of the hon. Member for Berwick-upon-Tweed would be to rule out any tax relief for people who are now, or who ever have been, covered by private medical insurance. I understand the hon. Gentleman's concern about deadweight cost, although on this occasion it is misplaced. I hope to show the hon. Gentleman that the effect of his amendments goes a good deal further than he intended and further, perhaps, on reflection, than he would think is desirable.
      4 pm
      I believe it is clear that the central point of the concern of the hon. Member for Berwick-upon-Tweed was the deadweight cost. It is inevitable with relief of this kind that, on its introduction, a significant proportion of the cost of relief will go to those who have already taken out private medical insurance, often at some personal sacrifice. However, it would be neither just, fair nor practical to discriminate against those who are already covered by medical insurance in that way. If we believe that tax relief is merited—I do, although the hon. Gentleman does not —such a discrimination would be entirely unacceptable. Those people thus discriminated against would feel—I think with some justice—that they were being penalised simply because they had had the foresight to make provision for their future needs, and in that they would be right. On reflection, the hon. Gentleman may not wish to do that.
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      I expect the new relief in later years to go increasingly to people who in retirement would not otherwise have had insurance cover. The deadweight cost, therefore, is not likely to run through in the future. It is those people who are the principal target for the new ring-fenced and limited relief proposed in the clause. By how much and how speedily that benefit will build up will depend on the rate at which the take-up of medical insurance increases over the next few years. That, too, is dependent upon uncertanties. To a large extent, it will depend on the way in which the marked is developed by the medical insurers.
      I have already said to the hon. Member for Berwick-upon-Tweed that his amendments go further than he intended. They do so because they have unwelcome side effects, which I hope may encourage the hon. Gentleman to withdraw them at the conclusion of the debate. First, they would act against the main objective of the proposal, which is—I reiterate in essence what I said the other day—to encourage those who have had medical insurance cover during their working lives to continue it in retirement. Many working people enter into medical insurance contracts, usually known as "group schemes", where their employer negotiates the insurance cover on behalf of his employees as a whole. Premiums are usually significantly less than for cover taken out on an individual basis, and in many cases, as the hon. Gentleman will know, the employer subsidises the cost.
      Individuals in such schemes, who bear part or all of the cost of medical insurance during their working lives, were intended to benefit from the relief when they retire, just as much as individuals whose insurance cover is wholly provided by their employer. But the amendments of the hon. Member for Berwick-upon-Tweed would draw a distinction between the two categories. Those who had a contract to make a contribution towards the cost would be debarred from the new relief on retirement, whereas those who had no contract, probably because the whole of the cost was borne by their employer during their working lives, would be eligible for the relief. Whatever other view the hon. Gentleman may have on the general principle, I am sure that he will recognise that that sort of discrimination could not be justified. I do not believe either that that is what the hon. Gentleman intended when he tabled his amendments.
      Mr. Beith: The Minister is basing his argument on the case that he advanced at Question Time on Thursday, that the relief is intended to provide for those who had already entered either into a contract or some form of health insurance—I appreciate that there may be a technical difference—with their employers prior to retirement, and who then found it difficult to maintain their contracts after they retired. If that is the case, why is the clause so wide? Why is it not confined to such people?
      Mr. Major: The hon. Member for Berwick-upon-Tweed is misrepresenting what I said. In answering questions the other day, I was referring to the people who had difficulty on retirement and to whose difficulty the clause was especially addressed. In no sense was I seeking to circumscribe the relief solely to those people. Other people may wish to take advantage of the relief and that is a decision for them but it is in respect of those people who face the particular hardship that we feel that the clause will go some way to putting right.

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      The second drawback of the amendments is that they would discourage people who are thinking of taking out medical insurance cover before next April. That cannot be justified and I suspect that the hon. Gentleman had not intended that effect when he tabled his amendments.
      On the hon. Gentleman's central point, the amendments would have the effect of limiting the deadweight cost of the scheme to a negligible level in 1990–91 as, of course, the hon. Gentleman intended. The great majority of the £40 million cost in 1990–91 will be spent in giving tax relief to those over-60s who have already taken out medical insurance cover. That is the inevitable deadweight cost which, as I conceded a moment ago, is unavoidable with the introduction of a new relief of this sort. However, when considering the deadweight cost, one must bear in mind that it will help many of those people to retain their cover and not to surrender it in the future as some may have found necessary.
      It is correct that only a small proportion of the initial £40 million relates to additional take-up as a result of the relief. However, the costing assumes an increase in take-up of about 10 per cent. in the first year from around the 600,000 who are covered at present to around 660,000. The hon. Gentleman's amendments do not limit the relief to those who do not have insurance cover now, but to those who have never had insurance cover at any stage in their lives. Therefore, the amendments would effectively limit the take-up of tax relief contracts to well below the 60,000 additional take-up that we envisaged. In practice, that would mean that any elderly person who had never had insurance cover would be ineligible for the relief, even on a wholly new contract taken out in retirement. Quite apart from the hon. Gentleman's objection in principle to tax relief, such discrimination between people taking out new insurance contracts is not logical and could not be justified under any premise.
      I hope that for those reasons—and as the issue of principle remains for us to debate later—the hon. Gentleman will realise that the amendments are defective and do not meet the underlying objectives that he had in mind and I hope that he will feel able to withdraw them. However, if he feels unable to withdraw them, I shall advise my hon. Friends to vote against them.
      Mr. Beith: I am glad that the Treasury's capacity for detecting hidden snags in proposals has increased since last year when the Chancellor brought forward his mortgage interest relief changes which were postponed until August with such dramatic consequences. I hope that he had the benefit then—but perhaps he did not and that is why he did it—of such detailed advice of the unintended side-effects of such amendments.
      The Minister seems unable to see the wood for the trees because throughout our discussion he has seemed unwilling to clarify the essential purpose of this legislation. Amendment No. 18 goes to the heart of that matter and identifies the very group of people on whom the Minister wishes to concentrate relief and would deny them the relief. That gives us an opportunity of finding out what the Minister really thinks about this. The Minister has sought again and again to suggest that the main purpose of the clause is to concentrate relief on a group of people who have already entered into medical insurance but who find it difficult to continue with it when they have retired. He
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      has also suggested that all but 10 per cent. of the cost in the first year will go to such people rather than to people who come new into private health insurance. If that is the object of the exercise, the Government should have put a different clause into the Bill.
      Treasury Ministers are hiding behind a slender tree—there are not many trees that the Chancellor could hide behind even if he tried—when they seek to pretend that the whole purpose of the clause is to help a few pensioners who entered employer-based schemes for health insurance before their retirement. Its purpose is to have a large and expanding opt-out from the National Health Service. It is the first step towards a two-tier Health Service.
      I accept that there are technical defects in the amendments and I therefore propose to invite my right hon. and hon. Friend to vote against the principle of the clause at a later stage. I therefore beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. Gordon Brown: I beg to move amendment No. 5, in page 39, line 7, leave out '1990' and insert '1993'.
      The Chairman: With this it will be convenient to take the following amendments:
      No. 8, in page 39, line 45, leave out from 'claim' to `deducted' in line 46 and insert
      `set off against its profits liable to tax the amount.'.
      No. 21, in page 40, line 23, at end add
      '(10) Relief under this section shall be given at the basic rate of income tax only.'.
      Mr. Brown: The amendments do not seek merely to limit the scope of private health insurance tax reliefs but prevent them from being implemented until after the next general election, the result of which will show clearly what the country wants done about this matter. On the Treasury's admission, the proposal will cost at least £40 million this year. That money will go, mainly to top rate taxpayers. The Chancellor has already admitted that at least half of it will go to the top 5 per cent. of taxpayers. As the Chief Secretary has just admitted, the majority will go to those who already have private medical insurance, and beyond that, the cash available is open-ended. Under the proposal, the number of pensioners eligible for relief is uncapped. Despite the claim last Thursday in Treasury Question Time that it would be ring-fenced, I shall show that the clause even includes 900,000 people who are not pensioners. The amounts on offer in tax relief are limitless. The proposal is inflationary and liable to push up Health Service costs without controlling them at all.
      It will provide an unjustifiable subsidy of incalculable cost and completely unproven value. The proposal does not suggest that the Health Service should buy operations or services from the private sector and the industries within it, but that a minority of people over 60 should have a minority of their operations and treatments subsidised when they are carried out in the private sector. The main effect of the proposal is that a monthly, three-monthly or yearly cheque will go to BUPA, Private Patients Plan and other private health insurance industries. That cheque will be paid straight from the Government to BUPA and the other organisations.
      We already know that the private health industry is subsidised by the Government. Employers can set the expenditure on private medical insurance against their tax

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      bills and people with salaries below £8,500 can avoid paying tax on private medical insurance. We know that the Government have set a limit on the amount of new investment that they will put into the Health Service and that there is a limit on the amount of money that they will give to the hospital service this year. They have set a limit on the amount of money to be used for new buildings and equipment. However, there is no limit on the subsidy that is given to the private sector in such an open-ended way. The scheme contains no rate-capping equivalent for BUPA, no cash limit for private medical insurance, and no cash ceiling is imposed by the Chancellor. It is an open-ended subsidy in which commercial medicine receives a signed cheque and effectively writes in the sum.
      It is not surprising that the proposal has not been defended by the Chancellor in any meaningful way. It was not even mentioned by him in his Budget Statement, even though it has appeared in the Finance Bill. On Second Reading of the Finance Bill, the Chief Secretary said that the proposal had achieved "a false importance." At no point has the Treasury given the scheme anything other than lukewarm endorsement.
      The reason for this is clear. It is a proposal which comes not from the Chancellor, Chief Secretary or Treasury, but from the Prime Minister. The proposal offends every Treasury principle. It is open-ended and uncapped, and it starts with a huge deadweight of people who already buy private medical insurance and who, therefore, will receive subsidies. It offends the Chancellor's own proposals for the simplification of the tax system.
      Mr. Tim Smith: The hon. Gentleman said that there was no cash limit on this tax relief. Can he name one tax relief that is cash-limited?
      Mr. Brown: The question that we are debating this evening is whether we should give open-ended subsidies. I think that the hon. Gentleman is genuinely worried about the scheme. He has already said:
      "What worries me is the deadweight cost of relief for all those elderly people who already buy private medicine without incentives. It is a subsidy to the private sector paid for by all taxpayers. If we don't stop here then it may spread to other fields such as independent schools."
      If the hon. Gentleman wants to pursue his objections to this open-ended subsidy and to prevent it from escalating into other areas, he would do well to support us in the Lobby this evening. I hope that other Conservative Members who have already expressed severe doubts about the advisability of the scheme will join him in opposing it this evening.
      4.15 pm
      I said that this offended Treasury principles. The Chancellor said in his 1988 Budget speech that the objective behind his tax reforms was to sweep away tax breaks. Yet, this is the introduction of a new tax break —as we had last year—which is even more unjustifiable than some of the tax breaks he is trying to sweep away. It is hardly supported by the Department of Health, either. It was barely mentioned in the Health Service review. It is not mentioned seriously in the working papers, or covered in the £1 million advertising campaign that the Health Secretary launched. The new Tory campaign guide, published only a few days ago, contains 15 pages on the National Health Service and only one sentence on this private medical insurance proposal. It is the proposal that dares not speak its name.
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      Perhaps the best idea of the Health Secretary's views on this matter was given when he became Secretary of State for Health in July and the proposal was first floated. I quote from an interview that he gave and which was mentioned in The Independent on 27 July 1988. Speaking on private medical insurance, he said:
      "You don't need it. We have a National Health Service."
      It is not surprising that the hon. Member for Beaconsfield (Mr. Smith) is not the only Conservative Back Bencher who is unhappy about the proposal. I have noted from the debates on this matter that the hon. Member for Horsham (Sir P. Hordern) has opposed the proposal and that the hon. Member for Corby (Mr. Powell) is very unhappy about it. I believe that more Conservative Members, some of whom will have absented themselves today, are unhappy about it.
      In the Finance Bill debate that we held only a week or two ago, apart from the hon. Member for Dover (Mr. Shaw), whose excuse is that he has had no research assistance to help him for some time, the only person who spoke in support of the private medical insurance proposal was the hon. Member for Gillingham (Mr. Couchman). He declared an interest in the form of his connection with a company called Denplan which led him to believe not only that the proposal should go ahead but that it should include insurance for dental treatment and operations. So the one Conservative Member who has spoken up strongly in the debate on this matter has had to declare an interest in it.
      This proposal was not in the manifestos of 1979, 1983 or 1987. It was never mentioned to the public as a possibility before it was thrust upon us as a result of the Health Service review, and the reason why is clear; it has neither the support of the Health Department nor a great deal of support in the Treasury. In the battle between the Chancellor and the Prime Minister over the garden wall at No. 10, the shriller voice was the more successful. The Chancellor's opposition on behalf of established Treasury principles was shouted down.
      Of course, there was a promise of consultation on the Health Service reforms. In January, when the Secretary of State for Health announced the reforms he said:
      "We will be consulting … we shall, of course, listen particularly to the views of the public and the patients."—[Official Report, 31 January 1989; Vol. 146, c. 173–174.]
      But there has been no consultation on this proposal, as the Chief Secretary well knows. There has been a review that was not independent or impartial and which never included a doctor, a nurse, or even a patient. It was staffed mainly by people who use the National Health Service only when the private sector fails them. Within a few weeks of the promise of consultation, this clause is being imposed without consultation, without full information, and even without—as yet—the publication of the regulations which allow us to judge how far the proposal will go.
      The only consultations held in the past few weeks have been with the private health industry. So keen are the Government to push the proposal ahead that the one group with which they have been prepared to consult has been the private health insurance industry.
      Never before has such a significant change been made in the principles underlying the National Health Service with so little consultation. Faced with a choice between listening to patients and doctors in the National Health

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      Service and listening to their friends in business, the Government listen to their friends in the City and in business, first time and every time.
      So keen are the Government to push this proposal through that they have made it a subsidy which is paid directly, through the cost being reduced, to the person with private medical insurance.
      I have examined the housing benefit forms that have been devised by the Government since the reform of social security. When pensioners want housing benefit, they must first obtain a form, fill it in, carefully read the detailed questions and supply the necessary information about their income, the income of people staying in the house and the details of savings and capital. They must be open about every bit of cash in their possession. All of that must be done to obtain a minimal amount of housing benefit.
      On the other hand, to get this private medical insurance tax relief, people need only wait for the private medical insurance industry to give it to them. The Treasury has made it that easy for people to obtain it. But the means-testing that is done for housing benefit, poll tax rebate and everything else is such that for pensioners it is a huge hurdle to overcome.
      Whatever the Government claim, this subsidy—and it is a subsidy—will go to a minority of pensioners for a minority of treatment and operations. The best way to relieve pressure on the NHS—the test which the Government say they are imposing—is not to give money to private health services but to give it directly to the NHS.
      Mr. James Couchman: The hon. Gentleman referred pejoratively to my Second Reading speech. He may not be aware that my main point was that the benefit coming from this tax relief will directly benefit health care. Whatever money is given by way of tax relief will represent an addition to the resources that go to health care in Britain.
      Mr. Brown: The hon. Gentleman has missed the point. Three Members of the Cabinet are over 60. They will enjoy a subsidy on their private medical insurance policies. They will get that relief without even having to claim it. The only claim they will need to make will be in respect of the top rate tax relief, but they will get the basic rate relief automatically.
      I have in my constituency a number of people on NHS waiting lists waiting, for example, for cataract and hip joint operations. The Government have made a choice between giving additional money to the NHS, to people who need it, and giving the money to people with private medical insurance policies, people who do not need it.
      Mr. Couchman: Is the hon. Gentleman aware that those on NHS waiting lists will benefit as a result of people taking their ills to the private sector?
      Mr. Brown: If what the Government propose goes ahead, those in the queue will be subsidising the queue-jumpers. If the Government want to use £40 million or more of resources to the best effect to help people on waiting lists, the most cost-effective way of doing that would be not to give it to BUPA and other similar bodies, but to give it to the NHS.
      Mr. Couchman: Will the hon. Gentleman concede that £40 million of tax relief, even at the top rate of tax, would result in £100 million worth of additional resources going to health care?
      Mr. Brown: I do not accept that. I assume that the same point will be made by the Chief Secretary. That £40 million will not go to pay for operations and hospital treatments. The hon. Member for Gillingham knows that because he has been advocating Denplan as an insurance scheme. The money will go to pay for the administration and marketing of BUPA and other schemes, and not necessarily towards improving the quality of health care.
      Mr. Win Griffiths: Does my hon. Friend agree that Mr. David Lock, the managing director of Private Patients Plan, gave the game away when he asked the Government:
      "Please do not ignore the incentives which would encourage patients to. provide for themselves and their families and reduce government expenditure on the NHS"?
      Mr. Brown: I am grateful to my hon. Friend for making that point. Not only have many people in the private health industry given the game away, but almost every organisation associated with the NHS—the Royal College of Nursing and others—has come out against the plan.
      Only a few days ago the Chief Secretary, in support of the Budget, quoted comments from Help the Aged, saying that it gave an unqualified welcome to the proposals in the Budget. But I have to tell him that only today it has said that the proposals being put forward for private medical insurance tax relief are a complete irrelevance. The same has been said by Age Concern and many other organisations.
      The Chief Secretary may also like to know that the Centre for Policy Studies, the Right-wing organization that the Prime Minister helped to set up some years ago, has not come out in support of the plan. It has advocated that the plan should not be proceeded with. It said:
      "It would be wrong to give it tax relief … The US system of private health insurance came close to collapse because nobody has responsibility for managing health costs. This mistake should not be repeated here."
      It goes on to give three additional reasons why it believes that private medical insurance tax relief should not be operated.
      Mr. Eindhoven, an American research scientist, has been given a great deal of credit for developing the proposals for the internal market on which the Health Minister and the Prime Minister have based their plans. Only a few days ago, in an interview to the British Medical Journal he was asked:
      "Were there no specific points"—
      in the Health Service review—
      "that made you think 'my goodness?"
      Mr. Eindhoven said:
      "The only thing like that was the proposal of tax relief for private health insurance. My reaction to that is watch out. This has been a disaster for us in the States."
      He was asked why, and he said:
      "Because it costs the federal budget a great deal of money —about $40 billion a year—and works to encourage the choice of a more costly rather than a less costly health scheme."
      Others have made exactly that sort of comment on the proposal. There is no support from the Health Service, there is no support on the basis of established Treasury principles, and there is little support even from some people in the private medical insurance industry.

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      There are good reasons why the country should be opposed to the scheme.
      Mr. Tony Marlow: The hon. Gentleman has a reputation for being an ex-student leader, so obviously at some stage in his life he was educated. Therefore, why cannot the hon. Gentleman understand that if the Government provide an incentive for health insurance more people will take it out, enabling more people to obtain their health care elsewhere, and freeing resources in the NHS for his constituents and my constituents and adding to the increasing resources that the Government have already put in to the Health Service?
      Mr. Brown: The hon. Gentleman fails to understand the drift of the argument. The Opposition argue that if the Government have £40 million—this also happens to be the argument of any serious person who has looked at the issue—the best and most economical way to use those resources to provide health care is not through a subsidy to the private medical insurance industry or people who take out private medical insurance, but to use them in the NHS. The hon. Gentleman has been unable by his question to persuade us that he has any case for the point of view that he has put forward.
      The problem is that we are not just talking about £40 million going in tax relief to private medical insurance; This is £40 million as a start that is going to a small number of people who are already rich enough to afford that private medical insurance in the first place.
      Doubtless one or two people in the lower income group will benefit from the scheme, but we know that half the cost of the first year of relief will go to the top 5 per cent. of pensioners—people who are already rich enough to afford private medical insurance and who already have massive tax relief from the Government in many other areas.
      4.30 pm
      Even those people, who have benefited so much, would say that if the Government had wished to give to pensioners the first priority should have been to do something about housing benefit cuts, eyesight and dental check-up charges, and low poll tax and rate rebates—all things that they know have done damage not just to individual pensioners but to the integrity of our community life in this country.
      The Chief Secretary tells us that the aim of this scheme is to help a number of elderly people who have had their private medical insurance through their companies all their working life and will be unable to afford to continue it after the age of 60. Somehow, he tells us, a priority for public spending resources in this country should be that a small group of people who have had private medical insurance as a perk from the company during their working life should now receive from the taxpayer additional resources to pay for their health care.
      I have had dozens of constituents come to see me about the freezing of transitional protection. I have had scores of constituents complaining about the implementation of charges for eyesight tests and dental check-ups and rising prescription charges. I have had hundreds of constituents worried about cuts in housing benefit. I have not received one constituent inquiry from someone worried about this tax relief for pensioners. Those people who argue the case for private medical insurance tax relief must bear in mind that the people most in need of resources from the
      738
      Government are not those rich enough to afford private medical insurance but those whom the Government have made poor as a result of housing benefit and other cuts.
      Our objections to this tax relief go beyond that. It is not just that only a few at the top are liable to benefit; it is that this subsidy is open-ended. The Chief Secretary has not yet told the House, and it has not been in the public arena to the extent that it should have, that this tax relief proposal is not just open to people over 60. There are 900,000 people under 60 who will be entitled to receive the benefit of this tax relief because they are married to people over 60 and their policies will be covered by the tax relief as well. That is another reason why this scheme is not ring-fenced, as the Chief Secretary says; it is open to another group of people, as high a figure as nearly 1 million of them, throughout the country.
      Mr. Beith: There is an even larger potential group of people who can also benefit from high-rate tax relief. Any relative who cares to pay the premiums for a pensioner to whom he is related can get the highest rate of tax relief in that way.
      Mr. Brown: I am grateful to the hon. Gentleman for pointing that out in his second intervention this afternoon. BUPA itself has said that this scheme will be used by what it calls yuppies—people with high salaries who buy private medical insurance as a present for their elderly parents. I have to ask the Chief Secretary whether he thinks it is a proper use of public sector resources to subsidise gifts of this sort.
      As to the question whether the subsidy is open-ended, I was interested in what the Financial Secretary said when he dealt with this matter. He said that he could not tell us what the costs of this scheme would be—rather like the Chief Secretary this afternoon. So we have the Treasury entering into a scheme without knowing what the cost will be. Then he said that the costs depended on meeting the new marketing challenge. The question was how much BUPA and other private sector organisations would meet the marketing challenge. So the resources devoted to this scheme are not to be decided on the basis of the needs of pensioners or the needs for health care throughout the country; they are to be decided by the extent to which BUPA meets the new marketing challenge. It is the advertising budgets of Saatchi and Saatchi that will decide the take-up of the scheme rather than the real needs of pensioners throughout the country.
      I will tell the Chief Secretary and the Financial Secretary how these resources could be better used. The £40 million, if it is really £40 million, that is being devoted this year to private medical insurance would pay for 3,000 nurses, 1,000 consultants, 20,000 ventilators, 1,300 ambulances or nearly 20,000 hip-joint replacement operations. But the money will not go to guarantee any operations or treatments; it will merely go to provide tax relief on insurance money that is paid out to companies such as BUPA.
      What will BUPA and similar organisations be able to do for pensioners with the money that is given in the form of subsidies to those who subscribe to private medical care? People who have had illnesses or even symptoms in the past cannot, when they are aged over 60, obtain private medical insurance in many cases. Policies will not anyway cover the mentally ill or those requiring psychiatric care, the physically or mentally handicapped, or those suffering

      739
      from long-term conditions such as cancer. So that money will be used to subsidise a minority of people undergoing a minority of treatments, and almost certainly a minority of the operations that they really need. Is that the best use of £40 million or more of public sector resources?
      Much of that money will be spent on administration. We know that about 6 per cent. of National Health Service costs and 5 per cent. of hospital costs are accounted for by administration. However, we know also that 10 per cent. of BUPA's costs are accounted for by administration, and that the figure is 12 per cent. in the case of Private Patients Plan. That is hardly cause for arguing that money is better spent in the inefficient private sector. The private sector under BUPA is the most inefficient of all.
      The cost of a hernia operation in the private sector is more than twice the National Health Service figure, as is that of a hip joint replacement. Operations as simple as cataract removal also cost twice as much in the private sector. The Government support the private sector not because it is efficient but simply because it is the private sector. They oppose extra funds for the public sector not because it is inefficient but simply because it is the public sector. The Government prefer to subsidise an inefficient private sector rather than support an efficient public sector.
      The Prime Minister herself, even though she supports the private sector, acknowledges that the coverage it can give is inadequate in respect of major operations. She commented:
      "The day may come when we"—
      she uses the term "we" again—
      "have to have a very complicated operation. I hope not. I hope it will never come. But if it does, then I am afraid that one could not possibly perhaps bear that on private insurance."
      Those are the words of the Prime Minister, who is the greatest supporter of private medical insurance and the author of the subsidy—but she recognises that no matter how large the resources she gives to private medicine to try to make it function more efficiently and encourage more people to subscribe to it, at the end of the day the private sector is unable to do the job if a major operation is required.
      The National Association of Health Authorities today published a new survey of Health Service finances, which reveals very clearly the remaining backlog. The survey claims that since 1980 the Government have underfunded the National Health Service by £3 billion. Last year underfunding was of the order of £400 million, as it was the year before that. Despite all the claims made by the Chief Secretary and other Ministers as to the huge resources that they made available to the Health Service this year, the hospital and community health services remain underfunded by £490 million.
      On the same day as that survey is published, the House is asked to divert to the private sector money that should go to the Health Service. All health arguments and all traditional Treasury arguments have been set aside. The only question asked by the Prime Minister was what could be done for the private sector, and how could the rich be helped to help themselves.
      We now know what the Chancellor meant when he gave that unintended interview to the correspondents on that Friday last year which caused so much embarrassment. He
      740
      said then that he wanted to target benefits to pensioners, that only a tiny minority of pensioners concerned him; what he did not say was that the tiny minority were not the poorest in the land but the richest and that the targeting was to be on the richest, not the poorest.
      This proposal has been rejected by almost everyone who has looked at it. It commands very little support, even on the Minister's Back Benches. It is objected to by all health organisations which have looked at it. It is even rejected by many of the Right-wing think-tanks which the Minister knows are the authors of many of the worst proposals for the National Health Service. Yet Ministers and the Government have made a choice between giving Health Service resources to those who need them and to those who do not. They have chosen to give these resources to those who do not need them. That is why we will oppose the proposal this evening.
      Mr. Major: In moving his amendment, the hon. Member for Dunfermline, East (Mr. Gordon Brown) was typically forceful, and it might be appropriate at the beginning of what I suspect will be a lengthy and interesting debate to set out the background and concerns to the proposal to introduce tax relief and the secure justification we believe exists for it.
      As I listened to what the hon. Gentleman said, I found it hard to appreciate that we are discussing tax relief for a limited number of elderly people rather than, as his dramatic delivery would have led us to believe, the ritual slaughter of the first born. It is curious that on all other occasions when assistance for the elderly has been suggested—and a lot of assistance for the elderly has been introduced under this Government—the Opposition tend to support it but on this occasion, for rather curious reasons, which I will come to later—[Interruption.] Not the rich elderly, as hon. Members will find out in a moment. I fear the hon. Gentleman has the measure rather out of perspective, though the manner in which he presented his case will enable elderly people who enjoy tax relief and who may enjoy tax relief to put the Opposition very clearly in perspective.
      In the course of his remarks the hon. Gentleman made a number of errors of substance, to which I shall return. There were a number of minor errors, which I simply correct in a spirit of accuracy. [Interruption.] The hon. Gentleman finds accuracy funny, as we have noticed before. My right hon. Friend the Chancellor mentioned tax relief for health insurance in his Budget. The cost of £40 million which the hon. Gentleman referred to arises, of course, next year, not this year. I assume that was a just a slip of the tongue.
      The position about the open-ended cheque is not at all correct. Treatments which may be covered will be specified in regulations and there is a natural limit to those. Those regulations will be available to the House at a later stage.
      Mr. Gordon Brown: Will the right hon. Gentleman give way?
      Mr. Major: In a moment. If the hon. Gentleman intervenes every time I point out his inaccuracies, we will still be here in the middle of August.
      The hon. Gentleman is, of course, wrong about getting relief without claiming it because the application form for insurance cover will also contain the claim for tax relief. Whether the claim is made is optional. Claimants will have to certify in the normal way as to their eligibility for tax

      741
      relief, just as with mortgage interest tax relief, which to the best of my knowledge the Opposition have not yet declared it to be their intention to abolish.
      The hon. Gentleman made some other errors, to which I will return when we deal with the more substantive parts of this amendment.
      Mr. Gordon Brown: Will the Chief Secretary confirm whether there is a ceiling on this tax relief or not?
      Mr. Major: There has never been in any tax relief of any sort the possibility of setting a cash limit. If the hon. Gentleman does not understand that, he ought not to be the Shadow Chief Secretary, for he understands very little. As it happens, Shadow Chief Secretary is likely to be the limit of where he gets—[Interruption.] I am perfectly prepared to exchange badinage with the Opposition if they wish, but they may care to listen to the substance of the debate.
      Amendment No. 5 would delay the introduction of tax relief on private health care provision until 1993. As the hon. Gentleman made clear, its intention is wholly different; but the effect is simply one of delay, which implies—inaccurately—that the Opposition accept the principle of tax relief and merely wish to defer it. The Opposition, however, are wholly opposed to tax relief, as any casual listener to the hon. Gentleman's tirade will have understood. The hon. Gentleman hopes that a delay beyond the end of the current Parliament will enable a new Labour Government quietly to strangle the extra help for the many elderly people who will welcome it. It will not, of course, because there will be no new Labour Government after the next general election. One of the reasons for that is Labour Members' basic and instinctive hostility to self-provision, self-dependence and individual choice, which they are showing yet again today. They hate those things; unless provision is made by the state, in their eyes it is not good.
      4.45 pm
      Mr. Gordon Brown: Will the Chief Secretary simply confirm that of that £40 million he expects at least £20 million to go to the richest people—the top 5 per cent.?
      Mr. Major: Let me tell the hon. Gentleman in precise terms that the Inland Revenue's best estimate is that, in the first year of the tax relief, well over 80 per cent. of those aged over 60 and covered by medical insurance will be either basic-rate taxpayers or not liable to tax at all. I hope that the hon. Gentleman will remember that when next he makes his inaccurate speeches.
      Mr. Gordon Brown: Will the Chief Secretary now answer my question? Is it or is it not the case that half the £40 million that he expects to be set aside will go to top-rate taxpayers?
      Mr. Major: I do not expect that to be the case. My answer to the hon. Gentleman's question showed clearly the extent to which he either does not understand what is going on or deliberately chooses to misrepresent it. I have opted for the charitable explanation, although others, of course, may not.
      Mr. Win Griffiths: Is the Chief Secretary aware that NHS provision is paid for by taxpayers and payers of
      742
      national insurance? The clause merely gives extra help to a very small number of people, when those resources could be better used in the NHS.
      Mr. Major: I understand the hon. Gentleman's point entirely, but we live in a society where there is a private medical sector as well as a National Health Service, whether he likes it or not. I suspect that that point is not alien to him. The private medical sector provides a good deal of care for people who would otherwise need to be treated within the NHS, which would add to the difficulties and delays that sometimes occur within it. [Interruption.] If hon. Members will permit me to get past the few first seconds of my speech, I shall explain the point directly, as it is the substance of the amendment.
      Mr. Gordon Brown: Is the Chief Secretary willing to correct his statement of a few minutes ago? Is he prepared to accept the accuracy of the answer given to me by his right hon. Friend the Financial Secretary on 22 March, stating that about half the relief is expected to be received by higher-rate taxpayers?
      Mr. Major: As far as I am aware, what I said a moment ago is correct: 80 per cent. of the beneficiaries will be basic-rate taxpayers. Although it is not possible to be certain about how that 80 per cent. breaks down within the total tax relief, it is clear that over a period the majority will go to basic-rate taxpayers—or indeed, as I shall explain shortly, in reduced payments for those who are not taxpayers at all. They will find, as we operate a MIRAS-type system, that the cost of their medical insurance cover is reduced by the rebatable element—25 per cent. at present—when they make their first payments under the new system. That will in our judgment grow over the years.
      Mr. Gordon Brown: Will the Chief Secretary tell us whether the Financial Secretary was right or wrong? I asked on 22 March:
      "what is his estimate of the proportion of the £40 million set aside for tax relief for private medical insurance that will go to top-rate taxpayers."
      He replied:
      "Around one half of the cost of relief is expected to be received by higher rate taxpayers."—[Official Report. 22 March 1989; Vol. 149, c. 588.]
      Is the Chief Secretary disowning the Financial Secretary?
      Mr. Major: The hon. Gentleman is overlooking two factors. [Interruption.] I am just about to explain to the hon. Gentleman since he does not understand. That includes, first, the basic rate of tax relief. So only a proportion of that half to which he refers is higher rate tax relief, for they would be entitled to the basic relief in any event. [Interruption.] It is no good hon. Gentlemen giggling and shouting. That happens to be fact. Secondly, since 80 per cent. of the beneficiaries will be basic rate taxpayers or not taxpayers at all—I shall reiterate the point so that the hon. Member for Dunfermline, East does not get it wrong again—over a period of time the majority of the tax relief will go, not to the rich, whom the Opposition claim are receiving such disproportionate amounts, but to people who are basic-rate taxpayers or not taxpayers at all. I hope the hon. Gentleman now understands the point. [Interruption.] If the hon. Member for Holborn and St. Pancras (Mr. Dobson) wishes to intervene instead of cackling in such an absurd fashion

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      from a seated position, I shall give way to him. He is the best advertisement I have yet seen for having television in the House. Then people might see how he behaves.
      Mr. Frank Dobson: Will the Chief Secretary confirm that of those people who have private health insurance, no fewer than 50 per cent. go into a National Health Service hospital when they are sick and in need of in-patient hospital treatment, thus saving the National Health Service not a penny?
      Mr. Major: As the hon. Gentleman's hon. Friend pointed out a moment ago, those who have private medical health insurance will also have paid their tax and national insurance contributions, so they have the same entitlement as the hon. Gentleman, if they choose to exercise it, to use the National Health Service. If they choose to pay separately and not use the provision, that is a matter for them which ought not to concern the hon. Gentleman.
      Mr. Denzil Davies: As I understood it, the Chief Secretary said that some elderly people who do not pay tax will get a benefit. Will he please explain that? I presume that most people on state pensions who do not have any other income do not pay tax. I take it that the personal allowance still covers the whole pension. Is he saying that that pensioner can deduct a sum equivalent to tax at the standard rate when making the payment of the premium, and can retain that money and not have it reclaimed by the Inland Revenue?
      Mr. Major: That is entirely correct. Since a system like MIRAS will operate, someone who is not a taxpayer would have the equivalent of the basic rate refund deducted from the premium, so that person would have a lower premium than otherwise.
      Mr. Denzil Davies: Could the insurance company reclaim the sum in full from the Inland Revenue?
      Mr. Major: Yes, in precisely the same way as the mortgage interest relief system operates, as the right hon. Gentleman, as a former Treasury Minister, will know.
      Mr. Beith: Will the Chief Secretary make it clear that the non-taxpaying pensioner will not have to sign a form when making the initial claim to say that he or she is liable to tax?
      Mr. Major: I will have to check that, but I suspect that people will have to indicate that they are eligible—no, I think the answer is that they will not because the 25 per cent. would be deductible automatically in any event. If I am inaccurate about that, I shall write to the hon. Gentleman later.
      One of the curiosities about the position of the Opposition, although they may not care to admit it, is that they are resolutely opposed to helping the elderly help themselves, or to helping families help the elderly, despite the general position that they take that they care and want to assist the elderly in whatever way is possible. The 5·5 million people currently covered by private medical insurance will surely notice that.
      I wish to turn in a moment directly to the concerns that the hon. Gentleman raised, but I should like to say something first about private health care provision and
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      public health provision. Although the Opposition choose not to mention it, public provision for the National Health Service has grown dramatically in recent years to deal with a variety of changes in circumstances, such as improving medical treatments, greater public expectations and demographic changes. By any realistic yardstick, the National Health Service is better funded than ever before. I, for one, have no doubt that that trend will continue, for we are determined to produce and improve public health care. The whole thrust of the health reforms has that in mind.
      Where we part company with the Opposition is that we believe that support for public provision should not mean opposition to private provision, although for many—I suspect not all—Opposition Members, private provision adds to the total resources for health care and should generally be welcomed. As to provision for health care, even the Labour party yesterday committed itself to the belief that firm public expenditure control was desirable and necessary. Whether the Labour party will ever pay more than lip service to that belief, or have the chance to, is a separate matter.
      I must make it clear to the hon. Member for Berwick-upon-Tweed (Mr. Beith), who raised the point earlier, that I welcome the expansion of private health care provision. I welcome it unreservedly, as one who has invariably used the National Health Service.
      There is a variety of reasons for my welcome for private health care provision. First, it relieves pressure on the National Health Service. Secondly, it increases the scope for co-operation between the National Health Service and the independent sector. Thirdly, it increases individual choice, and I find that attractive. It also means, of course, a wider range of options for National Health Service management as well as individual patients.
      There is already a growing partnership between the National Health Service and the independent sector. Through the reforms that we have in mind we want to open up further opportunities for the public and the private sectors to work together, providing services for each other, engaging in joint ventures, and sharing the use and spreading the cost of expensive hospital facilities. Anyone needing treatment, including those of us who continue to depend wholly on the National Health Service, can only benefit from closer co-operation, for private provision will supplement and not replace public provision in the National Health Service.
      The new relief that we are debating is limited. It is not a general relief for private medical care or even for medical insurance. It is limited in scope and ring-fenced to those over 60, or, as the hon. Member for Dunfermline, East accurately pointed out, the wives of those who are over 60, who also receive age allowance on exactly the same principle—unless the hon. Gentleman proposes to withdraw the age allowance in those circumstances. If he wishes to do that, I will let him admit it now; I assume that he does not. I am pleased that he is consistent and agrees with the principle.
      I must make it clear to him that we have no plans to extend the relief further down the age scale. Direct payments for private health care and most medical insurance premiums for those aged under 60 will not in future attract tax relief. [Interruption.] Many things come forward in the debate, but I think that a reference to the dock labour scheme may stretch the Chairman's patience.

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      The central justification for the new relief is entirely clear. It is one that I have set out before. As people reach 60, the cost of their private medical insurance rises. If they retire, their income generally tends to fall. Of course, usually they lose employers' contributions to any private medical insurance scheme to which they may have belonged. Many elderly people think that it is grossly unfair, and for the benefit of the hon. Member for Berwick-upon-Tweed I must make it clear that I agree with them without qualification. Clause 51 addresses that difficulty. The effect of the clause that the amendment seeks to wreck is that the new tax relief will be available from April 1990 where an individual aged 60 or over is covered by eligible medical insurance. It will be due where the premium is paid by the elderly themselves or where another individual pays the premium on their behalf. In most cases, that individual is likely to be a son or daughter or other close relative; but it could equally be a family friend.
      5 pm
      Mr. Win Griffiths: The Minister is enunciating what I take to be a principle which he wishes the Government to spread throughout tax relief between the employed person and the retired person. He seems to be saying that it is one way of helping people belonging to company-financed health plans to continue with those plans after retirement. Does he therefore agree that that principle could apply to any other perk that a company provides, such as a company car—so that people could receive some help with having a car after they retire—or any scheme of luncheon vouchers, as retired people might need help with their meals after they retire. Is the Minister seriously trying to tell us that there is a need to provide help with perks that were received during employment when people retire?
      Mr. Major: Unlike the hon. Gentleman, we know the difference between health relief and luncheon vouchers. That is why we have ring-fenced that relief specifically to people seeking some form of health or medical insurance. Unlike the hon. Gentleman, we think that that is particularly important and brings comfort to many elderly people who are keen to continue with the insurance, the protection and the cover that they enjoyed until the age of 60. It is ring-fenced to that.
      Mr. Win Griffiths: That is nice to know.
      Mr. Major: The hon. Gentleman now need be in no doubt about it.
      Basic rate relief will be given at source—like MIRAS to which the right hon. Member for Llanelli (Mr. Davies) referred a moment ago—so that only a net premium will need to be paid to the insurer. That means, even where a subscriber is not liable for tax, tax relief will still be given and only a net sum will be payable.
      The hon. Member for Dunfermline, East repeatedly referred to the fact that tax relief benefits only the rich, and I outlined the extent to which basic rate taxpayers will benefit. His belief that only the rich benefit is wholly wrong, as it is in the case of tax relief on mortgage interest. The measure brings private health care within the reach even of non-taxpayers for the reasons we have discussed in the past few minutes.
      Dr. Lewis Moonie: Can the Minister estimate the number of people on the basic old age pension who will take out private health insurance after this generous scheme comes in?
      Mr. Major: We shall have to wait and see. But I can tell the hon. Gentleman that any pensioners who do that will find that the tax relief reduces their premium by the standard basic rate of taxation—currently 25 per cent.—in precisely the same fashion that I have set out. Therefore, the hon. Gentleman may be surprised at the number of elderly people who will take advantage of the measure. The cost of a budget policy for someone between 60 and 69 would be £240 a year. That is a budget scheme and would vary with individual insurance companies. That £240 is before the deduction of the sum covered by the tax relief.
      Mr. Dobson: Will the Minister give way?
      Mr. Major: I am not keen to give way to the hon. Gentleman who has been chuntering like a clown throughout most of our proceedings.
      Mr. Dobson: Only from a sedentary position.
      Mr. Major: The hon. Gentleman is sometimes more funny than he is wise.
      It is completely inaccurate and outdated to suppose that only high earners have private medical insurance, in precisely the same fashion that home ownership, largely thanks to Conservative policies, has long ceased to be the privilege of the few. About 5·5 million people—one in 10 of the population—are now covered by medical insurance, many of them through company schemes. Even trade unions are arranging group cover for their members, for, unlike the Opposition, they believe in the principle and practice of private medical health care and I have no doubt that their members, once retired, may wish to take out their own policies and benefit from the tax relief that is offered to them.
      There is a further point. The type of insurance cover most generally marketed to older people, and which they are most likely to find attractive, is so-called "budget" cover. The very much lower premiums reflect retired people's priorities. For example, someone who has retired will be willing to have his non-acute operation at an off-peak time for the hospital at a lower cost. Tax relief will bring just that type of low-cost cover within reach of even more people than the 600,000 people over 60 already covered.
      Mr. Dobson: Is it not true that a number of the so-called budget schemes make themselves cheap by giving pensioners a certain amount of money provided that they can find treatment at a National Health Service hospital within six weeks? How will that save money for the National Health Service?
      Mr. Major: The hon. Gentleman overlooks the fact that cash schemes are not generally covered by the tax relief, but if there are any exceptions we shall look into them.
      I recognise that some hon. Members may be opposed to any tax relief, not on the grounds advanced by the Opposition, but on general fiscal policy grounds, because it contradicts strict tax neutrality principles. It does. I agree with that and there is no point in not recognising it and acknowledging it, and I do so. But we have never pretended that it is our policy to remove all tax relief

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      regardless of merits. Each is considered individually. My right hon. Friend the Chancellor made clear in 1984, when he introduced his first tax reform Budget, that he had no intention of removing all tax reliefs in the tax system. That is not our aim.
      It is true that the general presumption is in favour of fiscal neutrality, but in practice there will always be room for some carefully-considered and limited tax incentives to meet particular needs. That is why we have introduced a number of reliefs, such as those for profit-related pay and personal equity plans, which are specifically designed to make the economy more flexible. The new relief that we are introducing for health insurance is fully justified on merit, as it is well directed at a particular problem, will increase take up and have wider benefits.
      I referred earlier to the limited nature of the relief. I should make it clear that there are two restrictions on the relief apart from that imposed by the age of the insured person. First, the relief will be due only to people who are resident for tax purposes in the United Kingdom.
      It is axiomatic that a tax relief should not be given to people who put themselves outside the scope of normal United Kingdom taxation. Furthermore, by and large, people who are not resident in the United Kingdom do not use the National Health Service on a regular basis; thus, encouraging them to take out medical insurance would do little to relieve pressure on the NHS. They will not therefore qualify for relief.
      Secondly, the clause provides for relief to be withdrawn in certain circumstances. That is where, for example, tax relief has been given when it was not properly due, or when it was given in respect of a contract that has ceased to be eligible for relief, perhaps because its terms have varied. In those circumstances, it is right that no further relief should be given and that any excessive relief should be paid back as speedily as possible.
      I hope that hon. Members will now understand what caused us to bring this measure before the House and I hope too that they will appreciate that for many elderly people this new tax relief will be widely welcomed for a considerable period.
      I understand the concerns of hon. Members about this relief, but I must say bluntly that I do not share them. This modest measure will give the double benefit of peace of mind to those who are able to take up private medical insurance as a result of it and an increase in flexibility in the provision of health care, which can only benefit the National Health Service and the community as a whole. Those are both desirable policy objectives, so I invite the Committee to reject the amendment and to support the principle enunciated in clause 1.
      Mrs. Alice Mahon: I come to the debate with some experience in caring for the elderly in the National Health Service, because I spent 10 years of my life doing that. I also come to the debate with some trepidation. As with the elderly, every time the Government talk about improving the National Health Service, I feel some fear because in this debate, as in every other in which we see the Prime Minister's hand, we have to fight to preserve some part of that precious service. We have been in the battle of images versus the reality of the National Health Service since the Government came to office. The National Health Service is anathema to the Prime Minister. She hates it
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      because it is a Socialist concept for which she has no time and it means caring for people collectively. I believe that it is a good and decent principle to want to care for the elderly.
      I recognise the importance of this debate, and I do not under-estimate the dangers in the move towards tax relief for elderly people who take out private insurance. That will do nothing to help the vast needs of the elderly and I want to talk especially about the elderly in Calderdale. As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, the proposal has nothing to do with cost, because it is far more expensive to perform operations in the private sector and it has nothing to do with planning, in terms of surgeons' hours, nurses' time and the contribution of the Health Service workers. But the proposal has everything to do with the political will to get rid of the National Health Service or at least to weaken it seriously.
      In Calderdale, my local health district, there are 36,400 pensioners. I should add that Calderdale covers my constituency and the constituency of Calder Valley. There are 10,000 pensioner households; one in four of all Calderdale households is a pensioner household. The number of over-75s in Calderdale increased by 16 per cent. between 1971 and 1981. We have the highest proportion of over-75s of any urban authority and the number of over-75s is expected to rise by one half in the next decade. You will appreciate, Mr. Hogg, why I am so concerned about what will happen to those many elderly people.
      I obtained some of those figures from my local council and some from the Government. Over 5,000 of the 20,000 pensioner households receive some income support, so they are in the very lowest income bracket. Only about one third of all pensioners pay any tax. The national figure from the Government's 1986 general household survey showed that only 4 per cent. of people over 65 had private medical insurance. If that figure is applied to Calderdale, only approximately 400 pensioners out of 36,400, would benefit from the proposal. That gives us an idea of how few would benefit from the Government's tax relief.
      The Chief Secretary has said that some people on low incomes, who are not in the tax bracket, will be able to purchase one of the budget schemes at about £250 a year. Again, we see the battle between image and reality. The Chief Secretary and the Government know that those people are struggling to make ends meet and that the last thing they are likely to do is pay £250 in health insurance —unless, of course, the Government are successful in frightening them into doing so.
      5.15 pm
      This tax relief measure will do little for the 36,400 pensioners in Calderdale district health authority. It will do nothing to help with the vital resources needed by the National Health Service. It will only help the private sector to leech off even more from the National Health Service than it is doing now. Already, the private sector is causing parts of the National Health Service to bleed to death.
      The Government's policy on care for the elderly is relevant to this debate and, in some ways, that policy has been rather sinister. Over the past 10 years, we have seen a massive shut-down of long-stay beds for the elderly and a huge increase in private beds for the elderly. Billions of pounds of taxpayers' money has been pushed into the private sector, and care for the elderly is deteriorating. We have seen the massive institutionalisation of elderly

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      people. More and more elderly people have found themselves without adequate community care or caring relatives and have been forced into private homes. We have seen entrepreneur after entrepreneur jumping on to the granny gravy train as the Government encourage the waste of taxpayers' money.
      I am deeply concerned about what will happen to the elderly who are frightened into taking out private health cover. What will happen when the insurance companies keep rewriting the small print, as they inevitably will if more elderly people take up the so-called "offer"? We shall see insurance companies redefining what is medical, as happens now when authorities seek excuses to close down long-stay beds. We are moving towards the conditions prevailing in the United States, where elderly people believe that they are going into hospital under private medical cover for acute operations but, as often happens with people over 75, that acute condition becomes chronic.
      We shall see hospitals wanting to dump patients quickly whom they see as financial burdens. We shall have the dumping referred to in the excellent booklet by my hon. Friend the Member for Peckham (Ms. Harman), "Your dollars or your life". It should be compulsory reading for Opposition Members. Sixty per cent. of elderly people aged between 65 and 74 have long-standing illnesses. The image of them nipping into hospital, having a conveyor belt operation and nipping out again under a cheap private insurance scheme is nonsense.
      I have challenged the Minister on this subject, as only 400 of the elderly people in my health authority area are likely to derive any direct benefit from the proposal. To care for the elderly, the National Health Service needs a massive injection of cash. The £40 million that the proposal would cost would be a start, and if the Government could see their way to increasing that on a weekly basis for the next six months, we might see a return to properly funded health care.
      If we are to help the elderly, we need to spend more on chiropody, physiotherapy, occupational therapy and intensive home care packages to keep elderly people in their own homes and to help them not to become chronically sick.
      As my hon. Friend the Member for Dunfermline, East said so clearly, the measure will serve only to move us towards a more divided service for the elderly. It is being pushed upon an unwilling nation by a Prime Minister who is hellbent on getting rid of the National Health Service.
      A warning was sounded last week in the Vale of Glamorgan, where the Labour party achieved an excellent result. I know that the Chief Secretary is an ambitious Minister and that, like many of his colleagues, he tries to curry favour with the Prime Minister because she is king-maker at the moment, but I warn the right hon. Gentleman that he will be sounding his own death knell if he proceeds with proposals that have nothing to do with helping the elderly and everything to do with destroying the National Health Service.
      Sir Peter Hordern: I am not very happy about the clause, but before I give my reasons I want to say something about the speech made by the hon. Member for Dunfermline. East (Mr. Brown). The hon. Gentleman said that, under the clause, the queue would be subsidising the queue-jumper. I think that that encapsulates the Opposition's view of taxation. The hon. Gentleman and his party believe that resources belong to the state, not to
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      the individual. Let me distance myself immediately from that attitude. Money does not belong to the state and tax relief does not mean giving money to those who are relieved of tax. It means taking less away. In a general sense, that is an important distinction.
      The Labour party also suffers from the belief that if Governments take less away from people in tax, they make it less likely that they can increase public expenditure. As this Government's record has shown, however, if one reduces taxes in a general way, one so enhances the country's economic performance that one can increase revenue and so have more money available for public expenditure.
      The Labour party believes that we have a static economy and that if we relieve someone of the burden of taxation, it means that there is less available for someone else. In fact, we have a dynamic economy, and our experience of the past 10 years amply proves that point. Everything that I have read about the Opposition's policy on taxation leads me to believe that it is more a policy of retribution than a means of raising revenue for public expenditure.
      Mr. John Battle: It ought to be put on record that, taking into account indirect taxation, the people of this country have been taxed more heavily under this Government. It is a myth that the Government have given taxes back; they have increased the burden of taxation.
      The Temporary Chairman (Mr. Norman Hogg): The hon. Member for Horsham (Sir P. Hordern) need not feel obliged to respond to that point in any detail if he does not wish to.
      Sir Peter Hordern: I am grateful for your protection, Mr. Hogg. Doubtless I need it on other occasions but I do not on this occasion. It is true that indirect taxation has increased, but so has the country's wealth, which has meant that people are more able to bear the burden of taxation placed upon them. Moreover, rates of direct taxation have been substantially reduced. But I shall go no further, Mr. Hogg, because I want to restrict my remarks to the clause and the amendment.
      We need as broad a base as possible for taxation. If we are to enjoy the benefits of reductions in taxation leading to dynamism in the economy and therefore to more revenue and more public expenditure, it is essential that there should be as few exemptions from the general level of taxation as possible.
      Of course, we have some exemptions from taxation—some special allowances and tax concessions. We have had them for many years. However, I would distinguish those existing tax concessions from the one proposed in the Bill. We have tax concessions to encourage people to take out pensions, for example. That principle has been established for a long time. Some may say that we allow too many tax concessions for the pension industry, and I would number myself among them. We have tax concessions for the members of the property-owning democracy, although I do not think that the limit at which mortgage interest relief is allowed will be raised in future. It has not been raised for several years, so that concession is diminishing as a force, which encourages people in the belief that the Government genuinely think that there should be as little exemption to detract from reductions in direct taxation as possible. Other tax reliefs—for the business expansion scheme, for

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      example—are designed to encourage more rented accommodation or more industry, and such reliefs also serve a national purpose.
      The question arises whether the concession proposed in the Bill makes for the general good and whether it should have preference over others. No one has expressed the matter better than my right hon. Friend the Prime Minister. Some time ago she said that any tax concession for which extra public expenditure is required has to be set against the net income of a nurse. At that time the average nurse's salary was £140 a week, and tax and national insurance contributions amounted to £40 a week. My right hon. Friend said that that was important because any tax concession has to be set against the contribution that nurses make to national insurance and in taxation, and there are a great many nurses. That is a good test, and we should bear it in mind in considering the proposal.
      We should look at the evidence to see whether we need to subsidise private medical insurance. I understand that, at the end of 1987, 5·2 million people, including dependants, were covered by private health insurance. There is a distinction between the categories of those covered: 28 per cent. of people in professional classes are medically insured as compared with 7 per cent. of the people at large. The question immediately arises what the deadweight cost of the proposal will be, as the people who are already covered are hardly likely to be encouraged to take out even more cover. More to the point, the cost to the Exchequer is substantially greater than it would have been had a completely new allowance been proposed.
      I understand that, overall, the population over the age of 65 is no longer growing. The principal demographic change is among the really elderly, and there is a substantial increase in the number of those aged 85 and above. The total number of subscribers to private health schemes has grown from 1 million in 1977 to 2·2 million in 1987, so the question arises whether the concession is necessary to encourage people to join private health schemes.
      For that reason it is necessary to ask those who conduct the schemes what they believe is the position. I shall quote from an article by Barbara Miller that appeared in The Guardian on 12 October 1988, which was, of course, before the Health Service proposals were published. It said:
      "BUPA, the largest British private health insurance company with 61·7 per cent. share of the market, does not want any major government intervention to help boost the private sector. 'We are not predicting, or expecting, any bouquets from the Prime Minister's review,' says Neil Jamieson of BUPA. 'We want to stand on our own feet and not be supported by measures taken by the Government…We feel very uncomfortable with many of the ideas that have been put forward … We do not believe they are in the broad interests of the British public'."
      It is important to note that BUPA, the largest private health insurer, sees no need to give extra concessions or help to the private health sector.
      5.30 pm
      I accept entirely, as my right hon. Friend said, that those who do not pay taxation will, nevertheless, gain the advantage of a net reduction of the cost of medical insurance. However, does that total reduction overcome the amount required to compensate for the deadweight for existing subscribers? I do not know the calculations, but I believe that the cost of the concession will be some £40
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      million. I would guess that in the first year most of it will go to those who are already covered by existing schemes. If, however, the scheme becomes more popular, as the Government hope, it will cost much more than £40 million. Then, following the analogy of my right hon. Friend the Prime Minister, we must ask whether that is the best way to use the tax that a nurse pays.
      I believe that the top rate of tax of 40 per cent. is a significant achievement and is a credit to my right hon. Friends. However, it necessarily means that those people who now pay a top rate of 40 per cent. are not on the bread line. The whole emphasis of our reforms is that we should stand on our own feet, yet the clause proposes that those already on private health schemes should be helped a little more. Of course, the point could be made that medical treatment is much more expensive for the elderly, but that is a problem that we all face. When the top rate of tax is only 40 per cent., it appears unnecessary to give extra assistance to people joining private health schemes.
      Private health schemes are already making considerable progress. I have already mentioned the increased number of people covered by them. I understand that some company schemes already look after their pensioners and that more are proposing to do so, as I believe any good company scheme would aim to do. I wonder why it is necessary to have such an additional incentive when there is a natural trend towards the growth of private health insurance schemes and of company schemes assuming a responsibility for their pensioners.
      I would be more prepared to accept the clause if it gave tax relief only to the elderly. Has my right hon. Friend not noticed how many elderly people now retiring have pretty good occupational pension schemes and are very well covered? Of course, by the time they retire, they have probably paid off their mortgage and they could, perhaps, do with a tax concession for their extra needs as elderly people. I can see some force in that argument. However, I cannot see any force in the argument that their children, who may be high salary earners and paying tax at only 40 per cent, should be given maximum tax relief on something that they could well afford to pay for their parents in any event. We must think carefully before we say that it is necessary to give to such a large extent a partial relief for private health schemes to those who could well afford to and jolly well should look after their parents.
      Mr. D. N. Campbell-Savours: Will the hon. Gentleman press the Financial Secretary about the deadweight of those already in schemes, who, on the implementation of the Finance Bill, will be beneficiaries? Will the hon. Gentleman press the Financial Secretary to give the proportion of the relief and the projected relief that will be given to such people?
      Sir Peter Hordern: I have no doubt that my right hon. Friend will wish to deal with that point, because I have already raised it with him, but I am grateful to the hon. Gentleman.
      I understand that the Government have claimed that the relief would help to ease the problems in the National Health Service. Indeed, my right hon. Friend the Financial Secretary made the point on the Second Reading of the Finance Bill that there would be savings—to some extent to a geared degree—because a small relief would allow significantly less expenditure to be made in the National Health Service. I accept my right hon. Friend's point and

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      the spirit in which he made it. However, if that is correct, we should be thinking of carrying that principle a little further, not just by means of a tax concession, but, if it is as good as that, we should be paying people the marginal rate to opt out of the Health Service. I do not believe that that is a good idea and nor is it a good argument.
      If we are concerned about finding the best way to help the National Health Service, I suggest to my right hon. Friend that we ask my right hon. and learned Friend the Secretary of State for Health. I have noticed that my right hon and learned Friend the Secretary of State for Health must come to the House every year—sometimes in the face of great difficulties, which are sometimes caused by my right hon. and hon. Friends—to justify increases in health charges. I have always supported my right hon. and learned Friend when he comes to the House because the poorest are exempt from those charges. The aim of the charges is to raise some direct payment from those who can afford to pay. However, the essence of this relief is that, while there should be some small relief for those who do not pay tax, the largest element of relief will go to those on very high earnings. Therefore, we have a complete contrast between the position of my right hon. and learned Friend the Secretary of State for Health when he comes to the House concerning health charges and that of the proposal in the clause, which will give substantial relief to those who can well afford to make the arrangements in any event.
      If the aim of the clause is to ease the burden on the National Health Service, it would be best left to my right hon. and learned Friend the Secretary of State for Health to decide how the money might be used. We must also bear in mind that tax concessions make people think that there is some virtue in opting out of the National Health Service, which is a view I do not share. If we persist in that view, it is the surest way to cause people to regard the Health Service as some form of second-rate service. I do not believe that that is wise or accurate.
      If it is right to have tax concessions for health, there is a short distance to go before we shall be asked for tax concessions for education in the form, for example, of private education vouchers. That is something with which I would not agree. Unfortunately, we have got ourselves on a slippery slope and I for one am not prepared to go down it.
      Mr. Peter L. Pike: The hon. Member for Horsham (Sir P. Hordern) made some valid points in his contribution to this important debate. Although I do not intend to follow his line, he pursued well thought-out and important principles. At the end of his speech he said that he feared that the moves in the Finance Bill, and especially in clause 51, could set a dangerous precedent. I know that when the Minister speaks later in the debate he will deny that and say that the Government have no intention of moving in that direction in regard to health, education or similar areas. However, many people know that once the Government have started to move in a certain direction, subsequent years see further moves. Therefore, it is absolutely right that we should be concerned and somewhat fearful about the direction in which the Government intend to go.
      I support amendment No. 5, moved by my hon. Friend the Member for Dunfermline, East (Mr. Brown), which delays the implementation of the provisions of this clause until 1993. The clear intention is that the provisions will be
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      the subject of debate in a general election and that after being elected the Labour Government will say that we do not believe that that is the direction that we should take.
      In the first part of my speech I shall say why I disagree with the principles of the clause and I shall then turn my attention to the ways in which the money that we are discussing could be more widely used by the Government in the intervening three years from 1990 to 1993.
      The Minister referred to £40 million, but he cannot be absolutely certain about the figure. Although I understand the reasons why he canot be certain, that makes this provision even more of an open cheque or an open encouragement. Some sons and daughters will, of course, take out health insurance for their elderly parents or for other people in their family, but not knowing exactly what figure we are talking about is dangerous.
      If this proposal goes through and the Government do not heed the warnings, I accept that the right principle on which the provision should be carried out is on a MIRAS-type basis, which would benefit those pensioners who do not pay tax. However, I remind the Chief Secretary that the MIRAS principle was an extension of the option mortgage scheme that was originally introduced by the 1964–66 Labour Government to extend the tax concession that was then not available to people not paying tax to those at the lower end of the income scale. That welcome move ultimately developed into the MIRAS scheme as it now exists. If the provisions have to go through, such an underlying principle would be absolutely essential.
      The clause would give assistance to those people who least need it. Ultimately, it is the pensioners or the relatives of the pensioners with the highest incomes, especially those paying tax at the highest rate, who will get the biggest benefit from this proposal. I am always amazed that the, Government continually give any money or cash that is available to those who least need it and to the people who have most to start with. As evidence of that one need only look back to 1979, to the Government's first Finance Bill after the general election, when they reduced the standard rate of tax by only a small amount, but in effect gave a substantial amount to the people paying the higher rates of taxation. That trend has been evident in every Budget since.
      Upratings of pensions now take place in April—at almost exactly the same time as the Government produce their Budget. As that is so close to the Budget, people on benefit and at the poorest end of the income scale are justified in relating what is being given in the Budget to those who least need help to what they are receiving in their benefit increases.
      5.45 pm
      If the Minister really wanted to introduce a provision to help the elderly, instead of going ahead with this proposal, which is of benefit to some but not to those who most need it, it would be far better to give something to those 200,000 pensioners who received no increase in the April uprating and to the 300,000 who received only a partial increase. Some of the pensioners at the bottom of the scale will not receive any increase in their pension in next year's uprating. The Chief Secretary fully understands the reason for that. The pensioners who were on supplementary benefit before the major changes in the social security system in April 1988 then went on to income support and were not entitled to as much in income support as they had

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      received under supplementary benefit because the new system is far meaner and far tighter. Many people lost a lot and, although certain people were given protected payments, those protected payments were to be eroded against any future increase. Therefore, next April for another year in succession, some people will not receive any increase in the amount of money that they receive from the state in their benefit payments. They will realise that at the same time the Government are giving at least £40 million in possible tax concessions to those people who are able to take out private health insurance. I am sure that people on benefit will feel that that is not right.
      I do not intend to go too far along this line because on Thursday of this week we shall be having a major debate on the National Health Service review. I am sure that many, if not most, of our pensioners would prefer to see the Government move in a much more positive direction over the National Health Service instead of adopting the nonsensical and destructive approach of the review of which many people are rightly fearful. I know that hon. Members of all parties have been inundated with mail on this subject, especially from elderly people who fear an erosion of the Health Service.
      One thing about which such people will be most fearful is that provisions to encourage private health treatment represent a split and a division in the Health Service and give a better opportunity for treatment to those who are able to pay. The hon. Member for Horsham said that he did not believe that the Health Service was second-rate. I know that he fully believes that and that he will be one of those who will fight to ensure that the National Health Service always maintains its status in terms of the type of treatment that it can give.
      However, we must recognise that, whatever the clause provides in the future, the majority of elderly people will still depend on the National Health Service for their treatment and they are rightly concerned about what is happening. To some degree, this proposal, running along-side the National Health Service review as it does, proves our point that the Government are determined to break up and to destroy the principles of a National Health Service that is based on need and not the ability to pay. That is worrying.
      The district health authority in my area is proposing to close yet another hospital. It will be the third in the past three years. Hartley hospital and Victoria hospital have already been closed and the district health authority is now proposing to close Bank Hall hospital for the care of the elderly. Although the health authority has not published its consultation document, admissions have already been stopped. That means that by the time the consultation exercise, which must be carried out, is completed, we will be faced with a fait accompli. Yet even now we have insufficient accommodation for elderly people in the National Health Service within our district. We know the detail of the consultation and we know that it will show that in future there will be less provision for the elderly and for those who need to remain in hospital care. The proposal will not help.
      I have raised the following matter in Health Service debates and it ties in with the question of taxation. I wonder why people who pay for private treatment, who are not necessarily covered by insurance, often have to pay
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      in cash. It is extremely common in my constituency for patients to be asked to pay cash. That is not because the people running the private hospitals think that the chance of the patient's recovery is not good and that, therefore, they will not otherwise receive the money. The reason is that the full amount paid is not shown and, therefore, tax is not paid on it. The Minister might well look at that issue rather than pursue the policies outlined in clause 51.
      One of my constituents recently paid £1,000 cash for a cataract operation. He went against his principles but his wife was elderly and he was more worried about her and, in the end, he paid cash. He was asked to go to the hospital with not a cheque or banker's draft but cash.
      The proposal is wrong. It will help only those who, in the main, can secure private treatment. If people have the money and the choice is there, it is their right to exercise that choice. However, it is not for the Government to give a tax concession to encourage more and more people to do so. They should put that money into the Health Service and tell the Secretary of State for Health that money is available to be spent in that way.
      If the Government are successful in carrying the clause, they will give away at least £40 million. If they are prepared to do that, I can make some useful suggestions as to how they could put the money to better use. They could put it into the Health Service, which is important. The problem in the Health Service is not how it is run but the lack of resources, which could be made available. If the water industry were to remain in the public sector, the problem would be not who owned it, but the lack of money made available by a Government who have the resources to invest in it. They cannot keep talking about what happened pre-1979 because they have been in office for 10 years and must accept responsibility for what has happened.
      My own authority receives less money for housing from the Government than it did prior to 1979. Therefore, the improvements to old council houses have slowed down and, despite the community refurbishment schemes and the extra little schemes of which the Government are so fond, the authority still receives considerably less money from the Government. One programme that we designed to improve the pre-war council houses should be coming to completion now, but it will have to run for at least another 10 years because the resources are not available.
      The Opposition tend to get abused by people who say that our main concern is public sector housing. That is not true. We are just as concerned about problems in the private sector. There as a bonanza of grants up to 1983 but, having won the election in October, the Government announced a cutback. Money could be made available for grants and the improvement of older housing in certain parts of the country. When people apply for repair and improvement grants, they never obtain them because the councils never receive the cash from the Government. I know that my hon. Friend the Member for Halifax (Mrs. Mahon) has experienced the same difficulty with older terraced houses on her side of the Pennines. Such houses could be improved because they are basically good houses, yet councils are unable to provide the money for doing so.
      My own local authority has had to target just three areas—Leyland road, Hart street and Eliza street—because it could not deal with the borough as a whole. It had to stop repair and improvement grant applications in March 1984. Therefore, it will never be able to meet the demands of a mass of people who are in the pipeline. The

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      Government have thrown an extra £200,000 into private sector area renewal schemes, but that is chickenfeed. If the amendment were to succeed, part of the £40 million could go towards housing problems. The HIP allocation in Burnley was £2,250,000 for 1989–90 and it has received a few additional payments on top of that, but the projected programme needed an expenditure of £11,075,000 to deal with the problems.
      Lancashire county council faces a problem with schools. We have chased the Government year after year. They could give a bigger allocation for schools in 1990 because they are prepared to give this tax concession from April next year. Instead of giving that tax concession, they could give the money to local authorities to spend on schools. I have had to battle for several years for schools to be included in the programme because the council has received only a fraction of money that it has sought from the Government to bring the schools up to standard. The standard of school building affects the education of the children.
      Even though some schools are now included in the programme, problems still exist at Walshaw high school, Briercliffe primary school, Casterton Avenue primary school, Rosehill infants school, Gawthorpe high school, which needs an additional science laboratory, and Barden high school, which needs a home economics unit. It would be far better for the Government to spend money on those schools than to assist pensioners who do not really need help and who should be able to receive the treatment that they need. We want them to have the finest treatment from the NHS because they are entitled to that.
      We are still awaiting the Government's response on the important issue of community care—
      The Temporary Chairman: Order. What the hon. Gentleman says is immensely interesting, but it is important that he confines his remarks to the amendment that we are debating.
      Mr. Pike: I was explaining how the Government could use the £40 million if they were prepared to accept the amendment. I am always helpful to the Government and would not wish them to be embarrassed if the amendment were carried tonight and they did not know what to do with the £40 million next year. I have been extremely helpful to them in that respect. However, I recognise and understand the constraints upon us. I could have made the same argument about the roads in Lancashire.
      I shall return to the principle involved in the clause, which is leading us in the wrong direction. We want our elderly people to receive care under the National Health Service. We therefore believe that the Government should not give tax incentives to take people out of the NHS. They want to do that only because they are determined to cut the NHS and want to put a foot in the door and drag it down. That is the basic and fundamental reason why this proposal is contained within the Finance Bill.
      Clause 51 is not designed to help the pensioners, although a few will benefit. It is designed to make another chip in the Health Service because the Government recognise that the one last remnant that shows that Socialism can work in this country that they have failed to destroy is the National Health Service. I hope that when it comes to the vote, hon. Members will recognise that the clause is nonsensical and that the amendment should be carried. The clause should be deferred for three years.
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      If the Government believe that they are right, let them test their opinion at the next general election. Let the people decide. The proposal was not in the Government's manifesto. If they receive a mandate at the next election—I am increasingly convinced that they will not—let there then implement the proposal. The Government should accept the amendment and put the idea to the people of the country.
      6 pm
      Mr. Quentin Davies: The matters before us are of considerable importance. I listened with great attention to the arguments of the hon. Member for Dunfermline, East (Mr. Brown), but I was conscious of growing surprise. He is an experienced Member and passes in some quarters as an expert in financial and fiscal matters. The drift of his argument seemed to be that there was complete equivalence between a Government allocation and a tax relief—between a Government decision to increase its Budget in favour of a particular purpose or actively and laying aside a sum that would be forgone in the form of a tax relief to benefit the same activity or purpose.
      The hon. Member for Dunfermline, East appeared wholly ignorant of—or pretended to be ignorant of—one of the cardinal principles of fiscal policy: the gearing effect of tax relief. If the Government decide to increase the allocation to a particular activity by £1 million, the incremental resources directed to that activity are £1 million. If the Government decide to forgo £1 million in tax revenue by establishing a tax relief for that activity, and if the taxpayers who benefit from that relief pay tax at a marginal rate of, say, 40 per cent., the incremental resources that will flow to that activity will be £2,500,000—a substantial difference.
      Dr. Moonie: The money will be paid to the insurance companies, not to the individuals. It has nothing to do with a tax allowance—although people will pay less out of their own pockets, so the hon. Gentleman's argument is spurious. Government money through the MIRAS scheme will be paid directly to insurance companies such as BUPA, not to the people concerned, so it does come out of taxation.
      Mr. Davies: That makes no difference. The point is that a tax relief is established which creates an inducement for people to spend more money than they otherwise would on purchasing particular goods or services. The particular mechanism whereby they purchase, and the intermediaries who may be involved in the purchase, do not matter. They are entirely immaterial to the economic or fiscal arguments involved. So I must reject the hon. Gentleman's intervention.
      I return to the important question whether the hon. Member for Dunfermline, East was as ignorant as he pretended to be of the cardinal principle of fiscal policy to which I have referred—the gearing effect of tax reliefs. We discovered the answer to that question during his speech. My hon. Friend the Member for Gillingham (Mr. Couchman) reminded the hon. Gentleman of this principle. Then the hon. Member for Dunfermline, East made another extraordinary statement. He said that in this case the administrative costs of BUPA or PPP or the. Provident or other health insurers will more than take up the additional resources that the gearing effect will

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      generate. So the gearing effect will be discounted or compensated for or negated by the high level of administrative costs.
      Again, I ask myself whether the hon. Gentleman really believed what he was saying, and whether he expected the rest of the Committee to believe it. Does he really believe that the administrative costs of BUPA and PPP are 40 per cent. of their turnover? We had an interesting opportunity to discover the answer later in the hon. Gentleman's speech, when he mentioned the administrative costs that these health insurers generate—10 per cent. So the hon. Gentleman did not believe a word of his own argument.
      I greatly resent and regret what the hon. Gentleman offered us today; it was an exercise in deliberately cynical disingenuousness and predetermined humbug.
      The story does no stop there. The contradictions in the hon. Gentleman's speech went on and on. I am not in a position to say with certainty whether they were deliberately disingenuous or involuntary. Being an easygoing sort of person, well prepared to give colleagues the benefit of the doubt, I am perfectly prepared to believe that these other contradictions, unlike the one to which I have referred, were merely the reflection of weakness of reasoning or confusion of mind—
      Ms. Diane Abbott rose—
      Mr. Dennis Turner rose—
      Mr. Davies: Perhaps it might be useful to consider one or two of the other glaring contradictions in the speech of the hon. Member for Dunfermline, East. He complained at one point that the tax offset that the Government propose in clause 51 was not capped. A few moments later he complained that this tax relief would generate no material savings for the NHS. He cannot possibly have it both ways. By definition, to the extent to which the utilisation of this tax relief is capped, the benefits and savings to the NHS will be reduced.
      The hon. Gentleman complained vigorously about the deadweight. If this tax relief were not used to any great extent by new people subscribing to private health insurance, the deadweight cost would remain a relatively high, possibly a very high, proportion of the total cost of the relief that the Government are proposing. However, to the extent that the take-up is greater, the deadweight costs will fall as a proportion until they may become minimal, negligible or altogether non-existent. So the argument is untenable.
      I am flabbergasted that an experienced Member such as the hon. Member for Dunfermline, East should attempt to argue in the course of the same speech that a relief should be capped and then complain about the deadweight cost.
      The hon. Gentleman has done a great disservice to the Committee, and I am sorry that such an unfortunate example of a parliamentary speech should have begun the Labour party's contribution to its proceedings. I hope that the hon. Gentleman will think long and hard about his speech this afternoon and decide in the interests of the dignity and credibility of his party—if in no higher interests—that he will at least display slightly more respect for his audience inside the House and beyond it as the
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      deliberations of the Committee continue. If he feels in need of it, he should without delay arrange to take a crash course in elementary logic.
      Mr. Denzil Davies: I need not comment on the speech of the hon. Member for Stamford and Spalding (Mr. Davies) because, frankly, most of my hon. Friends—and I suspect many of his hon. Friends—found it incomprehensible.
      Amendment No. 5, which we are discussing, is linked with No. 8, which I tabled. Mine is a technical amendment on which I will not dwell. However, I must, for the record, point out that it should read:
      "Clause 51, page 39, line 45, leave out from 'claim' to 'deducted' in line 46 and insert 'set off against its profits liable to tax on the amount'"
      rather than just "tax the amount". It was obviously a printer's error.
      My hon. Friends and I, and some Conservative Members, oppose the clause for two reasons. First, we do not accept that this is the best way to spend £40 million, or whatever the sum might be. We appreciate that it is a figure that the Treasury or Inland Revenue has plucked out of the air. It is difficult to estimate sums of this kind because the ultimate figure will depend on the demand and what happens after 1990. Indeed, it could end up being £200 million. As the hon. Member for Horsham (Sir P. Hordern) said, if £40 million is available, it had better come out of the DHSS rather than out of the Inland Revenue and the Treasury for the NHS.
      On Saturday I was in my local advice centre, as many other hon. Members must have been in theirs. I discovered that the waiting time to see a consultant dermatologist in the Llanelli area is two years from the time of referral by a local GP. That is due to the shortage of appointments of consultants in dermatology, which is to some extent a Cinderella service.
      My hon. Friend the Member for Dunfermline, East (Mr. Brown) said that £40 million would pay for 1,000 consultants. In my constituency I need just one extra consultant in dermatology. That would be of far more benefit to the NHS in my constituency than the amount of money that will come back to those of my constituents who can afford to take up this so-called tax relief.
      My constituents must wait three years for a hip replacement operation. In other words, in my constituency I need two more orthopaedic surgeons. That would be of more benefit to the NHS and the elderly in my area than what is proposed in the clause.
      We know why the Government are taking this action. The Prime Minister wants a two-tier health service. She does not believe in the NHS. She could not get her way entirely with the changes that she wanted to make, so she rushed off to the tax system. I admit that Governments of both parties have sometimes rushed to the tax system when they have been unable to solve their problems and get their way by some other means.
      The second reason why Labour Members, and some Conservative Members, especially the hon. Member for Horsham, oppose the clause is that we believe that the tax system should not be used for what was once described as social engineering. We used to hear speeches from Conservative Members—not from the present Chief Secretary; he was not around in those days—including the present Chancellor of the Exchequer and the Financial Secretary, about the evils of social engineering. Of course, they were in opposition at the time. Certainly

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      Governments are not supposed to use the tax system to advance a philosophy or ideology. The tax system is supposed to be neutral and to raise money for the Government. Governments must achieve their aims by other means—by changing structures rather than by using the tax system.
      Conservative Administrations have been involved in more social engineering than have most Labour Governments since the war. I well remember the enterprise zone concept introduced by the former Chancellor of the Exchequer, now the Foreign Secretary. That was a bit of social engineering, and it has not worked. The Chancellor needs to encourage savings, and social engineering includes, for example, PEP schemes and unit trusts and the tax reliefs that are given to people to invest in schemes of that kind.
      There are many other examples of social engineering. We are debating one such piece of social engineering now; the Government are trying to achieve something in which they believe ideologically and they are trying to achieve it through the tax system.
      6.15 pm
      What the Government propose is all dressed up as a contract of insurance, but as I read the legislation, if an elderly person wishes to have one operation—my hon. Friend the Member for Burnley (Mr. Pike) referred to a cataract operation—presumably it will be necessary for that person simply to take a sum of money to an insurance company, buy what is called a premium and then get the operation that is required.
      That is a veneer. The Government are giving tax relief to buy services with money, although they are talking about health or medical insurance. It seems that it will be possible to make one payment, for one premium, and exchange that for a contract, and presumably after the one operation has been achieved, that will be the end of that piece of medical insurance. That is my understanding of how it will work. That is buying services and getting tax relief for the purchase. That is the wrong way to use the tax system. It is also dangerous because it could lead to all manner of other pieces of social engineering.
      The hon. Member for Horsham made the fair point that, with a top tax rate of 40 per cent. and a basic rate of 25 per cent., there is no justification for tax breaks or tax reliefs. The Government take much of their radical Right philosophy from the United States, from the Reagan followers. In fairness to President Reagan, he took a Bill through Congress under which he reduced the top rates of tax and wiped out most of the tax breaks and tax allowances.
      The Prime Minister likes to follow the American system, but she cannot bring herself not to use the tax system for ideological purposes. The logic of her philosophy would have been not to have tax reliefs. Then the Government could have reduced the top tax rates to 40 per cent. That would have made sense. Mortgage interest relief is another example of that. To try to have it both ways—a lower rate of tax plus the reliefs that they propose, which go to those who pay at the top rates—represents an unfair, unjust and unnecessary use of the tax system.
      In connection with the somewhat esoteric amendment that I tabled, which has not been selected, I understand that most organisations such as BUPA and PPP are taxed as provident associations. I gather that they are not
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      charities. I do not know whether they pay tax, and perhaps the Minister will say if they do. I appreciate that he is not permitted to go to the Inland Revenue and examine people's tax affairs, but presumably organisations such as BUPA publish accounts.
      My amendment was designed to ask whether, if such organisations do not pay tax, they can still claim back the tax which has been deducted in the MIRAS scheme. Presumably they can. That is unusual, since if they have no profits on which they pay tax, they are like charities; they simply claim a subsidy from the Treasury. So it is nothing but a subsidy.
      My understanding of the tax system is that normally the Revenue pays tax back—if, of course, one is paying tax on one's profits. But if one is not paying tax on one's profits, there is no real case in tax logic to reclaim the tax. If I am right, then this is a clear and straight subsidy, and there is no justification for it.
      The clause goes on to deal with qualifying individuals and insurance companies. My reading of the provision leads me to believe that a company doing business in the EEC would be a qualifying insurer for this purpose. The company does not even have to be resident in the United Kingdom, or even to trade here. Does that mean that, if an elderly person takes out a contract of insurance with a German medical insurance company, the Inland Revenue will send a chunk of money to Germany? Presumably the same would apply to a company in France or in any other EEC country.
      May we be told whether that is the case and, if so, why it is necessary? It appears to have been necessary to include a provision to apply the provision not only to insurers in Britain but to insurers in the EEC as well. I would not have thought that there was a Community directive to that effect. Do I gather from the look of amusement on the Minister's face that there is such a directive? Are the hands of the Government tied in the matter? In other words, we are not talking about £40 million going to the British health system, as Ministers like to call it; it seems that much of it will go across the exchanges to other countries.
      It is extraordinary that a business operating in Europe, paying no tax in Britain, should receive a tax subvention from the Inland Revenue. I take it that that is what will happen from the way in which the Financial Secretary was half-smiling in anticipation of that question.
      Clause 51 is unnecessary. It will hinder, not help, the NHS. A little of the £40 million that is available could be spent on providing more consultants. That would not be inflationary. It would not hurt the balance of payments more than it is hurt already. It would not lead to a surge of imports. As the hon. Member for Horsham said, that money should be spent on the NHS through the DSS, the Welsh Office and the Scottish Office, so that once again we can make our Health Service the best in the world.
      Mr. Matthew Carrington: Tax breaks are always hard to justify. It is difficult to introduce more tax concessions into our tax system and to maintain the essential elements of a fair, just and equitable taxation system. However, the introduction of tax relief on medical insurance is a small change. It can be justified because it removes an injustice presently experienced by those who, on retirement, find themselves cast out of insurance schemes because they can no longer afford them. This is a minor measure, but it rights a wrong. Like other tax concesssions, it brings greater justice into our fiscal system.

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      As private medical insurance expands, more and more people receive the benefit of such insurance from their companies. Often, they are not highly paid and so will not benefit from a large pension. When such people leave their employment they find that the benefits that went with it cease. Those who once enjoyed the benefits of private medical insurance will find those benefits withdrawn.
      Ms. Abbott: The hon. Gentleman talks about private health insurance being withdrawn from the over-60s as though that were an act of God. Is it not the case that private insurers withdraw such insurance from elderly people because there are no profits to be made from it? If the hon. Gentleman is worried about justice, he should be writing to those private insurers. Is it not the nature of a system run for profit that the elderly will not be covered?
      Mr. Carrington: The elderly frequently are covered. That is exactly the point.
      Ms. Abbott: One per cent.
      Mr. Carrington: Private insurance companies will frequently continue cover provided payments are made by the person insured. As long as the cover is continuous, elderly people find it perfectly possible to obtain cover and are encouraged to do so by many private insurance companies. The problem comes when there is a break in that cover because, at the point of retirement, they can no longer afford to pay the premium. That is the problem that clause 51 is trying to address.
      Another good justification for giving such a tax concession is that it seeks to ensure that private medical insurers can afford to address the problem of the elderly. They do that by building up the number of elderly people with medical insurance to a point at which it becomes self-sustaining because the number of people benefiting from it justifies the effort being made by the insurance companies to provide cover.
      Clause 51 is justifiable and highly beneficial. The amount of money involved is small; £40 million is about one tenth of 1 per cent. of the annual expenditure on the Health Service and is only a small proportion of Britain's annual health budget. Consequently, the cost to the Exchequer is small compared with the total amount paid out by taxpayers in providing medical cover for the nation.
      An additional benefit is that this measure will encourage the growth of private medical care. People will realise that by joining such schemes or by encouraging their employers to join such schemes, they will be able to obtain cover throughout their lives and not simply up to retirement. As more people are encouraged to join such schemes so more employers will be encouraged to provide them.
      The growth of private medical cover is beneficial to the whole of society, not just to those who obtain it. It is good for a number of reasons. To start with, it provides choice. People who wish to have such choice, or who work for employers who wish to provide them with that choice, will be able to say where they want to obtain their medical treatment. That introduces competition which benefits the NHS as well as the private sector.
      Many changes in the NHS in the attitude towards patients and the way in which they benefit from hotel-type services—we see this particularly in London hospitals—
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      are a reflection of the much higher quality of care provided by private hospitals. Our NHS hospitals have recognised that they must match that service in order to meet the requirements of the patients.
      Mr. Turner: Will the hon. Gentleman answer one simple question? How would the hon. Gentleman's analysis about patient choice, freedom and opportunity affect a person knocked down in the road tonight or a person suffering from a more common ailment such as appendicitis? Would not such people simply ask to be taken to a hospital to have their needs attended to? Is not all this an aberration—
      The Temporary Chairman: Order. The hon. Gentleman's intervention is becoming a little lengthy.
      Mr. Turner: I shall bring it to a conclusion, Mr. Hogg. Thank you for your forbearance.
      Should we not be working to build a Health Service for all, irrespective of means, so that all have the choice of good medicine and service wherever they are?
      Mr. Carrington: The competition created by the private medical sector has been important in changing what happens to such a person when he or she arrives at hospital. In the past, hospital waiting areas were dingy and over-crowded, not, to use the current jargon of the Health Service, user-friendly.
      6.30 pm
      What is now happening is that our major hospitals in London are changing the patient areas inside the hospitals to bring them more up to the standards regarded as usual in the private sector. That has been a reaction to the standards which have been shown to be perfectly possible and affordable within the private sector. It just took the extra effort and the private competition for the National Health Service to do the same. I believe that competition does nothing but good for the whole level of health care across the country and that the encouragement of that standard of health care is to everybody's advantage.
      One point that is very important and seems to get lost quite frequently in the discussion of private medical insurance is that private medical insurance cannot, is not, and never will be in the foreseeable future a substitute for the National Health Service. It does not pretend to be and, particularly for the elderly, never could be. I am not advocating that it should be and this clause does not propose that it should be. What happens now with medical cover is that it takes out the smaller operations and minor, more routine treatments which otherwise would clog up the NHS. It does not attempt to cover long-term care and should not do so. It is an add-on to the NHS; it does not pretend to be a substitute for it.
      Ms. Abbott: Is it not the case that in practice private medicine is a terrible drain on the Health Service? Is it not the case that the private sector trains no nurses and that every nurse who works in the private sector has cost our Health Service £10,000?
      Mr. Carrington: Private medical care is often a great benefit to the National Health Service in making it possible for the NHS to go to private hospitals and relieve the load with which it would not otherwise be able to cope. That is extremely beneficial. For the elderly to be able to get the minor treatment they need and to pay for it themselves and not be a drain on the NHS is to everyone's benefit. It frees

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      up the care which the Health Service can then give to other elderly people who are not able to cover themselves with private insurance.
      I believe that the only criticism which could be made of this clause and which in certain circumstances could be justified is that £40 million will be taken away from the NHS and be used to subsidise the tax relief which this clause would create. The sum of £40 million is very small in terms of the total NHS budget. I do not believe that it is measurable in the amounts which the Government are increasingly giving to the NHS. The Government are increasing the sums given to the NHS by very large amounts. Indeed, there is every evidence to show that this £40 million is in addition to Health Service resources rather than a substitution or a change in the resources from one point in health care to another.
      I therefore welcome the very beneficial effects which I believe this clause will have. It will be a major help to certain sectors of the elderly population. It will have a very limited detrimental effect on the overall tax position, which I believe is well justified by the major benefits to the health care of the elderly and of the country generally.
      Dr. Moonie: I listened with great attention and interest to the speeches of the hon. Members for Stamford and Spalding (Mr. Davies) and for Fulham (Mr. Carrington) but had some difficulty in getting the gist of what they were trying to say. I can only conclude that we have here as accomplished a pair of bankers as we have ever had in the House. My granny, Mr. Hogg, as you will well appreciate, being from a similar part of the world, used to have a pair of wally dugs on her mantelpiece. I have heard more sense talked by the dugs than I have heard from that pair this afternoon.
      The Chief Secretary, in reply to a remark by me from a sendentary position on the subject of the dock labour scheme, was somewhat dismissive of the analogy which I raised. I put it to the Committee, however, that it is appropriate because, while he was engaged in telling us with hand on heart that his party had no intention whatsoever of extending this tax relief, I attempted to draw his attention to the fact that two weeks before the Dock Work Bill, abolition of, was introduced, his hon. Friends were similarly standing with hand on heart saying that they had no intention of bringing that in either. I merely use that to show just how much faith we can put in the Minister's word on this occasion.
      I hope this evening to show that this proposal is utterly irrelevant to the health needs of the British people. The National Association of Health Authorities yesterday identified a cumulative underfunding of the NHS totalling £3 billion. We should remember that that association is not exactly stuffed with socialists, if the representatives that I have met are anything to go by. So, at a time when the Health Service is underfunded by £3 billion—and this is said by the Government's friends, not its enemies—the Government have shown us where their real priorities lie by promoting private medicine, not to supplement the NHS—I will come to some detailed arguments on that in a moment—not to ease its burden, but to begin a dubious crusade to change its nature and force more and more people to go to the private sector for a larger percentage of their health care and to leave the NHS to function, as they would like it to, as a safety net for those who cannot afford the insurance premiums for private care, those who in the main are old. I can assure hon. Members that there will not
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      be too many pensioners in my constituency rushing to take advantage of the tax relief on health insurance premiums after this scheme is brought in, assuming, of course, that I fail to persuade enough hon. Gentlemen to change their minds on the matter.
      Those who are old, those who suffer from chronic illness and those who are locked in poverty are the ones who will be left, under the Government's ultimate ideas, to be dealt with by the NHS. There will be those with mental illness or mental handicap—groups which are not covered by private medical insurance, those who have been so shabbily treated over the past 10 years and, I accept, before that—those for whom our Health Service remains a national scandal and an international disgrace.
      On the surface, as the Minister said, this is a small fiscal measure, costing, by the Government's admittedly curious accounting system, a mere £40 million in its first full year. It is a modest measure, we are asked to believe by the Chief Secretary to the Treasury, aimed at answering the pitiful cries for assistance that have come to his ears from those who have had their cover paid for them by their employers over the past few years and 'who will lose it when they become pensioners.
      On the contrary, this is not a minor change: it is a significant precedent that is being set by the Treasury, which has been forced into an ideological dilemma by the Prime Minister, who has decided for her own reasons to listen to the voice of self-interest, of special pleading, rather than that of reason. This, make no mistake, is merely the first step in the process. It will not be long before we are told that it is essential to extend it to other age groups and then to other areas of the economy, as the hon. Member for Beaconsfield (Mr. Smith) has mentioned in the past; to the area, possibly, of education. Before long, by the same logic, they may find the company car just as essential to an elderly person. Mobility is a tremendous component of health, as anybody involved in preventive medicine must know. It is just as logical to extend tax relief to the company car for the person who leaves employment as to extend it to medical care.
      Ms. Abbott: On a point of order, Mr. Chairman. I understand that there has just been a High Court ruling that the Government's leaflet on the poll tax is illegal. Would that be of relevance to this debate?
      The Temporary Chairman: I doubt whether the hon. Lady could find a way of bringing that in order, although as this afternoon has progressed it seems to me that many things have been in order that might otherwise have been out of order.
      Mr. George Howarth: Further to that point of order, Mr. Hogg. Would it be inappropriate at this point to suggest that perhaps the Minister responsible should come to the House and make a statement, because clearly it is a matter of great national importance and the world outside will be very keen to hear how the Government will explain this to the country?
      The Temporary Chairman: Whether or not the Minister comes to the Dispatch Box to make a statement is not a matter for me or for the Committee.
      Dr. Moonie: I am sure you will agree, Mr. Hogg, that that intervention was most interesting, and I see great consternation on the faces of Conservative Members.

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      Philosophically, I am implacably opposed to private medical care, but I would not deny another person's right to make his own decision as to whether it is right or wrong.
      I oppose the scheme on sound economic grounds as well. Public health care cannot be matched in the private sector at the same price. It is an asset that is the envy of every other civilised nation. It is effective and economical, and is equitable in its treatment of people. It requires only an adequate level of resources, but that has been repeatedly denied to it by the Government, despite the Government's protestations and cook-book figures. Those resources have been denied at a time when the Treasury's coffers are bursting with money that could be spent to alleviate some of the country's relatively minor problems.
      There are many good reasons why right hon. and hon. Members in all parts of the Committee should oppose the scheme. I disagree strongly with tax allowances or perks. I believe that the tax system should be essentially neutral, and Treasury Ministers probably do as well. However, in the case of mortgage tax relief, right hon. and hon. Members in all parts of the Committee acknowledge that it involves a degree of political expediency as well as moral rectitude in ensuring that people are treated equitably. It is perhaps not as easy to do away with some longstanding privileges as it is with others. In the past, the Chancellor of the Excheque has made statements broadly supporting the view that the tax system should be neutral, and they had my support. In any event, I see no reason for introducing a new form of tax saving that will be paid for out of the public purse.
      The new scheme must be regarded as a retrograde step. If the Chancellor stays in his job long enough, he too will come to regret it. The deadweight cost alone will be far higher than the Treasury's forecast. Money paid by other people into the Consolidated Fund will be used directly to subsidise the cost of providing a minority with private medical insurance. That subsidy will benefit people who cannot, by any stretch of the imagination, be deemed to be in need of such care.
      The scheme is also inequitable. It benefits a minority—not just pensioners, but whoever pays the premium. That can be any relative or friend who can prove that they have stumped up the money. That is unfair in the extreme. The vast majority of pensioners cannot afford private health care, though many of them pay taxes and will be subsidising those who will be enjoying the scheme's benefits. Very few pensioners in my own constituency are likely to enjoy any benefit.
      One point that has escaped the attention of most people who, unlike myself, do not have the good fortune to work in health care is that the subsidy will be paid to people who are healthy. Private medical insurance by definition—particularly in respect of the elderly—is not held by those who are sick. If one is sick, one is excluded from joining such schemes. As one of the benefits of private health care is that there is no waiting time, one can assume that the deadweight cost will be borne entirely by people who are either healthy or whose past ailments have already been treated, with very few exceptions. I do not see why a health care benefit should be paid to people who are healthy. Money should on the contrary be spent on those requiring health services and whose medical needs have already been identified.
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      I do not believe either that the scheme makes good business sense. The subsidy will go straight into the companies' profits. As was said by my hon. Friend the Member for Dunfermline, East (Mr. Brown), the money will not be passed on for health care. More importantly, private sector costs are rapidly escalating as the companies involved attempt to maintain their margins. Such schemes are largely concentrated in London and the south-east, so it is hardly surprising that their costs are rising at the rate that they are. The subsidy will serve to distort the health care market and accelerate the rising premium levels—in much the same way that mortgage tax relief helped to increase house prices over the past decade.
      I also oppose the measure on the ground of efficiency. It is targeted at the healthy and at the better off, and is generally wasteful. The same amount of money spent within the National Health Service would bring three times as much benefit. That has been clearly shown in my own constituency. Under a Government's initiative, money was allocated to reduce waiting lists. The health board, quite rightly, tested the market and investigated what the private sector could offer, but it discovered that by rearranging its own wards and theatres three times as many operations could be undertaken there than in a comparable private hospital. That analogy holds good in any other part of the country.
      The proposal is senseless. I do not know whether it was dreamt up by the Prime Minister or by some idiot savant in one of her so-called think tanks. Like the rest of the Government's health care proposals, the scheme is born out of expediency and self-interest, and it is not based on any proper analysis of health needs. Therefore, I hope that right hon. and hon. Members in all parts of the Committee will reject it when the Opposition amendment is voted on later tonight.
      Mr. Tim Smith: Although I disagree with much of what has been said from the Opposition Benches this afternoon, I must tell my right hon. Friend the Financial Secretary to the Treasury that I have reservations about the scheme, but largely for tax reasons. Before explaining them, I shall touch on one or two details of the proposed relief. I refer first to a sentence in an Inland Revenue press release stating:
      "Contracts paying a de minimis, sum of up to £5 a night for small out-of-pocket expenses—for example to cover newspapers and flowers—will, however, qualify."
      A cash payment of £35 per week cannot in my view be justified. I know that it is de minimis, but when people enter either a National Health Service or private hospital they make savings in their outgoings. To allow them £5 cash per night out of their policy is wrong.
      My second point has been touched on by one or two other hon. Members—that there is no cap on the relief. The table of costs of direct tax allowances and reliefs in the public expenditure White Paper reveals the £30,000 limit on mortgage tax relief, which we all know about, as well as the £4,800 limit on personal equity plans. There is also a £40,000 limit on the business expansion scheme. However, the private medical care scheme imposes no upper limit on the amount of premium qualifying for relief. Although the contract must fulfil certain conditions, there is no upper limit to the premium it involves, and perhaps there ought to be.
      I am concerned also about the deadweight cost. The Red Book states that the cost for 1990–91 of £40 million

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      assumes an increase in take-up as a result of the new relief of 10 per cent. That means, of course, that 90 per cent. of the new relief will go to people already paying these premiums, and the whole of that cost, I am sure my hon. Friend will accept, is a deadweight cost. That is a worrying factor because it means that the number of people it is estimated will be able to benefit from the relief is 5 per cent. of the 12 million pensioners in this country, which is 600,000 people. Of those 600,000 people, just 10 per cent., or 60,000, will be taking up this benefit because of the tax relief available. That is exactly half a per cent. of all pensioners.
      Mr. Max Madden: The hon. Gentleman is making a series of very important points and he has indicated the people who may well benefit from this medical tax relief. Am I right in suspecting that the Prime Minister could be one of those people?
      Mr. Smith: The Prime Minister has been mentioned in the course of this debate, but I am not in a position to comment on that.
      The next thing I am concerned about is the fact that the Treasury has decided that it is appropriate to give the tax relief not just at the standard rate but at the higher rate. There was misunderstanding earlier between my right hon. Friend the Chief Secretary and the hon. Member for Dunfermline, East (Mr. Brown) because two separate pieces of information were given which did not appear to be capable of reconciliation. I think they are. The first is that half of the £40 million will go to higher rate taxpayers. That is a matter of concern because it means that £20 million will go to higher rate taxpayers, so by definition £7·5 million will simply be relief at the higher rate, which is a disproportionately large amount. My right hon. Friend also said that 80 per cent. of the beneficiaries will be standard rate taxpayers. The reason for the apparent discrepancy between those two facts must be that a lot of the people who will pay the premiums are not retired people at all but the children of retired people, many of whom will be higher rate taxpayers.
      When it comes to whether this relief is justified in terms of taxation policy, we have to look at what is right in principle and I think we should start with the general proposition that we should have, as far as possible, a tax-neutral system and as few tax reliefs as possible. Of course, my right hon. Friend the Chancellor of the Exchequer has done away with quite a few, for example, life assurance premium relief and minor personal reliefs, but we still have quite a large number of tax reliefs, which are listed in the public expenditure White Paper, and they can be justified on two grounds: first of all, on the grounds of encouraging savings and home ownership, and secondly, on the grounds of encouraging enterprise and trying to make the economy more efficient, for example, profit-related pay and the business expansion scheme.
      However, this proposed relief does not fit into either of those categories and is difficult to justify in terms of the existing arrangements. The record of the Treasury has not been just to do away with some reliefs, but to cap some others. The £30,000 limit on mortgage interest relief has been with us for some time, so that the real value of it has fallen substantially in recent years, and in this Budget we have seen for the first time a cap on occupational pensions,
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      such as the new qualifying limit for salaries, which will be £60,000. If one chooses to have a pension based on a higher salary than that, one will not get any tax relief.
      I support that. It is right that there should be a cap on these tax reliefs, because they are all in effect public expenditure and have to be paid for by other taxpayers. That is why they are listed in a table in the public expenditure White Paper, which I have already referred to. However, this relief, like the mortgage interest relief at source relief, is public expenditure in another way in that it also goes to non-taxpayers. It is more than just a tax relief because it cannot be described in that way for non-taxpayers, who have no tax liability. It is a straight subsidy to them, and we should be clear that that is what it is.
      Looking at the other arguments used to support this, my right hon. Friend argued that it is a difficult time for people when they retire, because, when in employment, the employer provides this benefit for them. They do not pay for it themselves; it is a benefit in kind, part of their remuneration package, and the company gets tax relief against corporation tax. On the other hand, of course, they get taxed on it themselves; they have to pay income tax on the benefit in kind if they are paid more than £8,500 a year, which of course a majority are. The argument goes on that when they retire they are suddenly faced with paying the premium themselves, when they have a lower income because they have gone to their retirement pension.
      That rather misses the point of why we allow this as a tax deductible cost for employers in the first place. Why do employers pay these premiums? They do it for their own self-interest so that if a member of the work force becomes ill they want to minimise the time he is away from work, and one way of doing that is to pay private health premiums to ensure treatment is received as quickly as possible so that the employee can return to work. That is perfectly reasonable, but we should not kid ourselves about why they do it. Different considerations apply when someone retires, and it is very difficult to justify providing this relief, for the reasons I have already mentioned.
      I am sorry to disagree with my right hon. Friend, who said at the end of his speech that it would provide old people with peace of mind. It will never do that because it cannot be comprehensive. It is impossible to insure against every possible contingency and liability which arise in old age. In particular, of course, a lot of old people need long-term care, which is where the high costs arise to the Health Service, and there is no way one can insure against the costs of long-term care. One can insure against short-term illness, which is fine as far as it goes, because it will relieve the Health Service. There is no doubt about that. I am very much in favour of encouraging people as far as possible to use private health care. In the Second Reading debate I said that I have never understood why the Opposition complain that the Prime Minister does not use the NHS, because everybody who does not use it relieves it and there are more resources available for others. I have no difficulty about that. The same is true of the education service.
      What we are debating this evening is whether it is right to give those people who make that choice tax relief. I am in favour of freedom of choice, but should we give tax relief to encourage people to make this decision? On the basis of what I have heard, I do not think that the case has been proved.
      Mr. Charles Kennedy: I very much agree with the concluding sentiments of the hon. Member for Beaconsfield (Mr. Smith). Clearly the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) was not listening to him, because many of her colleagues concurred with him as well. We are not against choice in society; even the policy reviews of today are not against choice in society. We are against choice for the more privileged being tax-funded at the direct expense of the poorer in society. That is the nub of the offensiveness of these proposals, and the subsidy that the Government are giving. My hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) was quite correct in what he said when he moved an earlier amendment. In his opening speech, the Chief Secretary seemed to express surprise at the depth of feeling this subject aroused, and he said that he could not understand why there was so much concern and controversy, because, after all, it affected only "a limited number of elderly people", so it should be particularly contentious.
      We have heard that there is £40 million at stake—a significant sum of money. I do not agree with the hon. Member for Fulham (Mr. Carrington), who seemed to feel that, because it was a minuscule part of the total NHS budget, we should become particularly exercised over it. There is a significant amount of money at stake, but there is also a principle at stake. That principle—this follows directly from what was said by the hon. Member for Beaconsfield—is that the tax system should not be used, wherever possible, to subsidise or enhance choice for the minority at the expense of the majority.
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      The Secretary of State for Health and Social Security, as he was at the time, said in a BBC television interview for the programme "On the Record" that he was not considering such tax subsidies, because that was what the NHS was there for. Since the splitting of his Department into the Department of Health and the Department of Social Security, that Secretary of State has been confined largely to social security issues, while the new Secretary of State for Health has introduced a White Paper. I do not think that the proposal in the Budget can now be seen in isolation from other proposals in that White Paper.
      While the Budget is willing to fly in the face of the Chancellor's previous statements and his track record on tax reform and tax balance, the White Paper is silent on the subject of resources. There is a striking contrast between the two Departments. One is bringing forward major structural proposals for National Health Service reform, yet has nothing to say about the resources needed to improve the quality of health care. The other—the Treasury—has produced a proposal that, by its own admission, will not put a penny into the National Health Service directly, but will merely provide a subsidy for those who wish to opt for treatment outside the National Health Service. That seems a most curious, convoluted and contradictory set of proposals. Choice is all very well, but that kind of subsidised choice strikes me as offensive when the National Health Service is not receiving the funding that it deserves.
      It is pretty clear from the White Paper where the Government are going. They are making no secret of it: the Prime Minister has said many times in the past that she is in favour of a more American-style "go-getting" society. She does not appear to give even a passing thought to
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      those who may have nowhere to go and nothing to get, and that is never more obvious than in health care policy. As a Labour Member has already pointed out, many patients are languishing on waiting lists for referrals to consultants. The proper standard of service is not being delivered. One hopes that adequate health care would be the priority of any Government, whatever their political complexion; sadly, it is not the priority of this Government.
      It is clear that this type of subsidy will lead us further down the road to private health care. If people are fortunate enough to have a disposable income that allows them sufficient consumer choice to pay the insurance premiums for private health care if they so wish, good luck to them; I am not making an egalitarian point. How they spend their money is up to them. They should not, however, be able to indulge that choice, created by their security and affluence, at the direct expense of others who enjoy no such benefits and have not the opportunity to go one better at the taxpayers' expense. Sad to say, that fundamental principle is now lost on the Government.
      Several points have been made about administration. I note that amendment No. 21 endeavours to limit relief to the basic level of income tax. Let me make it clear that I do not believe that such a concession should be introduced in the first place, but if we are to believe reports, the Treasury was never in favour of the subsidy and it appeared in the Budget only as a result of insistence from No. 10 Downing street. If it is to retain any self-respect, the Treasury should go for the option in the amendment rather than for the entirely offensive option of allowing relief at the higher rate of 40 per cent. Limiting it to the basic rate would by no means ameliorate the difficulty that the Government are creating but it would at least save the additional financial and administrative machinery that would be required to collect the top-rate contributions.
      It seems bizarre, indeed perverse, that—judging by the figures that have been given in earlier speeches—undue additional resources will have to be devoted within the Treasury or Inland Revenue to top-rate taxpayers who are already receiving an enhancement to the buying power of their income that is well in excess of anything that they deserve. If the Government are so interested in prudence, efficiency and the correct use of public money and Civil Service time, I would expect them to find some attractions in amendment No. 21.
      The Chief Secretary was at pains to stress the help that the measure would provide for the elderly, and how much it would assist social policy. That view does not seem to be shared by Age Concern or the Royal College of Nursing, both of which have extensive and professional experience. The RCN points to the glaring inequality of the Government's social policy:
      "Put simply, clauses 51–54 of the Finance Bill fail the test as a social policy, just as they are fatally flawed as a fiscal policy."
      That, surely, must be the epitaph on the tombstone of this part of the Bill, and the Treasury, the Government and indeed the Conservative party should be ashamed of it.
      Mr. Tony Worthington: In preparation for this debate I have been reflecting on the way in which society has treated two people in their mid-seventies.
      On Friday I was visited in my surgery by a man whom I guessed to be about that age. He complained that he had been to a doctor and had been diagnosed as having psoriasis, an unpleasant complaint. He had been

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      prescribed an ointment, which was gradually dealing with the psoriasis but was destroying his clothing: his underclothes and other clothes were marked in a way that made them unfit to wear. He asked what could be done. Could he obtain cash with which to replace the clothing that had been spoilt by the medical treatment that he had received?
      I thought about it and said, "I cannot think of anything because under the Department of Social Security changes last year special payments have been withdrawn. You might get a loan from the social fund but probably you would not, because you are poor and it would be impossible for you to pay it back." The man needed probably £50 to £100 for basic requirements.
      I contrast him with another person in his mid-70s, say, a Mr. Denis Thatcher. According to BUPA, the cost of comprehensive cover for a married couple, where the older of the couple is over 70, would be cut from £1,102 to £661. I assume that Mr. Denis Thatcher pays tax at the rate of 40p in the £. That may be a foolish assumption, because there are enough concessions nowadays for a skilled operator like Mr. Thatcher to make sure that he pays only at the 25 per cent. level. At the 40 per cent. level, that would he a direct gift—
      Mr. Couchman: On a point of order, Sir Anthony. Is it in order for the hon. Gentleman to make disparaging comments about someone who has no possibility of answering the comments? I think that it is a most disgraceful slander.
      The Temporary Chairman (Sir Anthony Meyer): It is a point for debate; it is not out of order.
      Mr. Worthington: I would be delighted to give Mr. Thatcher the opportunity to reply and to debate the issue with me. It is a fair point to make that the Government are offering a choice about how to spend money. If someone in the position of Mr. Thatcher were to take out a BUPA comprehensive scheme, he would get a direct gift of £440.
      It is a question of priorities. Have the Government got the priorities right? Will the people who will receive the gifts from the taxation system merit those gifts? Should they have priority? There has been reference in the debate to the fact that the Chancellor unfortunately has turned away from his attempt when he became Chancellor to turn taxation and the receipt of income into a level playing field, so that all kinds of income were treated fairly and equally. I would have supported him in that attempt, but that is not what we are getting now.
      The proposal will lead to a direct gift from the rest of us to a group of people to enable them to take out private medical insurance after the age of 60. As has been said many times, there is an element of dishonesty about costing it at £40 million. That might be the cost in the first year, but it would be more honest to say that the total cost will be much greater. Many hon. Members have pointed out the sheer unfairness of the proposal. Someone on a higher rate of taxation could get the higher rate of tax relief on his income because he supported the health insurance of a relative or someone who was not even a relative—
      Mr. Jeremy Hanley: Is the hon. Gentleman trying to say that those who choose to take out health insurance are by definition rich and those who choose to use the National Health Service exclusively, without taking out health insurance, are by definition
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      poor? Surely some very wealthy people choose not to take out health insurance, thus taking pressure off the Health Service, and some people with very little money choose to use their money for things such as private education or private health care because they believe that that is best for them and their family. I hope that the hon. Gentleman is not making the mistake of assuming that all people in that category are rich.
      7.15 pm
      Mr. Worthington: That was a strange intervention, which would have been better made in a speech by the hon. Gentleman. There seems to be a shortage of speakers on the Government side. His intervention was not related to anything that I was saying. I invite the hon. Gentleman to make his own speech in his own time.
      What is inadequate and wrong about the proposal is that we are subsidising through taxation the private health sector. We are subsidising a relatively inefficient system compared with the National Health Service. It does not matter which yardstick one takes when considering health care in this country or in the rest of the world; it costs more to provide services through the private sector than through the National Health Service.
      Under the private system, human health care is moved into the world of garage and motor mechanics. What I mean by that is that if one is unfortunate enough to have an accident with the car, the immortal words spoken by the mechanic are, "Is it an insurance job?" If it is, that means that it will be bonanza day for the owner because of the treatment that his car will receive, and it will be bonanza day for the garage because of what it can charge. That is the experience with private health insurance as well. Wherever private health insurance has been introduced, up go the costs. One gets unnecessary medicine, which is administratively very expensive. That is what we are being asked to subsidise through the Government's proposal.
      Going back to the idea of a level playing field, when rates of income tax were heavily progressive—I would argue, probably against my party, that they were too severely progressive and that it was counter-productive—there was a case for people seeking to receve part of their income in perks. It might be argued that, in the past, the British entrepreneur or executive was underpaid compared with his European equivalent. He may have been underpaid, but he was certainly over-perked. It is difficult to find any other European country where there are so many ways in which people can receive tax relief with the agreement of the Government.
      I thought that the Government had recognised that tax perks were counter-productive and that all income should be treated equally. I was applauding the fact that the MIRAS scheme was being limited to £30,000 and was being phased out, although that was unspoken. One welcomes that and the fact that the tax perk of the company car is being made less valuable.
      A great many other perks remain. I am grateful to the Monks Partnership Ltd. for its work on board and senior management remuneration which pointed out that, among senior managers, 84 per cent. get free medical insurance, virtually all are given life assurance policies, 53 per cent. have their home telephone costs fully or partly met by their companies and 54 per cent. receive free newspapers—that is the level it gets down to. According to The Economist, 30

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      per cent. have their golf club fees paid. We should be getting away from that style of paying people. We should have fairness for everyone.
      The extension of a tax break on health insurance premiums for people over 60 is a step in the wrong direction. However one looks at it, it is a non-selective benefit. The poll tax is a rigorous means test; housing benefit is a rigorous means test; but tax relief on private health insurance involves no means test whatsoever. It is simply an attempt by the Government to make private health insurance and private medicine certain to succeed, even if people do not want it, because the conditions under which it operates are equivalent to living in a tax haven.
      We should resist that. It has been said many times during the debate, and it should be challenged, that it is indisputably true that, if someone uses the private health system, they are taking a burden off the National Health Service. I challenge that. I ask Conservative Members to produce the research that shows that the impact of private health care in Britain is taking a burden off the National Health Service.
      If I am sitting in front of a consultant, and he says, "I can operate on you next week in the private sector, but I can only operate on you in six months' or nine months' time in the National Health Service," I want to know how that is relieving the National Health Service. I want to know how that doctor can efficiently keep his private health list down so that he can operate next week without shunting someone down his National Health Service list. How does he achieve that? How does he move someone up his private medical list without moving someone else down his National Health Service list? I want to know how that can be achieved, given that there are a finite number of doctors and consultants. What is the consequence of such a doctor giving priority to his private list? It is frequently alleged that the work is then done by the senior registrars or junior doctors in that specialty.
      Mr. Couchman: From my experience as a former chairman of a health authority, perhaps the hon. Gentleman would like to know that many consultants are not contracted to perform full time for the National Health Service. Many of them work for the National Health Service for seven elevenths, eight elevenths or nine elevenths of a week. The rest of the time is their own to operate within the private sector. If someone has a hip operation in the private sector, where would he have that operation if he were not able to take advantage of the private sector? The work would be thrown straight back on to the National Health Service. I accept that he might be way down the list and that he has paid for the privilege of going up the list. That may be ideologically unhappy for Opposition Members, but ultimately every operation performed in the private sector means one operation fewer to be provided in a National Health Service hospital.
      Mr. Worthington: There are 168 hours in a week, and that number cannot be increased. A doctor can operate for a limited number of hours. The more that that doctor operates in the private sector, the fewer operations he can perform in the National Health Service.
      We have a great deal more to do. Unsupported assertions are being made by hon. Members on both sides of the House. Opposition Members have asserted that the
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      private health service is parasitical on the National Health Service, while Conservative Members have made unsupported assertions such as the one we have just heard. The necessary research has not been done to bear out my belief that when we support the private health system through such legislation as we are discussing today we further damage the National Health Service because no one will pay or should pay for that which is not worth paying for. People pay for the private health system because they get treated more quickly and are dealt with more rapidly.
      Ms. Abbott: I have never had the pleasure or the privilege of chairing a health authority, but I am the daughter of a nurse. It is all very well for Conservative Members to talk about consultants, but it takes more than consultants to provide treatment for a patient. Private health care leeches off the work of nurses and ancillary workers.
      Mr. Hanley: We have provided 60,000 more in the National Health Service.
      Ms. Abbott: Perhaps the hon. Gentleman should stand up and intervene. It takes more than consultants to provide treatment. It is the opinion of ordinary Health Service workers—not the chairs of health authorities, but nurses, ancillary workers, cleaners and other staff—that private health care does not provide choice but is a drain on the National Health Service resources, as the private sector trains no one.
      Mr. Worthington: It is unfortunate that hon. Members on both sides of the House have tended to concentrate on those at the top of the system without taking into account the contributions that are made lower down.
      In conclusion, I emphasise, that private health care flourishes in Britain because it is treated as a lame-duck industry that needs Government assistance in order to thrive. Inevitably it will thrive because it will be in the interest of the Government to create a two-tier system in which people are constantly forced to decide whether the National Health Service is providing an adequate service. If they decide it is not, they will invest in private medicine. I believe that, through provisions such as clause 51, the Government are driving more and more people to choose private medicine by accentuating the differences between private health care and the National Health Service.
      Mr. Ian Gow: Before I come to the main topic of the debate, I should like to ask my right hon. Friend the Financial Secretary two questions. I had not realised until the debate began that those who are not liable to income tax could claim tax relief. But if I understand clause 51 aright, even those who are not subject to income tax may deduct from their contribution to BUPA or PPP an amount equivalent to 25 per cent. of the premium. Clause 51(6)(b) states that the recipient of that contribution to a private scheme may
      "recover from the Board an amount equal to the amount deducted."
      Supposing that an elderly person, who is not liable for tax, who makes a contribution to a private insurance scheme, deducts 25 per cent. of the premium and the company to which that premium is paid is obliged to regard it as if the premium had been paid in full, can that private company recover from the Inland Revenue the amount of tax, even though no tax is payable by the contributor?

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      My second point is this. If I understood my right hon. Friend the Chief Secretary correctly, he said, when responding to an earlier observation, that clauses 51 to 54 had been the subject of discussion with the European Commission. That came as a great surprise to me. When my right hon. Friend the Financial Secretary replies to the debate, will he tell us in what circumstances we had to obtain clearance from Brussels for clauses 51 to 54? I am pleased that my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) is in his place on the Treasury Bench. He and I have a common view about the legitimacy of interventions from Brussels in affairs that we believe should be the responsibility of this Committee and this House. It would be of considerable concern to me if we had to obtain the sanction of either the bureaucrats or the Commission in Brussels for the proposals.
      7.30 pm
      My right hon. Friend the Chancellor, in his six years in office, has often proclaimed that part of his purpose is to move towards fiscal neutrality and he has already taken several steps in that direction, which I applaud. He has sought, for example, to diminish the perk of the company car, to which the hon. Member for Clydebank and Milngavie (Mr. Worthington) referred. My right hon. Friend has removed tax relief on new life insurance premiums. Clause 51 is not consistent with his previously declared policy. As someone who approves of fiscal neutrality and who believes that it should be up to the individual to decide how to use her or his money, without pressure from the Government or taxation privileges, I am somewhat anxious that we seem to be going in a direction opposite to that in previous Budgets.
      Even my right hon. Friend the Chancellor has not said that he wants to achieve perfect fiscal neutrality. He has persevered with tax relief on mortgage interest and with a tax arrangement that allows people to make contributions to retirement pensions and to deduct those contributions when calculating taxable income. Even my right hon. Friend has not said that complete fiscal neutrality is his goal, so the Committee must examine the extent to which the conferring of an additional element of discrimination in favour of particular taxpayers is justified. Clearly, my right hon. Friend the Chancellor and my right hon. Friend the Financial Secretary believe that there are exceptional circumstances, as they believe there are in the cases of providing pensions and purchasing a house.
      I want to devote the rest of my speech to the legitimacy of the claim about exceptional factors. This afternoon we are giving legislative effect to the announcement made in "Working for Patients". We have known about it since January, when the White Paper was presented to Parliament. The White Paper, which we are to debate on Thursday, is clear about the proposal. It says:
      "There is already a growing partnership between the NHS and the independent health sector."
      I pause just to add that I welcome that growing partnership warmly and to note that even the Labour party, and even the late Aneurin Bevan, when he set up the Health Service, did not seek to eliminate the private sector of medicine. Even those who sit on the Opposition Front Bench do not suggest that the remodelled Labour party is about to submit to the British people a policy for the abolition of private medicine. I am sure that I carry
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      Opposition Members with me when I speak in praise of the independent sector of medicine and say that I welcome the growing partnership.
      Page 68 of the White Paper says:
      "In 1986, contractual arrangements between the NHS and the independent sector led to over 26,000 in-patient treatments".
      Again, we are talking about lightening the burden on the Health Service and that is a particular example. That point was also made by my hon. Friend the Member for Gillingham (Mr. Couchman), who said that without doubt the existence of independent hospitals lightened the burden on the National Health Service.
      I do not doubt that independent hospitals lighten the burden, so I can understand why my right hon. Friend the Financial Secretary said on Second Reading of the Finance Bill:
      "If we can generate just a little additional demand for health insurance, that will relieve pressure on the National Health Service".—[Official Report, 25 April 1989; Vol. 151, c. 893.]
      I agree with my right hon. Friend. We need to take such steps as we can to diminish the pressure on the National Health Service.
      I want to read one final quotation. In our White Paper in January, we said that the purpose of what is now clause 51—which was then only a glint in my right hon. Friend's eye—was to
      "encourage both the provision of medical insurance for older people and its take-up".
      That purpose is laudable. When clause 51 comes into operation on April 1 1990, there will be an increase in the take-up of private medical insurance. A consequence of that will be to diminish the pressures on the National Health Service and there is not a single member of the Committee who would not agree that there are severe pressures on the service.
      Despite my serious reservation about the departure from fiscal neutrality—a laudable goal that I share with my right hon. Friend the Chancellor—the proposal is justified in the exceptional circumstances in which we find ourselves and I shall support it in the Lobby tonight.
      Mr. Thomas Graham: The clause is an act of political bribery. The Government are trying to gain a few extra votes at the expense of all those who are queueing up for operations. I find it incredible that they should have to play this game and introduce a scheme that will allow the rich—and perhaps those who are not so rich—between £40 million and £100 million more in tax concessions. That £100 million will end up in the coffers of the Government's friends in the private medical world—folk who will probably spend it on champagne when it could have been spent on medicine if it had gone to the National Health Service. The proposal is obscene, coming as it does after a massive lobby by people all over the country in defence of the National Health Service. It is incredible that we should be talking about a £40 million subsidy to people who do not need it and who can already choose private health insurance, when many people rely entirely on the National Health Service.
      I recently met representatives of the Inverclyde Crossroads care attendants scheme. It would break hon. Members' hearts to meet the carers whom I met, who know that that scheme is to come to an end. The £40 million that the present measure will cost could have been used to save the country hundreds of millions of pounds.

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      Throughout Scotland care attendant schemes are having to come to an end because of lack of money. I know one old woman of 64 who is looking after her mother of 84. It broke my heart to see that woman cry. She knows that the care attendant scheme is to end in September because of insufficient funds. At the moment, carers come in two or three days a week to give that woman respite and allow her to take some time out from constantly looking after her mum. She does not want her mother to be in hospital or away from her; she wants to look after her until the day she dies.
      The £40 million that the clause will cost could have spared that woman the trauma that she faces when the scheme ends in September. She does not know whether she will have to put her mother into care—which, after all, will cost the Government a vast sum. We are not talking about chickenfeed. If the scheme comes to an end, it will cost the Government about £3 million a year. What does it cost to run the scheme? It costs £1,000 a week—a miserable sum. For the sake of that sum, the Government are condemning nearly 60 families to a thoroughly troublesome time. They do not know where to turn now that the Government have turned their backs on them. The Government have not turned their backs on the rich—on those who can afford private schemes. The people whom I met cannot afford private schemes. They need the Government's help.
      The Government have a golden opportunity. They can stop this madness. They can reduce the waiting lists. They can ensure that the Inverclyde Crossroads care scheme can continue by releasing money to it and to similar schemes that benefit the country and its elderly people.
      I recently met carers in Linwood—another working class town where not many people can afford to belong to BUPA schemes. These folk rely on the National Health Service. Hundreds of people in that community are waiting for all kinds of operations—operations that cost much less in the National Health Service than they would in the private sector. A hip replacement operation costs £2,390 in the National Health Service, whereas in the private sector it can cost anything between £2,900 and £6,000. The Government are always talking about the free market and saying, "If it is cheaper, we must go for it." I do not know, for the life of me, why the Government should want to continue to subsidise private medicine and private health insurance when the National Health Service can do the operations more cheaply. It would be far better if the Government put the £100 million—perhaps £200 million—that the clause will cost into the National Health Service, where it would be much more productive. The Health Service could then conduct the operations which no private hospital can perform more cheaply.
      This week I shall be meeting doctors in my constituency who are horrified about the Government's proposals. They are horrified that such measures can be introduced when they have been denuded of funds and when they despair of seeing their patients get proper medical treatment. Those operations are not operations that can be performed in months and years ahead; the patients desperately need them now.
      I recently met a woman who is in absolute agony with her arthritis. She is waiting for a hip replacement, and she told me that she is walking in her dreams. She cannot relax or rest. The Government know that there are many men
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      and women lying ill whose illnesses could be cured were it not for lack of money. The Government boast that they are putting money into the Health Service, yet they are squandering £40 million to £200 million in the clause. They can do something about the problem. They can ensure that we get the additional money that we need so desperately in areas such as mine by stopping this nonsense.
      Schemes like the Crossroads schemes are worth their weight in gold. They give relief to families and job satisfaction to the paid carers who work in them. They give voluntary organisations a commitment to provide a service that they know is needed. The satisfaction that carers enjoy when they are granted respite has to be seen to be believed. I sincerely hope that the Government will listen to the cry for help for the Crossroads schemes in Scotland. I plead with them to listen to the cries of those who organise those schemes, which save the country millions of pounds and cost only £1,000 a week to support.
      The clause is an act of barbaric piracy at the expense of the poor and the needy. The Government are wrong and they should renounce their mad commitment to supporting private insurance. All over the country people are waiting for help from the Government. At present, they can get help only if they have a few bob and can afford to join a private insurance scheme.
      The Government can no longer turn their backs. Last week, they saw the result at the Vale of Glamorgan. I assure them that from now on at every by-election the electorate will return someone who opposes the Government's policies on the National Health Service—a needless policy that will result in more suffering. Men and women rely on their elected representatives to ensure that they get a fair deal.
      It is time that the Government gave a fair deal to the ordinary men and women who have no money and who rely on state benefit and support and on the fairness of politicians. It is time that they promised to deliver a fair and just system so that those people can live in peace and comfort without the ills and pains that a properly funded National Health Service can alleviate. The Minister should listen to my plea and ensure that the Ardgowan hospice and others like it are given money to care for cancer patients. He should recognise that the carers are invaluable. The Government should forget their private insurance scheme and ensure that the carers receive decent help and support so that people can remain living in the community. They do not want to die in hospital.
      Miss Ann Widdecombe: There has been some discussion as to whether the private sector assists or destroys the National Health Service. Obviously, many of the assumptions about whether clause 51 is an advantage or not will depend on that basic premise. I have heard nothing from the Opposition that has convinced me that the private sector does not act materially to the assistance of the National Health Service. I do not speak, as did my hon. Friend the Member for Gillingham (Mr. Couchman), as a former chairman of a health authority, but merely as an ordinary Member of Parliament. I was grateful a year ago for the private hospital in my area, when our National Health Service hospital, through a technical and not a financial problem, had to cease certain operations for many months. However, those operations were able to be carried out in the private sector. That is the sort of healthy alternative that I believe should be on offer and for which I for one am grateful.

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      The hon. Member for Clydebank and Milngavie (Mr. Worthington) asserted that, if consultants split their time between the private sector and the National Health Service, that would not assist the NHS, but would simply assist queue jumping. He asserted that an increased number of people would not be treated on the National Health Service. I submit that that is based on what is the rather naive assumption that, if one did not let the consultants split their time, they would spend their 100 hours a week entirely in the National Health Service and would not rather choose to spend their time entirely in the private sector, thus denying the National Health Service much expertise.
      I believe that the private sector assists the National Health Service and health provision in this country. It must be encouraged through all reasonable and equitable means. If one starts with that assumption and the assumption that alternatives to the National Health Service are an enhancing factor of the nation's health, surely it makes sense to say that a section of the population that puts an increasingly large burden on the Health Service should, especially, be assisted to choose to be treated elsewhere if they wish. I find it difficult to believe that my hon. Friend the Member for Beaconsfield (Mr. Smith) could say, on the one hand, that he thought that the private sector enhanced health provision, but, on the other, that that was no reason for encouraging a section of the population that did not use it quite extensively to take it up. That struck me as an inconsistent attitude.
      We know that there is an increasing number of elderly in the population and that they are becoming an increasing proportion of the population, but it is the tax-paying public who maintain the NHS. We, therefore, have a choice. We either encourage all the elderly to use the NHS exclusively and thus bear, through the tax system, the full cost of their treatment, or we say that, if they wish to have an alternative, they should be assisted. We would then bear the tax burden only of the relief which we are offering.
      I believe that there is more to it than that. There is the social position and the dignity of old-age pensioners. Last year I welcomed what I saw as a major reforming Budget in the way that it gave recognition to the social and independent position of women. This year, too, we have had a reforming Budget, which gives much greater attention to the social position of pensioners.
      Much has been made by the Opposition of the fact that tax relief is being allowed under clause 51 at the higher rate as well as at the basic rate of 30 per cent. However, if younger people are buying a house and pay a higher rate of tax, they receive the higher rate tax relief. If younger people buy a private pension or an occupational pension plan and they pay the higher rate of tax, they will receive the higher tax relief. Why, therefore, have the Opposition got it in for the old folk by saying that they should not receive higher tax relief?
      Mr. Beith: The amendment is in my name. The hon. Lady must surely know that in the case of mortgage interest tax relief, too, I have consistently argued that that tax relief should be limited to the basic rate.
      Miss Widdecombe: Therefore, I must withdraw my statement that the hon. Member for Berwick-upon-Tweed (Mr. Beith) has it in for the old folks. He obviously has it in for everybody. I think we must just proceed to disagree on that basis.
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      My hon. Friend the Member for Beaconsfield said that he did not understand that peace of mind was necessarily a major consideration, because there was no way that medical insurance could be comprehensive. It would not. of course, provide the long-term care which much of the NHS provides. That obviously must be so, but we should consider the fact that the elderly are the least able to take full advantage of many NHS facilities.
      The elderly are liable to suffer from long waiting lists more than anyone else, because the advances in medical science which flow from the Government's considerable investment in the NHS provide surgical and medical advantages which disproportionately benefit the elderly—for example, the new simplified cataract operation and hip replacements. It means, too, that, when those advances are made, there is immediately a concomitant rise in waiting lists. Because the elderly are those who consume those services most, they are the ones who suffer from the rise in waiting lists. Whereas, if it is a rise in waiting lists for ordinary operations, an individual can choose quite reasonably whether to wait for a long time locally or to go elsewhere in the region, or perhaps elsewhere in the country, that choice is not so readily available to the elderly, who find transport difficult, who will not have young spouses to drive them and who will be less willing to be separated from their families. They need, therefore, a much increased choice, as they are less able to exercise the choice that already exists in the NHS for the rest of us.
      Why should the elderly suffer a lowering of standards on retirement? It does not matter whether they have been paying for private medical insurance through their employers and that that is a benefit to the employers as well as to them. What matters is that they have had that advantage. When they retire and become dependent on a pension and thus a reduced income, the cost of medical insurance can have a major effect on the decision as to whether to keep up subscriptions. If we want the elderly to have the same opportunities and the same freedom of choice as the rest of the population, we must make it fairly simple for them to keep the benefits which they have always enjoyed. Because clause 51 states clearly that, whenever that benefit was acquired, the tax relief will be implemented after pensionable age, that will enable a pensioner to keep up a benefit that he has always enjoyed. It is really having it in for the old folks to say that they can enjoy a benefit right up to retirement age, but after that it will be made difficult for them.
      I believe that this is a social as well as a financial piece of legislation. It will enhance health care provision. It will also improve the position of pensioners and bring them into equity with younger people who already benefit from a substantial range of reliefs.
      Mr. Win Griffiths: I rise in support of the amendment tabled in the name of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) that deals with the specific question of when, if ever, the scheme should be implemented. It appears that we have a fundamental and significant new tax relief that is, in fact, operating in the opposite direction to which the Government have previously indicated they intend to go. Only a minority of Conservative Members who have spoken have given their wholehearted support to tax relief on medical insurance. The hon. Members for Horsham (Sir P. Hordern), for Beaconsfield (Mr. Smith), and for Eastbourne (Mr. Gow) all expressed reservations about the scheme, although it

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      appears that at least one of them—the hon. Member for Eastbourne—will persuade himself to vote with the Government.
      The questions that have been raised relate to the fundamental issue of whether we are taking pressure off the Health Service by extending the number of people using private medical facilities. The answer must unequivocally be no. We are talking about the amount of money that the Government are making available to support the provision of medical services in the United Kingdom and whether the Government can provide more and better medical services by spending that money in the Health Service or by spending it in the private sector. On any set of comparisons, the only conclusion that any reasonable person could reach is that it is far more cost-effective and cost-efficient for the Government to direct their resources towards the National Health Service.
      8 pm
      Let us look at some of the factors involved. It currently costs an average of £415 to provide hospital care for a person between the ages of 65 and 74. Under one of the medical plans—a PPP plan—the amount of relief for the taxpayer paying tax at 40 per cent. will be a subsidy of £589 from the Government. For full medical cover for a person between the ages of 70 and 74, the Government will provide a £645 subsidy. That money could be better spent providing further medical treatment for pensioners within the Health Service.
      Let us compare the occupancy rate of beds in the National Health Service with that in the private sector. There is an occupancy rate in the private sector of between 35 and 50 per cent. The Nuffield hospitals have an average of 61 per cent. and are the leaders in that area. However, in the National Health Service the occupancy rate averages 81 per cent. In Wales the figure is not quite that high. In 1978 the daily occupancy rate was 78·3 per cent. and in 1988 it was 77·3 per cent. Clearly, the National Health Service provides much more treatment in its beds than the private sector.
      If the Government wish to target their resources effectively and efficiently it would be far better to provide resources direct to the Health Service than to provide relief for the relatively small number of people who would take advantage of such schemes. Indeed, the Government think that that number is likely to remain relatively small.
      Several examples of specific costs of different types of surgery have already been given this evening. The cost of a tonsillectomy in the Health Service is about £360; in the private sector it is anything from £600 to £1,400. Obviously, somebody is making a great deal of money out of those costings. A hysterectomy costs £1,200 in the National Health Service but between £2,000 and £3,600 in the private sector. Where is it better to have that operation carried out? The answer is clearly, in the National Health Service. That is why the Government's scheme is so objectionable. It is an inefficient use of the resources that are provided for medical care in the United Kingdom.
      We must also consider who benefits and whether the scheme is likely to be extended to more and more people over the age of 60. We have heard the argument about the numbers of people who will receive standard rate relief and higher tax relief, but a far larger group of people do not pay income tax and could receive the 25 per cent. subsidy
      784
      if they paid for private health care. However, let us consider the cost of the health care that is available to them through private medical insurance. Even with the tax relief, BUPA has calculated that a couple, one of whom is over 70, who receive the standard rate of relief would still have to pay £17 per week. Can any Conservative Member imagine a pensioner couple, who are not liable for income tax but who have dangled before them the carrot of a 25 per cent. subsidy on medical insurance, being able to afford £17 per week? Of course, they could opt for the budget plan and would then have to pay only £10 per week, but that offers a much smaller range of treatment. A single person over 61 would have to pay £16 per week for the best range of treatments offered by BUPA or £10 per week if he or she opted for the lesser range of treatments.
      However, we must remember that the majority of people over 60 would not be able to take advantage of any of the medical insurance schemes in any case. I am referring to people with on-going chronic illnesses. They are the people who most need attention but they would have no prospect of gaining any help from the schemes that have been forwarded by the Government in clause 51. About 60 per cent. of that group of people nationwide are adversely affected by chronic illnesses.
      For people over the age of 74, the proportion rises to 69 per cent. In a country such as Wales which has a great tradition of heavy industry, those percentages are even higher. Although I do not have the precise figures to hand—I should be interested to know whether the Government have any information on this—I guess that less than one quarter of Welsh pensioners would be eligible for this misspending of our national resources.
      If the Government wanted to spend that money effectively, they could tackle the ever-increasing waiting lists. We have heard protestations from Conservative Members about how, over the past year or so at least, more money has been put into the Health Service and more patients have been treated than ever before. However, the fact is that waiting lists are increasing. In Wales the out-patient waiting list has increased over the past decade by over 24,000 and the in-patient waiting list has increased by almost 300, yet more patients are being treated. We must ask ourselves why. Have the Government created such social havoc and deprivation that, despite treating more people, more people are still waiting for treatment?
      I hope that this evening those Conservative Members who have expressed reservations will join us in the Lobby. The only sensible action for the, Goverment to take is to get rid of the scheme by accepting the amendment and postponing the implementation date to 1993. Then the issue of the future of the Health Service and the best way that it can be funded to provide comprehensive and effective treatment for all can well and truly be at the forefront of a general election campaign.
      I do not have to remind Conservative Members that the issue of the future of the Health Service was right at the forefront of the campaign recently conducted in the Vale of Glamorgan by-election where the Government were resoundingly beaten. The big difference between the Vale of Glamorgan by-election and any other recent by-election in which the Labour party has won a victory over the Government is that that by-election result did not rely on disenchanted Conservative voters not bothering to vote.

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      The Labour vote increased massively because Conservative voters switched to the Labour party, such was the depth of their discontent.
      Measures such as the one before us persuade voters everywhere that the Health Service is not safe in the Government's hands and that the sooner a Labour Government can take over and get rid of such proposals, the better it will be for the country at large.
      I hope that a sufficient number of Conservative Members, who have already expressed reservations about the proposal, will vote with us this evening. I notice that some Members who have publicly expressed reservations are not here this evening. One such is the hon. Member for Epping Forest (Mr. Norris) who was reported in The Observer in March of this year as saying:
      "A lot of my colleagues are concerned about this. It sets a dangerous precedent which could take us, in easy steps, to a two-tier health service.
      We also think the Government is wrong because it proposes to offer tax relief to the better off, the people who need it least."
      We are talking not merely about the efficient use of resources but of using the money for those who least need the help. It would be far better if the money were used for those who really need the help. I hope that our amendment will be supported this evening.
      Mr. Couchman: I had not intended to speak during this debate but I have been so incensed by some of the things said by Opposition Members that I wanted to offer a few thoughts.
      I shall first refer to the interest that I declared during the Second Reading debate on the Bill. It related to a specific company that I have lately advised but is not relevant to this evening's proceedings because those treatments which might be available under the relief which the Government propose are considered in clause 53 rather than clause 51. I should also like to make it clear that I have never paid a private health insurance life premium for myself or my family. We are National Health Service patients and have always been happy with the service that we have received.
      One fallacy that Opposition Members have offered us over and over again is that the relief that the Government propose, whether £40 million a year or £100 million, will not add to the total of health care resources available in this country. That is absolute nonsense. Not only is this relief more beneficial than a direct contribution of a like sum to the Health Service, but it will encourage many people who are approaching old age, who have perhaps had premiums paid through company schemes—contributory or non-contributory—to carry on using the schemes.
      I have just worked out a few simple arithmetic figures in relation to the money that may be available. If £40 million is the sum of relief that is likely to be allowed in the first year, even if, as suggested, 50 per cent. of that—£20 million—goes to higher rate taxpayers, it would bring in £50 million to the health insurance schemes. A further £20 million, based on 25 per cent., would bring in £80 million, which means that £130 million would be brought in. Even allowing for the 10 per cent. that BUPA finds it necessary to charge for administration—£13 million—it would seem that £117 million would be brought into the totality of health care resources. Even if some of that is deadweight, there will still be a net benefit over and above the £40 million.
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      8.15 pm
      If we look at the figures based on £100 million, they seem much more impressive. Even if 50 per cent. is paid to those who pay 40 per cent. tax, £125 million will go into health care and £200 million will be brought in on the basic rate relief, which means that more than £300 million of additional money will be brought into the total of health care resources. The deadweight in this case will be smaller because it will be taken up in the lower figure. The scheme would provide a most worthwhile contribution to resources.
      The hon. Member for Clydebank and Milngavie (M r. Worthington) talked about the contributions that consultants should make to the Health Service. I pointed out during his speech that not all consultants are contracted to the Health Service for 100 per cent. of their time. Many of them work part time for the Health Service, which is lucky for the Health Service because, in many cases, these people are eminent and bring excellence to the Health Service. They could devote 100 per cent. of their time to the private sector. The fact that they do not is a gain for the Health Service.
      Comments have also been made that not only consultants contribute to private sector health care, but nurses and ancillaries. However, most of those people have opted out of the Health Service and are fully employed in the private sector. They often prefer the working conditions, if not the higher wages. Some nonsense has been talked about the drain on the Health Service that would be caused by the offer of this relief. I should like the relief to be extended beyond the elderly, but I recognise that my right hon. Friend the Financial Secretary will resist any such suggestion.
      Much has been said about whether waiting lists have extended under this Government. Thirty years ago there was no waiting list for a hip operation simply because no such procedure existed. Procedures that have developed during the past 30 years have benefited the quality of life of elderly patients more than that of other patients.
      I welcome the clause which will allow many people, approaching or having reached retirement age, to continue to pay into private health insurance schemes and to enjoy treatment when it becomes necessary. Without any equivocation, I shall follow my right hon. Friend into the Lobby to vote for the clause.
      Mr. Turner: The best contribution that we could make in this debate would be to show the country that the Government's claims that they are committed to the National Health Service are false. This is not an isolated measure; it is part of the calculated attack on the National Health Service which began a couple of years after the Government came to power.
      Wolverhampton's local authority and, I am sure, authorities in the greater part of the country know to their cost that from 1982 onwards the Government have been reluctant to invest the money that is needed in the service. In the past two or three years there has been a campaign of intense destabilisation of the NHS. The Government have invested in it, but they must have realised that they were not investing enough resources to meet the demands of hospitals.
      Throughout the past year people in my area, although desperately ill, have been turned away from hospitals. There have been deaths every week because GPs have not been able to admit seriously ill patients to hospital. There

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      have been cut-backs in all the acute specialties. GPs, consultants and hospital authorities cry out that they cannot meet the demands made on their services. District and regional health authorities have been told that they must run services with the available money, even though they know that it is not enough to meet the need.
      A fundamental question is are the Government truly committed to maintaining, supporting and cherishing the National Health Service? The answer must be no. This legislation and the coming White Paper in the autumn are all stages in the process of destabilisation and the creation of a two-tier health system.
      A false premise lies behind most of the decisions and policies of the Government. It is to be seen not only in the Health Service, but in education and housing. The Government continually pursue division, trying to drive a wedge between people and pit them against each other. A Government truly acting for the people would try to nurture policies that would unify them.
      Earlier in the debate I said something that must be true and with which Conservative Members must agree. We all shared the terrible grief at the tragic explosion in the Grand hotel in Brighton. Did any of the people who were taken out of that hotel and placed in ambulances ask which hospital they were being taken to—National Health or private? Did they ask what sort of treatment they could expect? The truth is that they were grateful to be taken to a hospital in which they would get immediate treatment.
      I am not talking about people planning months ahead to have tennis elbow treated or a wart removed. I am talking about real illnesses—
      Mr. Couchman: No one has ever suggested that the private sector can possibly replace all that is provided by the National Health Service. Why will not Opposition Members see the complementary nature of the relationship between the private health sector and the NHS? By relieving pressure on what is known as cold or non-urgent surgery, the private sector makes its most valuable contribution to the acute services of the NHS, so that people on NHS waiting lists wait a little less.
      Mr. Turner: I contend that this measure does nothing but weaken the resources of the NHS, and that it will have no impact on the vast majority, who are taxpayers. Most people in Conservative Members' constituencies and in mine do not want to take out a subscription to BUPA or join a private medical insurance scheme. They want the Government to do what is necessary to build up the NHS, to which they contribute through their taxes week by week.
      Most of the queues of patients waiting for treatment are not affected by the clause. It is another signpost on the route which leads to further divisions between people and creates more disunity in the NHS—even though the measure is claimed to assist people over the age of 60.
      The good news is that this will not wash. I should have thought that by now Conservative Members would have understood from what happened last week and from what people tell us every day that the country wants a National Health Service for everyone, and wants the Government to commit the resources to make that possible. This Government will not do that, but at the next election we
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      shall return a Labour Government who will do what is necessary to reunite the Health Service and give a better deal to all who are ill.
      8.30 pm
      Mr. Andrew Mitchell: I shall be brief, and at the outset I apologise for having been absent for much of the debate, having been involved unavoidably at other meetings.
      I shall comment on several of the points made by the hon. Member for Wolverhampton, South-East (Mr. Turner), whose sincerity I accept. The argument that he adduced about our having attacked the NHS in the last 10 years will not wash because, as the Prime Minister pointed out earlier today, for every £1 that was spent 10 years ago, £3 is spent now. That cannot be described as an attack on the NHS.
      The hon. Gentleman would do the Committee a service if he would investigate the issue and establish the pressures on the NHS which make it important for us to get extra funds into the service, and achieving that, at least in part, is an aspect of the discussion we are having now.
      The hon. Gentleman spoke about what he called a hidden agenda for privatising the NHS. He is not alone in saying that. Many doctors are saying it to their patients. If he looks with sincerity at what is being said on this issue by Conservative Members, he will find that there is precious little argument in favour of privatisation.
      Many Conservative Members have no health insurance and have relations working in the NHS—my wife is a junior hospital doctor—and have a tremendous love and abiding respect for the NHS and those who work in it. I assure the hon. Gentleman that privatisation is not on the agenda. If he is talking about mounting a campaign on the subject, I will join him on the barricades, but it is a non-issue.
      The hon. Gentleman talked about our determination to weaken the NHS, for example, by the clause that we are discussing. But in the next breath he said that for the vast majority of our constituents the legislation would have no impact. It is important to recognise that hon. Members in all parts of the Committee want the NHS to be expanded and improved. Opposition Members are making heavy weather of the clause. It is not a major part of the Budget or the health review. It will make a modest contribution and have a beneficial effect at the margin.
      As I reflect on correspondence that I have received in the last two years from constituents who will be affected by the clause, I think of the position of those who leave their firms and retire, having had the benefit and protection of a good health scheme while they were in employment, only to be exposed on retirement to the full market cost, at a stage in their lives where premiums rise steeply. As I say, this is a modest proposal which will go some way to alleviating the problem of that group of people.
      My hon. Friend the Member for Gillingham (Mr. Couchman) said that the clause would be helpful to the NHS because it would remove responsibility for some elderly people, an area of care which is rapidly expanding. We appreciate the problems that are caused by the increase in the number of elderly people in the population. Magnificent medical advances have meant that many of our elderly constituents are living longer.
      The measure that we are discussing will make substantially more money available for the NHS at a time

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      when the NHS is battling to help as many elderly people as possible—because many thousands of people will take advantage of the form of insurance, thereby taking themselves out of the NHS.
      We have reached the stage when much of the care of the elderly already occurs in the private sector. I hope that Labour Members will get rid of the absurd shibboleth they have about private medicine. I put it to Labour spokesmen that perhaps in the next review of policy following the next general election, when they are considering the reasons for their defeat, they might put their attitude towards private medicine on the agenda for discussion at that time.
      We are discussing a sensible proposal, but it seems to contain a small illogicality. If elderly people are to receive tax relief for an insurance premium, why should they not receive tax relief on medical bills that they pay themselves?
      Having voiced my concern about that one illogicality, which I hope the Minister will examine on a future occasion, I support this proposal, which will make a modest contribution, and the effect of which will be entirely beneficial.
      Mr. Battle: It will be widely accepted in all parts of the Committee that there is deep uncertainty and unease about the Government's intentions for the future of the NHS. Perhaps that is because historically the service has not been with us for all that long. Many people remember what it meant to have to arrange to pay for the best of health. Because of that, people are worried lest, before the system has been developed to its absolute best, the Government try to privatise it.
      Throughout the debate we have heard Conservative Members try to argue both ways. On the one hand they say that they are fully committed to the NHS, and on the other they agree that they are committed to the principles of private health care. That is particularly demonstrated, we argue, when measures to support private health care undermine the NHS. The Financial Secretary must tonight spell out whose intentions lie behind the clause. Has what is proposed been squared with the Secretary of State for Health? Is it just a Treasury device that fits into the Finance Bill? Or is this simply the prejudicial preference of the Prime Minister?
      Although the hon. Member for Gedling (Mr. Mitchell) said there had been little argument in favour of privatising the NHS. shortly before he came into the Chamber I heard the hon. Member for Maidstone (Miss Widdecombe) try to make the case for a full blown medical insurance tax relief system, which I regarded as an argument for displacing, if not replacing, the NHS.
      Others have tried to soften the blow by suggesting that the measures in the Budget are about helping pensioners. That is surprising when one recalls that the same Treasury spokesmen deal with the DSS, and later I shall speak about the way in which they have dealt with pensioners, not least by not uprating their pensions properly and by reducing the rates of housing benefit.
      The general public are no longer sure whether the Government intend to shift health to the private sector, leaving behind only a residue of the NHS that we have known, or whether they intend genuinely to defend and extend the service.
      The Chief Secretary said that the Government had no intention of going further than the clause in supporting tax relief for private health. I take assurances such as that with a pinch of salt because I remember, for example, the
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      promises in the Conservative election manifesto to the effect that the child benefit level would be paid "as now". We discovered that that was meant literally, and therefore has been frozen for two years. We cannot rest secure in the Prime Minister's promise that the NHS is safe in Conservative hands because it seems from a report in The Independent on 15 April that there are pressures on the Government to extend tax relief in the private health sector. The article said:
      "The government is being pressed by some of its closest advisers on the National Health Service review to extend further tax relief on private care … Two proposals are being put forward: one to allow people over 60 who pay for treatment to claim relief; the other to allow the creation of special tax-free savings plans through building societies or other routes for private health care. The former move in particular could significantly increase the private health ca re market. For example, for a £4,000 hip replacement, those over 60—or the patients' relatives paying on their behalf—could reclaim £1,000, or £1,600 if they pay higher rate tax. The ideas have been put to officials by Dr. Michael Goldsmith, medical director of Medisure, the medical insurance advisers, who helped form the idea that GPs should become budget-holders able to buy hospital care; and by David Willetts, director of the Centre for Policy Studies, the right-wing think tank, who has been a key government adviser on the NHS changes."
      According to the article, Mr. Willetts said:
      "I hope that tax relief will not cover just insurance, and that it will cover any direct payment mechanism. I would like to see mechanisms in which you would have tax relief on any of your own directly paid costs."
      The article continued:
      "That could come, for example, if individuals used their savings to buy non-urgent health care."
      Mr. Willets added:
      "I hope that we will get this through".
      The Government should make it plain whether this is the last measure of its kind. Did the Financial Secretary mean it when he said that clause 51 will be the only relief on private medical insurance, which we believe undermines our National Health system? I agree with the hon. Member for Epping Forest (Mr. Norris) who has been quoted today as saying that this is a dangerous precedent, taking us on the easy steps to a two-tier Health Service. This is not simply a matter of tinkering at the margins, as the hon. Member for Gedling said. This is a case of eroding the fundamental principles of the NHS, one of which is that it should be free to all at the point of use according to need. In other words, it does not depend upon a price and privilege model of health care in Britain.
      One of the key phrases that could be used to describe the NHS is that it is a comprehensive service. The whole point of private health care is precisely that it is not a comprehensive service. That is especially true for the elderly, and that is why clause 51 is so strange. For a serious operation or long-term care an elderly patient will have to turn back to the NHS. The chief executive of BUPA has claimed that
      "Chronic illness is not a suitable subject for insurance."
      And the Private Patients Plan no longer includes "long term illness" as suitable for insured treatment.
      The 1986 general household survey shows that, far from this being a great boon to pensioners, only 4 per cent. of people over the age of 65 have any private medical insurance cover and only 1 per cent. of pensioners from skilled or semi-skilled manual categories are covered by any private medical insurance. No unskilled manual worker pensioners are covered. If this is a measure to assist pensioners who need help, it does not work—on two counts. It is not helping the poorest, and it does not help

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      their health needs when most are in need of substantial treatment because they come into the categories of chronic or long-term illness. It is exactly at that point that they have to switch back into the NHS.
      Will the Minister confirm that 52 per cent. of the in-patient stays of people of all ages with private medical insurance are on the NHS? Private health insurers specifically exclude most of the pre-existing medical conditions and chronic conditions such as arthritis, senile dementia or loss of mobility—precisely the complaints from which most pensioners suffer. Sixty per cent. of people aged between 65 and 74 are classed as having a long-standing illness, and that figure rises to 69 per cent. for people aged over 75.
      How on earth can this measure be said to be helping pensioners in their old age to receive health care? Even if they are wealthy enough to benefit from the tax concession, they will have to fall back on the NHS. This is supposed to be a health care measure, but it would be better to put the resources into the NHS rather than subsidising commercial medicine, which itself lives off the NHS, using its trained staff, facilities and resources. That should be taken into account when we evaluate the relationship between the NHS and the private sector. The Government do not have a mandate for private health care in Britain.
      I was interested to debate at the weekend the state of the world today with a Conservative. He suggested that there are only two categories of people in Britain—the investors and the wasters. If that is the kind of outlook of the Conservative party, it, sadly, will write off millions of people in our society who do not earn enough to be investors. We are now being told that we must invest in our health care otherwise we will be wasters.
      8.45 pm
      Many pensioners, certainly those who I represent, know exactly where they stand on clause 51. They will not be coming to my surgeries to welcome being given the choice to move into private health care. I suspect that they will say that if the Government want to assist pensioners, rather than sales talk for private medicine they would prefer a decent pension. They would have preferred their pensions to have been uprated last year according to the right rate of inflation, not that in October, as a result of which their pensions went down this year. They would also prefer to receive full housing benefit which has been cut for the past four years. That way pensioners would have a decent income and be able to make real choices about their lives rather than see the wealthiest being offered incentives via subsidies in private health companies.
      Some Conservative Members have said that this is a marginal measure which does not involve a great amount of money. If that is true, is it worth the trouble that will be caused by the possibility that this measure will open the door to subsidies for private health care? I urge Conservative Members to reject this measure and demonstrate their faith in the NHS. They should show that it is a marginal measure, not by removing the measure altogether but by suspending it now so that it can be put to the test at the general election. I hope that hon. Members will support the amendment and oppose clause 51.
      Mr. Anthony Coombs: Unfortunately, I have not been able to listen to all of what I am sure has been a fascinating and varied debate. However, what I have heard so far underlines my impression that the Oppostion parties' reaction to a pragmatic, limited and sensible measure is precisely the knee-jerk one that they seem to reserve for those people who dare even to think of providing for themselves rather than relying exclusively on the state.
      Not only do the Opposition reject, purely for ideological reasons, measures which will inevitably increase the total resources going into the health sector, and attempt to deny the long-term and well-established trend which shows that people want to provide for their own demands, whether in housing, education, share ownership or pensions—which, as has been said, extends even to some trade unions—but, sadly, by arguing for a delay to 1993, they refuse to recognise the urgency of the demographic changes and the demand that they will create on the resources of the Health Service. To meet this a variety of funding mechanisms will inevitably be required, despite the massive increases in this Government's funding of the National Health Service.
      The facts are there. Even at the present time 50 per cent. of NHS beds are used by people over the age of 60 and no less than 40 per cent. of the resources expended by the NHS are spent on elderly patients. By the year 2000 the number of people over 65 will have risen from 9 million to 10 million, the number of people over 75 will have increased by 43 per cent. and, according to an article in The Economist on 25 March this year, the number of people over 85 will have doubled to no less than 1 million.
      These health demands will not go away. They will continue to impose themselves on health services per se in both the public and the private sectors throughout the country. Everything that we can do to ensure that state money brings forward additional finance from the private sector will help us to meet the inevitably burgeoning health demands resulting from the demographic changes that I have described.
      It is obvious, as my hon. Friend the Member for Gillingham (Mr. Couchman) has said, that the provision of tax relief in this area, even assuming a rough balance between premium payments and treatment costs and a 10 per cent. administration levy by insurance companies on whose premiums tax relief will be available, and even assuming exclusively the top rate of tax, will mean a net gearing for Government funds which otherwise would not have been available of two and a half and, even at basic rate tax, possibly four times.
      It really is nonsense to say, as the Royal College of Nursing does, that the demand for resources for the care of the elderly into the next decade is likely to become increasingly acute, and at the same time to put forward on purely ideological grounds the antediluvian argument that by denying choice to some will increase choice for everybody; that even though the 330,000 potential National Health Service patients who may take advantage of this scheme may only rely upon it for certain services, their doing so will do nothing whatsoever to increase the opportunities in the National Health Service for the less well-off who have to rely upon it exclusively. Logically, those opportunities must be increased, and to argue against that is to argue against the interests of the less

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      well-off patients who are at present waiting for operations which they would otherwise be able to have far more quickly.
      The proposal has other advantages. As has been agreed by Help the Aged, the elderly in this country inevitably become wealthier and have more disposable income. This scheme should eventually increase competition and therefore cost effectiveness in the private health sector. It is worrying that 80 per cent. of treatments in the private sector are at present carried out by three companies and 50 per cent. by one alone, BUPA.
      Mr. Battle: Would the hon. Gentleman then explain to me why Help the Aged is opposed to this proposal?
      Mr. Coombs: Help the Aged approaches this proposal on precisely the kind of anachronistic ideological grounds as the Opposition. Yet at least Help the Aged recognises that an increasingly wealthy elderly population will demand the kind of services that other people have been able to demand over the last 10 or 20 years. I think that we ought to give them the opportunity rather than try to deprive them of it as the Labour party no doubt would.
      Quite obviously, these proposals will increase demand within the private health sector and, as a result, the range of treatments offered by that sector is likely to increase, further reducing demands upon the National Health Service. They may also well improve preventive health care in the private health sector and thus lead to the wider introduction of services such as health check-ups and well men and women clinics, which at present are provided almost exclusively in the public sector. As a result, public sector health resources will be concentrated more accurately on those who most need them and who cannot afford to pay for them themselves.
      I believe that these proposals are pragmatic. They go some way towards meeting an increasing need which will increase still further in the future and they provide for further resources with which to look after an increasingly healthy elderly population and enable it to improve further its own standard of living.
      I would like to see these proposals go further. There is a case for the increasing number of people over retirement age who continue to work and who at present have their insurance premiums for private health care paid for by their companies to have these disregarded as taxable benefits.
      Secondly, these proposals ought to extend not only to those pensioners with taxable earnings but also to those who have accumulated tax allowances. That would give us a successful scheme which I believe would have an enormous take-up, given the fact that this kind of health insurance after tax relief will make possible health care for £3 per week. That large take-up will enable elderly people in this country to emphasise their rejection of the ideological, Luddite, anachronistic arguments that we have heard from the Opposition Benches tonight.
      I therefore support this scheme and shall have great pleasure in voting against the amendment.
      Dr. Kim Howells: The arguments of the hon. Member for Gillingham (Mr. Couchman) and other hon. Gentlemen have sought to prove that the £40 million relief funded under this clause will not drain the Health Service of resources but will strengthen it. I believe that in many ways what they have said is at the heart of this debate. The Opposition are seeking to argue that no one,
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      rich or poor, young or old, should have to worry about having access to the very best in health care as represented by a strong and dynamic NHS, an NHS, moreover, which refuses to discriminate as to who it will and will not treat and stands as a model of care and medicinal excellence in a civilised modern society.
      I do not believe that the provisions in clause 51 will shake the financial roots of the NHS. They will serve, however, to promote some fear and jealousy and a good deal of uncertainty in the minds of many who depend upon the NHS but whose lack of income in the form of the receipt of wages or pensions places them outside the ranks of those who stand to gain from clause 51.
      In south Wales it will serve to deepen existing suspicions that these provisions are intended to help drive another nail into the coffin of the NHS. I do not expect the Government to understand that. They should understand it, though, because it was shouted at them time and again during the Vale of Glamorgan by-election. But I fear that the Government have become so arrogant, so sure of the infallibility of the increasingly mystical goals which are proclaimed from No. 10 Downing street, that they can no longer understand good advice or warning messages, let alone sheer criticism. But I heard those messages time and again during both the recent south Wales by-elections. The Government's goals may not have been quoted back at me word for word in the form in which they appear in clause 51, but people could recite without difficulty the philosophy that inspired them.
      9 pm
      I am new to the House, so my right hon. and hon. Friends will forgive my observation that I am startled that experienced and ambitious politicians such as those who were seated on the Government Front Bench earlier—young politicians even—are prepared to mortgage their political futures to legislation that is as wrong-headed as that encapsulated in clause 51. There can be only one explanation, which is that they have mortgaged themselves to such ideological nonsense in the vain hope of currying favour with the Prime Minister.
      I bet that a few of them do not sleep too well at night—not necessarily because they are worried about the future of the Health Service or of its patients, but because they heard the shuffling of feet and the drawing of daggers in the darkness behind them. They heard the impatient, dismissive growls of the former Defence Minister, the right hon. Member for Henley (Mr. Heseltine), as he seek s platforms to argue for a more corporate attitude to state intervention, on Japanese lines.
      Other Conservative Members heard the public plea, "It's got nothing to do with me, guy" from the present Secretary of State for Wales as he rushes from press conference to press conference stealing local authority initiatives and calling them his own, and doing everything that he can to convince the Welsh people that, like the right hon. Member for Henley, he is at heart a state interventionist. I have no doubt that Conservative Members wake in the night wondering how they can ditch that mortgage and survive when their political backers are put out of business.
      How much better it would be if their nights were disturbed by misgivings, not about their political futures but the likely implications of clause 51 for the future provision of health care in constituencies such as mine. In my constituency, large centres of population are unable to

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      afford the luxury of properly equipped, modern health centres. Clause 51 will not help to get them built. It will not help a community such as Tonyrefail in the north of my constituency, which cannot by any stretch of the imagination be called wealthy, but is full of hard-working, respectable people who have always sought to pay their way in life. They are people who have paid their national insurance stamp for decades and who display enormous patience and forbearance in tolerating an underfunded local health system.
      Last Saturday, a constituent of mine from Tonyrefail who is employed at the Royal Mint at Llantrisant—one of the most modern money factories anywhere in the world—told me that the people of Tonyrefail are desperate for a modern health centre. I asked him where the doctors there hold their surgeries now, and he told me—in the converted front rooms of terraced houses, as they have done for the past 30 years. That is an indictment of a decade ruled by the present Government.
      The Chancellor of the Exchequer has squandered £60 billion of oil revenue, yet a hard-working, respectable community such as Tonyrefail does not have a modern health centre. Nor do many similar communities in my constituency boast their own health centre. The people of south Wales have grown used to the Government preaching the gospel of private provision in all kinds of sectors. We expected something like clause 51, and we fully anticipate that it will result in future shortcomings similar to those we have experienced in other vital sectors such as education, training and environmental control.
      We witnessed at first hand that it is one thing to legislate for the private sector to provide an accessible, dynamic and comprehensive service to the general public, but it is another to convert that legislation into real results. As we have witnessed all too often in the case of the citadels of ideologically inspired government in eastern Europe, when good practice and common sense are shunted aside in the name of a political creed, it is the service and the people who suffer—as the people of Poland, Hungary, Romania and the Soviet Union are suffering now. The commissars, big-shot bureaucrats and hustlers can afford visits to private clinics in Switzerland or to private hospitals elsewhere for treatment. That scenario is one with which we in this country are becoming increasingly familiar. The chief commissar of Downing street, for example, boasts of her ability to choose dates, doctors and hospitals convenient to her. That was an insensitive and vulgar exhibition of the Prime Minister's lack of comprehension of the situation in which most of my constituents languish when they find themselves in need of surgery that is not considered urgent or of top priority.
      The majority of my constituents have neither the personal wealth nor the facilities available to them to exercise a similar degree of choice. Nor do they have something else that the Prime Minister has—thank God. They do not possess that vulgar streak of exhibitionism that drives the right hon. Lady to flaunt her wealth and position and to boast of it in the midst of a society still fraught with long hospital waiting lists and in which respectable communities such as Tonyrefail are denied even the provision of basic facilities such as a health centre.
      That is the real meaning of clause 51. It is another version of the Prime Minister's boast, another reprise of
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      that increasingly stale melody that Conservative Members continue humming as they mortgage away their political futures. Clause 51 is another insensitive and vulgar gesture in the face of the vast majority of people, made at the same time that the minority are urged to celebrate their good fortune. Clause 51 is saying to them, "Rejoice, rejoice. Celebrate the fact that you're not someone who has to join the queues for surgery or suffer means-testing to enjoy even the most basic medication and health care."
      More than 500,000 people are covered by the Mid Glamorgan health authority and they will not stand by in silence as its £149 million revenue allocation is whittled away and scattered around the shrine of the Government's barmy ideology. Those people made their voices heard last February in Pontypridd when the Tory vote slipped to third place behind the nationalists, and again last week in the Vale of Glamorgan, when the Tory vote dropped straight into the Bristol channel.
      If I am to be candid, a part of me hopes that the Government will not modify legislation such as clause 51, because in that way their support will be eroded as it was even in an area such as the Vale of Glamorgan, which voted Conservative for the past 38 years. The public understand only too clearly the intention behind clause 51 and its ilk. It is not about improving the Health Service but about ditching responsibility for a symbol of collective care and of community.
      The Prime Minister has made public her distaste for anything that smacks of community responsibility. If she is to surpass the vulgarity of her previous odes to the virtues of private medicine, she need only remind the public that if they find themselves unable to afford adequate health care in the privatised future, then they can chew aspirins. Supermarket shelves are full of them, and they are manufactured by the same transnational chemical corporations whose products poisoned us in the first place.
      My constituents complain frequently that they need to take aspirin to counteract the pain that the Prime Minister's speeches and those of her Ministers give rise to in their heads—and in other parts of their anatomy a long way from their heads.
      This year, Mid Glamorgan health authority's entire capital allocation is a little more than £7 million. The £40 million given away by clause 51 could solve a lot of problems that will not be solved because of the existing limit on that health authority's capital allocation. In my constituency there is a desperate shortage of nebulizers, for example, for the very young and very old suffering from asthma—as my own son does—and from pneumoconiosis and other respiratory disorders. They cost about £100 apiece, but many families in my constituency earn far less than £4,000 per year.
      My constituents want to hear something more relevant to their needs than these hymns to private insurance. They want to know why the east Glamorgan hospital has not been replaced yet. It has 500 beds and its fabric is deteriorating rapidly. This Government's indecision on its future is causing demoralisation and great unhappiness among east Glamorgan's most excellent staff. They do not want this kind of irrelevant, divisive legislation. They want to hear the Chancellor make it abundantly clear that the Exchequer does not grudge the allocation of extra funds to promote health care at all levels for everyone in this country, and not simply for those who can afford it. That is the way to promote efficiency, well-being, a sense of civic

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      pride, a sense of belonging to a responsible, modern nation. Slapdash temporary buildings, patched-up wards and dependence on charity for purchasing vital medical equipment are not symbols of a responsible Government and certainly not symbols of a Government who care for the people.
      The health authority in my area sighs with desperation and disbelief when it sees legislation such as this. The general manager informed me today that he needs funds for hospital redevelopment, for building maintenance, for investment in community care services, to make progress on their strategy in dealing with mental health problems and for general investment in new technology. We have dire problems of finance for our geriatric units at Dewi Sant, Tonteg and Rhiwfelin hospitals. The Hensol hospital for the mentally ill needs refurbishing and re-equipping, as does the Talygarn rehabilitation centre, which does such sterling work in returning the injured and disabled to meaningful employment, where they can help to top up the tax revenue collected by this Government.
      Clause 51 will do nothing for the hospitals and health care in my area of the Mid Glamorgan health authority; nothing constructive, that is. It will simply confirm what my constituents know already, that this Administration lacks the basic decency which refuses to allow those who possess it to flaunt their new clothes publicly, like a kept tart, and kept this Government have been: kept by the windfall of oil revenues, by a mean, parsimonious, grasping ideology, which takes from the weakest and rewards the strongest, as this clause seeks to do. However, it will not be kept for much longer. The people of Wales know that and the word is out. This Government and their vulgar, tasteless clause are on the way out. That is why I support the amendment tabled by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), and I hope that the Committee will as well.
      Mr. Beith: I had the opportunity earlier in our proceedings to talk more generally about our objections to this clause and my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) developed those arguments. I want to pick up one or two points referring specifically to amendment No. 21.
      The hon. Member for Wyre Forest (Mr. Coombs) has left us again, after a brief appearance in which he sought to comment on a number of speeches he had not heard, which was a pity because if he had listened to the hon. Member for Beaconsfield (Mr. Smith) or even the hon. Member for Eastbourne (Mr. Gow), with whom I usually find myself in disagreement—
      The Financial Secretary to the Treasury (Mr. Norman Lamont): The hon. Gentleman was not here when my hon. Friend the Member for Eastbourne (Mr. Gow) spoke, so how does he know?
      Mr. Beith: I was very sorry, during a brief absence, to miss what may have been the first speech of his I have agreed with for a long time.
      Mr. Lamont: I have never heard my hon. Friend the Member for Eastbourne speak without referring to the absence of the Liberals, which is normally his theme.
      Mr. Beith: It is a very old sport between us, and I am sorry that he is not here now to hear the Minister make that point.
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      What the hon. Member for Wyre Forest did not appreciate was that the objections to this clause and the reservations about it are not of the narrow, ideological kind which he sought to suggest, but extend into his own party, for the very good reason that the idea of subsidising private health insurance is one to which there are many well-based objections.
      A number of Government Members have spoken as if the argument were about whether people should be permitted to take out private health insurance. It is not—certainly not so far as I am concerned. It is about whether taxpayers in general should subsidise those who make this particular choice, and do so particularly at a time when, if the purpose of this is to devote revenue to the Health Service, that revenue could more usefully be devoted directly to the Health Service, and if it were, it would benefit more of those people in greatest need. When they argue that more money is becoming available for health care as a result of this clause, they seem to neglect the fact that it gives more money to health insurance for people who have already got it, and the vast majority of funds in the coming year will go to people who have already made the decision to take out private health insurance and do not need this clause to induce them to do so.
      Ministers have made great play of the argument that the main purpose of this proposal is to enable people to continue to have the private health insurance which they began when they were in employment, rather than to extend it, but alas I cannot believe them because it is clear from many speeches today that the spirit behind those within the Conservative party who like this clause is to extend this principle far more widely.
      Another Government Member argued that it is illogical simply to devote the tax relief to health insurance. It should, he argued, be extended to treatment as well, and I can see his logic that if there is to be a subsidy for public health insurance, why not put it direct to the treatment, to the person who has not got health insurance and is told that his only chance of a hip operation is to go private, otherwise he will have a long time to wait? Why should he not have the benefit of tax relief?
      9.15 pm
      Once this gate is open there is no limit to it, which is why Government Members should take more seriously the argument that the direction of these funds into the Health Service is a more cost-effective and better-controlled way of using them.
      Referring to amendment 21, it seems to me entirely illogical that the Government should feel it neccessary to extend this tax relief even to the extent of top rate tax. Ministers have admitted this afternoon that 50 per cent. of the relief coming out of this clause will go to 20 per cent. of the beneficiaries. They have argued that 80 per cent. of those who benefit from it will be on the standard rate of tax, but 50 per cent. of the relief will go to that 20 per cent. paying top rate tax. To do this, the Government must have the machinery to allow these people to reclaim tax at the higher rate, and it would be cheaper administratively, as well as in terms of the relief being afforded, to exclude the top rate of tax from the provisions of this clause. I see no reason at all why the Government should not accept amendment No. 21.
      I do not think that I could find very many pensioners in my constituency who regard this feature of the Budget

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      —or any other, for that matter—as helpful to pensioners. They will see it as further confirmation that the Government want the Health Service to develop on the basis that those who can afford to will be well advised to make some other provision for themselves, and will be helped to do so. That is not the kind of Health Service in which I believe.
      Mr. Nicholas Brown: Unlike many of those who have spoken in this debate, I have been able to attend the entirety of it, as indeed has the Government Front Bench. That is the way things work in this place, and quite right too. It is only fair that I confide to the Committee that the purpose of our amendment, although it only implies a delay in the implementation of clause 51 until 1993, is, of course, to do the clause in altogether. We anticipate winning the next general election, and the Labour party is certainly winning the by-elections.
      The Committee has had a good trawl through the claims which the Government have made for the measure contained in clause 51, and essentially the Government's case has come down to two separate propositions. The Government claim that the scheme will help people who have had private health care cover during their working lifetime to continue with private medical insurance into retirement, when, as the Government have acknowledged, incomes fall and private medical insurance premiums rise.
      The second, separate proposition which the Government have advanced for clause 51 is that it will reduce pressure on the National Health Service. As far as this side of the House is concerned—certainly as far as the Labour party is concerned—neither of those propositions has stood up to the scrutiny of today's debate. We regard the scheme contained in clause 51 as unfair, expensive and socially divisive, about which even those who genuinely support the Government have reservations. We were not surprised to learn from what I think are described as "the usually informed sources" among journalists, that initially the Secretary of State for Health and, indeed, the Chancellor strongly opposed the measure, and I find the denials that have been offered wholly unconvincing.
      Many Conservative Members consider the proposal the first step towards more significant and far-reaching changes, seeing it as the starting point for a two-tier Health Service in which better-off citizens enjoy private medical care and separate, diminished provision is made for the rest of us. The hon. Member for Horsham (Sir P. Hordern), indeed, saw it as a starting point for other tax reliefs—applying, for instance, to private education—and said that he would never support that.
      The Chancellor would have reasonable and understandable grounds for less than wholehearted enthusiasm about the scheme. My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) pointed out that the right hon. Gentleman is trying to thin out the range of tax allowances available to be offset against income. Now, however, he is being forced by the Prime Minister to acquiesce in the introduction of a whole new range of income tax reliefs. The scope for tax avoidance is clear, and it makes nonsense of the Government's efforts to thin out some reliefs and cap others.
      Much tax avoidance relies on a detailed knowledge of taxation regulations and an ability to fit the different bits
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      together in such a way that losses can be offset against what would otherwise be taxable real earnings. Those who seek to reduce the scope for avoidance by cutting the number of reliefs available are fighting a losing battle against those who exercise real power in the Conservative party.
      That should come as no surprise to anyone. The Conservative party is prepared to tolerate the abuse of the business expansion scheme and to allow the potential, indeed actual, avoidance in personal equity plans. It is willing to countenance a tax regime under which somebody earning £1 million a year could theoretically, if he made use of all the available allowances, pay no tax at all. In those circumstances, is it surprising that the Government are willing to acquiesce in this whole new territory for abuse—tax relief for private medical insurance?
      I understand that even their own supporters have asked the Government to narrow the regulations as far as possible and to restrict the scope of the scheme. The political implications are obvious: tax concessions for the rich and a two-tier Health Service for the rest of us. The offer of tax relief is clearly of particular advantage to the better off. As my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) has pointed out, it is they who need further financial concessions the least.
      There was a rather ungainly scrap at the beginning of the debate: the Chief Secretary seemed astonishingly reluctant to confirm the facts contained in a parliamentary answer given by his right hon. Friend the Financial Secretary. I think it would be helpful if I read out that answer, in which the right hon. Gentleman told my hon. Friend the Member for Dunfermline, East (Mr. Brown):
      "Tax relief on private medical insurance for the over-60s will not be available until 1990–91, when about 330,000 tax units (single people and married couples) aged 60 or above are expected to qualify for tax relief on medical insurance. The average subscription per tax unit is estimated to be about £400. Around one half of the cost of relief is expected to be received by higher rate taxpayers."—[Official Report, 22 March 1989; Vol. 149, c. 588.]
      I am surprised that the Chief Secretary found it difficult to stand up and say, "Yes, that is correct." Perhaps, however, his difficulty was understandable, as the social divisiveness of the proposal is something that the Government are trying to minimise.
      According to the Government, about 90 per cent. of the cost of the scheme will be attributable to those who already have private medical insurance. In other words, it is a straight concession to people who have already decided to make such provision without the incentive of tax relief. The implication is that only 10 per cent. of the estimated cost is to be laid at the door of those who find the new tax allowances attractive. That is the "year one" position, and that is the key to the Government's thinking. Why on earth make all the elaborate arrangements for deduction at source for the person making the payment, along the lines of the MIRAS scheme? Why ensure that higher-rate taxpayers obtain their rebates through adjustments of their PAYE codes if the measure is to have only marginal consequences? Why put such arrangements in train if the long-term implications are not extensive or important?
      These are the kind of arrangements that would be introduced for a scheme that was intended to be used widely and to become commonplace in the British income tax system. That is incompatible with the claim made by the hon. Members for Fulham (Mr. Carrington) and for

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      Gedling (Mr. Mitchell) that this was not to be treated as any great event. I hope, incidentally, that the wife of the hon. Member for Gedling remonstrates with him when he gets home and she finds out what he has said tonight.
      The Financial Secretary has told the Committee that the average subscription per tax unit is estimated to be about £400. That figure assumes the take-up set out in the parliamentary answer that I read out earlier. BUPA tells us, however, that the full cost for a pensioner couple can be as much as £2,160 a year, out of which the public will now have to finance payments of up to £860. It is not all as high as that, of course. BUPA claims that the cost of comprehensive cover when the older partner is over 70 will be £1,102 a year, cut to £827 by standard-rate tax relief.
      Mr. Win Griffiths: To do a little fine tuning on BUPA's description of its insurance scheme, will my hon. Friend confirm that when BUPA talks about "comprehensive cover" it actually means cover for certain specified types of illness, and that anyone suffering from an illness cannot obtain insurance cover?
      Mr. Brown: That is correct. BUPA operates a range of different schemes. I understand that the Government are to introduce regulations that will also limit the extent of insurance reliefs. BUPA offers what it calls a low cost scheme in which payments are restricted. Annual premiums under that scheme will be cut from £655 for a couple to £491 by standard rate tax relief.
      Those are large sums, and it is difficult to see them as being comparable with the small sums mentioned in the parliamentary answer. For those searching in the bargain basement of private sector health care insurance there is a new senior prime care scheme—it sounds more like beef than health care—which offers a substantial no claims discount of 27.5 per cent. for those aged 65 or over. Of course, that is capped at age 75. The cost of that would be £458·20 per annum for a couple.
      The assumption that must lie behind the Treasury estimate that the Financial Secretary gave to the House is that a small number of pensioners will opt for cheaper schemes. That assumption is surely wholly at variance with the arrangements that the Government are putting in place to handle the relief. Either the Government believe that this is the right thing to do and they want to encourage as many people as they can to take part in it, or they believe that it is small beer and nothing to get worried about. They cannot make both arguments, as they have tried to do in the debate.
      My hon. Friends the Members for Burnley (Mr. Pike) and for Halifax (Mrs. Mahon) emphasised that the scheme will do the Health Service no good and will certainly do it harm. If the Government had £40 million, or £200 million—the commitment is open-ended—to spend on health care, it should have been spent on the National Health Service so that everyone could benefit. There is no need to spend it on some citizens rather than on all. Depriving the National Health Service of the money does it harm. The private sector will not train nurses or provide long-term patient care. The private sector will not relieve pressure on National Health Service waiting lists and queues. The objective of the private sector is only to ensure that its clients can jump the queues by virtue of being private patients.
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      9.30 pm
      My hon. Friend the Member for Wolverhampton, South-East (Mr. Turner) made the point vividly that a Government that cared equally for everyone would try to reduce waiting lists and ensure fair and equal treatment for all patients regardless of their economic circumstances. The Government are exacerbating the problems, not eliminating them. They are saying that the wealthy should have preferential treatment in health care. What use will the scheme be to the poor and the majority of British pensioners who do not pay income tax and cannot benefit from tax relief?
      The majority of pensioners have no prospect of having their private sector health insurance premiums paid for them by wealthy relatives. The Chief Secretary tried to suggest that even poor pensioners could benefit if they were lucky enough to have a son or a friend who had become wealthy and was willing to pay for them. In those rare circumstances I suppose that they could benefit, but what are the odds of that happening? I was amazed that no one on the Conservative side suggested that poorer pensioners should think about clubbing together to form syndicates and offer themselves as tax loopholes to wealthy entrepreneurs along the lines of some of the schemes in business expansion projects. Perhaps encouragement of that is some way down the line.
      Britain's pensioners will have lived through the second world war. Many of them will have served their country during that war. They will all have paid their taxes and national insurance contributions throughout their working lives. Now, rightly, they believe that they are entitled to the best health care that the country can provide for their retirement. No one on the Labour side sees anything unreasonable in that. The Government are telling them that they can have the second-best health care that the country can provide or that they can take out private medical insurance. The Government echo the highwayman—"Your money or your life." That is a disgraceful, grotesque, unfair and callous message from Britain's most publicised granny.
      What is a pensioner who has waited for a hip replacement for perhaps more than two years to think when he sees a privately-insured pensioner having the operation carried out straight away in a National Health Service hospital, using National Health Service facilities, but paid for by private medical insurance? The majority of pensioners who will be in that position will not consider that to be anything but grotesquely unfair. It is the socially divisive nature of the proposal that is its main condemnation.
      The cause of delays in National Health Service operations is not administrative. In one local health authority in the northern region consultants were startled to receive a memo from the administrator asking them to refrain from carrying out expensive operations until the end of the financial year. When the consultants protested, they got a further memo asking them to try to carry out cheaper operations until the end of the financial year. Life is not like that, except perhaps for accountants. As my hon. Friend the Member for Pontypridd (Dr. Howells) said in an excellent intervention, health care should be delivered at all levels and not just to those who can afford it. Those sentiments will be echoed by every Opposition Member.
      The issue is not solely about resources. Private medical care will not create extra facilities in the National Health

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      Service; it will redistribute the use of existing facilities. Conservative Members have argued that the private sector is more cost-effective than the public sector. I have some figures showing the comparative costs of operations in the private and the public sector in the United Kingdom. I apologise to the Committee as the figures are a year old, but the differentials still stand.
      Depending on the extent of the operation, the cost of a hip replacement operation in the private sector is £1,750 rising to £3,350. The National Health Service bill is a set £3,300. The National Health Service bill for a hysterectomy is £1,200 and the private sector bill is almost twice that at £2,200.
      Mr. Couchman: Are the costs that the hon. Gentleman has just quoted for National Health Service treatment in hospitals where the costs are low, high or average? I suspect that the hon. Gentleman may be quoting those figures to present his argument in the best light.
      Mr. Brown: The figures were obtained from Hansard on 28 January 1988. They were supplied in a parliamentary answer, so I presume that they were designed to fit the interests of the Government rather than those of the Opposition. If they do not sustain the Government's case, all I can say to the hon. Gentleman is that the truth will out.
      Mr. Couchman: The hon. Gentleman will know that one of the complaints, worries and concerns of those of us who follow health care matters closely is that some hospitals within the National Health Service are vastly more efficient than others. Clearly, they are able to deliver more effective and therefore probably cheaper services than other hospitals. It is well known that some of our centres of excellence are comparatively expensive in delivering treatment.
      Mr. Brown: The evidence that I am citing shows that the private sector is comparatively expensive, as the hon. Gentleman pointed out. I can quote him the example of a hernia operation. I have a range of figures from the private sector from £660 to £1,270, a separate source gives the cost at £890 and a further source quotes £1,000. Those are all private sector quotes. According to Hansard, the cost in the National Health Service is £650. Those are substantial differences. The hon. Gentleman can say that I have picked the examples that suit me best, but I have quoted all the private sector quotes that we received, not simply the ones that suit my case best. I could have simply quoted £1,270, but I quoted all the figures from every source. Even the lowest quote from the private sector was more expensive than the National Health Service. That underlines my point.
      When the Chief Secretary, in a slightly embarrassed manner, hacked his way through what I thought was an unconvincing justification of the Government's position, and knocked lumps off the Financial Secretary in the process, some Conservative Members took part in the debate.
      I enjoyed the brave, reflective and well-measured speech by the hon. Member for Horsham (Sir P. Hordern). His was the authentic voice of what used to be the Tory party before the current leader got her hands on it. He weaved compassion throughout his speech.
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      The hon. Member for Beaconsfield (Mr. Smith) made an able, measured speech urging caution, particularly on taxation. I wholly agreed with him. I shall do him a great deal of harm, but just for once the hon. Member for Eastbourne (Mr. Gow) made a great deal of sense on the points that he raised about taxation. I agreed with what he had to say up to the point when he said that he would vote for clause 51 anyway. There is no need for him to do that, as he is no longer a Minister. He should exercise his independence and do what his heart tells him to do, which is to side with the Labour party. The people of Eastbourne will forgive him—on this occasion.
      Mr. John Smith: That is an important qualification.
      Mr. Brown: It certainly is in Eastbourne.
      My hon. Friend the Member for Kirkcaldy (Dr. Moonie) brought to the debate the voice of a doctor, a professional man who knew what he was talking about. It is interesting that the first interventions in support of the Government came from merchant bankers, as one of my hon. Friends pointed out, but the speech that made the most telling impact came from a member of the medical profession. My hon. Friend the Member for Kirkcaldy pointed out that clause 51 is irrelevant to the nation's health needs. It is designed not to supplement the National Health Service, but to change its nature. My hon. Friend was speaking for the whole of the Labour party when he said that we are implacably opposed to the proposal. We are opposed to it on philosophical and economic grounds, and on the ground of social justice. I urge the Committee to support the amendment and to reject clause 51.
      Mr. Norman Lamont: We have had a lively debate in which there have been some strong speeches from Opposition Members and some excellent speeches, not only from those to whom the hon. Member for Newcastle upon Tyne, East (Mr. Brown) referred, but from my hon. Friends the Members for Maidstone (Miss Widdecombe), Stamford and Spalding (Mr. Davies), Gillingham (Mr. Couchman), Fulham (Mr. Carrington), Gedling (Mr. Mitchell) and Wyre Forest (Mr. Coombs), all of whom supported the Government's policy enthusiastically. As the hon. Member for Newcastle upon Tyne, East said, my hon. Friend the Member for Eastbourne (Mr. Gow), after judicious and judicial deliberation, also supported our policy and we welcome that.
      My hon. Friend the Member for Eastbourne asked whether clauses 51 to 54 had been discussed with the European Commission. The answer is no. There is no need to discuss the clauses with the Commission, but we have had to take account of EC law in framing the provisions and that relates directly to the point that the right hon. Member for Llanelli (Mr. Davies) made and that he encapsulated in amendment No. 8. One of the benefits of the wide market within the European Community, as he knows, is that the United Kingdom financial services industry has the opportunity to compete within Europe. That opportunity extends to the non-life insurance services on which an EC directive becomes fully effective next year. It is, therefore, right that as long as United Kingdom insurance companies are able to market non-life insurance in Europe, European insurers should be able to compete for business in the United Kingdom on equal terms with British insurers. That is why clause 51 offers the new tax

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      relief when medical insurance cover is provided by a Community insurer, as well as when it is provided by a British insurer.
      The relief at source scheme will not be available when the insurer has no presence in the United Kingdom. In that case, the individuals themselves can claim the relief from their tax office. The benefit of tax relief goes to the person taking out the insurance policy, not to the company.
      The right hon. Gentleman also asked about the taxation of insurance companies and provident associations and what happened if they did not pay tax. The amount claimed back has nothing to do with the insurer's tax liability. It is the relief that the subscriber has withheld on his premium that matters. I hope that that answers the right hon. Gentleman's question.
      Mr. Denzil Davies: On the point about the EC directive, does the Prime Minister know about that? And did I hear the Minister say that an EEC insurance company that was not trading in Britain cannot claim back from the United Kingdom Inland Revenue the tax that has been deducted in paying the premium? Is that what the right hon. Gentleman said?
      9.45 pm
      Mr. Lamont: I said that relief would have to operate in a different way. The company would not be able to get relief at source, which is a different matter—
      Mr. Davies: Will the European insurance company get the tax back? 1 am not concerned how it happens, but does the relief go to the insurance company in the end?
      Mr. Lamont: The answer is no.
      My hon. Friend the Member for Eastbourne asked another question about non-taxpayers claiming relief. There seems to have been a degree of confusion about the matter. Non-taxpayers can benefit from what is proposed; the insurer can claim the amount even though the individual is not a taxpayer. That is not a new principle. It is precisely what happens with mortgage interest relief—with MIRAS. The fact that relief is available for non-taxpayers is one answer to those who say that the scheme is only for the rich and that it benefits only the better off. I emphasise that, in operating a MIRAS-type scheme for health insurance, the Inland Revenue auditors will be checking the insurers' books to ensure that the scheme is being operated wholly properly, just as they do with MIRAS.
      Mr. Win Griffiths: Is the Minister aware that an EEC directive that is currently being discussed would allow small companies not to be subject to compulsory audit? I know that the Government are against that aspect of the directive, but if it were introduced surely what the Minister has just said would no longer be true.
      Mr. Lamont: An Inland Revenue audit has nothing to do with a statutory audit for Companies Act purposes, so the hon. Gentleman is slightly off beam, I am afraid.
      The hon. Member for Berwick-upon-Tweed (Mr. Beith) asked whether the non-taxpayer would still have to fill in a form. The answer is yes. He would still be allowed to benefit from the tax relief, even as a non-taxpayer. I stress the role of the Revenue in looking at companies' books.
      The right hon. Member for Llanelli suggested that people might take out insurance shortly before they went
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      into hospital as a means of obtaining tax relief, rather like the man who takes out fire insurance just as his house begins to catch fire. In the first place, I think that it would be difficult to persuade the insurance company to give the relief, and in any case it would certainly not be approved by the Revenue.
      Opposition Members asked about the deadweight cost. There are about 300,000 medical insurance policyholders aged over 60 at present. The cost of £40 million in 1990–91 is based on the assumption that there will be a further 10 per cent. take-up in that year on top of the growth that we would otherwise have expected. My hon. Friend the Member for Beaconsfield (Mr. Smith) stressed the deadweight and how little additionality had been provided for. We strongly hope that people will take advantage of the relief and, although we are making only a modest assumption in the first year, hon. Members should remember that it is only a first-year cost.
      While emphasising the deadweight, Opposition Members have said, slightly inconsistently, that the cost of the measure could be very high, depending on the take-up. They advanced some alarmist arithmetic to suggest that if there were a 100 per cent. increase in the number of pensioners with provision for private health insurance, the cost might be hundreds of millions of pounds Even a 100 per cent. increase in take-up would increase the cost only to £70 million. Opposition Members have made that mistake because they greatly overestimate the cost of a typical health insurance policy taken out by elderly people.
      The hon. Member for Newcastle upon Tyne, East paraded some figures. He must have carried out much research to find the most expensive policy available, because the real facts are different. A policy of the sort most commonly marketed to the over-60s currently costs about £450 a year for a couple aged up to 69, rising to about £600 at age 70. The cost of tax relief will on average be less than £100 per head.
      Equally, the hon. Member for Bridgend (Mr. Griffiths) talked about PPP insurance cover for someone aged 65 to 74 costing £670 in tax relief. I have the PPP leaflet here and the annual premium for its retirement health plan for people aged 70 to 74 is just over £300, on which tax relief at 25 per cent. would be £75. The cover for someone aged 65 to 69 would cost even less.
      Mr. Win Griffiths: From memory, the figure that I quoted was for a couple, one of whom was over 70. It was not for one individual.
      Mr. Lamont: I have put the facts as they appear in the leaflet.
      Mr. Battle: Many people take out minimum limited cover.
      Mr. Lamont: Of course, as the hon. Gentleman just shouted out, many elderly people take out limited cover and the cost of that is much less, and so, too, is the tax relief. I do not see anything about which to apologise.
      A number of my hon. Friends, especially my hon. Friends the Members for Beaconsfield and Horsham (Sir P. Horden), made it clear that they had a number of reservations about the clause. My hon. Friends the Members for Horsham and for Beaconsfield made it clear that their objections are very different from those put forward by the Opposition. My hon. Friends made it clear that their main objections were on grounds of tax policy.

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      They believed that there should be fewer reliefs but lower rates. We have, of course, always made it clear that it would always be difficult, and probably not possible, to reach an entirely neutral tax system. As my hon. Friends know, we have certainly abolished some tax reliefs, but we have created others where we have thought they were socially or economically desirable. My hon. Friend the Member for Beaconsfield said that he thought that tax relief for saving or enterprise would be his choice, but why not also tax relief for helping the elderly or for relieving pressure on the National Health Service?
      My hon. Friend the Member for Beaconsfield suggested that, perhaps, we should have a cap on the relief, which was a point made by a number of Opposition Members. An analogy was drawn with relief only being allowed on the first £30,000 of a mortgage. However, there are limits on the amount of money that one can spend on medical insurance. What one is allowed to spend it on will be limited and defined in the regulations that will be specified under the Bill. We believe that the average cost will be about £100.
      The hon. Member for Newcastle upon Tyne, East referred to comments made by my right hon. Friend the Chief Secretary and my written answer. I assure the hon. Gentleman that there is no inconsistency between myself and my right hon. Friend. My right hon. Friend was right when he said that up to 80 per cent. of those covered will be basic rate taxpayers or not liable to tax. Opposition Members have not realised the difference between those paying the premiums and those covered by the premiums. My right hon. Friend's assertion is in no way inconsistent with my parliamentary answer, when I said that we expect that slightly more than half of the cost of tax relief will go to basic rate or non-taxpayers and half to higher rate taxpayers.
      The hon. Member for Holborn and St. Pancras (Mr. Dobson) referred to schemes which provided private sector treatment only if treatment was not available within the NHS within a few weeks. He asked how the schemes would relieve pressure on the National Health Service. I advise him that such schemes offer genuine medical insurance and, although they give a limited form of cover and a limited availability of private medical treatment, the premiums are lower and, to a limited extent, they still relieve the pressure on the National Health Service. Therefore, they qualify for the relief.
      The hon. Member for Holborn and St. Pancras referred to the schemes that are offering cash benefits. We do not see why schemes that offer cash benefits should qualify for insurance because the whole purpose of the provision is to relieve the pressure on the National Health Service, not to give cash benefits unrelated to medical care. However, as my hon. Friend the Member for Beaconsfield picked up, we have allowed a de minimis amount of £5 per day, but I emphasise that that £5 per day is in addition to medical cover being provided. It is supplementary to that. There is no question of people getting tax relief for cash allowances without having private medical treatment.
      Mr. Nicholas Brown: I understand what the right hon. Gentleman means about de minimis and, although £5 per day tax free may be de minimis to him, it is quite a lot of
      808
      money to many old-age pensioners. I am not sure that that exclusion in the regulations is not intended to help sell the schemes.
      Mr. Lamont: I very much doubt that because many of the cash amounts that are provided through schemes are substantially higher than that amount. In terms of the tax relief, the cost of £5 for the relatively short period of most illnesses is absolutely minuscule and does not add to the cost of the scheme.
      We believe that the scheme is justified. It is targeted and limited. It is aimed specifically at elderly people—at the over-60s. We have explained that we believe that many people who may have had company schemes and who may have contributed to private health insurance during their working lives find difficulty in maintaining such payments in retirement and that it is right to help them in that situation.
      Opposition Members have said that the money would be better spent on the National Health Service, but it is not an alternative. We are talking about an additional modest sum of £40 million, which is 0.15 per cent. of the total spending on the National Health Service and 1.6 per cent. of the increase in 1989–90. As my hon. Friends know, we are increasing spending by £2.5 billion this year and by £2.5 billion next year. That is a total increase of £5 billion in our spending on the National Health Service. A small, modest tax relief amounting to £40 million will help the Health Service in a different way by relieving the pressure on it.
      Opposition Members have also said that the provisions will undermine the National Health Service. I do not believe that for one minute. The fact that we have committed such huge resources to the National Health Service is evidence of that. The proportion of GDP spent on the National Health Service is higher today under this Government than it was under the Labour Government. That demonstrates that we have no intention of undermining the National Health Service. I repeat that the provision is designed to relieve pressure on the National Health Service. The hon. Member for Clydebank and Milngavie (Mr. Worthington) wondered how, but, by definition, a person using the private sector is not using the National Health Service.
      It is a fallacy to believe that medical resources are somehow fixed and limited and that they cannot be increased in response to extra demand. My hon. Friend the Member for Beaconsfield said that he did not doubt that and that he was satisfied that there would be some relief of the National Health Service but that he wondered why we had to have tax help as well. We believe that, over time, it will be a good bargain. The cost of the tax relief will be only £100 per person and the cost of the National Health Service per person over 60 is £850 for hospital treatment and £1,000 for the National Health Service provisions as a whole. Therefore, over time the tax relief will be cost-effective, notwithstanding the inevitable deadweight in the initial stages.
      We do not see the growth of the private sector as a threat to the National Health Service. As my hon. Friend the Member for Eastbourne said, we want a partnership between the Health Service and the private sector. As he said, it is part of the philosophy of the White Paper that the two should grow together. The growth of the private sector is not a bad thing.

      809
      Tax relief will generate additional resources. In an excellent speech, my hon. Friend the Member for Stamford and Spalding said that someone will obtain the tax relief only if the resources are provided for private health out of his own pocket. The total resources made available are not just the cost of the tax relief but of the person's expenditure on top of the tax relief. For a 40 per cent. taxpayer that means that the tax subsidy will be multiplied two and a half times. That is how extra resources will be brought into the Health Service as a result of this relief. That is how pressure on the National Health Service will be relieved.
      I do not believe, as Opposition Members seem to do, that resources are finite, or fixed and cannot be increased. This relief will help health services both public and private. Therefore, it is in the interests of everyone in the country and I urge my right hon. and hon. Friends to reject the amendment.
      Amendment negatived.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 238, Noes 183.

      Division No. 191]

      110.00 pm

      AYES

      Aitken, Jonathan

      Cran, James

      Alexander, Richard

      Currie, Mrs Edwina

      Alison, Rt Hon Michael

      Curry, David

      Allason, Rupert

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

      Amess, David

      Davis, David (Boothferry)

      Amos, Alan

      Day, Stephen

      Arbuthnot, James

      Devlin, Tim

      Arnold, Tom (Hazel Grove)

      Dorrell, Stephen

      Ashby, David

      Douglas-Hamilton, Lord James

      Atkins, Robert

      Dunn, Bob

      Baldry, Tony

      Durant, Tony

      Banks, Robert (Harrogate)

      Eggar, Tim

      Batiste, Spencer

      Evans, David (Welwyn Hatf'd)

      Beaumont-Dark, Anthony

      Evennett, David

      Bellingham, Henry

      Fallon, Michael

      Bendall, Vivian

      Favell, Tony

      Bennett, Nicholas (Pembroke)

      Field, Barry (Isle of Wight)

      Blackburn, Dr John G.

      Fishburn, John Dudley

      Blaker, Rt Hon Sir Peter

      Fookes, Dame Janet

      Body, Sir Richard

      Forman, Nigel

      Boscawen, Hon Robert

      Forsyth, Michael (Stirling)

      Boswell, Tim

      Forth, Eric

      Bottomley, Peter

      Fox, Sir Marcus

      Bottomley, Mrs Virginia

      Franks, Cecil

      Bowis, John

      Freeman, Roger

      Boyson, Rt Hon Dr Sir Rhodes

      French, Douglas

      Braine, Rt Hon Sir Bernard

      Gardiner, George

      Brandon-Bravo, Martin

      Garel-Jones, Tristan

      Brazier, Julian

      Gill, Christopher

      Bright, Graham

      Glyn, Dr Alan

      Brooke, Rt Hon Peter

      Goodhart, Sir Philip

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

      Goodlad, Alastair

      Bruce, Ian (Dorset South)

      Goodson-Wickes, Dr Charles

      Buchanan-Smith, Rt Hon Alick

      Gow, Ian

      Buck, Sir Antony

      Grant, Sir Anthony (CambsSW)

      Budgen, Nicholas

      Greenway, Harry (Ealing N)

      Burns, Simon

      Greenway, John (Ryedale)

      Burt, Alistair

      Gregory, Conal

      Butler, Chris

      Griffiths, Peter (Portsmouth N)

      Butterfill, John

      Grist, Ian

      Carlisle, Kenneth (Lincoln)

      Grylls, Michael

      Carrington, Matthew

      Gummer, Rt Hon John Selwyn

      Chalker, Rt Hon Mrs Lynda

      Hague, William

      Chope, Christopher

      Hamilton, Hon Archie (Epsom)

      Churchill, Mr

      Hamilton, Neil (Tatton)

      Clark, Dr Michael (Rochford)

      Hanley, Jeremy

      Clark, Sir W. (Croydon S)

      Hannam, John

      Colvin, Michael

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

      Coombs, Anthony (Wyre F'rest)

      Harris, David

      Cope, Rt Hon John

      Haselhurst, Alan

      Couchman, James

      Hawkins, Christopher

      810

      Hayes, Jerry

      Newton, Rt Hon Tony

      Hayward, Robert

      Nicholls, Patrick

      Heathcoat-Amory, David

      Nicholson, David (Taunton)

      Heddle, John

      Nicholson, Emma (Devon West)

      Heseltine, Rt Hon Michael

      Onslow, Rt Hon Cranley

      Hicks, Mrs Maureen (Wolv' NE)

      Oppenheim, Phillip

      Hicks, Robert (Cornwall SE)

      Page, Richard

      Higgins, Rt Hon Terence L.

      Paice, James

      Hind, Kenneth

      Parkinson, Rt Hon Cecil

      Hogg, Hon Douglas (Gr'th'm)

      Patnick, Irvine

      Howarth, G. (Cannock & B'wd)

      Patten, Chris (Bath)

      Howell, Rt Hon David (G'dford)

      Patten, John (Oxford W)

      Hunt, David (Wirral W)

      Pattie, Rt Hon Sir Geoffrey

      Hunter, Andrew

      Pawsey, James

      Irvine, Michael

      Porter, David (Waveney)

      Irving, Charles

      Price, Sir David

      Jack, Michael

      Raffan, Keith

      Jackson, Robert

      Redwood, John

      Janman, Tim

      Renton, Tim

      Jones, Gwilym (Cardiff N)

      Rhodes James, Robert

      Jones, Robert B (Herts W)

      Riddick, Graham

      Kellett-Bowman, Dame Elaine

      Rowe, Andrew

      Key, Robert

      Sayeed, Jonathan

      Kilfedder, James

      Shaw, Sir Giles (Pudsey)

      King, Roger (B'ham N'thfield)

      Shepherd, Colin (Hereford)

      Kirkhope, Timothy

      Shersby, Michael

      Knapman, Roger

      Skeet, Sir Trevor

      Knowles, Michael

      Speller, Tony

      Knox, David

      Spicer, Sir Jim (Dorset W)

      Lamont, Rt Hon Norman

      Squire, Robin

      Lang, Ian

      Stern, Michael

      Latham, Michael

      Stewart, Andy (Sherwood)

      Lawrence, Ivan

      Stradling Thomas, Sir John

      Lennox-Boyd, Hon Mark

      Sumberg, David

      Lester, Jim (Broxtowe)

      Taylor, Ian (Esher)

      Lightbown, David

      Taylor, John M (Solihull)

      Lilley, Peter

      Taylor, Teddy (S'end E)

      Lloyd, Sir Ian (Havant)

      Tebbit, Rt Hon Norman

      Lloyd, Peter (Fareham)

      Temple-Morris, Peter

      Macfarlane, Sir Neil

      Thompson, D. (Calder Valley)

      MacGregor, Rt Hon John

      Thompson, Patrick (Norwich N)

      Maclean, David

      Thorne, Neil

      McLoughlin, Patrick

      Thurnham, Peter

      McNair-Wilson, Sir Michael

      Tracey, Richard

      McNair-Wilson, P. (New Forest)

      Tredinnick, David

      Madel, David

      Trippier, David

      Major, Rt Hon John

      Trotter, Neville

      Malins, Humfrey

      Twinn, Dr Ian

      Mans, Keith

      Waddington, Rt Hon David

      Maples, John

      Wakeham, Rt Hon John

      Marland, Paul

      Walden, George

      Marshall, John (Hendon S)

      Walker, Bill (T'side North)

      Marshall, Michael (Arundel)

      Waller, Gary

      Martin, David (Portsmouth S)

      Ward, John

      Mates, Michael

      Wardle, Charles (Bexhill)

      Maude, Hon Francis

      Wells, Bowen

      Mayhew, Rt Hon Sir Patrick

      Wheeler, John

      Miller, Sir Hal

      Widdecombe, Ann

      Mills, Iain

      Wiggin, Jerry

      Mitchell, Andrew (Gedling)

      Winterton, Mrs Ann

      Mitchell, Sir David

      Wolfson, Mark

      Moate, Roger

      Wood, Timothy

      Monro, Sir Hector

      Woodcock, Mike

      Montgomery, Sir Fergus

      Yeo, Tim

      Morris, M (N'hampton S)

      Young, Sir George (Acton)

      Morrison, Sir Charles

      Younger, Rt Hon George

      Moss, Malcolm

      Neale, Gerrard

      Tellers for the Ayes:

      Nelson, Anthony

      Mr. Alan Howarth and

      Neubert, Michael

      Mr. Sydney Chapman.

      NOES

      Abbott, Ms Diane

      Beckett, Margaret

      Allen, Graham

      Beith, A. J.

      Anderson, Donald

      Bell, Stuart

      Archer, Rt Hon Peter

      Benn, Rt Hon Tony

      Armstrong, Hilary

      Bermingham, Gerald

      Banks, Tony (Newham NW)

      Blair, Tony

      Barron, Kevin

      Blunkett, David

      Battle, John

      Boyes, Roland

      811

      Bray, Dr Jeremy

      Lestor, Joan (Eccles)

      Brown, Gordon (D'mline E)

      Lewis, Terry

      Brown, Nicholas (Newcastle E)

      Livsey, Richard

      Buckley, George J.

      Lloyd, Tony (Stretford)

      Caborn, Richard

      Lofthouse, Geoffrey

      Campbell, Menzies (Fife NE)

      Loyden, Eddie

      Campbell, Ron (Blyth Valley)

      McAllion, John

      Campbell-Savours, D. N.

      McAvoy, Thomas

      Carlile, Alex (Mont'g)

      McFall, John

      Clark, Dr David (S Shields)

      McGrady, Eddie

      Clarke, Tom (Monklands W)

      McKay, Allen (Barnsley West)

      Clay, Bob

      McKelvey, William

      Clelland, David

      McLeish, Henry

      Clwyd, Mrs Ann

      McNamara, Kevin

      Cohen, Harry

      Madden, Max

      Cook, Frank (Stockton N)

      Mahon, Mrs Alice

      Cook, Robin (Livingston)

      Marek, Dr John

      Corbett, Robin

      Marshall, Jim (Leicester S)

      Corbyn, Jeremy

      Martin, Michael J. (Springburn)

      Cousins, Jim

      Martlew, Eric

      Cox, Tom

      Meacher, Michael

      Cryer, Bob

      Meale, Alan

      Cummings, John

      Michael, Alun

      Cunliffe, Lawrence

      Michie, Bill (Sheffield Heeley)

      Cunningham, Dr John

      Michie, Mrs Ray (Arg'l & Bute)

      Darling, Alistair

      Mitchell, Austin (G't Grimsby)

      Davies, Rt Hon Denzil (Llanelli)

      Moonie, Dr Lewis

      Davies, Ron (Caerphilly)

      Morgan, Rhodri

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

      Morley, Elliott

      Dixon, Don

      Morris, Rt Hon A. (W'shawe)

      Dobson, Frank

      Morris, Rt Hon J. (Aberavon)

      Doran, Frank

      Mullin, Chris

      Douglas, Dick

      Murphy, Paul

      Dunnachie, Jimmy

      Nellist, Dave

      Eadie, Alexander

      Oakes, Rt Hon Gordon

      Evans, John (St Helens N)

      O'Brien, William

      Ewing, Mrs Margaret (Moray)

      O'Neill, Martin

      Fearn, Ronald

      Orme, Rt Hon Stanley

      Field, Frank (Birkenhead)

      Patchett, Terry

      Fisher, Mark

      Pendry, Tom

      Flannery, Martin

      Pike, Peter L.

      Flynn, Paul

      Powell, Ray (Ogmore)

      Foot, Rt Hon Michael

      Prescott, John

      Foster, Derek

      Primarolo, Dawn

      Foulkes, George

      Quin, Ms Joyce

      Fyfe, Maria

      Radice, Giles

      Garrett, John (Norwich South)

      Randall, Stuart

      Godman, Dr Norman A.

      Redmond, Martin

      Golding, Mrs Llin

      Rees, Rt Hon Merlyn

      Gordon, Mildred

      Reid, Dr John

      Gould, Bryan

      Richardson, Jo

      Graham, Thomas

      Robertson, George

      Grant, Bernie (Tottenham)

      Rooker, Jeff

      Griffiths, Win (Bridgend)

      Ross, Ernie (Dundee W)

      Grocott, Bruce

      Rowlands, Ted

      Harman, Ms Harriet

      Ruddock, Joan

      Haynes, Frank

      Salmond, Alex

      Healey, Rt Hon Denis

      Sedgemore, Brian

      Henderson, Doug

      Sheerman, Barry

      Home Robertson, John

      Shore, Rt Hon Peter

      Hood, Jimmy

      Short, Clare

      Howarth, George (Knowsley N)

      Skinner, Dennis

      Howell, Rt Hon D. (S'heath)

      Smith, Andrew (Oxford E)

      Howells, Dr. Kim (Pontypridd)

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

      Hughes, John (Coventry NE)

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

      Hughes, Robert (Aberdeen N)

      Smith, John P.

      Hughes, Roy (Newport E)

      Snape, Peter

      Hughes, Sean (Knowsley S)

      Soley, Clive

      Hughes, Simon (Southwark)

      Steinberg, Gerry

      Illsley, Eric

      Strang, Gavin

      Ingram, Adam

      Straw, Jack

      Jones, Barry (Alyn & Deeside)

      Taylor, Mrs Ann (Dewsbury)

      Jones, leuan (Ynys Môn)

      Taylor, Matthew (Truro)

      Jones, Martyn (Clwyd S W)

      Turner, Dennis

      Kennedy, Charles

      Vaz, Keith

      Kinnock, Rt Hon Neil

      Wall, Pat

      Kirkwood, Archy

      Wallace, James

      Lamond, James

      Walley, Joan

      Leadbitter, Ted

      Wardell, Gareth (Gower)

      Leighton, Ron

      Welsh, Andrew (Angus E)

      812

      Williams, Rt Hon Alan

      Wray, Jimmy

      Williams, Alan W. (Carm'then)

      Wilson, Brian

      Tellers for the Noes:

      Winnick, David

      Mr. Ken Eastham and

      Worthington, Tony

      Mr. Robert N. Wareing.

      Clause 51 ordered to stand part of the Bill.
      10.15 pm
      Mr. Madden: On a point of order, Sir Paul. On 5 May the Minister for Local Government wrote to me and to all other hon. Members, presumably yourself included, saying that he was aware how important it was to make sure that people knew about the community charge—
      The First Deputy Chairman of Ways and Means (Sir Paul Dean): Order. I must stop the hon. Gentleman. We are in Committee on the Finance Bill. I doubt whether the hon. Gentleman is raising a point of order, but even if he is I cannot take it in Committee; I can take it only when we are sitting as a House.
      Mr. Madden: I understand that, Sir Paul. Before you took the Chair this matter was raised under points of order. As the Leader of the House is in his place, I wish to ask when the Government will make a statement advising us what action is being taken to stop these leaflets being put through the letter boxes—
      The First Deputy Chairman: Order. That is not a matter for the Committee of the whole House. The hon. Gentleman must seek some other way to raise the matter that concerns him.
      Mr. Madden rose—
      The First Deputy Chairman: Order. We are in Committee of the whole House and I hope that I have made it clear to the Committee that I cannot deal with such a matter now. I doubt very much whether it is a matter for the Chair anyway, but it is certainly not matter for me as Chairman of the Committee of the whole House.
      Mr. Bob Cryer: On a point of order, Sir Paul. In view of the circumstances in which the Government have been spending money, would it be possible for you to allow a manuscript amendment to the Bill at this stage in order to remove the Government's authority to spend money on these deceitful leaflets? The Minister has been running rampant doing this—
      The First Deputy Chairman: Order. The hon. Gentleman is very ingenious but in no way could that be made in order on the clauses we are now discussing. We now come to—
      Mr. Madden rose—
      The First Deputy Chairman: Order. I have tried to make it clear twice to the hon. Gentleman that I cannot conceivably take a point of order on the community charge while we are in Committee of the whole House considering the Finance Bill. I must reiterate that the hon. Gentleman must find another way to raise the matter which concerns him. I cannot take it now.
      Mr. Madden rose—
      Mr. Dennis Skinner rose—
      The First Deputy Chairman: Order. I am on my feet. We are in Committee on the Finance Bill. The points of order

      813
      which have been raised are not matters for the Chair and are certainly not in order on the proceedings of the Finance Bill, with which we must now get on. Mr. Alan Beith.
      Mr. Skinner: On a point of order, Sir Paul. You are absolutely right on this matter because it is difficult chairing meetings for a long time. However, I wonder whether you would be prepared to accept a manuscript amendment in the guise of a new clause to the Finance Bill in order to provide surcharges on those Ministers who have been spending taxpayers' money on these leaflets, just as you would if this were a local authority? Will you accept a manuscript amendment?
      The First Deputy Chairman: I regret to say that I cannot do that. We must deal with the amendments on the Amendment Paper and we must be fair to those hon. Members who have amendments in their names. Mr. Alan Beith.

    Clause 33

      CORPORATION TAX: SMALL COMPANIES
      Mr. Beith: I beg to move amendment No. 14, in page 23, line 5, leave out '£150,000' and insert '£250,000'.
      This concerns a form of relief to small businesses and I am bound to say that it is a much better way of spending taxpayers' money than on tendentious leaflets about the community charge, which I have received since my copy has already come through the door. Moreover, I think that those for whom this amendment is designed as a benefit, small companies, which contribute so largely to the public revenues, will feel very strongly that the funds they contribute through taxation should not be used for propaganda in pursuit of Government policies.
      I am sure that in considering my amendment the Minister will feel even more impelled to accept the greater relief I am suggesting, covered as he is with guilt through the activities of the Government in publishing at taxpayers' expense leaflets about the community charge.
      Mr. Madden: Does the hon. Gentleman, think, like me, that it is very important that this Committee, as it is concerned with small businesses and the business rate system, should be told what action the Government will take to recover the leaflets which have been put through the letter boxes of many of our constituents?
      The First Deputy Chairman: Order. I am sure that the hon. Gentleman will not spoil his amendment by getting out of order.
      Mr. Beith: I will certainly do my best to keep within order, Sir Paul, and to avoid your chastening.
      It is the sense of many small businesses that this Budget is certainly one of some disappointment. There are many specific measures that small businesses would have liked to see in the Budget in a number of areas. The area in which the Government have taken some action on the lines which we proposed is one on which I will argue that they ought to have gone considerably further.
      In our Budget proposals before Budget day we put forward the view that the threshold below which small businesses pay the lower level of corporation tax should be raised to £250,000. The Government agreed to a much smaller increase to a threshold of £150,000 based on a rate
      814
      fixed in 1982, so it has remained at that level for a long time. There is an argument for making the relief more extensive. However, while the amendment would benefit many small manufacturing firms, it does not cover the whole range of small business including sole traders and very small firms, whose activities fall far below the scope even of the relief I propose.
      The Government recognise that the present rate of corporation tax for small businesses is one on which relief could reasonably be raised. The Government get a great deal of money out of corporation tax. It is one of the most buoyant elements of revenue, and the Government continue quietly collecting that money without much public recognition of the contribution that business makes. The Chancellor is happy to talk about his Budget surplus and what he plans doing with it, but he does not seem so keen to explain how much of that surplus comes from asset sales and how much from corporation tax.
      One paradox is that corporation tax rates in this country are lower than in competitor countries, but that British companies pay more corporation tax than their European competitors. One can speculate as to why that is so. It could be because of greater compliance, more stringent enforcement, or different systems of relief. The fact remains that British businesses pay heavier amounts of corporation tax than do their Community competitors.
      One business sector particularly in need of relief is smaller manufacturing companies. Many of them are bearing the heaviest burden of the present high interest and high exchange rates. Some of the largest companies have considerable cash mountains at their disposal and are not the victims of high interest rates. Many gain substantially from them. All those involved in exports are affected by exchange rates, but the combined effect of high interest and high exchange rates bears most heavily on smaller firms. Companies that should now be preparing for 1992 face increasing costs, such as those involved in third party verification of products standards. Nevertheless, they feel a compelling need to improve their export performance. The Chancellor's whole Budget strategy is based on the assumption that there will be a massive improvement in our country's export performance. The major contributors to any such improvement must be smaller manufacturing companies, for whom I argue that a greater level of relief should be provided.
      The Government's main argument against reducing corporation tax is that that might add to wage inflation by reducing pressure on employers to control their labour costs. That contention cannot apply to smaller companies, which are not the culprits in fuelling wage inflation. They are not usually the leaders in the pay round, and often are among those that have worked hardest to trim their costs so that they can stay in business.
      The threshold at which those smaller companies become eligible for the higher rate of corporation tax should be raised not just to £150,000 but to £250,000. A related amendment increases the other end of the scale from £750,000 to £1 million, so that it will remain smooth between those two points. That is one way that the Budget can be made more helpful to small firms, and one that Conservative Members should find to their liking. I hope that some hon. and right hon. Members who have stayed on to listen to this short debate will join us in the Lobby tonight and support a higher level of relief for smaller businesses than is proposed in the Budget. I invite them to do so.
      10.30 pm
      The Paymaster General (Mr. Peter Brooke): The hon. Member for Berwick-upon-Tweed (Mr. Beith) moved his amendment concisely and briskly. He paid tribute to the interest his party has in small businesses and in that he is echoing the interest that the Government have. My hon. Friend the Member for Taunton (Mr. Nicholson) put a shrewd question to my right hon. Friend the Chancellor of the Exchequer on 27 April about tax concessions, which was specifically directed to small businesses since 1979, which was answered by my right hon. Friend the Financial Secretary. It ran to two and a half columns in the Official Report. I have no doubt at all that small business men in Somerset, who read eagerly the questions put down by my hon. Friend the Member for Taunton, responded enthusiastically to that information and that that was in part responsible for Somerset being wrested from the hon. Member's party during the recent county council elections.
      The hon. Member asked why, with lower rates of corporation tax, we achieved higher yields, and suggested it was either compliance or the quality of the surveillance by the Inland Revenue. The answer of course is the extremely successful and high rates of profitability being earned by British companies during the economic expansion we have enjoyed for the last seven or eight years. He made reference to interest rates, but small companies in particular wish to see a reduction in inflation, to which those interest rates are directed.
      As to the merits of the hon. Member's amendment, the background to the lower rate of corporation tax, the small companies' rate, is familiar to the Committee. Clause 33 increases the profit limits for the small companies rate and the associated marginal relief to £150,000 and £750,000 respectively, as the hon. Member said. The Government's changes in recent years have concentrated on bringing the rate of corporation tax down, so increasing the profit limits has not been a high priority and the limits have remained unchanged since 1983. This year we thought it right to increase the limits substantially.
      The two amendments which the hon. Member has tabled would increase the profit limits even further. In our view, those limits would be too high. Clause 33 already increases both limits by 50 per cent., which is more than enough to take account of inflation over the period since the limits were last raised. Over 20,000 companies will pay less tax as a result of this change. This represents half of those companies which were previously paying corporation tax at a higher rate than the small companies' rate. We think the new limits we have proposed are high enough.
      There is another objection to adopting the limits the amendments propose. Under our present proposal the special rate of corporation tax which applies to company profits between £150,000 and £750,000 will remain at 37½ per cent., because we are increasing both limits by the same proportion. If the limits were raised, as the hon. Member's amendments propose, to £250,000 and £1 million, the marginal rate would have to be 381/3 per cent. I know that some companies are convinced about the disincentive effect of high marginal rates, and we would be very reluctant to increase the marginal rate even by a small amount.
      Finally, I have seen the hon. Member's press release which accompanied this amendment. We are looking
      816
      forward very much to the hon. Member being on the Committee upstairs, but I hope that he will be able to manage something more substantial in his next press release than he has done tonight.
      Mr. Nicholas Brown: The Minister is quite right to raise the attendance of the hon. Member for Berwick-upon-Tweed (Mr. Beith) at the Finance Committee. The Minister will remember that the hon. Gentleman was a member of the Finance Bill Committee last year and attended only three of the 15 sittings. In fact, his absence from that Committee stage was commented on almost every day of the proceedings.
      Mr. Brooke: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) is quite right in his recollection of those events. There passed through my mind as I surveyed the empty seat of the hon. Member last year that remark of Sir Winston Churchill concerning the Margrave of Baden, who was one of the allies of the first Duke, of whom it was said that his military epitaph for all time should be that the two greatest captains of his age thought his absence from the field as an ally well worth 15,000 men.
      I urge my hon. and right hon. Friends to resist this amendment.
      Mr. Beith: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) and the Paymaster General must be the only two Members in the Committee who did not notice where I went in July last year or how I occupied my time during that month. I am glad to say that my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) discharged an excellent service in that Committee's far smaller number of sittings, during which I fought a certain election.
      If that is the only reason that the Government can think of for not allowing a higher level of relief for small business, and the only reason that the Labour party can think of for not supporting it—[HON. MEMBERS: "What about the policy review?"] Indeed, perhaps the matter could be brought into the Labour party's policy review. The dearth of serious argument, however, leads me to believe that my hon. Friends should be given the opportunity to invite those who genuinely support small business to come into the Lobby and vote for the amendment.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 14, Noes 179.

      Division No. 192]

      [10.35 pm

      AYES

      Beith, A. J.

      Livsey, Richard

      Campbell, Menzies (Fife NE)

      McGrady, Eddie

      Carlile, Alex (Mont'g)

      Michie, Mrs Ray (Arg'l & Bute)

      Ewing, Mrs Margaret (Moray)

      Salmond, Alex

      Fearn, Ronald

      Welsh, Andrew (Angus E)

      Hughes, Simon (Southwark)

      Jones, leuan (Ynys Mön)

      Tellers for the Ayes:

      Kennedy, Charles

      Mr. James Wallace and

      Kirkwood Archy

      Mr. Matthew Taylor.

      NOES

      Aitken, Jonathan

      Bellingham, Henry

      Alexander, Richard

      Bennett, Nicholas (Pembroke)

      Alison, Rt Hon Michael

      Blackburn, Dr John G.

      Amess, David

      Blaker, Rt Hon Sir Peter

      Amos, Alan

      Boscawen, Hon Robert

      Arbuthnot, James

      Boswell, Tim

      Arnold, Tom (Hazel Grove)

      Bottomley, Peter

      Batiste, Spencer

      Bottomley, Mrs Virginia

      Beaumont-Dark, Anthony

      Bowis, John

      817

      Braine, Rt Hon Sir Bernard

      Garel-Jones, Tristan

      Brandon-Bravo, Martin

      Gill, Christopher

      Brazier, Julian

      Glyn, Dr Alan

      Bright, Graham

      Goodson-Wickes, Dr Charles

      Brooke, Rt Hon Peter

      Gow, Ian

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

      Greenway, John (Ryedale)

      Buck, Sir Antony

      Gregory, Conal

      Burns, Simon

      Griffiths, Peter (Portsmouth N)

      Burt, Alistair

      Grist, Ian

      Butler, Chris

      Gummer, Rt Hon John Selwyn

      Butterfill, John

      Hague, William

      Carlisle, Kenneth (Lincoln)

      Hamilton, Hon Archie (Epsom)

      Carrington, Matthew

      Hamilton, Neil (Tatton)

      Chapman, Sydney

      Hanley, Jeremy

      Chope, Christopher

      Hannam, John

      Churchill, Mr

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

      Clark, Sir W. (Croydon S)

      Harris, David

      Colvin, Michael

      Hawkins, Christopher

      Conway, Derek

      Hayward, Robert

      Coombs, Anthony (Wyre F'rest)

      Heddle, John

      Cope, Rt Hon John

      Hicks, Mrs Maureen (Wolv' NE)

      Couchman, James

      Hicks, Robert (Cornwall SE)

      Cran, James

      Hind, Kenneth

      Currie, Mrs Edwina

      Hogg, Hon Douglas (Gr'th'm)

      Curry, David

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

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

      Howarth, G. (Cannock & B'wd)

      Davis, David (Boothferry)

      Howell, Rt Hon David (G'dford)

      Day, Stephen

      Hunt, David (Wirral W)

      Dorrell, Stephen

      Hunter, Andrew

      Douglas-Hamilton, Lord James

      Irvine, Michael

      Dunn, Bob

      Jack, Michael

      Durant, Tony

      Jackson, Robert

      Evans, David (Welwyn Hatf'd)

      Janman, Tim

      Fallon, Michael

      Jones, Gwilym (Cardiff N)

      Favell, Tony

      Jones, Robert B (Herts W)

      Forman, Nigel

      King, Roger (B'ham N'thfield)

      Forsyth, Michael (Stirling)

      Kirkhope, Timothy

      Forth, Eric

      Knapman, Roger

      Fowler, Rt Hon Norman

      Knowles, Michael

      Franks, Cecil

      Lamont, Rt Hon Norman

      Freeman, Roger

      Latham, Michael

      French, Douglas

      Lawrence, Ivan

      818

      Lennox-Boyd, Hon Mark

      Raffan, Keith

      Lester, Jim (Broxtowe)

      Redwood, John

      Lightbown, David

      Rhodes James, Robert

      Lilley, Peter

      Riddick, Graham

      Lloyd, Peter (Fareham)

      Rowe, Andrew

      Macfarlane, Sir Neil

      Shaw, Sir Giles (Pudsey)

      MacGregor, Rt Hon John

      Shepherd, Colin (Hereford)

      Maclean, David

      Speller, Tony

      McLoughlin, Patrick

      Stern, Michael

      Major, Rt Hon John

      Stewart, Andy (Sherwood)

      Mans, Keith

      Stradling Thomas, Sir John

      Marland, Paul

      Sumberg, David

      Marshall, John (Hendon S)

      Taylor, Ian (Esher)

      Martin, David (Portsmouth S)

      Taylor, Teddy (S'end E)

      Mates, Michael

      Tebbit, Rt Hon Norman

      Maude, Hon Francis

      Temple-Morris, Peter

      Mayhew, Rt Hon Sir Patrick

      Thompson, D. (Calder Valley)

      Miller, Sir Hal

      Thompson, Patrick (Norwich N)

      Mills, Iain

      Thorne, Neil

      Mitchell, Andrew (Gedling)

      Thumham, Peter

      Mitchell, Sir David

      Tracey, Richard

      Moate, Roger

      Tredinnick, David

      Monro, Sir Hector

      Trotter, Neville

      Morris, M (N'hampton S)

      Twinn, Dr Ian

      Morrison, Sir Charles

      Waddington, Rt Hon David

      Moss, Malcolm

      Walden, George

      Neale, Gerrard

      Walker, Bill (T'side North)

      Nelson, Anthony

      Wardle, Charles (Bexhill)

      Neubert, Michael

      Watts, John

      Nicholls, Patrick

      Wells, Bowen

      Nicholson, David (Taunton)

      Wheeler, John

      Nicholson, Emma (Devon West)

      Widdecombe, Ann

      Onslow, Rt Hon Cranley

      Winterton, Mrs Ann

      Oppenheim, Phillip

      Wood, Timothy

      Page, Richard

      Yeo, Tim

      Paice, James

      Younger, Rt Hon George

      Patnick, Irvine

      Pattie, Rt Hon Sir Geoffrey

      Tellers for the Noes:

      Pawsey, James

      Mr. John M. Taylor and

      Porter, David (Waveney)

      Mr. David Heathcoat-Amory.

      Price, Sir David

      Question accordingly negatived.
      Question proposed, That the clause stand part of the Bill.
      10.45 pm
      Mr. Nicholas Brown: There is less to clause 33 than meets the eye, and certainly less than the Government have claimed for it. Opposition Members are very understanding people, and we understand that it is a political necessity for the Conservative party to pretend to help small businesses. Of course it is necessary for the Minister and his colleagues to have something to tell their constituency parties. We are not unused to those circumstances. However, it is stretching the facts substantially further than is plausible to say, as the Chancellor of the Exchequer said in his Budget speech:
      "but I propose to increase the small companies' rate band substantially, by 50 per cent."—[Official Report, 14 March 1989; Vol. 149, c. 298.]
      Perhaps uniquely on the Opposition Treasury team, I am a fan of the Chancellor's increasingly frequent forays into self-parody and I am sure that that was one example of it.
      The truth is that the increase in the profit limit for the rate of small companies' corporation tax and the increase in the marginal relief threshold represent the first adjustment that the Government have made to those thresholds since 1982. It is in that context that the word "substantial" should be considered. If it is right to help small businesses in this way this year, one wonders why it was not right to do so last year, the year before that, and so on, back to 1982. The Government's arguments this year would have had similar force last year. If the measure is necessary to help small businesses, why was it not necessary last year? I ask the Paymaster General why this measure was not brought in last year, or the year before.
      It may be helpful to the Committee if I spell out the minimum amount in profits prepaying the higher marginal tax rate that applied from 1974 onwards. The House will see that the amount rose steadily. In 1974 the figure was £25,000; in 1975, it was £30,000; in 1976, £40,000; in 1977, £50,000; in 1978, £60,000; in 1979, £70,000; in 1980, £80,000; in 1981, £90,000; and in 1982, it was £100,000. With equivalent rises in the maximum amount of profits prepaying the highest marginal tax rate, there the levels remained. The figure remained at £100,000 from 1982 until this year's Budget. If the Government claim to be helping small businesses, they need to explain why the figure was frozen for that period.
      Mr. Beith: As the hon. Gentleman has criticised the Government for failing for so long to uprate the limit, will he explain why he did not feel able to invite his colleagues to join us in the Lobby in support of a higher threshold or to say during the debate why he was not going to do so?
      Mr. Brown: I am addressing my remarks to the clause stand part debate.
      Mr. Beith: Feeble.
      Mr. Brown: If the hon. Gentleman breaks the habit of a lifetime and stays to listen to the debate, he will find out about the Labour party's position, and he will discover that we believe that rates are now about right.
      Mr. James Wallace: How does the hon. Gentleman work that out?
      Mr. Brown: I shall explain. It is worked out by taking the indexation that applied to the thresholds under the last
      820
      Labour Government and applying that forward. If that indexation, which we accepted as right, had been applied throughout the period of Conservative Government, the rates would have been £140,000 and £705,000, respectively. That is not so very different from the thresholds that the Government propose. The difference, of course, is that, under a Labour Government, small businesses would have had the advantage of a year-by-year increase.
      Mr. Campbell-Savours: Is there not an additional factor? The Labour Government introduced the stock relief scheme against corporation tax, which had a marked effect on the corporation tax paid by companies.
      Mr. Brown: That is correct as well. My contention is that many small businesses would have been advantaged by the regime that pertained when we were in power.
      Mr. Wallace: The hon. Gentlemen has just agreed with his hon. Friend the Member for Workington (Mr. Campbell-Savours) that stock relief was an additional advantage. Now that it has gone, does he not think that the indexation that he has just used in a mechanistic and arithmetical way is an inadequate method of evaluating the benefit given? He should have been willing to support a figure higher than the one that he is ready to support.
      Mr. Brown: It is self-evident that I do not think that; I have just said so. I think that the approach that I have outlined, which has belatedly been adopted by the Government, is the right one. As Treasury Ministers frequently tell us, and as I shall be telling people one day, I suppose, it is always difficult to strike a balance in these matters. It is not illogical to say that that is how we arrived at the figure.
      Mr. Campbell-Savours: Is not the answer to the hon. Member for Orkney and Shetland (Mr. Wallace) that the stock relief scheme was brought in to deal with the inflation problems that followed the oil price increases in 1974, and that we are not dealing with the same conditions now?
      Mr. Brown: My hon. Friend is absolutely right, although I was trying to refrain from discussing the oil crisis and the subsequent inflation, and to stick to the narrower topic of corporation tax relief.
      The difference between the Labour party's position and that of the Government on this matter—
      Mr. Wallace: Will the hon. Gentleman give way?
      Mr. Brown: No, I shall not; the matter has already been given a good airing. No doubt the hon. Gentleman wishes to ask me to repeat what I said five minutes ago. That seems to have been the thrust of most of his interventions, and I will do that if he likes, but I would much rather explain the difference between the Labour party and the Government on this matter. The difference between us is that the Labour party believes that there should have been an annual uprating, whereas the Government chose to freeze the allowances for six years. The Government should address themselves to that, rather than to the more spurious points that the Liberal party is raising.
      The Government certainly cannot describe today's increase as substantial. In any event, the savings to small businesses are not as great as the Government are trying to suggest, and in many cases they will certainly not be sufficient to make up for the far more damaging effects of

      821
      interest rate rises, which amount to 5·5 per cent. since May 1988. Rising interest rates, rather than the small business corporation tax rate, represent the most significant problem that small businesses face today.
      In January this year the Small Business Research Trust stated that the biggest problem facing smaller firms is finance and interest rates. Interestingly enough, the second biggest problem facing small businesses was not corporation tax but skill shortages—again according to the Small Business Research Trust, although the trust did not go on to make the obvious point that skill shortages are caused by Government cuts in funds made available for education and training—indeed, by their failure even to admit that they should be addressing the problem.
      At the same time, the National Federation of Self Employed and Small Businesses was drawing our attention to the increasing burdens that were being placed on small businesses by the necessity of having to go to law on issues such as bad debts—surely an unfair burden on businesses and an indication of the real health, or otherwise, of at least part of the economy.
      Let me return to the major problem facing the small business community today—interest rates. All of us in the House would like to help our constituents who are running small businesses. Those whom I meet echo the comments of their local trade associations.
      Most Members of Parliament will have heard small business men say they are working not for themselves, but for the bank. The banks, of course, make a considerable effort through their television advertising to present themselves as partners in enterprise, but most small businesses find that venture capital can be obtained only in exchange for a first charge on the small business man's family home. In those circumstances, the banks could scarcely claim that the risk has been evenly shared or even that the banks are taking any risk at all.
      Government failure to develop an effective venture capital project, particularly for the regions—either through Government agencies or in partnership with private sector financial institutions—is a far greater restraint on the growth of small businesses than any change in corporation tax thresholds.
      Mr. Ian Taylor: The hon. Gentleman has overlooked the fact that the venture capital industry has grown dramatically in recent years and that it is now dealing with a whole range of small companies and providing them with the much-needed equity capital that eases the interest rate problems that many of them face.
      Mr. Brown: I am well aware of the activities of private sector venture capital banks and other financial institutions, but they operate very much at the margins. Many small businesses say that they cannot raise venture capital except at usurious rates of interest or by providing some form of security which leaves no risk for the venture capitalist, but leaves a great risk for the business man. In other words, it is an unacceptable risk for the business man. Small businesses need financial investing partners, which are not provided by private sector venture capital schemes. If the private sector takes high risks, it requires high rates of return on its money. It also wants whatever security it can get. It is not enough for the Government to leave it to the private sector. The Government have a duty,
      822
      either in partnership with the private sector or on their own, to make some sort of scheme available for the small business community.
      11 pm
      The charge that many small business men level against the banking community is that the banks will only lend money to those who are sufficiently wealthy not to need to borrow. In those circumstances, the recent interest rate rises prove to be an additional and in some cases an insuperable, rather than just a first hurdle for small businesses.
      A survey of regional chambers of commerce highlights this point. The overseas trades committee of t he Nottinghamshire chamber of commerce concluded in January of this year that it was difficult to reconcile the interest of British exporters with increasing interest rates, and pointed out that foreign companies exist in a quite different regime of interest rates.
      The Manchester chamber of commerce reported that 76 per cent. of its members had called for lower interest rates in its last survey. On Teesside the chamber of commerce felt that interest rate rises would make small businesses think twice about their investment decisions over the next six months. The secretary of the Glasgow chamber of commerce pointed out that high interest rates choke off marginal investment for small companies and that the service sector would be forced to load the additional cost on to clients, which could, in turn, mean that those clients would decide to make do with less services.
      Those are the views—perfectly rational and understandable—of the authentic voice of the small business community. The Government's endeavours to help small businesses are more cosmetic than real. Their schemes are cheap rather than effective. The National Audit Office told us last autumn, when it looked at the enterprise allowance scheme and the loan guarantee scheme, that 43 per cent. of the enterprise allowance scheme's small businesses failed completely after three years. It found, too, that 42 per cent. of the loans extended under the loan guarantee scheme were the subject of default. The Government's breezy optimism at the launch of the scheme claimed that it was intended to be self-financing. It has, of course, consistently lost money because defaults outweigh the returns on the successful schemes. The Government may very well not care about that.
      The reasoning behind the schemes were political and not economic. Boosting enterprise is a necessary political claim in a Conservative party, where there is also a marked reluctance to look at the realities that sit alongside those devices. It is nonsense to assume that every redundant shipyard worker can be converted into a small business man with £40 a week and a one-day induction course. To set 43 per cent. of applicants on the enterprise allowance scheme up for failure after three years is a cruel and unnecessary further blow to inflict on people, many of whom will already have been through the traumas of redundancy. The failure of new small businesses will bring further despair to their owners and their families. They may well also waste the financial compensation received in an earlier redundancy round. There is not much help to small businesses there, and there is no chance for such people to benefit from the enhanced thresholds in the corporation tax review that we are discussing.

      823
      If the Government really intended to help small businesses, they would have listened to the Labour party's Treasury team in the last Parliament, when we sought to amend the regulations covering the collection of VAT.
      Many small businesses resent the amount of work that they put into collecting taxes for the Government. When businesses fail, the Inland Revenue and the Customs and Excise are almost always substantial creditors. It was not unreasonable for the Government to tighten up the collection regulations, so that debts to the public purse could not steadily accumulate. What was totally unreasonable and particularly unfair to small businesses was to deny a "good cause" defence to a business man who was in difficulties with VAT returns. Very small businesses will not be the beneficiaries of the corporation tax changes.
      The sudden illness of the owner-manager of a small business can be a near-fatal blow to the prospects of the whole enterprise. In those circumstances it is wholly unreasonable for the Customs and Excise to harass the small business man when seeking its VAT payments. Indeed, it may be counter-productive. At a difficult time such pressures may force an otherwise viable business under. Clearly, a public interest defence of good cause could be advanced in those circumstances and I am amazed that a Government who claim to represent the small business community could not see that and legislate for it. It was left to the Labour party to advance such a proposition and the Conservative Government were left to reject it.
      Those are the real burdens on small businesses and this measure is the real agenda for small business men. The small business community would like the issues of interest rates and skills shortages to be addressed by the Government in the Finance Bill and elsewhere. The Conservative party will, of course, try to claim credit for the Bill but I conclude, as I opened, by saying that there is substantially less to this than meets the eye.
      Mr. Beith: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) has just produced some strangely conflicting remarks. At one point he seemed to imply that the Government had conquered the problem of inflation. He sought to argue that the reason that it was not necessary to take into account the disappearance of stock relief, which was a feature of the Labour Government's changes for small businesses, was that that problem was designed to deal with inflation. I must advise the hon. Gentleman that inflation is rising and is now at a serious level. Indeed, that is the plain justification for the Government's interest rate policy. Therefore, the absence of that feature must be one of the factors that one considers when trying to decide whether it would be appropriate to give small companies a higher level of relief than the Government propose.
      The hon. Gentleman then argued that the Government had got it about right because if one projects on a year-by-year index basis the position under the Labour Government, one arrives at almost the figure that the Government have proposed. If that is what he thinks, why did he not vote with the Government? It seems perfectly logical to vote with the Government and to support their proposition if one thinks that they have got it right, rather
      824
      than to skulk in the corner unable to vote either for or against the proposition that the relief should be considerably higher.
      The hon. Member for Newcastle upon Tyne, East was right to say that the corporation tax relief is a benefit that will not deal with many of the problems of the smallest businesses and that at all levels of small business the problems of the level of interest rates and specifically that of VAT collection loom large. There is clearly a strong case for relieving some of the burden of corporation tax, which is why we support what the Government are doing in default of the larger measure of relief that we have just sought to persuade the Committee to accept.
      I trust that having abstained in the previous Division the Labour party will not seek to oppose the inclusion of the clause in the Bill and that we can get on with these other matters when we reach the appropriate point.
      Mr. Campbell-Savours: The amendment that the hon. Member for Berwick-upon-Tweed (Mr. Beith) moved on behalf of the Social and Liberal Democratic party was not supported by my hon. Friends, for a simple reason—and I shall tell him what was said as we went through the Lobby. It was because we sat through a Bill in Committee last year without Liberal participation in debates on these matters and because, while we voted on such matters, no Liberal Member voted with us that we could not take his amendment seriously.
      If the hon. Gentleman thinks that he can come to the House on such an evening and move an amendment, having issued a press release, in the knowledge that in a previous year his hon. Friends refused to turn up and debate these matters at length, and if he thinks that at the same time, he can gather the credibility of the House of Commons, he is making a grave error of judgment. It may be that he had a very good case: I do not know. We did not consider it. It was not relevant. If he wishes to be taken seriously, he should ensure that his hon. Friends turn up to a Committee on the Finance Bill when we debate these matters again.
      I turn briefly to stock relief and its effect on many small businesses during the period of the Labour Government. In many ways that was the largest concession ever given, under corporation tax law, by any Government that I can recall. The intention was to ensure that businesses were compensated for stock increases that arose from the inflation which existed during the period of the Labour Government and which derived from the oil price increases of 1974. However, most accountants, when drawing up accounts on these matters, did not take into account merely inflationary increases in stocks, but stock volumes.
      During this period many companies were able to inflate their stock volumes to a major extent and yet, at the same time, claim relief on it. In my view, if the letter of the law had been strictly applied, those companies might have been subject to corporation tax during that period. Due to the complications of annual inventories and the difficulties of assessing the amount of stocks that companies were carrying, it was difficult for company accountants to assess what values could be attributed to inflationary factors, rather than stock volume increases.
      Therefore, I submit that this major tax concession, which was introduced by the Labour Government, cost the Exchequer thousands of millions of pounds over that period. If I recall correctly, during that period a number of large companies in this country paid no corporation tax,

      825
      while they made healthy profits. They were able to hide behind the arrangements—some might say sloppy arrangements—that operated during the period of stock relief concession. I do not condemn them for that.
      Mr. Hanley: It was very important.
      Mr. Campbell-Savours: It was an important principle. I predict that if the Government do not deal with the problems of the balance of payments, they may find that they have to introduce another stock relief scheme to deal with the inflationary problems that will inevitably arise. We cannot continue as we are at the moment.
      Some months ago, I asked the Chancellor a question at Question Time which, if I might say so modestly, was interesting. I asked whether it was fair to say that high penal interest rates were no more than a form of taxation paid to the private sector and private institutions. If a company pays high interest rates to what, in effect, is a private sector bank, it could be said that that is no more than a substitute for what in other conditions, perhaps of lower interest rates, might be a higher level of tax paid to the Exchequer in the form of corporation tax liability.
      When we discuss interest rates, particularly as they affect the small business sector, we should remember that we are talking about taxation. Penal interest rates are nothing but taxes paid to private banks. If we see them in that context, the premium that we pay in higher interest rates, rather than more moderate and sensible rates, is a tax imposed by Government—possibly because of the inadequacy of their economic policy—and paid to the private sector and private institutions.
      It is unreasonable of the Government not to concede this case. It is their economic policy and strategy that requires them to use interest rates as the weapon, in their view, to reduce the inflation level, and to deal with their other economic problems. In so far as it is a Government-inspired move to drive up interest rates to today's levels, they must take the responsibility, and accept and concede the principle that those high rates are no more than a form of taxation.
      When those high interest rates, particularly their impact on small businesses, are taken into account when the lower rate of corporation tax and the raising of the profit limit thresholds are being considered, as they are this evening, the other burdens that have fallen on small businesses over the last few years should also be taken into account.
      Another interesting factor that might be deemed a form of taxation is the large increase in commercial property rentals of the past two years. In the part of Lancashire in which I was once in business many years ago, one could regularly buy freehold square footage in the 1970s, for £1·50. The freehold price of a mill in Lancashire was rarely more than 75p a square foot. Today, even in the north, where there is still industrial recession, we pay £2 or £2·50 a square foot, not freehold but rental. Using the rental and the original capital cost multiplier, one can work out that the value of freehold industrial property in recent years has increased twenty to thirtyfold.
      11.15 pm
      In many ways, this has come about because there is not enough factory space on the market. If the Government built more factory space, through English Industrial Estates or similar organisations, or through local authorities, more commercial property would come on to the market, which would have a knock-on effect on the
      826
      costs of freehold acquisition and the rental prices of industrial and commercial property. But that is not happening. The scarcity of property is driving up rentals. This inflationary effect on property prices has been induced by the Government, and I submit that that is another form of taxation.
      This taxation may be paid to private landlords, but it is a form of taxation because it derives directly from Government policy, which does not provide for the building of sufficient industrial work space. In many parts of the country—certainly in Lancashire and parts of Yorkshire—there is a dearth of industrial and commercial property and rentals are being driven up, even in my constituency. I can remember that, even as late as 1979, square footage in Workington was sold for as little as 50p freehold. Now, people looking for space in west Cumberland will pay £2 or £2·50 a square foot for annual rental—a massive increase.
      Another factor to be taken into account in assessing the Government's tax regime for small businesses is the impact of the cuts in regional assistance. Regional support has been dramatically cut, so that in many parts of the country, of which my constituency is an example, a traditional capital-intensive industry such as Thamesboard Mills required such a large amount of Government money to set up its plant in Workington during a big expansion that a special Bill had to be passed to ensure that the company received its regional assistance, which exceeded the levels of grant that Ministers could sanction without such legislation.
      We no longer attract this sort of industry. We no longer get the Leyland Nationals, the Ektona Fibres, the Thamesboard Mills and other large capital-intensive industries. They are no longer interested in Workington because we have nothing to offer by way of substantial regional assistance.
      We are still an assisted area and we have development area status, but the level of assistance is substantially less than it used to be, and we are competing with other parts of the United Kingdom which have equally high levels of unemployment. In those areas are pools of unemployed and they are nearer to the great conurbations and market centres. In many ways they are winning against us in our bid to attract capital intensive industries.
      The burden on small businesses in my constituency, including the cuts in regional assistance and the fact that they are paying higher interest rates and higher rentals for their properties, puts them at a considerable disadvantage. So the concessions on corporation tax which the Government have announced today for small businesses are small compared with the added burdens that those businesses have acquired in recent years.
      Other cuts have applied to small businesses that would like to get into export markets to achieve growth, finding that they are hemmed in by saturation of the domestic market. Many small businesses used to use the British Overseas Trade Board as the vehicle for getting into foreign markets. I refer to businesses with perhaps half a dozen or a dozen employees, the very companies that are today in potentially expanding sectors. They have been clobbered, in effect, by the new rules under which the BOTB does not sponsor, in the way it did in the past, the small firms of which I speak.
      I was sent to Tokyo, Japan, in 1973 on a trade exhibition, paid for by the Department of Trade, where we secured a number of new accounts for the manufacturers

      827
      with which I was involved. I also attended on a number of occasions the Milan trade exhibition and other such gatherings in various parts of Europe, always sponsored by the BOTB or by sectional bodies within the industry which, in turn, were sponsore on group stands. I am told that much of that has ended. I attended an exhibition in Birmingham a couple of months ago to talk to people in the trade that I was in originally, and they told me that the level of support now for people in our markets is minimal.
      Mr. Hanley: If what the hon. Gentleman is saying is true, can he explain why more companies are now registered at Companies house than at any time in our history, allowing for the number of companies that have come off the register?
      Mr. Campbell-Savours: That may not be too correct a measure; we may be talking of small incorporated businesses involving two or three people who, for whatever reason, have been advised by their accountants to seek incorporation. What matters is how much wealth we produce, how many people are employed, how secure one's markets are at home, whether one will be wiped by the cool breeze of recession and whether one can get into export markets.
      Let us remember that export markets are a great plus for industry generally and certainly for smaller businesses. Such markets for small businesses often produce large orders. People who go abroad to sell do not want small orders; they want to do substantial business. Often in the 1970s I came across small business men whose major markets on the continent were store and wholesale groups and so on. It seems that much of that has gone because the contact point—the BOTB-sponsored exhibition—has, in effect, been lost from the support point of view, and many of those people no longer exhibit in overseas markets. That type of cost must be taken into account for businesses that want to enter those markets, and that cost must come into our evaluation of the real value of this concession for small businesses.
      Historically, the tourist industry has been well supported by Government. We now learn that the Government have placed a moratorium on payments under one of the sections dealing with grants under tourist legislation with the effect that many projects are being put in jeopardy. Those that are will have their profitability affected by the loss of that grant. When we evaluate the worth of a concession in corporation tax, we cannot take it in isolation. We must see it in the context of all those factors and many others that I have not mentioned this evening.
      My final point concerns the exchange rate and its effect on small businesses. I remember going to a trade exhibition in New York in 1980 to see some colleagues whom I had known when I was in business in the 1970s. We discussed the impact of the rise in sterling against the dollar on our ability to export to our overseas markets. One thing that rang out clearly throughout our conversations was that a high exchange rate was damaging Britain's exports.
      Following that meeting, I met people from many companies which were severely damaged by the high exchange rate in 1980, 1981 and 1982 when sterling was so valuable. I am sure that I am not alone in that experience.
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      I am sure that if hon. Members are truthful, they will remember that period well. We lost markets then, and now the exchange rate is over-valued. Until a decision is taken to reduce the exchange rate and come down to something like $1·40 to the pound, the trade deficit will not be closed. A convoluted argument was produced last year that a high exchange rate could lead to a reduction in the trade deficit, but I never subscribed to that view, although it was interesting. I think that the Government have changed their position on that.
      It is critical to close that trade deficit because that will provide the basis on which a real spark and some fire can be given to small business development in Britain. We need a way of ensuring that British manufacturers substitute for foreign imports. The only way that we can do that is by giving them some sort of competitive edge. That drop of 25 or 30 cents in the exchange rate will be critical in helping many companies to import substitute. That is what we have to do.
      When the Paymaster General discusses those matters with his colleagues in the Treasury, he must realise that he cannot go on like this, when he has at his fingertips a weapon that he can use which within months, or certainly within a few years, could have an immeasurable effect on the opportunities and potential for small businesses.
      Mr. Brooke: This has been an interesting and valuable debate, opened by the hon. Member for Newcastle upon Tyne, East (Mr. Brown) who began his speech by saying that the clause less than met the eye and concluded his speech with the same words. He also passed judgment on my right hon. Friend the Chancellor's use of the word "substantially". It was an agreeable metaphysical passage in his speech. The most metaphysical of all economic phenomena are invisible earnings.
      This is a debate about small companies which have been highly visible. My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) said that for the past eight years, and particularly for the past two or three years, there has been a notable and rapid expansion in the number of small companies that have entered business.
      The hon. Member for Newcastle upon Tyne, East confirmed in his speech what I said in my speech on the amendment No. 14 and I shall now confirm that he was right. As the Bellman said in "The Hunting of the Snark", "What I tell you three times is true".
      The hon. Gentleman asked why the Government had not changed these bands earlier. The reason was, as I said in my speech on the earlier amendment, that during the period to which he was referring we had been engaged in bringing the rate down. We brought the small companies rate down from 42 per cent. to 25 per cent. between 1979 and 1988.
      The hon. Gentleman said that so far as the Labour party was concerned the rates were now about right. I think he probably meant the bands. We follow with the keenest interest anything that the Labour party says about rates because we notice a certain reticence about indicating precisely at what level various rates will strike. I am greatly reassured to hear that the hon. Gentleman thinks in this instance that the rates are about right.
      Mr. Nicholas Brown: I referred to the rates at which the bands are set.
      11.30 pm
      Mr. Brooke: At any rate, I have sought to give the hon. Gentleman a response to what he said.
      He went on to talk about interest rates and the hon. Member for Workington (Mr. Campbell-Savours) also addressed that subject. We all come here with the various impedimenta of our experience. I always enjoy listening to the hon. Member for Workington—and I hope he will forgive me for saying so—talking about his experience in the private sector before he entered the House. I ran a business for 18 years before coming into the House and I think that those of us who run businesses of the sort of size that I did and, I suspect, the hon. Gentleman did are accustomed to aspects of the business cycle and to living through them. I certainly can remember living through the difficulties of the mid-1960s and the mid-1970s. I would have lived through the difficulties of the recession of 1969–71 if I had not been in New York, where the Wall Street Journal somewhat surprised me by being sufficiently frivolous as to say that the recession had become so serious that the Mafia had had to lay off two judges in New Jersey.
      The important thing for anybody running a small business is a sense of steadiness in the economic framework within which he is asked to operate, and that is something which the Government have sought to provide.
      Mr. Ted Rowlands: May I ask the right hon. Gentleman one simple question? How does he justify a stituation in which interest rates are virtually double the rate of inflation?
      Mr. Brooke: I think the hon. Gentleman is familiar with the relationship between the mortgage interest rate and the RPI in this country, which only applies elsewhere in Ireland and Canada.
      Mr. Rowlands: That was not my question.
      Mr. Brooke: The hon. Gentleman asked me about the inflation rate and I was saying that, since the interest rate and the mortgage interest rate, which flows from it, are part of the RPI, necessarily when inflation is rising it provides an upward stimulus and when it is falling it provides a very strong downward stimulus.
      Mr. Rowlands: I did not say anything about the mortgage rate. I asked a simple question. Why should interest rates be nearly double the rate of inflation?
      Mr. Brooke: I genuinely misunderstood the hon. Gentleman's question. I think he is taking us slightly wide of the clause; I shall watch you, Sir Paul, out of the corner of my eye. If the hon. Gentleman will refer to a table in a relatively recent copy of the Bank of England Quarterly Bulletin he will see the real interest rates in the United Kingdom, Japan and Germany and their relationship to the movements in wages and unit labour costs. The real rate of interest in this country being an offset to the fact that unit labour costs have been rising faster, one sees from the chart a rate which is comparable in the three places.
      Mr. Campbell-Savours: Is not the real reason the fact that the Chancellor wants all this hot money in London to pay for the trade deficit? Why does not the right hon. Gentleman be honest with the House?
      The First Deputy Chairman: Order. This debate is new getting rather wide. We must stick to the clause which we are discussing.
      Mr. Brooke: In the spirit of the question which the hon. Member for Workington asked, he knows that, because the balancing item is now larger than the deficit, it is difficult to know whether it is British exports which are being understated and what precisely is the nature of the capital inflow. I agree that we would be able to have a more interesting debate if we had precision on those figures.
      The hon. Member for Workington made reference to stock relief and went through an analysis in relation to inflation. I will not go into a discussion with him as to what caused inflation during that period but I can echo some of the things that he said about stock relief. In the 1980s, that provision became much less important as we reduced the rate of inflation, and it was abolished in 1984 as part of a package of measures enabling the rate of corporation tax to be reduced. Both the main and small companies rates are much lower than when we came to office.
      The hon. Gentleman referred to rentals for industrial space in his part of the country. I am delighted that on the basis of his analysis the demand for industrial space to which he also referred seems likely to increase the amount of space available. There was the slightest constituency dimension to the hon. Gentleman's speech, and, as to his comments on development areas, it is the case that, in the first 10 days after I was born my father anonymously contributed three articles to The Times on the subject of County Durham that all the historians of the 1930s say were responsible for the creation of development areas. My father is now dead, and although he was sympathetic and a stimulus to the concept of development areas in the 1930s, I am certain that he would be delighted that the manner in which the market is operating is causing the enterprise culture to flourish in all parts of the country.
      The hon. Gentleman's concluding remarks concerned the exchange rate. 1 was the financial correspondent for the Financial Times in Switzerland at a time when there were 12 deutschmarks to the pound and 12 Swiss francs to the pound. The remarkable achievement of Switzerland and Germany has been to run balance of payments surpluses over the ensuing nearly 30 years while enjoying a steady increase in the value of their currencies. In the early 1980s—the very period to which the hon. Gentleman referred—there was a swing of 2·8 per cent. in terms of Japan's trade position as a percentage of gross domestic product at a time when it had an appreciating currency.
      In the first quarter of this year, export volumes increased by 6·5 per cent. by comparison with the last quarter of 1988, at a time when import volumes increased by only 3·5 per cent. That is clear evidence that the reduction in demand for imports is improving our trading position.
      We have strayed some way from the terms of clause 33. The hon. Member for Newcastle upon Tyne, East sought to suggest that there was less to clause 33 than meets the eye. I am certain that the small business men, seeing that the bands have changed, will regard it as a very worthwhile clause, and I commend it to the Committee.
      Question put and agreed to.

    Clause 32

      CHARGE AND RATE OF CORPORATION TAX FOR FINANCIAL YEAR 1989
      Question proposed, That the clause stand part of the Bill.
      Mr. Rowlands: If we accept clause 32, we shall be accepting a uniform corporate rate for all companies. I take this opportunity to debate the situation affecting not the smaller firms that were the subject of clause 33 but mature manufacturing sector companies of medium to large size.
      I wonder whether the Government have noticed what is beginning to happen among such companies, particularly those in the consumer durable and white goods sectors, which still account for a significant number of jobs and for an important part of the country's ecomomy. I therefore question whether we should automatically endorse rates of 35 per cent. for all companies, irrespective of their current situation.
      I represent a community in which the only manufacturing base we have left is what I call the mature manufacturing sector, which is in consumer durables, selling to a replacement market rather than one for innovative products. They are seeking to encourage consumers to replace washing machines and so on—the consumer durable white goods. As a result of this they are finding increasing difficulty in making such sales.
      One of the major problems has been the increase in interest rates, which has led to a reduction in consumer power and therefore an increasing problem of growing stocks in this manufacturing sector. I raise this because I have a horrible feeling that we are about to enter another phase in which, for the Chancellor's policy to work, a number of our people will be put out of work. We went through it in the early eighties, and we were told we were over it by the Government, but now again we are seeing the terrible tell-tale signs. As a result of high interest rates and the dampening down of consumption, which I understand is the Government's case for high interest rates, the biggest impact will be not upon the imported manufacturing sector but on the domestic mature manufacturing sector. Sales in a whole area of our existing manufacturing sector will be affected by high interest rates.
      The Treasury never understands what happens to the economy. It runs this system, but never looks closely at what happens in micro terms as a result of general, broad economic policy and use of fiscal instruments. For example, high interest rates are a blunt instrument which affects everybody and everything. In the communities I represent, in the industries I know most about because my constituents are still employed in them, stocks are rising, sales are falling and we are beginning to worry about whether we shall have redundancies once again in this sector.
      I do not know what the answer is. Should there be a differential rate of interest for the manufacturing sector? Apparently not. So I raise the question whether there should be a differential rate of corporation tax. My right hon. Friend the Member for Llanelli (Mr. Davies) put down an amendment, which was not accepted for an understandable reason, to introduce such a differential. I ask the Minister whether he is happy with the fact that in this mature manufacturing sector there will be problems with employment. Will we go through a new phase of
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      redundancies? Will we yet again find ourselves being put out of work? On the other hand, does he think the economy will grow and we can see ourselves through this?
      I am not happy, and I therefore seek the opportunity on this clause to arouse the interest of the Government in this problem. Please will the Minister tell me whether he believes that as a result of high interest rates we shall be out of work, as we were in the early eighties?
      11.45 pm
      Mr. Brooke: I am delighted to respond to the hon. Gentleman the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). At the risk of extending my family references, my grandfather grew up in Rhymney as the son of the secretary of the iron works, and I am delighted to have this link with the hon. Member. He addressed the set-off between inflation and interest rates, and posed various questions about what the future might hold for us and probed whether the Government understood what was happening. Of course the Government understand the effect of a period of high interest rates on the economy and the level of demand, and the impact of that on manufacturers in the hon. Gentleman's constituency. Without question, however, we regard inflation as a much more serious problem and one that must be defeated and cured. A period of high interest rates is, in our view, a sensible instrument to use to achieve that objective.
      Since 1979—I am now addressing myself to the hon. Gentleman's query on behalf of his right hon. Friend the Member for Llanelli (Mr. Davies) about whether there should be a differential rate of corporation tax for the manufacturing side—there has been a major turnaround in the fortunes of manufacturing industries, which are now in a far stronger position than they have been for many years. Output has reached record levels. In 1988 alone it grew by 7 per cent., and the latest figures show that that growth is continuing. In the three months to February, output was 7·5 per cent. higher than it was in the same period last year. The pattern has been observable over a significant period; over the past two years annual growth has consistently exceeded 5 per cent. We have not experienced such developments for a long time.
      Mr. Rowlands: The Minister has drawn from his historic and family experience of our communities. May I bring him up to date? The area that I represent—along with other parts of the Principality and the rest of the country—has experienced threatened redundancies, shorter working weeks and rising stocks in consumer durables. Will the Minister answer a simple question? Dos he believe that for the Chancellor's policy to work more of our people must be put out of work?
      Mr. Brooke: It is certainly not my right hon. Friend's purpose that people should be put out of work; it is his purpose, however, that the level of demand in the economy should be somewhat reduced to achieve the beneficial effect on inflation that we seek. The hon. Gentleman cannot press me to make a specific forecast about what will happen in Merthyr Tydfil, which—in a pluralist system—will, by definition, depend on the companies involved. But there is no doubt that, first, manufacturing industry has been doing extremely well in the recent past, and, secondly, the Government see no reason for the differential rate of tax that the hon. Gentleman seemed, by implication, partly to suggest.
      Mr. Rowlands: The Minister winds his words around. I do not ask him to make a forecast; I simply ask him to confirm or deny that the potential consequence of high interest rates in a mature manufacturing sector is more people out of work. The Minister says that he wants to dampen down consumption; one of the effects of that is increased unemployment. Does he agree with that proposition?
      Mr. Brooke: The hon. Gentleman is talking about a highly complex interlocking set of equations.
      Mr. Rowlands: Those are just words.
      Mr. Brooke: The hon. Gentleman can say that they are only words, but the fact remains that what happens to wage rates in such circumstances directly affects what will happen in his constituency. I would find it difficult to make such a forecast.
      What the Chancellor is seeking to do is bring the economy back to a state of equilibrium in which there is no excess demand, inflation can be wrung out of the economy and we can revert to the steady growth that the country has seen over the past seven or eight years—growth that it has rarely known before in its history.
      Question put and agreed to.
      Clause 33 ordered to stand part of the Bill.
      To report progress and ask leave to sit again.—[Mr. Heathcoat-Amory.]
      Committee report progress; to sit again tomorrow.

Rose Theatre, Southwark
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heathcoat-Amory.]
11.49 pm
Mr. Simon Hughes: It was a great pleasure to hear on Thursday last that Mr. Speaker had selected for this evening the opportunity for me to raise the matter of the preservation of the Rose theatre in Southwark. I am very grateful to him for that.
When one is but the latest of a series of Members of Parliament for a constituency, the first of whom took his seat in 1295, one can reflect without too much need for research on some words appropriate for tonight:
"All the world's a stage,
And all the men and women merely players:
They have their exits, and their entrances".
We are here but briefly as politicians. The unusual privilege of being a politician normally allows one to make specific pleas for one's constituents; it rarely allows one to make pleas that also go far beyond the interests of one's constituents on a matter of national and international importance, or to make pleas for something of enormous historical importance. But that is what I can do this evening.
I want to do two simple things. First, on behalf of my constituents and many others in this country and beyond, I come to Parliament, to the centre of the modern, national political stage, to make a plea that the recently discovered ruins of the Rose theatre in Southwark be preserved from today henceforth for all the world to enjoy.
I come with a second plea specifically for the Government. I seek nothing more and nothing less than a simple declaration that the Government be willing to say today or, at the latest, later this week, that they are of the view that the Rose theatre should be preserved for all to see and that they will work actively to secure that.
It may sometimes be thought that modern constituents in an inner-city working community do not think that ruins are of great importance. In fact, our local newspaper last year did a vox pop and discovered exactly the opposite. The people of Southwark and Bermondsey said that they overwhelmingly supported the preservation of our history and our heritage.
The Minister will know that it was less than a year ago that I raised with her predecessor in the House the question of the archaeological heritage of Southwark, an enormously rich area of archaeological interest because of its ancient geographical importance, being at the crossing point into London from the continent and elsewhere. More recently, on 21 February this year, my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) asked the Secretary of State
"what representations he has received from English Heritage concerning the archaeological discovery of the Elizabethan Rose theatre in Southwark."
The Minister replied:
"None so far."—[Official Report, 21 February 1989; Vol. 147, c. 572.]
I know for a fact that since then letters have been pouring into her Department with increasing rapidity and authority.
Things have moved on, because the excavation of the Rose theatre has revealed that we have discovered a treasure indeed. Over the last few weeks, it has become clear that the ruins of one of the great Elizabethan theatres

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of Bankside—one directly linked with Shakespeare and lost to sight over 350 years ago—can now be seen and enjoyed at Bankside, by the Thames by Southwark bridge.
But next week, the foundations of the theatre are likely to be covered up and damaged substantially. They were discovered on land belonging to Imry Merchant Developers. I can say without equivocation that to date Imry, the landowner, has acted with absolute propriety and worked with English Heritage and the Museum of London to secure an opportunity for archaeologists to explore the theatre and to reveal the treasure that exists. I am grateful to the company, as I have said to the director in charge of the site, and I here repeat my thanks. But now we must go further. If the site is covered up at the beginning of next week, we shall lose a site of unique importance and an opportunity for all time.
The site is one of only eight theatres in London in the 16th century, four of which were on the south bank. The sites of the Hope and the Swan are likely to have been destroyed by commercial office developments. The site of the Globe has not been excavated and we do not know what, if anything, we shall find. We have excavated the site of the Rose as we have found it. Therefore we have found the first, and as far as we can be sure the only, in situ evidence of one of the Elizabethan theatres. No one knows whether we shall find any more, but we have found the site of the Rose; it is unique and it may be all we possess of the physical structure of the great public theatres of London 400 years ago. Those theatres were unique to London from the mid-17th century.
The Rose was built in 1587 by Philip Henslow, the impresario, and his partner, Edward Alleyn. It is the earliest of the four Shakespearean theatres. It saw Marlowe's plays performed—it saw "Dr. Faustus" and "The Jew of Malta"—and Jonson, Dekker, Webster and Shakespeare himself performed there too. "Henry VI" and "Titus Andronicus" were probably performed by Shakespeare himself on the stage that we can see now. I found it timely indeed that last Saturday I enjoyed a performance of "Henry VI" by the Royal Shakespeare Company at the Barbican, only a mile away from the original venue of that play. The last known performance at the Rose was in 1603. Soon afterwards, the theatre was demolished and covered up, although happily this theatre is one of the theatres where we know all that was put on and the only one of which we have an illustration contemporay to Shakespeare's plays.
As a result of the dig, we have discovered an enormous amount about the Elizabethan theatre that we did not know but had only speculated about. Previous evidence was contradictory We had to hypothesise as to what the theatre looked like and how it worked. Now we can see it for ourselves. Today in The Times there is an illustration by C. Walter Hodges of what the Rose must have looked like, based on the now available information. It shows the polygonal inner and outer walls of the galleries, the sloping mortar floor, the foundation of the stage and the towered tiring house behind. The heritage of Southwark, England and the world has now accurately been discovered on Bankside not far from here.
I have received many letters and expressions of interest in recent days. One letter from a student at King's college, London, asks:
836
"Is not the site of the Rose theatre on a par with that of the Tower of Westminster Abbey? Many foreign visitors surely find their strongest association with England through her great writers and few sights could hold more attractive power than one associated with Shakespeare. Thousands go to Stratford".
On Bankside we have the real thing. This week we have the opportunity to decide how we make sure that the excitement which I, like others, have enjoyed, is shared by people in years to come.
Another letter to me said:
"The discovery of the Rose theatre in Southwark provides one of the most important pieces of hard evidence on the nature of the Elizabethan theatre ever to have been found. Although it lies in the earth and rises but a few feet, it is a national monument to rank with Stonehenge."
On many occasions—by letter, parliamentary question and Adjournment debate—I have asked the Secretary of State to schedule the Rose and Globe theatres. I am aware of the procedure for scheduling and for designating areas as areas of archaeological importance. I first ask therefore that a decision be made this week to schedule the site of the Rose theatre and to designate north Southwark, contemplated as a possible area for such designation, as a sixth AAI. I hope that the Government will say that they are willing to consider that and I have today tabled a question to the Secretary of State asking specifically about scheduling.
I want to go further and to explore the ways forward, in the belief that they can be achieved. Given that the developers have so far been sympathetic and given that they now realise how amazing the discovery is, a breathing space is needed for them, the planners in Southwark and English Heritage, with Government support, to work out a way whereby the building that the developers want can be built in a modified form and yet the Rose can be preserved.
On an adjacent site, the actor, director and great friend of Shakespeare, Sam Wanamaker, is constructing a replica of the Globe. It would be a supreme dramatic irony if an American were to be recreating a model of our heritage while we were burying the original Rose theatre itself next door. We cannot allow that to happen.
The remains of the Rose should and must be preserved and presented for the public to view as a monument capable of interpretation. Given the will, the time, the money and the imagination, it must be possible to find a way of keeping the remains visible to future generations. All options should be considered, but the important precondition is that the site is not filled in and that piles are not driven through the foundations, as proposed for next week.
Reconstruction of the site elsewhere is not an option. That would not be authentic. Relocation is not an option, because it would not be the same as the original site. Covering the theatre up and opening it up again later is not an option, because even that would have risks to the site and some of the remains would be destroyed. The vibration of vehicles, the weight of vehicles and power-driving machines would cause additional destruction, apart from the immediate destruction caused by building work. However careful people are, covering in and opening up the remains would not be good enough.
Sam Wanamaker's proposal—although in the right direction—that the site could be viewed only through glass—whether light or darkly—is not sufficient. The Colosseum in Rome is enjoyable because one is in the

837
place. Stonehenge is right and important because it is as it was. Fishbourne is right because one can go in and walk around. We must be able to do the same with the Rose.
Many people have written to me expressing their support. John Earl, the director of the Theatres Trust, a body set up by Parliament to promote the better protection of theatres, says:
"It is of vital importance that the preservation and proper display of the Rose should be achieved to the highest international standards".
He goes on to comment that linking it to a possible development next door is not secure enough. The archaeologists on site make it clear that it must be preserved in a way that can be appreciated. It would be ludicrous for us to seek to achieve a lesser objective.
My colleague the hon. Member for Dulwich (Mr. Bowden) wanted to be here tonight and expressly sends support, as does my colleague the hon. Member for Peckham (Ms. Harman). Three parties are represented in the Southwark borough's three Members of Parliament and they are supported by the local authority, the Archbishop of Canterbury, the Archbishop of Southwark, the Bishop of Southwark and many from the theatre world —performers, managers, historians and many besides.
Many messages have come in from Britain and overseas. The most pre-eminent people in British theatre today feel that the Rose is so important that not only do they visit it; they want to make it clear that it must be preserved. I hope that I am not exaggerating when I say that the importance of the preservation of the Rose cannot be overestimated. It is a miracle that it has been found, and it must now be kept to be enjoyed.
The Secretary of State and, I understand, the Prime Minister have now been alerted to the importance of the site. I hope that the Minister will tell us tonight that the Government are willing to say that the work done so far is good but that, now we have discovered the treasure under the earth, we must ensure that it is preserved.
It is no good saying, "It is just another site and we cannot preserve them all." I was not here last Friday for the Adjournment debate about the Huggin hill palace in the City of London, although I have read the report of it in Hansard. The Minister made it clear that there were other Roman baths and that we might have to lose one. We cannot say that about the Rose. There is no other example of this part of our heritage in the country. It is unique, and must be recognised as such.
I shall end by quoting from others who have written in support of the case before us, but first let me sound a note of warning. It is not enough that we should continue to react at the last moment to each important find or to try at the eleventh hour to intervene in negotiations that have cliffhanger qualities. We should reform our planning structures so that, in future, we can protect sites in advance.
The Minister knows that this is not a one-off expression of interest on my part. I hope that she will see my bid tonight as part of my concern that we should not only increase the number of ancient monuments that we schedule and protect, increase the number of areas of archaeological importance that we designate and the financial wherewithal given for the work to be done, but we should ensure that local authorities protect archaeology and structure plans, that the Department's structure plan is made much more specific in its guidance and that the environmental impact assessment measure agreed last
838
year are specifically made to apply to the buried historic environment. We must do more, or we shall lose other sites, as valuable as the Rose but in different ways.
The conclusions of those who have visited the Rose are that we are confronted by our first sight of a playhouse that Shakespeare knew. My last quotation is from someone who wrote to me:
"It is all we have ever seen of the most important group of theatres in the history of Western civilisation and our first glimpse of the place where English drama reached its finest flowering. If we do not keep it the world will rightly judge us to be barbaric."
We have an historic responsibility and I hope that, in partnership with all concerned, we shall discharge it this week with honour.
12.8 am
The Parliamentary Under-Secretary of State for the Environment (Mrs. Virginia Bottomley): The hon. Gentleman said that this was not a one-off interest for him. I endorse that remark. He has raised questions of archaeological concern, particularly relating to his constituency, on several occasions—in questions, in letters and in the debate to which he referred, which took place shortly before I took over my present responsibilities.
I have much sympathy with the hon. Gentleman because I spent many years as a social worker in his part of Southwark. It is well known that helping people to have a sense of pride in the history of their community can play a very important part. I worked on the north Peckham estate, which is an estate where a sense of identity and an understanding of the past cannot be said to be the overriding preoccupation of its residents, so I can well understand the hon. Gentleman's wish for people to know and to understand the past of Southwark and to find ways to ensure that archaeological remains can be preserved and shared with others.
The hon. Gentleman also referred to the debate last Friday which concerned the impressive archaeological remains at Huggin hill in the City. I am grateful to the hon. Gentleman for giving me another opportunity to discuss archaeology. I have been waiting for some months in my present role for such matters to be discussed on the Floor of the House because they are of growing interest and concern. As development grows and as the whole profession of archaeology strengthens, new techniques and new ways of understanding become available. At the museum of London, which played an important part at the Rose theatre, there are no fewer than 400 archaeologists over the year who participate in digs in London.
The remains at Huggin hill, ascribed by some as those of the palace of Julius Agricola, the governor of Britain—although there is some argument about that—are indeed impressive. I can inform the hon. Gentleman that we are keeping in close contact with all the parties there, and we are continuing to press for a satisfactory outcome for all concerned.
Equally exciting are the discoveries to which the hon. Gentleman has referred. Those excavations have been established to the satisfaction both of the museum of London and of the scholars of the Elizabethan and Jacobean theatre as the site of the Rose theatre, which, as the hon. Gentleman said, in its heyday saw performances of most of Christopher Marlowe's plays, with Edward

839
Alleyn—that famous actor of his day and later founder of Dulwich college—playing the title role of Dr. Faustus and the Jew of Malta.
Perhaps of even greater excitement, certainly for Shakespeare scholars and enthusiasts all over the world, will be the fact that two of Shakespeare's early plays received their first performance there—Henry VI in 1592, in which some believe—the hon. Gentleman would count himself among them—Shakespeare appeared as a young actor, and also Titus Andronicus. For the first time we have clear evidence of the shape, size and layout of an Elizabethan theatre, which is crucial to the understanding of the production of the Elizabethan plays that have given so much to our culteral heritage of drama and theatre.
The excitement of this discovery—and for some the surprise—has led to an understandable wish for its preservation, especially because, as we know, such remains are irreplaceable. There are real practical and philosophical debates about the best way forward. How do we safeguard the best of our heritage in a manner consistent with the needs of a dynamic society? How do we also move towards the future? Some of those issues were discussed in our debate last week. I made it clear to the House then that we have seen very dramatic improvements in the relationship between developers and archaeologists.
In a controversial case in York concerning the palace of the Emperor Septimus Severus, there was speculation about how that could be preserved. As a result of good will and co-operation between the archaeologists and the developers, the developers have agreed to redesign the foundations to preserve the archaeology.
Much of that good will and co-operation stems directly from a very valuable code of practice produced by the Standing Conference of Archaeological Unit Managers and the British Property Federation. That partnership has resulted not only in co-operation, but in hard resources. While English Heritage has recently estimated that last year it made a contribution of about £7 million to archaeology, a further £14 million was contributed by developers for excavation. That reinforces the view that voluntary co-operation and partnership are working well in many cases.
As the hon. Gentleman said, the Rose theatre is not a scheduled ancient monument. Many will feel it essential for the protection of those remains, that they be scheduled. Indeed, only last week we received a request to this effect from the museum of London. Scheduling means that consent must be sought from the Secretary of State before any works that would disturb the monument may be carried out. However, it does not automatically mean that the site must be preserved for all time.
In considering the merits of any scheduling proposal, such as that put forward, it is necessary to bear in mind the fact that planning permission for the redevelopment of the site has previously been granted by the London borough of Southwark and that construction is indeed under way on another part of the site which is separate from the remains of the Rose theatre. It must also be appreciated that adequate time for excavation of the site
840
has already been negotiated between the museum of London and the developers, Imry Merchant Developers plc.
I was pleased to hear the hon. Gentleman pay tribute to the developers because I understand that the work has been carried out throughout in accordance with an agreement drawn up and fully adhered to by both sides. I know too that English Heritage, our agent in this area, has been keeping an informal watching brief on the site and that Imry Merchant has consistently respected its requirements. I have no hesitation in commending the developer's allocation of time, funds and equipment, which resulted in this dramatic discovery in the first place and which has allowed for the subsequent excavation of the site.
I am conscious also that Imry Merchant Developers plc is currently studying seriously the imaginative concept which hon. Members may have seen referred to in newspaper articles recently. The hon. Gentleman referred to Sam Wanamaker's idea for a below-ground Shakespeare museum, which would be linked by tunnel to the Rose site, emerging in an area from which the Rose remains could be viewed, at some time in the future.
I understand that Imry has evaluated this general concept so far as has been possible in the short time available, and that it is prepared to do whatever can be done in conformity with its general aims and objectives. It has indicated that the existing scheme could be modified so that it is compatible with such a scheme as has been put forward by Sam Wanamaker. This would involve the encapsulation of the site, and the covering of the remains, so that the filling could be dug out again at a later date and the remains seen from a viewing platform. I understand that this may not be sufficient to satisfy the hon. Gentleman, but it has been endorsed by English Heritage.
I stress that is remains to be seen whether it will prove possible to put the plan into effect. I am, however, encouraged that Imry is living up to its track record for responsible reaction to new situations. Its actions once again prove how seriously so many developers rightly take their responsibilities towards the archaeological heritage. However, I stress that, regardless of whether the Sam Wanamaker scheme comes to fruition, the remains of the Rose theatre site will be preserved for future generations beneath the new development.
In terms of extending our knowledge of Elizabethan theatre, the Rose project has already been a remarkable success. The information gathered from the excavations has amply demonstrated that. The remains will be substantially preserved beneath the new building. Although we can do nothing to mitigate the damage that has already been done by the piling from previous office blocks, any further damage to be caused by the new building is minimal.
That brings me to the question of designation under part II of the Ancient Monuments and Archaeological Areas Act 1979. We have discussed that matter previously. As I have said, English Heritage has recently consulted local authorities and a number of other bodies about the working of the system and about whether further designation would be desirable. We have received its advice and are considering it carefully and I shall consider the hon. Gentleman's remarks in that context.

841
I should like to congratulate the developers and the archaeologists on their splendid job. Like the hon. Gentleman, I hope that a way will be found to ensure that future generations are able to see this magnificent
842
discovery and I commit myself to working with all the parties to find an effective outcome that will achieve the goal that we are all pursuing.
Question put and agreed to.
Adjourned accordingly at nineteen minutes past Twelve o'clock.

THE ARTS

  Items in Lieu of Tax
  Mr. Bowis
  To ask the Minister for the Arts if there have been any items accepted in lieu of tax or allocated since he last made an announcement on the subject to the House.

  Mr. Luce
  Since my announcement on 3 May at column 105 I am pleased to announce that a painting by Rubens has been accepted in lieu of tax. In accordance with the condition on which it was offered, the painting will be allocated to the Ashmolean museum, Oxford. It satisfied £169,852·48 tax and followed the precedent set by the acceptance of Picasso's "Weeping Woman", in that the Ashmolean agreed to pay the owner the difference (£180,147·52) between the tax liability to be satisfied and the "special price" of £350,000.

  Tate Gallery
  Sir David Price
  To ask the Minister for the Arts whether he will arrange with the Property Services Agency that before the freehold of the Tate gallery is handed over to the trustees the fabric of the gallery is brought up to acceptable standards; and how much he estimates it will cost.

  Mr. Luce
  [holding answer 8 May 1989]: Untying of the national museums and galleries from the Property Services Agency took effect from 1 April 1988. The progressive transfer of ownership of the buildings to the relevant trustee bodies is part of this process. The Government share the view of the institutions concerned that this allows the trustees to make more flexible and effective use of the resources available for the upkeep and improvement of the buildings.

  I have also provided the national museums and galleries with substantial increases in their building and maintenance grant-in-aid over this period. The Tate gallery's provision of £2·4 million in 1988–89 was enhanced by a supplementary estimate of £0·8 million in that year; a further increase of 17 per cent. brings the figure for the current year to £3·8 million.

NATIONAL FINANCE

  Treasury Stock
  Mr. Andrew Bowden
  To ask the Chancellor of the Exchequer how many people have purchased 21/2 per cent. Treasury stock in each year since the stock was first issued; and how many holders of the stock sold their holdings in each year.

  Mr. Lilley
  I regret that the information is not available in the form requested.

  Overseas Investment
  Mr. Nicholas Bennett
  To ask the Chancellor of the Exchequer what information he has as to the levels of overseas investment of each of the Group of Seven countries in the latest year for which figures are available.

  Mr. Lilley
  [holding answer 28 April 1989]: Figures for the flow of net overseas investment in 1987 of all the countries in question, can be found in the February 1989 edition of the Bank of England Quarterly Bulletin, copies of which are available in the Library of the House.

  Liquefied Petroleum Gas (VAT)
  Mr. Neil Hamilton
  To ask the Chancellor of the Exchequer what are the anticipated costs of administering value added tax on liquefied petroleum gas in accordance with clause 20 of the Finance Bill.

  Mr. Lilley
  [holding answer 5 May 1989]: I regret that no estimate is available. However, the arrangements proposed in clause 20 of the Finance Bill were formulated after extensive consultations with representatives of fuel and power suppliers, and go as far as the Government are able within the terms of the judgment of the European Court of Justice to ease the administrative burden of operating the revised relief.

PRIME MINISTER

  UNESCO
  Mr. Dalyell
  To ask the Prime Minister whether, in view of the change in the director generalship of UNESCO, Her Majesty's Government will now re-apply for membership of UNESCO.

  The Prime Minister
  We are following developments at UNESCO closely and hope that the director general can bring about the changes that are needed. Before we can consider reviewing our position on membership we will need to be convinced that fundamental reforms are being implemented both in UNESCO's administration and in its programmes. This will certainly not be possible until after UNESCO's general conference in November this year, which will adopt the organisation's new medium-term plan (1990–95) as well as its programme and budget (1990–91).

  Wales (Visits)
  Mr. Wigley
  To ask the Prime Minister if she will list the dates on which she has made official visits to Wales since 1979, indicating the location of each visit.

  The Prime Minister
  The information is as follows:

  17 to 18 July 1980—Anglesey

  11 December 1980—Cardiff

  2 July 1982—Mid Wales

  21 September 1984—North East Wales

  26 April 1985—North Wales

  21 June 1986—Porthcawl

  13 March 1987—Bangor and Penmaenbach tunnel

  I have omitted from the above any dates on which I was solely engaged on party business.

  Engagements
  Mr. Barry Field
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.
  357
  Mr. Harry Greenway
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.

  Mr. Andrew F. Bennett
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.

  Mr. Mullin
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.

  Mr. David Shaw
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.

  Mr. Pike
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.

  Mr. Stern
  To ask the Prime Minister if she will list her official engagements for Tuesday 9 May.

  The Prime Minister
  This morning I had meetings with ministerial colleagues and others. I was also present at Victoria station to mark the arrival of President Babangida. In addition to my duties in the House I shall be having further meetings later today. This evening I will attend a state banquet in honour of President Babangida.

ENERGY

  Plutonium
  Dr. Thomas
  To ask the Secretary of State for Energy, pursuant to his reply to the hon. member for Nottingham, South (Mr. Brandon-Bravo), 2 February 1989,Official Report, column 402, how the clerical error to which he refers came about; whether the error has been notified to the safe works authorities; whether any other unreported errors have been made in plutonium accountancy; and if he will make a statement.

  Mr. Michael Spicer
  I have nothing to add to my reply of 2 Gebruary 1989 to my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo). I re-emphasise that the underlying data were not affected in any way.

  Dr. Thomas
  To ask the Secretary of State for Energy, pursuant to his reply to the hon. Member for Meirionnydd Nant Conwy,Official Report, 17 January 1989, column 157, in what form the unseparated plutonium was exported and to which country; from which reactors the 2,865 kg originated, and in what quantities from each reactor; and if he will update the table to March 1989.

  Mr. Michael Spicer
  The unseparated plutonium was exported in the form of irradiated fuel. The precise quantities of separated plutonium exports linked to individual reactors cannot be disclosed on the grounds of commercial confidentiality. Figures of exports and imports of plutonium for the financial year 1988–89 will be included in the published data on plutonium production later in the year.

  Radioactive Waste
  Dr. Thomas
  To ask the Secretary of State for Energy if he will publish a comparative table showing the volumes and radioactive content of radioactive waste arisings per unit of energy output expected from(a) thermal nuclear reactors, (b) fast breeder nuclear reactors and (c) fusion nuclear reactors; and if he will ask United Kingdom Nirex Ltd. to prepare management and storage plans for radioactive waste from fusion power.
  358
  Mr. Michael Spicer
  These are matters for the operators of the reactor types in question. I have asked the chairmen of the Central Electricity Generating Board and the United Kingdom Atomic Energy Authority to write to the hon. Member about thermal nuclear reactors and fast breeder nuclear reactors respectively. The prospects for power from fusion reactors are so far distant that it is not practicable to make any such estimate.

  UK Nirex Ltd. will provide facilities for the disposal of intermediate and low-level wastes arising from all sources, including any which may eventually arise from fusion power.

  Coal Mines (Rescue Service)
  Mr. Gareth Wardell
  To ask the Secretary of State for Energy what responsibilities his Department has for the provision of a rescue service for licensed coal mines.

  Mr. Michael Spicer
  This Department has no direct responsibilities for the provision of rescue services at licensed mines. The Coal and Other Mines (Fire and Rescue) Regulations 1956 require that the owner of a mine is responsible for ensuring provision for rescue is available. The Health and Safety Executive's mines and quarries inspectorate is responsible for ensuring the provisions of the 1956 regulations are complied with.

OVERSEAS DEVELOPMENT

  Cyprus
  Mr. Faulds
  To ask the Secretary of State for Foreign and Commonwealth Affairs how much public money has been committed to Cyprus by the British Government in the last 12 months for the benefit of(a) Turkish Cypriots and (b) Greek Cypriots; and for what purposes.

  Mr. Chris Patten
  The following commitments have been made to Cyprus in the last 12 months.

  I Overseas Development Administration Technical Cooperation Programme

  (a) Turkish Community:—
  English Language Teacher Training in Turkish medium schools: £69,800 for the period 1988–91
  Book Presentation Programme: £4,000 for 1989–90

  (b) Greek Community
  Pedagogical Institute Teacher Training Project £103,000 for the period 1989–92
  Book Presentation Programme £6,000 for 1989–90 Overseas Development Administration Technical Co-operation Training Programme
  £121,000 for 1989–90
  As I told the hon. Member on 1 March 1988, at column 502, the ratio of awards to Greek and Turkish Cypriots will vary from year to year, depending on the quality of the candidates coming forward and other factors. It is not possible to forecast at this stage the distribution of future awards.

  II FCO Scholarship and Award Scheme for 1988–89

  (a) Turkish Candidates £81,217

  (b) Greek Candidates £37,413

  III FCO Fee Support Scheme for 1988–89

  (a) Turkish Candidates £49,129

  (b) Greek Candidates £744,365

  IV British Council (exchanges of persons, information activities, etc.) for 1989–90

  (a) Turkish beneficiaries £10,940

  (b) Greek beneficiaries £66,590

  V Home Office (Anti-drug trafficking programmes for 1988–89)

  (a) Turkish Community:
  Training for Turkish Cypriot customs officers: £2,200
  359
  (b) Greek Community:
  Provision of customs equipment: £8,300

  Mr. Faulds
  To ask the Secretary of State for Foreign and Commonwealth Affairs how much public money has been committed to Cyprus by the European Community in the last 12 months for the benefit of(a) Turkish Cypriots and (b) Greek Cypriots; and for what purposes.

  Mr. Chris Patten
  The European Community allocated £29 million under the second five year financial protocol for Cyprus which expired last December. A further five-year financial protocol under which £41 million will be provided was agreed at the beginning of this year. The Community seeks to support projects of benefit to the whole population of the island; in particular, it has met the cost of water, electricity and sewerage works. No division of the sums committed for the benefit of Turkish Cypriots and Greek Cypriots is available.

  Mr. Faulds
  To ask the Secretary of State for Foreign and Commonwealth Affairs how much public money has been committed to Cyprus by the United Nations and its specialised agencies in the last 12 months for the benefit of(a) Turkish Cypriots and (b) Greek Cypriots; and for what purposes.

  Mr. Chris Patten
  In 1987, the latest year for which figures are available, total net official development assistance to Cyprus from the United Nations and its agencies was $7·62 million, or some £4·65 million. Detailed information on the precise destination and purpose of this assistance is not held centrally.

  Mr. Faulds
  To ask the Secretary of State for Foreign and Commonwealth Affairs if the Government intend to continue the paying of public funds to the Greek Cypriots as aid, in view of the finding of the Select Committee on Foreign Affairs that by most criteria the southern sector of Cyprus is no longer eligible for economic aid.

  Mr. Chris Patten
  We regard it as important to make technical co-operation and other public funds available to both communities in Cyprus.

FOREIGN AND COMMONWEALTH AFFAIRS

  Immigration
  Mr. Madden
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) when Mr. Sodigar Hussain applied to the post in Islamabad to join his wife, Mrs. Zaidah Begum, whose date of birth is 27 January 1967; and when a decision on his application will be taken;

  (2) when Shamim Akhter, who was born on 12 November 1964, applied to the post in Islamabad to enter the United Kingdom; when her application was refused; when the post dispatched an explanatory statement setting out the reasons her application was refused; and if he will make a statement;

  (3) when Mr. Mchd Arif, who was born on 1 September 1963, will be issued with a visa by the post in Islamabad following his successful appeal against refusal to grant him permission to enter the United Kingdom;

  (4) when Mrs. Musrat Begum, whose date of birth is 1 January 1958, applied to the post in Islamabad, to join her husband in the United Kingdom; and when a decision will be taken on her application.
  360
  Mr. Eggar
  The information requested is not readily available. A further reply will be sent to the hon. Member in due course.

  South Africa
  Mr. Anderson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what evidence is now available of the use against the security forces in Northern Ireland of weapons obtained through the agency of South African intelligence personnel; and whether that evidence will affect in any way the policies of the Government towards South Africa.

  Mrs. Chalker
  I refer the hon. Member to the answers that my right hon. and learned Friend the Secretary of State gave to questions on this matter in the House on 24 April at columns 660–65.

  It remains our policy towards South Africa to work for the abolition of apartheid arid the peaceful transition to a non-racial representative system of government.

  Gibraltar (Incident)
  Mr. Andrew F. Bennett
  To ask the Secretary of State for Foreign and Commonwealth Affairs, in the light of recent statements from Spanish police sources that the Provisional IRA active service unit was under surveillance until crossing into Gibraltar and that it was known that the unit was not armed or in possession of a bomb, what steps he is proposing to take to determine what information British or Gibraltarian security forces had in their possession when these members of the unit were shot.

  Mr. Waldegrave
  We received full and invaluable co-operation from the Spanish authorities throughout this affair for which we remain very grateful. The nature of that co-operation is covered in the statement made to the Gibraltar coroner's officer by the responsible Spanish police officer, a copy of which, together with its translation by the coroner's officer, I have placed in the Library of the House.

  Neil Sanderson
  Mr. Madden
  To ask the Secretary of State for Foreign and Commonwealth Affairs what action he has taken to request United Kingdom posts in Peru and Brazil to undertake inquiries about the whereabouts of Neil Sanderson; and what contact officials at United Kingdom posts have had with the Governments or other agencies in Peru and Brazil to obtain information about Neil Sanderson.

  Mr. Eggar
  Her Majesty's embassies at Lima and Brasilia, Her Majesty's consulates-general at Rio de Janeiro and Sao Paulo, and the honorary consulates in Manaus, Belem and Recife were also alerted by consular department of the Foreign and Commonwealth Office in January this year, when Mr. Sanderson's father reported that his son was missing after setting off alone from Peru to canoe down the Amazon. None of the posts has had contact with Mr. Sanderson.

  Our posts have informed the Brazilian federal and the Peruvian police of the situation but our posts do not have the staff resources to make searches for missing persons themselves. We have advised Mr. Sanserson's family to

  361
  contact their local police in Yorkshire in order to request a formal police investigation in South America, via Interpol.

  Chemical Weapons
  Mr. Burns
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on progress towards an agreement on banning chemical weapons.

  Mr Waldegrave
  Following the Paris conference on chemical weapons in January this year the chemical weapons negotiations in Geneva have had an active spring session which has just ended. Progress has been made on a number of issues, but much work remains to be done, especially on verification, before a comprehensive effectively verifiable and global convention on chemical weapons can be achieved.

TRANSPORT

  London Underground
  Mr. Wheeler
  To ask the Secretary of State for Transport what proposals London Underground has made for the modernisation of the Northern line; and if he will make a statement.

  Mr. Portillo
  London Underground Ltd. is currently studying the options for modernising the Northern line but no proposals have yet been put to the Department.

  Mr. John Wheeler
  To ask the Secretary of State for Transport what proposals for the modernisation of the Central line of London Underground he has received; at what cost; and if he will make a statement.

  Mr. Portillo
  Last October my right hon. Friend the Secretary of State approved proposals to modernise and re-equip the Central line at a cost of over £700 million. New, faster trains will be introduced; the signalling will be replaced; and other improvements will be made. These changes will increase the line's capacity and reliability.

  Monopolies and Mergers Commission
  Mr. Aspinwall
  To ask the Secretary of State for Transport what action his Department has taken to respond to the proposals made in the 1983 Monopolies and Mergers Commission report on the Civil Aviation Authority and national air traffic service; and if he will make a statement.

  Mr. Peter Bottomley
  The Department of Transport monitored the actions taken by the Civil Aviation Authority in response to the 1983 report of the Monopolies and Mergers Commission, and discussed the follow-up action at a number of meetings with the CAA on 29 March 1984 and 23 January 1985. Statements were made to the House of Commons in answers to written questions at columns 274 and 415 on the progress being made by the CAA. My right hon. Friend the then Secretary of State for Transport wrote to the incoming chairman of the CAA on 24 July 1986 setting out his objectives. These included action on several of the recommendations of the Monopolies and Mergers Commission.
  362
  Mr. Aspinwall
  To ask the Secretary of State for Transport what information he has on the action the Civil Aviation Authority has taken to fulfil the recommendations made in the 1983 Monopolies and Mergers Commission report on the Civil Aviation Authority and national air traffic service showing the dates on which specific actions were taken.

  Mr. Peter Bottomley
  The information given to the Secretary of State for Transport on the action taken by the Civil Aviation Authority to fulfil the recommendations made in the 1983 Monopolies and Mergers Commission report on the CAA and the national air traffic services is set out in the published CAA reports CAP 548 (February 1984) and CAP 499 (January 1985).

  Rail Safety
  Mr. Harry Barnes
  To ask the Secretary of State for Transport what is the policy of his Department in seeking to ensure safety on British Rail.

  Mr. Portillo
  Responsibility for safety of operation lies with the British Railways board. The Department's railway inspectorate has certain statutory functions, principally the inspection and approval of new works on behalf of my right hon. Friend, and the monitoring of standards required by the Health and Safety at Work etc. Act 1974. Both contribute to the overall maintenance of high safety standards.

  Bypasses
  Mr. Amos
  To ask the Secretary of State for Transport if he will list (i) his Department's prediction at planning stage of the average daily traffic flow in the opening year for trunk road bypass schemes completed in 1986–87 and 1987–88 and (ii) the observed average daily traffic flow in the opening for those schemes in 1986–87 and 1987–88.

  Mr. Peter Bottomley
  Traffic is counted on all new trunk road schemes approximately one year after opening, to allow traffic patterns to settle down before the flow is measured. For bypass schemes opened in 1986–87, predicted and actual traffic in 1987–88 are given in the table.

  Annual average daily traffic flow

  Forecast

  Scheme

  Low growth

  High growth

  count Traffic

  A52 Bingham bypass

  9,400

  10,000

  10,500

  A43 Bulwick bypass

  5,000

  5,300

  5,700

  A11 Barton Mills bypass

  16,600

  17,800

  19,250

  A12 Chelmsford bypass

  —

  139,000

  45,400

  A31 Ferndown bypass

  14,700

  16,400

  18,000

  A54 Kelsall bypass

  8,400

  9,100

  10,600

  A57 Worksop bypass

  10,300

  12,800

  9,800

  A428 Bromham bypass

  15,100

  16,550

  13,350

  Al0 Ely/Littleport bypass

  5,000

  5,400

  6,800

  A49 Tarporley bypass

  6,700

  7,300

  9,800

  A47 Billesdon bypass

  5,850

  6,300

  9,200

  A56 Accrington bypass

  21,300

  25,900

  13,100

  1 Central forecast.

  Those bypass schemes opened in 1987–88 for which data are available are listed below:

  363

  Forecast

  Scheme

  Low growth

  High growth

  count Traffic

  A43 Towcester bypass

  12,650

  14,250

  14,150

  A10 Buntingford bypass

  8,900

  10,050

  10,150

  A43 Brackley bypass

  8,450

  9,500

  11,400

  The forecasts for the schemes listed above were done several years ago, mostly between 1980 and 1984. The forecast range reflects uncertainty about future income and fuel prices, which are the main factors influencing the national traffic growth forecasts. Other uncertainties arise from traffic modelling and other developments which occur between the time of the forecast and the traffic count. Traffic counts are also subject to a degree of uncertainty.

  Channel Tunnel (Rail Link)
  Ms. Harman
  To ask the Secretary of State for Transport whether he will put in the Library copies of any environmental impact, engineering, costing and any other reports on the proposed route for the Channel tunnel rail link.

  Mr. Portillo
  I have already arranged for copies of British Rail's published report and information pack on the rail link to be placed in the Library. BR will be carrying out an environmental assessment of the proposed route, in accordance with the requirements of the EC directive, and has undertaken to present an environmental statement to Parliament at the same time as it deposits a Private Bill. We will consider whether there are any further reports which it would be helpful to deposit in the Library in due course.

EDUCATION AND SCIENCE

  Research Institutes
  Mr. Cousins
  To ask the Secretary of State for Education and Science if he will list by standard region the research institutes operated for or on behalf of his Department and the total employment thereat; if he will give for each region the total number of such institutes and the employment therein; and if he will express the regional totals as a percentage of the national totals.

  Mr. Jackson
  The details requested in respect of establishments of the research councils, as at 1 April 1989, are as follows:

  Numbers

  North

  MRC

  Neurochemical Pathology Unit: Newcastle

  29

  External Scientific Staff

  4

  NERC

  British Geological Survey: Newcastle

  12

  Institute of Freshwater Ecology: Windermere

  65

  Institute of Terrestrial Ecology: Merlewood

  48

  Terrestrial and Freshwater Sciences: Merlewood, Newcastle

  2

  Total 6 Establishments (1£3 per cent.)

  160

  North West

  MRC

  External Scientific Staff

  16

  364

  Numbers

  NERC

  Proudman Laboratory: Bidston

  82

  Scientific Services: Bidston

  6

  SERC

  Daresbury Laboratory: Warrington

  552

  Total 4 Establishments (5·4 per cent.)

  656

  Yorkshire and Humberside

  MRC

  Social and Applied Psychology Unit: Sheffield

  34

  External Scientific Staff

  1

  Total 2 Establishments (0·3 per cent.)

  35

  West Midlands

  AFRC

  Institute of Horticultural Research: Wellesbourne

  183

  Institute of Animal Physiology and Genetics Research: Cold Norton Farm

  10

  MRC

  External Scientific Staff

  8

  Total 3 Establishments (1·7 per cent.)

  201

  East Midlands

  MRC.

  Institute of Hearing Research: Nottingham

  37

  NERC.

  British Geological Survey: Nottingham

  417

  Scientific Services: Nottingham

  21

  Total—3 Establishments (3·9 per cent.)

  475

  South West

  AFRC.

  Institute for Grassland and Animal Production: Okehampton

  36

  Institute of Arable Crops Research: Long Ashton

  251

  Institute of Food Research: Bristol

  214

  MRC.

  Common Cold Unit: Salisbury

  25

  External Scientific Staff

  10

  NERC.

  British Geological Survey: Exeter, Hartland

  12

  Scientific Services: Swindon

  36

  Institute of Freshwater Ecology: Wareham

  31

  Institute of Terrestrial Ecology: Wareham

  24

  Plymouth Marine Laboratory

  157

  Scientific Services: Plymouth

  6

  Total$11 Establishments (6·6 per cent.)

  802

  East Anglia

  AFRC.

  Institute of Animal Physiology and Genetics Research: Cambridge

  263

  Institute of Plant Science Research: Cambridge

  142

  Institute of Plant Science Research: Norwich

  186

  Institute of Food Research: Norwich

  300

  Institute of Arable Crops Research: Bury St. Edmunds

  46

  Institute of Arable Crops Research: Cambridge

  15

  MRC.

  Development and Integration of Behaviour Unit: Cambridge

  11

  Laboratory of Molecular Biology: Cambridge

  224

  Molecular Genetics Unit: Cambridge

  9

  Molecular Immunopathology Unit: Cambridge

  20

  Molecular Neurobiology Unit: Cambridge

  24

  Dunn Nutrition Unit: Cambridge

  77

  Clinical Oncology and Radiotherapeutics Unit: Cambridge

  37

  Biostatistics Unit: Cambridge

  13

  Medical Cryobiology Group: Cambridge

  10

  Crystallography Section: Cambridge

  1

  External Scientific Staff

  19

  NERC.

  Institute of Terrestrial Ecology: Monkswood

  67

  365

  Numbers

  Scientific Services: Monkswood

  8

  Sea Mammal Research Unit: Cambridge

  14

  British Antarctic Survey: Cambridge

  421

  Total—22 Establishments (16·6 per cent.)

  2,028

  South East

  AFRC.

  Institute for Animal Health: Compton

  201

  Institute for Animal Health: Pirbright

  177

  Institute of Arable Crops Research: Harpenden

  474

  Institute of Engineering Research: Bedford

  217

  Institute of Food Research: Reading

  186

  Institute of Grassland and Animal Production: Hurley/Shinfield

  311

  Institute of Plant Science Research: Brighton

  67

  Institute of Horticultural Research: East Mailing

  253

  Institute of Horticultural Research: Littlehampton

  199

  MRC.

  National Institute of Medical Research: London

  528

  Collaborative Research Centre: London

  528

  Clinical Research Centre: Harrow

  424

  Blood Group Unit: London

  9

  Cognitive Development Unit: London

  15

  Biochemical and Clinical Magnetic Resonance Unit: Oxford

  9

  Environmental Epidemiology Unit: Southampton

  23

  Child Psychiatry Unit: London

  15

  Cellular Immunology Unit: Oxford

  16

  Cell Mutation Unit: Brighton

  16

  Cyclotron Unit: London

  124

  Dental Research Unit: London

  14

  Epidemiology and Medical Care Unit: London

  42

  Human Biochemical Genetics Unit: London

  24

  Neuro-Otology Unit: London

  12

  Human Movement and Balance Unit: London

  23

  Leukemia Unit: London

  11

  Immunochemistry Unit: Oxford

  14

  Experimental Embryology and Teratology Unit: Carshalton

  11

  Molecular Haematology Unit: Oxford

  15

  Institute of Molecular Medicine: London

  4

  Mammalian Development Unit: London

  15

  Anatomical Neurobiology Unit: Oxford

  13

  Neurological Protheses Unit: London

  7

  Cell Biophysics Unit: London

  25

  Social Psychiatry Unit: London

  20

  Clinical Pharmacology Unit: Oxford

  23

  Toxicology Unit: Carshalton

  142

  External Scientific Staff

  81

  NERC.

  Institute of Virology and Microbiology: Oxford

  64

  Institute of Oceanographic Sciences Deacon Laboratory: Surrey

  153

  Scientific Services: Deacon Laboratory: Surrey

  4

  British Geological Survey: London

  43

  British Geological Survey: Wallingford

  38

  Institute of Hydrology: Wallingford

  142

  Scientific Services:

  Wallingford

  15

  Didcot

  1

  Reading

  4

  London

  10

  British Antarctic Survey: London

  2

  SERC.

  Rutherford Appleton Laboratory: Didcot

  1,363

  Royal Greenwich Observatory: Herstmonceux

  173

  Totals—51 Establishments (51·6 per cent.)

  6,300

  Scotland

  AFRC.

  Institute for Animal Health: Edinburgh

  49

  Institute for Grassland and Animal Production: Roslin

  65

  366

  Numbers

  Institute of Animal Physiology and Genetics Research: Roslin

  213

  MRC.

  Blood Pressure Unit: Glasgow

  40

  Brain Metabolism Unit: Edinburgh

  39

  Epidemiological Studies in Psychiatry Unit: Edinburgh

  14

  Human Genetics Unit: Edinburgh

  154

  Medical Sociology Unit: Glasgow

  26

  External Scientific Staff

  4

  NERC.

  British Geological Survey:

  Eskdalemuir

  3

  Edinburgh

  246

  Dunstaffnage Marine laboratory: Oban

  56

  Marine Sciences: Stirling

  4

  Scientific Services:

  Edinburgh

  9

  East Kilbride

  2

  Institute of Terrestrial Ecology:

  Banchory

  28

  Edinburgh

  55

  Institute of Hydrology: Balquhidder

  1

  SERC.

  Royal Observatory: Edinburgh

  118

  Totals—19 Establishments (9·2 per cent.)

  1,126

  Wales

  AFRC.

  Institute for Grassland and Animal Production: Aberystwyth

  204

  MRC.

  Epidemiology Unit: Cardiff

  24

  External Scientific Staff

  2

  NERC.

  British Geological Survey: Aberystwyth

  13

  Institute of Hydrology: Plynlimon

  6

  Institute of Terrestrial Ecology: Bangor

  26

  Scientific Services:

  Barry

  131

  Bangor

  131

  Totals—8 Establishments (3·4 per cent.)

  409

  Northern Ireland

  NERC.

  British Geological Survey

  7

  Totals—1 Establishment (0·0 per cent.)

  7

  Totals—130 Establishments

  12,199

  EC Marine Science and Technology Programme
  Mr. Cousins
  To ask the Secretary of State for Education and Science what is the distribution across the EEC countries of the expressions of interest in the proposed EEC marine science and technology programme; whether Her Majesty's Government have approved this programme; and how the distribution of expressions of interest varies amongst EEC countries as between higher education institutes, research centres and industry.

  Mr. Jackson
  The Government agreed to a common position in March, as my right hon. Friend the Chancellor of the Duchy of Lancaster reported to the House on 7 April, at columns 314–15. The Government expect to agree to the final adoption of this programme at the Community's Council of Ministers (Research) on 6 June. The approximate percentage distribution of expressions of
  367
  interest among the member states was estimated by the Commission for internal purposes in June 1988, when just over 1,000 had been received, as follows:

  per cent.

  Belgium

  4

  Federal Republic of Germany

  11

  Denmark

  3

  Spain

  6

  France

  22

  Greece

  5

  Italy

  9

  Ireland

  5

  Netherlands

  4

  Portugal

  3

  United Kingdom

  27

  EFTA countries

  1

  The distribution between higher education institutes, research centres and industry for the whole European Community was estimated at 41, 37 and 22 per cent. respectively. The United Kingdom distribution has been estimated at 59, 21 and 20 per cent. respectively. The distribution for other individual states is not readily available and cannot be obtained without disproportionate cost. However, I have arranged for a copy of the full list to be placed in the Library of the House.

  General Practice
  Mr. Litherland
  To ask the Secretary of State for Education and Science if he intends to make any special provision to assist departments of general practice in universities.

  Mr. Jackson
  It is for each university to determine how the substantial public funds it receives, together with its other income, should be distributed between its faculties and departments. In the case of medical education, this normally follows discussion with the relevant health authorities.

  Mr. Michael Morris
  To ask the Secretary of State for Education and Science what courses are planned to be available in technical colleges or colleges of advanced education to train general practice managers; and how many places are envisaged for these courses.

  Mr. Jackson
  This information is not available centrally. It is for the institutions themselves to plan such courses taking into account demand for places.

  I refer my hon. Friend to the reply that my right hon. and learned Friend the Secretary of State for Health gave on 8 May at column 320 about arrangements to enable general practitioners to acquire necessary management skills.

  University Intakes
  Sir Rhodes Boyson
  To ask the Secretary of State for Education and Science what figures are available to indicate the percentage of the intake to universities since 1959 who came from working-class homes.

  Mr. Jackson
  The percentage of home university students accepted through the Universities Central Council on Admissions, and who were from social groups IIIM, IV and V since 1977 are shown in the table. Comparable figures for earlier years are not available.
  368

  Percentages of home acceptances through UCCA from social classes IIIM, IV, V

  Year

  Per cent.

  1977

  23

  1978

  23

  1979

  22

  1980

  19

  1981

  18

  1982

  18

  1983

  20

  1984

  20

  1985

  21

  1986

  21

  1987

  21

  1988

  20

  British Independent Schools
  Mr. Haselhurst
  To ask the Secretary of State for Education and Science whether he has given further consideration to the proposals for a grant scheme put forward by the Council of British Independent Schools in the European Communities; and if he will make a statement.

  Mrs. Rumbold
  My right hon. Friend met representatives of COBISEC on 6 December. At the meeting he undertook to consider the proposals further on the basis of certain additional evidence which COBISEC was to provide. I understand that some of this additional evidence is still in preparation and we must await this before any decision can be taken.

  Publicity
  Mr. Dobson
  To ask the Secretary of State for Education and Science if he will place in the Library details of each major publicity campaign mounted by his Department in 1985–86 and each successive year, including in each case the objectives of the campaign, the intended audience and the outcome of the monitoring of the achievement of the intended objectives, and national research conducted for him by the Central Office of Information together with a note of the intended objectives in the campaigns for 1989–90.

  Mrs. Rumbold
  [pursuant to her reply, 2 May 1989, c. 79–80]: The requested information about publicity campaigns has today been placed in the Library.

WALES

  Schools (Books and Equipment)
  Ms. Richardson
  To ask the Secretary of State for Wales if he will publish a table showing the latest figure for expenditure per pupil on(a) books and (b) equipment and comparable figures for each year since 1978–79 in (i) primary schools, (ii) seconday schools and (iii) special schools in cash and real terms using an index of 100 for 1978–79.

  Mr. Wyn Roberts
  I shall reply to the hon. Lady as soon as possible.

  Tourism
  Mr. Wigley
  To ask the Secretary of State for Wales how many projects have been identified in Wales as
  369
  suitable for European Community financing under the provisions of article 6 of the European Tourism Year 1990 decision document, adopted by the European Community Council on 21 December 1988.

  Mr. Peter Walker
  None so far. A project submitted by the Wales tourist board was considered by the national examining committee on 4 May. I understand that the committee sought further information on the project and that it is intended that an expanded submission will be considered at the committee's June meeting.

  Mr. Wigley
  To ask the Secretary of State for Wales whether his Department is making available specific grants for tourism operators in Wales to achieve the objectives of the European Tourism Year 1990 in line with the European Community Council decision of 21 December 1988.

  Mr. Peter Walker
  No. However, the European Commission has decided to allocate approximately £3·3 million to the year. From this source, funds will be available for co-financing of projects by public and private bodies, for prizes and competitions and for information and publicity campaigns. Bids should be submitted to the United Kingdom's national examining committee via the British tourism authority.

  Official Visits
  Mr. Wigley
  To ask the Secretary of State for Wales on how many occasions since he became Secretary of State for Wales he has made official visits to Wales.

  Mr. Peter Walker
  Since becoming Secretary of State for Wales I have fulfilled 301 official engagements in the Principality.

  Dermatologists
  Mr. Denzil Davies
  To ask the Secretary of State for Wales how many consultant dermatologists are attached to hospitals within the East Dyfed health authority and the West Glamorgan health authority.

  Mr. Grist
  As at 30 September 1988 it is provisionally estimated that there were 0·9 whole-time equivalent consultant dermatologists employed by the East Dyfed health authority and 1·8 by the West Glamorgan health authority.

  Mr. Denzil Davies
  To ask the Secretary of State for Wales what is the average length of waiting time before a patient can see a consultant dermatologist after referral by a general practitioner at(a) Llanelli general hospital, (b) West Wales hospital, Carmarthen, (c) Morriston hospital and (d) Singleton hospital.

  Mr. Grist
  Information is not available centrally in the form requested. The number of people waiting, as at 31 March 1988, for a first consultation with a dermatologist is shown in the table:—

  Number who have been waiting for more than three months

  Total number

  Number waiting

  Llanelli General Hospital

  154

  74

  West Wales Hospital

  637

  480

  Morriston Hospital

  73

  60

  Singleton Hospital

  1,060

  583

  Development Board for Rural Wales
  Sir Anthony Meyer
  To ask the Secretary of State for Wales if he has any plans to review the new town responsibilities of the Development Board for Rural Wales; and if he will make a statement.

  Mr. Peter Walker
  The Mid Wales Development Council and its successor body, the Development Board for Rural Wales, were charged with developing Newtown in Powys using new town powers. Population has risen consistently and is now close to the target level of 11,000. With the task of developing Newtown almost complete, I am reviewing the appropriate timetable for winding up the board's new town responsibilities consulting with the board and with the relevant local authorities as necessary. I expect to make a further announcement later this year.

  Agriculture Development and Advisory Service
  Mr. Wigley
  To ask the Secretary of State for Wales whether his Agriculture Development and Advisory Service in Wales has succeeded during the past two years in achieving its revenue target; and whether the Transgoed laboratories reached their target contribution towards this revenue in the same period.

  Mr. Ryder
  I have been asked to reply.

  The Agriculture Development and Advisory Service has achieved the overall revenue target set in appropriations in aid for its advisory services in 1987–88 and, on the basis of provisional results, in 1988–89. All constituent units of the Agriculture Development and Advisory Service have contributed to this performance. It is not our policy to disclose details of individual Agriculture Development and Advisory Service units targets.

  Pensioners
  Dr. Kim Howells
  To ask the Secretary of State for Wales how many women over the age of 59 years and how many men over the age of 64 years are registered as resident within Wales, by county.

  Mr. Grist
  [holding answer 8 May 1989]: The latest estimates of population in the age groups requested are given in the table:

  Population mid-1987

  County

  Women aged 60 and over (thousands)

  Men aged 65 and over (thousands)

  Clwyd

  53·6

  27·0

  Dyfed

  47·4

  24·3

  Gwent

  53·3

  27·4

  Gwynedd

  34·7

  16·9

  Mid Glamorgan

  63·9

  31·6

  Powys

  15·2

  8·7

  South Glamorgan

  484

  23·7

  West Glamorgan

  48·7

  24·2

  TOTAL FOR WALES

  365·2

  183·8

  Source: Office of Population Censuses and Surveys.

AGRICULTURE, FISHERIES AND FOOD

  Research Institutes
  Mr. Wigley
  To ask the Minister of Agriculture, Fisheries and Food how many research institutes are
  371
  supported by his Department; how many people they employ; how many of these are located in Wales; and how many are employed in those institutes.

  Mr. Donald Thompson
  I refer the hon. Member to the reply given to the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) on 4 May, at columns 193–95.

  Rabbit Meat
  Mr. David Evans
  To ask the Minister of Agriculture, Fisheries and Food how many tons of rabbit meat were imported in(a) the United Kingdom and (b) other members of the European Community from the People's Republic of China in 1988, 1987 and 1986.

  Mr. Donald Thompson
  Imports in 1988 of meat and edible meat offal of rabbits and hares from the People's Republic of China are shown in the table. Corresponding data are not available for 1986 and 1987, when a different trade classification system applied.

  Tonnes

  United Kingdom

  2,125

  France

  6,595

  Belgium and Luxembourg

  657

  Germany

  724

  Italy

  640

  Portugal

  207

  Spain

  760

  Greece

  n/a

  Source: Eurostat.

  Pesticides
  Mr. Denzil Davies
  To ask the Minister of Agriculture, Fisheries and Food how many employees in his Department are engaged in testing vegetables for pesticide residue.

  Mr. Ryder
  At any one time, some 60 to 100 analysts in MAFF and other Government Departments are involved in analysing pesticide residues in the whole range of foods monitored by the working party on pesticide residues. The number engaged on testing vegetables within these figures will vary according to the nature of samples being analysed at any one time.

  Mr. Denzil Davies
  To ask the Minister of Agriculture, Fisheries and Food how many pesticide ingredients are licensed to be used on food.

  Mr. Ryder
  I regret that the information requested is not readily available. Approvals issued under the Control of Pesticides Regulations 1986 relate to individual pesticide products, rather than active ingredients. These are listed in "Pesticides 1989" a copy of which is available in the Library of the House.

  "Salmonella in Eggs"
  Sir Hal Miller
  To ask the Minister of Agriculture, Fisheries and Food when the Government will respond to the first report of the Agriculture Committee, "Salmonella in Eggs"; and if he will make a statement.

  Mr. MacGregor
  The Government welcome the Committee's lucid analysis of the extent and implications of the problem of salmonella in eggs. In particular the 372
  Government consider that the Committee's very thorough report has put the problem into the correct perspective by refuting the more extreme and alarmist impressions.

  The Government also welcome the Committee's endorsement of our comprehensive campaign to control the disease and achieve the best possible standards in our egg industry. The response gives further details of measures, which we are taking to ensure the maximum possible degree of safety at every point in the chain from the poultry breeder to the kitchen table. Salmonella is a worldwide problem and no other country, to the best of our knowledge, has pursued such a vigorous campaign to combat it.

  The Government are grateful to the Agriculture Committee for the valuable contribution its report has made towards this campaign.

  Suckler Cow Premium
  Mr. Curry
  To ask the Minister of Agriculture, Fisheries and Food whether he will pay the maximum rate of suckler cow premium following European Community decisions to increase the contribution from Community funds.

  Mr. MacGregor
  The beef reform package agreed by the Council of Agriculture Ministers in January included both an increase in the Community-funded element of the suckler cow premium from 25 ecus to 40 ecus and the continued option of paying a top-up of 25 ecus from national funds. In Northern Ireland the first 20 ecus of this top-up are also met from Community funds. More recently, as part of last month's price fixing, I negotiated a substantial devaluation of the green pound for beef which eliminated the monetary gap.

  I am pleased to announce that the Government have decided to pay the maximum rate of national supplement to the suckler cow subsidy, taking full account of the recent devaluation and the scope provided by the scheme rules. As a result the rate of the suckler cow premium for the 1989–90 scheme year will be increased from £33–40 per cow to £47·43.

  More beef producers than ever will benefit from the increased rate of premium because of a further change in the rules which in future will allow premium to be paid to farmers earning less than half their income from their holdings, provided they meet the other scheme rules. In particular, I would expect some crofters, farmers seeking to diversify, and those on low incomes to be able to benefit.

  These changes to the suckler cow premium, which means a 42 per cent. increase in the rate, demonstrate the Government's commitment to the beef sector, especially the more extensive production of quality beef from specialist suckler herds. For several years now the specialist beef sector has shown good signs of recovery. Producers now have an added incentive to build on this recovery and take advantage of the more open competitive climate which results from the reformed beef regime.

  EC Meetings
  Mr. Wray
  To ask the Minister of Agriculture, Fisheries and Food if he will list all the European Community meetings on matters concerning his Department held in 1985, 1986, 1987 and 1988.
  373
  Mr. Ryder
  [holding answer 8 May 1989]: The Agriculture Council met on 14 occasions in 1985, 11 in 1986, 13 in 1987 (including one held jointly with Economic and Finance Ministers) and 13 in 1988.

  There were also occasional informal meetings of Agriculture Ministers. The Fisheries Council met on four occasions in 1985, five in 1986, two in 1987 and five in 1988. Also, at certain meetings of the Internal Market Council in 1988, a number of food items relevant to the single market were discussed. In addition there were numerous meetings of officials. Information on the number of such meetings could only be provided at disproportionate cost.

  Nitrate Leaching
  Mr. Gill
  To ask the Minister of Agriculture, Fisheries and Food what progress he has made on the preparation of proposals for the designation of areas sensitive to nitrate leaching.

  Mr. MacGregor
  The Government yesterday tabled amendments to the Water Bill to provide for the designation of nitrate-sensitive areas. Following my written reply to the House on 22 March I am pleased to announce that my Department and the Welsh Office Agricultural Department have today issued a joint consultation document entitled "Nitrate-Sensitive Areas Scheme". This has been deposited in the Libraries of both Houses and is available in the Vote Office. It is also being circulated widely to some 170 farming, water, environmental and other interested parties. The document takes account of Government statements on the principles underlying a scheme and sets out the detailed ideas as a basis for discussion. We look forward to receiving comments on the issues covered in the document from a wide range of organisations.

  Undersea Rescue Services (Chemicals)
  Dr. Thomas
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the dangers posed to undersea rescue services in attempts to recover the container of Lindane chemicals lost off the sunken Perintis freighter in March by the surplus conventional explosives and radioactive waste packages disposed of in the third deep trench at 49 degrees 50 minutes north, two degrees 18 minutes west in the 1950's.

  Mr. Archie Hamilton
  I have been asked to reply.

  Attendance of trade union representatives

  Attendance of private sector representatives

  Area Manpower Board

  Number of meetings

  Possible

  Actual

  Possible

  Actual

  1. Berkshire and Oxfordshire

  6

  25

  15

  32

  16

  2. Hampshire and Isle of Wight

  9

  33

  23

  42

  25

  3. Kent

  12

  60

  31

  60

  26

  4. Surrey

  11

  55

  44

  55

  34

  5. East And West Sussex

  13

  65

  54

  52

  37

  6. Buckinghamshire

  8

  24

  19

  32

  13

  7. Essex

  7

  33

  16

  42

  31

  8. Hertfordshire

  6

  18

  16

  30

  12

  9. London North

  12

  48

  42

  60

  35

  10. London South East

  13

  39

  22

  78

  45

  11. London South and West

  11

  55

  37

  55

  32

  12. London North East

  11

  56

  24

  48

  27

  13. Dorset and Somerset

  12

  60

  36

  60

  32

  14. Avon

  12

  60

  28

  60

  24

  15. Devon and Cornwall

  11

  44

  26

  44

  25

  374
  The area in question was used by the United Kingdom for the disposal of surplus conventional munitions from 1946 until about 1971, and for the disposal of low grade radioactive waste from 1950 to 1963. The disposal site is publicised in Admiralty charts and in OECD Nuclear Energy Agency publications, both of which are readily available. The recovery of the container of Lindane, lost from the MV Perintis, is the responsibility of the French Government, who are aware of the presence of the disposal site and have made contact with my Department. The danger to any recovery operation posed by the radioactive waste is considered negligible. The presence of conventional explosives in the area should not prevent such an operation, provided that standard procedures for dealing with explosives are followed.

EMPLOYMENT

  Industrial Injuries
  Mr. Allen
  To ask the Secretary of State for Employment, further to his answer of Friday 21 April,Official Report, column 347, if he will consider extending the 1985 regulations to workers at the House of Commons.

  Mr. Nicholls
  The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1985 were made under the Health and Safety at Work etc. Act 1974. As I explained to the hon. Member on Monday 17 April at column 44, the Act does not apply to the House of Commons and I do not intend to seek its extension to the House.

  Under the arrangements for inspection of the Palace of Westminster and the parliamentary estate, the palace authorities would inform the Health and Safety Executive of major accidents, dangerous occurrences or diseases that occur at the palace. No such reports have been received by HSE since the arrangements were formalised.

  Area Manpower Boards
  Ms. Short
  To ask the Secretary of State for Employment what was the possible and actual attendance, separately, for both private sector and trade union representatives on area manpower boards, for each area manpower board in Great Britain for the last full year that these boards were in operation.

  Mr. Cope
  The information requested is set out in the table.
  375

  Attendance of trade union representatives

  Attendance of private sector representatives

  Area Manpower Board

  Number of meetings

  Possible

  Actual

  Possible

  Actual

  16. Gloucestershire and Wiltshire

  9

  43

  34

  27

  13

  17. Birmingham and Solihull

  11

  49

  31

  52

  32

  18. Coventry and Warwickshire

  7

  35

  23

  42

  33

  19. Dudley and Sandwell

  11

  53

  39

  50

  28

  20. Hereford and Worcestershire

  9

  45

  26

  36

  27

  21. Shropshire

  7

  35

  18

  28

  9

  22. Staffordshire

  4

  20

  19

  20

  14

  23. Wolverhampton and Walsall

  12

  60

  25

  48

  29

  24. Bedfordshire and Cambridgeshire

  —

  —

  —

  —

  —

  25. Norfolk and Suffolk

  8

  40

  22

  40

  19

  26. Derbyshire

  8

  40

  30

  32

  16

  27. Leicestershire

  10

  50

  29

  60

  24

  28. Lincolnshire

  9

  45

  24

  45

  19

  29. Northamptonshire

  11

  55

  30

  55

  34

  30. South Yorkshire

  11

  55

  41

  55

  36

  31. Bradford, Calderdale and Kirklees

  14

  84

  62

  56

  36

  32. Leeds and Wakefield

  13

  65

  34

  65

  32

  33. North Yorkshire

  12

  60

  34

  60

  23

  34. Humberside

  11

  55

  34

  55

  28

  35. Merseyside

  12

  60

  31

  60

  23

  36. Manchester

  12

  84

  54

  60

  31

  37. Cheshire

  10

  50

  14

  52

  25

  38. Lancashire

  12

  52

  16

  52

  29

  39. Cumbria

  8

  32

  23

  32

  15

  40. North Tyne

  6

  34

  14

  36

  25

  41. Cleveland

  12

  60

  35

  60

  43

  42. Durham

  12

  60

  41

  72

  42

  43. South Tyne

  12

  60

  53

  96

  55

  44. Mid and South Glamorgan

  9

  45

  29

  36

  15

  45. Gwynedd

  8

  32

  20

  40

  19

  46. Dyfed and West Glamorgan

  6

  30

  20

  30

  24

  47. Clwyd and Powys

  10

  50

  31

  50

  33

  48. Gwent

  9

  45

  27

  45

  21

  49. Highlands and Islands

  11

  55

  36

  55

  35

  50. Grampian and Tayside

  12

  60

  50

  60

  36

  51. Central and Fife

  10

  50

  17

  50

  26

  52. Lothian and Borders

  11

  66

  40

  55

  26

  53. Glasgow

  13

  65

  16

  65

  40

  54. Lanarkshire

  13

  65

  43

  65

  36

  55. Renfrew, Dumbarton and Argyll

  12

  60

  31

  60

  30

  56. Ayrshire

  11

  49

  30

  45

  21

  57. Dumfries and Galloway

  12

  57

  38

  60

  24

  ACAS
  Mr. McAllion
  To ask the Secretary of State for Employment what proposals the Government have for reforming the Advisory, Conciliation and Arbitration Service.

  Mr. Nicholls
  The Government have no such proposals.

  Employment Training
  Mr. Harry Greenway
  To ask the Secretary of State for Employment how many people have so far been accepted for training under the ET programme; at what cost; and if he will make a statement.

  Mr. Nicholls
  By 28 April, 275,000 people had started on employment training. The cost for each trainee will be about £2,300. It is a remarkable achievement that so many people have been helped by the most successful training programme for adults ever run by the Government.

  Vauxhall Motors (Luton)
  Mr. Bright
  To ask the Secretary of State for Employment what information he has on the effect of the expansion of Vauxhall Motors Ltd. Luton plant on the local unemployment register.
  376
  Mr. Lee
  It is not possible to forecast what effect this investment will have on the rate of unemployment in the Watford and Luton travel-to-work area, but I am sure it will be welcomed locally and will help maintain jobs and prosperity in the area.

  Industrial Action
  Mr. Amess
  To ask the Secretary of State for Employment if he has any plans to seek to repeal the current legislation on picketing and secondary action and to replace it with a voluntary code; and if he will make a statement.

  Mr. Nicholls
  The Green Paper "Removing Barriers to Employment", published on 20 March, contains the Government's current proposals for the further reform of industrial relations and trade union law. The Green Paper proposes no change to the law on picketing. It does however propose the removal of immunity for organising secondary action among workers of an employer not party to the trade dispute and the extension of the definition of secondary action so that it includes action by those who work under contracts "for services".

  Labour Shortages
  Mr. Butler
  To ask the Secretary of State for Employment what measures his Department proposes in order to deal with anticipated shortages of skilled labour in future years.

  Mr. Cope
  Training and enterprise councils will offer employers major opportunities to meet their future skill needs, improve the supply of skills and promote enterprise. The whole range of my Department's Training Agency programmes already have these among their aims and will continue to pursue them vigorously.

  Workfare Scheme
  Mr. Ralph Howell
  To ask the Secretary of State for Employment if he has any plans for setting up a pilot workfare scheme to study workfare systems in the United States of America and Sweden; and if he will make a statement.

  Mr. Cope
  [holding answer 24 April 1989]: We have no such plans. Our priority is to encourage unemployed people to take up the 600,000 to 700,000 existing vacancies.

SOCIAL SECURITY

  Community Charge
  Mr. Gareth Wardell
  To ask the Secretary of State for Social Security (1) what the community charge liability will be for a person who is having a reduction made in social security benefit in order to repay an overpayment of benefit received under section 53 of the Social Security Act 1986;

  (2) what the community charge liability will be for a person disqualified from receiving unemployment benefit under sections 20(1)(a), (b), (c), (d) and (e) and sections 20(2)(a) and (b) of the Social Security Act 1975, and ineligible to receive income support under section 22(4)(c)(i) of the Income Support (General) Regulations 1987;

  (3) what the community charge liability will be for a person disqualified from receiving unemployment benefit under sections 20(1)(a), (b), (c), (d) and (e) and sections 20(2)(a) and (b) of the Social Security Act 1975.

  Mr. Peter Lloyd
  None of these reductions or disqualifications will affect the amount of community charge rebate a person receives, and so will not alter the amount of community charge he has to pay. When a person's net income is assessed for the purposes of determining a claim for community charge rebate, his gross income from prescribed benefits will be included, irrespective of any sums that may have been deducted from these benefits. A person who has been awarded income support will be entitled to the maximum community charge rebate of 80 per cent. irrespective of whether he may have been disqualified from unemployment, sickness or invalidity benefit, or may be having a reduction made from any benefit to which he is entitled.

HOME DEPARTMENT

  Crime (Humberside)
  Mr. David Davis
  To ask the Secretary of State for the Home Department what steps his Department is taking against crime in Humberside; and if he will make a statement.

  Mr. John Patten
  Our strategy for crime reduction applies to all parts of England and Wales. Police manpower and resources have been substantially increased, Crime Concern was launched with Government support in May 1988 to stimulate, support and develop local crime prevention activity and the largest ever national crime prevention publicity campaign was launched last year.

  Total crime in Humberside fell by 4 per cent. in 1988. My right hon. Friend approved a further 20 police posts for the force from 1 April bringing the authorised establishment up to 1992. The Government encourage the growth and development of neighbourhood watch schemes and crime prevention panels. There are now 1,331 watch schemes covering approximately 29,500 households throughout Humberside, with 15 panels and two junior panels. Hull is one of the areas in our Safer Cities programme.

  Police (Misconduct)
  Mr. Skinner
  To ask the Secretary of State for the Home Department how many inquiries instituted by his Department of a police force of one jurisdiction into the activities of a police force of another jurisdiction have found evidence of misconduct in the last 10 years.

  Mr. Douglas Hogg
  The Home Office has no power to institute inquiries of one police force by another into allegations of misconduct. The investigation of such allegations is a matter for the chief officer of the force concerned, subject to the provisions of part IX of the Police and Criminal Evidence Act 1984 where a complaint is made by a member of the public.

  Prior to the introduction of the 1984 Act, section 49 of the Police Act 1964 provided for the Secretary of State to direct a chief officer to request an officer from another force to conduct a complaints investigation. Figures relating to the number of occasions when this power was exercised, and the number of investigations which revealed evidence of misconduct, are not held centrally, and could only be obtained at disproportionate cost.

  Broadcasting Directive
  Mr. Bowis
  To ask the Secretary of State for the Home Department if he will make a statement on the recent discussions in the European Community Council of Ministers on the draft broadcasting directive.

  Mr. Renton
  Under the Spanish presidency, the Council of Ministers (Internal Market) has had a series of meetings in order to identify a satisfactory way forward on the European Commission's proposal for a directive on broadcasting. These enabled the Council, on 13 April, to adopt a common position on the draft directive.

  The original proposal from the Commission gave rise to a number of difficulties for us and other member states. We were concerned in particular at the proposals for formal

  379
  numerical quotas for European programme content, the provisions put forward on copyright and the potentially troubling extension of EC competence implicit in the proposals on protection of minors. More generally we argued that the Council of Europe was the right forum for the conclusion of a European regulatory instrument in relation to broadcasting, and we were therefore putting our weight behind efforts to conclude a European convention on transfrontier broadcasting under the aegis of the Council of Europe. These concerns were made clear when the House had the opportunity to debate the directive on 20 January 1987.

  Since then, we have played a full part in the negotiations on the draft convention, the text of which was finalised in March. The United Kingdom signed the convention when it was opened for signature on 5 May. The convention substantially meets all the points on which we had reservations in relation to the draft directive, and is in our judgment an acceptable basis for European regulation. We therefore welcomed the decision of the European Council in Rhodes last December that the future work of the Community in relation to broadcasting should be based on that of the Council of Europe and that the directive should accordingly be adapted in the light of the convention. This alignment of the two instruments has been undertaken by the Internal Market Council. As a result a new draft of the directive has been produced which follows closely the approach of the convention. This has enabled us to withdraw our earlier objections to the substance of the directive.

  I submitted to the Select Committee on European Legislation on 30 March an explanatory memorandum discussing in detail the specific modifications made by the Internal Market Council to the Commission's original proposal. The Committee subsequently recommended that a further debate be held on the draft directive. I regret that given the timing of the recommendation it was not practicable to arrange a further debate before the meeting of the Internal Market Council at which the common position was adopted. I have written to the Chairman of the Committee to explain the Government's approach to this matter.

  We believe that the Council's common position represents a satisfactory outcome. We have successfully resisted the arguments of some members states for protectionist measures which would have imposed greater rstrictions on European broadcasters and have instead achieved a substantially deregulatory text fully in line with that of the Council of Europe convention. Our recent White Paper on Broadcasting made clear that these international instruments, when concluded, would contribute to the maintenance of programme standards throughout Europe, while removing the barriers which have hitherto inhabited the free flow of broadcasting services. They are consistent with the approach of the Government towards domestic broadcasting services in establishing an enabling regulatory framework to allow increased opportunities for broadcasters and viewers while ensuring the maintenance of programme standards on taste and decency.

  Gaelic Broadcasting
  Mrs. Ray Michie
  To ask the Secretary of State for the Home Department, if he will make a statement on his Department's plans for the development of Gaelic Broadcasting.

  Mr. Renton
  We are considering this subject in the light of responses to the Government's White Paper on broadcasting.

TRADE AND INDUSTRY

  Shoe Industry
  Mr. Tredinnick
  To ask the Chancellor of the Duchy of Lancaster when he last met representatives of the shoe industry; what was discussed; and if he will make a statement.

  Mr. Atkins
  My right hon. Friend the Minister for Trade met the hon. Members for Sedgefield (Mr. Blair) and for Leicester, East (Mr. Vaz) and representatives of the footwear industry in February 1988 to discuss footwear imports from the far east and south-east Asia. A number of other hon. Members have since made their concerns known. However, I can add nothing to previous answers to the House until the EC Commission reports the findings of its Communitywide investigation into imports of footwear from Taiwan and South Korea.

  National Engineering Laboratory
  Mr. Ted Garrett
  To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the future ownership of the national engineering laboratory.

  Mr. Ingram
  To ask the Chancellor of the Duchy of Lancaster when he intends to announce his decision on the Touche Ross report on the future of the national engineering laboratory.

  Mr. Newton
  My right hon. and noble Friend the Secretary of State for Trade and Industry is currently considering a report on the national engineering laboratory prepared by management consultants Touche Ross and hopes to make an announcement shortly concerning the future of the laboratory, including ownership.

  Vauxhall Motors
  Mr. Bright
  To ask the Chancellor of the Duchy of Lancaster when he or his officials next expect to meet the management of Vauxhall Motors Ltd. to discuss changes in the pattern of purchasing of materials to the benefit of United Kingdom suppliers.

  Mr. Atkins
  My officials meet the company regularly to discuss a wide range of issues including component and material sourcing.

  Mr. Bright
  To ask the Chancellor of the Duchy of Lancaster what contribution was made from public funds to Vauxhall Motors Ltd's investment in 1988 in its Luton plant.

  Mr. Atkins
  None.

  Company Investigations
  Mr. John Garrett
  To ask the Chancellor of the Duchy of Lancaster which accountancy firms have been criticised in the Department of Trade and Industry's inspectors' reports on investigations into companies in each of the past five years.

  Mr. Maude
  Two of the reports of inspectors appointed under the Companies Act that have been published since 1984 have contained criticisms of accountants. These were the reports of the investigations into the affairs of Milbury plc and into the affairs of The Greenbank Trust plc, both published in 1987 and in both of which the auditors of the company under investigation were the subject of criticisms by the inspectors.

  North East

  North West

  Yorkshire and Humberside

  East Midlands

  South West

  West Midlands

  (a) Number of applications received between 1 April 1988 and 31 March 1989

  294

  434

  238

  27

  106

  571

  (b) Number of applications processed between 1 April 1988 and 31 March 1989

  273

  438

  240

  32

  97

  608

  (c) Total grant paid (£ million) between 1 April 1988 and 31 March 1989

  33·6

  22·0

  21·1

  1·0

  5·0

  24·1

  Regional Development Grants
  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster what was(a) the number of applications for regional development grants outstanding on 31 March 1988, (b) the number of applications processed, (c) the number of those applications that are still outstanding and

  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-April 1989

  3,256

  2,729

  828

  239

  540

  Number still outstanding end-April 1989

  4

  11

  2

  1

  0

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

  18·9

  17·0

  4·4

  1·8

  2·0

  Grants
  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 innovation grants from 1 April 1988 to 31 March 1989, (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 investment grants from 1 April 1988 to 31 March 1989, (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. Atkins
  [holding answer 8 May 1989]: Regional enterprise grants (REGs) became available on 1 April 1988 in the development areas, and on 1 September 1988 in South Yorkshire. The information requested, for the English regions for which DTI is responsible, for the 12 months to 31 March 1989, is as follows:

  Regional Selective Assistance
  Mr. McLeish
  To ask the Chancellor of the Duchy of Lancaster what was(a) the number of applications for regional selective assistance received between 1 April 1988 and 31 March 1989, (b) the number of applications that have been processed and (c) the total amount of money paid out in that period for each of his Department's regions.

  Mr. Atkins
  [holding answer 8 May 1989]: The information requested in respect of regional selective assistance (RSA) industrial and training grants by region is as follows:

  (d) the total amount of money paid out since 31 March 1988 to those applicants for each of his Department's regions.

  Mr. Atkins
  [holding answer 8 May 1989]: The information requested in respect of the revised regional development grant scheme by region is as follows:

  Regional Enterprise Grants

  Number of applications

  Number of offers

  Value of offers

  (£000)

  Investment1

  North East

  424

  274

  1,517

  North West

  433

  254

  1,585

  Yorkshire and Humberside

  196

  118

  949

  East Midlands

  42

  34

  299

  South West

  146

  98

  432

  Total England

  1,241

  778

  4,782

  Innovation2

  North East

  136

  55

  1,021

  North West

  145

  43

  912

  Yorkshire and Humberside

  71

  28

  631

  East Midlands

  9

  5

  113

  South West

  35

  13

  218

  Total England

  396

  144

  2,895

  1 Payments of £712,379 have been made under Investment up to end March.

  2 Payments of £205,956 have been made under Innovation up to end March.

  383
  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 time scale of the projects on which applicants have sought grants since scheme commencement in April.

  Total provision for expenditure on regional enterprise grants in England in 1988–89 as published in the Supply Estimates was £14 million. 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.

ENVIRONMENT

  Accommodation Costs (Cambridgeshire)
  Sir Eldon Griffiths
  To ask the Secretary of State for the Environment what estimate he has made of the cost per square foot of accommodation for civil servants in(a) the rural districts of Forest Heath, east Cambridgeshire and (b) the city of Cambridge.

  Mr. Chope
  There is limited office space available in the rural districts of Forest Heath and east Cambridgeshire. The annual rental cost is estimated at £4 per sq ft in Ely and £7 per sq ft in Newmarket depending on size, location and quality. For any new hirings in Cambridge the figure is estimated to be of the order of £15 per sq ft. The site at Brooklands is Crown freehold, but the market value is currently estimated at £7 per sq ft.

  LDDC (Planning Permission)
  Ms. Gordon
  To ask the Secretary of State for the Environment if he will list all planning permissions given to the London docklands development corporation along the river Thames in the borough of Tower Hamlets which secure a public riverside walkway.

  Mr. Trippier
  A list of 45 permissions given by the LDDC since 1981, together with details of seven current cases, has been placed in the Library. These cases demonstrate the corporation's commitment to extensive riverside and dockside access.

  Wartime Excavations
  Ms. Walley
  To ask the Secretary of State for the Environment if he will take steps to record those wartime sites which were evacuated for sand excavation and subsequently infilled with rubble and waste.

  Mr. Chope
  The Department is currently undertaking a jointly funded project with the British Geological Survey of the solid and drift geology of almost all the built-up area of Stoke on Trent and Newcastle under Lyme. The project started in January 1988 and is planned to be completed by July 1990. Part of the output of the project will be a series of maps, on a number of different themes relevant to planning and development, including the incidence of made ground, categorised where possible by the type of fill material used.

  This project is one of a series of geological mapping projects being undertaken in various parts of the country
  384
  as part of the Department's research programme. The project aims to concentrate on areas of development pressure and to identify among other things, areas where planners and developers may need to pay particular attention to ground conditions.

  Rents
  Ms. Gordon
  To ask the Secretary of State for the Environment what arrangements he is making to ensure that after April 1990 landlords will not be permitted to raise rents by continuing to charge tenants the amount which formerly covered rent and rates.

  Mrs. Virginia Bottomley
  Protected tenants paying rents which include rates will have the normal protection of the Rent Act 1977 for tenancies entered into before I5 January 1989, and may register fair rents which are exclusive of rates. The Housing Act 1988 will apply to most tenancies entered into after that date, and any rents determined by the rent assessment committee under that Act will be exclusive of rates.

  Nottingham City Council (Budget Returns)
  Mr. Allen
  To ask the Secretary of State for the Environment, further to his reply on 25 April to the hon. Member for Sheffield, Brightside (Mr. Blunkett)Official Report, column 532, if he has received detailed budget returns from Nottingham city council.

  Mr. Gummer
  Yes, a return from Nottingham city council has been received. Returns from 21 authorities remain outstanding.

  Toyota Plant
  Mr. Harry Barnes
  To ask the Secretary of State for the Environment if he will extend the borrowing facilities for Derbyshire county council to enable it to provide the infrastructure for the establishment of the Toyota plant.

  Mr. Gummer
  Under the terms of the block borrowing approval issued for 1989–90, it is open to Derbyshire county council to borrow to finance infrastructure works undertaken in 1989–90. But the authority's total borrowing for the year must be contained within the ceiling established by that approval.

  Radioactivity Study
  Mr. Foulkes
  To ask the Secretary of State for the Environment what action he proposes to take following the publication by his Department of the report on the study of radioactivity three years after Chernobyl carried out by the Institute of Terrestrial Ecology; what part he intends aerial monitoring should play in future surveys; what role he intends local authorities should play; and if he will make a statement.

  Mrs. Virginia Bottomley
  The Institute of Terrestrial Ecology report on the radio activity in the environment has suggested that the radioactive caesium in organic litter layers under grass, bracken, heather and woodland could be an explanation of the longevity of radio activity in pasture and in grazing animals. A further programme of research is being planned to investigate this possibility.

  Aerial monitoring is being considered as a means of rapid identification of areas of high radioactivity

  385
  deposition in the event of any future overseas nuclear accident. The role of local authorities is set out in the booklet "The National Reponse Plan and Radioactive Incident Monitoring Network (RIMNET) Phase I" published by HMSO. Copies of which have been placed in the Library of the House.

  Fish Farming
  Mr. David Nicholson
  To ask the Secretary of State for the Environment what representations he has received about fish farming in national parks; and if he will make a statement.

  Mrs. Virginia Bottomley
  [holding answer 8 May 1989]: We have received representations from the chairman of the Exmoor national park committee and the chairman of the Association of County Councils' national parks committee. We are today issuing a consultation paper on permitted use rights in the countryside which includes an invitation for views on the adequacy of existing planning controls over fish farming in national parks.

  Exmoor National Park
  Mr. David Nicholson
  To ask the Secretary of State for the Environment if he will make a statement on the Government response to issues raised during the recent visit to the Exmoor national park by the Minister for Housing, Environment and Countryside.

  Mrs. Virginia Bottomley
  [holding answer 8 May 1989]: My noble Friend's visit to the Exmoor national park was informal and a wide range of issues were discussed. A "response" is not appropriate in the circumstances.

  Football Supporters Association
  Mr. Harry Barnes
  To ask the Secretary of State for the Environment what discussions he has held with the Football Supporters Association since the Hillsborough tragedy; and if he will make a statement.

  Mr. Moynihan
  [holding answer 4 May 1989]: I have not held any discussions with the Football Supporters Association since the Hillsborough tragedy, but I understand that Lord Justice Taylor has granted the association leave to be represented at the oral hearings which will form part of his inquiry into the tragedy.

  Sick Building Syndrome
  Mr. Redmond
  To ask the Secretary of State for the Environment what percentage of Government employees have been diagnosed as suffering from sick building syndrome during the last 12 months; and if he will make a statement.

  Mr. Chope
  [holding answer 27 April 1989]: No Government employee has been diagnosed as having suffered from sick building syndrome because the nature of the conditions which are generally associated with this problem are such that they could originate from any number of different causes.

  The cause of sick building syndrome is not known. The Government are participating in research which is currently being carried out.

  Community Charge
  Mr. Wray
  To ask the Secretary of State for the Environment what was the total cost to public funds of the Price Waterhouse report on the cost of administering and collecting the poll tax in England and Wales.

  Mr. Gummer
  [holding answer 8 May 1989]: The Government have no plans to introduce a poll tax. The cost of the report on the community charge to which the hon. Member presumably refers was £60,000.

  Mr. Blunkett
  To ask the Secretary of State for the Environment what representations he has received from local authorities on the actual costs of introducing the community charge; and if he will consider the provision of additional finance(a) in the current financial year and (b) in 1990–91.

  Mr. Gummer
  We have received a number of representations from charging authorities on the costs of introducing the community charge. We believe that sufficient resources, both capital and revenue, have been made available by the Government for 1989–90. Collection costs in 1990–91 will be taken into account in assessing charging authorities' need to spend. We shall be discussing authorities' need to spend with the local authority associations before making proposals for the 1990–91 settlement.

HEALTH

  AIDS
  Mr. Butler
  To ask the Secretary of State for Health whether he proposes to issue instructions to the Health Education Authority to bring to public attention evidence presented in the Journal of the American Medical Association 1989, 261(2), pp. 244–5, that passionate kissing favours the transmission of HIV.

  Mr. Mellor
  The article referred to in the Journal of the American Medical Association presents evidence to suggest that passionate kissing can produce microlesions in the mouth, which could, in theory, result in the transmission of HIV since any activity which could involve blood coming into contact with damaged tissue carries such a risk. However, there is no evidence, of anyone having become infected with HIV through passionate kissing. In developing AIDS educational material the HEA has regard to the latest medical and scientific knowledge, and is guided by the Government's expert advisory group on AIDS.

  Mr. Strang
  To ask the Secretary of State for Health how many cases there are of HIV being transmitted through mouth-to-mouth resuscitation.

  Mr. Mellor
  I am advised that no such cases have been reported anywhere in the world.

  Mr. Strang
  To ask the Secretary of State for Health (1) whether he will make a statement on the steps being taken in the National Health Service to reduce the risk of health workers contracting HIV from their patients;

  (2) how many health-care workers have caught HIV from their patients during the course of their National Health Service duties over the last 10 years.

  Mr. Mellor
  The risks of health care workers contracting HIV from patients are extremely low. One case has been reported in the United Kingdom. Nevertheless, in view of the serious consequences of HIV infection specific guidelines have been given to the health service on the steps which should be taken to minimise the risks of transmission of HIV. This guidance is currently under review by the expert advisory group on AIDS. In addition, much of the general control of infection guidance issued by the Department is relevant to the prevention of HIV transmission in the health care setting.

  Osteoporosis
  Mr. Frank Field
  To ask the Secretary of State for Health what preventive action he is taking against osteoporosis.

  Mr. Freeman
  In conjunction with the Health Education authority we take every opportunity to encourage women to take regular exercise and to avoid smoking and excessive alcohol intake, all of which help to prevent osteoporosis. Hormone replacement therapy, which is available on the NHS, can be effective in preventing osteoporosis. Since there may be risks as well as benefits of such treatment for some people, the individual patient's suitability for HRT should be a matter for the clinical judgment of their doctor. The Medical Research Council has set up a specialist group to look at the further 388
  research required into osteoporosis and HRT. The National Osteoporosis Society has been awarded a grant of £20,000 a year for three years under the Department's grant aid programme and provides information and literature for the general public and for doctors on osteoporosis.

  "Working For Patients"
  Mr. Strang
  To ask the Secretary of State for Health what effect paragraph 4.9 of "Working For Patients" (Cm. 555) will have on the manner in which regions can charge one another for cross-boundary flows in genito-urinary medicine without breaching patient confidentiality; and how paragraph 4.9 will affect health authorities in controlling their cross-boundary costs in direct access services such as GUM medicinal and family planning.

  Mr. Mellor
  We are currently considering with health service representatives the scope and operation of cross-charging arrangements and will have regard to the position of direct access services and the confidentiality requirements of genito-urinary medicine services.

  Mr. Strang
  To ask the Secretary of State for Health (1) whether he will make a statement as to the maintenance of genito-urinary medicine and venereal disease clinics as a core service in the light of paragraph 4.15 of "Working For Patients" (Cm. 555);

  (2) if he will make a statement on the effect paragraph 4.15 of "Working For Patients" (Cm. 555) will have on the designation of health care for drug misusers as a cote service.

  Mr. Mellor
  I refer the hon. Member to my right hon. and learned Friend's reply to the hon. Member for Peckham (Ms. Harman) on 7 February at column 640.

  AIDS-HIV Patient Treatment
  Mr. Strang
  To ask the Secretary of State for Health (1) what effect paragraph 6.9 of "Working For Patients" (Cm. 555) will have on people with HIV infection seeking primary care from other Health Service sources such as GUM clinics, while remaining registered with a general practitioner;

  (2) if he will make a statement on how paragraph 4.25 of "Working For Patients" (Cm. 555) will affect the application by person with AIDS for a referral to a centre other than the one with which the district health authority has a contract;

  (3) if he will make a statement on how paragraph 7.15 of "Working For Patients" (Cm. 555) will affect the ability of general practitioners to use their drug budgets to pay for patients with HIV-related diseases;

  (4) how paragraph 4.8 of "Working For Patients" will affect the additional costs of treating AIDS patients;

  (5) if he will make a statement on the effect paragraph 6.5 of "Working For Patients" (Cm. 555) will have on the budgeting of practice staff costs for HIV and AIDS counselling services;

  (6) if he will make a statement on the effect paragraph 6.4 of "Working For Patients" (Cm. 555) will have on general practitioners dealing with people with AIDS;

  (7) if he will make a statement on the effect paragraph 4.15 of "Working For Patients" will have on the designation of AIDS care as a core service;
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  (8) if he will make a statement as to the application of paragraph 4.17 of "Working For Patients" (Cm. 555) to the care of AIDS patients;

  (9) if he will make a statement as to the effect of paragraph 2.13 of "Working For Patients" (Cm. 555) on the training of receptionists in relation to people with HIV and AIDS;

  (10) how paragraph 4.30 of "Working For Patients" (Cm. 555) will affect staff training and improved methods of care for people with AIDS where general hospital services are provided through National Health Service hospital trusts or private hospitals outside the control of health authorities;

  (11) whether he will make a statement as to the effect of paragraph 2.8 of "Working For Patients" (Cm. 555) on key HIV and AIDS care services;

  (12) if he will make a statement as to the effect the renegotiating of services outlined in paragraph 4.13 of "Working For Patients" (Cm. 555) will have on the ability of people with AIDS to develop a relationship of trust and understanding with a particular centre.

  Mr. Mellor
  The aims of the proposals in "Working for Patients" are to improve services for patients, to extend patient choice, to delegate responsibility to where the services are provided, and to secure the best value for money. The aim of the implementation work now in hand is to ensure that the arrangements introduced meet the needs of all patients, including people with AIDS and HIV infection. That work includes detailed consideration of the account needing to be taken of HIV morbidity in deciding resource allocations; contractual arrangements to cover services which hospitals provide for people who have not been referred by their GPs; the account needing to be taken of the health needs of people with AIDS and other chronic illnesses in determining GPs' practice and prescribing budgets; and arrangements for the education and training of NHS staff and general practitioners in HIV-related matters.

  Dental Treatment
  Mr. Fearn
  To ask the Secretary of State for Health how much the maximum cost of dental treatment has risen in cash and real terms between April 1979 and April 1989.

  Mr. Freeman
  The information requested is set out in the table:

  Maximum charge for a course of treatment in the general dental service

  £

  April 1979

  30·00

  April 1989 (current prices)

  150·00

  April 1989 (1979–80 price)

  75·69

  Nurses' and Midwives' Pay Review Body
  Mr. Hunter
  To ask the Secretary of State for Health whether he will place in the Library a copy of the Health Department's written evidence to the nurses' and midwives' pay review body on the new grading structure for nursing and midwifery education staff.

  Mr. Mellor
  My right hon. and learned Friend has done so today.

  GPs (Retirement)
  Mr. French
  To ask the Secretary of State for Health what plans he has made for introducing a retirement age for general medical practitioners and for abolishing 24-hour retirement without abatement of pension; and if he will make a statement.

  Mr. Mellor
  As we made clear in "General Practice in the NHS: A New Contract", issued to all GPs in February, compulsory retirement for general medical practitioners aged 70 or over will be introduced from April 1991.

  We intend to reduce the retirement age to 65 in due course, as proposed in the White Paper "Working for Patients". The arguments for doing so in terms of standards of service to patients are strong. However we are proceeding on a longer timetable for that proposal and our first objective is to introduce a compulsory retirement age of 70 for GPs.

  "Promoting Better Health" made clear that similar provisions should apply to general dental practitioners. We will therefore introduce a retirement age of 65 on April 1997. This retirement age will be introduced in stages. That is, dental practitioners aged 72 or over on 1 April 1990 will have to retire on that date. The age of retirement will be reduced thereafter year by year after 1990 until it reaches 65 in 1997. We have negotiated with the General Dental Services committee compensation payments for those dentists who retire in the first three years of the scheme for loss in respect of the sale of goodwill of their practices.

  Regulations on the compulsory retirement of GPs and dentists will be published as soon as possible.

  Turning to 24-hour retirement, we will end from April 1990 the provision whereby a general medical or opthalmic medical practitioner, or dental practitioner, may on reaching 65 retire, draw his or her pension and return to practice after 24 hours without abatement of pension. This provision is wholly exceptional in the public sector. It was introduced to encourage elderly practitioners to remain in practice at a time when there was a shortage of young doctors and dentists. Now that there are adequate numbers of younger doctors and dentists the arrangement is no longer justified. The position of those practitioners who currently benefit under this provision will be protected.

  Youth Treatment Centres
  Mr. Stern
  To ask the Secretary of State for Health when he will publish the findings of the inspection of Glenthorne and St. Charles youth treatment centres carried out by his social services inspectorate; and if he will make a statement.

  Mr. Mellor
  I have today placed copies of the findings of the inspection, carried out by my social services inspectorate, in the Library of each House. This is the first such inspection of the youth treatment centres and I am grateful to the inspectorate for its thorough and detailed work. The Government fully accept their responsibility for ensuring that the special service provided by the centres for a group of youngsters with very severe problems is delivered as effectively and efficiently as possible. The inspectorate's report will be a great assistance in that task.

  The inspection pointed to the urgent need for improvements to the fabric of the buildings, and action on this has already been set in hand. In considering the wider

  391
  recommendations relating to professional and management matters, the Government will wish to take account of the views of those directly involved in providing and using the youth treatment service. The findings are being made available to them and to others with an interest. I have also taken the opportunity to visit both centres to hear at first hand the views of staff and local management. Their task is a difficult one and I wish to applaud the commitment and dedication that they bring to it.

SCOTLAND

  Scottish Educational Trust for United Nations and International Affairs
  Mr. Steel
  To ask the Secretary of State for Scotland what contribution is made to the study of social sciences in Scotland by the Scottish Educational Trust for United Nations and International Affairs; and whether he intends to give it support from the Scottish Education Department.

  Mr. Rifkind
  The Scottish Educational Trust for United Nations and International Affairs produces materials which education authorities may choose to purchase for school use. The trust's aims and activities do not come within current priorities for grant to voluntary organisations.

  Adult and Continuing Education
  Mr. Steel
  To ask the Secretary of State for Scotland whether there exists in Scotland a unit for the development of adult and continuing education; and what funding is available from Government sources for such services.

  Mr. Rifkind
  There is no direct equivalent to the unit for the development of adult and continuing education in Scotland. The Scottish Institute for Adult and Continuing Education aims to advance education amongst adult members of the community and to co-ordinate the efforts of organisations, institutions and individuals in attaining that aim. In 1988–89 the institute received funding of £34,000 from the Scottish Education Department and £46,000 from other Government Departments and public bodies.

  Open Learning Centres
  Mr. Steel
  To ask the Secretary of State for Scotland (1) what funding is available from Government sources for open learning centres for adults in inner cities in Scotland;

  (2) if there is in Scotland an adult literacy and basic skills unit; and what funding is available from Government sources for adult basic education work in Scotland.

  Mr. Rifkind
  The provision of adult basic education in Scotland is primarily the responsibility of the local authorities, who determine the extent and means of provision within the broad guidelines and resources provided by central Government.

  The Government are making available £30,000 in both 1988–89 and 1989–90 to assist the establishment of an open learning centre at Whitfield, Dundee and £16,000 in both 1988–89 and 1989–90 to support the work of the Edinburgh walk-in numeracy centre. The Training Agency will be
  392
  making £80,000 available towards the establishment of four open learning centres (including Whitfield) in 1989–90.

  The former Scottish adult basic education unit was integrated with the Scottish Community Education Council in 1986. Adult basic education was accorded first priority by the council in its corporate plan for 1988–89 and approximately one third of Scottish Education Department grant of £550,000 to the council was directed to that subject.

  The Scottish Education Department will in addition be making a further £100,000 available towards other adult basic education initiatives in 1989–90.

  Ethnic Minority Adults
  Mr. Steel
  To ask the Secretary of State for Scotland whether he intends to implement section 11 of the Local Government (Scotland) Act 1966 to provide for the settlement, welfare and education of ethnic minority adults.

  Mr. Rifkind
  I have no plans to introduce specific grants to local authorities under section 11 of the 1966 Act.

  REPLAN
  Mr. Steel
  To ask the Secretary of State for Scotland whether he intends to introduce an equivalent of the REPLAN educational programme for unemployed adults which exists in England and Wales.

  Mr. Rifkind
  I refer the right hon. Member to the reply given to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on 18 April 1989.

  Community Care
  Mr. Galbraith
  To ask the Secretary of State for Scotland, following National Health Service circular 1989 (Gen 5), which body is to take the lead role in community care; what is the future role of joint planning; and if he will make a statement.

  Mr. Michael Forsyth
  National Health Service circular 1989(Gen)5 on the "Establishment of Community Care Facilities by Health Boards for People Being Discharged from Long-Stay Hospitals" made no changes to existing responsibilities for community care or joint planning. The Government are currently considering the future funding and organisation in light of Sir Roy Griffiths' report.

  Mental Health (Scotland) Act 1984
  Mr. Galbraith
  To ask the Secretary of State for Scotland whether the working party preparing a code of practice based on the Mental Health (Scotland) Act 1984 has met to consider responses received to the draft code; and whether a further draft code will be published.

  Mr. Michael Forsyth
  All comments on the draft code are being carefully considered but my right hon. and learned Friend has not felt it necessary to reconvene the working party. It is not currently the intention to publish a further draft before it is laid before Parliament.

  Mr. Galbraith
  To ask the Secretary of State for Scotland how many responses he has had on the draft code of practice circulated under section 119 of the Mental
  393
  Health (Scotland) Act 1984 for (a) health boards (b) local authorities, (c) voluntary organisations, (d) professional associations and (e) individuals.

  Mr. Michael Forsyth
  The information requested is as follows:

  Category

  Number of responses

  Health boards

  14

  Local authorities

  3

  Voluntary organisations

  4

  Professional associations

  15

  Individuals

  —

  Others

  4

  Total

  40

  Mr. Galbraith
  To ask the Secretary of State for Scotland what representations he has had concerning guidance on provisions for guardianship contained in the Mental Health (Scotland) Act 1984; and if he will make a statement.

  Mr. Michael Forsyth
  A number of representations about guidance on guardianship were received in the course of our consultations on a code of practice on the 1984 Act. These comments along with the other responses to the consultation exercise are still under consideration.

  Incinerators
  Mr. Darling
  To ask the Secretary of State for Scotland if he will list all the municipal incinerators in Scotland and indicate which ones are licensed to burn(a) radioactive waste, (b) special waste and (c) clinical waste.

  Lord James Douglas-Hamilton
  Incinerators operated by local authorities in Scotland are listed in the table. Such incinerators operate under the conditions specified in a resolution passed by the disposal authority. These resolutions, which are required to be made available for public inspection, include such limitations on the incineration of controlled wastes as the authority considers to be necessary; controlled wastes include special and clinical wastes.

  Under the Radioactive Substances Act 1960 responsibility for the control of radioactive wastes rests with the Secretary of State for Scotland. The municipal incinerators authorised by him to burn radioactive waste are shown in the list below.

  Incinerator and authority

  Aberdeen (East Tullos)1—City of Aberdeen District Council

  Alloa—Clackmannan District Council

  Dundee (Baldovie)1—City of Dundee District Council

  Govan—City of Glasgow District Council

  Polmadie1—City of Glasgow District Council

  Linwood—Renfrew District Council

  Chinglebraes—Orkney Islands Council

  Rova Head—Shetland Islands Council

  1 Authorised to burn low level radioactive wastes.
  394
  Mr. Darling
  To ask the Secretary of State for Scotland (1) what regulations govern emissions from hospital incinerators; and if he has any plans to improve the operating standards of hospital incinerators;

  (2) if he has any proposals to remove Crown immunity from hospital incinerators.

  Mr. Michael Forsyth
  The Health and Safety (Emissions to Atmosphere) (Amendment) Regulations 1989 set emission standards for incinerators with a capacity of over 1 tonne per hour. These regulations apply to hospital incinerators but there is at present no Scottish hospital incinerator of the relevant size.

  New controls on smaller incinerators will be introduced as soon as possible. It is intended that these controls will also apply to hospital incinerators.

  Pollution Inspectorate
  Mr. Darling
  To ask the Secretary of State for Scotland what resources are available to and what are the staffing levels of Her Majesty's pollution inspectorate in Scotland; what proposals he has to extend the staffing establishment; and if he will make a statement.

  Lord James Douglas-Hamilton
  Her Majesty's industrial pollution inspectorate for Scotland is part of the Scottish Development Department and has a staff of 20 including 13 professionally qualified engineers and scientists. The inspectorate's complement is in line with its current commitments, but staffing levels are reviewed regularly.

  Drinking Water
  Mr. Darling
  To ask the Secretary of State for Scotland what recent advice he has received on acceptable levels of lead in drinking water.

  Mr. Michael Forsyth
  Current medical advice is that there is little evidence to suggest that there are any health risks if the lead content in water is below the current European Commission maximum of 50 microgrammes per litre.

  Mr. Darling
  To ask the Secretary of State for Scotland what is the most recent information available on levels of lead in drinking water in(a) Edinburgh and (b) Scotland; and what estimate he has as to when the levels will be reduced to within European Economic Community safety limits.

  Lord James Douglas-Hamilton
  A recent survey of lead-plumbed properties in Edinburgh showed that the average lead level in tap water was less than 0–03 microgrammes per litre; it is estimated that not more than 15,000 people receive water which, on occasions, may exceed the maximum admissible concentration in the EC drinking water directive. Similar survey information is not available for the rest of Scotland. Six water authorities are completing programmes of treatment to reduce plumbosolvency and ensure compliance with the directive, as shown in the table:
  395

  Number of supplies not meeting standard

  Estimated population affected ('000s)

  Region

  Now

  At end of 1989

  Now

  At end of 1989

  Dumfries and Galloway

  22

  None

  65·0

  None

  Highland

  9

  None

  7·5

  None

  Tayside

  10

  None

  18·6

  None

  Grampian

  14

  None

  31·2

  None

  Lothian

  1

  1

  15·0

  15·0

  Strathclyde

  22

  16

  73·0

  37·0

  TOTAL

  78

  17

  210·3

  52·0

  Complete compliance should be achieved by Lothian early in 1991 while in Strathclyde all but two schemes will be completed by that date. The last two should be finished by 1992.

  Mr. Darling
  To ask the Secretary of State for Scotland what action is being taken to implement the European Economic Community directive on safe levels of lead in water; and if he will make a statement.

  Lord James Douglas-Hamilton
  Responsibility for the quality of water supplies lies with the water authorities, the regional and islands councils. They are introducing improved treatment to reduce plumbosolvency and are removing lead communication pipes in their ownership whenever there is an opportunity to do so. Enhanced capital allocations have been made available to local authorities to enable them to make faster progress with this work. Consumers are encouraged to replace that part of their lead piping leading to the kitchen tap by the availability of home improvement grant at an enhanced level for this purpose. These measures should ensure that the directive's limits are met.

  Mr. Darling
  To ask the Secretary of State for Scotland what information he has on the effectiveness of lime and orthophosphate in reducing levels of lead in pipes and in tanks.

  Lord James Douglas-Hamilton
  The addition of both lime and orthophosphate to water which contains no significant amount of lead is aimed at reducing the plumbosolvency of the water; that is the ability to take up lead from lead plumbing, mainly in the ownership of consumers. Lime is generally effective, but some larger supply areas require further treatment using orthophosphate. Neither of these treatments affect the amount of lead available from lead pipes and tanks, they merely limit uptake.

  Mr. Darling
  To ask the Secretary of State for Scotland what information he has on the level of nitrate pollution in drinking water in(a) Edinburgh and (b) Scotland.

  Lord James Douglas-Hamilton
  Public water supplies in Edinburgh are well within the nitrate limits set in the EC drinking water directive. Elsewhere in Scotland, no consumers receive from public supplies water with levels of nitrate above those in the directive. Local environmental health authorities will advise consumers on levels in private supplies and on any appropriate remedial action.

  Mr. Darling
  To ask the Secretary of State for Scotland what information he has on levels of aluminium in drinking water in Scotland.

  Lord James Douglas-Hamilton
  Fourteen public supplies in Scotland contain levels of aluminium from 396
  natural sources above the maximum admissible concentration (MAC) set in the EC drinking water directive. In each case the levels are well within those recommended by medical advisers as being acceptable and derogations have been granted as provided in article 9 of the directive. More than 69 supplies do not comply because of the presence of aluminium used in treatment. Most of these supplies are already the subject of improvement programmes in terms of article 20 of the directive. Some which exceed the MAC occasionally have yet to be fully assessed following recent reinterpretation of the status of the MAC.

  Mr. Darling
  To ask the Secretary of State for Scotland what information he has on levels of trihalomethane in drinking water in Scotland.

  Lord James Douglas-Hamilton
  Detailed information on levels of trihalomethanes in drinking water is not held centrally. A national standard of 200 microgrammes per litre as an average over three months was set for Scotland in 1985 and all supplies comply with this limit. Consideration is currently being given to lowering the standard to 100 microgrammes per litre and to taking action to achieve this lower level in all supplies within a set period.

  Mr. Darling
  To ask the Secretary of State for Scotland what information he has on the extent to which drinking water in Scotland is deliberately dosed with aluminium compounds; and for what purpose.

  Lord James Douglas-Hamilton
  Almost half of the water put into supply is treated in works where aluminium compounds are used to remove colour and suspended solids.

  Pollution Control
  Mr. Darling
  To ask the Secretary of State for Scotland how many staff in the Scottish Office are working on aspects of air and water pollution.

  Lord James Douglas-Hamilton
  A large number of Scottish Office staff have responsibilities which involve aspects of these subjects. In the divisions and units directly concerned with pollution matters, 58 staff are engaged full-time on these duties and 64 part-time. The majority of the full-time staff are engaged on environmental studies in the marine laboratory, Aberdeen; most of the remainder are located in the parts of the Scottish Development Department which deal with environmental pollution.

  Hazardous Waste Inspectorate
  Mr. Darling
  To ask the Secretary of State for Scotland what are the staffing levels in, and what resources are available to, the hazardous waste inspectorate in Scotland.
  397
  Lord James Douglas-Hamilton
  Six professional staff are engaged for part of their time on hazardous waste inspectorate duties, amounting to the equivalent of two full-time officers. Staffing levels are currently being reviewed. The inspectorate can call on the resources of a wide spectrum of professional expertise available in the Scottish Office.

  Waste Disposal
  Mr. Darling
  To ask the Secretary of State for Scotland if he will list all the sites in Scotland which are licensed to dispose of(a) radioactive waste, (b) special waste and (c) clinical waste.

  Lord James Douglas-Hamilton
  Sites currently approved by the Secretary of State for the disposal of low level radioactive waste in accordance with authorisations granted under the Radioactive Substances Act 1960 are listed in the table.

  Site

  Operator

  Black Devon Tip

  Clackmannan District Council

  Lower Polmaise Tip

  Stirling District Council

  Balbarton Tip

  Kirkcaldy District Council

  Ness Tip

  City of Aberdeen District Council

  Braehead Tip

  City of Edinburgh District Council

  East Saltoun Tip

  East Lothian District Council

  Birdston Tip

  Strathkelvin District Council

  Earnock Tip

  East Kilbride District Council

  Cathkin Tip

  East Kilbride District Council

  Kilgarth Tip

  City of Glasgow District Council

  Summerston Tip

  City of Glasgow District Council

  Riverside Tip

  City of Dundee District Council

  Longman Tip

  Inverness District Council

  Dalmacoulter Tip

  Monklands District Council

  Melville Wood Tip

  North East Fife District Council

  Under the Control of Pollution Act 1974 the districts and islands councils in Scotland are the licensing authorities for controlled waste which includes special and clinical waste. Licences, and resolutions in the case of a council's own operation, are not necessarily written in terms of special or clinical wastes. The disposal facilities listed in the table can dispose of wastes which could be regarded as special wastes or clinical wastes respectively. Municipal incinerators are not included in the lists as they have been covered by my reply today to the hon. Member on that subject.

  Sites which may accept 'special waste'

  Site

  Authority Area

  Material

  Central Region

  Kinneil Kerse Tip, Bo'ness Foreshore, Bo'ness

  Falkirk DC

  Asbestos and toxic industrial wastes

  West Carron, Carron Road, Falkirk

  Falkirk DC

  Asbestos

  Lower Polmaise, Fallin, Stirling

  Stirling DC

  Asbestos

  Fife Region

  East Forthar Farm, Kingskettle, Ladybank

  NE Fife DC

  Dyestuffs waste

  Grampian Region

  Little Clinterty, Clinterty, Aberdeen

  City of Aberdeen DC

  Some chemical wastes

  Blackdog Farm (North). Bridge of Don

  Gordon DC

  Asbestos

  Highland Region

  Council Site, Brackletter, Spean Bridge

  Lochaber DC

  Asbestos

  398

  Site

  Authority Area

  Material

  Nontox Ltd., Ardersier (Incinerator)

  Inverness DC

  Tar, Pitch, Bitumen, Asphalts, Paint Wastes

  Lothian Region

  Levenseat Landfill Ltd., Levenseat Quarry, Fauldhouse

  West Lothian

  Asbestos

  Strathclyde Region

  Stevenston Works Tip, Stevenston

  Cunninghame DC

  Chemical industry wastes

  Greenoakhill Tip, Hamilton Road, Broomhouse, Glasgow

  City of Glasgow DC

  Major site for toxic waste

  Craignaught Quarry, Dunlop

  Kilmarnock and Loudoun DC

  Asbestos

  Lanarkshire Lagoons, Ravenscraig Works, Motherwell

  Motherwell DC

  Industrial sludges

  Coke Ovens Area, Ravenscraig Works, Motherwell

  Motherwell DC

  Emergency disposal of coke manufacturing effluents into boreholes

  Auchinlea North

  Motherwell DC

  Asbestos, paint wastes, industrial effluent treatment sludge, interceptor wastes, acid tars

  Tweeniehills quarry, Kilarchan

  Renfrew DC

  Tanning wastes

  Birdston, Kirkintilloch

  Strathkelvin DC

  Major site for toxic liquids and industrial wastes

  Tayside Region

  Lochead Farm Landfill Site, Forfar

  Angus DC

  Asbestos

  Leysmill Quarry, Leysmill, Arbroath

  Angus DC

  Asbestos

  Leoch and Fallows Quarries, Rosemill, Dundee

  City of Dundee DC

  Asbestos

  Wellbank Quarry, Wellbank, Dundee

  City of Dundee DC

  Asbestos

  Luncarty Bleachfield, Luncarty, Perth

  Perth and Kinross DC

  Bleachworks residues

  Shetland Islands

  Sullom Voe Terminal, Calback Ness, Shetland Islands

  Shetland Islands Council

  Oil contaminated soil

  Sites which may accept clinical waste

  Site

  Authority Area

  Clinical Waste

  Component Authorised

  Kinneil Kerse Tip, Foreshore, Bo'ness

  Falkirk DC

  Veterinary wastes

  Lochead Tip, Wellwood, Dunfermline

  Dunfermline DC

  Veterinary wastes

  Melville Wood, Ladybank, Fife

  North East Fife DC

  Animal Carcasses (Prior Arrangement)

  Westburn Lane, St. Andrew's, Fife (Incinerator)

  North East Fife DC

  Medical, surgical, veterinary wastes. Carcasses and flesh

  Greenoakhill Tip, Glasgow, Strathclyde

  City of Glasgow DC

  Medical wastes

  Hunterston A Power Station
  Mr. Darling
  To ask the Secretary of State for Scotland when the nuclear installations inspectorate will publish the long-term safety review for Hunterston A power station; and if he will make a statement.

  Mr. Lang
  I understand that the Health and Safety Executive's nuclear installations inspectorate intends to publish this summer the findings on its assessment of the South of Scotland electricity board's long term safety review for Hunterston A power station.

  Fish Landings
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what were the total values of all fish landings in Scotland for each year from May 1979 to the last available figures for the current year.

  Mr. Michael Forsyth
  The total values of all fish landings into Scotland by United Kingdom and foreign vessels since 1979 are:

  Calendar year

  £ million

  1979

  124

  1980

  115

  1981

  128

  1982

  149

  1983

  173

  1984

  197

  1985

  219

  1986

  238

  1987

  278

  11988

  257

  21989

  50

  1 Provisional.

  2 January-March.

  Fishing Fleets
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what is the total complement of the Scottish fishing fleets; what are the categories of vessels; how many fishermen are employed in the industry; and where are the home ports of the vessels.

  Mr. Michael Forsyth
  At the end of 1988 there were 8,71·1 fishermen employed in Scotland. The table shows the number of vessels in the Scottish fishing fleet at 31 December 1988 split by base district and by main method of fishing.

  The number of active vessels in the Scottish fishing fleet at the end of 1988

  Number

  (a) By base district

  Eyemouth

  151

  Pittenweem

  117

  Arbroath

  87

  Aberdeen

  53

  Peterhead

  153

  Fraserburgh

  169

  MacDuff

  100

  Buckie

  116

  Lossiemouth

  119

  Wick

  99

  Orkney

  103

  Shetland

  124

  Stornoway

  210

  Ullapool

  59

  Mallaig

  210

  400

  Number

  Oban

  125

  Campbeltown

  174

  Ayr

  128

  Kinlochbervie

  12

  Lochinver

  25

  Total All

  2,334

  (b) By main method of fishing

  Demersal

  Trawl

  423

  Seine

  251

  Lines

  63

  Other

  29

  Total Demersal

  766

  Pelagic

  Purse Seine

  46

  Pelagic Trawl

  6

  Other

  2

  Total Pelagic

  54

  Shellfish

  Nephrops Trawl

  466

  Other Shellfish

  1,068

  Total Shellfish

  1,514

  TOTAL ALL METHODS

  2,334

  Fish Processing
  Mr. Bill Walker
  To ask the Secretary of State for Scotland if he will list the projects in the fish processing industry in Scotland which received European Community grant aid in the period May 1979 to May 1989 and the total value of grants given to each product.

  Mr. Michael Forsyth
  The information is set out in the table. Awards are made under the EC Processing and Marketing Regulation 355/77.

  Year and title

  Grant awarded £

  1979

  Provision of fish freezing facilities at Whalsay, Shetland

  25,285

  Installation of equipment in a fish processing factory at Campbeltown, Argyll

  55,875

  Construction of a fish processing plant at Scalloway, Shetland

  35,331

  Installation of freezing facilities in a fish processing factory at Aberdeen

  26,451

  Installation of packaging equipment in a fish processing factory at Fraserburgh

  44,221

  Construction of a fish processing plant at Aberdeen

  160,173

  Provision of additional equipment in a fish processing plant at Aberdeen

  14,000

  Construction of a fish market at Aberdeen

  60,000

  1980

  Improvement of a fish processing plant at Stornoway, Western Isles

  65,468

  Equipment of a fish processing plant at Buckie, Grampian

  68,950

  Construction of a fish processing plant at Inverbervie, Grampian

  44,875

  Construction of a fish processing plant at Fraserburgh

  88,835

  Construction of a fish processing plant at Aberdeen

  65,770

  Improvement of a fish processing plant at Stonehaven

  28,312

  Construction of a fish processing plant at Aberdeen

  44,625

  Construction of a fish processing plant at Wick

  11,681

  Expansion of a fish processing plant at Aberdeen

  68,750

  1981

  Construction of a fish processing plant at Peterhead

  6,380

  401

  Year and title

  Grant awarded £

  Extension of a fish market at Kinlochbervie

  35,483

  Equipment of a fish processing plant at Scalloway, Shetland

  25,179

  Provision of a fish processing plant at Aberdeen

  29,250

  Improvement of a fish processing plant at Fraserburgh

  63,157

  Improvement of a fish processing plant at Annan

  79,718

  1982

  Expansion of fish processing facilities at Aberdeen

  62,100

  Construction of a fish market at Blackness Harbour, Scalloway, Shetland

  48,417

  Extension of a fish processing factory at Peterhead

  34,178

  Extension of a fish processing factory at Annan

  53,642

  Provision of fish processing facilities at Northmavine, Shetland

  92,787

  Provision of prawn processing facilities at Newton Stewart

  68,999

  1983

  Provision of additional fish processing facilities at Buckie

  210,961

  Improvement of a fish processing plant at Aberdeen

  23,780

  Expansion of a fish freezing plant at Aberdeen

  34,097

  New Factory for curing, smoking and freezing fish at Achiltibuie

  17,874

  Provision of fish processing facilities at Kyle of Lochalsh

  15,585

  Establishment of salmon processing plant at Inverness

  80,720

  Expansion of a fish processing factory at Inverbervie

  100,000

  1984

  Provision of a fish processing plant at Kirkwall, Orkney

  121,848

  Improvement of fish processing facilities at Mintlaw, Grampian

  26,509

  Installation of white fish processing equipment at a factory in Aberdeen

  79,733

  Improvement of fish processing facilities at Gairloch

  53,213

  Provision of additional fish processing equipment at Pittenweem, Fife

  11,261

  Extension of a fish processing factory at Scalloway, Shetland

  10,237

  Provision of fish processing facilities at Aberdeen

  74,460

  Expansion of fish processing facilities at Aberdeen

  165,000

  Provision of fish freezing equipment at a factory at Aberdeen

  7,500

  Improvement of fish processing facilities at Fraserburgh

  48,250

  1985

  Improvement of a fish processing factory at Peterhead

  37,500

  Improvement of fish processing facilities at Aberdeen

  15,629

  Expansion of fish processing facilities at Fraserburgh

  58,141

  Expansion of fish processing facilities at Arbroath

  56,529

  Provision of additional fish processing equipment at Fraserburgh

  117,450

  Provision of fish processing facilities at Aberdeen

  141,212

  Improvement of fish processing facilities at Aberdeen

  20,875

  Provision of fish processing facilities at Peterhead

  22,650

  Provision of fish processing facilities at Peterhead

  38,105

  Provision of fish processing facilities at Peterhead

  19,830

  Provision of fish chilling and freezing equipment at Kirkcudbright

  30,500

  Provision of fish processing equipment at Mintlaw, Grampian

  15,790

  Modernisation of fish processing facilities at Aberdeen

  36,609

  Provision of trout processing facilities at Bellshill

  30,002

  Extension of fish processing facilities at Mid Yell, Shetland

  15,451

  Modernisation of facilities for processing fish offal at Aberdeen

  159,955

  Extension of fish processing facilities at Kirkwall, Orkney

  7,334

  Expansion of fish processing facilities at Fraserburgh

  17,000

  Expansion of fish processing facilities at Boddam, Grampian

  111,915

  402

  Year and title

  Grant awarded £

  Expansion of fish processing facilities at Buckie, Grampian

  92,991

  Improvements to salmon processing facilities at Brydekirk, Dumfriesshire

  118,372

  Improvement of fish processing facilities at Aberdeen

  23,000

  Improvement of fish processing facilities at Peterhead

  27,782

  1986

  Improvement to fish processing facilities at Peterhead

  26,511

  Improvements to fish processing facilities at Aberdeen

  56,468

  Expansion of fish freezing and storage facilities at Campbeltown, Argyll

  22,500

  Provision of fish grading and packing equipment at Aberdeen

  11,250

  Expansion of fish processing facilities at Aberdeen

  7,094

  Provision of fish processing facilities at Aberdeen

  15,680

  Provision of fish processing facilities at Aberdeen

  13,636

  Extension of fish processing facilities at Boddam, Grampian

  179,446

  Provision of fish processing facilities at Mintlaw, Grampian

  636,415

  Provision of fish processing facilities at Fraserburgh

  387,424

  Provision of drying facilities for use in production of fishmeal at Aberdeen

  109,422

  Installation of thawing equipment for the fish sector at Fraserburgh

  139,845

  Provision of fish processing equipment at Shetland

  31,295

  1987

  Modernisation of processing facilities for white fish at Peterhead

  8,509

  Provision of processing facilities for pelagic fish at Peterhead

  15,924

  Construction of a fish feed factory at Invergordon

  243,132

  Provision of fish and shellfish processing plant at Motherwell

  71,675

  Installation of plant and machinery for the handling of fish at Peterhead

  12,956

  Expansion of fish processing facilities at Duns

  71,221

  Provision of fish market at Fraserburgh

  107,300

  Extension of existing fish processing facilities at Macduff, Grampian

  7,989

  Provision of a fish processing factory at Peterhead

  58,559

  Provision of fish processing equipment at Fraserburgh

  25,944

  Provision of blast freezer for fish at Fraserburgh

  36,699

  Modernisation of fish processing facilities at Brydekirk, Annan

  70,064

  Expansion of shellfish processing plant at Inverurie

  58,750

  Provision of fish and shelfish processing facilities at Invergordon

  71,200

  Provision of a fish marketing building at Kinlochbervie Harbour, Highland region

  118,883

  Provision of additional fish processing equipment at Fraserburgh

  157,362

  Provision of fish packing equipment at Aberdeen

  46,110

  Provision of additional fish processing capacity at Aberdeen

  123,248

  1988

  Provision of additional fish processing equipment at Lerwick, Shetland

  52,521

  Provision of additional fish processing capacity at Buckie, Grampian

  44,266

  Provision of fish processing equipment at Mintlaw, Grampian

  96,830

  Provision of additional fish processing facilities at Tullos, Aberdeen

  40,641

  Modernisation of fish processing facilities at Fraserburgh

  253,206

  Provision of a blast freezer for fish at Aberdeen

  23,750

  Provision of salmon processing facilities at Arbroath

  51,648

  Establishment of fish curing and smoking plant at Kirkwall, Orkney

  93,809

  Modernisation and expansion of fish processing facilities at Peterhead

  68,578

  Provision of a fish house in Aberdeen

  11,310

  403

  Year and title

  Grant awarded £

  Provision of additional cold store capacity and fish processing machinery at Peterhead

  30,113

  Provision of fish processing facilities at Fraserburgh

  91,734

  Provision of fish grading, chilling and freezing facilities at Aberdeen

  107,336

  Provision of fish processing facilities at Aberdeen

  113,384

  114 projects-Total aid awarded

  7,825,179

  Fishing Vessels
  Mr. Bill Walker
  To ask the Secretary of State for Scotland (1) how many owners of Scottish fishing vessels received grant aid for the modernisation programme in the period May 1979 to May 1989; and what was the total value of these grants;

  (2) what is the total value of grants aid given to the Scottish fishing industry in the period May 1979 to May 1989 for the building of new fishing vessels.

  Mr. Michael Forsyth
  During the period in question £93,181,802 was awarded in grant aid. This figure is made up of £25,880,605 EC assistance, £15,571,812 assistance from the Highlands and Islands Development Board and £51,729,385 in national grants. The EC assistance figure of £25,880,605 comprise £19,619,574 towards the cost of the building of new fishing vessels and £6,261,031 towards the cost of modernisations. The breakdown of the national grant aid and the assistance from the Highlands and Islands Development Board is not readily available, and could be obtained only at disproportionate cost.

  Beef Premium
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what are the total values of payments made to farmers in Scotland for the beef premium in the period from May 1979 to May 1989; and how much of this was funded from the European Community and how much from the central Government.

  Mr. Michael Forsyth
  The total payments made to farmers in Scotland for the beef variable premium from January 1979 to 2 April 1989 inclusive amount to £157·7 million. Of this total, £63·1 million was funded by the European Community and £94·6 million by the Government. This scheme was replaced by the beef special premium scheme on 3 April 1989, which is entirely funded by the Community. Payments under this scheme have just commenced.

  Sheepmeat Regime
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what are the total values of payments made to farmers in Scotland for the sheepmeat regime since 1979; and how much of this was from the European Community and how much from central Government in the period May 1979 to May 1989.

  Mr. Michael Forsyth
  The total payments made to farmers in Scotland from January 1979 to April 1989 inclusive for the fat sheep guarantee scheme, sheep annual premium and sheep variable premium scheme amount to 404
  £375 million. Of this total £367·5 million was funded by the European Community and £7·5 million by the Government.

  Fishing (Loans)
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what is the total value of loans made to the Scottish fishing industry from the Sea Fish Industry Authority in the period May 1979 to May 1989; and how many vessels these loans cover.

  Mr. Michael Forsyth
  The total value of loans from the Sea Fish Industry Authority for the period May 1979 to May 1989 is £14,437,119. Information on the number of vessels assisted is not available as records relating to the earlier years have been destroyed.

  Military Establishments
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what is the estimated total value to the economy of Scotland of the presence of military establishments of United Kingdom armed forces in various locations in Scotland.

  Mr. Lang
  It is not possible to provide comprehensive estimates. But details of the deployment of defence manpower in Scotland and estimates of defence equipment expenditure in Scotland are given in the table. There are no separate estimates of defence manpower expenditure in Scotland, although total United Kingdom defence expenditure on personnel in 1987–88 was £7,212 million.

  Scotland

  Total United Kingdom

  Defence manpower July 19881

  31,500

  2461,100

  Defence equipment expenditure3 (£ million)

  400

  6,600

  Source: Statement on the Defence Estimates 1989, Volume 2.

  1 Includes civilian and military manpower.

  2 Includes 97,800 personnel stationed overseas.

  3 This estimate is based on the location of the main supplier for each contract and does not take account of the location of sub-contractors.

  Tourism
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what was the total value of tourism in Scotland in each of the years from May 1979 to April 1989.

  Mr. Lang
  Figures for 1988 and 1989 are not yet available.

  Domestic/Overseas Tourism Expenditure

  £ million Cash prices

  1979

  590

  1980

  659

  1981

  718

  1982

  760

  1983

  897

  1984

  1,423

  1985

  1,421

  1986

  1,576

  1987

  1,894

  Source: Domestic: British Tourism Survey up to 1983, National Survey of Tourism in Scotland from 1983, Overseas: International Passenger Survey.

  Harbours
  Mr. Bill Walker
  To ask the Secretary of State for Scotland how many harbour projects in Scotland have been carried out in the period from May 1979 to April 1989; where are the locations; how much money was granted to these projects; and what were the sources of the funds.

  Mr. Michael Forsyth
  From May 1979 to April 1989, the harbours listed in the table received grant from DAFS under section 2 of the Fisheries Act 1955, amounting to a total of £8,146,558

  Fife

  Anstruther

  Crail

  Pittenweem

  Grampian

  Aberdeen1

  Buckie

  Burghead

  Fraserburgh1

  Gourdon

  Lossiemouth

  Macduff

  Peterhead1

  Stonehaven

  Whitehills

  Highland

  Keiss1

  Kinlochbervie1

  Lochinver

  Lybster

  Mallaig1

  Ullapool

  Wick

  Lothians

  Port Seton

  Orkney

  Trumland

  Westray

  Shetland

  Blackness (Scalloway)1

  Cullivoe

  Lerwick

  Symbister1

  Strathclyde

  Ayr

  Campbeltown1

  Gairloch1

  Girvan

  Oban

  Port Ellen

  Tarbert

  Central

  Arbroath

  Western Isles

  Stornoway1

  Uig

  1 During the same period, these harbours were also awarded grant from the European Regional Development Fund amounting to a total of £7,596,291.

  The following harbours received grant only from the European regional development fund:

  Kylesku

  John o' Groats

  Carradale

  Gravir

  Highlands and Islands Development Board
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what was the total budget for the Highlands and Islands Development Board for the years May 1979 to April 1989; how much central Government gave towards the budget; and how much was obtained from other sources.

  Mr. Lang
  The table sets out grant-in-aid from central Government to the Highlands and Islands Development Board, receipts from other sources and gross expenditure for the financial years 1979–80 to 1988–89.

  Highlands and Islands development board

  Expenditure 1979–80 to 1988–89 (£ million at outturn prices)

  Year

  Grant-in-aid

  Receipts

  Gross Expenditure

  1979–80

  17·4

  3·9

  21·3

  1980–81

  20·0

  3·7

  23·7

  1981–82

  22·9

  4·4

  27·3

  1982–83

  27·5

  5·2

  32·7

  1983–84

  31·3

  6·8

  38·1

  1984–85

  34·6

  7·5

  42·1

  1985–86

  30·4

  9·2

  39·6

  1986–87

  26·4

  9·1

  35·5

  1987–88

  26·2

  11·7

  37·9

  1988–89

  31·6

  10·4

  42·0

  Agricultural Development Programmes
  Mr. Bill Walker
  To ask the Secretary of State for Scotland how many ADPs are operating in Scotland; where are the locations; what is the total value of grants made to farmers under these schemes; and what is the source of these funds.

  Mr. Michael Forsyth
  There is one agricultural development programme (ADP) operating in Scotland covering the islands off the north and west coasts but excluding the Western Isles which have recently benefited from an integrated development programme.

  The programme provides for expenditure by the United Kingdom Government of £38 million (of which £27 million has already been committed) over a five-year period with reimbursement at the rate of 40 per cent. from the guidance section of the European agricultural guarantee and guidance fund.

  Fishing (Aid)
  Mr. Bill Walker
  To ask the Secretary of State for Scotland how much financial aid has been given to the fishing industry under the European agriculture guidance and guarantee fund scheme since May 1979 to date.

  Mr. Michael Forsyth
  A total of £25,800,605 has been awarded to the Scottish fishing industry for the construction and modernisation of fishing vessels.

  Mr. Bill Walker
  To ask the Secretary of State for Scotland how many grants have been given to members of the Scottish fishing industry under the European agriculture guidance and guarantee fund scheme since May 1979 to May 1989; and how many new vessels were built with those grants.

  Mr. Michael Forsyth
  A total of 561, of which 196 were for the construction of new vessels.

  Doctors and Dentists (Retirement)
  Mr. Bill Walker
  To ask the Secretary of State for Scotland what plans he has made for introducing a retirement age for general medical and dental practitioners and for abolishing 24-hour retirement without abatement of pension; and if he will make a statement.

  Mr. Michael Forsyth
  As we made clear in "General Practice in the NHS: A New Contract", issued to all Scottish GPs on 12 April, compulsory retirement for general medical practitioners aged 70 or over will be introduced from April 1991.

  We intend to reduce the retirement age to 65 in due course, as proposed in the White Paper "Working for Patients". The arguments for doing so in terms of standards of services to patients are strong. However we are proceeding on a longer timetable for that proposal and our first objective is to introduce a compulsory retirement age of 70 for GPs.

  "Promoting Better Health" made clear that similar provisions should apply to general dental practitioners. We will, therefore, introduce a retirement age of 65 on April 1997. This age will be introduced in stages. That is, dental practitioners aged 72 or over on 1 April 1990 will have to retire on that date. The age of retirement will be reduced thereafter year by year after 1990 until it reaches 65 in 1997. We have negotiated with the general dental services committee compensation payments for those dentists who retire in the first three years of the scheme for loss in respect of the sale of goodwill of their practices.

  Regulations on the compulsory retirement of GPs and dentists will be published in the next few months.

  Turning to 24-hour retirement, we will end from April 1990 the provision whereby a general medical or ophthalmic medical practitioner, or dental practitioner, may on reaching 65 retire, draw his or her pension and return to practice after 24 hours without abatement of pension. This provision is wholly exceptional in the public sector. It was introduced to encourage elderly practitioners to remain in practice at a time when there was a shortage of young doctors and dentists. Now that there are adequate numbers of younger doctors and dentists the arrangement is no longer justified. The position of those practitioners who currently benefit under this provision will be protected.

DEFENCE

  Nuclear Tests
  Mr. Ashley
  To ask the Secretary of State for Defence is he has any further information about the dangers of radiation from nuclear tests.

  Mr. Sainsbury
  It is the function of the Government's independent advisors on radiological protection matters, the National Radiological Protection Board, to review all new information, including that on the test veterans, and advise the Government accordingly.

  Submarines
  Mr. Foulkes
  To ask the Secretary of State for Defence what representations he has received concerning incidents involving submarines and fishing vessels.

  Mr. Archie Hamilton
  As I told the hon. Member on 11 April 1989 at column 515, letters continue to be received
  408
  from fishermen's organisations and from other interested groups about a number of incidents in which submarines are alleged to have been involved. The hon. Member himself raised this subject with the Royal Navy and the US Navy in Scotland yesterday during an all-party visit to Faslane and Holy Loch.

  Mr. Janman
  To ask the Secretary of State for Defence what is the latest position regarding discussions between his Department, the port of Tilbury and Thurrock borough council regarding the use of the port of Tilbury by nuclear-powered Royal Navy submarines; and if he will make a statement.

  Mr. Archie Hamilton
  As I said in my answer to the hon. Member for Clwyd, South-West (Mr. Jones) on 9 March at column 677, my officials have had preliminary discussions with port and local authorities about visits to Tilbury by Royal Navy ships, including nuclear powered submarines. This remains the position. It would be premature to anticipate the outcome of these discussions at this stage.

  Dr. Moonie
  To ask the Secretary of State for Defence if he has any plans to update the Royal Navy's plans for evacuation and safety in the event of an accident to a nuclear submarine which involves an escape of radiation.

  Mr. Doran
  To ask the Secretary of State for Defence if he has any plans to update the Royal Navy's plans for evacuation and safety in the event of an accident to a nuclear submarine which involves an escape of radiation.

  Ms. Walley
  To ask the Secretary of State for Defence if he has any plans to update the Royal Navy's plans for evacuation and safety in the event of an accident to a nuclear submarine which involves an escape of radiation.

  Mr. McFall
  To ask the Secretary of State for Defence if he has any plans to update the Royal Navy's plans for evacuation and safety in the event of an accident to a nuclear submarine which involves an escape of radiation.

  Mr. Archie Hamilton
  All aspects of planning for accidents in Royal navy nuclear-powered submarines are kept under constant review.

  Mr. Wigley
  To ask the Secretary of State for Defence how many incidents have there been during the past 10 years in which allegations have been made of submarines fouling fishing nets in the Irish sea; and in how many of these alleged incidents it has been substantiated that United Kingdom submarines have been involved.

  Mr. Archie Hamilton
  Since 1982, the date from which information is held, we are able to trace 35 cases in which Royal Navy submarines are alleged to have been in collision with fishing vessels or their gear in the Irish sea, Clyde approaches and north Channel. Six of these allegations were substantiated following investigation.

  Ms. Gordon
  To ask the Secretary of State for Defence what were the nature and circumstances of navigational problems encountered by Royal Navy nuclear-powered submarines at the port of Hull.
  409
  Mr. Archie Hamilton
  Entry by submarines into the port of Hull was complicated by the tides there. In 1983, a nuclear-powered submarine had to turn back at the point of entering Hull as a safe entry could not be guaranteed in the bad weather conditions at the time. In 1985, another nuclear-powered submarine was exposed to the risk of slight external damage while it was being guided into the port. In the light of these incidents, and the emphasis we place on the safety of nuclear-powered vessels, we reluctantly decided that the navigational risks of nuclear-powered submarines visiting Hull under these circumstances outweighed the benefits of such visits, even though Hull was popular with submarine crews and previous visits had been a great success.

  RAF Upper Heyford
  Mr. Dunnachie
  To ask the Secretary of State for Defence what consultations and representations he has received about future uses of RAF Upper Heyford.

  Mr. Andrew Smith
  To ask the Secretary of State for Defence what consultations and representations he has received about future uses of RAF Upper Heyford.

  Ms. Primarolo
  To ask the Secretary of State for Defence what consultation and representations he has received about future use of RAF Upper Heyford.

  Mr. Wall
  To ask the Secretary of State for Defence what consultation and representations he has received about future use of RAF Upper Heyford.

  Mr. Archie Hamilton
  NATO has not yet taken decisions on restructuring its forces following the INF treaty; no are decisions imminent. In the meantime, the British Government have not agreed to any changes to the role of aircraft of the 20th tactical fighter wing based at RAF Upper Heyford, which forms an important part of NATO'S longer-range intermediate-range strike capability. My right hon. Friend has received a number of representations about the future use of the base from hon. Members and members of the public.

  Nuclear Weapons
  Dr. Marek
  To ask the Secretary of State for Defence if he will make a statement about Her Majesty's Government's current proposals to modernise short-range nuclear forces.

  Mr. Patchett
  To ask the Secretary of State for Defence if he will make a statement about Her Majesty's Government's current proposals to modernise short-range nuclear forces.

  Mr. Flynn
  To ask the Secretary of State for Defence if he will make a statement about Her Majesty's Government's current proposals to modernise short-range nuclear forces.

  Mr. Barron
  To ask the Secretary of State for Defence if he will make a statement about Her Majesty's Government's current proposals to modernise short-range nuclear forces.

  Mr. Younger
  Along with their allies, the British Government believe that to support the strategy of flexible response NATO requires a mix of nuclear forces, including 410
  short-range systems, and that these need to be kept up to date and effective where necessary. However, specific proposals on modernisation are made by the appropriate NATO authorities, not by individual nations.

  Mr. Galbraith
  To ask the Secretary of State for Defence what consideration has been given to the development, procurement and deployment of short-range attack missiles with a nuclear capability.

  Mr. Sedgemore
  To ask the Secretary of State for Defence what consideration has been given to the development, procurement and deployment of short-range attack missiles with a nuclear capability.

  Mr. Redmond
  To ask the Secretary of State for Defence what consideration has been given to the development, procurement and deployment of short-range attack missiles with a nuclear capability.

  Mr. Wareing
  To ask the Secretary of State for Defence what consideration he has given to the development, procurement and deployment of short-range attack missiles with a nuclear capability.

  Mr. Archie Hamilton
  We are currently considering the options for a possible delivery system for a replacement for the United Kingdom's theatre nuclear weapons, including a derivative of the American short-range attack missile II, the SRAM(T). The SRAM(T) has already been selected by the Pentagon as the basis for a United States nuclear stand-off missile programme.

  Mr. Bill Walker
  To ask the Secretary of State for Defence what short-range nuclear air-launched weapons the Warsaw pact has discontinued operating during the 1980s.

  Mr. David Davis
  To ask the Secretary of State for Defence what short-range nuclear air-launched weapons the Warsaw pact has discontinued operating during the 1980s.

  Mr. Dykes
  To ask the Secretary of State for Defence what short-range nuclear air-launched weapons the Warsaw pact has discontinued operating during the 1980s.

  Mr. Barry Field
  To ask the Secretary of State for Defence what short-range nuclear air-launched weapons the Warsaw pact has discontinued operating during the 1980s.

  Mr. Archie Hamilton
  We have no evidence to indicate that the Warsaw pact has discontinued the use of any of its air-launched nuclear weapons since 1980. Indeed, there are signs that the variety of these weapons held by the Soviet air forces has been increased.

  Miss Lestor
  To ask the Secretary of State for Defence what representations he has received from his Belgian counterpart about Her Majesty's Government's policy towards the modernisation of short-range nuclear weapons.

  Mr. Allen McKay
  To ask the Secretary of State for Defence what representations he has received from his Belgian counterpart about Her Majesty's Government's policy towards the modernisation of short-range nuclear weapons.
  411
  Mr. Corbyn
  To ask the Secretary of State for Defence what representations he has received from his Belgian counterpart about Her Majesty's Government's policy towards the modernisation of short-range nuclear weapons.

  Mr. Younger
  I refer the hon. Members to the reply I gave earlier today to the hon. Member for Manchester, Blackley (Mr. Eastham).

  Mrs. Gillian Shephard
  To ask the Secretary of State for Defence what short-range nuclear missiles the Warsaw pact has discontinued operating during the 1980s.

  Mr. Maples
  To ask the Secretary of State for Defence what short-range nuclear missiles the Warsaw pact has discontinued operating during the 1980s.

  Mr. Andy Stewart
  To ask the Secretary of State for Defence what short-range nuclear missiles the Warsaw pact has discontinued operating during the 1980s.

  Mr. Archie Hamilton
  We do not believe that the Warsaw pact has discontinued the use of any short-range missile systems during the 1980s. It retains a massive 16:1 superiority over NATO in short-range nuclear-capable missile launchers in Europe. The FROG-7 missile, with a range of 70 km has been replaces by the SS-21 missile, with a range of 120 km, in the forward area. We have no indication that the FROG-7s withdrawn have been destroyed. The SS-1 SCUD has been upgraded and remains in service with the Warsaw pact.

  Mr. Frank Cook
  To ask the Secretary of State for Defence what are the most recent proposals for new nuclear artillery shells.

  Mr. Ray Powell
  To ask the Secretary of State for Defence what are the most recent proposals for new nuclear artillery shells.

  Mr. Bradley
  To ask the Secretary of State for Defence what are the most recent proposals for new nuclear artillery shells.

  Mr. Younger
  I refer the hon. Members to the reply I gave earlier today to the hon. Member for Burnley (Mr. Pike).

  Mr. Anthony Coombs
  To ask the Secretary of State for Defence what short-range nuclear artillery the Warsaw pact has discontinued operating during the 1980s.

  Mr. Archie Hamilton
  There is no evidence that Soviet artillery pieces capable of firing nuclear rounds have been removed from service in the 1980s. On the contrary, the Soviet Union has improved both quantitatively and qualitatively its nuclear-capable artillery with the introduction of new weapons systems: the 152mm 2S5, the long-range 203mm 2S7, and the 240mm 2S4 mortar. These new systems provide much greater mobility and firepower.

  MOD Police
  Mr. Turner
  To ask the Secretary of State for Defence what is his policy toward the deployment of members of the Ministry of Defence police on land outside his Department's responsibility.

  Mr. Ron Brown
  To ask the Secretary of State for Defence what is his policy toward the deployment of members of the Ministry of Defence police on land outside his Department's responsibility.
  412
  Mr. Loyden
  To ask the Secretary of State for Defence what is his policy toward the deployment of members of the Ministry of Defence police on land outside his Department's responsibility.

  Mr. Sainsbury
  I refer the hon. Members to the answer I gave earlier today to the hon. Member for Bolsover (Mr. Skinner).

  Armoured Vehicles
  Mr. Summerson
  To ask the Secretary of State for Defence what armoured vehicles have been ordered by his Department for the Army since 1979.

  Mr. Gregory
  To ask the Secretary of State for Defence what armoured vehicles have been ordered by his Department for the Army since 1979.

  Mr. Sainsbury
  I refer my hon. Friends to the answer which I gave earlier today to my hon. Friend the Member for Gedling (Mr. Mitchell).

  Baghdad International Exhibition
  Mr. Battle
  To ask the Secretary of State for Defence what information he has about defence sales arising from the Baghdad international exhibition.

  Mr. Henderson
  To ask the Secretary of State for Defence what information he has about defence sales arising from the Baghdad international exhibition.

  Mr. Terry Lewis
  To ask the Secretary of State for Defence what information he has about defence sales arising from the Baghdad international exhibition.

  Ms. Mowlam
  To ask the Secretary of State for Defence what information he has about defence sales arising from the Baghdad international exhibition.

  Mr. Sainsbury
  It is too early to know if the exhibition gave rise to any defence sales prospects to Iraq or other countries. Any overseas sale would require an export licence and any for Iraq would be considered against the guidelines announced by my right hon. and learned Friend the Foreign and Commonwealth Secretary on 29 October 1985, at column 454.

  Chemical Weapons
  Mr. McCartney
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about development in the United States of new types of chemical weapons.

  Mr. Haynes
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about development in the United States of America of new types of chemical weapons.

  Mr. Graham
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about development in the United States of America of new types of chemical weapons.

  Mr. Parry
  To ask the Secretary of State for Defence what discussions he has had with his United States counterpart about development in the United States of new types of chemical weapons.
  413
  Mr. Archie Hamilton
  My right hon. Friend has regular discussions with his United States counterpart on a wide range of defence issues. They last met at the nuclear planning group meeting in Brussels on 19 and 20 April.

  Soviet Strategy (Maskirovka)
  Mr. Moss
  To ask the Secretary of State for Defence what evidence his Department has that the Soviets are continuing to practise deception known as maskirovka, as part of their general strategy.

  Mr. Archie Hamilton
  The concept of Maskirovka ("masking") is strongly emphasised in Soviet military writings, where it is held to have contributed to their successes in world war II. It embraces all concealment and deception techniques at every level from the strategic to the tactical. Maskirovka continues to be a key element in Soviet military doctrine and we have no evidence that its importance has diminished.

  NATO
  Mr. Couchman
  To ask the Secretary of State for Defence what representations he has received seeking the reduction of the United Kingdom's defence budget to the average North Atlantic Treaty Organisation level.

  Mr. Archie Hamilton
  None. The United Kingdom's defence expenditure and the extent of our contribution to the Alliance is substantially above the NATO median. The United Kingdom's defence budget is planned to rise in real terms over the period to 1991–92 and taking into account the latest reported budgetary plans of the other members of the Alliance, the United Kingdom is likely to remain amongst the leading contributors.

  Mr. Wallace
  To ask the Secretary of State for Defence when he next plans to meet the Secretary General of NATO; and what matters will be discussed.

  Mr. Younger
  I next expect to see Dr. Woerner at the meeting of NATO's defence planning committee next month. We shall discuss a wide range of subjects of mutual interest.

  Dr. Thomas
  To ask the Secretary of State for Defence if he will make a statement on(a) the failures and, (b) the successes, of the North Atlantic Treaty Organisation since 1959.

  Mr. Archie Hamilton
  Since the signing of the North Atlantic Treaty on 4 April 1949, NATO has been outstandingly successful in keeping the peace in Europe during times of instability and rapid change in many parts of the world.

  Malta
  Mr. Harry Barnes
  To ask the Secretary of State for Defence when he last met his Maltese counterpart; and what subjects were discussed.

  Mr. Younger
  The Premier, Dr. Fenech-Adami, is the Minister with responsibility for the Maltese armed forces. We have held no substantive bilateral talks, although I met him during his visit to London last September.

  Education Support
  Dr. Twinn
  To ask the Secretary of State for Defence what training and education support is provided by his Department for Commonwealth and other friendly nations.

  Mr. Neubert
  Training and education support for Commonwealth and other friendly nations is provided by allocating places on United Kingdom service training courses to students from those countries and by sending service training teams overseas to assist our friends and allies in establishing their own training colleges and organisations in an effective and efficient way.

  West Germany
  Ms. Short
  To ask the Secretary of State for Defence if he will make a statement upon his recent discussions with his West German counterpart.

  Mr. Bill Michie
  To ask the Secretary of State for Defence if he will make a statement upon his recent discussions with his West German counterpart.

  Mr. Younger
  I refer the hon. Members to the reply I gave earlier today to the hon. Member for Newport, East (Mr. Hughes).

  Mr. Menzies Campbell
  To ask the Secretary of State for Defence when he next plans to meet the Secretary of State for Defence of the Federal Republic of Germany; and what matters will be discussed.

  Mr. Younger
  I expect to meet Dr. Stoltenberg to discuss a range of matters of mutual defence interest, at the meeting of NATO's defence planning committee next month.

  Force Levels
  Mr. Gow
  To ask the Secretary of State for Defence to what extent the Army, the Royal Air Force, the Royal Navy, and the Royal Marines are below their established strengths; and if he will make a statement.

  Mr. Neubert
  Shortfalls in service manpower are measured by comparing adult trained strengths against trained manpower requirements. As at 31 March 1989, shortfalls were Royal Navy 1,380, Royal Marines 43, Army 3,006, Royal Air Force 2,797. In order to encourage greater efficiency in the use of manpower, policy decisions have been taken to aim manpower plans at levels a little below the full requirement. Not all of these shortfalls are, therefore, unplanned.

  WEU Assembly
  Mr. Paice
  To ask the Secretary of State for Defence when next he intends to address the Western European Union Assembly; and if he will make a statement.

  Mr. Younger
  I shall be addressing the Western European Union Assembly on 4 June. This will provide a welcome opportunity to report on the achievements of the United Kingdom Presidency.

  Lance Missile
  Mr. Brian Wilson
  To ask the Secretary of State for Defence what is current NATO policy on the possible replacement of the Lance missile.
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  Mr. Ron Davies
  To ask the Secretary of State for Defence what is current NATO policy on the possible replacement of the Lance missile.

  Mr. Maxton
  To ask the Secretary of State for Defence what is current NATO policy on the possible replacement of the Lance missile.

  Mr. Morgan
  To ask the Secretary of State for Defence what is current NATO policy on the possible replacement of the Lance missile.

  Mr. Archie Hamilton
  At their recent meeting in Brussels in the nuclear planning group, NATO Defence Ministers expressed their determination to maintain effective nuclear forces across the entire spectrum, including short-range missiles, and agreed that these forces must be kept up to date where necessary.

  Z-berths
  Mr. Tony Lloyd
  To ask the Secretary of State for Defence what is his policy towards the declaration of further civilian port facilities as Z-berths.

  Mr. Ronnie Campbell
  To ask the Secretary of State for Defence what is his policy toward the declaration of further civilian port facilities as Z-berths.

  Mr. Buckley
  To ask the Secretary of State for Defence what is his policy toward the declaration of further civilian port facilities as Z-berths.

  Mr. Tony Banks
  To ask the Secretary of State for Defence what is his policy toward the declaration of further civilian port facilities as Z-berths.

  Mr. Archie Hamilton
  The Royal Navy's requirements for port visits by nuclear-powered submarines are continually under review. When a port appears suitable and practicable, the safety considerations are discussed with local civilian authorities before a final decision is taken.

  Frigates and Destroyers
  Mr. Martlew
  To ask the Secretary of State for Defence if he will make a further statement about!the procurement of frigates and destroyers for the Royal Navy.

  Mr. Ted Garrett
  To ask the Secretary of State for Defence if he will make a further statement about the procurement of frigates and destroyers for the Royal Navy.

  Mr. Caborn
  To ask the Secretary of State for Defence if he will make a further statement about the procurement of frigates and destroyers for the Royal Navy.

  Mr. Steinberg
  To ask the Secretary of State for Defence if he will make a further statement about the procurement of frigates and destroyers for the Royal Navy.

  Mr. Sainsbury
  The Government remain committed to maintain a force of about 50 destroyers and frigates and has plans for sufficient new orders to achieve this target. I refer the hon. Members to the answer I gave on 28 April 1989 at column 686 of the Official Report for details of the recent invitation to tender for further type 23 frigates.

  "Defence and the Environment"
  Mr. Patnick
  To ask the Secretary of State for Defence what progress has been made in implementing the proposals outlined in his Department's booklet, "Defence and the Environment."

  Mr. Neubert
  "Defence and the Environment" was published in 1987 as part of the Department's contribution to the European Year of the Environment. It did not contain any specific proposals, but described the extent of conservation activity on the defence estate. We continue to place a high priority on conservation in the management of our estate and the number of local conservation groups has continued to increase. In January 1988, we concluded a joint declaration of intent with the Nature Conservancy Council with which we enjoy a close working relationship.

  Contracting Out
  Mr. David Evans
  To ask the Secretary of State for Defence what has been the estimated annual saving made by his Department since 1979 in contracting out defence support services.

  Mr. Sainsbury
  Since 1979 and up to March 1988, contracting out of defence support services, excluding the transfer of the royal dockyards to commercial management, has resulted in a net financial saving now running at some £50 million per annum and a reduction of over 13,000 mainly civilian public sector posts.

  French Defence Minister
  Mr. Carrington
  To ask the Secretary of State for Defence when next he intends meeting the French Defence Minister; and what matters will be discussed.

  Mr. Younger
  I have no firm plans for an early meeting with M. Chevenement.

  Guerrilla Warfare
  Mr. Hanley
  To ask the Secretary of State for Defence what part guerrilla warfare has in his Department's plans for the defence of the United Kingdom.

  Mr. Greg Knight
  To ask the Secretary of State for Defence what part guerrilla warfare has in his Department's plans for the defence of the United Kindom.

  Mr. Archie Hamilton
  None. The defence of the United Kingdom is based upon our membership of the NATO Alliance and upon our possession, within the Alliance, of strong conventional forces and of a credible nuclear deterrent. By these means peace has been maintained within Europe for 40 years since the formation of NATO in 1949.

  Low Flying
  Mr. Kirkwood
  To ask the Secretary of State for Defence if he will now consider establishing an independent inquiry into the need for low flying.

  Mr. Neubert
  No.

  Mr. Amos
  To ask the Secretary of State for Defence what was the number of low-flying sorties over
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  the Tynedale area in Northumberland in 1988; what is the estimated number for 1989; and if he will make a statement.

  Mr. Neubert
  Central records are not held in a form which would enable the information requested for 1988 to be provided; nor is it possible to estimate the level of activity that the Tynedale area will see during 1989. I can assure my hon. Friend, however, that the Government will continue to do all within their power to minimise the disturbance caused by low-flying training and to spread this activity as widely and fairly as possible throughout the country.

  NATO (Nuclear Planning)
  Mr. Tredinnick
  To ask the Secretary of State for Defence what discussions he has had recently with NATO Ministers about the modernisation of NATO's short-range nuclear weapons; and if he will make a statement.

  Mrs. Mahon
  To ask the Secretary of State for Defence if he will make a statement on the outcome of the recent NATO nuclear planning group meeting.

  Ms. Ruddock
  To ask the Secretary of State for Defence if he will make a statement on the outcome of the recent NATO nuclear planning group meeting.

  Mr. Younger
  I refer the hon. Members to the reply I gave earlier today to the hon. Member for Glasgow, Provan (Mr. Wray).

  NATO (Arms Levels)
  Ms. Abbott
  To ask the Secretary of State for Defence what discussions he has had with his NATO allies about levels of(a) conventional arms, and (b) tactical nuclear forces, in Europe.

  Mr. Flannery
  To ask the Secretary of State for Defence what discussions he has had with his NATO allies about levels of(a) conventional arms, and (b) tactical nuclear forces, in Europe.

  Mr. James Lamond
  To ask the Secretary of State for Defence what discussions he has had with his NATO allies about levels of(a) conventional arms and (b) tactical nuclear forces in Europe.

  Mr. Buchan
  To ask the Secretary of State for Defence what discussions he has had with his North Atlantic Treaty Organisation allies about levels of(a) conventional arms and (b) tactical nuclear forces in Europe.

  Mr. Younger
  I hold regular discussions with my NATO colleagues on a wide range of defence issues. We last met at the nuclear planning group on 19 and 20 April; and we shall be meeting again next month in the defence planning committee.

  Plessey
  Mr. Adley
  To ask the Secretary of State for Defence what further assessment he has made in the light of the Monopolies and Mergers Commission report of the implications for defence procurement of the GEC/Siemens bid for Plessey; and if he will make a statement.

  Mr. Colvin
  To ask the Secretary of State for Defence if he will make a further statement on the defence implications of the GEC/Siemens bid for Plessey.
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  Mr. Sainsbury
  The Monopolies and Mergers Commission concluded in its report that the bid for GEC and Siemens for Plessey could proceed provided certain undertakings were secured. The MOD's view of the implications of the bid were clearly stated in the MMC report. My right hon. and noble Friend the Secretary of State for Trade and Industry placed responsibility on the MOD to secure two of these undertakings. Discussions to this end are now in hand.

  Ships (Orders)
  Dr. Blackburn
  To ask the Secretary of State for Defence what ships have been ordered by his Department for the Royal Navy since 1979.

  Mr. Knapman
  To ask the Secretary of State for Defence what ships have been ordered by his Department for the Royal Navy since 1979.

  Mr David Shaw
  To ask the Secretary of State for Defence what ships have been ordered by his Department for the Royal Navy since 1979.

  Mr. Sainsbury
  I refer my hon. Friend to table 5 of volume 1 of the "Statement on the Defence Estimates."

  MARILYN
  Mr. Burns
  To ask the Secretary of State for Defence what roles are envisaged for women in MARILYN, the study on future manpower policy.

  Mr. Neubert
  The MARILYN study recognised that the wider employment of women would assist in meeting the Army's manpower requirements.

  Soviets Strategy (Afghanistan)
  Mr. Irvine
  To ask the Secretary of State for Defence whether he has evidence that the Soviets have adapted their military thinking as a consequence of their experiences in Afghanistan.

  Mr. Archie Hamilton
  The nine-year Soviet occupation of Afghanistan inevitably provided the Soviet Union with an extensive opportunity to learn practical lessons on the battlefield. The nature of the irregular warfare in Afghanistan forced the Soviet armed forces to adapt their traditional, heavily-mechanised tactics to suit local conditions and they recognised the requirement for greater flexibility in thought and action. Nevertheless, overall the lessons learned by the Soviets in Afghanistan have limited application in the NATO area.

  Burden Sharing
  Mr. Fatchett
  To ask the Secretary of State for Defence how the latest United States plans for burden sharing will affect United Kingdom defence costs and commitments.

  Mr. Allen
  To ask the Secretary of State for Defence how the latest United States plans for burden sharing will affect United Kingdom defence costs and commitments.

  Mr. Archie Hamilton
  I refer the hon. Members to the answer I gave earlier today to the hon. Member for Sunderland, North (Mr. Clay).

  Trident
  Mrs. Fyfe
  To ask the Secretary of State for Defence what progress has been made in the Trident testing programme.

  Mr. Madden
  To ask the Secretary of State for Defence what progress has been made in the Trident testing programme.

  Mr. Cox
  To ask the Secretary of State for Defence what progress has been made in the Trident testing programme.

  Mr. Sainsbury
  A series of 19 firings from a land-based launch pad was completed in January. 15 were complete successes, and one a partial success. The first test firing from a submarine on 21 March was terminated four seconds into the flight by the missile's self-destruct mechanism. The United States investigation into the cause of the failure has identified the need for modifications to the first stage thrust control system. It is planned to trial these modifications during the next submarine-launched test flight towards the end of July.

  Nuclear Defence Establishments (Safety)
  Mr. Sumberg
  To ask the Secretary of State for Defence what is the estimated annual cost of securing Britain's nuclear defence establishments from infiltration by protest organisations.

  Mr. Sainsbury
  Security measures at Britain's defence nuclear establishments are designed to provide protection against a range of potential threats, principally espionage, sabotage, terrorism and subversion. However, it is not possible to identify that part of the total cost of protection which is attributable to the activity of protesters.

  Tanks
  Mr. Marlow
  To ask the Secretary of State for Defence what assessment he has made of the relative vulnerability of tanks as a result of likely technological changes over the next 10 years.

  Mr. Archie Hamilton
  The vulnerability of all our weapon systems, including tanks, is kept under review.

  Sweden
  Mr. Amess
  To ask the Secretary of State for Defence when he next intends visiting Sweden; and if he will make a statement.

  Mr. Younger
  I enjoyed a most successful and interesting visit to Sweden from 23 to 26 April. I saw the full range of the Swedish defence forces' impressive capabilities and had useful discussions on matters of mutual interest with Mr. Carlsson, the Defence Minister.

  Exports
  Mr. Hind
  To ask the Secretary of State for Defence if he will make a statement on the levels of export defence sales supported by DESO in 1988–89.

  Mr. Sainsbury
  The DESO continues to assist British companies market and sell their defence products overseas. It is through the sustained efforts of British 420
  industry, with the support of the DESO, that Britain maintains her position in the world as a major exporter of defence equipment. A broad overall view of United Kingdom successes is given in the "Statement on the Defence Estimates 1989" which records that new contracts signed in 1988 are expected to be worth £3,500 million—a sign of the competitiveness of the British defence industry.

  Nuclear-powered Naval Vessels (Accidents)
  Mr. Douglas
  To ask the Secretary of State for Defence if he will make a statement on the nature of the contacts between his Department and the relevant United States and Russian authorities in relation to co-operation in the event of accidents to nuclear-powered naval vessels.

  Mr. Archie Hamilton
  The Ministry of Defence would, where possible, lend whatever assistance was requested in the event of an accident involving a nuclear-powered naval vessel belonging to another country.

  Warsaw Pact Operational Manoeuvre Groups
  Mr. Brazier
  To ask the Secretary of State for Defence what information he has on the future of the Warsaw pact's operational manoeuvre groups.

  Mr. Archie Hamilton
  We have no evidence that the Soviet Union has abandoned the deep strike element of its offensive doctrine. The concept of the operational manoeuvre group, which is to maintain the momentum of attack throughout the entire depth of its operational area, remains an integral part of that doctrine.

  Soviet Air Force
  Mr. Patrick Thompson
  To ask the Secretary of State for Defence what evidence he has that the Soviet air force has reduced its offensive capability.

  Mr. Archie Hamilton
  I refer my hon. Friend to the answer I gave earlier today to my hon. Friend the Member for Wyre (Mr. Mans).

  Nimrod
  Mr. Favell
  To ask the Secretary of State For Defence if he will make a statement on the location of the Nimrod AEW airframes and the use to which they are to be put.

  Mr. Sainsbury
  Three Nimrod AEW airframes have been broken up for spares to support the Nimrod maritime patrol aircraft fleet. A fourth is a ground instructional aircraft at RAF Finningley. The remaining aircraft are currently at RAF Abingdon. Following careful consideration, we have concluded that there is no viable alternative use for five of these airframes, and they are now being used for spares to support the Nimrod maritime patrol aircraft fleet. The future use of the last two airframes is still under consideration.

  36 Engineer Regiment
  Mr. Rowe
  To ask the Secretary of State for Defence what conclusion he has reached following the consideration of the possibility of redeploying 36 Engineer regiment from Maidstone.
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  Mr. Neubert
  My right hon. Friend the Secretary of State for Defence has reviewed the possible deployment options for 36 Engineer Regiment. Having carefully considered the range of factors involved, he has concluded that the regiment should remain based at Maidstone.

  Nuclear-powered Submarines
  Mr. Conway
  To ask the Secretary of State for Defence if he will publish the results of the environmental radiation monitoring which is carried out by his Department in connection with nuclear-powered submarine operation.

  Mr. Archie Hamilton
  The Defence Radiological Protection Service will publish the results of environmental radiation monitoring carried out around nuclear-powered submarine berths in the United Kingdom, in the form of an annual report. With the agreement of the United States Government, results of monitoring carried out by the United States Navy in Holy Loch will also be included. The first published report, covering 1988 monitoring results, should be available in the summer of this year.

  Arms Talks
  Mr. Harry Greenway
  To ask the Secretary of State for Defence what discussions he has had with his counterparts in West Germany and other NATO countries about nuclear and conventional arms in recent weeks; and if he will make a statement.

  Mr. Younger
  I refer my hon. Friend to the answer I gave earlier to the hon. Member for Glasgow, Provan (Mr. Wray). We shall be discussing conventional defence matters at a meeting of the NATO defence planning committee in June.

  United States of America (Defence Secretary)
  Mr. Mullin
  To ask the Secretary of State for Defence when he next expects to meet the United States Defence Secretary.

  Mr. Younger
  I next expect to meet the United States Secretary for Defence at the meeting of NATO's defence planning committee next month.

  Disarmament
  Dr. Thomas
  To ask the Secretary of State for Defence if he will publish a table showing(a) the total number and explosive capacity, respectively, of all nuclear warheads removed from deployment, (b) the total number and description of all chemical weapons removed from deployment and (c) the total number of conventional weapons and descriptions of each type removed from deployment by the North Atlantic Treaty Organisation since 1959; and whether the withdrawals were made by unilateral or multilateral decisions.

  Mr. Archie Hamilton
  Much of the information requested is not available in the detail and format required or is classified. However, I am able to offer the following comments:

  (a) In 1979, NATO Defence Ministers agreed to reduce by 1,000 the number of nuclear warheads stockpiled in Europe, and in 1983 (at Montebello) agreed to reduce the stockpile by a further 1,400 warheads.
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  These two actions brought the NATO nuclear stockpile in Europe to its lowest level since 1969. This level is being further reduced as warheads are removed in association with the implementation of the INF treaty.

  (b) There are no chemical weapons declared to NATO. The United Kingdom abandoned its own chemical weapons capability in the late 1950s. The United States has only a limited retaliatory capability and has announced at the opening of the CFE talks in March 1989 that it would accelerate the withdrawal of its CW stocks from the Federal Republic of Germany, previously planned to be completed by 1992. Moreover, the United States has destroyed some 15 million pounds of chemical agent since 1970.

  (c) We do not hold comprehensive information on all the past modernisation and disposal measures which have been carried out by our NATO allies.

  Nuclear Waste
  Dr. Thomas
  To ask the Secretary of State for Defence when the last sea dump of radioactive waste arising from military uses of nuclear materials took place; what was the total quantity of radioactivity contained in radioactive waste packages of military origin nuclear waste disposed of at sea; what volume of such radioactive waste has been disposed of at sea; and if there are any plans to renew the sea disposal of radioactive wastes arising from defence programmes.

  Mr. Sainsbury
  It has not been the Government's practice to provide a detailed breakdown between civil and military sources of the drummed radioactive wastes disposed of at sea in the operations up to and including 1982. As required under the London dumping convention (LDC), global figures have been given to the Nuclear Energy Agency (NEA). As my right hon. Friend the Secretary of State for Energy informed the House on 26 May 1988 at column 233, the Government have decided not to resume sea dumping of drummed radioactive wastes, but intend to keep open this option for large items arising from decommissioning operations.

  Condor II Missile
  Dr. Thomas
  To ask the Secretary of State for Defence, pursuant to his reply to the hon. Member for Meirionnydd Nant Conwy,Official Report, 17 March, column 379, whether the Condor II ballistic missile under development by Argentina has the capacity to be fitted with nuclear warheads.

  Mr. Archie Hamilton
  We cannot rule out the possibility that Condor II could be technically capable of carrying a nuclear warhead. We have, however, seen nothing to suggest that Argentina currently has a nuclear weapons programme.

  Plutonium
  Dr. Thomas
  To ask the Secretary of State for Defence whether any plutonium placed up to 1 April 1969 in the defence stockpile managed by the United Kingdom Atomic Energy Authority has since been used in a nuclear test explosion.
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  Mr. Sainsbury
  It is not our practice to comment on the nature or source of fissile material used in nuclear test explosions other than to say it has been material manufactured for defence purposes outside safeguards and free of end-use restrictions.

  Military Bases
  Mr. Flynn
  To ask the Secretary of State for Defence (1) if he will place in the Library, copies of all environmental impact statements prepared for the United States Congress to cover United Kingdom military bases leased to, or made available to, United States military forces based in the United Kingdom;

  (2) what plans he has to initiate legislation to cover (a) the production of environmental impact statements to cover all United Kingdom military bases in the United Kingdom and abroad, and (b) the removal of Crown immunity from United Kingdom military bases.

  Mr. Neubert
  While the Town and Country Planning Acts do not apply to Crown development, the MOD follows the provisions of DOE circular 18/84, Welsh circular 23/88 and Scottish Development Department circular 21/84.

  Similarly the requirement for environmental impact assessments is set out in DOE circular 15/88, Welsh Office circular 23/88 and Scottish Development Department circular 13/88. The MOD follows these provisions. No environmental impact assessments have been produced on behalf of United States forces based in the United Kingdom.

  "Science and Mythology in the Making of Defence Policy"
  Dr. Thomas
  To ask the Secretary of State for Defence if he will obtain for his departmental library a copy of "Science and Mythology in the Making of Defence Policy", published in November 1988.

  Mr. Archie Hamilton
  The Ministry of Defence library already has a copy.

  "Pressure: How America Runs NATO"
  Dr. Thomas
  To ask the Secretary of State for Defence if he will obtain for his departmental library a copy of, "Pressure: How America Runs NATO", published in March.

  Mr. Archie Hamilton
  The Ministry of Defence library ordered a copy before the publication date, and is presently awaiting delivery.

  Defence Policy
  Dr. Thomas
  To ask the Secretary of State for Defence if he will list the failures of implementation of Her Majesty's Government's defence policy since May 1979; and if he will make a statement on why policy failures have occurred.

  Mr. Archie Hamilton
  This Government have been successful in implementing their defence policy.

  Research Contracts
  Ms. Gordon
  To ask the Secretary of State for Defence how many research contracts or agreements in universities 424
  or other institutions of higher education, which are currently being funded by his Department, are in each classification of secrecy.

  Mr. Sainsbury
  The MOD has currently 757 agreements and 96 contracts with United Kingdom universities and other higher education institutions. Four agreements and one contract are classified confidential; the remainder of the agreements and contracts are unclassified.

  Ms. Gordon
  To ask the Secretary of State for Defence how many contracts and agreements have existed in the past five years between his Department and universities and other institutions of higher education for research related to the verification of arms control treaties by seismology; from which Ministry of Defence research establishment contracts or agreements originated; and if he will make a statement.

  Mr. Sainsbury
  I refer the hon. Member to the answer I gave to her on 24 February at column 847.

  US Military Forces
  Mr. Bill Walker
  To ask the Secretary of State for Defence what estimate he has made of the value to the Scottish economy of United States based military forces.

  Mr. Archie Hamilton
  We estimate that the overall economic impact of United States military forces based in the United Kingdom is about £700 million for 1988, but no separate assessment has been made for Scotland.

  European Fighter Aircraft
  Mr. Jack
  To ask the Secretary of State for Defence what progress has been made on resolving the choice of radars for the European fighter aircraft.

  Mr. Sainsbury
  The United Kingdom and our EFA partners are in the process of evaluating the merits of the competing tenders. A decision will be reached at the earliest opportunity.

  Defence Procurement
  Mr. Campbell-Savours
  To ask the Secretary of State for Defence what further steps he is taking to improve the process of defence procurement.

  Mr. Sainsbury
  Efforts to improve the process of defence procurement, aimed at achieving better value for money, will continue unabated. We shall continue to stress the importance of competition and a more commercial approach to contracting, and we will continue to encourage the widest possible range of companies to compete for our business. In particular, the new suppliers service, launched in November 1988 to extend the range of the highly successful work of the small firms advice division, encourages new suppliers of any size and background to bring their products and services to the attention of the MOD.

  We are continuing to implement the recommendations of the Jordan/Lee/Cawsey report "Learning From Experience" including those concerning a fully professional approach to project management.

  We are encouraging our allies, through the NATO conference of national armamaments directors (CNAD), also to adopt a more commercial approach to defence

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  procurement. Within Europe, we wholeheartedly support the work of the Independent European Programme Group (IEPG), which we currently chair, which aims to promote a more open market in defence goods.

  Dog Training
  Mr. Latham
  To ask the Secretary of State for Defence what progress is being made with his review of dog training at the Royal Army Veterinary Corps, Melton Mowbray.

  Mr. Neubert
  It is hoped that consideration of the consultant's recommendation may be completed in June.

  Contracts (Competitive Tender)
  Mr. John Marshall
  To ask the Secretary of State for Defence what improvements in efficiency have been achieved since his Department adopted a policy of increasing the number of contracts subject to competitive tender.
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  Mr. Sainsbury
  [holding answer 27 April 1989]: The increased use of competitive tendering is at the heart of the MOD's more commercial approach to defence procurement. This approach continues to bring substantial cash savings, and to encourage better quality and more timely delivery of equipment. It also continues to promote improvements in the efficiency and competitiveness of the British defence industry, contributing to its recent export successes, and its position as the world's third largest defence exporter.

  The use of competitive tendering for defence services, since 1979, has led to a net financial saving now running at some £50 million a year, has improved efficiency and has permitted service manpower to be redeployed to front-line tasks. Large savings have been made in areas such as cleaning, catering, grounds maintenance and security guarding, but contractors also manage many other support activities and facilities for the services, including the royal dockyards. More details are given on page 35 of the "Statement on the Defence Estimates 1989".

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chelmsford.

Lindane in Channel: Pollution Threat
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
What is their latest information concerning the container of lindane lost in the Channel, and what efforts they are making to recover it.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, the French authorities, responsible for co-ordinating counter-pollution operations in the area of the Channel where the container was lost, have carried out an exhaustive but unsuccessful search for it using both surface vessels and a submersible. UK assistance was offered, but not required. The special search has now been called off on the basis of a joint Anglo-French scientific assessment of the pollution threat which concluded that the likelihood of contamination is much less than first feared. The French Navy will continue to look for the missing container in the process of normal training and exercises.
Lord Hatch of Lusby: My Lords, I have two questions. The first is: is it the case that Her Majesty's Government are responsible for the waters within the three-mile limit around the Channel Islands where this container may well have sunk? Secondly, when the Minister speaks about the Anglo-French team being satisfied, is it satisfied that the leak of this dangerous pesticide cannot get into the food chain via absorption into the water and then its intake into fish? Is the team satisfied for all time when this incident is only one month old?
Lord Brabazon of Tara: My Lords, the area concerned is on the French side of the dividing line under the arrangements that we have with the French whereby we look after one side of the Channel and they look after the other. It is in the French area at the moment, or is thought to be.
So far as concerns the threat to the environment, the team of biologists to which I have referred met in Cherbourg and concluded that the physical nature of the lindane—which is in a solid waxy form which makes it highly insoluble in seawater—the packaging, the depth of water in which the container was lost and the water currents are such that the likelihood of contamination is low. However, the French continue to carry out an intensive programme of sampling and analysis of seawater and fish, and results to date have shown no abnormal levels of lindane.
Lord Campbell of Croy: My Lords, can my noble friend confirm reports that other containers of lindane were on board the transporting vessel which later sank on the North side of the Channel? If that is correct, will there be an inquiry into the suitability of this transport and the action which was taken?
Lord Brabazon of Tara: No, my Lords, there was no further lindane lost from the ship. There were 32 drums of Cypermethrin and permethrin. We organised a serach and we managed to recover 28 of those drums. The remaining four cannot be found; but the danger from them is very minimal.
Lord Underhill: My Lords, is is not a fact that the container of lindane was first lost in international waters in the Channel? When the container was found it was then in the French area of responsibility. Is it not of some concern that this should be left solely with the French to determine? Surely this is of international consequence and I believe the House would like to know on what scientific basis it is judged that there is no further danger arising from the lindane container? Is it not a fact that the International Maritime Organisation is to investigate the future carrying and transhipment of hazardous cargoes? Does that not indicate the seriousness of that matter?
Lord Brabazon of Tara: Indeed, my Lords, the container was originally found by the French and taken in tow by the French. Unfortunately the tow parted some 35 kilometres from Cherbourg. New measures recently have been agreed with the IMO which will require all toxic substances to be carried below deck. There are also amendments coming into force requiring packages to be designed and tested to the United Nations standards, to withstand normal hazards of handling and transport. Additionally there are proposals at the IMO to develop tests to ensure the survivability of such packages when they have been immersed in water over a period of time. In addition, we are presently considering, with other North Sea states, what further inspections might be undertaken by surveyors to ensure that the regulations are being complied with.
Lord Hailsham of Saint Marylebone: My Lords, can my noble friend help me by refreshing my memory as to the exact nature of our arrangements with the French? What is their juridicial basis? Is it based on treaty, and if so what? Or is it based on customary international law?
Lord Brabazon of Tara: My Lords, in this area of the Channel there is a long-standing bilateral agreement called the Manche plan with the French and they are responsible for co-ordinating counter-pollution measures on their side and we are responsible for our side.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord be good enough to answer that part of my noble friend's question which referred to the scientific basis? Can he explain to the House what precisely he meant when he said that there was no abnormal level of lindane in the water? Is he saying that there

543
is a normal level of lindane to be found in seawater around our coasts?
Lord Brabazon of Tara: My Lords, I apologise to the noble Lord for not having answered that question at the time. The scientific basis was established at a meeting between marine chemists and biologists representing both French and British Ministries, on our side the Ministry of Agriculture, which met in Cherbourg and reached the conclusion that they did.
As regards my reference to the abnormal level of lindane, there is a small level of lindane in sea water in those waters which results from pesticides being used in France and coming through the river system into the sea.
Lord Hatch of Lusby: My Lords, the noble Lord admitted that neither he nor anybody else knows where the container is. If that is the case, why has the search been called off? Is there any truth in the fact that this area of the sea bed has been polluted by waste ever since the war, particularly in that part just off Guernsey known as Hurd Deep? Is it the case that the search has been called off for fear of disturbing what may be—and I should like the noble Lord to tell us whether he has any knowledge of this—nuclear active waste which has been dumped there for many years and which is now on the sea bed?
Lord Brabazon of Tara: My Lords, I have absolutely no knowledge of any nuclear waste in that area. Of course, that would be a question which the noble Lord should refer to the French rather than to ourselves. The search has been called off on the basis of the scientific evidence. The container simply cannot be found and there is a limit to the amount of time one can continue searching.

Charities and the 1989 Budget
2.45 p.m.
Baroness Sharpies Baroness Sharpies asked Her Majesty's Government:
What is the approximate value to charities of the economic measures outlined in the 1989 Budget.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, the Budget measures are estimated to be worth around £60 million a year to charities. In total, charities receive roughly twice as much in real terms from the Government by way of grants and tax reliefs as they did 10 years ago. Private giving to charities, stimulated by incentives introduced by the Government, has also roughly doubled in real terms over the same period.
Baroness Sharpies: My Lords, I thank my noble friend for that excellent reply. Can he say whether payroll giving has been successful and also whether covenanted gifts have also been a great success?
Lord Young of Graffham: My Lords, there are now some 3,600 schemes set up by employers, with over
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100,000 employees participating in payroll giving. The current Finance Bill proposes to double the annual limit on contributions to £480 from the start of the current income tax year; that is, from 6th April of this year. The increase in covenanted giving has come about since the reduction from seven to four years and the introduction of higher rate relief for individuals making charitable covenants.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the tax concessions to which he referred which bring a benefit to the charities concerned are merely a thimble-full of relief in an ocean of despair which his Government have created? Are they not thoroughly ashamed of a position in which the bottom one-eighth of the population now receive far less than they did 10 years ago, as is verified by the Institute of Fiscal Studies in its latest report?
Lord Young of Graffham: No, my Lords. The Government are entirely unaware of the points made by the noble Lord and do not agree with them. We have seen charitable giving increasing over the past 10 years. As regards the other figures to which he referred, they are capable of a very different interpretation indeed.
Lord Allen of Abbeydale: My Lords, while the VAT concessions on charitable fund-raising events and advertising are to be welcomed, do they not underline the anxieties about the lack of control over fund-raising activities? Can the Secretary of State say whether it is proposed to deal with that issue in the promised White Paper on charities?
Lord Young of Graffham: My Lords, I do not think it is for me to anticipate the contents of the White Paper, which should be due in the not too distant future. The Government are aware that certain activities are carried on by charitable organisations which should be looked at closely. No doubt that is a matter which will come again before your Lordships.
Lord Molloy: My Lords, the Minister has said that he is not aware of the points raised by my noble friend Lord Bruce. If he is not aware of them and does not know of their existence, how can he disagree with them?
Lord Young of Graffham: My Lords, the Government do not accept the very emotive language used by the noble Lord, Lord Bruce of Donington, with which they entirely disagree.
Lord Taylor of Blackburn: My Lords, why is the Minister not aware of the content of the White Paper when he seems to be answering today for the Treasury and yesterday for employment and he is Secretary of State for Trade and Industry? What role does he fulfil, and why can he not answer? He seems to know it all.
Lord Young of Graffham: My Lords, I do.
Lord Stanley of Alderley: My Lords, while I welcome my noble friend's initial reply, is he aware

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that the charity with which I am involved receives more and more each year from a very generous public? However, I ask the Government to resist any pressure from the EC to raise additional VAT revenue from the charities.
Lord Young of Graffham: My Lords, the Government are aware that private giving in real terms has risen by 75 per cent. over the past 10 years. They are also aware of some tendencies within the Community to wish to charge almost everything to VAT.
Lord Winstanley: My Lords, as the noble Lord knows it all, as has been acknowledged, is he in a position to tell the House how much charities have lost as a result of the levying of the community charge on charitable employees living in residential homes?
Lord Young of Graffham: My Lords, I certainly did not say that I knew it all. I said that it was my responsibility to answer for almost all. As regards the other part of the noble Lord's question, my understanding is that the community charge is not payable in England, and I am not responsible for answering questions on Scotland, although if he inquires, I shall find out and write to him.

Hospitals: Disposal of Land
2.50 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether they will give an undertaking that no pressure will be brought to bear on hospitals opting out of the National Health Service to dispose of land and other property owned by them.
Lord Henley: My Lords, I do not understand the noble Lord's reference to hospitals opting out of the National Health Service. On the assumption that he is referring to self-governing hospitals, the recent White Paper makes clear that these will remain firmly within the NHS. The White Paper also explains that self-governing hospitals will be free to make use of their assets to provide health care and to dispose of assets, subject only to a reserve power for the Secretary of State to intervene if a disposal would be against the public interest.
Lord Molloy: My Lords, I thank the noble Lord for that reply. As regards hospitals in or out of the NHS, if Her Majesty's Government feel that the value of the land is so great that it ought to be sold and these hospitals refuse to do so, can he definitely confirm that they will not have the equivalent amount of money deducted from the national fund from which they require money to continue their existence?
Lord Henley: My Lords, again I am afraid I do not entirely understand the noble Lord. There is no advantage in the NHS spending money on maintaining or securing surplus property which could be better spent on patient services. I stress two
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points. First, only surplus land will be sold, and that is true of both self-governing or other hospitals. No health authority will be made to sell land for which it has a use. Secondly, all proceeds of sales are retained by the NHS. In the year 1988–89 about £280 million was raised.
Lord Ennals: My Lords, will the Minister confirm that yesterday was the closing date for hospitals to indicate their wish to opt out, or whatever phrase he wishes to use? Will he also explain how decisions on opting out, or whatever other term he likes to use, will be taken to ensure that the wishes of the community are met rather than those of some small special interest group? Will there be some sort of workplace ballot or some other procedure enabling people to express their views on whether opting out is a good thing.
Lord Henley: My Lords, the noble Lords knows perfectly well that I did not use the phrase "opting out", and nor will I use those words. These hospitals are not opting out; they will be self-governing hospitals.
As regards the date of 8th May, that is the final date for expressions of interest but it is not, so to speak, written in tablets of stone and we will continue to accept expressions of interest. Indeed, we have had a great many expressions of interest, as the noble Lord knows. On consultation, the Secretary of State will take into account the views of all staff and certainly he would not want any hospitals to have self-governing status without the active support of the doctors and the local community.
Lord Ennals: My Lords, can the Minister say how these views will be assessed? How will the Secretary of State know the views of the various groups?
Lord Henley: My Lords, the noble Lord is going beyond the Question on the Order Paper, but we should like to hear from individual members of the public as well as from local pressure groups.
Lord Nugent of Guildford: My Lords, can my noble friend confirm that over 100 hospitals have indicated that they would like to become self-governing? If so, is he aware that that is encouraging news because there is no doubt that self-governing hospitals will be able to play a much greater part in the health service?
Lord Henley: Yes, my Lords, over 100 hospitals have expressed interest from every region in the country.
Lord Winstanley: My Lords, is not the important issue not so much whether surplus hospital land is sold but to whom it is sold and for what purpose? Does not the noble Lord agree that much hospital land, particularly the land surrounding some of the large mental hospitals which are scheduled for closure, is potentially valuable amenity and recreational land, often in built-up urban areas? Can he tell the House whether efforts will be made to ensure that such land is retained for those purposes?
Lord Henley: My Lords, I cannot give that assurance. Certainly in selling off land we should like to obtain as much money as possible. As I said, the money is for the National Health Service.
Lord Wallace of Coslany: My Lords, will the noble Lord explain in clear language who actually takes a decision in local hospitals to opt out, or self-govern if that is the phrase? Is it not more desirable that where a hospital belongs to a district the inhabitants of the district should decide and not just a few people?
Lord Henley: My Lords, I have already answered that question. Anyone can express interest in a hospital opting out. The final decision will be taken by the Secretary of State after he has listened to consultations from the local community and staff.
Lord McCarthy: My Lords, will the noble Lord return to the question asked by my noble friend Lord Molloy? Is not the difference that in the past when the authorities sold off land they kept a large part of the proceeds at local authority level? Now when they are forced to sell, the Government put the money into the national purse and do what they like with it.
Lord Henley: My Lords, the Government put the money into the National Health Service. I made that perfectly clear. In the case of self-governing hospitals the money goes to the self-governing hospital.
Lord Stoddart of Swindon: My Lords, the noble Lord said that applications had been received for self-governing status from every region in the country. I understood that the Oxford region had not put in applications. Is my understanding wrong?
Lord Henley: My Lords, the noble Lord no doubt read a report in The Times of yesterday which as far as I can remember indicated that in the Northern and Oxford regions there were no formal expressions of interest. That is incorrect. There have been expressions of interest from both regions.
Lord Molloy: My Lords, is the Minister prepared to request from his right honourable friend in another place that consideration be given to the following? Over the past four years there has been a dramatic increase of Britons waiting for hospital beds. The total has now reached 691,000. Therefore, would it not be wise and prudent for some of the surplus hospital land to be used to construct more wards and make a contribution to reducing the abominable waiting lists which have developed over the past four years?
Lord Henley: My Lords, the noble Lord knows perfectly well that we had a Question on that last week. His question goes quite beyond the Question on the Order Paper. He knows very well that this Government have been engaged in one of the biggest hospital building programmes since the creation of the NHS.
Lord Molloy: My Lords, my question has everything to do with the Question on the Order Paper. It is concerned with the land which might be regarded as surplus and then flogged off to the highest bidder. I am saying that it should be used to help shorten NHS waiting lists. I hope that the entire House agrees with that.
Lord Henley: My Lords, I shall pass on the noble Lord's comments to my right honourable friend.

Jordan
2.57 p.m.
Lord Dulverton Lord Dulverton asked Her Majesty's Government:
Whether they are taking any measures to assist Jordan in its present difficulties, in view of the importance of the stability of Jordan to the Middle East.
The Minister of State for Defence Procurement (Lord Trefgarne): Yes, my Lords, we agree on the importance of Jordan in the Middle East and have already offered to increase our technical co-operation programme by replacing a £5 million loan with £5 million of technical co-operation on grant terms. We shall play our full part in efforts by the international financial institutions to assist Jordan.
Lord Dulverton: My Lords, I am grateful to my noble friend for that considerable encouragement. However, as noble Lords know, Jordan ran into considerable financial difficulties which broke out in violence a few weeks ago. Jordan is a very poor country, so could not our friends and allies, including the International Monetary Fund, take action to assist Jordan's financial position, bearing in mind the debt that we have owed Jordan ever since the First World War?
Lord Trefgarne: My Lords, I entirely agree with my noble friend about the importance of Jordan and the strength of our links with that country. We certainly agree too that the solution lies with the international monetary community. The IMF is planning to assist Jordan and discussions are now proceeding to that end.
Lord Cledwyn of Penrhos: My Lords, we welcome the information given by the noble Lord and the action proposed to be taken by Her Majesty's Government. Can he go a little further and give the House more information about the IMF? Is it the case that it appears to be proposing conditions which will make it more difficult for the Jordanian Government, especially in relation to increased prices? Can he say whether the visit which King Hussein was proposing to make to this country on his return from the United States recently has been rearranged? Is he likely to visit this country?
Lord Trefgarne: My Lords, His Majesty the King of Jordan is a frequent visitor to the United Kingdom. Although I am not aware of any immediate plans for him to visit this country I should be surprised if he does not do so again shortly.

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As regards IMF support for Jordan, its government has already taken a number of steps, such as increasing the price of petrol. I understand that that was one of the causes of the recent problems and it is much in the mind of the IMF. I dare say that it would be possible soon to reach agreement with the fund, whereupon new assistance could be made available. We look forward to playing our part in providing that assistance.
Lord Kennet: My Lords, is there any new European Community programme in that direction?
Lord Trefgarne: My Lords, I am not aware of any specific European Community programme. We are supporting the IMF's efforts most vigorously at the present time but there may also be scope for bilateral assistance from others of Jordan's traditional friends and allies.
Lord Glenamara: My Lords, can the Minister say to what extent the new grant-aid that he has announced is tied to the sale of arms to Jordan?
Lord Trefgarne: My Lords, not at all.

Business
Viscount Long: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Water Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjournment the Second Reading of the Licensing (Amendment) Bill will be taken.

Deputy Chairmen of Committees
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Viscount of Oxfuird be added to the panel of Lords appointed to act as Deputy Chairmen of Committees for this Session.—(The Chairman of Committees.)
On Question, Motion agreed to.

Water Bill
3.2 p.m.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 11 [Appointment of undertakers]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 147A:
Page 10, line 16, at beginning insert—
("( 1 ) The following provisions of this section shall have effect subject to this subsection, and no appointment may be made by the Secretary of State or the Director before the expiry of a period of twelve months after the establishment of the Authority.").
The noble Lord said: We have now reached Part II of the Bill. Members will be aware that there is still a considerable time to go in the debates in Committee. But at least we can say that so far we have taken a number of significant and important steps. First, we have agreed at this stage to the establishment of the National Rivers Authority and are well aware of the interim arrangements. There now begins to emerge the range of duties, functions and work which it must carry out not least in trying to satisfy the public that it is aware of its concerns and responsibilities.
We are not talking in terms of the privatisation of water because that issue was resolved on Second Reading. We are now discussing the process of putting the flesh on the bones of the issue. The Committee will be aware that, whenever convenient, all speakers from this side have endorsed the concept of the National Rivers Authority. However, many Members, including myself, wish that it had stronger powers. A number of government assurances have been given in respect of the function of the National Rivers Authority. No doubt during later debates we shall be asking for more such assurances.
The amendment seeks to suspend the appointments to be made by the Secretary of State or the director before the expiry of a period of 12 months after the establishment of the authority. The amendment is introduced at this stage because Clause 11 deals with the technical mechanics of appointing the water undertakers. We need to be clear about what we are asking the Committee to do.
Many governments are faced with requests from oppositions to defer or delay the implementation of a measure which they dislike. I make no apology to the Committee because we on this side vehemently dislike the Bill's objectives. However, I believe that the case for the amendment is well made and well understood by the people of this country. There has been no survey, no test of opinion, and no opportunity has been taken by the Government or independent sources to indicate the unease of the public as regards the impact of the Bill.
We believe that there is a range of issues which needs to be tested, worked out, argued and debated not on the Floor of either House but by the National Rivers Authority with a range of people. They need to get to grips with the scale of the environmental problems. The pressures which will be put upon the National Rivers Authority are real and great.
My most recent experience of a major Bill was the Football Spectators Bill. With other noble Lords, we sought to make the case that the measure which the Government wished to impose was so large and needed to be got so right that it was worth deferring or delaying the full implementation of that Bill until it was clear beyond a peradventure that the

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authority—in that instance the Football Memberhip Authority—had got it right. I believe that there is no issue other than the Water Bill about which the maxim, "It is better to get it right than to get it quick" is more apt.
We are not impeding the progress of the Bill. If the amendment is passed there will be no interference with the legislative timetable; the Bill will be obtained. We are not seeking to prevent the act of privatisation. That is the intention of the Government. Once the Bill with the amendments becomes an Act of Parliament there is nothing that the Opposition will be able to do to impede the Act. However, it will provide a breathing space of 12 months during which all the arguments, questions and issues about which the people of this country have expressed their deep concern can be investigated.
For example, it is likely that the National Rivers Authority will have to contract back at least part of its laboratory and testing function to the new plcs. That process, as proposed in the amendment, will enable the authority to set up its initial laboratory and scientific facilities and to establish working patterns and anticipated workloads before any contracting back to the new plcs takes place.
If any contracting back was required in the 12 months' period, that could be to the existing water authorities. The Committee is well aware of the phrase "a dry run" or "a dummy run". When private water plcs begin to operate—I make no aspersions on their ability to deliver what they are contracted to do—will it not be better if opportunities have been taken by the rivers authorities and in other ways to make sure that they are able to do that which they are asked to do? An enormous regulatory framework will be set up to make sure that the business, the management and the running of the water authorities are right. All three Members of the Committee on the other side who are involved with this Bill were here last night to a very late hour. They will well understand that in the fields of conservation, recreation and leisure, there are enormous areas about which there can be dispute and on which there should be discussion and, I hope, amicable agreement.
Last night we got into argument on who is responsible when a plc creates subsidiaries. Will it be the parent body or the subsidiaries who have to carry out the functions under the code of practice? When a core company has an agent, what is the relationship between that agent and the core company? Who will carry the responsibilities? There are a range of matters that have to be considered. Once the Bill has become law and there is a breathing space, then I believe that you will get more sense out of these matters. The Minister may believe there is enthusiasm in the country for water to become privatised. I can tell him that there is a great deal more unease about how this Bill will work than there has been about many others in the past.
What will the Government be gaining if they proceed to complete the measures as fast as they can? They may argue that the market cannot wait and
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that the Treasury, the Exchequer and the financial management of the Government of their assets are matters to which a timetable applies. I repeat that we on this side of the Committee are not seeking to disturb the legislative timetable with this amendment. We are seeking to delay the implementation of the Act wholly in order to make sure that the health, the wealth and the happiness of the people of this country will be better protected. I beg to move.
3.15 p.m.
Lord Renton: The noble Lord's amendment is a delaying tactic. It is a quite usual gambit of those who oppose Bills. The next best thing is to attempt to delay a Bill coming into force. I hope that none of the Members of the Committee will be carried away by the moderate and conciliatory tone of the noble Lord, Lord Graham of Edmonton. The noble Lord wishes to delay the effect of Clause 11 for a year. That is the operative clause for bringing into force the new organisation proposed by the Bill and the appointment of the proposed water and sewerage undertakers. We are a revising Chamber. It is unusual for us as such a body to ask another place to delay the coming into operation of a Bill which it has already considered at length and in depth.
I would not expect my noble friends on the Front Bench to agree to this amendment, and I sincerely hope that they do not. However, the noble Lord, Lord Graham, and Members of the Committee opposite, may be consoled by the fact that under Clause 187(3) and (4), the commencement clause as it is called—we have a long way to go before we reach it—Clause 11 will be brought into force on a date to be appointed by the Secretary of State by an order made by statutory instrument. That is a quite usual way of bringing a Bill into force, especially when a good deal of preparation will be needed.
If the noble Lord is genuinely seeking (without any intention of causing delay for the sake of it) some flexibility, that flexibility is inherent in Clause 187. The Secretary of State will be the person in the best position to know how far the arrangements have gone for bringing the Bill into force. It will be for him to decide when to bring Clause 11 into operation and appoint the proposed new undertakers. I am opposed to this amendment. I hope and assume that my noble friends on the Front Bench will also be opposed to it.
Lord Harmar-Nicholls: I do not believe that the amendment is at all in keeping with the very reasonable case that the noble Lord, Lord Graham, made. He argues that none of these appointments by the Secretary of State or the director should be made until they are satisfied that they have the right people to do the job and that those appointed are likely to be acceptable. That is what we would expect any sensible Secretary of State or director to do. The amendment says that irrespective of whether the Secretary of State and the director have made up their minds, irrespective of whether they know they have the right people and that all will proceed correctly, they have to wait 12 months. That is an

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inflexible approach which may well endanger the beginning of this work.
We should not be led astray by the dulcet tones of the noble Lord, the words that he used and his general approach. We should not ignore what it is that we shall be voting for if we are pushed to that situation. The amendment is not on. But the noble Lord's general argument is very much on. I hope that it will be in the minds both of the Secretary of State and the director when the time comes to make the appointments.
Lord Ezra: I wish to follow up what the noble Lord, Lord Renton, said in the latter part of his remarks. With a complex measure of this sort it is clearly right to do things in due order. Everyone has agreed that the NRA has a very important function to perform. The date on which the various other bodies and the plcs come into operation is something that has to be worked out to get the best results. If Clause 187 gives that discretion to the Secretary of State, then I hope that when the noble Earl replies to the debate he will indicate how the discretion will be used in order to make sure that the Bill, when enacted, comes into operation in the most effective manner.
Lord Nugent of Guildford: I wish to call attention to a practical difficulty in the noble Lord's amendment. The business of supplying water, operating the sewage treatment processes and managing the whole of the rest of the vast business has to go on. The regional water authorities which are fulfilling this function come to an end when the legislative process is completed and the undertakings are sold in the market to private shareholders. It would seem quite illogical not to make the necessary appointments in order to take charge of this vast process of water supply and sewage treatment which has to continue. It would be a complete vacuum. However, these things would go on. The people on the ground, so to speak, or in the water would still be there working away. I should have thought that the sooner the new organisation is working with the new people in charge and responsible the better.
The Earl of Balfour: I should like to add one other comment. Part II of the Bill which we are now considering deals entirely with the appointment and regulation of water and sewerage services. The National Rivers Authority does not come into Part II except in the case of Clause 39 which deals with bulk supplies. I do not think that the amendment would be appropriate in the place that it is.
The Earl of Caithness: The effect of the amendment, as my noble friends have so ably pointed out, would be to delay the appointment of the water and sewerage undertakers for at least a year after the establishment of the NRA. I should make it clear to the Committee immediately that the amendment is technically defective. That is not an argument I often use but in this instance it is so defective that it is worth bringing to the Committee's attention.
When the Committee agreed that Clause 4 should stand part of the Bill we were approving the
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arrangements for the transfer of the functions of the 10 water authorities of England and Wales in a two-way split. All those functions not transferring to the National Rivers Authority would apply to the successor limited companies owned by the Crown and appointed for their areas as water and sewerage undertakers. The property, rights and liabilities of the water authorities would be similarly divided between the successor companies and the NRA in accordance with schemes under Schedule 2. Again we agreed that Schedule 2 should stand part of the Bill. The fact is that this Bill has been drafted on the basis that the appointment of undertakers and the transfer date cannot be separated. If we were to accept the amendment there would be an enormous number of consequential ones.
But setting that technical aspect on one side for the time being, let us consider the merits of what is proposed. It would seem that the noble Lord, Lord Graham of Edmonton, proposes that the production industry—the water and sewerage services—should remain with the existing water authorities while all the pollution control and water resources functions are transferred to the National Rivers Authority. I am not persuaded by the case we have heard this afternoon. Nothing we have heard has justified the double upheaval proposed, with the NRA starting its life getting used to the difficulties of acting as environmental watchdog for another public agency and then more than 12 months later having to readjust its whole approach once the limited companies are appointed. This double trouble would simply not serve anyone's interest. The danger is that to prolong the reorganisation of the water industry will delay the achievement of the benefits of privatisation.
In my Second Reading speech I referred to conflicts of interest in the current system. We have heard the "gamekeeper-poacher" phrase so often that we risk losing sight of the importance of separating the control of the production side of the water industry, which there is every reason to believe is best provided by the private sector, from the regulatory function which this Bill will make clearer or place firmly in the hands of the Secretary of State supported by the NRA and the Director General of Water Services. It is an important feature of what we propose that there should be no conflicts of interest between the regulator and the industry. So long as both the industry and the regulation are under public control there will be people who suggest that there is a threat of conflicts of interest.
We firmly believe that it is important that people should not be able to accuse the Government of fudging decisions crucial to water standards because of public expenditure priorities. It has been suggested that we should allow time for the NRA, to settle down to its task before appointing the new water and sewerage undertakers. Since the enactment of the Public Utility Transfers and Water Charges Act great progress has been made in preparing for the establishment of the NRA. Under the guidance of my noble friend Lord Crickhowell and the NRA Advisory Committee each water authority produced last year a scheme of organisation showing how its NRA functions would be organised. From 1st April

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this year separate NRA units have been operational within each of the existing water authorities and most of the 6,500 staff are already in place.
In today's debate we have heard no convincing reasons why we should deny the public the earliest possible achievement of the separation of production from regulation. Nor have we heard any convincing reasons why the NRA should need time to settle down in a cosy public sector world before facing the private sector water industry. I am forced to conclude therefore that this is nothing but another attempt to wreck the Government's policy, to delay the Bill by forcing on it a whole series of consequential transitional arrangements which the Opposition have not thought through fully. The consequences are to delay privatisation. As the noble Lord, Lord Graham of Edmonton, said when he moved the amendment, he vehemently dislikes what the Bill sets out to do. What other reason does the noble Lord need for putting forward this amendment?
Lord Graham of Edmonton: If my case did not disappoint the Minister his response came up to my expectations. He said that in order to avoid uncertainty, uncertainty created by the Bill and the Government's intentions, it is best that this be done quickly. I acknowledge what the Minister said about the possible blemishes and defects of the amendment and indeed about its consequences. I am not as competent or as well served as the Minister in these matters. The noble Lord, Lord Nugent, made the same case: now that the ball has started to roll it is best for all concerned to carry on. That is the argument for throwing caution to the winds. It is not I who said that the case for water privatiation has not been handled well. Those were the words of the Prime Minister.
On two or three occasions the Minister used the phrase "the earliest possible benefits". Does he genuinely believe that people out there are waiting and crying out for the implementation of this Bill in order that they can have the benefits? All the evidence indicates that there is unease. I am not talking about hostility or opposition, although if I were talking in political terms I would say that there is hostility and opposition to it.
What is the purpose of the 12-month period? If the Government really believe that they can get their way by argument and persuasion it would provide them with a good deal more time. A general election is certainly more than 12 months away. They will be able to persuade the people and demonstrate to them that they have been ultra cautious and careful. I believe it was the Minister or one of his colleagues who said that these matters will not be proceeded with until the Minister is satisfied. I have my own store of experiences in this Chamber and in another place. I believe that once the Government have their Bill there will be a momentum and impetus to carry it forward.
I do not deny that we on this side of the Committee are vehemently opposed to the principle of privatising water. We have tried to make the case that water is a unique commodity and deserves
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above all others a mechanism for delay—but we would say to make sure that we have it right. The Minister has not satisfied me. I invite the Committee to share my view. I shall press the amendment to a vote.
3.29 p.m.
On Question, Whether the said amendment (No. 147A) shall be agreed to?
Their Lordships divided: Contents, 48; Not-Contents, 120.

DIVISION NO. 1

CONTENTS

Ampthill, L.

Longford, E.

Ardwick, L.

Lovell-Davis, L.

Boston of Faversham, L.

McCarthy, L.

Bottomley, L.

McIntosh of Haringey, L.

Briginshaw, L.

Mais, L.

Brooks of Tremorfa, L.

Mason of Barnsley, L.

Bruce of Donington, L.

Molloy, L.

Campbell of Eskan, L.

Mountevans, L.

Carmichael of Kelvingrove,L.

Mulley, L.

Nicol, B.

Cledwyn of Penrhos, L.

Peston, L.

Davies of Penrhys, L.

Phillips, B.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.

Ennals, L.

[Teller.]

Fisher of Rednal, B.

Serota, B.

Graham of Edmonton, L.

Shepherd, L.

[Teller.]

Simon, V.

Hatch of Lusby, L.

Stallard, L.

Hirshfield, L.

Stoddart of Swindon, L.

Irvine of Lairg, L.

Strabolgi, L.

Jenkins of Putney, L.

Taylor of Mansfield, L.

John-Mackie, L.

Turner of Camden, B.

Kearton, L.

Underhill, L.

Kilbracken, L.

Wedderburn of Charlton, L.

Leatherland, L.

White, B.

Lock wood, B.

NOT-CONTENTS

Alexander of Tunis, E.

Erroll of Hale, L.

Alport, L.

Faithfull, B.

Arran, E.

Ferrers, E.

Balfour, E.

Forester, L.

Bauer, L.

Fortescue, E.

Belstead, L.

Fraser of Kilmorack, L.

Bessborough, E.

Gisborough, L.

Blake, L.

Gridley, L.

Blatch, B.

Hailsham of Saint

Blyth, L.

Marylebone, L.

Boyd-Carpenter, L.

Harlech, L.

Brabazon of Tara, L.

Harmar-Nicholls, L.

Brightman, L.

Harvington, L.

Butterworth, L.

Henley, L.

Caithness, E.

Hesketh, L.

Campbell of Croy, L.

Hives, L.

Carnegy of Lour, B.

Hood, V.

Carnock, L.

Hooper, B.

Cayzer, L.

Hylton-Foster, B.

Chelmer, L.

Jenkin of Roding, L.

Constantine of Stanmore, L.

Killearn, L.

Cottesloe, L.

Kinloss, Ly.

Cullen of Ashbourne, L.

Lauderdale, E.

Dacre of Glanton, L.

Lawrence, L.

De L'Isle, V.

Lloyd-George of Dwyfor, E.

Denham. L. [Teller.]

Long, V. [Teller.]

Dulverton, L.

McFadzean, L.

Dundee, E.

Mackay of Clashfern, L.

Dunrossil, V.

MacLehose of Beoch, L.

Ebbisham, L.

Macleod of Borve, B.

Eden of Winton, L.

Malmesbury, E.

Effingham, E.

Margadale, L.

Ellenborough, L.

Marley, L.

Elliot of Harwood, B.

Massereene and Ferrard, V.

557

Melville, L.

Saint Oswald, L.

Merrivale, L.

Sanderson of Bowden, L.

Middleton, L.

Shannon, E.

Monk Bretton, L.

Sharpies, B.

Montgomery of Alamein, V.

Simon of Glaisdale, L.

Morris, L.

Skelmersdale, L.

Mottistone, L.

Somers, L.

Mowbray and Stourton, L.

Stanley of Alderley, L.

Munster, E.

Strathclyde, L.

Murton of Lindisfarne, L.

Strathspey, L.

Napier and Ettrick, L.

Sudeley, L.

Nelson, E.

Swansea, L.

Norfolk, D.

Swinfen, L.

Norrie, L.

Terrington, L.

Nugent of Guildford, L.

Teviot, L.

O'Brien of Lothbury, L.

Thomas of Gwydir, L.

Orkney, E.

Thomas of Swynnerton, L.

Pender, L.

Trafford, L.

Peyton of Yeovil, L.

Trumpington, B.

Porritt, L.

Tweedsmuir, L.

Pym, L.

Vaux of Harrowden, L.

Radnor, E.

Waldegrave, E.

Reay, L.

Whitelaw, V.

Reigate, L.

Wise, L.

Renton, L.

Wynford, L.

Rugby, L.

Young of Graffham, L.

St. Davids, V.

Resolved in the negative, and amendment disagreed to accordingly.
3.37 p.m.
[Amendment No. 148 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 148ZA:
Page 10, line 18, leave out from ("State") to ("the") in line 21 and insert ("as").
The noble Lord said: The purpose of this amendment is to restore the answerability to Parliament and the political responsibility of the Secretary of State as regards the appointment of water and sewerage undertakers. It is a curious feature of this part of the Bill that it should be thought appropriate that the task of appointing the new undertakers should be delegated to the Director General of Water Services. As we understood the role of the director general when we were dealing with his responsibilities under Part I of the Bill, he is there to be a regulator of the water and sewerage businesses.
However, the appointment of the water and sewerage undertakings which are to succeed the water authorities is a very different matter. It is a matter which affects the taxpayer. I say that because the ability of the new undertakers to pay the most favourable price for the shares of the new water supply plcs is absolutely critical so far as concerns the taxpayer. Therefore it is of great importance to the Treasury and it is also a matter of considerable political importance. It embraces all the issues of consumer protection and of the environment which we have been debating as we consider the Bill in Committee.
It is one thing to say that the Director General of Water Services will have the continuing role of regulator after privatisation has taken place. That is the structure of the Bill and it is not one that we have sought to change in Committee. To say that the director general should have the ability, acting
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with the consent or in accordance with the general authorisation given by the Secretary of State, to make an appointment as a water or sewerage undertaker for any area of England and Wales is a different matter. It goes directly against the political responsibility which the Secretary of State ought to have to Parliament and in which the director general ought to be subordinate to the Secretary of State and therefore subordinate to Parliament.
It is not just a matter of the initial appointment of the undertakers; it is the whole question of the potential for takeover of water undertakings which is a matter of widespread and justified public concern. As the new undertakers come in, I suppose that most of them, if not all, will be experienced as water undertakers; but many of them will be inexperienced as sewerage undertakers, because at the moment sewerage functions are held by local authorities. They will therefore be dealing with functions in which they are relatively inexperienced. They will have to make arrangements for contracting out those functions. We also have amendments on that point. It is clear that undertakers could be appointed which have little understanding of those problems.
It is clear that the whole question of preparing for the termination of local authority agency agreements will take up a considerable amount of time in the early days of the new water and sewerage undertakers, and yet the appointment of those undertakers is, according to the Bill, to be delegated to the director general rather than kept in the Secretary of State's hands. It is only the Secretary of State who can satisfy himself that the appointed undertaker intends to make such agency agreements, or to continue such agency agreements, as are necessary to guarantee that the sewerage functions are carried out with sufficient technical competence.
In their draft articles of association, the Government have indicated that in the short term they propose to secure undertakers from the threat of an unwelcome takeover. I emphasise the phrase "in the short term" because there is no guarantee that that assurance will be continued in the longer term. Indeed, the Government have gone out of their way to say that it is entirely proper that the water undertakings should be vulnerable to takeover in the longer term. What we say in the amendment is that the Secretary of State should periodically satisfy himself that the company has not fallen into the hands of people who are not technically competent to carry out the functions. What we require—I hope that the amendment will produce it—is the equivalent of the golden share: a long-term security, based on the accountability of the Secretary of State, of the undertaker's ability to perform his functions.
There is a third reason why it is important to have the amendment; that is, that the Secretary of State is in those respects to act on behalf of consumers. We have had a considerable debate on the director general's role in relation to consumer protection. The Opposition has consistently expressed the view, which is shared by the consumer representative organisations—the Consumers' Association and the government-funded National Consumer Council—that there is a difference between the

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regulatory function, which is supposed to be impartial as between suppliers, shareholders and consumers, and the role of consumer advocacy.
We take the view that the restriction to the Secretary of State of the power to make the appointment of undertakers is an essential separation of powers from the regulatory function of the director general, because the Secretary of State, being answerable to Parliament, can be taken to represent the views of the consumer. If he does not do so, he can be called to account in Parliament.
The model instrument of appointment which we have is defective in a number of respects. They all require the direct intervention of the Secretary of State to put them right. Let me take just a few of those respects, because of course the model instrument of appointment is not yet included in the Bill although it may be necessary to bring it into the Bill so as to debate it fully at a later stage.
I shall pick just three examples to show how necessary it is to have the amendment now. The first is the need for proper insurance. At the moment, all the protections for the environment and the consumer are hedged about in the Bill with conditions that say that in the event of emergency or disaster or if they are trying to put something right the protections for the environment and the consumer which are supposed to exist have no effect, and the director general is supposed to be lenient with undertakers. All of those provisos which weaken—in many cases fatally weaken—the protection intended for the consumer and the environment could be avoided if it were made a requirement on the undertakers to take out adequate insurance to protect them against those eventualities. That is nothing extraordinary. If that did not happen in the private sector throughout industry, Lloyd's would not have had some of the difficulties that it has experienced in recent years; and the insurance industry as a whole would be a much more secure place.
Such natural disasters are insured against. The hurricane of October 1987 was covered by considerable insurance, but the damage to the water supply in Camelford, which caused so much misery and sickness to the people in Camelford, was not covered. It is now necessary for the people in Camelford whose health has been damaged by the negligence of the water authority to sue that authority, in the knowledge that it does not have the insurance necessary to protect itself against those claims.
It would be possible for the Secretary of State to include an insurance provision in the appointment of the new water and sewerage undertakers. For that purpose, it is important that it is the Secretary of State himself who takes the responsibility for the appointment.
I come to my second example. I shall not expand upon it because it is a subject of a later amendment this afternoon. It relates to price control. The model instrument of appointment makes totally inadequate provision for the regulation of prices under the K formula. It is not just that the model instrument of
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appointment of December 1988 is itself defective; it is that everything we learn about the turmoil within the department in trying to interpret that model instrument of appointment reveals that it thinks that it is inadequate as well. It is obvious that something is badly wrong with the price-fixing mechanism contained in the Bill. We have not yet had an opportunity to debate it, but we will. In the meantime, it is entirely appropriate that the power to make the appointment should be retained by the Secretary of State.
My third example relates to accountability for codes of conduct. There are to be codes of conduct for customers. We debated a number of codes of conduct when we discussed Clause 10. Undoubtedly there will be additional codes of conduct on disconnections and leakages. It is proposed that they should be the responsibility of the director where the Secretary of State feels that that is appropriate. Accountability for the effectiveness of those codes of conduct should be with Parliament, and therefore the Secretary of State's role in maintaining the authority to make appointments ought to be sustained. That is the purpose of the amendment.
We are not concerned with the Secretary of State for ever having all the powers which could properly be delegated to the director general. We say that at the stage of making the appointment it is the Secretary of State and Parliament which have the real responsibility and that the powers should be retained in their hands. I beg to move.
Lord Jenkin of Roding: Only one part of the speech of the noble Lord, Lord McIntosh, caused me gently to lift my eyebrows. It was when he expressed surprise that the provision was in Clause 10 of the Bill. I should have thought that even the most cursory examination of the Telecommunications Act and the Gas Act would show that the model we have here has ample precedent in both those Acts.
The first appointments are made by the Secretary of State and subsequent appointments are made by the director general. I suggest to the noble Lord the reason why it is entirely right that that should be so. One of the features of state-owned industries which over the years has given rise to complaints by the industries that they are not allowed to manage their businesses properly—they find themselves constantly having to look over their shoulders—is precisely that they are constantly aware that their appointments are due to decisions made by the Minister. The Minister himself inevitably, being a political animal in a political environment, is likely to make decisions which have political implications and overtones.
One of the principal objectives of the whole process of privatisation is that the managements of the industries concerned are removed from the political environment. Parliament takes a major political decision in deciding that that shall happen. But thereafter, once it has happened and Parliament so agrees, the industries are in the private sector. It is crucial that they should not be constantly subject to the threat of ministerial interference because it is known that in the background lies the ministerial power of appointment.

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Of course those industries have to be regulated. Of course, as the noble Lord, Lord McIntosh, indicated, there are many matters which he recognises to be appropriate for regulation. The other day we rejected an amendment which would have removed the director general altogether from this scheme. But who is better to determine whether a new company, a new operator or a new undertaker is fit and proper to be appointed if a change of appointment is necessary? Who is better placed to do that than the director general?
A great many of the considerations which will determine whether a person or company should be appointed are matters which fall fairly and squarely within the director general's remit. It is entirely right that the appointment should not be seen to be influenced by political considerations. It is essentially a matter of standards, the capacity and ability to do the job and the assurances which would have to be forthcoming in order to comply with the terms and conditions of the appointment.
The noble Lord may know more about this than I do and he talked about turmoil in the department. This is a draft document; of course parts of it are still subject to consideration and change. It is very helpful that we have it before us when we debate the matter, but even the noble Lord would agree that it contains a very large number of conditions of appointment in Schedule B which constrain the appointed company in a great many ways and also put all sorts of duties on it.
However they are duties which will fall to be scrutinised, monitored and enforced by the director general and not by the Secretary of State. The latter has other duties, so it is the director general's duty. I hope that my noble friends on the Front Bench will not feel themselves beguiled in any way by the words of the noble Lord, Lord McIntosh. There is ample precedent. So far as I am aware it has not yet had to be applied in the case of other industries. But it may eventually be applied here because there will be a number of undertakers—some are manifestly stronger than others—as the industry moves from the public to the private sector. It may well be that there need to be new appointments. However the Bill is quite right; it is entirely right and proper to place that duty in the hands of the director general and not the Secretary of State.
Lord Renten: If I were moving an amendment to Clause 11(1) I should have been more inclined to leave out paragraph (a) than paragraph (b) which the noble Lord, Lord McIntosh, suggests should be omitted. I say that for this reason. It is not a question of appointing individuals as a Minister appoints individuals to area boards of a nationalised industry. This is a question of choosing and appointing companies fit to carry out these duties as undertakers. The inquiries that will have to be made in choosing suitable companies for the purpose are essentialy commercial inquiries. They should be carried out by a truly independent person, as the director will undoubtedly be. He must be independent of Parliament, for example, or at any rate independent of another place.
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Under Schedule 3 he is subject to the House of Commons Disqualification Act, which incidentally also applies to the directors of the companies chosen. We find that in Clause 11(9) which we are discussing. They too will be disqualified under the House of Commons Disqualification Act. In those circumstances, and bearing in mind the inquiries that will have to be made. I should have thought that the director was a better person perhaps even than the Secretary of State to carry out the work.
I was a little surprised to hear my noble friend Lord Jenkin say that he assumed that the companies would be appointed at first by the Secretary of State and only when there was to be a change would the director make the appointment. Frankly, that is not how the Bill reads and that is not how I would wish it to read. Of course one is tempted to answer in some detail the various points made and examples given by the noble Lord, Lord McIntosh. But I think that there is the general principle to consider here. My noble friend Lord Jenkin has rightly pointed out that the process must be independent of politics; therefore there is no question of the matter being raised in Parliament. It had better be entirely free from political pressures and have the independent director bearing the responsibility. I should have been happy to see him bear it fully.
Lord Ezra: From what has been said so far, particularly from the interventions of the noble Lords, Lord Jenkin and Lord Renton, there is some confusion about the wording of Clause 11(1). It says that the appointment may be made either by the Secretary of State or, with his consent and authorisation, by the director. The interpretation of the noble Lord, Lord Jenkin, was that the initial appointment was to be made by the Secretary of State and subsequently it would be made by the director. That is not what the wording says.
Further, the noble Lord, Lord Renton. said that his preference would be to eliminate the Secretary of State and give the whole responsibility to the director. The noble Lord, Lord McIntosh, on the other hand, said that he would prefer the Secretary of State to have it. To start with, we ought to have some clarification as to who will make the appointments. That is what we ask the noble Earl. Will it be the Secretary of State or, with his authorisation, the director? Are they going to take it in turn? Will one of them do half the companies and the other one the other half? This is fairly uncertain drafting, whatever else one may think about it.
Further as a public responsibility, namely, to supply water and sewerage services, is involved—although the companies will be private companies, they will have a public responsibility—I believe the Secretary of State should come into these appointments in a positive and formal manner. On the whole, I side with the view of the noble Lord, Lord McIntosh of Haringey. However, I ask for some clarification as to what will happen under this clause if it remains as it is.
4 p.m.
The Earl of Caithness: Perhaps it is opportune for me to clarify the situation. The noble Lord, Lord

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Ezra, says there is a certain confusion in the drafting. He picked up a point that my noble friend Lord Renton made. Sadly, I have to disagree with one part of my noble friend's remarks. I take my noble friend forward to Clause 11(4). He will see clearly that the initial appointments are made by the Secretary of State. I do not think there is any confusion there. I hope that, on reconsideration, both the noble Lord, Lord Ezra, and my noble friend will realise that the provision is well set out.
These initial appointments are made when the successor companies to the water authorities are still wholly owned by the Crown. The Secretary of State is required to appoint those successor companies to the present water authorities as water and sewerage undertakers. He is also required to appoint the statutory water companies as water undertakers. It is thereafter that appointments may be made by the Secretary of State or by the director with his consent or in accordance with a general authorisation given by the Secretary of State. I confirm to the Committee that it is our intention to give the general authorisation to the director general after the initial appointments have been made.
Lord McIntosh of Haringey: I clearly misread Clause 11(4) too. I understood it to refer to the transfer from statutory water companies to the new regime rather than the transfer from water authorities to the new regime.
The Earl of Caithness: On the advice that I have, I think the noble Lord is wrong. I shall, of course, check because the matter has now been raised by three Members of the Committee. However, in my view, and on the advice that I have, it is clear that Clause 11(4) makes the Secretary of State responsible.
The intended operation of this clause is that subsequent appointments, inset appointments—the appointments we discussed earlier in Committee; for instance those for the greenfield sites—and replacement appointments and variations, will be made and administered by the director under a general authorisation given by the Secretary of State. It may be considered that this would open up the risk of his becoming too influenced by the industry. But, although with these subsequent appointments there is likely to be a choice of successor companies, the director will be under the important duty in Clause 7(3)(d) to facilitate effective competition between persons seeking appointments.
Does Clause 7(3)(d) ring a bell with the Committee? It imposes this important duty on the director general. It rang a bell with me. I looked it up and found that it was one of the clauses that the noble Lord, Lord McIntosh of Haringey, sought to remove at an earlier stage of our proceedings. That occurred at Amendment No. 87. The debate can be found at col. 378 of the Official Report of 4th May. In that debate I announced to the Committee late at night that the mother of my noble friend Lord Hesketh had succeeded in triumphing in the local elections and had taken the Liberal seat of Towcester and District.
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Further duties in Clauses 7 and 26, which include a responsibility to exercise his powers in the interests of customers and potential customers, so that functions are properly discharged in every area, impose another safeguard. I feel that the risk of agency capture is not great. There will, for example, be a relatively large number of water and sewerage undertakers. Even when this is taken into account it is not likely that replacement appointments and variations will be made frequently. More importantly—I believe this is telling—his duties under these clauses will provide the director with the necessary knowledge required for assessment of applicants.
A further consideration is that the director will be able to exercise his powers without any suspicion of political interference. That point was well made by both my noble friends Lord Jenkin of Roding and Lord Renton. Therefore, I need to add no more. These two considerations made the director, in my view, the most appropriate and best informed person to make the appointment decision.
There are three points I wish to deal with before I conclude. The first is the subject we were discussing earlier, namely, Clause 11(4). Clause l l (4)(a) refers to the statutory water companies. Clause l l (4)(b) relates to the water authorities. I believe my noble friend Lord Jenkin of Roding and I were correct in expressing to the Committee our conviction that it was carefully taken care of in the Bill.
The second point concerns the assertion of the noble Lord, Lord McIntosh, that taxpayers' interests might suffer on subsequent appointments. It is not usually the case that the taxpayer has an interest when replacement appointments are made. The replacement appointee will indeed be expected to pay for the assets taken over from the outgoing appointee. That payment goes to the outgoing appointee who owns the assets, rather than to the taxpayer.
My third point again concerns the noble Lord, Lord McIntosh of Haringey. The noble Lord said that many of the new appointees will be inexperienced as sewerage undertakers. The suggestion that the water authority successor companies are inexperienced as sewerage undertakers does not, I suggest, correspond with the facts as we see them today. It is true that local authorities undertake some sewerage functions now, and they will continue to do so. Both now and in the future they will be operating under arrangements made with the undertaker, and to his requirements.
Even now, water authorities undertake many sewerage functions themselves. Even in the case of a new appointee appointed sometime in the future, the personnel of the companies and of the local authorities would be likely to remain in place, as no new appointee would be foolhardy enough to try to do without them. The clinching argument is that the director would have to satisfy himself that a new appointee would perform the functions properly.
Lord Renton: Before my noble friend sits down, I wonder whether he will consider this. It is perfectly plain that subsection (1) as it stands is inconsistent with subsection (4), and inconsistent with the view

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of the matter, which I accept as being correct, put forward by him and by my noble friend Lord Jenkin of Roding. Therefore, quite apart from the questions raised by the noble Lord, Lord McIntosh, on this amendment, I suggest that subsection (1) needs to be made consistent.
It should in effect read—I am not drafting, but merely stating what the effect should be—that, "subject to the following provisions of this chapter, a company may in the first place be appointed by the Secretary of State, or thereafter, with the consent of or in accordance with a general authorisation given by him, by the director". The subsection should be drafted something like that. If that were done, it could save confusion.
The Earl of Caithness: I shall answer my noble friend on that point. I was getting seriously worried that we had arrived at day four of the Committee Stage without having a discussion with my noble friend on the legal drafting of the Bill. We have done that on every Bill in a very happy manner. I shall, of course, take the concerns of my noble friend and draw them to the attention of my advisers.
Lord McIntosh of Haringey: In the early 17th century it was the habit of the king for his own financial gain to award monopoly rights to certain favoured of his subjects, some of whom used to pay him money for the privilege, and some of whom were given the privilege because they had sunk some ships of the king's enemies, had frustrated some of those enemies' intentions or performed political services for the king. During that period Parliament insistently, over and over again, year after year, sought to restrict the ability of the king to grant monopoly rights over such commodities as tobacco, salt, soap, oil and other items which at that time were essentials of life. Parliament was nearly always frustrated because, although measures were nearly always passed, the king had better lawyers than Parliament and found ways round the laws which Parliament passed. (Acts in those days were a good deal shorter than nowadays.) If the lawyers could not find a way round the Acts passed by Parliament, the king simply ignored them. We are approaching that position now.
We are approaching the position in which for the first time in the history even of this Government power is being given to private companies to hold the monopoly rights of supply of a commodity which is absolutely essential to every single person in this country and for which—whatever arguments there may have been about economic competition in comparative costs—there is no distributional competition of any kind. There is no such thing as two types of tap available to any consumer of water.
This is therefore a different proposition from any of the previous privatisation measures. It is different from the privatisation of any of the sources of energy such as gas and electricity. It is different from the privatisation of individual companies such as Amersham International or even the British Airports Authority, and I shall come back to that in a minute. It is different from the privatisation of the means of communication such as British Telecom.
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What is being handed out here in the appointments is complete power over the consumer. The only way in which we are protected against that complete power is in the responsibilities of the Secretary of State to the elected representatives of the people in Parliament.
I listened with some amazement to the noble Lord, Lord Jenkin, when he talked in despite (using the word in its old sense) of political decisions by the Secretary of State on the appointment of water authorities. That may be the way in which politicians think about political decisions, politicians who have lived through good or bad decisions.
Lord Renton: I think that either the noble Lord misheard me or I did not make myself clear. I said that these would be commercial decisions.
Lord McIntosh of Haringey: I referred to the noble Lord, Lord Jenkin, and not to the noble Lord, Lord Renton. I did not hear the noble Lord, Lord Renton, make comparable points. The point that I wish to make is that, however much by taking part in these debates we are acting as politicians whatever our other interests may be, however cynical we may be about the nature and limitations of the political process, for the people of this country who will be the captive consumers of the water companies the political decisions are the only protection they have. In our view it is essential that the Secretary of State should retain this first and most important function.
I accept that if subsections (1) and (4) can be brought to mean the same thing the Secretary of State has responsibility for the first appointment. Subsequent appointments, and in particular appointments when there has been a default, are of very great public concern and ought to be subject to the authority of Parliament just as much as the appointments in the first instance. Let us leave the director general to perform his regulatory role. The regulatory role does not and ought not to include the final decision on the making of an appointment to a natural monopoly like water.
There may be defects in the Bill which have caused defects in the drafting of the amendment and I shall not pursue the matter to a vote. However, this is a point on which we shall have to seek at a later stage to secure the protection of consumers and the protection of the democratic process in this country. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.15 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 148ZB:
Page 10, line 22, at end insert ("and in respect of any such company the Secretary of State shall as soon as practicable publish a statement setting out his intentions with respect to any sale of its shares and the proportions thereof at any stage").
The noble Lord said: Amendment No. 148ZB may be thought to be a matter of less moment than the preceding amendment. However, it is extremely important, not just in the terms in which we have been talking but in terms of the financial community—and it is not often that I speak up

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for the financial community in this Chamber—that there should be as soon as possible a statement setting out the Secretary of State's intention with relation to the flotation of the company.
I read in this morning's edition of The Times the latest in a series of articles by Graham Searjeant, the Financial Editor, in which he says that it is almost certain that 100 per cent. of the capital of the 10 water authorities will be sold in the share issue scheduled for November despite the unpopularity of water privatisation. He foreshadowed this a couple of weeks ago in an article which, like today's, was clearly based on very considerable inside information about the way in which the department is thinking. If I were asked to put in one sentence what we are saying in this amendment it is that Parliament ought to share the information which is available to the Financial Editor of The Times. So far we have not been vouchsafed the same privileges which Mr. Graham Searjeant has.
In the article he makes some very interesting speculations, which have been continued in the financial press over a number of weeks or even months. He suggests that the preliminary plan is to sell 25 per cent. of the issue overseas, 40 per cent. to private investors and employees and 35 per cent. to British financial institutions. He goes on to say that Japanese investors, enthused by the prospect of dividend yields of around 8 per cent., have already suggested that they could be interested in up to 30 per cent. of the issue. Dividend yields of 8 per cent. are more attractive to Japanese investors than they are to British investors because the sublime economic incompetence of this Government is such that our real interest rates are enormously higher than those of our competitors in the developed world.
That leads to a curious state of affairs, does it not? Here we are subsidising ān industry which has been in public ownership in most of this country almost since the beginning and in many cases certainly since the 16th and 17th centuries. We are doing so at such a time and in such a form that it will be attractive to Japanese investors and not particularly attractive to British investors. I do not know whether that is a more serious reflection on the competence of the economic management of the Treasury or of the economic management of the Department of the Environment. I think both stand pretty thoroughly condemned by the situation in which we find ourselves.
I think that we deserve a few straight answers from the Minister this afternoon. What is the intention of government? Is it their intention to float 100 per cent. of the industry or 51 per cent.? Is it their intention to allocate any particular proportion of the shares in the industry to particular types of investor? Is it their intention to engage in marketing campaigns for the shares overseas? I understand that visits have been made to other countries by those who are interested in marketing to overseas investors what has up till now been the property of the British public. Why is it that we alone in Parliament are not to be given the facts about this flotation?
It has not been possible to say any of this in dealing with the Bill so far because we have not dealt with the appointment. It is still not possible to say it in the way that we should like to because the terms of the flotation do not form part of the Bill. However, we must seriously ask whether the Government are treating Parliament fairly and openly and whether we are being given the information that we ought to be given in order to make a realistic judgment about whether this is a sensible proposition at all. I beg to move.
Lord Jenkin of Roding: The Government will of course publish such a statement. It is called a prospectus and it will set out matters in the greatest possible detail and, I fancy, in rather more detail than the noble Lord, Lord McIntosh of Haringey, will wish to read from cover to cover. I estimate that it will probably fill no fewer than a dozen pages of The Times or the Financial Times at the very least in order to give all the information.
However, I rise not to make an obvious point, but to put before the Committee a possible consideration as to why it would be undesirable for the Government to go into any great detail about the matter in advance of the issue of the prospectus. As he is well informed about these affairs, the noble Lord, Lord McIntosh of Haringey, may be aware that there comes a point with every such privatisation Bill when a letter goes round Whitehall, principally to Ministers, their junior Ministers and their PPSs, and to senior officials. The letter warns them that, in view of the fact that a prospectus seems likely to be issued—there may be more than one prospectus—they should all be exceedingly careful, with that prospect hanging over the industry, as to what they say in public about the issue of shares, the attractiveness of the shares as an investment or the sort of market that might expect to arise once the shares are issued and traded.
That is a perfectly proper precaution. So far as I am aware, it has been taken in every single case when the Government have been the seller of the shares that they own. It is perfectly obvious why that should be so. Otherwise, there would be a considerable risk that statements would be made which would then have to be reflected in the prospectus and which might well affect the marketing of the shares.
It is a difficult operation which I believe Her Majesty's Government have handled reasonably well over the years. It is primarily the responsibility of the Treasury, not of the operational department, acting with the advice of merchant bankers who are very skilled in these matters. However, I would be slow to press my noble friend on the Front Bench to make any statement of the kind for which the noble Lord, Lord McIntosh of Haringey, asks. It seems to me that that would create precisely the difficulties that the procedures, which are most carefully drawn up on legal advice, seek to avoid, and that they would be likely to be flouted.
We must wait for the prospectus until we know precisely what will happen. Whether there can be more general statements of intent, going beyond what my noble friend said in the Second Reading

569
debate, for instance, and what has been said by Ministers in another place, is obviously a matter on which they will have taken advice as regards how far they can go. The kind of detailed statement for which the amendment calls seems to me to be wholly inappropriate.
Lord McIntosh of Haringey: On that point, is the noble Lord suggesting that it would be an improper prejudging of the prospectus for the Government to make a statement as to whether they will sell 51 per cent. or 100 per cent.? That is the most important point that I was making. The Government should make that point clear not only because it is of interest and concern to the electors of this country, but because it is a matter of interest and concern to the City and, in turn, determines who the likely investors will be. Surely, before the prospectus is issued and while the Bill is still before Parliament, the Government should make their position clear on this most important aspect of the flotation.
Lord Jenkin of Roding: I shall take that as an intervention, although I had sat down. That approach may or may not be appropriate. I should not like to make a judgment on the legal issue. It is clear that the noble Lord's Amendment No. 148ZB goes a thousand miles beyond that approach.
Lord Ezra: One could debate a good deal the question of when the detailed information about the flotation of the companies should be made known. I have a certain sympathy for saying that the full details should be presented in the prospectus. Nevertheless, what worries me about what the noble Lord, Lord McIntosh of Haringey, pointed out is that there already appears to have been something of a leak to the financial press. That happens all too often.
I should like to ask the noble Lord whether that information in the financial press represents more or less what the Government have in mind. Was it a sheer guess on the part of the financial journalist or was he subject to one of those regular, off-the-record press briefings about which we hear so much, so that he could publish the information in his journal? Basically, the point raised by the noble Lord, Lord McIntosh of Haringey, about at least knowing whether the Government will sell off the totality or whether they will retain a majority in public hands is of sufficient importance for the information to be made known before the details are published in the prospectus.
Baroness White: Perhaps I may point out to the Minister another matter that is very much in the public mind, particularly after the broadcast on Sunday last; namely, the amount that is to be spent on flotation, and who decides it and when. Is it true that the costs of privatising the water industry, including, as I understood the remarks on that occasion, the costs to the Government of the flotation, will be at least £30 million of our money, either as consumers of water or as taxpayers paying the costs of flotation met by the Government?
Anyone who listened to "The World This Weekend" programme on Radio 4 at one o'clock on
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Sunday would have been startled by the discussion of the amount that is likely to be spent. I do not pretend that that is an official figure, but, if it is anything approaching that figure, the Government will find that it is not particularly popular with the public in general, whatever it may be in the City of London.
The Earl of Caithness: I begin by congratulating the noble Lord, Lord McIntosh of Haringey, on bringing forward this amendment, for, as any noble Lord who has read the Bill will recognise, it is totally out of place in Clause 11, which deals with the appointment of utility companies initially and at a future date. The clause is not about the privatisation of the holding companies of the 10 utility subsidiaries which will be successor companies to the water authorities.
The noble Lord suggested that the Government have started out with, perhaps, the intention of selling 100 per cent. of the equity in the 10 holding companies and have now changed their mind or are undecided. I can confirm, as did my honourable friend in another place, that the Government fully intend to dispose of all the shares in the holding companies. The question yet to be decided—that is the point that all noble Lords should recognise—is whether it would be timely to do so at the outset, in the offers for sale which will take place later this year, or whether it would be preferable to do so in more than one tranche. It would be unusual to have any preconception about the matter at this stage. There has never been a commitment to an initial offer of 100 per cent. of the shares. One need look no further than the provisions of Clause 86,
"Target investment limit for Government shareholding",
which was present in the Bill as introduced in another place. That provision has effect only if the Government sell less than 100 per cent. of the equity at the outset.
The amendment calls on the Secretary of State to publish a statement setting out his intention with respect to any sale of shares. Although, as drafted, the amendment relates to the appointed subsidiaries, the noble Lord has the holding companies very much in mind. My right honourable friend has of course already published statements about the Government's intention. As far back as July last year, he announced our intention to float all 10 holding companies simultaneously towards the end of his year. That remains our intention.
The amendment goes on to require the publication as soon as practicable of a statement of the proportion of shares to be sold. My right honourable friend will make such an announcement when it is timely to do so. At this stage I cannot forecast when and in what terms any such announcement may be made. The prospectuses of the holding companies will contain details of the remaining government holdings if there are to be any.
I believe that the amendment is unnecessary to the extent that the matters with which it deals have already been covered or will be covered at the latest in the prospectuses for flotation of the companies later this year. I believe that to the extent that the amendment seeks to impose some form of statutory

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timetable it is misconceived, as my noble friend Lord Jenkin of Roding said so well in an earlier statement. The timing of announcements on offer structure details must be decided in the light of market conditions and considerations.
Lord McIntosh of Haringey: I have seldom been the victim of such a piece of selective quotation as that which the noble Earl has just put forward. He read out a selected part of my amendment; namely:
"publish a statement setting out his intentions with respect to any sale of its shares".
He did not read out the following words:
"and the proportions thereof at any stage".
It is quite clear from the Government's reply that, as I thought, they are treating Parliament with contempt on this most important matter. We have had repeated that it is the Government's intention ultimately to sell 100 per cent. of the water business. We have had repeated the statement that the Government have not yet made up their mind as to the stages in which the business should be sold. I suggest to the Committee that it might just have been possible to delay a decision on this matter—that a delay of this kind could have been defended—while the Bill was going through another place. But the second Chamber is now considering this Bill and the other place will only have an opportunity to consider any amendments that are made and not to reconsider the Bill as a whole.
I suggest that, if it is considering the desirability or otherwise of privatising the water industry, Parliament needs to know when the industry is to be privatised and in what stages. It is not just a matter of academic interest. It needs to know because it affects who will buy the water industry and because the whole of the argument for privatisation depends to some extent on who will buy the industry. It is quite clear from comments in all the financial papers that investors are thinking in those terms and it is quite clear that somebody in government—perhaps not at the highest level—is saying things to the financial press that Ministers are not prepared to say to Parliament.
I do not think that this is satisfactory or that Parliament should think that it is satisfactory. Whatever may be the niceties of these subsidiary companies or the plcs, it is right that we should take a view on this matter by voting on this amendment.
4.33 p.m.
On Question, Whether the said amendment (No. 148ZB) shall be agreed to?
Their Lordships divided: Contents, 76; Not-Contents, 119.

DIVISION NO. 2

CONTENTS

Addington, L.

Blackstone, B.

Amherst, E.

Bonham-Carter, L.

Ampthill, L.

Boston of Faversham, L.

Ardwick, L.

Bottomley, L.

Attlee, E.

Brooks of Tremorfa, L.

Aylestone, L.

Bruce of Donington, L.

572

Carmichael of Kelvingrove,L.

Milverton, L.

Molloy, L.

Cledwyn of Penrhos, L.

Mountevans, L.

Davies of Penrhys, L.

Nicol, B.

Dean of Beswick, L.

Northfield, L.

Dormand of Easington, L.

Peston, L.

Elwyn-Jones, L.

Phillips, B.

Ennals, L.

Pitt of Hampstead, L.

Ezra, L.

Ponsonby of Shulbrede, L.

Falkland, V.

[Teller.]

Fisher of Rednal, B.

Robson of Kiddington, B.

Gladwyn, L.

Rochester, L.

Glenamara, L.

Ross of Newport, L.

Graham of Edmonton, L.

Sainsbury, L.

Grey, E.

Serota, B.

Hampton, L.

Shepherd, L.

Hatch of Lusby, L.

Simon, V.

Hirshfield, L.

Stallard, L.

Houghton of Sowerby, L.

Stedman, B.

Hughes, L.

Stoddart of Swindon, L.

Jenkins of Hillhead, L.

Strabolgi, L.

Jenkins of Putney, L.

Taylor of Blackburn, L.

John-Mackie, L.

Taylor of Gryfe, L.

Kearton, L.

Taylor of Mansfield, L.

Kilbracken, L.

Tordoff, L. [Teller.]

Lloyd of Kilgerran, L.

Turner of Camden, B.

Longford, E.

Underhill, L.

Lovell-Davis, L.

Vernon, L.

McCarthy, L.

Wallace of Coslany, L.

McGregor of Durris, L.

Walston, L.

McIntosh of Haringey, L.

Whaddon, L.

McNair, L.

White, B.

Mason of Barnsley, L.

Winstanley, L.

NOT-CONTENTS

Airey of Abingdon, B.

Hailsham of Saint

Alexander of Tunis, E.

Marylebone, L.

Alexander of Weedon, L.

Harlech, L.

Alport, L.

Henley, L.

Arran, E.

Hesketh, L.

Auckland, L.

Hives, L.

Balfour, E.

Hood, V.

Bauer, L.

Hooper, B.

Belstead, L.

Hylton-Foster, B.

Blake, L.

Jenkin of Roding, L.

Blatch, B.

Kimberley, E.

Blyth, L.

Lauderdale, E.

Boyd-Carpenter, L.

Lawrence, L.

Brabazon of Tara, L.

Long, V.

Brougham and Vaux, L.

Luke, L.

Caithness, E.

McFadzean, L.

Campbell of Croy, L.

Mackay of Clashfern, L.

Carnegy of Lour, B.

MacLehose of Beoch, L.

Carnock, L.

Macleod of Borve, B.

Cayzer, L.

Malmesbury, E.

Colnbrook, L.

Margadale, L.

Constantine of Stanmore, L.

Marley, L.

Cottesloe, L.

Marshall of Leeds, L.

Cranbrook, E.

Massereene and Ferrard, V.

Dacre of Glanton, L.

Merrivale, L.

Davidson, V. [Teller.]

Middleton, L.

De L'lsle, V.

Monteagle of Brandon, L.

Denham. L. [Teller.]

Montgomery of Alamein, V.

Dilhorne, V.

Morris, L.

Dundee, E.

Mottistone, L.

Eden of Winton, L.

Mowbray and Stourton, L.

Ellenborough, L.

Munster, E.

Elles, B.

Murton of Lindisfarne, L.

Elliot of Harwood, B.

Nelson, E.

Erroll of Hale, L.

Norfolk, D.

Faithfull, B.

Nugent of Guildford, L.

Ferrers, E.

Oppenheim-Barnes, B.

Forester, L.

Orkney, E.

Fortescue, E.

Pender, L.

Fraser of Carmyllie, L.

Peyton of Yeovil, L.

Fraser of Kilmorack, L.

Platt of Writtle, B.

Gainford, L.

Porritt, L.

Gisborough, L.

Pym, L.

Glenarthur, L.

Radnor, E.

Gridley, L.

Reay, L.

573

Reigate, L.

Swinfen, L.

Renton, L.

Terrington, L.

Renwick, L.

Teviot, L.

Romney, E.

Thomas of Gwydir, L.

Rugby, L.

Trafford, L.

St. Davids, V.

Trumpington, B.

Saltoun of Abernethy, Ly.

Tweedsmuir, L.

Sanderson of Bowden, L.

Vaux of Harrowden, L.

Sharpies, B.

Waldegrave, E.

Skelmersdale, L.

Whitelaw, V.

Stanley of Alderley, L.

Wise, L.

Strathclyde, L.

Wynford, L.

Strathspey, L.

Young, B.

Sudeley, L.

Young of Graffham, L.

Swansea, L.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.41 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 148ZC:
Page 10, line 22, at end insert—
("1A) An appointment under this section shall be made by Order of the Secretary of State, and so such Order shall be made unless a draft has been laid before and approved by resolution of each House of Parliament.").
The noble Lord said: The purpose of this amendment is to insert a new subsection after subsection (1) of Clause 11. That is the right place for it, because it follows immediately subsection (1), which lays down the responsibility for who should make the appointment. But it refers particularly to subsection (3), which reads:
"The appointment of a company to be a water undertaker or sewerage undertaker shall be by service on the company of an instrument in writing containing the appointment and describing the area for which it is made".
This is, in effect, a piece of correspondence between the Secretary of State or the director and the undertaker and, despite the supreme importance for the consumers who are to be subject to this natural monopoly of the conditions of the appointment and of the area with which the appointment is concerned, there is no opportunity whatsoever for Parliament to consider the appointment, to consider the document and to consider the terms of it.
I do not think even this Government suppose in their fondest moments that there will not be continuing parliamentary discussion of the water business. After all, there has been continuing parliamentary discussion of the other privatised industries, entirely properly, despite the appointment of the Directors General of Telecommunications, of Gas Supply and so on. There will continue to be parliamentary discussion of privatised industries, because Parliament represents the consumers of these industries who are the forced customers for these industries, for these natural monopolies. If that is the case for the other industries which have been privatised, how much more so is it for the water industry?
Members of Parliament are simply not going to get away with responding to their constituents who complain about water supplies by saying, "Oh, it is nothing to do with me. It is the customer service committees; it is the Director General of Water Services; it is the National Rivers Authority.
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Parliament has no influence on this matter any more". Any Member of Parliament who makes that sort of comment to his constituents will invite an adverse vote at the next general election, and deservedly so.
It is a matter of public concern that we should have an adequate regulatory system for our water industry, and it is a matter of public concern that ultimately there should be an opportunity for parliamentary redress if the regulatory system, which is, after all, ultimately under the control of the Secretary of State, falls down.
We are not in this Bill proposing that all of the regulatory functions of the director should be exercised by the Secretary of State. That view was expressed by the noble Lord, Lord Nugent, last week and the Committee took another view, so I am not opening that subject again. What I am saying is that at the time of the appointment, which is the first occasion on which public concern needs to be expressed, it is important that Parliament should have an opportunity to consider the terms of the appointment.
Unless that is the case, and unless the terms of the appointment are actually available to be discussed in Parliament, subsequent discussion of the water industry and of consumer interests in the water industry will be weakened, because the original terms will not have been subjected to parliamentary scrutiny, and it will not be possible to refer back to them and for the government side to say, "Well, you in Parliament agreed with us that these should be the terms of the appointment".
I hope it will not always be the case that Parliament will agree with everything the Government do in this respect, but it is certainly important that Parliament should have an opportunity to consider the terms, to make detailed comments on them and to have their views taken into account by government in the formulation of the letters of appointment. A written contract between the Secretary of State and the undertaker is simply not adequate for parliamentary control in an industry such as the water industry, which is the subject of this Bill. I beg to move.
Lord Renton: Whether parliamentary control is needed and desirable in the circumstances or not, I think that it is overdoing it to call for an affirmative resolution. We often have to consider whether there shall be a negative or an affirmative procedure for considering statutory instruments by each House of Parliament, but we reserve the affirmative resolution for really important matters. To have the business of each House cluttered up, if I may say so, with matters of this kind, however important they may be, is not exercising the sort of judgment that we ought to exercise.
I say that on the assumption that some kind of parliamentary control is required, as the noble Lord has said. But in the entirely fresh circumstances in which we are legislating for the water industry I would have thought, following the speech made by my noble friend Lord Jenkin of Roding on the last amendment but one, that we really do not need to have that kind of control.
The Earl of Caithness: The effect of this amendment is to modify the power of the Secretary of State or of the director, where the Secretary of State has given his consent or a general authorisation to appoint water and sewerage undertakers, by subjecting their decisions to parliamentary debate. The amendment would apply not only to the initial appointments but to replacement and inset appointments. This term "inset appointments" is used to describe appointments made under Clause 12(2)(b) to make new appointments for areas which are not served by the existing appointee.
The Bill allows for the director to make replacement appointments and inset appointments under a general authorisation given by the Secretary of State. Because the director will have the necessary understanding of the performance of the existing appointees and, under his Clause 26 duties, of the wider context of the industry, he will consequently be the person best qualified to make any subsequent appointments and this is the way in which it is intended the clause will operate. The duties of the director general in Clause 7, which include the responsibility to exercise his powers in the interests of customers and potential customers and so that the functions are properly discharged in every area, provide the necessary safeguards.
My noble friend Lord Renton made a very telling point when he said that what was important within the new structure was that the existing controls and duties of the Secretary of State and/or the director general were such that we were in a different situation. The important things for us to get right are the duties and the enforcement duties of both the Secretary of State and/or the director general, so that in the event of a subsequent appointment being made it is made in the interests of the customers and potential customers. That is in Clause 7. That gives the assurance.
Lord Graham of Edmonton: I cannot understand either the noble Lord, Lord Renton, or the Minister downgrading the desire or the interests of Parliament, either to be involved in or to have oversight of, or to have some opportunity of scrutinising, the appointments. I understood the noble Lord, Lord Renton, when he referred to matters of this kind, and said "however important they may be". I believe that they are important matters. Parliament decides. We know how Parliament decides, by the size of the majority. It is quite clear that this Parliament will not decide, but the principle exists of Parliament wanting to be involved in the scrutiny. I believe that "scrutiny" is the right word.
We continue to ask from this side of the Chamber: who will be responsible? How will it be done, and what safeguards will there be? Water is a unique situation. The degree of accountability can be considered separately. There is no blanket way of doing things. The Minister tells us that in this instance it is not necessary. The noble Lord, Lord Renton, was making the case that the affirmative procedure would be necessary only in very exceptional circumstances. We believe that this is an exceptional circumstance. It is one in which we want to be involved.
576
Once again the Minister completely fails to understand the crucial importance. People who take an opposite view to him on the issue see the need to ensure that the public understand that Parliament, so far as it can, is trying to ensure—because ultimately Parliament will be responsible—that it is not losing any opportunity to make sure that the people, the places and the legislation are gone through with a fine-tooth comb.
Lord Renton: If I may just deal with the point on which the noble Lord, Lord Graham of Edmonton, took up a phrase that I perhaps incautiously mentioned. There are degrees of importance. I should have said that this is not sufficiently important to be made the subject of an affirmative resolution. But within the context of the Bill of course it is important. But the Bill contains its own checks and balances, obligations, and so on. I should have thought that it was perfectly justifiable, however important one considers these matters, to be left subject to the checks and balances inherent in the Bill.
Lord McIntosh of Haringey: We are not talking about an overwhelming burden on Parliament. We are talking about 10 water authorities in the first instance and 29 statutory water companies. Orders of this kind are commonly brought, even en masse, before Parliament. For example, orders for the establishment of urban development corporations have to be framed for each of the urban development corporations. It is perfectly common and perfectly acceptable for these orders to be brought before Parliament in a bundle to be debated together. I can understand how Members of the Committee may feel some resentment that an additional burden may be caused by orders requiring an affirmative resolution. But if I were a Member of the House of Commons I do not believe that I should feel protected by the delegation of the responsibility of the appointment by the Secretary of State and/or the director by means of a letter of appointment.
Members in another place have constituents. Those constituents will hold Members, particularly Members of the Government party, responsible for the performance of the water industry subsequent to privatisation. This Government will be blamed for the inevitable increase in water charges. If there is any defect in drinking water quality or in the quality of our environment following the Bill, whether or not it is a defect in relation to European legislation, the political fact is that the Government will be blamed for the defects because this Government will have taken responsibility for the new arrangements for the water industry. I should have thought that any self-respecting Member of Parliament would want the opportunity to take part in a debate on the appointment of the new water undertakers, and would want to be able to say to his constituents that he had done just that.
Lord Renton: Is not the noble Lord overlooking the fact that the Secretary of State can be questioned about any of his responsibilities under the Bill in another place? Up to a point he can be questioned about various other matters which arise under the

577
Bill. There can be debates in another place about the way the Bill is working out. But that is very different from saying that there should be a specific obligation in respect of these really quite numerous companies and undertakers for there to be an affirmative resolution. This is far removed from that.
Lord McIntosh of Haringey: The noble Lord is quite right in saying that there can be subsequent debates on the performance of the water undertakings. I venture to suggest that there will be subsequent debates on the performance of the water industry under privatisation. That is an inevitable political fact. But in one sense those debates will concern the whereabouts of the horse when the stable door has been shut behind it. The true responsibility of Parliament ought to be not only to consider what is going wrong after privatisation has taken place but to consider the process of privatisation including not only the passage of the Bill but also the nature of the appointment agreement. This will not be a standard appointment agreement produced on a word processor for all the water undertakings. It is already clear—we shall see this in discussion on the next amendment—that the price charging formula, the RPI plus K formula, will not be the same for all the water undertakings. The nature of the appointment, and the RPI plus K formula for each undertaking, is a matter of public concern, particularly for the Members of Parliament representing the areas concerned by the appointment.
It is appropriate for the full responsibility of Parliament not only for dealing with what goes wrong afterwards, but for dealing with the original state of affairs that Members should have the opportunity to debate the appointment. As between a negative and an affirmative resolution, I concede that the noble Lord, Lord Renton, may have a point: a negative resolution might be more appropriate in this case. For that reason, if for no other, I do not propose to press this amendment to a Division.
The Earl of Caithness: I am grateful to the noble Lord for giving way. I sense that he is coming towards a decision on what he might do with the amendment. I should therefore like to take this opportunity to make a couple of points in answer to what he and the noble Lord, Lord Graham of Edmonton, said in his intervention. I take great issue with the noble Lord, Lord Graham, in saying that we are downgrading the interests of Parliament. We certainly are not. The interests that noble Lords have taken in the Bill is testimony to the importance that we give to the interests of Parliament.
The second point was the suggestion made by the noble Lord, Lord McIntosh, that to bring before Parliament all appointments would not be time demanding. There will be approximately 39 initial appointments and then there will be a continuing flow of inset appointments. We already have evidence that a number of companies involved in the water industry are keen on the inset appointment procedure as a form of competition. They can move into a new area, take the opportunities available and provide a better service to the public than their competitors. That is a relevant form of competition.
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I return to a comment made by the noble Lord, Lord McIntosh, in respect of the previous amendment. It was that we are giving complete power to the private company over the consumers. That is totally incorrect. One of the reasons the Bill is so lengthy is in order to protect the consumer. It is full of protection of the public interest and to such an extent that the noble Lord, Lord McIntosh, wondered whether the regulation is too harsh. The regulations and the functions are important, not necessarily the ownership, because if Parliament has agreed the strict regulation of the industry that is a key point.
5 p.m.
Lord McIntosh of Haringey: I should be grateful if the noble Earl could show me where on the record I said that the regulation is too harsh. The only occasion on which I recall using those words was during Second Reading when I observed that the Financial Times described the regulatory regime as being very harsh. I certainly did not say that I thought that it was harsh. The Financial Times has the right to state what it thinks. My view is that regulation is the absolute minimum of what is required. A great deal of time is being taken up in Committee in seeking to make the regulatory regime more powerful.
I totally disagree with the Minister's response to my noble friend Lord Graham. I have already indicated that I shall not pursue the amendment partly because of the difference between the negative and the affirmative resolution procedure and also because I accept the fact that the Minister has made a valid point about the difference between the initial appointments and subsequent inset appointments. It may well be that at a later stage we shall return to the issue with amendments reflecting both those possible changes in our position.
The fundamental position that we take, as expressed by my noble friend Lord Graham, is that if, as it will, Parliament has the power to debate the future of the water industry after privatisation it should be concerned with the terms on which that privatisation takes place. If the terms were in the Bill, the passage of the Bill would suffice. They are not in the Bill; they are in the terms of appointment. While that remains the case the terms should be debated by Parliament. In order to enable that to be done more effectively I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 148ZD:
Page 10, line 31, at end insert ("including the duty under subsection (5A) below").
The noble Lord said: This is a paving amendment, and in moving it I should like to speak also to Amendments Nos. 150A, which is substantive, 152A and 159C.
The principal amendment, No. 150A, places duties on the water and sewerage undertakers and the director which are to be included into the appointment. They require the director to determine

579
a formula under subsection (5B) of the amendment. It is:
"such formula or formulae in respect of charges as appear to him to be appropriate, consistent with the need to maintain and improve levels of public health".
Amendment No. 152A refers to the necessity for the Secretary of State to bring before Parliament the details of the charging formula or formulae. Amendment No. 159C specifically refers to a direction containing any allowance for cost inflation to be included into the formula for the determination of price increases. It will be seen that the four amendments sit properly together.
As the Minister reminded the Committee a few moments ago, this is a very lengthy Bill. During the time that I have been in this Chamber it is the first Bill to be printed in two volumes. However, despite its length, it is in many respects a hollow Bill because it does not contain the important facts which we need to know in order to make a true judgment as to the wisdom of government policy in the privatisation of water.
Members on both sides of the Committee have preconceived ideas about whether it is desirable. Members of the public have preconceived ideas about whether it is desirable: they do not like it. But we owe it to ourselves as well as to the public to examine in a little more detail one of the most fundamental issues in the privatisation of water. It is an issue which will be of the greatest concern to the general public. It is an issue which it is not possible to debate in terms of the Bill as it stands before us. It is the issue of charging.
The charging formula on the basis of which water and sewerage undertakings will set their charges is set out in the model instrument of appointment. It has been the subject of considerable public debate, although not on the detailed terms of the Bill. Broadly speaking, it is the RPI plus k formula. I shall not attempt to define what the Government intend by that formula but I wish to point out the differences between that and any previous charging formula in a privatisation Bill.
The most important consideration is that previous formulae for the charging of gas and telecommunications, for example, have been in the form of RPI minus k, x or whatever. It could be argued—and the Government have done so—that the fact that it is RPI minus x means that prices must rise over a period of time more slowly than inflation. In other words, prices must decrease in real terms.
Having worked in private industry almost all my life, I am perfectly familiar with management objectives set to the director of production, for example, in a manufacturing company after having been told that for the next three years the factory costs of its product must decline by 10 or 20 per cent. a year. That objective is intended to secure efficiency of operation, economy and greater profit. Much as we may dislike some of the other implications of the charging formulae for gas or telecommunications, and much as we were dissatisfied with the formulae as they were
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incorporated in Bills which passed through this Chamber, we recognise the fact that there is a fundamental logic behind the idea that when you have privatised a monopoly you should force it to be efficient by forcing it to keep its prices below the rate of inflation. That appears to be common sense and it has been the basis of whatever popularity the Government's privatisation programme has achieved.
However, when you get to an RPI plus k formula, a formula in which the public must expect increases in prices in the coming years which are greater than the rate of inflation—in other words, water which is more expensive in real terms—that argument drains away. I am sorry; one must avoid metaphors relating to water in dealing with the Water Bill. That argument no longer has any force. The argument of economic efficiency, management and performance as a test of the virtue of privatisation is totally obscured by any formula which allows a real increase in the price of water.
That is made worse because formula k—and of course that is only a simplification of something which in the model instrument of appointment on page 13 is a very complex formula for weighted average charges increase, including a very considerable number of component variables—is intended to cover a number of completely unlike factors. The final determination of k for an individual water or sewerage undertaking will combine in a single figure both some estimation of the effect on the prices it has to charge of its capital programmes over a period of time—and the capital programmes are those programmes which are required to bring the water and sewerage activities up to the standard required both by our Government and by the European Community—and some sort of estimation (putting into figures in some way) of the geophysical (I think is the correct word) features of the area which the undertaking is supplying. In other words, how expensive is it for the water to be collected? Has it to be purified in any way? Does it have to be fetched a long distance to its point of use? It must include an indication of the differential cost of distribution. The cost of distribution in rural areas is very much greater than it is when customers are closely clustered together as in urban areas. In other words, the inherent costs of supply as well as the costs of any capital programmes must be taken into account in calculating k.
Some of those are long-term factors. They relate to the investment required and the condition of the assets. I have not even mentioned the thorny issue of asset management. The consultants for the Government are spending vast amounts of public money, no doubt justifiably, in trying to assess what the asset management cost will be for the individual water authorities. Nobody knows the conditions of our sewers, how much water is being leaked in our water distribution system or what can be done to stop it. Those are all unknowns but they will have to become knowns in order for a realistic figure to be set for k—for the charges which the customers will pay for water.
Therefore, it is a combination of these long-term issues of investment and of the long-term physical

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environment in which the water and sewerage undertakings are working with short-term issues such as cash flow. I should have thought that water and sewerage undertakings had a relatively favourable cash flow situation in that they can regulate their charges very securely over a financial year. On the other hand, by being privatised they are abandoning some of the security that they have had which has entitled them to borrow money at public rather than private sector rates of interest.
We have already been over this ground. I have sought to pursue with the Government what they expect the new undertakings must pay for their capital. Of course it is quite critical to know what rates of interest they must pay for their capital in order to know how much they should be allowed to charge for water. I suggested that there were three options: the existing rate of interest, the rate of interest on a utilities basis and the rate of interest on an equities basis. I suggested what the cost may be to water customers in real terms over a period of years. I have got nowhere. That is why I say that the Bill is hollow. There has not been an adequate response by the Government as to how much the consumers will have to pay for their water.
The pricing formula of k is an amalgam of completely unlike functions, a basket of factors, which cannot realistically or properly be put together. Let us remind ourselves that those charges will be imposed and no one will be able to say, "No, I am not going to pay that for my water. I shall go elsewhere". That is a fundamental point about the water industry to which we must keep on returning in order that we do not forget it in the mass of propaganda which goes on about the benefits of privatisation. If I were an accountant seeking to take a true and fair view, I should say that k cannot be the simple formula which the Government seek to pretend that it is. It must be more complex. As soon as one looks at the more complex formula and as soon as one realises what the Government are trying to do, it becomes clear that the attempt to privatise water is being made at the wrong time.
I am not making a Second Reading point. We have not had an opportunity to debate the charging to the consumer at all in the Bill so far. It would have been impossible to have had an adequate discussion of the issues on Second Reading. However, as we have proceeded through the Committee stage, it has become eminently clear that if there is to be any sort of rational decision about the cost of water to consumers in this country, there has to be either some greater recognition of the public service element in water, however unpalatable that may be to a Government who are hell-bent on privatising now or some more realistic estimate of the cost of the investment programme which will be necessary and which water authorities will have to undertake over the next 10 years. In other words, I suggest that the charging formula which we have so far, or the attempts at it, are no doubt a brave attempt at trying to reconcile the very many factors involved in the pricing of our water but they are a doomed attempt.
Perhaps I may give a few more reasons why that is the case. The first is concerned with the accountancy
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side of it and that is something which will have to appear in the prospectus. I am sorry that the noble Lord, Lord Jenkin, is not in his seat because I believe that he would have been interested in this point and I should have welcomed his business judgment on it. It seems to me that the decision as to whether the prospectus should be phrased in historic current cost terms is quite critical to the success or otherwise of the flotation. Whatever decision is taken, the charging formula for water will have to be robust as between historic and current cost calculations. It cannot simply be left to the judgment of investors as to what they choose to believe is the Government's intention. Before they come to finalise the prospectus the Government will have to make a decision on that point. They ought to be discussing this issue with Parliament. However, the way this Bill is formulated it is not possible for the issue to be determined by Parliament. As the Bill is framed it leaves the Director General of Water Services to decide on the issue.
There are two ways in which the Government, if they are behaving responsibly, could deal with that. They could force the director general to specify in advance the accountancy procedures on which he is going to set k or to set up some sort of independent adjustment procedure. I do not know what the Government are going to do but they should be doing something and they ought to be discussing it with Parliament as the Bill goes through. My suspicion is that the Government simply want to avoid current cost accounting at all costs and want to stick to historic cost accounting. They may believe that thinking in the accountancy profession is such that they still have an opportunity before historic cost accounting is totally discredited to get away without specifying current cost accounting.
I understand that Mr. Byatt, the designate Director General of Water Services, wanted current cost accounting and I should be interested to hear the Government's views on the way in which the flotation documents and the prospectus will, in the end, be formulated.
I am sorry if I have gone on at length about what some people may feel to be technicalities. These are not technicalities. These are not matters at the margin. These are matters which make a difference between the Secretary of State's estimate that water prices will increase between 7.5 per cent. and 12.5 per cent. in real terms in the next 10 years and other perfectly respectable economist estimates that prices may have to rise by as much as 150 per cent. in real terms in the next 10 years. However much the Government may have passed by the argument in presenting the Bill so far, customers will be intensely concerned with the effect on water prices of these perhaps rather technical decisions which the Government will have to take. It is for that reason we are proposing amendments which will require the director to set up a price formula which can be defended, attacked and discussed but is at any rate a public matter to be dealt with. It is an issue of great public concern.
I appreciate that in this Committee amendments and arguments about the environment attract a great deal more attention than economic and consumer

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protection matters. I understand that. I sympathise with that view and I hope that I have taken my share of the necessary role of opposition in seeking to protect the environment as the Bill proceeds through its Committee stage. However, we are now dealing with a subject which, in my view, is at least as important as the environmental concerns expressed in this Committee; namely the protection of water customers from exploitation by a private monopoly, licensed by government, in a way which this Government refuse to explain in public.
The intention of our amendment is to force the Government at least to talk publicly and openly about what is in their mind about the charging procedures for our water, to attempt to defend their formulae and explain what it is they intend for water prices. In my view that was not done in the debates in another place. The Committee deserves no less than it should be done properly now. I beg to move.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh): Clause 11 provides for the appointment of companies as water and sewerage undertakers by the Secretary of State or, with his consent, by the director. Subsection (2)(a) requires the appointed company to meet obligations of water and sewerage undertakers set out elsewhere in legislation, including elsewhere in the provisions of this Bill. Hence this clause deals with the consequences of appointments and is not the place for setting out provisions relating to further conditions to be included in appointments. That is dealt with in Clause 14.
It is thus inappropriate for Amendment No. 150A and its paving Amendment No. 148ZD to seek to place a duty on an appointed company in Clause 11. Putting that aside,the effect of the amendment would be to require the appointed company to seek the approval of the director for its proposed charges for domestic and non-domestic customers. The director would be required to determine whether charges proposed by the company were consistent with a formula determined by him. In turn, that formula would need to be consistent with the public health duties of the director. The director would also be required to ensure that all items, and only those items, admissible by the formula were considered in his determination. The company would have a duty to comply with the director's determination.
We believe that this is a strange amendment. The director is required to devise a charging formula of his own design, presumably to limit the level of charges. He is then required to follow his own rules in applying the formula.
Similarly, Amendment No. 152A makes the presumption, not present in the Bill, that a charging formula, or charging formulae, will apply to water undertakers. It would require the Secretary of State to lay the details of the formula before Parliament together with a statement of the level of charges likely to result and the reasons for the application of the formula. It also envisages that the statement would be provided by the director except in the case of an initial appointment.
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This is a curious amendment. It cannot decide whether to admit the truth—that the Government's proposals for regulation of charges are well known—or whether to pretend a bashful ignorance of them. As I have said, the amendment acknowledges that there will be a charges formula. Indeed the model instrument of appointment which contains it was published last December. I remind the Committee that my noble friend Lord Jenkin of Roding has described it as infinitely desirable.
Amendment No. 159C seeks to clarify the scope of direction giving powers that can be included in companies' appointments. This time the proposal is to clarify that conditions could allow the Director General of Water Services to give directions concerning "any additional element", in addition to cost inflation, to be included in any formula for the determination of price increases.
Condition B of the model instrument of appointment provides for increases in a basket of each company's charges to be subject to an annual limit related to the retail prices index; or, to use shorthand, RPI+k: where k is a number which will be inserted in individual licences. Clearly this condition is at the heart of economic regulation of the companies. The level of k will be set in the light of all the factors set out in the general duties clause, Clause 7; completely paraphrased by the noble Lord, Lord McIntosh, earlier this afternoon. This will guide the Secretary of State and the director when exercising their powers under Chapter I of Part II of the Bill.
The level of charges must allow proper discharge of the companies' functions. It also provides a stimulus to making efficiency savings in that profits can thereby be increased, subject to periodic reviews of the limit after 10 years, or after five years if the company or the director require it. In such reviews savings will be shared with customers.
Provision is also made for k to be adjusted where new obligations are imposed or there are substantial adverse circumstances which management could not have avoided. These provisions offer the safeguards that are necessary for viable companies to be established given the range of factors which may move the goal-posts. They will ensure that the companies will be able to discharge their functions, yet they are also carefully tailored to ensure customers' interests are protected.
Where the director's determinations are disputed, the matter will be referred to the Monopolies and Mergers Commission. This is a reasonable safeguard for the companies to expect. It has been incorporated into the structure of Clause 14 and the conditions of appointment. The condition also requires that each company provides the director each year with sufficient information to satisfy him that its proposed charges comply with the charges' limits. The condition reflects the duties of the Secretary of State and the director general set out in Clause 7 which we have already debated. By seeking to identify specific obligations as Amendment No. 150A implies, such as the need to maintain and improve levels of public health, the amendment starts a process which we believe that it cannot hope to complete. The obligations of undertakers are

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extensive as the size of the Bill reflects, even though it does not contain them all. The aim to be clear and precise is a laudable one, but I can assure the Committee that trying to isolate the relationship between individual obligations and the level of charges within the charges' formula itself is not a fruitful way forward. The general duties already give all the guidance that is needed.
The framework that I have described is superior to the proposals in these amendments which are confused to the extent that they give unqualified powers exclusively to the director and we believe that they are rather autocratic. The noble Lord, Lord McIntosh, took issue with the change in formula from previous electricity and gas privatisations whereby you had RPI minus x plus y versus RPI plus k. There are two very important differences between gas and water. The first is that there is a far higher variable as regards the price of obtaining gas (as we can see by looking back over the past four years) than there is as regards the basic commodity of water. As the noble Lord, Lord McIntosh, pointed out, ahead of the water industry is a major programme of compliance to meet present and future standards. k can be not only a positive number, but it can also be a negative one. The level is dependent on many factors and thus efficiency savings alone could allow RPI minus something.
5.30 p.m.
Lord McIntosh of Haringey: Is the noble Lord seriously suggesting that that will be the case in the next 10 years?
Lord Graham of Edmonton: It could be the case.
Lord Hesketh: As I have just said, I am suggesting that there is no possibility today or tomorrow because of the matter of compliance, but in the years that lie ahead it is possible and it is not unreasonable. The fact is that compliance in the short term does not mean that that is likely. It is all very well for the noble Lord, Lord McIntosh, to smile and stroke his head, but the fact is that he cannot say with certainty that there is no possibility of k becoming a minus because there is such a possibility. We absolutely accept that there will be unavoidable local variations in the inherent cost of supply and the condition of the assets. That is why different companies must have ks appropriate to their circumstances. A good deal of work is being done (as the noble Lord, Lord McIntosh pointed out) to ensure that each company and its customers are fairly treated.
The process must be particular to each company and it must follow common principles. But we cannot accept that the regulator's job is impossible. Water and sewerage undertakers have enough in common for there to be a good deal of scope for comparative competition. The standards set by the most efficient companies will be the guiding light. If it is impossible to make sound judgments as to efficiency and appropriate local costs, how is the industry to be efficiently supervised even in the public sector? The industry is a monopoly whether it is in public or private hands. The noble Lord's deep gloom about the possibility of intelligent informed
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analysis we believe to be a recipe for despair. Because of that we hope very much that the noble Lord, Lord McIntosh, will be able to withdraw his amendments.
Lord Graham of Edmonton: The Minister seeks to deride the attempts made by my noble friend Lord McIntosh and those on this side of the Committee to describe what we intend. The Minister and his colleague are using emotive and evocative adjectives in describing what we are going to do. If I categorise what he has sought to do as deriding—I shall not go so far as to say rubbishing—the case that has been made, I believe that can be sustained on a reading tomorrow of the Official Report.
The raison d'être of our concern here is not so much that there is a need for a formula, but that the public need to have maximum intelligence of the situation so that they can understand as soon as possible. No one on this side of the Committee has doubted the enormous costs that will be inherent in maintaining satisfactory standards. It will cost a great deal of money. No one is deriding the fact that at the end of the day the consumer, in one way or another, will have to pay. No one is pointing fingers either at the Government or the present water authorities. One has to consider the enormous size of the bills that will have to be picked up particularly as regards the enormous size of the jobs that have to be undertaken; for example, the replacement of the Victorian sewers in places like Manchester. It will be an exercise in futility to try to point the finger of accusation at any government or any authority.
We start from the premise that it is inevitable that there will be a big bill to picked up by the public. My noble friend has alluded to the possibly sanguine or conservative noises that have come from the Government and to the possibly wild exaggerations that have been alluded to by others. It is not an exact science. We recognise that very careful and sensible calculations have to be made. I believe that the public will respond to being intelligently informed of what it is that they are asking the Government to do, and not by privatisation. However, if that is the route, the public are asking the Government for legislation to protect the environment, to promote conservation and to improve the quality of water. They ask that the polluter be punished and that codes of practice should be brought in. The Government will not need to be persuaded by people on this side of the Committee that those provisions have to be planned for.
What the noble Lord says will be read outside far more than what I say because what he says is part of government thinking. I do not deride what the Minister said. He will have read a brief prepared in the department. In it the country is being invited to contemplate the possibility that at some time in the future the cost of water increases could be below the level of the RPI. In theory that is likely to be the case. The Minister has tried to set opposite the increases required to fulfil the Government's ambitions, the efficiency savings that can be made. It takes an enormously flexible imagination to believe that, with the tremendous amount of work that has to be paid for by the consumer, that sum will ever be less than the efficiency savings that can be made.

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The Minister speaks in terms of efficiency savings being shared by the shareholders and of there at least being the prospect that in five or 10 years matters will get better for the shareholders. We understand the nexus and the feelings of those who invest their money. They are entitled to a reasonable return. We are saying to the Government that it is right that Parliament should be more closely involved in these matters. I believe that the major issue of charges to the consumer will be determined if not wholly then almost wholly, outside the ambit of Parliament itself and proper debate.
The director general and the plcs will have arguments and put forward propositions. I am not for a moment saying that the director general will not be as strict and as disciplined as we want him to be or as understanding as he needs to be of the need to serve capital. Those who invest in the company will be entitled to make a profit. However, we are concerned with the right of the public to be consulted through the mechanism of understanding what the charges will be. I do not think that it is unfair or punitive for the companies to have to explain the charges to the director general, who will subsequently have the power to amend or reject them. That is what the amendment is about.
The Minister said that the standards set by the most efficient will be the guiding light. That is well understood; but cannot the noble Lord understand that people outside this Chamber will better appreciate the Bill if they are treated intelligently from the beginning and are better informed about what is important? We have discussed quality and management, but the noble Lord must understand that for most people in most things the price is crucial. He will also know that a great deal of mischief can and possibly has been made about the unnecessary way in which the public will have to pick up the bill. A discipline will be exercised on the companies if they have to comply and conform with some of the elements inside their costs.
The noble Lord takes exception to our amendment in which we talk in terms of formulae in respect of charges being consistent with the need to maintain and improve levels of public health. He derided that as being unnecessary and as moving in the direction of being too specific. People outside the Committee would not believe that a Bill which contained a statutory duty to have regard to, to be concerned about and to take into account measures to maintain and improve public health could be other than good. It might not be convenient and might be something that one would wish to avoid. I cannot believe that anything that a public company, one of the major undertakers or the Government would want to do would not comply with maintaining and improving levels of public health. The noble Lord has completely failed to understand what we are about.
The noble Lord resists an attempt to give scope and direction. He said that far too much attention is given to scope and direction. Is it a heinous crime for a Parliament to want to say to those who will be given power and authority—the Secretary of State, the director general and the companies—that we want to be involved in the scope and direction of
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the charging formula? That is nothing to be ashamed of. The Government have fallen into the trap of believing that in their committed and principled stand in opposition to the Bill Members on this side of the Committee will not be concerned once the Bill becomes an Act about trying to make it fair. The Minister must know of the unease about the possibility of large sums of money being made by people investing in the quality of water. This is not an argument about privatisation. It is an argument about accountability and sense. The Government have shown little of either in deriding our arguments.
5.45 p.m.
Lord Hesketh: Perhaps I may make one point. I have always considered it a great privilege to be a Member of this Chamber. I take issue with the noble Lord, Lord Graham. I would never deride or rubbish the noble Lord, Lord McIntosh, for whom I have the highest regard, as I am sure he knows.
Lord McIntosh of Haringey: This is a difficult situation. We tried in putting forward this amendment to bring on to the face of the Bill the opportunity to discuss one of the most important issues brought up by water privatisation. I refer to the cost to the consumer. We have done so in a form which does no more than bring out into the open the need for realistic calculations of water costs after privatisation. We have not suggested a completely new way of assessing what water charges should be after privatisation. We have done nothing radical. We have not in any way suggested in the amendment delaying the process of privatisation or putting it under a different form of public control. All we are saying is that people care about the price of water and that the Government ought to be more open and honest about the calculations they are making and ought to share their thinking with the public.
The Minister's response, I am sorry to say, made no progress towards explaining what is in the Government's mind, explaining the formulae which will be used to determine prices and sharing with the Committee the Government's view on the effect of the formulae. I said that the formulae as they stand are far too simplistic. I would go further. They are naive.
I am confirmed in that view by this morning's reports about the action that the Office of Fair Trading is likely to take in a reference to the Monopolies and Mergers Commission in regard to BAA, which is the former British Airports Authority. When the Government privatised the British Airports Authority they thought that they were protecting the charges that would be made by this monopoly—it has a monopoly of the services provided in London airports and at a number of other airports—by saying that the RPI minus x formula should apply to the charges made by BAA. They were naive about it. It was a figure of RPI minus 1 per cent., which was presumably a calculation of the savings to be made by increased efficiency.
However, the formula only covered the cost of landing an aircraft and parking it at the airport. It covered only a half of the cost of the airport's income

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and was based on a charge per passenger, which means that the airports automatically had a huge increase in revenue arising from the increase in passengers crowded into already inadequate conditions in the airports run by BAA. Therefore, even if we took that situation on its own, the charging formula so painstakingly arrived at in the privatisation Bill was inadequate.
However, what the Government completely neglected to do when setting the charges for BAA was to take control of the franchise income of the airports. We are told that as a result a company such as Bee Line which operates from Reading to Heathrow has been informed that the cost of its licence fee will rise from £54 to £10,000. We are also told that the Association of Heathrow Hoteliers says that under the new charges its bill for using the airport will rise from £16,000 to £180,000 per year. Further, we understand that the operators of a half-hour courtesy coach service from a hotel near Gatwick—which has not been charged for in the past—will now face an annual bill of more than £60,000. To say that that is causing dismay is far too mild a description of what is felt by those who are providing essential services at our airports—the transport services, the shops and indeed the airlines which are the customers and the victims of BAA. It results from a private monopoly, an inadequate regulatory regime and an inadequate pricing system.
Unless the Government come clean or at least reveal more than they have done so far about the pricing formulae for water, the horror being expressed by the "franchisees" at British airports under the BAA will be multiplied a millionfold when water customers—that is, all of us—realise what is happening to them.
It is not as if the formula provided any protection for the consumer. In every single case where we can determine what the RPI plus k formula means, there is protection for the undertaker but no protection for the consumer. The whole concept of cost pass through means that additional unexpected costs which arise, and which must be borne by the water undertakers, can be passed through to the customer to be paid. It is not suggested that the customer should share in the benefit of any savings. Oh no! Any savings which are made will go entirely to the shareholders.
What is being proposed is a completely one-sided asymmetrical procedure. When replying to the amendments, which were an attempt to bring the issue out into the open, the Minister made no attempt whatever to defend the one-sided nature of the formulae and the fact that it is always the customer who has to pay. He did not even analyse adequately the reasons for one water undertaking being different from another. The reason is clear: the water industry, more than any other industry I can imagine, is an industry of very high fixed costs.
As I said when introducing the amendment, such costs are non-comparable fixed costs; indeed, they vary from one area to another. They are different according to the historical backlog of work to be done on the water distribution and sewerage systems; they are different as regards the quality of the water
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being provided, that is, both for drinking and for bathing and therefore subject to the cost impact of the EC regulations which all the water undertakings will have to obey; and they are different in relation to the risk of the kind of disaster which occurred at Camelford with comparable examples in Oxfordshire.
While such differences exist it is not appropriate for the Minister to criticise my arguments by saying that there would be equal problems of pricing in the public sector. There would not be equal problems of pricing in the public sector. The problems of investment in the water industry are the same in the public sector as they are in the private sector. It will not cost any less, or any more, to comply with the European Community regulations or with our own requirements for improved quality water. However, in the private sector it is—as it ought to be—a matter of public investment shared properly by all taxpayers. It is only under privatisation that it becomes necessary to go through this elaborate and deceitful rigmarole of passing costs on in a different way to different customers of different water undertakings. This rod—this complex and incomprehensible series of formulae—is devised for their own back by the Government through the very fact of introducing privatisation. It is not a fundamental feature of the water industry as such; it is a feature of privatisation.
The answers given by the Government to these questions of fundamental importance are so totally inadequate that I think it essential that I should first seek the opinion of the Committee, and, secondly, that I should give Members of this Chamber notice that we shall return to this matter in great detail at a later stage of the Bill's proceedings. I say that because even if the amendments meet with the approval of the Committee they are, as I said, not radical and they do not deal—as I would wish to deal—with the more fundamental issues of pricing under private monopoly conditions.
The Government have not thought out their formula and they have not thought out their policy. Indeed, if they have gone any way along the road of thinking the matter out they have not shared their views with Members of the Committee. It must be said that we in Parliament deserve better than that.
5.56 p.m.
On Question, Whether the said amendment (No. 148ZD) shall be agreed to?
Their Lordships divided: Contents, 69; Not-Contents, 108.

DIVISION NO. 3

CONTENTS

Addington, L.

Craigavon, V.

Ardwick, L.

Davies of Penrhys, L.

Attlee, E.

Dean of Beswick, L.

Aylestone, L.

Dormand of Easington, L.

Barnett, L.

Elwyn-Jones, L.

Bottomley, L.

Ennals, L.

Brightman, L.

Ezra, L.

Broadbridge, L.

Falkland, V.

Brooks of Tremorfa, L.

Fisher of Rednal, B.

Carmichael of Kelvingrove,L. [Teller.]

Graham of Edmonton, L.

Gregson, L.

591

Grey, E.

Rochester, L.

Hampton, L.

Ross of Newport, L.

Hatch of Lusby, L.

Rugby, L.

Hughes, L.

Russell, E.

Jenkins of Putney, L.

Saltoun of Abernethy, Ly.

Kennet, L.

Serota, B.

Lloyd of Kilgerran, L.

Shepherd, L.

Lockwood, B.

Simon, V.

McCarthy, L.

Stedman, B.

McGregor of Durris, L.

Stoddart of Swindon, L.

McIntosh of Haringey, L.

Taylor of Blackburn, L.

McNair, L.

Taylor of Mansfield, L.

Mason of Barnsley, L.

Thurlow, L.

Monson, L.

Tordoff, L.

Mountevans, L.

Turner of Camden, B.

Murray of Epping Forest, L.

Underhill, L.

Nicol, B.

Vernon, L.

Northfield, L.

Wallace of Coslany, L.

O'Neill of the Maine, L.

Walston, L.

Phillips, B.

Whaddon, L.

Pitt of Hampstead, L.

White, B.

Ponsonby of Shulbrede, L.[Teller.]

Wigoder, L.

Williams of Elvel, L.

Rea, L.

Winstanley, L.

Robson of Kiddington, B.

NOT-CONTENTS

Ailesbury, M.

Hylton-Foster, B.

Airey of Abingdon, B.

Ingrow, L.

Alexander of Tunis, E.

Jenkin of Roding, L.

Alport, L.

Lauderdale, E.

Arran, E.

Long, V.

Balfour, E.

Luke, L.

Bauer, L.

McAlpine of West Green, L.

Bessborough, E.

McFadzean, L.

Birdwood, L.

Mackay of Clashfern, L.

Blake, L.

Macleod of Borve, B.

Blatch, B.

Malmesbury, E.

Blyth, L.

Mancroft, L.

Boyd-Carpenter, L.

Margadale, L.

Brabazon of Tara, L.

Marley, L.

Brougham and Vaux, L.

Marshall of Leeds, L.

Butterworth, L.

Massereene and Ferrard, V.

Caithness, E.

Merrivale, L.

Carnegy of Lour, B.

Middleton, L.

Carnock, L.

Monteagle of Brandon, L.

Clitheroe, L.

Morris, L.

Colnbrook, L.

Mottistone, L.

Colwyn, L.

Munster, E.

Constantine of Stanmore, L.

Murton of Lindisfarne, L.

Cottesloe, L.

Nelson, E.

Cranbrook, E.

Nugent of Guildford, L.

Crickhowell, L.

Oppenheim-Barnes, B.

Dacre of Glanton, L.

Orkney, E.

Davidson, V. [Teller.]

Pender, L.

De L'Isle, V.

Peyton of Yeovil, L.

Denham. L. [Teller.]

Prior, L.

Derwent, L.

Pym, L.

Dundee, E.

Radnor, E.

Eden of Winton, L.

Reay, L.

Ellenborough, L.

Rees, L.

Elles, B.

Renwick, L.

Faithfull, B.

Saint Albans, D.

Ferrers, E.

St. Davids, V.

Fortescue, E.

St. John of Fawsley, L.

Fraser of Carmyllie, L.

Sanderson of Bowden, L.

Fraser of Kilmorack, L.

Sharpies, B.

Gisborough, L.

Skelmersdale, L.

Glenarthur, L.

Slim, V.

Gridley, L.

Stanley of Alderley, L.

Hailsham of Saint Marylebone, L.

Strathclyde, L.

Sudeley, L.

Harlech, L.

Swansea, L.

Havers, L.

Teynham, L.

Henley, L.

Thomas of Gwydir, L.

Hesketh, L.

Trafford, L.

Hives, L.

Trumpington, B.

Hooper, B.

Tryon, L.

Hunter of Newington, L.

Vaux of Harrowden, L.

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Wise, L.

Young, B.

WyattofWeeford, L.

Young of Graffham, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 148A and 148B not moved.]
6.4 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 148C:
Page 10, line 47, at end insert ("and
(e) of requiring the company to have due regard to any code of practice relating to customer service issued by the Director.").
The noble Lord said: The intention of Amendment No. 148C is to introduce the concept of a code of practice relating to customer service which could be drawn up by the Director General of Water Services. The proposal is that a company should be required to have due regard to such a code of practice and the obligations—this is the point of raising the matter in this clause—should be a requirement of the undertaker's appointment.
We have already discussed in Committee on a number of occasions the director general's role as a regulator as opposed to his role as a consumer watchdog. The Bill as drafted forces him to attempt to carry out both those roles, and so he has to reconcile his primary obligations under Clause 7 to keep the industry going and to secure its profitability, with the obligations to the consumer, and the obligations as regards the maintenance of levels of service and the environment, which occurs in other parts of the Bill.
We are not trying to upset what we still believe to be a fundamental contradiction in the director general's role, but we are trying at least to strengthen his hand in relation to the obligations that he has to the consumer and to maintaining levels of service. We should like to see the code of practice deal with some of the detailed service standards issues which it is not possible realistically to make part of the enforcement procedures in Clause 20.
I have already referred to the obligations under Clause 20 and, in particular, under Clause 20(5). But it is fair to say, in anticipation of our discussions on Clause 20—and the Government will agree with this—that these are complicated procedures. Moreover, the whole idea of provisional orders, subject to certain conditions, which precede a final order for compliance, and the whole concept of exclusions which might be evaded in the short term, and avoided in the longer term, by an attempt by a company to remedy the breach, have led to what is an exceptionally complex piece of enforcement legislation in Clause 20.
We recognise that undertakings will have many difficulties. We do not suggest that we should entirely replace the enforcement procedure in Clause 20 with the amendments, but we believe that the fundamental obligations of the water and sewerage undertakings under the Bill should be brought out into the open and to the forefront of the minds of the water and sewerage undertakings, by being included in a code of practice whose observance

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would be part of the letter of appointment for the water undertaking in the first place. In our view, that would redress the balance which at present seems to be loaded too much in favour of the undertakings and too little in favour of the consumers and the quality of service that they will demand from the water undertakings. I beg to move.
Lord Renton: Quite clearly, if there are to be codes of practice, the people concerned—the people to whom the guidance is directed—should have regard to them. It is just a question of whether there is anywhere else in the Bill—I have been looking at Clause 8, and I am not quite sure whether there is anywhere else in the Bill—which would require the company concerned, and indeed any relevant body, to have due regard to any code of practice. I would assume that there is some way of ensuring that. That is the point upon which I shall be interested to hear my noble friend.
The Earl of Caithness: Amendment No. 148C would make it a statutory requirement that the appointed companies should pay due regard to any customer service codes of practice issued by the director.
It may be helpful if I first explain the nature of the three customer codes of practice which the director is to approve under the draft model instrument of appointment. The first code is essentially a general advice and information document largely of relevance to domestic customers. This is provided for under licence condition F and provides for a code to be drawn up by the appointee setting out inter alia the services offered, the terms and conditions on which they are supplied, arrangements for the payment of bills, where customers can obtain information or advice and the arrangements for handling complaints.
In addition to this more general information document, there are two more specific codes for domestic customers concerning, under condition G, the disconnection of water supply for non-payment of charges and, under condition H, the liability for charges of domestic customers occupying metered premises where there is an unidentified leak on the supply pipe.
To supplement the information contained in the draft model instrument of appointment, I am making available to Members of the Committee further copies in the Library of the model code under condition F and the draft codes under conditions G and H as recommended by the Water Authorities Association and Water Companies Association to their members and published in February. Following points raised in another place I should add that we are currently considering with the industry whether further revisions should be made to the disconnection code concerning the exceptions to county court action for the recovery of water charge arrears. I very much hope that we will be able to make an announcement on these before the Committee debates Clause 49.
I am happy to say that we have not only decided that all three customer codes should be submitted to the director for his approval but that the procedures
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to be followed in the case of the disconnection and leakage codes are to be written into the licence. The appointee will now, therefore, be required to adopt a procedure in relation to disconnection of water supply to domestic premises for non-payment of charges which is consistent with the principles set out in the revised condition G and consistent with the provisions of Clause 49 of the Bill. The appointee is also to be required to follow the procedures to be set out in condition H under which customers with domestic water meters will not have to pay higher than expected bills resulting from an undetected leak from a supply pipe. As a consequence, the director will now be able to take enforcement action as appropriate for breaches of the procedures set out in these two licence conditions.
In the case of the general customer code of practice under licence condition F, however, there is not an equivalent set of enforceable procedures which it would be sensible to set out in the condition. This code is essentially an information document.
I therefore consider that we have gone as far as is desirable to make these codes enforceable. I say "desirable" because anything further would be inconsistent with their status as codes of practice. Compared with the vagueness of the reference to "due regard to" in the amendment, our approach to enforcement under these proposed licence conditions provides much clearer guidance to the customer, to the company and to the director general. I hope that the noble Lord, Lord McIntosh of Haringey, will welcome it.
Lord McIntosh of Haringey: I sincerely thank the Minister for what he said. The changes that he is proposing in the status of the disconnection code and the leakage code are real changes. The additional power that the director will have to seek to secure compliance with the code and the enforcement that will be applied are certainly an advance on anything that the Government have said before. I wish to pursue this matter with the Minister in a moment.
On the issue of the more general code of practice, the Minister still says very firmly that it is not a matter for compliance because it gives only general guidance. Quite understandably, he criticises the phrase "due regard" in the amendment. However, there are still two points on which I should like further clarification of his proposals. First, when it comes to the leakage and disconnection codes, the Minister talks about enforceability. Is he talking about enforceability in terms of Clause 20 or about enforceability as we are talking about it, because it becomes a condition of the appointment itself?
Secondly, when the Minister says that the more general code is only for guidance, does he mean that there is no part of the more general code which could not be framed in such a way that it had more strength than being simply for guidance? If he means that, it will be necessary for us to take the more general code apart, line by line, and seek to give it more strength than it has at the moment. We are certainly not satisfied that there are not significant elements in the general code of practice which ought to have greater protection.

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Perhaps I may repeat my questions, because I spoke for longer than I meant to. First, what is the enforceability of the leakages and enforcement codes? Secondly, is there nothing in the more general code which could not be given greater strength?
6.15 p.m.
The Earl of Caithness: The enforcement duty for leakages and disconnections is through Clause 20 of the Bill. On the second point, I am unable to answer the noble Lord now. I should like to take his point away and consider it. As I have said, there is a very general obligation which is for information only. Whether one can take part of that code out and make it more enforceable without affecting other parts of the code is something which I think needs a little more thought than I have been able to give it since the noble Lord asked me that question.
Lord McIntosh of Haringey: That is a generous and realistic response. I believe that parts of the general code could be treated in the same way as the Government now propose to treat the leakage and disconnection codes, and I think we shall make even more progress than the real progress which we made just now. In the light of that, I am very pleased to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 149 and 150 had been withdrawn from the Marshalled List.]
[Amendment No. 150A not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 150B:
Page 11, line 31, at end insert—
("(5) A company that is a water or sewerage undertaker shall state in its annual report how it has fulfilled its duties under section 8 above").
The noble Lord said: This is a harmless little amendment. It is already clear that the water or sewerage undertakers will produce annual reports. It is already clear that water authorities and sewerage authorities now take pride in their annual reports in referring to the way in which they carry out their environmental responsibilities. Sometimes when looking at the annual reports one gets the impression that the authorities are environmental charities rather than water undertakings, so keen are they to tell us what good boys and girls they are.
I think that the new water undertakings, the plcs, will welcome the provision offered by this amendment that they should refer in their annual reports to how they have fulfilled their duties under Clause 8. I remind the Committee that that is the clause which specifies the general environmental and recreational duties of the relevant bodies which are the water undertakings in this context. I hope that the amendment will find favour with the Government. I do not believe that it would do anything other than give statutory force to something which the good water and sewerage undertakings ought to be doing anyway. I beg to move
Lord Harmar-Nicholls: I wonder whether this matter needs statutory force. It is one thing to say
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that somebody must give a report; it is another thing to write into a Bill what must be put into the report. The amendment goes some way towards doing that. If the undertakings are giving a report, the report should reflect the work that they have done and how they have done it. To me, to put it in a statute is putting gilt on the lily.
Lord Ross of Newport: The fact is, as the noble Lord, Lord McIntosh, said, most of the water authorities are very proud of their response to their environmental duties. On Second Reading I produced a newspaper which the Southern Water Authority sends out quarterly, saying exactly what it is doing to improve the environment and to provide habitats and things like that for wildlife. I think that is a marvellous idea. I do not see any reason why there should not be some part in the annual report devoted to environmental responsibilities. I wholeheartedly support this suggestion.
Baroness White: I am sure we would all wish to support the suggestion that this provision should be a mandatory obligation. After all, Section 8 is one of the most important sections from the point of view of public interest and public opinion. I presume that the majority of companies concerned would do this in any case. However, I think the public have a right to expect that this information will be included in any annual report. I cannot believe it would be detrimental to any of the companies concerned that they should be under some obligation to do so.
Lord Jenkin of Roding: I wish to ask a question, which perhaps my noble friend can answer. condition I provides for
"levels of service information and service targets".
That clearly applies to water and sewerage undertakers and, so far as I can see, it refers to the carrying out of all their functions. Would the reports that have to be made under condition I already have to provide the information which the amendment seeks? If so, it does not seem to me to be a substantially heavier burden to suggest that some summary of that should go into an annual report.
My impression is that all the authorities are very proud of what they have done in this regard and wish they could do more. They would like to be able to point that out. However, I am not absolutely certain whether that provision needs to be in the Bill. Nevertheless, I hope that the water companies will be encouraged to sing their achievements loud and long.
The Earl of Arran: This amendment raises matters which were considered at some length yesterday. Therefore, I can offer the noble Lord, Lord McIntosh, a very short response. It may be short, but I hope it will be sweet. The noble Lord may already have divined that. We should like to consider this amendment. We have sympathy with the underlying purpose of the noble Lord, but we should like a little time to consider whether the Bill or, as we are inclined to think, the code of practice is the best way to achieve that. I readily assure the noble Lord that we shall do our best to achieve the

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underlying objectives of the amendment. In those circumstances, I hope the noble Lord will be content for us to take the amendment away today for further consideration.
Lord McIntosh of Haringey: I cannot resist that, can I? I am content for the Government to take the amendment away and think about it. I am grateful for the interventions of other Members of the Committee, which I am sure helped to convince the Government that this was the right thing to do. I shall only add that it seems to be assumed that all the existing authorities trumpet their environmental achievements. I do not think that is quite the case. I think the necessity for a provision along these lines lies in the fact that although one would think all the authorities trumpet their environmental achievements, that is not the case.
Much public attention has rightly been focused on Clause 8 and on some elements in Clause 8 which may not be fully apparent and certainly do not attract public attention in the way they should. The very discipline of referring to the elements of environmental and recreational protection in the terms they are referred to in Clause 8 may be helpful in reminding the undertakings of the points they should be referring to in their annual reports.
I shall listen with some interest to the conclusion of the Government's considerations. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 151 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 151 A:
Page 11, line 38, at end insert—
("(6A) Before terminating the appointment of a company holding an appointment under this Chapter or varying the area to which it relates, the Secretary of State or the Director shall—

(a) serve notice of his intention to do so on every local authority whose area includes the whole or any part of the area to which the appointment relates and

(b) publish a copy of the notice in such manner as may be prescribed.").

The noble Lord said: In moving this amendment, I wish to speak also to Amendment No. 151 B, and also to the closely related Amendments Nos. 153A, 155A and 157A. Amendments Nos. 151A and 151B have similar objectives. Those objectives are to secure that local authorities are notified when there is any termination of appointment in their areas. Amendment No. 151A also states that a copy of the termination notice should be published in such a way as may be prescribed by the Secretary of State. This also applies to any variation in the area over which an appointment was made.
I know that some Members of the Committee groan when we on these Benches refer to the continuing role of local authorities. However, I hope they will be convinced that the continuing role of local authorities in relation to the water business is very important, even under the terms of the legislation as drafted. It certainly justifies this quite modest and innocuous notification procedure.
First, local authorities may still be directly involved in the provision of water and sewerage services. They may provide those services directly, or as agents for the undertakings. Secondly, local authorities are planning authorities in the areas concerned, and in view of the inevitable involvement of the new water and sewerage undertakings in the planning process it is important that they should know what is happening to the water undertakings in their areas and that they should be able to assess the implications for them of new planning developments.
Thirdly, in addition to the important recreational functions of the water industry, local authorities have a very significant role in recreation. It is important that they should co-ordinate what they do in the recreational area with the activities of the water and sewerage undertakings and other parts of private industry.
A further point about the role of local authorities is one that should not be ignored, although it often is. Local authorities have a significant function in publicising matters of public interest to the ratepayers in their areas, who are also of course the water consumers. If local authorities are kept adequately informed of changes that affect the service which the undertakings will give to the people in their areas, as water consumers and as users of environmental facilities and recreational services, that can only increase the public understanding of the role of the water undertakings. Therefore, it can only benefit the public good and the public awareness of the virtue of the water undertakings.
Amendments Nos. 153A, 155A and 157A are all identical. They contain a very specific point about the information which should be given to local authorities which are acting as the sewerage agencies for the appointees. I do not think there is anything controversial about this, but it will be clear that when local authorities are acting as agents they should not be kept in the dark about things which are statutorily required to be notified to the appointees. I beg to move.
Lord Hesketh: This group of amendments provides for the notification of local authorities on modification or termination of appointments. Amendment No. 151A requires that the Secretary of State or director shall notify local authorities of his intention to terminate or vary a company's appointment, and shall publish such a notice. Amendment No. 151B is an alternative, and requires that the local authority shall be notified when the company is served with notice of termination or variation. The three amendments to Clause 13 require that notices shall also be served on local authorities acting as sewerage agents.
I hope the Committee will feel able to reject these amendments. They are unnecessary, for the reasons I shall describe. In addition, those relating to Clause 13, which concern sewerage agency, attempt to place agents on the same footing as the company by which they are engaged and so carry the unfortunate implication that that undertaker is a less than fully competent or responsible body.

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We believe that these amendments are unnecessary because there is already a requirement, in Clause 13, for the Secretary of State or the director to inform those local authorities which will be affected by replacement appointments or variations to them. Clause 13 requires notice to be given to authorities in time for them to comment so that any representations they may wish to make can be considered. We believe that no purpose is served by requiring the Secretary of State to notify authorities of proposed termination.
I hope that the Committee will therefore reject these amendments.
6.30 p.m.
Lord McIntosh of Haringey: In relation to the specific points concerning Clause 13, the Minister is quite right to remind the Committee that the Secretary of State, under Clause 13(l)(a), has the obligation to notify local authorities of an application in the area. However, he has not specifically responded to my point about—I am sorry; I need to have so many pieces of paper at the same time—local authorities which may not be in the same area but which may act as sewerage agent for the undertaking. I think that there is nothing illogical in saying that a local authority which acts as a sewerage agent but is responsible for a different area should have the same rights of notification as the local authority in whose area the application falls.
Lord Hesketh: In relation to the specific point concerning a local authority which has an agency in a different area—if that is the correct interpretation of what the noble Lord, Lord McIntosh, said—we should like to consider the matter.
Lord McIntosh of Haringey: I think that is fair. The original interpretation of my amendments was incorrect and I think that it would be right for me to give the Government an opportunity to think about the amendments in the way that has been suggested. I hope that the Government will seek to return to the matter at a later stage. If not, we shall. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 151B not moved.]
[Amendment No. 152 had been withdrawn from the Marshalled List.]
[Amendment No. 152A not moved.]
Clause 11 agreed to.
Clause 12 [Restrictions on making replacement appointments]:
[Amendment No. 153 had been withdrawn from the Marshalled List.]
Clause 12 agreed to.
Clause 13 [Procedure for replacement appointments]:
[Amendment No. 153A not moved.]
[Amendments Nos. 154 and 155 had been withdrawn from the Marshalled List.]
[Amendment No. 155A not moved.]
[Amendments Nos. 156 and 157 had been withdrawn from the Marshalled List.]
[Amendment No. 157A not moved.]
Clause 13 agreed to.
Clause 14 [Conditions of appointment]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 157B:
Page 14, line 24, leave out ("may") and insert ("shall").
The noble Lord said: In moving Amendment No. 157B I should like to speak also to Amendment No. 158E. The Committee may recognise the familiar phrase:
"leave out ("may") and insert ("shall")".
It is something that we have seen with almost monotonous regularity in the course of this Bill and other Bills. In this case there is a particular point in the exercise and I hope that the amendments will receive the approval of the Committee.
Clause 14 is concerned with the more detailed conditions of appointment of the undertakings. The conditions set out in subsection (1) refer to the conditions which the Secretary of State or director may require of the undertakers under Part I of the Bill, Part I being that which imposes both general and detailed environmental and recreational duties on the water undertakers.
We have spent so long discussing Part I of the Bill and we have gone in such detail through the duties which shall be required of the undertakers, as they will be required of the authority and the director in appropriate circumstances, that it seems to me extraordinary that when we come to look at the conditions of employment we should end up with the phrase:
"An appointment under this Chapter may include",
rather than "shall include".
Presumably Clause 14 is included in the Bill because there is some intention that the conditions will be imposed. If the Government had no intention of imposing those conditions they would not have bothered to introduce Clause 14 at all. There must be some positive intention. The whole structure of Part I is based on duties which are then applied to undertakers under Part II. In Clause 14 they become conditions of appointment and later, in Clause 20, for example—and there are many other examples which I could take—they become enforcement orders. The procedure for the application of the statements of principle in Part I is to be found in Part II. The provision that the duties under Part I should be part of the appointment is, as I said, specifically referred to in Clause 14.
There is little doubt therefore that the appointments are intended to reflect conditions which give effect to the Secretary of State's and the director's duties under Part I. When we look at the model conditions of appointment we see that that is borne out. Admittedly, those model conditions of appointment have not yet been approved and may

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yet be varied in different ways. Nevertheless, it is peculiar that when the Government's intention appears to be clear they should shy away from an obligation in the first line of Clause 14 which would cause no pain.
This is not purely a matter of form. It is not a purely semantic argument. If the provision is left as it stands in the Bill, if it is left that appointments under the chapter may include these conditions, it is possible that an appointment could be agreed between the Secretary of State and the undertaker which did not involve the conditions. It could be that adequate care was not taken to secure not only that the conditions were agreed to but that they could be carried out.
It is a curious discretion for the Secretary of State or the director to have when so much pain has been incurred in securing the best possible wording, in the Government's view, is included in Part I of the Bill. It is curious, when so many assurances have been given to those who are concerned about the recreational and environmental aspects of water supply, that the possibility remains in Clause 14 as drafted that the Secretary of State or the director may, apparently on a whim, decide not to include the conditions in the terms of the appointment.
Even if a judgment has been made that they are requisite and expedient and ought to be included, there is still a further layer of discretion. Under the present drafting the Secretary of State or the director could be clear that certain conditions would be required to give effect to obligations under Part I but could still decide not to include the obligations under an appointment.
That point might not appear to matter. It might not appear to noble Lords that making it a condition of the appointment is a real threat. But I can assure the Committee that pics which found that an analysis had been made of their environmental and recreational duties under Part I, and then found that their appointment was being approved without the conditions of appointment being effected by them, would understandably think that this was a licence to go ahead and ignore the obligations under Part I.
I do not suggest that the water undertakings as a whole or even individually are a bunch of rogues, but legislation is supposed to provide for all the likely circumstances that might arise. It is supposed to provide for a rational degree of enforcement and compliance with conditions which have long been discussed both in another place and in this Committee and which have achieved a degree of precision that the Government think appropriate for them. If we spent all that time producing statements concerning environmental and recreational duties, why on earth can they not be conditions of appointment? I beg to move.
The Earl of Arran: I fear that we shall have to disappoint the noble Lord as regards these two amendments. Perhaps I may briefly explain why.
The effect of the amendments is to require that all the conditions described in Clause 14, subsections (1) and (2), must be included in the conditions of appointment. However, it is standard practice for
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clauses describing potential conditions of appointment to use "may" rather than "shall", as may be seen in the Gas Act and the Telecommunications Act. That form of drafting provides a degree of flexibility. The model conditions of appointment for initial appointments have been published, but it is anticipated that those appointments will be in force for at least 25 years. A degree of flexibility to meet changing circumstances is clearly a necessity and it is for those reasons that I ask noble Lords to reject the amendments.
6.45 p.m.
Lord McIntosh of Haringey: We have heard those arguments on many occasions before and they are no more convincing now than they were before. The Government seek to assure us that, when there is a range of potential obligations or opportunities, it is standard practice to use the term "may" instead of the word "shall' on the grounds that it is more flexible to include "may" in order that the Government, the director, the Secretary of State or whoever can pick and choose. I believe that that is the implication of what the noble Lord said in respect of the different obligations.
If it is necessary for the legislation to be so drafted that the director shall impose only those conditions that are appropriate in a particular case, then the legislation should be drafted to say that. It should not be drafted so that all the conditions and all the obligations on the Secretary of State are discretionary rather than mandatory. In other words, I concede that the noble Lord has a case. The amendment would be undesirable if "shall" meant that every single one of the conditions, whether or not they were appropriate, had to be imposed.
However, the remedy is not to throw the baby out with the bath water. It is not to take away any mandatory conditions, but to draft the clause so that the appropriate conditions for the case, the individual undertaker and the range of recreational and environmental obligations of the undertaker are included in the Bill. That may mean more work for the draftsman. It may be more complicated. It may even mean—the noble Lord, Lord Renton, is not here to express horror at this suggestion—that the Bill will be a little longer than it would otherwise have been, but it will mean that it is more precise. That would be desirable even at the expense of a few more lines of primary legislation.
I neglected to refer to Amendment No. 158E which applies the same logic—which I believe to be impeccable—to subsection (2) of Clause 14. In all the examples that I gave, I referred only to the conditions in subsection (1), but Clause 14(2) is complementary to the environmental and recreational duties. It is at least as important because it covers all the other requirements that the director may have to make including, for example, questions which might go so far as reference to the Monopolies and Mergers Commission and questions about disputes between the director and the water undertaking. In those circumstances, it seems even more irrational for the Govenment to maintain their

603
principle of introducing the subsections with the word "may" rather than the word "shall".
Perhaps the noble Lord will answer one question: is there no way in which legislation could be drafted to secure that, where there is a potential list of conditions, only those conditions that the director considers to be appropriate to the case—rather than all of them—could be included? Could not the introductory line therefore be amended to say "shall" rather than "may"?
The Earl of Arran: I do not think that I can bring much succour to the noble Lord. Perhaps I may make one overriding point; namely, that the legislation is designed to meet all circumstances, as the noble Lord has himself said. That is why the Bill must not anticipate that conditions of the type set out in Clause 14 will always be needed. That is the point that we are trying to make.
Lord Harmar-Nicholls: My noble friend is quite right in sticking to his guns on this matter. If the noble Lord had his way, we would not need a Secretary of State or a director. We could have a robot who would merely apply a section of the Bill as we drafted it. Flexibility is important. One cannnot anticipate all the circumstances. I have no doubt that the noble Lord approves of buying a ready made suit off the peg instead of having one made to measure which sometimes gives more satisfaction and is more comfortable to wear. My noble friend is right to retain the flexibility. The words "shall" and "may" are very distinct in the tasks that they impose upon the people who must do the work from day to day.
Lord Graham of Edmonton: We still come back to the central principle; namely, the sense in which people will read the Bill. Let us leave aside the word "may" and assume that there is a list of conditions. The Minister and the noble Lord, Lord Harmar-Nicholls, claim that some licence needs to be in the hands of the director and of the Secretary of State to determine which of those conditions will and will not apply. Let us suppose that, in the fullness of time—which may not be very long—most of the conditions that may have to apply are not applied. A case can always be made out for a condition not being appropriate. I sought earlier to move an amendment to provide the NRA, the Secretary of State and everyone concerned at top level in getting the Act right the means to do so before it began to bite.
I am fairly certain that one of the exercises that could have been considered would have been to see precisely the range of conditions that would have to apply. Suspicion will always exist and may be alluded to. If the list of conditions is so flexible and capable of being varied, one asks why those conditions do not apply in one case and why punitive conditions may apply to one person and not to another.
The noble Lord, Lord Harmar-Nicholls, made the quite reasonable point that one needs flexibility. If flexibility as opposed to rigidity were the hallmark of the measures contained in the Bill there might be
604
a case to be made, but I do not know the clauses to which it would refer. I can almost see the noble Lord rising to his feet, if not tonight, then another evening, because he is always in his place, and pointing out that there should be no sense of dubiety about any legislation. It should be quite clear and there should be no room for argument.
It is true that the conditions under which an appointment shall be made ought not to be capable of being rubbished, ignored or got round stealthily. I believe that my noble friend has made a very valid point. Why, in Clause 14, do we have a permissive provision? At the end of the day we do not know the conditions. It is not a matter of arguing for certain things which must be complied with. We are anxious that the people who have power should use it properly by consulting and undertaking various exercises, and finally, in saying that this is the framework, the yardstick and the measuring rod with which everyone must comply, they must be satisfied. One can be emotive and even pejorative and say that it is hard and that it is a discipline, but they must be satisfied.
My earlier amendment was designed to give people the opportunity of getting things right. It is not that I wish the Bill well but I am a stickler for Bills being enforced and respected. And they must be right. As for the people who will be affected, some of them are our servants; namely the Secretary of State, the director and the people whom he appoints. There are other very important people. It is a clumsy phrase to use to say that they are in it for the money, but they are in for real. It is most important that they know where they stand. They may not like the conditions that are laid down but at least they know their position. It is also important that everyone else should know the position.
There is always the danger, given a power to be flexible or lenient, that someone will feel by comparison badly done by. That is why I believe that these amendments are very sensible.
Lord McIntosh of Haringey: I should like to ask the noble Earl two specific questions. First, does he think that the public, who are very concerned with environmental and recreational matters and who have been widely alerted to the protections which are supposed to exist in Part I of the Bill, will be satisfied with permissive rather than mandatory conditions of appointment in Clause 14? Does he not think that public confidence in the Government's good intentions in drafting Part I will be strengthened if the Government found a way round their drafting difficulties and put "shall" rather than "may"?
Secondly, in the case of subsection (2) where there may well be conflict, in particular with references to the Monopolies and Mergers Commission, between the director general and the undertakers, does he not think that the undertakers' hands will be strengthened if they could say to the Monopolies and Mergers Commission, "Well, the director general did not think it important enough to put in our conditions of appointment"? I wonder whether the noble Earl can help the Committee on those two questions.
The Earl of Arran: Perhaps I can elaborate a little. We on these Benches frequently have to suffer the accusation that this Government are too rigid. I have tried to demonstrate the reasons why in these particular circumstances it is thought that flexibility is the best way to proceed. Let me expand a little on that point.
First, Clause 14(l)(a) is a power for the Secretary of State or the director to include all such conditions as appear to him to be requisite or expedient having regard to Part I duties. That seems very close to what the noble Lord wants. I suggest that it would not make sense to require him to do what he thought requisite or expedient. The only test of the duty would be his own judgment.
The noble Lord referred to subsection (2). Here the appointment has certain effects whatever it says in the conditions. For example subsection (2)(a) has the effect that an undertaker is required to perform all its statutory duties. The director has no discretion to allow a company to ignore them.
I hope that I have been able to be sensible and persuasive in reply to the noble Lord, Lord McIntosh. Once again, for the reasons I have given, I ask him to withdraw the amendment.
Lord McIntosh of Haringey: The noble Earl has made no attempt to answer my questions. He has simply read out the additional section of his brief which says, "If pressed". I am not impressed; I shall press the amendment.
6.57 p.m.
On Question, Whether the said amendment (No. 157B) shall be agreed to?
Their Lordships divided: Contents, 50; Not-Contents, 92.

DIVISION NO. 4

CONTENTS

Ampthill, L.

Nicol, B.

Ardwick, L.

Northfield, L.

Attlee, E.

Pitt of Hampstead, L.

Brooks of Tremorfa, L.

Ponsonby of Shulbrede, L.

Carter, L. [Teller.]

[Teller.]

Davies of Penrhys, L.

Raglan, L.

Dean of Beswick, L.

Robson of Kiddington, B.

Dormand of Easington, L.

Ross of Newport, L.

Elwyn-Jones, L.

Russell, E.

Falkland, V.

Serota, B.

Graham of Edmonton, L.

Stedman, B.

Gregson, L.

Stoddart of Swindon, L.

Grey, E.

Taylor of Blackburn, L.

Hampton, L.

Taylor of Mansfield, L.

Harris of Greenwich, L.

Tordoff, L.

Houghton of Sowerby, L.

Turner of Camden, B.

Jenkins of Putney, L.

Underhill, L.

Lloyd of Kilgerran, L.

Vernon, L.

Lockwood, B.

Wallace of Coslany, L.

McIntosh of Haringey, L.

Walston, L.

McNair, L.

Whaddon, L.

Mason of Barnsley, L.

White, B.

Meston, L.

Wigoder, L.

Monson, L.

Williams of Elvel, L.

Mountevans, L.

Winstanley, L.

Murray of Epping Forest, L.

NOT-CONTENTS

Ailesbury, M.

Balfour, E.

Alport, L.

Bauer, L.

Arran, E.

Belstead, L.

Auckland, L.

Blake, L.

606

Blatch,B.

Hylton-Foster, B.

Blyth, L.

Ingrow, L.

Boyd-Carpenter, L.

Jenkin of Roding, L.

Brabazon of Tara, L.

Kenilworth, L.

Brightman, L.

Kinloss, Ly.

Brougham and Vaux, L.

Lauderdale, E.

Butterworth, L.

Lindsey and Abingdon, E.

Caithness, E.

Long, V. [Teller.]

Campbell of Croy, L.

McFadzean, L.

Carnegy of Lour, B.

Malmesbury, E.

Carnock, L.

Margadale, L.

Coleraine, L.

Marley, L.

Colnbrook, L.

Marshall of Leeds, L.

Cottesloe, L.

Merrivale, L.

Craigavon, V.

Middleton, L.

Cranbrook, E.

Monteagle of Brandon, L.

Davidson, V. [Teller.]

Montgomery of Alamein, V.

De L'lsle, V.

Morris, L.

Denham. L.

Mottistone, L.

Dundee, E.

Munster, E.

Eden of Winton, L.

Nelson, E.

Ellenborough, L.

Nugent of Guildford, L.

Elliot of Harwood, B.

Oppenheim-Barnes, B.

Faithfull, B.

Orkney, E.

Ferrers, E.

Pender, L.

Fortescue, E.

Reay, L.

Fraser of Carmyllie, L.

Renwick, L.

Gardner of Parkes, B.

St. John of Bletso, L.

Gisborough, L.

Saint Oswald, L.

Glenarthur, L.

Saltoun of Abernethy, Ly.

Grantchester, L.

Sharpies, B.

Greenway, L.

Skelmersdale, L.

Gridley, L.

Stanley of Alderley, L.

Hailsham of Saint

Strathclyde, L.

Marylebone, L.

Sudeley, L.

Harlech, L.

Thomas of Gwydir, L.

Harmar-Nicholls, L.

Trafford, L.

Harrowby, E.

Trumpington, B.

Havers, L.

Vaux of Harrowclen, L.

Henley, L.

Wyatt of Weeford, L.

Hesketh, L.

Wynford, L.

Hives, L.

Young, B.

Hooper, B.

Resolved in the negative, and amendment disagreed to accordingly.
7.4 p.m.
[Amendment No. 158 had been withdrawn from the Marshalled List.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 158A:
Page 14, line 31, at end insert—
("(aa) conditions requiring the payment of penalties for any breach of any conditions provided for under this subsection, the amount of such penalties to be determined by or under the conditions and to be payable to the Secretary of State;").
The noble Lord said: I beg to move Amendment No. 158A standing in the names of my noble friend Lord McIntosh of Haringey and the noble Lord, Lord Ezra. I believe it is for the convenience of the Committee if I speak also to Amendments Nos. 158 and 158D.
We are dealing with the very essence of some of those conditions that we should have liked to see made mandatory in respect of the previous amendments. The Committee will recall that the argument then was about whether conditions that were laid down would be mandatory or optional, and we are now to deal with some of the conditions that we want included. They cover a proper system of

607
compensation to consumers for breaches of service obligations as laid down in the conditions of appointment.
The precise structure of the amendments would give the Secretary of State power to include these requirements as conditions in appointments negotiated with the plcs. Amendment No. 158A would require plcs to pay penalties for breach of conditions inserted into the appointment. I do not think there is any argument that, in all cases, there needs to be not only enforceability but sanctions if there is a breach of a condition for being given an appointment, out of which a great deal of money can be made—or a great many people can be made healthy or unhealthy—which, in itself, is a great prize.
But then there is the question of enforcement, and if there has been a dereliction—let us hope not a tragic one—there has to be some form of compensation. So Amendment No. 158A would require plcs to pay penalties for breach of conditions inserted into an appointment and the penalties would be determined by, and payable to, the Secretary of State.
Amendment No. 158B would similarly require the payment of compensation by an appointee to any person affected by the breach of a condition, with the amount of compensation to be determined under the conditions of appointment. Amendment No. 158D would provide that any duty to abide by a condition on a plc would be owed to any person affected by a breach of that duty and would be actionable at the suit of that person.
That is what is intended by these amendments. Whether they have that effect remains to be seen. They cut through the tortuous process of enforcement, which the Committee will come to consider when it comes to Clause 20. Under that clause the Secretary of State or the director are given substantial yet qualified powers to require enforcement in relation to matters such as drinking water quality. There is, however, a complicated procedure of provisional orders before final orders may be issued, and the requirement in subsection (5) of that clause that no final orders may be made where it appears that a company has taken steps to secure compliance. These are very vague provisions.
The amendments seek to highlight the limitations of the Government's well-publicised but vaguely defined £5 per day compensation scheme for consumers for certain breaches of conditions. The Commitee will recall that play has been made about water which fails to arrive or water which is of an indifferent quality. There has been this vague generalisation that it is possible for the consumer who is detrimentally affected to get compensation of £5 a day, if certain conditions are breached. Apart from the low level of payment which is implied by the scheme, which may fall well below the sort of damage caused at, for instance, Camelford in Cornwall, where there was a sad situation last year, or in any other major disasters, that scheme ignores some of the most common occurrences in failure of service.
For example, Amendment No. 159A highlights the fact that the scheme ignores the recurrence of nuisance by foul water flooding. Several thousand homes in the Thames Water area are permanently vulnerable to the problem. It is a persistent nuisance which causes the greatest inconvenience and damage to health. Even if a scheme were applied in such cases, £5 a day seems so trivial an amount of compensation as to be derisory.
The National Consumer Council has played a major part in this aspect, as the Committee will appreciate. We are talking not only about the rights of consumers, but also their protection. The National Consumer Council makes the point that the process of regulation should protect the consumer from exploitation due to lack of choice. If one is dissatisfied with almost any other commodity one can go somewhere else where it will be cheaper, better and obtained more conveniently. That will not be so with the supply of water. I shall be receiving water from a monopolist—that is what the supplier of water will be—who, despite all the claims about competition in the industry, can charge prices higher than the consumer would pay in a competitive market. It can therefore make excessive profits. Regulation must cover prices.
The regulating quality is not realistic unless failure to deliver the required quality results in some form of penalty. In a competitive market a company would lose business as a result of unacceptable reductions in quality. Equally, in a non-competitive market, a financial penalty is the appropriate mechanism. Amendment No. 158A is the appropriate amendment for setting these matters up. The penalty must exceed the cost savings from the reduction in quality. We are not arguing that there will be devices and short cuts, but where there is a failure to comply with the conditions, there ought to be an adequate penalty.
A system of penalty payments for lapses in overall service standards will go some way towards reproducing the incentives of a competitive market. I want to make three short points. First, the system will provide an incentive for the company to ensure that it meets the standards specified. Secondly, it provides the management of the company with immediate feedback from lapses in service quality in a way that is highly visible to shareholders. There is nothing more salutary to anyone in charge of a service than a turning off in demand and the receivers of that service becoming irate, screaming blue murder and threatening legal action. The third point is that it is important that there should be punitive punishments and penalties if publicity indicates to the regulator, the customers and the public that a particular company is failing and that action is required to bring it up to scratch.
We can learn much from the United States which has had considerable experience of regulating private sector utilities. Many state regulators are equipped with such powers and may be able to fine the companies up to 100,000 dollars per day or more for failure to meet quality of service standards. In America these powers are seen as valuable regulatory tools to ensure that quality and quantity standards

609
are maintained. It is unlikely that they will not prove valuable here as well.
This is a crucial, necessary adjunct to the legislation. If the Government want to keep faith with the public upon whom we believe they are fostering their legislation, they should demonstrate that it is not one-sided and that they are on the side of the consumer, particularly when the consumer is detrimentally affected by an inadequate service which is not delivered. I beg to move.
7.15 p.m.
Baroness Blatch: I want to deal with Amendments Nos. 158A and 158B. Clauses 38 and 68 already provide for standards of performance and for payments to those affected where the standards are not met. The amendment requires payments by the undertaker to the Secretary of State in the event of a breach of standards. Why the Secretary of State? The appointment contains a framework within which the undertaking is enabled to meet the required standards imposed under Clauses 38 and 68. There are other clauses which provide for payment of damages if the undertakers fail to meet those standards; for example, Clause 40(6) which deals with requisitioning of water mains, and Clause 45(7), which deals with the supply of water for domestic purposes. Is it not better that any penalties that are to be paid for a breach of standards should be paid to the person affected by those breaches rather than to the Secretary of State?
Lord Brightman: I am disposed to support the amendment because it is entirely a matter of discretion for the Secretary of State or the director. There is no obligation to impose conditions requiring the payment of penalties under the proposed amendment. We know from a previous discussion that Clause 14 is wholly flexible and imposes no obligation on those concerned to include in the appointment the matters which are set out in Clause 14(1). Therefore it seems to me that the amendment is innocuous from the point of view of the Government. It is purely a matter of discretion and imposes no duty whatever.
Lord Ross of Newport: One of the problems of following the noble Lord, Lord Graham of Edmonton, is that one's brief has been very fully put to the Committee. I support the amendment because I believe it is only right that these penalties should be written into the Bill. I suspect that the rights of individuals, which come at a later stage, are too uncertain of being effective. In this case the Secretary of State or the director will impose fines on companies.
For better or worse we seem to be following everything that goes on in the United States these days. I speak of television and such like. Here is an example where the states impose penalties through regulatory powers. From the consumer's point of view, it would be right that the state in this case should enforce the penalties. I hope that it would also recompense those affected. There are some alarming cases at present—not only in Camelford. There is flooding from sewage in parts of my former
610
constituency. The Thames Water Authority has been liable in parts of London, and in Liverpool serious flooding has occurred from sewage. There is a desperate need to protect consumers from that sort of incident.
Having said all that and having gone through all these clauses at various stages, how the Government think that people will subscribe to buy shares at the end of the day I do not know. Many restrictions are being written into the Bill. But that is what the Government want. They want to privatise the water industry, and it is only right that these things should happen. I support the amendment.
Lord Harmar-Nicholls: I am inclined to think that the message behind the amendment ought to be considered with sympathy. Some kind of penalty is necessary to keep people in line. But, like my noble friend, I do not know why the penalty should be payable to the Secretary of State. I should have thought that the consumer who was affected should be entitled to such a payment. I have in mind a business with which I am connected which includes a swimming bath. Because of subsidence in the road, the quality of the water coming in puts the users to a lot of expense. The quality of the water in the bath means that the company should be able to sue the local authority claiming payment for neglect. Whatever the consequence of puttng in a penalty, the message behind the amendment ought to be looked at to see that if obligations are not being met by the undertaking there is some recognition of it.
Baroness White: I should like to draw attention to Amendment No. 158D in particular. It deals with compensation to the individual rather than with the payment of penalties to the Secretary of State or anyone else.
I am indebted to the National Consumers' Council for calling my attention to the amendments. Its representatives have indentified nine separate divisions for compensation to the individual in different parts of the Bill. The council believes that this complex web of regulation and compensation provides inadequate redress for consumers. The arrangements, which are excessively complex, are in practice worthless unless the consumer can afford the services of a solicitor. We all know that the activities of the noble and learned Lord the Lord Chancellor do not deal adequately with those who find it difficult to afford to employ solicitors. I have the greatest sympathy with the suggestion that Amendment No. 158D would simplify a process for any consumer who had been affected by breaches of service standards to seek compensation.
In this instance, in addition to those mentioned by the noble Lord, Lord Graham, all consumers have a special interest unless they are either so poor that they are certain to obtain legal aid or so rich that they do not care. I do not belong to either category, and I strongly support Amendment No. 158D.
Lord Hesketh: The purpose of these amendments is to provide for conditions in the instrument of appointment of a company to require compensation to be paid by the appointee for breaches of any

611
condition of appointment. In the first amendment payment would be made to the Secretary of State and in the second payment would be made to those affected by the breach of conditions. Additional conditions permitted by the amendment would determine the amount of the penalty or compensation to be paid.
The third amendment provides that breaches of conditions should be actionable by those affected. These amendments concentrate on the payment of penalties; but, in our view, where there is a breach of conditions the matter of paramount importance is to ensure that the breach is remedied. To achieve that I consider the real deterrent to be the enforcement procedure.
A framework for enforcement of various obligations by the Secretary of State or director general is provided by Clause 20. In the case of conditions included in instruments of appointment under Clause 14, the director general is responsible. Where an order is made under Clause 20, the duty to comply with the order is, under Clause 22, a duty owed to any person affected by contravention of the order. Breaches of that duty are actionable by such affected persons.
It has been suggested by the National Consumers' Council that given the necessity of maintaining water supplies, revocation of a licence for the supply of water can never really be contemplated. First, we believe that that is not true. Clause 23 provides for the appointment of a special administrator to enable the carrying out of the undertaker's functions during the transfer of those functions and the necessary assets to another company. Secondly, there are a number of steps which can be taken short of licence revocation. These include a public statement by the director general followed if necessary by a provisional or final order as I have already mentioned.
Apart from the practicalities of operating such a system of penalty payments, there are adequate incentives to improve the quality of service to customers under licence condition I. This provides for a system of service indicators and service targets. Where performance is inadequate the director will be able to ask the Secretary of State to make regulations to specify the levels of service to be provided.
The question of customer compensation for a breach of conditions is covered by the guaranteed standards scheme. It would be inappropriate to cover all aspects of service given the strengthened framework of individual statutory rights under the Bill.
The Bill provides for appropriate remedies in cases where the new water plcs fail to comply with their water supply/sewerage and water quality obligations. Breaches of the water supply and sewerage obligations are currently criminal offences. This is to be retained for cases where an undertaker fails to meet its obigations in respect of water constancy and pressure, and provision and maintenance of fire hydrants. Fines for breaches of these obligations are to be increased. The noble Lord, Lord Graham,
612
brought to our attention yet again the case of Camelford. A new criminal offence is to be introduced of supplying water unfit for human consumption. Furthermore, for the first time the Bill provides for the other specific water supply and sewerage obligations, where duties are owed to the individual consumer, to be subject in future to civil liability. This is considered the more appropriate course for breaches of obligations where individuals sustain loss or damage as a result.
We reject the objective that Amendment No. 158D seeks to establish: that the breach of a condition shall be actionable at large irrespective of loss or damage. The conditions of appointment are imposed to provide overall economic regulation of the appointment of an undertaker by the Secretary of State or the director. If the instrument of appointment is not primarily intended to provide remedies of direct application to individuals, these remedies are provided elsewhere. It would therefore be misleading to encourage individuals to seek payment for the breach of a licence condition. One of the functions of the director general is to ensure that the companies meet the conditions of their appointment. It would be more effective for him to ensure that the breach is either remedied or did not occur.
There are a number of new criminal offences that we are introducing for the protection of the consumer. For the reasons that I have laid before the Committee, I recommend that Members reject the amendments.
Lord Harmar-Nicholls: I am not happy with the reply regarding Amendment No. 158A where the "small man" may be involved. In respect of Amendment No. 158D, the "big people" have the resources and can deal with the situation. If the companies do not supply under the proper conditions there should be a penalty and it should be known. Indeed, the Government have adopted that attitude. If my noble friend has a word with the Treasury he will discover that if someone does not pay their VAT within the three months allowed there is an automatic penalty in addition to the interest. If the Treasury believe that that is a good way to make people pay and have the automatic penalty within its power—and, Heaven knows, it uses it—then the users of water should have the same protection.
I agree with my noble friend that it is best for the director general to try to set conditions in which the problem does not arise; and if it has done so, to remedy it quickly. In the meantime, somebody will suffer. One of the biggest inducements to get on with the job and get the plumber in is an automatic penalty for every day lost. I do not believe that my noble friend's answer to Amendment No. 158A is satisfactory.
Lord Hesketh: In answer to the last point made by my noble friend Lord Harmar-Nicholls, the situation is entirely covered by the guaranteed standards scheme.
Lord Graham of Edmonton: The National Consumers' Council does not think much of the guaranteed standards scheme. It is possibly better equipped than the noble Lord, Lord Harmar-Nicholls, or myself to study the matters and relate them to the consumer. The Government appear to be anxious to avoid laying a punishment on the companies found to be derelict in their duties.
The noble Baroness, Lady Blatch, wondered why we were seeking not only to impose a penalty but to give the moneys raised to the Secretary of State. That is outwith the rights, enshrined in the various clauses of the Bill, of individuals to take action. The Government are involved in the cost of a bureaucracy. I should not have thought that the noble Baroness would jib at the proposition that where people have been found to be derelict in obeying the law they will have to pay the penalty.
The noble Lord from the Cross-Benches made a fair point. There is an enormous amount of flexibility here. We are arguing about the principle. The principle is that where a company has been given a licence if not to print money then certainly to earn it, it is under certain obligations. Where it fails to carry them out, whether it is dereliction on the part of an employee or the management, or whether it is an accident, and consumers of water are disadvantaged, the company should pay. That is the case.
My noble friend Lady White drew the attention of the Committee to a range of matters in the Bill. She quite rightly mentioned nine illustrations where the consumer of water ostensibly has a remedy. Clause 46 states that the failure to provide a water main is actionable if it causes loss or damage. Clause 41 states that failure to provide a connection to a water main after notice from the owner or occupier is actionable if it causes loss or damage. In Clause 45(7) failure to supply water or to maintain a connection between a water main and a service pipe is actionable if it causes loss or damage.
This series of amendments is designed to give the consumer more confidence than the generality which we have talked about where if a consumer is disadvantaged he could claim £5 a day for loss of service. We must be quite specific about that. This is another illustration of where the Government are far too sanguine in believing that the breaches will not occur but that if they do occur little people will be able to look after themselves under the existing provisions of the Bill.
These amendments seek to sum up the villains. They are the water undertakers and they will be categorised as such. Therefore, they must pay. The only way to do that is to hit them hard. The people who will suffer in the vast majority of cases are not the large industrial undertakings but ordinary domestic people—the people who live next door to you and I and across the street. We want to give them confidence that if any of the derelictions which I have mentioned happen, they are protected under this Bill by being able to claim compensation. Many people will not claim compensation because they are frightened by the law and by the cost of it.Those people will not be faced by a little shopkeeper but will be faced by a massive industrial undertaking.
614
The water companies which emerge in the next two or three years will be massive, well-breeched industrial complexes. They will be able to take on the consumers. In my view the noble Lord has failed to satisfy the Committee and I intend to press this matter to a vote.
7.34 p.m.
On Question, Whether the said amendment (No. 158A) shall be agreed to?
Their Lordships divided: Contents, 44; Not-Contents, 59.

DIVISION NO. 5

CONTENTS

Ampthill, L.

Lockwood, B.

Brightman, L.

McNair, L.

Broadbridge, L.

Mason of Barnsley, L.

Brooks of Tremorfa, L.

Monson, L.

Carmichael of Kelvingrove,L.

Mountevans, L.

Murray of Epping Forest, L.

Carter, L.

Nicol, B.

Clwyd, L.

Ponsonby of Shulbrede, L.

Cocks of Hartcliffe, L.

[Teller.]

Davies of Penrhys, L.

Robson of Kiddington, B.

Dean of Beswick, L.

Ross of Newport, L.

Dormand of Easington, L.

Russell, E.

Elwyn-Jones, L.

Russell of Liverpool, L.

Ezra, L.

Stedman, B.

Falkland, V.

Stoddart of Swindon, L.

Graham of Edmonton, L.

Taylor of Blackburn, L.

Grey, E.

Tordoff, L. [Teller.]

Hampton, L.

Turner of Camden, B.

Harris of Greenwich, L.

Underhill, L.

Houghton of Sowerby, L.

Wedderburn of Charlton, L.

Howie of Troon, L.

White, B.

Kilmarnock, L.

Wigoder, L.

Lloyd of Kilgerran, L.

Winstanley, L.

NOT-CONTENTS

Alport, L.

Hives, L.

Arran, E.

Hooper, B.

Balfour, E.

Kinloss, Ly.

Bauer, L.

Lindsey and Abingdon, E.

Belstead, L.

Long, V. [Teller.]

Blake, L.

McFadzean, L.

Blatch, B.

Malmesbury, E.

Blyth, L.

Margadale, L.

Boyd-Carpenter, L.

Marshall of Leeds, L.

Brougham and Vaux, L.

Middleton, L.

Caithness, E.

Monk Bretton, L.

Carnegy of Lour, B.

Monteagle of Brandon, L.

Carnock, L.

Montgomery of Alamein,

Colwyn, L.

Morris, L.

Cranbrook, E.

Mottistone, L.

Davidson, V. [Teller.]

Munster, E.

De L'lsle, V.

Nelson, E.

Dundee, E.

Pender, L.

Eden of Winton, L.

St. John of Bletso, L.

Elliot of Harwood, B.

Saltoun of Abernethy, Ly.

Faithfull, B.

Sharpies, B.

Fortescue, E.

Skelmersdale, L.

Fraser of Carmyllie, L.

Stanley of Alderley, L.

Gisborough, L.

Strathclyde, L.

Glenarthur, L.

Trafford, L.

Grantchester, L.

Trumpington, B.

Greenway, L.

Wise, L.

Gridley, L.

Wynford, L.

Henley, L.

Young, B.

Hesketh, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.41 p.m.
[Amendment No. 158B not moved.]
The Earl of Arran: I hope that the Committee will agree that this is a suitable moment to break for dinner and I suggest that we return to the Committee stage of the Bill at 8.40 p.m.
I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Licensing (Amendment) Bill [H.L.]
7.42 p.m.
Lord Brooks of Tremorfa: My Lords, I beg to move that this Bill be now read a second time.
Since the introduction of the Licensing (Amendment) Act 1988, which had the effect of increasing the number of permitted hours on Sundays, Christmas Days and Good Fridays in licensed premises from five and a half hours to six and a half hours, there have been many expressions of resentment that the extra hour does not apply to registered members' non-profit-making clubs. Clubs generally welcome, through their representative associations, the introduction of this Licensing (Amendment) Bill 1989 which is aimed at restoring parity of permitted hours on Sundays for members' clubs to those enjoyed by public houses and other on-licences.
The Committee of Registered Clubs Associations is an association of club organisations comprising the Working Men's Club and Institute Union Limited, the Royal British Legion, the National Union of Labour and Socialist Clubs, the National Union of Liberal Clubs, the Royal Naval Association and the Royal Air Force Association. I should say at this point that I act as secretary of the all-party group for non-profit making members' clubs. It is a group which started with five members and now has over 200 members. I understand that it is the largest parliamentary group which is meeting regularly.
The association is representative of approximately 6,000 bona fide registered members' clubs which operate on a non-profit-making basis and which provide facilities and social recreation for 8 million male and female members. It was formed in 1983 as a means of being both an advisory and defensive organisation whose sole objective is to act in advocacy and defence of clubs in the legislative and other public spheres. Whereas the association is quite young in years, the individual club organisations are of long standing. As an example, the Working Men's Club and Institute Union Limited, the oldest of the club associations, was formed in 1862. It is interesting to note that it was formed by a Unitarian Church minister with the aid of the Victorian gentry as a means of giving working men an alternative to the licensed houses and beer shops then so degrading an influence upon the mass of the people. It has a proud history of providing education, recreation and convalescent home
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facilities as well as making a tremendous contribution to the communities at large in social welfare facilities.
A former president of the union, Lord Roseberry, once said:
"All that is to be done for the working men is to be done by themselves. What a man does for himself is worth ten times as much as what can be done for him by anyone else".
At that same meeting in 1875 the right honourable Lord Frederick Cavendish, MP, moved, and Sir Harcourt Johnstone, MP, seconded, a resolution:
"That Working Men's Clubs are calculated not only to diminish excess in the use of intoxicating liquors, but also to promote self-culture and the growth of a healthy public spirit among the mass of people".
The history, aims and objectives of the Royal British Legion, the Royal Naval Association and the Royal Air Force Association are well known to us all and their clubs are an extension of those objectives. The National Union of Labour and Socialist Clubs and the National Union of Liberal Clubs are, as their titles suggest, politically motivated. As for the Association of Conservative Clubs, that has been in existence since 1894. While not in membership of CORCA—the Committee of Registered Clubs Associations—I know that the association is of the same accord as the other club associations in that a Motion at its last annual general meeting, under the chairmanship of the noble Lord, Lord Kaberry, to do everything possible to restore parity of Sunday permitted hours was unanimously supported. To all these we can add the Association of Golf Clubs and the many rugby and cricket clubs throughout the country.
For many years the permitted hours applicable to public houses and registered members' clubs have been the same, having been fixed by the appropriate licensing justices for the district. Certainly this applied in practice on Sundays. Clubs have had and continue to have flexibility in fixing their permitted hours on Sundays with the following conditions: first, the hours fixed shall not be longer than five and a half hours and shall not begin earlier than 12 noon or end later than 10.30 in the evening; secondly, there shall be a break in the afternoon of not less than two hours which shall include the hours from 3 to 5 p.m. and, thirdly, there shall not be more than three and a half hours after 5 o'clock.
In practice, the clubs observe the normal pattern of using the hours of 12 noon to 2 p.m. and from 7 p.m. to 10.30 p.m., as did public houses. Since the introduction of the extra hour in the afternoon for public houses on Sundays it has had a detrimental effect on clubs. It has created a preference in the minds of many club members to resort to the public house rather than to the club. Club management committees are loath to adjust the afternoon hours to counteract this situation, thereby leaving only two and a half hours in the evening—and with good reason. Since the closing of the music halls, the apprenticeship platform for up and coming entertainers has been, and still is, the members' clubs' stages. Many, if not all, the national and indeed some international entertainers owe their success to the opportunity and experience given and gained in working men's clubs.

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The introduction of the Licensing (Amendment) Act 1988, as expected, brought with it a more relaxed approach to the consumption of alcohol, and experience shows that it has proved most successful. Clubs are by their nature self-disciplining. Drunkeness is not tolerated and it is an offence which is answerable to the clubs' management committees. Club members in general are law-abiding, decent people who have proved constantly over the years able to govern and manage their own affairs. They are entitled to enjoy their leisure hours on Sundays in the way that they choose and they should not be denied the opportunity of enjoying a drink between 2 o'clock and 3 o'clock in their own club surroundings instead of having to go to a public house.
Since 1976 clubs and public houses in Scotland have had parity of permitted hours on Sundays for six-and-a-half hours; namely, from 12.30 p.m. to 2.30 p.m., and from 6.30 p.m. to 11 p.m. Clubs can, if they so wish, apply for an extended hours' order granted annually to provide permitted hours on Sundays from 12.30 p.m. to midnight without a break. It appears a little daft to say that the clubs in Scotland are different from clubs in England and Wales. There can be no argument for saying that clubs should be treated differently from public houses on Sundays.
Moved, That the Bill be now read a second time.—(Lord Brooks of Tremorfa.)
7.50 p.m.
Earl Grey: My Lords, we on these Benches are in agreement with this Bill that brings into line the clubs with other places where people gather to drink alcoholic beverages. Clubs are not places where one usually expects abuse to take place as there are more often than not customs and rules of the club that are sadly lacking in other public places. On that basis, we are perfectly willing to support the passage of this Bill through Parliament.
Baroness Sharpies: My Lords, although I am no longer a publican, I still take a keen interest in the licensing trade. I find this very modest Bill entirely logical. It makes the hours which clubs will be open on Sundays the same as those permitted in pubs under the recent Act.
Lord Monson: My Lords, I apologise for my name not being on the list of speakers. The reason is that I saw this Bill for the first time at a quarter-past seven this evening, which is just over half an hour ago. This Bill has been ably introduced from the Opposition Benches. But the House may remember that it was an equally distinguished noble Lord from the Government Benches, the noble Lord, Lord Kaberry of Adel, who twice tried to push through amendments to what is now the Licensing Act 1988. If accepted those amendments would have had the same effect as this Bill, if I have interpreted it correctly. So it is not a party political matter, as the noble Baroness, Lady Sharpies, reminded us. On both occasions, at Report stage and Third Reading, spoke in favour of the noble Lord, Lord Kaberry's amendments. The logic and justice of bringing the
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permitted opening hours of clubs into line with those of pubs on Sundays is just as powerful today as it was last year. I therefore warmly support this Bill.
7.53 p.m.
Lord Dean of Beswick: My Lords, I rise to support the objectives of this Bill. Standing at the Dispatch Box on this occasion I almost get a feeling of déjà vu—that we have been here before. I echo the sentiments of the noble Lord, Lord Monson, concerning the noble Lord, Lord Kaberry. He is an old political opponent from Leeds but nevertheless a personal friend. During the passage of the Licensing Bill last year he went to great lengths to get the objectives of this Bill inserted into that one. At Report stage we had a lengthy debate at which he withdrew the amendment. He brought it back at Third Reading and said that he had been disappointed at the response of the Government to the negotiations at that time.
From my own experience as a club secretary in Manchester for some 22 years, and having been privileged to represent an area of West Leeds that had a large number of very prominent working men's clubs, I know that they form a very important part of the social fabric of those areas. The clubs are quite different from pub life. To all intents and purposes these days they are social gathering places and they make great efforts to see that they are run within the law. The number of clubs that unfortunately (but rarely) come in conflict with the law are few indeed. The clubs are extremely well-run establishments, and they cater for both ends of the community. Very often they cater for the ageing sector of the community, and also the younger sector, which is the main recipient of the extensive funds that they provide to assist them.
I recall the rather lengthy exchange that took place with the noble Earl, Lord Ferrers, at Third Reading of the last Bill. I rather thought that the matter got a little out of context. I have the Official Report before me now and I refer to cols. 1183 and 1184. The noble Earl was saying that, because the House had taken a decision on the question of pubs regarding an amendment moved by the noble Lord, Lord Harmar-Nicholls, that particular amendment was passed against the Government's advice. So when this amendment was tabled at Third Reading they did not feel inclined to give any other advice. I thought that time would eventually catch up with that situation. I am not particularly a pub man. If I go out for a drink these days I still go to a club. I am a member of one or two clubs.
I find it strange that this difference has continued for quite a few months. I do not find a logical argument to justify the difference other than for the Government to say that we are prepared to go back to square one and remove the hour from the pubs. There may be some logic if the Government argued that, but they do not. I am particularly pleased that supporters for this Bill are on all sides of the House. Though we lost the vote on the last occasion, we received the support of 49 Members of your Lordships' House who went through the Division Lobbies in order to get this particular facet put right. The Division was called at six o'clock, rather late

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for a Thursday in terms of the sittings of your Lordships' House. So, we then had a great deal of support.
I am delighted that we have support from all corners of the House for this debate. I am sorry that the noble Lord, Lord Kaberry, who was the original instigator in this matter, cannot be present with us. I have no idea why he is not here; but I am sure that he is with us totally in spirit, and he will support us. From these Benches, we totally support what my noble friend Lord Brooks of Tremorfa is trying to do. We express our appreciation to those on the other side of the House for the support that they have given.
7.57 p.m.
The Earl of Arran: My Lords, the noble Lord, Lord Brooks of Tremorfa, has explained very well that the purpose of this Bill is to extend registered clubs the extra hour's opening time on Sunday that was, at the wish of your Lordships, granted to licensed premises in the Licensing Act 1988.
Licensed premises can now open from 12 noon until 3 p.m. and from 7 p.m. until 10.30 p.m. on Sundays, a total of six-and-a-half hours. Registered clubs, on the other hand, have a greater degree of flexibility so far as concerns Sunday hours. They may within certain limits choose when they wish to open on Sundays. Those limits are that they do not begin to serve alcohol before 12 noon or continue to do so after 10.30 p.m. They must take a break between 3 p.m. and 5 p.m. and they must not serve alcohol for more than three-and-a-half hours after 5 p.m. But most significantly in this context they may not open for more than five-and-a-half hours in all. Therefore if they choose, for example, to open for a full three hours until 3 p.m. on Sunday lunchtimes to be in line with licensed premises, then they may only open for two-and-a-half hours during the evening.
We know very well that the present discrepancy in the total Sunday opening hours between licensed premises and registered clubs is a source of great concern to those connected with the clubs' movement. Your Lordships may recall that when attempts were made to amend the Licensing Bill to restore parity in the matter the Government concluded that such a change could not be justified. We had stated quite firmly from the outset that, as a matter of principle, we did not intend to use the Licensing Bill to make any changes in the Sunday opening hours. But we subsequently (shall we say?) bowed to strong pressure from your Lordships to allow licensed premises to stay open until 3 p.m. on Sundays to allow families and others to enjoy a drink and perhaps a meal in a more leisurely fashion on their day off in a way that would not significantly affect the position of Sunday as a special day. We did not, however, wish to depart any further from the commitment we had given not to seek any changes in Sunday hours in the Bill, particularly when the law already enabled clubs to keep their bars open until 3 p.m. if they so wished. We therefore opposed amending the Licensing Bill in this fashion.
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This Bill gives us an opportunity to consider the matter afresh. No question now arises of any commitments we have given being compromised and we are fully aware of the strong feelings the issue has aroused among the clubs movement. We are therefore content to adopt a neutral stance towards the Bill and to leave it to your Lordships to decide whether it should be given a Second Reading.
Lord Brooks of Tremorfa: My Lords, I am extremely grateful to noble Lords and to the noble Baroness for their support this evening. Opposition in your Lordships' House was described to me on one occasion as being like a British boxer boxing on the Continent, knocking out his opponent and getting a draw. It seems to me that we have achieved rather more than that tonight. I am grateful to the Minister for letting democracy prevail. I ask the House to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8.40 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.1 to 8.40 p.m.]

Water Bill
House again in Committee on Clause 14.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 158C:
Page 14, line 36, at end insert—
("(1A) An appointment made under this Chapter shall include a condition requiring a review of the appointed company's charges at such intervals as the Director may determine being not less than every five years.").
The noble Lord said: This amendment is intended to clarify the position relating to the timescales over which the charging regime of companies will be reviewed. The amendment says:
"An appointment made under this Chapter shall include a condition requiring a review of the appointed company's charges at such intervals as the Director may determine being not less than every five years".
Under the Government's proposals as they are currently understood, the Secretary of State will set prices over the initial period which we understand is likely to be 10 years. Thereafter the director has a duty to keep matters under review. However, Clause 26 does not specify a period over which such a review may take place. Subsection (3) of that clause enables the Secretary of State to give general directions concerning considerations which the director should take into account and the order of priority in which matters should be brought under review. It is presumably under that power that the timescale, if any, will be established.
We have heard statements by Ministers which have suggested that the review would be on a five-yearly basis. However, that provision does not appear in the Bill. The reason for raising the issue here under Clause 14, rather than when we deal with

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Clause 46, is precisely the confused presentation of the Bill. The appointment and its conditions, including such matters as pricing, are dealt with at the beginning of Chapter I. The director's review, including the same matters, is dealt with at Clause 26. Although this is by no means the grossest example of the complexities of the Bill, it still seems sensible to discuss conditions of appointment and the review of the operation of such conditions at the same time.
The amendment would have two effects. It would formalise what is understood to be the position in relation to a requirement for a review every five years. It would also introduce a shorter delay in getting the director involved in pricing after the initial price fixing by the Secretary of State. If, as is understood, the Secretary of State intends the initial pricing regime to last for 10 years, the amendment would at least introduce a review of such prices—whether or not it led to any change as a result—after five years. Surely that is desirable in circumstances where prices have been fixed other than by the consumer watchdog in the first instance. Were the Government to concede that the director alone should fix prices from the outset, a period of 10 years may be more acceptable for the initial period in terms of consumer protection. I beg to move.
8.45 p.m.
The Earl of Arran: With the agreement of Members of the Committee I hope to be able to enlighten the noble Lord, Lord Graham of Edmonton, upon this amendment and also upon Amendment No. 164A.
Clause 14 sets out the potential scope of conditions of appointment of the water and sewerage undertakers and contains ancillary provisions concerning their appointment. The conditions of appointment of each company, including those concerning charging, charges schemes, customer services committees and accounts will be set out in each company's instrument of appointment. Those conditions impose enforceable obligations on each undertaker who will need to satisfy the director general that it has complied with those conditions.
The purpose of Amendment No. 158C is to place on the face of the Bill a specific condition which would bind the company to a review of its charges at intervals of not less than every five years. Amendment No. 164A would require the instrument of appointment to include a condition obliging an appointee to submit to the Secretary of State or the director general detailed accounts of its charges. The amendment would require the director or Secretary of State to review and, if he considered appropriate, publish those accounts not less than once every five years. The relevant customer service committee would also be provided with those accounts.
Perhaps I should briefly explain at this point how the Bill and the instrument of appointment work together to control the charges levied by the appointed companies. Clause 74 of the Bill provides utilities with powers to charge. Clause 7(3) places a duty on the director to ensure that customers, and potential customers, are protected as regards charges in respect of water and sewerage services.
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The model instrument of appointment includes a specific condition on charges, condition B, which restricts charges increases to an amount linked to the retail prices index by a price control formula.
Condition D of the instrument of appointment places an obligation on the appointee to ensure that it shows no undue preference for, or undue discrimination against, classes of customer in setting its standard charges. On request the appointee must provide information to demonstrate compliance with the condition.
Appointees will also be required under condition B to provide such information about standard charges for water, sewerage and trade effluents that is necessary to satisfy the director that its charges increases comply with the formula. The director therefore effectively monitors the charges level of each appointed company each year. However, the instrument of appointment goes further and provides for the director to conduct a detailed review of the business of each appointee at 10-yearly intervals, or five-yearly, on the request of the appointee or at the director's discretion, This review would include, but go much wider than, a review of the company's charges.
On Amendment No. 164A the director has an explicit duty under Clause 7 to protect customers' interests in charging matters and he would therefore take account of the views of the relevant customer service committee automatically. He may include such information about charges in his annual report as he sees fit and would certainly do so if they were matters of general interest.
Condition E of the instrument of appointment requires that a comprehensive accounting statement, including an analysis of turnover of the appointed business, must be published with the annual accounts of the appointee or the appointee's holding company. Copies of those accounts must be made available to customers on request.
Finally, condition F of the instrument of appointment requires companies to set out their domestic charge schemes within the customers' code of practice, and these too will be available on request free of charge. An outline of the code has already been published. The objectives these amendments seek to meet are already provided for in the Bill and in the model instrument of appointment. I therefore urge the noble Lord, Lord Graham, to consider withdrawing the amendment.
Lord Graham of Edmonton: I am bound to say that the Minister drew to my attention a great deal more of the detail surrounding the issue than I had in mind. I am reasonably satisfied that the phrase the Minister uses constantly, "the underlying intention of the amendment", is met by his explanation. Will he justify the 10-year period, because 10 years is a long time? A great deal happens in 10 years. I believe that the Minister used the term "monitoring". Not only are the charges to be monitored, but so are the accounts and the method of operation. In other words, the totality of the business is, if not under constant review (with a capital R), being monitored carefully.

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If the director general is doing his job, he will not merely wait for people to complain but will take an active interest in what goes on. There will not be just one man; there will be a staff. They will be watching the business closely. I asked for a review. That does not mean a change; it merely means a close look to see that all the matters that should be complied with are being complied with. Why has 10 years been chosen as opposed to five years or some different period?
The Earl of Arran: I hope that I can put the mind of the noble Lord, Lord Graham of Edmonton, at ease by saying that 10 years has been chosen because the industry is regarded as being stable and therefore it takes 10 years to change.
Lord Graham of Edmonton: A business which is stable takes 10 years to change! I believe that that explanation is the best we will get tonight. I should have thought that if a business is stable those who are in charge of it would be in charge of it. That is a phrase which goes down with the Ministers as "Euphemisms I have known". People who run a stable business are in control of it. They can make changes at any moment. An unstable business could take a long time to change because no one is in control of the elements.
Anyone who takes on the task of running a water undertaking needs a long time. We are not talking about the life of a company. If capital is to be invested and skilled people are to be attracted into the company they need to know that it is possible to look ahead with certainty. Ten years may well be a fair period for what one might call the putative life of the business. I am arguing for a five-year review so that the public can be satisfied about the changes.
I do not intend to press the amendment. I shall withdraw it. Will the Minister say why he is resisting what I am asking for? That may be a formality in the light of his earlier explanation. From what the Minister said, everything that I envisage being undertaken by my review takes place all the time. Why resist the amendment if it provides the director general and the companies with an opportunity publicly to say, "We have been vetted. We have been examined. We have been given a clean bill of health"? If it emerges that something major needs to be done, such things can be looked at every five years. A few more words from the Minister will satisfy me.
The Earl of Arran: The noble Lord, Lord Graham, seems determined that under condition B the review must be at 10-year intervals. As I hope I made clear when speaking to the amendment, under condition B the review can be five-yearly if required on the request of the appointee, or, at the director's discretion, within not less than five years.
Lord Graham of Edmonton: The Minister is saying that the review could be three-yearly if the company or the director requested it. If it could be three, it could be nine. I am trying to ensure that at least
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once every five years there is a thorough review of the company's modus operandi and of its compliance with its responsibilities.
I am grateful to the Minister for enlightening me about the number of safeguards that are built into different aspects of the Bill. I shall read what he said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 158D and 158E not moved.]
[Amendment No. 159 had been withdrawn from the Marshalled List.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 159A:
Page 14, line 42, at end insert ("including directions as to water pressure, interruptions to supply and foul water flooding").
The noble Lord said: This is a further endeavour to be specific. I know that the Government will talk about the general conditions of appointment set out in Clause 14. The Minister may say that not only are the elements in the amendment specific but they are inappropriate ones to be added to the clause. The amendment was introduced in another place by the Conservative Member of Parliament for Warrington, Mr. Chris Butler. He talked about three specific levels of service: first, water pressure; secondly, interruptions to supply; and, thirdly, foul water flooding.
The Government will of course tell me that the company has to provide the director with details of its intentions as to the quality of its services in the form of service targets to be achieved by a certain date. That date, or time period, will be specified by the Secretary of State on making the appointment or by the Director General of Water Services. As regards the three key aspects of service, the company will have to state its future service targets. If he considers it necessary, the director general may keep the quality of services under review. That important information about service targets is embedded deep in the licence and even then not in any detail.
There is a case for including the specific requirements in the Bill, Ideally, the licence conditions should also specify a whole range of minimum service standards. The water consuming public will also have the points contained in the amendment high up on their list of requirements. We want them included because the people who may be inconvenienced in distressing ways as a result of those derelictions need to have confidence in the provisions.
In the other place, the Conservative Member for Warrington said that he was concerned particularly about foul water flooding from private or unadopted sewers connected to the public main. When those sewers eventually deteriorate, flooding homes with raw sewage, it is often impossible to establish liability for the incident as the original builder of the sewer may no longer exist.
Warrington is not a great distance from Manchester. Mr. Butler could well be making a special case. He is not only entitled to do that; he is obliged to do so on behalf of the people who may have had distressing experiences. Throughout the

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passage of the Bill, Mr. Butler told the other place that the Government had been extremely unhelpful as regards private sewers. Will the Minister take on board the nexus of the dereliction by those who are responsible for private sewers and the damage that can be caused by the three points that I have mentioned? The Minister, Mr. Moynihan, replied to Mr. Butler that these matters were not put in the Bill itself because their inclusion in the appointment would allow more flexibility for each undertaker. I do not understand how being specific would lead to more flexibility. Perhaps I have it wrong. I see that the Minister is puzzled and he will want some advice on the matter. I have been reading a paraphrasing of Mr. Moynihan's remarks. I did not quote directly from the Official Report. I am told that the Minister said that the three target levels of service were important aspects of the quality of service to customers as they would set benchmarks for the expected level of service to be achieved. They are thus an essential starting point for establishing and managing systems of long-term investment planning.
The question which needs to be asked is this. If these levels of service are so important, why would a general direction, as in this amendment, be inappropriate? It is a probing amendment of course because we want the Minister to tell the Committee that the worries of people raising these matters on behalf of others who could be badly affected may be put at rest.
As regards foul water flooding, according to the work done by Doctor Judith Rees of the London School of Economics, there has been a disturbing increase in sewer failures in most water authority areas. The number of unsatisfactory storm overflows and incidents of foul water flooding appears to have risen—just like the level of the water, I suppose. In the Thames Water Authority, about 13,000 homes are classified as under undue risk of sewage flooding, compared with 8,000 in 1982. I suppose that one could say that with 20 million households perhaps an increase of 5,000 does not amount to very much unless you are one of the 5,000.
In addition, some water authorities, such as Southern, indicate in their plans that the number of households at risk will increase in future as expenditure on sewerage renewal and pipe enlargement lags behind increases in discharge levels. We also now know that foul water flooding is not to be included in the Government's guaranteed standards scheme. So much for the scheme lauded by the noble Lord, Lord Hesketh, before the dinner break. That is something which worries many people greatly and we shall return to it later in the Bill. This omission makes it all the more vital that some general directions in regard to the matter be given on the face of the Bill.
The last point which is covered by the amendment is in respect to water pressure. There is evidence that Thames Water pressure has been substantially reduced in order to save pumping costs. It could also be done to reduce the likelihood of failure of the mains which Thames Water know to be ageing—a way of concealing the true state of the system and reducing or postponing maintenance costs. I do not make that charge because these are surmises and suppositions. But it certainly sounds possible to me.
The managers of water plcs will, after privatisation, be doing their best to see just what they can get away with; in other words, the minimum that they need to do in order to comply with the conditions that they have accepted. This is extremely worrying as it will be many years before the full effect of corner cutting is known. Once again we need something comprehensible in the Bill to allay the fears of the ordinary person who may not be able to cope with the detail of the licence. I beg to move.
9 p.m.
Lord Ross of Newport: Perhaps I may speak briefly in support of the amendment which I agree is probing. It seems to me that the Bill gives a marvellous opportunity to put right some of the problems which still exist. I am not too aware of private sewers going into the main sewers, but obviously they exist. I am very well aware—and I am sure that the noble Earl, with his experience as a land agent will also know—of many instances where private water pipes come off the mains. That causes a lot of problems because in some estates they have not been properly maintained and there has been a refusal on the part of the water authorities and water companies to do anything about the problem. That is perfectly fair, because they are not responsible; but they provide the water.
It seems to me that just as there is still a mess in this country of unadopted roads; and we can never get enough people to put up the money to get those roads taken over and adopted, there is a chance in the Bill to put right some of the things that are still wrong. That would be beneficial to the people who are serviced by these mains. It is a long shot. Perhaps the Minister cannot respond to it at this time; but there is an opportunity here.
Certainly as regards private sewers which are going into the main sewers, presumably there is some responsibility for these and some money or compensation to come from people if the sewers are defective. So it would appear to me that if we could obtain the right terms spread over a fair number of years, this is a chance to put people on water mains which will be repairable by the authorities. The same thing could happen with the sewers. I raise the matter because it is still a problem in many parts of the country.
The Earl of Caithness: The effect of the directions in the amendments would be that the director could impose requirements as to the service to be provided in respect of these three aspects of service. However, I put it to the noble Lord, Lord Graham of Edmonton, that the framework provided by the Bill and the model instrument of appointment of the water and sewerage undertakers already provides a better answer.
Condition I of the model instrument of appointment provides for the appointed companies to provide information annually to the director about the general quality of specified aspects of their service to customers. The Secretary of State will specify an initial list. In some cases the information required will be a summary of the quality achieved in terms of the proportion of customers receiving a specified level of service. In three cases—water

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pressure, interruptions to supply and foul water flooding—the requirement will be for the company to state its target performance and to report and explain the performance achieved against that target.
I draw to Lord Graham's attention Clauses 38(1) and 68(1) of the Bill. They provide for the Secretary of State on the application of the director to make regulations establishing specific requirements which, if not met, will amount to breaches of the general duties of the undertakers in Clauses 37 and 67. The intention is that where the director does not receive a satisfactory explanation of the quality of service achieved, and cannot be given adequate assurances about improvements, he will be able to ask the Secretary of State to impose specific requirements in such regulations. This is consistent with parliamentary accountability for the imposition of obligations on the companies. The regulations would be enforceable under Clause 20 of the Bill, and breaches could potentially lead to loss of a company's appointment. They are therefore, I submit, a powerful weapon against substandard service.
The noble Lord, Lord Graham of Edmonton, referred to the problem of private sewers. The noble Lord, Lord Ross of Newport, also referred to that matter. If one purchases a house for which there is a private supply or a private sewer, that will be brought to one's attention by the solicitor. I believe the noble Lord, Lord McIntosh of Haringey, gave us a specific example of that. He mentioned a house that he bought and that he was advised by his solicitor of certain restrictions appertaining to that property. Nevertheless, as he informed the Committee at an earlier stage, he went ahead and bought the property. If one purchases a house which has a private sewer, one's solicitor will bring to one's attention the liability and the benefit that attaches to that.
The amendment seeks to establish that the director should be able to act simply by giving directions. We do not accept that. It is right for him to use his powers to protect customers in relation to quality of service, as well as charging matters. But in our view it must be for the Government to establish the standards which the companies are obliged to meet. I think that is the important point; it is the concept of the standards which the companies are obliged to meet which has not worked terribly well in the past because of the absence of a separation of the gamekeeper and poacher functions. The more I listen to Members of the Committee opposite, the more I believe it must be right to separate these functions and to put the supply industry into the private sector.
Lord Graham of Edmonton: I am grateful to the Minister. Can he confirm my understanding of what he said? I understood him to suggest that already the Government envisage that among the directions that will be given and the matters that will be set against the standards are the issues of water pressure, interruptions to supply and foul water flooding. I believe the Minister specifically referred to those problems in the earlier part of his brief.
Perhaps I am asking the Minister to do something which is already the Government's intention. I am
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asking that these provisions be specifically written on the face of the Bill. However, I believe I heard the Minister say that directions would be given as regards the problems to which I have referred. Those directions would specify that the performance targets of the companies would need to be measured and set against the standards laid down. The whole tenor of the Minister's reply suggested that the standards were the important concept.
I shall withdraw the amendment if the Minister tells me that among the standards that will be set, used as a measurement and acted upon are the issues of water pressure, interruptions to supply and foul water flooding.
The Earl of Caithness: I hope that I can help the noble Lord. I understand the gist of what he is saying with regard to the amendment. I again put it to the noble Lord that the framework provided by the Bill and the model instrument of appointment of the water and sewerage undertakers—I refer the noble Lord again to condition I—cover the points about which he is concerned.
Lord Graham of Edmonton: The Minister needs to do better than that. I asked a specific question. I believe in the earlier part of the Minister's brief he specifically referred to directions in respect of water pressure, interruptions to supply and foul water flooding. I am prepared to wait a little so that assistance may be provided to the Minister. I simply want the Minister to say that those three problems will form part of the monitoring process by the director general when he looks at the manner in which a company complies with the conditions that are laid down.
I shall withdraw my request that those specific directions should be written on the face of the Bill, but I want the Minister to tell the Committee that there is no need for that action in any case because the Government intend to provide for that in some other way.
The Earl of Caithness: The noble Lord has now reached the point I reached when I answered him earlier. His concerns are of course met because, as I said, it will be a requirement for a company to state its target on such matters as water pressure, interruptions to supply and foul water flooding.
Lord Graham of Edmonton: If the Minister had said that two minutes ago—
The Earl of Caithness: I did.
Lord Graham of Edmonton: No, the Minister said that the matter was already covered. I remember that the Minister said what he has just again referred to in his opening speech. However, I wanted that to be on the record.
The Earl of Caithness: It was already on the record; I said it.
Lord Graham of Edmonton: I shall give way to the Minister in a moment. If the Minister is getting annoyed with himself we can all sit back and enjoy

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the spectacle. I wanted the Minister to confirm that my understanding was correct. It was not a case of wanting to get it on the record twice. I am grateful to the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.15 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 159B:
Page 14, line 42, at end insert ("including in particular any such direction relating to the charging of non-domestic consumers for the cost of reception, treatment and disposal of trade effluent.").
The noble Lord said: The purpose of Amendment No. 159B is to include trade effluent charges in the Bill as matters for specific direction under the licence. No doubt it will be dismissed by the Government, like the previous amendment, as being too specific for this clause. In other words, there are matters and manners in which trade effluent is recognised as an element, perhaps as one of the five items included in the tariff basket. That is perhaps appropriate.
The tariff basket includes unmeasured water supply, unmeasured sewerage services, measured water supply, measured sewerage services and the reception, treatment and disposal of trade effluent. As I understand it, at present trade effluent is dealt with on a cost recovery basis and not for profit, although the charge includes a 5 per cent. rate of return on any new assets. In general the system is considered reasonably fair. After privatisation trade effluent will be dealt with through the tariff basket.
I should like the Minister to put my fears at rest. I am afraid that within the basket there is potential for cross-subsidisation. The most worrying aspect is the potental for undue subsidisation of industrial customers by domestic consumers. In my view that is a concern of sufficient importance to justify the inclusion in the Bill of the direction contained in the amendment. I beg to move.
The Earl of Caithness: The amendment would specifically allow the director to be enabled to give directions about the charging of non-domestic consumers for the cost of reception, treatment and disposal of trade effluent. Once again, the Bill and the model instrument of appointment already provide a better regulatory framework than the one the amendment seeks to erect. Schedule 8 of the Bill amends the existing legislation concerning trade effluents.
If the noble Lord would be so kind as to turn to that schedule he will see that paragraph 3(4)(a) amends the Public Health (Drainage of Trade Premises) Act 1937 so that the Director General of Water Services may settle appeals concerning individual charges except where a standard charge has been set in a charges scheme under Clause 75 of the Bill. All such charges schemes will however be required to comply with the requirement in condition D of the model instrument of appointment that they must show no undue discrimination between classes of customer.
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I hope that that answers the question that the noble Lord posed. Let me repeat it, because he likes it on the record twice.
Lord Hacking: If the noble Lord is repeating what he said perhaps he would be kind enough to give the schedule number. I am finding some difficulty in following this.
The Earl of Caithness: I referred the noble Lord to Schedule 8 and I also referred him to Clause 75. I repeat what I said for the sake of the noble Lord, Lord Graham of Edmonton. All such charges schemes will, however, be required to comply with the requirement in condition D of the model instrument of appointment that they must show no undue discrimination between classes of customer.
There is at present a drafting defect in condition D so that trade effluent charges schemes, unlike other charges schemes, have not been brought within that requirement as intended. That omission will be corrected in the actual appointments. The director general thus already has adequate powers to ensure that trade effluent tariffs are fair. Additionally, trade effluent charges at standard rates will be included in the basket of charges which will be subject to the RPI plus K limit on increases in condition B of the model instrument of appointment, as the noble Lord has already drawn to the attention of the Committee. We therefore see no need for an additional power for the director, in conditions of appointment, further to regulate trade effluent charges by means of directions.
Lord Graham of Edmonton: I am grateful to the Minister, not only for giving me the information but for repeating it. On this occasion, because I listened most attentively the first time, there was no need for him to repeat it, but, nevertheless, I am grateful to him for doing so.
When the Minister has a reasonable and sensible point to make, it is worth repeating. He told us that there would be no discrimination. That is right and proper with respect to any category or class of user. He also told us that the domestic user will not find that his or her charges are higher than those of another user as a result of a partial subsidy to the water user. In general, the public will accept that it must bear a true and proper proportion of the charges, not only for water but for other utilities. However, it will want to avoid any further increase in what it has been told will already be an increased cost for water in the future.
The Minister must also understand that there is suspicion that, as a result of the power and pressure of large industrial users, they will want to be given some advantage. I accept what the Minister has told me and I shall read what he has said and then refer to the Bill. He has told me that a duty is written into the Bill for the director to ensure that there is no discrimination of the kind that I feared. I am grateful to the Minister for his remarks. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 159C not moved.]
[Amendments Nos. 160 to 163 had been withdrawn from the Marshalled List.]
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 164:
Page 15, line 8, at end insert—
("( ) It shall be a condition of the appointment of every water undertaker and sewerage undertaker that a prescribed percentage of contracts constituting or including an agreement which provides for the carrying out of works by such an undertaker shall be subject to similar restrictions to those imposed by section 4 of the Local Government Act 1988 (works contracts: restrictions) on a defined authority.").
The noble Lord said: My noble friend Lord Ezra apologises that he cannot be here because he has an important engagement elsewhere. This amendment is one of his own devising.
As the Committee will know, noble Lords on these Benches have opposed the privatisation of the water authorities on various grounds, but basically because, in our view, it transfers a public monopoly into a private monopoly. The noble Earl appears to think that the Bill is going in the right direction, but the longer I sit here and think about it the more worried I become. I fear the worst for the future.
However, having accepted that the Bill will go through, my noble friend Lord Ezra undertook to see what else could be done to bring some competition into the industry. That is why we are bringing forward this amendment. It serves to raise the issue of competition in the privatised water industry and to ensure that it is a condition of an undertaker's appointment that certain contracts would be put out to tender in the same way as for a council's direct labour organisation. It is well known that local authorities throughout the country are being obliged more and more to put their services out to tender, for example, in respect of school meals and road repairs. It seems to us that there is no earthly reason why that should not happen among the privatised water companies.
It is interesting to note the provisions of Clause 155, which are very restrictive for a party that believes in competition. Under that clause, certain undertakings are protected from any competition from the privatised water authorities. The same applies to the Civil Aviation Authority, British Coal, the Post Office, British Rail, the CEGB and numerous other examples. I should have thought that this might appeal to the Government. What source of local government should actually be sourced to the privatised water industry? I move the amendment in that respect and hope that at least it might bring some favourable response from the Government. I beg to move.
Lord Hesketh: The effect of this amendment would be to impose an obligation on water and sewerage undertakers to ensure that for a prescribed proportion of works contracts which they enter into they have first to ensure that the contract has been the subject of competitive tendering in a similar way to the requirements of Section 4 of the Local Government Act 1988.
While I do not dispute the benefits of competitive tendering we believe that this amendment is not appropriate to the Water Bill. It is part of the philosophy of privatisation that the successor companies will be as free as any other company in the private sector to carry on their business as they consider best. The objective of the requirements of
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Section 4 of the Local Government Act 1988 on local authorities is to introduce a mechanism to encourage efficiency in public sector activities. But in the private sector this will not be necessary. The wishes of the shareholders and the profit motive provide the incentive to efficiency.
The fact is that these companies will not be local authorities. It is for that reason that I hope the noble Lord will feel able to withdraw his amendment.
Lord Graham of Edmonton: It is remarkable that the spurs which the Government feel appropriate in the realm of local government should not be considered necessary in private monopoly situations. The Minister said that they would not be necessary. If he really believes that there will be any true competition in the provision of water to domestic or industrial users in the future, then he must know more than the rest of the country. It is a nonsense to talk in terms of protection so far as concerns these companies.
If the Government believe in the keen winds of competition being likely to create efficiency, they ought not to protect this latest baby that they have conceived. Well, it is conceivable. The Government are making a laughing stock of themselves. They are standing on their head when it comes to their arguments which insist that local authorities in 1988, 1989 and 1990 should have to subject themselves to competition but that the latest privatised baby of the Government should be protected from competition of one kind or another in certain services. It is a laugh; it is a joke; but it is real.
Lord Ross of Newport: We have exposed a fairly delicate area in which the Government do not come off very well. I wish that the noble Lord, Lord Harris, were present. He might be very much in support of this idea. I certainly think that the boss of the noble Earl, the Secretary of State himself, might be quite interested in it. I hope that it will be drawn to his attention.
I have spoken in some support of the existing water authorities, and certainly of the one I know in the South. I think that they have done a pretty good job. However, when I look at the depots that they have built and the vans in them—vast numbers of them are occupied by their vehicles—and I consider the local staff, and so forth, I fear for the future. I suggest that it is absolute nonsense to come forward and say that local authorities cannot be trusted and that services must be put out to tender and so on, but that the private monopoly—and we have had the example of the British Airports Authority abusing their monopoly at the present time—should not have to put out some of its contracting to tender.
I think that it should be written into the Bill, and I ask the Government to think again. I do not expect them to do anything tonight, and I shall leave it at that. I think we have won the argument. Nevertheless, I withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 164A not moved.]
[Amendments Nos. 165 and 166 had been withdrawn from the Marshalled List.]
9.30 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 166A:
Page 15, line 45, at end insert—
("(7A) Any member of staff of the relevant authority made redundant as a consequence of the transfer of the water authorities' functions shall be compensated in accordance with a scheme to be drawn up by the Secretary of State providing for terms no less beneficial to the individual than those which applied upon the abolition of the Greater London Council and metropolitan county council.").
The noble Lord said: This amendment looks at the potential for a compensation scheme for staff made redundant as a result of the transfer of water authority functions. Earlier amendments, which have already been debated, have looked at the pension rights of staff following transfer, but this amendment goes a stage further in looking at the Government's intention as to compensation and detriment.
The amendment suggests that a scheme should be drawn up by the Secretary of State providing terms no less beneficial to individuals than those which applied on the abolition of the metropolitan county councils and the Greater London Council. Those schemes could be taken as a model for dealing with the obviously complicated position following the transfer of functions.
The Committee will readily understand that in practice a large number of the existing staff of the water authorities are likely to be re-employed by the plc. A number will not be automatically re-employed, but may well find employment within different strata of the new water industry, whether or not within their existing areas. But for others there will be no place in the new structures and this amendment gives the Government the opportunity to spell out what redundancy terms are envisaged for staff in that position.
The Government may also be able to give an indication of whether any detriment terms will be available for staff who in practice end up in jobs which are less well paid under the new regime. There are widespread fears that the result of privatisation may be significant hardship for individuals. If the Government are not able to point to a scheme created by the Secretary of State, will they state what terms are in mind as regards the water authorities or what terms are planned for the new plcs?
The specific proposal in the amendment is that terms should be included in the conditions of appointment. I wonder whether it is the Government's intention to include such conditions and what levels of compensation or detriment will be payable by the new plcs where appropriate.
I wonder whether the Minister will take on board that there needs to be some comment made in relation to the timetable for the flotation and the appointment of new undertakers, and the impact of
such a timetable on the interests of staff and the availability to them of information as to the future. The amendment is intended to raise an important area of issues to which the Committee may wish to return in looking at the practical details of implementation.
The Minister and his colleagues have been very adept at pointing out to me and others on this side of the Committee that the points we raise are already taken care of, that they are in mind or that this can be covered in one way or another. I stand here very happily, willing to have pointed out to me yet again either that the amendment is not necessary or that it is covered. But I hope the Minister will take on board that there are people outside this House who are not only worried as to what will happen to them personally as employees, but are also worried as mothers, fathers, householders and persons with responsibilities. They want to know not what is in it for them, but what the Government have in mind in providing them with the maximum benefit that is possible when the company that they are working for is privatised. I beg to move.
Lord Hesketh: The first point to make to the noble Lord, Lord Graham, is that we are not proposing to abolish anything. We are seeing the water authorities being divided. But in abolishing bodies like the GLC and the metropolitan authorities, where staff contracts could not have anticipated the authorities' demise, it was proper to consider whether special redundancy provisions were justified. The GLC abolition provisions were different because the legislation concerned provided for redundancies.
The Water Bill does not set out to make any staff redundant as a direct consequence of its provisions and we are not expecting any staff to be made redundant. Should any staff be made redundant for any reason, they will be entitled to redundancy payments under the terms of their existing contracts with the water authorities. The other question that the noble Lord, Lord Graham, asked related to detrimental terms, if I understood him correctly. Staff will be transferred—this is the inter-relationship between the new companies and the NRA, which I believe he was talking about—on terms that are no less good than their existing terms. I hope that on the basis of that information the noble Lord, Lord Graham, will see fit to withdraw his amendment.
Lord Graham of Edmonton: I am grateful to the Minister as always for the clarity of his remarks. But they are not much comfort for people outside. It is not possible for me to quantify. First, the Minister tells me that the Government do not envisage any redundancies. I accept that they are not planning to put people out of work. He believes that all those who are currently employed by the water authorities will find jobs under the new aegis. But that could be a pious hope. If the Government are true to their political beliefs he knows that one of the selling points of privatisation is the assertion that non-privatised companies are overstaffed and that there are savings to be made by making people redundant, by reducing the workforce.
I am not telling the Minister anything new. I am not telling him not to believe that which has come to pass. I know from my dealings with privatisations in the past—the dockyards and the ordnance

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factories in particular—that one inevitable consequence when private companies get their hands on public assets and seek to make better returns to their shareholders is that they reduce the workforce. There was also a reduction in the size and in the capability of Britain to operate its own dockyards and munition factories. But that is a small price for a country to pay in order to line the pockets of shareholders. I am suggesting that the same kind of thing can happen here.
If the noble Earl, Lord Caithness, finds my words offensive, they are designed so to be. I speak of the consequences of privatisation. People have been made redundant, largely to increase the return for the shareholder. When the shareholder is invited to participate in the running and the capitalising of the water authorities, one of the points that will be made is that savings and increased efficiency can be achieved by reducing the workforce.
The Minister tells us that if people are made redundant they will be entitled to the benefits of their existing contracts. That is not a very good inducement. The Minister is really saying that a good, strong trade union will fight to the end and will be able to extract from the putative employer better terms than otherwise. The Minister knows that the statutory governmental scheme is small; it is thin; and it is skinny. In many of the redundancies that take place the terms are doubled, trebled and, in my own experience, quadrupled. That is put down to good trade union organisation. The Government are telling us that they are not prepared to say anything helpful here tonight or to write anything helpful into the Bill, about the kind of yardstick that the director general has to bear in mind which will form part of the conditions of the transfer of employees from the water industry.
Can the Minister tell us whether these employees will be covered by the arrangements known as the TUPE 81 arrangements? Those were the arrangements whereby employees in a nationalised company became employees in a privatised company. Can the Minister tell us whether the kind of conditions which existed as regards redundancies in the dockyards and Royal Ordnance factories will provide the same protection? Although they were not well liked they certainly provided some protection. Can the Minister help about that matter?
Lord Hesketh: In order to make the position absolutely clear I shall quote from page 194 of the Bill. Paragraph 3(2)(e) of Schedule 2 states:
"that the effect of any transfer under the scheme in relation to contracts of employment with a water authority is not to be to terminate any of those contracts but is to be that the periods of employment with that authority are to count for all purposes as periods of employment with the water authority's successor company or, as the case may require, with the Authority".
Lord Graham of Edmonton: I did not understand what the Minister said. Not only did he speak far too fast but he referred to documents and matters to which I am not privy. If the Minister quoted straight from the Bill I am as entitled as anyone to have that in my hand and to look at it.
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The Minister talks in terms of transfer. What does the Bill say about redundancies? The gravamen of these amendments is redundancies, involving people who discover that when their employers change there is no place for them. Let us forget about the detrimental effect when someone who is earning £ 12,000 per year is offered a job at £ 10,000 per year when he is offered a transfer. That is one aspect but the Minister tells me that it cannot happen. I am wondering about the position of someone who is invited to take a job of a different grade and standing. I am talking of someone who is told that regrettably there is no job for him. What does the Bill provide for such people other than what the Minister has told us—that they will be covered by their terms of contract?
Lord Hesketh: I do not believe that I can go much further than I have already. I answered the point clearly when I replied on the first question.
Lord Trafford: Before the noble Lord rises again to speak on the issue I should like quickly to put forward three points. First, if a concern becomes a private company—a plc—it is not in the interests of that company to have bad labour relations. I believe that he and I agree about that, irrespective of other aspects on which we disagree. Secondly, most takeover concerns—and in one sense it would be a takeover—lead to a better payment for severance (call it what you will) than usual. That is because in terms of labour relations it is the right thing to do and the best thing in the interests of those concerned and of the continuing labour force.
Thirdly, if there were any redundancies or changes it is obviously in the interests of the unions and the new management that relations should be the best rather than the worst. Otherwise, before the plc begins it has shot itself through the foot.
Given those points, given the legal protection under the Employment Act, given the Minister's quote from the point of view of transfers, those aspects are covered. Although one can immediately recognise the anxieties expressed eloquently by the noble Lord, a number of built-in protections occur—and I am sure that with his experience they occur to the noble Lord—which do not necessarily lead to the black picture which he has painted.
9.45 p.m.
Lord Graham of Edmonton: I am grateful to the noble Lord, Lord Trafford, because he may well have said substantially what the Minister said, but he did so in a kinder tone and light. I accept the premises which the noble Lord makes. On the basis that a company wishes to continue and enjoy the services of its employees no less favourably than previously, of course good management will try to sort it out.
I hope that the noble Lord, Lord Trafford, equally understands that, based on my experience, I have found that there are more rather than fewer redundancies. The advice which I am given by the

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trade unions affected is that now is the time to make the points and to get the assurances and, for example, to get the remarks made by the noble Lord, Lord Trafford, on the record as his understanding of how the matter may develop. Of course, that is not a ministerial commitment.
I certainly accept that if one could rely on good sense prevailing, the politics having taken place and the Bill having become an Act, then we shall get on with the job. The unions have the job of protecting their members. I am only concerned that the Minister did not quite appreciate that I was not concerned about people who continue to have their jobs but was concerned about people who lose their jobs. I was rather disappointed that the Minister's defence was that they would be protected under the terms of their contract. In the light of labour conditions of 1989 that does not auger well. I pointed out to the Committee that good trade union practice has ensured that Government terms are upped twice, three and sometimes four times. I am grateful to the Minister because I believe that he has gone so far as he can. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 [Modification by agreement]:
[Amendment No. 167 had been withdrawn from the Marshalled List.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 167A:
Page 15, line 49, at end insert ("except that no such consent shall be required if, in the opinion of the Director such modification is reasonably necessary to secure the maintenance of supplies or the protection of public health.").
The noble Lord said: The provisions of Clause 15 allow the director general to modify the conditions of a company's appointment if the company consents to the modification. The consent procedure is lengthy. It requires formal notice and a period for representations. In cases where such modifications are required to secure the maintenance of drinking water supplies to consumers or to safeguard the protection of public health, it is considered proper that the director general should be in a position to act expediently and that his actions should not be fettered by the comparatively long procedural requirements of this clause. The director general would not use those powers frivolously and would in any case be expected to consider the balance between the benefits of swift action and the consequences of such action on the undertaker.
Of course, the Minister will appreciate that this is very much a probing amendment and I look forward to hearing what he has to say. I beg to move.
The Earl of Arran: Again, this is an amendment on which I hope we can put the mind of the noble Lord, Lord Graham, at rest because the point which he makes is already covered in the Bill.
As he said, the effect of this amendment would be to permit the modification of the conditions of employment by the director general without the consent of the company where a modification is
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needed to ensure continuity of supply or for the protection of public health.
In no way do we dispute—in fact, we fully agree—that the continuity of supply and public health are of vital importance. However, the amendment appears to be based on a fundamental misunderstanding of the operation of the Bill which contains extensive requirements, some 19 clauses and five schedules concerning water supply, sewerage, sewage disposal and water quality. Those requirements are backed by an effective enforcement mechanism to ensure that they are met.
Therefore, it is not necessary to use a modification procedure to meet the objectives of the amendment. To attempt to deal with those important matters both in conditions of appointment and in Bill provisions would only serve to cause duplication and confusion of responsibilities for enforcement. I hope that my explanation meets with the agreement and approval of the noble Lord, Lord Graham. In those circumstances, I hope that he will withdraw his amendment.
Lord Graham of Edmonton: With agreement and approval, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 168 to 172 had been withdrawn from the Marshalled List.]
Clause 15 agreed to.
Clause 16 [Modification references to Monopolies Commission]:
[Amendments Nos. 173 to 179 had been withdrawn from the Marshalled List.]
Clause 16 agreed to.
Clause 17 [Reports on modification references]:
The Earl of Balfour The Earl of Balfour moved Amendment No. 180:
Page 18, line 19, leave out ("definite") and insert ("their").
The noble Earl said: Clause 17 follows on to some extent from Clause 16. For the Monopolies and Mergers Commission to come to "definite conclusions" is too strong a phrase, particularly when referring to Clause 16 which in subsection (2) states that,
"The Director may … vary a reference".
In subsection (3) there is also reference to "variation" of a reference.
With that brief explanation that the word "their" widens the Bill a little and is not so definite as the word chosen, I beg to move.
The Earl of Arran: I hope to be able to satisfy the concern of my noble friend on this amendment. Subsection (1) sets out what the MMC must specify in its report and this includes definite conclusions on the questions in the reference. The effect of this amendment would be that the MMC's conclusions need not be definite.
We consider it to be an essential requirement that when circumstances have given rise to the need for

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a reference to the MMC a clear resolution of the questions put to the commission is obtained. This amendment would have the effect that that essential requirement would not be ensured. If definite conclusions are not reached the consequential effect is that matters which operate against the public interest may also not be identified. It follows that they will not be remedied. Thus the object of seeking a report from the commission is defeated. The wording is identical in the equivalent clauses in the gas and telecommunications Acts.
With that explanation I trust my noble friend will see fit to withdraw his amendment.
The Earl of Balfour: I am most grateful for that explanation. I now realise that the word "definite" is necessary. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Balfour: moved Amendment No. 181:
Page 18, line 49, after ("to") insert ("the Secretary of State and to").
The noble Earl said: The last part of Clause 17 states that the Secretary of State may make comments in respect of,
"the public interest or the commercial interests of any person".
Unless he is sent a copy of the report referred to in subsection (4) there could be an unnecessary delay. The reason I felt that both the director and the Secretary of State should have a copy of the report was in case the wrong kind of information leaked out as much as anything else. I beg to move.
The Earl of Arran: Once again I hope to be able to put my noble friend's mind at rest. The effect of this amendment would be that a report of the monopolies commission on a reference under Clause 16 would be sent directly to both the director and the Secretary of State.
While on first thoughts this may seem a sensible proposal, since the director on receipt of a report must send a copy to the Secretary of State, we do not agree that it is the best course of action. It is, in our view, a question of functions. The director clearly will have the information and specialist knowledge necessary to make a reference to the monopolies commission, which may relate to carrying out functions in connection with the appointment or to matters which operate against the public interest. The report should surely be made directly to him. The Secretary of State, whose interest is to exclude if necessary any material which would be against the public interest or the commercial comments the director may wish to draw to his attention. I suggest that with that explanation my noble friend will consider withdrawing his amendment.
The Earl of Balfour: I am most grateful to my noble friend for that explanation, and I am satisfied with the answer. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 182 to 186 had been withdrawn from the Marshalled List.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 186A:
Page 19, line 10, leave out ("the commercial interests of any person") and insert ("would be unreasonably damaging to the interests of any person, other than any company which has been appointed under this Chapter, and to the carrying out of whose functions the report relates").
The noble Lord said: I beg to move the amendment that stands in the name of my noble friend Lord McIntosh of Haringey. It is not wholly disconnected with the point that has just been made by the noble Earl. Under Clause 17(6) the Secretary of State may direct the director to exclude matters from the otherwise published version of the report where it appears to him that publication would be against the public interest or the commercial interests of any person. This amendment would allow the first leg of the discretion to stand; that is, that it would be against the public interest. In particular, the Government in the other place themselves made concessions on the question of commercial interests as a barrier to disclosure. The immediate issue arose there in the somewhat unlikely circumstances of what is now Clause 164 of the Bill concerning directions in the interests of national security.
Challenged to find an example of such a direction which should not be published in the commercial interests of any person, the Minister accepted that he could not find any such example and he was willing to strike the words from the Bill. Amendments were removed at Report stage. This amendment picks up a similar principle as regards the MMC reports. On this occasion it would seem possible that the interests of another company not directly involved in the carrying out of the appointment by the company under investigation could be unreasonably affected in certain circumstances. The purpose of having a report at all however could be completely frustrated if the commercial interests barrier was taken to apply to the plc under investigation.
It is difficult to see how in the case of any report which suggests any change or improvement, that it could not be argued that the commercial interests of the plc were affected by those comments becoming public. I beg to move.
Lord Hesketh: The amendment restricts the discretion of the Secretary of State to issue directions to the Director General of Water Services concerning the exclusion of matters in MMC reports when they are published. The amendment would have the effect of excluding the Secretary of State's powers to make such directions when he judges that publication will be against the commercial interests of any person. It substitutes the power for him to make directions against publication when in his view publication will be unreasonably damaging to the interests of any person other than the appointed company.
The amendment is in our view inequitable. The protection provided by the Bill as drafted would apply both to the company being investigated by the

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Monopolies and Mergers Commission and any other company whose interest could be damaged. That does not mean that where a reference is made to the MMC the commercial interests of the company are to be put before the public interest. The company is not protected in the sense that it will be allowed to withhold relevant matters from the MMC on the grounds of their commercial sensitivity. But it does not follow that everything which must be disclosed to the MMC, and which may or may not be relevant to its findings, must necessarily be published. If companies knew that all their evidence to the MMC, however commercially sensitive, would automatically be published, an unhelpful tendency might be established for companies to hold back or obscure the information which they had provided. That would adversely affect the ability of the commission to protect the public interest which is dependent on securing full exposure of the relevant acts from the company under investigation. The clause as drafted simply gives the Secretary of State a discretion to issue directions. It is for him to judge whether information should be published. Both the Secretary of State and the director can of course take unpublished information into account in taking their decisions.
The amendment is therefore inequitable and potentially unhelpful. And as the subsection as it stands is in line with comparable provisions in the Gas Act and the Telecommunications Act I see no reason why the Water Bill need be different.
Lord Graham of Edmonton: I am grateful to the Minister for his explanations. I shall study what he has said with care, and if I consider that I need to come back at a later stage I reserve the right so to do. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 agreed to.
Clause 18 [Modification following report]:
[Amendments Nos. 187 to 191 had been withdrawn from the Marshalled List.]
Clause 18 agreed to.
Clause 19 [Modification by order under other enactments]:
The Earl of Balfour The Earl of Balfour moved Amendment No. 192:
Page 20, line 24, leave out ("that Act") and insert ("the said Act of 1973".)
The noble Earl said: Within Clause 19 we are dealing with two Acts—the Fair Trading Act 1973 and the Competition Act 1980.I feel that there could be some misunderstanding in subsection (2)(b). My amendment seeks purely to remove any doubts. I beg to move.
The Earl of Arran: I wonder whether I may be so bold as to attempt a hat-trick with my noble friend Lord Balfour. This is a technical amendment which is intended to clarify Clause 19(2)(b) where a
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reference is made to "that Act". The amendment proposes the substitution of,
"the said Act of 1973".
This amendment, though we appreciate its helpful intention, is not necessary. The only preceding reference to an Act in Clause 19(2) is a reference in paragraph (a) to the Fair Trading Act 1973, and the reference to "that Act" in paragraph (b) therefore accords with the convention adopted in the rest of the Bill. This is purely a drafting point but we are satisfied that the reference in question is clearly related to the earlier reference. With great respect, I hope that my noble friend will withdraw the amendment.
The Earl of Balfour: Luckily, in the 1980 Act there are not 73 clauses, so if one starts to look through the Act one can be in no doubt. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 19 agreed to.
The Earl of Arran: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at four minutes past ten o'clock.

  BRITISH LIBRARY MOVE: GOVERNMENT AID
  BRITISH LIBRARY MOVE: GOVERNMENT AID
  BRITISH LIBRARY NEW TECHNOLOGY: FUNDING
  BRITISH LIBRARY NEW TECHNOLOGY: FUNDING
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  PRISON QUARTERS, WAYLAND: VALUATION